<PAGE>
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED.
<PAGE>
SUBJECT TO COMPLETION. DATED DECEMBER 10, 1998.
Prospectus Supplement to Prospectus Dated August 2, 1996.
$
[LOGO]
UNUM CORPORATION
% Notes due December , 2028
-------------
UNUM Corporation will pay interest on the Notes on June and December of
each year. The first interest payment will be made on June , 1999. The Notes
will be issued only in denominations of $1,000 and integral multiples of $1,000.
UNUM Corporation has the option to redeem all or a portion of the Notes at
any time at a price based on the present value on the redemption date, using a
discount rate based on a U.S. Treasury security having a remaining life to
maturity comparable to the Notes, of the then remaining scheduled payments of
principal and interest on the Notes to be redeemed, plus 20 basis points, plus
accrued interest. The redemption price will in no event be less than 100% of the
principal amount of the Notes to be redeemed.
-----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-----------------
<TABLE>
<CAPTION>
Per Note Total
--------------- ---------------
<S> <C> <C>
Initial public offering price............................. % $
Underwriting discount..................................... % $
Proceeds, before expenses, to UNUM Corporation............ % $
</TABLE>
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the Notes will accrue from December , 1998 and
must be paid by the purchaser if the Notes are delivered after December ,
1998.
-----------------
The Underwriters expect to deliver the Notes in book-entry form only through
the facilities of The Depository Trust Company against payment in New York, New
York on December , 1998.
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
-----------------
Prospectus Supplement dated December , 1998.
<PAGE>
THE COMPANY
UNUM CORPORATION AND SUBSIDIARIES
UNUM Corporation ("UNUM") is a Delaware corporation organized in 1985 as an
insurance holding company. We are:
- - the leading provider of group long term disability insurance ("group LTD") in
the United States and the United Kingdom;
- - the leading provider of group short term disability ("group STD") in the
United States; and
- - a major provider of group life, individual disability ("ID"), long term care
insurance, special risk, reinsurance and payroll-deducted voluntary employee
benefit products offered to employees at their worksites.
The operations of our subsidiaries, described below, account for
substantially all of our consolidated assets and revenues. Our principal
executive offices are located at 2211 Congress Street, Portland, Maine 04122 and
our telephone number is (207) 770-2211. Through our affiliates, we have
operations in North America, the United Kingdom, the Pacific Rim and Latin
America.
We conduct our operations in North America through a number of wholly-owned
subsidiaries, including:
- - UNUM Life Insurance Company of America ("UNUM America"), a Maine life
insurance company licensed in 49 states, the District of Columbia and Canada;
- - First UNUM Life Insurance Company ("First UNUM"), a New York life insurance
company;
- - Colonial Life & Accident Insurance Company ("Colonial"), a South Carolina
life insurance company licensed in 49 states and the District of Columbia;
and
- - Duncanson & Holt, Inc. ("D&H"), a leading accident and health reinsurance
underwriting manager.
Effective December 31, 1996, we merged Commercial Life Insurance Company
into UNUM America. During 1997, we acquired Options and Choices Inc. ("OCI"),
which delivers integrated information and analysis to help organizations manage
their health and disability program costs. OCI is based in Cheyenne, Wyoming,
and is a wholly-owned subsidiary.
Our United Kingdom operations are conducted by:
- - UNUM Limited, the leading provider of group LTD in the United Kingdom; and
- - Duncanson & Holt Europe Ltd.
Our Pacific Rim operations are led by a wholly-owned subsidiary, UNUM Japan
Accident Insurance Company Limited, a Japanese non-life insurance company
established in 1994.
Our Latin American operations were established on July 31, 1997, with the
acquisition of Boston Compania Argentina de Seguros SA, a general lines
property/casualty, life and workers compensation insurance company based in
Buenos Aires, Argentina.
On October 1, 1996, UNUM America and First UNUM closed the sale of their
respective group tax-sheltered annuity ("TSA") businesses to The Lincoln
National Life Insurance Company and Lincoln Life & Annuity Company of New York,
both subsidiaries of Lincoln National Corporation. The sale involved
approximately 1,700 group contractholders and assets under management of
approximately $3.3 billion. The contracts were initially reinsured on an
indemnity basis. Upon consent of the TSA contractholders and participants, the
contracts are considered reinsured on an assumption basis, legally releasing
UNUM America and First UNUM from future contractual obligation to the respective
contractholders and participants. As of September 30, 1998, consents for
assumption reinsurance have been received relating to approximately 92% of
assets under management.
S-1
<PAGE>
PROVIDENT COMPANIES, INC. AND SUBSIDIARIES
Provident Companies, Inc. ("Provident") is a Delaware corporation organized
as an insurance holding company. Based in Chattanooga, Tennessee, Provident,
through its subsidiaries, provides disability insurance and related products for
individual and corporate customers, operating in all 50 states and Canada. Its
two principal operating subsidiaries are Provident Life and Accident Insurance
Company and The Paul Revere Life Insurance Company ("Paul Revere").
Through its subsidiaries, Provident is the largest provider of individual
disability insurance in North America on the basis of in-force premiums. They
also provide a complementary portfolio of life insurance products, employee
group benefits and related services.
In early 1997, Provident acquired Paul Revere and GENEX Services, Inc.
("Genex"). Paul Revere is a specialist in disability insurance and was the
largest provider of individual disability insurance in North America, based on
in-force premium, from 1989 through 1996. Genex provides Provident with
specialized skills in disability case management and vocational rehabilitation
that advance Provident's goal of providing products that enable disabled
policyholders to return to work.
In June 1997, Provident announced an agreement to transfer its dental
business to Ameritas Life Insurance Corp. The full transition of the dental
business was completed in November 1997. In December 1997, Provident entered
into a definitive agreement to sell its in-force individual fixed annuities and
TSA business to various affiliates of American General Corporation ("American
General"), which became effective April 30, 1998. American General also acquired
a number of miscellaneous group pension lines that are no longer actively
marketed. The sale to American General did not include Provident's block of
traditional guaranteed investment contracts or group single premium annuities,
which will continue in a run-off mode.
MERGER AGREEMENT
On November 22, 1998, UNUM and Provident announced a definitive merger
agreement that will create UNUMProvident Corporation ("UNUMProvident"). Under
the agreement, which has been approved by the boards of directors of both
companies, UNUM shareholders will receive one share of UNUMProvident in exchange
for each UNUM common share, and Provident shareholders will receive 0.73 shares
of UNUMProvident in exchange for each Provident common share. The transaction is
intended to qualify as a pooling of interests for accounting and financial
reporting purposes and is expected to be a tax-free reorganization.
The transaction is expected to be completed by midyear 1999, and is subject
to clearance or approval by certain federal and state regulators, approval by
shareholders of both companies and customary closing conditions. Members of the
Maclellan family, representing approximately 26% of Provident's common stock,
have agreed to vote in favor of the merger.
As a result of the merger, approximately 58% of UNUMProvident will be owned
by current UNUM shareholders and 42% by current Provident shareholders.
Effective November 22, 1998, both UNUM and Provident have rescinded their
existing share repurchase programs. The merger agreement provides for the
payment of termination fees under certain circumstances and UNUM and Provident
have also entered into customary "cross" stock option agreements. The stock
option agreements limit the total profit either company can obtain under its
respective stock option agreement and any termination fee receivable under the
merger agreement to a total of $250 million.
Pursuant to the Indenture for the Notes offered by this prospectus, upon
effectiveness of the merger, UNUMProvident will assume all of UNUM's obligations
under the Indenture and the Notes. There are no assurances that the merger will
be completed.
S-2
<PAGE>
BUSINESS SEGMENTS OF UNUM CORPORATION AND SUBSIDIARIES
DISABILITY INSURANCE SEGMENT
The Disability Insurance segment, which in 1997 accounted for 57% of UNUM's
revenues and 58% of income before income taxes, includes disability products
offered in North America, the United Kingdom and Japan. For the nine months
ended September 30, 1998, this segment accounted for 57% of revenues and 63% of
income before income taxes. These products include: group LTD, group STD, ID,
disability reinsurance operations and long term care insurance.
UNUM America and First UNUM's group LTD product is the Disability Insurance
segment's principal product. UNUM America and First UNUM target sales of group
LTD to executive, administrative and management personnel and other
professionals such as educators, consultants, health care providers, accountants
and engineers.
Since 1976, UNUM America and First UNUM combined have been the United
States' leading provider of group LTD based on inforce cases and premium
according to EMPLOYEE BENEFIT PLAN REVIEW, a recognized industry publication.
The EMPLOYEE BENEFIT PLAN REVIEW also reported that UNUM America and First UNUM
combined were the top providers of group STD for 1996 based on premium and
number of inforce lives. In the United Kingdom, UNUM Limited was the leading
provider for 1996 of group LTD insurance based on premium revenue, as reported
by ERC Frankona Reassurance Ltd's annual group risk survey.
SPECIAL RISK INSURANCE SEGMENT
The Special Risk Insurance segment in 1997 accounted for 25% of UNUM's
revenues and 19% of income before income taxes. For the nine months ended
September 30, 1998, this segment accounted for 28% of revenues and income before
income taxes. The Special Risk Insurance segment includes group life, special
risk accident insurance, reinsurance underwriting management operations, non-
disability reinsurance operations and other special risk insurance products.
COLONIAL PRODUCTS SEGMENT
The Colonial Products segment in 1997 accounted for 14% of UNUM's revenues
and 18% of income before income taxes. For the nine months ended September 30,
1998, this segment accounted for 14% of revenues and 19% of income before income
taxes. The Colonial Products segment includes Colonial and affiliates.
Colonial markets a broad line of payroll-deducted, voluntary employee
benefit products to employees at their worksites, which includes accident and
sickness, disability, cancer and life products. During 1997, Colonial formed a
strategic marketing alliance with The Lincoln National Life Insurance Company
("Lincoln Life") to create cross-selling opportunities in the worksite market.
In addition, Colonial coinsures and administers Lincoln Life's existing block of
worksite-marketed universal life insurance.
RETIREMENT PRODUCTS SEGMENT
The Retirement Products segment in 1997 accounted for 4% of UNUM's revenues
and 14% of income before income taxes. For the nine months ended September 30,
1998, this segment accounted for 1% of revenues. This segment includes products
no longer actively marketed by UNUM including: TSAs, guaranteed investment
contracts, deposit administration accounts, 401(k) plans, individual life and
group medical insurance.
S-3
<PAGE>
INVESTMENTS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 DECEMBER 31, 1997
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
(IN MILLIONS) AMOUNT VALUE AMOUNT VALUE
- -------------------------------------------------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Fixed maturities available for sale............... $ 7,697.1 $ 7,697.1 $ 7,310.9 $ 7,310.9
Equity securities available for sale.............. 28.5 28.5 30.7 30.7
Mortgage loans.................................... 1,215.5 1,354.8 1,131.0 1,243.7
Real estate, net.................................. 248.2 231.5
Policy loans...................................... 138.0 128.5
Other long-term investments....................... 1.7 1.8
Short-term investments............................ 295.4 124.5
----------- -----------
Total investments............................. $ 9,624.4 $ 8,958.9
----------- -----------
----------- -----------
</TABLE>
Our investment objective is to optimize total asset return within
appropriate risk criteria established for each product line. We seek to meet
this objective through our asset/liability management process and active asset
management of the portfolios. Our long term investment strategy is to invest
primarily in investment grade bonds and commercial mortgages. Product line
investment strategies are developed to complement business risks by meeting the
liquidity and solvency requirements of each product. We purchase assets with
maturities, expected cash flows and prepayment conditions that are consistent
with these strategies. The nature and quality of the types of investments comply
with policies established by management, which are generally more stringent
overall than the statutes and regulations imposed by the jurisdictions in which
our insurance subsidiaries are licensed. UNUM's investments are reported in the
consolidated financial statements at net realizable value or net of applicable
allowances for probable losses.
At December 31, 1997, our fixed maturity portfolio included $83.7 million of
below investment grade bonds (below "Baa"/"BBB") recorded at fair value. These
bonds had an associated amortized cost of $80.2 million. At December 31, 1996,
our fixed maturity portfolio included $102.0 million of bonds rated below
Baa/BBB recorded at fair value, with an associated amortized cost of $101.7
million. The amount of fixed maturities delinquent 60 days or more was zero at
December 31, 1997, and 1996. The percentage of mortgage loans delinquent 60 days
or more on a contract delinquency basis was 0.7% at December 31, 1997 and 0.5%
at December 31, 1996.
SIGNIFICANT INVESTMENT TRANSACTIONS
In late 1996, UNUM transferred approximately $403 million of cash into a
trust account held for the benefit of Centre Life Reinsurance Limited ("Centre
Re"), in accordance with the reinsurance agreement between UNUM America and
Centre Re.
On October 1, 1996, UNUM transferred approximately $2,690 million of assets
into a trust account held for the benefit of The Lincoln National Life Insurance
Company and Lincoln Life & Annuity Company of New York to effect the sale of the
TSA business. The assets transferred consisted of approximately $1,826 million
of short-term investments, $589 million of fixed maturities and $275 million of
cash.
During the second quarter of 1995, UNUM sold virtually all of the common
stock portfolio of its United States subsidiaries, primarily due to
consideration of statutory capital requirements associated with investment in
common stocks and to increase future investment income. UNUM reinvested the
proceeds from the sale of the common stock portfolio primarily in investment
grade fixed income assets. The common stock sale accounts for the significantly
higher level of realized investment gains reported in 1995.
