SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
Commission file number 1-8729
UNISYS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-0387840
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Unisys Way
Blue Bell, Pennsylvania 19424
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 986-4011
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. YES [X] NO [ ]
Number of shares of Common Stock outstanding as of September 30, 2000:
314,135,593.
2
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Millions)
September 30, December 31,
2000 1999
----------- ------------
Assets
- ------
Current assets
Cash and cash equivalents $ 234.9 $ 464.0
Accounts and notes receivable, net 1,386.9 1,430.5
Inventories
Parts and finished equipment 241.5 236.8
Work in process and materials 177.6 136.1
Deferred income taxes 482.3 472.7
Other current assets 94.8 105.6
-------- --------
Total 2,618.0 2,845.7
-------- --------
Properties 1,612.0 1,723.0
Less-Accumulated depreciation 996.1 1,102.2
-------- --------
Properties, net 615.9 620.8
-------- --------
Investments at equity 224.5 225.5
Software, net of accumulated amortization 283.2 259.8
Prepaid pension cost 1,080.8 975.9
Deferred income taxes 655.6 655.6
Other assets 366.5 306.4
-------- --------
Total $5,844.5 $5,889.7
======== ========
Liabilities and stockholders' equity
- ------------------------------------
Current liabilities
Notes payable $ 472.3 $ 26.9
Current maturities of long-term debt 18.7 22.9
Accounts payable 990.5 1,036.7
Other accrued liabilities 965.6 1,183.1
Estimated income taxes 359.5 348.9
-------- --------
Total 2,806.6 2,618.5
-------- --------
Long-term debt 535.9 950.2
Other liabilities 331.0 367.7
Stockholders' equity
Common stock, issued: 2000,316.0;
1999,312.5 3.2 3.1
Accumulated deficit (868.4) (1,054.4)
Other capital 3,641.8 3,575.0
Accumulated other comprehensive
loss (605.6) (570.4)
-------- --------
Stockholders' equity 2,171.0 1,953.3
-------- --------
Total $5,844.5 $5,889.7
======== ========
See notes to consolidated financial statements.
3
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Millions, except per share data)
Three Months Nine Months
Ended September 30 Ended September 30
----------------- ------------------
2000 1999 2000 1999
-------- -------- -------- --------
Revenue $1,690.9 $1,865.4 $4,956.7 $5,584.7
-------- -------- -------- --------
Costs and expenses
Cost of revenue 1,216.2 1,195.2 3,461.9 3,581.8
Selling, general and
administrative 320.1 354.8 924.1 1,034.9
Research and development expenses 77.5 86.2 237.8 251.4
-------- -------- -------- --------
1,613.8 1,636.2 4,623.8 4,868.1
-------- -------- -------- --------
Operating income 77.1 229.2 332.9 716.6
Interest expense 18.5 34.1 57.7 103.0
Other income (expense), net 6.4 1.0 36.5 (65.3)
-------- -------- -------- --------
Income before income taxes 65.0 196.1 311.7 548.3
Estimated income taxes 22.1 45.6 106.0 169.9
-------- -------- -------- --------
Income before extraordinary items 42.9 150.5 205.7 378.4
Extraordinary items (12.1) (19.8) (12.1)
-------- -------- -------- --------
Net income 42.9 138.4 185.9 366.3
Dividends on preferred shares 1.9 36.7
-------- -------- -------- --------
Earnings on common shares $ 42.9 $ 136.5 $ 185.9 $ 329.6
======== ======== ======== ========
Earnings per common share
Basic
Before extraordinary items $ .14 $ .49 $ .66 $ 1.22
Extraordinary items (.04) (.06) (.04)
-------- -------- -------- --------
Total $ .14 $ .45 $ .60 $ 1.18
======== ======== ======== ========
Diluted
Before extraordinary items $ .14 $ .47 $ .65 $ 1.17
Extraordinary items (.04) (.06) (.04)
-------- -------- -------- --------
Total $ .14 $ .43 $ .59 $ 1.13
======== ======== ======== ========
See notes to consolidated financial statements.
4
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Millions)
Nine Months Ended
September 30
-----------------
2000 1999
-------- -------
Cash flows from operating activities
Income before extraordinary items $ 205.7 $ 378.4
Add(deduct) items to reconcile income before
extraordinary items to net cash (used for)
provided by operating activities:
Extraordinary items (19.8) (12.1)
Depreciation 109.4 105.3
Amortization:
Marketable software 90.2 83.6
Goodwill 7.7 10.2
(Increase) in deferred income taxes, net (9.6) ( 70.3)
Decrease (increase) in receivables, net 8.4 ( 47.1)
(Increase) decrease in inventories (46.2) 64.4
(Decrease) in accounts payable and
other accrued liabilities (335.6) (224.0)
Increase in estimated income taxes 10.5 68.1
(Decrease) in other liabilities (3.4) ( 16.2)
(Increase) in other assets (110.6) ( 94.4)
Other 20.6 74.2
------- -------
Net cash (used for) provided by operating
activities (72.7) 320.1
------- -------
Cash flows from investing activities
Proceeds from investments 525.1 803.6
Purchases of investments (454.0) (778.2)
Proceeds from sales of properties 17.0 21.7
Investment in marketable software (113.6) ( 83.7)
Capital additions of properties (143.2) (139.0)
Purchases of businesses (13.9) ( 53.9)
------- -------
Net cash used for investing activities (182.6) (229.5)
------- -------
Cash flows from financing activities
Redemption of preferred stock (197.0)
Proceeds from issuance of long-term debt 30.3
Payments of long-term debt (447.2) (161.5)
Net proceeds from (reduction in)
short-term borrowings 442.5 ( 9.1)
Dividends paid on preferred shares ( 59.4)
Proceeds from employee stock plans 42.5 74.4
------- -------
Net cash provided by (used for) financing
activities 37.8 (322.3)
------- -------
Effect of exchange rate changes on
cash and cash equivalents (11.6) ( 10.7)
------- -------
(Decrease) in cash and cash equivalents (229.1) (242.4)
Cash and cash equivalents, beginning of period 464.0 616.4
------- -------
Cash and cash equivalents, end of period $ 234.9 $ 374.0
======= =======
See notes to consolidated financial statements.
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the financial information furnished
herein reflects all adjustments necessary for a fair presentation of
the financial position, results of operations and cash flows for the
interim periods specified. These adjustments consist only of normal
recurring accruals. Because of seasonal and other factors, results
for interim periods are not necessarily indicative of the results to
be expected for the full year.
a. The shares used in the computations of earnings per share are as
follows (in thousands):
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
2000 1999 2000 1999
------- ------- ------- -------
Basic 313,744 302,183 312,473 279,678
Diluted 315,516 314,541 316,539 292,733
b. A summary of the company's operations by business segment for the
three and nine month periods ended September 30, 2000 and 1999 is
presented below(in millions of dollars):
Total Corporate Services Technology
Three Months Ended ----- --------- -------- ----------
September 30, 2000
------------------
Customer revenue $1,690.9 $1,200.2 $ 490.7
Intersegment $( 92.8) 10.6 82.2
-------- ------- -------- --------
Total revenue $1,690.9 $( 92.8) $1,210.8 $ 572.9
======== ======= ======== ========
Operating income(loss) $ 77.1 $ 2.8 $ 18.1 $ 56.2
======== ======= ======== ========
Three Months Ended
September 30, 1999
------------------
Customer revenue $1,865.4 $1,318.5 $ 546.9
Intersegment $(151.7) 17.7 134.0
-------- ------- -------- --------
Total revenue $1,865.4 $(151.7) $1,336.2 $ 680.9
======== ======= ======== ========
Operating income(loss) $ 229.2 $( 13.5) $ 104.9 $ 137.8
======== ======= ======== ========
Nine Months Ended
September 30, 2000
----------------
Customer revenue $4,956.7 $3,454.1 $1,502.6
Intersegment $(326.7) 35.2 291.5
-------- ------- -------- --------
Total revenue $4,956.7 $(326.7) $3,489.3 $1,794.1
======== ======= ======== ========
Operating income(loss) $ 332.9 $ 20.4 $ 37.5 $ 275.0
======== ======= ======== ========
Nine Months Ended
September 30, 1999
------------------
Customer revenue $5,584.7 $3,901.3 $1,683.4
Intersegment $(415.6) 49.0 366.6
-------- ------- -------- --------
Total revenue $5,584.7 $(415.6) $3,950.3 $2,050.0
======== ======= ======== ========
Operating income(loss) $ 716.6 $( 21.6) $ 288.7 $ 449.5
======== ======= ======== ========
6
Notes to Consolidated Financial Statements (cont'd)
Presented below is a reconciliation of total business segment operating
income to consolidated income before taxes (in millions of dollars):
Three Months Nine Months
Ended Ended
September 30 September 30
--------------- -------------
2000 1999 2000 1999
------ ------ ------ ------
Total segment operating income $ 74.3 $242.7 $312.5 $738.2
Interest expense (18.5) ( 34.1) (57.7) (103.0)
Other income (expense), net 6.4 1.0 36.5 ( 65.3)
Corporate and eliminations 2.8 ( 13.5) 20.4 ( 21.6)
------ ------ ------ ------
Total income before income taxes $ 65.0 $196.1 $311.7 $548.3
====== ====== ====== ======
c. Comprehensive income for the three and nine months ended September 30, 2000
and 1999 includes the following components (in millions of dollars):
Three Months Nine Months
Ended Sept 30 Ended Sept 30
--------------- -------------
2000 1999 2000 1999
------ ------ ------ ------
Net income $ 42.9 $138.4 $185.9 $366.3
Other comprehensive
income (loss)
Foreign currency
translation adjustment 2.0 ( 19.9) (21.5) ( 63.0)
Related tax expense
(benefit) 5.1 1.0 13.7 1.5
------ ------ ------ ------
Total other comprehensive
income (loss) (3.1) ( 20.9) (35.2) ( 64.5)
------ ------ ------ ------
Comprehensive income $ 39.8 $117.5 $150.7 $301.8
====== ====== ====== ======
Accumulated other comprehensive income (loss), all of which
relates to foreign currency translation adjustments, as of
September 30,2000 and December 31, 1999 is as follows (in millions of
dollars):
September 30, December 31,
2000 1999
---------------- -----------
Balance at beginning of period $(570.4) $(531.6)
Translation adjustments ( 35.2) ( 38.8)
------- -------
Balance at end of period $(605.6) $(570.4)
======= =======
d. The amount credited to stockholders' equity for the income tax benefit
related to the company's stock plans for the nine months ended September
30, 2000 and 1999 was $10.5 million and $53.8 million, respectively. The
company expects to realize these tax benefits on future Federal
income tax returns.
7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Overview
- ------------
The company is continuing to transition its business to meet the new
requirements of the e-business marketplace. During the third quarter, the
company completed a strategic business review aimed at focusing the company
on higher-growth, higher-margin e-business opportunities and improving its
financial performance. As a result of this review, the company plans to
implement a series of actions during the fourth quarter of 2000 designed to
build its revenue base in new high-growth markets; focus its research and
development resources on high-potential new markets; de-emphasize non-
strategic, low-growth and low-margin businesses and products; and reduce its
cost structure in line with its new, more focused business model. In
particular, the company plans to:
* Streamline its portfolio of industry-specific repeatable solutions from
more than 30 programs currently to approximately 15 strategic solutions, and
introduce new, high-potential solutions in growth areas such as wealth
management and mobile-commerce;
* Enhance its outsourcing business to more aggressively pursue joint
ventures and other new business models to drive accelerated growth in this
key growth area;
* Focus its networking business on high value-added services, such as
managed network outsourcing services, network consulting, and an expanded
network security management practice;
* Continue to focus its technology business on high-end, enterprise-class
servers and de-emphasize low-margin commodity products.
In addition, the company plans to reduce its cost structure in line with its
lower revenue levels and its focus on higher-growth, higher-margin
opportunities going forward. As the first action in this cost structure
realignment, the company is offering an early retirement incentive to
approximately 1,500 U.S. employees. To the extent eligible employees elect
this program, funding will come from the company's pension plan. The company
estimates that it will take a one-time, pre-tax charge of approximately $200
million in the fourth quarter of 2000 related to the early retirement and
other actions.
Results of Operations
- ---------------------
For the three months ended September 30, 2000, the company reported net
income of $42.9 million or $.14 per diluted share, compared to $138.4
million, or $.43 per diluted share, for the three months ended September 30,
1999. The prior period included an extraordinary item of $12.1 million, or
$.04 per diluted common share, for the early extinguishment of debt and a
one-time tax benefit of $22.0 million, or $.07 per diluted share. Excluding
these items, earnings in the prior period were $.40 per diluted common share.
8
Total revenue for the quarter ended September 30, 2000 was $1.69 billion,
down 9% from revenue of $1.87 billion for the quarter ended September 30,
1999. Excluding the negative impact of foreign currency translations, revenue
in the quarter declined 6%. The decrease in revenue was principally due to
continuing weakness in the company's services business as well as lower sales
of enterprise servers. Total gross profit percent was 28.1% in the third
quarter of 2000 compared to 35.9% in the year-ago period, principally due to
a lower mix of higher-margin products and services than in the year-ago
quarter and reduced utilization of services personnel.
