As filed with the Securities and Exchange Commission on January 30, 1998.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
THE EASTERN COMPANY
(Exact name of registrant as specified in its charter)
Connecticut 06-0330020
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
112 Bridge Street, Naugatuck, Connecticut 06770
(Address of principal executive offices) (Zip code)
THE EASTERN COMPANY 1997 DIRECTORS STOCK OPTION PLAN
(Full title of the plan)
John V. Galiette, Esq.
Reid and Riege, P.C.
One State Street
Hartford, Connecticut 06103-3185
(860) 240-1009
(Name, address, including zip code, and telephone number,
including area code of agents for service)
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed maximum
securities Amount maximum offering aggregate Amount of
to be to be price offering registration
registered registered (1) per share (1)(2) price (1) fee (2)
Common stock 150,000 $14.875 for 90,000 $2,561,250 $776.14
$20.375 for 60,000
(1) These amounts have been estimated solely for the purpose of
calculating the registration fee. Pursuant to Rule 457(c) and (h) under
the Securities Act of 1933, as amended, these amounts have been computed
on the basis of the exercise price of options, where known, and where such
exercise price is not known, on the basis of the average of the bid and
ask prices of the Registrant's Common Stock as traded on the American
Stock Exchange.
(2) The registration fee equals one thirty-third of one percent of the sum
of: (a) $1,338,750, which is the aggregate exercise price of 90,000
options granted at an exercise price of $14.875 per share; plus (b)
$1,222,500, which is $20.375, the average of the high and low prices of
the Registrant's Common
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Stock on January 27, 1998, multiplied by 60,000, a good faith estimate of
the aggregate number of shares of Common Stock of the Registrant to be
issued under options to be granted pursuant to the Plan.
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PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents which have been filed by The Eastern Company, a
Connecticut corporation (the "Registrant"), with the Securities and Exchange
Commission (the "Commission") are incorporated herein by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 28, 1996.
(b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 29, 1997, June 28, 1997 and September 27, 1997.
(c) The description of the Registrant's Common Stock contained on
pages 17 and 18 of the Registrant's Form S-8, Registration No. 33-29452,
relating to The Eastern Company Incentive Stock Option Plan and The Eastern
Company 1989 Executive Stock Incentive Plan filed pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), and any amendments updating such
description filed with the Commission.
(d) The description of the Registrant's Common Stock contained in
the Registrant's registration statement filed pursuant to Section 12(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any
amendments updating such description filed with the Commission.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold, or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in the
documents incorporated or deemed incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any other subsequently
filed document which also is incorporated or deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The consolidated financial statements of The Eastern Company incorporated
by reference in this Registration Statement have been audited by Ernst & Young
LLP, independent auditors, to the extent indicated in their report thereon which
is also incorporated by reference herein. Such financial statements have been
incorporated herein by reference in reliance on such report given on the
authority of such firm as experts in accounting and auditing.
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The validity of the issuance of the shares of common stock offered hereby
will be passed upon for the Registrant by Reid and Riege, P.C., Hartford,
Connecticut.
Item 6. Indemnification of Directors and Officers.
Section 33-770 et seq. of the Connecticut General Statutes provides for
permissive indemnification, mandatory indemnification and court-ordered
indemnification of directors.
(A) A corporation may indemnify a director against liability incurred in a
pending, threatened or completed action, suit or proceeding if: (1) he conducted
himself in good faith; and (2) he reasonably believed (a) in the case of conduct
in his official capacity with the corporation, that his conduct was in its best
interests, and (b) in all other cases, that his conduct was at least not opposed
to its best interests; and (3) in the case of any criminal proceeding, that he
had no reasonable cause to believe that his conduct was unlawful.
A corporation may not indemnify a director unless a determination has been
made that indemnification of the director is permissible because the director
has met the applicable standard of conduct. This determination must be made
either: (1) by a majority vote of the members of the board of directors who are
not parties to the proceeding; or (2) if a quorum cannot be obtained, by a
majority vote of a committee which is composed of two or more directors who are
not parties to the proceeding and which is designated by vote of the directors
who are not parties to the proceeding; or (3) by special legal counsel selected
by the directors or a committee of directors who are not parties to the
proceeding (or by the full board if a quorum of directors not involved in the
proceeding cannot be obtained); or (4) by vote of the shareholders (although
shares owned by directors who are parties to the proceeding cannot vote).
Notwithstanding the above, however, a corporation may not indemnify a
director: (1) in connection with a proceeding by or in the right of the
corporation if the director was adjudged liable to the corporation; or (2) in
connection with any other proceeding charging improper personal benefit to him,
whether or not involving action in his official capacity, in which he was
adjudged liable on the basis that personal benefit was improperly received by
him.
