<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Bell & Howell
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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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(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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<PAGE>
NOTICE OF 1997
ANNUAL MEETING
AND
PROXY STATEMENT
<PAGE>
BELL & HOWELL COMPANY
5215 OLD ORCHARD ROAD
SKOKIE, ILLINOIS 60077
APRIL 16, 1997
DEAR SHAREHOLDER,
YOU ARE INVITED TO ATTEND THE 1997 ANNUAL MEETING TO BE HELD ON
THURSDAY, MAY 14, 1997, IN SKOKIE, ILLINOIS.
THE ANNUAL MEETING WILL BEGIN WITH VOTING ON THE MATTERS SET FORTH IN
THE ACCOMPANYING NOTICE OF ANNUAL MEETING AND PROXY STATEMENT AND ON OTHER
BUSINESS MATTERS PROPERLY BROUGHT BEFORE THE MEETING, FOLLOWED BY DISCUSSION.
AS LAST YEAR, SHAREHOLDERS WHO CANNOT ATTEND THE MEETING IN PERSON WILL
BE ABLE TO HEAR THE MEETING LIVE OVER THE INTERNET. YOU ARE DIRECTED TO THE
INSTRUCTIONS FOR CONNECTING TO THE BELL & HOWELL'S HOME PAGE ENCLOSED
SEPARATELY WITH THIS PROXY STATEMENT.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU CAN BE SURE YOUR SHARES ARE
REPRESENTED AT THE MEETING BY PROMPTLY COMPLETING, SIGNING, DATING AND
RETURNING YOUR PROXY FORM IN THE ENCLOSED ENVELOPE OR BY VOTING OVER THE
INTERNET IN THE MANNER PROVIDED ON THE PROXY FORM.
CORDIALLY,
CHAIRMAN OF THE BOARD
<PAGE>
BELL & HOWELL COMPANY
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
Bell & Howell Company's 1997 Annual Meeting of Shareholders will be held at
5215 Old Orchard Road, Skokie, Illinois, on Wednesday, May 14, 1997, at
8:00 a.m., CDT. The shareholders will act on the matters listed below:
(1) Election of Directors for the ensuing year and
(2) Transaction of such other business as may properly come before the
meeting.
This Proxy Statement is furnished in connection with the solicitation of
proxies by Bell & Howell Company on behalf of the Board of Directors for the
1997 Annual Meeting of Shareholders.
Only Shareholders of record at the close of business on March 20, 1997, will
be entitled to vote at the meeting and any adjournments.
You can ensure that your shares are voted at the meeting by promptly
completing, signing, dating and returning the enclosed proxy form in the
envelope provided or by voting over the Internet in the manner provided on
the proxy form. Sending in a signed proxy will not affect your right to
attend the meeting and vote. A shareholder who gives a proxy may revoke it
at any time before it is exercised by voting in person at the Annual Meeting,
by submitting another proxy bearing a later date or by notifying the
Inspector of Election in writing of such revocation.
If you plan to attend the meeting, please complete and return the advance
registration form on the back page of this Proxy Statement. An admission
card, which will expedite your admission to the meeting, will be mailed to
you about ten days prior to the meeting.
GARY S. SALIT April 16, 1997
Corporate Counsel and Secretary
<PAGE>
1. ELECTION OF DIRECTORS
At the 1997 Annual Meeting, 10 Directors are to be elected to hold office
until the 1998 Annual Meeting and until their successors have been elected
and have qualified. The Board's nominees, Messrs. William J. White
(Chairman), David W. Bonderman, David G. Brown, J. Taylor Crandall, Daniel L.
Doctoroff, Nils A. Johansson, William E. Oberndorf, James P. Roemer, Gary L.
Roubos and John H. Scully, listed on pages 3 and 4 with brief biographies,
are all current Bell & Howell Directors. The Board knows of no reason why
any nominee may be unable to serve as a Director. If any nominee is unable
to serve, the shares represented by all valid proxies will be voted for the
election of such other person as the Board may recommend.
The following sets forth the names, ages and year each Director was first
elected a Director, and the recent business experience and certain other
information relating to each Director:
WILLIAM J. WHITE, 58, has served as Chairman of the Board and Director of the
Company since its organization in February 1993 and of Bell & Howell
Operating Company ("BHOC") since February 1990. He served as Chief Executive
Officer of the Company from its organization to February 1997 and of BHOC
from February 1990 to February 1997. He was President of the Company from
February 1993 to February 1995 and of BHOC from February 1990 to February
1995. Prior to joining Bell & Howell, Mr. White was President and Chief
Executive Officer of Whitestar Graphics, Inc. (a printing and graphics
company) from January 1989 through January 1990, when it was acquired by the
William Blair Leveraged Capital Fund. He is also a Director of TJ
International, Inc. and Readers Digest Association, Inc.
JAMES P. ROEMER, 49, has served as Director of the Company and BHOC since
February 1995. In February 1997 he was elected President and Chief Executive
Officer of the Company and BHOC. From February 1995 to February 1997 he
served as President and Chief Operating Officer of the Company and BHOC.
Prior to that, he served as President and Chief Executive Officer of UMI
Company from January 1994 to June 1995. Mr. Roemer joined Bell & Howell as
Vice President and Bell & Howell Publication Systems Company (PSC) as
President and Chief Operating Officer in October 1991 and was promoted to
President and Chief Executive Officer of PSC in September 1993. Prior to
joining Bell & Howell, Mr. Roemer was President of the Michie Group, Mead
Data Central from December 1989 to October 1991. From January 1992 to
December 1989 he was Vice President and General Manager of Lexis, an on-line
information service. From April 1981 to December 1982 he served as acting
President of Mead Data Central.
DAVID BONDERMAN, 54, has been a Director of the Company since its
organization in February 1993 and served as a Director of BHOC from December
1987 until February 1993. He has been the Managing General Partner of TPG
Partners L.P. (a private investment company) since December 1993. From
August 1992 to December 1993, he was a private investor. From July 1983
through August 1992, he was Vice President and Chief Operating Officer of
Keystone, Inc (a private investment company). He is also a Director of
Beringer Wine Estates, Inc., Carr Realty Group, Continental Airlines, Ducati
Motor Holdings S.p.A., National Education Corporation, Ryanair, Ltd., Virgin
Cinemas, Ltd. and Washington Mutual Inc.
3
<PAGE>
DAVID G. BROWN, 40, has been a Director of the Company since April 1995 and
served as a Director of BHOC from January 1994 to April 1995. He has been a
principal in Arbor Investors LLC (a private investment company ) since August
1995 and has been a Vice President of Keystone, Inc. since August 1993. Prior
to joining Keystone, Mr. Brown was a Vice President in the Corporate Finance
Department of Salomon Brothers Inc from August 1985 to July 1993. While at
Salomon Brothers Inc, Mr. Brown served on the Board of Directors of Redman
Industries from January 1990 to January 1992.
