Edgar Filing: EASTERN CO

SCHEDULE 14A INFORMATION PROXY STATEMENT
PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

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The Eastern Company
---------------------------------------
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THE EASTERN COMPANY
112 Bridge Street
P.O. Box 460
Naugatuck, CT 06770-0460
--------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 27, 2005
--------------

The Annual Meeting of shareholders of The Eastern Company ("Eastern" or
the "Company") will be held on April 27, 2005 at 11:00 a.m., local time, at the
office of the Company, 112 Bridge Street, Naugatuck, Connecticut 06770-0460, for
the following purposes:

1. To elect two directors.
2. To ratify the Audit Committee's recommendation and the Board of
Directors appointment of Ernst & Young LLP as the independent
registered public accounting firm to audit the consolidated
financial statements of the Company and its subsidiaries for the
fiscal year 2005.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.

The Board of Directors has fixed February 18, 2005 as the record date for
the determination of common shareholders entitled to notice of, and to vote at,
the Annual Meeting or any adjournment thereof.

Your vote is very important. Whether or not you plan to attend the Annual
Meeting, we urge you to sign, date and return the enclosed proxy card promptly
in the postpaid return envelope that is provided. If you attend the meeting and
desire to vote in person, your proxy will not be used.

All shareholders are cordially invited to attend the meeting, and
management looks forward to seeing you there.

By order of the Board of Directors,

John L. Sullivan III
Secretary

March 23, 2005

PROXY STATEMENT

THE EASTERN COMPANY

for the Annual Meeting of Shareholders
To Be Held on April 27, 2005

The Board of Directors of The Eastern Company ("Eastern" or the "Company")
is furnishing this proxy statement in connection with its solicitation of
proxies for use at the 2005 Annual Meeting of Shareholders and at any
adjournment thereof. This proxy statement is first being furnished to
shareholders on or about March 23, 2005.

GENERAL INFORMATION REGARDING VOTING AT THE ANNUAL MEETING

The Board of Directors of Eastern has fixed the close of business on
February 18, 2005 as the record date for determining the shareholders entitled
to notice of, and to vote at, the Annual Meeting. On the record date, there were
3,634,867 outstanding shares of Eastern common stock with each Common Share
entitled to one vote.

The presence, in person or by proxy, of holders of a majority of the
voting power of the Common Shares entitled to vote at the Annual Meeting is
necessary to constitute a quorum.

Shares represented by Eastern's proxy card will be voted at the Annual
Meeting, either in accordance with the directions indicated on the proxy card,
or, if no directions are indicated, in accordance with the recommendations of
the Board of Directors contained in this Proxy Statement and on the form of
proxy. If a proxy is signed and returned without specifying choices, the Common
Shares represented thereby will be voted (1) FOR the proposal to elect Messrs.
Everets and Leganza to the Board of Directors and (2) FOR the appointment of
Ernst & Young LLP as the independent registered public accounting firm. The
Company is not aware of any matters other than those set forth herein which will
be presented for action at the Annual Meeting. If other matters should be
presented, the persons named in the proxy intend to vote such proxies in
accordance with their best judgment.

A shareholder may revoke the appointment of a proxy by making a later
appointment or by giving notice of revocation to The Eastern Company, 112 Bridge
Street, P.O. Box 460, Naugatuck, CT 06770-0460. Attendance at the Annual Meeting
does not in itself revoke the appointment of a proxy; however, it may be revoked
by giving notice in open meeting. A revocation made during the Annual Meeting
after the polls have been closed will not affect the previously taken vote.

-1-

Solicitation of Proxies

The cost of solicitation of proxies will be borne by the Company. This
solicitation by mail to the Company's shareholders (including this proxy
statement and the enclosed proxy) began on approximately March 23, 2005. In
addition to this solicitation by mail, officers and regular employees of the
Company and its subsidiaries may make solicitation by mail, telephone or
personal interviews, and arrangements may be made with companies, brokerage
firms, and others to forward proxy material to their principals. The Company
will defray the expenses of such additional solicitations.

Voting at the Annual Meeting

A plurality of the votes duly cast is required for the election of
directors. Each of the other matters to be acted upon at the Annual Meeting will
be approved if the votes cast in favor of the matter exceed the votes cast
opposing the matter.

Under Connecticut law, an abstaining vote or a broker "non-vote" is
considered to be present for purposes of determining a quorum but is not deemed
to be a vote cast. A broker "non-vote" occurs when a nominee holding shares for
a beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner. As a result, abstentions and
broker "non-votes" are not included in the tabulation of the voting results on
the election of directors or the other matters to be acted on at the Annual
Meeting, each of which requires the approval of a plurality or majority of the
votes cast, and therefore do not have the effect of votes of opposition in such
tabulations.

The Board of Directors recommends voting:

FOR the election of Messrs. Everets and Leganza as directors.
FOR the appointment of Ernst & Young LLP as the independent registered
public accounting firm.

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Item No. 1

ELECTION OF DIRECTORS

At the meeting, two directors will be elected to serve for a three-
year term which expires in 2008 and until their successors are elected and
qualified. Mr. John W. Everets and Mr. Leonard F. Leganza, current directors
whose terms expire in 2005, are the nominees for election at the meeting.

Unless otherwise specified in your proxy, the persons with power of
substitution named in the proxy card will vote your shares FOR the Company's
nominees named below. If the nominees are unable or unwilling to accept
nomination, the proxies will be voted for the election of such other persons as
may be recommended by the Board of Directors. The Board of Directors, however,
has no reason to believe that the Company's nominees will be unavailable for
election at the Annual Meeting. Approval of this resolution requires the
affirmative vote of a plurality of the votes duly cast by the shares represented
at the meeting which are entitled to vote on the matter.

The Board of Directors recommends a vote FOR the election of Messrs.
Everets and Leganza as directors.

Each director has furnished the biographical information set forth below
with respect to his present principal occupation, business and other
affiliations, and beneficial ownership of equity securities of the Company.
Unless otherwise indicated, each director has been employed in the principal
occupation or employment listed for at least the past five years.

COMPANY NOMINEES FOR ELECTION AT THE 2005 ANNUAL MEETING
FOR A THREE-YEAR TERM EXPIRING IN 2008

Common
Stock
Beneficially
Name, Age and Positions Principal Occupation Owned as of Percentage
Presently Held with During Past Five Years: Director February 18, of
The Company Other Directorships Since 2005 Class
----------- ------------------- ----- ---- -----

John W. Everets, 58 President and CEO 1993 76,795 2.1%
Director 2,3 G.E. H.P.S.C.
Boston, MA
(Financial Services)
Director: H.P.S.C. Inc.
Dairy Mart

Leonard F. Leganza, 74 President and CEO 1981 219,258 5.7%
Director, President and The Eastern Company
Chief Executive Officer Naugatuck, CT
of the Company 1 Director: American-Republican
Inc.