Any indemnification permitted in connection with a proceeding by or in the
right of the corporation is limited to reasonable expenses incurred by the
director in connection with the proceeding. A corporation may advance reasonable
expenses incurred by a director in connection with a proceeding if: (1) the
director furnishes the corporation with a written affirmation of his good faith
belief that he has met the standard of conduct for receiving indemnification;
(2) the director furnishes the corporation with a written undertaking to repay
any advances if it is ultimately determined that he did not meet the standard of
conduct; and (3) the corporation determines that the facts then known do not
preclude indemnification.
(B) Unless limited by its article of incorporation, a corporation shall
indemnify a director who was wholly successful, on the merits or otherwise, in
the defense of any proceeding against reasonable expenses incurred by him in
connection with the proceeding.
(C) Unless a corporation's articles of incorporation provide otherwise, a
court may order a corporation to indemnify a director if the director applies to
the court for indemnification and the court determines that: (1) the director is
entitled to mandatory indemnification; or (2) the director is fairly and
reasonably entitled to indemnification in view of all of the relevant
circumstances, whether or not he met the standard of conduct for permissive
indemnification or was adjudged liable to the corporation. However, if he was
adjudged liable to the corporation, his indemnification will be limited to only
the reasonable expenses incurred.
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The rules which apply above relating to the indemnification of directors
also apply to officers who are not directors of the corporation. In addition, a
corporation may indemnify and advance expenses to an officer, employee or agent
who is not a director to the extent, consistent with public policy, that is
permitted by its articles of incorporation, bylaws, general or specific action
of its board of directors, or contract.
Article Tenth of the Registrant's certificate of incorporation and Section
33-636(b)(4) of the Connecticut General Statutes limit the personal liability of
the Registrant's directors to the Registrant or its shareholders for monetary
damages for any failure on the part of the directors to exercise the requisite
degree of care in fulfilling their duties and responsibilities in their capacity
as directors. However, the protection does not extend to acts or omissions of
the directors that involve a knowing and culpable violation of law, enable the
director or an associate to receive an improper personal economic gain, show a
lack of good faith and a conscious disregard for the duty of the director of the
corporation under circumstances in which the director was aware that his conduct
or omission created an unjustifiable risk of serious injury to the corporation,
constitute a sustained and unexcused pattern of inattention amounting to an
abdication of the director's duty to the corporation, or involve unlawful
distributions to the director.
The Registrant's by-laws also require the indemnification of the
Registrant's directors and officers. Article VII, Section 7 of the by-laws
provides that each director and officer of the Registrant will be indemnified
against losses incurred by him with respect to any action, suit or proceeding to
which he is made a party by reason of his being a director or officer, unless he
is adjudged in such action, suit or proceeding to be liable for his own
misconduct in the performance of his duty as such director or officer. This
right of indemnification is in addition to any other such rights to which the
director or officer may, as a matter of law, be entitled.
The Registrant has also obtained directors' and officers' liability
insurance, the effect of which is to indemnify the directors and officers of the
Registrant against certain damages and expenses because of certain claims made
against them which are caused by their negligent act, error or omission.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following exhibits are filed as part of this Registration Statement:
4(a) The Eastern Company 1997 Directors Stock Option Plan
4(b) The Registrant's restated certificate of incorporation dated
August 14, 1991, and the Registrant's amended and restated
By-laws dated February 13, 1991, are incorporated by reference
to the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 28, 1991 and the Registrant's Form 8-K
filed on February 13, 1991.
4(c) Letter to all shareholders of the Registrant dated September
16, 1991 describing the Registrant's redemption of shareholder
purchase rights dated August 29, 1986 and the issuance of a
new purchase rights dividend distribution, and the "Summary of
Rights to Purchase Common Stock" as enclosed with said letter,
are incorporated by reference to
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the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 28, 1991.
4(d) Rights Agreement entered into between the Registrant and The
First National Bank of Boston, dated September 16, 1991,
incorporated by reference in the Registrant's Form 8-K filed
on September 16, 1991.
4(e) First Amendment dated November 11, 1992 to the Rights
Agreement dated as of September 16, 1991 between the
Registrant and The First National Bank of Boston, incorporated
by reference in the Registrant's Form 10-K for the fiscal year
ended January 2, 1993.
5 Opinion of Reid and Riege, P.C. as to the legality of the
securities being registered.
23(a) Consent of Reid and Riege, P.C. (Reference is made to the
Opinion of Reid and Riege, P.C. filed as Exhibit 5.)
23(b) Consent of Independent Auditors.
24 Power of Attorney (included in signature page to this
Registration Statement).
99(1) Resale S-3-type prospectus filed with this Registration
Statement on Form S-8 in accordance with General Instruction C
of Form S-8.
99(2) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 28, 1996 is incorporated herein by
reference.
99(3) The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 29, 1997, June 28, 1997 and September 27,
1997 are incorporated herein by reference.
