This Registration Statement also Constitutes Post-Effective Amendment No. 1 to
Registration Statement No. 333-20373 and Post-Effective Amendment No. 1 to
Registration Statement No. 33-25715
As filed with the Securities and Exchange Commission on May 5, 1998
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
UNISYS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-0387840
(State of Incorporation) (I.R.S. Employer Identification No.)
Township Line and Union Meeting Roads
Blue Bell, Pennsylvania 19424
(215) 986-4011
(Address, including zip code, and telephone number, including area code,
of principal executive offices)
HAROLD S. BARRON
Senior Vice President,
General Counsel and Secretary
Unisys Corporation
Township Line and Union Meeting Roads
Blue Bell, Pennsylvania 19424
(215) 986-5299
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
NANCY STRAUS SUNDHEIM, ESQ. RISE B. NORMAN, ESQ.
UNISYS CORPORATION SIMPSON THACHER & BARTLETT
Township Line and Union Meeting Roads 425 Lexington Avenue
Blue Bell, Pennsylvania 19424 New York, New York 10017
------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this registration statement as
determined in light of market conditions and other factors.
------------
If the only securities being registered on this form are being offered
pursuant to a dividend or interest reinvestment plan, please check the
following box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
------------
CALCULATION OF REGISTRATION FEE
==============================================================================
Proposed
Maximum
Title of Each Class of Aggregate Amount of
Securities to be Registered Offering Registration
Price(1)(2) Fee(3)
- ------------------------------------------------------------------------------
Senior Debt Securities;
Subordinated Debt Securities;
Common Stock, par value
$.01 per share(4)(5);
Preferred Stock, par value
$1 per share (5);
Warrants $385,293,412 $113,662
==============================================================================
(1) In U.S. dollars or the equivalent thereof in foreign currencies or
foreign currency units.
(2) Estimated solely for purposes of calculating the registration fee.
(3) The registration fee has been calculated in accordance with Rule 457(o)
under the Securities Act of 1933, as amended, and reflects the offering price
rather than the principal amount of any Debt Securities issued at a discount.
(4) Includes Preferred Share Purchase Rights ("Rights"). The Rights are
associated with and trade with the Common Stock. The value, if any,
attributable to the Rights is reflected in the market price of the Common
Stock.
(5) In addition to any Common Stock or Preferred Stock that may be issued
directly under this Registration Statement, there are being registered
hereunder such indeterminate number of shares of Common Stock or Preferred
Stock as may be issued upon conversion or exchange of Debt Securities or
Preferred Stock. No separate consideration will be received for any Common
Stock or Preferred Stock so issued upon conversion or exchange.
PURSUANT TO RULE 429 OF THE RULES AND REGULATIONS OF THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT CONTAINS A COMBINED PROSPECTUS THAT ALSO RELATES TO (1) A
REGISTRATION STATEMENT ON FORM S-3 (NO. 333-20373) (RELATING TO AN AGGREGATE
$450,000,000 OF SECURITIES) PREVIOUSLY FILED BY THE REGISTRANT AND DECLARED
EFFECTIVE ON FEBRUARY 18, 1997 AND (2) A REGISTRATION STATEMENT ON FORM S-3
(NO. 33-25715) (RELATING TO AN AGGREGATE $400,000,000 OF SECURITIES)
PREVIOUSLY FILED BY THE REGISTRANT AND DECLARED EFFECTIVE ON JANUARY 26, 1989.
THIS REGISTRATION STATEMENT CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 TO THE
REGISTRANT'S REGISTRATION STATEMENT ON FORM S-3 (NO. 333-20373) WITH RESPECT
TO THE REMAINING $115,206,588 OF UNSOLD SECURITIES THEREUNDER AND POST-
EFFECTIVE AMENDMENT NO. 1 TO THE REGISTRANT'S REGISTRATION STATEMENT ON FORM
S-3 (NO. 33-25715) WITH RESPECT TO THE REMAINING $199,500,000 OF UNSOLD
SECURITIES THEREUNDER, AND SUCH POST-EFFECTIVE AMENDMENTS SHALL HEREAFTER
BECOME EFFECTIVE CONCURRENTLY WITH THE EFFECTIVENESS OF THIS REGISTRATION
STATEMENT AND IN ACCORDANCE WITH SECTION 8(C) OF THE SECURITIES ACT OF 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
1
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 5, 1998
PROSPECTUS
$700,000,000
Unisys Corporation
Securities
------------
Unisys Corporation (the "Company") may offer from time to time, together
or separately, (1) its unsecured debt securities (the "Debt Securities"),
which may be either senior debt securities ("Senior Debt Securities") or
subordinated debt securities ("Subordinated Debt Securities"); (2) shares of
its Common Stock, par value $.01 per share ("Common Stock"); (3) shares of its
Preferred Stock, par value $1 per share ("Preferred Stock") and (4) warrants
or similar rights ("Warrants") to purchase Debt Securities, Common Stock or
Preferred Stock (the Debt Securities, the Common Stock, the Preferred Stock
and the Warrants are collectively referred to as the "Securities"), in
amounts, at prices and on terms to be determined at the time of offering. The
Securities offered pursuant to this Prospectus may be issued in one or more
series or issuances and will be limited to $700,000,000 aggregate offering
price (or its equivalent, if Debt Securities are issued with principal amounts
denominated in one or more foreign currencies or foreign currency units). A
Prospectus Supplement (the "Prospectus Supplement") will describe the specific
terms of the particular Securities in respect of which this Prospectus is
being delivered (the "Offered Securities"), including, where applicable (1) in
the case of Debt Securities, the specific designation (including whether
senior or subordinated and whether convertible), aggregate principal amount,
currency or currency unit for which the Debt Securities may be purchased or in
which the principal and any premium or interest is payable, maturity, premium,
if any, rate and times of payment of any interest, any terms for optional or
mandatory redemption, the terms for any conversion into Common Stock, the
initial public offering price and other special terms; (2) in the case of
Preferred Stock, the specific title and stated value, any dividend,
liquidation, redemption, voting and other rights, any terms for conversion
into Common Stock, the initial public offering price and other special terms
and (3) in the case of Warrants, the number and terms thereof, the designation
and the number of securities issuable upon exercise, the purchase price and,
where applicable, the duration and detachability thereof.
------------
SEE "RISK FACTORS" COMMENCING ON PAGE 3 FOR A DISCUSSION
OF CERTAIN FACTORS WHICH PROSPECTIVE PURCHASERS OF THE
SECURITIES SHOULD CONSIDER.
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 Securities will be sold either through underwriters, dealers or
agents, or directly by the Company. The accompanying Prospectus Supplement
will set forth the names of any underwriters or agents involved in the sale of
the Securities in respect of which this Prospectus is being delivered, the
proposed amounts, if any, to be purchased by underwriters and the
compensation, if any, of such underwriters or agents.
The aggregate proceeds to the Company from all Securities will be the
purchase price of Securities sold less the aggregate of agents' commissions
and underwriters' discounts and other expenses of issuance and distribution.
See "Plan of Distribution."
________________, 1998.
2
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (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 being
offered hereby (the "Registration Statement"). As permitted by the rules and
regulations of the Commission, this Prospectus, which constitutes a part of
the Registration Statement, does not contain certain information, exhibits and
undertakings contained in the Registration Statement. Such additional
information can be inspected at and obtained from the Commission in the manner
set forth below. For further information, reference is made to the
Registration Statement and to the exhibits thereto. Statements contained
herein concerning any documents are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit
to the Registration Statement. Each such statement is qualified in its
entirety by such reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith is required to file periodic reports, proxy statements
and other information with the Commission relating to its business, financial
statements and other matters. Such reports, proxy statements and other
information, as well as the Registration Statement, may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Regional Offices of the Commission located in the Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and 7 World
Trade Center, New York, New York 10048. Copies of such material can also be
obtained from the Commission at prescribed rates by addressing written
requests for such copies to the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549. Such reports, proxy
statements and other information are also available for inspection at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York, 10005. The Commission maintains a Web site, which contains reports,
proxy and information statements and other information regarding registrants
that, like the Company, file electronically with the Commission, at the
following address: http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The following documents have been filed with the Commission pursuant to
the Exchange Act and are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1997.
2. The Company's Current Reports on Form 8-K dated January 15, 1998 and
January 27, 1998.
3. The description of the Company's Common Stock contained in the
registration statement of Burroughs Corporation ("Burroughs"), the predecessor
to the Company, on Form 8-B dated May 22, 1984 (as amended on Form 8 dated May
7, 1991), filed pursuant to Section 12 of the Exchange Act, including any
amendment or report filed for the purpose of updating such description.
4. The description of the Company's Preferred Share Purchase Rights contained
in the Registration Statement of Burroughs on Form 8-A dated March 11, 1986
(as amended on Forms 8 dated, respectively, April 16, 1986, July 8, 1987 and
May 7, 1991 and on Form 8-A/A dated February 26, 1996), filed pursuant to
Section 12 of the Exchange Act, including any amendment or report filed for
the purpose of updating such description.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof
and prior to the termination of the offering of the Securities shall be deemed
to be incorporated by reference herein and to be a part hereof from the date
of filing of such documents. Any statements contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein, in the
accompanying Prospectus Supplement or in any other subsequently filed document
which also is incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed to
constitute a part hereof except as so modified or superseded.
3
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, on written or oral request, copies of any or all
documents incorporated by reference herein (other than the exhibits thereto
unless such exhibits are incorporated specifically by reference therein).
Requests should be directed to Unisys Corporation, Township Line and Union
Meeting Roads, Blue Bell, Pennsylvania 19424, Attention: Financial
Communications; Telephone (215) 986-5777.
THE COMPANY
The Company is a major supplier of information services, systems and
solutions on a worldwide basis. Through its three business units, Information
Services, Computer Systems and Global Customer Services, the Company provides
systems and solutions designed to enhance the productivity, competitiveness
and responsiveness of its clients.
The Company was incorporated in February 1984 under the laws of Delaware
and is the successor by merger to Burroughs Corporation, a Michigan
corporation incorporated in 1905. In November 1986, Sperry Corporation, a
Delaware corporation incorporated in 1955, was merged with and into the
Company, and the Company's name was changed to Unisys Corporation.
The principal executive offices of the Company are located at Township
Line and Union Meeting Roads, Blue Bell, Pennsylvania 19424. The Company's
telephone number is (215) 986-4011.