-3-

CONTINUING DIRECTOR (TERM TO EXPIRE IN 2007)

Charles W. Henry, 55 Partner 1989 93,364 2.5%
Director 1,2,3 Kernan & Henry
Waterbury, CT
(Law Firm)

CONTINUING DIRECTORS (TERM TO EXPIRE IN 2006)

David C. Robinson, 62 Managing Director 1990 94,946 2.6%
Director 1,2 Sinclair Robinson
Waterbury, CT
(Employee Benefit Specialists)
Director: Engineered Sinterings
& Plastics Inc.

Donald S. Tuttle III, 56 Vice President Investments 1988 83,733 2.3%
Director 1,2,3 UBS PaineWebber
Middlebury, CT
(Investment Firm)

1 Member of the Executive Committee
2 Member of the Compensation Committee
3 Member of the Audit Committee

-4-

Item No. 2

APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The services of Ernst & Young LLP for the fiscal year ended January 1,
2005 included an audit of the consolidated financial statements of the Company;
assistance in connection with filing the Form 10-K annual report with the
Securities and Exchange Commission; assistance on financial accounting and
reporting matters; and meetings with the Audit Committee of the Board of
Directors.

All audit services provided by Ernst & Young LLP for 2004, which were
similar to the audit services provided in prior years, were approved by the
Audit Committee in advance of the work being performed.

The Audit Committee has recommended, and the Board of Directors has
approved, continuing the services of Ernst & Young LLP for the current fiscal
year. Accordingly, the Board of Directors will recommend at the meeting that the
shareholders approve the appointment of Ernst & Young LLP to audit the
consolidated financial statements of the Company for the current year.

The proposal to appoint Ernst & Young LLP as the independent registered
public accounting firm will be approved if, at the Annual Meeting at which a
quorum is present, the votes cast in favor of the proposal exceed the votes cast
opposing the proposal.

Representatives of Ernst & Young LLP will be present at the Annual Meeting
and will have an opportunity to make a statement if they desire to do so, as
well as respond to questioning.

Audit Fees: Ernst & Young LLP audit fees were $296,500 in 2004 and
$239,808 in 2003, including fees associated with the annual audit, the reviews
of the Company's quarterly reports on Form 10-Q and statutory audits required
internationally.

Audit-Related Fees: Fees for audit related services were $31,000 in 2004
and $35,050 in 2003. Audit related services primarily include audits of the
employee benefit plans of the Company.

Tax Fees: Tax fees for preparation of foreign tax returns were $12,438 in
2004 and $9,925 in 2003.

All Other Fees: None

The Board of Directors recommends a vote FOR the appointment of Ernst &
Young LLP as the independent registered public accounting firm.

-5-

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL SHAREHOLDERS

The following table sets forth information, as of February 18, 2005
(unless a different date is specified in the notes to the table), with respect
to (a) each person known by the Board of Directors of the Company to be the
beneficial owner of more than 5% of the Company's outstanding Common Shares, (b)
each current director of the Company, (c) each of the Named Officers (as
hereinafter defined) and (d) all directors and executive officers of the Company
as a group:

Amount and nature
of beneficial Percent of
Shareholder ownership (a) class (b)

Babson Capital Management LLC (c) 311,500 8.6%
One Memorial Drive
Cambridge, MA 02142-1300

Bank of America as trustee under the Salaried 260,282 7.2%
Employees' Retirement Plan of The Eastern Company (d)
100 Federal Street
Boston, MA 02110

John W. Everets 76,795 2.1%

Charles W. Henry (e) 93,364 2.5%

Leonard F. Leganza 219,258 5.7%

David C. Robinson 94,946 2.6%

John L. Sullivan III (f) 64,899 1.8%

Donald S. Tuttle III 83,733 2.3%

Russell G. McMillen (g) 182,627 5.0%

All directors and executive officers as a group (7 persons)(h) 799,497 19.3%

-6-

(a) The Securities and Exchange Commission has defined "beneficial owner"
of a security to include any person who has or shares voting power or
investment power with respect to any such security or who has the right
to acquire beneficial ownership of any such security within 60 days.
Unless otherwise indicated, (i) the amounts owned reflect direct
beneficial ownership, and (ii) the person indicated has sole voting and
investment power.

Amounts shown include the number of Common Shares subject to
outstanding options under the Company's stock option plans that are
exercisable within 60 days.

Reported shareholdings include, in certain cases, shares owned by or in
trust for a director or nominee, and in which all beneficial interest
has been disclaimed by the director or the nominee.

(b) The percentages shown for the directors and executive officers are
calculated on the basis that outstanding shares include Common Shares
subject to outstanding options under the Company's stock option plans
that are exercisable by the directors and officers within 60 days.

(d) Reported shareholdings as of February 18, 2005. The Eastern Company, in
accordance with its fiduciary responsibilities, will provide Bank of
America, as trustee of the salaried pension plan, with voting
instructions for the Common Shares held in this trust.

(e) Includes 10,125 shares beneficially owned by Mr. Robinson, over which
Mr. Henry has sole voting power only, and 6,000 shares beneficially
owned by Mr. McMillen, over which Mr. Henry has shared voting and
investment power.

(f) Mr. Sullivan is a Named Officer of the Company. See "Executive
Compensation - Summary Compensation Table" for information regarding
Mr. Sullivan's age and business experience.

(g) Emeritus Director of the Company.

(h) Directors and Executive Officers (including the Emeritus Director) have
sole voting and investment power as to 815,622 shares (19.7% of the
outstanding stock). Included are stock options for 509,244 shares
deemed exercised solely for purposes of showing beneficial ownership by
such group.

-7-

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers, and persons who beneficially own more than 10%
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and with the American Stock Exchange. Directors, officers and greater-than-10%
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) reports that they file. Based solely on its review
of copies of such reports filed with the SEC since January 2004, or written
representations from certain reporting persons that no such reports were
required for those persons, the Company believes that all persons subject to the
reporting requirements of Section 16(a) have filed the required reports on a
timely basis.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors of the Company is committed to sound corporate
governance practices. The Board of Directors believes that its corporate
governance practices enhance its ability to achieve the Company's goals, to
govern the Company with high standards of integrity, and to increase shareholder
value.