99(4) Notice of the 1997 Annual Meeting of Shareholders and Proxy
Statement of the Registrant dated February 28, 1997 are
incorporated herein by reference.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)
(3) of the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the aggregate
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement;
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(iii) To include any material information with respect
to the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this Registration
Statement;
Provided, however, that paragraphs (a)(1)(i) and (ii) shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for the
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act and each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act that is incorporated by reference
in this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Naugatuck, State of Connecticut, on the 30th day
of January, 1998.
THE EASTERN COMPANY
By /s/ Leonard F. Leganza
Leonard F. Leganza
(President and Chief
Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. By so signing, each of the undersigned,
in his or her capacity as a director or officer, or both, as the case may be, of
the Registrant does hereby appoint Leonard F. Leganza and Donald E. Whitmore,
Jr., and each of them severally, or if more than one acts, a majority of them,
his or her true and lawful attorneys or attorney to execute in his or her name,
place and stead, in his or her capacity as a director or officer or both, as the
case may be, of the Registrant any and all amendments to said Registration
Statement and post-effective amendments thereto and all instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Each of said attorneys shall have full power and authority
to do and perform in the name and on behalf of each of the undersigned, in any
and all capacities, every act whatsoever requisite or necessary to be done in
the premises as fully, and to all intents and purposes, as each of the
undersigned might or could do in person, hereby ratifying and approving the acts
of said attorneys and each of them.
Signature Title Date
President and
/s/ Leonard F. Leganza Director (Chief January 30, 1998
Leonard F. Leganza Executive Officer)
Executive Vice
/s/ Donald E. Whitmore, Jr. President, Chief January 30, 1998
Donald E. Whitmore, Jr. Financial Officer
and Director
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/s/ John W. Everets Director January 30, 1998
John W. Everets
/s/ Charles W. Henry Director January 30, 1998
Charles W. Henry
/s/ Russell G. McMillen Director January 30, 1998
Russell G. McMillen
/s/ David C. Robinson Director January 30, 1998
David C. Robinson
/s/ Donald S. Tuttle, III Director January 30, 1998
Donald S. Tuttle, III
Treasurer and
/s/ John Sullivan Corporate Controller January 30, 1998
John Sullivan
The Plan. Pursuant to the requirements of the Securities Act of
1933, the person who administers the Plan has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Naugatuck and State of Connecticut on the 30th day
of January, 1998.
THE EASTERN COMPANY 1997
DIRECTORS STOCK OPTION PLAN
By THE EASTERN COMPANY
By /s/ Leonard F. Leganza
Leonard F. Leganza
Its President and Chief
Executive Officer
EXHIBIT 4(a)
THE EASTERN COMPANY
1997 DIRECTORS STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to promote the interests of The
Eastern Company and its shareholders by providing a method whereby non-employee
directors of the Company may become owners of the Company's common stock by the
exercise of Non-qualified Stock Options, thereby encouraging qualified
individuals to become members of the Board of Directors of the Company.
2. Definitions. As used herein, the following terms
shall have the following meanings:
(a) Award shall mean the grant of a Non-qualified Stock Option as authorized
by Section 4.
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(b) Award Agreement shall mean an agreement described in Section 7 of the
Plan which is entered into between the Company and a Non-employee Director and
which sets forth the terms, conditions and limitations applicable to an Award
granted hereunder.
(c) Board shall mean the board of directors of The
Eastern Company.
(d) Code shall mean the Internal Revenue Code of 1986,
as amended.
(e) Committee shall mean the Incentive Compensation Committee of the Board or
any successor committee with substantially the same responsibilities.
(f) Company shall mean The Eastern Company and each "parent or subsidiary
corporation" of The Eastern Company (as those terms are defined in Section 424
of the Code).
(g) Eastern Common Stock shall mean the common stock, no par value, of The
Eastern Company.
(h) Non-employee Director shall mean a director of The Eastern Company who is
not an employee of the Company.
(i) Non-qualified Stock Option shall mean the right to purchase a specified
number of shares of Eastern Common Stock at a specified price during a specified
period of time which is granted pursuant to the terms of the Plan and which does
not comply with all of the requirements for incentive stock options set forth in
Section 422 of the Code.
3. Administration. In order to administer the issuance of Awards to
Non-employee Directors pursuant to the Plan, there shall be a Committee which is
appointed by the Board and which consists of not less than three non-employee
directors of the Company (as defined in Rule 16b-3 promulgated by the Securities
and Exchange Commission, as it may be amended from time to time). Subject to the
express provisions of the Plan, the Committee shall select the Non- employee
Directors to be granted Awards, shall determine the time or times when each
Award will be granted, shall determine the number of shares subject to each
Award, shall determine the exercise price of the Non-qualified Stock Options,
shall determine the time or times within which the Non-qualified Stock Options
may be exercised, and shall determine the form and content of the Award
Agreements (including, but not limited to, such terms, conditions and
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limitations as the Committee may deem to be necessary or desirable).