S-4
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF UNUM CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
(IN MILLIONS, EXCEPT PER COMMON SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
REVENUES:
Premiums.................................... $ 2,857.8 $ 2,403.2 $ 3,263.7 $ 3,151.5 $ 3,018.2 $ 2,721.3 $ 2,474.1
Net investment income(a) ................... 506.0 493.0 657.4 806.7 1,031.4 815.8 839.8
Fees and other income....................... 96.8 200.5 227.3 113.5 73.3 75.5 83.1
--------- --------- --------- --------- --------- --------- ---------
Total revenues............................ 3,460.6 3,096.7 4,148.4 4,071.7 4,122.9 3,612.6 3,397.0
BENEFITS AND EXPENSES:
Benefits to policyholders................... 2,106.3 1,803.1 2,438.8 2,342.2 2,493.0 2,239.0 1,775.7
Interest credited........................... 35.6 68.7 83.5 200.6 227.4 242.7 281.0
Operating expenses.......................... 646.9 573.8 803.7 869.0 728.2 713.0 675.6
Commissions................................. 384.4 306.1 410.5 386.9 369.9 355.9 326.8
Increase in deferred policy acquisition
costs..................................... (175.1) (115.7) (166.9) (109.3) (114.7) (155.3) (135.1)
Interest expense............................ 36.6 31.2 42.4 40.7 37.2 18.7 12.7
--------- --------- --------- --------- --------- --------- ---------
Total benefits and expenses............... 3,034.7 2,667.2 3,612.0 3,730.1 3,741.0 3,414.0 2,936.7
--------- --------- --------- --------- --------- --------- ---------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECTS OF ACCOUNTING CHANGES............... 425.9 429.5 536.4 341.6 381.9 198.6 460.3
Income taxes.................................. 129.3 135.4 166.1 103.6 100.8 43.9 148.3
--------- --------- --------- --------- --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECTS OF ACCOUNTING
CHANGES..................................... 296.6 294.1 370.3 238.0 281.1 154.7 312.0
Cumulative effects of accounting changes...... -- -- -- -- -- -- (12.1)(b)
--------- --------- --------- --------- --------- --------- ---------
NET INCOME.................................... $ 296.6 $ 294.1 $ 370.3 $ 238.0 $ 281.1 $ 154.7 $ 299.9
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
BALANCE SHEET DATA:
(at end of period)
Assets........................................ $14,930.6 $13,302.9 $13,440.1 $15,580.4 $14,787.8 $13,127.2 $12,437.3
Short-term debt............................... $ 196.1 $ 260.6 $ 126.6 $ 117.7 $ 126.5 $ 246.6 $ 110.0
Long-term debt................................ $ 544.0 $ 371.4 $ 509.2 $ 409.2 $ 457.3 $ 182.1 $ 128.6
Stockholders' equity.......................... $ 2,747.1 $ 2,346.4 $ 2,434.8 $ 2,263.1 $ 2,302.9 $ 1,915.4 $ 2,102.7
OTHER DATA:
NET INCOME PER COMMON SHARE:
Basic....................................... $ 2.15 $ 2.10 $ 2.65 $ 1.63 $ 1.93 $ 1.04 $ 1.90
Diluted..................................... $ 2.10 $ 2.05 $ 2.59 $ 1.61 $ 1.92 $ 1.04 $ 1.88
Dividends paid per share...................... $ 0.4375 $ 0.4225 $ 0.5650 $ 0.5450 $ 0.5175 $ 0.4600 $ 0.3825
Book value per share.......................... $ 19.85 $ 16.91 $ 17.61 $ 15.75 $ 15.77 $ 13.23 $ 13.84
Number of shares:
Shares outstanding.......................... 138.4 138.8 138.3 143.6 146.0 144.8 152.0
Weighted average shares outstanding:
Basic....................................... 138.3 140.3 139.9 145.9 145.4 148.3 157.6
Diluted..................................... 141.5 143.2 142.9 148.0 146.6 149.5 159.3
Ratio of earnings to fixed charges(c)......... 10.6 12.0 11.0 7.5 9.0 7.7 20.0
</TABLE>
- ------------------------------
(a) Net investment income is comprised of investment income (net of expenses)
and net realized investment gains/(losses).
(b) Effective January 1, 1993, the company adopted Financial Accounting Standard
No. 106, "Employers' Accounting for Postretirement Benefits Other than
Pensions," which decreased net income by $32.1 million and Financial
Accounting Standard No. 109, "Accounting for Income Taxes," which increased
net income by $20.0 million.
(c) For purposes of computing the ratio of earnings to fixed charges, earnings
as adjusted consist of income before income taxes plus fixed charges. Fixed
charges consist of interest expense and the estimated interest portion of
rent expense.
S-5
<PAGE>
SELECTED CONSOLIDATED SEGMENT INCOME STATEMENT DATA OF UNUM CORPORATION AND
SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
<CAPTION>
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
REVENUES:
Premiums and fees and other income:
Disability Insurance Segment............... $1,621.3 $1,393.2 $1,882.6 $1,917.7 $1,879.9 $1,716.2 $1,547.9
Special Risk Insurance Segment............. 896.1 694.2 947.2 783.3 702.3 607.1 559.4
Colonial Products Segment.................. 416.8 396.2 530.8 498.2 475.1 441.3 407.4
Retirement Products Segment................ 20.4 120.1 130.3 65.8 34.1 31.4 42.5
Corporate.................................. -- -- 0.1 -- 0.1 0.8 --
-------- -------- -------- -------- -------- -------- --------
Total premiums and fees and other
income................................. 2,954.6 2,603.7 3,491.0 3,265.0 3,091.5 2,796.8 2,557.2
-------- -------- -------- -------- -------- -------- --------
NET INVESTMENT INCOME: (A)
Disability Insurance Segment............... 363.9 350.2 468.0 468.5 592.9 400.3 369.8
Special Risk Insurance Segment............. 59.6 52.7 71.5 57.6 48.4 40.7 34.8
Colonial Products Segment.................. 49.6 41.7 57.6 47.3 52.2 32.6 41.4
Retirement Products Segment................ 30.4 43.3 54.4 217.2 323.7 338.0 387.6
Corporate.................................. 2.5 5.1 5.9 16.1 14.2 4.2 6.2
-------- -------- -------- -------- -------- -------- --------
Total net investment income.............. 506.0 493.0 657.4 806.7 1,031.4 815.8 839.8
-------- -------- -------- -------- -------- -------- --------
Total revenues........................... 3,460.6 3,096.7 4,148.4 4,071.7 4,122.9 3,612.6 3,397.0
-------- -------- -------- -------- -------- -------- --------
BENEFITS AND EXPENSES:
Disability Insurance Segment............... 1,715.9 1,510.6 2,037.9 2,170.9 2,255.8 2,060.3 1,603.6
Special Risk Insurance Segment............. 835.5 659.7 917.4 761.7 690.4 581.9 555.3
Colonial Products Segment.................. 387.5 364.9 489.6 453.1 439.6 411.2 378.4
Retirement Products Segment................ 49.5 89.9 108.5 281.6 312.3 327.4 375.8
Corporate.................................. 46.3 42.1 58.6 62.8 42.9 33.2 23.6
-------- -------- -------- -------- -------- -------- --------
Total benefits and expenses.............. 3,034.7 2,667.2 3,612.0 3,730.1 3,741.0 3,414.0 2,936.7
-------- -------- -------- -------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES AND
CUMULATIVE EFFECTS OF ACCOUNTING CHANGES:
Disability Insurance Segment............... 269.3 232.8 312.7 215.3 217.0 56.2 314.1
Special Risk Insurance Segment............. 120.2 87.2 101.3 79.2 60.3 65.9 38.9
Colonial Products Segment.................. 78.9 73.0 98.8 92.4 87.7 62.7 70.4
Retirement Products Segment................ 1.3 73.5 76.2 1.4 45.5 42.0 54.3
Corporate.................................. (43.8) (37.0) (52.6) (46.7) (28.6) (28.2) (17.4)
-------- -------- -------- -------- -------- -------- --------
Total income before income taxes and
cumulative effects of accounting
changes................................ 425.9 429.5 536.4 341.6 381.9 198.6 460.3
Income taxes................................. 129.3 135.4 166.1 103.6 100.8 43.9 148.3
Cumulative effects of accounting changes..... -- -- -- -- -- -- (12.1)(b)
-------- -------- -------- -------- -------- -------- --------
NET INCOME................................... $ 296.6 $ 294.1 $ 370.3 $ 238.0 $ 281.1 $ 154.7 $ 299.9
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
</TABLE>
- ------------------------------
(a) Net investment income is comprised of investment income (net of expenses)
and net realized investment gains/(losses).
(b) Effective January 1, 1993, UNUM adopted Financial Accounting Standard No.
106, "Employers' Accounting for Postretirement Benefits Other than
Pensions," which decreased net income by $32.1 million and Financial
Accounting Standard No. 109, "Accounting for Income Taxes," which increased
net income by $20.0 million.
S-6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF PROVIDENT COMPANIES, INC. AND
SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
(IN MILLIONS, EXCEPT PER COMMON SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
REVENUES:
Premiums.................................... $ 1,759.8 $ 1,471.5 $ 2,053.7 $ 1,175.7 $ 1,251.9 $ 1,382.6 $ 1,400.2
Net investment income(a).................... 1,057.8 1,003.2 1,369.8 1,081.5 1,189.6 1,208.5 1,362.3
Fees and other income....................... 134.3 87.5 129.7 34.7 113.8 171.1 175.5
--------- --------- --------- --------- --------- --------- ---------
Total revenues............................ 2,951.9 2,562.2 3,553.2 2,291.9 2,555.3 2,762.2 2,938.0
--------- --------- --------- --------- --------- --------- ---------
TOTAL BENEFITS AND EXPENSES................... 2,589.1 2,299.2 3,172.9 2,065.7 2,379.3 2,561.3 3,078.1
--------- --------- --------- --------- --------- --------- ---------
INCOME BEFORE INCOME TAXES.................... 362.8 263.0 380.3 226.2 176.0 200.9 (140.1)
Income taxes.................................. 135.0 91.5 133.0 80.6 60.4 65.6 (58.9)
--------- --------- --------- --------- --------- --------- ---------
NET INCOME(B)................................. $ 227.8 $ 171.5 $ 247.3 $ 145.6 $ 115.6 $ 135.3 $ (81.2)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
BALANCE SHEET DATA:
(at end of period)
Assets........................................ $23,267.0 $22,839.5 $23,177.6 $14,992.5 $16,301.3 $17,149.9 $16,891.9
Long-term debt, subordinated debt securities
and preferred stock......................... $ 900.0 $ 881.2 $ 881.2 $ 356.2 $ 356.2 $ 358.7 $ 403.8
Common stockholders' equity(c)................ $ 3,448.5 $ 2,908.5 $ 3,123.1 $ 1,582.4 $ 1,496.1 $ 1,012.9 $ 1,245.4
OTHER DATA:
NET INCOME PER COMMON SHARE:
Diluted..................................... $ 1.63 $ 1.31 $ 1.84 $ 1.44 $ 1.13 $ 1.35 $ (1.02)
Dividends paid per share...................... $ 0.30 $ 0.28 $ 0.38 $ 0.36 $ 0.36 $ 0.52 $ 0.52
Book value per share.......................... $ 25.50 $ 21.53 $ 23.11 $ 17.34 $ 16.48 $ 11.17 $ 13.76
Number of shares:
Shares outstanding.......................... 135.2 135.1 135.1 91.3 90.8 90.7 90.5
Weighted average shares outstanding:
Diluted................................... 138.6 123.5 127.3 92.2 90.9 90.7 90.4
</TABLE>
- ------------------------------
(a) Net investment income is comprised of investment income (net of expenses)
and net realized investment gains/(losses).
(b) There were no cumulative effects of accounting changes for Provident during
the periods presented.
(c) Common stockholders' equity excludes the value of Provident's preferred
stock.
S-7
<PAGE>
UNAUDITED SELECTED PRO-FORMA COMBINED
FINANCIAL INFORMATION OF UNUMPROVIDENT
The following unaudited selected pro-forma combined financial information of
UNUMProvident is presented to show the impact of the merger on the historical
financial positions and results of operations of UNUM and Provident under the
"pooling of interests" method of accounting. The information combines the
historical financial information of UNUM and Provident as of September 30, 1998
and for the nine months ended September 30, 1998 and 1997 and for each of the
five years ended December 31, 1997, 1996, 1995, 1994 and 1993.
The unaudited selected pro-forma combined financial information assumes the
merger was consummated as of the earliest date presented. All selected pro-forma
combined financial information is based on, derived from, and should be read in
conjunction with the historical consolidated financial statements and related
notes of both UNUM and Provident and the condensed pro forma financial
information included in UNUM's Current Report on Form 8-K dated November 22,
1998 as filed on December 10, 1998, which is incorporated herein by reference.
The pro-forma data are presented for comparative purposes only and are not
necessarily indicative of the future financial position or the results of
operations that would have been realized had the merger been consummated during
the periods or as of the dates for which the pro-forma data are presented.
Management of UNUM and Provident are currently assessing non-recurring merger
charges which could be material to the combined company's results of operations
and financial condition for the period in which the charge occurs. As such, no
estimate has been reflected in the selected pro-forma combined financial
information.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
(IN MILLIONS, EXCEPT PER COMMON SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
REVENUES:
Premiums.................................... $ 4,617.6 $ 3,874.7 $ 5,317.4 $ 4,327.2 $ 4,270.1 $ 4,103.9 $ 3,874.3
Net investment income (a)................... 1,563.8 1,496.2 2,027.2 1,888.2 2,221.0 2,024.3 2,202.1
Fees and other income....................... 231.1 288.0 357.0 148.2 187.1 246.6 258.6
--------- --------- --------- --------- --------- --------- ---------
Total revenues............................ 6,412.5 5,658.9 7,701.6 6,363.6 6,678.2 6,374.8 6,335.0
TOTAL BENEFITS AND EXPENSES................... 5,623.8 4,966.4 6,784.9 5,795.8 6,120.3 5,975.3 6,014.8
--------- --------- --------- --------- --------- --------- ---------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECTS OF ACCOUNTING CHANGES............... 788.7 692.5 916.7 567.8 557.9 399.5 320.2
Income taxes.................................. 264.3 226.9 299.1 184.2 161.2 109.5 89.4
--------- --------- --------- --------- --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECTS OF ACCOUNTING
CHANGES(B).................................. $ 524.4 $ 465.6 $ 617.6 $ 383.6 $ 396.7 $ 290.0 $ 230.8
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
BALANCE SHEET DATA:
(at end of period)
Assets........................................ $38,197.6 $36,142.4 $36,617.7 $30,572.9 $31,089.1 $30,277.1 $29,329.2
Long-term debt, subordinated debt securities
and preferred stock......................... $ 1,444.0 $ 1,252.6 $ 1,390.4 $ 765.4 $ 813.5 $ 540.8 $ 532.4
Common stockholders' equity(c)................ $ 6,195.6 $ 5,254.9 $ 5,557.9 $ 3,845.5 $ 3,799.0 $ 2,928.3 $ 3,348.1
OTHER DATA:
NET INCOME PER COMMON SHARE:
Diluted..................................... $ 2.15 $ 1.95 $ 2.57 $ 1.72 $ 1.80 $ 1.29 $ 0.92
Dividends paid per share...................... $ 0.43 $ 0.41 $ 0.55 $ 0.53 $ 0.51 $ 0.54 $ 0.48
Book value per share.......................... $ 26.13 $ 22.14 $ 23.46 $ 18.29 $ 17.84 $ 13.88 $ 15.36
Number of shares:
Shares outstanding.......................... 237.1 237.4 236.9 210.3 212.3 211.0 218.0
Weighted average shares outstanding:
Diluted................................... 242.6 233.4 235.8 215.3 213.0 215.7 225.3
</TABLE>
- ------------------------------
(a) Net investment income is comprised of investment income (net of expenses)
and net realized investment gains/(losses).
(b) Effective January 1, 1993, UNUM adopted Financial Accounting Standard No.
106, "Employers' Accounting for Postretirement Benefits Other than
Pensions," which decreased net income by $32.1 million and Financial
Accounting Standard No. 109, "Accounting for Income Taxes," which increased
net income by $20.0 million.
(c) Common stockholders' equity excludes the value of Provident's preferred
stock.
S-8
<PAGE>
USE OF PROCEEDS
UNUM intends to use the net proceeds from the sale of the Notes (estimated
to be $ ) to repay short-term debt (which, at November 30, 1998, totaled
approximately $225.6 million, at an average interest cost of approximately
5.31%) and for general corporate purposes.