The Company's Board of Directors has three standing committees: an
Executive Committee, an Audit Committee and a Compensation Committee. During
2004, the Board of Directors had seven (7) meetings. During 2004, each Director
attended 100 percent of these meetings and the meetings of committees on which
he served.

Executive Committee. The Executive Committee, acting with the
full authority of the Board of Directors, approves minutes, monthly
operating reports, capital expenditures, banking matters, and other
issues requiring immediate attention. During 2004, the Executive
Committee held no (0) meetings.

Audit Committee. The Audit Committee advises the Board of
Directors and provides oversight on matters relating to the Company's
financial reporting process, accounting functions and internal
controls, and the qualifications, independence, appointment, retention,
compensation and performance of the Company's independent registered
public accounting firm. The Audit Committee also provides oversight
with respect to the legal compliance and ethics programs established by
management and the Board of Directors. The Company's Code of Business
Conduct and Ethics, as adopted by the Board of Directors on February 4,
2004, is included as Exhibit B to this proxy statement. During 2004,
the Audit Committee held five (5) meetings.

Compensation Committee. The Compensation Committee is
responsible for establishing basic management compensation, incentive
plan goals, and all related matters, as well as determining stock
option grants to employees. During 2004, the Compensation Committee
held two (2) meetings.

The Company does not have a standing nominating committee. Rather, due to
the small size of the Company's Board of Directors, the independent members of
the Board of Directors consider director nominees. As defined by the rules and
regulations of the American Stock Exchange, the independent members of the Board
of Directors of the Company include all of the members of the Board of Directors
other than the president and chief executive officer of the Company. These
independent directors select and nominate individuals for election to the Board
of Directors. A copy of the charter describing the nominations process for
directors is available on the Company's website at www.easterncompany.com.

-8-

Each member of the Board of Directors must have the ability to apply good
business judgment and must be able to exercise his or her duties of loyalty and
care. Candidates for the position of director must exhibit proven leadership
capabilities and high integrity, exercise high level responsibilities within
their chosen careers, and have an ability to quickly grasp complex principles of
business and finance. In general, candidates will be preferred to the extent
they hold an established executive level position in business, finance, law,
education, research, government or civic activities. When current members of the
Board of Directors are considered for nomination for reelection, their prior
contributions to the Board of Directors, their performance and their meeting
attendance records are taken into account.

The independent members of the Board of Directors will consider director
nominees who are identified either by the directors, by the shareholders, or
through some other source. The independent members of the Board of Directors may
also utilize the services of a third party search firm to assist them in the
identification or evaluation of director candidates, as they deem necessary or
appropriate.

Shareholders wishing to submit the names of qualified candidates for
possible nomination to the Board of Directors may make such a submission by
sending to the Board of Directors (in care of the Secretary of the Company) the
information described in the Company's Bylaws. This information generally must
be submitted not more than 90 days nor less than 60 days prior to the first
anniversary of the preceding year's annual meeting.

The independent members of the Board of Directors will make a preliminary
assessment of each proposed nominee based upon his or her resume and
biographical information, the individual's willingness to serve as a director,
and other background information. This information is evaluated against the
criteria described above and the specific needs of the Company at the time.
Based upon a preliminary assessment of the candidate(s), those who appear best
suited to meet the needs of the Company may be invited to participate in a
series of interviews, which are used as a further means of evaluating potential
candidates. On the basis of information learned during this process, the
independent members of the Board of Directors will determine which nominee(s)
they will recommend for election to the Board of Directors. The independent
members of the Board of Directors use the same process for evaluating all
nominees, regardless of the original source of the nomination.

DIRECTOR COMPENSATION

Each director who is not an employee of the Company ("Outside Director")
is paid a director's fee for his services at the annual rate of $24,600. All
annual fees paid to non-employee members of the Board of Directors of the
Company are paid in Common Shares of the Company or cash, in accordance with the
Directors Fee Program adopted by the shareholders on March 26, 1997 and amended
on January 5, 2004. The directors make an annual election, within a reasonable
time before their first quarterly payment, to receive their fees in the form of
cash, stock or a combination thereof. The election remains in force for one
year.

-9-

Audit Committee Financial Expert

The Board of Directors has determined that all audit committee members are
financially literate and are independent under the current listing standards of
the American Stock Exchange. The Board has also determined that John W. Everets
qualifies as an "audit committee financial expert" as defined by the SEC rules
adopted pursuant to the Sarbanes-Oxley Act of 2002.

Report of the Audit Committee

The Audit Committee oversees the Company's financial reporting process on behalf
of the Board of Directors. The Board of Directors adopted a revised written
charter for the Audit Committee on February 4, 2004, which is included as
Exhibit A to this proxy statement.

Management has the primary responsibility for the financial statements and the
reporting process, including the system of internal control. The independent
accountants are responsible for expressing an opinion on the conformity of those
statements with generally accepted accounting principles. Within this framework,
the Audit Committee has reviewed and discussed the audited financial statements
included in the Annual Report on Form 10-K with the independent accountants and
management. In connection therewith, the Audit Committee reviewed with the
independent accountants their judgments as to the quality, not just the
acceptability, of the Company's accounting principles; the reasonableness of
significant judgments; the clarity of disclosures in the financial statements;
and other related matters as required to be discussed under generally accepted
auditing standards.

In addition, the Audit Committee has discussed with the independent accountants
the auditors' independence from management and the Company, including the
matters in the written disclosures required by the Independence Standards Board,
and considered the compatibility of nonaudit services with the auditors'
independence.

The Audit Committee also discussed with the Company's independent accountants
the overall scope and plan for their audit, their evaluation of the Company's
internal controls and the overall quality of the Company's financial reporting.
The Audit Committee meets with and without management present and held five
meetings during fiscal year 2004.

In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended January 1, 2005 for filing with the Securities and Exchange
Commission. The Audit Committee has recommended and the Board of Directors has
approved, subject to shareholder ratification, the selection of Ernst & Young
LLP as the Company's independent registered public accounting firm for the
current fiscal year.

Audit Committee:

John W. Everets, Chairman
Charles W. Henry
Donald S. Tuttle III

-10-

EXECUTIVE COMPENSATION

Summary Compensation Table

The following information relates to annual and long-term compensation for
services to the Company in all capacities for the fiscal years ended January 1,
2005, January 3, 2004 and December 28, 2002 of those persons who, at January 1,
2005 were (i) the Chief Executive Officer; and (ii) the Vice President,
Secretary and Treasurer (collectively, the "Named Officers").