The Committee shall have full power and authority, subject to such orders or
resolutions not inconsistent with the provisions of the Plan as may from time to
time be issued or adopted by the Board, to interpret the provisions of the Plan
and administer the issuance of Awards to Non- employee Directors under the Plan.
All decisions of the Committee hereunder shall be either by the affirmative vote
of a majority of the members of the Committee at a meeting called for such
purpose or by a writing signed by all of the members of the Committee. Subject
to any applicable provisions of the Company's bylaws, all such decisions shall
be final and binding on all persons including the Company, its shareholders,
employees and optionees.
4. Eligibility. Non-employee Directors shall be
eligible to participate in the Plan and receive Awards of
Non-qualified Stock Options, as selected by the Committee in
its sole discretion. More than one Award may be granted to
the same Non-employee Director.
5. Shares Subject to the Plan. The shares subject to the Awards granted under
this Plan shall be authorized but unissued shares, or treasury shares, of
Eastern Common Stock. The total amount of Eastern Common Stock which may be
issued under Awards granted under this Plan shall not exceed in the aggregate
150,000 shares. Moreover, in no event may Non-qualified Stock Options authorize
the issuance of more than five percent (5%) of the outstanding shares of Eastern
Common Stock in any one year.
If an Award lapses, expires, terminates, ceases to be exercisable or is
forfeited in whole or in part, or if any stock acquired pursuant to any Award is
reacquired by the Company without the payment of consideration, the shares
subject to but not issued under such Award or so reacquired shall be available
for the grant of other Awards.
6. Awards.
(a) The purchase price of the shares subject to each
Non-qualified Stock Option granted to a Non-employee
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Director shall be established by the Committee at the time of the grant of the
Non-qualified Stock Option.
(b) The term of a Non-qualified Stock Option granted to a Non-employee
Director shall expire ten years and one month from the date it is granted.
(c) Each Non-qualified Stock Option granted to a Non- employee Director under
this Plan may be exercised only during the continuation of the optionee's
service as a Non- employee Director, except as provided in Section 6(d) hereof.
A Non-qualified Stock Option granted to a Non- employee Director may be
exercised in whole at any time, or in part from time to time, during its term.
(d) Any Non-qualified Stock Option granted to a Non- employee Director, the
period of which has not theretofore expired, shall terminate at the time of the
death of the optionee, or at the time of the termination of his service as a
member of the Board, and no shares may thereafter be issued pursuant to such
Non-qualified Stock Option; provided, however, that, subject to the condition
that no Non-qualified Stock Option granted to a Non-employee Director may be
exercised in whole or in part after ten years and one month from the date it is
granted:
(i) upon such a termination of service as a director (other than by
death), the optionee may, within three months after the date of such
termination, exercise such Non-qualified Stock Option in whole or in part;
provided, however, that: (A) if such termination is due to disability, such
three month period shall be extended to one year; and (ii) if an optionee
terminates service as a director at or after attaining age sixty-five (65), such
three month period shall be extended to one year; and
(ii) upon the death of any optionee either prior to such a termination
of service as a director, or within the three month or one year period referred
to in (i) above, such optionee's estate or the person or persons to whom such
optionee's rights under the Non-qualified Stock Option are transferred by will
or the laws of descent and distribution may, within one year after the date of
such optionee's death, exercise such Non-qualified Stock Option in whole or in
part.
(e) The purchase price of each share shall, at the time of exercise of any
Non-qualified Stock Option, be paid in full in cash, or with previously acquired
shares of Eastern Common Stock having an aggregate fair market value at such
time equal to the purchase price, or in cash and such shares.
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(f) Upon the exercise of a Non-qualified Stock Option, a certificate or
certificates representing the shares of Eastern Common Stock so purchased shall
be delivered to the person entitled thereto.
(g) An optionee shall have no rights as a shareholder with respect to shares
subject to his Non-qualified Stock Option until such shares are issued to him
and are fully paid, and no adjustment will be made for dividends or other rights
for which the record date is prior thereto.
(h) Each Non-qualified Stock Option granted to a Non- employee Director under
this Plan shall by its terms be non-transferable by the optionee other than by
will or the laws of descent and distribution and, during the lifetime of the
optionee, be exercisable only by him.
7. Award Agreements. Each Award granted under this Plan shall be evidenced by
an Award Agreement setting forth the number of shares of Eastern Common Stock
subject to the Award, and such other terms and conditions applicable to the
Award as are required by or are consistent with the terms of the Plan. By
acceptance of an Award, each Non-employee Director thereby agrees to such terms
and conditions and to the terms of this Plan pertaining thereto.
8. Term of Plan. This Plan shall terminate ten years after the date of its
adoption by the Board, or upon any earlier termination date established by
action of the Board, and no Awards shall be granted thereafter. Such termination
shall not affect the validity of any Awards then outstanding.
