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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the
Securities Exchange Act of 1934)
UNISYS CORPORATION
(Name of the Issuer and Person Filing Statement)
8 1/4% Convertible Subordinated Notes due 2006
(Title of Class of Securities)
909214 AZ 1
(CUSIP Number of Class of Securities)
Harold S. Barron
Senior Vice President, Secretary and General Counsel
Unisys Corporation
Township Line and Union Meeting Roads
Blue Bell, Pennsylvania 19424
(215) 986-5299
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of Person Filing Statement)
Copies to:
Nancy S. Sundheim, Esquire Gary L. Sellers, Esquire
Unisys Corporation Simpson Thacher & Bartlett
Township Line and Union Meeting Roads 425 Lexington Avenue
Blue Bell, Pennsylvania 19424 New York, New York 10017
November 7, 1997
(Date Tender Offer First Published,
Sent or Given to Security Holders)
CALCULATION OF FILING FEE
Transaction Valuation* Amount of Filing Fee
$613,739,700 $122,748
* Calculated pursuant to Rule 0-11(a)(4) under the Securities Act of 1933, as
amended, based on the average of the high and low prices of the 8 1/4%
Convertible Subordinated Notes due 2006 reported in the over-the-counter market
on October 31, 1997. Assumes that $294 million in principal amount of the
outstanding 8 1/4% Convertible Subordinated Notes due 2006 will be accepted for
conversion pursuant to the Conversion Offer.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
Amount Previously Paid: Not Applicable
Form or Registration No.: Not Applicable
Filing Party: Not Applicable
Date Filed: Not Applicable
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Item 1. SECURITY AND ISSUER.
(a) The name of the issuer is Unisys Corporation, a Delaware
corporation (the "Company"). The Company's principal
executive office is located at Township Line and Union
Meeting Roads, Blue Bell, Pennsylvania 19424 (telephone
number (215) 986-4011).
(b) This schedule relates to the offer by the Company to pay
a cash premium equal to $155.00 plus accrued and unpaid
interest (the "Conversion Premium") for each $1,000 in
principal amount of the Company's 8 1/4% Convertible
Subordinated Notes due 2006 (the "2006 Notes") that are
converted into Common Stock, par value $.01 per share (the
"Common Stock"), of the Company, upon the terms and subject
to the conditions set forth in the Offer of Premium Upon
Conversion dated November 7, 1997 (the "Offer of
Premium") and the related Notice of Special Conversion
(the "Notice of Special Conversion") (copies of which are
attached hereto as Exhibits (a)(1) and (a)(2),
respectively, and which together constitute the
"Conversion Offer"). The information set forth under the
captions "The Conversion Offer--Terms of Conversion
Offer" and "The Conversion Offer--Security Ownership of
2006 Notes" in the Offer of Premium is incorporated
herein by reference.
(c) The information set forth under the caption "Price Range of
Common Stock and 2006 Notes and Dividend Policy" in the
Offer of Premium is incorporated herein by reference.
(d) Inapplicable.
Item 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth under the caption "Source and
Amount of Funds" in the Offer of Premium is incorporated
herein by reference.
Item 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The information set forth under the captions "The Conversion
Offer--Purpose of the Conversion Offer" and "The Conversion Offer--
Capitalization" in the Offer of Premium is incorporated herein by reference.
(a) The information set forth under the caption "The Conversion
Offer--Purpose of the Conversion Offer" in the Offer of
Premium is incorporated herein by reference.
(b)-(d) None.
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(e) The information set forth under the captions
"Capitalization" and "Unaudited Pro Forma Consolidated
Financial Information" in the Offer of Premium is
incorporated herein by reference.
(f)-(j) None.
Item 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth under the caption "Miscellaneous" in the Offer of
Premium is incorporated herein by reference.
Item 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE ISSUER'S SECURITIES.
Except as stated under the caption "The Conversion Offer--Fees and Expenses"
in the Offer of Premium, which is incorporated herein by reference, there are no
contracts, arrangements, understandings or relationships relating, directly or
indirectly, to the Conversion Offer (whether or not legally enforceable) between
the Company or any of its executive officers or directors and any person with
respect to any securities of the Company.
Item 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under the caption "The Conversion Offer--Fees and
Expenses" in the Offer of Premium is incorporated herein by reference.
Item 7. FINANCIAL INFORMATION.
(a) The information set forth under the captions "Selected
Historical Consolidated Financial and Operating
Information," "Capitalization" and "Incorporation of Certain
Documents by Reference" in the Offer of Premium is
incorporated herein by reference.
(b) The information set forth under the caption "Unaudited Pro
Forma Consolidated Financial Information" in the Offer of
Premium is incorporated herein by reference.
Item 8. ADDITIONAL INFORMATION.
(a) None.
(b) There are no applicable regulatory requirements which must
be complied with or approvals which must be obtained in
connection with the Conversion Offer other than compliance
with the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder, the Securities
Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder including, without
limitation, Rule 13e-4 promulgated thereunder, and the
requirements of state securities or "blue sky" laws.
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(c) Inapplicable.
(d) None.
(e) None.
Item 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)1 Offer of Premium dated November 7, 1997.
(a)2 Form of Notice of Special Conversion, together with
Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)3 Press Release issued by the Company on November 7, 1997
(a)4 Form of Letter to Clients.
(a)5 Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)6 Form of Notice of Guaranteed Delivery.
(a)7 Form of Letter to Noteholders from Lawrence A. Weinbach,
Chairman, Chief Executive Officer and President of the
Company, dated November 7, 1997.
(c)1 Form of Conversion Offer Advisor Agreement between the
Company and Bear, Stearns & Co. Inc.
(c)2 Form of Conversion Agent Agreement between the Company
and The Bank of New York.
(c)3 Form of Information Agent Agreement between the Company
and Georgeson & Company Inc.
(f)1 Questions and Answers.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
UNISYS CORPORATION
Dated: November 7, 1997 By: /s/Lawrence A. Weinbach
----------------------------
Lawrence A. Weinbach
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Exhibit (a)1
OFFER OF PREMIUM
UNISYS CORPORATION
OFFER OF PREMIUM UPON CONVERSION
OF UP TO $294,000,000 IN PRINCIPAL AMOUNT OF ITS
8 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2006
($299,000,000 IN PRINCIPAL AMOUNT OUTSTANDING)
THE CONVERSION OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON MONDAY, DECEMBER 8, 1997, UNLESS EXTENDED.
Unisys Corporation, a Delaware corporation (the "Company"), hereby offers,
upon the terms and subject to the conditions set forth in this Offer of Premium
Upon Conversion (the "Offer of Premium") and the accompanying Notice of Special
Conversion (the "Notice of Special Conversion" which, together with the Offer of
Premium, constitute the "Conversion Offer") to pay a cash premium (the
"Conversion Premium") equal to $155.00 plus accrued and unpaid interest from
September 15, 1997 to the Expiration Date (as defined below) for each $1,000 in
principal amount of its 8 1/4% Convertible Subordinated Notes due 2006 (the
"2006 Notes," the holder of such a 2006 Note being referred to herein as a
"Noteholder" or "Holder") that is converted into Common Stock, par value $.01
per share (the "Common Stock"), of the Company prior to the Expiration Date. A
Noteholder whose 2006 Notes are accepted for conversion pursuant to the
Conversion Offer will receive 145.4545 shares of Common Stock (based upon the
2006 Notes' original conversion price of $6.875 per share of Common Stock) and
the Conversion Premium for each $1,000 in principal amount of 2006 Notes which
is accepted by the Company for conversion. Noteholders are not entitled to
appraisal rights in connection with the Conversion Offer.
The Conversion Offer, proration period and withdrawal rights will expire at
5:00 p.m., New York City time, on Monday, December 8, 1997, or, if the
Conversion Offer is extended by the Company, in its sole discretion, the latest
date and time to which the Conversion Offer is extended (the "Expiration Date").
Tenders of 2006 Notes for conversion may be withdrawn at any time prior to the
Expiration Date and, unless accepted for conversion by the Company, may be
withdrawn at any time after forty business days after the date of this Offer of
Premium. If more than $294 million in principal amount of 2006 Notes is properly
tendered for conversion and not withdrawn prior to the Expiration Date, the
Company will accept 2006 Notes for conversion pursuant to the Conversion Offer
on a pro rata basis (subject to certain adjustments to avoid conversions of 2006
Notes other than in increments of $1,000). Any 2006 Notes which are tendered but
not accepted for conversion pursuant to the Conversion Offer will be returned to
the tendering Noteholder. Holders of 2006 Notes which are not converted into
Common Stock pursuant to the Conversion Offer will not be entitled to receive
the Conversion Premium upon conversion of such 2006 Notes. The Company expressly
reserves the right to (i) extend, amend or modify the terms of the Conversion
Offer in any manner and (ii) withdraw or terminate the Conversion Offer at any
time for any reason. See "The Conversion Offer -- Expiration Date; Extensions;
Amendments; Termination."
The Common Stock and the 2006 Notes are traded on the New York Stock
Exchange (the "NYSE") under the symbols "UIS" and "UIS 8C06," respectively. On
November 6, 1997, the last reported sale price of the Common Stock on the NYSE
was $13 13/16 per share and the last reported sale price of the 2006 Notes in
the over-the-counter market was $212 per $100 in principal amount of 2006 Notes.
SEE "RISK FACTORS" COMMENCING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE CONVERSION OFFER AND AN
INVESTMENT IN THE COMMON STOCK.
NEITHER THIS TRANSACTION NOR THE SECURITIES TO BE ISSUED UPON CONVERSION OF THE
2006 NOTES HAVE BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS OFFER OF PREMIUM. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Offer of Premium is November 7, 1997.
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Neither the Company nor its Board of Directors makes any recommendation
that Holders tender or refrain from tendering their 2006 Notes pursuant to the
Conversion Offer and no one has been authorized to make any such recommendation
on behalf of the Company. Each Holder should decide for himself or herself
whether to tender 2006 Notes pursuant to the Conversion Offer. This is a matter
for each Holder to determine after consultation with his or her advisors,
including tax counsel, on the basis of his or her own financial position and
requirements.
The Conversion Offer is being made by the Company in reliance on the
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), afforded by Section 3(a)(9) thereof. The
Company, therefore, will not pay any commission or other remuneration to any
broker, dealer, salesman or other person for soliciting conversions of 2006
Notes. Employees of the Company will answer inquiries concerning the Conversion
Offer, but they will not receive additional compensation therefor. Georgeson &
Company Inc., as the Information Agent, and The Bank of New York, as the
Conversion Agent, will assist holders of 2006 Notes in obtaining copies of the
materials relating to the Conversion Offer.
The Company has made no arrangements for and has no understanding with any
broker, dealer, salesman or other person regarding the solicitation of
conversions hereunder, and no person has been authorized to give any information
or to make any representation not contained or incorporated by reference in this
Offer of Premium in connection with the Conversion Offer. If given or made, such
information or representation must not be relied upon as having been authorized
by the Company or any other person. Neither the delivery of this Offer of
Premium nor any conversion pursuant to the Conversion Offer shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company and its subsidiaries since the respective dates as of
which information is given herein.
This Offer of Premium does not constitute an offer or solicitation to any
person in any jurisdiction in which such offer or solicitation would be
unlawful. The Conversion Offer is not being made to, and tenders will not be
accepted from, Noteholders in any jurisdiction in which the Conversion Offer or
the acceptance thereof would not be in compliance with the laws of such
jurisdiction.
CONVERSION AGENT, INFORMATION AGENT AND ASSISTANCE
The Bank of New York is the Conversion Agent in connection with the
Conversion Offer. All documents necessary to effect a conversion of 2006 Notes
pursuant to the Conversion Offer, including the Notice of Special Conversion,
should be addressed to the Conversion Agent at one of its addresses set forth on
the back cover of this Offer of Premium. Any questions or requests for
assistance may be directed to the Conversion Agent at The Bank of New York,
Floor 7E, 101 Barclay Street, New York, New York 10286, Attn: Enrique Lopez,
Reorganization Section; telephone: (212) 815-2742. Georgeson & Company Inc. is
the Information Agent in connection with the Conversion Offer. Any questions or
requests for assistance may also be directed to the Information Agent at Wall
Street Plaza, New York, New York 10005; telephone: (800) 223-2064. Holders of
2006 Notes requiring additional information or assistance may contact Unisys
Investor Relations, at Township Line and Union Meeting Roads, Blue Bell,
Pennsylvania 19424; telephone: (215) 986-6999.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith is required to file periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission")
relating to its business, financial statements and other matters.
The Company has filed with the Commission an Issuer Tender Offer Statement
on Schedule 13E-4 under the Exchange Act with respect to the Conversion Offer
(the "Tender Offer Statement"). As permitted by the rules and regulations of the
Commission, this Offer of Premium, which constitutes a part of the Tender Offer
Statement, does not contain certain information, exhibits and undertakings
contained in the Tender Offer Statement. Such additional information may be
inspected at and obtained from the Commission in the manner set forth below. For
further information, reference is made to the Tender Offer Statement and to the
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exhibits thereto. Statements contained herein concerning any such documents are
not necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Tender Offer Statement. Each such
statement is qualified in its entirety by such reference.
Such periodic reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission located in the Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, New York,
New York 10048. Copies of such material may also be obtained from the Commission
at prescribed rates by addressing written requests for such copies to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission also maintains a website that contains reports, proxy
statements and other information regarding the Company. The address of the
website is http://www.sec.gov. Such reports, proxy statements and other
information are also available for inspection at the offices of the NYSE, 20
Broad Street, New York, New York 10005.
INFORMATION INCORPORATED BY REFERENCE
The following documents have been filed with the Commission pursuant to the
Exchange Act and are incorporated by reference into this Offer of Premium:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
2. The Company's Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 1997, June 30, 1997 and September 30, 1997.
3. The Company's Current Report on Form 8-K dated October 7, 1997.
4. The description of the Company's Common Stock contained in the
registration statement of Burroughs Corporation ("Burroughs"), the
predecessor to the Company, on Form 8-B dated May 22, 1984 (as amended on
Form 8 dated May 7, 1991), filed pursuant to Section 12 of the Exchange
Act, including any amendment or report filed for the purpose of updating
such description.
5. The description of the Company's Preferred Share Purchase Rights
contained in the Registration Statement of Burroughs on Form 8-A dated
March 11, 1986 (as amended on Forms 8 dated, respectively, April 16, 1986,
July 8, 1987 and May 7, 1991 and on Form 8-A/A dated February 26, 1996),
filed pursuant to Section 12 of the Exchange Act, including any amendment
or report filed for the purpose of updating such description.
6. The description of the 2006 Notes contained in the Company's
prospectus dated March 4, 1996 filed pursuant to Rule 424(b) of the
Securities Act of 1933, as amended (the "Securities Act").
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of the Conversion Offer shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents. Any statements contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes hereof to the
extent that a statement contained herein or in any other subsequently filed
document which also is incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed to
constitute a part hereof except as so modified or superseded.
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The Company will provide without charge to each person to whom a copy of
this Offer of Premium is delivered, on written or oral request, copies of any or
all documents incorporated by reference herein (other than the exhibits thereto
unless such exhibits are incorporated specifically by reference therein).
Requests should be directed to Unisys Corporation, Township Line and Union
Meeting Roads, Blue Bell, Pennsylvania 19424, Attention: Financial
Communications; Telephone (215) 986-5777. In order to ensure timely delivery of
the documents, any such request should be made not later than five business days
prior to the Expiration Date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Conversion Agent, Information Agent and Assistance.................................... 2
Available Information................................................................. 2
Information Incorporated by Reference................................................. 3
Summary............................................................................... 5
Recent Developments................................................................... 8
Risk Factors.......................................................................... 8
Price Range of Common Stock and 2006 Notes and Dividend Policy........................ 11
Capitalization........................................................................ 12
Selected Historical Consolidated Financial and Operating Information.................. 13
Unaudited Pro Forma Consolidated Financial Information................................ 14
The Conversion Offer.................................................................. 15
General............................................................................. 15
Purpose of the Conversion Offer..................................................... 15
Terms of the Conversion Offer....................................................... 15
Proration........................................................................... 16
Expiration Date; Extensions; Amendments; Termination................................ 17
Procedures for Acceptance of Conversion Offer....................................... 17
Withdrawal of Tendered 2006 Notes................................................... 19
Notice of Special Conversion........................................................ 20
Conversion Agent and Information Agent.............................................. 20
Financial Advisor................................................................... 21
Accrued Interest on 2006 Notes...................................................... 21
Security Ownership of 2006 Notes.................................................... 21
Fees and Expenses................................................................... 21
Description of Capital Stock.......................................................... 21
Transfer Agent and Registrar.......................................................... 26
Source and Amount of Funds............................................................ 26
Certain Federal Income Tax Considerations............................................. 26
Miscellaneous......................................................................... 29
</TABLE>
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SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the detailed information and financial statements, including the
notes thereto, contained elsewhere in this Offer of Premium or incorporated
herein by reference.
THE COMPANY
The Company is an information management company that provides information
services, technology, software and customer support on a worldwide basis. The
Company operates in the information management business segment.
The Company was incorporated in February 1984 under the laws of Delaware
and is the successor by merger to Burroughs Corporation, a Michigan corporation
incorporated in 1905. In November 1986, Sperry Corporation, a Delaware
corporation incorporated in 1955, was merged with and into the Company, and the
Company's name was changed to Unisys Corporation.
The principal executive offices of the Company are located at Township Line
and Union Meeting Roads, Blue Bell, Pennsylvania 19424. The Company's telephone
number is (215) 986-4011.
THE CONVERSION OFFER
PURPOSE OF CONVERSION OFFER
The principal purpose of the Conversion Offer is to improve the Company's
finances by reducing the Company's debt and interest expense and to provide the
Company with additional financial flexibility. See "The Conversion
Offer -- Purpose of the Conversion Offer".
THE CONVERSION OFFER
Upon the terms and subject to the conditions set forth herein and in the
accompanying Notice of Special Conversion, the Company is offering to pay the
Conversion Premium for each $1,000 in principal amount of the 2006 Notes that is
converted into Common Stock pursuant to the Conversion Offer prior to the
Expiration Date; provided, however, that the Company will only accept for
conversion pursuant to the Conversion Offer up to $294 million in principal
amount of the 2006 Notes. A Noteholder whose 2006 Notes are tendered for
conversion pursuant to the Conversion Offer will receive 145.4545 shares of
Common Stock (based upon the 2006 Notes' original conversion price of $6.875 per
share of Common Stock) and the Conversion Premium for each $1,000 in principal
amount of 2006 Notes which are accepted by the Company for conversion. See "The
Conversion Offer -- Terms of the Conversion Offer."
EXPIRATION DATE; WITHDRAWALS
Subject to the conditions of the Conversion Offer, the Company will pay the
Conversion Premium in connection with 2006 Notes validly tendered (and not
withdrawn) prior to 5:00 p.m., New York City time, on the Expiration Date. The
Conversion Offer will expire on the Expiration Date. Tenders of 2006 Notes
pursuant to the Conversion Offer may be withdrawn at any time prior to the
Expiration Date and, unless accepted for conversion by the Company pursuant to
the Conversion Offer, may be withdrawn at any time after forty business days
after the date of this Offer of Premium. See "The Conversion Offer -- Withdrawal
of Tendered 2006 Notes" and "-- Expiration Date; Extensions; Amendments;
Termination."
PRORATION
If more than $294 million in principal amount of 2006 Notes is tendered for
conversion pursuant to the Conversion Offer and not withdrawn prior to the
Expiration Date, then the Company will, upon the terms and subject to the
conditions of the Conversion Offer, accept 2006 Notes for conversion pursuant to
the
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Conversion Offer on a pro rata basis (with adjustments to avoid conversions of
2006 Notes other than in increments of $1,000). Any 2006 Notes which are
tendered but not accepted for conversion pursuant to the Conversion Offer will
be returned to the tendering Noteholder. Holders of 2006 Notes which are not
converted into Common Stock pursuant to the Conversion Offer will not be
entitled to receive the Conversion Premium upon conversion of such 2006 Notes.
See "The Conversion Offer -- Proration."
EXTENSIONS, AMENDMENTS AND TERMINATION
The Company expressly reserves the right to (i) extend, amend or modify the
terms of the Conversion Offer in any manner and (ii) withdraw or terminate the
Conversion Offer at any time for any reason. See "The Conversion
Offer -- Expiration Date; Extensions; Amendments; Termination."
PROCEDURES FOR ACCEPTANCE OF CONVERSION OFFER
Each Holder of a 2006 Note wishing to accept the Conversion Offer and
receive the Conversion Premium must (i) properly complete and sign the Notice of
Special Conversion, or a facsimile thereof (all references in this Offer of
Premium to the Notice of Special Conversion shall be deemed to include a
facsimile thereof), in accordance with the instructions contained herein and
therein, together with any required signature guarantees, and deliver the same
to The Bank of New York, as Conversion Agent, at either of its addresses set
forth on the back cover of this Offer of Premium, and cause certificates for the
2006 Notes to be received by the Conversion Agent at one of such addresses; (ii)
transfer such 2006 Notes by book-entry transfer pursuant to The Depository Trust
Company's Automated Tender Offer Program procedures (and a confirmation of such
book-entry transfer must be received by the Conversion Agent prior to the
Expiration Date); or (iii) comply with the guaranteed delivery procedures
described herein. See "The Conversion Offer -- Procedures for Acceptance of
Conversion Offer."
SPECIAL PROCEDURES FOR BENEFICIAL OWNERS
Any beneficial owner whose 2006 Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to accept the Conversion Offer should contact such registered holder promptly
and instruct such registered holder to tender on such beneficial owner's behalf.
If such beneficial owner wishes to tender on its own behalf, such owner must,
prior to completing and executing a Notice of Special Conversion and delivering
its 2006 Notes, either make appropriate arrangements to register ownership of
the 2006 Notes in such owner's name or obtain a properly completed assignment
from the registered holder. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Date. See "The Conversion Offer -- Procedures for Acceptance of Conversion
Offer."
GUARANTEED DELIVERY PROCEDURES
If a Holder desires to accept the Conversion Offer and time will not permit
a Notice of Special Conversion or certificates representing 2006 Notes to reach
the Conversion Agent before the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected in
accordance with the guaranteed delivery procedures set forth in "The Conversion
Offer -- Procedures for Acceptance of Conversion Offer."
ACCEPTANCE OF 2006 NOTES AND DELIVERY OF CONSIDERATION
Upon the terms and subject to the conditions of the Conversion Offer,
including the reservation by the Company of the right to withdraw or terminate
the Conversion Offer and certain other rights, the Company will accept for
conversion pursuant to the Conversion Offer up to $294 million in principal
amount of the 2006 Notes that are properly tendered in the Conversion Offer and
not withdrawn prior to the Expiration Date. Subject to such terms and
conditions, the Common Stock and the Conversion Premium will be delivered as
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promptly as practicable following the Expiration Date. See "The Conversion
Offer -- Terms of the Conversion Offer" and "-- Expiration Date; Extensions;
Amendments; Termination."
ACCRUED INTEREST ON 2006 NOTES
Subject to the terms and conditions of the Conversion Offer, interest
accrued on the 2006 Notes from September 15, 1997 to the Expiration Date will be
included in the Conversion Premium. No interest will accrue or be paid on the
Conversion Premium. The 2006 Notes which are not tendered or which are not
accepted for conversion pursuant to the Conversion Offer will continue to
receive interest in accordance with the 2006 Notes.