J. TAYLOR CRANDALL, 42, has been a Director of the Company since its
organization in February 1993 and was a Director of BHOC from November 1990
until February 1993. He has been Vice President and Chief Financial Officer
of Keystone, Inc. since October 1986. He was President, Director and sole
stockholder of Acadia MGP, Inc. (managing general partner of Acadia
Investment Partners, L.P., the sole general partner of Acadia Partners, L.P.
(an investment partnership) from January 1992 to September 1995. He is also
a Director of Washington Mutual Inc.
DANIEL L. DOCTOROFF, 38, has been a Director of the Company since its
organization in February 1993 and served as a Director of BHOC from June 1990
until February 1993. He has served as Managing Partner of Insurance Partners
Advisors, L.P. since February 1994 and as Managing Director of Oak Hill
Partners, Inc. (successor to Rosecliff, Inc., the investment advisor to
Acadia Partners, L.P.) since March 1992. Since October 1992, he also has
been a Vice President of Keystone, Inc. He was Managing Director of
Rosecliff, Inc. from August 1987 through March 1992. He is also a Director
of Capstar Hotel Company, Kemper Corporation and Specialty Foods Corporation.
NILS A. JOHANSSON, 48, has been a Director of the Company since its
organization in February 1993 and of BHOC since April 1990. Since January
1994, he has held the office of Executive Vice President and Chief Financial
Officer of the Company and BHOC. Mr. Johansson served as Senior Vice
President, Finance and Chief Financial Officer of the Company from February
1993 to January 1994 and of BHOC from December 1991 to January 1994. From
May 1989 to December 1991, he was Vice President, Finance, Treasurer and
Chief Financial Officer of BHOC. From February 1981 to May 1989 he held
various executive positions with Bell & Howell, including positions in
corporate treasury and group control, planning, financial analysis and
business development.
WILLIAM E. OBERNDORF, 43, has been a Director of the Company since its
organization in February 1993 and was a Director of BHOC from July 1988
through February 1993. He has served as Managing Director of SPO Partners &
Co. (a private investment company) since March 1991 and was General Partner
of San Francisco Partners II (an investment limited partnership) from 1978
through 1990. He is also a Director of Plum Creek Timber Company, L.P.
GARY L. ROUBOS, 60, has been a Director of the Company since February 1994.
He has been Chairman of the Board of Dover Corporation (a diversified
equipment manufacturer) since August 1989 and was President from May 1977 to
May 1993. He is also a Director of Dover Corporation, Omnicom Group, Inc.
and The Treasurer's Fund.
JOHN H. SCULLY, 52, has been a Director of the Company since its organization
in February 1993 and was a Director of BHOC from July 1988 until February
1993. He has served as Managing Director of SPO Partners & Co. since
March 1991. From 1971 to 1990, he was General Partner of San Francisco Partners
II. He is also a Director of Plum Creek Timber Company, L.P.
4
<PAGE>
- - INFORMATION RELATING TO DIRECTORS AND EXECUTIVE OFFICERS
The following table includes all Bell & Howell stock holdings, as of
March 20, 1997, of the Company's Directors and five most highly-compensated
executive officers.
- ------------------------------------------------------------------------------
Directors and Executive Officers: Number of Shares Percent
- ------------------------------------------------------------------------------
David Bonderman(1) 727,385 4.0%
William J. White(2) 549,540 3.0%
John H. Scully 292,812 1.6%
Nils A. Johansson 247,812 1.4%
James P. Roemer 171,555 *
J. Taylor Crandall 130,228 *
William E. Oberndorf 54,190 *
Henry G. Riner 18,020 *
Ben L. McSwiney 13,500 *
Daniel L. Doctoroff 10,758 *
Gary L. Roubos 1,704 *
All directors and executive officers as a 2,479,209 13.5%
group (16 persons)
- ------------------------------------------------------------------------------
______________
(1) Includes 72,488 shares owned by Group Management, Inc. and 64,483 shares
owned by Bonderman Family Limited Partnership.
(2) Includes 447,300 shares held in a trust of which Mr. White is neither
trustee nor beneficiary but for which he has the power to vote and dispose
of shares.
(3) Includes 292,812 shares owned by Cranberry Lake Partners Limited over which
Mr. Scully exercises investment discretion.
* less than 1%
- - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists beneficial owners of more than five percent of the
Company's Common Stock as of December 31, 1996.
- ------------------------------------------------------------------------------
Name and Address of Beneficial Owner Number of Shares Percent
- ------------------------------------------------------------------------------
Keystone, Inc.
3100 Texas Commerce Tower
201 Main Street
Fort Worth, Texas 76102 4,363,000 shares 23.8%
FMR Corp.
32 Devonshire Street
Boston, Massachusetts 02109-3614 1,938,000 shares 10.6%
- ------------------------------------------------------------------------------
5
<PAGE>
- - BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held four meetings during 1996. The average
attendance by Directors at these meetings was 93%, and all nominees attended
at least 75% of the Board and Committee meetings they were scheduled to
attend.
The committees of the Board of Directors are a Compensation Committee and an
Audit Committee.
Members of the Compensation Committee are Directors Oberndorf (Chairman),
Bonderman, Crandall, Doctoroff and Roubos. This Committee has two primary
responsibilities: (1) to monitor the Company's management resources,
structure, succession planning, development and selection process and the
performance of key executives; and (2) to review and approve executive
compensation. It also serves as the committee administering the Bell &
Howell 1995 Stock Option Plan and the Management Incentive Bonus Plan. This
Committee met twice during 1996.
Members of the Audit Committee are Directors Roubos (Chairman), Oberndorf and
Scully. This Committee addresses the quality of the Company's financial
reporting and related systems of internal accounting controls. Its duties
include: (1) approving the selection of independent auditors; (2) reviewing
the scope and results of the independent audit; (3) reviewing the evaluation
of the Company's systems of internal accounting controls and (4) appraising
the Company's financial reporting (including its Proxy Statement and 10-K)
and the accounting standards and principles followed. The Audit Committee
met twice during 1996.
All of the Directors, except for Messrs. Johansson, Roemer and White,
participate in the 1995 Non-Employee Directors' Stock Option Compensation
Plan. The Plan provides for annual non-qualified stock option grants to each
Director who is serving on the Board at the time of such grant and who is not
also an employee of Bell & Howell or any of its affiliates. Each annual
grant permits a non-employee Director to purchase a specified number of
shares of the Company's Common Stock at an exercise price not less than the
fair value of the Common Stock on the date the option is granted. The
number of shares which may be purchased is equal to the total annual
compensation otherwise payable to a Director divided by the fair market value
of an option on one share of Common Stock. For these purposes, the value of
an option is determined using the Black-Scholes option-pricing model. Annual
grants will be made as of the last day of trading of the Company's Common
Stock in the second fiscal quarter of each fiscal year through 2005. The
options expire ten years after the date they are granted or at such earlier
date as may be provided by the Plan provisions upon retirement, disability,
death or other termination of service.