ANNUAL COMPENSATION LONG TERM COMPENSATION

AWARDS PAYOUTS

Other Restricted Securities
Name and Principal Annual Shares Underlying LTIP All Other
Position as of Salary Bonus (1) Compensation (2) Awards Options/SARs Payouts Compensation (3)
January 1, 2005 Year ($) ($) ($) ($) (#) ($) ($)
------------------------------------------------------------------------------------------------------------------------------------

Leonard F. Leganza, 74 2004 $400,000 $244,301 $7,750 -- -- -- $ 5,761
Director, President and 2003 $375,000 $136,206 -- -- -- -- $ 5,562
CEO (4) 2002 $350,000 $140,000 -- -- -- -- $ 5,463

John L. Sullivan III, 52 2004 $200,000 $122,151 $7,200 -- -- -- $ 6,845
Vice President, Secretary 2003 $191,923 $ 72,643 $7,200 -- -- -- $ 6,001
and Treasurer (5) 2002 $160,000 $ 64,000 -- -- -- -- $ 8,031

(1) Bonuses are reported in the year earned. Payment is normally made the
following year.

(2) Other Annual Compensation includes car allowances.

(3) All Other Compensation includes matching Company 401(k) contributions,
premiums for term life insurance and life insurance in excess of $50,000.

(4) Mr. Leganza became President and CEO on April 23, 1997.

(5) Mr. Sullivan became Vice President and Treasurer on January 2, 2000. Prior
to that, he was the Corporate Controller and Treasurer of the Company. Mr.
Sullivan was appointed Secretary on April 26, 2000.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS

On February 22, 2005, The Eastern Company executed an Employment Agreement
(the "Agreement") with the Company's President and Chief Executive Officer,
Leonard F. Leganza. The term of the Agreement will expire on December 31, 2007,
subject to renewal for one or more additional one-year periods.

Under the terms of the Agreement, Mr. Leganza will serve as the President
and Chief Executive Officer of the Company through December 31, 2006, and will
become the Chairman of the Board of Directors of the Company on January 1, 2007.
During the term of the Agreement, Mr. Leganza will be entitled to receive base
compensation at a rate determined by the Board of Directors, and will also be
eligible to participate in the Company's bonus and equity incentive plans.

-11-

If Mr. Leganza's employment as President and Chief Executive Officer
terminates for any reason other than for cause (as defined in the Agreement),
Mr. Leganza will be entitled to receive deferred compensation equal to $100,000
per year for five years (pro rated if he both ceases to be President and Chief
Executive Officer and terminates his service as a member of the Board of
Directors prior to January 1, 2008). The deferred compensation will begin on the
later of January 1, 2008 or the date on which he ceases to be President and
Chief Executive Officer. However, the deferred compensation will begin earlier
than January 1, 2008 if he both ceases to be President and Chief Executive
Officer and terminates his service as a member of the Board of Directors prior
to that date.

If Mr. Leganza's employment is terminated without cause, Mr. Leganza and
his spouse will continue to be entitled to participate in the Company's group
medical insurance plan.

If Mr. Leganza's employment is terminated after a change in control of the
Company (as defined in the Agreement), Mr. Leganza will be entitled to receive a
lump sum severance payment equal to 2.99 times his average adjusted compensation
(as defined in the Agreement). However, this amount will be reduced to the
extent necessary to avoid the applicability of Section 280G of the Internal
Revenue Code. Following a change in control, Mr. Leganza will also be entitled
to receive the deferred compensation and medical benefits, whether or not his
termination of employment is for cause.

Pursuant to the terms of the Agreement, Mr. Leganza has entered into
certain noncompetition, nonsolicitation and nondisclosure covenants with the
Company.

The Agreement supersedes the terms of the prior severance agreement
between the Company and Mr. Leganza dated February 21, 2001.

Should an unfriendly change in control of the Company take place, John L.
Sullivan III is guaranteed to receive a lump sum payment equal to one full year
of his annual base salary.

-12-

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

All non-employee members of the Board of Directors are members of the
Compensation Committee. In reviewing and overseeing the Company's compensation
programs, the Compensation Committee adheres to a compensation philosophy which
provides executive compensation programs that are designed to:

Attract and retain key executives crucial to the long-term success of
the Company.

Reward executives for the achievement of operational and
strategic objectives.

Compensate executives commensurate with each executive's performance,
experience and responsibilities.

Align the interests of executives with the long-term interest of
shareholders through award opportunities that can result in the
ownership of common stock.

As a means of implementing these compensation philosophies and
objectives, the Company's compensation program for executives consists of base
salary, participation in the Company's incentive compensation program,
participation in the employee stock incentive programs, and such individual
bonuses as the Committee deems warranted based on the personal achievements of
each managing director and corporate executive. The base salaries are determined
by evaluating the executives' responsibilities and their individual performance,
as well as the competitive environment. Participation in the incentive
compensation program is at the discretion of the Compensation Committee. Awards
under the incentive compensation program to Company executives are based upon
achieving targeted operating earnings goals linked to overall corporate goals.
The Compensation Committee believes that the employee stock incentive programs
provide executives, who have substantial responsibility for the management and
growth of the Company, with the opportunity to increase their ownership in the
Company, thereby more closely aligning the best interests of the shareholders
and the executives.

Effective January 3, 2005, the Compensation Committee increased the
salary paid to Leonard F. Leganza, President and Chief Executive Officer, by
12.5% based upon his level of achievement in line with the Company's executive
compensation program. The Compensation Committee increased the salary paid to
John L. Sullivan III by 12.5% effective January 3, 2005.

Compensation Committee:

John W. Everets
Charles W. Henry
David C. Robinson, Chairman
Donald S. Tuttle III

-13-

PENSION PLANS

Retirement Benefits

The Company maintains a pension plan for salaried employees. Under the
plan, the amount of a member's annual normal retirement benefit is equal to one
percent (1%) of total annual compensation applicable to each year of service and
the sum of one half of one percent (0.5%) of average annual compensation plus
one half of one percent (0.5%) of average annual compensation in excess of
$10,000, multiplied by years of service not in excess of thirty (30). Average
annual compensation means the average of the member's annual compensation for
the five (5) consecutive calendar years prior to retirement which result in the
highest average.

As of January 1, 2005, Messrs. Leganza and Sullivan had 7 and 28 years of
service respectively. The estimated annual retirement benefits payable to
Messrs. Leganza and Sullivan are $27,876 and $108,739 respectively. These
benefits are based on the five year certain form of annuity.