COMMON AND PREFERRED STOCK
As of September 30, 1997, there were (i) 360.0 million authorized shares of
Common Stock, of which approximately 175.8 million were issued and outstanding
and approximately 151.0 million were reserved for issuance upon conversion of
outstanding securities (including the 2006 Notes) or pursuant to various
employee benefit plans and (ii) 40.0 million authorized shares of Preferred
Stock, par value $1 per share, of which the Company's Board of Directors has
authorized the issuance of 30.0 million shares of Series A Cumulative
Convertible Preferred Stock (the "Series A Preferred Stock") and 1.5 million
shares of Junior Participating Preferred Stock (the "Junior Preferred Stock")
and of which approximately 28.4 million shares of Series A Preferred Stock and
no shares of Junior Preferred Stock were issued and outstanding. After September
30, 1997, approximately 33.7 million shares of Common Stock previously reserved
for issuance were issued in connection with the call for redemption of the
Company's 8 1/4% Convertible Subordinated Notes due 2000 (the "2000 Notes"). See
"Recent Developments." If $294 million in principal amount of the 2006 Notes is
converted pursuant to the Conversion Offer, approximately 42.8 million of the
shares of Common Stock previously reserved for issuance upon conversion of the
2006 Notes will be issued and outstanding. See "Description of Capital Stock."
MARKET PRICES
The Common Stock is listed on the NYSE under the symbol "UIS", and the
Common Stock issuable upon conversion of the 2006 Notes has been listed for
trading on the NYSE upon official notice of issuance. The 2006 Notes are also
listed on the NYSE under the symbol "UIS 8C06". On November 6, 1997, the last
reported sale price of the Common Stock on the NYSE was $13 13/16 per share and
the last reported sale price of the 2006 Notes in the over-the-counter market
was $212 per $100 in principal amount of 2006 Notes.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
For a discussion of certain federal income tax consequences, see "Certain
Federal Income Tax Considerations."
UNTENDERED 2006 NOTES
Holders of 2006 Notes who do not tender their 2006 Notes in the Conversion
Offer or whose 2006 Notes are not accepted for conversion will continue to hold
such 2006 Notes and will be entitled to all of the rights, and will be subject
to all of the limitations, applicable thereto. To the extent that 2006 Notes are
converted in the Conversion Offer, the trading market for, and liquidity of, the
remaining 2006 Notes may become more limited. See "Risk Factors -- Certain
Consequences to Non-Tendering Holders."
CONVERSION AGENT AND INFORMATION AGENT
The Bank of New York has been appointed as Conversion Agent in connection
with the Conversion Offer. Questions and requests for assistance, requests for
additional copies of this Offer of Premium or of the Notice of Special
Conversion and requests for Notices of Guaranteed Delivery should be directed to
Georgeson & Company Inc., which has been retained by the Company to act as
Information Agent for the Conversion Offer. The addresses and telephone numbers
of the Conversion Agent and Information Agent are set forth on the back cover of
this Offer of Premium.
7
<PAGE> 8
RECENT DEVELOPMENTS
On September 23, 1997, the Company announced the election of Lawrence A.
Weinbach as the Company's Chairman, President and Chief Executive Officer. Mr.
Weinbach is former managing partner/chief executive of Andersen Worldwide.
On October 7, 1997, the Company called all $345 million outstanding
principal amount of the 2000 Notes for redemption on October 27, 1997. The 2000
Notes were convertible, prior to the close of business on October 27, 1997 (the
"Conversion Expiration Time"), into an aggregate of approximately 33.7 million
shares of Common Stock. In connection with the call for redemption, the Company
entered into a standby arrangement with an investment bank (the "Purchaser")
providing that, if fewer than all of the 2000 Notes were surrendered for
conversion prior to the Conversion Expiration Time, the Purchaser would purchase
from the Company such number of shares of Common Stock as would have been
issuable upon conversion of such unsurrendered 2000 Notes. Prior to the
Conversion Expiration Time, approximately $344 million in principal amount of
the 2000 Notes were converted into approximately 33.6 million shares of Common
Stock. The Purchaser purchased an additional 0.1 million shares of Common Stock
pursuant to the standby arrangement, and the proceeds were used by the Company
to effect the redemption of the 2000 Notes not surrendered for conversion. As a
result, no 2000 Notes are currently outstanding, and the Company has issued all
of the approximately 33.7 million shares of Common Stock previously reserved for
issuance in respect thereof.
RISK FACTORS
This Offer of Premium contains or incorporates by reference certain
forward-looking statements, as defined in the Private Securities Litigation
Reform Act of 1995. All forward-looking statements rely on assumptions and are
subject to risks, uncertainties and other factors that could cause the Company's
actual results to differ materially from expectations. These include, but are
not limited to, the risk factors set forth below. In addition to the other
information contained and incorporated by reference herein, the following risk
factors should be considered carefully in evaluating the Company and its
business before tendering 2006 Notes pursuant to the Conversion Offer.
COMPETITIVE MARKETPLACE
The Company operates in an industry characterized by aggressive
competition, rapid technological change, evolving technology standards and short
product life cycles. The Company's competitors include computer hardware
manufacturers, software providers and information services companies, many of
which have greater financial and other resources than the Company and are
substantially less leveraged. The Company competes primarily on the basis of
product performance, service, technological innovation and price. Future
operating results will depend on the Company's ability to design, develop,
introduce, deliver or obtain new and innovative products and services on a
timely and cost-effective basis; on its ability to mitigate the effects of
competitive pressures and volatility in the information technology and services
market on revenues, pricing and margins; and on its ability to effectively
manage the shift of its business mix away from traditional high margin product
and services offerings.
HIGH LEVERAGE AND CASH REQUIREMENTS
At both September 30, 1997 and December 31, 1996, the Company had
approximately $2.3 billion in principal amount of debt (inclusive of both the
2006 Notes and the 2000 Notes), an increase of approximately $400 million from
December 31, 1995. Total interest expense for the nine months ended September
30, 1997 and for the full year 1996 was $179.4 million and $249.7 million,
respectively. Long-term debt of $213.0 million is scheduled to mature in 1998.
At December 31, 1996, the Company had outstanding $1.6 billion of Series A,
B and C convertible preferred stock. Dividends paid on preferred stock in 1996
amounted to $120.8 million ($106.5 million -- Series A; $14.3 million -- Series
B and C). The Company redeemed all $150 million of its outstanding Series B and
C preferred stock for cash during the first half of 1997.
8
<PAGE> 9
Cash requirements for the restructuring actions discussed below are
expected to be approximately $210 million in 1997 and a total of $120 million in
1998 and thereafter. Although the Company expects annualized savings generated
by the restructuring actions to more than offset cash requirements, several
factors, particularly the timing of implementation of the remaining actions,
could cause actual cash requirements and savings to differ from expectations.
During the first nine months of 1997, net cash used for continuing
operations was $463.2 million. For the year 1996, net cash used for continuing
operations was $64.6 million. In 1996, proceeds from the issuance of debt
exceeded principal payments of debt by $373.3 million. During 1995, net cash
used for continuing operations was $412.4 million. In 1995, discontinued
operations provided cash of $658.3 million, primarily from the sale of the
Company's defense systems business.
In June 1997, the Company entered into a two-year $200 million revolving
credit facility replacing the prior one-year facility. The facility includes
certain financial tests that must be met as conditions to a borrowing and
provides that no loans may be outstanding for 20 consecutive days in each
quarter. The facility may not be used to refinance other debt. The amount the
Company may borrow at any given time is dependent upon the amount of certain of
its accounts receivable and inventory.
The Company may require continued access to financing sources to meet its
cash requirements for debt maturities, restructurings and operating activities.
There can be no assurance that such access will always be available to the
Company or that the Company would be permitted to incur additional indebtedness
under its then existing set of restrictive covenants.
RESTRUCTURINGS AND NET LOSSES
The Company operates in an industry characterized by ongoing dramatic
changes, including, in the case of the Company, a shift from higher margin to
lower margin products and services. In order to improve its operating results,
the Company has moved aggressively to realign its operations to reflect the
rapidly changing market for information processing products and services. In
1995, the Company reported a net loss of $624.6 million ($4.35 per share), which
included a fourth quarter pretax restructuring charge of $717.6 million,
primarily relating to the internal realignment of the Company into three
operating units and covering work force reductions, product and program
discontinuances and consolidation of office facilities and manufacturing
capacity. For the year ended December 31, 1996, the Company reported net income
of $49.7 million, or a loss of $0.41 per share after preferred dividends. In the
fourth quarter of 1996, the Company reversed certain reserves established under
the 1995 restructuring plan, due to lower-than-anticipated costs for work force
reductions. This reversal was offset by charges of $84 million relating to the
refocusing and discontinuance of certain products and programs. The Company
recorded special pretax charges of $186.2 million in 1994, $1.2 billion in 1991,
$181.0 million in 1990 and $231.0 million in 1989. Principally due to these
special charges, the Company had net losses of $1.4 billion in 1991, $436.7
million in 1990 and $639.3 million in 1989. No assurance can be given that the
Company will not experience losses in the future.
SYSTEMS INTEGRATION CONTRACTS
Certain of the Company's systems integration contracts are fixed-price
contracts under which the Company assumes the risk for the delivery of the
contracted services at an agreed-upon fixed price. The Company has at times
experienced problems in performing certain of its fixed-price contracts on a
profitable basis and has provided periodically for adjustments to the cost to
complete such contracts. In the fourth quarter of 1995, the Company recorded a
pretax charge for contract losses of $129.0 million, primarily relating to a few
large, multi-year, fixed-price systems integration contracts. In the first
quarter of 1997, the Company recorded charges of approximately $25 million for
additional estimated contract costs identified during the quarter. There can be
no assurance that the Company will not experience such contract performance
problems in the future, which problems could affect the Company's results of
operations.
9
<PAGE> 10
IMPORTANCE OF INTERNATIONAL OPERATIONS
Revenue from international operations accounted for approximately 60% of
the Company's total revenue in each of the last three years. There is no
material concentration of revenues in any particular country. Due to its foreign
operations, the Company is exposed to the effects of foreign exchange rate
fluctuations on the U.S. dollar.
The Company uses foreign exchange forward contracts and options, generally
having maturities of less than nine months, to reduce such exposure. Such
contracts and options are entered into for the sole purpose of hedging certain
transactional exposures. The Company does not hold or issue financial
instruments for speculative trading purposes. In addition to fluctuations in
foreign currency exchange rates, the Company's international business could be
affected by many factors beyond its control, such as instability of foreign
economies, U.S. and foreign government laws and policies affecting trade and
investment, and governmental changes. Although the Company has not experienced
any significant problems in foreign countries arising from such factors, there
can be no assurance that such problems will not arise in the future.
NO DIVIDENDS ON COMMON STOCK; DIVIDEND LIMITATIONS
The Company has not declared or paid any cash dividends on its Common Stock
since 1990 and does not anticipate declaring or paying dividends on the Common
Stock in the foreseeable future. Certain of the Company's debt instruments and
credit facilities contain financial covenants which limit the payment of
dividends on the Company's capital stock. See "Price Range of Common Stock and
2006 Notes and Dividend Policy."
EFFECT OF CONVERSION OFFER ON EARNINGS OF THE COMPANY
The payment of the cash premium equal to $155.00 for each $1,000 in
principal amount of 2006 Notes plus fees and expenses incurred in connection
with the Conversion Offer will be treated as a current expense for financial
reporting purposes. Therefore, if $294 million in principal amount of the 2006
Notes is converted pursuant to the Conversion Offer, net income will be reduced
by approximately $46.1 million in the period in which the Conversion Offer is
completed, which will be in the fourth quarter of 1997 unless the Conversion
Offer is extended or withdrawn by the Company. See "Unaudited Pro Forma
Consolidated Financial Information."
CERTAIN CONSEQUENCES TO NON-TENDERING HOLDERS
To the extent that 2006 Notes are tendered and accepted for conversion in
the Conversion Offer, the trading market for the remaining 2006 Notes will
become more limited. A security with a smaller outstanding principal amount
available for trading (a smaller "float") may command a lower price than would a
comparable security with a greater float. Therefore, the market price for the
remaining 2006 Notes may be affected adversely to the extent that the number of
2006 Notes converted pursuant to the Conversion Offer reduces the float. The
reduced float may also tend to make the trading price more volatile. Based upon
the published guidelines of the NYSE, the Company does not believe that the
conversion of up to $294 million in principal amount of the 2006 Notes pursuant
to the Conversion Offer would cause the remaining 2006 Notes to be delisted from
the NYSE. Noteholders are not entitled to appraisal rights in connection with
the Conversion Offer.
CHANGES IN OUTSTANDING SHARES
As of September 30, 1997, there were 360.0 million authorized shares of
Common Stock, of which approximately 175.8 million shares were issued and
outstanding and 151.0 million shares were reserved for issuance upon conversion
of outstanding securities (including the 2000 Notes and the 2006 Notes) or
pursuant to various employee benefit plans. After September 30, 1997, the
Company issued approximately 33.7 million shares of Common Stock previously
reserved for issuance in connection with the call for redemption of the 2000
Notes. If $294 million in principal amount of the 2006 Notes is converted
pursuant to the Conversion Offer, approximately 42.8 million of the shares of
Common Stock previously reserved for issuance upon conversion of the 2006 Notes
will be issued and outstanding. See "Description of Capital Stock,"
"Capitalization" and "Unaudited Pro Forma Consolidated Financial Information."
The issuance of the additional shares
10
<PAGE> 11
of Common Stock pursuant to the Conversion Offer represents a conversion rate of
145.4545 shares for each $1,000 in principal amount of 2006 Notes accepted for
conversion pursuant to the Conversion Offer (based upon the 2006 Notes' original
conversion price of $6.875 per share of Common Stock).
NO RECOMMENDATION
Neither the Company's Board of Directors nor the Company makes any
recommendation to Noteholders as to whether to tender or refrain from tendering
in the Conversion Offer. Participation in the Conversion Offer is voluntary and
Noteholders should carefully consider whether to accept. Noteholders are urged
to consult their financial and tax advisors in making their own decisions on
what action to take in light of their own particular circumstances.
PRICE RANGE OF COMMON STOCK AND 2006 NOTES AND DIVIDEND POLICY
The following table sets forth the reported high and low sale prices of the
Company's Common Stock as reported on the NYSE Composite Tape and of the 2006
Notes as reported in the over-the-counter market for the periods indicated.
<TABLE>
<CAPTION>
COMMON STOCK 2006 NOTES(a)
-------------- ---------------
HIGH LOW HIGH LOW
---- --- ---- ----
<S> <C> <C> <C> <C>
1997
Fourth Quarter (through November 6, 1997).............. $16 1/2 $11 1/8 $238 $200
Third Quarter.......................................... 15 3/4 7 3/8 230 1/2 130
Second Quarter......................................... 8 5 3/4 131 111
First Quarter.......................................... 7 5/8 6 1/4 130 1/2 116 1/2
1996
Fourth Quarter......................................... 7 3/4 5 7/8 131 113 1/2
Third Quarter.......................................... 7 1/4 5 3/8 118 107
Second Quarter......................................... 9 1/8 5 5/8 143 1/4 108
First Quarter.......................................... 7 3/4 5 3/8 114 105
1995
Fourth Quarter......................................... 8 5/8 5 1/2 -- --
Third Quarter.......................................... 11 7 5/8 -- --
Second Quarter......................................... 11 3/4 9 1/8 -- --
First Quarter.......................................... 10 1/8 8 1/2 -- --
</TABLE>
- ---------------
(a) The 2006 Notes were issued on March 8, 1996.
On November 6, 1997, the closing price of the Company's Common Stock on the
NYSE was $13 13/16 per share and the closing price of the 2006 Notes in the
over-the-counter market was $212 per $100 principal amount of 2006 Notes. As of
September 30, 1997, there were approximately 37,600 holders of record of shares
of the Company's Common Stock and nine holders of record of the 2006 Notes.
Holders of Common Stock are entitled to receive dividends from funds
legally available therefor, when, as and if declared by the Board of Directors
of the Company, subject to the prior rights of holders of any preferred stock of
the Company. The Company has not declared or paid dividends on the Common Stock
since 1990. The indenture governing certain of the Company's senior indebtedness
generally limits dividends (other than certain dividends in arrears on the
Company's preferred stock), distributions, repurchases or redemptions paid or
made with respect to the Company's capital stock after June 30, 1992 to an
aggregate amount equal to 50% of aggregate cumulative consolidated net income
(as defined in the indenture), plus capital contributions and proceeds of equity
issuances, plus $150 million.
11
<PAGE> 12
CAPITALIZATION
The following table sets forth the capitalization of the Company at
September 30, 1997 and as adjusted to give effect to (i) the assumed conversion
of $294 million in principal amount of the 2006 Notes into approximately 42.8
million shares of Common Stock pursuant to the Conversion Offer and (ii) the
issuance by the Company of approximately 33.7 million shares of Common Stock on
or prior to October 28, 1997 in connection with the call for redemption of the
2000 Notes (the "2000 Notes Conversion").
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
---------------------------
ACTUAL AS ADJUSTED(a)
-------- --------------
(MILLIONS OF DOLLARS)
<S> <C> <C>
Subordinated Debt:
8 1/4% Convertible Subordinated Notes due 2000.................... $ 344.8 $ --
8 1/4% Convertible Subordinated Notes due 2006.................... 299.0 5.0
Senior Debt, Excluding Current Portion.............................. 1,411.1 1,411.1
-------- --------
Total Long-Term Debt.............................................. 2,054.9 1,416.1
-------- --------
Stockholders' Equity:
Preferred Stock, par value $1 per share, 40.0 million shares
authorized; 28.4 million shares issued......................... 1,420.2 1,420.2
Common Stock, par value $.01 per share, 360.0 million shares
authorized; actual: 176.5 million shares issued; as adjusted:
253.0 million shares issued.................................... 1.8 2.5
Accumulated Deficit................................................. (744.4) (790.5)
Other Capital....................................................... 858.7 1,487.3
-------- --------
Total Stockholders' Equity..................................... 1,536.3 2,119.5
-------- --------
Total Capitalization...................................... $3,591.2 $3,535.6
======== ========
</TABLE>
- ---------------
(a) "As Adjusted" information also includes an increase to Other Capital
reflecting interest accrued to the redemption date for the 2000 Notes, a
decrease to Other Capital reflecting unamortized costs associated with
issuance of the 2006 Notes and the 2000 Notes, a decrease to Other Capital
reflecting costs of the 2000 Notes Conversion, and an increase in
Accumulated Deficit reflecting the cash premium equal to $155.00 for each
$1,000 in principal amount of 2006 Notes plus fees and expenses incurred in
connection with the Conversion Offer.
12
<PAGE> 13
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING INFORMATION
The following table presents selected historical consolidated financial
data of the Company as of December 31, 1996 and 1995 and as of September 30,
1997 and 1996 and for the fiscal years and nine-month periods ended on such
dates. The selected consolidated financial data for the full year periods have
been derived from audited Consolidated Financial Statements of the Company. The
selected consolidated financial data for the interim periods have been derived
from unaudited interim consolidated financial statements of the Company. Such
selected financial data should be read in conjunction with "Management's
Discussion and Analysis of Results of Operations and Financial Condition" and
the Company's Consolidated Financial Statements and the notes thereto
incorporated herein by reference to the Company's Annual Report on Form 10-K and
the Company's Quarterly Report on Form 10-Q. Results of operations for interim
periods should not be regarded as necessarily indicative of the results of
operations for the full year. In the opinion of the Company's management, the
unaudited interim statements include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for such
interim periods. The comparability of the results for the periods presented is
significantly affected by certain events, as described in Note 2 to the
Company's Consolidated Financial Statements.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
--------------------- ---------------------
1997 1996 1996 1995(a)
-------- -------- -------- --------
(MILLIONS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C>
RESULTS OF OPERATIONS DATA:
Revenue.................................................... $4,737.4 $4,559.0 $6,370.5 $6,342.3
Operating Income (Loss).................................... 396.3 180.5 327.4 (562.1)
Interest Expense........................................... 179.4 185.5 249.7 202.1
Income (Loss) From Continuing Operations Before Income
Taxes and Extraordinary Item............................. 177.9 9.2 93.7 (781.1)
Income (Loss) From Continuing Operations Before
Extraordinary Item....................................... 112.1 6.1 61.8 (627.3)
Income From Discontinued Operations........................ -- -- -- 2.7
Extraordinary Item......................................... -- -- (12.1) --
Net Income (Loss).......................................... 112.1 6.1 49.7 (624.6)
Earnings (Loss) From Continuing Operations Per Common Share
Primary.................................................. .16 (.49) (.34) (4.37)
Fully Diluted............................................ .16 (.49) (.34) (4.37)
Number of Shares Used in Earnings Per Share Computation
Primary.................................................. 176.8 172.4 172.6 171.2
Fully Diluted............................................ 176.8 172.4 172.6 171.2
Ratio of Earnings to Fixed Charges......................... 1.76 (b) 1.28 (b)
BALANCE SHEET DATA (AT END OF PERIOD):
Cash, Cash Equivalents and Marketable Securities........... $ 555.1 $ 843.2 $1,034.8 $1,119.7
Working Capital............................................ 282.3 170.4 668.0 71.3
Total Assets............................................... 6,151.4 6,698.7 6,967.1 7,113.2
Current Debt............................................... 233.8 448.4 19.7 355.6
Long-Term Debt............................................. 2,054.9 1,822.2 2,271.4 1,533.3
-------- -------- -------- --------
Total Debt................................................. 2,288.7 2,270.6 2,291.1 1,888.9
Preferred Stock............................................ 1,420.2 1,570.2 1,420.2 1,570.3
Common Stockholders' Equity................................ 116.1 171.0 185.8 289.9
Common Stockholders' Equity per Share...................... .66 .98 1.06 1.69
</TABLE>
- ---------------
(a) For the year ended December 31, 1995, the Company recorded special pretax
charges of $846.6 million.
(b) Earnings for the nine months ended September 30, 1996 and the year ended
December 31, 1995 were inadequate to cover fixed charges by approximately
$4.8 million and $776.1 million, respectively.
13
<PAGE> 14
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following pro forma consolidated financial data of the Company consist
of unaudited Pro Forma Condensed Consolidated Balance Sheet Data as of December
31, 1996 and September 30, 1997 (the "Pro Forma Balance Sheet Data") and
unaudited Pro Forma Condensed Consolidated Statement of Income Data for the year
ended December 31, 1996 and the nine months ended September 30, 1997 (the "Pro
Forma Statement of Income Data" and, collectively with the Pro Forma Balance
Sheet Data, the "Pro Forma Information"). The Pro Forma Information gives effect
to (i) the Conversion Offer, assuming that $294 million in principal amount of
the 2006 Notes is converted into Common Stock and that the cash premium equal to
$155.00 for each $1,000 in principal amount of 2006 Notes plus fees and expenses
incurred in connection with the Conversion Offer are paid, and (ii) the 2000
Notes Conversion. The Pro Forma Balance Sheet Data are presented as if both the
Conversion Offer and the 2000 Notes Conversion had been consummated on December
31, 1996 and September 30, 1997, respectively. The Pro Forma Statement of Income
Data are presented as if the Conversion Offer and the 2000 Notes Conversion had
been consummated as of the beginning of the periods shown.
The Pro Forma Information should be read in conjunction with the separate
historical financial statements of the Company, the related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" incorporated by reference into this Offer of Premium. The Pro Forma
Information does not purport to represent what the Company's financial position
or results of operations would actually have been if the aforementioned
transactions in fact had occurred on such date or at the beginning of the period
indicated or to project the Company's financial position or results of
operations at any future date or for any future period.
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED DECEMBER
SEPTEMBER 30, 31,
1997(a) 1996(a)
------------- -----------
(MILLIONS, EXCEPT
PER SHARE DATA AND RATIOS)
<S> <C> <C>
RESULTS OF OPERATIONS DATA:
Revenue.................................................................. $ 4,737.4 $ 6,370.5
Operating Income......................................................... 396.3 327.4
Interest Expense......................................................... 139.9 196.9
Income Before Income Taxes and Extraordinary Item........................ 218.9 148.5
Income Before Extraordinary Item......................................... 138.7 97.4
Extraordinary Item....................................................... -- (12.1)
Net Income............................................................... 138.7 85.3
Earnings (Loss) Before Extraordinary Item Per Common Share
Primary................................................................ .21 (.09)
Fully Diluted.......................................................... .21 (.09)
Number of Shares Used in Earnings Per Share Computation
Primary................................................................ 253.3 249.1
Fully Diluted.......................................................... 253.3 249.1
Ratio of Earnings to Fixed Charges....................................... 2.14 1.55
BALANCE SHEET DATA (AT END OF PERIOD):
Cash, Cash Equivalents and Marketable Securities......................... $ 505.2 $ 984.9
Working Capital.......................................................... 236.7 625.6
Total Assets............................................................. 6,091.5 6,905.5
Current Debt............................................................. 233.8 19.7
Long-Term Debt........................................................... 1,416.1 1,632.4
-------- --------
Total Debt............................................................... 1,649.9 1,652.1
Preferred Stock.......................................................... 1,420.2 1,420.2
Common Stockholders' Equity.............................................. 699.3 770.7
Common Stockholders' Equity per Share.................................... 2.77 3.07
</TABLE>
- ---------------
(a) Results of Operations Data exclude the one-time charge against net income in
the fourth quarter of 1997 for the cash premium equal to $155.00 for each
$1,000 in principal amount of 2006 Notes plus fees and expenses incurred in
connection with the Conversion Offer, estimated at approximately $46.1
million.
