The Eastern Company Adopts New Shareholder Rights Plan and Redeems Existing Rights

The Eastern Company Adopts New Shareholder Rights Plan and Redeems Existing Rights7/22/1998NAUGATUCK, Conn.--(BUSINESS WIRE)--July 22, 1998--The Eastern Company (AMEX:EML) announced the adoption today of a new Shareholder Rights Plan and the redemption of the company's existing Rights.

Mr. Leonard F. Leganza, president and CEO of The Eastern Company, stated, "The new Rights are intended to assure that our shareholders will receive fair and equal treatment if efforts are ever made to gain control of The Eastern Company without paying a fair price to all of our shareholders. The Plan provides for a $120.00 exercise price. We believe this price reflects the significant improvement in sales and earnings that have taken place in 1997 and to date in 1998, as well as management's and the board's continued confidence in the company's future growth." He added, "The new Rights are not being issued in response to any known effort to acquire The Eastern Company."

The Rights will be exercisable only if a person or group acquires 10 percent or more of the company's common stock or announces a tender offer, which if successful, would result in a person or group owning 10 percent or more of the common stock. If a person or group acquires 10 percent or more of the company's common stock, each Right will entitle its holder (other than the acquiring person or group) to purchase, at the then current market price, a number of shares of the company's common stock having an aggregate market value of twice the exercise price of the Rights.

Prior to any acquisition by a person or group of beneficial ownership of 10 percent or more of the company's common stock, the Rights are redeemable for one cent ($0.01) per Right at the option of of the board of directors.

If the company is acquired in a merger or other business combination, each Right will entitle its holder to purchase, at the then current market price, a number of the acquiring company's common shares having a market value of twice the exercise price of the Rights.

The new Rights will be distributed as a dividend on August 21, 1998 to shareholders of record on August 7, 1998. No separate Rights certificates will be issued on August 21, 1998 because the Rights will initially trade together with the Company's common stock and will be represented by the company's common stock certificates.

The Eastern Company will make a payment of one cent ($0.01) per share for the redemption of each original Right granted under the 1991 program (which the company intends to treat as a dividend for tax purposes) on August 21, 1998 to common shareholders of record on August 7, 1998.

The Eastern Company manufactures and markets a broad range of locks, latches, fasteners and other security hardware that meets diverse security and safety needs of industrial and commercial customers. Headquartered in Naugatuck, CT, the company has seven manufacturing locations in the U.S.A., Canada, Mexico and the Pacific Rim. It has paid consecutive quarterly dividends since 1940.

Forward-Looking Statements: Information in this news release contains statements which reflect the company's current expectations regarding its future operating performance and achievements. Actual results may differ due to the many economic uncertainties that affect the company's business environment. Further information about the potential factors which could affect the company's financial result are included in the company's reports and filings with the Securities and Exchange Commission. The company is not obligated to update or revise the aforementioned statements for those new developments.


     CONTACT: The Eastern Company
              John Dibble, (203) 729-2255 ext.241