The Company has adopted an unfunded supplemental employee retirement plan
(the "SERP") for the benefit of Mr. Leganza. Under the terms of the SERP, Mr.
Leganza will receive a monthly retirement benefit equal to the excess of: (a)
the benefit he would be entitled to receive under the Company's qualified
pension plan, based on the assumption that Mr. Leganza was fully vested under
the plan and without regard to the limitations on benefits imposed by the
Internal Revenue Code; over (b) the benefit which he is actually entitled to
receive under the Company's qualified pension plan, subject to the plan's
vesting schedule and the limitations on benefits imposed by the Internal Revenue
Code. The monthly retirement benefit under the SERP will begin at the time of
Mr. Leganza's termination of employment. The benefit will be paid as an annuity
over Mr. Leganza's life, with 60 monthly payments guaranteed. However, if Mr.
Leganza is married at the time benefits start, his benefits will be actuarially
adjusted and will be paid over his life with the provision that, at the time of
his death, 50% of the amount payable to him during his lifetime will be paid to
his surviving spouse for the remainder of her lifetime. The SERP also provides
for the payment of benefits in the event of Mr. Leganza's death or disability
while employed.

SIP Plan

The Company maintains a savings and investment plan (the "SIP Plan") for
eligible employees. An eligible employee who is participating in the SIP Plan
may execute a salary reduction agreement requiring the Company to reduce his or
her taxable earnings by a percentage of his or her compensation (as elected by
the participant) and to contribute that amount to the SIP Plan. The amount of
the contribution could not exceed $13,000 for calendar year 2004, plus an
additional $3,000 catch-up contribution for those participants age 50 and older.
If an employee executes such a salary reduction agreement, the Company will make
a matching contribution to the SIP Plan on behalf of the employee. For 2004 the
matching contribution equaled 50% of that portion of an employee's salary
reduction contribution which did not exceed 4% of his or her earnings. An
employee is fully vested in his or her salary reduction contributions and the
earnings on those contributions. An employee will become vested in any matching
contributions, and the earnings thereon, with full vesting after completing five
years of service or upon reaching age 65. Employees who are participating in the
SIP Plan may direct that their account balances be invested in one or more
investment options offered under the plan.

-14-

EXECUTIVE INCENTIVE PLAN

The President and the Vice President, Secretary and Treasurer were
eligible to receive an incentive with the actual amount of the incentive being
based on the performance of the Company during 2004. All group Vice Presidents
and Division Managers were eligible to earn their incentive based on achieving
their respective targets.

Effective for 2005, the President and the Vice President, Secretary and
Treasurer and group Vice Presidents and Division Managers can earn their
incentive bonus, with unlimited potential, based on achieving corporate and
respective division or group targets.

STOCK OPTIONS

On April 26, 1989, the shareholders approved The Eastern Company 1989
Executive Stock Incentive Plan (the "1989 Plan"), which by its terms expired on
February 7, 1999. No additional options may be granted under the 1989 Plan.
However, options previously granted remain exercisable in accordance with their
terms.

On April 26, 1995, the shareholders approved The Eastern Company 1995
Executive Stock Incentive Plan (the "1995 Plan"), which by its terms expired on
February 8, 2005. No additional options or shares of restricted stock may be
granted under the 1995 Plan. However, options previously granted remain
exercisable in accordance with their terms.

On September 17, 1997 the Compensation Committee adopted The Eastern
Company 1997 Directors Stock Option Plan (the "1997 Plan") which by its terms
will expire either on September 16, 2007 or upon any earlier termination date
established by the Board of Directors. The 1997 Plan authorizes the granting of
non-qualified stock options to the non-employee directors of the Company to
purchase Common Shares. On December 15, 1999, the Board of Directors approved an
increase in the total number of Common Shares which may be issued under options
granted under the 1997 Plan from 225,000 shares to 325,000 shares.

On April 25, 2001, the shareholders approved The Eastern Company 2000
Executive Stock Incentive Plan (the "2000 Plan"), which by its terms will expire
either on July 19, 2010 or upon any earlier termination date established by the
Board of Directors. The 2000 Plan authorizes the granting of incentive stock
options and non-qualified stock options to purchase Common Shares and the
granting of shares of restricted stock. The Compensation Committee of the
Company's Board of Directors will determine the restrictions which will apply to
shares of restricted stock granted under the 2000 Plan. Awards may be granted to
salaried officers and other key employees of the Company, whether or not such
employees are also serving as directors of the Company. The 2000 Plan also
provides for the grant of nonqualified stock options to non-employee directors
of the Company. The total amount of Common Shares which may be issued under
awards granted under the 2000 Plan shall not exceed in the aggregate 300,000
shares.

The purchase price of the shares subject to each option granted under the
1989 Plan and each incentive stock option granted under the 1995 and 2000 Plans
may not be less than the fair market value of the shares on the date of grant.
The purchase price of shares subject to non-qualified stock options granted
under the 1995, 1997 and 2000 Plans, and the price (if any) which must be paid
to acquire a share of restricted stock granted under the 1995 and 2000 Plans,
will be set by the Compensation Committee of the Company's Board of Directors.
All non-qualified stock options granted to date have required a purchase price
equal to 100% of the fair market value of the Common Shares on the date of the
grant.

Incentive stock options generally may not be granted under the 1995 and
2000 Plans to any employee who owns more than ten percent (10%) of the Company's

-15-

voting stock at the time of such grant. Incentive stock options must be
exercised within ten years. Non-qualified stock options must be exercised within
the period set forth in the plan or, if the plan permits, within the period
established by the Compensation Committee. Moreover, options may not be
exercised more than three months after termination of employment or termination
of service as a director, except in the case of death or disability, in which
event the option may be exercised within one year after death or disability.
Under the 1995, 1997 and 2000 Plans, the three month period is also extended to
one year for an optionee who terminates employment or terminates service as a
director at or after reaching age sixty-five (65).

Option/SAR and Long-term Incentive Plan. There were no grants of stock
options, stock appreciation rights or long-term incentive awards to any Named
Officers during the year ended January 1, 2005. On May 5, 2004, Mr. Sullivan
exercised 2,500 options granted under the 1989 Plan at a price of $11.92 per
share.

Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values

Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options/SARs Options/SARs
Acquired on Value at FY-End(#) at FY-End ($) (i)
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------

Leonard F. Leganza -- -- 200,000 -- $1,323,525 --
President & CEO

John L. Sullivan III 2,500 $ 10,975 (ii) 60,244 2,256 $ 293,016 $12,634
Vice President,
Secretary & Treasurer

(i) Based on the fair market value of the Company Common Shares on January 1,
2005 of $20.00 per share and the option exercise prices ranging from $9.92
to $18.50 per share.
(ii) Based on the fair market value of the Company Common Shares on May 5, 2004
of $16.31 per share and the option exercise price of $11.92 per share.