CAPITALIZATION
The following table summarizes the consolidated capital structure of UNUM at
September 30, 1998, and as adjusted to give effect to (i) the issuance of the
Notes offered by this prospectus, and (ii) the application of the net proceeds
from the sale of the Notes to repay short-term debt.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-----------------------
<S> <C> <C>
ACTUAL AS ADJUSTED
--------- ------------
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term debt, including current maturity(1)...................... $ 196.1 $
--------- ------------
--------- ------------
Long-term debt:
Medium-Term Notes................................................. $ 254.0 $ 254.0
Series A Junior Subordinated Debentures
% Notes due December , 2028.................................... --
Other Notes Payable............................................... 290.0 290.0
--------- ------------
Total long-term debt.......................................... 544.0
--------- ------------
Stockholders' equity:
Preferred stock, par value $0.10 per share, authorized 10,000,000
shares, none issued............................................. -- --
Common stock, par value $0.10 per share, authorized 240,000,000
shares, issued 199,975,916 shares............................... 20.0 20.0
Additional paid-in capital........................................ 1,138.9 1,138.9
Unrealized gains, net............................................. 312.7 312.7
Unrealized foreign currency translation adjustment................ (16.3) (16.3)
Retained earnings................................................. 2,398.6 2,398.6
Less:
Treasury stock, at cost (61,593,276 shares)..................... 1,091.7 1,091.7
Restricted stock deferred compensation.......................... 15.1 15.1
--------- ------------
Total stockholders' equity.................................... 2,747.1 2,747.1
--------- ------------
Total capitalization................................................ $ 3,291.1 $
--------- ------------
--------- ------------
</TABLE>
- ------------------------
(1) As of November 30, 1998, $225.6 million of short-term debt was outstanding.
S-9
<PAGE>
DESCRIPTION OF NOTES
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES OFFERED
HEREBY (REFERRED TO IN THE PROSPECTUS AS "SENIOR DEBT SECURITIES") SUPPLEMENTS,
AND TO THE EXTENT INCONSISTENT THEREWITH REPLACES, THE DESCRIPTION OF THE
GENERAL TERMS AND PROVISIONS OF SENIOR DEBT SECURITIES SET FORTH IN THE
PROSPECTUS, TO WHICH DESCRIPTION REFERENCE IS HEREBY MADE.
GENERAL
The Notes will be issued as a series of Debt Securities under the Indenture,
dated September 15, 1990 (the "Indenture"), between UNUM and The Chase Manhattan
Bank (National Association), succeeded by merger by The Chase Manhattan Bank
(the "Trustee"), as trustee. For a description of the rights attaching to
different series of Debt Securities under the Indenture, see "Description of
Debt Securities" in the Prospectus.
The Notes will be issued as unsecured obligations of UNUM in an aggregate
principal amount of $ and will be issued only in book-entry form through
the facilities of The Depository Trust Company (the "Depositary"), and will be
in denominations of $1,000 and integral multiples thereof. Transfers or
exchanges of beneficial interests in Notes in book-entry form may be effected
only through a participating member of the Depositary. See "Global Securities"
below. The Notes will mature on December , 2028.
The Notes will bear interest from December , 1998, payable semi-annually
in arrears on each June and December , commencing June , 1999, at the rate
set forth on the cover page of this Prospectus Supplement, to the persons in
whose names the Notes are registered on the preceding June and December ,
respectively.
OPTIONAL REDEMPTION
The Notes will be redeemable, in whole or in part, at the option of UNUM at
any time at a redemption price equal to the greater of (i) 100% of the principal
amount of such Notes or (ii) as determined by a Quotation Agent, the sum of the
present values of the remaining scheduled payments of principal and interest
thereon (not including any portion of such payments of interest accrued as of
the date of redemption) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate, plus 20 basis points, plus, in each case, accrued interest
thereon to the date of redemption.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by a Quotation Agent as having a maturity comparable to the remaining
term of the Notes that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of the Notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (ii) if the Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such Quotations.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Trustee after consultation with UNUM.
"Reference Treasury Dealer" means (i) Goldman, Sachs & Co. and its
respective successors; provided, however, that if the foregoing shall cease to
be a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), UNUM shall substitute therefor another Primary Treasury
S-10
<PAGE>
Dealer; and (ii) any other Primary Treasury Dealer selected by the Trustee after
consultation with UNUM.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of the Notes to be redeemed.
Unless UNUM defaults in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the Notes or portions thereof
called for redemption.
The Notes will not be entitled to any sinking fund.
GLOBAL SECURITIES
The Notes will be represented by one or more Global Securities registered in
the name of the nominee of the Depositary, and will be available for purchase in
denominations of $1,000 and any integral multiple thereof. Each Global Security
will be deposited with the Depositary or a nominee thereof or custodian therefor
and will bear a legend regarding the restrictions on exchanges and registration
of transfer thereof referred to below and any such other matters as may be
provided for pursuant to the Indenture.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") or persons that may hold beneficial interests through
participants. In addition, ownership of beneficial interests by participants in
a Global Security will be evidenced only by, and the transfer of that ownership
interest will be effected only through, records maintained by the Depositary or
its nominee. Ownership of beneficial interests in such Global Security by
persons that hold through participants will be evidenced only by, and the
transfer of that ownership interest within such participant will be effected
only through, records maintained by such participant. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in such Global Security.
Payment of principal of and any premium and interest on Notes represented by
any Global Security will be made to the Depositary's nominee as the registered
owner and holder of such Global Security. Neither UNUM, the Trustee, nor any
agent of UNUM or the Trustee will have any responsibility or liability for any
aspect of the Depositary's or its nominee's records or any participant's records
relating to or payments made on account of beneficial ownership interests in a
Global Security or for maintaining, supervising or reviewing any of the
Depositary's or its nominee's records or any participant's records relating to
such beneficial ownership interests.
A permanent Global Security is exchangeable for definitive Notes registered
in the name of, and a transfer of a permanent Global Security may be registered
to, any Person other than the Depositary or its nominee, only if:
(a) the Depositary notifies UNUM that it is unwilling or unable to
continue as Depositary for such Global Security or if at any time the
Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
(b) UNUM in its sole discretion determines that such Global Security
shall be exchangeable for definitive Notes in registered form; or
(c) any event shall have happened and be continuing that constitutes or,
after notice or lapse of time, or both, would
S-11
<PAGE>
constitute an Event of Default with respect to the Notes.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary was created to hold securities of its participants and to
facilitate the clearance and settlement of securities transactions, such as
transfers and pledges, among its participants in such securities through
electronic computerized book-entry changes in accounts of the participants,
thereby eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Persons who are not participants may beneficially own securities held by the
Depositary only through participants.
DEFEASANCE
The Indenture provisions relating to satisfaction and discharge and legal
and covenant defeasance which are described in the accompanying Prospectus under
the caption "Description of Debt Securities -- Satisfaction and Discharge of
Indentures" will apply to the Notes.
CONCERNING THE TRUSTEE
UNUM maintains banking relationships in the ordinary course of business with
The Chase Manhattan Bank.
PAYING AGENT AND REGISTRAR
The Chase Manhattan Bank will act as Paying Agent and Registrar for the
Notes.
S-12
<PAGE>
UNDERWRITING
UNUM and the underwriters for the offering (the "Underwriters") named below
have entered into a pricing agreement which incorporates the provisions of the
related underwriting agreement, with respect to the Notes. Subject to certain
conditions, each Underwriter has severally agreed to purchase the principal
amount of Notes indicated in the following table.
<TABLE>
<CAPTION>
Principal Amount
Underwriters of Notes
- --------------------------------------------------------- -----------------
<S> <C>
Goldman, Sachs & Co. .................................... $
J.P. Morgan Securities Inc. .............................
Morgan Stanley & Co. Incorporated........................
-----------------
Total.............................................. $
-----------------
-----------------
</TABLE>
------------------------
Notes sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this Prospectus
Supplement. Any Notes sold by the Underwriters to securities dealers may be sold
at a discount from the initial public offering price of up to % of the
principal amount of the Notes. Any such securities dealers may resell any Notes
purchased from the Underwriters to certain other brokers or dealers at a
discount from the initial public offering price of up to % of the principal
amount of the Notes. If all the Notes are not sold at the initial public
offering price, the Underwriters may change the offering price and the other
selling terms.
The Notes are a new issue of securities with no established trading market.
UNUM has been advised by the Underwriters that the Underwriters intend to make a
market in the Notes, but they are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
In connection with the offering, the Underwriters may purchase and sell
Notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the Underwriters of a greater aggregate
principal amount of Notes than they are required to purchase from UNUM in the
offering. Stabilizing transactions consist of certain bids or purchases for the
purpose of preventing or retarding a decline in the market price of the Notes
while the offering is in progress.
The Underwriters may also impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the Underwriters have repurchased Notes sold by
or for the account of such Underwriter in stabilizing or short covering
transactions.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the Notes. As a result, the price of the Notes may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the Underwriters at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
UNUM estimates that its share of the total expense of the offering,
excluding underwriting discounts and commissions, will be approximately $ .
UNUM has agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
In the ordinary course of their respective businesses, the Underwriters and
their affiliates have engaged, and may in the future engage, in investment
banking transactions with UNUM, Provident or their affiliates.
S-13
<PAGE>
VALIDITY OF THE NOTES
The validity of the Notes will be passed upon for UNUM by Kevin J. Tierney,
Senior Vice President, Secretary and General Counsel of UNUM and by Cravath,
Swaine & Moore, New York, New York with respect to certain matters of New York
law, and for the Underwriters by Sullivan & Cromwell, New York, New York. Mr.
Tierney owns less than one percent of UNUM's Common Stock.
EXPERTS
The consolidated balance sheets of
UNUM and subsidiaries as of December 31, 1997 and 1996 and the consolidated
statements of income, stockholders' equity, and cash flows for each of the years
ended December 31, 1997, 1996 and 1995, incorporated herein by reference, have
been incorporated herein in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of that firm as experts in
accounting and auditing.
The consolidated financial statements of Provident included in UNUM's
Current Report on Form 8-K dated November 22, 1998 as filed on December 10, 1998
("Form 8-K"), have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon incorporated by reference herein. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of that firm as experts in
accounting and auditing.
With respect to Provident's unaudited condensed consolidated interim
financial information for the nine-month period ended September 30, 1998,
included in UNUM's Form 8-K and incorporated by reference herein, Ernst & Young
LLP have reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their separate
report, included in UNUM's Form 8-K, and incorporated by reference herein,
states that they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
report on such information should be restricted considering the limited nature
of the review procedures applied. The independent auditors are not subject to
the liability provisions of Section 11 of the Securities Act for their report on
the unaudited interim financial information because that report is not a
"report" or a "part" of a Registration Statement, prepared or certified by the
auditors within the meaning of Sections 7 and 11 of the Securities Act.
S-14
<PAGE>
UNUM CORPORATION
DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK AND WARRANTS
-----------------
UNUM Corporation may from time to time offer, together or separately, its
(i) debt securities (the "Debt Securities") which may be either senior debt
securities (the "Senior Debt Securities") or subordinated debt securities (the
"Subordinated Debt Securities"); (ii) shares of its preferred stock, $.10 par
value (the "Preferred Stock"); (iii) shares of its common stock, $.10 par value
(the "Common Stock"); and (iv) warrants to purchase Debt Securities, Preferred
Stock, Common Stock or other securities of the Company as shall be designated by
the Company at the time of offering (the "Warrants"), in amounts, at prices and
on terms to be determined at the time of offering. The Debt Securities,
Preferred Stock, Common Stock and Warrants are collectively called the
"Securities."
The Securities offered pursuant to this Prospectus may be issued in one or
more series or issuances and will be limited to $500,000,000 aggregate public
offering price (or its equivalent (based on the applicable exchange rate at the
time of sale) in one or more foreign currencies, currency units or composite
currencies as shall be designated by the Company). Certain specific terms of the
particular Securities in respect of which this Prospectus is being delivered are
set forth in the accompanying Prospectus Supplement (the "Prospectus
Supplement"), including, where applicable, (i) in the case of Debt Securities,
the specific title, aggregate principal amount, whether such Debt Securities are
Senior Debt Securities or Subordinated Debt Securities, maturity date, initial
public offering or purchase price, interest rate or rates (which may be fixed,
floating or adjustable) and timing of payments thereof, yield, provision for
redemption or sinking fund requirements, if any, currencies of denomination or
currencies otherwise applicable thereto, terms for any conversion or exchange
into Common Stock or other securities or property of the Company, in the case of
Subordinated Debt Securities, any other variable terms, any listing on a
securities exchange and methods of distribution; (ii) in the case of Preferred
Stock, the specific title, the aggregate amount, any dividend (including the
method of calculating payment of dividends), liquidation, redemption, voting and
other rights, any terms for any conversion or exchange into Common Stock or
other securities or property of the Company, methods of distribution and the
initial public offering or purchase price and other special terms; (iii) in the
case of Common Stock, the methods of distribution and the public offering or
purchase price; and (iv) in the case of Warrants, the securities of the Company
which are issuable upon exercise of the Warrants, the exercise period, the
methods of distribution, the initial public offering or purchase price and the
exercise price and detachability of such Warrants if issued with other
securities. All or a portion of the Debt Securities of a series may be issuable
in temporary or permanent global form. The Company's Common Stock is listed on
the New York Stock Exchange and the Pacific Stock Exchange under the trading
symbol "UNM." Any Common Stock sold pursuant to a Prospectus Supplement will be
listed on such exchanges, subject to official notice of issuance.
The Debt Securities will be unsecured. Unless otherwise specified in a
Prospectus Supplement, the Senior Debt Securities will rank equally with all
other unsecured and unsubordinated indebtedness of the Company. The Subordinated
Debt Securities will be subordinated in right of payment to all Senior
Indebtedness of the Company (as hereinafter defined).
The Prospectus Supplement may contain information concerning certain United
States Federal income tax considerations applicable to the Securities offered
therein.
The Securities may be sold by the Company directly or through agents,
underwriters or dealers, as designated from time to time or through a
combination of such methods. If agents of the Company or any dealers or
underwriters are involved in the sale of the Securities in respect of which this
Prospectus is being delivered, the names of such agents, dealers or underwriters
and any applicable commissions or discounts will be set forth in or may be
calculated from the Prospectus Supplement with respect to such Securities. See
"Plan of Distribution."
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-------------------
THE DATE OF THIS PROSPECTUS IS AUGUST 2, 1996.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITERS, DEALERS OR AGENTS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER
TO BUY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
NORTH CAROLINA
The Commissioner of Insurance of the State of North Carolina has not
approved or disapproved this offering nor has the commissioner passed upon the
accuracy or adequacy of this Prospectus.
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 files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy and
information statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the following Regional Offices of the Commission: Midwest Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and Northeast Regional Office, 7 World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. Reports, proxy and information statements and other information
concerning the Company may also be inspected at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005 and the Pacific
Stock Exchange, 301 Pine Street, San Francisco, California 94104, on which
certain of the Company's securities are listed.
