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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
BOWNE & CO., INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
<PAGE> 2
(BOWNE LOGO)
EMPOWERING INFORMATION.(SM)
Proxy Statement
and Notice of Annual Meeting of Stockholders
(Meeting Date: May 28, 1998)
BOWNE & CO., INC.
345 Hudson Street
New York, NY 10014
<PAGE> 3
(BOWNE LOGO)
BOWNE & CO., INC.
345 Hudson Street
New York, New York 10014
Robert M. Johnson
Chairman and
Chief Executive Officer
April , 1998
Dear Stockholder,
It is my privilege to invite you to attend Bowne's Annual Meeting of
Stockholders on Thursday, May 28, 1998, beginning at 10:00 A.M. in the rooftop
ballroom on the 20th Floor of the St. Regis Hotel, 2 East 55th Street, New York
City. Our Proxy Statement for the meeting is attached, and both your voting card
and a copy of our 1997 Annual Report are enclosed.
This year, Bowne becomes one of the growing number of companies which
present their proxy statements in "plain English." For the first time we're also
offering you the option of voting either electronically, by telephone or with a
traditional mail-in proxy. All of us at Bowne hope you like these innovations,
and we welcome your comments.
The theme of our Annual Meeting will be "Empowering Information." Besides
considering the four proposals explained in the Proxy Statement, we'll review
the major developments at Bowne since our last Stockholders' meeting.
I hope you'll join me at the meeting on May 28. Even if you can't attend,
your vote is very important to us. Either way, please return a signed proxy card
or give us your instructions by e-mail or by telephone, so that you can be sure
your shares will be properly voted.
Sincerely,
/s/ ROBERT M. JOHNSON
<PAGE> 4
(LOGO)
BOWNE & CO., INC.
345 Hudson Street
New York, New York 10014
NOTICE OF THE 1998 ANNUAL MEETING OF STOCKHOLDERS
The Stockholders of Bowne & Co., Inc. will hold their Annual Meeting on
THURSDAY, MAY 28, 1998, beginning at 10:00 A.M. (local time), in the rooftop
ballroom on the 20th Floor of the St. Regis Hotel, 2 East 55th Street (at the
corner of Fifth Avenue) in New York City. There will be four proposals on the
agenda, and we will take action on each of them:
PROPOSAL A -- To elect five Nominees (Robert M. Conway, Edward H.
Meyer, James P. O'Neil, Judith Shapiro and Lisa A. Stanley) to serve on the
Company's Board of Directors;
PROPOSAL B -- To approve the appointment of Ernst & Young LLP as the
Company's auditors for the current fiscal year;
PROPOSAL C -- To approve an amendment to the Company's corporate
charter that will increase the number of Directors who make up the Board to
a minimum of nine and a maximum of fifteen; and
PROPOSAL D -- To approve a plan to reincorporate the Company in
Delaware.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "IN FAVOR OF" ALL FOUR
PROPOSALS.
Our Proxy Statement is attached to this notice. It discusses the four
proposals and contains other information about the Company. The Proxy Statement
also explains how you may vote at the Annual Meeting in person or by proxy. We
may take action on additional business at the meeting if it is proper for
consideration by the Stockholders.
Stockholders who are entitled to vote at the Annual Meeting will be
determined from the Company's records when business closed on April 8, 1998. You
do not need a ticket of admission to attend the meeting.
By order of the Board of Directors,
Douglas F. Bauer
Counsel & Corporate Secretary
April , 1998
<PAGE> 5
TABLE OF CONTENTS
Voting Procedures...........................................
Who May Vote?.............................................
How the Proxies Vote for You..............................
How Instructions Can Be Revoked...........................
How Votes Are Counted.....................................
Other Business at the Annual Meeting......................
Cost of This Solicitation.................................
PROPOSALS: "A" -- ELECTION OF DIRECTORS....................
"B" -- APPOINTMENT OF AUDITORS..................
"C" -- INCREASING THE NUMBER OF DIRECTORS.......
"D" -- REINCORPORATING IN DELAWARE..............
Information About the Nominees and Other Directors..........
About the Board and Its Committees..........................
The Board.................................................
How Directors are Chosen..................................
Committees of the Board...................................
Compensation Committee Interlocks and Insider
Participation..........................................
Compensation of Directors.................................
Directors' and Officers' Insurance........................
Ownership of the Common Stock...............................
Principal Stockholders....................................
Management's Ownership of Stock...........................
Comparison of Stockholder Returns...........................
Report on Executive Compensation by the Compensation
Committee.................................................
Executive Compensation Tables...............................
Summary Compensation Table................................
Option Grants in 1996 and 1997............................
Aggregated Options Exercised in 1996 and 1997 and Year-End
Values of Options......................................
Long-Term Incentive Awards in 1997........................
Retirement Benefits.......................................
Contractual Arrangements with Executives..................
Comparison of New York and Delaware Corporate Laws..........
Other Information...........................................
Proposals and Nominations by Stockholders.................
How to Get Form 10-K......................................
Appendix: Agreement and Plan of Merger......................
<PAGE> 6
PROXY STATEMENT
Your vote as a Stockholder is important to Bowne. In case you cannot attend
our Annual Meeting in person, the Company's Board of Directors has named two
people as "Proxies" and asks you to let them vote your shares at the meeting. We
encourage you to sign and return the enclosed voting card even if you plan to
attend the meeting, unless you intend to vote by telephone or by e-mail.
Incidentally, the terms "Bowne" and "Company" (as well as the words "we,"
"us" and "our") refer to Bowne & Co., Inc. when we use them in this Proxy
Statement. The "Proxies" are the individuals named on your voting card or any
other people they may choose to be their substitutes. We refer to the American
Stock Exchange as the "Exchange," and the terms "Common Stock" and "stock"
both mean the Company's Common Stock, par value $.01 per share, which is traded
on the Exchange.
The Company's management prepared this Proxy Statement and began sending it
to Stockholders on April , 1998.
VOTING PROCEDURES
Who May Vote? You are entitled to vote your Common Stock if our records
show that you held the shares when business closed on the "record date." The
record date was April 8, 1998. A total of XX,XXX,XXX shares of Common Stock were
outstanding and entitled to vote on the record date, and there were no shares
outstanding in any other class of stock. The enclosed voting card shows the
exact number of shares you may vote. Each share of Common Stock is entitled to
one vote on each of the four proposals explained in this Proxy Statement, and
all votes will be confidential.
How the Proxies Vote for You. If you own Common Stock in your own name,
you are a "holder of record." That means you may use the enclosed voting card to
tell the Proxies how you want them to vote your shares. Be sure to sign, date
and mail the card in the postage-paid envelope which Bowne has provided. Or you
may send your instructions to the Proxies either by telephone or by e-mail using
the telephone number or e-mail address printed in the instructions which are
attached to your voting card. The telephone and e-mail methods of voting confirm
for you automatically that your instructions have been properly recorded. You
have the same choice of ways to vote if your shares are held in Bowne's "Direct
Stock Purchase and Dividend Reinvestment Plan," because you are the holder of
record for those shares. On the other hand, if a broker, bank or other nominee
holds your Common Stock for your benefit but not in your own name, your shares
are "in street name." In that case, your broker, bank or other nominee will
advise you how to vote the shares.
Whether you mail your instructions or send them by e-mail or telephone, the
Proxies will vote your shares exactly as you tell them to. If your instructions
do not indicate how the Proxies should vote your shares on a particular
proposal, the Proxies will vote in the way the Board of Directors recommends in
this Proxy Statement. If action is taken at the meeting on any matters that are
not described in this Proxy Statement, the Proxies will use their own judgment
to determine how to vote your shares. If the Annual Meeting is interrupted
before we have completed our business or adjourned to another date, the Proxies
will still vote your shares when the meeting resumes, unless you revoke your
instructions in the meantime.
Of course, you may come to the Annual Meeting in person and vote your
shares by written ballot at that time. If you want to vote in person, be sure to
revoke any voting instructions you gave before the meeting to the Proxies or to
anyone else.
How Instructions Can Be Revoked. To revoke or change instructions you have
given, you must tell the Corporate Secretary in writing before the Proxies vote
your shares at the Annual Meeting.
How Votes Are Counted. The Bank of New York, which is the Company's
Registrar and Transfer Agent, will count all the votes. The Annual Meeting can
be held only if a "quorum" of the outstanding shares of Common Stock is
represented. A quorum is at least one share more than half of the outstanding
shares entitled to vote, regardless of whether they are represented in person or
by proxy. If you give instructions to the Proxies to vote for you, or you attend
the meeting in person, then your shares will count when we determine whether
there is a quorum, even if you decide to abstain from the actual voting.
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If a broker, bank or other nominee holds your Common Stock, that nominee
will normally ask for your instructions and then vote your shares accordingly.
With your permission, the nominee will name the Proxies to vote in the way you
instruct. Unless the nominee receives instructions from you to vote differently,
the nominee will direct the Proxies on the tenth day before the meeting to vote
your shares in favor of Proposals "A," "B" and "C." This is because the Exchange
considers those three proposals "routine." But a nominee may not let the Proxies
vote either for or against Proposal "D" without your instructions, because the
Exchange does not consider that proposal routine. Shares represented at the
meeting by a broker, bank or other nominee will be counted when we determine if
there is a quorum, whether or not the nominee votes or abstains.
If a Stockholders abstains, or if a Stockholder's nominee cannot vote
because the proposal is not routine, his or her shares will normally not count
as votes for or against that particular matter. This means that shares which
abstain or cannot be voted will not affect the outcome of that particular vote.
Proposals "C" and "D" are exceptions to this rule because they require the
affirmative votes of two-thirds of all the outstanding shares. Therefore, shares
which abstain on Proposal "C" or "D" will have the same effect as votes against
those proposals.
If you attend the Annual Meeting and want to vote shares which a nominee
holds "in street name," you must have a written proxy from the nominee and it
must name you as the nominee's representative to vote. You must give the written
proxy to the Corporate Secretary before the voting starts.
Other Business at the Annual Meeting. The Company does not know of any
business to be presented at the Annual Meeting besides the proposals described
in this Proxy Statement. However, if other proper business comes before the
meeting, the Proxies will cast all the votes they are entitled to cast according
to their discretion, unless their written instructions are to the contrary.
Cost of This Solicitation. Bowne will pay all the costs of soliciting your
instructions for the Proxies. The Company may solicit by personal interview or
by any other means of communication. The Company reimburses brokers, banks and
other nominees for expenses they incur in forwarding the Proxy Statement and
other material to owners of the Common Stock and in gathering their voting
instructions. The Company has retained the proxy-soliciting firm of D. F. King &
Co., Inc., to assist in this solicitation for a fee not to exceed $10,000 plus
reasonable out-of-pocket expenses.
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<PAGE> 8
PROPOSAL "A" -- ELECTION OF DIRECTORS
The first item of business at the Annual Meeting will be the election of
five Nominees to the Board of Directors. The current Directors have nominated
these people:
Robert M. Conway
Edward H. Meyer
James P. O'Neil
Judith Shapiro
Lisa A. Stanley
THE BOARD RECOMMENDS THAT YOU VOTE "IN FAVOR OF" ALL FIVE OF THESE
NOMINEES.
The Company has three "Classes" of Directors with staggered terms of
three-years each. "Class I" has fewer members than the other Classes because
only two Directors were nominated at last year's Annual Meeting. Therefore, the
Board has nominated Ms. Shapiro to become a member of Class I for the remaining
two years of a term that will expire at the Annual Meeting in 2000 and when her
successor is elected. The four other Nominees named above will, if elected,
become "Class II" Directors, and their full three-year terms will expire at the
Annual Meeting in 2001 and when their respective successors are elected.
Each Director will be elected by a "plurality" of the votes cast at the
Annual Meeting. A plurality is any number of shares which is larger than the
numbers cast for competing candidates. Each Stockholder may vote for five
Nominees but may not cast more than one vote for any particular Nominee. All
five people consent to being nominated, and they agree to serve if the
Stockholders elect them at the Annual Meeting. If any Nominee should become
unavailable before the meeting, the Proxies may vote your shares in favor of a
substitute Nominee proposed by the Board of Directors.
On pages XX through XX of this Proxy Statement, biographies of each of the
current Directors appear opposite their photographs, together with a biography
of one Nominee who is not currently a Director. Asterisks identify the Nominees.
In addition, we have included a biography of the Director who currently serves
in Class II and who has chosen to retire when his current term expires at the
Annual Meeting. The biographies show their principal occupations during the last
five years. They are in alphabetical order, and the age indicated for each
Nominee is as of the Annual Meeting date. You can find more information about
the Board and its standing Committees on pages XX through XX of this Proxy
Statement.
3
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PROPOSAL "B" -- APPOINTMENT OF AUDITORS
The Board of Directors changed the Company's fiscal year, on October 30,
1997, from one ending October 31 to one ending December 31. Then, on March 5,
1998, the Board appointed the independent accounting firm of Ernst & Young LLP
to be auditors of the Company for the current fiscal year, which will end
December 31, 1998. This appointment of Ernst & Young LLP is subject to approval
by the Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "IN FAVOR OF" THE APPROVAL
OF THE APPOINTMENT OF ERNST & YOUNG LLP.