-16-

SHAREHOLDER RETURN PERFORMANCE INFORMATION

The following graph sets forth the Company's cumulative Total Shareholder
Return based upon an initial $100 investment made on December 31, 1999 (i.e.,
stock appreciation plus dividends during the past five fiscal years) compared to
the Wilshire 5000 Index and the S&P Industrial Machinery Index.

The Company manufactures and markets a broad range of locks, latches,
fasteners and other security hardware that meets the diverse security and safety
needs of industrial and commercial customers. Consequently, while the S&P
Industrial Machinery Index being used for comparison is the standard index most
closely related to the Company, it does not completely represent the Company's
products or market applications. The Wilshire 5000 is a market index made up of
5,000 publicly-traded companies, including those having both large and small
capitalization.

(CHART OF CUMULATIVE TOTAL RETURN APPEARS HERE)

Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04

Eastern Co. $100 $87 $82 $78 $114 $148
Wilshire 5000 $100 $89 $79 $63 $83 $93
S&P(C) Industrial Machinery $100 $95 $101 $100 $138 $163

-17-

ADDITIONAL INFORMATION

Any shareholder who intends to present a proposal at the 2006 Annual
Meeting of shareholders and desires that it be included in the Company's proxy
material must submit to the Company a copy of the proposal on or before November
23, 2005. Any shareholder who intends to present a proposal at the 2006 Annual
Meeting but does not wish that the proposal be included in the Company's proxy
material must provide notice of the proposal to the Company, in accordance with
the terms of the Company's by-laws, no earlier than January 27, 2006 and no
later than February 26, 2006.

It is the Company's policy to have the members of the Board of Directors
attend the Annual Meeting, to the extent feasible. All of the members of the
Board of Directors attended the 2004 Annual Meeting.

If any shareholder wishes to send communications to the Board of Directors
or to any member of the Board of Directors, he or she may do so by sending such
communications to the Board of Directors or to the individual director in care
of The Eastern Company, 112 Bridge Street, P.O. Box 460, Naugatuck, Connecticut
06770. All such communications will be delivered to the Board of Directors or to
the individual director in strict confidence.

FORM 10-K ANNUAL REPORT

A copy of the Company's annual report on Form 10-K as filed with the
Securities and Exchange Commission for the fiscal year ended January 1, 2005
will be furnished without exhibits to shareholders upon written request.
Exhibits to the Form 10-K will be provided if so indicated. Direct all inquiries
to Investor Relations, The Eastern Company, 112 Bridge Street, P.O. Box 460,
Naugatuck, Connecticut 06770-0460.

OTHER BUSINESS

Under Connecticut law, no business other than the general purpose or
purposes stated in the notice of meeting may be transacted at an annual meeting
of shareholders. If any matter within the general purposes stated in the notice
of meeting but not specifically discussed herein comes before the meeting or any
adjournment thereof, the persons named in the enclosed proxy will vote upon such
matter in accordance with their best judgment.

This proxy statement and the above notice are sent by order of the Board
of Directors.

John L. Sullivan III
Secretary

March 23, 2005

-18-

EXHIBIT `A'

The Eastern Company

AUDIT COMMITTEE CHARTER

(1) General

There shall be a committee of the Board which shall be called the Audit
Committee (the "Committee").

The Committee shall consist of no fewer than three members. Each member of the
Committee shall satisfy the independence, experience and financial expertise
requirements of Section 10A of the Securities Exchange Act of 1934 (as amended
by the Sarbanes-Oxley Act of 2002, and the rules promulgated thereunder) and the
rules and regulations of the American Stock Exchange. Directors' fees are the
only compensation that a Committee member may receive from the Company.

The Board shall appoint the members of the Committee annually, considering the
views of the president and chief executive officer, as appropriate. The members
of the Committee shall serve until their successors are appointed and qualify,
and shall designate the chairman of the Committee. The Board shall have the
power at any time to change the membership of the Committee and to fill
vacancies in it, subject to such new member(s) satisfying the independence,
experience and financial expertise requirements referred to above.

The Committee shall meet on at least a quarterly basis.

Except as expressly provided in this Charter or the by-laws of the Company or as
otherwise provided by law or the rules of the American Stock Exchange, the
Committee shall fix its own rules of procedure.

(2) Statement of Purpose and Policy

The Committee shall provide assistance to the Board in fulfilling its oversight
responsibility to the shareholders, potential shareholders, the investment
community, and others relating to the Company's financial statements and the
financial reporting process, the systems of internal accounting and financial
controls, the internal audit function, the annual independent audit of the
Company's financial statements, and the legal compliance and ethics programs as
established by management and the Board. In so doing, it is the responsibility
of the Committee to maintain free and open communication between the Committee,
the independent auditors, the internal auditors, and the management of the
Company. In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities, and personnel of the Company, and with the power to retain
outside counsel or other experts for this purpose.

(3) Audit Committee Authority and Responsibilities

The Committee shall have the authority to appoint or replace the Company's
independent accounting firm (subject, if applicable, to shareholder
ratification), and shall approve all audit engagement fees and terms and all

-19-

non-audit engagements with the independent accounting firm. The Committee shall
consult with management but shall not delegate these responsibilities, except
that pre-approvals of non-audit services may be delegated to a single member of
the Committee. In its capacity as a committee of the Board, the Committee shall
be directly responsible for the oversight of the work of the independent
accounting firm (including resolution of disagreements between management and
the independent accounting firm regarding financial reporting) for the purpose
of preparing or issuing an audit report or related work, and the independent
accounting firm shall report directly to the Committee.

The Committee shall have the authority, to the extent it deems necessary or
appropriate, to retain special legal, accounting or other consultants to advise
the committee and carry out its duties, and to conduct or authorize
investigations into any matters within its scope of responsibilities. The
Committee shall meet periodically with management and the independent accounting
firm in separate executive sessions in furtherance of its purposes.

The Committee may request any officer or employee of the Company or the
Company's outside counsel or independent accounting firm to attend a meeting of
the Committee or to meet with any members of, or consultants to, the Committee.

The Committee shall make regular reports to the Board. The Committee shall
review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval. The Committee shall annually review
the Committee's own performance.