The Company has filed with the Commission a registration statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Securities offered hereby (the "Registration Statement"). This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Reference is made to the Registration Statement
and to the exhibits relating thereto for further information with respect to the
Company and the Securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995 (except for Items 7 and 8 of Part II and Item 14 of Part IV), Quarterly
Report on Form 10-Q for the three-month period ended March 31, 1996, and Current
Report on Form 8-K dated January 24, 1996, filed by the Company under the
Exchange Act, and the description of the Company's Common Stock and Share
Purchase Rights Plan contained in its Registration Statements filed pursuant to
Section 12 of the Exchange Act and any amendment or report filed for the purpose
of updating those descriptions, are incorporated herein by reference.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the offering of the Securities shall hereby be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein or in
the accompanying Prospectus Supplement modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on written or oral request of such person, a copy of
any or all of the foregoing documents incorporated by reference into this
Prospectus (without exhibits to such documents other than exhibits specifically
incorporated by reference into such documents). Requests for such copies should
be directed to the office of the Secretary, UNUM Corporation, 2211 Congress
Street, Portland, Maine, 04122, telephone number (207) 770-4319.
2
<PAGE>
THE COMPANY
UNUM Corporation ("the Company") is a Delaware corporation organized in 1985
as an insurance holding company. The Company and its subsidiaries ("UNUM") are
the leading providers of group long term disability insurance ("group LTD") in
the United States and the United Kingdom. UNUM is also a major provider of
employee benefits, individual disability insurance and special risk reinsurance.
UNUM also markets long term care and retirement income products. UNUM is based
in Portland, Maine and through its affiliates has offices in North America, the
United Kingdom and the Pacific Rim. The Company's principal executive offices
are located at 2211 Congress Street, Portland, Maine 04122 and its telephone
number is (207) 770-2211.
The operations of the following subsidiaries account for substantially all
of UNUM's consolidated assets and revenues: UNUM Life Insurance Company of
America ("UNUM America"), the leading provider of group disability insurance in
the nation and a provider of employee benefits, long term care and retirement
products; First UNUM Life Insurance Company (New York state only) ("First
UNUM"); Commercial Life Insurance Company, a leader in special risk insurance
and professional association insurance marketing; UNUM Limited, the leading
group disability insurance provider in the United Kingdom; Duncanson & Holt,
Inc., a leading accident and health reinsurance underwriting manager; Colonial
Life & Accident Insurance Company ("Colonial"), a leader in payroll-deducted
voluntary employee benefits offered to employees at their worksites; and UNUM
Japan Accident Insurance Company Limited.
BUSINESS SEGMENTS
UNUM reports its operations principally in four business segments:
Disability Insurance, Special Risk Insurance, Colonial Products and Retirement
Products. Corporate includes transactions that are generally non-insurance
related and interest expense on corporate borrowings.
DISABILITY INSURANCE SEGMENT. The Disability Insurance segment, which in
1995 accounted for 60.0% of UNUM's revenues and 56.8% of its income before
income taxes, includes disability products offered in North America, the United
Kingdom and Japan including: group LTD, individual disability, group short term
disability, association group disability, disability reinsurance and long term
care insurance.
Group LTD is the Disability Insurance segment's principal product. UNUM
America and First UNUM target sales of group LTD to executive, administrative
and management personnel, and other professionals. Since 1976, UNUM America and
First UNUM combined have been the United States' leading provider of group LTD
according to EMPLOYEE BENEFIT PLAN REVIEW, a recognized industry publication.
UNUM Limited targets group LTD sales to management personnel, other
professionals, and technical and skilled artisans. UNUM Limited was the leading
provider for 1995 of group LTD insurance in the United Kingdom, as reported by
Employers Re. International.
SPECIAL RISK INSURANCE SEGMENT. The Special Risk Insurance segment in 1995
accounted for 18.2% of UNUM's revenues and 15.8% of its income before income
taxes. The Special Risk Insurance segment includes group life, special risk
accident insurance, non-disability reinsurance operations, reinsurance
underwriting management operations and other special risk insurance products.
COLONIAL PRODUCTS SEGMENT. The Colonial Products segment in 1995 accounted
for 12.8% of UNUM's revenues and 23.0% of its income before income taxes. The
Colonial Products segment includes Colonial and affiliates. Colonial, the
principal subsidiary, markets a broad line of payroll-deducted, voluntary
benefits to employees at their worksites, while focusing on accident and
sickness, cancer and life products.
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<PAGE>
RETIREMENT PRODUCTS SEGMENT. The Retirement Products segment accounted for
8.7% of UNUM's revenues and 11.9% of its income before income taxes in 1995.
This segment markets and services tax-sheltered annuities in UNUM America and
First UNUM. This segment also includes guaranteed investment contracts, deposit
administration accounts, 401(k) plans, individual life and group medical
insurance, all of which are no longer actively marketed by UNUM.
RECENT DEVELOPMENTS
During the first quarter of 1996, UNUM America and First UNUM entered into
an agreement for the sale of their respective group tax-sheltered annuity
("TSA") businesses to The Lincoln National Life Insurance Company ("Lincoln
Life"), a part of Lincoln National Corporation, and to a new New York insurance
subsidiary of Lincoln Life. The sale, which is subject to regulatory approvals,
involves approximately 1,700 group contractholders and assets under management
of approximately $3 billion. The agreement initially contemplates the
reinsurance of these contracts under an indemnity reinsurance arrangement. These
contracts will then be reinsured pursuant to an assumption reinsurance
arrangement upon consent of the TSA contractholders and/or participants. The
purchase price (ceding commission) at closing is expected to be approximately
$70 million. It is anticipated that it will take several months to obtain the
necessary approvals and otherwise close the sale. There is no guarantee that the
sale will close.
On February 7, 1996, UNUM announced plans to merge Commercial Life Insurance
Company into UNUM America to accelerate growth of its special risk business,
increase its commitment to the association group business and to improve
operating and capital efficiencies. The merger is expected to become effective
on December 31, 1996, subject to regulatory approvals.
On December 29, 1993, UNUM filed suit in the United States District Court
for the District of Maine, seeking a federal income tax refund. The suit is
based on a claim for a deduction in certain prior tax years, for $652 million in
cash and stock distributed to policyholders in connection with the 1986
conversion of Union Mutual Life Insurance Company to a stock company. UNUM has
fully paid, and provided for in prior years' financial statements, the tax at
issue in this litigation. On May 23, 1996, the District Court issued its
decision that the distribution in question was not a deductible expenditure.
UNUM believes its claims are meritorious, and expects to appeal the decision to
the Court of Appeals for the First Circuit. The ultimate recovery, if any,
cannot be determined at this time.
INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------------- -----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
----------- ---------- ----------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Fixed maturities:
Available for sale......................................... $ 9,135.4 $ 9,135.4 $ 1,640.6 $ 1,640.6
Held to maturity........................................... -- -- 6,227.2 6,168.6
Equity securities available for sale......................... 25.2 25.2 627.9 627.9
Mortgage loans............................................... 1,163.4 1,274.9 1,216.3 1,265.4
Real estate.................................................. 222.2 190.8
Policy loans................................................. 219.2 219.2 201.0 201.0
Other long-term investments.................................. 30.4 38.1
Short-term investments....................................... 896.7 896.7 291.9 291.9
----------- -----------
Total investments...................................... $ 11,692.5 $ 10,433.8
----------- -----------
----------- -----------
</TABLE>
UNUM's investment portfolio is concentrated in investment grade bonds. UNUM
evaluates total expected return after consideration of associated expenses and
losses, within criteria established for
4
<PAGE>
each product line. Product line investment strategies are developed to
complement business risks by meeting the liquidity and solvency requirements of
each product. UNUM purchases assets with maturities, expected cash flows and
prepayment conditions that are consistent with these strategies. The nature and
quality of the types of investments comply with policies established by
management, which are more stringent overall than the statutes and regulations
imposed by the jurisdictions in which UNUM's insurance subsidiaries are
licensed. UNUM's investments are reported in the consolidated financial
statements at net realizable value or net of any applicable allowances for
probable losses.
During the second quarter of 1995, UNUM sold virtually all of the common
stock portfolio of its United States subsidiaries, primarily due to
consideration of statutory capital requirements associated with investment in
common stocks and to increase future investment income. UNUM has reinvested the
proceeds from the sale of the common stock portfolio primarily in investment
grade fixed income assets. Dependent on capital considerations and market
conditions, UNUM may invest in equity securities in the future.
In November 1995, the FASB issued "A Guide to Implementation of Statement
115 on Accounting for Certain Investments in Debt and Equity Securities," which
provided a one-time opportunity to reassess the appropriateness of the
classifications of securities described in FAS 115, and to reclassify fixed
maturities from the held to maturity category without calling into question the
intent to hold other debt securities to maturity in the future. On December 31,
1995, UNUM reassessed its fixed maturity portfolio and, as allowed under the
implementation guidance, reclassified fixed maturities with an amortized cost of
$6,082.8 million and a related net unrealized gain of $393.0 million from the
held to maturity category to available for sale.
At December 31, 1995, the fixed maturity portfolio included $139.4 million
of below investment grade bonds (below "Baa") recorded at fair value, which
represented 1.5% of the fixed maturity portfolio, and had an associated
amortized cost of $133.8 million. At December 31, 1994, the carrying value of
below investment grade bonds included in the fixed maturity portfolio was $193.8
million, which represented 2.5% of the fixed maturity portfolio, and had an
associated market value of $193.4 million. The percentage of mortgage loans
delinquent 60 days or more on a contract delinquency basis was 0.2% and 1.8% at
December 31, 1995, and 1994, respectively.
5
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues
Premiums.................................................. $ 3,018.2 $ 2,721.3 $ 2,474.1 $ 2,142.4 $ 1,938.9
Net investment income (a)................................. 1,031.4 815.8 839.8 850.7 811.6
Fees and other income..................................... 73.3 75.5 83.1 55.4 34.0
---------- ---------- ---------- ---------- ----------
Total revenues.............................................. 4,122.9 3,612.6 3,397.0 3,048.5 2,784.5
Benefits and expenses
Benefits to policyholders................................. 2,493.0 2,239.0 1,775.7 1,532.6 1,387.1
Interest credited......................................... 227.4 242.7 281.0 328.4 357.7
Operating expenses........................................ 728.2 713.0 675.6 590.9 554.8
Commissions............................................... 369.9 355.9 326.8 298.9 258.8
Increase in deferred policy acquisition costs............. (114.7) (155.3) (135.1) (111.7) (104.8)
Interest expense.......................................... 37.2 18.7 12.7 10.9 11.3
---------- ---------- ---------- ---------- ----------
Total benefits and expenses............................. 3,741.0 3,414.0 2,936.7 2,650.0 2,464.9
---------- ---------- ---------- ---------- ----------
Income before income taxes and cumulative effects of
accounting changes......................................... 381.9 198.6 460.3 398.5 319.6
Income taxes................................................ 100.8 43.9 148.3 107.3 74.3
---------- ---------- ---------- ---------- ----------
Income before cumulative effects of accounting changes...... 281.1 154.7 312.0 291.2 245.3
Cumulative effects of accounting changes.................... -- -- (12.1) -- --
---------- ---------- ---------- ---------- ----------
Net Income.............................................. $ 281.1 $ 154.7 $ 299.9 $ 291.2 $ 245.3
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
BALANCE SHEET DATA
(at end of period)
Assets...................................................... $ 14,787.8 $ 13,127.2 $ 12,437.3 $ 11,959.8 $ 11,310.9
Short-term debt............................................. $ 126.5 $ 246.6 $ 110.0 $ 122.7 $ 150.1
Long-term debt.............................................. $ 457.3 $ 182.1 $ 128.6 $ 77.2 $ 51.5
Stockholders' equity........................................ $ 2,302.9 $ 1,915.4 $ 2,102.7 $ 2,010.9 $ 1,755.5
OTHER DATA
Earnings per share.......................................... $ 3.87 $ 2.09 $ 3.81(b) $ 3.71 $ 3.15
Dividends paid per share.................................... $ 1.035 $ 0.92 $ 0.765 $ 0.625 $ 0.49
Book value per share........................................ $ 31.54 $ 26.45 $ 27.67 $ 25.44 $ 22.46
Number of shares (millions):
Shares outstanding........................................ 73.0 72.4 76.0 79.1 78.2
Weighted average shares outstanding....................... 72.7 74.2 78.8 78.5 77.8
Ratio of earnings to fixed charges (c)...................... 9.0 7.7 20.0 19.1 14.0
</TABLE>
- --------------------------
(a) Net investment income is comprised of investment income (net of expenses)
and net realized investment gains.
(b) Earnings per share before cumulative effects of accounting changes was
$3.96. Effective January 1, 1993, the Company adopted Financial Accounting
Standard No. 106, "Employers' Accounting for Postretirement Benefits Other
than Pensions," which decreased net income by $32.1 million, or $0.40 per
share, and Financial Accounting Standard No. 109, "Accounting for Income
Taxes," which increased net income by $20.0 million, or $0.25 per share.
(c) For purposes of computing the ratio of earnings to fixed charges, earnings
as adjusted consist of income from continuing operations before income taxes
plus fixed charges. Fixed charges consist of interest expense and the
estimated interest portion of rent expense.