In order to approve their appointment, the Stockholders must vote a
majority of their shares in favor of the appointment. A majority is one share
more than half of all the shares represented at the meeting.
Ernst & Young LLP has served as the Company's auditors since 1991. The
Audit Committee of the Board of Directors reviews the services provided by the
Company's auditors and the possible effect of those services on the independence
of their audit. Ernst & Young LLP has no relationship with the Company or its
subsidiaries other than its employment as auditors or in connection with
particular accounting assignments for which the Company retains that firm from
time to time. Representatives of Ernst & Young LLP will be present at the Annual
Meeting and may make a statement, if they want to. The representatives of Ernst
& Young LLP will also have an opportunity to respond to appropriate questions
from Stockholders at the Annual Meeting. If the necessary majority does not
ratify the appointment, the Board will reconsider its selection of auditors.
During the 1997 fiscal year, Ernst & Young LLP provided the following
services to the Company, among others:
- They examined the consolidated financial statements contained in the
Company's Annual Report to Stockholders and in its annual report on Form
10-K.
- They met with the Audit Committee.
- They prepared federal and state tax returns for the Company and its
subsidiaries.
- They examined the financial statements of the Company's employee benefit
plans and provided tax services relating to those plans.
- They performed "due diligence" examinations of certain proposed
acquisition candidates.
- They consulted on miscellaneous accounting and tax matters when
requested.
4
<PAGE> 10
PROPOSAL "C" -- INCREASING THE NUMBER OF DIRECTORS
On November 20, 1997, subject to the Stockholders' approval, the Board of
Directors amended the Company's Certificate of Incorporation regarding the
number of Directors who may serve on the Board. The Certificate of Incorporation
is commonly called the "corporate charter," and it is the basic document which
governs the organization of the Company. The amendment increases the minimum
number of members who may serve on the Board from six to nine, and it increases
the maximum number of members from ten to fifteen. But the amendment preserves
the current requirement that only a two-thirds vote of the Stockholders can
approve any further increase or decrease in the permitted size of the Board.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "IN FAVOR OF" APPROVING THE
AMENDMENT.
This charter amendment will become effective if approved at the meeting by
Stockholders who hold at least two-thirds of all the outstanding Common Stock.
If at least two-thirds of the outstanding shares approve the amendment, we will
file it with the New York Secretary of State and it will go into effect
immediately. Then, the Board will also amend the Company's by-laws so that they
conform with the charter amendment. If the following Proposal "D" is also
approved, we will carry the same provisions over to the charter and by-laws of
the the new corporation.
If approved, the amendment will change "Article Ninth" of the Company's
charter so that it reads as follows:
"NINTH: The Board of Directors shall consist of not fewer than nine
nor more than fifteen directors, as shall be fixed from time to time by a
majority of the members of the Board then in office. Notwithstanding any
other provision of this Certificate of Incorporation, and in addition to
any other vote that may be required by this Certificate of Incorporation or
by law, this Article may not be amended, altered, repealed or otherwise
changed unless approved by the affirmative vote of the holders of at least
two-thirds of the outstanding shares of stock of the Corporation entitled
to vote thereon."
The current minimum of six Directors and maximum of ten were approved by
the Stockholders in 1990. Today, however, the Board believes that the Company's
increased size and the greater number of matters that call for Board attention
create a need for a larger and more diversified Board. Specifically, the Board
is likely to benefit if other professions and disciplines are represented among
its members. The Company's Board of Directors now has ten members. After the
Annual Meeting, the Board will continue to have ten members if all of the
Board's current Nominees are elected. But the Board has determined that a
minimum of nine Directors is necessary to meet the Company's growing needs, and
that as many as fifteen Directors can, in time, constitute an efficient Board to
oversee the Company.
There is no plan at this time to add specific candidates to the Board other
than the Nominees named in this Proxy Statement. Instead, the charter amendment
will permit the election of the best qualified candidates if and when they are
identified. No resignation by any current Director, and no threat to resign or
refusal to serve, has prompted this amendment. Nor was it adopted in response to
any Stockholder action or proposal.
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PROPOSAL "D" -- REINCORPORATING IN DELAWARE
On March 5, 1998, the Board of Directors adopted a plan, subject to
approval by the Stockholders, to reincorporate the Company under the laws of the
State of Delaware. The current Bowne & Co., Inc. was incorporated under the laws
of New York State in 1968, but the Board believes Delaware corporate law will
better serve the Stockholders' interests and provide the Company with advantages
not available under New York corporate law. Therefore, the Company will ask
Stockholders at the Annual Meeting to approve the Merger Agreement which appears
as an Appendix at the end of this Proxy Statement. Such a transaction is
commonly called a "reincorporation."
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "IN FAVOR OF" THE PLAN TO
REINCORPORATE THE COMPANY IN DELAWARE.
The Company will continue to be called "Bowne & Co., Inc." after the
reincorporation. To explain the proposal, however, we will call the Company that
exists today as a New York corporation either "the Company" or "Bowne-New York,"
and for convenience "Bowne-Delaware" is what we will call the new Delaware
corporation that we will organize as a wholly-owned subsidiary of Bowne-New
York. If the holders of at least two-thirds of all outstanding shares of the
Common Stock approve the Merger Agreement, Bowne-New York will be merged into
Bowne-Delaware. The effective date will be when the necessary documents have
been filed in both New York and Delaware. Bowne-Delaware will be the surviving
corporation, and the charter and by-laws of the new corporation will be
substantially the same as those of Bowne-New York today.
Reasons for the Change. For many years, Delaware has encouraged
incorporation in that state by adopting modern, comprehensive and flexible
corporate laws, and it periodically updates and revises them to meet changing
business needs. The Delaware General Corporation Law is considered a
sophisticated statute, highly conducive to business. That is why many
corporations choose Delaware initially as their place of incorporation, and why
many others have reincorporated in Delaware by means of transactions like the
one now proposed. Because of Delaware's policy of encouraging incorporation and
its preeminence as the most popular state of incorporation for major
corporations, the courts of Delaware have developed considerable expertise in
dealing with corporate issues. As a result, Delaware's case law interpreting its
corporate laws is more developed than that of any other state. This gives
Delaware corporate law an extra measure of predictability that is useful and
often crucial in our precedent-based judicial system.
For the board and the management of a Delaware corporation, these features
of Delaware law allow greater certainty in managing the corporation. The state's
court system also provides for the relatively prompt resolution of most
corporate disputes. For example, Delaware has a specialized Court of Chancery
which hears cases involving corporate law. The Court of Chancery has no
jurisdiction over most other kinds of cases, and therefore its dockets are not
as backlogged as many other states. In addition, the Supreme Court of Delaware
hears and decides important corporate appeals rapidly.
The Board of Directors of the Company considered the predictability and
flexibility of Delaware law and the efficiency of its judicial process when it
recommended the present proposal. The Board also recognized the possibility that
choosing to be governed by the corporate law of Delaware, as so many other
corporations have done, may further enhance the reputation of the Company.
Continuity of business or other factors. The Company has carried on its
business under the "Bowne" trademark continuously since its establishment in New
York City in 1775, and we believe it is the oldest firm still doing business
there under its original name. The merger into Bowne-Delaware will not break
this continuity. Bowne-Delaware will have its principal corporate offices in New
York City at Bowne-New York's current address, and will appoint a registered
agent to represent it in Delaware. Reincorporation in Delaware will not change
the business plan, management, assets, liabilities, net worth, capitalization or
employee benefit plans of the Company. Furthermore, each incentive stock option
that would be, or later become, exercisable for shares of the Company's Common
Stock will automatically be, or later become, exercisable for the same number of
shares of the common stock of Bowne-Delaware on the same terms and conditions.
Authorized Shares of Capital Stock. After the reincorporation, the
authorized capital stock of Bowne-Delaware will consist of 60,000,000 shares of
common stock, par value $.01 per share, and 1,000,000 shares of
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preferred stock, par value $.01 per share. These figures are the same as those
currently authorized for Bowne-New York. Bowne-Delaware will not issue any
common stock or preferred stock in connection with the reincorporation, other
than the shares which the old shares will convert into. The Board of Directors
of Bowne-Delaware will have authority to issue preferred stock in series, just
as the Board of Bowne-New York may do today. The Board will determine the voting
powers, designations, preferences and relative rights, qualifications,
limitations and restrictions on any preferred stock it may issue.
Conversion of Shares. As soon as the reincorporation becomes effective,
Bowne-Delaware will issue a press release announcing that the transaction has
occurred. At the same time, the holders of the old shares of Bowne-New York will
become holders of the new shares of Bowne-Delaware. Shares of the stock of
Bowne-New York will automatically convert into shares of Bowne-Delaware, on
these terms:
- The conversion will be on a one-for-one basis.
- Each share of the old Common Stock of Bowne-New York which is outstanding
at the effective date will become one share of the new common stock, par
value $.01 per share, of Bowne-Delaware.
- Each share of the old Common Stock held in the treasury of Bowne-New York
will become a share of treasury stock in Bowne-Delaware, and each share
of preferred stock in the Bowne-New York treasury will become a share of
the corresponding class of preferred stock in the Bowne-Delaware
treasury.
- Each special "right" attached to the shares of the Common Stock of
Bowne-New York will become a "right" attached to the corresponding shares
of Bowne-Delaware on the same terms and conditions. This includes the
Rights Agreement dated January 30, 1997, which provided Stockholders with
some protection against hostile attempts to take control of the Company.
Bowne-Delaware will adopt the Rights Agreement promptly after the
reincorporation.
THIS MEANS THAT, BEGINNING ON THE EFFECTIVE DATE, EACH BOWNE-NEW YORK STOCK
CERTIFICATE WHICH WAS OUTSTANDING JUST BEFORE THE REINCORPORATION WILL
AUTOMATICALLY REPRESENT THE SAME NUMBER OF BOWNE-DELAWARE SHARES. THEREFORE,
STOCKHOLDERS OF BOWNE-NEW YORK NEED NOT EXCHANGE THEIR STOCK CERTIFICATES FOR
NEW BOWNE-DELAWARE STOCK CERTIFICATES. LIKEWISE, STOCKHOLDERS SHOULD NOT DESTROY
THEIR OLD CERTIFICATES AND SHOULD NOT SEND THEIR OLD CERTIFICATES TO THE
COMPANY, EITHER BEFORE OR AFTER THE EFFECTIVE DATE OF REINCORPORATION.
Trading of the Stock. After reincorporation, those who were formerly
Stockholders of Bowne-New York may continue to make sales or transfers using
their Bowne-New York stock certificates. Bowne-Delaware will issue new
certificates representing shares of Bowne-Delaware common stock for transfers
occurring after the effective date. On request, Bowne-Delaware will issue new
certificates to anyone who holds Bowne-New York stock certificates. Any request
for new certificates will be subject to normal requirements including proper
endorsement, signature guarantee, if required, and payment of applicable taxes.
Stockholders whose shares of Bowne-New York were freely tradable before the
reincorporation will own shares of Bowne-Delaware which are freely tradable
after reincorporation. Similarly, any Stockholders holding securities with
transfer restrictions before reincorporation will hold shares of Bowne-Delaware
which have the same transfer restrictions after reincorporation. For purposes of
computing the holding period under Rule 144 of the Securities Act of 1933, as
amended, those who hold Bowne-Delaware stock certificates will be deemed to have
acquired their shares on the date they originally acquired their shares in
Bowne-New York.
After the reincorporation, Bowne-Delaware will continue to be a publicly
held company. Bowne-Delaware intends to list its common stock on the Exchange.
It will also file with the Securities and Exchange Commission and provide to its
stockholders the same types of information that Bowne-New York has previously
filed and provided.
Vote Required for Approval. Approval of the Merger Agreement and
reincorporation in Delaware will require the affirmative vote of the holders of
two-thirds of the outstanding Common Stock. As of the record date for the Annual
Meeting, the Directors and Officers of the Company have the right to vote
1,668,115 shares, representing XX% of the outstanding Common Stock, and have
advised the Company that their present intent is to vote in favor of the
proposal to reincorporate in Delaware.
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<PAGE> 13
No Right to Dissent. New York law provides that, because the Company's
Common Stock is listed on the Exchange, no Stockholder has a right to dissent
from the reincorporation if the holders of two-thirds of the outstanding stock
approve it.
Certain Federal Income Tax Consequences. The following is a brief summary
of the principal federal income tax consequences of reincorporation under
current law to holders of the Company's Common Stock. This summary is for
general information only. It does not address potential legislative changes that
may affect these consequences, and it does not address any state, local or
foreign tax consequences of reincorporation. The Company has not obtained, and
does not intend to obtain, a ruling from the Internal Revenue Service to the
effect that the reincorporation is nontaxable.
Neither the Company nor its Stockholders will recognize any gain or loss by
reason of the reincorporation. The tax basis of Bowne-Delaware common stock
received by a Stockholder of Bowne-New York through the reincorporation will be
the same as the tax basis of Bowne-New York Common Stock prior to
reincorporation. A Stockholder of Bowne-New York who holds the stock as a
capital asset should include the period he or she has held the Common Stock in
determining the holding period for his or her Bowne-Delaware stock.