In performing its functions, the Committee shall undertake those tasks and
responsibilities that, in its judgment, would most effectively contribute and
implement the purposes of the Committee. The following functions are some of the
common recurring activities of the Committee in carrying out its oversight
responsibility:

Review and discuss with management and the independent accounting firm
the Company's annual audited financial statements, including
disclosures made in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" or similar disclosures, and the
matters required to be discussed pursuant to the Statement on Auditing
Standards No. 61, and recommend to the Board whether the audited
financial statements should be included in the Company's Form 10-K.

Review and discuss with management and the independent accounting firm
the Company's quarterly financial statements, including disclosures
made under "Management's Discussion and Analysis of Financial Condition
and Results of Operations" or similar disclosures, and the matters
required to be discussed pursuant to the Statement on Auditing
Standards No. 61, prior to the filing of its Form 10-Q, including the
results of the independent accounting firm's reviews of the Company's
quarterly financial statements to the extent applicable.

Review and discuss with management and the independent accounting firm,
as applicable: (a) major issues regarding accounting principles and
financial statement presentations, including any significant changes in
the Company's selection or application of accounting principles, and
major issues as to the adequacy of the Company's internal controls and
any special audit steps adopted in light of material control
deficiencies; (b) analyses prepared by management or the independent
accounting firm setting forth significant financial reporting issues

-20-

and judgments made in connection with the preparation of the financial
statements, including analyses of the effects on the financial
statements of alternative methods under generally accepted accounting
principles ("GAAP"); (c) any management letter provided by the
independent accounting firm and the Company's response to that letter;
(d) any problems, difficulties or differences encountered in the course
of the audit work, including any disagreements with management or
restrictions on the scope of the independent accounting firm's
activities or on access to requested information and management's
response thereto; (e) the effect of regulatory and accounting
initiatives, as well as off-balance sheet structures, on the financial
statements of the Company; and (f) earnings press releases (paying
particular attention to any use of "pro-forma," or "adjusted" non-GAAP,
information), as well as financial information and earnings guidance
(generally or on a case-by-case basis) provided to analysts and rating
agencies.

Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof
review such audit, including any comments or recommendations of the
independent auditors.

Review the disclosures concerning the Committee and its operations as
may be required for inclusion in proxy materials distributed by the
Company in connection with meetings of its shareholders.

Establish and review procedures for the receipt, retention and
treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, and the confidential,
anonymous submission by Company employees of concerns regarding
questionable accounting or auditing matters.

Review and discuss all relationships which the independent accounting
firm has with the Company in order to consider and evaluate the
independent accounting firm's continued independence, ensure the
rotation of the lead (or coordinating) audit partner and other
significant audit partners, and establish clear hiring policies for
employees or former employees of the independent accounting firm who
are proposed to be hired by the Company.

When applicable, review the independent accounting firm's attestation
to management's report included in the annual report on Form 10-K which
evaluates the Company's internal controls and procedures for financial
reporting.

Review any reports of the independent accounting firm mandated by
Section 10A of the Securities Exchange Act of 1934, as amended, and
obtain from the independent accounting firm any information with
respect to illegal acts in accordance with Section 10A.

Discuss with management the Company's major financial risk exposures
and the steps management has taken to monitor and control such
exposures, including the Company's risk assessment and risk management
policies.

Perform any other activities consistent with this Charter, the
Company's By-laws, or governing law as the Committee or the Board deems
necessary or appropriate.

-21-

(4) Limitations of Audit Committee's Roles

While the Committee has the responsibilities and powers set forth in its
Charter, it is not the duty of the Committee to prepare financial statements, to
plan or conduct audits, or to determine that the Company's financial statements
and disclosures are complete and accurate and are in accordance with GAAP and
applicable rules and regulations. These are the responsibilities of management
with advice from the independent accounting firm.

-22-

EXHIBIT `B'

THE EASTERN COMPANY

CODE OF BUSINESS CONDUCT AND ETHICS

(1) Complying With Law

All employees, officers and directors of the Company should respect and comply
with all of the laws, rules and regulations of the U.S. and any states,
counties, cities and other countries or jurisdictions in which the Company
conducts its business or whose laws, rules and regulations are applicable to the
Company.

The U.S. Foreign Corrupt Practices Act prohibits giving anything of value,
directly or indirectly, to foreign government officials or foreign political
candidates in order to obtain or retain business. It is strictly prohibited to
make illegal payments to government officials of any country. In addition, the
U.S. government has a number of laws and regulations regarding business
gratuities which may be accepted by U.S. government personnel. The promise,
offer or delivery to an official or employee of the U.S. government of a gift,
favor or other gratuity in violation of these rules would not only violate
Company policy but could also be a criminal offense. State and local
governments, as well as foreign governments, may have similar rules. The
Company's counsel can provide guidance in this area.

(2) Conflicts Of Interest

All employees, officers and directors of the Company should be scrupulous in
avoiding a conflict of interest with regard to the Company's interests. A
"conflict of interest" exists whenever an individual's private interests
interfere or conflict in any way (or even appear to interfere or conflict) with
the interests of the Company. A conflict situation can arise when an employee,
officer or director takes actions or has interests that may make it difficult to
perform his or her Company work objectively and effectively.

It is almost always a conflict of interest for a Company employee to work
simultaneously for a competitor, customer or supplier. Employees are not allowed
to work for a competitor as a consultant or board member. The best policy is to
avoid any direct or indirect business connection with the Company's competitors,
customers or suppliers, except on the Company's behalf.

Conflicts of interest may also arise when an employee, officer or director, or
members of his or her family, receives improper personal benefits as a result of
his or her position in the Company, whether received from the Company or a third
party. Loans to, or guarantees of obligations of, employees, officers or
directors or their respective family members may create conflicts of interest.
Federal law prohibits loans to directors and executive officers.

Conflicts of interest are prohibited as a matter of Company policy, except under
guidelines approved by the Board of Directors or committees of the Board of
Directors. Conflicts of interest may not always be clear-cut, so employees who
have any questions should consult with higher levels of management or the
Company's counsel. Any employee, officer or director who becomes aware of a
conflict or potential conflict should bring it to the attention of a supervisor,
manager or other appropriate personnel, or consult the procedures described in
this Code.

-23-

(3) Corporate Opportunity

Employees, officers and directors are prohibited from: (a) taking for themselves
personally opportunities that properly belong to the Company or are discovered
through the use of corporate property, information or position; (b) using
corporate property, information or position for personal gain; and (c) competing
with the Company. Employees, officers and directors owe a duty to the Company to
advance its legitimate interests when the opportunity to do so arises.