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<PAGE>
SELECTED CONSOLIDATED SEGMENT INCOME STATEMENT DATA OF THE COMPANY
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Premiums and other income:
Disability Insurance Segment.............................. $1,879.9 $1,716.2 $1,547.9 $1,339.8 $1,214.6
Special Risk Insurance Segment............................ 702.3 607.1 559.4 432.8 368.5
Colonial Products Segment................................. 475.1 441.3 407.4 371.9 325.4
Retirement Products Segment............................... 34.1 31.4 42.5 52.5 64.4
Corporate................................................. 0.1 0.8 -- 0.8 --
-------- -------- -------- -------- --------
Total premiums and other income......................... 3,091.5 2,796.8 2,557.2 2,197.8 1,972.9
-------- -------- -------- -------- --------
Net investment income: (a)
Disability Insurance Segment.............................. 592.9 400.3 369.8 370.5 333.8
Special Risk Insurance Segment............................ 48.4 40.7 34.8 32.2 26.5
Colonial Products Segment................................. 52.2 32.6 41.4 35.4 38.5
Retirement Products Segment............................... 323.7 338.0 387.6 408.7 411.3
Corporate................................................. 14.2 4.2 6.2 3.9 1.5
-------- -------- -------- -------- --------
Total net investment income............................. 1,031.4 815.8 839.8 850.7 811.6
-------- -------- -------- -------- --------
Total revenues.......................................... 4,122.9 3,612.6 3,397.0 3,048.5 2,784.5
-------- -------- -------- -------- --------
Benefits and expenses:
Disability Insurance Segment.............................. 2,255.8 2,060.3 1,603.6 1,446.6 1,306.4
Special Risk Insurance Segment............................ 690.4 581.9 555.3 418.7 355.2
Colonial Products Segment................................. 439.6 411.2 378.4 346.8 306.4
Retirement Products Segment............................... 312.3 327.4 375.8 427.5 484.4
Corporate................................................. 42.9 33.2 23.6 10.4 12.5
-------- -------- -------- -------- --------
Total benefits and expenses............................. 3,741.0 3,414.0 2,936.7 2,650.0 2,464.9
-------- -------- -------- -------- --------
Income (loss) before income taxes and cumulative effects of
accounting changes:
Disability Insurance Segment.............................. 217.0 56.2 314.1 263.7 242.0
Special Risk Insurance Segment............................ 60.3 65.9 38.9 46.3 39.8
Colonial Products Segment................................. 87.7 62.7 70.4 60.5 57.5
Retirement Products Segment............................... 45.5 42.0 54.3 33.7 (8.7)
Corporate................................................. (28.6) (28.2) (17.4) (5.7) (11.0)
-------- -------- -------- -------- --------
Total income before income taxes and cumulative effects
of accounting changes................................. 381.9 198.6 460.3 398.5 319.6
-------- -------- -------- -------- --------
Income taxes................................................ 100.8 43.9 148.3 107.3 74.3
-------- -------- -------- -------- --------
Cumulative effects of accounting changes.................... -- -- (12.1)(b) -- --
-------- -------- -------- -------- --------
Net income.............................................. $ 281.1 $ 154.7 $ 299.9 $ 291.2 $ 245.3
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
- --------------------------
(a) Net investment income is comprised of investment income (net of expenses)
and net realized investment gains.
(b) Effective January 1, 1993, the Company adopted Financial Accounting Standard
No. 106, "Employers' Accounting for Postretirement Benefits Other than
Pensions," which decreased net income by $32.1 million, or $0.40 per share,
and Financial Accounting Standard No. 109, "Accounting for Income Taxes,"
which increased net income by $20.0 million, or $0.25 per share.
7
<PAGE>
USE OF PROCEEDS
Except as set forth in a Prospectus Supplement, the Company intends to use
the net proceeds from the sale of the Securities for general corporate purposes,
including working capital, capital expenditures, investment in subsidiaries,
refinancing of debt, possible future business acquisitions and for the
repurchase of its Common Stock. The Company does not have any present plans, and
is not engaged in any negotiations, for the use of any such proceeds, or the
issuance of Common Stock, in any future acquisition. Any proposal to use
proceeds from any offering of Securities in connection with an acquisition will
be disclosed in the Prospectus Supplement relating to such offering.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may not apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Senior Debt Securities are to be issued under an Indenture, dated as of
September 15, 1990 (the "Senior Indenture"), between UNUM Corporation (for
purposes of this "Description of Debt Securities," exclusive of its
subsidiaries, the "Company") and The Chase Manhattan Bank, N.A., as trustee. The
Subordinated Debt Securities are to be issued under a separate Indenture dated
as of May 1, 1995 (the "Subordinated Indenture") between the Company and Mellon
Bank, N.A., as trustee. The Senior Indenture and the Subordinated Indenture are
sometimes referred to collectively as the "Indentures." Copies of the Senior
Indenture and the Subordinated Indenture are filed or incorporated by reference
as exhibits to the Registration Statement of which this Prospectus is a part.
The Chase Manhattan Bank, N.A. and Mellon Bank, N.A. are hereinafter referred to
as the "Trustee." The following summaries of certain provisions of the Senior
Debt Securities, the Subordinated Debt Securities and the Indentures do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Indentures applicable to a particular
series of Debt Securities, including the definitions therein of certain terms.
Wherever particular Sections, Articles or defined terms of the Indentures are
referred to, such Sections, Articles or defined terms are incorporated herein by
reference. Article and Section references used herein are references to the
applicable Indenture. Except as otherwise indicated, the terms of the Senior
Indenture and the Subordinated Indenture are identical. Capitalized terms not
otherwise defined herein shall have the meaning given in the Indentures.
GENERAL
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and each Indenture provides that Debt
Securities may be issued thereunder from time to time in one or more series. The
Debt Securities will be unsecured. Unless otherwise specified in the Prospectus
Supplement, the Senior Debt Securities when issued will be unsubordinated
obligations of the Company and will rank equally and ratably with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated Debt
Securities when issued will be subordinated in right of payment to the prior
payment in full of all Senior Indebtedness (as defined below) of the Company, as
described under "Subordination of Subordinated Debt Securities" and in the
Prospectus Supplement applicable to an offering of Subordinated Debt Securities.
Since the Company is a holding company, the right of the Company, and hence the
right of creditors of the Company (including the Holders of Debt Securities), to
participate in any distribution of the assets of any subsidiary upon its
liquidation or reorganization or otherwise is necessarily subject to the prior
claims of creditors of the subsidiary, except to the extent that claims of the
Company itself as a creditor of the subsidiary may be recognized.
8
<PAGE>
Reference is made to the Prospectus Supplement relating to the particular
Debt Securities offered thereby (the "Offered Debt Securities") which sets forth
whether the Offered Debt Securities shall be Senior Debt Securities or
Subordinated Debt Securities, and further sets forth the following terms, where
applicable, of the Offered Debt Securities: (1) the title of the Offered Debt
Securities; (2) any limit on their aggregate principal amount; (3) whether they
are to be issuable in temporary or permanent global form; (4) the price(s)
(expressed as a percentage of the aggregate principal amount thereof) at which
they will be issued; (5) the date(s) on which they will mature; (6) the rate(s)
(which may be fixed, floating or adjustable) at which they will bear interest,
if any, and the date from which such interest will accrue; (7) the dates on
which such interest will be payable and the Regular Record Dates for such
Interest Payment Dates; (8) any mandatory or optional sinking fund or analogous
provisions; (9) any index or formula used to determine the amount of payments of
principal of and premium, if any, and interest; (10) the date, if any, after
which and the price(s) at which the Company may redeem them at its option; (11)
the currency or currencies (including composite currencies) of payment of
principal of and premium, if any, and interest thereon if other than U.S.
dollars (the "Specified Currency"); (12) the terms and conditions, if any,
pursuant to which the Subordinated Debt Securities are convertible into or
exchangeable for Common Stock or other securities or property of the Company;
(13) the Person to whom any interest on the Offered Debt Securities will be
payable, if other than the Person in whose name such Offered Debt Securities are
registered on any Regular Record Date; (14) the place or places where principal
of (and premium, if any) and interest, if any, on Offered Debt Securities will
be payable; (15) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which the Offered Debt Securities will be
issuable; (16) any event or events of default applicable with respect to the
Offered Debt Securities in addition to those provided in the applicable
Indenture; (17) any other covenant or warranty included for the benefit of the
Offered Debt Securities in addition to (and not inconsistent with) those
included in the applicable Indenture for the benefit of Debt Securities of all
series, or any other covenant or warranty included for the benefit of the
Offered Debt Securities in lieu of any covenant or warranty included in the
Indentures for the benefit of Debt Securities of all series or any provision
that any covenant or warranty included in the applicable Indenture for the
benefit of Debt Securities of all series shall not be for the benefit of the
Offered Debt Securities, or any combination of such covenants, warranties or
provisions; and (18) any other terms. (Section 301) Debt Securities may also be
issued under the Indentures upon the exercise of Warrants. See "Description of
Warrants."
The Indentures do not contain any provisions that afford Holders of the Debt
Securities protection in the event of a highly leveraged or similar transaction
involving the Company.
Offered Debt Securities may be issued at a substantial discount to their
principal amount (the "Original Issue Discount Securities"). Certain United
States Federal income tax and other considerations applicable to Original Issue
Discount Securities, and to Offered Debt Securities that are denominated in
other than U.S. dollars, will be described in the applicable Prospectus
Supplement.
The Indentures provide the Company with the ability, in addition to the
ability to issue Offered Debt Securities with terms different from those of Debt
Securities previously issued, to "reopen" a previous issue of a series of Debt
Securities and issue additional Offered Debt Securities of such series. (Section
301)
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise provided in an applicable Prospectus Supplement with
respect to a series of Offered Debt Securities, Offered Debt Securities
denominated in U.S. dollars will be issued only in denominations of $1,000 or
any integral multiple thereof without coupons. The Prospectus Supplement
relating to a series of Offered Debt Securities denominated in a foreign or
composite currency will specify the denominations thereof. (Section 302) Offered
Debt Securities of any series will be exchangeable for other Offered Debt
Securities of the same series containing identical terms and provisions and of a
like aggregate principal amount and containing identical terms and provisions of
different authorized
9
<PAGE>
denominations. (Section 305) Offered Debt Securities may be issuable under the
Indentures in temporary or permanent global form. (Section 202) See "Global
Securities."
Unless otherwise indicated in an applicable Prospectus Supplement, the
principal office of the Trustee in The City of New York will be designated as
the Company's Paying Agent for payments with respect to Debt Securities. Any
other Paying Agents in the United States initially designated by the Company for
the Offered Debt Securities will be named in the related Prospectus Supplement.
The Company may at any time designate additional Paying Agents or rescind the
designation of any Paying Agents or approve a change in the office through which
any Paying Agent acts, except that the Company will be required to maintain a
Paying Agent in each Place of Payment for such series. All monies paid by the
Company to a Paying Agent for the payment of principal of and premium, if any,
and interest, if any, on any Debt Security which remains unclaimed at the end of
two years after such principal, premium or interest shall have become due and
payable will be repaid to the Company, and the Holder of such Offered Debt
Security will thereafter look only to the Company for payment thereof. (Section
1003)
GLOBAL SECURITIES
If any Offered Debt Securities are issuable in temporary or permanent global
form, the applicable Prospectus Supplement will describe the circumstances, if
any, under which beneficial owners of interests in any such permanent global
Debt Security may exchange such interests for definitive Offered Debt Securities
of such series and of like tenor and principal amount in any authorized form and
denomination. Principal of and any premium and interest on a permanent global
Debt Security will be payable in the manner described in the applicable
Prospectus Supplement.
CERTAIN COVENANTS IN THE INDENTURES
LIMITATIONS ON SALES OF RESTRICTED SUBSIDIARIES' CAPITAL STOCK. The Company
will not sell, transfer or otherwise dispose of any shares of capital stock of a
Restricted Subsidiary (other than directors' qualifying shares or sales to
Restricted Subsidiaries), and it will not permit any Restricted Subsidiary to
sell, transfer or otherwise dispose of any shares of capital stock of any other
Restricted Subsidiary (other than for directors' qualifying shares or sales or
other transfers to the Company or to a Restricted Subsidiary), unless the entire
capital stock of such Restricted Subsidiary at the time owned by the Company and
its Restricted Subsidiaries shall be disposed of at the same time for a
consideration consisting of cash or other property, which, in the opinion of the
Board of Directors of the Company, is at least equal to the fair value thereof.
(Section 1006)
For purposes of the Indentures, "Restricted Subsidiary" means each of UNUM
Life Insurance Company of America, First UNUM Life Insurance Company, and
Colonial Companies, Inc., as well as any successor to all or a principal part of
the business of any such subsidiary, any subsidiary which owns or holds capital
stock of any such subsidiary and any other subsidiary which the Company's Board
of Directors designates as a Restricted Subsidiary. (Section 101) The Restricted
Subsidiaries accounted for approximately 90% of the consolidated revenues of the
Company during 1995 and approximately 91% of the consolidated assets of the
Company at December 31, 1995.
LIMITATIONS ON LIENS ON RESTRICTED SUBSIDIARIES' CAPITAL STOCK.
The Company will not, and it will not permit any Restricted Subsidiary at
any time directly or indirectly to, create, assume, incur, or permit to exist
any indebtedness secured by a pledge, lien, or other encumbrance on the capital
stock of any Restricted Subsidiary without making effective provision whereby
the Debt Securities then outstanding (and, if the Company so elects, any other
indebtedness ranking on a parity with the Debt Securities) shall be equally and
ratably secured with such secured indebtedness so long as such other
indebtedness shall be secured. (Section 1007)
10
<PAGE>
CONVERSION RIGHTS
The terms on which Subordinated Debt Securities of any series are
convertible into or exchangeable for Common Stock or other securities or
property of the Company will be set forth in the Prospectus Supplement relating
thereto. Such terms shall include provisions as to whether conversion or
exchange is mandatory, at the option of the Holder or at the option of the
Company, and may include provisions pursuant to which the number of shares of
Common Stock or other securities of the Company to be received by the Holders of
Subordinated Debt Securities would be calculated according to the market price
of Common Stock or other securities of the Company as of a time stated in the
Prospectus Supplement. The conversion price of any Subordinated Debt Securities
of any series that is convertible into Common Stock of the Company may be
adjusted for any stock dividends, stock splits, reclassification, combinations
or similar transactions, as set forth in the applicable Prospectus Supplement.
(Article Fourteen)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior payment
in full of all Senior Indebtedness. Upon any payment or distribution of assets
to creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshalling of assets or any
bankruptcy, insolvency, debt restructuring or similar proceedings in connection
with any insolvency or bankruptcy proceeding of the Company, the Holders of
Senior Indebtedness will first be entitled to receive payment in full of
principal of (and premium, if any) and interest, if any, on such Senior
Indebtedness before the Holders of the Subordinated Debt Securities will be
entitled to receive or retain any payment in respect of the principal of (and
premium, if any) or interest, if any, on the Subordinated Debt Securities.
(Section 1302)
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company may recover less, ratably, than Holders of Senior
Indebtedness and may recover more, ratably, than the Holders of the Subordinated
Debt Securities.
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the Holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of all
amounts due thereon before the Holders of the Subordinated Debt Securities will
be entitled to receive any payment upon the principal of (or premium, if any) or
interest, if any, on the Subordinated Debt Securities. (Section 1303)
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Subordinated Debt Securities may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default. (Section 1304) For
purposes of the subordination provisions, the payment, issuance and delivery of
cash, property or securities (other than stock and certain subordinated
securities of the Company) upon conversion of a Subordinated Debt Security will
be deemed to constitute payment on account of the principal of such Subordinated
Debt Security.
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Indebtedness, which may include indebtedness that is senior to
the Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities constitute Senior Indebtedness under the
Subordinated Indenture.