For the three months ended September 30, 2000, selling, general and
administrative expenses were $320.1 million (18.9% of revenue) compared to
$354.8 million (19.0% of revenue) for the three months ended September 30,
1999. The decrease in these expenses reflected continued progress in
controlling costs through the company's worldwide business process
standardization program as well as the benefits of tight controls placed on
discretionary spending during the quarter. This led to a reduction in
general and administrative expenses which was partially offset by an increase
in selling expenses. Research and development expenses were $77.5 million
compared to $86.2 million a year earlier.
For the third quarter of 2000, the company reported an operating income
percent of 4.6% compared to 12.3% for the third quarter of 1999.
Information by business segment is presented below (in millions):
Elimi-
Total nations Services Technology
------- ------- -------- ----------
Three Months Ended
September 30, 2000
- ------------------
Customer revenue $1,690.9 $1,200.2 $490.7
Intersegment $( 92.8) 10.6 82.2
-------- ------- -------- ------
Total revenue $1,690.9 $( 92.8) $1,210.8 $572.9
======== ======= ======== ======
Gross profit percent 28.1% 21.6% 38.9%
======== ======== ======
Operating income
percent 4.6% 1.5% 9.8%
======== ======== ======
Three Months Ended
September 30, 1999
- ------------------
Customer revenue $1,865.4 $1,318.5 $546.9
Intersegment $(151.7) 17.7 134.0
-------- ------- -------- ------
Total revenue $1,865.4 $(151.7) $1,336.2 $680.9
======== ======= ======== ======
Gross profit percent 35.9% 25.8% 48.5%
======== ======== ======
Operating income
percent 12.3% 7.8% 20.2%
======== ======== ======
9
In the Services segment, customer revenue decreased 9% to $1.20 billion in
the third quarter of 2000 from $1.32 billion in the third quarter of 1999 as
an increase in networking services revenue was more than offset by declines
in systems integration and repeatable solutions, proprietary maintenance, and
outsourcing. The decline in proprietary maintenance revenue, which continues
to decline industry wide, reflected customers' higher rates of replacement of
older equipment last year with newer systems that are under warranty and
require less maintenance. The gross profit percent declined to 21.6% in the
current quarter compared to 25.8% in the prior period, principally reflecting
reduced utilization of services personnel as well as a lower mix of higher-
margin systems integration and solutions, and proprietary maintenance revenue
in the quarter. Operating income percent declined to 1.5% in the current
quarter from 7.8% last year, principally due to the gross profit decline.
In the Technology segment, customer revenue decreased 10% to $491 million in
the third quarter of 2000 from $547 million in the prior-year period, as
strong initial sales of the company's new Cellular MultiProcessing servers
were more than offset by a decline in ClearPath enterprise server revenue.
The current quarter comparison was difficult because the September 1999
quarter reflected strong revenue levels associated with spending by customers
in preparation for the year 2000 transition. The gross profit percent was
38.9% in 2000 compared to 48.5% in 1999, due in large part to a lower
percentage of enterprise server sales in the current quarter. Operating
profit in this segment declined to 9.8% in 2000 from 20.2% in 1999,
principally due to the gross profit decline.
Interest expense for the three months ended September 30, 2000 was $18.5
million compared to $34.1 million for the three months ended September 30,
1999. The decline was principally due to the company's debt reduction
program.
Other income (expense), net, which can vary from quarter to quarter, was
income of $6.4 million in the current quarter compared to income of $1.0
million in the year-ago quarter. The change was primarily due to higher
interest income and foreign exchange gains in the current period versus a
year ago.
Income before income taxes was $65.0 million in the third quarter of 2000
compared to $196.1 million last year. The provision for income taxes was
$22.1 million in the current period (34% effective rate) compared to $45.6
million in the year-ago period. The tax provision in the prior period
included a one-time benefit of $22.0 million related to a U.S. Treasury
income tax regulation pertaining to the use of net operating loss
carryforwards of acquired companies. Exclusive of this benefit, the
effective tax rate in 1999 was 35%. The decline in the effective tax rate
was principally due to tax planning strategies.
10
For the nine months ended September 30, 2000, revenue was $4.96 billion, down
11% from $5.58 billion for the nine months ended September 30, 1999. Net
income in the current nine month period was $185.9 million, or $.59 per
diluted share, compared to net income of $366.3 million, or $1.13 per diluted
share, in the prior-year period. Both periods include an extraordinary item
for the early extinguishment of debt: $19.8 million, or $.06 per diluted
share, in the nine months ended September 30, 2000 and $12.1 million, or $.04
per diluted share, in the nine months ended September 30, 1999. In addition,
the prior-year period included the one-time tax benefit mentioned above.
Excluding these items, income in the current period was $205.7 million, or
$.65 per diluted share, compared to $356.4 million, or $1.10 per diluted
share, in the prior-year period.
In December 1999, the Securities and Exchange Commission's ("SEC") staff
issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements." SAB No. 101 provides the staff's views on applying
generally accepted accounting principles to selected revenue recognition
issues and is effective for the company in the first quarter of 2000.
However, in March and again in September 2000, in response to requests from a
number of groups asking for additional time to determine the effect, if any,
on registrants' revenue recognition practices, the SEC staff delayed the
implementation date of SAB No. 101. SAB No. 101 now must be implemented by
the company no later than the fourth quarter of 2000, effective retroactively
to the first quarter of 2000. In addition, on October 12, 2000, the SEC
staff issued a Frequently Asked Questions ("FAQ") document which clarifies
and elaborates on the SEC staff's views regarding revenue recognition. The
company's initial assessment of the impact of SAB No. 101 is that it would
not have a material effect on its consolidated financial position,
consolidated results of operations, or liquidity. However, the company is in
the process of reassessing the impact, if any, of SAB No. 101 based on the
FAQ document.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". This
statement, which is effective for the company for the year beginning January
1, 2001, establishes accounting and reporting standards for derivative
instruments and hedging activities. SFAS No. 133 requires a company to
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. Changes in
the fair value of derivatives will be reported currently in earnings or in
other comprehensive income depending on their effectiveness pursuant to SFAS
No. 133. Adoption of SFAS No. 133 will also require a change in accounting
for the company's yen cross currency swap, as discussed separately below.
Management does not currently expect that adoption of SFAS No. 133 will have
a material effect on the company's consolidated financial position,
consolidated results of operations, or liquidity.
Financial Condition
- -------------------
Cash and cash equivalents at September 30, 2000 were $234.9 million compared
to $464.0 million at December 31, 1999. During the nine months ended
September 30, 2000, cash used for operations was $72.7 million compared to
cash provided by operations of $320.1 million a year ago, primarily
reflecting a decline in profitability and higher accounts receivable levels.
11
Cash used for investing activities during the first nine months of 2000 was
$182.6 million compared to $229.5 million during the first nine months of
1999. During the current period, both proceeds from investments and
purchases of investments, which represent primarily foreign exchange hedging
contract activity, declined from the prior year as a result of extending the
duration of individual contracts to more closely match the timeframe of
related underlying exposures. This change in duration of foreign currency
contracts did not significantly impact net cash flows. In addition, the
current period reflects lower cash usage for purchases of businesses and, as
described below, $27.5 million proceeds from the termination of the euro
swap.
Cash provided by financing activities during the nine months ended September
30, 2000 was $37.8 million compared to cash usage of $322.3 million in the
year-ago period. The current period includes net proceeds from short-term
borrowings of $442.5 million, principally borrowings used to repay long-term
debt of $447.2 million, as described below. Included in the prior period
were payments of $197.0 million for redemptions of preferred stock and $59.4
million for preferred stock dividends.
Total debt was $1.0 billion at September 30, 2000, up $26.9 million from
December 31, 1999.
The company has a $400 million credit agreement which expires June 2001. As
of September 30, 2000, $240 million was outstanding under this agreement at
an average rate of 7.05%.
On April 15, 2000, the company redeemed all of its $399.5 million outstanding
12% senior notes due 2003 at the stated redemption price of 106% of
principal. As a result, the company recorded an extraordinary after-tax
charge of $19.8 million, or $.06 per diluted share, for the call premium and
unamortized debt expense. In March 2000, the company entered into an
additional $150 million credit agreement expiring April 2001 for the purpose
of funding this redemption. As of September 30, 2000, the entire amount was
borrowed under this agreement at a rate of 7.47%. The redemption was funded
through a combination of cash and short-term borrowings under the company's
two credit agreements.
The company may, from time to time, redeem, tender for, or repurchase its
securities in the open market or in privately negotiated transactions
depending upon availability, market conditions, and other factors.
In the third quarter of 1999, the company entered into interest rate swaps
and currency swaps for euros and Japanese yen. In May 2000, the company
terminated the euro currency swap and received $27.5 million. A gain of $.9
million on the termination was recorded in the second quarter of 2000. On
October 5, 2000, the company terminated both of its interest rate swaps at a
net cost of $.7 million which will be recognized in interest expense over the
remaining terms of the related debt instruments.
12
The only remaining swap instrument is the Japanese yen cross currency swap,
which has been designated as a hedge of the company's net investments
denominated in yen. Under this instrument, the company is obligated to
deliver on April 1, 2008, 23.2 billion yen in exchange for $200 million. At
September 30, 2000, the company has a payable of $14.0 million included in
other liabilities (long-term) related to the yen currency swap. Under this
instrument, the company pays yen libor plus .40% and receives US libor plus
.83% (.78875% and 7.49% at September 30, 2000, respectively). The company
records the effect of the interest rate difference in interest expense,
which, since inception of the swap, has approximated a $3.5 million reduction
in interest expense each quarter. Upon adoption of SFAS No. 133 on January
1, 2001, this benefit can no longer be recorded in interest expense.
The company has on file with the Securities and Exchange Commission an
effective registration statement covering $700 million of debt or equity
securities, which enables the company to be prepared for future market
opportunities.
At September 30, 2000, the company had deferred tax assets in excess of
deferred tax liabilities of $1,382 million. For the reasons cited below,
management determined that it is more likely than not that $1,085 million of
such assets will be realized, therefore resulting in a valuation allowance of
$297 million.
The company evaluates quarterly the realizability of its deferred tax assets
and adjusts the amount of the related valuation allowance, if necessary. The
factors used to assess the likelihood of realization are the company's
forecast of future taxable income, and available tax planning strategies that
could be implemented to realize deferred tax assets. Approximately $3.2
billion of future taxable income (predominantly U.S.) is needed to realize
all of the net deferred tax assets. Failure to achieve forecasted taxable
income might affect the ultimate realization of the net deferred tax assets.
See "Factors That May Affect Future Results" below.
Stockholders' equity increased $217.7 million during the nine months ended
September 30, 2000, principally reflecting net income of $185.9 million and
$66.6 million for issuance of stock under stock option and other plans offset
in part by currency translation of $35.2 million.
Conversion to the Euro Currency
- -------------------------------
On January 1, 1999, certain member countries of the European Union
established fixed conversion rates between their existing currencies and the
European Union's common currency (the "euro"). The transition period for the
introduction of the euro began on January 1, 1999. The company is addressing
the issues involved with the introduction of the euro. The more important
issues facing the company include converting information technology systems,
reassessing currency risk, and negotiating and amending agreements. Based on
progress to date, the company believes that the use of the euro will not have
a significant impact on the manner in which it conducts its business.
Accordingly, conversion to the euro is not expected to have a material effect
on the company's consolidated financial position, consolidated results of
operations, or liquidity.
13
Factors That May Affect Future Results
- --------------------------------------
From time to time, the company provides information containing "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. In addition to changes in
general economic and business conditions and natural disasters, these
include, but are not limited to, the factors discussed below.
The company operates in an industry characterized by aggressive competition,
rapid technological change, evolving technology standards, and short product
life-cycles.
Future operating results will depend on the company's ability to design,
develop, introduce, deliver, or obtain new products and services on a timely
and cost-effective basis; on its ability to effectively implement the actions
being taken as a result of its strategic review; on its ability to
effectively execute its sales efforts under the organizational model
implemented at the beginning of 2000; on its ability to mitigate the effects
of competitive pressures and volatility in the information services and
technology industry on revenues, pricing and margins; on its ability to
effectively manage the shift of its business mix away from traditional high-
margin product and services offerings; and on its ability to successfully
attract and retain highly skilled people. In addition, future operating
results could be impacted by market demand for and acceptance of the
company's service and product offerings.
Certain of the company's systems integration contracts are fixed-price
contracts under which the company assumes the risk for delivery of the
contracted services at an agreed-upon price. Future results will depend on
the company's ability to profitably perform these services contracts and bid
and obtain new contracts.
The company frequently forms alliances with third parties that have
complementary products, services, or skills. Future results will depend in
part on the continuing relationships with, and on the performance and
capabilities of, these third parties. Future results will also depend upon
the ability of external suppliers to deliver components at reasonable prices
and in a timely manner and on the financial condition of, and the company's
relationship with, distributors and other indirect channel partners.
Approximately 58% of the company's total revenue derives from international
operations. The risk of doing business internationally include foreign
currency exchange rate fluctuations, changes in political or economic
conditions, trade protection measures, and import or export licensing
requirements.