RISK FACTORS
This Prospectus contains or incorporates by reference certain forward-
looking statements, as defined in the Private Securities Litigation Reform Act
of 1995. All forward-looking statements rely on assumptions and are subject
to risks, uncertainties and other factors that could cause the Company's
actual results to differ materially from expectations. These include, but are
not limited to, the risk factors set forth below. Prospective investors
should consider carefully, in addition to the other information contained and
incorporated by reference herein, the following factors before deciding to
purchase the Securities offered hereby.
COMPETITIVE MARKETPLACE
The Company operates in an industry characterized by aggressive
competition, rapid technological change, evolving technology standards and
short product life cycles. The Company's competitors include computer
hardware manufacturers, software providers and information services companies,
many of which have greater financial and other resources than the Company and
are substantially less leveraged. The Company competes primarily on the basis
of product performance, service, technological innovation and price. Future
operating results will depend on the Company's ability to design, develop,
introduce, deliver or obtain new and innovative products and services on a
timely and cost-effective basis; on its ability to mitigate the effects of
competitive pressures and volatility in the information technology and
services market on revenues, pricing and margins; and on its ability to
effectively manage the shift of its business mix away from traditional high
margin product and services offerings.
HIGH LEVERAGE AND CASH REQUIREMENTS
At December 31, 1997 and December 31, 1996, the Company had approximately
$1.7 billion and $2.3 billion principal amount of debt, respectively. Total
interest expense for 1997 and 1996 was $233.2 million and $249.7 million,
respectively. The Company's debt-to-capital ratio was 58% at December 31,
1997 and 59% at December 31, 1996.
The Company has outstanding $1.4 billion of Series A convertible
preferred stock. Dividends paid on the Series A preferred stock in 1997
amounted to $106.3 million.
The total cash requirements associated with the restructuring actions
discussed below are expected to be approximately $180 million in 1998 and a
total of $58 million in 1999 and beyond. Several factors, including foreign
4
currency fluctuations and negotiations with third parties, could cause actual
cash requirements to differ from expectations.
During 1997, net cash used for continuing operations was $207.1 million.
For the year 1996, net cash used for continuing operations was $64.6 million.
In 1996, proceeds from the issuance of debt exceeded principal payments of
debt by $373.3 million. During 1995, net cash used for continuing operations
was $412.4 million. In 1995, discontinued operations provided cash of $658.3
million, primarily from the sale of the Company's defense systems business.
In June 1997, the Company entered into a two-year $200 million revolving
credit facility replacing the prior one-year facility. The facility includes
certain financial tests that must be met as conditions to a borrowing and
provides that no amounts may be outstanding under the facility for a minimum
of 20 consecutive days in each quarter. The facility may not be used to
refinance other debt. The amount the Company may borrow at any given time is
dependent upon the amount of certain of its accounts receivable and inventory.
The Company may require continued access to financing sources to meet its
cash requirements for debt service, restructurings and operating activities.
There can be no assurance that such access will always be available to the
Company or that the Company would be permitted to incur additional
indebtedness under its then existing set of restrictive covenants.
NET LOSSES AND RESTRUCTURINGS
The Company operates in an industry characterized by ongoing dramatic
changes, including, in the case of the Company, a shift from higher margin to
lower margin products and services. In order to improve its operating
results, the Company has moved aggressively to realign its operations to
reflect the rapidly changing market for information processing products and
services. In the fourth quarter of 1997, the Company took a one-time charge
of $1.1 billion against net income. The charge included $127.0 million
principally related to the Company's decision to discontinue the manufacturing
and assembly of personal computers and low-end servers and to dispose of a
small, non-strategic technology product, the writeoff of $883.6 million in
goodwill principally related to the 1986 merger of Burroughs Corporation and
Sperry Corporation and $42.0 million related to the conversion, in December
1997, of $271.2 million of the Company's 8 1/4% convertible subordinated notes
due 2006. After this charge, the Company reported a net loss of $853.6
million for 1997. In 1995, the Company reported a net loss of $624.6 million,
which included a fourth quarter pretax restructuring charge of $717.6 million,
primarily relating to the internal realignment of the Company into three
operating units and covering work force reductions, product and program
discontinuances and consolidation of office facilities and manufacturing
capacity. For the year ended December 31, 1996, the Company reported net
income of $49.7 million. In the fourth quarter of 1996, the Company reversed
certain reserves established under the 1995 restructuring plan, due to lower-
than-anticipated costs for work force reductions. This reversal was offset by
charges of $84 million relating to the refocusing and discontinuance of
certain products and programs. The Company recorded special pretax charges of
$186.2 million in 1994, $1.2 billion in 1991, $181.0 million in 1990 and
$231.0 million in 1989. Principally due to these special charges, the Company
had net losses of $1.4 billion in 1991, $436.7 million in 1990 and $639.3
million in 1989. No assurance can be given that the Company will not
experience losses in the future.
5
SYSTEMS INTEGRATION CONTRACTS
Certain of the Company's systems integration contracts are fixed-price
contracts under which the Company assumes the risk for the delivery of the
contracted services at an agreed-upon fixed price. The Company has at times
experienced problems in performing certain of its fixed-price contracts on a
profitable basis and has provided periodically for adjustments to the cost to
complete such contracts. In the fourth quarter of 1995, the Company recorded
a pretax charge for contract losses of $129.0 million, primarily relating to a
few large multi-year, fixed-price systems integration contracts. In the first
quarter of 1997, the Company recorded charges of approximately $25 million for
additional estimated contract costs identified during the quarter. There can
be no assurance that the Company will not experience such contract performance
problems in the future, which problems could affect the Company's results of
operations.
IMPORTANCE OF INTERNATIONAL OPERATIONS
Revenue from international operations accounted for approximately 60% of
the Company's total revenue in each of the last three years. There is no
material concentration of revenues in any particular country. Due to its
foreign operations, the Company is exposed to the effects of foreign exchange
rate fluctuations on the U.S. dollar.
The Company uses foreign exchange forward contracts and options,
generally having maturities of less than nine months, to reduce such exposure.
Such contracts and options are entered into for the sole purpose of hedging
certain transactional exposures. The Company does not hold or issue financial
instruments for speculative trading purposes. In addition to fluctuations in
foreign currency exchange rates, the Company's international business could be
affected by many factors beyond its control, such as instability of foreign
economies, U.S. and foreign government laws and policies affecting trade and
investment, and governmental changes. Although the Company has not
experienced any significant problems in foreign countries arising from such
factors, there can be no assurance that such problems will not arise in the
future.
NO DIVIDENDS ON COMMON STOCK; DIVIDEND LIMITATIONS
The Company has not declared or paid any cash dividends on its Common
Stock since 1990 and does not anticipate declaring or paying dividends on the
Common Stock in the foreseeable future. Certain of the Company's debt
instruments and credit facilities contain financial covenants which limit the
payment of dividends on the Company's capital stock.
USE OF PROCEEDS
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the Company will use the net proceeds from the sale of the Offered
Securities for general corporate purposes and to reduce or refinance
indebtedness.
RATIOS OF EARNINGS
The following tables set forth the ratio of earnings to fixed charges and
the ratio of earnings to combined fixed charges and preferred stock dividends
for the Company for each of the years in the five-year period ended December
31, 1997.
The ratio of earnings to fixed charges has been computed by dividing
earnings by fixed charges. The ratio of earnings to combined fixed charges
and preferred stock dividends has been computed by dividing earnings by the
sum of fixed charges and preferred dividend requirements. Earnings consist of
income (loss) from continuing operations before income taxes, extraordinary
items and changes in accounting principles minus undistributed earnings of
associated companies plus fixed charges. Fixed charges consist of interest on
all indebtedness, amortization of debt issuance expenses and the portion of
rental expense representative of interest.
6
RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31
------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
* 1.28 * 1.11 2.21
- --------
* Earnings for the years ended December 31, 1997 and 1995 were
inadequate to cover fixed charges by $752.9 million and $776.1 million,
respectively.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Year Ended December 31
------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
* * * * 1.39
- --------
* Earnings for the years ended December 31, 1997, 1996, 1995 and 1994
were inadequate to cover combined fixed charges and preferred stock dividends
by $923.8 million, $97.0 million, $961.2 million and $153.6 million,
respectively.
DESCRIPTION OF THE DEBT SECURITIES
The following sets forth certain general terms and provisions of the
Indentures under which the Debt Securities are to be issued. The particular
terms of a series of Debt Securities will be set forth in the Prospectus
Supplement or Prospectus Supplements relating to such Debt Securities.
The Senior Debt Securities are to be issued under an Indenture (the
"Senior Indenture") between the Company and Bank of Montreal Trust Company, as
Trustee (the "Senior Trustee"), or under a substantially identical indenture
with a different trustee. The Subordinated Debt Securities are to be issued
under an Indenture dated as of March 1, 1996 (the "Subordinated Indenture")
between the Company and The Bank of New York, as Trustee (the "Subordinated
Trustee"), or under a substantially identical indenture with a different
trustee. The Senior Indenture and the Subordinated Indenture are sometimes
referred to individually as an "Indenture" and collectively as the
"Indentures". The Senior Trustee and the Subordinated Trustee are sometimes
referred to individually as a "Trustee" and collectively as the "Trustees".
The following are brief summaries of certain provisions of the Indentures.
The summaries do not purport to be complete and are subject to the detailed
provisions of the Indentures, copies of which are filed as exhibits to the
Registration Statement. Capitalized terms used in this Prospectus and not
otherwise defined have the meanings specified in the Indentures.
GENERAL
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provide that Debt Securities may
be issued from time to time in series.
The Senior Debt Securities will be unsecured obligations of the Company
and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company. The Subordinated Debt Securities will be
unsecured obligations of the Company and will be subordinated in right of
payment to all Senior Indebtedness (as defined below in "Subordination of Debt
Securities").