14
<PAGE> 15
THE CONVERSION OFFER
GENERAL
NEITHER THE COMPANY'S BOARD OF DIRECTORS NOR THE COMPANY MAKES ANY
RECOMMENDATION TO HOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING IN
THE CONVERSION OFFER. PARTICIPATION IN THE CONVERSION OFFER IS VOLUNTARY AND
HOLDERS OF 2006 NOTES SHOULD CAREFULLY CONSIDER WHETHER TO ACCEPT. HOLDERS OF
2006 NOTES ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR
OWN DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
PURPOSE OF THE CONVERSION OFFER
The principal purpose of the Conversion Offer is to improve the Company's
finances by reducing the Company's debt and interest expense and to provide the
Company with additional financial flexibility.
Other than pursuant to the Conversion Offer, the Company has no present
plans or intention to make acquisitions of or offers for the 2006 Notes.
However, the Company will continue to monitor the market for the 2006 Notes and
reserves the right, in its sole discretion, to acquire and to make offers for
2006 Notes subsequent to the Expiration Date for cash or in exchange for other
securities, by optional redemption or otherwise. The terms of any such
acquisitions or offers may differ from the terms of the Conversion Offer. Such
acquisitions or offers, if any, may depend upon, among other things, the price
and availability of the 2006 Notes and the Company's tax position. The 2006
Notes are not redeemable prior to March 15, 1999. After March 15, 1999, the 2006
Notes are redeemable by the Company, as a whole or in part, at any time upon at
least 20 but not more than 60 days' notice, at the following prices (expressed
as percentages of principal amount), together with accrued interest to the date
fixed for redemption:
If redeemed during the 12-month period beginning March 15:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
-------------------------------------------------- ----------
<S> <C>
1999.............................................. 105.775%
2000.............................................. 104.950
2001.............................................. 104.125
2002.............................................. 103.300
2003.............................................. 102.475
2004.............................................. 101.650
2005.............................................. 100.825
</TABLE>
TERMS OF THE CONVERSION OFFER
Upon the terms and subject to the conditions set forth herein and in the
accompanying Notice of Special Conversion, the Company is offering to pay a
Conversion Premium equal to $155.00 in cash plus accrued and unpaid interest
from September 15, 1997 to the Expiration Date for each $1,000 in principal
amount of 2006 Notes that is converted into Common Stock pursuant to the
Conversion Offer prior to the Expiration Date; provided, however, that the
Company will only accept for conversion pursuant to the Conversion Offer up to
$294 million in principal amount of the 2006 Notes. A Noteholder whose 2006
Notes are tendered for conversion pursuant to the Conversion Offer will receive
145.4545 shares of Common Stock (based upon the 2006 Notes' original conversion
price of $6.875 per share of Common Stock) and the Conversion Premium for each
$1,000 in principal amount of 2006 Notes which is accepted by the Company for
conversion. Fractional shares of Common Stock will not be issued in the
Conversion Offer. A person otherwise entitled to a fractional share of Common
Stock pursuant to the terms of the Conversion Offer will receive cash equal to
the closing sale price of such fractional share on the NYSE on the Expiration
Date.
15
<PAGE> 16
Upon the terms and subject to the conditions set forth herein and in the
Notice of Special Conversion, the Company will accept 2006 Notes validly
tendered and not withdrawn as promptly as practicable after the Expiration Date
unless the Conversion Offer has been withdrawn or terminated. The Company will
not accept 2006 Notes for conversion pursuant to the Conversion Offer prior to
the Expiration Date. The Company expressly reserves the right, in its sole
discretion, to delay acceptance of 2006 Notes tendered under the Conversion
Offer, or the payment of the Conversion Premium (subject to Rules 13e-4 and
14e-1 under the Exchange Act, which require that the Company consummate the
Conversion Offer or return the 2006 Notes deposited by or on behalf of the
Holders thereof promptly after the termination or withdrawal of the Conversion
Offer), or to withdraw or terminate the Conversion Offer and not accept any 2006
Notes at any time for any reason. In all cases, except to the extent waived by
the Company or described herein, delivery of Common Stock and the Conversion
Premium upon conversion of 2006 Notes pursuant to the Conversion Offer will be
made only after timely receipt by the Conversion Agent of 2006 Notes (or
confirmation of book-entry transfer of 2006 Notes), a properly completed and
duly executed Notice of Special Conversion and any other documents required
thereby.
As of November 6, 1997, there was $299.0 million in principal amount of
2006 Notes outstanding. This Offer of Premium, together with the Notice of
Special Conversion, is being sent to all registered Holders as of November 6,
1997.
The Company shall be deemed to have accepted for conversion, pursuant to
the Conversion Offer, validly tendered 2006 Notes (or defectively tendered 2006
Notes with respect to which the Company has waived such defect) when, as and if
the Company has given oral or written notice thereof to the Conversion Agent.
The Conversion Agent will act as agent for the tendering Holders for the purpose
of receiving the Common Stock and the Conversion Premium from the Company and
remitting such Common Stock and Conversion Premium to tendering Holders. Upon
the terms and subject to the conditions of the Conversion Offer, delivery of
Common Stock and the Conversion Premium due upon conversion of the 2006 Notes
accepted pursuant to the Conversion Offer will be made as promptly as
practicable after the Expiration Date.
If any tendered 2006 Notes are not accepted for conversion pursuant to the
Conversion Offer because of an invalid tender, the occurrence of certain other
events set forth herein or otherwise, unless otherwise requested by the Holder
under "Special Delivery Instructions" in the Notice of Special Conversion, such
2006 Notes will be returned, without expense, to the tendering Holder thereof
(or, in the case of 2006 Notes tendered by book-entry transfer into the
Conversion Agent's account at DTC (as defined below), such 2006 Notes will be
credited to an account maintained at DTC designated by the participant therein
who so delivered such 2006 Notes), as promptly as practicable after the
Expiration Date or the withdrawal or termination of the Conversion Offer.
Holders who tender 2006 Notes in the Conversion Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Notice of Special Conversion, transfer taxes with respect to the conversion of
2006 Notes pursuant to the Conversion Offer. See "-- Fees and Expenses."
PRORATION
If more than $294 million in principal amount of the 2006 Notes is properly
tendered and not withdrawn prior to the Expiration Date, then the Company will,
upon the terms and subject to the conditions of the Conversion Offer, accept
2006 Notes for conversion pursuant to the Conversion Offer on a pro rata basis
based on the amount of 2006 Notes validly tendered (with adjustments to avoid
conversions of 2006 Notes other than in increments of $1,000). Any 2006 Notes
which are tendered but not accepted for conversion pursuant to the Conversion
Offer will be returned to the tendering Noteholders. Holders of 2006 Notes which
are not converted into Common Stock pursuant to the Conversion Offer will not be
entitled to receive the Conversion Premium upon conversion of such 2006 Notes.
In the event that proration is required, the Company does not expect that
it would be able to announce the final proration factor or to commence delivery
of Common Stock and the Conversion Premium for any 2006 Notes converted pursuant
to the Conversion Offer until approximately seven NYSE trading days after
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<PAGE> 17
the Expiration Date, because of the difficulty in determining the number of 2006
Notes validly tendered (including 2006 Notes tendered pursuant to the guaranteed
delivery procedure described below) and not withdrawn prior to the Expiration
Date. Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Holders of 2006 Notes may
obtain such preliminary information from the Information Agent and may also be
able to obtain such information from their brokers.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Conversion Offer will expire on the Expiration Date. The Company
reserves the right to extend the period of time during which the Conversion
Offer is open, in its sole discretion at any time and from time to time, by
giving oral or written notice to the Conversion Agent and by timely public
announcement communicated, unless otherwise required by applicable law or
regulation, by making a release to the Dow Jones News Service. During any
extension of the Conversion Offer, all 2006 Notes previously tendered pursuant
to the Conversion Offer and not withdrawn will remain subject to the Conversion
Offer.
The Company expressly reserves the right to (i) amend or modify the terms
of the Conversion Offer in any manner and (ii) withdraw or terminate the
Conversion Offer, at any time for any reason. If the Company makes a material
change in the terms of the Conversion Offer, the Company will extend the
Conversion Offer. The minimum period for which the Conversion Offer will be
extended following a material change will depend upon the facts and
circumstances, including the relative materiality of the change. With respect to
a change in the consideration offered to holders of 2006 Notes, the Conversion
Offer will be extended for a minimum of ten business days following public
announcement of such change. Any withdrawal or termination of the Conversion
Offer will be followed as promptly as practicable by public announcement
thereof. In the event the Company withdraws or terminates the Conversion Offer,
it will give immediate notice to the Conversion Agent, and all 2006 Notes
theretofore tendered pursuant to the Conversion Offer will be returned promptly
to the tendering Holders thereof. See "-- Withdrawal of Tendered 2006 Notes."
PROCEDURES FOR ACCEPTANCE OF CONVERSION OFFER
To tender 2006 Notes pursuant to the Conversion Offer: (i) a properly
completed and duly executed Notice of Special Conversion (or facsimile thereof)
and any other documents required by the Notice of Special Conversion must be
received by the Conversion Agent at one of its addresses set forth on the back
cover of this Offer of Premium and certificates for the 2006 Notes to be
tendered must be received by the Conversion Agent at one of such addresses by
the Expiration Date; (ii) such 2006 Notes must be delivered by book-entry
transfer pursuant to the procedures of ATOP described below (and a confirmation
of such delivery received by the Conversion Agent) by the Expiration Date; or
(iii) the guaranteed delivery procedure described below must be complied with.
The Company understands that the Conversion Agent will make a request to
establish accounts with respect to the 2006 Notes at The Depository Trust
Company ("DTC") for the purpose of facilitating the Conversion Offer, and
subject to the establishment thereof, any financial institution that is a
participant in DTC's system may make book-entry delivery of 2006 Notes by
causing DTC to transfer such 2006 Notes into the Conversion Agent's account with
respect to the 2006 Notes in accordance with DTC's Automated Tender Offer
Program ("ATOP") procedures for such book-entry transfers. The acceptance for
conversion of 2006 Notes so tendered will only be made after timely confirmation
of the book-entry transfer of such 2006 Notes into the Conversion Agent's
account, and timely receipt by the Conversion Agent of an Agent's Message (as
such term is defined in the next sentence) and any other documents required by
the Notice of Special Conversion. The term "Agent's Message" means a message,
transmitted by DTC and received by the Conversion Agent and forming a part of a
book-entry confirmation, which states that DTC has received an express
acknowledgment from a participant tendering 2006 Notes that are the subject of
such book-entry confirmation that such participant has received and agrees to be
bound by the terms of the Notice of Special Conversion, and that the Company may
enforce such agreement against such participant. Holders of 2006 Notes tendered
pursuant to the ATOP procedures do not have to deliver a Notice of Special
Conversion. Although delivery of 2006 Notes may be effected through book-entry
transfer in accordance with the ATOP procedures without delivery of a Notice of
Special Conversion, any other documents required to be delivered
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<PAGE> 18
pursuant to the Notice of Special Conversion must, as described herein, be
received by the Conversion Agent at one of its addresses set forth on the back
cover of this Offer of Premium by the Expiration Date, or the guaranteed
delivery procedure described below must be complied with. Delivery of the Notice
of Special Conversion and any other required documents to DTC does not
constitute delivery to the Conversion Agent.
Except as otherwise provided below, all signatures on a Notice of Special
Conversion must be guaranteed by a firm that is a member of a registered
national securities exchange or the National Association of Securities Dealers,
Inc., or by a commercial bank or trust company having an office, branch or
agency in the United States each of which participates in a Medallion Program
approved by the Securities Transfer Association, Inc. (each being an "Eligible
Institution"). Signatures on a Notice of Special Conversion need not be
guaranteed if (i) the Notice of Special Conversion is signed by the registered
Holder of the 2006 Notes tendered therewith and such Holder has not completed
the boxes entitled "Special Payment Instructions" or "Special Delivery
Instructions" on the Notice of Special Conversion or (ii) such 2006 Notes are
tendered for the account of an Eligible Institution. See Instructions 1 and 4 of
the Notice of Special Conversion.
If a Holder desires to tender 2006 Notes pursuant to the Conversion Offer
and cannot deliver all required documents to the Conversion Agent by the
Expiration Date, such 2006 Notes may nevertheless be tendered if all of the
following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Company is received by
the Conversion Agent (as provided below) by the Expiration Date; and
(iii) the certificates for such 2006 Notes (or a confirmation of a
book-entry transfer of such 2006 Notes into the Conversion Agent's account
at DTC), together with a properly completed and duly executed Notice of
Special Conversion (or facsimile thereof) and any other documents required
by the Notice of Special Conversion, are received by the Conversion Agent
within three NYSE trading days after the date of execution of the Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by mail, or, if from an Eligible Institution, by facsimile transmission, to the
Conversion Agent, and must include a guarantee by an Eligible Institution in the
form set forth in such Notice.
Under federal income tax laws with respect to backup withholding, the
Conversion Agent may be required to withhold 31% of the amount of any payments
made to certain Holders pursuant to the Conversion Offer. In order to avoid such
backup withholding, each tendering Holder and, if applicable, each other payee,
should complete and sign the Substitute Form W-9 included as part of the Notice
of Special Conversion so as to provide the information and certification
necessary to avoid backup withholding. Certain Holders (including, among others,
all corporations and certain foreign individuals) are exempt from this backup
withholding requirement. In order for a foreign individual to qualify for an
exemption from backup withholding, that Holder must submit a statement, signed
under penalties of perjury, attesting to his exempt status. Such statements can
be obtained from the Conversion Agent. See Instruction 9 of the Notice of
Special Conversion.
Cash payments made pursuant to the Conversion Offer to a foreign Noteholder
or his agent will be subject to withholding of federal income tax unless such
foreign Holder provides the Conversion Agent with a certification, in form and
substance satisfactory to the Company, in which such Holder certifies that such
Holder's conversion of 2006 Notes into Common Stock and cash (including any cash
received in lieu of a fractional share of Common Stock) qualifies as a sale or
exchange, rather than as a dividend, for federal income tax purposes. The
withholding rate is ordinarily 30% unless the foreign Holder is eligible for a
reduced tax treaty rate with respect to dividend income, in which case
withholding will be made at the reduced treaty rate, or the foreign Holder
otherwise establishes to the satisfaction of the Conversion Agent that such
Holder is exempt from tax on such conversion. See Instruction 10 of the Notice
of Special Conversion. Foreign Noteholders are urged to consult their own tax
advisors regarding the application of federal income tax
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<PAGE> 19
withholding, including eligibility for a withholding tax reduction or exemption
or for a refund of all or a portion of the tax withheld. See "Certain Federal
Income Tax Considerations."
The tender of 2006 Notes pursuant to the Conversion Offer in accordance
with the procedures described above will constitute an agreement between the
tendering Holder and the Company upon the terms and subject to the conditions of
the Conversion Offer, including the tendering Holder's representation and
warranty that (i) such Holder owns the 2006 Notes being tendered within the
meaning of Rule 14e-4 under the Exchange Act and (ii) the tender of such 2006
Notes complies with Rule 14e-4.
It is a violation of Rule 14e-4 under the Exchange Act for a person,
directly or indirectly, to tender 2006 Notes for his or her own account unless
the person so tendering (i) has a net long position equal to or greater than the
number of (a) 2006 Notes tendered or (b) other securities immediately
convertible into, or exercisable or exchangeable for, the number of 2006 Notes
tendered and will acquire such 2006 Notes for tender by conversion, exercise or
exchange of such other securities and (ii) will cause such 2006 Notes to be
delivered in accordance with the terms of the Conversion Offer. Rule 14e-4
provides a similar restriction applicable to the tender or guarantee of a tender
on behalf of another person. The tender of 2006 Notes pursuant to any one of the
procedures described above will constitute the tendering Holder's representation
and warranty that (i) such Holder has a net long position in the 2006 Notes
being tendered within the meaning of Rule 14e-4 under the Exchange Act and (ii)
the tender of such 2006 Notes complies with Rule 14e-4.
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for conversion of any tender of 2006
Notes will be determined by the Company, in its sole discretion, which
determination shall be final and binding. The Company reserves the absolute
right to reject any or all tenders of 2006 Notes determined by it not to be in
proper form or the acceptance for conversion of, or conversion of, 2006 Notes
that may, in the opinion of the Company's counsel, be unlawful. The Company also
reserves the absolute right to waive any defect or irregularity in any tender of
2006 Notes. None of the Company, the Information Agent, the Conversion Agent or
any other person will be under any duty to give notification of any defect or
irregularity in tenders or incur any liability for failure to give any such
notification.
THE METHOD OF DELIVERY OF ALL DOCUMENTS IN CONNECTION WITH TENDERING
PURSUANT TO THE CONVERSION OFFER IS AT THE ELECTION AND RISK OF THE TENDERING
HOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THE NOTICE OF SPECIAL CONVERSION,
DELIVERY WILL BE DEEMED MADE ONLY WHEN DOCUMENTS ARE ACTUALLY RECEIVED BY THE
CONVERSION AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED, AND SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY.
Tenders of 2006 Notes involving any irregularities will not be deemed to
have been made until such irregularities have been cured or waived. 2006 Notes
received by the Conversion Agent that are not validly tendered and as to which
the irregularities have not been cured or waived will be returned by the
Conversion Agent to the tendering Holder (or, in the case of 2006 Notes tendered
by book-entry transfer into the Conversion Agent's account at DTC that are not
validly tendered and as to which the irregularities have not been cured or
waived, will be credited to an account maintained at DTC designated by the
participant therein who so delivered such 2006 Notes), unless otherwise
requested by the Holder in the Notice of Special Conversion, as promptly as
practicable after the Expiration Date or the withdrawal or termination of the
Conversion Offer.
WITHDRAWAL OF TENDERED 2006 NOTES
Tenders of 2006 Notes made pursuant to the Conversion Offer may be
withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are
irrevocable, except that they may be withdrawn at any time after 40 business
days after the date of this Offer of Premium unless theretofore accepted for
conversion as provided in this Offer of Premium.
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<PAGE> 20
To be effective, a written or (where permitted) facsimile transmission
notice of withdrawal must be timely received by the Conversion Agent at one of
its addresses set forth on the back cover of this Offer of Premium and must
specify the name of the person who tendered the 2006 Notes to be withdrawn and
the amount of 2006 Notes to be withdrawn. If the 2006 Notes to be withdrawn have
been delivered to the Conversion Agent, a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution (except in the case of 2006
Notes tendered by an Eligible Institution) must be submitted prior to the
release of such 2006 Notes. In addition, such notice must specify, in the case
of 2006 Notes tendered by delivery of certificates, the name of the registered
Holder (if different from that of the tendering Holder) and the serial numbers
shown on the particular certificates evidencing the 2006 Notes to be withdrawn
or, in the case of 2006 Notes tendered by book-entry transfer, the name and
number of the account at DTC to be credited with the withdrawn 2006 Notes.
Withdrawals may not be rescinded and 2006 Notes withdrawn will thereafter be
deemed not validly tendered for purposes of the Conversion Offer. However,
withdrawn 2006 Notes may be retendered by again following one of the procedures
described in "-- Procedures for Acceptance of Conversion Offer" at any time
prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding. None of the Company,
the Information Agent, the Conversion Agent or any other person will be under
any duty to give notification of any defect or irregularity in any notice of
withdrawal or incur any liability for failure to give any such notification.
NOTICE OF SPECIAL CONVERSION
The Notice of Special Conversion contains, among other things, the
following terms and conditions, which are part of the Conversion Offer:
The party tendering 2006 Notes for conversion (the "Transferor")
exchanges, assigns and transfers the 2006 Notes, as applicable, to the
Company and irrevocably constitutes and appoints the Conversion Agent as
the Transferor's agent and attorney-in-fact to cause the 2006 Notes to be
assigned, transferred and converted. The Transferor represents and warrants
that it has full power and authority to tender, exchange, convert, assign
and transfer the 2006 Notes and to acquire Common Stock issuable upon the
conversion of such tendered 2006 Notes, and that, when the same are
accepted for conversion, the Company will acquire good and unencumbered
title to the tendered 2006 Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse
claim. The Transferor also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Company to be necessary or
desirable to complete the conversion, assignment and transfer of tendered
2006 Notes or transfer ownership of such 2006 Notes on the account books
maintained by DTC. All authority conferred by the Transferor will survive
the death, bankruptcy or incapacity of the Transferor and every obligation
of the Transferor shall be binding upon the heirs, legal representatives,
successors, assigns, executors and administrators of such Transferor.
CONVERSION AGENT AND INFORMATION AGENT
The Bank of New York has been appointed as Conversion Agent for the
Conversion Offer. Deliveries to the Conversion Agent should be made as follows:
<TABLE>
<CAPTION>
By Mail: By Hand or Overnight Courier:
<S> <C>
The Bank of New York The Bank of New York
Floor 7E 101 Barclay Street
101 Barclay Street Corporate Trust
New York, NY 10286 Securities Window
Attn: Enrique Lopez Ground Level
Reorganization Section New York, NY 10286
</TABLE>
By Facsimile: (212) 571-3080 (for Eligible Institutions only)
For information call: (212) 815-2742
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<PAGE> 21
Georgeson & Company Inc. has been retained by the Company as Information
Agent for the Conversion Offer. Questions and requests for assistance regarding
the Conversion Offer, requests for additional copies of this Offer of Premium or
of the Notice of Special Conversion and requests for Notice of Guaranteed
Delivery may be directed to the Information Agent at Wall Street Plaza, New
York, New York 10005; telephone (800) 223-2064 ; Banks and Brokers please call
(800) 445-1790.
The Company will pay the Conversion Agent and the Information Agent
reasonable and customary fees for their services and will reimburse them for all
of their reasonable out-of-pocket expenses in connection therewith.
FINANCIAL ADVISOR
The Company has retained Bear, Stearns & Co. Inc. ("Bear Stearns") to
render certain financial advisory and investment banking services, including
certain services in connection with the Conversion Offer. Bear Stearns has not
been retained to render, and has not rendered, an opinion as to the fairness of
the Conversion Offer. For its services as financial advisor relating to the
Conversion Offer, Bear Stearns has received a fee of $250,000. Bear Stearns also
will be reimbursed by the Company for its reasonable out-of-pocket expenses and
is entitled to be indemnified by the Company against certain liabilities,
including certain liabilities under the federal securities laws.
ACCRUED INTEREST ON 2006 NOTES
Although the Company is not required, pursuant to the terms of 2006 Notes,
to pay accrued interest to holders of 2006 Notes that are converted pursuant to
the Conversion Offer, interest accrued on the 2006 Notes from September 15, 1997
to the Expiration Date will be included in the Conversion Premium. No interest
will accrue or be paid on the Conversion Premium. 2006 Notes which are not
tendered or which are not accepted for conversion will continue to receive
interest in accordance with the 2006 Notes. In the event that the Conversion
Offer expires on December 8, 1997 without being extended, the accrued interest
payable to tendering Holders will be $19.0208 for each $1,000 in principal
amount of 2006 Notes tendered.
SECURITY OWNERSHIP OF 2006 NOTES
As of the date of this Offer of Premium, none of the officers and directors
of the Company owns any 2006 Notes.
FEES AND EXPENSES
Tendering Noteholders will not be obligated to pay brokerage commissions,
solicitation fees, or, subject to Instruction 5 of the Notice of Special
Conversion, transfer taxes on the acquisition of the 2006 Notes by the Company
or the issuance of shares of Common Stock in the Conversion Offer. The total
cash expenditures (excluding the Conversion Premium) to be incurred by the
Company in connection with the Conversion Offer, including printing, accounting
and legal fees, the fees and expenses of the Conversion Agent and the
Information Agent and the fees and expenses of Bear Stearns described above, are
estimated to be approximately $500,000. The Company will not pay any commission
or other remuneration to any broker, dealer, salesman or other person for
soliciting tenders of 2006 Notes in connection with the Conversion Offer.