For 1996, the annual compensation was set at $20,000 per annum for each
non-employee Director. Based on that amount, each non-employee Director
received an option grant on 1,225 shares of the Company's Common Stock at an
exercise price of $32.625, determined as of June 28, 1996, using the formula
described above. All Directors are reimbursed travel expenses for attendance
at Board meetings.
6
<PAGE>
- - REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
- COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The Compensation Committee of the Board of Directors, consisting entirely of
non-employee Directors, approves the objectives and policies governing the
compensation to the Company's executive officers. In 1996, the Committee met
twice, primarily to review and approve performance targets and achievement
levels and to review major compensation actions.
The philosophy of the Committee is:
- to align executive compensation with shareholder interests
- to ensure that compensation is at a level that enables the Company to
attract and retain high quality talent
- to provide significant rewards for achievement of business objectives
and growth in shareholder value
The Company's compensation program for executive officers currently consists
of the following key elements: base salary, annual bonuses and stock option
grants. Each element of the program has a somewhat different purpose, and all
of the Committee's determinations during 1996 (as in prior years) regarding
the appropriate form and level of executive compensation payments and awards
were ultimately judgments based upon the Committee's ongoing assessment and
understanding of the Company and its executive officers. Salary payments in
1996 were made to compensate ongoing performance through the year, while 1996
bonuses were paid in 1997 based, in part, upon the Committee's judgment
regarding the executive officers' contributions and achievement of business
objectives during 1996. Stock option grants are primarily designed to
provide strong incentives for creation of long-term shareholder value and
continued retention by the Company of executive officers and other key
employees. Unvested stock option grants are generally forfeited if the
executive officer leaves the Company before retirement.
All stock option grants are made under the Bell & Howell 1995 Stock Option
Plan and are directly linked to the shareholders' interest as the value of
the awards will increase or decrease based upon the future price of the
Company's Common Stock.
In determining the overall level and form of executive compensation to be
paid or awarded in 1996, the Committee's judgment was primarily based upon
its ongoing assessment of the Company's overall performance -- and its future
objectives and challenges -- rather than as a guideline or formula based on
any particular performance measure in a single year. Some of the specific
factors affecting the Committee's judgment in 1996 included, among other
things: continued increases in the Company's earnings per share and
productivity in a period of rapid change and intensified competition. The
Committee also considered the compensation practices and performances of
other major corporations, which are most likely to compete with the Company
for the services of its executive officers.
7
<PAGE>
The Committee's decisions concerning the specific 1996 compensation elements
for individual executive officers, including the Chief Executive Officer,
were made within this broad framework and in light of each executive
officer's level of responsibility, performance and current salary.
Federal tax law establishes certain requirements in order for compensation
exceeding $1 million earned by certain executives to be deductible. Because
the total compensation for executive officers is below the $1 million
threshold, the Compensation Committee has not had to address the issues
relative thereto.
- BASES FOR CHIEF EXECUTIVE OFFICER COMPENSATION
For 1996, Mr. White received total cash payments of $968,186 in salary and
bonus (as shown in the Summary Compensation Table on page 9).
For 1996, Mr. Roemer received total cash payments of $798,287 in salary and
bonuses (as shown in the Summary Compensation Table on page 9).
As shown in the Summary Compensation Table, Mr. Roemer was also granted stock
options for 385,000 shares of Bell & Howell common stock in 1995, the first
portion of which becomes exercisable in May 1998. These grants would be
forfeited if he were to leave the Company for reasons other than disability
or death before they become exercisable. These grants offer Mr. Roemer an
opportunity for significant capital accumulation if exceptional shareholder
value is created.
In determining Mr. Roemer's 1997 compensation, the Committee has focused on
his ability to enhance the long-term value of the Company. During his tenure
with Bell & Howell, he has been a leader in the revitalization of the Company
and its evolution into a provider of technological solutions within a number
of market segments. Mr. Roemer's total compensation is based on both Bell &
Howell's recent performance, including 1996 increases in revenues, net
income, operating cash flow and productivity, and his contributions to the
overall long-term strategy and financial strength of the Company.
*****
The foregoing report on executive compensation is provided by the following
outside directors, who comprised the Compensation Committee during 1996:
William E. Oberndorf (Chairman) Daniel L. Doctoroff
David W. Bonderman Gary L. Roubos
J. Taylor Crandall
8
<PAGE>
- - SUMMARY COMPENSATION TABLE
The following table sets forth the cash compensation paid by the Company or a
subsidiary of the Company to each of its five most highly compensated
executive officers for fiscal 1996, 1995 and 1994:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
------------------------------
<S> <C> <C> <C> <C> <C> <C>
AWARDS (2) PAYOUTS (3)
---------- ----------
ANNUAL COMPENSATION SECURITIES
NAME AND PRINCIPAL FISCAL ------------------- UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY BONUS (1) OPTIONS (#) PAYOUTS COMPENSATION
- ------------------ ------ -------- --------- ---------- ------- ------------
William J. White, 1996 $643,853 $294,241 --- $ --- $ 30,092 (4)
Chairman of the Board 1995 614,427 307,501 460,000 --- 34,574 (4)
1994 597,696 582,754 --- --- 36,711 (4)
James P. Roemer 1996 510,572 233,331 --- 54,384 94,984 (5)
President and Chief 1995 405,655 252,689 385,000 --- 21,992 (5)
Executive Officer 1994 206,000 132,679 --- 431,679 176,758 (5)
Nils A. Johansson 1996 396,162 181,046 --- 79,380 27,069 (6)
Executive Vice President 1995 363,827 216,063 270,000 --- 31,768 (6)
and Chief Financial Officer 1994 264,092 184,865 --- 184,500 21,200 (6)
Ben L. McSwiney 1996 254,539 107,413 12,000 --- 113,422 (8)
President of MPS 1995 (7) 140,219 9,363 10,500 --- 2,963 (8)
Henry G. Riner 1996 249,999 34,050 12,000 10,560 65,746 (10)
President of UMI 1995 (9) 193,655 95,000 10,000 --- 6,411 (10)
</TABLE>
(1) Consists of amounts awarded under an employment agreement in respect of Mr.
White and under the Bell & Howell Operating Company's Management Incentive
Bonus Plan (the "MIB") in respect of Messrs. Roemer, Johansson, McSwiney
and Riner. The MIB provides a financial incentive for key management
employees to focus their efforts on, and achieve, annual financial targets.
Payments under the MIB for fiscal 1996 were made in February 1997.