9. Exercise of Awards.
(a) The exercise of any Award shall be by written notice to the Committee
which shall contain the following statement:
"By virtue of my position with The Eastern Company, I have access to
the kind of financial and other information about The Eastern Company as
would be contained in a registration statement filed under the Securities Act
of 1933."
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(b) In the absence of an effective registration statement under the
Securities Act of 1933, as amended, (the "Act") at the time of the grant of an
Award, each Non- employee Director, by accepting the Award, represents and
agrees for himself, his estate and his transferees by will or under the laws of
descent and distribution that all shares of stock acquired pursuant thereto
shall be acquired for investment and not with a view to further distribution
or for purposes of resale. Exercise of any Award shall be by written notice
which, in the absence of an effective registration statement under the Act,
shall contain a statement in substantially the following form:
"I am acquiring these shares for my own account for investment and not
with a view toward distribution in a manner which would require registration
under the Securities Act of 1933, and I do not presently have any reason to
anticipate any change in my circumstances or other particular occasion or
fact which would cause me to sell the shares being acquired. I agree that the
certificates representing these shares, in the absence of such an effective
registration statement, may be marked with a legend reading as follows:
'The shares represented by this certificate have not been registered
under the Securities Act of 1933. The shares have been acquired for
investment and may not be sold, transferred, pledged or hypothecated in the
absence of an effective registration statement for the shares under the
Securities Act of 1933 or an opinion of counsel to The Eastern Company that
registration is not required under said Act.'"
To the extent required by the securities laws, all shares acquired pursuant
to any Award shall be marked with the foregoing legend.
10. Adjustment of Shares Subject to Award and Exercise Price.
(a) Subject to any required action by the Company's shareholders, the number
of shares of Eastern Common Stock subject to each outstanding Award, and the
exercise price per share thereof in each such Award, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Eastern
Common Stock resulting from a subdivision or consolidation of shares or the
payment of a stock dividend (but only on such common stock) or any other
increase or decrease in the number of such shares effected without receipt of
full consideration by the Company.
<PAGE>
(b) Subject to any required action by the Company's shareholders, the
aggregate number of shares of Eastern Common Stock subject to this Plan shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Eastern Common Stock resulting from a subdivision or consolidation of
shares or the payment of a stock dividend (but only on such common stock) or any
other increase or decrease in the number of such shares effected without receipt
of full consideration by the Company.
(c) Subject to any required action by the Company's shareholders, if the
Company shall be the surviving corporation in any reorganization or
consolidation, each outstanding Award shall pertain to and apply to the
securities to which a holder of the number of shares of Eastern Common Stock
subject to the Award would have been entitled as a result of such reorganization
or consolidation.
(d) In the event of a change in Eastern Common Stock, as presently
constituted, which is limited to a change of all of its authorized shares into
the same number of shares with par value or with a different par value or
without par value, the shares resulting from any such change shall be deemed to
be the common stock subject to the Plan.
(e) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board whose
determination in that respect, including any determination of the value of
consideration received for shares, shall be final, binding and conclusive.
11. Amendments and Discontinuance. The Board may amend, suspend or
discontinue the Plan at any time and in any manner.
12. Continuance of Service as a Non-employee Director. Neither the Plan nor
the granting of any Award hereunder shall impose any obligation to retain any
Non-employee Director as a member of the Board.
<PAGE>
13. Tax Withholding. The Company shall have the power to withhold, or require
an optionee to remit to the Company, an amount sufficient to satisfy Federal,
state and local withholding tax requirements on any Award granted under the
Plan. To the extent permissible under applicable tax, securities and other laws,
the Company may, in its sole discretion, permit the Non-employee Director to
satisfy a tax withholding requirement by directing the Company to apply shares
of Eastern Common Stock to which he is entitled as a result of the exercise of a
Non-qualified Stock Option.
14. Limits of Liability.
(a) Any liability of the Company to any Non-employee Director with respect to
an Award shall be based solely upon the contractual obligations created by the
Plan and the Award Agreement.
(b) Neither the Company, nor any member of the Board or the Committee, nor
any other person participating in the determination of any question under the
Plan or the interpretation, administration or application of the Plan, shall
have any liability to any party for any action taken or not taken, in good
faith, under the Plan.
15. Governing Law. The Plan, and all Award Agreements hereunder, shall be
construed in accordance with the laws of the State of Connecticut.
16. Effective Date. The Plan shall be effective as of September 17, 1997,
the date of its approval by the Incentive Compensation Committee of the Board.
<PAGE>
John V. Galiette
(860) 240-1009
EXHIBIT 5
January 30, 1998
Board of Directors
The Eastern Company
112 Bridge Street
P.O. Box 460
Naugatuck, CT 06770
Re: Issuance of Shares of The Eastern Company Common Stock Pursuant to The
Eastern Company 1997 Directors Stock Option Plan
Dear Sirs:
As counsel for The Eastern Company, a Connecticut corporation (the
"Company"), we have participated with the Company and its officers in the
preparation for filing with the Securities and Exchange Commission ("SEC") of
the Registration Statement on Form S-8 (the "Registration Statement") covering
certain shares of common stock, no par value per share, of the Company (the
"Shares"). The Shares will be issued pursuant to The Eastern Company 1997
Directors Stock Option Plan (the "Plan") upon the exercise of certain stock
options to be granted under the Plan.