14
Part II - OTHER INFORMATION
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Item 1. Legal Proceedings
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As previously reported, most recently in the company's Quarterly Report on
Form 10-Q for the period ended June 30, 2000, a number of purported class
action lawsuits seeking unspecified compensatory damages have been filed
against Unisys and various current and former officers in the U.S. District
Court for the Eastern District of Pennsylvania by persons who acquired Unisys
common stock during the period May 4, 1999 through October 14, 1999. On
February 16, 2000, these actions, which are in the early stages, were
consolidated under the caption In re: Unisys Corporation Securities
Litigation. The plaintiffs allege violations of the Federal securities laws
in connection with statements made by the company concerning certain of its
services contracts. The company believes it has meritorious defenses and
intends to defend this action vigorously.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
See Exhibit Index
(b) Reports on Form 8-K
During the quarter ended September 30, 2000, the company filed no
Current Reports on Form 8-K.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
UNISYS CORPORATION
Date: October 23, 2000 By: /s/ Janet M. Brutschea Haugen
-----------------------------
Janet M. Brutschea Haugen
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
10.1 1990 Unisys Long-Term Incentive Plan, as amended and restated
effective September 22, 2000
10.2 Unisys Directors Stock Option Plan, as amended and restated
effective September 22, 2000
10.3 Unisys Corporation Deferred Compensation Plan, as amended and
restated effective September 22, 2000
10.4 Deferred Compensation Plan for Directors of Unisys Corporation, as
amended and restated effective September 22, 2000
10.5 Unisys Corporation Director Stock Unit Plan, as amended and restated
effective September 22, 2000
11.1 Statement of Computation of Earnings Per Share for the nine months
ended September 30, 2000 and 1999
11.2 Statement of Computation of Earnings Per Share for the three months
ended September 30, 2000 and 1999
12 Statement of Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
1990 UNISYS LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE AND ADOPTION OF THE PLAN
1.1 Purpose. The purpose of the 1990 Unisys Long-Term Incentive Plan
(hereinafter referred to as the "Plan") is to assist in attracting and
retaining highly competent employees and to act as an incentive in motivating
selected officers and other key employees of Unisys and its Subsidiaries to
achieve long-term corporate objectives.
1.2 Adoption and Term. The Plan has been approved by the Board and is
effective as of January 1, 1990, and will remain in effect until terminated
or abandoned by action of the Board; provided, however, that no Incentive
Stock Option may be granted after December 31, 1999.
ARTICLE II
DEFINITIONS
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest Fair Market Value of a share of
Company Common Stock during the sixty day period ending on the date of such
Change in Control or (ii) in the case of a Change in Control described in
Section 2.7(a) or 2.7(c), the highest price per share of Company Common Stock
paid to holders of Company Common Stock in any transaction (or series of
transactions) constituting or resulting from such Change in Control.
2.2 "Award" shall mean any one or a combination of Non-Qualified Stock
Options or Incentive Stock Options described in Article VI, Stock
Appreciation Rights described in Article VI, Restricted Shares described in
Article VII, Performance Units described in Article VIII, Performance Awards
described in Article IX, or any other award made under the terms of the Plan.
2.3 "Award Agreement" means a written agreement between the Company
and a Participant or a written acknowledgement from the Company specifically
setting forth the terms and conditions of an Award granted under the Plan.
2.4 "Award Period" means, with respect to an Award, the period of time
set forth in the Award Agreement during which specified target performance
goals must be achieved or other conditions set forth in the Award Agreement
must be satisfied.
2.5 "Beneficiary" means an individual, trust or estate who or which by
designation of the Participant or Transferee or operation of law succeeds to
the rights and obligations of the Participant or Transferee under the Plan
and Award Agreement upon the Participant's or Transferee's death.
2.6 "Board" means the Board of Directors of Unisys.
2.7 "Change in Control" means any of the following events:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20%
or more of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (a),
the following acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this
Section 2.07; or
(b) Individuals who, as of May 25, 1995, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board; or
(c) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be,
of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
2.8 "Code" means the Internal Revenue Code of 1986, as amended.
References to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends,
supplement or supersedes said section.
2.9 "Committee" means the Corporate Governance and Compensation
Committee of the Board.
2.10 "Company Common Stock" means the common stock of Unisys, par value
$.01 per share.
2.11 "Company Voting Securities" means the combined voting power of all
outstanding voting securities of Unisys entitled to vote generally in the
election of directors for the Board.
2.12 "Date of Grant" means the date designated by the Committee as the
date as of which it grants an Award, which shall not be earlier than the date
on which the Committee approves the granting of such Award.
2.13 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.14 "Exercise Price" means, with respect to a Stock Appreciation
Right, the amount established by the Committee in the Award Agreement which
is to be subtracted from the Fair Market Value on the date of exercise in
order to determine the amount of the payment to be made to the Participant,
as further described in Section 6.2.
2.15 "Fair Market Value" means, on any date, the average of the high
and low quoted sales prices of a share of Company Common Stock, sold regular
way, through the official close of the New York Stock Exchange at 4:00 p.m.
U.S. Eastern Standard Time on such date or, if there were no sales on such
date, on the last date preceding such date on which a sale was reported.
2.16 "Incentive Stock Option" means a stock option within the meaning
of Section 422A of the Code.
2.17 "Incumbent Board" means the Board as of May 25, 1995.
2.18 "Non-Qualified Stock Option" means a stock option which is not an
Incentive Stock Option.
2.19 "Normal Retirement Date" means the date on which a Participant is
eligible to retire with unreduced benefits under a defined benefit pension
plan or arrangement of Unisys or one of its Subsidiaries or, in the event
that the Participant is not a member of such a defined benefit pension plan
or arrangement, the date on which the Participant would otherwise be eligible
to retire with unreduced benefits under the Unisys Pension Plan.
2.20 "Options" means all Non-Qualified Stock Options and Incentive
Stock Options granted at any time under the Plan.
2.21 "Other Retirement Date" means a date earlier than a Participant's
Normal Retirement Date which is specifically designated by the Committee to
be the date upon which a Participant retires for purposes of this Plan.
2.22 "Outstanding Company Common Stock" means, at any time, the issued
and outstanding shares of Company Common Stock.
2.23 "Participant" shall have the meaning set forth in Section 5.1.
2.24 "Performance Awards" means Awards granted in accordance with
Article IX.
2.25 "Performance Units" means Awards granted in accordance with
Article VIII.
2.26 "Plan" shall mean the 1990 Unisys Long-Term Incentive Plan as
described herein and as may be amended from time to time.
2.27 "Purchase Price", with respect to Options, shall have the meaning
set forth in Section 6.1(b).
2.28 "Restricted Shares" means Company Common Stock subject to
restrictions imposed in connection with Awards granted under Article VII.
2.29 "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act, as it may be
amended from time to time, and any successor rule.
2.30 "Stock Appreciation Right" means Awards granted in accordance with
Article VI.
2.31 "Stock Award" means a Non-Qualified Stock Option, an Incentive
Stock Option, a Stock Appreciation Right, a Restricted Stock Award or any
other stock-based Award authorized by the Board hereunder.
2.32 "Subsidiary" shall have the meaning set forth in Section 425(f) of
the Code.
2.33 "Termination of Employment" means the voluntary or involuntary
termination of a Participant's employment with Unisys or a
Subsidiary for any reason, including death, disability, retirement
or as the result of the divestiture of the Participant's employer
or any similar transaction in which the Participant's employer
ceases to be Unisys or one of its Subsidiaries. Whether military
or other government or eleemosynary service shall constitute
Termination of Employment, or whether a Termination of Employment
is a result of disability, shall be determined in each case by the
Committee in its sole discretion.
2.34 "Transferee" means the holder of Non-Qualified Stock Options after
a transfer in accordance with Section 11.4 and the Award Agreement.
2.35 "Unisys" means Unisys Corporation, a Delaware corporation.
ARTICLE III
ADMINISTRATION
3.1 Committee. The Plan shall be administered by the Committee. The
Committee shall be selected from time to time by the Board, and shall be
comprised of not less than three members of the Board or such other persons
who would constitute a disinterested administrator under the requirements of
Rule 16b-3. The Committee shall have exclusive and final authority in each
determination, interpretation or other action affecting the Plan and its
Participants. The Committee shall have the sole discretionary authority to
interpret the Plan, to establish and modify administrative rules for the
Plan, to impose such conditions and restrictions on Awards as it determines
appropriate, to cancel Awards (including those made pursuant to other plans
of Unisys), to allow some or all Non-Qualified Stock Options of some or all
Participants to be transferable subject to the limitations set forth in the
Award Agreement, and to substitute new options for underwater options
(including options granted under other Plans of Unisys) with the consent of
the recipient, and to take such steps in connection with the Plan and Awards
granted as it may deem necessary or advisable. The Committee may, with
respect to Participants who are not subject to Section 16(b) of the Exchange
Act, delegate such of its powers and authority under the Plan as it deems
appropriate to designated officers or employees of Unisys.
ARTICLE IV
STOCK
4.1 Number of Shares Issuable. Subject to adjustments as provided in
Section 11.9, the stock to be offered under the Plan shall be authorized and
unissued shares, or issued shares which shall have been reacquired by Unisys,
of Company Common Stock. The total number of shares initially authorized to
be issued under the Plan shall be 4 million shares, which limit shall be
increased as of January 1 of each calendar year commencing in 1991 by a
number of shares equal to 2% of the total amount of Outstanding Company
Common Stock (not including shares issued under this Plan) as of such January
1; provided, however, that not more than one million shares of Company Common
Stock shall be issued upon the exercise of Incentive Stock Options awarded
under the Plan. In addition, the 1.4 million shares remaining available for
the grant of awards as of January 1, 1990 under the terms of the 1982 Unisys
Long-Term Incentive Plan shall be available for issuance hereunder.
4.2 Shares Subject to Terminated Awards. The shares of Company Common
Stock involved in any unexercised portions of terminated Options (including
cancelled Options) granted under Article VI, shares of Company Common Stock
forfeited as provided in Section 7.2(a), unexercised shares from terminated
awards under Section 9.2 and shares of Company Common Stock subject to Awards
which are otherwise surrendered by the Participant or Transferee may again be
subject to Stock Awards. Shares of Company Common Stock subject to Options,
or portions thereof, which have been surrendered in connection with the
exercise of Stock Appreciation Rights shall not be available for subsequent
Option grants under the Plan, but shares of Company Common Stock issued in
payment of such Stock Appreciation Rights shall not be charged against the
number of shares of Company Common Stock available for the grant of Options.
Any shares of Company Common Stock issued by Unisys pursuant to its
assumption or substitution of outstanding grants from acquired companies
shall not reduce the number of shares available for grants under this Plan.
ARTICLE V
PARTICIPANTS
5.1 Eligible Participants. Participants in the Plan shall be such
officers and other key employees of Unisys and its Subsidiaries, whether or
not members of the Board, as the Committee, in its sole discretion, may
designate from time to time. The Committee's designation of a Participant in
any year shall not require the Committee to designate such person to receive
Awards or grants in any other year. The designation of a Participant to
receive awards or grants under one portion of the Plan does not require the
Committee to include such Participant under other portions of the Plan. The
Committee shall consider such factors as it deems pertinent in selecting
Participants and in determining the type and amount of their respective
Awards.
ARTICLE VI
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
6.1 Option Awards.
(a) The Committee may grant, to such Participants as the
Committee may select, Options entitling the Participant or
Transferee to purchase Company Common Stock from Unisys in such
quantity, at such price, and on such terms and subject to such
conditions, not inconsistent with the terms of this Plan, as may
be established by the Committee. The terms of any Stock Option
granted under this Plan shall be set forth in an Award Agreement.
(b) Purchase Price of Options. The Purchase Price of each
share of Company Common Stock which may be purchased upon exercise
of any Option granted under the Plan shall be determined by the
Committee, provided that, with respect to Participants or
Transferees subject to Section 16(b) of the Exchange Act, such
Purchase Price shall be not less than 50% of the Fair Market Value
on the Date of Grant, and provided further that the Purchase Price
for shares of Company Common Stock purchased pursuant to Stock
Options designated by the Committee as Incentive Stock Options
shall be equal to or greater than the Fair Market Value on the
Date of Grant as required under Section 422A of the Code.
(c) Designation of Incentive Stock Options. Except as
otherwise expressly provided in the Plan, the Committee may
designate, at the time of the grant of each Option, the Option as
an Incentive Stock Option under Section 422A of the Code.
(1) Incentive Stock Option Share Limitation. No
Participant may be granted Incentive Stock Options under the
Plan (or any other plans of Unisys) which would result in
stock with an aggregate Fair Market Value (measured on the
Date of Grant) of more than $100,000 first becoming
exercisable in any one calendar year, or which would entitle
such Participant to purchase a number of shares greater than
the maximum number permitted by Section 422A of the Code as
in effect on the Date of Grant.