(2) Amounts reflected in this column are for grants of stock options under the
1995 Stock Option Plan for the Common Stock of Company. No Stock
Appreciation Rights (SAR's) have been used by the Company.
(3) For fiscal 1994, consists of amounts earned under Bell & Howell Operating
Company's Long-Term Incentive Plan: 1991-1994 (the "1991-1994 LTIP"). The
1991-1994 LTIP provided long-term incentives to key management employees by
rewarding them for achieving financial targets for the period commencing
fiscal 1991 through fiscal 1994. Messrs. White, McSwiney and Riner did
not participate in the 1991-1994 LTIP. Mr. Roemer earned $287,674 under an
additional long-term incentive plan in 1994. Payments under the 1991-1994
LTIP were made in March 1995.
For fiscal 1996, consists of amounts earned under Bell & Howell Operating
Company's Long-Term Incentive Plan: 1993-1996 (the" LTIP II"). LTIP II
provided long-term incentives to key management employees by rewarding them
for achieving financial targets for the period commencing fiscal 1993
through fiscal 1996. LTIP II was terminated as of the end of fiscal 1994
and replaced with the 1995 Stock Option Plan. Awards earned as of the end
of 1994 were frozen at that time. Prorated payments under the LTIP II were
made in cash in February 1997.
(4) For fiscal 1996, 1995 and 1994, consists of $3,000 in contributions to the
Bell & Howell Profit Sharing Retirement Plan ("PSRP"); $16,027, $20,944 and
$19,953, respectively, in contributions to the Bell & Howell Replacement
Benefit Plan ("RBP") and $11,065, $10,630 and $13 758, respectively, in
imputed life insurance.
(5) For fiscal 1996, 1995 and 1994 consists of $3,000 in contributions to the
PSRP; $3,384, $2,084 and $1,905, respectively, in imputed life insurance;
and $12,381, $16, 908 and $7,183, respectively, in contributions to the
RBP; and for fiscal 1996 and 1994 consists of $76,219 and $164,670,
respectively for relocation and related expenses.
(6) For fiscal 1996, 1995 and 1994, includes $6,000 in contributions to the
PSRP; $18,489, $23,328 and $13,172, respectively, in contributions to the
RBP; and $2,580, $2,440 and $2,028, respectively, in imputed life
insurance.
(7) 1995 reflects compensation for the six-month period from July 1995, when
Mr. McSwiney's employment by the Company began, through December 1995.
(8) For fiscal 1996 and 1995, consists of $3,000 and $2,308, respectively, in
contribution to the PSRP; and $3,011 and $655, respectively, in imputed
life insurance; and for fiscal 1996 includes $2,278 in contributions to the
RBP. Fiscal 1996 includes the taxable income component on the exercise of
previously issued non-qualified stock options of $45,562.
(9) 1995 reflects compensation for the full year 1995, during which Mr. Riner
was promoted to President of UMI.
(10) For fiscal 1996 and 1995, consists of $3,000, in contributions to the PSRP;
$3,992 and $2,558, respectively, in contribution to the RBP; and $2,289 and
$853, respectively, in imputed life insurance. Fiscal 1996 includes the
taxable income component on the exercise of previously issued non-qualified
stock options of $22,562.
9
<PAGE>
- - STOCK OPTIONS
In May 1995, the Company adopted the 1995 Stock Option Plan (the "Option
Plan"). A total of 2,160,000 shares of Common Stock was reserved for issuance
under the Option Plan. The intent of the Option Plan is to increase
shareholder value and maintain an entrepreneurial spirit within the Company
by providing significant capital accumulation opportunities to the Company's
key employees, but only if exceptional shareholder value is created. Under
the Option Plan, the Company granted options to Messrs. White, Roemer and
Johansson in the amounts shown on the table which follows on page 12,
exercisable in a series of six option exercise prices, the first of which was
$15.50, the initial public offering price, and the remainder of which will
equal 120% of the exercise price of the preceding increment. These options
are exercisable as follows: up to 25% after three years, up to 50% after four
years and up to 100% after five years. The term for options granted to
Messrs. White, Roemer and Johansson is six years.
Options to Messrs. McSwiney and Riner, in the amounts shown on the table
which follows, as well as to other executive officers and key employees, were
granted by the Company to those persons selected by the Compensation
Committee based on the value of their contribution to the Company. Under the
terms of the Option Plan, these persons may receive incentive stock options
in such amounts as may be established by the Compensation Committee at the
time of grant. The exercise price of each option will also be determined by
the Compensation Committee at the time of grant, but the price will not be
less than the fair market value of the Common Stock on the date of grant.
The term for such options is ten years and vest in equal increments over a
five year period from the date of each grant. In addition to the options
granted to Messrs. White, Roemer and Johansson, as of March 20, 1997, the
Company had outstanding grants of 366,000 shares to executive officers and
key employees.
The table on page 12 also shows the potential realizable value from stock
options granted in 1995 and 1996. These hypothetical gains are based
entirely on assumed annual growth rates of five, ten and twenty per cent in
the value of the Company's Common Stock price over the lives of the stock
options granted. The options granted to Mr. White, for example, would produce
the pre-tax gain of $8,732,066 shown in the table if the Company's Common
Stock price rises by 20% per annum over the six year life of the options.
Based on the number of shares outstanding at the end of 1996, such an
increase in the Company's Common Stock price would produce a corresponding
aggregate pre-tax gain of over $563,607,009 for the Company's shareholders.
In other words, Mr. White's potential gain from stock options granted in 1995
would equal about one and 50/100ths percent (i.e., 1.5%) of the potential
gain to all shareholders resulting from the assumed future stock price
increases.
The tables on pages 11 and also provide information on stock options granted
to the five most highly compensated executive officers during 1996. Stock
options to Messrs. White, Roemer and Johansson expire six years after the
date of grant and to all other executive officers, including Messrs. Riner
and McSwiney, expire ten years after the date of grant. Grants to Messrs.
White, Roemer and Johansson are not exercisable until May 1, 1998. Grants to
all other executive are not exercisable until one year from the initial date
of grant.
Under current law, the following are U.S. federal income tax consequences
generally arising with respect to awards under the Plan.
A participant who is granted an incentive stock option does not recognize any
taxable income at the time of the grant and, similarly, the Company is not
entitled to any deduction at the time of grant. If the participant makes no
disposition of the shares acquired pursuant to an incentive stock option
before the later of two years form the date of grant and one year from the
date of exercise, any gain or loss realized on a subsequent disposition of
the shares will be treated as a long-term capital gain or loss. Under such
circumstances, the Company will not be entitled to any deduction for federal
income tax
10
<PAGE>
purposes. Conversely, if a participant disposes of the acquired
shares before two years from the date of grant or one year from the date of
exercise, any gain will be treated as ordinary income and any loss will be
treated as a short-term capital loss. The Company will then be entitled to a
deduction for federal income tax purposes.