In connection with the filing of the Registration Statement, we have been
asked to give our opinion, in our capacity as counsel for the Company, as to the
legality of the Shares being registered, indicating whether the Shares, when
acquired by the holders of options granted under the Plan, will be legally
issued, fully paid and non-assessable.
In rendering this opinion, we have examined and relied upon originals or
copies, certified or otherwise, of all such corporate records, documents,
agreements or other instruments of the Company, and have made such investigation
of law, and have discussed with the officers of the Company such questions of
fact, as we have deemed necessary or appropriate. In rendering this opinion, we
have relied upon certificates and statements of officers and directors of the
Company as to factual matters, and we have assumed the genuineness of all
documents submitted as copies.
Relying on the matters stated above, and based upon and subject to the
foregoing, we are of the opinion that the Shares, when acquired by the holders
of options granted under the Plan, will be legally issued, fully paid and
non-assessable.
<PAGE>
We hereby consent to the use of this opinion as an exhibit to the Company's
Registration Statement on Form S-8.
Very truly yours, REID and RIEGE, P.C.
/s/ John V. Galiette
John V. Galiette
JVG/hs
<PAGE>
EXHIBIT 23(b)
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Interests of
Named Experts and Counsel" in the Registration Statement (Form S-8) and
"Experts" in the related Prospectus and Reoffer Prospectus, all pertaining to
The Eastern Company 1997 Directors Stock Option Plan, and to the incorporation
by reference in the aforementioned Registration Statement of our report dated
January 31, 1997, with respect to the consolidated financial statements of The
Eastern Company included in its Annual Report (Form 10-K) for the year ended
December 28, 1996, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Hartford, Connecticut
January 30, 1998
<PAGE>
EXHIBIT 99(1)
REOFFER PROSPECTUS
THE EASTERN COMPANY
Common Stock
No Par Value Per Share
This prospectus (the "Prospectus") relates to certain shares of common stock,
no par value per share, of The Eastern Company (the "Common Stock"), which may
be issued upon the exercise of stock options granted under The Eastern Company
1997 Directors Stock Option Plan (the "Plan"). The Eastern Company (the
"Company") will receive no part of the proceeds from the sales of Common Stock
to be made on behalf of the Selling Shareholders. (See "Selling Shareholders"
herein for information concerning the several Selling Shareholders).
The Company's Common Stock is listed on the American Stock Exchange. On
January 27, 1998, the reported closing price per share of the Common Stock was
$20.375.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") NOR HAS THE SEC PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE EASTERN COMPANY
112 BRIDGE STREET
P.O. BOX 460
NAUGATUCK, CONNECTICUT 06770
(203) 729-2255
The date of this Prospectus is January 30, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports and other information with the Securities and Exchange Commission (the
"SEC"). Such reports and other information concerning the Company can be
inspected and copied at the public reference facilities maintained by the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's Regional Offices
in New York (Seven World Trade Center, New York, New York 10048) and Chicago
(500 West Madison Street, Suite 1400, Chicago, Illinois 60061), and copies of
such material can be obtained from the Public Reference Section of the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Certain of
such reports, proxy statements and other information is also available from the
SEC over the Internet at http://www.sec.gov.
The Company's Common Stock is listed on the American Stock Exchange. Reports,
proxy and information statements, in addition to other information concerning
the Company, can be inspected at the American Stock Exchange.
This Prospectus does not contain all information set forth in the
Registration Statement and Exhibits thereto which the Company has filed with the
SEC under the Securities Act of 1933 (the "1933 Act") and to which reference is
hereby made.
A copy of any document or part thereof which is incorporated into the
Registration Statement by reference shall be provided without charge to each
person to whom a Prospectus is delivered upon the written or oral request of
such person. Such requests for information should be directed to The Eastern
Company, c/o Corporate Secretary, 112 Bridge Street, P.O. Box 460, Naugatuck,
Connecticut 06770, telephone (203) 729-2255.
The Company intends to distribute to its shareholders annual reports
containing financial statements which have been audited by its independent
auditors and quarterly reports containing unaudited financial information for
the first three quarters of each year.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer or solicitation by anyone in any state in which such offer or solicitation
is not authorized, or in which the person making such offer or solicitation is
not qualified to do so, or to any person to whom it is
<PAGE>
unlawful to make such offer or solicitation. The delivery of this Prospectus at
any time does not imply that information herein is correct as of any time
subsequent to the date hereof.