(2) Other Incentive Stock Option Terms. Whenever
possible, each provision in the Plan and in every Option
granted under this Plan which is designated by the Committee
as an Incentive Stock Option shall be interpreted in such a
manner as to entitle the Option to the tax treatment
afforded by Section 422A of the Code. If any provision of
this Plan or any Option designated by the Committee as an
Incentive Stock Option shall be held not to comply with
requirements necessary to entitle such Option to such tax
treatment, then (A) such provision shall be deemed to have
contained from the outset such language as shall be
necessary to entitle the Option to the tax treatment
afforded under Section 422A of the Code, and (B) all other
provisions of this Plan and the Stock Option Agreement shall
remain in full force and effect. If any agreement covering
an Option designated by the Committee to be an Incentive
Stock Option under this Plan shall not explicitly include
any terms required to entitle such Incentive Stock Option to
the tax treatment afforded by Section 422A of the Code, all
such terms shall be deemed implicit in the designation of
such Option and the Option shall be deemed to have been
granted subject to all such terms.
(d) Rights as a Stockholder. A Participant or Transferee
shall have no rights as a stockholder with respect to any shares
of Company Common Stock covered by an Option until the Participant
or Transferee shall have become the holder of record of any such
shares, and no adjustment shall be made for dividends in cash or
other property or distributions or other rights with respect to
any such shares of Company Common Stock for which the record date
is prior to the date on which the Participant or a Transferee of
the Option shall have become the holder of record of any such
shares covered by the Option.
6.2 Stock Appreciation Rights.
(a) Stock Appreciation Right Awards. The Committee is
authorized to grant to any Participant a Stock Appreciation Right
covering any share of Company Common Stock which is at the Date of
Grant also covered by an Option granted to the same Participant
either prior to or simultaneously with the grant to such
Participant of the Stock Appreciation Right, provided: (1) any
Option covering any share of Company Common Stock shall expire and
not be exercisable upon the exercise of any Stock Appreciation
Right with respect to the same share; (2) any Stock Appreciation
Right covering any share of Company Common Stock shall not be
exercisable upon the exercise of any related Option with respect
to the same share; and (3) an Option and Stock Appreciation Right
covering the same share of Company Common Stock may not be
exercised simultaneously. Upon exercise of a Stock Appreciation
Right with respect to a share of Company Common Stock, the
Participant will be entitled to receive an amount equal to the
difference between (y) the Exercise Price established in the Award
Agreement from (z) the Fair Market Value of a share of Company
Common Stock on the date of exercise, which amount shall be
payable as provided in Section 6.2(e).
(b) Exercise Price. The Exercise Price established under
any Stock Appreciation Right granted under this Plan shall be
determined by the Committee and shall not be less than the lower
of (1) the Purchase Price of the related Option or (2) 50% of the
Fair Market Value on the Date of Grant of the Stock Appreciation
Right. Upon exercise of Stock Appreciation Rights, the number of
shares subject to exercise under the related Option shall
automatically be reduced by the number of shares of Company Common
Stock represented by the Option or portion thereof which is
surrendered as a result of the exercise of such Stock Appreciation
Right.
(c) Payment of Incremental Value. Any payment which may
become due from Unisys by reason of a Participant's exercise of a
Stock Appreciation Right may be paid to the Participant as
determined by the Committee (1) all in cash, (2) all in Company
Common Stock, or (3) in any combination of cash and Company Common
Stock. In the event that all or a portion of the payment is made
in Company Common Stock, the number of shares of the Company
Common Stock delivered in satisfaction of such payment shall be
determined by dividing the amount of the payment by the Fair
Market Value on the Exercise Date. The Committee may determine
whether payment upon exercise of a Stock Appreciation Right will
be made in cash or stock, or a combination thereof, upon or at any
time prior to the exercise of such Stock Appreciation Right. No
fractional share of Company Common Stock shall be issued to make
any payment; if any fractional shares would be issuable, the mix
of cash and Company Common Stock payable to the Participant shall
be adjusted as directed by the Committee to avoid the issuance of
any fractional share.
6.3 Terms of Stock Options and Stock Appreciation Rights.
(a) Conditions on Exercise. An Award Agreement with
respect to Options or Stock Appreciation Rights may contain such
waiting periods, exercise dates and restrictions on exercise
(including, but not limited to, periodic installments which may be
cumulative) as may be determined by the Committee at the time of
grant. Where payment is to be made in whole or in part in cash,
no Stock Appreciation Right may be exercised prior to six months
from the Date of Grant.
(b) Duration of Options and Stock Appreciation Rights.
Options and Stock Appreciation Rights shall terminate after the
first to occur of the following events:
(1) Expiration of the Option or Stock Appreciation Right
as provided in the Award Agreement; or
(2) Termination of the Award as provided in
Section 6.3(e), following the Participant's Termination of
Employment; or
(3) In the case of an Incentive Stock Option, ten years
from the Date of Grant; or
(4) Solely in the case of Stock Appreciation Rights, upon
the expiration of the related Options.
(c) Acceleration of Exercise Time. The Committee, in its
sole discretion, shall have the right (but shall not in any case
be obligated) to permit purchase of shares under any Option
exercise or exercise of a Stock Appreciation Right prior to the
time such Option or Stock Appreciation Right would otherwise
become exercisable under the terms of the Award Agreement.
(d) Extension of Exercise Time. In addition to the
extensions permitted under Section 6.3(e) in the event of
Termination of Employment, the Committee, in its sole discretion,
shall have the right (but shall not in any case be obligated) to
permit any Option or Stock Appreciation Right granted under this
Plan to be exercised after its expiration date described in
Section 6.3(e), subject, however to the limitations described in
Section 6.3(b)(1), (3) and (4).
(e) Exercise of Options or Stock Appreciation Rights upon
Termination of Employment.
(1) Termination of Vested Options and Stock Appreciation
Rights Upon Termination of Employment.
(A) Termination. In the event of Termination of
Employment of a Participant other than because of death,
disability or retirement on a Normal Retirement Date, to the
extent the right to exercise the Option or Stock
Appreciation Right has accrued at the date of Termination of
Employment, the right of the Participant or Transferee to
exercise the Option or Stock Appreciation Right under the
Plan shall terminate at the date of such Termination of
Employment, unless otherwise provided in this Section 6.3(e)
or as otherwise provided by the Committee in accordance with
Section 6.3(d).
(B) Disability or Retirement. Upon a Participant's
Termination of Employment by reason of disability or
retirement on a Normal Retirement Date, a Participant or
Transferee may, within five years after the Termination of
Employment, exercise all or a part of his or her Options
which were exercisable upon such Termination of Employment
(or which became exercisable at a later date pursuant to
Sections 6.3(e)(2) or (3)), and may, within six months after
Termination of Employment, exercise all or a part of his or
her Stock Appreciation Rights which he or she was entitled
to exercise upon Termination of Employment (or which became
exercisable at a later date pursuant to Sections 6.3(e)(2)
or (3)). In no event, however, may any Option or Stock
Appreciation Right be exercised later than the date
described in Section 6.3(b)(1), (3) or (4).
(C) Death. In the event of the death of a
Participant while employed by Unisys or a Subsidiary, or
within the additional period of time from the date of
Termination of Employment and prior to the expiration of the
Option or Stock Appreciation Right as permitted in Section
6.3(e)(1)(B) or Sections 6.3(e)(2) or (3), to the extent the
right to exercise the Option or Stock Appreciation Right
accrued as of the date of such Termination of Employment or
thereafter and did not expire during such additional period
and prior to the Participant's death, the right of the
Participant's Beneficiary or Transferee to exercise the
Option under the Plan shall expire upon the earliest of (i)
five years from the date of the Participant's death or (ii)
five years from the date of the Participant's Termination of
Employment or (iii) the date of expiration of the Option
determined pursuant to Section 6.3(b)(1), (3) or (4).
Unless otherwise provided by the Committee in accordance
with Section 6.3(d), Stock Appreciation Rights shall expire
upon the Participant's death.
(2) Termination of Unvested Options or Stock Appreciation
Rights Upon Termination of Employment. Except as otherwise
provided in Section 6.3(e)(3), to the extent the right to exercise
an Option or a Stock Appreciation Right, or any portion thereof,
has not accrued as of the date of Termination of Employment, such
right shall expire at the date of such Termination of Employment.
Notwithstanding the foregoing, the Committee, within its
discretion and under such terms as it deems appropriate, may
permit a Participant who terminates employment on a Normal
Retirement Date or Other Retirement Date and who will continue to
render significant services to Unisys or one of its Subsidiaries
after his or her Termination of Employment, to continue vesting in
his or her Options and Stock Appreciation Rights during the period
in which the individual continues to render such services.
(3) Continued Vesting in Options upon Retirement at Age 55
with Five Years of Service -- Extended Period of Exercise --
Effective for Option Grants Made on and after April 22, 1999.
Notwithstanding anything in this Section 6.3(e) to the contrary,
with respect to any Option or Stock Appreciation Right granted on
or after April 22, 1999,
(A) to the extent that the right to exercise the
Option or Stock Appreciation Right, or any portion thereof,
has not accrued as of the date of Termination of Employment,
the Participant or Transferee shall continue to vest in the
Option or Stock Appreciation Right after Termination of
Employment in accordance with the vesting schedule contained
in the applicable Award Agreement, and
(B) the Participant or Transferee may exercise the
Option, to the extent the right to exercise has accrued as
of the date of Termination of Employment or thereafter in
accordance with this Section 6.3(e)(3), within five years of
the date of the Participant's Termination of Employment, and
may exercise the Stock Appreciation Right, to the extent the
right to exercise has accrued as of the date of Termination
of Employment or thereafter in accordance with this Section
6.3(e)(3), within six months of the date of the
Participant's Termination of Employment,
provided that the Termination of Employment occurs after the
Participant has attained age 55 and completed five years of
service with Unisys and/or its Subsidiaries. In no event,
however, may any Option or Stock Appreciation Right be exercised
later than the date described in Section 6.3(b)(1), (3) or (4).
The rights described in this Section 6.3(e)(3) may be revoked by
the Senior Vice-President, Worldwide Human Resources, or his/her
successor, if in his/her discretion it is determined that the
Participant has been terminated for cause or, before or after
termination, has engaged in conduct that is deemed to be
materially adverse or detrimental to the interests of the Company,
including, but not limited to, the violation of any restrictive
covenant contained in the Participant's stock option Award
Agreement.
6.4 Exercise Procedures. Each Option and Stock Appreciation Right
granted under the Plan shall be exercised by written notice to Unisys which
must be received by the office of Unisys designated in the Award Agreement on
or before the expiration date of the Award. The Purchase Price of shares
purchased upon exercise of an Option granted under the Plan shall be paid in
full in cash by the Participant or Transferee pursuant to the Award
Agreement; provided, however, that the Committee may (but need not) permit
payment to be made by delivery to Unisys of either (a) shares of Company
Common Stock (which may include Restricted Shares or shares issued in
connection with the exercise of the Option, subject to such rules as the
Committee deems appropriate) or (b) any combination of cash and shares of
Company Common Stock, or (c) such other consideration as the Committee deems
appropriate and in compliance with applicable law (including payment in
accordance with a cashless exercise program under which, if so instructed by
the Participant or Transferee, shares of Company Common Stock may be issued
directly to the Participant's or Transferee's broker or dealer upon receipt
of the Purchase Price in cash from the broker or dealer.) In the event that
any Company Common Stock shall be transferred to Unisys to satisfy all or any
part of the Purchase Price, the part of the Purchase Price deemed to have
been satisfied by such transfer of Company Common Stock shall be equal to the
product derived by multiplying the Fair Market Value as of the date of
exercise times the number of shares transferred. The Participant or
Transferee may not transfer to Unisys in satisfaction of the Purchase Price
(y) a number of shares which when multiplied times the Fair Market Value as
of the date of exercise would result in a product greater than the Purchase
Price or (z) any fractional share of Company Common Stock. Any part of the
Purchase Price paid in cash upon the exercise of any Option shall be added to
the general funds of Unisys and be used for any proper corporate purpose.
Unless the Committee shall otherwise determine, any Company Common Stock
transferred to Unisys as payment of all or part of the Purchase Price upon
the exercise of any Option shall be held as treasury shares.
6.5 Change in Control.
(a) Options. In the event of a Change in Control, (1) all
Options outstanding on the date of such Change in Control shall
become immediately and fully exercisable, and (2) a Participant
who is an elected officer or director of Unisys will be permitted
to surrender for cancellation within sixty days after such Change
in Control any Option or portion of an Option to the extent not
yet exercised (or with respect to an Option or portion of an
Option granted less than six months prior to the date of the
Change in Control, within sixty days after the expiration of a six
month period following the Date of Grant) and to receive a cash
payment in an amount equal to the excess, if any, of (A) in the
case of a Non-Qualified Stock Option, the Adjusted Fair Market
Value of the Company Common Stock subject to the Option or a
portion thereof surrendered or in the case of an Incentive Stock
Option, the Fair Market Value of the Company Common Stock subject
to the Option or portion thereof surrendered, over (B) the
Purchase Price. The provisions of this Section 6.5(a) shall be
applicable to Non-Qualified Stock Options and Incentive Stock
Options. The provisions of this Section 6.5(a) shall not be
applicable to any Options granted to a Participant if any Change
in Control results from such Participant's beneficial ownership
(within the meaning of Rule 13d(3) under the Exchange Act) of
Company Common Stock or Company Voting Securities.
