The Eastern Company Adopts New Shareholder Rights

The Eastern Company Adopts New Shareholder Rights6/23/2008 11:25:00 AM

Plan to Replace Expiring Plan

NAUGATUCK, Conn.--(BUSINESS WIRE)--June 23, 2008--The Eastern Company (AMEX - EML) announced the adoption today of a new Shareholder Rights Plan to replace its expiring plan.

Mr. Leonard F. Leganza, Chairman, 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 uninvited 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 an $80.00 exercise price. We believe this price reflects the operating results that have taken place in 2007 and to date in 2008, as well as the Board's and management'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% 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% or more of the Company's common stock. If a person or group acquires 10% 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.

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.

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

The new Rights will be distributed as a dividend on July 23, 2008 to shareholders of record on July 3, 2008. No separate Rights certificates will be issued on July 23, 2008 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 is a 150-year-old leading manufacturer of vehicular and industrial hardware, locks, metal castings, coin collection and smart card products. It operates from nine locations in the U.S., Canada, Mexico, Taiwan and China. The diversity of the Company's products enables it to respond to the changing requirements of a broad array of markets.

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 results is 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
Leonard F. Leganza
or
John L. Sullivan III
203-729-2255

SOURCE: The Eastern Company