A participant who is granted a non-qualified stock option will not have
taxable income at the time of grant, but will have taxable income at the time
of exercise equal to the difference between the exercise price and the market
value of the Company's Common Stock on the date of exercise. The Company is
entitled to a tax deduction for the same amount.
Option grants totalling approximately [28,000] shares were exercisable at the
end of fiscal 1996.
- - AGGREGATED OPTION EXERCISES IN 1996 AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
OPTIONS AT VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS
YEAR-END (#) (1) AT YEAR-END ($)(1)(2)
--------------------- ---------------------
<S> <C> <C> <C> <C>
SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) ($) (1) UNEXERCISABLE UNEXERCISABLE
- ------------------ --------------- -------------- --------------------- ---------------------
William J. White None N/A None / 460,000 (3) None / $575,000 (3)
James P. Roemer None N/A None / 385,000 (3) None / 481,250 (3)
Nils A. Johansson None N/A None / 270,000 (3) None / 337,500 (3)
Ben L. McSwiney None N/A 2,100/ 8,400 (4) 4,725 / 18,900 (4)
None / 12,000 (5) None / None (5)
Henry G. Riner None N/A 2,000/ 8,000 (4) 14,500 / 58,000 (4)
None/ 12,000 (5) None / None (5)
</TABLE>
(1) All information provided is with respect to stock options. No SARs have
been issued by the Company.
(2) The amounts have been determined by multiplying the aggregate number of
options by the difference between $22.75, the closing price of the Common
Stock on December 27, 1996 (the last trading day of 1996), and the exercise
price of the options.
(3) These options are exercisable as follows: up to 25% after May 1998, up to
50% after May 1999 and up to 100% after May 2000.
(4) These options are exercisable in 20% cumulative increments beginning in
May of each year from May 1996 through May 2000.
(5) These options are exercisable in 20% cumulative increments beginning in
May of each year from May 1997 through May 2001.
11
<PAGE>
- - STOCK OPTIONS GRANTED IN 1995 AND 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Number of Percent
Securities of Total Exercise Latest Potential Realizable Value at Assumed
Underlying Annual or Possible Annual Rates of Stock Price
Year of Options Options Base Price Expiration Price Appreciation For Option Term
Name Grant Granted (#) Granted ($/Sh) Date 5% 10% 20%
William J. White 1995 46,000 $15.50 May 2001 $242,488 $550,123 $1,416,007
1995 46,000 18.50 May 2001 104,488 412,123 1,278,007
1995 92,000 22.25 May 2001 - 479,246 2,211,013
1995 92,000 26.75 May 2001 - 65,246 1,797,013
1995 92,000 32.00 May 2001 - - 1,314,013
1995 92,000 38.50 May 2001 - - 716,013
----------
460,000 35.4%
James P. Roemer 1995 38,500 $15.50 May 2001 $202,952 $460,429 $1,185,136
1995 38,500 18.50 May 2001 87,452 344,929 1,069,636
1995 77,000 22.25 May 2001 - 401,108 1,850,522
1995 77,000 26.75 May 2001 - 54,608 1,504,022
1995 77,000 32.00 May 2001 - - 1,099,772
1995 77,000 38.50 May 2001 - - 599,272
----------
385,000 29.7%
Nils A. Johansson 1995 27,000 $15.50 May 2001 $142,330 $322,898 $ 831,134
1995 27,000 18.50 May 2001 61,330 241,898 750,134
1995 54,000 22.25 May 2001 - 281,297 1,297,769
1995 54,000 26.75 May 2001 - 38,297 1,054,769
1995 54,000 32.00 May 2001 - - 771,269
1995 54,000 38.50 May 2001 - - 420,269
----------
270,000 20.8%
Ben L. McSwiney 1996 12,000 5.3% $31.75 May 2006 $239,609 $607,216 $1,978,052
1995 10,500 0.8% 20.50 July 2005 135,370 343,053 1,117,521
Henry G. Riner 1996 12,000 5.3% $31.75 May 2006 $239,609 $607,216 $1,978,052
1995 10,000 0.8% 15.50 May 2005 97,479 247,030 804,719
</TABLE>
(1) THE OPTION PLAN REPLACED THE BELL & HOWELL COMPANY AND SUBSIDIARIES LONG-
TERM INCENTIVE PLAN: 1993-1996 ("LTIP II") WHICH COVERED OFFICERS AND
CERTAIN EMPLOYEES AND WAS TO PROVIDE PAYMENTS BASED ON THE PARTICIPANT'S
PARTICIPATION LEVEL (WHICH IS EITHER 30% OR 60% OF THE EMPLOYEE'S BASE RATE
OF PAY ON JANUARY 1, 1993 OR THE DATE SUCH PARTICIPANT WAS DESIGNATED AS
ELIGIBLE FOR LTIP II BY THE BOARD OF DIRECTORS), CONTINGENT UPON
ACHIEVEMENT OF ESTABLISHED FINANCIAL TARGETS. PRORATED AMOUNTS UNDER LTIP
II WERE PAID TO ELIGIBLE PARTICIPANTS IN FEBRUARY 1997.
(2) THE TABLE SETS FORTH THE POTENTIAL REALIZABLE VALUES OF SUCH OPTIONS, UPON
THEIR LATEST POSSIBLE EXPIRATION DATE, AT ARBITRARILY ASSUMED ANNUALIZED
RATES OF STOCK PRICE APPRECIATION OF FIVE,TEN AND TWENTY PERCENT OVER THE
TERM OF THE OPTIONS. BECAUSE ACTUAL GAINS WILL DEPEND UPON, AMONG OTHER
THINGS, THE ACTUAL DATES OF EXERCISE OF THE OPTIONS AND THE FUTURE
PERFORMANCE OF THE COMMON STOCK IN THE MARKET, THE AMOUNTS REFLECTED IN
THIS TABLE MAY NOT REFLECT THE VALUES ACTUALLY REALIZED. NO GAIN TO THE
NAMED EXECUTIVE OFFICERS IS POSSIBLE WITHOUT AN INCREASE IN STOCK PRICE
WHICH WILL BENEFIT ALL SHAREHOLDERS PROPORTIONATELY.
12
<PAGE>
- - SUPPLEMENTAL RETIREMENT PLAN
The Bell & Howell Supplemental Retirement Plan ("SRP") provides officers and
certain employees with additional pension benefits upon retirement, in order
to supplement social security and other benefits provided under the Bell &
Howell Profit Sharing Retirement Plan ("PSRP") and the Bell & Howell
Replacement Benefit Plan ("RBP").