(b) Stock Appreciation Rights. In the event of a Change
in Control, all Stock Appreciation Rights shall become immediately
and fully exercisable. Upon any exercise of a Stock Appreciation
Right (other than a Stock Appreciation Right granted in tandem
with a related Incentive Stock Option) or any portion thereof
during the 60-day period following the Change in Control, (or with
respect to a Stock Appreciation Right granted to an officer or
director of Unisys less than six months prior to the date of the
Change in Control, within sixty days after the expiration of a six
month period following the Date of Grant) the amount payable shall
be determined by reference to the Adjusted Fair Market Value of
the Company Common Stock and shall be paid in cash. Stock
Appreciation Rights granted in connection with Incentive Stock
Options will be payable as determined by reference to the Fair
Market Value of the Company Common Stock on the date of such
exercise and shall be paid in cash. The provisions of this
Section 6.5(b) shall not be applicable to any Stock Appreciation
Rights granted to a Participant if any Change in Control results
from such Participant's beneficial ownership (within the meaning
of Rule 13d(3) under the Exchange Act) of Company Common Stock or
Company Voting Securities.
ARTICLE VII
RESTRICTED SHARES
7.1 Restricted Share Awards. The Committee may grant to any
Participant an Award of shares of Company Common Stock in such quantity, and
on such terms, conditions and restrictions (whether based on performance
standards, periods of service or otherwise) as the Committee shall establish.
The terms of any Restricted Share Award granted under this Plan shall be set
forth in an Award Agreement with provisions subject to and not inconsistent
with this Plan.
(a) Issuance of Restricted Shares. As soon as practicable
after the Date of Grant of a Restricted Share Award by the
Committee, Unisys shall cause to be transferred on the books of
the Company, shares of Company Common Stock, evidencing the
Restricted Shares covered by the Award, but subject to forfeiture
to Unisys as of the Date of Grant if an Award Agreement with
respect to the Restricted Shares covered by the Award is not duly
executed by the Participant and timely returned to Unisys. At the
discretion of the Company, the shares will be registered on behalf
of the Participant in book entry form or will be registered in the
name of the Participant with a stock certificate, appropriately
legended to reference the applicable restrictions, duly issued.
All shares of Company Common Stock covered by Awards under this
Article VII shall be subject to the restrictions, terms and
conditions contained in the Plan and Award Agreement entered into
by the Participant.
(b) Stockholder Rights. Beginning on the Date of Grant of
the Restricted Share Award and subject to execution of the Award
Agreement provided for in Section 7.1(a), the Participant will
become a stockholder of Unisys with respect to all shares
represented under the Award Agreement and shall have all of the
rights of a stockholder, including, but not limited to, the right
to vote such shares and the right to receive dividends (or
dividend equivalents); provided, however, that any shares of
Company Common Stock distributed as a dividend or otherwise with
respect to any Restricted Shares as to which the restrictions have
not yet lapsed shall be subject to the same restrictions as such
Restricted Shares and shall be represented by book entry and held
as prescribed in Section 7.1(a); and
(c) Restriction on Transferability. None of the
Restricted Shares may be assigned or transferred (other than by
will or the laws of descent and distribution, or to an inter vivos
trust with respect to which the Participant is treated as the
owner under sections 671 through 677 of the Code), pledged or sold
prior to their delivery to a Participant or, in the case of a
Participant's death, to the Participant's Beneficiary; and
(d) Delivery of Shares Upon Vesting. Upon expiration or
earlier termination of the forfeiture period without a forfeiture
and the satisfaction of or release from any other conditions
prescribed by the Committee, or at such earlier time as provided
under the provisions of Section 7.3, the restrictions applicable
to the Restricted Shares shall lapse. As promptly as
administratively feasible thereafter, Unisys shall deliver to the
Participant or, in case of the Participant's death, to the
Participant's Beneficiary, a stock certificate for the appropriate
number of shares of Company Common Stock, free of all such
restrictions, except for any restrictions that may be imposed by
law. Except in the case where a Participant has made an Election
described in Section 11.5(c), the appropriate number of shares
shall equal the number of Restricted Shares with respect to which
the restrictions have lapsed, less the number of shares of Company
Common Stock, rounded up for any fraction to the next whole
number, whose Fair Market Value as of the date on which the
restrictions lapse is equal to such amount as is determined by
Unisys to be sufficient to satisfy applicable federal, state or
local withholding tax requirements. Unisys shall remit in a
timely manner to the appropriate taxing authorities the amount so
withheld with any partial share excess applied to federal
withholding. Although the stock certificate delivered to the
Participant or the Participant's beneficiary will be for a net
number of shares, the Participant or the Participant's beneficiary
shall be considered, for tax purposes, to have received a number
of shares of Company Common Stock equal to the full number of
Restricted Shares with respect to which the restrictions have
lapsed. In the case where a Participant has made an Election
described in Section 11.5(c) with respect to Restricted Shares,
the appropriate number shall equal the number of Restricted Shares
with respect to which the restrictions have lapsed.
7.2 Terms of Restricted Shares.
(a) Forfeiture of Restricted Shares. Subject to
Sections 7.2(b) and 7.3, all of the Restricted Shares with respect
to a Restricted Share Award shall be forfeited and returned to
Unisys and all rights of the Participant with respect to such
Restricted Shares shall terminate unless the Participant continues
in the service of Unisys or a Subsidiary as an employee until the
expiration of the forfeiture period and satisfies any other
conditions set forth in the Award Agreement. The Committee shall
determine the forfeiture period and any other terms and conditions
applicable with respect to any Restricted Share Award.
(b) Waiver of Forfeiture Period. Notwithstanding anything
contained in this Article VII to the contrary, the Committee may,
in its sole discretion, waive the forfeiture period and any other
conditions set forth in any Award Agreement under certain
circumstances (including the death, disability or retirement of
the Participant or a material change in circumstances arising
after the date of an Award) and subject to such terms and
conditions (including forfeiture of a proportionate number of the
Restricted Shares) as the Committee shall deem appropriate.
7.3 Change in Control. In the event of a Change in Control, and
irrespective of whether or not the one year period following the date of the
Restricted Share Award required under the provisions of Section 7.2(a) has
been met, all restrictions applicable to a pro-rata portion of the Restricted
Shares represented by each such Restricted Share Award shall terminate fully
and the Participant shall immediately have the right to the delivery of stock
certificates in accordance with Section 7.1(d). The pro-rata portion of the
Participant's Restricted Shares represented by each Restricted Share Award
shall be determined by multiplying the number of shares subject to such Award
by a fraction, the numerator of which is the number of whole months such
Participant was employed during the Award period through the date of the
Change in Control and the denominator of which is the number of months in the
Award Period. In the event a Participant remains in the employment of Unisys
following a Change in Control through the end of the Award Period for a
Restricted Share Award with respect to which a pro-rata portion of the
Restricted Shares granted under such Award has been delivered to a
Participant under this Section, the Participant shall be entitled to receive
the difference between (x) the number of Restricted Shares delivered pursuant
to this Section and (y) the number of Restricted Shares or other
consideration otherwise deliverable or payable at such time pursuant to the
Award.
ARTICLE VIII
PERFORMANCE UNITS
8.1 Performance Unit Awards.
(a) Grant of Performance Units. The Committee may grant
to Participants Performance Units, the value of which is related
to the value of or the appreciation in the value of Company Common
Stock. The number of Performance Units awarded, the method for
valuing such Units, and such terms and conditions as the Committee
deems appropriate shall be set forth in an Award Agreement. At
the discretion of and subject to any terms established by the
Committee, Participants may be credited with dividend equivalents
or other distribution equivalents to correspond to dividends or
distributions made with respect to holders of Company Common
Stock.
(b) Payment of Performance Units. Performance Units may
become payable to the Participant after a specified period of time
or upon the occurrence of a specified event such as death,
disability, retirement or such other date, and may be subject to
forfeiture under such circumstances, as are established by the
Committee in the Award Agreement. Payment may be made in cash,
Company Common Stock or in such other form, in a lump sum or
installments, as the Committee establishes in the Award Agreement.
ARTICLE IX
PERFORMANCE AWARDS
9.1 Performance Awards.
(a) Award Periods and Calculations of Potential Incentive
Amounts. The Committee may grant Performance Awards to
Participants. A Performance Award shall consist of the right to
receive a payment contingent upon certain predetermined
performance targets and earned during an Award Period.
Performance Awards may be made in conjunction with, or in addition
to, Restricted Share Awards made under Article VII and may, in
addition to predetermined performance targets, be based on other
factors such as changes in the Fair Market Value over the Award
Period. Unless otherwise determined by the Committee, the Award
Period shall be a period of three calendar years commencing as of
the beginning of the calendar year in which the Performance Award
is granted. The Committee, in its discretion and under such terms
as it deems appropriate, may permit newly eligible employees, such
as those who are promoted or newly hired, to receive Performance
Awards after an Award Period has commenced. A new Award Period
shall commence each year, unless otherwise specified by the
Committee.
(b) Performance Targets. The performance targets may
include specified levels of earnings per share, return on
investment, return on shareholder equity and/or such other goals
related to Unisys performance as may be established by the
Committee in its discretion. The performance targets established
by the Committee may vary for different Award Periods and need not
be the same for each Participant receiving a Performance Award in
an Award Period. The Committee, in its discretion, but only under
extraordinary circumstances as determined by the Committee, may
change any prior determination of performance targets for any
Award Period at any time prior to the final determination of the
Award when events or transactions occur to cause the performance
targets to be an inappropriate measure of achievement.
(c) Earning Performance Awards. The Committee at the Date
of Grant shall prescribe a formula to determine the percentage of
the Performance Award to be earned based upon the degree of
attainment of performance targets. In the event the minimum
performance targets established by the Committee is not achieved,
no payment shall be made to the Participant. In the event the
performance targets are fully achieved, 100% of the Performance
Award shall be paid to the Participant. The Committee may provide
for grants up to a maximum of 150% of Performance Awards for
achievement exceeding performance targets.
(d) Payment of Earned Performance Awards. Payments of
earned Performance Awards shall be made in cash or Company Common
Stock, or a combination of cash and Company Stock at the
discretion of the Committee. Payment normally will be made as
soon as is practicable following the end of an Award Period; the
Committee, however, may permit deferral of the payment of all or a
portion of a Performance Award paid in cash upon the request of
the Participant timely made in accordance with rules prescribed by
the Committee. Deferred amounts may generate earnings for the
Participant under the conditions of a separate plan providing for
such as adopted by the Board. The Committee, in its sole
discretion, may also define such other conditions of payment of
earned Performance Awards as it may deem desirable in carrying out
the purposes of the Plan.
9.2 Terms of Performance Awards.
(a) Termination of Employment. Unless otherwise provided
below or in Section 9.3, in the case of a Participant's
Termination of Employment prior to the end of an Award Period, the
Participant will not have earned any Performance Awards.
(b) Retirement. If a Participant's Termination of
Employment is because of retirement on a Normal Retirement Date or
Other Retirement Date prior to the end of an Award Period, the
Participant will not be paid any Performance Awards, unless the
Committee, in its sole and exclusive discretion, determines that
an Award should be paid. In such a case, the Participant shall be
entitled to receive a pro-rata portion of his or her Award as
determined under Subsection (d).
(c) Death or Disability. If a Participant's Termination
of Employment is due to death or disability (as determined in the
sole and exclusive discretion of the Committee) following at least
twenty-four months of participation in any three year Award
Period, but prior to the end of an Award Period, the Participant
will be entitled to receive a pro-rata share of his or her Award
as determined under Subsection (d).
(d) Pro-Rata Payment. The amount of any payment made to a
Participant whose employment is terminated by retirement, death or
disability (under circumstances described in subsections (b) and
(c)) will be the amount determined by multiplying the amount of
the Performance Award which would have been earned, determined at
the end of the Award Period, had such employment not been
terminated by a fraction, the numerator of which is the number of
whole months such Participant was employed during the Award
Period, and the denominator of which is the number of months of
the Award Period. Any such payment made to a Participant whose
employment is terminated prior to the end of an Award Period under
this Section 9.2 shall be made at the end of the respective Award
Period, unless otherwise determined by the Committee in its sole
discretion. Any partial payment previously made or credited to a
deferred account for the benefit of a Participant as provided
under Section 9.1(d) of the Plan shall be subtracted from the
amount otherwise determined as payable as provided in this
Section.
(e) Other Events. Notwithstanding anything to the
contrary in this Article IX, the Committee may, in its sole and
exclusive discretion, determine to pay all or any portion of a
Performance Award to a Participant who has terminated employment
prior to the end of an Award Period under certain circumstances
(including the death, disability or retirement of the Participant
or a material change in circumstances arising after the Date of
Grant) and subject to such terms and conditions as the Committee
shall deem appropriate, provided that the Participant shall have
completed, at his or her Termination of Employment, one year of
employment after the Date of Grant. The Board may determine to
pay all or a part of a Performance Award to a Participant who has
completed less than one year of employment after the Date of
Grant.