STOCKHOLDERS SHOULD CONSULT THEIR PERSONAL TAX ADVISERS TO DISCUSS THEIR
OWN TAX SITUATIONS AND ANY POTENTIAL CHANGES IN FEDERAL, STATE AND LOCAL LAWS
AND OTHER APPLICABLE TAX MATTERS RELATING TO REINCORPORATION.
Comparison of the New York and Delaware Corporate Laws. After
reincorporation, the Stockholders will become stockholders of Bowne-Delaware.
There are, of course, differences between the New York and Delaware corporate
laws which may affect Stockholders. A summary of the principal differences
between the two bodies of law appears at pages XX through XX of this Proxy
Statement. Of course, the comparison is not a substitute for direct reference to
the actual laws or for professional interpretation of them.
Abandonment. If the Board of Directors decides not to proceed with the
reincorporation at any time before the reincorporation becomes effective, the
Board will have the right to abandon the Merger Agreement and take no further
action towards reincorporating the Company in Delaware.
8
<PAGE> 14
- --------------------------------------------------------------------------------
PAGES XX THROUGH XX PRESENT MORE INFORMATION ABOUT THE COMPANY'S BOARD OF
DIRECTORS AND OFFICERS, ABOUT THE COMPENSATION OF ITS EXECUTIVES AND ABOUT THE
RETURN ON ITS STOCKHOLDERS' INVESTMENT. NO SPECIFIC PROPOSAL REGARDING THIS
INFORMATION IS ON THE AGENDA OTHER THAN THE FOUR PROPOSALS DISCUSSED ON THE
PRECEDING PAGES.
INFORMATION ABOUT THE NOMINEES AND OTHER DIRECTORS
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------
[ROBERT M. CONWAY ROBERT M. CONWAY (AGE 54)* Limited Partner of Goldman,
PHOTO] Sachs & Co. Mr. Conway also serves on the supervisory board
of Bowne Williams Lea International, a joint venture in
which the Company participates. He first became a Director
of the Company in 1994.
[ROBERT M. JOHNSON ROBERT M. JOHNSON (AGE 52) Chairman of the Board and Chief
PHOTO] Executive Officer of the Company since 1997. Mr. Johnson had
previously been President and Chief Executive Officer of the
Company from 1996. He was formerly Publisher, President and
Chief Executive Officer of Newsday, Inc., a subsidiary of
Times Mirror, Inc. First elected to the Company's Board in
1996, he is a Class III Director whose current term will
expire in 1999.
- -----------------------------------------------------------------------------------
[EDWARD H. MEYER EDWARD H. MEYER (AGE 71)* Chairman of the Board and
PHOTO] President, Grey Advertising Inc. Mr. Meyer is also a
director of Ethan Allen Interiors Inc., Harman International
Industries, Inc., The May Department Stores Company, and
several mutual funds advised by Merrill Lynch Asset
Management, Inc. and its affiliates. He became a Director of
the Company in 1983. (Note 1)
- -----------------------------------------------------------------------------------
[JAMES P. O'NEIL JAMES P. O'NEIL (AGE 53)* President and Chief Operating
PHOTO] Officer of the Company since 1997. Mr. O'Neil was formerly
Executive Vice President and prior to that Vice President,
Finance of the Company. He became a Director in 1996.
- -----------------------------------------------------------------------------------
[H. MARSHALL SCHWARZ H. MARSHALL SCHWARZ (AGE 61) Chairman of the Board and
PHOTO] Chief Executive Officer of U.S. Trust Corporation. Mr.
Schwarz also serves as a director of Atlantic Mutual
Companies. He was first elected to the Company's Board in
1986 and is a Class III Director whose current term will
expire in 1999.
- -----------------------------------------------------------------------------------
[JUDITH SHAPIRO PHOTO] JUDITH SHAPIRO (AGE 51)** Senior Vice President, Management
Information Systems, for Joseph E. Seagram & Sons, Inc.
since 1995. Ms. Shapiro was previously Vice President of
Smithkline Beecham Corp. Since March 1998 she also has a
consulting arrangement with the Company on information
technology. She became a Director of the Company in 1997.
</TABLE>
9
<PAGE> 15
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------
[WENDELL M. SMITH WENDELL M. SMITH (AGE 63) President of Polestar Ltd. Until
PHOTO] 1996, Mr. Smith was Chairman of the Board of Baldwin
Technology, Inc. He was elected to the Company's Board of
Directors for the first time in 1992 and is a Class III
Director whose current term will expire in 1999.
- -----------------------------------------------------------------------------------
[LISA A. STANLEY LISA A. STANLEY (AGE 42)* Financial planning consultant
PHOTO] affiliated with Tax & Financial Group Advisors of Newport
Beach, California. She is not currently a Director. (Note 2)
- -----------------------------------------------------------------------------------
[THOMAS O. STANLEY THOMAS O. STANLEY (AGE 71) Retired. Formerly, Mr. Stanley
PHOTO] was Staff Vice President, Research Programs, for RCA
Laboratories. Mr. Stanley served as a Director of the
Company for 40 years, and will retire from the Board when
his current term as a Class II Director expires on May 28,
1998. (Note 3)
- -----------------------------------------------------------------------------------
[VINCENT TESE PHOTO] VINCENT TESE (AGE 55) Cable television owner and operator.
Mr. Tese is also a director of Bear Stearns & Co., Inc.,
Cablevision, Inc., Allied Waste Industries, Inc., Custodial
Trust Company, and Mack-Cali Realty Corp. He was first
elected to the Company's Board in 1996, and is a Class I
Director whose current term will expire in 2000.
- -----------------------------------------------------------------------------------
[RICHARD R. WEST RICHARD R. WEST (AGE 60) Dean Emeritus, Stern School of
PHOTO] Business, New York University. Previously, Mr. West was Dean
of the Stern School of Business and Professor of Finance. He
is also a director of Alexander's Inc., Vornado Realty
Trust, and several mutual funds advised by Merrill Lynch
Asset Management, Inc. and its affiliates or by Hotchkis and
Wiley. Elected to the Board in 1994, Mr. West is a Class I
Director of the Company whose current term will expire in
2000.
- -----------------------------------------------------------------------------------
</TABLE>
Notes: * Candidate for election as a Class II Director.
** Candidate for election as a Class I Director.
1. In 1996 the Board endorsed a Company policy that prohibits anyone to
be nominated or elected to the Board after reaching age 72, and also
encourages him or her to retire from the Board on
10
<PAGE> 16
reaching that age. Mr. Meyer will observe his seventy-second birthday
in 1999 and has informed the Company that he intends to step down as
a Director prior to the 1999 Annual Meeting if he is re-elected.
2. Ms. Stanley is the niece of Thomas O. Stanley.
3. Mr. Stanley is the uncle of Lisa A. Stanley.
ABOUT THE BOARD AND ITS COMMITTEES
The Board. Bowne is governed by a Board of Directors and various
Committees of the Board which meet periodically throughout the year. The Board
held six formal meetings during the calendar year 1997. In addition to those
meetings, Board members also share information and exchange views with the
Chairman and with each other at their Committee meetings and by telephone and
other means of communication on matters that concern the Company.
How Directors Are Chosen. Candidates for the Board of Directors may be
recommended by the Stockholders, by other Board members, by management or by any
interested person. A Stockholder who wants to recommend a candidate should write
to: Douglas F. Bauer, Counsel & Corporate Secretary, Bowne & Co., Inc., 345
Hudson Street, New York, New York 10014. Stockholders may also nominate Board
candidates at the Annual Meeting, and we have described the procedure and the
advance notice for this under the heading "Proposals by Stockholders" on page XX
of this Proxy Statement.
Committees of the Board. The Board has four standing committees. Their
principal functions and current memberships are described below:
- The Executive Committee has many of the powers of the full Board in
managing the Company and may exercise those powers between regular Board
meetings. However, the Committee may not amend the Company's by-laws,
fill vacancies on the Board, make other fundamental corporate changes or
take actions which require the vote of the full Board under New York
State law. In addition, the Executive Committee oversees matters of
corporate responsibility which involve interests other than those of the
Stockholders, such as the concerns of employees, customers and the public
at large. The Committee also considers any candidates proposed from time
to time for the Board of Directors as well as those recommended by
Stockholders. The current members of the Committee are Messrs. Stanley
(Chairman), Johnson, Meyer and Schwarz. During calendar year 1997, they
met twice and took action at three other times without meetings by
adopting resolutions with unanimous written consent by the members.
- The Audit Committee chooses independent public accountants to serve as
the Company's auditors. The Committee reviews the scope and the results
of their audit along with the Company's Chief Financial Officer, as well
as the fees they charge and the other activities they perform for the
Company. The Audit Committee also oversees the Company's internal
financial controls and looks into other accounting matters when there is
a need to do so. Currently the members are Messrs. Smith (Chairman),
Conway and Tese. They met twice during 1997.
- The Compensation Committee reviews and approves salaries and incentive
compensation for officers of the Company and other members of its senior
management. Some of the Company's compensation programs involve present
or deferred awards of the Common Stock, while others call for cash
payments. The Compensation Committee also oversees retirement and other
employee benefits plans, and usually asks for Board approval of any
significant changes that will affect employees. The current members of
this Committee are Messrs. Schwarz (Chairman), Smith, Stanley and West.
They met three times during 1997.
- The Finance Committee reviews the financial reports of the Company. In
addition, the Committee oversees the investment policies of the Company
and the investment performance of the respective funds held in trust for
the Company's employee benefit plans. The Finance Committee members
currently are Messrs. West (Chairman), Conway, Meyer and Tese. They met
twice during 1997.
11
<PAGE> 17
Compensation Committee Interlocks and Insider Participation. No member of
the Compensation Committee during 1997 was an officer or employee of the Company
or any of its subsidiaries. The only person who served on the Compensation
Committee during 1997 in addition to the four current members named above, was
Beverley B. Wadsworth. Ms. Wadsworth retired from the Board and from the
Committee when her term expired at the 1997 Annual Meeting.
Compensation of Directors. Beginning with the last quarter of calendar
year 1997, each Director who is not an employee receives an annual retainer of
$20,000 and a fee of $1,000 for each Board meeting attended. The annual retainer
had previously been $16,000. Committee members are paid $750 for each Committee
meeting attended, except that the Chairman of each Committee receives $1,250 for
any meeting at which he presides. Directors who consent to resolutions in
writing without attending a meeting receive no compensation for it. Directors
who are Bowne employees also receive no fees for their services on the Board.
On November 20, 1997, the Board approved a new Stock Plan for Directors,
and it went into effect on January 1, 1998. This plan converts one half of a
Director's retainer fee into "stock units." These stock units represent the
right to receive shares of Common Stock with a value equivalent to the fees
converted by the plan. The plan calls for issuing the corresponding number of
shares of outstanding Common Stock when the Director leaves the Board. These
shares will be issued from the Company's treasury. The plan also allows the
Director to choose whether or not to convert the other half of the retainer fee
and any of the Board attendance and Committee fees into stock units of
equivalent value. After the Director leaves the Board, these too will be issued
to him or her as Common Stock. The Company will calculate dividends on these
stock units as if they had already been issued to the Director as Common Stock,
and these dividends will be automatically reinvested in additional stock units
for eventual distribution. Stock units have no voting rights.
Before the Stock Plan for Directors went into effect, the Company had a
retirement program for non-employee members of the Board. That program paid a
cash retirement benefit, which was also subject to customary vesting rules. The
benefit was five times the total of retainer payments a Director received during
his or her last twelve months on the Board. The new plan adopted in 1997
replaced that old program and converted whatever cash retirement benefit a
Director may have had under it into stock units with an equivalent value. The
Stock Plan for Directors postpones any payout of these stock units as Common
Stock until the Director leaves the Board. The cash retirement benefits
converted into stock units for the non-employee Directors were respectively: Mr.
Conway, $34,000; Mr. Schwarz, $85,000; Mr. Smith, $51,000; and Mr. West,
$34,000. The two other non-employee Directors are exempt from the Stock Plan
because of their ages. They will receive their cash retirement benefits under
the earlier program after their retirement, as follows: Mr. Stanley, $85,000
when he retires at the 1998 Annual Meeting, and Mr. Meyer, $85,000 when he
retires prior to the 1999 Annual Meeting.
A one-time award of additional stock units, equal in value to a Board
member's annual retainer, will be made under the Stock Plan to any Director who
had fewer than two years of Board service or who joins the Board after the plan
went into effect. This one-time award will be subject to customary vesting rules
and distributed to the Director in installments after leaving the Board.
Therefore, Ms. Shapiro and Mr. Tese will receive stock units valued at $20,000,
and Ms. Stanley will receive the same award if she is elected at the Annual
Meeting.
The Company offers to reimburse reasonable travel expenses which the
Directors incur in attending Board and Committee meetings. During 1997, the only
Board member who attended fewer than three quarters of the meetings of the Board
and the Committees on which he served was Mr. Meyer. This occurred because his
travel commitments prevented him from attending four meetings during the year,
two of which were held on the same day.
Directors' and Officers' Insurance. The Company purchases insurance
covering the Directors and Officers against liabilities they may incur in
performing their duties. The current policy also insures the Company against any
obligation it may have to indemnify the Directors and Officers for such
liabilities. Federal Insurance Company and National Union Fire Insurance Company
of Pittsburgh currently provide this coverage for the period from June 16, 1997
through June 16, 1998. The total premium was $194,600.
