SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
SCHEDULE TO
(Rule 13e-4)
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
______________
BWAY CORPORATION
(Name of Subject Company (Issuer) and Filing Person (Offeror))
______________
Options Under Bway Corporation's
1995 Long-Term Incentive Plan
to Purchase Common Stock, Par Value $.01 Per Share,
Held by Option Holders
(Title of Class of Securities)
______________
056039100
(CUSIP Number of Underlying Class of Securities)
______________
copies to:
Kevin C. Kern Jeffrey L. Schulte, Esq.
Vice President, Administration and Heath D. Linsky, Esq.
Chief Financial Officer Morris, Manning & Martin
Bway Corporation 1600 Atlanta Financial Center
8607 Roberts Drive, Suite 250 3343 Peachtree Road, N.E.
Atlanta, Georgia 30350 Atlanta, Georgia 30326
(770) 645-4800 (404) 233-7000
(Name, address and telephone number of person
authorized to receive notices and
communications on behalf of filing person)
[X] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[_] third party tender offer subject to Rule 14d-1.
[X] issuer tender offer subject to Rule 13e-4.
[_] going-private transaction subject to Rule 13e-3.
[_] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [_]
[BWAY LOGO]
June 7, 2001
Subject Line: Introducing Bway's Stock Option Replacement Program
Because Bway is committed to developing additional incentive programs
for employees, it is pleased to announce a Stock Option Replacement Program for
the benefit of option holders whose stock options are currently underwater
(meaning their exercise or "strike" price is above the current market value of
Bway's common stock). The Stock Option Replacement Program is an opportunity for
eligible holders of options to choose whether they want to keep their current
options or have them replaced with a grant given at a later date that has the
potential for a lower strike price.
This letter gives an overview of the program. Bway's offer to exchange
new options for currently outstanding options has not yet begun. In several
days, Bway intends to furnish you with "Offer to Exchange" that describes the
program and a "Letter of Transmittal" that option holders will use if they want
to participate in the program.
Bway's offer will be made under the terms and subject to the conditions
of the Offer to Exchange and Letter of Transmittal. BEFORE YOU DECIDE WHETHER TO
TENDER ANY OF YOUR OPTIONS, YOU SHOULD CAREFULLY READ THE ENTIRE OFFER TO
EXCHANGE AND THE LETTER OF TRANSMITTAL WHEN THEY ARE DELIVERED TO YOU, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE EXCHANGE OFFER. BWAY WILL FILE
THESE MATERIALS WITH THE SEC AS PART OF A TENDER OFFER STATEMENT. YOU WILL BE
ABLE TO OBTAIN THESE MATERIALS AND OTHER DOCUMENTS FILED BY BWAY WITH THE SEC
FOR FREE FROM THE SEC'S WEB SITE AT www.sec.gov.
The Stock Option Replacement Program - What It Is
The Stock Option Replacement Program will allow eligible holders of
options, including employees and directors, to turn in options granted under the
1995 Long-Term Incentive Plan, as amended and restated (the "Plan"), that have
an exercise price of $9.00 or higher per share, in exchange for Bway committing
to grant new options at a later date. That date will be on or about the first
business day that is at least six months and one day following the date Bway
cancels the tendered options. (The "Cancellation Date" is the day immediately
following the deadline for participation.) For example, if the Cancellation
Date, or day that Bway accepts and cancels tendered options is during July 2001,
Bway will grant the new options during January 2002. Under this program, for
every option a holder turns in, he or she will receive one option (subject to
certain adjustments that may occur and that will be described in the Offer to
Exchange) at a strike price equal to the fair market value of Bway common stock
on the grant date.
For example, if a holder returns a grant of 3,000 options with a strike
price of $15.00 per share prior to the scheduled expiration date in early July
2001, that holder will receive a new grant of 3,000 stock options in early
January 2002 with a strike price equal to the fair market value of Bway common
stock on the future grant date.
The new options will have an exercise schedule beginning on the date of
grant, currently scheduled to be in January 2002. 50% of the new options will be
immediately exercisable on the date of grant and 50% of the new options will be
exercisable on the first anniversary of the date of grant. That means that the
new grant will be fully exercisable in one year, subject to the terms and
conditions discussed below. Please note that this exercise schedule will apply
to all new options granted under this program, even those issued in exchange for
currently exercisable options. Stock option grants that you choose not to tender
will continue to be exercisable according to their current schedule. The new
options will expire 10 years from the date of grant.