7
The applicable Prospectus Supplement will describe the following terms
of the Debt Securities offered thereby: (1) the title of such Debt Securities;
(2) whether such Debt Securities are Senior Debt Securities or Subordinated
Debt Securities; (3) any limit on the aggregate principal amount of such Debt
Securities; (4) the date or dates on which such Debt Securities may be issued
and are or will be payable; (5) the rate or rates per annum (which may be
fixed or variable) at which such Debt Securities will bear interest, if any,
or the method by which such rate or rates shall be determined, and the date or
dates from which such interest, if any, will accrue; (6) the date or dates on
which interest, if any, on such Debt Securities will be payable and the
regular record date or dates therefor; (7) the place or places where the
principal of, and premium, if any, and any interest on such Debt Securities
will be payable; (8) the period or periods within which, the price or prices
at which, the currency or currencies (including currency units) in which, and
the terms and conditions upon which such Debt Securities may be redeemed at
the option of the Company; (9) the obligation, if any, of the Company to
redeem, to repay or purchase such Debt Securities pursuant to any sinking fund
or analogous provisions, upon the happening of a specified event or at the
option of a holder thereof, and the period or periods within which, the price
or prices at which and the terms and conditions upon which such Debt
Securities will be redeemed, repaid or purchased pursuant to any such
obligations; (10) whether such Debt Securities are to be issued in whole or in
part in the form of one or more Global Notes (as defined under "Denominations,
Registration and Transfer") and, if so, the identity of the depositary, if
any, for such Global Note or Notes; (11) if other than dollars, the foreign
currency or currencies (including currency units) in which the principal of,
and premium, if any, and any interest on such Debt Securities shall or may be
paid and, if applicable, whether at the election of the Company and/or the
holder, and the conditions and manner of determining the exchange rate or
rates; (12) any index used to determine the amount of payment of principal of,
and premium, if any, and any interest on such Debt Securities; (13) whether
such Debt Securities are convertible into shares of Common Stock and the terms
and conditions upon which any conversion will be effected, including the
conversion price, the conversion period and other conversion provisions; (14)
any addition to, or modification or deletion of, any Events of Default or
covenants provided for with respect to such Debt Securities and (15) any other
detailed terms and provisions of such Debt Securities which are not
inconsistent with the Indentures.
Debt Securities may be issued at or above par or with an original issue
discount. The applicable Prospectus Supplement will describe Federal income
tax consequences and other special considerations applicable to any Debt
Securities issued with original issue discount or above par.
If the purchase price of any of the Debt Securities is denominated in one
or more foreign currencies or currency units, or if the principal of or any
premium or interest on any series of Debt Securities is payable in one or more
foreign currencies or currency units, the applicable Prospectus Supplement
will describe the restrictions, elections, Federal income tax considerations,
specific terms and other information with respect to such series and such
foreign currency or currency units.
DENOMINATIONS, REGISTRATION AND TRANSFER
Debt Securities will be issued as registered securities either in
certificated form or in the form of one or more global securities (each a
"Global Note"). Debt Securities which are book-entry securities ("Book-Entry
Notes") will be issued as registered Global Notes. Unless otherwise provided
in an applicable Prospectus Supplement with respect to a series of Debt
Securities, the Debt Securities will be issued in denominations of $1,000 or
any integral multiple thereof. One or more Global Notes will be issued in
denominations or aggregate denominations equal to the aggregate principal
amount of outstanding Debt Securities of the series to be represented by such
Global Note or Notes.
8
Debt Securities of any series (other than a Book-Entry Note) may be
exchanged for other Debt Securities of the same series and of a like aggregate
principal amount and tenor of different authorized denominations. Whenever
any such Debt Securities are surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Debt Securities
which the holder making the exchange is entitled to receive.
Debt Securities (other than Book-Entry Notes) may be presented for
registration of transfer (with the form of transfer endorsed thereon duly
executed), at the office of the Security Registrar designated by the Company
for such purpose with respect to any series of Debt Securities and referred to
in an applicable Prospectus Supplement, without service charge and upon
payment of any taxes and other governmental charges as described in the
applicable Indenture. Such transfer or exchange will be effected upon the
Security Registrar being satisfied with the documents of title and identity of
the person making the request. The Company has appointed the Trustee under
each Indenture as Security Registrar for the applicable Debt Securities.
For a discussion of restrictions on the exchange, registration and
transfer of Global Notes, see "Global Notes".
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement,
payment of principal of, and premium, if any, and any interest on Debt
Securities will be made at the office of such Paying Agent or Paying Agents as
the Company may designate from time to time, except that at the option of the
Company payment of any interest may be made (1) by check mailed to the address
of the person entitled thereto as such address shall appear in the Security
Register or (2) by wire transfer to an account maintained by the person
entitled thereto. Unless otherwise indicated in an applicable Prospectus
Supplement, payment of any installment of interest on Debt Securities will be
made to the person in whose name such Debt Security is registered at the close
of business on the regular record date for such interest.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee under the applicable Indenture will act as the Company's sole Paying
Agent through its principal office. Any other Paying Agents in the United
States initially designated by the Company for the offered Debt Securities
will be named in an applicable Prospectus Supplement. The Company may at any
time designate additional Paying Agents or rescind the designation of any
Paying Agent 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 moneys paid by the Company to the Trustee or a Paying Agent for the
payment of principal of, and premium, if any, and any interest on any Debt
Security that remain 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 Debt Security or any coupon will thereafter
look only to the Company for payment thereof.
GLOBAL NOTES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Notes that will be deposited with, or on behalf of,
a depositary (a "Depositary") identified in the Prospectus Supplement relating
to such series.
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will
apply to all depositary arrangements.
BOOK-ENTRY NOTES
Unless otherwise specified in an applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Note to be deposited with
or on behalf of a Depositary will be represented by a Global Note registered
in the name of such depositary or its nominee. Upon the issuance of a Global
9
Note, the Depositary for such Global Note will credit, on its book-entry
registration and transfer system, the respective principal amounts of the Debt
Securities represented by such Global Note to the accounts of institutions
that have accounts with such Depositary or its nominee ("participants"). The
accounts to be credited shall be designated by the underwriters or agents of
such Debt Securities, or by the Company if such Debt Securities are offered
and sold directly by the Company. Ownership of beneficial interests in such
Global Notes will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests by
participants in such Global Notes will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by the
Depositary or its nominee for such Global Note. Ownership of beneficial
interests in Global Notes by persons that hold through participants will be
shown on, 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 certificated form. Such limits and
such laws may impair the ability to transfer beneficial interests in a Global
Note.
So long as the Depositary, or its nominee, is the registered owner of a
Global Note, such depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Debt Securities represented by such
Global Note for all purposes under the Indenture governing such Debt
Securities. Except as set forth below, owners of beneficial interests in such
Global Notes will not be entitled to have Debt Securities of the series
represented by such Global Note registered in their names, will not receive or
be entitled to receive physical delivery of Debt Securities of such series in
certificated form and will not be considered the owners or holders thereof
under the applicable Indenture.
Payment of principal of, and premium, if any, and any interest on Debt
Securities registered in the name of or held by a Depositary or its nominee
will be made to the Depositary or its nominee, as the case may be, as the
registered owner or the holder of the Global Note representing such Debt
Securities. None of the Company, any Trustee, any Paying Agent or the
Security Registrar for such Debt Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in a Global Note for such Debt
Securities or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
The Company expects that the Depositary for Debt Securities of a series
or its nominee, upon receipt of any payment of principal, premium or interest
in respect of a Global Note, will credit immediately participants' accounts
with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Note as shown on the records
of such depositary or nominee. The Company also expects that payments by
participants to owners of beneficial interests in such Global Note held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name", and will be the
responsibility of such participants.
Unless and until it is exchanged in whole for Debt Securities in
certificated form, a Global Note may not be transferred except as a whole by
the Depositary for such Global Note to a nominee of such depositary or by a
nominee of such depositary to such depositary or another nominee of such
depositary or by such depositary or any such nominee to a successor of such
depositary or a nominee of such successor. If a Depositary for Debt
Securities is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by the Company within ninety days, the
Company will issue Debt Securities in certificated form in exchange for the
Global Note or Notes representing such Debt Securities. In addition, the
Company may at any time and in its sole discretion determine not to have any
Debt Securities in registered form represented by one or more Global Notes
and, in such event, will issue Debt Securities in certificated form in
exchange for the Global Note or Notes representing such Debt Securities.
Further, if the Company so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Global Note representing Debt
Securities of such series may, on terms acceptable to the Company and the
Depositary for such Global Note, receive Debt Securities of such series in
certificated form. In any such instance, an owner of a beneficial interest in
a Global Note will be entitled to physical delivery in certificated form of
Debt Securities of the series represented by such Global Note equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name.
10
CERTAIN COVENANTS APPLICABLE TO SENIOR DEBT SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement with
respect to Senior Debt Securities of a series, Senior Debt Securities will
have the benefit of the following covenants contained in the Senior Indenture.
Unless otherwise indicated in the applicable Prospectus Supplement with
respect to Subordinated Debt Securities of a series, the Subordinated Debt
Securities will not have the benefit of such covenants.
Limitation Upon Mortgages and Liens
Neither the Company nor a Subsidiary will create or assume, except in
favor of the Company or a Wholly-Owned Subsidiary, any mortgage, pledge, lien
or encumbrance upon any Principal Manufacturing Property or any stock or
indebtedness of any Subsidiary without equally and ratably securing the
outstanding Senior Debt Securities. For the purpose of providing such equal
and ratable security, the principal amount of outstanding Senior Debt
Securities issued with original issue discount shall be such portion of the
principal amount as may be specified in the terms of that series. This
limitation will not apply to certain permitted encumbrances as described in
the Senior Indenture, including (1) purchase money mortgages entered into
within specified time limits; (2) liens existing on acquired property; (3)
certain tax, materialmen's, mechanics' and judgment liens, certain liens
arising by operation of law and certain other similar liens; (4) liens in
connection with certain government contracts; (5) certain mortgages, pledges,
liens or encumbrances in favor of any state or local government or
governmental agency in connection with certain tax-exempt financings; (6)
pledges of customers' accounts or paper and (7) mortgages, pledges, liens and
encumbrances not otherwise permitted if the sum of the indebtedness thereby
secured plus the aggregate sales price of property involved in certain sale
and leaseback transactions does not exceed the greater of $250,000,000 or 5%
of Consolidated Stockholders' Equity.