DESCRIPTION OF CAPITAL STOCK
The following descriptions do not purport to be complete and are subject
to, and qualified in their entirety by reference to, the more complete
descriptions thereof set forth in (1) the Company's Certificate of
Incorporation; (2) the Company's By-Laws and (3) the Rights Agreement (as
defined below), all of which have been filed with the Commission and are
incorporated herein by reference.
The Company's authorized capital stock consists of 360.0 million shares of
Common Stock, par value $.01 per share, and 40.0 million shares of Preferred
Stock, par value $1 per share. Under the Company's
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<PAGE> 22
Certificate of Incorporation, the Board of Directors may, by resolution,
establish series of Preferred Stock having such voting powers, and such
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, as the Board of
Directors may determine.
As of September 30, 1997, there were approximately 175.8 million shares of
Common Stock outstanding, and the Company had reserved approximately 151.0
million additional shares of Common Stock for issuance pursuant to various
employee benefit plans and upon conversion of outstanding securities, including
the 2000 Notes and the 2006 Notes. After September 30, 1997, the Company issued
approximately 33.7 million shares of Common Stock previously reserved for
issuance in connection with the 2000 Notes Conversion.
The Board of Directors has authorized the issuance of 30.0 million shares
of Series A Preferred Stock and 1.5 million shares of Junior Preferred Stock. As
of September 30, 1997, there were approximately 28.4 million shares of Series A
Preferred Stock and no shares of Junior Preferred Stock outstanding.
COMMON STOCK
General
Subject to the rights of the holders of shares of Preferred Stock, holders
of shares of Common Stock (1) are entitled to receive dividends when and as
declared by the Board of Directors of the Company from funds legally available
for that purpose; (2) have the exclusive right, except as otherwise may be
required by law, to vote for the election of directors and for all other
purposes and (3) are entitled, upon any liquidation, dissolution or winding up
of the Company, to a pro rata distribution of the assets and funds of the
Company available for distribution to stockholders. Each share of Common Stock
is entitled to one vote on all matters on which stockholders generally are
entitled to vote. Holders of shares of Common Stock do not have preemptive
rights to subscribe for additional shares of Common Stock or securities
convertible into shares of Common Stock. The Common Stock is traded on the NYSE
and prices are reported by the NYSE Composite Tape under the symbol "UIS".
Dividend Limitations
The Company has not declared or paid any cash dividends on the Common Stock
since 1990 and does not anticipate declaring or paying dividends on the Common
Stock in the foreseeable future. In addition, the Company's most restrictive
outstanding debt instruments generally limit aggregate dividends paid on the
Company's capital stock since June 30, 1992 (other than $185 million paid in
respect of dividends in arrears) to an amount no greater than 50% of cumulative
consolidated net income since July 1, 1992, plus capital contributions and
proceeds of equity issuances, plus $150 million.
Preferred Share Purchase Rights and Junior Participating Preferred Stock
The Company has distributed to its stockholders one Preferred Share
Purchase Right (the "Rights") with respect to each outstanding share of Common
Stock pursuant to a Rights Agreement (the "Rights Agreement") dated as of March
7, 1986 between the Company and Harris Trust Company of New York, as Rights
Agent. Each Right entitles the holder thereof, until the earlier of March 17,
2001 or the redemption of the Rights, to buy one three-hundredth of a share of
the Junior Preferred Stock at an exercise price of $75. The Rights are
represented by the certificates for shares of Common Stock and will not be
exercisable, or transferable apart from the shares of Common Stock, until the
earlier of the tenth day after the announcement that a person or group has
acquired beneficial ownership of 20% or more of the shares of Common Stock (a
"20% holder") or the tenth day after a person commences, or announces an
intention to commence, an offer, the consummation of which would result in a
person beneficially owning 30% or more of the shares of Common Stock as of such
date (the earlier of such dates being called the "Distribution Date"). The
Rights could then begin trading separately from the shares of Common Stock.
In the event that the Company is acquired in a merger or other business
combination transaction, each Right will entitle its holder to purchase, at the
exercise price of the Right, that number of shares of common stock of the
surviving company which, at the time of such transaction, would have a market
value of two times
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<PAGE> 23
the exercise price of the Right. Alternatively, if a 20% holder were to acquire
the Company by means of a reverse merger in which the Company and its stock
survive, or were to engage in certain "self-dealing" transactions, each Right
not owned by the 20% holder would become exercisable for the number of shares of
Common Stock which, at that time, would have a market value of two times the
exercise price of the Right.
The Rights are redeemable at $.01 2/3 per Right at any time prior to the
time that a person or group has acquired beneficial ownership of 20% of the
shares of Common Stock. The Rights will expire on March 17, 2001 (the "Final
Expiration Date"), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed by the Company in accordance with their terms. At no
time will the Rights have any voting rights.
The foregoing summary of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is filed
with the Commission an exhibit to the Company's Annual Report on Form 10-K.
The shares of Junior Preferred Stock purchasable upon exercise of the
Rights will be nonredeemable. Each share of Junior Preferred Stock will have a
minimum preferential quarterly dividend of $15 per share, but will be entitled
to a dividend of 300 times the aggregate dividend declared per share of Common
Stock. In the event of liquidation, the holders of the shares of Junior
Preferred Stock will receive a preferred liquidation payment of $100 per share,
but will be entitled to receive an aggregate liquidation payment per share equal
to 300 times the payment made per share of Common Stock. Each share of the
Junior Preferred Stock will have 300 votes, voting together with the shares of
Common Stock. In the event of any merger, consolidation or other transaction in
which shares of Common Stock are exchanged, each share of the Junior Preferred
Stock will be entitled to receive 300 times the amount received per share of
Common Stock. The Junior Preferred Stock has customary antidilution provisions
to protect the dividend, liquidation and voting rights described above.
The purchase price payable, and the number of shares of Junior Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (1) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
shares of Junior Preferred Stock; (2) as a result of the grant to holders of the
shares of Junior Preferred Stock of certain rights or warrants to subscribe for
shares of Junior Preferred Stock or of securities convertible into shares of
Junior Preferred Stock (at a price, or with a conversion price, respectively,
less than the then current market price for the shares of Junior Preferred
Stock) or (3) as a result of the distribution to holders of the shares of Junior
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends at a rate not in excess of 125% of the rate of the last
cash dividend theretofore paid or dividends payable in shares of Junior
Preferred Stock) or of subscription rights or warrants (other than those
referred to above). With certain exceptions, no adjustment in the purchase price
will be required until cumulative adjustments require an adjustment of at least
1% in such purchase price. The percentage of a share of Junior Preferred Stock
for which a Right is exercisable and the number of Rights outstanding are also
subject to adjustment in the event of dividends on the shares of Common Stock
payable in shares of Common Stock or subdivisions, combinations or
consolidations of the shares of Common Stock, occurring, in any case, before the
Rights become exercisable or transferable apart from the shares of Common Stock.
One Right is presently associated with each issued and outstanding share of
Common Stock. The Company will issue one Right with each share of Common Stock
issued upon the conversion of any 2006 Note unless, prior to such conversion,
the Rights are redeemed or become exercisable and transferable apart from the
shares of Common Stock.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms that the Board of Directors determines are not in the best interests of
the Company's stockholders, except pursuant to an offer conditioned on a
substantial number of Rights being acquired. The Rights should not interfere
with any merger or other business combination approved by the Board of Directors
since the Rights may be redeemed by the Company at $.01 2/3 per Right prior to
the time that a person or group has acquired beneficial ownership of 20% or more
of the shares of Common Stock.
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<PAGE> 24
Anti-Takeover Provisions
The Company is a Delaware corporation and subject to Section 203 of the
Delaware General Corporation Law. Generally, Section 203 prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the time of the
transaction in which the person became an interested stockholder, unless (1)
prior to such time, either the business combination or such transaction is
approved by the board of directors of the corporation; (2) upon consummation of
the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 85% of the outstanding
voting stock or (3) at or after such time the business combination is approved
by the board and by the affirmative vote of at least 66 2/3% of the outstanding
voting stock that is not owned by the interested stockholder. A "business
combination" includes mergers, asset sales and other transactions resulting in a
financial benefit to the interested stockholder. An "interested stockholder" is
a person who, together with affiliates and associates, owns (or within three
years, did own) 15% or more of the corporation's outstanding voting stock.
The Company's Certificate of Incorporation and By-Laws contain certain
anti-takeover provisions that are intended to enhance the likelihood of
continuity and stability in the composition of the Board of Directors and that
may have the effect of delaying, deferring or preventing a future takeover or
change in control of the Company unless such takeover or change in control is
approved by the Board of Directors. Such provisions may also render the removal
of the current Board of Directors more difficult.
The Company's Certificate of Incorporation and By-Laws provide that the
Board of Directors shall consist of not less than 10 nor more than 20 directors
(subject to any rights of the holders of shares of Preferred Stock to elect
additional directors), with the exact number to be fixed by the Board of
Directors pursuant to a resolution adopted by a majority of the entire Board.
The Board of Directors is divided into three classes of directors, which classes
are as nearly equal in number as possible. One class of directors is elected
each year for a term of three years. Directors may be removed from office only
for cause and only by the affirmative vote of the holders of at least 80% of the
voting power of all capital stock of the Company entitled to vote generally in
the election of directors (the "Voting Stock"), voting as a single class.
Subject to any rights of the holders of shares of Preferred Stock, vacancies in
the Board of Directors and newly created directorships are filled for the
unexpired term only by the vote of a majority of the remaining directors in
office. Pursuant to the Certificate of Incorporation, advance notice of
stockholder nominations for the election of directors must be given in the
manner provided in the Company's By-Laws. The By-Laws provide that written
notice of the intent of a stockholder to make a nomination at a meeting of
stockholders must be delivered to the Secretary of the Company not less than 90
days prior to the date of the meeting, in the case of an annual meeting, and not
more than seven days following the date of notice of the meeting, in the case of
a special meeting. The notice must contain certain background information about
the nominee and the number of shares of the Company's capital stock beneficially
owned by the nominee. The affirmative vote of the holders of 80% or more of the
voting power of the then outstanding shares of Voting Stock, voting as a single
class, is required to amend, alter or repeal the provisions of the Certificate
of Incorporation and By-Laws discussed above.
The Company's Certificate of Incorporation also provides that certain
mergers, consolidations, sales or other transfers of assets of, issuances or
reclassifications of securities of, or adoptions of plans of liquidation by the
Company (individually, a "Business Combination") must be approved by an
affirmative vote of the holders of 80% or more of the voting power of the then
outstanding shares of Voting Stock, voting as a single class, when such action
involves a person (an "Interested Stockholder") who beneficially owns more than
20% of the voting power of the then outstanding shares of Voting Stock, unless
certain minimum price, form of consideration and procedural requirements (the
"Fair Price Provisions") are satisfied or unless a majority of the directors not
affiliated with the Interested Stockholder approve the Business Combination. The
affirmative vote of the holders of 80% or more of the voting power of the then
outstanding shares of Voting Stock, voting as a single class, is required to
amend, alter or repeal such provisions of the Certificate of Incorporation.
Under the Certificate of Incorporation and By-Laws, except as otherwise
required by law and subject to the rights of the holders of shares of Preferred
Stock, stockholders may not call a special meeting of
24
<PAGE> 25
stockholders. Only the Board of Directors, pursuant to a resolution adopted by a
majority of the entire Board, may call a special meeting of stockholders. The
General Corporation Law of the State of Delaware provides that, unless
specifically prohibited by the certificate of incorporation, any action required
or permitted to be taken by stockholders of a corporation may be taken without a
meeting, without prior notice, and without a stockholder vote if a written
consent or consents setting forth the action to be taken is signed by the
holders of outstanding shares of capital stock having the requisite number of
votes that would be necessary to authorize or take such action at a meeting of
stockholders. The Company's Certificate of Incorporation requires that
stockholder action be taken at a meeting of stockholders and prohibits
stockholder action by written consent. The affirmative vote of the holders of
80% or more of the voting power of the then outstanding shares of Voting Stock,
voting as a single class, is required to amend, alter or repeal the provisions
of the Certificate of Incorporation and By-Laws discussed above.
The purpose of certain provisions of the Certificate of Incorporation and
By-Laws discussed above relating to (1) a classified Board of Directors; (2) the
removal of directors and the filling of vacancies; (3) the prohibition of
stockholder action by written consent and (4) supermajority voting requirements
for the repeal of provisions (1) through (3) is to help assure the continuity
and stability of the business strategies and policies of the Company and to
discourage certain types of transactions that involve an actual or threatened
change of control of the Company. They are designed to make it more difficult
and time-consuming to change majority control of the Board of Directors and thus
to reduce the vulnerability of the Company to an unsolicited takeover proposal
that does not contemplate the acquisition of at least 80% of the voting power of
all of the Voting Stock or to an unsolicited proposal for the restructuring or
sale of all or part of the Company.
Such charter and by-law provisions may make more difficult or discourage a
proxy contest, or the assumption of control, by a holder of a substantial block
of shares of Common Stock, or the removal of the incumbent Board of Directors,
and could thus increase the likelihood that incumbent directors will retain
their positions. In addition, since the Fair Price Provisions discussed above
provide that certain business combinations involving the Company and a certain
type of stockholder which do not meet specified criteria or are not approved by
supermajority vote cannot be consummated without the approval of a majority of
those directors who are not affiliated with such stockholder, such provisions
could give incumbent management the power to prevent certain takeovers. The Fair
Price Provisions may also discourage attempts to effect a "two-step" acquisition
in which a third party purchases a controlling interest in cash and acquires the
balance of the voting stock of the Company for less desirable consideration.
Under the classified board and related provisions, the third party would not
immediately obtain the ability to control the Board of Directors through its
first-step acquisition and, under the Fair Price Provisions, having made the
first-step acquisition, the third party could not acquire the balance of the
Voting Stock for a lower price without a supermajority vote or the approval of a
majority of such unaffiliated directors.
These provisions of the Certificate of Incorporation and By-Laws help
ensure that the Board of Directors, if confronted with an unsolicited proposal
from a third party which has acquired a block of shares of Common Stock, will
have sufficient time to review the proposal and to consider appropriate
alternatives for the Company's stockholders.
Such charter and by-law provisions are intended to encourage persons
seeking to acquire control of the Company to initiate such an acquisition
through arm's-length negotiations with the Board of Directors, who would then be
in a position to negotiate a transaction which would treat all stockholders in
substantially the same manner. Such provisions may have the effect of
discouraging a third party from making an unsolicited tender offer or otherwise
attempting to obtain control of the Company, even though such an attempt might
be beneficial to the Company and its stockholders. In addition, since the
provisions are designed to discourage accumulations of large blocks of shares of
Common Stock by purchasers whose objective is to have such shares repurchased by
the Company at a premium, such provisions could tend to reduce the temporary
fluctuations in the market price of Common Stock caused by such accumulations.
Accordingly, stockholders of the Company could be deprived of certain
opportunities to sell their shares at a temporarily higher market price.
25
<PAGE> 26
The Rights could also have the effect of delaying, deferring or preventing
a takeover or change in control of the Company. See "Common Stock-Preferred
Share Purchase Rights and Junior Participating Preferred Stock".
SERIES A PREFERRED STOCK
The Series A Preferred Stock ranks prior to the Common Stock and the Junior
Preferred Stock as to payment of dividends and as to distribution of assets upon
liquidation, dissolution or winding up of the Company.
The Series A Preferred stock accrues quarterly cumulative dividends at the
annual rate of $3.75 per share and is entitled to receive $50 per share, plus
accrued and unpaid dividends, upon liquidation. The shares of Series A Preferred
Stock are convertible, at the option of the holders thereof, into shares of
Common Stock at a conversion price of $29.93 per share, subject to adjustment to
prevent dilution under certain circumstances. For purposes of calculating the
number of shares of Common Stock into which shares of Series A Preferred Stock
are convertible at the conversion price, the price per share of the Series A
Preferred Stock is $50. Each share of Series A Preferred Stock is currently
convertible into 1.67 shares of Common Stock. The Series A Preferred Stock is
redeemable at the option of the Company at a redemption price of $50 per share.
If dividends on the shares of Series A Preferred Stock and any class or series
of stock ranking on a parity with the Series A Preferred Stock as to dividends
(the "Parity Dividend Stock") are in arrears in an amount equal to at least six
quarterly dividends, the number of directors of the Company will be increased by
two as of the date of the next meeting of stockholders at which directors are to
be elected, and the holders of shares of Series A Preferred Stock and of Parity
Dividend Stock (voting together as a separate class) will be entitled to vote
for and to elect such additional directors. The holders of shares of Series A
Preferred Stock have certain voting rights if the Company determines to
authorize, create or issue, or increase the authorized amount of, any class or
series of stock ranking prior to or on a parity with the Series A Preferred
Stock. The consent of the holders of a majority of the outstanding shares of
Series A Preferred Stock (voting separately as a class with all other series of
capital stock ranking on a parity as to dividends or upon liquidation with the
Series A Preferred Stock and also being affected) is also required to amend the
Company's Certificate of Incorporation if the amendment would have a materially
adverse effect on the powers, preferences or special rights of the Series A
Preferred Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Harris Trust
Company of New York.
SOURCE AND AMOUNT OF FUNDS
Assuming that $294 million in principal amount of the 2006 Notes is
converted pursuant to the Conversion Offer, the Company estimates that the total
amount of cash required by the Company to pay the Conversion Premium (excluding
accrued interest) and the fees and expenses related to the Conversion Offer will
be approximately $46.1 million. The Company expects to obtain such amounts from
working capital.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material United States federal
income tax considerations relevant to a conversion of 2006 Notes into Common
Stock and the payment of the Conversion Premium and the ownership and
disposition of Common Stock by persons acquiring Common Stock pursuant to the
Conversion Offer. This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations (including Proposed Regulations and
Temporary Regulations) promulgated thereunder, Internal Revenue Service ("IRS")
rulings, official pronouncements and judicial decisions, all as in effect on the
date hereof and all of which are subject to change, possibly with retroactive
effect, or different interpretations. This summary is applicable only to Holders
who hold 2006 Notes as a capital asset and who will hold any Common Stock
received in the Conversion Offer as a capital asset.
26
<PAGE> 27
This summary does not discuss all tax consequences that may be relevant to
a particular Holder in light of the Holder's particular circumstances and it is
not intended to be applicable in all respects to all categories of investors,
some of whom -- such as insurance companies, tax-exempt persons, financial
institutions, regulated investment companies, dealers in securities or
currencies, persons that hold 2006 Notes or the Common Stock received in the
conversion as a position in a "straddle," as part of a "synthetic security,"
"hedge," "conversion transaction," "constructive sale transaction" or other
integrated investment or persons whose functional currency is other than United
States dollars -- may be subject to different rules not discussed below. In
addition, this summary does not address any state, local or foreign tax
considerations that may be relevant to a Holder's decision to convert 2006 Notes
for Common Stock and the Conversion Premium pursuant to the Conversion Offer.
ALL NOTEHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE CONVERSION OF 2006
NOTES AND THE OWNERSHIP AND DISPOSITION OF COMMON STOCK RECEIVED IN THE
CONVERSION OFFER IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
CONVERSION AND RECEIPT OF CONVERSION PREMIUM
Recognition of Gain or Loss on Conversion. The conversion of 2006 Notes
into Common Stock and the Conversion Premium (the "Conversion") will not be a
taxable transaction to the Company, but may be a taxable transaction to the
Noteholders to the extent of the cash received, with the consequences described
below.
A Noteholder whose 2006 Notes are converted into Common Stock and the
Conversion Premium will recognize gain to the extent of the lesser of (i) the
excess of the fair market value of the total amount received in the Conversion
(i.e., the sum of the value of the Common Stock and the Conversion Premium,
excluding the accrued interest portion thereof) over such Noteholder's tax basis
in the 2006 Notes converted, or (ii) the amount of the Conversion Premium,
excluding the accrued interest portion thereof. Such gain would likely be
capital gain (subject to the market discount rules discussed below). Under
recently enacted legislation, capital gains of individuals derived in respect of
capital assets held for more than one year are eligible for reduced rates of
taxation which may vary depending upon the holding period of such capital
assets. To the extent the Conversion Premium (excluding the accrued interest
portion thereof) exceeds the amount specified in clause (i) above, such amount
will not be currently taxable but will reduce a Noteholder's basis in the Common
Stock received in the Conversion as discussed below. A Noteholder is not allowed
to recognize a loss on the Conversion.
Basis and Holding Period of Common Stock Received. A Holder's tax basis in
the Common Stock received in the Conversion will be equal to the Holder's tax
basis in the 2006 Notes converted in the Conversion, increased by the amount of
any gain recognized by the Holder and decreased by the amount of the Conversion
Premium (excluding the accrued interest portion thereof) received. The holding
period of the Common Stock will include the holding period of the 2006 Notes
converted in the Conversion.
Cash in Lieu of Fractional Shares. Holders who receive cash in lieu of
fractional shares of Common Stock should be treated as having received the cash
in redemption of the fractional share interest and should generally recognize
capital gain or loss equal to the difference between the amount of cash received
and the Holder's tax basis in such fractional share interest. Under recently
enacted legislation, capital gains of individuals derived in respect of capital
assets held for more than one year are eligible for reduced rates of taxation
which may vary depending upon the holding period of such capital assets. The
deductibility of capital losses is subject to limitations.
Accrued Interest. Pursuant to the Conversion Offer, Noteholders will
receive, in cash, the interest which has accrued on the 2006 Notes from
September 15, 1997 to the Expiration Date. This amount will be taxable to the
Holders as ordinary interest income at the time it is paid or accrued in
accordance with such Holder's method of accounting for tax purposes.
27
<PAGE> 28
Market Discount. The Code generally requires Holders of "market discount
bonds" to treat as interest income any gain realized on the disposition of such
bonds to the extent of the market discount accrued during the Holder's period of
ownership. A "market discount bond" generally is a debt obligation purchased at
a market discount, subject to a statutory de minimis exception. For this
purpose, a purchase at a market discount includes a purchase at or after the
original issue at a price below the stated redemption price at maturity.
An exception to the market discount rules is made for certain
nonrecognition transactions, such as the Conversion Offer. According to this
exception, Holders of 2006 Notes will be required to treat accrued market
discount as interest income at the time of the conversion only to the extent
gain is recognized by the Holder pursuant to the Conversion Offer. However, on a
subsequent disposition of the Common Stock received in the Conversion Offer,
gain realized on the disposition will be treated as ordinary income to the
extent of the market discount accrued by the Holder prior to the Conversion
Offer but not recognized at the time of the conversion.
A Holder's accrued market discount generally equals a percentage of the
bond's market discount, which is based on the number of days the Holder held the
bond at the time of its disposition, over the number of days from the date the
Holder acquired the bond to its date of maturity. Also, Holders of market
discount bonds are required, under certain circumstances, to defer the deduction
of all or a portion of the interest on indebtedness incurred or maintained to
acquire or carry market discount bonds. Neither the rule treating accrued market
discount as ordinary income on a disposition nor the rule deferring interest
deductions applies if the Holder of a "market discount bond" elects to include
the accrued market discount in income currently. This election would apply to
all market discount bonds acquired on or after the first day of the first
taxable year to which the election applies, and may be revoked only with the
consent of the IRS.
Sale or Exchange of Common Stock. In general, subject to the market
discount rules discussed above, the sale, exchange or redemption of the Common
Stock received in the Conversion Offer will result in capital gain or loss equal
to the difference between the amount realized and the Holder's adjusted tax
basis in the Common Stock immediately before such sale, exchange or redemption.
For a discussion of the determination of a Holder's initial tax basis in the
Common Stock, see "Conversion and Receipt of Conversion Premium -- Basis and
Holding Period of Common Stock Received." Under recently enacted legislation,
capital gains of individuals derived in respect of capital assets held for more
than one year are eligible for reduced rates of taxation which may vary
depending upon the holding period of such capital assets. The deductibility of
capital losses is subject to limitations.
Non-United States Noteholders. If a "Non-United States Noteholder"
converts a 2006 Note into Common Stock and cash (including any cash received in
lieu of a fractional share of Common Stock) and does not prove, in a manner
satisfactory to the Company or other withholding agent, that the cash is not
treated as a dividend for U.S. federal income tax purposes, United States
federal withholding tax will be withheld from the proceeds at a rate of 30% of
the gross amount of such proceeds unless such Holder establishes that it is
eligible for a reduced tax treaty rate with respect to dividend income, in which
case the tax will be withheld at the reduced rate, or establishes that it is
otherwise exempt from such tax. Non-United States Noteholders should consult
their tax advisors regarding these withholding rules and the procedures for
obtaining a refund if the amount withheld exceeds the Non-United States
Noteholder's final tax liability.