12
<PAGE> 18
OWNERSHIP OF THE COMMON STOCK
Principal Stockholders. The Company knows only one individual Stockholder
who owns more than five percent of the Common Stock that was outstanding on the
record date for the Annual Meeting. He currently serves as a Director of the
Company and as Chairman of its Executive Committee. In addition, an investment
management firm reported on a Schedule 13G, filed February 13, 1998 with the
Securities and Exchange Commission, that it held more than five percent of the
outstanding Common Stock for the benefit of clients who have entrusted assets to
the firm for investment. Most of those clients share voting power with the firm
according to the SEC filing. The Company does not know of any other Stockholder
who owns more than five percent of the outstanding shares.
The individual Stockholder and the investment management firm mentioned
above are:
PRINCIPAL STOCKHOLDERS OF THE COMPANY
<TABLE>
<CAPTION>
PERCENT OF
STOCKHOLDER ADDRESS NO. OF SHARES OUTSTANDING
- ----------- ------- ------------- -----------
<S> <C> <C> <C>
Thomas O. Stanley............................. c/o Bowne & Co., Inc. 1,466,004 %
345 Hudson Street
New York, NY 10014
Lazard Freres & Co., LLC...................... 30 Rockefeller Plaza 965,200 %
New York, NY 10020
</TABLE>
Stock Ownership by Directors and Officers. The following table shows the
number of shares of Common Stock and deferred "stock units" which each of the
current Directors owned as of the record date for the Annual Meeting, including
the number of shares owned by the four Nominees who currently serve on the Board
and the one Nominee who is not already a Director. The table also shows how many
shares and stock units each of the executives named on page XX owned
beneficially on that same date, together with the shares owned and stock units
held on that date by all eighteen Directors and Officers as a group. The
Directors and executives named in the table all have sole power to vote or to
dispose of the shares indicated opposite his or her name, except where there is
a note to the contrary.
In addition to shares of Common Stock owned outright, the figures in the
following table include incentive stock options which are currently exercisable
on the record date by the individual executives of the Company under its Stock
Option Plans, or which will become exercisable within 60 days after the record
date. The figures include stock held in the Company's Employees' Stock Purchase
Plan for the benefit of each individual executive. The figures include stock
units awarded to the listed executives under the Company's Long-Term Performance
Plan and its Deferred Award Plan. The figures also include the stock units into
which cash retirement benefits previously owed to individual Directors were
converted by the Stock Plan for Directors, as well as the one time awards to
certain Directors as described under "Compensation of Directors" for which we
have assumed full vesting. Ownership reported in the table is direct, except for
shares held indirectly through the Employees' Stock Purchase Plan, stock units
awarded under the Stock Plan for Directors, the Long-Term Incentive Plan or the
Deferred Award Plan, and options not yet exercised under the Stock Option Plans.
The Stock Plan for Directors is described above under the heading "Compensation
of Directors," while the Stock Option Plans, the Employees' Stock Purchase Plan,
the Long-Term Performance Plan and the Deferred Award Plan are all described
below under the heading "Executive Compensation."
None of the individuals listed below owned more than 1% of the outstanding
Common Stock, except one current Director, named above under the heading
"Principal Stockholders of the Company," who owned X.X%. The table also shows
the total shares of all current Directors and Officers as a group. The number of
13
<PAGE> 19
shares shown for all Directors and Officers as a group would represent XX.X% of
the outstanding shares if they had all been issued and outstanding on the record
date.
STOCK OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF INDIVIDUAL BENEFICIAL OWNERSHIP(1)
- ------------------ -----------------------
<S> <C>
Robert M. Conway............................................ 10,049
Carl J. Crosetto............................................ 23,345(2)
Denise K. Fletcher.......................................... 7,585(3)
Robert M. Johnson........................................... 73,990(4)
Edward H. Meyer............................................. 2,400
James P. O'Neil............................................. 53,496(5)
H. Marshall Schwarz......................................... 3,596
Judith Shapiro.............................................. 870
Wendell M. Smith............................................ 1,628
Lisa A. Stanley............................................. 96,012(6)
Thomas O. Stanley........................................... 1,466,004(7)
John A. Stone............................................... 2,142(8)
Vincent Tese................................................ 870
Richard R. West............................................. 4,273
All Directors and Officers as a group (18 individuals)...... 1,668,115(9)
</TABLE>
- ---------------
(1) We include in these figures stock units equivalent to the following numbers
of shares, which have been awarded to the various individuals under
either the Stock Plan for Directors or the Long-Term Performance Plan
and Deferred Award Plan, and we have assumed that they could be converted
into Common Stock within 60 days of the record date: Mr. Conway, 329; Mr.
Crosetto, 8,409; Ms. Fletcher, 4,003; Mr. Johnson, 23,807; Mr. Meyer, none;
Mr. O'Neil, 10,009; Mr. Schwarz, 297; Ms. Shapiro, 329; Mr. Smith, 148; Ms.
Stanley, none; Mr. Stanley, none; Mr. Stone, 2,091; Mr. Tese, 329; Mr. West,
353; and four others included in the group of all Directors and Officers,
5,998. The figures assume the reinvestment of cash dividends that would be
payable through the record date on these units if they were outstanding as
issued shares.
(2) Includes 811 shares held by the Employees' Stock Purchase Plan for Mr.
Crosetto's account, as well as options to purchase 14,125 shares which he
may currently exercise under the Company's Stock Option Plans or which will
become exercisable within 60 days after the record date of the Annual
Meeting.
(3) Includes options to purchase 2,500 shares which Ms. Fletcher may currently
exercise under the Stock Option Plans or which will become exercisable
within 60 days after the record date. The figure in the table also includes
82 shares held by the Employees' Stock Purchase Plan for her account, but
excludes all shares held for other participants in the same Plan, of which
Ms. Fletcher is a trustee.
(4) In addition to the incentive awards referred to in Note 1 above, which the
Board made to Mr. Johnson under the Deferred Award Plan, this figure also
includes 40,000 restricted shares which Mr. Johnson acquired by agreement
with the Company when he became Chief Executive Officer. The latter
agreement may require Mr. Johnson to return some or all of them to the
Company if his employment terminates before January 2001. Also included are
182 shares held by the Employees' Stock Purchase Plan for his account, and
options to purchase 10,000 shares which are currently exercisable or which
will become exercisable within 60 days after the record date.
(5) Includes options to purchase 15,500 shares which Mr. O'Neil may currently
exercise under the Stock Option Plans or which will become exercisable
within sixty days after the record date. The figure in the table also
includes 400 shares held by the Employees' Stock Purchase Plan for Mr.
O'Neil's account, but excludes all shares held for other participants in the
same Plan, of which Mr. O'Neil is a trustee.
14
<PAGE> 20
(6) We report Ms. Stanley's holdings because she is a Nominee for election to
the Board, although she is not currently a Board member. We did not include
these shares in the total reported as of the record date for all Directors
and Officers as a group.
(7) Mr. Stanley is the only Director who owns in excess of 1% of the outstanding
common stock. When his term as a Director ends at the Annual Meeting on May
28, 1998, he will retire from the Board.
(8) Includes 51 shares held by the Employees' Stock Purchase Plan for Mr.
Stone's account.
(9) Includes 6,459 shares owned outright by four other Officers not listed in
the table by name, as well as options to purchase 3,875 shares which are
currently exercisable or which will become exercisable within 60 days after
the record date, and 1,536 shares held in the Employees' Stock Purchase Plan
for their accounts. This total does not include the remainder of shares held
in the latter plan for other participants or the shares owned by the
Nominee who is not currently a Director.
15
<PAGE> 21
COMPARISON OF STOCKHOLDER RETURNS
The graph printed below compares yearly changes in the total return to
Stockholders on Bowne Common Stock against two other measures of performance.
The comparison is on a cumulative basis for the Company's last five fiscal
years. The two other performance measures used for comparison are the total
return on the Standard & Poor's 500 Index, and the total return on the Standard
& Poor's Services (Commercial & Consumer) Index.
For convenience, we refer to the two comparison measures as the "S&P 500"
and the "S&P Services Index." We chose the S&P 500 because it's a broad index of
the equity markets. On the other hand, we chose the S&P Services Index as our
own "peer group" because it represents the capital-weighted performance results
of companies in specialized commercial and consumer services. The S&P Services
Index was previously known as the Standard & Poor's Specialized Services Index.
The companies represented in the S&P Services Index are also included in the S&P
500.
The method we used to calculate yearly changes in Bowne's return is the
same method used for both the S&P 500 and the S&P Services Index. In each case,
we assumed an initial investment of $100 on October 31, 1992. Then we calculated
the cumulative yearly change in that investment over the next five years, first,
by taking the difference between the price per share of the particular
securities on October 31, 1992 and their price per share at the end of each
succeeding fiscal year. Throughout the five years we assumed that all dividends
paid were reinvested in more of the same securities. And finally, we turned the
result into a percentage of change by dividing that result by the difference
between the price per share on October 31, 1992 and the price per share at the
end of the particular fiscal year.
Note that the Company's fiscal year changed during the period covered by
our graph. The fiscal year ended on October 31 for each of the first four years
in the graph. But, for 1997 and all later years, the Board of Directors changed
the fiscal year for financial reporting purposes from October 31 to one ending
on December 31. The return on investment for years before the change hasn't been
restated, and therefore the first four years in our graph end on October 31,
while the latest year in our graph represents the fourteen month period from
October 31, 1996 through December 31, 1997. We calculated the percentage of
change for the interim period by comparing the value of the investment at the
beginning and again at the end of those two months. No dividends were paid
during this interim period.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD BOWNE & CO., S&P SERVICES
(FISCAL YEAR COVERED) INC. S&P 500 INDEX
<S> <C> <C> <C>
10/31/92 100.00 100.00 100.00
10/31/93 145.31 114.94 91.89
10/31/94 115.86 119.39 92.06
10/31/95 137.65 150.96 112.96
10/31/96 175.84 187.33 125.89
12/31/97 306.20 270.65 160.73
</TABLE>
16
<PAGE> 22
REPORT ON EXECUTIVE COMPENSATION
BY THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors determined base
salaries and incentive awards for the Company's senior executives for the fiscal
year which ended December 31, 1997. This included the five individuals named in
the "Summary Compensation Table" of the Company's Proxy Statement. The
Committee's decisions reflected ongoing efforts by the Board of Directors and by
management to link executive compensation more closely with corporate
performance and with the creation of long-term Stockholder value. In the
Committee's opinion, the compensation summarized in the table was appropriate,
both by recognizing the Company's outstanding financial results for the year and
by fostering continued progress in creating Stockholder value.
The long-standing policy of the Company has been to keep the base salaries
of its key employees at reasonable but competitive levels, given the Company's
position as a leader in several different and highly specialized business areas.
For 1997, the Committee retained a leading compensation consulting firm to
reassess the base salaries of the Company's senior executives. Based on the
consultants' general survey data, the Committee concluded that the base salaries
of a number of senior executives needed to be increased modestly in order to
remain competitive.
In addition, the Company seeks to attract and retain well-qualified
executives by supplementing these base salaries with carefully designed
incentive programs. These programs recognize not only the overall financial
performance of the Company but also each individual's contributions to Company
performance and to the operating results of the particular business unit for
which he or she is responsible.
The Summary Compensation Table in the Proxy Statement shows the base
salaries, incentive bonuses and other compensation of the five named executives.
Furthermore, the material following that table describes the basic programs
governing each of these compensation components. The mathematical formulas used
to administer those programs cannot be revealed because they involve highly
confidential commercial information, and the disclosure of such information
would be detrimental to the Company. Similarly, neither the performance targets
we set for individuals and business units nor the very specific personal goals
we established for each of the senior executives, discussed below, can be
disclosed without jeopardizing the Company's advantage in its highly competitive
businesses.
We set an aggressive performance target for the Chief Executive Officer
("CEO") at the beginning of 1997, and we calculated a significant portion of his
incentive compensation for the year by applying a formula to the Company's net
income in excess of that target. We also determined in advance a maximum
permissible award as a "cap" on the application of this formula. Net income in
1997 exceeded the target set for the CEO, resulting in an award at the maximum
level. We based the remainder of his bonus on specific goals agreed upon between
the CEO and the Committee at the beginning of the year. However, the CEO and the
Committee agreed that he was not fully successful in achieving all those
goals, and this portion of his bonus was modestly reduced. Because the Company's
performance significantly exceeded the target, the total incentive compensation
which the Committee granted the CEO was greater than his aggregate targets.
Incentive compensation for the four named individuals other than the CEO
was linked in part to the net income of the Company and in part to their
individual achievement of strategic objectives. Those objectives were highly
personalized, having been defined in consultation with each executive. Some of
the objectives were quantitative, and others qualitative. Examples of objectives
set for specific individuals were the successful integration of new business
units and new customer services; the application of new technologies; the
introduction of operating efficiencies and cost-reductions; the effort to focus
all employees on quality and customer satisfaction; the strengthening of
internal organization with special emphasis on more efficient teamwork; and the
improvement of free cash flow. Each executive was evaluated separately, and
incentive awards were made accordingly.