Limitation Upon Sale and Leaseback Transactions
The Company and any Subsidiary will be prohibited from selling any
Principal Manufacturing Property owned on the date of the Senior Indenture
with the intention of taking back a lease thereof, other than a temporary
lease (a lease of not more than 36 months) with the intent that the use of the
property by the Company or such Subsidiary will be discontinued before the
expiration of such period, unless (1) the sum of the sale price of property
involved in sale and leaseback transactions not otherwise permitted plus all
indebtedness secured by certain mortgages, pledges, liens and encumbrances
does not exceed the greater of $250,000,000 or 5% of Consolidated
Stockholders' Equity or (2) the greater of the net proceeds of such sale or
the fair market value of such Principal Manufacturing Property (which may be
conclusively determined by the Board of Directors of the Company) are applied
within 120 days to the optional retirement of outstanding Senior Debt
Securities or to the optional retirement of other Funded Debt (as defined) of
the Company ranking on a parity with outstanding Senior Debt Securities.
Certain Definitions
Certain terms defined in the Senior Indenture and applicable to the
foregoing covenants are summarized below:
"Consolidated Stockholders' Equity" means the total stockholders' equity
of the Company and its consolidated subsidiaries which, under generally
accepted accounting principles, would appear on a consolidated balance sheet
of the Company and its subsidiaries, excluding the separate component of
stockholders' equity attributable to foreign currency translation adjustments
pursuant to "Statement of Financial Accounting Standards No. 52-Foreign
Currency Translation" or any successor provision or principle of generally
accepted accounting principles.
"Principal Manufacturing Property" means any manufacturing property
located within the United States of America (other than its territories or
possessions) owned by the Company or any Subsidiary, except for any
manufacturing property that, in the opinion of the Board of Directors, is not
of material importance to the business conducted by the Company and its
Subsidiaries, taken as a whole.
11
"Subsidiary" means any corporation of which at least a majority of the
outstanding voting stock is owned by the Company or by other Subsidiaries, but
will not include any such corporation (an "Affiliated Corporation") which (1)
does not transact any substantial portion of its business or regularly
maintain any substantial portion of its operating assets in the United States;
(2) is principally engaged in financing sales or leases of merchandise,
equipment or services by the Company, a Subsidiary or another Affiliated
Corporation; (3) is principally engaged in holding or dealing in real estate
or (4) is principally engaged in the holding of stock in, and/or the financing
of operations of, Affiliated Corporations.
"Wholly-Owned Subsidiary" means a Subsidiary of which all of the
outstanding voting stock (other than directors' qualifying shares) is at the
time, directly or indirectly, owned by the Company and/or by one or more
Wholly-Owned Subsidiaries.
CONSOLIDATION, MERGER, SALE OR LEASE OF ASSETS
Each Indenture provides that the Company, without the consent of the
holders of any of the outstanding Debt Securities, may consolidate with or
merge into, or transfer or lease its assets substantially as an entirety to,
any corporation organized under the laws of any domestic jurisdiction,
provided that (1) the successor corporation assumes the Company's obligations
under such Indenture and the Debt Securities issued thereunder; (2) after
giving effect to the transaction, no Event of Default and no event which,
after notice or lapse of time, would become an Event of Default shall have
occurred and be continuing and (3) certain other conditions are met.
EVENTS OF DEFAULT
The following are Events of Default under the Indentures with respect to
Debt Securities of any series: (1) failure to pay principal of or any premium
on any Debt Security of that series when due; (2) failure to pay any interest
on any Debt Security of that series when due, continued for 30 days; (3)
failure to deposit any sinking fund payment in respect of any Debt Security of
that series when due; (4) failure to perform any other covenant of the Company
in the applicable Indenture (other than a covenant included in such Indenture
solely for the benefit of a series of Debt Securities other than that series),
continued for 90 days after written notice as provided in the Indenture; (5)
certain events of bankruptcy, insolvency or reorganization and (6) any other
Event of Default provided with respect to Debt Securities of that series. Such
other Events of Default, if any, will be described in the Prospectus
Supplement relating to such Debt Securities.
If any Event of Default with respect to Debt Securities of any series at
the time outstanding occurs and is continuing, either the Trustee or the
holders of at least 25% in aggregate principal amount of the outstanding Debt
Securities of that series may declare the principal amount (or, if the Debt
Securities of that series are issued with original issue discount, such
portion of the principal amount as may be specified in the terms of that
series) of all the Debt Securities of that series to be due and payable
immediately. At any time after a declaration of acceleration with respect to
Debt Securities of any series has been made, but before a judgment or decree
based on acceleration has been obtained, the holders of a majority in
aggregate principal amount of outstanding Debt Securities of that series may,
under certain circumstances, rescind and annul such acceleration.
The Indentures provide that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under
no obligation to exercise any of its rights or powers under the Indenture at
the request or direction of any of the holders, unless such holders shall have
offered to the Trustee reasonable indemnity. Subject to such provisions for
the indemnification of the Trustee, the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of any series will have
the right to 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 the Debt Securities of that series.
The Company is required to furnish the Trustees annually with a statement
as to the performance by the Company of certain of its obligations under the
Indentures and as to any default in such performance.
12
MODIFICATION AND WAIVER
Each Indenture provides that the Company and the Trustee may, without the
consent of any holders of Debt Securities, enter into supplemental indentures
for the purposes, among other things, of adding to the Company's covenants,
adding any additional Events of Default, establishing the form or terms of
Debt Securities or curing ambiguities or inconsistencies in such Indentures or
making other provisions; provided such action shall not adversely affect the
interests of the holders of any series of outstanding Debt Securities in any
material respect.
Modifications of and amendments to the Indentures may be made by the
Company and the Trustee with the consent of the holders of a majority (66 2/3%
in the case of the Senior Indenture) in aggregate principal amount of the
outstanding Debt Securities of each series affected by such modification or
amendment; provided, however, that no such modification or amendment may,
without the consent of the holder of each outstanding Debt Security affected
thereby, (1) change the stated maturity of the principal of, or any
installment of principal or interest on, any Debt Security; (2) reduce the
principal amount of, or any premium or interest on, any Debt Security; (3)
reduce the amount of principal of Debt Securities issued with original issue
discount payable upon acceleration of the maturity thereof; (4) change the
currency of payment of principal of, or any premium or interest on, any Debt
Security; (5) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security; or (6) reduce the percentage
in principal amount of outstanding Debt Securities of any series, the consent
of whose holders is required for modification or amendment of the Indenture.
The holders of a majority in aggregate principal amount of the
outstanding Debt Securities of each series may, on behalf of all holders of
Debt Securities of that series, waive any past default under the applicable
Indenture with respect to Debt Securities of that series, except a default in
the payment of the principal of or any premium or interest on any of the Debt
Securities of such series or in respect of a covenant or provision of such
Indenture that cannot, under the terms of such Indenture, be modified or
amended without the consent of the holders of each outstanding Debt Security
affected thereby.
DEFEASANCE
Each Indenture provides that, if such provision is made applicable to the
Debt Securities of any series, the Company, at its option, will be discharged
from its obligations in respect of the outstanding Debt Securities of a series
(except for certain obligations to register the transfer or exchange of Debt
Securities of such series, convert Debt Securities of such series, replace
stolen, lost or mutilated Debt Securities of such series, maintain paying
agencies and hold moneys for payment in trust) or, in the case of Senior Debt
Securities, will not be subject to certain covenants applicable to the Debt
Securities of such series, in each case if the Company deposits with the
Trustee, in trust, money or government obligations which through the payment
of interest thereon and principal thereof in accordance with their terms will
provide money in an amount sufficient to pay all the principal of, and
premium, if any, and any interest on the Debt Securities of such series on the
dates such payments are due in accordance with the terms of such Debt
Securities. To exercise any such option, the Company is required, among other
things, to deliver to the Trustee an opinion of counsel to the effect that the
deposit and related defeasance would not cause the holders of the Debt
Securities of such series to recognize income, gain or loss for United States
income tax purposes and the holders would be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if the deposit and related defeasance had not occurred.
13
CONVERSION RIGHTS
The terms on which and the prices at which Subordinated Debt Securities
of a series may be convertible into Common Stock will be set forth in the
Prospectus Supplement relating thereto. Such terms will include provisions as
to whether conversion is mandatory, at the option of the holder or at the
option of the Company.
SUBORDINATION PROVISIONS
Except as described in the applicable Prospectus Supplement, the
indebtedness evidenced by the Subordinated Debt Securities will be subordinate
in right of payment to all Senior Indebtedness (as hereinafter defined).
No payment shall be made by the Company on account of principal of, and
premium, if any, or interest on the Subordinated Debt Securities or on account
of the purchase, redemption or other acquisition of the Subordinated Debt
Securities if there shall have occurred and be continuing any default in the
payment of principal, premium, if any, or interest on any Senior Indebtedness
continuing beyond the period of grace, if any, specified in the instrument
evidencing such Senior Indebtedness.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization, the payment of the principal of,
and premium, if any, and interest on the Subordinated Debt Securities is to be
subordinated to the extent provided in the Subordinated Indenture in right of
payment to the prior payment in full of all Senior Indebtedness. By reason of
this provision, in the event of the Company's dissolution or insolvency,
holders of Senior Indebtedness may receive more, ratably, and holders of
Subordinated Debt Securities may receive less, ratably, than the other
creditors of the Company.
The foregoing subordination provisions will not prevent the occurrence of
any Event of Default under the Subordinated Indenture.
The term "Senior Indebtedness" means the principal of, premium, if any,
and any interest on, and any other payment due pursuant to the terms of an
instrument (including, without limitation, fees, expenses, collection expenses
(including attorneys' fees), interest yield amounts, post-petition interest
and taxes) creating, securing or evidencing any of the following, whether
outstanding on the date of the Subordinated Indenture or thereafter incurred
or created:
(1) All indebtedness of the Company for money borrowed or constituting
reimbursement obligations with respect to letters of credit (including
indebtedness secured by a mortgage, conditional sales contract or other lien
which is (A) given to secure all or a part of the purchase price of property
subject thereto, whether given to the vendor of such property or to another,
or (B) existing on property at the time of acquisition thereof);
(2) All indebtedness of the Company evidenced by notes, debentures, bonds or
other securities;
(3) All indebtedness of others of the kinds described in either of the
preceding clauses (1) or (2) assumed by or guaranteed in any manner by the
Company or in effect guaranteed by the Company through an agreement to
purchase, contingent or otherwise; and
(4) All renewals, deferrals, increases, extensions or refundings of and
modifications to indebtedness of the kinds described in any of the preceding
clauses (1), (2) or (3);
except (A) the Subordinated Debt Securities, (B) certain outstanding
subordinated indebtedness of the Company and (C) any indebtedness, renewal,
extension or refunding that, under the provisions of the instrument creating,
evidencing, or assuming or guaranteeing it, is not superior in right of
payment to the Subordinated Debt Securities or is subordinate by its terms in
right of payment to the Subordinated Debt Securities.