For this purpose, a Non-United States Noteholder is any person who, for
United States federal income tax purposes, is not (i) a citizen or resident of
the United States, (ii) a corporation or partnership created or organized in or
under the laws of the United States or of any State, or (iii) a domestic trust
or estate.
28
<PAGE> 29
BACKUP WITHHOLDING
ANY NOTEHOLDER PARTICIPATING IN THE CONVERSION WHO FAILS TO COMPLETE AND
SIGN THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE NOTICE OF SPECIAL
CONVERSION (OR, IN THE CASE OF A NON-UNITED STATES HOLDER, FORM W-8 WHICH MAY BE
OBTAINED FROM THE CONVERSION AGENT) MAY BE SUBJECT TO A REQUIRED FEDERAL INCOME
TAX BACKUP WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH NOTEHOLDER
PURSUANT TO THE CONVERSION OFFER. To prevent backup United States federal income
tax withholding with respect to payments pursuant to the Conversion (including
the Conversion Premium and cash in lieu of any fractional share), a United
States Holder must provide the Conversion Agent with such United States Holder's
correct taxpayer identification number and certify that such United States
Holder is not subject to backup withholding of federal income tax by completing
the Substitute Form W-9 included in the Notice of Special Conversion. Certain
Noteholders (including, among others, all corporations and certain foreign
Noteholders) are exempt from backup withholding. For a Non-United States Holder
to qualify as an exempt recipient, such Noteholder must submit an IRS Form W-8,
signed under penalties of perjury, attesting to that Noteholder's exempt status.
A copy of IRS Form W-8 may be obtained from the Conversion Agent.
Unless a Noteholder provides the appropriate certification, the Conversion
Agent will be required to withhold, and will withhold, 31% of the gross proceeds
otherwise payable to such Noteholder. The amount of any such backup withholding
will be allowed as a credit against such Noteholder's United States federal
income tax liability and may entitle such Noteholder to a refund, provided the
required information is furnished to the IRS.
MISCELLANEOUS
Except as set forth below, neither the Company nor, to its knowledge, any
of its subsidiaries, executive officers or directors or any associate of any
such executive officer or director has engaged in any transactions involving the
2006 Notes or the Common Stock during the 40 business days preceding the date
hereof. Neither the Company nor, to its knowledge, any of its executive officers
or directors is a party to any contract, arrangement, understanding or
relationship relating directly or indirectly to the Conversion Offer with any
other person with respect to the 2006 Notes or the Common Stock.
On September 11, 1997, Robert H. Brust, Senior Vice President and Chief
Financial Officer of the Company, was granted 75,000 restricted shares of Common
Stock under the Company's 1990 Long-Term Incentive Plan (the "LTIP"). On
September 23, 1997, pursuant to the terms of his employment agreement, Lawrence
A. Weinbach, Chairman, President and Chief Executive Officer of the Company, (1)
was granted options under the LTIP to purchase an aggregate of 1,000,000 shares
of Common Stock at a purchase price of $11.7813 per share, (2) was granted
169,762 restricted shares of Common Stock under the LTIP and (3) purchased
84,881 shares of Common Stock from the Company at a purchase price of $11.7813
per share. On October 17, 1997, Gail D. Fosler, a Director of the Company,
purchased 10,300 shares of Common Stock in an open-market transaction at a
purchase price of $14.75 per share. On October 20, 1997, Ms. Fosler purchased
8,000 shares of Common Stock in an open market transaction at a purchase price
of $15 per share.
29
<PAGE> 30
Facsimile copies of the Notice of Special Conversion will be accepted. The
Notice of Special Conversion and any other required documents should be sent by
each Holder of 2006 Notes or his broker, dealer, commercial bank, trust company
or other nominee to the Conversion Agent at one of the addresses set forth
below:
The Conversion Agent is:
THE BANK OF NEW YORK
For information call: (212) 815-2742
<TABLE>
<CAPTION>
By Mail: By Hand or Overnight Courier:
<S> <C>
(registered or certified mail recommended)
The Bank of New York The Bank of New York
Floor 7E 101 Barclay Street
101 Barclay Street Corporate Trust
New York, NY 10286 Securities Window
Attn: Enrique Lopez Ground Level
Reorganization Section New York, NY 10286
</TABLE>
By Facsimile Transmission
(for Eligible Institutions only):
(212) 571-3080
PLEASE CONFIRM RECEIPT OF NOTICE OF GUARANTEED DELIVERY BY TELEPHONE.
The Information Agent is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, NY 10005
Call Toll-Free: (800) 223-2064
Banks and Brokers, please call: (800) 445-1790
Any questions or requests for assistance or additional copies of this Offer
of Premium and the Notice of Special Conversion may be directed to the
Information Agent at its telephone number and location set forth above. You may
also contact your broker, dealer, commercial bank or trust company or other
nominee for assistance concerning the Conversion Offer.
<PAGE> 1
Exhibit (a)2
NOTICE OF SPECIAL CONVERSION
TO CONVERT UP TO $294,000,000 IN PRINCIPAL AMOUNT OF THE
8 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2006
OF
UNISYS CORPORATION
INTO
145.4545 SHARES OF COMMON STOCK AND $155.00 IN CASH PLUS ACCRUED INTEREST FOR
EACH $1,000 IN
PRINCIPAL AMOUNT OF NOTES ON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH
HEREIN AND IN THE
OFFER OF PREMIUM DATED NOVEMBER 7, 1997
THE CONVERSION OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON MONDAY, DECEMBER 8, 1997, UNLESS EXTENDED.
Conversion Agent:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
By Mail: By Hand or Overnight Courier:
<S> <C>
(registered or certified mail recommended)
The Bank of New York The Bank of New York
Floor 7E 101 Barclay Street
101 Barclay Street Corporate Trust
New York, NY 10286 Securities Window
Attn: Enrique Lopez Ground Level
Reorganization Section New York, NY 10286
</TABLE>
DELIVERY OF THIS NOTICE OF SPECIAL CONVERSION TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF SPECIAL CONVERSION VIA
FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ON THE BACK COVER OF
THE OFFER OF PREMIUM WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Offer of Premium Upon
Conversion dated November 7, 1997 (the "Offer of Premium") of Unisys Corporation
(the "Company") which, together with this Notice of Special Conversion (the
"Notice of Special Conversion"), describes the Company's offer (the "Conversion
Offer") to pay a cash premium (the "Conversion Premium") equal to $155.00 plus
accrued and unpaid interest from September 15, 1997 to the Expiration Date (as
defined in the Offer of Premium) for each $1,000 in principal amount of its
8 1/4% Convertible Subordinated Notes due 2006 (the "2006 Notes") which are
converted to Common Stock, par value $.01 per share (the "Common Stock"), of the
Company prior to the Expiration Date. A holder of 2006 Notes (a "Noteholder" or
"Holder") whose 2006 Notes are tendered and accepted for conversion pursuant to
the Conversion Offer will receive 145.4545 shares of Common Stock (based upon
the 2006 Notes' original conversion price of $6.875 per share of Common Stock)
and the Conversion Premium for each $1,000 in principal amount of 2006 Notes.
The Company will accept for conversion pursuant to the Conversion Offer no more
than $294 million in principal amount of 2006 Notes.
The undersigned has checked the appropriate boxes below and signed this
Notice of Special Conversion to indicate the action the undersigned desires to
take with respect to the Conversion Offer.
PLEASE READ THE ENTIRE NOTICE OF SPECIAL CONVERSION AND THE OFFER OF
PREMIUM CAREFULLY BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS NOTICE OF SPECIAL CONVERSION MUST BE
FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE
OFFER OF PREMIUM AND THIS NOTICE OF SPECIAL CONVERSION MAY BE DIRECTED TO THE
CONVERSION AGENT.
<PAGE> 2
This Notice of Special Conversion is to be used (i) if certificates
representing 2006 Notes are to be forwarded herewith or (ii) if delivery of 2006
Notes is to be made in accordance with the guaranteed delivery procedures set
forth in the Offer of Premium under the caption "The Conversion
Offer -- Procedures for Acceptance of Conversion Offer."
Holders who cannot deliver all documents required hereby to the Conversion
Agent prior to the Expiration Date must tender their 2006 Notes according to the
guaranteed delivery procedure set forth in the Offer of Premium under the
caption "The Conversion Offer -- Procedures for Acceptance of Conversion Offer."
Holders of Notes that are tendering by book-entry transfer to the
Conversion Agent's account at DTC can execute the tender through the procedures
of the Automated Tender Offer Program ("ATOP") of The Depository Trust Company
("DTC"), for which the Conversion Offer is eligible. DTC participants that are
accepting the Conversion Offer must transmit their acceptance to DTC, which will
verify the acceptance and execute a book-entry delivery to the Conversion
Agent's account at DTC. DTC will then send an Agent's Message (as defined in the
Offer of Premium) to the Conversion Agent for its acceptance. Delivery of the
Agent's Message by DTC will satisfy the terms of the Conversion Offer as to
execution and delivery of a Notice of Special Conversion by the participant
identified in the Agent's Message. DTC participants may also accept the
Conversion Offer by submitting a notice of guaranteed delivery through ATOP.
<PAGE> 3
List below the 2006 Notes to which this Notice of Special Conversion
relates. If the space provided below is inadequate, the Certificate Numbers and
the principal amount of 2006 Notes should be listed on a separate signed
schedule affixed hereto.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
DESCRIPTION OF 2006 NOTES TENDERED HEREWITH
- ----------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
OR NAME OF DTC PARTICIPANT AND PARTICIPANT'S AGGREGATE
DTC ACCOUNT NUMBER IN WHICH NOTES ARE HELD CERTIFICATE PRINCIPAL AMOUNT PRINCIPAL AMOUNT
(PLEASE FILL IN IF BLANK) NUMBER(S)* REPRESENTED** TENDERED**
- ----------------------------------------------------------------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
TOTAL PRINCIPAL
AMOUNT OF NOTES
- ----------------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
** Unless otherwise specified, it will be assumed that the entire aggregate principal represented by the
2006 Notes described above is being tendered. See Instruction 3.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The names and addresses of the registered Holders should be printed, if not
already printed above, exactly as they appear on the 2006 Notes tendered hereby.
The 2006 Notes and the principal amount of the 2006 Notes that the undersigned
wishes to tender should be indicated in the appropriate boxes.
Unless the context requires otherwise, the term "Holder" for purposes of
this Notice of Special Conversion means any person in whose name 2006 Notes are
registered on the books of the Company or any other person who has obtained a
properly completed assignment from the registered holder or any person whose
2006 Notes are held of record by DTC who desires to deliver such 2006 Notes by
book-entry transfer at DTC.
<PAGE> 4
[ ] CHECK HERE IF TENDERED 2006 NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE CONVERSION AGENT AT DTC AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------------------------------------
Account Number: Transaction Code Number:
---------------- ---------------------
[ ] CHECK HERE IF TENDERED 2006 NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery:
------------------------------------------------------------------
If delivered by book-entry transfer:
Name of Tendering Institution:
-----------------------------------------------------------------------------
Account Number: Transaction Code Number:
---------------- ---------------------
NOTE: SIGNATURES MUST BE PROVIDED HEREIN.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Conversion Offer, the
undersigned hereby tenders to the Company the above-described 2006 Notes.
Subject to, and effective upon, the acceptance for conversion of the 2006
Notes tendered herewith, the undersigned hereby tenders, exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to all such 2006 Notes. The undersigned hereby irrevocably constitutes and
appoints the Conversion Agent as the true and lawful agent and attorney-in-fact
of the undersigned (with full knowledge that said Conversion Agent also acts as
the agent of the Company in connection with the Conversion Offer) and with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to (i) deliver certificates for such 2006 Notes
for conversion, or transfer ownership of such 2006 Notes on the account books
maintained by DTC, together, in any such case, with all accompanying evidences
of transfer and authenticity, to the Conversion Agent for the account of the
Company, (ii) present such 2006 Notes for conversion on the books of the Company
and (iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such 2006 Notes, all in accordance with the terms of the Conversion
Offer.
The undersigned represents and warrants that (i) it has full power and
authority to tender, exchange, convert, assign and transfer the 2006 Notes
tendered hereby and to acquire the Common Stock and the Conversion Premium
issuable upon the conversion of such tendered 2006 Notes, (ii) when the
undersigned's 2006 Notes are accepted for conversion, the Company will acquire
good and unencumbered title to such 2006 Notes free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim,
(iii) the undersigned "owns" the 2006 Notes tendered hereby within the meaning
of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended,
and (iv) the tender of the 2006 Notes by the undersigned complies with Rule
14e-4. The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Conversion Agent or the Company
to be necessary or desirable to complete the exchange, conversion, assignment
and transfer of tendered 2006 Notes or transfer ownership of such 2006 Notes on
the account books maintained by DTC. All authority herein conferred or agreed to
be conferred
<PAGE> 5
shall survive the death, bankruptcy or incapacity of the undersigned and every
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
The Company has expressly reserved the right to amend or modify the terms
of the Conversion Offer in any manner, or to withdraw or terminate the
Conversion Offer, at any time for any reason. The undersigned recognizes that as
a result of the foregoing, the Company may not be required to convert any of the
2006 Notes tendered hereby pursuant to the Conversion Offer and, in such an
event, the 2006 Notes not converted will be returned to the undersigned at the
address shown below the signature of the undersigned. Tendered 2006 Notes may be
withdrawn at any time prior to the Expiration Date (as defined in the Offer of
Premium) and, unless accepted for conversion by the Company, may be withdrawn at
any time after 40 business days after the date of the Offer of Premium. In the
event of a termination of the Conversion Offer, the 2006 Notes tendered pursuant
to the Conversion Offer will be returned to the tendering Holders promptly (or,
in the case of 2006 Notes tendered by book-entry transfer, such 2006 Notes will
be credited to the account maintained at DTC from which such Notes were
delivered). If the Company makes a material change in the terms of the
Conversion Offer or in the information concerning the Conversion Offer, the
Company will disseminate additional Conversion Offer materials and extend the
Conversion Offer, in each case to the extent required by law.
The undersigned understands that tenders of 2006 Notes pursuant to any of
the procedures described in the Offer of Premium and in the instructions hereto
and acceptance of such 2006 Notes by the Company will constitute a binding
agreement between the undersigned and the Company upon the terms and subject to
the conditions of the Conversion Offer. For purposes of the Conversion Offer,
the undersigned understands that validly tendered 2006 Notes (or defectively
tendered 2006 Notes with respect to which the Company has waived such defect)
will be deemed to have been accepted by the Company if, as and when the Company
gives oral or written notice thereof to the Conversion Agent.
Unless otherwise indicated under "Special Payment Instructions" below,
please cause the Common Stock and the Conversion Premium to be issued or paid,
and return any 2006 Notes not tendered or not accepted for conversion to be
issued, in the name(s) of the undersigned (and, in the case of 2006 Notes
tendered by book-entry transfer from, and Common Stock to be issued to, DTC, by
credit to the account at DTC designated above). Similarly, unless otherwise
indicated under "Special Delivery Instructions," please mail any certificates
for 2006 Notes not tendered or not accepted for conversion (and accompanying
documents, as appropriate), and any Common Stock and the Conversion Premium
deliverable pursuant to the Conversion Offer, to the undersigned at the address
shown below the undersigned's signature(s). If both "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please cause
Common Stock to be issued, and return any 2006 Notes not tendered or not
accepted for conversion, in the name(s) of, and deliver any certificates for
such 2006 Notes and such Common Stock to, the person(s) so indicated. The
undersigned recognizes that the Company has no obligation, pursuant to the
"Special Payment Instructions," to transfer any 2006 Notes from the name of the
registered holder(s) thereof if the Company does not accept for conversion any
of the 2006 Notes so tendered.
<PAGE> 6
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF 2006 NOTES REGARDLESS
OF WHETHER 2006 NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Notice of Special Conversion must be signed by the registered
Holder(s) exactly as name(s) appear(s) on certificate(s) for 2006 Note(s) or, if
tendered by a participant in DTC, exactly as such participant's name appears on
a security position listing as owner of 2006 Notes, or by person(s) authorized
to become registered Holder(s) by endorsements and documents transmitted
herewith. If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 4.
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATORY
(SEE GUARANTEE REQUIREMENT BELOW)
Dated
- --------------------------------------------------------------------------------
Name(s)
- --------------------------------------------------------------------------------
------------------------------------------------------------------------
(PLEASE PRINT)
Capacity
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and
Tel. Number
- --------------------------------------------------------------------------------
Tax Identification or
Social Security No.
- --------------------------------------------------------------------------------
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
SIGNATURE GUARANTEE
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 4)
Authorized Signature
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Title
- --------------------------------------------------------------------------------
Name of Firm
- --------------------------------------------------------------------------------
Area Code and Tel. Number
- --------------------------------------------------------------------------------
[place seal here]
<PAGE> 7
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 2, 4, 5 AND 11)
To be completed ONLY if (i) the certificates for the shares of Common
Stock or the Conversion Premium to be received upon conversion of 2006
Notes accepted for conversion pursuant to the Conversion Offer or (ii)
2006 Notes in a principal amount not tendered or not accepted for
Conversion pursuant to the Conversion Offer, are to be issued in the name
of or paid to someone other than the person(s) whose signature(s)
appear(s) within this Notice of Special Conversion.
Name(s)
-------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
(PLEASE PRINT)
------------------------------------------------------------
------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
ISSUE: [ ] CHECK FOR CONVERSION PREMIUM
[ ] CERTIFICATE FOR COMMON STOCK
[ ] CERTIFICATE FOR 2006 NOTES
============================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 2, 4, 5 AND 11)
To be completed ONLY if (i) the certificates for the shares of Common
Stock or the Conversion Premium to be received upon conversion of 2006
Notes accepted for conversion pursuant to the Conversion Offer or (ii)
2006 Notes in a principal amount not tendered or not accepted for
conversion pursuant to the Conversion Offer, are to be mailed to an
address different from that shown in the box entitled "Description of 2006
Notes Tendered Herewith" within this Notice of Special Conversion.
Name(s)
-------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
(PLEASE PRINT)
------------------------------------------------------------
------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
MAIL: [ ] CHECK FOR CONVERSION PREMIUM
[ ] CERTIFICATE FOR COMMON STOCK
[ ] CERTIFICATE FOR 2006 NOTES
------------------------------------------------------------
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE CONVERSION OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Notice of Special Conversion must be guaranteed by a firm
that is a member of a registered national securities exchange or the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office, branch or agency in the United States, each of which
participates in a Medallion Program approved by the Securities Transfer
Association, Inc. (each being an "Eligible Institution"). Signatures on this
Notice of Special Conversion need not be guaranteed if (a) this Notice of
Special Conversion is signed by the registered holder(s) of the 2006 Notes
(which term, for purposes of this document, shall include any participant in DTC
whose name appears on a security position listing as the owner of 2006 Notes)
tendered herewith and such holder(s) have not completed either of the boxes
entitled "Special Payment Instructions" or "Special Delivery Instructions" on
this Notice of Special Conversion or (b) such 2006 Notes are tendered for the
account of an Eligible Institution. See Instruction 4.
2. Delivery of Notice of Special Conversion and 2006 Notes. This Notice
of Special Conversion is to be completed by holders of 2006 Notes (a) if
certificates representing 2006 Notes are to be forwarded herewith or (b) if
delivery of 2006 Notes is to be made in accordance with the guaranteed delivery
procedures set forth in the Offer of Premium under the caption "The Conversion
Offer -- Procedures for Acceptance of Conversion Offer" and instructions are not
being transmitted in respect of such 2006 Notes through ATOP. Certificates for
2006 Notes, as well as this Notice of Special Conversion (or a facsimile
hereof), properly completed and duly executed, with any required signature
guarantees, or timely confirmation of a book-entry transfer of such 2006 Notes
into the Conversion Agent's account at DTC pursuant to the ATOP procedures and,
in each case, any other documents required by this Notice of Special Conversion,
must be received by the Conversion Agent at one of its addresses set forth on
the front page hereof prior to the Expiration Date.
THE METHOD OF DELIVERY OF THIS NOTICE OF SPECIAL CONVERSION, THE 2006 NOTES
AND ANY OTHER REQUIRED DOCUMENTS (INCLUDING DELIVERY THROUGH DTC AND ANY
ACCEPTANCE OR AGENT'S MESSAGE DELIVERED THROUGH ATOP) IS AT THE ELECTION AND
RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN DOCUMENTS ARE ACTUALLY RECEIVED BY THE CONVERSION AGENT.
IT IS SUGGESTED THAT IF SUCH DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, BE USED.
Holders who cannot deliver all required documents to the Conversion Agent
prior to the Expiration Date or comply with book-entry transfer procedures on a
timely basis may tender their 2006 Notes pursuant to the guaranteed delivery
procedure set forth in the Offer of Premium under "The Conversion
Offer -- Procedures for Acceptance of Conversion Offer." Pursuant to such
procedure: (a) such tender must be made by or through an Eligible Institution
(as defined in Instruction 1); (b) on or prior to the Expiration Date the
Conversion Agent must have received from such Eligible Institution a letter or
(where permitted) a facsimile transmission setting forth the name and address of
the tendering holder, the names in which such 2006 Notes are registered, and, if
possible, the certificate numbers of the 2006 Notes to be tendered; and (c) this
Notice of Special Conversion and all other documents required by this Notice of
Special Conversion, together with certificates representing such 2006 Notes, or
a confirmation of any book-entry transfer of such 2006 Notes into the Conversion
Agent's account at DTC pursuant to the ATOP procedures, must be received by the
Conversion Agent within three New York Stock Exchange trading days after the
date of execution of such letter or facsimile transmission, all as provided in
the Offer of Premium under the caption "The Conversion Offer -- Procedures for
Acceptance of Conversion Offer."
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Notice of Special
Conversion (or facsimile thereof), shall waive any right to receive notice of
the acceptance of the 2006 Notes for conversion.
3. Partial Tenders; Withdrawals. (Not applicable to holders who tender by
book-entry transfer.) If less than the entire principal amount of 2006 Notes
evidenced by a submitted certificate is to be tendered, the tendering holder
must fill in the principal amount of 2006 Notes tendered in the box entitled
"Principal Amount Tendered." In such a case, a new certificate representing the
2006 Notes submitted but not tendered will be sent to such holder as soon as
practicable
<PAGE> 9
after the Expiration Date. All 2006 Notes represented by certificates delivered
to the Conversion Agent will be deemed to have been tendered unless otherwise
indicated.
Tenders of 2006 Notes pursuant to the Conversion Offer may be withdrawn at
any time prior to the Expiration Date and, unless accepted for conversion by the
Company, may be withdrawn at any time after 40 business days after the date of
the Offer of Premium. To be effective, a written notice of withdrawal delivered
by hand, mail delivery or facsimile transmission must be timely received by the
Conversion Agent. Any such notice of withdrawal must specify the person named in
the Notice of Special Conversion as having tendered 2006 Notes to be withdrawn,
the certificate numbers of the 2006 Notes to be withdrawn, the principal amount
of 2006 Notes delivered for conversion, a statement that such holder is
withdrawing its election to have such 2006 Notes converted, and the name of the
registered holder of such 2006 Notes, and must be signed by the holder in the
same manner as the original signature on this Notice of Special Conversion
(including any required signature guarantees) or be accompanied by evidence
satisfactory to the Company that the person withdrawing the tender has succeeded
to the beneficial ownership of the 2006 Notes being withdrawn. The Conversion
Agent will return properly withdrawn 2006 Notes promptly following receipt of
notice of withdrawal. All questions as to the validity of notice of withdrawal,
including time of receipt, will be determined by the Company, and such
determination will be final and binding on all parties. Withdrawals of tenders
of 2006 Notes may not be rescinded and any 2006 Notes withdrawn will thereafter
be deemed not validly tendered for purposes of the Conversion Offer. Properly
withdrawn 2006 Notes, however, may be retendered by following the procedures
therefor at any time prior to the Expiration Date.