All members of the Company's senior management also participated in a new
long-term incentive compensation plan, instituted in 1997 to encourage and
reward improvements in the Company's free cash flow. The correlation between
this goal and increasing Stockholder value is widely recognized. The plan
17
<PAGE> 23
measures improvements in free cash flow on a three-year average basis, and a
uniform target was set for all senior executives. The Company exceeded the first
year target for this program, and therefore all members of senior management
received bonuses determined by the plan.
For 1997, a substantial portion of the incentive compensation awarded to
the Company's senior executives took the form of deferred "stock units" rather
than cash. These stock units were awarded, instead of cash bonuses, in those
cases where the Company exceeded either the annual bonus or the long-term bonus
targets, both of which were capped at a percentage above the target. These units
are stock equivalents which accrue imputed dividends but which do not confer
ownership or voting rights until converted into actual Common Stock upon the
executive's termination of employment. Like stock options, these stock units
broaden equity participation in the Company by its key employees and align their
efforts more closely with the interests of Stockholders. Such stock equivalents
will be governed by the Long-Term Performance and Deferred Award Plans described
in the Proxy Statement.
Under a qualified plan which the Stockholders approved at the Company's
1997 Annual Meeting, the Compensation Committee also granted incentive stock
options during the year to a large number of key employees, including the CEO
and the four other named executives. The number of options granted to each
employee reflected his or her personal achievements and opportunity for
contribution to the overall performance of the Company. In making specific
awards, the Committee took into account the responsibilities of the employees
and any prior grants made to them, as well as an imputed value for each award
based on the Black-Scholes valuation model. These options will become
exercisable over a period of years, and thus help to secure continuing service
by each grantee. An appreciating equity position in the Company not only rewards
sustained efforts by an executive but also concentrates those efforts more fully
upon increasing Stockholder value.
Section 162(m) of the Internal Revenue Code may prohibit the Company to
deduct certain forms of compensation paid to an executive in excess of $1
million in any one year, unless the relevant compensation programs are
"performance-based" and specifically approved by Stockholders. Because the
Company's Stock Option Plans meet these criteria, awards made under those plans
are not a factor affecting compensation for Section 162(m) purposes. The
Committee intends to defer any other compensation awarded to an executive which
is not deductible under Section 162(m), and will instead convert the
non-deductible amount into additional stock units with a value equal to 1.2
times the compensation being deferred. In the same way, the Committee will
continue deferring any compensation which exceeds the limitation in future
years.
Finally, during the 1997 fiscal year, the full Board of Directors
unanimously ratified all actions and recommendations of the Committee which
required such approval.
This report was approved on April 6, 1998 by the undersigned, who are all
the members of the Compensation Committee.
H. Marshall Schwarz, Chairman
Wendell M. Smith
Thomas O. Stanley
Richard R. West
18
<PAGE> 24
EXECUTIVE COMPENSATION TABLES
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION(1) SHARES ALL OTHER
--------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(2) (3)
- --------------------------- ---- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Robert M. Johnson(4)............. 1997 $420,000 $570,000 40,000 $559,078
Chairman and 1996 322,000 400,000 40,000(5) 268,057
Chief Executive Officer -- -- -- -- --
James P. O'Neil.................. 1997 300,000 320,000 25,000 229,435
President and 1996 218,000 208,000 20,000(5) 133,317
Chief Operating Officer 1995 170,000 175,000 12,000 34,988
Carl J. Crosetto(6).............. 1997 250,000 292,500 15,000 254,554
Vice President and 1996 228,000 260,000 12,500 88,446
Director of Sales -- -- -- -- --
Denise K. Fletcher(7)............ 1997 200,000 170,000 15,000 135,029
Vice President and 1996 -- -- 10,000 --
Chief Financial Officer -- -- -- -- --
John A. Stone(8)................. 1997 200,000 136,000 10,000 87,257
Vice President and -- -- -- -- --
Chief Technology Officer -- -- -- -- --
</TABLE>
- ---------------
(1) Annual Compensation. The five individuals named in this table were the most
highly compensated executives of the Company in fiscal year 1997. The
Company calculated the cash compensation reported in this table on a
calendar year basis for the year ended December 31, 1997, and on a fiscal
year basis for the years ended October 31, 1996 and 1995. The figures
reported here as bonuses include the cash portion of payments made under
both the annual bonus and long-term incentive bonus programs of the Company,
described in this Proxy Statement under the heading "Long-Term Incentive
Awards in 1997." Deferred bonus payments are included in the column "All
Other Compensation."
(2) Shares Underlying Options. Awards made under the Company's Stock Option
Plans are explained below under the heading "Option Grants in 1996 and
1997".
(3) All Other Compensation. The amounts shown in this column represent the
total of the Company's contributions under its Profit-Sharing Plan and its
Employees' Stock Purchase Plan, described below, together with the dollar
value of deferred stock units awarded under the Company's Long-Term
Performance Plan and Deferred Award Plan, which are described on pages XX
and XX.
- - The Profit-Sharing Plan is a defined contribution plan for eligible
employees which meets regulatory requirements. Under this plan, the Company
makes a contribution to the account of an employee based upon his or her
"considered compensation," as defined in the plan. The contribution may not
be greater than 10% of pre-tax income (before deducting the contribution),
nor can it be greater than 15% of considered compensation overall. The
profitability of the employee's particular business unit determines 50% of
the contribution, and the profitability of all participating units as a
group determines the rest.
- - The Employees' Stock Purchase Plan is also a defined contribution plan which
meets regulatory requirements. Under this plan, eligible employees who elect
to participate may contribute up to $200 per month. It provides for matching
contributions by the Company equal to one-half of the employees'
contributions, subject to vesting rules. The trustees of the plan then use
the total of all contributions to purchase shares of Common Stock on the
open market, and dividends paid on those shares are reinvested in additional
Common Stock. Taxation of the Company's contributions is deferred until an
employee withdraws his or her stock or terminates employment.
(4) Mr. Johnson joined the Company in January 1996.
19
<PAGE> 25
(5) Although the Compensation Committee approved these grants in November 1996,
Mr. Johnson's options to purchase any of the 40,000 shares in his grant and
Mr. O'Neil's options to purchase 1,100 shares included in his grant were
subject to approval by the Stockholders. In March 1997, Stockholders
approved these options when they ratified the 1997 Stock Option Plan.
(6) Mr. Crosetto became an executive of the Company in June 1996 and Vice
President of the Company in 1998.
(7) Ms. Fletcher joined the Company in July 1996.
(8) Mr. Stone joined the Company in January 1997.
OPTION GRANTS IN 1996 AND 1997
<TABLE>
<CAPTION>
NUMBER OF
SHARES % OF TOTAL
UNDER- OPTIONS EXERCISE GRANT DATE
LYING OPTIONS GRANTED PRICE EXPIRATION PRESENT VALUE
GRANTED(1) IN YEAR PER SHARE DATE (2)
------------- ---------- --------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
1996:
Mr. Johnson............ 40,000 22% $22.3125 November 20, 2006 $392,700
Mr. O'Neil............. 20,000 11% 22.3125 November 20, 2006 196,350
Mr. Crosetto........... 12,500 7% 22.3125 November 20, 2006 122,719
Ms. Fletcher........... 10,000 5% 22.3125 November 20, 2006 98,175
Mr. Stone.............. -- -- -- November 20, 2006 --
1997:
Mr. Johnson............ 40,000 9% $37.0625 November 19, 2007 $681,950
Mr. O'Neil............. 25,000 5% 37.0625 November 19, 2007 426,219
Mr. Crosetto........... 15,000 3% 37.0625 November 19, 2007 255,731
Ms. Fletcher........... 15,000 3% 37.0625 November 19, 2007 255,731
Mr. Stone.............. 10,000 2% 37.0625 November 19, 2007 170,488
</TABLE>
- ---------------
(1) The Board of Directors has adopted three stock option plans which meet
regulatory requirements, and the Stockholders approved them in 1981, 1992
and 1997 respectively. These plans authorize the Board or the Compensation
Committee to grant incentive stock options to key employees, including the
five people named in this table and the other Officers of the Company, among
others. Each option allows its grantee to purchase a certain number of
shares of Common Stock. The schedule by which the options become
exercisable, the price per share at which they may be exercised, and the
other terms of the grant are all fixed on the grant date. The exercise price
is normally equal to the fair market value of the Common Stock on the grant
date, determined as specified in the plans, and may never be less than the
fair market value. The earliest of the three plans has expired by its terms,
but a number of options granted under it remain outstanding.
The Board or the Compensation Committee has discretion to accelerate the
exercisability of any outstanding option. The exercisability of each option
will automatically accelerate if there is a "change of control" of the
Company, such as any person's acquisition of at least 15% of the outstanding
shares, the implementation of a tender offer other than by the Company, the
election of Directors comprising at least one-third of the Board who were
not nominated by the current Board members, or a merger, consolidation or
liquidation of the Company or sale of all or substantially all its assets. A
grantee may exercise his or her option at any time until the tenth
anniversary of the grant date unless it is terminated earlier according to
the plan provisions.
Grants of options are normally made at the end of a calendar year, when the
contributions of each key employee can be evaluated. During the two-month
interim between the fiscal year which ended October 31, 1996 and the
beginning of the 1997 fiscal year on January 1, 1997, the Compensation
Committee granted options to four of the people named in this table. These
1996 options are given in the
20
<PAGE> 26
table above because they did not appear in the Company's last Proxy
Statement inasmuch as the grants came after the 1996 fiscal year. During the
1997 fiscal year, the Committee granted options to all five of the named
individuals. In each case, the Committee determined the fair market value of
the Common Stock by taking the mean of the highest and the lowest trading
prices reported on the Exchange on the grant date. In each case, the
Committee provided that 25% of each grant would become exercisable on the
first anniversary of the grant date, and 25% on each of the three following
anniversaries.
(2) We calculated present values using the Black-Scholes option-pricing model.
In addition to information in the table, the model relied on the following
assumptions: (a) a volatility rate of 30.1% in 1997 and 32.2% in 1996, based
on monthly closing stock prices over the five-year period preceding each
grant date; and (b) a dividend yield of 1.2% in 1997 and 1.7% in 1996, as of
the respective grant date. We did not adjust the values to reflect the
non-transferability of options or the risk of forfeiture.
The values that may actually be realized someday from the exercise of these
options may be substantially different from the "present values" shown in
this table. The Black-Scholes option pricing model is a widely used
mathematical formula for estimating option values, but it assumes several
factors that may not hold true over the ten-year life of these options. The
Company's performance will continue to be influenced by future events and
factors currently unknown. Stockholders and other investors should not in
any way view these present values as a forecast of the performance of the
Common Stock or future growth in the market price of the Common Stock.
AGGREGATED OPTION EXERCISES IN 1996 AND 1997
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT YEAR-END AT YEAR-END
ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCSIABLE EXERCISABLE UNEXERCSIABLE
----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Johnson.................. -- $ -- 10,000 70,000 $175,313 $637,188
Mr. O'Neil (1997)............ 13,500 261,438 31,000 61,000 726,406 773,406
Mr. O'Neil (1996)............ 6,000* 39,030 -- -- -- --
Mr. Crosetto................. 14,000 226,922 12,875 40,875 281,324 571,871
Ms. Fletcher................. -- -- 2,500 22,500 43,828 173,203
Mr. Stone.................... -- -- -- 10,000 -- 27,813
</TABLE>
- ---------------
* This exercise of options did not appear in the Company's last Proxy Statement
because the transaction occurred after the end of the 1996 fiscal year on
October 31, 1996 and before the beginning of the 1997 calendar year.
LONG-TERM INCENTIVE AWARDS IN 1997
<TABLE>
<CAPTION>
STOCK UNITS
AWARDED
---------
<S> <C>
Mr. Johnson............................................ 15,697
Mr. O'Neil............................................. 6,179
Mr. Crosetto........................................... 6,939
Ms. Fletcher........................................... 3,457
Mr. Stone.............................................. 2,086
</TABLE>
The figures reported in the table above, as well as the following
discussion of the Company's long-term incentives, refer to two separate plans,
the Long-Term Performance Plan and the Deferred Award Plan.
During 1997, the Compensation Committee of the Board of Directors awarded
the deferred "stock units" shown in the table as additional incentive
compensation under the two plans described below. Participants in these plans
are senior executives of the Company selected annually by the Compensation
Committee,
21
<PAGE> 27
including the five named in the table. The stock units awarded under these plans
represent the right to receive shares of Common Stock but have no voting rights.
When an executive retires or leaves the Company, the Company's treasury will
issue him or her actual shares of Common Stock equal to the number of stock
units previously held. The Company will also calculate the cash dividends that
would have been paid on these stock units if they were actually outstanding as
Common Stock, and the Company will reinvest these imputed dividends into
additional stock units for distribution when the executive receives the rest of
his or her account.
- Under the Long-Term Performance Plan, the Compensation Committee defined
specific cash flow improvement goals for eligible executives at the
beginning of the fiscal year. The Compensation Committee also determined
a "target bonus" for each executive in relation to those performance
goals. At the end of the year, the Compensation Committee awarded bonuses
in the form of (1) cash for performance up to target, and (2) deferred
stock units for performance that exceeded the goals set by the Committee.
To determine the amount of each award, the Compensation Committee used a
formula that measures the amount by which actual performance exceeded the
goals.