14
As of December 31, 1997, the Company had Senior Indebtedness (excluding
accrued interest and premium, if any) of approximately $1.6 billion. The
amount of Senior Indebtedness may change in the future. The Subordinated
Indenture contains no limitations on the incurrence of Senior Indebtedness.
NOTICES
Notices to holders of Debt Securities will be given by mail to the
addresses of such holders as they appear in the Security Register.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed
in accordance with, the laws of the State of New York.
CONCERNING THE TRUSTEES
Each Trustee, or its affiliates, has normal banking relationships with
the Company. In addition, the Subordinated Trustee and Bank of Montreal, the
parent of the Senior Trustee, each participates as a lender in the Company's
revolving credit facility. The Senior Trustee also serves as trustee under
another indenture with the Company pursuant to which unsecured senior debt
securities are currently outstanding. Harris Trust Company of New York, an
affiliate of the Senior Trustee, serves as the Company's transfer agent.
DESCRIPTION OF CAPITAL STOCK
The following descriptions do not purport to be complete and are subject
to, and qualified in their entirety by reference to, the more complete
descriptions thereof set forth in (1) the Company's Certificate of
Incorporation; (2) the Company's By-Laws and (3) the Rights Agreement (as
defined below), all of which are exhibits to the Registration Statement.
The Company's authorized capital stock consists of 720,000,000 shares of
Common Stock, par value $.01 per share, and 40,000,000 shares of Preferred
Stock, par value $1 per share.
As of March 31, 1998, there were approximately 251.4 million shares of
Common Stock outstanding, and the Company had reserved approximately 80.5
million additional shares of Common Stock for issuance pursuant to various
employee benefit plans and upon the conversion of outstanding shares of
Preferred Stock and other outstanding securities.
The Board of Directors has authorized the issuance of 30.0 million shares
of Series A Cumulative Convertible Preferred Stock (the "Series A Preferred
Stock") and 1.5 million shares of Junior Participating Preferred Stock (the
"Junior Preferred Stock"). As of March 31, 1998 there were approximately 28.4
million shares of Series A Preferred Stock and no shares of Junior Preferred
Stock outstanding.
The Series A Preferred Stock ranks prior to the Common Stock and the
Junior Preferred Stock as to payment of dividends and as to distribution of
assets upon liquidation, dissolution or winding up of the Company. Unless
otherwise set forth in the applicable Prospectus Supplement, each series of
Preferred Stock offered hereby will rank on a parity with each other such
series and with the Series A Preferred Stock.
COMMON STOCK
General
Subject to the rights of the holders of shares of Preferred Stock,
holders of shares of Common Stock (1) are entitled to receive dividends when
and as declared by the Board of Directors of the Company from funds legally
available for that purpose; (2) have the exclusive right, except as otherwise
15
may be required by law, to vote for the election of directors and for all
other purposes and (3) are entitled, upon any liquidation, dissolution or
winding up of the Company, to a pro rata distribution of the assets and funds
of the Company available for distribution to stockholders. Each share of
Common Stock is entitled to one vote on all matters on which stockholders
generally are entitled to vote. Holders of shares of Common Stock do not have
preemptive rights to subscribe for additional shares of Common Stock or
securities convertible into shares of Common Stock. The Common Stock is traded
on the New York Stock Exchange and prices are reported by the New York Stock
Exchange Composite Tape under the symbol UIS. Harris Trust Company of New
York is the transfer agent for the Common Stock.
Dividend Limitations
The Company has not declared or paid any cash dividends on the Common
Stock since 1990 and does not anticipate declaring or paying dividends on the
Common Stock in the foreseeable future. In addition, the Company's most
restrictive outstanding debt instruments generally limit aggregate dividends
paid on the Company's capital stock since June 30, 1992 (other than $185
million paid in respect of dividends in arrears) to an amount no greater than
50% of cumulative consolidated net income since July 1, 1992, plus capital
contributions and proceeds of equity issuances, plus $150 million.
Preferred Share Purchase Rights and Junior Participating Preferred Stock
The Company has distributed to its stockholders one Preferred Share
Purchase Right (the "Rights") with respect to each outstanding share of Common
Stock pursuant to a Rights Agreement (the "Rights Agreement") dated as of
March 7, 1986 between the Company and Harris Trust Company of New York, as
Rights Agent. Each Right entitles the holder thereof, until the earlier of
March 17, 2001 or the redemption of the Rights, to buy one three-hundredth of
a share of the Junior Preferred Stock at an exercise price of $75. The Rights
are represented by the certificates for shares of Common Stock and will not be
exercisable, or transferable apart from the shares of Common Stock, until the
earlier of the tenth day after the announcement that a person or group has
acquired beneficial ownership of 20% or more of the shares of Common Stock (a
"20% holder") or the tenth day after a person commences, or announces an
intention to commence, an offer, the consummation of which would result in a
person beneficially owning 30% or more of the shares of Common Stock as of
such date (the earlier of such dates being called the "Distribution Date").
The Rights could then begin trading separately from the shares of Common
Stock.
In the event that the Company is acquired in a merger or other business
combination transaction, each Right will entitle its holder to purchase, at
the exercise price of the Right, that number of shares of common stock of the
surviving company which, at the time of such transaction, would have a market
value of two times the exercise price of the Right. Alternatively, if a 20%
holder were to acquire the Company by means of a reverse merger in which the
Company and its stock survive, or were to engage in certain "self-dealing"
transactions, each Right not owned by the 20% holder would become exercisable
for the number of shares of Common Stock which, at that time, would have a
market value of two times the exercise price of the Right.
The Rights are redeemable at $.01 2/3 per Right at any time prior to the
time that a person or group has acquired beneficial ownership of 20% of the
shares of Common Stock. The Rights will expire on March 17, 2001 (the "Final
Expiration Date"), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed by the Company in accordance with their terms. At
no time will the Rights have any voting rights.
The foregoing summary of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement, which is an
exhibit to the Registration Statement.
The shares of Junior Preferred Stock purchasable upon exercise of the
Rights will be nonredeemable. Each share of Junior Preferred Stock will have
a minimum preferential quarterly dividend of $15 per share, but will be
entitled to a dividend of 300 times the aggregate dividend declared per share
of Common Stock. In the event of liquidation, the holders of the shares of
Junior Preferred Stock will receive a preferred liquidation payment of $100
per share, but will be entitled to receive an aggregate liquidation payment
per share equal to 300 times the payment made per share of Common Stock. Each
share of the Junior Preferred Stock will have 300 votes, voting together with
16
the shares of Common Stock. In the event of any merger, consolidation or
other transaction in which shares of Common Stock are exchanged, each share of
the Junior Preferred Stock will be entitled to receive 300 times the amount
received per share of Common Stock. The Junior Preferred Stock has customary
antidilution provisions to protect the dividend, liquidation and voting rights
described above.
The purchase price payable, and the number of shares of Junior Preferred
Stock or other securities or property issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (1) in the
event of a stock dividend on, or a subdivision, combination or
reclassification of the shares of Junior Preferred Stock; (2) as a result of
the grant to holders of the shares of Junior Preferred Stock of certain rights
or warrants to subscribe for shares of Junior Preferred Stock or of securities
convertible into shares of Junior Preferred Stock (at a price, or with a
conversion price, respectively, less than the then current market price for
the shares of Junior Preferred Stock) or (3) as a result of the distribution
to holders of the shares of Junior Preferred Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends at a rate
not in excess of 125% of the rate of the last cash dividend theretofore paid
or dividends payable in shares of Junior Preferred Stock) or of subscription
rights or warrants (other than those referred to above). With certain
exceptions, no adjustment in the purchase price will be required until
cumulative adjustments require an adjustment of at least 1% in such purchase
price. The percentage of a share of Junior Preferred Stock for which a Right
is exercisable and the number of Rights outstanding are also subject to
adjustment in the event of dividends on the shares of Common Stock payable in
shares of Common Stock or subdivisions, combinations or consolidations of the
shares of Common Stock, occurring, in any case, before the Rights become
exercisable or transferable apart from the shares of Common Stock.
One Right is presently associated with each issued and outstanding share
of Common Stock. The Company will issue one Right with each share of Common
Stock issued prior to the Final Expiration Date unless, prior to such
issuance, the Rights are redeemed or become exercisable and transferable apart
from the shares of Common Stock.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms that the Board of Directors determines are not in the best interests
of the Company's stockholders, except pursuant to an offer conditioned on a
substantial number of Rights being acquired. The Rights should not interfere
with any merger or other business combination approved by the Board of
Directors since the Rights may be redeemed by the Company at $.01 2/3 per
Right prior to the time that a person or group has acquired beneficial
ownership of 20% or more of the shares of Common Stock.
Anti-Takeover Provisions
The Company is a Delaware corporation and subject to Section 203 of the
Delaware General Corporation Law. Generally, Section 203 prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the time of the
transaction in which the person became an interested stockholder, unless (1)
prior to such time, either the business combination or such transaction is
approved by the board of directors of the corporation; (2) upon consummation
of the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 85% of the outstanding
voting stock or (3) on or after such time the business combination is approved
by the board and by the affirmative vote of at least 66 2/3% of the
outstanding voting stock that is not owned by the interested stockholder. A
"business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. An
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years, did own) 15% or more of the
corporation's outstanding voting stock.
The Company's Certificate of Incorporation and By-Laws contain certain
anti-takeover provisions that are intended to enhance the likelihood of
continuity and stability in the composition of the Board of Directors and that
may have the effect of delaying, deferring or preventing a future takeover or
change in control of the Company unless such takeover or change in control is
approved by the Board of Directors. Such provisions may also render the
removal of the current Board of Directors more difficult.