4. Signature on this Notice of Special Conversion; Written Instruments and
Endorsements. If this Notice of Special Conversion is signed by the registered
holder(s) of the 2006 Notes tendered hereby, the signature must correspond with
the name(s) as written on the face of the certificates or on the security
position listing of DTC without alteration, enlargement or any change
whatsoever.
If any of the 2006 Notes tendered hereby are owned of record by two or more
persons, all such persons must sign this Notice of Special Conversion.
If 2006 Notes tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate copies of this Notice of Special Conversion as there are different
registrations of 2006 Notes.
If this Notice of Special Conversion is signed by the registered holder or
holders of the 2006 Notes tendered hereby, no endorsements of certificates or
separate written instruments of transfer or exchange are required unless the
Conversion Premium or the Common Stock, or 2006 Notes not tendered or not
accepted for conversion, are to be issued or returned to any person other than
the registered holder. Signatures on any such certificates and written
instruments must be guaranteed by an Eligible Institution.
IF THIS NOTICE OF SPECIAL CONVERSION IS SIGNED BY A PERSON OTHER THAN THE
REGISTERED HOLDER(S) OF THE 2006 NOTES LISTED, THE CERTIFICATES REPRESENTING
SUCH 2006 NOTES MUST BE ENDORSED OR ACCOMPANIED BY SEPARATE WRITTEN INSTRUMENTS
OF TRANSFER OR EXCHANGE IN FORM SATISFACTORY TO THE COMPANY AND DULY EXECUTED BY
THE REGISTERED HOLDER(S), IN EITHER CASE SIGNED EXACTLY AS THE NAME(S) OF THE
REGISTERED HOLDER(S) APPEAR(S) ON THE 2006 NOTES. SIGNATURES ON ANY SUCH
CERTIFICATES OR INSTRUMENTS MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
If this Notice of Special Conversion, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
5. Transfer Taxes. Except as set forth in this Instruction 5, the Company
will pay all transfer taxes, if any, applicable to the conversion of 2006 Notes
pursuant to the Conversion Offer. If, however, the Conversion Premium is to be
delivered, or any Common Stock to be issued pursuant to the Conversion Offer or
2006 Notes not tendered or accepted for conversion are to be returned, in the
name of any person other than the registered holder of the 2006 Notes tendered,
or if a transfer tax is imposed for any reason other than the conversion of 2006
Notes pursuant to the Conversion Offer, then the amount of any such transfer
taxes (whether imposed on the registered holder or any other persons) will be
payable by the tendering holder. If satisfactory evidence of the payment of such
taxes, or exemption therefrom, is not
<PAGE> 10
submitted with this Notice of Special Conversion, the amount of such transfer
taxes will be billed directly to such tendering holder.
6. Extensions, Amendments and Termination. The Company expressly reserves
the right to extend, amend or modify the terms of the Conversion Offer in any
manner and withdraw or terminate the Conversion Offer at any time for any
reason.
7. Inadequate Space. If the space provided in this Notice of Special
Conversion is inadequate, the certificate numbers and/or principal amount
represented by the 2006 Notes should be listed on a separate signed schedule
attached hereto.
8. Irregularities. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of Notices of Special Conversion or
2006 Notes will be resolved by the Company, and such determination will be final
and binding on all parties. The Company reserves the absolute right to reject
any or all Notices of Special Conversion or tenders that are not in proper form
or the acceptance of which would, in the opinion of the Company's counsel, be
unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to the particular 2006 Notes covered by any Notice of
Special Conversion. None of the Company, the Conversion Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. The Company's interpretation of the terms and conditions of the
Conversion Offer shall be final and binding on all parties.
9. Substitute Form W-9. Except as described herein under "Important Tax
Information," federal income tax laws require each tendering holder to provide
the Conversion Agent with a correct taxpayer identification number ("TIN") on
the Substitute Form W-9 which is provided herein, and to indicate whether or not
the holder is not subject to backup withholding by crossing out Part 2 on the
Substitute Form W-9 if the holder is currently subject to backup withholding.
Failure to provide the information on the Form or to cross out Part 2 of the
Form (if applicable) may subject the tendering holder to a $50 penalty imposed
by the Internal Revenue Service and to 31% federal income tax backup withholding
on payments made to the holder pursuant to the Conversion Offer. The box in Part
3 of the Form may be checked if the tendering holder has not been issued a TIN
and has applied for a TIN or intends to apply for a TIN in the near future. If
the box in Part 3 is checked and the holder does not provide the Conversion
Agent with a TIN within sixty (60) days, the Company will withhold 31% on all
such payments thereafter until a TIN is provided to the Conversion Agent.
10. Withholding of Foreign Holders in Connection with the Conversion
Offer. United States federal income tax generally will be withheld from the
gross proceeds payable to a holder that is a non-United States person (a
"foreign holder") unless such foreign holder provides the Conversion Agent with
a certification, in form and substance satisfactory to the Company, in which
such holder certifies that such holder's conversion of 2006 Notes into Common
Stock and cash (including any cash received in lieu of a fractional share of
Common Stock) qualifies as a sale or exchange, rather than as a dividend, for
federal income tax purposes (see "Certain Federal Income Tax Considerations" in
the Offer of Premium) and such foreign holder agrees that it will provide
additional information to the Company if necessary to demonstrate such
qualification and that it will reimburse the Company if it is determined that
federal withholding tax was due. The withholding rate is ordinarily 30% unless
the foreign holder establishes that it is eligible for a reduced tax treaty rate
with respect to dividend income, in which case withholding will be made at the
reduced treaty rate, or the foreign holder otherwise establishes to the
satisfaction of the Conversion Agent that such holder is exempt from tax on such
conversion. For this purpose, a non-United States person is any person who, for
United States federal income tax purposes, is neither (i) a citizen or resident
of the United States, (ii) a corporation or partnership created or organized in
or under the laws of the United States or of any State or of any of its
territories or possessions, or (iii) a domestic trust or estate. A holder's
status as a foreign holder and eligibility for a reduced rate of withholding
will be determined by reference to the holder's address and to any outstanding
certificates (e.g., Form W-8 or substitute) or statements concerning eligibility
for a reduced rate of withholding, unless facts and circumstances indicate that
reliance is not warranted. FOREIGN HOLDERS SHOULD CONSULT THEIR TAX ADVISOR
REGARDING THESE WITHHOLDING RULES AND THE PROCEDURES FOR OBTAINING A REFUND IF
THE AMOUNT WITHHELD EXCEEDS THE HOLDER'S FINAL TAX LIABILITY.
11. Special Payment Instructions; Special Delivery Instructions. If the
Conversion Premium or Common Stock to be received in the Conversion Offer, or
any 2006 Notes not tendered or not accepted for conversion, are to be returned
in
<PAGE> 11
the name of someone other than the tendering holder, the tendering holder must
fill in the information in the box entitled "Special Payment Instructions." If
the Conversion Premium or Common Stock to be received in the Conversion Offer,
or any 2006 Notes not tendered or accepted for conversion, are to be mailed to
an address other than that shown herein, the tendering holder must fill in the
information in the box entitled "Special Delivery Instructions."
12. Definitions. Capitalized terms used in this Notice of Special
Conversion and not otherwise defined have the meanings given to such terms in
the Offer of Premium.
13. Requests for Assistance or Additional Copies. Questions relating to
the procedures for acceptance of the Conversion Offer, as well as requests for
additional copies of the Offer of Premium and this Notice of Special Conversion,
may be directed to the Information Agent for the Conversion Offer at the address
and telephone number set forth below.
THE INFORMATION AGENT FOR THE OFFER IS:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, NY 10005
Call Toll-Free: (800) 223-2064
Brokers and Banks, please call: (800) 445-1790
IMPORTANT: THIS NOTICE OF SPECIAL CONVERSION (OR A FACSIMILE HEREOF),
TOGETHER WITH THE 2006 NOTES AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF
GUARANTEED DELIVERY, MUST BE RECEIVED BY THE CONVERSION AGENT ON OR PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder whose tendered 2006 Notes are
accepted for conversion pursuant to the Conversion Offer is required to provide
the Conversion Agent with such Holder's current TIN on Substitute Form W-9
below. If such Holder is an individual, the TIN is his or her Social Security
number. If the Conversion Agent is not provided with the correct TIN, the Holder
or other payee may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, the payments made to such Holder or other payee pursuant
to the Conversion Offer may be subject to 31% backup withholding tax.
Certain Holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that Holder must submit to the Conversion Agent a properly completed
Internal Revenue Service Form W-8 (a "Form W-8"), signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Conversion Agent. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
If backup withholding applies, the Conversion Agent is required to withhold
31% of the Purchase Price paid to the Holder or other payee. Backup withholding
is not an additional tax. Rather, the federal income tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on the payments made to a Holder or other
payee pursuant to the Conversion Offer, the Holder is required to notify the
Conversion Agent of the Holder's current TIN (or the TIN of any other payee) by
completing the form below, certifying that the TIN provided on Substitute Form
W-9 is correct (or that such Holder is awaiting a TIN), and that (i) the Holder
has not been notified by the Internal Revenue Service that the Holder is subject
to backup withholding as a result of failure to report all interest or dividends
or (ii) the Internal Revenue Service has notified the Holder that the Holder is
no longer subject to backup withholding.
<PAGE> 12
WHAT NUMBER TO GIVE TO THE CONVERSION AGENT
The Holder is required to give the Conversion Agent the TIN (e.g., Social
Security number or Employer Identification Number) of the record owner of the
2006 Notes. If the 2006 Notes are registered in more than one name or are not
registered in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
- ---------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security Number(s)
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. or Employer Identification
FORM W-9 Number(s)
--------------------------
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION
NUMBER ("TIN")
-----------------------------------------------------------------------------
PART 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification
number (or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding because (a) I am exempt from
backup withholding or (b) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as a result of
failure to report all interest or dividends or (c) the IRS has notified
me that I am no longer subject to backup withholding.
-----------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax
return.
-----------------------------------------------------------------------------
PART 3 -- Awaiting TIN [ ]
Signature
------------------------------------------------
Date
-----------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING OF 31% OF
ANY PAYMENTS MADE TO YOU PURSUANT TO THE CONVERSION OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable cash payments made to me thereafter will be withheld until I
provide a taxpayer identification number.
<TABLE>
<S> <C>
- ---------------------------------------------- ----------------------------------------------
(SIGNATURE) (DATE)
</TABLE>
<PAGE> 14
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
A. TIN = The Taxpayer Identification Number for most individuals is your social
security number. Refer to the following chart to determine the appropriate
number.
<TABLE>
<CAPTION>
GIVE THE
FOR THIS TYPE OF SOCIAL SECURITY
ACCOUNT: NUMBER OF --
-------------------------------- ------------------------
<C> <S> <C>
1. Individual The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-trustee(1)
trust account (grantor is also
trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
5. Sole proprietorship The owner(3)
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF IDENTIFICATION
ACCOUNT: NUMBER OF --
-------------------------------- ------------------------
<C> <S> <C>
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or The legal entity(4)
pension trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational or other
tax-exempt organization
account
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of The public entity
Agriculture
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the individual's name. You may also enter your business name or "doing
business as" name. You may use either your Social Security number or your
employer identification number.
(4) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no owner is circled when there is more than one name, the number will
be considered to be that of the first name listed.
(5) Exempt Payee -- The following lists exempt payees. If you are exempt, you
must complete the form and provide your TIN in order to establish that you
are exempt. Write "Exempt" in Part II of the form, sign and date the form.
For this purpose, Exempt Payee includes: (1) A corporation; (2) An organization
exempt from tax under section 301(a), or an individual retirement plan (IRA) or
a custodial account under 403(b)(7); (3) The United States or any of its
agencies or instrumentalities; (4) A State, the District of Columbia, a
possession of the Unites States, or any of their political subdivisions or
instrumentalities; (5) A foreign government or any of the political
subdivisions, agencies or instrumentalities; (6) An international organization
or any of its agencies or instrumentalities; (7) A foreign central bank of
trust; (8) A dealer in securities or commodities required to register in the
U.S. or a possession of the U.S.; (9) A dealer in securities or commodities
required to register with the Commodity Exchange Trading Commission; (10) A real
estate investment trust; (11) An entity registered at all times during the past
year under the Investment Company Act of 1940; (12) A common trust fund operated
by a bank under Section 584(a); (13) A financial institution; (14) A person
registered under the Investment Company Act of 1940 who regularly acts as a
broker.
<PAGE> 1
EXHIBIT (a)(3)
PRESS RELEASE
CONTACT: J. PETER HYNES, UNISYS, 215-986-6948
INTERNET: [email protected]
UNISYS ANNOUNCES A SPECIAL OFFER TO CONVERT
$294 MILLION OF ITS 8 1/4% CONVERTIBLE NOTES DUE 2006
BLUE BELL, PA, NOVEMBER 7, 1997 -- Continuing its aggressive efforts to reduce
debt, Unisys Corporation announced today that it was making a special
conversion offer to holders of its 8 1/4% convertible subordinated notes due in
the year 2006. Under the offer, holders of these notes who elect to convert
their notes into common shares will receive a cash premium of $155 plus accrued
interest for each note. The market value of each note based on yesterday's last
reported sale price was $2,120. Each note is convertible into approximately 145
shares of Unisys common stock.
"We feel this is an attractive offer to holders of these notes and hope that
our noteholders will take advantage of the opportunity to convert," said
Lawrence A. Weinbach, Unisys chairman, president, and chief executive officer.
"We have set a target of reducing our debt by $1 billion by the year 2000 and
are taking tangible steps toward that goal. Last month we successfully
completed a conversion of our 8 1/4% year 2000 convertible notes, which reduced
our debt by $345 million and increased shareholders' equity by a similar
amount. Step by step, we are moving to reduce debt, reduce interest expense, and
create a more flexible capital structure that supports our growth initiatives."
Unisys said it will take a one-time charge against net income in the fourth
quarter to cover the cost of the transaction. Measuring the exact impact of the
transaction is dependent on the
<PAGE> 2
amount of notes held by noteholders who accept this offer. Assuming the full
$294 million of notes are converted, the company would take a one-time charge
against fourth-quarter net income of approximately $46 million, would issue an
additional 42.8 million shares of common stock, and would save approximately
$24 million in annual interest payments. Unisys currently has approximately 210
million common shares outstanding. The company said the conversion will not
impact fully diluted earnings per share since the additional shares are already
included in this calculation.
The company said the offer and withdrawal rights will remain open until 5:00
p.m., Eastern Standard Time, on December 8, 1997, unless extended. Procedures
and materials for surrendering the notes for conversion will be mailed to
noteholders by Georgeson & Company Inc. Noteholders with questions should
contact Georgeson at (800) 223-2064.
<PAGE> 1
Exhibit (a)4
NOTICE OF PREMIUM UPON CONVERSION
OF UP TO $294,000,000 IN PRINCIPAL AMOUNT OF THE
8 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2006
OF
UNISYS CORPORATION
November 7, 1997
To Our Clients:
Enclosed for your consideration is an Offer of Premium Upon Conversion
("Offer of Premium") dated November 7, 1997 of Unisys Corporation (the
"Company") and a related Notice of Special Conversion (which together constitute
the "Conversion Offer") relating to the offer by the Company, upon the terms and
subject to the conditions of the Conversion Offer, to pay a cash premium (the
"Conversion Premium") equal to $155.00 plus accrued and unpaid interest from
September 15, 1997 to the Expiration Date (as defined in the Offer of Premium)
for each $1,000 in principal amount of the Company's 8 1/4% Convertible
Subordinated Notes due 2006 (the "2006 Notes") which are converted into Common
Stock, par value $.01 per share (the "Common Stock"), of the Company prior to
the Expiration Date. A Noteholder whose 2006 Notes are tendered and accepted for
conversion pursuant to the Conversion Offer will receive 145.4545 shares of
Common Stock (based upon the 2006 Notes' original conversion price of $6.875 per
share of Common Stock) and the Conversion Premium for each $1,000 in principal
amount of 2006 Notes. The Company will accept for conversion pursuant to the
Conversion Offer no more than $294 million in principal amount of the 2006
Notes.
Your attention is directed to the following:
1. The Conversion Offer, proration period and withdrawal rights will
expire at 5:00 p.m., New York City time, on Monday, December 8, 1997, unless
extended.
2. The Company expressly reserves the right to (i) extend, amend or
modify the terms of the Conversion Offer in any manner and (ii) withdraw or
terminate the Conversion Offer at any time for any reason. The Conversion
Offer is not conditioned upon any minimum amount of 2006 Notes being
tendered.
3. Any transfer taxes applicable to the conversion of 2006 Notes
pursuant to the Conversion Offer will be paid by the Company, except as
otherwise provided in Instruction 5 of the Notice of Special Conversion.
4. Upon the terms and subject to the conditions of the Conversion Offer,
if no more than $294 million in principal amount of the 2006 Notes has been
validly tendered pursuant to the Conversion Offer and not withdrawn prior to
the Expiration Date, the Company will accept for conversion all such 2006
Notes, and if more than $294 million in principal amount of the 2006 Notes
has been validly tendered pursuant to the Conversion Offer and not withdrawn
prior to the Expiration Date, the Company will accept such 2006 Notes for
conversion pursuant to the Conversion Offer on a pro rata basis (with
adjustments to avoid conversions of 2006 Notes other than in $1,000
increments). Fractional shares of Common Stock will not be issued in the
Conversion Offer. A Noteholder otherwise entitled to a fractional share of
Common Stock pursuant to the terms of the Conversion Offer shall receive
cash equal to the closing sale price of such fractional share on the New
York Stock Exchange on the Expiration Date. Any 2006 Notes which are
tendered but not accepted for conversion pursuant to the Conversion Offer
will be returned to the tendering Noteholder. Holders of 2006 Notes which
are not converted into Common Stock pursuant to the Conversion Offer will
not be entitled to receive the Conversion Premium upon conversion of such
2006 Notes.
The Conversion Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of 2006 Notes residing in any jurisdiction in which the
making of the Conversion Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.
We are the holder of record of 2006 Notes held for your account. A tender of
such 2006 Notes can be made only by us as the record holder and pursuant to your
instructions. THE ENCLOSED NOTICE OF SPECIAL CONVERSION IS FURNISHED TO YOU FOR
YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER 2006 NOTES HELD BY US
FOR YOUR ACCOUNT.
WE REQUEST YOUR INSTRUCTIONS ON THE INSTRUCTION FORM ON THE REVERSE SIDE OF
THIS LETTER AS TO WHETHER YOU WISH TO TENDER ANY OR ALL OF THE 2006 NOTES HELD
BY US FOR YOUR ACCOUNT, PURSUANT TO THE TERMS AND CONDITIONS OF THE CONVERSION
OFFER. IF YOU WISH US TO CONVERT ANY OR ALL OF YOUR 2006 NOTES, PLEASE SO
INSTRUCT US BY COMPLETING, EXECUTING AND RETURNING THE INSTRUCTION FORM.
<PAGE> 2
INSTRUCTIONS WITH RESPECT TO CONVERSION OFFER BY
UNISYS CORPORATION
FOR UP TO $294,000,000 IN PRINCIPAL AMOUNT OF ITS
8 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2006
The undersigned acknowledges receipt of your letter enclosing the Offer of
Premium Upon Conversion ("Offer of Premium"), dated November 7, 1997, and the
related Notice of Special Conversion, relating to the offer by Unisys
Corporation (the "Company") to pay a cash premium (the "Conversion Premium")
equal to $155.00 plus accrued and unpaid interest from September 15, 1997 to the
Expiration Date (as defined in the Offer of Premium) for each $1,000 in
principal amount of the Company's 8 1/4% Convertible Subordinated Notes due 2006
(the "2006 Notes") which are converted into Common Stock, par value $.01 per
share (the "Common Stock"), of the Company prior to the Expiration Date. The
undersigned understands that the Company will accept for conversion pursuant to
the Conversion Offer no more than $294 million in principal amount of 2006
Notes.
This will instruct you to tender the principal amount of 2006 Notes
indicated below which are held by you for the account of the undersigned,
pursuant to the terms and subject to the conditions of the Conversion Offer, and
confirm that you may make the representations contained in the Notice of Special
Conversion on behalf of the undersigned.
<TABLE>
<CAPTION>
------------------------------------------------
<S> <C>
PRINCIPAL AMOUNT OF 8 1/4% CONVERTIBLE
SUBORDINATED NOTES DUE 2006 TO
BE CONVERTED PURSUANT TO THE
CONVERSION OFFER:
$
--------------------------------------------*
------------------------------------------------
SIGN HERE
------------------------------------------------
------------------------------------------------
SIGNATURES(S)
------------------------------------------------
------------------------------------------------
PLEASE PRINT NAME(S)
ADDRESS
----------------------------------------
------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
------------------------------------------------
TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all of the undersigned's
8 1/4% Convertible Subordinated Notes due 2006 are to be tendered for
conversion pursuant to the Conversion Offer.
<PAGE> 1
Exhibit (a)5
NOTICE OF PREMIUM UPON CONVERSION
OF UP TO $294,000,000 IN PRINCIPAL AMOUNT OF THE
8 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2006
OF
UNISYS CORPORATION
THE CONVERSION OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON MONDAY, DECEMBER 8, 1997, UNLESS EXTENDED.
November 7, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Unisys Corporation, a corporation organized under the laws of the State of
Delaware (the "Company"), is offering, upon the terms and subject to the
conditions set forth in the Offer of Premium Upon Conversion dated November 7,
1997 (the "Offer of Premium"), and in the related Notice of Special Conversion
enclosed herewith (which together constitute the "Conversion Offer"), to pay a
cash premium (the "Conversion Premium") equal to $155.00 plus accrued and unpaid
interest from September 15, 1997 to the Expiration Date (as defined in the Offer
of Premium) for each $1,000 in principal amount of the Company's 8 1/4%
Convertible Subordinated Notes due 2006 (the "2006 Notes") which are converted
into Common Stock, par value $.01 per share (the "Common Stock"), of the Company
prior to the Expiration Date. A Noteholder whose 2006 Notes are tendered and
accepted for conversion pursuant to the Conversion Offer will receive 145.4545
shares of Common Stock (based upon the 2006 Notes' original conversion price of
$6.875 per share of Common Stock) and the Conversion Premium for each $1,000
principal amount of 2006 Notes. The Company will accept for conversion pursuant
to the Conversion Offer no more than $294 million in principal amount of 2006
Notes.
Upon the terms and subject to the conditions of the Conversion Offer, if no
more than $294 million in principal amount of the 2006 Notes has been validly
tendered pursuant to the Conversion Offer and not withdrawn prior to the
Expiration Date, the Company will accept for conversion pursuant to the
Conversion Offer all such 2006 Notes, and if more than $294 million in principal
amount of the 2006 Notes has been validly tendered pursuant to the Conversion
Offer and not withdrawn prior to the Expiration Date, the Company will accept
such 2006 Notes for conversion pursuant to the Conversion Offer on a pro rata
basis (with adjustments to avoid conversions of 2006 Notes other than in $1,000
increments). Fractional shares of Common Stock will not be issued in the
Conversion Offer. A person otherwise entitled to a fractional share of Common
Stock pursuant to the terms of the Conversion Offer shall receive cash equal to
the closing price of such fractional share on the New York Stock Exchange on the
Expiration Date. Any 2006 Notes which are tendered but not accepted for
conversion pursuant to the Conversion Offer will be returned to the tendering
Noteholder. Holders of 2006 Notes which are not converted into Common Stock
pursuant to the Conversion Offer will not receive the Conversion Premium upon
conversion of such 2006 Notes.
For your information and for forwarding to your clients for whom you hold
2006 Notes registered in your name or in the name of your nominee, we enclose
the following documents:
1. The Offer of Premium dated November 7, 1997;
2. The Notice of Special Conversion for your use and for the
information of your clients. Facsimile copies of the Notice of Special
Conversion may be used to convert 2006 Notes pursuant to the Conversion
Offer;
3. A form of letter which may be sent to your clients for whose
accounts you hold 2006 Notes registered in your name or in the name of your
nominee, with space provided for obtaining such client's instructions with
regard to the Conversion Offer;
<PAGE> 2
4. A Notice of Guaranteed Delivery to be used to accept the Conversion
Offer if the 2006 Notes cannot be delivered to the Conversion Agent by the
Expiration Date, or the book-entry transfer of the 2006 Notes cannot be
completed by the Expiration Date, or all required documents cannot be
delivered to the Conversion Agent by the Expiration Date;
5. A letter from the Chairman, President and Chief Executive Officer
of the Company to the holders of 2006 Notes;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to The Bank of New York, the Conversion
Agent.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE CONVERSION OFFER, PRORATION PERIOD
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MONDAY,
DECEMBER 8, 1997, UNLESS EXTENDED.