An eligible executive must also decide, before each fiscal year begins,
whether to take his or her award under the Long-Term Performance Plan in
cash, up to the amount of the "target bonus," or to defer some or all of
that amount as stock units. On the other hand, deferral into stock units
is mandatory in the case of any amounts earned above the "target bonus"
and not optional for the executive. The Company calculates the number of
stock units by multiplying 1.2 times the cash value of the portion of the
bonus which the executive is deferring. To the extent that an executive
chooses to receive his or her award as cash, the dollar amount received
is included in the "Summary Compensation Table" on page XX as "Annual
Compensation;" and to the extent that the executive receives stock units,
the dollar amount of the award is included in that same table as "All
Other Compensation."
- The Deferred Award Plan also provides for mandatory deferral of incentive
compensation in certain cases. Under the annual bonus plan, any amount
earned above the goal for which a "target bonus" was established must be
paid in deferred stock units. Deferral of a target bonus into stock units
will also be mandatory to the extent that the law forbids the Company to
take a tax deduction for a particular cash bonus payment. In both
instances, this plan provides that the executive will receive stock units
equivalent in value to 1.2 times the portion of his or her bonus that
must be deferred.
The Deferred Award Plan also applies if a contribution to be made under
the Profit-Sharing Plan for the benefit of a particular executive would
exceed limits set by the Internal Revenue Service. In such a case, the
plan provides that the Company will make only the allowable contribution
to his or her account and will convert the balance into stock units. To
calculate the number of such stock units, the Company multiplies 1.4
times the amount by which the contribution would have exceeded the
limits, as an allowance for income taxes on the disallowed portion.
The Compensation Committee has discretion to revoke an award made under
these plans if the executive leaves the Company and competes against the Company
or discloses confidential information of the Company. In a case of financial
hardship, the Committee also has discretion to make an early distribution from
the executive's account of the number of shares of Common Stock sufficient to
cover the hardship. If there is a "change of control" of the Company, the
Compensation Committee may convert the stock units into the cash value of the
original bonus.
RETIREMENT BENEFITS
The five people named in the Summary Compensation Table on page XX
participate in the Company's Pension Plan along with most other employees of the
Company and its U.S. subsidiaries. This is a defined benefit plan which meets
regulatory requirements. A participant's benefits under the Pension Plan are
based on age, length of service and an average of his or her five highest
consecutive years of cash compensation. Cash compensation for this purpose is
the sum of the amounts shown under the heading "Annual Compensation" in the
Summary Compensation Table on page XX. These benefits are payable upon normal
22
<PAGE> 28
retirement as a life annuity beginning at age 65 or the actuarial equivalent of
such an annuity. A discounted benefit may be paid on early retirement after age
55.
The Company also has a Supplemental Retirement Program for certain key
employees including the five named people. Substantially identical contracts
between the Company and each participant govern this non-qualified arrangement.
These contracts supplement the Company's Pension Plan by providing a benefit
that generally equals one-half of the participant's average annual salary and
bonus for the immediately preceding five years, less the benefit payable under
the Pension Plan. A participant who retires at age 65 normally receives the full
supplemental benefit if he or she has twenty years of service or more. If he or
she retires after age 55 (or earlier in Mr. O'Neil's case if his employment
terminates involuntarily), he or she will receive a partial benefit calculated
upon the actual years of service. Messrs. O'Neil and Crosetto will each have 20
years of service at retirement, while Ms. Fletcher will have 17, Mr. Johnson 14
and Mr. Stone 11 years. Certain events that result in a "change of control" of
the Company may make a partial benefit available at an earlier date. The program
also provides benefits in case a participant dies or becomes disabled while
employed, regardless of age.
The Summary Compensation Table on page XX does not include these retirement
benefits. If the five people named in the table remain with the Company until
age 65, they will receive the following retirement benefits under the
combination of the Pension Plan and the Supplemental Retirement Program:
<TABLE>
<CAPTION>
ANNUAL BENEFIT IF AVERAGE COMPENSATION IS:
----------------------------------------------
$300,000 $500,000 $800,000 $1,000,000
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Mr. Johnson................................... $105,000 $175,000 $280,000 $350,000
Mr. O'Neil.................................... 150,000 250,000 400,000 500,000
Mr. Crosetto.................................. 150,000 250,000 400,000 500,000
Ms. Fletcher.................................. 127,500 212,500 340,000 425,000
Mr. Stone..................................... 82,500 137,500 220,000 275,000
</TABLE>
CONTRACTUAL ARRANGEMENTS WITH EXECUTIVES
Some key employees of the Company, including the five named in the table,
have signed identical Termination Protection Agreements with the Company. Each
agreement will provide a benefit to the employee if the Company terminates his
or her employment "without cause" and within thirty months after a "change in
control" of the Company, as the agreement defines those terms. If a change of
control is imminent, the employee would receive the same benefit if the employee
chooses to leave because the Company reduces his or her responsibilities or
compensation, or if the outside party acquiring control asks the Company to
terminate the employee. The benefit in such cases would normally be twice the
sum of the employee's base salary and latest target bonus. There are other
"change of control" provisions in the Company's Stock Option Plans described
above under the heading "Option Grants in 1996 and 1997."
The Company signed a separate agreement with Mr. Johnson in January 1996.
This agreement applies if the Company terminates him without cause, or if he
terminates his own employment with good cause. In addition to the retirement
benefits available to other senior executives of the Company, Mr. Johnson would
receive a lump sum payment equal to the bonus he received for his last fiscal
year before the termination and, for 18 months thereafter, he would continue to
receive payments equal to his base salary in effect at the termination.
COMPARISON OF NEW YORK AND DELAWARE CORPORATE LAWS
If Proposal "D" is approved by the holders of at least two-thirds of the
Company's outstanding Common Stock, and if the Company reincorporates in
Delaware as outlined on pages XX through XX of this Proxy Statement, then the
Stockholders of the Company ("Bowne-New York," that is) will become stockholders
of the new Delaware corporation, "Bowne-Delaware." There are differences between
the Business Corporation
23
<PAGE> 29
Law of New York ("BCL") and the General Corporation Law of Delaware (" DGCL")
which will affect the rights of Stockholders in certain respects. Some of these
differences define the particular provisions a corporation may choose to put
into its certificate of incorporation, commonly called the "charter," and other
differences may not apply to the Company.
We have prepared the following summary because Stockholders should
understand how the BCL and the DGCL may differ. The following summary is not a
substitute for direct reference to the statutes themselves or for professional
interpretation of them.
Amendment of Charter. Both the BCL and the DGCL allow a board of directors
to recommend a charter amendment for approval by the stockholders, and a
majority of the shares entitled to vote at a stockholders' meeting are normally
enough to approve that amendment. Both laws require that a majority of the
holders of any particular class of stock must approve the amendment if it would
have an adverse effect on the holders of that class. In addition, both laws
allow a corporation to require a vote larger than a majority on special types of
issues.
Amendment of By-laws. The by-laws of Bowne-New York provide, as permitted
by the BCL, that the Board of Directors may amend, adopt or repeal the Company's
by-laws. Under the DGCL, however, the board may amend, adopt or repeal by-laws
only if permitted by the charter. The charter of Bowne-Delaware will
specifically permit amendment of the by-laws by the board. Additionally, both
the BCL and the DGCL allow stockholders to further amend or repeal by-laws
adopted or amended by the board.
Special Meetings of Stockholders. Under both the BCL and the DGCL, the
board of directors or anyone authorized in the charter or by-laws may call a
special meeting of stockholders. Currently the by-laws of Bowne-New York allow
the Board, the Chief Executive Officer or the President to call a special
meeting, and the provision in the by-laws of Bowne-Delaware will be comparable.
Corporate Action Without Stockholders' Meeting. The BCL and DGCL differ
about whether corporate action can be taken by written consent and without a
stockholders' meeting. Under the BCL, the holders of at least the minimum number
of votes required to authorize such an action may take the action if the
corporation's charter allows this, but otherwise the consent must be unanimous.
The DGCL, on the other hand, lets stockholders take action by the written
consent of at least the minimum number required to act at a stockholders'
meeting, unless the charter forbids it. The Bowne-Delaware charter, however,
will provide that stockholders may take corporate action only at a stockholders'
meeting and not by written consent.
Inspection of Stockholders List. The BCL limits the right of a stockholder
to inspect the list of record stockholders depending on the number of shares
held and the length of ownership. But under the DGCL, any stockholder may
inspect the stockholders' list for any purpose reasonably related to the
person's interest as a stockholder. In addition, for at least ten days prior to
each stockholders' meeting, a Delaware corporation must make available for
examination a list of stockholders entitled to vote at the meeting.
Vote Required for Certain Transactions. Until February 1998, the BCL
required the holders of two-thirds of the outstanding stock of a New York
corporation to approve certain mergers, consolidations or sales of all or
substantially all the corporation's assets that may occur outside the ordinary
course of business. Since February 1998, however, a New York corporation may
provide in its charter that the holders of a majority of the outstanding stock
may approve such transactions, although the Company has not adopted such a
charter provision. Under the DGCL, on the other hand, holders of a majority of
the outstanding stock entitled to vote on such transactions have the power to
approve a merger, consolidation or sale of all or substantially all the assets
without a special provision in the charter, unless the charter provides
otherwise. Furthermore, in the
24
<PAGE> 30
case of a merger under the DGCL, stockholders of the surviving corporation do
not have to approve the merger at all, unless the charter provides otherwise, if
these three conditions are met:
- No amendment of the surviving corporation's charter is made by the merger
agreement; and
- Each share of the surviving corporation's stock outstanding immediately
prior to the effective date of the merger is to be an identical
outstanding or treasury share of the surviving corporation after the
effective date; and
- The merger results in no more than a 20% increase in its outstanding
common stock.
Special vote requirements may apply to certain business combinations with
interested stockholders. See the discussion of these below under the heading
"Business Combinations with Interested Stockholders."
Classification of Directors. Both laws permit "classified" boards of
directors, which means the directors have staggered terms that do not all expire
at once. The BCL permits as many as four classes, the DGCL only three. The
Company now has three classes of directors, and Bowne-Delaware will also have
three. In order to give stockholders of Bowne-Delaware the same protections as
those currently available in Bowne-New York, the charter of the Delaware
corporation will state that any change in the classification of the board will
require a two-thirds vote of the stockholders. This may help to prevent
unwarranted removal of directors as discussed below under the heading "Removal
of Directors."
Removal of Directors. Under the BCL, directors may be removed by the
stockholders for cause, or by either the stockholders or the directors if the
charter so provides. The Company's present charter does provide that directors
may be removed either by stockholders or by the Board, as long as there is
cause. After the reincorporation, directors under the DGCL would generally be
subject to removal with or without cause by a majority of the stockholders,
unless the charter provides otherwise, but in a Delaware corporation with a
classified board, directors can be removed only for cause. Therefore, the
charter of Bowne-Delaware will be written so as to give the same protections as
those currently provided in the charter of Bowne-New York, and any attempt to
remove directors will require cause and a two-thirds vote of the stockholders.
Limitation of Directors' Liability. Both states permit the limitation of a
director's personal liability while acting in his or her official capacity.
Under the BCL, a director is not liable to the corporation or to its
stockholders for monetary damages if the director has acted in good faith and
with the same degree of care that an ordinarily prudent person would exercise in
similar circumstances. The DGCL, on the other hand, requires a charter provision
in order to limit a director's liability for breach of his or her fiduciary duty
to the corporation. The Company's current charter limits monetary liability to
the fullest extent permitted by the BCL, and the charter of Bowne-Delaware will
likewise limit such liability to the fullest extent permitted by the DGCL.
But in some cases directors may be liable despite these limitations. Under
the BCL, for example, a director is not immune from liability if he or she
violates applicable statutes which expressly make directors liable. The DGCL
forbids any limitation of liability if the director breached his or her duty of
loyalty to the corporation or its stockholders, or if he or she failed to act in
good faith, received an improper personal benefit from the corporation, or
authorized a dividend or stock repurchase that was forbidden by the DGCL.
Indemnification of Directors and Officers; and Insurance. With some
variations, both the BCL and the DGCL allow a corporation to "indemnify," that
is, to make whole, any person who is or was a director, officer, employee or
agent of the corporation if that person is held liable for something he or she
did or failed to do in an official capacity. Besides covering court judgments,
out-of-court settlements, fines and penalties, both laws also allow the
corporation to advance certain reasonable expenses the person will incur or to
reimburse the person's expenses after he or she incurs them, even if liability
is not actually proven. The right to indemnification under both laws does not
normally exclude other rights of recovery the indemnified person may have.
Additionally, each of the two laws permits a corporation to purchase
insurance for directors, officers, employees and agents against some or all of
the costs of such indemnification or against liabilities arising from actions
and omissions of the insured person, even though the corporation may not have
power to indemnify the person against such liabilities. The BCL, however,
restricts the kinds of claims that may be made under insurance purchased by the
corporation against these liabilities. For example, there would be no insurance
coverage if the person to be indemnified was guilty of deliberate dishonesty
and that dishonesty was material to the event that produced the claim, or if
the person gained some financial profit or other advantage that he or she was
not entitled to.