17
The Company's Certificate of Incorporation and By-Laws provide that the
Board of Directors shall consist of not less than 10 nor more than 20
directors (subject to any rights of the holders of shares of Preferred Stock
to elect additional directors), with the exact number to be fixed by the Board
of Directors pursuant to a resolution adopted by a majority of the entire
Board. The Board of Directors is divided into three classes of directors,
which classes are as nearly equal in number as possible. One class of
directors is elected each year for a term of three years. Directors may be
removed from office only for cause and only by the affirmative vote of the
holders of at least 80% of the voting power of all capital stock of the
Company entitled to vote generally in the election of directors (the "Voting
Stock"), voting as a single class. Subject to any rights of the holders of
shares of Preferred Stock, vacancies in the Board of Directors and newly
created directorships are filled for the unexpired term only by the vote of a
majority of the remaining directors in office. Pursuant to the Certificate of
Incorporation, advance notice of stockholder nominations for the election of
directors must be given in the manner provided in the Company's By-Laws. The
By-Laws provide that written notice of the intent of a stockholder to make a
nomination at a meeting of stockholders must be delivered to the Secretary of
the Company not less than 90 days prior to the date of the meeting, in the
case of an annual meeting, and not more than seven days following the date of
notice of the meeting, in the case of a special meeting. The notice must
contain certain background information about the nominee and the number of
shares of the Company's capital stock beneficially owned by the nominee. The
affirmative vote of the holders of 80% or more of the voting power of the then
outstanding shares of Voting Stock, voting as a single class, is required to
amend, alter or repeal the provisions of the Certificate of Incorporation and
the By-Laws discussed above.
The Company's Certificate of Incorporation also provides that certain
mergers, consolidations, sales or other transfers of assets of, issuances or
reclassifications of securities of, or adoptions of plans of liquidation by
the Company (individually, a "Business Combination") must be approved by an
affirmative vote of the holders of 80% or more of the voting power of the then
outstanding shares of Voting Stock, voting as a single class, when such action
involves a person (an "Interested Stockholder") who beneficially owns more
than 20% of the voting power of the then outstanding shares of Voting Stock,
unless certain minimum price, form of consideration and procedural
requirements (the "Fair Price Provisions") are satisfied or unless a majority
of the directors not affiliated with the Interested Stockholder approve the
Business Combination. The affirmative vote of the holders of 80% or more of
the voting power of the then outstanding shares of Voting Stock, voting as a
single class, is required to amend, alter or repeal such provisions of the
Certificate of Incorporation.
Under the Certificate of Incorporation and By-Laws, except as otherwise
required by law and subject to the rights of the holders of shares of
Preferred Stock, stockholders may not call a special meeting of stockholders.
Only the Board of Directors, pursuant to a resolution adopted by a majority of
the entire Board, may call a special meeting of stockholders. The General
Corporation Law of the State of Delaware provides that, unless specifically
prohibited by the certificate of incorporation, any action required or
permitted to be taken by stockholders of a corporation may be taken without a
meeting, without prior notice, and without a stockholder vote if a written
consent or consents setting forth the action to be taken is signed by the
holders of outstanding shares of capital stock having the requisite number of
votes that would be necessary to authorize or take such action at a meeting of
stockholders. The Company's Certificate of Incorporation requires that
stockholder action be taken at a meeting of stockholders and prohibits
stockholder action by written consent. The affirmative vote of the holders of
80% or more of the voting power of the then outstanding shares of Voting
Stock, voting as a single class, is required to amend, alter or repeal the
provisions of the Certificate of Incorporation and By-Laws discussed above.
The purpose of certain provisions of the Certificate of Incorporation and
By-Laws discussed above relating to (1) a classified Board of Directors; (2)
the removal of directors and the filling of vacancies; (3) the prohibition of
stockholder action by written consent and (4) supermajority voting
requirements for the repeal of provisions (1) through (3) is to help assure
the continuity and stability of the business strategies and policies of the
Company and to discourage certain types of transactions that involve an actual
or threatened change of control of the Company. They are designed to make it
more difficult and time-consuming to change majority control of the Board of
Directors and thus to reduce the vulnerability of the Company to an
unsolicited takeover proposal that does not contemplate the acquisition of at
least 80% of the voting power of all of the Voting Stock or to an unsolicited
proposal for the restructuring or sale of all or part of the Company.
18
Such charter and by-law provisions may make more difficult or discourage
a proxy contest, or the assumption of control, by a holder of a substantial
block of shares of Common Stock, or the removal of the incumbent Board of
Directors, and could thus increase the likelihood that incumbent directors
will retain their positions. In addition, since the Fair Price Provisions
discussed above provide that certain business combinations involving the
Company and a certain type of stockholder which do not meet specified criteria
or are not approved by supermajority vote cannot be consummated without the
approval of a majority of those directors who are not affiliated with such
stockholder, such provisions could give incumbent management the power to
prevent certain takeovers. The Fair Price Provisions may also discourage
attempts to effect a "two-step" acquisition in which a third party purchases a
controlling interest in cash and acquires the balance of the voting stock of
the Company for less desirable consideration. Under the classified board and
related provisions, the third party would not immediately obtain the ability
to control the Board of Directors through its first-step acquisition and,
under the Fair Price Provisions, having made the first-step acquisition, the
third party could not acquire the balance of the Voting Stock for a lower
price without a supermajority vote or the approval of a majority of such
unaffiliated directors.
These provisions of the Certificate of Incorporation and By-Laws help
ensure that the Board of Directors, if confronted with an unsolicited proposal
from a third party which has acquired a block of shares of Common Stock, will
have sufficient time to review the proposal and appropriate alternatives for
the Company's stockholders.
Such charter and by-law provisions are intended to encourage persons
seeking to acquire control of the Company to initiate such an acquisition
through arm's-length negotiations with the Board of Directors, who would then
be in a position to negotiate a transaction which would treat all stockholders
in substantially the same manner. Such provisions may have the effect of
discouraging a third party from making an unsolicited tender offer or
otherwise attempting to obtain control of the Company, even though such an
attempt might be beneficial to the Company and its stockholders. In addition,
since the provisions are designed to discourage accumulations of large blocks
of shares of Common Stock by purchasers whose objective is to have such shares
repurchased by the Company at a premium, such provisions could tend to reduce
the temporary fluctuations in the market price of Common Stock caused by such
accumulations. Accordingly, stockholders of the Company could be deprived of
certain opportunities to sell their shares at a temporarily higher market
price.
The Rights could also have the effect of delaying, deferring or
preventing a takeover or change in control of the Company. See "Common Stock-
Preferred Share Purchase Rights and Junior Participating Preferred Stock".
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
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.
Under the Company's Certificate of Incorporation, the Board of Directors
may, by resolution, establish series of Preferred Stock having such voting
powers, and such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as the Board of Directors may determine.
The Preferred Stock offered hereby will 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 the particular
series of Preferred Stock offered thereby for specific terms, including: (1)
the designation and stated value per share of such Preferred Stock 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,
19
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 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 pre-emptive rights. Preferred
Stock 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, with respect to dividend rights and rights on
liquidation, dissolution and winding up of the Company, rank prior to the
Common Stock and the Junior Preferred Stock (the "Junior Stock") and on a
parity with the Series A Preferred Stock and each other series of Preferred
Stock offered hereby (the "Parity 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. 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. Dividends on any series of the Preferred Stock
may be cumulative or noncumulative, as provided in the Prospectus Supplement
relating thereto. If the Board of Directors of the Company fails to declare a
dividend payable on a dividend payment date on any series of Preferred Stock
for which dividends are noncumulative, then the right to receive a dividend in
respect of the dividend period ending on such dividend payment date will be
lost, and the Company will have no obligation to pay the dividend accrued for
that period, whether or not dividends are declared for any future period.
Dividends on shares of each series of Preferred Stock for which dividends are
cumulative will accrue from the date set forth in the applicable Prospectus
Supplement.
The Preferred Stock of each series will include customary provisions (1)
restricting the payment of dividends or the making of other distributions on,
or the redemption, purchase or other acquisition of, Junior Stock unless full
dividends, including, in the case of cumulative Preferred Stock, accruals, if
any, in respect of prior dividend periods, on the shares of such series of
Preferred Stock have been paid and (2) providing for the pro rata payment of
dividends on such series and other Parity Stock when dividends have not been
paid in full upon such series and other Parity Stock.
See "Certain Provisions of Outstanding Preferred Stock" for a description
of provisions of the Company's Series A Preferred Stock that could limit the
Company's ability to pay dividends on the Preferred Stock offered hereby.
20
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
Junior Stock, 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. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the amounts
payable with respect to the Preferred Stock of any series and any Parity Stock
are not paid in full, the holders of the Preferred Stock of such series and of
such Parity Stock will share ratably in any such distribution of assets of the
Company in proportion to the full respective preferential amounts (which may
include accumulated dividends) to which they are entitled. After payment of
the full amount of the liquidating distribution to which they are entitled,
the holders of such series of Preferred Stock will have no right or claim to
any of the remaining assets of the Company. Neither the sale of all or a
portion of the Company's assets nor the merger or consolidation of the Company
into or with any other corporation shall be deemed to be a dissolution,
liquidation or winding up, voluntarily or involuntarily, of the Company.
Redemption
The terms, if any, on which shares of a series of Preferred Stock may be
subject to optional or mandatory redemption 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.
Voting Rights
The holders of Preferred Stock of a series offered hereby will not be
entitled to vote except as indicated below or in the Prospectus Supplement
relating to such series of Preferred Stock or as required by applicable law.
Unless otherwise specified in the Prospectus Supplement relating to a
particular series of Preferred Stock, when and if any such series is entitled
to vote, each share in such series will be entitled to one vote.
Unless otherwise specified in the related Prospectus Supplement, holders
of shares of a series of Preferred Stock will have the following voting
rights. If, on the date used to determine stockholders of record for any
meeting of stockholders of the Company at which directors are to be elected,
dividends payable on any series of Preferred Stock offered hereby and any
other series of Parity Stock are in arrears in an amount equal to at least six
quarterly dividends, the number of directors of the Company will be increased
by two and the holders of all such series of Preferred Stock, voting as a
class without regard to series, will be entitled to elect such two additional
directors at such meeting. The affirmative vote or consent of the holders of
at least a majority of the outstanding shares of a series of Preferred Stock
and any other series of Parity Stock also being affected, voting as a single
class without regard to series, will be required for any amendment of the
Company's Certificate of Incorporation if the amendment would have a
materially adverse effect on the powers, preferences or special rights of such
series. The affirmative vote or consent of the holders of at least two-thirds
of the outstanding shares of a series of Preferred Stock and any other series
of Parity Stock, voting as a single class without regard to series, will be
required to authorize, create or issue, or increase the authorized amount of,
any class or series of capital stock ranking prior to such series of Preferred
Stock as to dividends or upon liquidation.