Generally, the SRP provides for lifetime monthly pension payments which equal
the excess, if any, of (i) up to 50% (the actual percentage being
proportional to length of service) of the participant's average monthly
compensation (which is defined to include salary and annual bonuses up to
150% of target) during the highest paid four years of the participant's last
six years of employment over (ii) the sum of the aggregate monthly amounts
which are payable under the PSRP, RBP (in each case exclusive of voluntary
and mandatory employee contributions and investment additions thereon) and
primary social security benefits. If a participant is involuntarily
terminated other than "for cause" and he has been a plan participant for at
least five years, he shall be entitled to deferred SRP payments calculated as
if his termination date were his retirement date. If a participant
voluntarily terminates his employment and he has been an employee for at
least ten years and a plan participant for at least five years, he shall be
entitled to deferred SRP payments calculated as if his termination date were
his retirement date. The estimated credited years of service at the end of
fiscal 1996 for each of the individuals listed in the Supplemental Retirement
Plan Table below are six, five, fifteen, one and two years for Messrs. White,
Roemer, Johansson, McSwiney and Riner, respectively. The Company estimates
that the annual benefits which have accrued through the end of fiscal 1996
and would be payable upon retirement at age 60 pursuant to the SRP would be
$142,950, $43,600, $152,475 and $3,675 for Messrs. White, Roemer, Johansson
and Riner, respectively. No SRP benefits have yet accrued at the end of
fiscal 1996 for Mr. McSwiney.
The Company estimates that the following annual benefits would be payable
upon retirement at or after age 60 to persons in the following specified
participation levels, compensation and year-of-service classifications, less
amounts received as social security benefits and benefits under Bell & Howell
Operating Company's other retirement plans:
Participation Years of Service
Level I
Remuneration 15 20 or more
------------ --------- ------------------
$250,000 $ 93,750 $125,000
425,000 159,375 212,500
600,000 225,000 300,000
775,000 290,625 387,500
950,000 356,250 475,000
Participation Years of Service
Level II
Remuneration 15 20 25 30 or more
------------- ------- ------- ------- ----------
$125,000 $34,375 $43,750 $53,125 $ 62,500
150,000 41,250 52,500 63,750 75,000
175,000 48,125 61,250 74,375 87,500
200,000 55,000 70,000 85,000 100,000
225,000 61,875 78,750 95,625 112,500
- 13 -
<PAGE>
- - RELATED PARTY TRANSACTIONS
The Company has made loans (the balance of which totaled $1,443,896 at the
end of fiscal 1996) to certain key employees in connection with their
purchases of the Company's Common Stock. Pursuant to the terms of such
loans, the shares acquired are pledged as security. The following
individuals had loans in excess of $60,000 outstanding at the end of fiscal
1996: N. A. Johansson ($236,128), S. T. Lieberman ($90,818), M.T. Rubly
($359,987), B. L. McSwiney ($356,977) and H. G. Riner ($257,814). Each loan
is evidenced by an installment note which bears interest at BHOC's marginal
rate of borrowing (approximately 6% at this time). The notes from Messrs.
Johansson and Lieberman and Ms. Rubly are due on December 31, 1998, and the
notes from Messrs. McSwiney and Riner are due on December 31, 2000.
Interest and principal may be deferred until that date.
- - EMPLOYMENT CONTRACT
BHOC entered into an employment agreement with William J. White dated as of
March 23, 1990. Mr. White's salary and bonus are set by the Compensation
Committee of the Company's Board of Directors. Pursuant to the terms of the
employment agreement, Mr. White is an employee at will. The agreement
provides that Mr. White shall be entitled to severance pay equal to one-half
of his annual base salary at the time of his termination and a prorated bonus
if terminated without cause or if Mr. White resigns for good reason (as
defined therein). The agreement contains noncompetition and confidentiality
commitments.
- - CERTAIN TRANSACTIONS
During 1996, Bell & Howell Company and its subsidiaries did not have any
purchase, sale, lease, finance, insurance or other transactions with
companies or organizations with which Bell & Howell's Directors are
associated.
14
<PAGE>
- - PERFORMANCE GRAPH: FISCAL 1996
COMPARISON OF EIGHT MONTH CUMULATIVE TOTAL RETURN AMONG BELL & HOWELL, DOW
JONES INDUSTRIAL AVERAGE (DJIA) AND S&P GROUP
The following graph compares the cumulative total return of the Company's
Common Stock as compared with the S&P 500 Stock Index and a weighted
composite of the S&P Publishing Index and S&P Office Equipment & Supplies
Index, weighted based on the Company's current year EBITDA.
The graph assumes a $100 investment made on May 2, 1995, the first trading
date of the Company's Common Stock, and the reinvestment of all dividends, as
follows:
Dollar Value of $100 Investment at
------------------------------------
May 2, 1995 December 28, 1996
----------- -----------------
Bell & Howell $100.00 $146.77
Composite Group 100.00 128.47
S&P 500 100.00 146.99
15
<PAGE>
2. OTHER MATTERS
- - SHAREHOLDER PROPOSALS FOR 1998
Under the rules of the Securities and Exchange Commission, shareholder
proposals submitted for next year's Proxy Statement must be received by Bell
& Howell no later than the close of business on December 14, 1997, to be
considered. Proposals should be addressed to Gary S. Salit, Esq., Bell &
Howell Company, 5215 Old Orchard Road, Skokie, Illinois 60077-1076.
- - VOTING SECURITIES
Shareholders of record at the close of business on March 20, 1996, will be
eligible to vote at the meeting. The voting securities of Bell & Howell
consist of its $.001 par value common stock, of which 18,335,182 shares were
outstanding on March 20, 1997. Each share outstanding on the record date
will be entitled to one vote.
Individual votes of shareholders are kept private, except as appropriate to
meet legal requirements. Access to proxies and other individual share owner
voting records is limited to the Independent Inspectors of Election (Boston
EquiServe, L.P.) and certain employees of Bell & Howell and its agents who
must acknowledge in writing their responsibility to comply with this policy
of confidentiality.
- - VOTE REQUIRED FOR APPROVAL
The 10 nominees for director receiving a plurality of the votes cast at the
meeting in person or by proxy shall be elected. All other matters require
for approval the favorable vote of a majority of shares voted at the meeting
in person or by proxy. Abstentions and broker non-votes will not be treated
as votes cast and, therefore, will have no effect on the outcome of the
matters to be voted on at the meeting.
- - MANNER FOR VOTING PROXIES
The shares represented by all valid proxies received will be voted in the
manner specified on the proxy forms. Where specific choices are not
indicated, the shares represented by all valid proxies received will be voted
for: the nominees for director named earlier in this Proxy Statement.
Should any matter not described above be acted upon at the meeting, the
persons named in the proxy form will vote in accordance with their judgment.
The Board knows of no other matters which may be presented to the meeting.