25
<PAGE> 31
The by-laws of Bowne-New York currently indemnify to the fullest extent
permitted by the BCL, and the by-laws of Bowne-Delaware will indemnify as fully
as the DGCL allows. However, neither the BCL nor the DGCL permit indemnification
of a director, officer, employee or agent if a court finds the person liable to
the corporation itself, unless the court determines otherwise. Furthermore, if
the corporation sues the person because of some act or omission, the
corporation does not need to indemnify the person unless a court determines the
person was not liable. Furthermore, the DGCL generally requires that the person
to be indemnified must have acted in good faith and in a manner he or she
reasonably believed was consistent with the best interests of the corporation.
If Proposal "D" is approved by the Company's Stockholders, the DGCL
indemnification provisions will not apply to acts and omissions that occurred
before the effective date of the reincorporation.
Loans and Guarantees of Obligations for Directors. Under the BCL, the
holders of a majority of the shares entitled to vote, excluding any shares of
the director who is the proposed borrower, is required to approve any loans to,
or guarantees of obligations of, a director. Under the DGCL, a board of
directors may authorize loans or guarantees of indebtedness to employees,
officers and directors.
Issuance of Rights and Options to Directors, Officers and Employees. Under
the BCL, the issuance of any stock rights or stock options, as well as plans to
issue rights or options, to officers, directors or employees must be approved by
a majority of votes cast at a stockholders' meeting. The DGCL does not require
stockholder approval of such transactions. However, the rules of the Exchange,
where the Company's stock is listed and where the stock of Bowne-Delaware will
be listed, require stockholder approval of option plans in certain
circumstances.
Consideration for Shares. Under the BCL, obligations for future services
or payments are not considered payment or partial payment for shares of a
corporation. Stock certificates cannot be issued until full payment has been
made, except for shares purchased under a stock option plan permitting
installment payments. Under the DGCL, however, a corporation can receive cash,
services, personal or real property, leases of real property or any combination
of these as payment in full or in part for the shares. A purchaser of shares
under the DGCL may pay an amount equal to or greater than the par value of such
shares if the corporation receives a binding obligation of the purchaser to pay
the balance of the purchase price.
Dividends, and Redemption of Stock. Subject to its charter provisions, a
corporation may generally pay dividends, redeem shares of its stock or make
other distributions to stockholders if the corporation is solvent and would not
become insolvent because of the dividend, redemption or distribution. The assets
applied to such a distribution may not be greater than the corporation's
"surplus."
The BCL defines surplus as the excess of net assets over stated capital,
and lets the board adjust stated capital. The DGCL, on the other hand, defines
surplus as the excess of net assets over capital, and lets the board adjust
capital. If there is no surplus, the DGCL allows the corporation to apply net
profits from the current or preceding fiscal year, or both, unless the
corporation's net assets are less than the capital represented by issued and
outstanding stock which has a preference on any distribution of assets.
Regarding redemptions, both the BCL and the DGCL permit them only when the
corporation has outstanding shares of at least one class of voting stock which
is not subject to the redemption.
Appraisal Rights. Generally, "appraisal rights" entitle dissenting
stockholders to receive the fair value of their shares in the merger or
consolidation of a corporation or in the sale of all or substantially all its
assets. The BCL also extends appraisal rights to an exchange of the
corporation's shares.
The BCL provides that dissenting stockholders have no appraisal rights if
their shares are listed on the Exchange or another national securities exchange.
But in the case of shares not listed on an exchange, appraisal rights under the
BCL allow any stockholder of a New York corporation, with various exceptions, to
26
<PAGE> 32
receive fair value for his or her shares in such transactions. Regardless of
listing on an exchange, appraisal rights are available under the BCL in a merger
between a parent corporation and its subsidiary where only one of them is a New
York corporation, or in a merger between a parent and subsidiary where both are
New York corporations and the parent owns at least 90% of the subsidiary. Also,
appraisal rights are available to stockholders who are not allowed to vote on a
merger or consolidation and whose shares will be cancelled or exchanged for cash
or something else of value other than shares of the surviving corporation or
another corporation. When appraisal rights are available, the stockholder may
have to request the appraisal and follow other required procedures.
Similarly, under the DGCL, appraisal rights are not available to a
stockholder if the corporation's shares are listed on the Exchange or another
national securities exchange or held by more than 2,000 stockholders of record,
or if the corporation will be the surviving corporation in a merger which does
not require the approval of the surviving corporation's stockholders. But,
regardless of listing on an exchange, a dissenting stockholder in a merger or
consolidation has appraisal rights under the DGCL if the transaction requires
him or her to exchange shares for anything of value other than one or more of
the following:
- Shares of stock of the surviving corporation or of a new corporation
which results from the merger or consolidation.
- Shares of another corporation which will be listed on a national
securities exchange or held by more than 2,000 stockholders of record
after the merger or consolidation occurs.
- Cash instead of fractional shares of the surviving corporation or another
corporation.
The Company's Common Stock is currently listed on the Exchange, and
Bowne-Delaware will also list its own common stock on the Exchange by filing a
Substitution Listing Application.
Business Combinations with Interested Stockholders. These provisions in
both laws may help to prevent or delay changes of corporate control. In
particular, both the BCL and the DGCL restrict or prohibit an interested
stockholder from entering into certain types of business combinations unless the
transaction is approved in advance by the board of directors.
Under the BCL, an interested stockholder is generally prohibited from
entering into certain types of business combinations with a New York corporation
for a period of five years after becoming an interested stockholder, unless the
board of directors approved either the business combination or the acquisition
of stock by the interested stockholder before the interested stockholder
acquired his or her shares. An "interested stockholder" under the BCL is
generally a beneficial owner of at least 20% of the corporation's outstanding
voting stock. "Business combinations" under the BCL include mergers and
consolidations between corporations or with an interested stockholder; sales,
leases, mortgages or other dispositions to an interested stockholder of assets
with an aggregate market value which either (1) equals 10% or more of the
corporation's consolidated assets or outstanding stock, or (2) represents 10%
or more of the consolidated earning power or net income of the corporation;
issues and transfers of stock with an aggregate market value of at least 5% in
relation to the outstanding stock of the corporation; liquidation or
dissolution of the corporation proposed by or in connection with an interested
stockholder; reclassification or recapitalization of stock that would increase
the proportionate stock ownership of an interested stockholder; and the receipt
by an interested stockholder of benefit from loans, guarantees, pledges or
other financial assistance or tax benefits provided by the corporation.
After the five-year period referred to in the BCL, the law allows such
business combinations if either the board of directors or a majority of the
outstanding voting stock not owned by the interested stockholder have approved
the business combination or the purchase of stock by the interested stockholder
before the interested stockholder acquired his or her shares. Business
combinations are also permitted when certain statutory "fair price"
requirements are met.
One section of the DGCL, Section 203, generally prohibits an interested
stockholder from entering into certain types of business combinations with a
Delaware corporation for three years after becoming an interested stockholder.
An "interested stockholder" under the DGCL is any person other than the
corporation and its
27
<PAGE> 33
majority-owned subsidiaries who owns at least 15% of the outstanding voting
stock, or who owned at least 15% within the preceding three years, and this
definition includes affiliates of the corporation. Briefly described, these
prohibited combinations include:
- Mergers or consolidations.
- Sales, leases, exchanges or other dispositions of 10% or more of (1) the
aggregate market value of all assets of the corporation or (2) the
aggregate market value of all the outstanding stock of the corporation.
- Issuances or transfers by the corporation of its stock that would
increase the proportionate share of stock owned by the interested
stockholder.
- Receipt by the interested stockholder of the benefit of loans, advances,
guarantees, pledges or other financial benefits provided by the
corporation.
- Any other transaction, subject to certain exceptions, that
increases the proportionate share of the stock owned by the interested
stockholder.
A Delaware corporation may choose not to have Section 203 of the DGCL
apply. The Company has chosen, however, to accept the protections of Section
203, and therefore the charter of Bowne-Delaware will not waive those
protections. Nevertheless, Section 203 will not apply in the following cases:
- If, before the stockholder became an interested stockholder, the board of
directors approved the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder.
- If, after the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of
the voting stock of the corporation outstanding at the time the
transaction commenced, subject to technical calculation rules.
- If, on or after the time the interested stockholder became an interested
stockholder, the board of directors approved the business combination,
and at least two-thirds of the outstanding voting stock which is not
owned by the interested stockholder also ratified the business
combination at a stockholders' meeting.
28
<PAGE> 34
OTHER INFORMATION
PROPOSALS AND NOMINATIONS BY STOCKHOLDERS. If a Stockholder wants to
nominate a candidate for the Board of Directors, or to offer any proposal
including one to amend our by-laws, the Company must receive the nomination or
amendment by April XX, 1998 in order to have it considered at the 1998 Annual
Meeting.
On the other hand, if a Stockholder wants to make any proposal at our
next Annual Meeting in 1999, including nominations and by-law amendments, the
Company must receive notice of the proposal by March 29, 1999. If the
Stockholder wants the Company to include that proposal in its 1999 Proxy
Statement, the Company must have the proposal by December XX, 1998. We must
receive any such proposal, amendment or nomination at the Company's executive
offices at 345 Hudson Street, New York, New York 10014, marked to the attention
of Douglas F. Bauer, Counsel & Corporate Secretary, before the deadlines
mentioned above.
A proposal, amendment or nomination must be in writing and must identify
the Stockholder who proposes it. A nomination of a Board candidate must also
include a written consent by the candidate that he or she will serve if
elected, as well as all information about the proposing Stockholder and the
candidate which the rules and regulations of the Securities and Exchange
Commission would require in a proxy statement soliciting proxies for the
election of that candidate.
HOW TO GET FORM 10-K. EVERY YEAR THE COMPANY FILES AN ANNUAL REPORT ON
FORM 10-K WITH THE SECURITIES AND EXCHANGE COMMISSION. ON REQUEST, WE WILL SEND
ANY STOCKHOLDER A COPY OF THAT REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
1997. YOU MAY REQUEST YOUR COPY BY WRITING TO: DOUGLAS F. BAUER, COUNSEL &
CORPORATE SECRETARY, BOWNE & CO., INC., 345 HUDSON STREET, NEW YORK, NEW YORK
10014.
<PAGE> 35
APPENDIX
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), made this day of
, 1998, by and between Bowne & Co., Inc., a New York
corporation ("Bowne-New York"), and Bowne & Co., Inc., a Delaware corporation
and a wholly-owned subsidiary of Bowne-New York ("Bowne-Delaware") (the two
corporate parties hereto being sometimes collectively referred to as the
"Constituent Corporations").
WITNESSETH:
WHEREAS, the Boards of Directors of Bowne-New York and Bowne-Delaware have
determined that the proposed merger (the "Merger") of Bowne-New York with
Bowne-Delaware upon the terms hereinafter set forth is advisable and in the best
interests of the shareholders of such corporations, and the Boards of Directors
of Bowne-New York and Bowne-Delaware have adopted and approved this Agreement
and both such Boards of Directors have directed that this Agreement be submitted
to the shareholders of Bowne-New York and Bowne-Delaware for their approval; and
WHEREAS, the Merger is intended to constitute a reorganization within the
meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986; and
WHEREAS, Bowne-New York and Bowne-Delaware, as appropriate, intend to take
all such action as may be necessary or appropriate as and when required by the
provisions of this Agreement in order to consummate the Merger;
WHEREAS, the authorized capital stock of Bowne-New York consists solely of
(i) 60,000,000 shares of common stock, par value $.01 per share, of which
[ ] shares are issued and outstanding as of the date hereof and
(ii) 1,000,000 shares of preferred stock, par value $.01 per share, of which no
shares are issued and outstanding as of the date hereof; and
WHEREAS, the authorized capital stock of Bowne-Delaware consists solely of
(i) 60,000,000 shares of common stock, par value $.01 per share, of which
[ ] shares are issued and outstanding as of the date hereof, all
of which shares are owned by Bowne-New York and (ii) 1,000,000 shares of
preferred stock, par value $.01 per share, of which no shares are issued and
outstanding as of the date hereof;
NOW, THEREFORE, the Constituent Corporations do hereby agree to merge on
the terms and conditions herein provided, as follows:
ARTICLE I
GENERAL
1.1 Agreement to Merge. The parties to this Agreement agree to effect the
Merger herein provided for, subject to the terms and conditions set forth
herein.
1.2 Effective Time of the Merger. The Merger shall be effective in
accordance with the laws of the States of New York and Delaware. The date and
time the Merger becomes effective is referred to as the "Effective Time of the
Merger".
1.3 Surviving Corporation. At the Effective Time of the Merger, Bowne-New
York shall be merged with and into Bowne-Delaware, and Bowne-Delaware shall be
the surviving corporation, governed by the laws of the State of Delaware
(hereinafter sometimes called the "Surviving Corporation"). The name of the
Surviving Corporation will be Bowne & Co., Inc.
1.4 Certificate of Incorporation and Bylaws. At the Effective Time of the
Merger, the Certificate of Incorporation and Bylaws of Bowne-Delaware in effect
immediately prior to the Effective Time of the Merger
A-1
<PAGE> 36
shall be the Certificate of Incorporation and Bylaws of the Surviving
Corporation, subject always to the right of the Surviving Corporation to amend
its Certificate of Incorporation and Bylaws in accordance with the laws of the
State of Delaware and the provisions of the Certificate of Incorporation.