(4) Confidentiality

Employees, officers and directors of the Company must maintain the
confidentiality of confidential information entrusted to them by the Company or
its suppliers or customers, except when disclosure is authorized by management
or required by law, regulation or legal proceedings. Whenever feasible,
employees, officers and directors should consult Company counsel if they believe
they have a legal obligation to disclose confidential information. Confidential
information includes all non-public information that might be of use to
competitors of the Company, or harmful to the Company or its customers if
disclosed.

(5) Fair Dealing

Each employee, officer and director should endeavor to deal fairly with the
Company's customers, suppliers, competitors, officers and employees. None should
take unfair advantage of anyone through manipulation, concealment, abuse of
privileged information, misrepresentation of material facts or any other unfair
dealing practice.

(6) Protection And Proper Use of Company Assets

All employees, officers and directors should protect the Company's assets and
ensure their efficient use. Theft, carelessness, and waste have a direct impact
on the Company's profitability. All Company assets should be used for legitimate
business purposes only.

(7) Public Company Reporting

As a public company, it is of critical importance that the Company's filings
with the Securities and Exchange Commission be full, fair, accurate, timely and
understandable. All of the Company's books, records, accounts and financial
statements must be maintained in reasonable detail, must appropriately reflect
the Company's transactions and must conform both to applicable legal
requirements and to the Company's system of internal controls. Unrecorded or
"off the books" funds or assets should not be maintained unless permitted by
applicable law or regulation.

Depending on his or her position with the Company, an employee, officer or
director may be called upon to provide necessary information to assure that the
Company's public reports are complete, fair and understandable. The Company
expects employees, officers and directors to take this responsibility very
seriously and to provide prompt, accurate answers to inquiries related to the
Company's public disclosure requirements.

-24-

(8) Accounting Complaints

The Company's policy is to comply with all applicable financial reporting and
accounting regulations applicable to the Company. If any employee, officer or
director of the Company has concerns or complaints regarding questionable
accounting or auditing matters of the Company, then he or she is encouraged to
submit those concerns or complaints (anonymously, confidentially or otherwise)
to the chairman of the Audit Committee of the Board of Directors (which will,
subject to its duties arising under applicable law, regulation or legal
proceedings, treat such submissions confidentially). Such submissions may be
directed to the attention of the chairman of the Audit Committee, or to any
other director who is a member of the Audit Committee, at the principal
executive offices of the Company.

(9) Reporting Any Illegal Or Unethical Behavior

Employees are encouraged to talk to supervisors, managers or other appropriate
personnel about observed illegal or unethical behavior and, when in doubt, about
the best course of action in a particular situation. Employees, officers and
directors who are concerned that violations of this Code have occurred or may
occur, or that other illegal or unethical conduct by employees, officers or
directors of the Company has occurred or may occur, should contact their
supervisors or superiors. If they do not believe it appropriate or are not
comfortable approaching their supervisors or superiors about their concerns or
complaints, then they may contact either the chairman of the Audit Committee or
Company counsel. If their concerns or complaints require confidentiality,
including keeping their identity anonymous, then their confidentiality will be
protected, subject to applicable law, regulation or legal proceedings.

(10) No Retaliation

The Company will not permit retaliation of any kind by or on behalf of the
Company and its employees, officers and directors against good faith reports or
complaints of violations of this Code or other illegal or unethical conduct.

(11) Accountability for Adherence to the Code

All employees, officers and directors are responsible for abiding by this Code.
This includes individuals who are responsible for a failure to exercise proper
supervision and to detect and report a violation by their subordinates.
Employees, officers and directors who violate this Code are subject to
disciplinary action, up to and including dismissal.

(12) Amendment, Modification And Waiver

This Code may be amended, modified or waived by the Board of Directors, subject
to the disclosure and other provisions of the Securities Exchange Act of 1934,
as amended.

IMPORTANT - THIS CODE OF BUSINESS CONDUCT AND ETHICS, AND THE POLICIES
DESCRIBED IN IT, ARE NOT AN EMPLOYEE CONTRACT. THE COMPANY DOES NOT CREATE ANY
CONTRACTUAL RIGHTS BY ISSUING THIS CODE OF BUSINESS CONDUCT AND ETHICS OR SUCH
POLICIES. THIS CODE OF BUSINESS CONDUCT AND ETHICS DOES NOT LIMIT THE
OBLIGATIONS OF ANY EMPLOYEE UNDER ANY EXISTING NON-COMPETE, NON-DISCLOSURE OR
OTHER EMPLOYMENT-RELATED AGREEMENTS TO WHICH THE EMPLOYEE IS BOUND, OR ANY
COMPANY POLICIES WHICH COVER THE EMPLOYEE.

-25-

PROXY

THE EASTERN COMPANY
112 Bridge Street, Naugatuck, CT 06770-0460
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY

The undersigned hereby appoints Charles W. Henry and David C. Robinson or
any one or more of them, true and lawful attorneys and agents, with the power of
substitution for the undersigned in his name, place and stead, to vote at the
Annual Meeting of Shareholders of The Eastern Company on April 27, 2005 and any
adjournments thereof, all shares of common stock of said Company which the
undersigned would be entitled to vote, if then personally present, as specified
on the reverse side of this card on proposals 1 and 2 and in their discretion on
all other matters coming before the meeting.

THIS PROXY WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER BUT IF NO CHOICE IS
SPECIFIED, IT WILL BE VOTED FOR PROPOSALS 1 AND 2.

(Continued and to be signed on the reverse side)

Annual Meeting of Shareholders of
THE EASTERN COMPANY

April 27, 2005

Please sign, date and mail back your
proxy card as soon as possible!

Please detach and mail in the envelope provided.
-------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1 and 2
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE (X).

1. Election of two Directors for a 3-year term:

NOMINEE:
[ ] FOR ALL NOMINEES ( ) J.W. Everets
( ) L.F. Leganza

[ ] AGAINST NOMINEES

[ ] FOR ALL EXCEPT
(See instructions below)

INSTRUCTION: To vote against any individual nominee(s), mark "FOR ALL
EXCEPT" and fill in the circle next to each nominee you
wish to vote against, as shown here: (X)

2. Ratify the appointment of the independent FOR AGAINST ABSTAIN
registered public accounting firm [ ] [ ] [ ]
(Ernst & Young LLP)

SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

-----------------------------------------------------------------------
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that [ ]
changes to the (registed names(s) on the account may not be submitted via
this method.

Signature of Shareholder -------------------------- Date -----------------
Signature of Shareholder -------------------------- Date -----------------

Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full
corporate name by duly athorized officer, giving full title as such.
If signer is a partnership, please sign in partnership name by authorized
person.