16
<PAGE>
- - SOLICITATION OF PROXIES
Proxies will be solicited on behalf of the Board of Directors by mail,
telephone, telegraph or in person, and solicitation costs will be paid by
Bell & Howell. Copies of proxy material and of the Form 10-K for 1997 will
be supplied to brokers, dealers, banks and voting trustees, or their
nominees, for the purpose of soliciting proxies from beneficial owners, and
Bell & Howell will reimburse such record holders for their reasonable
expenses.
- - ACCOUNTING INFORMATION
Selection of the independent auditors is made by the Board of Directors upon
consultation with the Audit Committee. The Company's independent auditors
for fiscal 1996 were KPMG Peat Marwick, LLP, which will be available to
respond to appropriate questions at the Annual Meeting of Shareholders.
April 11, 1997
<PAGE>
1997 ANNUAL MEETING OF SHAREHOLDERS
8:00 A.M. CDT
MAY 14, 1997
5215 OLD ORCHARD ROAD
SKOKIE, ILLINOIS
CUT OFF AT DOTTED LINE
- ------------------------------------------------------------------------------
ADVANCE REGISTRATION FORM
Send your completed and signed proxy form in the enclosed envelope. Include
this Advance Registration Form in the envelope if you plan to attend the
Annual Meeting.
Attendance at the Annual Meeting is limited to Bell & Howell shareholders or
their named representative. We reserve the right to limit the number of
representatives who may attend the Annual Meeting.
(PLEASE PRINT)
Shareholder's Name ________________________________________________
Address ___________________________________________________________
___________________________________________________________
(Admission card will be returned c/o the Shareholder's address)
<PAGE>
Bell & Howell Company
5215 Old Orchard Road
Skokie, Illinois 60077-1076
Ladies and Gentlemen:
We have acted as special Delaware counsel to Bell & Howell Company, a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies for the annual meeting of stockholders of the Company to be held on May
14, 1997 (the "Annual Meeting"). In this connection, you have requested our
opinion as to certain matters arising under the General Corporation Law of the
State of Delaware (the "General Corporation Law").
For the purpose of rendering our opinion as stated herein, we have been
furnished and have reviewed the following documents:
(i) the Certificate of Incorporation of the Company as amended through
February 10, 1993, which we are advised and accordingly assume constitutes the
certificate of incorporation of the Company in effect on the date hereof, and
(ii) the By-laws of the Company as amended through April 1, 1997, which we
are advised and accordingly assume constitute the by-laws of tile Company in
effect on the date hereof.
With respect to the foregoing documents, we have assumed: (i) the
authenticity of all documents submitted to us as originals, the conformity to
authentic originals of all documents submitted to us as copies or forms, the
genuineness of all signatures and the legal capacity of natural persons, and
(ii) that the foregoing documents, in the forms submitted for our review, have
not been and will not be altered, amended or repealed in any respect material to
our opinion as expressed herein. We have not reviewed any documents of or
applicable to the Company other than the documents listed above, nor have we
conducted any independent factual investigation of our own for
<PAGE>
Bell & Howell Company
April 1, 1997
Page 2
purposes of rendering this opinion; rather, we have relied solely upon the
facts and statements set forth in the documents listed above and the additional
information recited or assumed in this opinion, all of which we assume to be
true, accurate and complete in all material respects. In addition, for purposes
of rendering our opinion as expressed herein, we have been advised and assume
that the Company does not have in place any policy regarding confidential voting
by stockholders.
We have been advised that the proxy statement with respect to the Annual
Meeting will give stockholders the option of transmitting proxies over the
Internet. In particular, we understand that the proxy statement of the Company
for the Annual Meeting, which proxy statement will be mailed to all stockholders
of record by United States mail, will instruct such stockholders wishing to
transmit proxies over the Intemet to: (i) visit the Company's "home page" on the
Internet (the "Company's Home Page"), and (ii) fill out the form of proxy for
the Annual Meeting accessible at the Company's Home Page. In filling out the
form of proxy, each stockholder will be required to provide (a) the
stockholder's full name and address, (b) the number of shares held of record by
the stockholder as indicated on the proxy card, (c) a telephone number where the
stockholder may be reached, and (d) the confidential personal identification
number contained on the front of the proxy card mailed to such stockholder with
the proxy statement. After providing this information, the stockholder will be
asked to complete an electronic proxy card indicating how the stockholder wishes
to vote with respect to the various matters to be voted upon at the Annual
Meeting. Upon supplying the requested information, an image of a proxy card will
be generated and shown to the stockholder who will be asked to verify that the
information provided is accurate and whether the stockholder wishes to vote at
<PAGE>
Bell & Howell Company
April 1, 1997
Page 3
the Annual Meeting as set forth on image. Upon answering yes to this question,
the stockholder will be asked whether the completed proxy should be transmitted
to the transfer agent. Upon answering yes to this question, a proxy containing
the stockholder's voting instructions will be electronically created and
transmitted to Boston Equiserve L.P., the Company's transfer agent. No such
electronic proxy will be transmitted unless all of the required information is
provided. Upon receipt of the electronic proxy, the transfer agent will print a
hard copy of the electronic proxy image and determine whether the confidential
personal identification number provided for the stockholder is correct. The
transfer agent will note whether this information was correctly provided on the
face of the copy of the electronic proxy delivered to the inspectors of
election.
You have requested our opinion whether the electronically transmitted
proxy created as a result of the electronic process described above is
permissible under the General Corporation Law. The General Corporation Law
was amended in 1990 to add a new Section 212(c). That subsection provides in
pertinent part:
(c) Without limiting the manner in which a stockholder may authorize
another person or persons to act for him as proxy pursuant to subsection
(b) of this section, the following shall constitute a valid means by which
a stockholder may grant such authority:
* * *
(2) a stockholder may authorize another person or persons to act for him as
proxy by transmitting or authorizing the transmission of a telegram,
cablegram, OR OTHER MEANS OF ELECTRONIC TRANSMISSION to the person who will
be the holder of the proxy or to a proxy solicitation, proxy support
service organization or like agent duly authorized by the person who will
be the holder of the proxy to receive such transmission, provided that such
telegram, cablegram or other MEANS OF ELECTRONIC TRANSMISSION must either
set forth or be submitted with information from which it can be determined
<PAGE>
Bell & Howell Company
April 1, 1997
Page 4
that the telegram, cablegram OR OTHER ELECTRONIC TRANSMISSION was
authorized by the stockholder. If it is determined such telegrams,
cablegrams OR OTHER ELECTRONIC TRANSMISSIONS are valid, the inspectors or,
if there are no inspectors, such other persons making that determination
shall specify the information upon which they relied.
(emphasis supplied).
This specific statutory authorization for proxies transmitted via
electronic means supersedes prior case law questioning the validity of such
proxies under Delaware law. SEE, E.G., PARSHALLE V. ROY, 567 A.2d 19 (Del.