9.3 Change in Control. In the event of a Change in Control, a pro-
rata portion of Performance Awards for all Award Periods not yet completed
shall immediately become fully payable to all Participants and shall be paid
within 30 days after such Change in Control to Participants. The pro-rata
portion of each Performance Award shall be determined by multiplying 100
percent of the targeted award by a fraction, the numerator of which is the
number of whole months such Participant was employed during the Award Period
as of the date of the Change in Control and the denominator of which is the
total number of months in the Award Period. All payments made with respect
to Performance Awards on and after the date of Change in Control shall be
made wholly in cash and shall be reduced by the amount of any previous
prepayment or deferral with respect to the Award. In the event a Participant
remains in the employment of Unisys following a Change in Control through the
end of any Award Period with respect to which a pro-rata portion of
Performance Awards have been accelerated pursuant to this Section and the
amounts payable as a result of the Company's reaching performance targets set
forth in the Performance Award have exceeded the amounts paid to a
Participant under this Section, a Participant shall be entitled to receive
the difference between (x) the amount paid pursuant to this Section and (y)
the amount otherwise payable at such time pursuant to the Award.
ARTICLE X
OTHER STOCK-BASED AWARDS
10.1 Grant of Other Awards. Other Awards of Company Common Stock or
other securities of Unisys Corporation and other Awards that are valued in
whole or in part by reference to, or are otherwise based on, Company Common
Stock may be granted either alone or in addition to or in conjunction with
other Awards under the Plan. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the persons to
whom and the time or times at which such Awards shall be made, the number of
shares of Company Common Stock or other securities, if any, to be granted
pursuant to such Awards, and all other conditions of the Awards. Any such
Award shall be confirmed by an Award Agreement executed by the Committee and
the Participant, which Agreement shall contain such provisions as the
Committee determines to be necessary or appropriate to carry out the intent
of this Plan with respect to such Award.
10.2 Terms of Other Awards. In addition to the terms and conditions
specified in the Award Agreement, Awards made pursuant to this Article X
shall be subject to the following:
(a) Any shares of Company Common Stock subject to Awards
made under this Article X may not be sold, assigned, transferred,
pledged or otherwise encumbered prior to the date on which the
shares are issued, or, if later, the date on which any applicable
restriction, performance or deferral period lapses; and
(b) If specified by the Committee in the Award Agreement,
the recipient of an Award under this Article X shall be entitled
to receive, currently or on a deferred basis, interest or
dividends or dividend equivalents with respect to the Company
Common Stock or other securities covered by the Award; and
(c) The Award Agreement with respect to any Award shall
contain provisions dealing with the disposition of such Award in
the event of a Termination of Employment prior to the exercise,
realization or payment of such Award, whether such termination
occurs because of retirement, disability, death or other reason,
with such provisions to take account of the specific nature and
purpose of the Award.
ARTICLE XI
TERMS APPLICABLE TO ALL AWARDS GRANTED UNDER THE PLAN
11.1 Plan Provisions Control Award Terms. The terms of the Plan shall
govern all Awards granted under the Plan, and in no event shall the Committee
have the power to grant any Award under the Plan which is contrary to any of
the provisions of the Plan. In the event any provision of any Award granted
under the Plan shall conflict with any term in the Plan as constituted on the
Date of Grant of such Award, the term in the Plan as constituted on the Date
of Grant of such Award shall control. Except as provided in Section 11.3,
the terms of any Award granted under the Plan may not be changed after the
Date of Grant of such Award so as to materially decrease the value of the
Award without the express approval of the holder.
11.2 Award Agreement. No person shall have any rights under any Award
granted under the Plan unless and until Unisys and the Participant to whom
such Award shall have been granted shall have executed and delivered an Award
Agreement or other Award acknowledgment expressly granting the Award to such
person and containing provisions setting forth the terms of the Award.
11.3 Modification of Award After Grant. No Award granted under the
Plan to a Participant may be modified (unless such modification does not
materially decrease the value of the Award) after the date of its grant
unless by express written agreement between Unisys and the Participant or
Transferee provided that any such change (a) shall not be inconsistent with the
terms of the Plan, and (b) shall be approved by the Committee. No modifications
may be made to any Awards granted to a Participant while the Participant or
Transferee is subject to Section 16(b) of the Exchange Act except in
compliance with Rule 16b-3.
11.4 Limitations on Transfer. Except as provided in Section 7.1(c) and
this Section 11.4, a Participant's or Transferee's rights and interest under
the Plan may not be assigned or transferred other than by will or the laws of
descent and distribution, and during the lifetime of a Participant or
Transferee, only the Participant or Transferee personally (or the
Participant's or Transferee's personal representative) may exercise rights
under the Plan. The Participant's or Transferee's Beneficiary may exercise
the Participant's or Transferee's rights to the extent they are exercisable
under the Plan following the death of the Participant or Transferee. The
Committee, in its discretion, may allow some or all Non-Qualified Stock
Options of some or all Participants to be transferable subject to limitations
set forth in the Award Agreement.
11.5 Taxes. Except as otherwise provided in Section 7.1(d) with respect to
Restricted Share Awards, Unisys shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant
in lieu of withholding) the amount of any withholding or other tax required
by law to be withheld or paid by Unisys with respect to any amount payable
and/or shares issuable under such Participant's Award, or with respect
to any income recognized upon a disqualifying disposition of shares received
pursuant to the exercise of an Incentive Stock Option, and Unisys may defer
payment or issuance of the cash or stock upon exercise or vesting of an Award
unless indemnified to its satisfaction against any liability for any such
tax. The amount of such withholding or tax payment shall be determined by
the Committee and shall be payable by the Participant at the time of issuance
or payment (except as otherwise payable under Section 11.5(c)) in accordance
with the following rules:
(a) Unless otherwise provided by the Committee, with
respect to Participants who are subject to the provisions of
Section 16(b) of the Exchange Act on the date on which the
withholding requirements apply, Unisys shall withhold from such
Award the appropriate number of shares of Company Common Stock,
rounded up to the next whole number, whose Fair Market Value is
equal to such amount, or, in the case of a cash payment, the
amount of cash, as is determined by Unisys to be sufficient to
satisfy applicable tax withholding requirements;
(b) With respect to Participants who are not subject to
the provisions of Section 16(b) of the Exchange Act on the date on
which the withholding requirements apply, the Participants shall
have the right to elect to meet his or her withholding requirement
through the method described in Subsection (a) above or by direct
payment to Unisys of the amount of any taxes required to be
withheld with respect to such Award; provided however, that the
payment of withholding requirements with respect to Restricted
Share Awards shall be governed solely by the provisions of Section
7.1(d).
(c) Election to be Taxed at Date of Grant.
If permitted under applicable Federal income tax laws, a
Participant may elect to be taxed in the year in which an Award is made. If
the Participant makes such an election, the Participant shall promptly notify
Unisys in writing and shall provide Unisys with a copy of the executed
election form as filed with the Internal Revenue Service by no later than
thirty days from the Date of the Grant. Promptly following such
notification, the Participant shall pay directly to Unisys the cash amount
determined by Unisys to be sufficient to satisfy applicable federal, state or
local withholding tax requirements.
11.6 Modification for Overseas Participants. Notwithstanding any
provision to the contrary, the Committee may incorporate such provisions, or
make such modifications or amendments in Award Agreements of Participants who
reside or are employed outside of the United States of America, or who are
citizens of a country other than the United States of America, as the
Committee deems necessary or appropriate to accomplish the purposes of the
Plan with respect to such Participant in light of differences in applicable
law, tax policies or customs, and to ascertain compliance with all applicable
laws.
11.7 Special Provisions for Certain Non-Employees. Notwithstanding any
provision herein to the contrary, the Committee may grant Awards under the
Plan to non-employees who, in the judgment of the Committee, render
significant services to Unisys or any of its Subsidiaries, on such terms and
conditions as the Committee deems appropriate and consistent with the intent
of the Plan.
11.8 Surrender of Awards. Any Award granted under the Plan may be
surrendered to Unisys for cancellation on such terms as the Committee and
holder approve.
11.9 Adjustments to Reflect Capital Changes.
(a) Recapitalization. The number and kind of shares
subject to outstanding Awards, the Purchase Price or Exercise
Price for such shares, and the number and kind of shares available
for Awards subsequently granted under the Plan shall be
appropriately adjusted to reflect any stock dividend, stock split,
combination or exchange of shares, merger, consolidation or other
change in capitalization with a similar substantive effect upon
the Plan or the Awards granted under the Plan. The Committee
shall have the power to determine the amount of the adjustment to
be made in each case.
(b) Sale or Reorganization. After any reorganization,
merger or consolidation in which Unisys is the surviving
corporation, each Participant shall, at no additional cost, be
entitled upon any exercise of an Option or receipt of other Award
to receive (subject to any required action by shareholders), in
lieu of the number of shares of Company Common Stock receivable or
exercisable pursuant to such Award, the number and class of shares
of stock or other securities to which such Participant would have
been entitled pursuant to the terms of the reorganization, merger
or consolidation if, at the time of such reorganization, merger or
consolidation, such Participant had been the holder of record of a
number of shares of stock equal to the number of shares receivable
or exercisable pursuant to such Award. Comparable rights shall
accrue to each Participant in the event of successive
reorganizations, mergers or consolidations of the character
described above.
(c) Options to Purchase Stock of Acquired Companies.
After any reorganization, merger or consolidation in which Unisys
or a Subsidiary of Unisys shall be a surviving corporation, the
Committee may grant substituted options under the provisions of
the Plan, pursuant to Section 425 of the Code, replacing old
options granted under a plan of another party to the
reorganization, merger or consolidation whose stock subject to the
old options may no longer be issued following such merger or
consolidation. The foregoing adjustments and manner of
application of the foregoing provisions shall be determined by the
Committee in its sole discretion. Any such adjustments may
provide for the elimination of any fractional shares which might
otherwise become subject to any Options.
11.10 No Right to Employment. No employee or other person shall have
any claim of right to be granted an Award under this Plan. Either the Plan
or any action taken hereunder shall be construed as giving any employee any
right to be retained in the employ of Unisys or any of its Subsidiaries.
11.11 Awards Not Includable for Benefit Purposes. Payments received by
a Participant pursuant to the provisions of the Plan shall not be included in
the determination of benefits under any pension, group insurance or other
benefit plan applicable to the Participant which are maintained by Unisys or
any of its Subsidiaries, except as may be determined by the Board.
11.12 Governing Law. All determinations made and actions taken pursuant
to the Plan shall be governed by the laws of the Commonwealth of Pennsylvania
and construed in accordance therewith.
11.13 No Strict Construction. No rule of strict construction shall be
implied against Unisys, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Award granted under the
Plan or any rule or procedure established by the Committee.
11.14 Compliance with Rule 16b-3. It is intended that the Plan be
applied and administered in compliance with Rule 16b-3. If any provision of
the Plan would be in violation of Rule 16b-3 if applied as written, such
provision shall not have effect as written and shall be given effect so as to
comply with Rule 16b-3, as determined by the Committee. The Board is
authorized to amend the plan and to make any such modifications to Award
Agreements to comply with Rule 16b-3, as it may be amended from time to time,
and to make any other such amendments or modifications as it deems necessary
or appropriate to better accomplish the purposes of the Plan in light of any
amendments made to Rule 16b-3.
11.15 Captions. The captions (i.e., all underlined words) used in the
Plan are for convenience only, do not constitute a part of the Plan, and
shall not be deemed to limit, characterize or affect in any way any
provisions of the Plan, and all provisions of the Plan shall be construed as
if no captions have been used in the Plan.
11.16 Severability. Whenever possible, each provision in the Plan and
every Award at any time granted under the Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any
provision of the Plan or any Award at any time granted under the Plan shall
be held to be prohibited by or invalid under applicable law, then (a) such
provision shall be deemed amended to accomplish the objectives of the
provision as originally written to the fullest extent permitted by law and
(b) all other provisions of the Plan and every other Award at any time
granted under the Plan shall remain in full force and effect.
11.17 Amendment and Termination.
(a) Amendment. The Board shall have complete power and
authority to amend the Plan at any time and to add any other stock
award or other incentive compensation programs to the Plan as it
deems necessary or appropriate and no approval by the stockholders
of Unisys or by any other person, committee or entity of any kind
shall be required to make any amendment; provided, however, that
the Board shall not, without the requisite affirmative approval of
stockholders of Unisys, make any amendment which requires
shareholder approval under Rule 16b-3 or the Code, unless such
compliance is no longer desired, or under any other applicable
law. No termination or amendment of the Plan may, without the
consent of the Participant to whom any Award shall theretofore
have been granted under the Plan or without the consent of a
Transferee, adversely affect the right of such individual under
such Award. For the purposes of this section, an amendment to the
Plan shall be deemed to have the affirmative approval of the
stockholders of Unisys if such amendment shall have been submitted
for a vote by the stockholders at a duly called and constituted
meeting of such stockholders at which a quorum is present and a
majority of the votes cast with respect to such amendment at such
meeting shall have been cast in favor of such amendment.
(b) Termination. The Board shall have the right and the
power to terminate the Plan at any time. No Award shall be
granted under the Plan after the termination of the Plan, but the
termination of the Plan shall not have any other effect and any
Award outstanding at the time of the termination of the Plan may
be exercised after termination of the Plan at any time prior to
the expiration date of such Award to the same extent such Award
would have been exercisable had the Plan not terminated.
September 22, 2000
UNISYS DIRECTORS STOCK OPTION PLAN
ARTICLE I
Purpose and Adoption of the Plan
---------------------------------
1.1 PURPOSE. The Unisys Directors Stock Option Plan (the "Plan") is
established as a sub-plan to the 1990 Unisys Long-Term Incentive Plan. The
purpose of the Plan is to assist in attracting and retaining highly qualified
individuals to serve as outside directors of Unisys, to reward outside
directors for their service to Unisys and to act as an incentive in
motivating the outside directors to achieve long-term objectives of Unisys
and its shareholders.