THE COMPANY
The Eastern Company is a diversified manufacturer of locks and other
proprietary metal products, serving the security, underground mining, specialty
castings; and transportation and industrial hardware markets. It has its
corporate headquarters at 112 Bridge Street, Naugatuck, Connecticut 06770 and
its
telephone number is (203) 729-2255.
Additional information concerning the Company is set forth in its most
recent Annual Report on Form 10-K, copies of which will be furnished, upon
request, to non-employee members of the Company's Board of Directors who are
determined to be eligible to participate in the Plan.
SELLING SHAREHOLDERS
The following tables set forth information as of January 28, 1998 with
respect to those Selling Shareholders who have acquired or may acquire shares of
the Company's Common Stock under the Plan.
To the best of the Company's knowledge, there is no understanding between
any of the Selling Shareholders and any securities broker or dealer with respect
to the sale of shares of Common Stock to which this Prospectus relates.
All expenses (excluding commissions) in connection with the offering of
the shares being offered by this Prospectus will be paid by the Company. Such
expenses (excluding commissions but including registration fees, transfer agent
fees, printing costs and legal and accounting fees) are not expected to exceed
$5,000.00.
<PAGE>
Restricted
Stock and
Shares of Shares of
Shares of Common Stock Common
Common Stock Issuable Under Stock
Name, Address Beneficially Outstanding Offered By
and Positions Held as of Options as of This
with the Company 1/28/98(1) 1/28/98 Prospectus
Leonard F. Leganza 3,710 56,250 59,960
62 Tunxis Village
Farmington, CT 06032
(President, Chief
Executive Officer
and Director)
Donald E. Whitmore, Jr. 25,736 17,500 43,236
99 Deerbrooke Circle
Southington, CT 06489
(Executive Vice President,
Chief Financial Officer
and Director)
John W. Everets 12,154 15,000 27,154
72 Chestnut Street
Boston, MA 02108
(Director)
Charles W. Henry 5,815 26,250 32,065
Ash Swamp Road
Woodbury, CT 06798
(Director)
Russell G. McMillen 109,574 15,000 124,574
96 Crest Road
Middlebury, CT 06762
(Director)
David C. Robinson 18,018 20,250 38,268
211 North Shore Road
New Preston, CT 06777-1123
(Director)
Donald S. Tuttle, III 5,259 24,050 29,309
775 South Street
Middlebury, CT 06762
(Director)
(1) Shareholdings include, in certain cases, shares owned by or in trust for
spouses and/or children (in which case all beneficial interest has been
disclaimed).
<PAGE>
DESCRIPTION OF COMPANY COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held on
all matters submitted to a vote of shareholders. Holders of common stock are
entitled: (a) to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefor; and (b) in the event of the
liquidation, dissolution, or winding-up of the Company, to share pro rata the
remaining assets after payment of all debts, obligations, and liabilities.
Shareholders have no preemptive subscription or conversion rights. There are no
redemption or sinking fund provisions applicable to the Common Stock. The
Company's certificate of incorporation, as amended and restated, does not
provide for cumulative voting. The presently issued and outstanding shares of
Common Stock are, and the shares of Common Stock offered hereby by the Company
when issued and delivered as contemplated herein, will be, fully paid and
non-assessable.
EXPERTS
The consolidated financial statements of The Eastern Company incorporated
by reference in the Registration Statement have been audited by Ernst & Young
LLP, independent auditors, to the extent indicated in their report thereon which
is also incorporated by reference herein. Such financial statements have been
incorporated herein by reference in reliance on such report given on the
authority of such firm as experts in accounting and auditing.
The validity of the issuance of the shares of common stock offered hereby
will be passed upon for the Company by Reid and Riege, P.C., Hartford,
Connecticut.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Plan has been filed with the SEC as an exhibit to the Registration
Statement of which this Prospectus is a part and is incorporated by reference
herein. Reference should be made to the Plan for a full and complete statement
of its respective provisions.
Also incorporated herein by reference are the Company's Annual Report on
Form 10-K for the fiscal year ending December 28, 1996, and the Company's
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 29, 1997,
June 28, 1997 and September 27, 1997, and the Company's Proxy Statement dated
February 28, 1997, all as filed with the SEC. All documents subsequently filed
by the Company with the SEC pursuant to
<PAGE>
Sections 13, 14, and 15(d) of the Securities Exchange Act of 1934 prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold, or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of each such document.
The Company will provide upon request and without charge to each person to
whom this Prospectus is delivered a copy of any or all of the documents
incorporated herein by reference (other than exhibits to such documents which
are not specifically incorporated therein by reference). Written requests should
be directed to:
The Eastern Company
c/o Corporate Secretary
112 Bridge Street
P.O. Box 460
Naugatuck, Connecticut 06770
Telephone requests may be directed to the Corporate Secretary at (203) 729-2255.