Ch. 1989); CONCORD FINANCIAL GROUP V. TRI-STATE MOTOR TRANSIT CO., 567 A.2d 1
(Del. Ch. 1989). As indicated in the commentary to the legislation enacting
Section 212(c), that subsection ". . . specifically authorizes the creation
of a proxy relationship by telegram, cablegram or other means of electronic
transmission provided that the telegram, cablegram or electronic transmission
either sets forth or is submitted with information from which it can be
determined that the telegram, cablegram or other electronic transmission was
authorized by the stockholder."
Section 212(c)(2) makes it clear that electronically transmitted proxies
are permissible under Delaware law. Section 212(c) requires, however, as a
condition to the validity of any particular electronically transmitted proxy,
that such proxy either contain or be submitted with information from which it
can be determined by the inspectors of election that such proxy was authorized
by the stockholder. Section 212(c) does not specify the information which must
be contained in or submitted with electronically transmitted proxies in order to
satisfy this requirement.
You have advised us, and accordingly we have assumed, that the following
procedures will be employed in connection with the solicitation of electronic
proxies. As described above, the transfer agent will send, by United States
<PAGE>
Bell & Howell Company
April 1, 1997
Page 5
mail, to each record stockholder of the Company an individual proxy statement
together with a proxy card bearing a confidential personal identification
number assigned to such stockholder. Each such proxy staterent will invite
the stockholder, if the stockholder so wishes, to transmit a proxy over the
Internet. The personal identification number assigned to each record
stockholder will be known only to the transfer agent and his employees, and
will not be known or be made available by the transfer agent to the Company.
Stockholders who visit the Company's Home Page as indicated in the proxy
statement for the purpose of transmitting a proxy will be asked to provide
their personal identification number. The electronic proxy transmitted to the
transfer agent will include the personal identification number provided by
the stockholder, and the transfer agent will then verify the personal
identification number so provided by the stockholder is the correct number
for such stockholder. If the name and personal identification number are not
provided correctly, the proxy will not be voted.
We are also advised, and accordingly have assumed, that hard copies of
the electronic proxies will be delivered to the inspectors of election
appointed for the Annual Meeting together with a written description by the
Company of the foregoing procedures and that the proxies will indicate on
their faces whether or not the personal identification numbers were correctly
provided.
While there is no decision of a Delaware court determining the issue, and
accordingly the matter is not free from doubt, we believe that the procedures
described above to be utilized with respect to electronic proxies to be
transmitted over the Intemet on behalf of record holders are adequate to
enable a determination to be made by the inspectors of election whether or
not a particular proxy was authorized by the holder of record. As set forth
above, we
<PAGE>
Bell & Howell Company
April 1, 1997
Page 6
have been advised, and we assume, that electronic proxies submitted on behalf
of stockholders of record will set forth whether or not the personal
identification number was provided by the stockholder voting by proxy. In
PARSHALLE V. ROY, SUPRA, the Court of Chancery suggested that if the company
adopted some mechanism, such as the issuance of a confidential identification
number to be used in connection with the electronic transmission, such
procedures might have validated the electronically transmitted proxies used
in that case. ID., 567 A.2d at 27-28. Here, the personal identification
number procedure described above will be utilized. In addition, the fact that
the Company is not soliciting electronic transmission of proxies in the mass
media renders the entire process less subject to the potential for abuse
which was noted by the Delaware courts in PARSHALLE V. ROY, SUPRA, and
CONCORD FINANCIAL GROUP V. TRI-STATE MOTOR TRANSIT CO., SUPRA.
Based upon and subject to the foregoing, and subject to the
qualifications and limitations set forth hereinbelow, it is our opinion that
the procedures described hereinabove for the electronic transmission by
record holders of proxies and for the authentication thereof are permitted
under the General Corporation Law.
The foregoing opinion is limited to the General Corporation Law. We have
not considered and express no opinion on the effect of any other laws or the
laws of any other state or jurisdiction, including federal laws regulating
securities or other federal laws, or the rules and regulations of stock
exchanges or of any other regulatory body. In addition, we have not
considered, and express no opinion on, the validity of any particular proxies
which may be cast at the Annual Meeting. The opinion expressed herein is
solely for your benefit in connection with the matters described herein and
may not be relied upon by any other person, or for any other purpose, without
our prior written consent. We understand that you wish to furnish a copy of
this opinion to the Securities and Exchange Commission and we consent to your
doing so.
Richards, Layton & Finger
<PAGE>
BELL & HOWELL COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS MAY 14, 1997
The undersigned hereby constitutes and appoints David G. Brown and
P Gary L. Roubos, and each of them jointly and severally, proxies, with
R full power of substitution to vote all shares of Common Stock which the
O undersigned is entitled to vote at the Annual Meeting of Shareholders
X of Bell & Howell Company (the "Company") to be held on May 14, 1997, at
Y 5215 Old Orchard Road, Skokie, Illinois, or any adjournment thereof.
The undersigned acknowledges the receipt of Notice of the aforesaid
Annual Meeting and Proxy Statement, each dated April 16, 1997, grants
authority to any of said proxies, or their substitutes, to act in the
absence of others, with all the powers which the undersigned would
possess if personally present at such meeting, and hereby ratifies and
confirms all that said proxies, or their substitutes, may lawfully do
in the undersigned's name, place and stead. The undersigned instructs
said proxies, or any of them, to vote as set forth on the reverse side.
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE>
PLEASE MARK
/X/ VOTES AS IN
THIS EXAMPLE.
ALL PROXIES SIGNED AND RETURNED WILL BE VOTED OR NOT VOTED IN ACCORDANCE WITH
YOUR INSTRUCTIONS, BUT THOSE WITH NO CHOICE SPECIFIED WILL BE VOTED "FOR"
EACH OF THE NOMINEES FOR DIRECTOR NAMED BELOW.
1. Election of Directors
NOMINEES: David Bonderman, David G. Brown, J. Taylor Crandall, Daniel L.
Doctoroff, Nils A. Johansson, William E. Oberndorf, James P. Roemer, Gary L.
Roubos, John H. Scully and William J. White.
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
/ / / /
/ / ____________________________________
FOR all nominees except those whose name(s)
are written above.
2. On all other matters which may properly come before the meeting or any
adjournment thereof.
_______________________________________________________
/ / MARK HERE
FOR ADDRESS
CHANGE AND NOTE AT LEFT
NO POSTAGE REQUIRED IF THIS PROXY IS RETURNED
IN THE ENCLOSED ENVELOPE AND MAILED IN THE
UNITED STATES.
Please sign exactly as name appears hereon. Joint owners should
each sign. Persons signing in a representative or fiduciary
capacity should add their titles.
PLEASE SIGN BELOW, DATE AND RETURN PROMPTLY.
NAME: __________________________________
ADDRESS: _______________________________
CITY, STATE, ZIP _______________________
PHONE: _________________________________
NUMBER OF SHARES _______________________