In all cases, conversion of 2006 Notes accepted for conversion pursuant to
the Conversion Offer will be made only after timely receipt by the Conversion
Agent of (i) certificates representing such 2006 Notes, (ii) the Notice of
Special Conversion (or facsimile thereof) properly completed and duly executed
with any required signature guarantees, and (iii) any other documents required
by the Notice of Special Conversion.
The Conversion Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of 2006 Notes residing in any jurisdiction in
which the making of the Conversion Offer or the acceptance thereof would not be
in compliance with the laws of such jurisdiction.
The Company will not pay any fees or commissions to brokers, dealers or
other persons for soliciting tenders of 2006 Notes pursuant to the Conversion
Offer. The Company will, however, upon request, reimburse brokers, dealers,
commercial banks and trust companies for reasonable costs and expenses incurred
by them in forwarding materials to their clients. The Company will pay all
transfer taxes applicable to the conversion of 2006 Notes pursuant to the
Conversion Offer, except as otherwise provided in Instruction 5 of the Notice of
Special Conversion.
Questions and requests for assistance with respect to the Conversion Offer
should be directed to, and additional copies of the enclosed materials may be
obtained from, Georgeson & Company Inc., the Information Agent for the
Conversion Offer, at its address and telephone numbers set forth on the back
cover of the Offer of Premium.
Very truly yours,
UNISYS CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE COMPANY, THE CONVERSION AGENT OR THE
INFORMATION AGENT, OR ANY AFFILIATE THEREOF, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO MAKE ANY STATEMENTS OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE CONVERSION OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
<PAGE> 1
Exhibit (a)6
NOTICE OF GUARANTEED DELIVERY
TO CONVERT
8 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2006
OF
UNISYS CORPORATION
PURSUANT TO THE OFFER OF PREMIUM DATED NOVEMBER 7, 1997
AND THE RELATED NOTICE OF SPECIAL CONVERSION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This form, or a form substantially equivalent to this form, must be used to
accept the Conversion Offer (as defined below) if (i) certificates for the
8 1/4% Convertible Subordinated Notes due 2006 (the "2006 Notes") of Unisys
Corporation (the "Company") cannot be delivered to The Bank of New York, as
Conversion Agent, by the Expiration Date (as defined in the Company's Offer of
Premium Upon Conversion dated November 7, 1997 (the "Offer of Premium")), (ii)
the procedure for book-entry transfer of 2006 Notes (as described in the Offer
of Premium) cannot be completed by the Expiration Date, or (iii) the Notice of
Special Conversion (or a facsimile thereof) and all other required documents
cannot be delivered to the Conversion Agent prior to the Expiration Date. This
Notice of Guaranteed Delivery, properly completed and duly executed, may be
delivered by hand or sent by facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight delivery) or mailed
to the Conversion Agent. See "The Conversion Offer -- Procedures for Acceptance
of Conversion Offer" in the Offer of Premium.
The Conversion Agent for the Conversion Offer is:
THE BANK OF NEW YORK
For information call: (212) 815-2742
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Courier:
(registered or certified mail recommended)
The Bank of New York The Bank of New York
Floor 7E 101 Barclay Street
101 Barclay Street Corporate Trust
New York, NY 10286 Securities Window
Attn: Enrique Lopez Ground Level
Reorganization Section New York, NY 10286
</TABLE>
By Facsimile Transmission:
(212) 571-3080
(for Eligible Institutions only)
PLEASE CONFIRM RECEIPT OF NOTICE OF GUARANTEED DELIVERY BY TELEPHONE.
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION HEREOF VIA FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A NOTICE OF SPECIAL CONVERSION IS REQUIRED TO BE
GUARANTEED BY AN ELIGIBLE INSTITUTION, SUCH SIGNATURE GUARANTEE MUST APPEAR IN
THE APPLICABLE SPACE PROVIDED ON THE NOTICE OF SPECIAL CONVERSION FOR GUARANTEE
OF SIGNATURES.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders the principal amount of 2006 Notes indicated
below, upon the terms and subject to the conditions contained in the Offer of
Premium Upon Conversion dated November 7, 1997 of Unisys Corporation (the "Offer
of Premium") and the related Notice of Special Conversion, receipt of which are
hereby acknowledged.
Principal Amount of 2006 Notes tendered for conversion pursuant to Conversion
Offer: $ __________________________
Certificate Number(s) of 2006 Notes tendered (if available):
__________________
______________________________________________________________________________
If 2006 Notes will be tendered pursuant to the Conversion Offer by book-entry
transfer:
Name of Tendering Institution:
________________________________________________
Account No.
__________________________________ at The Depository Trust Company
Signature(s):
_________________________________________________________________
Name(s):
______________________________________________________________________
(PLEASE PRINT)
Address(es):
__________________________________________________________________
__________________________________________________________________
(ZIP CODE)
Area Code and Telephone Number:
_______________________________________________
THE FOLLOWING GUARANTEE MUST BE COMPLETED.
<PAGE> 3
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc., or
a commercial bank or trust company having an office, branch or agency in the
United States, hereby guarantees (i) that the above named person(s) "own(s)" the
2006 Notes tendered hereby within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended, (ii) that such tender of 2006 Notes complies
with Rule 14e-4 and (iii) to deliver to the Conversion Agent either the 2006
Notes tendered hereby pursuant to the Conversion Offer, in proper form for
transfer, together with the properly completed and duly executed Notice of
Special Conversion (or facsimile thereof), with any required signature
guarantee, or confirmation of the book-entry transfer of the 2006 Notes tendered
hereby into the account of the Conversion Agent at The Depository Trust Company,
in each case along with any other required documents, within three New York
Stock Exchange trading days after the date of execution of this Notice.
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP CODE)
Area Code and Tel. No.:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Authorized Signature
Name:
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Title:
- --------------------------------------------------------------------------------
Date:
- --------------------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR 2006 NOTES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR 2006 NOTES SHOULD BE SENT WITH YOUR NOTICE OF
SPECIAL CONVERSION.
<PAGE> 1
Exhibit (a)7
FORM OF LETTER TO NOTEHOLDERS FROM LAWRENCE A. WEINBACH
November 7, 1997
To: Holders of Unisys Corporation 8 1/4% Convertible Subordinated Notes due 2006
I am pleased to announce that, pursuant to the enclosed Offer of Premium,
Unisys Corporation (the "Company") is offering to pay a cash premium plus
accrued interest to holders of our 8 1/4% Convertible Subordinated Notes due
2006 (the "Notes") who choose to convert Notes into Common Stock of the Company
prior to the expiration of the offer. The offer will expire on Monday, December
8, 1997, at 5:00 p.m., New York City time, or on such later date to which the
offer is extended by Unisys (the "Expiration Date").
The Notes are convertible into Common Stock of the Company at a conversion
price of $6.875 per share, which is equivalent to a conversion rate of 145.4545
shares of Common Stock for each $1,000 in principal amount of the Notes.
Holders whose Notes are tendered and accepted for conversion pursuant to
this offer will receive the following per $1,000 in principal amount of Notes:
- 145.4545 shares of Common Stock. Cash in lieu of any fractional share
will be paid based upon the closing price of the Common Stock on the
Expiration Date.
- $155 in cash.
- Accrued and unpaid interest from September 15, 1997 to the Expiration
Date of $19.0208 in cash (assuming that the offer expires on December 8,
1997). If the offer is extended beyond December 8, 1997, the amount of
accrued and unpaid interest to be paid will increase.
All holders of the $299 million in principal amount of Notes outstanding
are eligible to accept this special conversion offer, but Unisys will accept for
conversion pursuant to the offer no more than $294 million in principal amount
of the Notes. In the event that more than $294 million in principal amount of
the Notes is tendered for conversion pursuant to the conversion offer as of the
Expiration Date, Unisys will accept such Notes on a pro rata basis.
We hope that you will take advantage of this opportunity to convert your
Notes. We have set a target of reducing our debt by $1 billion by the year 2000
and are taking tangible steps toward that goal. Last month we successfully
completed a conversion of our 8 1/4% year 2000 convertible notes, which reduced
our debt by $345 million and increased shareholder's equity by a similar amount.
Step by step, we are moving to reduce debt, reduce interest expense, and create
a more flexible capital structure that supports our growth initiatives.
If you wish to tender your Notes for conversion pursuant to the offer, you
should read carefully the enclosed materials, including the Offer of Premium and
the Notice of Special Conversion, and comply with the procedures set forth
therein for tendering Notes. Tenders of Notes pursuant to the offer, together
with the delivery of any required documents to The Bank of New York (at either
of the addresses shown in the Notice of Special Conversion), must be made no
later than 5:00 p.m., New York City time, on the Expiration Date.
Questions and requests for assistance, requests for additional copies of
the Offer of Premium or of the Notice of Special Conversion and requests for
Notices of Guaranteed Delivery should be directed to Georgeson & Company Inc.,
which has been retained by Unisys to act as Information Agent for the Conversion
Offer. Georgeson can be contacted at (800) 223-2064; banks and brokers should
call (800) 445-1790.
Very truly yours,
Lawrence A. Weinbach
Chairman, President and Chief
Executive Officer
Enclosures: Offer of Premium
Notice of Special Conversion
<PAGE> 1
EXHIBIT (c)(1)
FORM OF CONVERSION OFFER ADVISOR AGREEMENT
November 7, 1997
PERSONAL & CONFIDENTIAL
Unisys Corporation
Township Line & Union Meeting Roads
Blue Bell, PA 19424-001
Attention: Mr. Angus F. Smith
Vice President & Treasurer
Gentlemen:
This letter confirms the agreement (the "Agreement") between Unisys Corporation
("Unisys" or the "Company") and Bear, Stearns & Co. Inc. ("Bear Stearns") as
follows:
1. The Company hereby engages Bear Stearns to render financial
advisory services (the "Services") to the Company in
connection with the Company's offer of premium upon conversion
("the Offer") of the Company's 8-1/4% Convertible Notes due
2006 ("the Notes").
2. Bear Stearns hereby accepts the engagement and, in that
connection, agrees to advise the Company with respect to the
Offer of premium upon conversion.
3. In connection with Bear Stearns' engagement, the Company will
furnish Bear Stearns with all information concerning the
Company, the Notes, and the Offer which Bear Stearns deems
appropriate and will provide Bear Stearns with access to the
Company's officers, directors, employees, accountants, counsel
and other representatives (collectively, the
"Representatives").
The Company recognizes and confirms that in performing its
duties pursuant to this Agreement, Bear Stearns will be using
and relying entirely on data, material and other information
(the "Information") furnished by the Company and its
Representatives. The Company hereby agrees and represents that
all Information furnished to Bear Stearns pursuant to this
Agreement shall be accurate and complete in all material
respects at the time provided, and that if the Information
becomes inaccurate, incomplete or misleading during the term
of Bear Stearns' engagement hereunder, the Company shall so
notify Bear Stearns in writing. The Company further represents
and warrants that any projections or other Information
provided by it to Bear Stearns will have been prepared in good
faith and will be based upon assumptions which, in light of
the circumstances under which they are made, are reasonable.
Accordingly, Bear Stearns assumes no responsibility for the
accuracy and completeness of the Information. In rendering its
services hereunder, Bear Stearns will be using and relying
upon the Information without
<PAGE> 2
Mr. Angus F. Smith
Unisys Corporation
November 7, 1997
Page 2 of 5
independent investigation or verification thereof or
independent evaluation of any of the assets or liabilities of
the Company. All material non-public information concerning
the Company which is given to Bear Stearns will be used solely
in the course of the performance of Bear Stearns' services
hereunder and will be treated confidentially by Bear Stearns
for so long as it remains non-public. Except as otherwise
required by law, Bear Stearns will not disclose this
Information to any third party without the Company's consent.
4. As compensation for Bear Stearns' services hereunder, the
Company will pay to Bear Stearns an advisory fee of
$250,000.00 payable upon execution of this letter.
5. The Company shall reimburse Bear Stearns for all of its
reasonable out-of-pocket fees, expenses and costs (including,
but not limited to, travel, accommodations, telephone, courier
and supplies) in connection with the performance of its
activities under this Agreement.
All such fees, expenses and costs will be billed periodically
by Bear Stearns and are payable when invoiced. Upon
termination or expiration of this Agreement or completion of
Bear Stearns' assignment, any unreimbursed fees and expenses
will be immediately due and payable. Any obligation pursuant
to this Paragraph 5 shall survive the termination or
expiration of this Agreement.
6. The Company agrees to indemnify Bear Stearns in accordance
with the indemnification provisions (the "Indemnification
Provisions") attached to this Agreement, which Indemnification
Provisions are incorporated herein and made a part hereof and
which shall survive the termination, expiration or
supersession of this Agreement.
7. Bear Stearns' engagement hereunder may be terminated at any
time by the Company or by Bear Stearns, upon written notice
thereof to the other party, provided, however, any termination
of Bear Stearns' engagement hereunder shall not affect the
Company's obligation to pay fees and expenses to the extent
provided for herein and to indemnify Bear Stearns and certain
related persons and entities with respect to actions and
omissions prior to such termination as provided in the
Indemnification Provisions.
8. Except as required by applicable law or otherwise provided
above, no opinion rendered or advice given by Bear Stearns,
whether formal or informal, may be disclosed in whole or in
part, or summarized, excerpted from or otherwise publicly
referred to, or made available to third parties without Bear
Stearns' prior written consent. In addition, neither Bear
Stearns nor its advice may be otherwise publicly referred to
without its prior written consent.
<PAGE> 3
Mr. Angus F. Smith
Unisys Corporation
November 7, 1997
Page 3 of 5
9. The Company agrees that, following the completion of the
Offer, Bear Stearns has the right to place advertisements in
financial and other newspapers and journals at its own expense
describing its services to the Company hereunder, provided
that Bear Stearns will submit a copy of any such
advertisements to the Company for its approval, which approval
shall not be unreasonably withheld or delayed.
10. This Agreement does not create, and shall not be construed as
creating, rights enforceable by any person or entity not a
party hereto, except those who may be entitled thereto by
virtue of paragraph 6 and the Indemnification Provisions
hereof. The Company acknowledges and agrees that: (i) Bear
Stearns is being retained to provide Services to the Company
and that Bear Stearns is not being retained to advise the
Company on, or to express any opinion as to, the wisdom,
desirability or prudence of consummating a transaction and
(ii) Bear Stearns is not and shall not be construed as a
fiduciary of the Company and shall have no duties or
liabilities to the equity holders or creditors of the Company
or any other person by virtue of this Agreement or the
retention of Bear Stearns hereunder, all of which are hereby
expressly waived. The Company also agrees that Bear Stearns
shall not have any liability (whether direct or indirect, in
contract, tort or otherwise) to the Company or to any person
(including, without limitation, equity holders and creditors
of the Company) claiming through the Company for or in
connection with the engagement of Bear Stearns, this Agreement
and the transactions contemplated hereby other than any such
liability that is found in a final judgment by a court of
competent jurisdiction (not subject to appeal) to have
resulted primarily and directly from the negligence or willful
misconduct of Bear Stearns. The Company acknowledges that Bear
Stearns was induced to enter into this Agreement by, inter
alia, the provisions of this paragraph.
11. Bear Stearns acknowledges that the Offer is being made in
reliance on the exemption from the registration requirements
of the Securities Act of 1933, as amended, afforded by Section
3(a)(9) thereof and accordingly agrees that it will not in any
way solicit conversions of the Notes or take any other actions
that could cause the exemption afforded by Section 3(a)(9) to
no longer be available.
12. The Company and Bear Stearns acknowledge and agree that there
are no brokers, representatives or other persons which have an
interest in compensation due to Bear Stearns from any
transactions contemplated herein.
13. If any provision of this Agreement shall be held or made
invalid by a statute, rule, regulation, decision of a tribunal
or otherwise, the remainder of this Agreement shall not
<PAGE> 4
Mr. Angus F. Smith
Unisys Corporation
November 7, 1997
Page 4 of 5
be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
14. The undersigned represents and warrants that it has all
requisite power and authority, and all necessary
authorizations, to enter into and carry out the terms and
provisions of this Agreement.
15. In connection with this engagement Bear Stearns is acting as
an independent contractor with duties owing solely to the
Company. This Agreement may not be amended or modified except
in writing and shall be governed by and construed in
accordance with the laws of the State of New York, without
regard to conflicts of law principles thereof.
We are delighted to accept this engagement and look forward to working with you
on this assignment. Please confirm that the foregoing is in accordance with your
understanding by signing and returning to us the enclosed duplicate of this
letter.
Very truly yours,
BEAR, STEARNS & CO. INC.
By: /s/Fares D. Noujaim
Fares D. Noujaim
Senior Managing Director
ACCEPTED AND AGREED TO:
UNISYS CORPORATION
By: /s/ Angus F. Smith
Angus F. Smith
Vice President & Treasurer
<PAGE> 5
INDEMNIFICATION PROVISIONS
Unisys Corporation (the "Company") agrees to indemnify and hold
harmless Bear, Stearns & Co. Inc. ("Bear Stearns"), to the fullest extent
permitted by law, from and against any and all losses, claims, damages,
liabilities, obligations, penalties, judgments, awards, costs, expenses and
disbursements (and any and all actions, suits, proceedings and investigations in
respect thereof and any and all legal and other costs, expenses and
disbursements in giving testimony or furnishing documents in response to a
subpoena or otherwise), including, without limitation, the costs, expenses and
disbursements, as and when incurred, of investigating, preparing or defending
any such action, suit, proceeding or investigation (whether or not in connection
with litigation in which Bear Stearns is a party), directly or indirectly,
caused by, relating to, based upon, arising out of or in connection with (a) the
letter agreement dated November 10 , 1997 between Bear Stearns and the Company,
as it may be amended from time to time (the "Agreement") or (b) any untrue
statement or alleged untrue statement of a material fact contained in, or
material omissions or alleged material omissions from, any information furnished
by the Company to Bear Stearns; provided, however, such indemnity agreement
shall not apply to any portion of any such loss, claim, damage, obligation,
penalty, judgment, award, liability, cost, expense or disbursement to the extent
it is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) to have resulted primarily and directly from the
negligence or willful misconduct of Bear Stearns.
These indemnification provisions shall be in addition to any liability
which the Company may otherwise have to Bear Stearns or the persons indemnified
below in this sentence and shall extend to the following: The Bear Stearns
Companies Inc., Bear, Stearns & Co. Inc., their respective affiliated entities,
directors, officers, employees, and controlling persons (within the meaning of
the federal securities laws). All references to Bear Stearns in this
Indemnification Agreement shall be understood to include any and all of the
foregoing.
If any action, suit, proceeding or investigation is commenced, as to
which Bear Stearns proposes to demand indemnification, it shall notify the
Company with reasonable promptness; provided, however, that any failure by Bear
Stearns to notify the Company shall not relieve the Company from its obligations
hereunder. Bear Stearns shall have the right to retain counsel of its own choice
to represent it, and the Company shall pay the fees, expenses and disbursements
of such counsel; and such counsel shall, to the extent consistent with its
professional responsibilities, cooperate with the Company and any counsel
designated by the Company. The Company shall be liable for any settlement of any
claim against Bear Stearns made with the Company's written consent, which
consent shall not be unreasonably withheld. The Company shall not, without the
prior written consent of Bear Stearns, settle or compromise any claim, or permit
a default or consent to the entry of any judgment in respect thereof, unless
such settlement, compromise, or consent includes, as an unconditional term
thereof, the giving by the claimant to Bear Stearns of an unconditional release
from all liability in respect of such claim.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these indemnification provisions is made but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then the Company, on the one hand, and Bear Stearns, on the other hand, shall
contribute to the losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses and disbursements to which the indemnified
persons may be subject in accordance with the relative benefits received by the
Company, on the one hand, and Bear Stearns, on the other hand, and also the
relative fault of the Company, on the one hand, and Bear Stearns, on the other
hand, in connection with the statements, acts or omissions which resulted in
such losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses and disbursements and the relevant equitable
considerations shall also be considered. No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
also found liable for such fraudulent misrepresentation. Notwithstanding the
foregoing, Bear Stearns shall not be obligated to contribute any amount
hereunder that exceeds the amount of fees previously received by Bear Stearns
pursuant to the Agreement.
Neither termination nor completion of the engagement of Bear Stearns
referred to above shall affect these indemnification provisions which shall then
remain operative and in full force and effect.
<PAGE> 1
EXHIBIT (c)(2)
FORM OF CONVERSION AGENT AGREEMENT
The Bank of New York
101 Barclay Street
New York, NY 10286
Attention: Ms. Lucille Firrincieli
Ladies and Gentlemen:
Unisys Corporation, a Delaware corporation (the "Offeror"), is offering
to pay a cash premium (the "Conversion Premium") equal to $155.00 plus accrued
and unpaid interest to the Expiration Date (as defined below) for each $1,000 in
principal amount of its 8 1/4% Convertible Subordinated Notes due 2006 (the
"2006 Notes"), the holder of such a 2006 Note being referred to herein as a
"Holder" that is converted into Common Stock, $.01 par value per share (the
"Common Stock"), of the Offeror prior to the Expiration Date, upon the terms and
subject to the conditions set forth in the Offer of Premium Upon Conversion
dated November 7, 1997 and the related Notice of Special Conversion, copies of
which are attached hereto as Exhibits A and B, respectively, and which together,
as they may be supplemented from time to time, constitute the "Conversion
Offer".
The Offeror hereby appoints The Bank of New York to act as Conversion
Agent in connection with the Conversion Offer. References hereinafter to "you"
shall refer to The Bank of New York.
The Conversion Offer was commenced by the Offeror on November 7, 1997.
The Notice of Special Conversion that accompanies the Offer of Premium is to be
used by the Holders to accept the Conversion Offer, and contains instructions
with respect to the delivery of 2006 Notes tendered.
The Conversion Offer shall expire at 5:00 p.m., New York City time, on
December 8, 1997 (the "Initial Expiration Date"), or on such subsequent date or
time to which the Offeror may extend the Conversion Offer. Subject to the terms
of the Conversion Offer, the Offeror expressly reserves the right to extend the
Conversion Offer from time to time and may extend the Conversion Offer by giving
notice to you before 9:00 a.m., New York City time, on the business day
following the scheduled Expiration Date. The later of the Initial Expiration
Date or the latest time and date to which the Conversion Offer may be so
extended is hereinafter referred to as "the Expiration Date".
1. You will establish and maintain a book-entry account in respect of
the 2006 Notes at The Depository Trust Company ("DTC"), in connection with the
<PAGE> 2
Conversion Offer, in accordance with Rule 17Ad-14 under the Securities Exchange
Act of 1934, as amended. Any financial institution that is a participant in the
DTC system may make book-entry delivery of 2006 Notes by causing DTC to transfer
such 2006 Notes into the account maintained by you, pursuant to this paragraph,
in accordance with DTC's procedure for such transfer, and you may effect a
withdrawal of 2006 Notes through such account by book-entry movement. Holders of
certificates in physical form must deliver such certificates, together with the
Notice of Special Conversion (or facsimile thereof) with any required signature
guarantees and any other documents to you in order for 2006 Notes to be properly
tendered. The accounts shall be maintained until all 2006 Notes tendered
pursuant to the Conversion Offer shall have been either accepted for conversion
pursuant to the Conversion Offer or returned.
2. You are to examine each of the Notices of Special Conversion and
certificates for 2006 Notes and any other documents delivered or mailed to you
by or for Holders to ascertain whether: (i) the Notices of Special Conversion
and any such other documents are duly executed and properly completed in
accordance with instructions set forth therein and (ii) the Notices of Special
Conversion have otherwise been properly tendered. In each case where the Notice
of Special Conversion or any other document has been improperly completed or
executed or any of the certificates for 2006 Notes are not in proper form for
transfer or some other irregularity in connection with the acceptance of the
Conversion Offer exists, you will endeavor to inform the presenters of the need
for fulfillment of all requirements and to take any other action as may be
necessary or advisable to cause such irregularity to be corrected.