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"Senior Indebtedness" is defined to include all amounts due on and
obligations in connection with any of the following, whether outstanding at the
date of execution of the Subordinated Indenture or thereafter incurred or
created:
(a) indebtedness, obligations and other liabilities (contingent or
otherwise) of the Company for money borrowed, or evidenced by bonds, debentures,
notes or similar instruments;
(b) reimbursement obligations and other liabilities (contingent or
otherwise) of the Company with respect to letters of credit, bankers'
acceptances issued for the account of the Company or with respect to interest
rate protection agreements or currency exchange or purchase agreements;
(c) obligations and liabilities (contingent or otherwise) in respect of
leases by the Company as lessee which, in conformity with generally accepted
accounting principles, are accounted for as capitalized lease obligations on the
balance sheet of the Company;
(d) all direct or indirect guarantees or similar agreements in respect of,
and obligations or liabilities (contingent or otherwise) to purchase or
otherwise acquire or otherwise to assure a creditor against loss of the Company
in respect of, indebtedness, obligations or liabilities of another Person
described in clauses (a) through (c);
(e) any indebtedness described in clauses (a) through (d) secured by any
mortgage, pledge, lien or other encumbrance existing on property which is owned
or held by the Company, regardless of whether the indebtedness secured thereby
shall have been assumed by the Company; and
(f) any and all deferrals, renewals, extensions and refundings of, or
amendments, modifications or supplements to, any indebtedness, obligation or
liability of the kind described in clauses (a) through (e); unless in any case
in the instrument creating or evidencing such indebtedness, obligation,
liability, guaranty, assumption, deferral, renewal, extension or refunding, it
is provided that such indebtedness, obligation, liability, guaranty, assumption,
deferral, renewal, extension or refunding involved is not senior in right of
payment to the Subordinated Debt Securities or that such indebtedness is PARI
PASSU with or junior to the Subordinated Debt Securities. (Section 101)
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of any Holders of Outstanding Debt
Securities, may consolidate or merge with or into any Person, or transfer or
lease its assets substantially as an entirety to any Person, or may acquire or
lease the assets of any Person, provided that: (a) the successor formed by such
consolidation or into which the Company is merged or which acquires or leases
the assets of the Company substantially as an entirety is organized under the
laws of any United States jurisdiction and assumes the Company's obligations on
the Debt Securities and under the applicable Indenture; (b) after giving effect
to the transaction, no Event of Default (and no event which, after notice or
lapse of time or both, would become an Event of Default) shall have happened and
be continuing; and (c) certain other conditions are met. (Article Eight)
EVENTS OF DEFAULT
Under the Indentures, the following will be Events of Default with respect
to Debt Securities of a particular series: (a) the Company defaults in the
payment of interest on any Debt Security of that series when due and payable and
the Default continues for a period of 30 days; (b) the Company defaults in the
payment of any principal of and premium, if any, on any Debt Security of that
series when due and payable at maturity, upon redemption or otherwise, or in the
deposit of any sinking fund payment when due by the terms of a Debt Security of
that series; (c) the Company fails to comply with or perform any of
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its other agreements, covenants or warranties in the Debt Securities of that
series or the Indenture in respect of Debt Securities of that series and the
Default continues for 60 days after written notice as provided in the applicable
Indenture; (d) there shall be a default by the Company or any Restricted
Subsidiary under any (i) debt for money borrowed (including Debt Securities of
any series other than that series), (ii) mortgage, indenture or other instrument
under which there may be issued or may be secured or evidenced any indebtedness
for money borrowed, (iii) guarantee of payment for money borrowed or (iv) debt
evidenced by bonds, debentures, notes or other similar instruments (excluding
trade accounts payable or accrued liabilities arising in the normal course of
business which are not overdue by more than 90 days or which are being contested
in good faith) and such default shall result in such indebtedness becoming due
prior to its stated maturity; PROVIDED, HOWEVER, a default shall exist under
this clause (d) only if all such defaults relate to such indebtedness or such
guarantees with an aggregate principal amount in excess of $5,000,000, the
acceleration of which has not been rescinded or annulled within 10 days after
written notice as provided in the applicable Indenture; (e) certain events of
bankruptcy, insolvency or reorganization of the Company or any Restricted
Subsidiary; and (f) any other Event of Default provided with respect to Debt
Securities of that series. (Section 501) The applicable Trustee or the Holders
of at least 25% in principal amount of the Outstanding Debt Securities of that
series (each series acting as a separate class) may declare all unpaid principal
of and accrued interest (or such lesser amount as may be provided for in the
Debt Securities of that series) on all then Outstanding Debt Securities of that
series to be due and payable immediately if an Event of Default (other than one
in (e) above) with respect to Debt Securities of such series shall occur and be
continuing at the time of declaration. If an Event of Default as specified in
(e) above occurs, all unpaid principal and accrued interest (or such lesser
amount as may be provided for in the Debt Securities of that series) shall IPSO
FACTO become and be immediately due and payable without any other declaration or
act on the part of the Trustee or any Holder. (Section 502)
At any time after a declaration of acceleration has been made with respect
to Debt Securities of any series, the Holders of a majority in principal amount
of the Outstanding Debt Securities of that series may rescind any declaration of
acceleration with respect to the Debt Securities of that series and its
consequences, (a) if the rescission would not conflict with any judgment or
decree; (b) if all existing Events of Defaults with respect to Debt Securities
of that series have been cured or waived except non-payment of principal or
interest on Debt Securities of that series that has become due solely because of
the acceleration; and (c) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed therefore in such
Debt Securities has been paid. (Section 502) Any Event of Default with respect
to Debt Securities of any series may be waived by the Holders of a majority in
principal amount of the Outstanding Debt Securities of that series, except in a
case of failure to pay principal or premium, if any, or interest on, or deposit
of any sinking fund payment with respect to, any Debt Security of that series
for which payment or deposit had not been subsequently made or in respect of a
covenant or provision which cannot be modified or amended without the consent of
the Holder of each Outstanding Debt Security of such series affected. (Section
504)
If any event which is, or after notice or lapse of time or both would become
an Event of Default (a "Default") occurs with respect to Debt Securities of any
series and it is known to the applicable Trustee, the Trustee shall mail to
Holders of Debt Securities of that series a notice of Default within 90 days
after it occurs unless such Default shall have been cured or waived, PROVIDED
that except in the case of a Default in the payment of the principal of or
premium, if any, or interest on, any Debt Security of any series or in the
making of any sinking fund payment payable with respect to Debt Securities of
any series, the Trustee may withhold the notice if and so long as the board of
directors, the executive committee or a trust committee of directors or
Responsible Officers of the Trustee in good faith determines that withholding
the notice is in the interests of Holders of Debt Securities of that series and
PROVIDED, FURTHER, that in the case of any Default of the character specified in
clause (c) under "Events of Default" with respect to Debt Securities of any
series, no notice to Holders shall be given until at least 30 days after the
occurrence thereof. (Section 602)
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Reference is made to the Prospectus Supplement relating to any series of
Debt Securities which are Original Issue Discount Securities for the particular
provisions relating to the principal amount of such Original Issue Discount
Securities due upon the occurrence of any Event of Default and the continuation
thereof.
The Holders of a majority in principal amount of the Outstanding Debt
Securities of a series may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to Debt Securities of such series,
PROVIDED that the Trustee may refuse to follow any directions that conflict with
any law or the Indenture, are unduly prejudicial to the rights of other Holders
of that series, or would involve the Trustee in personal liability. (Section
505)
In case an Event of Default shall occur and be continuing, the Trustee shall
exercise such of its rights and powers under the applicable Indenture and use
the same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
(Section 601) Before proceeding to exercise any right or power under the
applicable Indenture at the direction of such Holders, the Trustee will be
entitled to receive from such Holders security or indemnity satisfactory to it
against the costs, expenses and liabilities which might be incurred by it in
complying with any such direction. (Section 603)
MODIFICATION AND WAIVER
With certain exceptions, modification or amendment of the Indentures or the
rights of Holders of the Debt Securities of any series may be effected by the
Company and the Trustee with the consent of the Holders of at least 66 2/3% in
principal amount of the Outstanding Debt Securities of each series affected
thereby, PROVIDED that no such modification or amendment may, without the
written consent of the Holder of each Outstanding Debt Security affected
thereby, (a) change the Stated Maturity of the principal of, or any installment
of principal of, or interest on, any Debt Security; (b) reduce the principal
amount of, or the interest on, any Debt Security or any premium payable upon the
redemption thereof or reduce the amount of principal of an Original Issue
Discount Security which could be declared due and payable upon an acceleration;
(c) change the Place of Payment or coin or currency of any payment of principal,
any premium or interest on any Debt Security; (d) impair the right to institute
suit for the enforcement of any payment on or with respect to any Debt Security;
(e) reduce the percentage in principal amount of the Outstanding Debt Securities
of any series, the consent of whose Holders is required to approve any
supplemental indenture, to waive compliance with certain provisions of the
applicable Indenture or certain defaults thereunder and their consequences, or
to reduce quorum or voting requirements applicable to meetings of Holders; (f)
in the case of Subordinated Debt Securities, adversely change the right to
convert or exchange, including decreasing the conversion rate or increasing the
conversion price of such Subordinated Debt Securities; (g) in the case of the
Subordinated Indenture, modify the subordination provisions in a manner adverse
to the Holders of any Subordinated Debt Securities; or (h) modify the foregoing
requirements in (a) through (g) above, requiring the consent of each Holder of
each Outstanding Debt Security affected thereby, or the percentage of such
Holders required to waive past defaults, or the percentage of such Holders that
may rescind an acceleration, except to increase any such percentage, and except
to provide that other provisions of the Indentures cannot be modified or waived
without the consent of the Holder of each Outstanding Debt Security affected
thereby. (Section 902) Except with respect to certain fundamental provisions,
the Holders of at least a majority in principal amount of Outstanding Debt
Securities of any series may, with respect to such series, waive past defaults
under the Indentures and waive compliance by the Company with certain provisions
of the Indentures. (Section 513)
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SATISFACTION AND DISCHARGE OF INDENTURES
The Indentures generally provide that the Company may terminate certain of
its obligations under the Debt Securities of any series and under the Indentures
(with respect to such series) if (i) all the Debt Securities of such series
previously authenticated and delivered (other than lost, destroyed or stolen
Debt Securities that have been replaced or paid or for whose payment money has
been deposited in trust) have been delivered to the Trustee for cancellation and
the Company has paid all sums payable by it thereunder, (ii) such Debt
Securities of such series have matured or will mature within one year or all of
them are to be called for redemption within one year under arrangements
satisfactory to the Trustee for giving the notice of redemption and the Company
irrevocably deposits with the Trustee money or U.S. Government Obligations
sufficient to pay principal of, premium, if any, and interest on the Outstanding
Debt Securities of such series that are due or will become due upon redemption
or maturity, as the case may be, and to pay all other sums payable by it
thereunder or (iii) upon compliance with certain conditions specified in the
Indentures, 123 days after the Company makes the deposit with the Trustee of
money or U.S. Government Obligations specified in clause (ii). In such case,
Holders of the Debt Securities must look to the deposited money for payment.
(Section 401)
The Indentures further provide that if the Company has made the election
provided by clause (iii) above, it may elect either (a) to defease and be
discharged from any and all obligations with respect to the Debt Securities of
such series, except for the obligations to register the transfer or exchange of
such Debt Securities, to replace temporary or mutilated, destroyed, lost or
stolen Debt Securities, to maintain an office or agency in respect of the Debt
Securities, and to hold moneys for payment in trust ("legal defeasance") or (b)
to be released from its obligations with respect to the Debt Securities of such
series under the covenant default (except with respect to the covenant to pay
principal and interest) and cross-acceleration provisions under "Events of
Default" and from the restrictions described under certain covenants in the
Indentures, including "Limitations on Sales of Restricted Subsidiaries' Capital
Stock" and "Limitations on Liens on Restricted Subsidiaries' Capital Stock,"
and, in the case of Subordinated Debt Securities, the provisions described under
"Subordination of Subordinated Debt Securities" ("covenant defeasance"). As a
condition to legal defeasance or covenant defeasance, the Company must deliver
to the Trustee an opinion of counsel (as specified in the Indentures) to the
effect that the Holders of the Debt Securities of such series will not recognize
income, gain or loss for United States Federal income tax purposes as a result
of such legal defeasance or covenant defeasance and will be subject to United
States Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such legal defeasance or covenant
defeasance had not occurred. In the case of legal defeasance under clause (a) or
covenant defeasance under clause (b) above, a ruling of the Internal Revenue
Service may be delivered in lieu of such opinion. (Section 401)
Under current United States Federal income tax law, legal defeasance would
likely be treated as a taxable exchange of such Debt Securities for interests in
the defeasance trust. As a consequence, a Holder would recognize gain or loss
equal to the difference between the Holder's tax basis for such Debt Securities
and the value of the Holder's interest in the defeasance trust, and thereafter
would be required to include in income its share of the income, gain and loss of
the defeasance trust. Under current Federal income tax law, covenant defeasance
would likely not be treated as a taxable exchange of such Debt Securities.
Purchasers of such Debt Securities should consult their tax advisors with
respect to the more particular tax consequences to them of such legal defeasance
and covenant defeasance, including the applicability and effect of United States
Federal income and other tax law.
The Company may exercise its legal defeasance option with respect to the
Debt Securities of such series, notwithstanding its prior exercise of its
covenant defeasance option. If the Company exercises its legal defeasance
option, payment of such Debt Securities may not be accelerated because of an
Event of Default. If the Company exercises its covenant defeasance option,
payment of such Debt Securities may not be accelerated because of the covenant
default (except with respect to the covenant to pay principal and interest) and
cross-acceleration provisions or certain of the covenants, including those
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noted under clause (b) above. However, if such an acceleration were to occur
because of other defaults, the realizable value at the acceleration date of the
money and U.S. Government Obligations in the defeasance trust could be less than
the principal and interest then due on such Debt Securities, because the
required deposit in the defeasance trust is based upon scheduled cash flows
rather than market value, which will vary depending upon interest rates and
other factors. (Section 401)
The term "U.S. Government Obligations" is defined to mean direct obligations
of the United States for the payment of which its full faith and credit is
pledged, or obligations of a person controlled or supervised by and acting as an
agency or instrumentality of the United States and the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depositary receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act) as custodian with respect
to any such U.S. Government Obligations or a specific payment of principal of or
interest on any such U.S. Government Obligations held by such custodian for the
account of the holder of such depositary receipt, PROVIDED that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depositary receipt from any amount received
by the custodian in respect of the U.S. Government Obligations or the specific
payment of principal of or interest on the U.S. Government Obligations evidenced
by such depositary receipt. (Section 101)
CONCERNING THE TRUSTEES
The Company maintains banking relationships in the ordinary course of
business with The Chase Manhattan Bank, N.A. and Mellon Bank, N.A. In addition,
Mellon Bank, N.A. is a participant in the Company's $500 million revolving
credit facility entered into as of December 13, 1994.
DESCRIPTION OF CAPITAL STOCK
The following descriptions and the descriptions contained in "Description of
Preferred Stock" and "Description of Common Stock" are summaries, and reference
is herein made to the detailed provisions of the following documents, copies of
which are filed as exhibits to the Registration Statement: (i) the Company's
Certificate of Incorporation, as amended (the "Certificate of Incorporation");
(ii) the Company's By-Laws (the "By-Laws"); and (iii) the Rights Agreement
between the Company and First Chicago Trust Company of New York, as Rights Agent
(the "Rights Agreement"), pursuant to which shares of Junior Participating
Preferred Stock, Series A ("Junior Participating Preferred Stock") are issuable.