CERTAIN PROVISIONS OF OUTSTANDING PREFERRED STOCK
As of March 31, 1998, there were approximately 28.4 million shares of
Series A Preferred Stock outstanding. The Series A Preferred Stock accrues
quarterly cumulative dividends at the annual rate of $3.75 per share and is
entitled to receive $50 per share, plus accrued and unpaid dividends, upon
liquidation. Each share of Series A Preferred Stock is currently convertible,
at the option of the holder thereof, into 1.67 shares of Common Stock. The
21
Series A Preferred Stock prohibits the payment of cash dividends or other
distributions on, and the purchase, redemption or other acquisition of, any
shares of Junior Stock until all accrued and unpaid dividends on such
Preferred Stock have been paid. When dividends are not paid in full on the
Series A Preferred Stock, all dividends paid upon shares of such series and
Parity Stock must be paid pro rata so that the amount of dividends paid per
share on the Series A Preferred Stock and the Parity Stock bear to each other
the same ratio that accrued dividends per share on such series and the Parity
Stock bear to each other.
DESCRIPTION OF THE WARRANTS
The Company may issue Warrants for the purchase of Debt Securities,
Preferred Stock or Common Stock. Warrants may be issued independently or
together with Debt Securities, Preferred Stock or Common Stock offered by any
Prospectus Supplement and may be attached to or separate from any such
Securities. Each series of Warrants will be issued under a separate warrant
agreement (a "Warrant Agreement") to be entered into between the Company and a
bank or trust company, as warrant agent (the "Warrant Agent"). The Warrant
Agent will act solely as an agent of the Company in connection with the
Warrants and will not assume any obligation or relationship of agency or trust
for or with any holders or beneficial owners of Warrants. The following
summary of certain provisions of the Warrants does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the
provisions of the Warrant Agreement that will be filed with the Commission in
connection with the offering of such Warrants.
DEBT WARRANTS
The Prospectus Supplement relating to a particular issue of Warrants for
the purchase of Debt Securities ("Debt Warrants") will describe the terms of
such Debt Warrants, including the following: (1) the title of such Debt
Warrants; (2) the offering price for such Debt Warrants, if any; (3) the
aggregate number of such Debt Warrants; (4) the designation and terms of the
Debt Securities purchasable upon exercise of such Debt Warrants; (5) if
applicable, the designation and terms of the Debt Securities with which such
Debt Warrants are issued and the number of such Debt Warrants issued with each
such Debt Security; (6) if applicable, the date from and after which such Debt
Warrants and any Debt Securities issued therewith will be separately
transferable; (7) the principal amount of Debt Securities purchasable upon
exercise of a Debt Warrant and the price at which such principal amount of
Debt Securities may be purchased upon exercise (which price may be payable in
cash, securities, or other property); (8) the date on which the right to
exercise such Debt Warrants shall commence and the date on which such right
shall expire; (9) if applicable, the minimum or maximum amount of such Debt
Warrants that may be exercised at any one time; (10) information with respect
to book-entry procedures, if any; (11) the currency or currency units in which
the offering price, if any, and the exercise price are payable; (12) if
applicable, a discussion of material United States Federal income tax
considerations; (13) the antidilution provisions of such Debt Warrants, if
any; (14) the redemption or call provisions, if any, applicable to such Debt
Warrants; and (15) any additional terms of the Debt Warrants, including terms,
procedures, and limitations relating to the exchange and exercise of such Debt
Warrants.
STOCK WARRANTS
The Prospectus Supplement relating to any particular issue of Warrants
for the purchase of Common Stock or Preferred Stock will describe the terms of
such Warrants, including the following: (1) the title of such Warrants; (2)
the offering price for such Warrants, if any; (3) the aggregate number of such
Warrants; (4) the designation and terms of any Preferred Stock purchasable
upon exercise of such Warrants; (5) if applicable, the designation and terms
of the Securities with which such Warrants are issued and the number of such
Warrants issued with each such Security; (6) if applicable, the date from and
after which such Warrants and any Securities issued therewith will be
separately transferable; (7) the number of shares of Common Stock or Preferred
Stock purchasable upon exercise of a Warrant and the price at which such
shares may be purchased upon exercise (which price may be payable in cash,
securities, or other property); (8) the date on which the right to exercise
such Warrants shall commence and the date on which such right shall expire;
(9) if applicable, the minimum or maximum amount of such Warrants that may be
22
exercised at any one time; (10) the currency or currency units in which the
offering price, if any, and the exercise price are payable; (11) if
applicable, a discussion of material United States Federal income tax
considerations; (12) the antidilution provisions of such Warrants, if any;
(13) the redemption or call provisions, if any, applicable to such Warrants;
and (14) any additional terms of the Warrants, including terms, procedures,
and limitations relating to the exchange and exercise of such Warrants.
PLAN OF DISTRIBUTION
The Offered Securities may be sold to underwriters for public offering
pursuant to terms of offering fixed at the time of sale. In addition, the
Offered Securities may be sold by the Company to other purchasers directly or
through agents. Any such underwriter or agent involved in the offer and sale
of the Offered Securities will be named in an applicable Prospectus
Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price
or prices, which may be changed, or from time to time at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Company also may offer and sell the
Offered Securities in exchange for one or more of its outstanding issues of
debt securities. The Company also may, from time to time, authorize
underwriters acting as the Company's agents to offer and sell the Offered
Securities upon the terms and conditions as shall be set forth in an
applicable Prospectus Supplement. In connection with the sale of Offered
Securities, underwriters may be deemed to have received compensation from the
Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Offered Securities for whom they may
act as agents. Underwriters may sell Offered 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 (which may
be changed from time to time) from the purchasers for whom they may act as
agents.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of Offered Securities, and any
discounts, concessions or commissions allowed by underwriters to participating
dealers, will be set forth in an applicable Prospectus Supplement.
Underwriters, dealers and agents participating in the distribution of the
Offered Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions
under the Securities Act. Underwriters, dealers and agents may be entitled,
under agreements entered into with the Company, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act, and to reimbursement by the Company for certain expenses.
If so indicated in an applicable Prospectus Supplement, the Company may
authorize agents, underwriters or dealers acting as the Company's agents to
solicit offers from certain institutional investors to purchase Offered
Securities from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts")
providing for payment and delivery on a future date or dates specified
therein. There may be limitations on the minimum amount which may be purchased
by any such institutional investor or on the portion of the aggregate amount
of the particular Offered Securities which may be sold pursuant to such
arrangements. Institutional investors to which such offers may be made, when
offered, include commercial and savings banks, insurance companies, pension
funds, investment banks, educational and charitable institutions and such
other institutions as may be approved by the Company. Each Contract will be
subject to the approval of the Company. Contracts will not be subject to any
conditions except (1) purchase shall not at the time of delivery be prohibited
under the laws of any jurisdiction in the United States to which the purchaser
is subject and (2) if the Offered Securities are being sold to underwriters,
the Company shall have sold to underwriters the total amount of the Offered
Securities less the amount covered by Contracts. Agents or underwriters will
have no responsibility in respect of the delivery or performance of Contracts.
23
LEGAL MATTERS
Unless otherwise indicated in an accompanying Prospectus Supplement,
certain legal matters in connection with the Offered Securities will be passed
upon for the Company by Harold S. Barron, Esq., Senior Vice President, General
Counsel and Secretary of the Company, and for any agents or underwriters by
Simpson Thacher & Bartlett. As of March 31 1998, Mr. Barron owned 70,295
shares (including 66,695 restricted shares and restricted share units) of
Common Stock and held options to purchase 229,000 shares of Common Stock.
EXPERTS
The consolidated financial statements of the Company at December 31, 1997
and 1996, and for each of the three years in the period ended December 31,
1997 incorporated by reference or appearing in the Company's Annual Report
(Form 10-K) for the year ended December 31, 1997, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon
incorporated therein and incorporated herein by reference. Such consolidated
financial statements are, and audited financial statements to be included in
subsequently filed documents will be, incorporated herein in reliance upon the
reports of Ernst & Young LLP (to the extent covered by consents filed with the
Commission) given upon the authority of such firm as experts in accounting and
auditing.
NO DEALER, SALESMAN OR UNISYS
OTHER PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER
THAN THOSE CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS OR
ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY ACCOMPANYING
PROSPECTUS SUPPLEMENT NOR ANY SALE
MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE $700,000,000
AFFAIRS OF THE COMPANY SINCE THE DATE
OF THIS PROSPECTUS OR ANY ACCOMPANYING
PROSPECTUS SUPPLEMENT. NEITHER THIS
PROSPECTUS NOR ANY ACCOMPANYING PROSPECTUS UNISYS CORPORATION
SUPPLEMENT CONSTITUTES AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SECURITIES
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED
TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
___________ PROSPECTUS
TABLE OF CONTENTS
Page
Available Information 2
Information Incorporated by Reference 2
The Company 3
Risk Factors 3
Use of Proceeds 5
Ratios of Earnings 5
Description of the Debt Securities 6
Description of Capital Stock 14
Description of the Warrants 21
Plan of Distribution 22
Legal Matters 23
Experts 23 _____________, 1998
II-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following statement sets forth the estimated amounts of expenses,
other than underwriting discounts and commissions, to be borne by the
registrant in connection with the distribution of the Securities:
Securities and Exchange Commission Registration Fee $ 113,662
Trustees' and Transfer Agents' Fees 25,000
Printing and Engraving Expenses 175,000
Rating Agency Fees 200,000
Accounting Fees and Expenses 75,000
Blue Sky Fees and Expenses 20,000
New York Stock Exchange listing fees, if applicable 20,000
Miscellaneous Expenses 10,338
--------
Total $639,000
========
__________
All of the amounts are estimated except for the Securities and Exchange
Commission registration fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
for, among other things:
a. permissive indemnification for expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred by designated persons,
including directors and officers of a corporation, in the event such persons
are parties to litigation other than stockholder derivative actions if certain
conditions are met;
b. permissive indemnification for expenses actually and reasonably incurred
by designated persons, including directors and officers of a corporation, in
the event such persons are parties to stockholder derivative actions if
certain conditions are met;
c. mandatory indemnification for expenses actually and reasonably incurred by
designated persons, including directors and officers of a corporation, in the
event such persons are successful on the merits or otherwise in litigation
covered by a. and b. above; and
d. that the indemnification provided for by Section 145 shall not be deemed
exclusive of any other rights which may be provided under any by-law,
agreement, stockholder or disinterested director vote, or otherwise.