3. With the approval of an authorized officer of the Offeror, Gary D.
Fromer, Esquire, counsel to the Offeror (such approval, if given orally, to be
confirmed in writing), or any other party designated by such an officer, you are
authorized to waive any irregularities in connection with any tender pursuant to
the Conversion Offer.
4. Tenders of Notices of Special Conversion may be made only as set
forth in the section of the Offer of Premium entitled "The Conversion Offer --
Procedures for Acceptance of Conversion Offer", and 2006 Notes shall be
considered properly tendered to you only when:
(a) certificates for 2006 Notes (whether physically
delivered or delivered pursuant to the procedure for
book-entry transfer set forth in the section of the
Offer of Premium entitled "The Conversion Offer --
Procedures for Acceptance of Conversion Offer" in
which latter case confirmation of receipt of such
tendered 2006 Notes must be received by you) are
covered by a properly completed and duly executed
Notice of Special Conversion received by you
(together with any other required documents) prior
to the Expiration Date, or by an appropriate Notice
of Guaranteed Delivery received by you in accordance
with the Offer of Premium prior to the
2
<PAGE> 3
Expiration Date. For the purposes of these
instructions, "an appropriate Notice of Guaranteed
Delivery" shall be a Notice of Guaranteed Delivery
substantially in the form attached hereto as Exhibit
C, which is either delivered to you by hand or
transmitted to you by facsimile transmission and mail
or overnight courier;
(b) certificates for 2006 Notes (together with any other
required documents) are received by you, or you have
received confirmation of receipt of such 2006 Notes
pursuant to the book-entry transfer procedures set
forth in the Offer of Premium, prior to the
Expiration Date or, in the case of an appropriate
Notice of Guaranteed Delivery, along with a properly
completed and duly executed Notice of Special
Conversion (or a manually signed facsimile thereof)
and any other documents required by the Notice of
Special Conversion, within three New York Stock
Exchange, Inc. trading days after the date of such
Notice of Guaranteed Delivery; and
(c) the adequacy of the items relating to certificates
for 2006 Notes and the related Notice of Special
Conversion has been favorably passed upon as above
provided.
Notwithstanding the provisions of this paragraph 4, (i) 2006 Notes
which the Offeror shall approve as having been properly tendered and (ii) 2006
Notes which are properly tendered pursuant to the procedures of DTC's Automated
Tender Offer Program shall be considered to be properly tendered.
A tender made on the basis of an appropriate Notice of Guaranteed
Delivery will not be considered to have been properly made unless certificates
for all of the 2006 Notes covered thereby have been deposited (either physically
or pursuant to book-entry transfer) within the time periods provided in this
paragraph 4 and the Offer of Premium; and when all such certificates have been
so delivered and all other requirements in this paragraph 4 and the Offer of
Premium have been complied with, the tender will be deemed effected at the time
of receipt by you of the Notice of Special Conversion or appropriate Notice of
Guaranteed Delivery, as the case may be, provided for in the Offer of Premium
and this paragraph 4.
5. You shall advise the Offeror with respect to any 2006 Notes received
subsequent to the Expiration Date and accept its instructions with respect to
disposition of such 2006 Notes.
6. You shall accept tenders:
(a) in cases where the 2006 Notes are registered in two
or more names only if signed by all named holders.
3
<PAGE> 4
(b) in cases where the signed person (as indicated on the
Notice of Special Conversion) is acting in a
fiduciary or a representative capacity only when
proper evidence of his authority so to act is
submitted.
(c) from persons other than the registered holder
provided that normal transfer requirements, including
any applicable transfer taxes, are fulfilled.
You shall accept partial tenders of 2006 Notes where so indicated in
the Notice of Special Conversion and deliver certificates for 2006 Notes to the
trustee for split-up and return of untendered 2006 Notes to the Holder as
promptly as practicable.
7. The Offeror will accept for conversion pursuant to the Conversion
Offer 2006 Notes duly tendered on the terms and subject to the conditions set
forth in the Offer of Premium and the Notice of Special Conversion. Payment of
the Conversion Premium and accrued interest in respect of 2006 Notes duly
tendered and purchased pursuant to the Conversion Offer will be made by check on
behalf of the Offeror by you at the rate set forth in the Offer of Premium (or
such higher amount as is offered by the Offeror pursuant to the Conversion
Offer) as soon as practicable after notice (such notice, if given orally, to be
confirmed in writing) of acceptance of said 2006 Notes by the Offeror and the
funds referred to below are received by you; provided, however, that in all
cases, payment for 2006 Notes tendered and accepted for conversion pursuant to
the Conversion Offer will be made only after timely receipt by you of
certificates for such 2006 Notes (or timely confirmation of a book-entry
transfer of such 2006 Notes into your account at DTC), a properly completed and
duly executed Notice of Special Conversion (or facsimile thereof) and any other
required documents.
Immediately available funds representing the aggregate amount of
Conversion Premium due to tendering Holders, along with certificates
representing the shares of Common Stock into which validly tendered 2006 Notes
are being converted (or book-entry transfer of such shares), will be deposited
with you on the day checks and share certificates are to be mailed or delivered
by you. After such payment, you shall promptly present certificates for said
2006 Notes, and any applicable transfer taxes (to be furnished by the Offeror),
together with any other documents reasonably requested by the Offeror, including
a certificate by you indicating the number of 2006 Notes validly tendered for
conversion, all in accordance with written instructions from the Offeror.
8. 2006 Notes tendered for conversion pursuant to the Conversion Offer
are irrevocable, except that 2006 Notes tendered for conversion pursuant to the
Conversion Offer may be withdrawn at any time prior to the Expiration Date, and
unless theretofore purchased by the Offeror, may also be withdrawn at any time
on or after January 7, 1998, if not accepted for purchase. See the Offer of
Premium for further details.
4
<PAGE> 5
9. The Offeror shall not be required to accept any 2006 Notes tendered
for conversion pursuant to the Conversion Offer if any of the conditions set
forth in the Conversion Offer are not met. Notice of any decision by the Offeror
not to purchase or pay for any 2006 Notes tendered shall be given (and confirmed
in writing) by the Offeror to you.
10. If, pursuant to the Conversion Offer, the Offeror does not accept
for conversion, and deliver to you the Conversion Premium, and shares of Common
Stock due in respect of, the 2006 Notes validly tendered, you shall as soon as
practicable return those certificates for unaccepted 2006 Notes (or effect
appropriate book-entry transfer), together with any related required documents
and the Notices of Special Conversion relating thereto that are in your
possession, to the persons who deposited them.
11. All certificates for unaccepted 2006 Notes, checks or drafts for
the Conversion Premium and certificates for shares of Common Stock due upon
conversion of the 2006 Notes shall be forwarded by first-class mail.
12. You are not authorized to offer to pay any concessions, commissions
or solicitation fees to any broker, dealer, bank or other persons or to engage
or utilize any person to solicit tenders.
13. As Conversion Agent hereunder you:
(a) shall have no duties or obligations other than those
specifically set forth herein or as may be
subsequently set forth herein or as may be
subsequently agreed to between you and the Offeror;
(b) will be regarded as making no representations and
having no responsibilities as to the validity,
sufficiency, value or genuineness of any of the
certificates or the 2006 Notes represented thereby
deposited with you pursuant to the Conversion Offer,
and will not be required to and will make no
representation as to the validity, value or
genuineness of the Conversion Offer;
(c) shall not be obligated to take any legal action
hereunder which might in your judgment involve any
expense or liability, unless you shall have been
furnished with reasonable indemnity;
(d) may reasonably rely on and shall be protected in
acting in reliance upon any certificate, instrument,
opinion, notice, letter, telegram, or other document
or security delivered to you and reasonably believed
by you to be genuine and to have been signed by the
proper party or parties;
5
<PAGE> 6
(e) may act upon any tender, statement, request, comment,
agreement or other instrument whatsoever not only as
to its due execution and validity and effectiveness
of its provisions, but also as to the truth and
accuracy of any information contained therein, which
you shall in good faith believe to be genuine or to
have been signed or represented by a proper person or
persons;
(f) may rely on and shall be protected in acting upon
written or oral instructions from any authorized
officer of the Offeror;
(g) may consult with counsel of your selection with
respect to any questions relating to your duties and
responsibilities and the opinion of such counsel
shall be full and complete authorization and
protection in respect to any action taken, suffered
or omitted by you hereunder in good faith and in
accordance with the opinion of such counsel, and
(h) shall not advise any person tendering 2006 Notes
pursuant to the Conversion Offer as to the wisdom of
accepting the Conversion Offer.
Offeror and you hereby acknowledge that you are the Trustee for the 2006 Notes
pursuant to the First Supplemental Indenture, dated as of March 8, 1996, to the
Indenture dated as of March 1, 1996, between Offeror and you (together, as
amended from time to time, the "2006 Notes Indenture"). You agree that, in
connection with the Conversion Offer, you will continue to perform all of your
duties and obligations, and shall retain all of your rights, as Trustee under
the 2006 Notes Indenture.
14. You shall take such action as may from time to time be requested by
the Offeror (and such other action as you may deem appropriate) to furnish
copies of the Offer of Premium, Notice of Special Conversion and Notice of
Guaranteed Delivery in the forms attached hereto, or in such other forms as may
be approved from time to time by the Offeror, to all persons requesting such
documents and to accept and comply with telephone requests for information
relating to the Conversion Offer. The Offeror will furnish you with copies of
such documents on your request.
15. You are authorized to cooperate with and to furnish information to
any organization (and its representatives) designated from time to time by the
Offeror in any manner reasonably requested by it in connection with the
Conversion Offer and any tenders thereunder.
16. You shall advise by facsimile transmission or telephone, and
promptly thereafter confirm in writing, to Office of the Treasurer of the
Offeror, (at the address and telephone or other number set forth on Schedule II
hereto) and such other person or persons as any of them may request, daily (or
more frequently if requested) up to and including the Expiration Date, as to the
principal amount of 2006 Notes which has been tendered pursuant to the
Conversion Offer
6
<PAGE> 7
and the items received by you pursuant to this Agreement, separately reporting
and giving cumulative totals as items properly received, items improperly
received and items covered by Notices of Guaranteed Delivery referred to in
paragraph (b) of paragraph 4 hereof. In addition, you will also inform, and
cooperate in making available to, the aforementioned persons upon oral request
made from time to time prior to the Expiration Date of such other information as
they may reasonably request. Such cooperation shall include, without limitation,
the granting by you to the Offeror and the persons listed in the preceding
sentence, and such persons as the Offeror may request, of access to those
persons on your staff who are responsible for receiving tenders, in order to
ensure that immediately prior to the Initial Expiration Date and each other
Expiration Date, if any, the Offeror shall have received information in
sufficient detail to enable it to decide whether to extend the Conversion Offer.
You shall prepare a final list of all persons whose tenders were accepted, the
principal amount of 2006 Notes tendered, and the principal amount of 2006 Notes
accepted and deliver said list to the persons set forth above.
17. Notices of Special Conversion and Notices of Guaranteed Delivery
submitted in lieu thereof pursuant to the Offer of Premium shall be stamped by
you as to the date, and, after the expiration of the Conversion Offer, the time,
of receipt thereof and shall be preserved by you for a period of time at least
equal to the period of time you preserve other records pertaining to the
transfer of securities. You shall dispose of unused Notices of Special
Conversion and other surplus materials by returning them to Office of the
Treasurer of the Offeror.
18. For services rendered as Conversion Agent hereunder, you shall be
entitled to such compensation as set forth on Schedule I attached hereto upon
the completion of the Conversion Offer. The provisions of this section shall
survive the termination of this Agreement.
19. You hereby acknowledge receipt of the Offer of Premium and Notice
of Special Conversion. Any inconsistency between this Agreement, on the one
hand, and the Offer of Premium and Notice of Special Conversion (as they may be
amended from time to time), on the other hand, shall be resolved in favor of the
latter two documents, except with respect of the duties, liabilities and
indemnification of you as Conversion Agent.
20. The Offeror covenants and agrees to indemnify and hold you harmless
against any loss, liability, cost or expense, including reasonable attorneys'
fees and expenses (incurred without negligence, misconduct or bad faith on your
part), arising out of or in connection with any act, omission, delay or refusal
made by you in reasonable reliance upon any signature, endorsement, assignment,
certificate, order, request, notice, instruction or other instrument or document
reasonably believed by you to be valid, genuine and sufficient and in accepting
for conversion or effecting any conversion of 2006 Notes reasonably believed by
you in good faith to be authorized, and in delaying or refusing in good faith to
accept for conversion or effect any conversion of 2006 Notes. In each case, the
Offeror shall be notified by you, by letter or facsimile transmission, of the
written assertion of a claim against you or of any other action commenced
against you, promptly after you shall have received any such written assertion
or shall have been served with a summons in connection therewith. The Offeror
shall be entitled to participate at its own expense in the defense of any such
claim or other action and, if the Offeror so elects, the Offeror shall assume
the defense of any suit brought to enforce any such claim. In
7
<PAGE> 8
the event that the Offeror shall assume the defense of any such suit, the
Offeror shall not be liable for the fees and expenses of any additional counsel
thereafter retained by you, so long as the Offeror shall retain counsel
reasonably satisfactory to you to defend such suit. The provisions of this
section shall survive the termination of this Agreement.
21. You shall arrange to comply with all requirements under the tax
laws of the United States, including those relating to missing Tax
Identification Numbers, and shall file any appropriate reports with the Internal
Revenue Service (e.g., 1099, 1099B, etc). The Offeror understands that you are
required to deduct 31% on payments to holders who have not supplied their
correct Taxpayer Identification Number or required certification. Such funds
will be turned over to the Internal Revenue Service.
22. You shall deliver or cause to be delivered in a timely manner to
each governmental authority to which any stock transfer taxes are payable in
respect of the conversion of 2006 Notes your check in the amount of all stock
transfer taxes so payable, and the Offeror shall reimburse you for the amount of
any and all transfer taxes payable in respect of the conversion of 2006 Notes;
provided, however, that you shall reimburse the Offeror for amounts refunded to
you in respect of your payment of any such transfer taxes, at such time as such
refund is received by you.
23. This Agreement and your appointment as Conversion Agent hereunder
shall be construed and enforced in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely within such
state, and shall inure to the benefit of, and the obligations created hereby
shall be binding upon, the successors and assigns of each of the parties hereto.
This Agreement may not be modified orally.
24. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original but which together shall constitute one
and the same agreement.
UNISYS CORPORATION
By: /s/ ANGUS F. SMITH
--------------------------
Name: Angus F. Smith
Title: Vice President and Treasurer
ACKNOWLEDGED AND AGREED:
THE BANK OF NEW YORK
By: /s/ LUCILLE FIRRINCIELI
- -----------------------------
Name: Lucille Firrincieli
Title: Vice President
8
<PAGE> 1
EXHIBIT (c)(3)
FORM OF INFORMATION AGENT AGREEMENT
November 7, 1997
Unisys Corporation
P. O. Box 500
Blue Bell, PA 19424
LETTER OF AGREEMENT
-------------------
This Letter of Agreement (the "Agreement") sets forth the terms and conditions
under which Georgeson & Company Inc. ("Georgeson") has been retained by Unisys
Corporation ("Unisys") as Information Agent in connection with the Offer of
Premium Upon Conversion of Unisys 8-1/4% Convertible Notes due 2006 (the
"Offer"). The term of the Agreement shall be the term of the Offer, including
any extensions thereof.
1. During the term of the Agreement, Georgeson will: provide advice and
consultation with respect to the planning and execution of the Offer;
assist in the preparation and placement of newspaper ads; assist in
the distribution of Offer documents to brokers, banks, nominees,
institutional investors, and other shareholders and investment
community accounts; answer collect telephone inquiries from
noteholders and their representatives; provide prompt and accurate
information from the Offer documents to such persons; and, if
requested, call individuals who are registered holders.
2. Unisys will pay Georgeson a fee of $10,000, of which half is payable
in advance per the enclosed invoice and the balance at the expiration
of the Offer, plus an additional fee to be mutually agreed upon if the
Offer is extended more than fifteen business days beyond the initial
expiration date. If Georgeson is requested to call individuals who are
registered holders, Unisys Corporation will pay Georgeson an
additional sum computed on the basis of $8.00 per call. In addition,
Unisys will reimburse Georgeson for reasonable costs and expenses
incurred by Georgeson in fulfilling the Agreement, including but not
limited to: expenses incurred by Georgeson in the preparation and
placement of newspaper ads, including typesetting and space charges;
postage and freight charges incurred by Georgeson in the delivery of
Offer documents; printing costs; charges for the production of
shareholder lists (paper, computer cards, etc.), statistical analyses,
mailing labels, or other forms of information requested by Unisys or
its agents and other expenses or disbursements authorized by Unisys or
its agents.
3. If requested, we will check, itemize and pay, on your behalf, from
funds provided by you, the charges of brokers and banks, with the
exception of ADP Proxy Services which will bill you directly, for
forwarding Offer materials to beneficial owners. To ensure that we
have sufficient funds in your account to pay these bills promptly, you
agree to provide us, at the time we complete the initial delivery of
this material, with a preliminary payment equal to 75% of the
anticipated broker and bank charges for distributing this material.
For this service, you will pay us five dollars and fifty cents ($5.50)
for each broker and bank invoice paid by us. If you prefer to pay
these bills directly, please strike out and initial this clause before
returning the Agreement to us.
<PAGE> 2
Unisys Corporation
November 7, 1997
Page 2
4. Georgeson hereby agrees not to make any representations not included in
the Offer documents.
5. Unisys agrees to indemnify and hold Georgeson harmless against any loss,
damage, expense (including, without limitation, reasonable legal and
other related fees and expenses), liability or claim arising out of
Georgeson's fulfillment of the Agreement (except for any loss, damage,
expense, liability or claim arising out of Georgeson's own negligence,
misconduct or breach hereof). At its election, Unisys may assume the
defense of any such action. Georgeson hereby agrees to advise Unisys of
any such liability or claim promptly after receipt of any notice
thereof. Georgeson hereby agrees not to settle any litigation in
connection with any claim or liability with respect to which Georgeson
may seek indemnification from Unisys without Unisys prior written
consent. The indemnification contained in this paragraph will survive
the term of the Agreement.
6. Georgeson agrees to preserve the confidentiality of all non-public
information provided by Unisys or its agents for our use in providing
services under this Agreement, or information developed by Georgeson
based upon such non-public information.
IF THE ABOVE IS AGREED TO BY YOU, PLEASE SIGN AND RETURN THE ENCLOSED DUPLICATE
OF THIS AGREEMENT TO GEORGESON & COMPANY INC., WALL STREET PLAZA, NEW YORK, NEW
YORK 10005, ATTENTION: MARCY ROTH, CONTRACT ADMINISTRATOR.
ACCEPTED: Sincerely,
UNISYS CORPORATION GEORGESON & COMPANY INC.
By: /s/ Angus F. Smith By: /s/ Kay DeAngelis
---------------------------- ----------------------------
Angus F. Smith Kay DeAngelis
Title: Vice President and Treasurer Title: Senior Managing Director
---------------------------- -------------------------
Date: November 7, 1997
-------------------------
<PAGE> 1
EXHIBIT(f)(1)
QUESTIONS AND ANSWERS
Q.1 WHY IS UNISYS MAKING THIS OFFER?
A.1 Unisys is making this offer to provide an incentive for the immediate
conversion of up to $294 million of its 8-1/4% Convertible Subordinated Notes
due 2006 into common stock. We expect two benefits from this. It will
strengthen the company's balance sheet by increasing its common equity and
reducing debt. In addition, it will reduce the future interest payments on the
8-1/4% Convertible Subordinated Notes due 2006, which may improve the company's
creditworthiness.
Q.2 WHY ISN'T UNISYS SIMPLY CALLING THE 8-1/4% CONVERTIBLE SUBORDINATED
NOTES DUE 2006 FOR REDEMPTION IN ORDER TO FORCE CONVERSION?
A.2 Under terms of the notes, Unisys is not permitted to call the 8-1/4%
Convertible Subordinated Notes due 2006 for redemption until March 15, 1999.
Q.3 WHY IS UNISYS SEEKING ONLY $294 MILLION IN PRINCIPAL AMOUNT OF THE
$299 MILLION OF THE 2006 NOTES OUTSTANDING?
A.3 Unisys has elected to leave at least $5 million of the 2006 notes
outstanding after the induced conversion to ensure that the 2006 notes would
remain listed by the New York Stock Exchange for holders choosing not to
convert their notes under the offer.
Q.4 WILL HOLDERS OF THE 8-1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2006
WHO CHOOSE TO CONVERT IN THE OFFER RECEIVE UNPAID AND ACCRUED INTEREST?
A.4 Yes.
Q.5 HOW WILL THE CONVERSION AFFECT UNISYS FINANCIAL STATEMENTS?
A.5 Measuring the exact impact of the transaction is dependent on the
amount of notes held by noteholders who accept this offer. Assuming the full
$294 million of notes are converted, the company would take a one-time charge
against fourth-quarter net income of approximately $46 million, would issue an
additional 42.8 million shares of common stock, and would save approximately
$24 million in annual interest payments. In addition, the company's total
debt-to-capital ratio would decline from approximately 51% to 44%.
Q.6 WHAT IS THE TAX TREATMENT OF THE PREMIUM TO THE NOTEHOLDER?
A.6 You should consult your tax advisor. In most circumstances, the
premium of $155 per $1,000 of principal amount of notes will constitute capital
gain provided that the 2006 notes were held as capital assets.
<PAGE> 2
Q.7 HOW MUCH OF THE OUTSTANDING SUBORDINATED 2006 NOTES DOES UNISYS EXPECT TO
CONVERT WITH THIS OFFER?
A.7 While we cannot know how many holders will accept, we expect that the
combination of the premium of $155 per $1000 of principal amount of notes and
the option of holding Unisys common stock is attractive to all holders. We will
only convert up to $294 million in principal amount of the 8-1/4% convertible
Subordinated Notes due 2006 outstanding pursuant to this offer. Each holder
will need to make an individual assessment of the conversion offer.
Q.8 IS THERE A MINIMUM PARTICIPATION REQUIREMENT FOR THE OFFER?
A.8 No. We intend to pay the cash premium of $155 per $1,000 in principal
amount of all Convertible Subordinated Notes due 2006 properly tendered for
conversion, up to $294 million in principal amount of such notes outstanding.
Q.9 WHEN WILL THE OFFER END?
A.9 The offer and withdrawal rights will end at 5:00 p.m., Eastern Standard
Time, December 8, 1997, unless the company extends the offer. The company also
has the right to terminate or amend the offer at any time before closing without
paying the premium; however, the offer must remain open for 5 to 10 business
days after any material amendments to the offer are made.
Q.10 CAN UNISYS CHANGE THE TERMS OF THE OFFER?
A.10 Yes, as stated above, termination of the offer or amendments thereto are
permitted. We would give notice of changes in accordance with the SEC's rules.
The offer must remain open for 5 to 10 business days after any material
amendments to the offer.
Q.11 WHAT WILL HAPPEN TO SUBORDINATED 2006 NOTES THAT ARE NOT CONVERTED IN THE
OFFERING?
A.11 Holders of Subordinated 2006 Notes that are not converted in the offering
will not be entitled to the $155 cash premium. Those 2006 notes will remain
outstanding, will continue to receive interest payments, and will keep all the
other rights and preferences they currently have. Since there is only a limited
market for the 2006 notes currently outstanding, the 2006 notes which could
remain outstanding after the offer could have substantially reduced liquidity.
Q.12 ARE THERE ANY LIMITATIONS ON TRADING THE COMMON STOCK FOR THE SUBORDINATED
NOTEHOLDERS?
A.12 No. Once the 8-1/4% Convertible Subordinated Notes due 2006 are
converted, the common stock received is tradable in the public market.
<PAGE> 3
There are no limitations on covering short positions or selling the new shares
for a profit.
Q.13 HOW DO I GET MATERIALS TO PARTICIPATE IN THE CONVERSION OFFER?
A.13 If a broker or other custodian holds your 8-1/4% Convertible
Subordinated Notes due 2006 registered in its name, the broker should forward
materials to you. You should then instruct your broker whether you want to
participate in the conversion offer. You may also obtain materials from the
information agent for the conversion offer, Georgeson & Company Inc., Wall
Street Plaza, 88 Pine Street, New York, NY, 10005. Georgeson's telephone number
is (800) 223-2064.