INDEMNIFICATION
Section 33-770 et seq. of the Connecticut General Statutes provides for
permissive indemnification, mandatory indemnification and court-ordered
indemnification of directors.
(A) A corporation may indemnify a director against liability incurred in a
pending, threatened or completed action, suit or proceeding if: (1) he conducted
himself in good faith; and (2) he reasonably believed (a) in the case of conduct
in his official capacity with the corporation, that his conduct was in its best
interests, and (b) in all other cases, that his conduct was at least not opposed
to its best interests; and (3) in the case of any criminal proceeding, that he
had no reasonable cause to believe that his conduct was unlawful.
A corporation may not indemnify a director unless a determination has been
made that indemnification of the director is permissible because the director
has met the applicable standard of conduct. This determination must be made
either: (1) by a majority vote of the members of the board of directors who are
not parties to the proceeding; or (2) if a quorum cannot be obtained, by a
majority vote of a committee which is composed of two or more directors who are
not parties to the proceeding and which is designated by vote of the directors
who are not parties to the proceeding; or (3) by special legal counsel selected
by the directors or a committee of directors who are not parties to the
proceeding (or by the full board if a quorum of directors not involved in the
proceeding cannot be obtained); or
<PAGE>
(4) by vote of the shareholders (although shares owned by directors who are
parties to the proceeding cannot vote).
Notwithstanding the above, however, a corporation may not indemnify a
director: (1) in connection with a proceeding by or in the right of the
corporation if the director was adjudged liable to the corporation; or (2) in
connection with any other proceeding charging improper personal benefit to him,
whether or not involving action in his official capacity, in which he was
adjudged liable on the basis that personal benefit was improperly received by
him.
Any indemnification permitted in connection with a proceeding by or in the
right of the corporation is limited to reasonable expenses incurred by the
director in connection with the proceeding. A corporation may advance reasonable
expenses incurred by a director in connection with a proceeding if: (1) the
director furnishes the corporation with a written affirmation of his good faith
belief that he has met the standard of conduct for receiving indemnification;
(2) the director furnishes the corporation with a written undertaking to repay
any advances if it is ultimately determined that he did not meet the standard of
conduct; and (3) the corporation determines that the facts then known do not
preclude indemnification.
(B) Unless limited by its article of incorporation, a corporation shall
indemnify a director who was wholly successful, on the merits or otherwise, in
the defense of any proceeding against reasonable expenses incurred by him in
connection with the proceeding.
(C) Unless a corporation's articles of incorporation provide otherwise, a
court may order a corporation to indemnify a director if the director applies to
the court for indemnification and the court determines that: (1) the director is
entitled to mandatory indemnification; or (2) the director is fairly and
reasonably entitled to indemnification in view of all of the relevant
circumstances, whether or not he met the standard of conduct for permissive
indemnification or was adjudged liable to the corporation. However, if he was
adjudged liable to the corporation, his indemnification will be limited to only
the reasonable expenses incurred.
The rules which apply above relating to the indemnification of directors
also apply to officers who are not directors of the corporation. In addition, a
corporation may indemnify and advance expenses to an officer, employee or agent
who is not a director to the extent, consistent with public policy, that is
permitted by its articles of incorporation, bylaws, general or specific action
of its board of directors, or contract.
Article Tenth of the Company's certificate of incorporation and Section
33-636(b)(4) of the Connecticut General Statutes limit the personal liability of
the Company's directors to the Company or its shareholders for monetary damages
for any failure on the part of the directors to exercise the requisite degree of
<PAGE>
care in fulfilling their duties and responsibilities in their capacity as
directors. However, the protection does not extend to acts or omissions of the
directors that involve a knowing and culpable violation of law, enable the
director or an associate to receive an improper personal economic gain, show a
lack of good faith and a conscious disregard for the duty of the director of the
corporation under circumstances in which the director was aware that his conduct
or omission created an unjustifiable risk of serious injury to the corporation,
constitute a sustained and unexcused pattern of inattention amounting to an
abdication of the director's duty to the corporation, or involve unlawful
distributions to the director.
The Company's by-laws also require the indemnification of the Company's
directors and officers. Article VII, Section 7 of the by-laws provides that each
director and officer of the Company will be indemnified against losses incurred
by him with respect to any action, suit or proceeding to which he is made a
party by reason of his being a director or officer, unless he is adjudged in
such action, suit or proceeding to be liable for his own misconduct in the
performance of his duty as such director or officer. This right of
indemnification is in addition to any other such rights to which the director or
officer may, as a matter of law, be entitled.
The Company has also obtained directors' and officers' liability
insurance, the effect of which is to indemnify the directors and officers of the
Company against certain damages and expenses because of certain claims made
against them which are caused by their negligent act, error or omission.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions or otherwise, the Company has been advised
that, in the opinion of the SEC, such indemnification is against public policy
as expressed in the 1933 Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the Common Stock which is the subject of this Reoffer
Prospectus, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