The Company's Certificate of Incorporation provides that a director of
the Company shall not be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director except for
liability (i) for any breach of the director's duty of loyalty to the Company
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) for paying
a dividend or approving a stock repurchase in violation of Section 174 of the
DGCL or (iv) for any transaction from which the director derived an improper
personal benefit.
The Certificate of Incorporation also provides that each person who was
or is made a party to, or is involved in, any action, suit or proceeding by
reason of the fact that he or she is or was a director or officer of the
Company (or was serving at the request of the Company as a director, officer,
employee or agent for another entity) shall be indemnified and held harmless
by the Company, to the fullest extent authorized by the DGCL, as in effect
(or, to the extent indemnification is broadened, as it may be amended) against
all expense, liability or loss reasonably incurred by such person in
connection therewith. The Certificate of Incorporation further provides that
such rights to indemnification are contract rights and shall include the right
to be paid by the Company the expenses incurred in defending the proceedings
specified above, in advance of their final disposition, provided that, if the
DGCL so requires, such payment shall only be made upon delivery to the Company
by the indemnified party of an undertaking to repay all amounts so advanced if
II-2
it shall ultimately be determined that the person receiving such payment is
not entitled to be indemnified. Persons so indemnified may bring suit against
the Company to recover unpaid amounts claimed thereunder, and if such suit is
successful, the expense of bringing such suit shall be reimbursed by the
Company. The Certificate of Incorporation provides that the right to
indemnification and to the advance payment of expenses shall not be exclusive
of any other right which any person may have or acquire under any statute,
provision of the Company's Certificate of Incorporation or By-Laws, or
otherwise. By resolution effective September 16, 1986, the Board of Directors
extended the right to indemnification provided directors and officers by the
Certificate of Incorporation to employees of the Company. The Certificate of
Incorporation also provides that the Company may maintain insurance, at its
expense, to protect itself and any of its directors, officers, employees or
agents against any expense, liability or loss, whether or not the Company
would have the power to indemnify such person against such expense, liability
or loss under the DGCL.
On April 28, 1988, at the Company's 1988 Annual Meeting of Stockholders,
the stockholders authorized the Company to enter into indemnification
agreements ("Indemnification Agreements") with its directors, and such
Indemnification Agreements have been executed with each of the directors of
the Company. The Indemnification Agreements provide that the Company shall,
except in certain situations specified below, indemnify a director against any
expense, liability or loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement) incurred by the
director in connection with any actual or threatened action, suit or
proceeding (including derivative suits) in which the director may be involved
as a party or otherwise, by reason of the fact that the director is or was
serving in one or more capacities as a director or officer of the Company or,
at the request of the Company, as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other entity or enterprise.
The Indemnification Agreements require indemnification except to the
extent (i) payment for any liability is made under an insurance policy
provided by the Company, (ii) indemnification is provided by the Company under
the Certificate of Incorporation or By-Laws, the DGCL or otherwise than
pursuant to the Indemnification Agreement, (iii) the liability is based upon
or attributable to the director gaining any personal pecuniary profit to which
such director is not legally entitled or is determined to result from the
director's knowingly fraudulent, dishonest or willful misconduct, (iv) the
liability arises out of the violation of certain provisions of the Securities
Exchange Act of 1934 or (v) indemnification has been determined not to be
permitted by applicable law.
The Indemnification Agreements further provide that, in the event of a
Potential Change in Control (as defined therein), the Company shall cause to
be maintained any then existing policies of directors' and officers' liability
insurance for a period of six years from the date of a Change in Control (as
defined therein) with coverage at least comparable to and in the same amounts
as that provided by such policies in effect immediately prior to such
Potential Change in Control. In the event of a Potential Change in Control,
the Indemnification Agreements also provide for the establishment by the
Company of a trust (the "Trust"), for the benefit of each director, upon the
written request by the director. The Trust shall be funded by the Company in
amounts sufficient to satisfy any and all liabilities reasonably anticipated
at the time of such request, as agreed upon by the director and the Company.
The Indemnification Agreements also provide that no legal actions may be
brought by or on behalf of the Company, or any affiliate of the Company,
against a director after the expiration of two years from the date of accrual
of such cause of action, and that any claim or cause of action of the Company
or its affiliate shall be extinguished and deemed released unless asserted by
the timely filing of a legal action within such two year period.
The directors and officers of the Company are insured against certain
civil liabilities, including liabilities under federal securities laws, which
might be incurred by them in such capacity.
ITEM 16. EXHIBITS
See Index to Exhibits.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
II-3
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933 (the "Securities Act"), unless the information required to be
included in such post-effective amendment is contained in a periodic report
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") and incorporated herein
by reference;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement, unless the information required to be included in such
post-effective amendment is contained in a periodic report filed by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act and
incorporated herein by reference;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the Securities offered therein, and the
offering of such Securities at that time shall be deemed to be the initial
bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of
the Securities being registered which remain unsold at the termination of the
offering;
(4) That, for purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the Securities offered therein, and the offering of such
Securities at that time shall be deemed to be the initial bona fide offering
thereof;
(5) That, for purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective; and
(6) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted against the registrant by such
director, officer or controlling person in connection with the Securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Township of Whitpain, Commonwealth of
Pennsylvania, on May 4, 1998.
UNISYS CORPORATION
By:/s/Lawrence A. Weinbach
--------------------
Lawrence A. Weinbach
Chairman, President and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
Harold S. Barron, Robert H. Brust, Angus F. Smith and Lawrence A. Weinbach,
and each of them, with full power of substitution and full power to act
without the other, his or her true and lawful attorney-in-fact and agent in
his or her name, place and stead, to execute in the name and on behalf of such
person, individually and in each capacity stated below, any and all amendments
(including post-effective amendments) to this Registration Statement, any
registration statements on Form 462(b) and all documents relating thereto, and
to file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, and generally to do
all such things in his or her name and on his or her behalf in his or her
respective capacities as officers or directors of Unisys Corporation to comply
with the provisions of the Securities Act of 1933, as amended, and all
requirements of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on MAY 4, 1998.
Signature Title
--------- -----
/s/ Lawrence A. Weinbach Chairman, President and Chief Executive
- ------------------------ Officer (principal executive officer)
Lawrence A. Weinbach and Director
/s/Robert H. Brust Senior Vice President and Chief
- ------------------ Financial Officer
Robert H. Brust (principal financial officer)
/s/ Janet M. Brutschea Haugen Vice President and Controller
- ----------------------------- (principal accounting officer)
Janet M. Brutschea Haugen
II-5
/s/ J.P. Bolduc Director
- ---------------
J.P. Bolduc
/s/ James J. Duderstadt Director
- -----------------------
James J. Duderstadt
- --------------- Director
Henry C. Duques
/s/ Gail D. Fosler Director
- ------------------
Gail D. Fosler
/s/ Melvin R. Goodes Director
- --------------------
Melvin R. Goodes
/s/ Edwin A. Huston Director
- -------------------
Edwin A. Huston
/s/ Kenneth A. Macke Director
- --------------------
Kenneth A. Macke
/s/ Theodore E. Martin Director
- ----------------------
Theodore E. Martin
/s/ Robert McClements, Jr. Director
- --------------------------
Robert McClements, Jr.
EXHIBIT INDEX
Exhibit
Number Document Description
- ------- ---------------------
1.1 Form of Underwriting Agreement Basic Provisions (with
forms of Terms Agreement attached) (incorporated by
reference to Exhibit 1.1 to the registrant's
Registration Statement on Form S-3 (Registration No.
333-08933))
1.2 Agency Agreement (to be filed as an Exhibit to a report
of the registrant pursuant to Section 13(a) or 15(d)
of the Exchange Act and incorporated herein by
reference)
4.1 Form of Senior Indenture
4.2 Form of Indenture dated as of March 1, 1996 between
Unisys Corporation and The Bank of New York
(incorporated by reference to Exhibit 4.2 to the
registrant's Current Report on Form 8-K dated March
4, 1996)
4.3 Restated Certificate of Incorporation of Unisys
Corporation (incorporated by reference to Exhibit 4.1
to the registrant's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1997)
4.4 Certificate of Amendment of Restated Certificate of
Incorporation dated April 24, 1998.
4.5 By-Laws of Unisys Corporation (incorporated by
reference to Exhibit 3 to the registrant's Quarterly
Report on Form 10-Q for the quarterly period ended
June 30, 1995)
4.6 Form of Rights Agreement dated as of March 7, 1986
between Burroughs Corporation and Harris Trust
Company of New York, as Rights Agent (incorporated by
reference to Exhibit 1 to the registrant's
Registration Statement on Form 8-A, dated March 11,
1986)
4.7 Amendment No. 1 to Rights Agreement dated as of
February 22, 1996 (incorporated by reference to
Exhibit 4 to the registrant's Current Report on Form
8-K dated February 22, 1996)
4.8 Form of Warrant Agreement (to be filed as an Exhibit
to a report of the registrant pursuant to Section
13(a) or 15(d) of the Exchange Act and incorporated
herein by reference)
5 Opinion of Harold S. Barron, Senior Vice President,
General Counsel and Secretary of Unisys Corporation
12.1 Statement of Computation of Ratio of Earnings to
Fixed Charges (incorporated by reference to Exhibit
12 to the registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997)
12.2 Statement of Computation of Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends
23.1 Consent of Ernst & Young LLP (independent auditors)
23.2 Consent of Harold S. Barron (included in Exhibit 5)
24 Power of Attorney (included on pages II-4 and II-5 of
this Registration Statement)
25.1 Statement of Eligibility on Form T-1 of Bank of
Montreal Trust Company, as Senior Trustee
25.2 Statement of Eligibility on Form T-1 of The Bank of
New York, as Subordinated Trustee (incorporated by
reference to Exhibit 25(b) to the registrant's
Registration Statement on Form S-3 (Registration No.
33-64396))