1.2 ADOPTION AND TERM. The Plan has been approved by the Board and
is effective as of January 1, 2000, and will remain in effect until
terminated or abandoned by action of the Board.
ARTICLE II
Definitions
-----------
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest Fair Market Value of a share of
Company Common Stock during the sixty day period ending on the date of such
Change in Control or (ii) in the case of a Change in Control described in
Section 2.7(a) or 2.7(c), the highest price per share of Company Common Stock
paid to holders of Company Common Stock in any transaction (or series of
transactions) constituting or resulting from such Change in Control.
2.2 "Award" shall mean the grant of an Option made under the terms
of the Plan.
2.3 "Award Agreement" means a written agreement between the Company
and a Participant or a written acknowledgement from the Company specifically
setting forth the terms and conditions of an Award granted under the Plan.
2.4 "Beneficiary" means an individual, trust or estate who or which
by designation of the Participant or Transferee or operation of law succeeds
to the rights and obligations of the Participant or Transferee under the Plan
and Award Agreement upon the Participant's or Transferee's death.
2.5 "Board" means the Board of Directors of Unisys.
2.6 "Change in Control" means any of the following events:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common Stock") or (ii)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (iv) any acquisition
by any corporation pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (c) of this Section 2.07; or
(b) Individuals who, as of May 25, 1995, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board; or
(c) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be,
of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
References to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends,
supplement or supersedes said section.
2.8 "Committee" means the Corporate Governance and Compensation
Committee of the Board.
2.9 "Company Common Stock" means the common stock of Unisys, par
value $.01 per share.
2.10 "Company Voting Securities" means the combined voting power of
all outstanding voting securities of Unisys entitled to vote generally in the
election of directors for the Board.
2.11 "Date of Grant" means the date designated by the Committee as
the date as of which it grants an Award, which shall not be earlier than the
date on which the Committee approves the granting of such Award.
2.12 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.13 "Fair Market Value" means, on any date, the average of the high
and low quoted sales prices of a share of Company Common Stock, sold regular
way, through the official close of the New York Stock Exchange at 4:00 p.m.
U.S. Eastern Standard Time on such date or, if there were no sales on such
date, on the last date preceding such date on which a sale was reported.
2.14 "Incumbent Board" means the Board as of May 25, 1995.
2.15 "Non-Qualified Stock Option" means a stock option that is not
an incentive stock option within the meaning of Section 422A of the Code.
2.16 "Option" means a Non-Qualified Stock Option granted under the
Plan.
2.17 "Outstanding Company Common Stock" means, at any time, the
issued and outstanding shares of Company Common Stock.
2.18 "Participant" shall have the meaning set forth in Section 5.1.
2.19 "Plan" shall mean the Unisys Directors Stock Option Plan as
described herein and as may be amended from time to time.
2.20 "Purchase Price", with respect to Options, shall have the
meaning set forth in Section 6.1(b).
2.21 "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act, as it may be
amended from time to time, and any successor rule.
2.22 "Subsidiary" shall have the meaning set forth in Section 425(f)
of the Code.
2.23 "Termination of Service" means the voluntary or involuntary
termination of a Participant's service as a director of Unisys for any
reason, including death, disability or retirement. Whether a Termination of
Service is a result of disability shall be determined in each case by the
Committee in its sole discretion.
2.24 "Transferee" means the holder of Non-Qualified Stock Option
after a transfer in accordance with Section 7.4.
2.25 "Unisys" means Unisys Corporation, a Delaware corporation.
ARTICLE III
Administration
--------------
3.1 COMMITTEE. The Plan shall be administered by the Committee.
The Committee shall be selected from time to time by the Board, and shall be
comprised of not less than three members of the Board or such other persons
who would constitute "Non-Employee Directors" under the requirements of Rule
16b-3. The Committee shall have exclusive and final authority in each
determination, interpretation or other action affecting the Plan and its
Participants. The Committee shall have the sole discretionary authority to
interpret the Plan, and to take such steps in connection with the Plan and
Awards granted as it may deem necessary or advisable. With Board
ratification, the Committee may cancel Awards and substitute new Options for
underwater Options with the consent of the recipient and under such terms as
it deems appropriate.
ARTICLE IV
Shares Issued Under Awards
---------------------------
4.1 SHARES AVAILABLE FOR ISSUANCE. The shares issued as a result of
the grant of Awards under this Plan shall be issued from the shares available
for awards made under the terms of the 1990 Unisys Long-Term Incentive Plan.
4.2 SHARES SUBJECT TO TERMINATED AWARDS. The shares of Company
Common Stock involved in any unexercised portions of terminated Options
(including cancelled Options) granted under the Plan may again be subject to
Awards under the Plan or the 1990 Unisys Long-Term Incentive Plan.
ARTICLE V
Participants
------------
5.1 ELIGIBLE PARTICIPANTS. Participants in the Plan eligible to
receive Awards shall be those members of the Board who are not employees of
Unisys.
ARTICLE VI
Stock Options
---------------
6.1 OPTION AWARDS.
(a) The Committee may grant, to such Participants as the
Committee may select, Options entitling the Participant or Transferee to
purchase Company Common Stock from Unisys in such quantity, at such price,
and on such terms and subject to such conditions, not inconsistent with the
terms of this Plan, as may be established by the Committee. The terms of any
Stock Option granted under this Plan shall be set forth in an Award
Agreement. All Awards made by the Committee under the Plan will be subject
to ratification by the Board.
(b) PURCHASE PRICE OF OPTIONS. The Purchase Price of each
share of Company Common Stock which may be purchased upon exercise of any
Option granted under the Plan shall be determined by the Committee, provided
that such Purchase Price shall be not less than 50% of the Fair Market Value
on the Date of Grant
(c) RIGHTS AS A STOCKHOLDER. A Participant or Transferee
shall have no rights as a stockholder with respect to any shares of Company
Common Stock covered by an Option until the Participant or Transferee shall
have become the holder of record or beneficial owner of any such shares, and
no adjustment shall be made for dividends in cash or other property or
distributions or other rights with respect to any such shares of Company
Common Stock for which the record date is prior to the date on which the
Participant or Transferee shall have become the holder of record or
beneficial owner of any such shares covered by the Option.
6.2 TERMS OF STOCK OPTIONS.
(a) CONDITIONS ON EXERCISE. An Award Agreement with
respect to Options may contain such waiting periods, exercise dates and
restrictions on exercise (including, but not limited to, periodic
installments which may be cumulative) as may be determined by the Committee
at the time of grant. Unless otherwise authorized by the Board, no Stock
Option may be exercised in whole or in part prior to one year from the Date
of Grant, except as set forth in Section 6.4.
(b) DURATION OF OPTIONS. Options shall terminate after
the first to occur of the following events:
(1) Expiration of the Option as provided in the Award
Agreement; or
(2) Termination of the Award as provided in Section
6.2(e), following the Participant's Termination of Service.
(c) ACCELERATION OF EXERCISE TIME. The Committee, in its
sole discretion, shall have the right (but shall not in any case be
obligated) to permit purchase of shares under any Option prior to the time
such Option would otherwise become exercisable under the terms of the Award
Agreement, except that the acceleration of exercise prior to one year from
the Date of Grant must be approved by the Board.
(d) EXTENSION OF EXERCISE TIME. In addition to the
extensions permitted under Section 6.2(e) in the event of Termination of
Service, the Committee, in its sole discretion, shall have the right (but
shall not in any case be obligated) to permit any Option granted under this
Plan to be exercised after its expiration date described in Section 6.2(e),
subject, however to the limitations described in Section 6.2(b)(1).
(e) EXERCISE OF OPTIONS UPON TERMINATION OF SERVICE.
(1) TERMINATION WITH LESS THAN FIVE YEARS OF SERVICE. In
the event of Termination of Service of a Participant who had not served on
the Board for at least five years for a reason other than death or
disability, to the extent the right to exercise the Option had accrued at the
date of Termination of Service, the right of the Participant or Transferee to
exercise the Option under the Plan shall terminate at the date of such
Termination of Service, unless otherwise provided by the Committee in
accordance with Section 6.2(d). Options, or any portion thereof, that had
not become exercisable as of the date of such Termination of Service shall
expire as of such date.
(A) DISABILITY. Upon a Participant's Termination
of Service by reason of disability prior to the date on which the Participant
completes five years of service, the Participant or Transferee may, within
five years after the Termination of Service, exercise all or any part of his
or her Options which were exercisable upon such Termination of Service. In
no event, however, may any Option be exercised later than the date described
in Section 6.2(b)(1). Options, or any portion thereof, that had not become
exercisable as of the date of such Termination of Service shall expire as of
such date.
(B) DEATH. In the event of the death of a
Participant while serving as a director of Unisys or within the additional
period of time from the date of Termination of Service and prior to the
expiration of the Option as permitted in Section 6.2(e)(1)(A) or Section
6.2(e)(2), to the extent the right to exercise the Option accrued as of the
date of such Termination of Service or thereafter and did not expire during
such additional period and prior to the Participant's death, the right of the
Participant's Beneficiary or Transferee to exercise the Option under the Plan
shall expire upon the earliest of (i) five years from the date of the
Participant's death or (ii) five years from the date of the Participant's
Termination of Service or (iii) the date of expiration of the Option
determined pursuant to Section 6.2(b)(1). Options, or any portion thereof,
that had not become exercisable as of the date of the Participant's death
shall expire as of the date of death.
(2) TERMINATION OF SERVICE WITH FIVE YEARS OF SERVICE.
If a Participant terminates service after completing five years of service as
a director of Unisys,
(A) to the extent that the right to exercise an
Option, or any portion thereof, has not accrued as of the date of Termination
of Service, the Participant or Transferee shall continue to vest in the
Option after Termination of Service in accordance with the vesting schedule
contained in the applicable Award Agreement, and
(B) the Participant or Transferee may exercise the
Option, to the extent the right to exercise has accrued as of the date of
Termination of Service or thereafter in accordance with Section 6.2(e)(2)(A),
within five years of the date of the Participant's Termination of Service,
provided in no event may any Option be exercised later than the date
described in Section 6.2(b)(1).
6.3 EXERCISE PROCEDURES. Each Option granted under the Plan shall
be exercised by written notice to Unisys which must be received by the office
of Unisys designated in the Award Agreement on or before the expiration date
of the Award. The Purchase Price of shares purchased upon exercise of an
Option granted under the Plan shall be paid in full in cash by the
Participant or Transferee pursuant to the Award Agreement; provided, however,
that the Committee may (but need not) permit payment to be made by delivery
to Unisys of either (a) shares of Company Common Stock (which may include
shares issued in connection with the exercise of the Option, subject to such
rules as the Committee deems appropriate) or (b) any combination of cash and
shares of Company Common Stock, or (c) such other consideration as the
Committee deems appropriate and in compliance with applicable law (including
payment in accordance with a cashless exercise program under which, if so
instructed by the Participant or Transferee, shares of Company Common Stock
may be issued directly to the Participant's or Transferee's broker or dealer
upon receipt of the Purchase Price in cash from the broker or dealer.) In
the event that any Company Common Stock shall be transferred to Unisys to
satisfy all or any part of the Purchase Price, the part of the Purchase Price
deemed to have been satisfied by such transfer of Company Common Stock shall
be equal to the product derived by multiplying the Fair Market Value as of
the date of exercise times the number of shares transferred. The Participant
or Transferee may not transfer to Unisys in satisfaction of the Purchase
Price (y) a number of shares which when multiplied times the Fair Market
Value as of the date of exercise would result in a product greater than the
Purchase Price or (z) any fractional share of Company Common Stock. Any part
of the Purchase Price paid in cash upon the exercise of any Option shall be
added to the general funds of Unisys and be used for any proper corporate
purpose. Unless the Committee shall otherwise determine, any Company Common
Stock transferred to Unisys as payment of all or part of the Purchase Price
upon the exercise of any Option shall be held as treasury shares.
6.4 CHANGE IN CONTROL. In the event of a Change in Control, (1) all
Options outstanding on the date of such Change in Control shall become
immediately and fully exercisable, and (2) a Participant will be permitted to
surrender for cancellation within sixty days after such Change in Control any
Option or portion of an Option to the extent not yet exercised (or with
respect to an Option or portion of an Option granted less than six months
prior to the date of the Change in Control, within sixty days after the
expiration of a six month period following the Date of Grant) and to receive
a cash payment in an amount equal to the excess, if any, of (A) the Adjusted
Fair Market Value of the Company Common Stock subject to the Option or a
portion thereof surrendered, over (B) the Purchase Price. The provisions of
this Section 6.4 shall not be applicable to any Options granted to a
Participant if any Change in Control results from such Participant's
beneficial ownership (within the meaning of Rule 13d(3) under the Exchange
Act) of Company Common Stock or Company Voting Securities.