The authorized capital stock of the Company consists of: (i) 120,000,000
shares of Common Stock, par value $0.10 per share, and (ii) 10,000,000 shares of
Preferred Stock, par value $0.10 per share, of which 1,000,000 are designated as
Junior Participating Preferred Stock.
As of March 31, 1996, there were outstanding: (a) 73,274,752 shares of
Common Stock (as well as the same number of rights to purchase shares of Junior
Participating Preferred Stock, pursuant to the Rights Agreement) and (b)
employee stock options to purchase an aggregate of 5,835,464 shares of Common
Stock.
DESCRIPTION OF PREFERRED STOCK
The following description sets forth certain general terms and provisions of
the Preferred Stock to which any Prospectus Supplement may relate. Certain other
terms of a particular series of Preferred Stock will be described in the
Prospectus Supplement relating to that series. If so indicated in the Prospectus
Supplement, the terms of any such series may differ from the terms set forth
below. The description of certain provisions of the Preferred Stock set forth
below and in any Prospectus Supplement does not purport to be complete and is
subject to and qualified in its entirety by reference to the
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Company's Certificate of Incorporation and the certificate of designation
relating to each such series of Preferred Stock, which will be filed with the
Commission in connection with the offering of such series of Preferred Stock.
GENERAL
Under the Company's Certificate of Incorporation, the Board of Directors is
authorized to fix and determine the terms, limitations and relative rights and
preferences of any class of preferred stock, including, without limitation, any
voting rights thereof, to divide and issue any of the classes of preferred stock
in series, and to fix and determine the variations among series to the extent
permitted by law. The Company has authorized 1,000,000 shares of Junior
Participating Preferred Stock for issuance upon exercise of certain preferred
share purchase rights associated with each share of outstanding Common Stock as
provided in the Rights Agreement. See "Description of Common Stock--Share
Purchase Rights Plan--Description of Junior Participating Preferred Stock."
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in the Prospectus
Supplement relating to a particular series of Preferred Stock. Reference is made
to the Prospectus Supplement relating to a particular series of Preferred Stock
offered thereby for specific terms including: (1) the designation and the number
of shares offered; (2) the amount of liquidation preference per share; (3) the
price at which such Preferred Stock will be issued; (4) the dividend rate (or
method of calculation), the dates on which dividends will be payable, whether
such dividends will be cumulative or noncumulative and, if cumulative, the dates
from which dividends will commence to cumulate; (5) any redemption or sinking
fund provisions; (6) any conversion or exchange rights; and (7) any additional
voting, dividend, liquidation, redemption, sinking fund and other rights,
preferences, privileges, limitations and restrictions.
The Preferred Stock offered hereby will be issued in one or more series. The
holders of Preferred Stock will have no preemptive rights. Any shares of
Preferred Stock sold hereunder will be fully paid and nonassessable upon
issuance against full payment of the purchase price therefor. Unless otherwise
specified in the Prospectus Supplement relating to a particular series of
Preferred Stock, each series of Preferred Stock will rank on a parity as to
dividends and liquidation rights in all respects with each other series of
Preferred Stock (other than the Junior Participating Preferred Stock).
DIVIDEND RIGHTS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of funds
legally available therefor, cash dividends at such rates and on such dates as
are set forth in the Prospectus Supplement relating to such series of Preferred
Stock. Different series of the Preferred Stock may be entitled to dividends at
different rates or based upon different methods of determination. Such rate may
be fixed or variable or both. Each such dividend will be payable to the holders
of record as they appear on the stock books of the Company on such record dates
as will be fixed by the Board of Directors of the Company or a duly authorized
committee thereof. Dividends on any series of the Preferred Stock may be
cumulative or noncumulative, as provided in the Prospectus Supplement relating
thereto.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of each series of Preferred Stock will be
entitled to receive out of assets of the Company available for distribution to
stockholders, before any distribution of assets is made to holders of Common
Stock or any other class of stock ranking junior to such series of the Preferred
Stock upon liquidation, liquidating distributions in the amount set forth in the
Prospectus Supplement relating to such series of Preferred Stock plus an amount
equal to accrued and unpaid dividends for the then current dividend period and,
if such series of the Preferred Stock is cumulative, for all dividend periods
prior thereto, all as set forth in the Prospectus Supplement with respect to
such shares.
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REDEMPTION
The terms, if any, on which shares of a series of Preferred Stock may be
subject to optional or mandatory redemption, in whole or in part, will be set
forth in the Prospectus Supplement relating to such series.
CONVERSION
The terms, if any, on which shares of any series of Preferred Stock are
convertible into Common Stock will be set forth in the Prospectus Supplement
relating thereto. Such terms may include provisions for conversion, either
mandatory, at the option of the holder, or at the option of the Company, in
which case the number of shares of Common Stock to be received by the holders of
Preferred Stock would be calculated as of a time and in the manner stated in the
Prospectus Supplement.
TRANSFER AGENT AND REGISTRAR
The transfer agent, registrar and dividend disbursement agent for the
Preferred Stock will be designated in the applicable Prospectus Supplement. The
registrar for shares of Preferred Stock will send notices to shareholders of any
meetings at which holders of the Preferred Stock have the right to elect
directors of the Company or to vote on any other matter.
VOTING RIGHTS
The holders of Preferred Stock of a series offered hereby will not be
entitled to vote except as indicated in the Prospectus Supplement relating to
such series of Preferred Stock or as required by applicable law.
DESCRIPTION OF COMMON STOCK
GENERAL
Subject to the rights of the holders of any shares of the Company's
Preferred Stock which may at the time be outstanding, holders of Common Stock
are entitled to such dividends as the Board of Directors may declare out of
funds legally available therefor. The holders of Common Stock will possess
exclusive voting rights in the Company, except to the extent the Board of
Directors specifies voting power with respect to any Preferred Stock issued.
Except as hereinafter described, holders of Common Stock are entitled to one
vote for each share of Common Stock, but will not have any right to cumulate
votes in the election of directors. In the event of liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to receive,
after payment of all of the Company's debts and liabilities and of all sums to
which holders of any Preferred Stock may be entitled, the distribution of any
remaining assets of the Company. Holders of the Common Stock will not be
entitled to preemptive rights with respect to any shares which may be issued.
Any shares of Common Stock sold hereunder will be fully paid and non-assessable
upon issuance against full payment of the purchase price therefor. First Chicago
Trust Company of New York is the transfer agent for the Common Stock. The Common
Stock is listed on the New York Stock Exchange and the Pacific Stock Exchange
under the symbol "UNM."
CERTAIN PROVISIONS
The provisions of the Company's Certificate of Incorporation and By-Laws
which are summarized below may be deemed to have an anti-takeover effect and may
delay, defer or prevent a tender offer or takeover attempt that a stockholder
might consider in such stockholder's best interest, including those attempts
that might result in a premium over the market price for the shares held by
stockholders.
CLASSIFIED BOARD. The Board of Directors is divided into three classes that
are elected for staggered three-year terms. A director may be removed by the
stockholders, but only for cause, and only by
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the affirmative vote of the holders, voting as a single class, of 80% or more of
the total number of votes entitled to be cast by all holders of the voting stock
which shall include all capital stock of the Company which by its terms may vote
on all matters submitted to stockholders of the Company generally.
ISSUANCE OF PREFERRED STOCK. Pursuant to the Certificate of Incorporation,
the Board of Directors by resolution may establish one or more series of
Preferred Stock having such number of shares, designation, relative voting
rights, dividend rates, liquidation and other rights, preferences and
limitations as may be fixed by the Board of Directors without any further
stockholder approval. Such rights, preferences, privileges and limitations as
may be established could have the effect of impeding or discouraging the
acquisition of control of the Company.
BUSINESS COMBINATIONS. In addition, the Certificate of Incorporation and
By-Laws of the Company contain supermajority voting provisions relating to the
approval of business combinations with certain stockholders. Pursuant to the
Company's Certificate of Incorporation, any Business Combination (as defined
therein, which term includes a merger, sale of all or substantially all its
assets, the adoption of a plan of liquidation and similar extraordinary
corporate transactions) with (i) any person (other than the Company, its
subsidiaries, certain employee benefit plans of the Company and the trustees of
such plans) who is the beneficial owner of 10% or more of the UNUM Voting Stock
(as defined below) or (ii) any person who is an Affiliate or Associate (as
defined in Rule 12b-2 of the Exchange Act) of the Company and who was the
beneficial owner of 10% or more of the UNUM Voting Stock at any time in the two
years prior to the date in question (each such person, a "UNUM Interested
Stockholder") must be approved by a supermajority vote, unless the Business
Combination has been approved by the vote of a majority of the Continuing
Directors (as defined below) of the Company's Board of Directors. "UNUM Voting
Stock" means all capital stock of the Company which by its terms may vote on all
matters submitted to stockholders of the Company generally. "Continuing
Director" means any Board of Directors member who while serving as a Board of
Directors member is not an Affiliate or Associate or representative of the UNUM
Interested Stockholder and who was a Board of Directors member before the UNUM
Interested Stockholder became such and includes certain successors to such Board
of Directors members. The required supermajority vote consists of the
affirmative vote of the holders of (i) 80% or more of the UNUM Voting Stock,
voting together as a single class, and (ii) at least a majority of the shares of
UNUM Voting Stock not held by the UNUM Interested Stockholder, voting together
as a single class.
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION. Under the Certificate of
Incorporation, the amendment of, repeal of or adoption of any provision
inconsistent with certain provisions of the Certificate of Incorporation
relating to (i) the election of the Board of Directors, its powers and related
matters requires the affirmative vote of the holders of at least 80% of the
outstanding UNUM Voting Stock, voting together as a single class, and (ii)
Business Combinations with UNUM Interested Stockholders and the required votes
for amendments of the Certificate of Incorporation requires the affirmative vote
of the holders specified in clause (i) above and the affirmative vote of the
holders of at least a majority of the outstanding UNUM Voting Stock which is not
beneficially owned by any UNUM Interested Stockholder, voting together as a
single class. The above supermajority voting requirements do not apply to any
amendment, repeal or adoption recommended by the Board of Directors of the
Company if a majority of the Board of Directors of the Company then in office
consists of persons who would be eligible to serve as Continuing Directors.
AMENDMENTS TO THE BY-LAWS. The Certificate of Incorporation provides that
the By-Laws may be amended by the affirmative vote of a majority of directors
present at a meeting of the Board of Directors at which a quorum is present or
by the affirmative vote of the holders of at least 80% of all outstanding UNUM
Voting Stock, voting together as a single class.
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STOCKHOLDER PROPOSAL PROCEDURES. The By-Laws require any stockholder who
wants to present a proposal for action by the stockholders at an annual meeting
to deliver a written notice to the Secretary of the Company. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Company, not less than 60 days nor more than
90 days prior to the date of the annual meeting, unless less than 75 days'
notice or prior public disclosure of the date of such meeting has been given or
made to the stockholders, in which case a stockholder's notice must be received
no later than the close of business on the 15th day following the day on which
such notice was mailed or such disclosure was made.
SHARE PURCHASE RIGHTS PLAN
On March 13, 1992, the Board of Directors of the Company adopted a
stockholder rights plan and declared a dividend distribution of one right (a
"Right") for each outstanding share of Common Stock to stockholders of record at
the close of business on March 23, 1992. Each Right entitles the registered
holder to purchase from the Company a unit consisting of one one-hundredth of a
share (a "Unit") of Junior Participating Preferred Stock, at a purchase price of
$150 per Unit, subject to adjustment (the "Purchase Price"). The terms of the
Junior Participating Preferred Stock are such that one Unit is essentially
equivalent to one share of Common Stock. The description and terms of the Rights
are set forth in a Rights Agreement, dated as of March 13, 1992 and amended as
of June 19, 1996 (as amended, the "Rights Agreement"), between the Company and
First Chicago Trust Company of New York, as rights agent (the "Rights Agent").
Initially, the Rights are attached to all outstanding Common Stock
certificates, and no separate certificates evidencing Rights ("Rights
Certificates") are distributed. The Rights will separate from the Common Stock
and a "Distribution Date" will occur upon the earlier of (i) ten (10) days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 10% or more of the outstanding shares of
Common Stock, except for persons or a group of affiliated or associated persons
who become the beneficial owner of 10% or more of the outstanding shares of
Common Stock solely as a result of a reduction in the number of shares of Common
Stock outstanding due to a repurchase of shares by the Company unless such
person or group thereafter acquires additional shares representing 1% or more of
the outstanding Common Stock (the "Stock Acquisition Date") or (ii) ten (10)
business days (or such later date as may be determined by the Board of
Directors) following the announcement of a tender offer or exchange offer that
would result in a person or group beneficially owning 10% or more of such
outstanding shares of Common Stock. However, if the Board of Directors of the
Company determines that any person who would otherwise be an Acquiring Person
has become such inadvertently, then such person will not become an Acquiring
Person if certain conditions are satisfied, including divestiture by such person
of beneficial ownership of the shares of Common Stock that would have otherwise
caused such person to become an Acquiring Person.
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after March 23, 1992
contain a notation incorporating the Rights Agreement by reference, and (iii)
the surrender for transfer of any certificates for Common Stock outstanding will
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificates. The Rights are not exercisable until the
Distribution Date and will expire at the close of business on March 13, 2002,
unless earlier redeemed by the Company as described below (the "Expiration
Date").
In the event that (i) a Person becomes an Acquiring Person (except pursuant
to an offer for all outstanding shares of Common Stock which at least a majority
of the members of the Board of Directors who are not officers of the Company and
who are not representatives, nominees, affiliates or associates of an Acquiring
Person determine to be fair to and otherwise in the best interests of the
Company and its stockholders (a "Fair Offer")) or (ii) an Acquiring Person or
any of its affiliates or associates shall merge
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<PAGE>
into or otherwise combine with the Company in a transaction in which the Company
is the surviving corporation and the Common Stock remains outstanding and
unchanged, each holder of a Right will thereafter have the right to receive,
upon exercise, Common Stock (or, in certain circumstances, cash, property or
other securities of the Company or a reduction in the Purchase Price) having a
value equal to two times the exercise price of the Right. Notwithstanding any of
the foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by an Acquiring Person or an
associate or affiliate of an Acquiring Person will be null and void. However,
Rights are not exercisable following the occurrence of any of the events set
forth in this paragraph until such time as the Rights are no longer redeemable
by the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation (other than a merger
described in the preceding paragraph or a merger which follows, and is at the
same price as, a Fair Offer), or (ii) 50% or more of UNUM's assets or earning
power is sold or transferred, each holder of a Right (except Rights which
previously have become null and void as set forth above) shall thereafter have
the right to receive, upon exercise, common stock of the acquiring company
having a value equal to two times the exercise price of the Right. The events
set forth in this paragraph and in the preceding paragraph are referred to as
the "Triggering Events."
At any time after there is an Acquiring Person and prior to the acquisition
by such Acquiring Person of 50% or more of the outstanding Common Stock, the
Board of Directors may exchange the Rights (other than Rights owned by the
Acquiring Person which have become null and void), in whole or in part, at an
exchange ratio of one share of Common Stock or one Unit of Junior Participating
Preferred Stock (or a share or unit of another series of the Company's preferred
stock having equivalent rights, preferences and privileges) per Right (subject
to adjustment).