1.5 Directors. The directors of Bowne-New York in office at the Effective
Time of the Merger shall be and constitute the directors of the Surviving
Corporation, each holding the same directorship in the Surviving Corporation as
he or she held in Bowne-New York for the terms elected and/or until their
respective successors shall be elected or appointed and qualified. The directors
of the Surviving Corporation shall continue to be members of the same class of
directors as they were in Bowne-New York, and the time for election of each
class of directors for the Surviving Corporation shall be the same as it was for
the corresponding class of directors of Bowne-New York.
1.6 Officers. The officers of Bowne-New York in office at the Effective
Time of the Merger shall be and constitute the officers of the Surviving
Corporation, each holding the same office in the Surviving Corporation as he or
she held in Bowne-New York for the terms elected and/or until their respective
successors shall be elected or appointed and qualified.
1.7 Effect of the Merger. On and after the Effective Time of the Merger,
the separate existence of Bowne-New York and Bowne-Delaware shall cease and the
Surviving Corporation shall succeed, without further action, to all the
properties and assets of Bowne-New York and Bowne-Delaware of every kind, nature
and description and to Bowne-New York's and Bowne-Delaware's business as a going
concern. The Surviving Corporation shall also succeed to all rights, title and
interests to all real estate and other property owned by Bowne-New York or
Bowne-Delaware without reversion or impairment, without further act or deed, and
without any transfer or assignment having occurred, but subject to any existing
liens thereon. All liabilities and obligations of Bowne-New York or
Bowne-Delaware shall become the liabilities and obligations of the Surviving
Corporation, and any proceedings pending against Bowne-New York or
Bowne-Delaware will be continued as if the Merger had not occurred.
1.8 Further Assurances. Bowne-New York hereby agrees that at any time, or
from time to time, as and when requested by the Surviving Corporation, or by its
successors and assigns, it will execute and deliver, or cause to be executed and
delivered in its name by its last acting officers, or by the corresponding
officers of the Surviving Corporation, all such conveyances, assignments,
transfers, deeds or other instruments, and will take or cause to be taken such
further or other action and give such assurances as the Surviving Corporation,
its successors or assigns may deem necessary or desirable in order to evidence
the transfer, vesting of any property, right, privilege or franchise or to vest
or perfect in or confirm to the Surviving Corporation, its successors and
assigns, title to and possession of all the property, rights, privileges,
powers, immunities, franchises and interests referred to in this Article I and
otherwise to carry out the intent and purposes thereof.
ARTICLE II
CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
2.1 Bowne-New York Capital Stock. At the Effective Time of the Merger, by
virtue of the Merger and without any action on the part of Bowne-New York,
Bowne-Delaware or the holders of any of the common stock ("Bowne-New York Common
Stock") of Bowne-New York: (i) each issued and outstanding share of Bowne-New
York Common Stock, including any rights attached thereto, and each share of
Common Stock of Bowne-New York, including any rights attached thereto, held in
the treasury of Bowne-New York, shall be converted into one share of
Bowne-Delaware Common Stock with such similar rights attached thereto, and (ii)
each share of Bowne-New York Convertible Preferred Stock, Series A, held in the
treasury of Bowne-New York, shall be converted into one share of Bowne-Delaware
Convertible Preferred Stock, Series A, with such similar rights attached
thereto.
2.2 Bowne-Delaware Capital Stock. At the Effective Time of the Merger, by
virtue of the Merger and without any action on the part of Bowne-New York,
Bowne-Delaware or the holders of any of the common stock ("Bowne-Delaware Common
Stock") of Bowne-Delaware, each issued and outstanding share of Bowne-Delaware
Common Stock shall be cancelled.
A-2
<PAGE> 37
ARTICLE III
TERMINATION AND AMENDMENT
3.1 Termination. This Agreement may be terminated and abandoned at any
time prior to the Effective Time of the Merger, whether before or after action
thereon by the shareholders of the Constituent Corporations, by the mutual
written consent of the Boards of Directors of Bowne-New York and Bowne-
Delaware.
3.2 Consequences of Termination. In the event of the termination and
abandonment of this Agreement pursuant to the provisions of Section 3.1 hereof,
this Agreement shall be of no further force or effect.
3.3 Modification, Amendment, Etc. Any of the terms or conditions of this
Agreement may be waived at any time, whether before or after action thereon by
the shareholders of the Constituent Corporations, by the party entitled to the
benefits thereof, and this Agreement may be modified or amended at any time,
whether before or after action thereon by the shareholders of the Constituent
Corporations, to the full extent permitted by the corporate laws of the States
of New York and Delaware. Any waiver, modification or amendment shall be
effective only if reduced to writing and executed by the duly authorized
representatives of the Constituent Corporations.
ARTICLE IV
MISCELLANEOUS
4.1 Expenses. The Surviving Corporation shall pay all expenses of
carrying this Agreement into effect and accomplishing the Merger herein provided
for.
4.2 Headings. Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provisions of this
Agreement.
4.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original instrument, and all such counterparts together shall constitute only
one original.
4.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
conflicts of laws principles thereof.
A-3
<PAGE> 38
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf by an officer duly authorized thereunto as of the date
first above written.
Bowne & Co., Inc., a New York
corporation
By
--------------------------------------
Its
--------------------------------------
Bowne & Co., Inc., a Delaware
corporation
By
--------------------------------------
Its
--------------------------------------
A-4
<PAGE> 39
(LOGO)
<PAGE> 40
BOWNE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Revoking any prior appointment, the undersigned appoints Robert M. Johnson
and Douglas F. Bauer, and each of them, attorneys-in-fact and agents with power
of substitution, to vote as proxy for the undersigned at the Annual Meeting of
Stockholders of Bowne & Co., Inc., to be held at the St. Regis Hotel, 2 East
55th Street, New York, New York, on Thursday, May 28, 1998, beginning at 10:00
A.M. local time, and at any adjournment thereof, with respect to the number of
shares the undersigned would be entitled to vote if personally present.
THE SHARES COVERED BY THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED
(A) FOR THE ELECTION OF DIRECTORS; (B) TO APPROVE THE APPOINTMENT OF AUDITORS;
(C) TO APPROVE INCREASING THE NUMBER OF DIRECTORS; (D) TO APPROVE
REINCORPORATING IN DELAWARE; AND IN ACCORDANCE WITH THE DISCRETION OF THE
NAMED ATTORNEYS-IN-FACT AND AGENTS ON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING, UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED ON THE
REVERSE SIDE.
The undersigned acknowledges receipt of a copy of the Proxy Statement
which was mailed to all stockholders of record beginning on April , 1998,
relating to such Annual Meeting.
BOWNE & CO., INC.
P.O. Box 11066
New York, N.Y. 10203-0066
(Continued, and to be dated and signed, on the other side)
<PAGE> 41
A. Election of four Class II Directors (R.M. Conway, E.H. Meyer, J.P. O'Neil,
L.A. Stanley) and one Class I Director (J. Shapiro).
For all [ ] Against all [ ] Exceptions* [ ]
nominees nominees
*To withhold authority to vote for any nominee, mark the box next to
"Exceptions" and strike out that nominee's name.
B. Approval of the appointment of Ernst & Young LLP as auditors.
For [ ] Against [ ] Abstain [ ]
C. Approval to increase the number of Directors.
For [ ] Against [ ] Abstain [ ]
D. Approval to reincorporate in Delaware.
For [ ] Against [ ] Abstain [ ]
The proxies are authorized to vote in accordance with their discretion on such
other business as may properly come before the meeting.
IF YOU HAVE NOTED AN ADDRESS CHANGE OR COMMENTS ON EITHER SIDE OF THIS CARD,
PLEASE MARK HERE: [ ]
(Signature should conform exactly to the name imprinted on this card. Executors,
administrators, guardians, trustees, attorneys-in-fact and officers signing for
corporations should state full title or signatory capacity.)
Dated , 1998
-----------------------------------------------------------
Signed
---------------------------------------------------------------
- ----------------------------------------------------------------------
VOTES MUST BE INDICATED [ ]
(X) IN BLACK OR BLUE INK.
SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 42
BOWNE VOTING INSTRUCTIONS
THESE INSTRUCTIONS ARE SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Revoking any prior instructions, the undersigned participant in the Bowne &
Co., Inc. Employees' Stock Purchase Plan (the "Plan"), who is beneficial owner
of certain shares under the Plan, instructs the Trustees of the Plan and their
proxies to vote at the Annual Meeting of Stockholders of Bowne & Co., Inc., to
be held at the St. Regis Hotel, 2 East 55th Street, New York, New York, on
Thursday, May 28, 1998, beginning at 10:00 A.M. local time, and at any
adjournment thereof, with respect to the number of shares held by the Trustees
for the account of the undersigned as of April 8, 1998.
THE SHARES COVERED BY THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED (A)
FOR THE ELECTION OF DIRECTORS; (B) TO APPROVE THE APPOINTMENT OF AUDITORS; (C)
TO APPROVE INCREASING THE NUMBER OF DIRECTORS; (D) TO APPROVE REINCORPORATING IN
DELAWARE; AND IN ACCORDANCE WITH THE DISCRETION OF THE TRUSTEES ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING, UNLESS INSTRUCTIONS TO THE
CONTRARY ARE INDICATED ON THE REVERSE SIDE. ANY SHARES UNDER THE PLAN AS TO
WHICH NO VOTING INSTRUCTIONS ARE RECEIVED WILL BE VOTED BY THE TRUSTEES IN THEIR
SOLE DISCRETION.
The undersigned acknowledges receipt of a copy of the Proxy Statement
which was mailed to all stockholders of record beginning on April , 1998,
relating to such Annual Meeting.
BOWNE & CO., INC.
P.O. Box 11066
New York, N.Y. 10203-0066
(Continued, and to be dated and signed, on the other side)
<PAGE> 43
A. Election of four Class II Directors (R.M. CONWAY, E.H. MEYER, J.P. O'NEIL,
L.A. Stanley) and one Class I Director (J. SHAPIRO).
For all Against all Exceptions*
nominees [ ] nominees [ ] [ ]
*To withhold authority to vote for any nominee, mark the box next to
"Exceptions" and strike out that nominee's name.
B. Approval of the appointment of Ernst & Young LLP as auditors.
For [ ] Against [ ] Abstain [ ]
C. Approval to increase the number of Directors.
For [ ] Against [ ] Abstain [ ]
D. Approval to reincorporate in Delaware.
For [ ] Against [ ] Abstain [ ]
The proxies are authorized to vote in accordance with their discretion on such
other business as may properly come before the meeting.
IF YOU HAVE NOTED AN ADDRESS CHANGE OR COMMENTS ON EITHER SIDE OF THIS CARD,
PLEASE MARK HERE: [ ]
(Signatures should conform exactly to the name
imprinted on this card.)
Dated , 1998
------------------------
Signed
----------------------------------------
-----------------------------------------------
VOTES MUST BE INDICATED [ ] IN BLACK OR BLUE INK. (X)
SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 44
(LOGO)
BOWNE & CO., INC. PROXY
345 HUDSON STREET
NEW YORK, N.Y. 10014
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Revoking any prior appointment, the undersigned appoints Robert M. Johnson
and Douglas F. Bauer, and each of them, attorneys-in-fact and agents with power
of substitution, to vote as proxy for the undersigned at the Annual Meeting of
Stockholders of Bowne & Co., Inc., to be held at the St. Regis Hotel, 2 East
55th Street, New York, New York, on Thursday, May 28, 1998, beginning at 10:00
A.M. local time, and at any adjournment thereof, with respect to the number of
shares the undersigned would be entitled to vote if personally present.
THE SHARES COVERED BY THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED (A)
FOR THE ELECTION OF DIRECTORS; (B) TO APPROVE THE APPOINTMENT OF AUDITORS; (C)
TO APPROVE INCREASING THE NUMBER OF DIRECTORS; (D) TO APPROVE REINCORPORATING IN
DELAWARE; AND IN ACCORDANCE WITH THE DISCRETION OF THE NAMED ATTORNEYS-IN-FACT
AND AGENTS ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING,
UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED ON THE REVERSE SIDE.
The undersigned hereby acknowledges receipt of a copy of the Proxy Statement
which was mailed to all stockholders beginning on April , 1998, relating to
such Annual Meeting.
(Continued, and to be dated and signed, on the other side)
<PAGE> 45
(Continued from other side)
Votes must be indicated (X) in black or blue ink. Then sign, date and return
this card promptly using the enclosed envelope.
A. Election of Directors:
[ ] FOR all nominees [ ] AGAINST all nominees [ ] *EXCEPTIONS
Nominees: four Class II Directors: (R.M. Conway; E.H. Meyers; J.P. O'Neil;
L.A. Stanley) and one Class I Director (J. Shapiro)
*(To withhold authority to vote for any nominee, mark the box next to
"Exceptions" and strike out that nominee's name.)
B. Approval of the appointment of Ernst & Young LLP as auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
C. Approval to increase the number of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
D. Approval to reincorporate in Delaware.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to
vote in accordance with their
discretion on such other
business as may properly come
before the meeting.
(Signatures should conform
exactly to the name imprinted on
this card. Executors,
administrators, guardians,
trustees, attorneys-in-fact and
officers signing for
corporations should state full
title or signatory capacity.)
Signed_________________________
Dated____________________, 1998