For option grants under the Plan tendered pursuant to the Stock Option
Replacement Program, new options will be granted pursuant to, and be subject to
the terms and conditions of, the Plan and a stock option agreement with Bway
that you will have to sign on the new grant date.
Who is Eligible
All holders of options, including employees and directors, are eligible
to tender their options for exchange.
How it Works
If you choose to replace your stock options, please keep in mind the
following:
. All unexercised options with an exercise price of $9.00 per share or
higher, whether exercisable or not exercisable, can be surrendered for
exchange.
. Only 50% of the new options will be immediately exercisable, even if you
surrender vested options for replacement.
How to Participate
The Offer to Exchange and Letter of Transmittal that we plan to deliver
to you shortly will explain what you need to do to participate in the Stock
Option Replacement Program. The deadline for participation will be 20 business
days after the Offer to Exchange and Letter of Transmittal is distributed by
Bway. No action is required in response to this letter. However, you should
review the Offer to Exchange and Letter of Transmittal documents closely when
they arrive in a few days.
Frequently Asked Questions
Why is Bway giving its eligible option holders the opportunity to replace
current underwater options for new options?
Bway realizes that many current outstanding options have strike prices
that are significantly higher than the current market price of the common stock.
Because of that, those options may not currently be providing the long-term
performance incentives that Bway would like its key team members to have. This
replacement program gives option holders a choice to receive options that over
time may have a greater potential to increase in value.
If I tender options, why do I have to wait six months and one day for a new
grant? Why can't I get a new grant immediately at the current stock price?
So that we may avoid undesirable accounting treatment, accounting
literature requires that we wait a minimum of six months and one day before we
issue the replacement options. Further, we are not allowed to establish the
exercise price for such replacement options prior to the actual issuance date if
we are to avoid such unfavorable accounting treatment for this replacement
program. This program balances our desire to make an opportunity available for
key team members while not creating a program that is fiscally irresponsible.
Why doesn't Bway simply reprice current options?
Based on accounting guidance, "repricing" existing options would result
in the adverse accounting treatment referred to above and would cause Bway to
incur additional compensation expense each quarter until such repriced options
are exercised, cancelled or expired. Also, this program lets option holders make
an individual decision about what they want to do with their options - repricing
requires that everyone participate whether they want to or not.
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What do we expect the stock price to be in January of next year when the new
options are granted?
There's no way to predict what the stock price will be in January 2002,
just as there's no way to predict market volatility over the next six months.
It's possible that the market price of Bway common stock could increase so that
the exercise price of your replacement options granted in January 2002 could be
higher than the current strike price of the options you surrender for exchange.
You need to make your decision on participating in the Stock Option
Replacement Program based on the strike price of your current options, your
expectations regarding the performance of our stock between now and January
2002, the revised exercise schedule, the deferral of additional grants during
the waiting period and other factors disclosed in the Offer to Exchange.
How can I find out the size and strike price of my current option grants?
We will send you a letter indicating the size and strike price of your
current option grants. In addition, you can review your current stock option
agreement(s) or contact Kevin C. Kern at (770) 645-4800.
What if I tender options, but I am no longer with Bway (for any reason,
including voluntary termination, involuntary termination or death) before the
new options are granted in January 2002?
If for any reason you are not eligible to receive options pursuant to
the Plan (if you are no longer an employee or director of Bway) from the date
you tender options through the date we grant the new options, for any reason,
you will not receive any new options or any other consideration for your
tendered options.
What if I tender options and Bway undergoes a change of control, such as a
merger, prior to the grant of the new options?
If we undergo a change of control, such as a merger, prior to the grant
of the new options, it would be our intent to negotiate the terms of that change
of control transaction such that you would receive options to purchase
securities of the acquiror. However, we have the right to take any actions we
deem necessary or appropriate to complete a transaction that our board of
directors believes is in our best interest and our stockholders' best interest,
and this could result in your not being granted the new options.
What happens to other grants I may have that I choose not to replace?
Nothing. They remain outstanding and retain their current exercise
price and continue to vest. The portion that is exercisable may be exercised
during the period after the Cancellation Date and prior to the grant date of the
new options.
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