At any time until ten (10) days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (the "Redemption Price"), which is payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors. Immediately upon the
action of the Board of Directors ordering redemption of the Rights, the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The Purchase Price payable, and the number of shares of Junior Participating
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends. Stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) or for common stock of the
acquiring company as set forth above.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
in a manner which causes the Rights to become exercisable unless the offer is
conditioned on substantially all the Rights being acquired. This potential
dilution may have the effect of delaying, deferring or discouraging attempts to
acquire control of the Company which are not approved by the Company's Board of
Directors. However, the Rights should not interfere with any merger or other
business combination approved by the Company's Board of Directors.
DESCRIPTION OF JUNIOR PARTICIPATING PREFERRED STOCK
GENERAL. In connection with the Rights Agreement, 1,000,000 shares of
Junior Participating Preferred Stock have been reserved and authorized for
issuance by the Board of Directors of the Company.
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<PAGE>
No shares of Junior Participating Preferred Stock are outstanding as of the date
of this Prospectus. The following statements with respect to the Junior
Participating Preferred Stock do not purport to be complete and are subject to
the detailed provisions of the Certificate of Incorporation and the certificate
of designation relating to the Junior Participating Preferred Stock (the
"Certificate of Designation"), which are filed as exhibits to the Registration
Statement of which this Prospectus is a part.
RANKING. The Junior Participating Preferred Stock shall rank junior to all
other series of the Company's Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide
otherwise.
DIVIDENDS AND DISTRIBUTIONS. Subject to the prior and superior rights of
the holders of any shares of any series of Preferred Stock ranking prior and
superior to the shares of Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Junior Participating Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for that purpose, quarterly dividends payable in cash
on the 19th day of February, May, August and November in each year (each such
date being referred to herein as "Quarterly Dividend Payment Date") commencing
on the first Quarterly Dividend Payment Date after the first issuance of a share
or fraction of a share of Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $5.00 or (b)
(subject to adjustment upon certain dilutive events) 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock, since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Junior Participating Preferred
Stock.
The Company shall declare a dividend or distribution on the Junior
Participating Preferred Stock immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in shares of
Common Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $5.00 per share on the Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
VOTING RIGHTS. The holders of shares of Junior Participating Preferred
Stock shall have the following voting rights: (a) subject to adjustment upon
certain dilutive events, each share of Junior Participating Preferred Stock
shall entitle the holder thereof to 100 votes on all matters submitted to a vote
of the stockholders of the Company; (b) except as otherwise provided by the
Certificate of Designation or by law, the holders of shares of Junior
Participating Preferred Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of stockholders of
the Company; and (c) if at any time dividends on any Junior Participating
Preferred Stock shall be in arrears in an amount equal to six (6) quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning
of a period (herein called a "default period") which shall extend until such
time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Junior
Participating Preferred Stock then outstanding shall have been declared and paid
or set apart for payment. During each default period, all holders of Preferred
Stock (including holders of the Junior Participating Preferred Stock) with
dividends in arrears in an amount equal to six (6) quarterly dividends thereon,
voting as a class, irrespective of series, shall have the right to elect two (2)
Directors, until the expiration of a default period.
LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the Company, no distribution shall be
made to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Junior Participating
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Preferred Stock unless, prior thereto, the holders of shares of Junior
Participating Preferred Stock shall have received $250 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A Liquidation Preference,
no additional distributions shall be made to the holders of shares of Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 100 (as appropriately adjusted to reflect such events as
stock splits, stock dividends and recapitalizations with respect to the Common
Stock) (such number in clause (ii) immediately above being referred to as the
"Adjustment Number"). Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Junior Participating Preferred Stock and Common Stock, respectively,
holders of Junior Participating Preferred Stock and holders of shares of Common
Stock shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to one (1) with
respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
In the event, however, that there are not sufficient assets available to
permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Junior Participating Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
CONSOLIDATION, MERGER, ETC. In case the Company shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case, the shares of Junior
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to adjustment upon certain dilutive
events) equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged.
REDEMPTION. The outstanding shares of Junior Participating Preferred Stock
may be redeemed at the option of the Board of Directors in whole, but not in
part, at any time, or from time to time, at a cash price per share equal to 105
percent of (i) the product of the Adjustment Number times the Average Market
Value (as such term is hereinafter defined) of the Common Stock, plus (ii) all
dividends which on the redemption date have accrued on the shares to be redeemed
and have not been paid, or declared and a sum sufficient for the payment thereof
set apart, without interest. The "Average Market Value" is the average of the
closing sale prices of the Common Stock during the 30-day period immediately
preceding the date before the redemption date on the Composite Tape for New York
Stock Exchange Listed Stocks, or, if such stock is not quoted on the Composite
Tape, on the New York Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities exchange registered under
the Exchange Act, on which such stock is listed, or, if such stock is not listed
on any such exchange, the average of the closing sale prices with respect to a
share of Common Stock during such 30-day period, as quoted on the National
Association of Securities Dealers, Inc. Automated Quotations System or any
system then in use, or, if no such quotations are available, the fair market
value of the Common Stock as determined by the Board of Directors in good faith.
23
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DESCRIPTION OF WARRANTS
The Company may issue Warrants, including Warrants to purchase Debt
Securities, Preferred Stock, Common Stock or other securities of the Company.
Warrants may be issued independently or together with any such securities of the
Company and may be attached to or separate from such securities of the Company.
The Warrants are to be issued under warrant agreements (each a "Warrant
Agreement") to be entered into between the Company and a bank or trust company,
as warrant agent (the "Warrant Agent"), all as shall be set forth in the
Prospectus Supplement relating to Warrants being offered pursuant thereto.
WARRANTS
The applicable Prospectus Supplement will describe the terms of Warrants
offered thereby, the Warrant Agreement relating to such Warrants and the warrant
certificates representing such Warrants, including the following: (1) the title
of such Warrants; (2) the securities of the Company for which such Warrants are
exercisable; (3) the aggregate number of such Warrants; (4) the price or prices
at which such Warrants will be issued; (5) the currency or currencies, including
composite currencies or currency units, in which the price of such Warrants may
be payable; (6) the procedures and conditions relating to the exercise of such
Warrants; (7) the designation and terms of any related securities of the Company
with which such Warrants are issued, and the number of such Warrants issued with
each such security; (8) the date, if any, on and after which such Warrants and
the related securities of the Company will be separately transferable; (9) the
date on which the right to exercise such Warrants shall commence, and the date
on which such right shall expire; (10) the maximum or minimum number of such
Warrants which may be exercised at any time; (11) a discussion of material
United States Federal income tax considerations, if any; (12) any other terms of
such Warrants and terms, procedures and limitations relating to the exercise of
such Warrants; and (13) the terms of the securities of the Company purchasable
upon exercise of such Warrants.
Warrant certificates will be exchanged for new warrant certificates of
different denominations, and Warrants may be exercised at the corporate trust
office of the Warrant Agent or any other office indicated in the Prospectus
Supplement. Prior to the exercise of their Warrants, holders of Warrants
exercisable for Debt Securities will not have any of the rights of holders of
the Debt Securities purchasable upon such exercise and will not be entitled to
payments of principal (or premium, if any) or interest, if any, on the Debt
Securities purchasable upon such exercise. Prior to the exercise of their
Warrants for shares of Preferred Stock or Common Stock, holders of such Warrants
will not have any rights of holders of the Preferred Stock or Common Stock
purchasable upon such exercise and will not be entitled to dividend payments, if
any, or voting rights of the Preferred Stock or Common Stock purchasable upon
such exercise.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder of Warrants to purchase for cash such
principal amount or such number of securities of the Company at such exercise
price as shall in each case be set forth in, or be determinable as set forth in,
the Prospectus Supplement relating to the Warrants offered thereby. After the
close of business on the expiration date, unexercised Warrants will become void.
Warrants may be exercised as set forth in the Prospectus Supplement relating
to the Warrants offered thereby. Upon receipt of payment and the warrant
certificate properly completed and duly executed at the corporate trust office
of the Warrant Agent or any other office indicated in the Prospectus Supplement,
the Company will, as soon as practicable, forward the securities purchasable
upon such exercise. If less than all of the Warrants represented by such warrant
certificate are exercised, a new warrant certificate will be issued for the
remaining Warrants.
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FOREIGN CURRENCY RISKS
GENERAL
EXCHANGE RATES AND EXCHANGE CONTROLS. An investment in Debt Securities
denominated in other than U.S. dollars entails significant risks that are not
associated with a similar investment in a security denominated in U.S. dollars.
Such risks include, without limitation, the possibility of significant changes
in rates of exchange between the U.S. dollar and the various foreign currencies
or composite currencies, and the possibility of the imposition or modification
of foreign exchange controls by either the U.S. or foreign governments. Such
risks generally depend on economic and political events over which the Company
has no control. In recent years, rates of exchange between the U.S. dollar and
certain foreign currencies have been highly volatile, and such volatility may be
expected to continue in the future. Fluctuations in any particular exchange rate
that have occurred in the past are not necessarily indicative, however, of
fluctuations in the rate that may occur during the term of any Debt Security.
Depreciation of the Specified Currency other than U.S. dollars against the U.S.
dollar would result in a decrease in the effective yield of such Debt Security
below its coupon rate, and in certain circumstances could result in a loss to
the investor on a U.S. dollar basis.
Governments have imposed from time to time and may in the future impose
exchange controls that could affect exchange rates as well as the availability
of a specified foreign currency at a Debt Security's maturity. Even if there are
no actual exchange controls, it is possible that the Specified Currency for any
particular Debt Security would not be available at such Debt Security's
maturity. In that event, the Company will repay such Debt Security at maturity
in U.S. dollars on the basis of the most recently available Exchange Rate.
This Prospectus does not describe all the risks of an investment in Debt
Securities denominated in other than U.S. dollars. Prospective investors should
consult their own financial and legal advisors as to the risks entailed by an
investment in Debt Securities denominated in other than U.S. dollars. Debt
Securities denominated in other than U.S. dollars are not an appropriate
investment for investors who are unsophisticated about foreign currency
transactions.
Currently, there are limited facilities in the United States for conversion
of U.S. dollars into certain foreign currencies, and vice versa.
Unless otherwise specified in the Prospectus Supplement, Debt Securities
denominated in other than U.S. dollars or European currency units will not be
sold in, or to residents of, the country issuing the Specified Currency in which
particular Debt Securities are denominated. The information set forth in this
Prospectus is directed to prospective purchasers who are United States
residents, and the Company disclaims any responsibility to advise prospective
purchasers who are residents of countries other than the United States as to any
matters that may affect the purchase, holding, or receipt of payments of
principal of and interest on the Debt Securities. Such persons should consult
their own financial and legal advisors with regard to such matters.
GOVERNING LAW AND JUDGMENTS. The Debt Securities will be governed by and
construed in accordance with the laws of the State of New York. Under the
Judiciary Law of the State of New York, a judgment in an action based upon an
obligation denominated in a currency other than U.S. dollars will be rendered in
the foreign currency of the underlying obligation and converted into U.S.
dollars at the rate of exchange prevailing on the date of the entry of the
judgment or decree.
EXCHANGE RATE AND CONTROLS FOR SPECIFIED CURRENCIES
For any Debt Security denominated in other than U.S. dollars, the Prospectus
Supplement relating to such Debt Securities will contain information concerning
exchange rates. The information concerning exchange rates will be furnished as a
matter of information only and should not be regarded as indicative of the rate
of or trends in future fluctuations in currency exchange rates.
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PLAN OF DISTRIBUTION
The Company may sell Securities to or through underwriters, and also may
sell Securities directly to other purchasers or through agents.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities, for whom they
may act as agents, in the form of discounts, concessions, or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions, or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers, and agents that participate in the distribution
of Securities may be deemed to be underwriters, and any discounts or commissions
they receive from the Company, and any profit on the resale of Securities they
realize may be deemed to be underwriting discounts and commissions, under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from the Company will be described, in the Prospectus
Supplement.
Each series of Securities will be a new issue with no established trading
market, other than the Common Stock which is listed on the New York Stock
Exchange and the Pacific Stock Exchange. Any Common Stock sold pursuant to a
Prospectus Supplement will be listed on such exchanges, subject to official
notice of issuance. The Company may elect to list any series of Debt Securities,
Preferred Stock or Warrants on an exchange, but is not obligated to do so. It is
possible that one or more underwriters may make a market in a series of
Securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. Therefore, no assurance can be given as to
the liquidity of the trading market for the Securities.
Under agreements the Company may enter into, underwriters, dealers, and
agents who participate in the distribution of Securities maybe entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, or be customers of, the Company in the ordinary course of
business.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Securities from the Company pursuant to
contracts providing for payment and delivery on a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. The obligations of any purchaser under any such contract will be
subject to the condition that the purchase of the Securities shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
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VALIDITY OF THE SECURITIES
The validity of the Securities will be passed upon for the Company by
Skadden, Arps, Slate, Meagher & Flom, New York, New York. The validity of the
Securities in connection with any offering thereof will be passed upon for the
Company by Kevin J. Tierney, Senior Vice President, Secretary and General
Counsel of the Company and by Skadden, Arps, Slate, Meagher & Flom, New York,
New York with respect to certain matters of New York law, and for the
underwriters or agents by Sullivan & Cromwell, New York, New York. Mr. Tierney
owns less than one percent of the Company's Common Stock.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1995, have been incorporated herein by reference in reliance upon the report
of Coopers & Lybrand L.L.P., independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
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No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the Notes offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
--------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Page
---------
Prospectus Supplement
The Company................................... S-1
Selected Consolidated Financial Data of UNUM
Corporation and Subsidiaries................ S-5
Selected Consolidated Segment Income Statement
Data of UNUM Corporation and Subsidiaries... S-6
Selected Consolidated Financial Data of
Provident Companies, Inc. and
Subsidiaries................................ S-7
Unaudited Selected Pro-Forma Combined
Financial Information of UNUMProvident...... S-8
Use of Proceeds............................... S-9
Capitalization................................ S-9
Description of Notes.......................... S-10
Underwriting.................................. S-13
Validity of the Notes......................... S-14
Experts....................................... S-14
Prospectus
Available Information......................... 2
Incorporation of Certain Documents by
Reference................................... 2
The Company................................... 3
Selected Consolidated Financial Data of
Company..................................... 6
Selected Consolidated Segment Income Statement
Data of the Company......................... 7
Use of Proceeds............................... 8
Description of Debt Securities................ 8
Description of Capital Stock.................. 16
Description of Preferred Stock................ 16
Description of Common Stock................... 18
Description of Warrants....................... 24
Foreign Currency Risks........................ 25
Plan of Distribution.......................... 26
Validity of the Securities.................... 27
Experts....................................... 27
</TABLE>
$
UNUM CORPORATION
% Notes
due December , 2028
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[LOGO]
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GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
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