ARTICLE VII
Terms Applicable to All Awards Granted Under the Plan
-----------------------------------------------------
7.1 PLAN PROVISIONS CONTROL AWARD TERMS. The terms of the Plan
shall govern all Awards granted under the Plan, and in no event shall the
Committee have the power to grant any Award under the Plan which is contrary
to any of the provisions of the Plan. In the event any provision of any
Award granted under the Plan should conflict with any term in the Plan as
constituted on the Date of Grant of such Award, the term in the Plan as
constituted on the Date of Grant of such Award shall control. Except as
provided in Section 7.3, the terms of any Award granted under the Plan may
not be changed after the Date of Grant of such Award so as to materially
decrease the value of the Award without the express approval of the holder.
7.2 AWARD AGREEMENT. No person shall have any rights under any
Award granted under the Plan unless and until Unisys and the Participant to
whom such Award shall have been granted shall have executed and delivered an
Award Agreement or other Award acknowledgment expressly granting the Award to
such person and containing provisions setting forth the terms of the Award.
7.3 MODIFICATION OF AWARD AFTER GRANT. No Award granted under the
Plan to a Participant may be modified (unless such modification does not
materially decrease the value of the Award) after the date of its grant
unless by express written agreement between Unisys and the Participant or
Transferee provided that any such change (a) shall not be inconsistent with
the terms of the Plan, and (b) shall be approved by the Committee. No
modifications may be made to any Awards granted to a Participant while the
Participant or Transferee is subject to Section 16(b) of the Exchange Act
except in compliance with Rule 16b-3.
7.4 LIMITATIONS ON TRANSFER. A Participant's or Transferee's rights
and interest under the Plan may not be assigned or transferred other than by
will or the laws of descent and distribution, and during the lifetime of a
Participant or Transferee, only the Participant or Transferee personally (or
the Participant's or Transferee's personal representative) may exercise
rights under the Plan. The Participant's or Transferee's Beneficiary may
exercise the Participant's or Transferee's rights to the extent they are
exercisable under the Plan following the death of the Participant or
Transferee. The Committee, in its discretion, may allow some or all Non-
Qualified Stock Options of some or all Participants to be transferable
subject to limitations set forth in the Award Agreement.
7.5 TAXES. Unisys shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant
in lieu of withholding) the amount of any withholding or other tax required
by law to be withheld or paid by Unisys with respect to any amount payable
and/or shares issuable under such Participant's Award, and Unisys may defer
payment or issuance of the cash or stock upon exercise of an Award unless
indemnified to its satisfaction against any liability for any such tax. The
amount of such withholding or tax payment shall be determined by the
Committee and shall be payable by the Participant at the time of issuance or
payment
7.6 SURRENDER OF AWARDS. Any Award granted under the Plan may be
surrendered to Unisys for cancellation on such terms as the Committee and
holder approve.
7.9 ADJUSTMENTS TO REFLECT CAPITAL CHANGES.
(a) RECAPITALIZATION. The number and kind of shares
subject to outstanding Awards, the Purchase Price or Exercise Price for such
shares, and the number and kind of shares available for Awards subsequently
granted under the Plan shall be appropriately adjusted to reflect any stock
dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in capitalization with a similar substantive
effect upon the Plan or the Awards granted under the Plan. The Committee
shall have the power to determine the amount of the adjustment to be made in
each case.
(b) SALE OR REORGANIZATION. After any reorganization,
merger or consolidation in which Unisys is the surviving corporation, each
Participant shall, at no additional cost, be entitled upon any exercise of an
Option to receive (subject to any required action by shareholders), in lieu
of the number of shares of Company Common Stock receivable or exercisable
pursuant to such Award, the number and class of shares of stock or other
securities to which such Participant would have been entitled pursuant to the
terms of the reorganization, merger or consolidation if, at the time of such
reorganization, merger or consolidation, such Participant had been the holder
of record of a number of shares of stock equal to the number of shares
receivable or exercisable pursuant to such Award. Comparable rights shall
accrue to each Participant in the event of successive reorganizations,
mergers or consolidations of the character described above.
(c) OPTIONS TO PURCHASE STOCK OF ACQUIRED COMPANIES.
After any reorganization, merger or consolidation in which Unisys or a
Subsidiary of Unisys shall be a surviving corporation, the Committee may
grant substituted options under the provisions of the Plan, pursuant to
Section 425 of the Code, replacing old options granted under a plan of
another party to the reorganization, merger or consolidation whose stock
subject to the old options may no longer be issued following such merger or
consolidation. The foregoing adjustments and manner of application of the
foregoing provisions shall be determined by the Committee in its sole
discretion. Any such adjustments may provide for the elimination of any
fractional shares, which might otherwise become subject to any Options.
7.7 GOVERNING LAW. All determinations made and actions taken
pursuant to the Plan shall be governed by the laws of the Commonwealth of
Pennsylvania and construed in accordance therewith.
7.8 NO STRICT CONSTRUCTION. No rule of strict construction shall be
implied against Unisys, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Award granted under the
Plan or any rule or procedure established by the Committee.
7.9 COMPLIANCE WITH RULE 16B-3. It is intended that the Plan be
applied and administered in compliance with Rule 16b-3. If any provision of
the Plan would be in violation of Rule 16b-3 if applied as written, such
provision shall not have effect as written and shall be given effect so as to
comply with Rule 16b-3, as determined by the Committee. The Board is
authorized to amend the plan and to make any such modifications to Award
Agreements to comply with Rule 16b-3, as it may be amended from time to time,
and to make any other such amendments or modifications as it deems necessary
or appropriate to better accomplish the purposes of the Plan in light of any
amendments made to Rule 16b-3.
7.10 CAPTIONS. The captions (i.e., all underlined words) used in
the Plan are for convenience only, do not constitute a part of the Plan, and
shall not be deemed to limit, characterize or affect in any way any
provisions of the Plan, and all provisions of the Plan shall be construed as
if no captions have been used in the Plan.
7.11 SEVERABILITY. Whenever possible, each provision in the Plan
and every Award at any time granted under the Plan shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of the Plan or any Award at any time granted under the Plan shall
be held to be prohibited by or invalid under applicable law, then (a) such
provision shall be deemed amended to accomplish the objectives of the
provision as originally written to the fullest extent permitted by law and
(b) all other provisions of the Plan and every other Award at any time
granted under the Plan shall remain in full force and effect.
7.12 AMENDMENT AND TERMINATION.
(a) AMENDMENT. The Board shall have complete power and
authority to amend the Plan at any time and to add any other stock award or
other incentive compensation programs to the Plan as it deems necessary or
appropriate and no approval by the stockholders of Unisys or by any other
person, committee or entity of any kind shall be required to make any
amendment. No termination or amendment of the Plan may, without the consent
of the Participant to whom any Award shall theretofore have been granted
under the Plan or without the consent of a Transferee, adversely affect the
right of such individual under such Award.
(b) TERMINATION. The Board shall have the right and the
power to terminate the Plan at any time. No Award shall be granted under the
Plan after the termination of the Plan, but the termination of the Plan shall
not have any other effect and any Award outstanding at the time of the
termination of the Plan may be exercised after termination of the Plan at any
time prior to the expiration date of such Award to the same extent such Award
would have been exercisable had the Plan not terminated.
UNISYS CORPORATION
DEFERRED COMPENSATION PLAN
(as amended and restated effective September 22, 2000)
ARTICLE I
PURPOSE & AUTHORITY
1.1 PURPOSE. The purpose of the Plan is to offer Eligible
Executives the opportunity to defer receipt of a portion of their
compensation from the Corporation, under terms advantageous to both the
Eligible Executive and the Corporation.
1.2 EFFECTIVE DATE. The Board originally approved the
Officers' Plan on January 29, 1982. The Plan has been amended and
restated from time to time since its original adoption and, except to
the extent specifically provided otherwise, this amended and restated
version of the Plan is effective with respect to all amounts credited to
a Participant's Account as of September 22, 2000 or any date thereafter.
1.3 AUTHORITY. Any decision made or action taken by the
Corporation and any of its officers or employees involved in the
administration of this Plan, or any member of the Board or the Committee
arising out of or in connection with the construction, administration,
interpretation and effect of the Plan shall be within the absolute
discretion of all and each of them, as the case may be, and will be
conclusive and binding on all parties. No member of the Board and no
employee of the Corporation shall be liable for any act or action
hereunder, whether of omission or commission, by any other member or
employee or by any agent to whom duties in connection with the
administration of the Plan have been delegated or, except in
circumstances involving the member's or employee's bad faith, for
anything done or omitted to be done by himself or herself.
ARTICLE II
DEFINITIONS
2.1 "Account" means, for any Participant, each memorandum
account established for the Participant under Section 5.1.
2.2 "Account Balance" means, for any Participant as of any
date and with respect to any Account, the aggregate amount reflected in
that Account.
2.3 "Annual Incentive Pay" means, for any individual, the
amount payable, if any, to such individual under the Unisys Executive
Variable Compensation Plan (or under any successor annual incentive plan
of the Corporation) or under any other similar annual incentive plan of
the Corporation approved by the Vice President, Human Resources.
2.4 "Beneficiary" means the person or persons designated
from time to time in writing by a Participant to receive payments under
the Plan after the death of such Participant or, in the absence of such
designation or in the event that such designated person or persons
predeceases the Participant, the Participant's estate.
2.5 "Board" means the Board of Directors of the Corporation.
2.6 "Committee" means the Corporate Governance and
Compensation Committee of the Board, or such other committee as may be
appointed by the Board to administer the Plan.
2.7 "Corporation" means Unisys Corporation.
2.8 "Corporation Contributions" means discretionary
contributions that are made by the Corporation at any time based on
individual or corporate performance or such other criteria as is deemed
appropriate by the Corporation.
2.9 "Corporation Contributions Account" means that portion
of a Participant's Account to which any Corporation Contributions made
under the Plan for him or her are credited.
2.10 "Deferral Election" means an election by an Eligible
Executive to defer a portion of his or her compensation from the
Corporation under the Plan, as described in Section 3.1.
2.11 "Directors' Plan" means the Deferred Compensation Plan
for Directors of Unisys Corporation.
2.12 "Eligible Executive" means, for any calendar year, an
employee (a) whose base salary from the Corporation equals or exceeds 70
percent (70%) of the maximum amount of compensation that is permitted to
be taken into account under Section 401(a)(17) of the Internal Revenue
Code and who is eligible to receive Annual Incentive Pay or sales
commissions, (b) whose base salary from the Corporation equals or
exceeds the maximum amount of compensation that is permitted to be taken
into account under Section 401(a)(17) of the Internal Revenue Code, or
(c) who satisfies any other eligibility criteria established by the
Committee.
2.13 "Fair Market Value" means, on any date, the sales price
of a share of Unisys Common Stock as of the official close of the New
York Stock Exchange at 4:00 p.m. US Eastern Standard Time. .
2.14 "Investment Measurement Option" means any of the
hypothetical investment alternatives available for determining the
additional amounts to be credited to a Participant's Account under
Section 5.2. Effective January 1, 1997, the Investment Measurement
Options available are all of the investment options available to
eligible participants under the USP. Performance Unit Compensation
deferred under the Plan will be held as Stock Units.
2.15 "Officers' Plan" means the Deferred Compensation Plan
for Officers of Unisys Corporation, the predecessor of this Plan.
2.16 "Option for Stock Units" means an option, created
pursuant to a Participant's election in accordance with Section 3.2,
that, if exercised by the Participant, will result in the crediting of
Stock Units to the Participant's Account.
2.17 "Participant" means an Eligible Executive or former
Eligible Executive who has made a Deferral Election and who has not
received a distribution of his or her entire Account Balance.
2.18 "Performance Unit Compensation" means any amount payable
to an Eligible Executive as a result of the Eligible Executive's vesting
in a Performance Unit award (including, but not limited to, share unit
and restricted share unit awards) made under the terms of the 1990
Unisys Long-Term Incentive Plan, or any successor equity-based incentive
compensation plan.
2.19 "Plan" means the Unisys Corporation Deferred
Compensation Plan, as set forth herein and as amended from time to time.
2.20 "Revised Election" means an election made by a
Participant, in accordance with Section 6.2, to change the date as of
which payment of his or her Account Balance is to commence and/or the
form in which such payment is to be made.
2.21 "Stock Units" means Unisys common stock-equivalent
units. Each Stock Unit represents the equivalent of one share of Unisys
common stock; therefore, the value of a Stock Unit on any given date is
the Fair Market Value of a share of Unisys Common Stock on that date.
2.22 "USP" means the Unisys Savings Plan.
2.23 "Valuation Date" means any business day as of which the
interest of a Participant in each of the Participant's Accounts is
valued.
ARTICLE III
DEFERRAL OF COMPENSATION
3.1 DEFERRAL ELECTION.
(a) During any calendar year, each individual who is an
Eligible Executive for such calendar year may, by properly completing
and filing a Deferral Election in the form and manner prescribed by the
Committee (including properly completing a life insurance application if
required by the Committee), elect to defer:
(1) all or a portion of his or her salary that,
absent deferral under this Plan but giving effect to any deferral or
salary deduction election under any other plan maintained by the
Corporation (other than the USP), would be paid to him or her for
services rendered during the remainder of the current calendar year
and/or the next following calendar year; and/or
(2) up to seventy-five percent (75%) of his or her
sales commissions that, absent deferral under this Plan but giving
effect to any deferral or salary deduction election under any other plan
maintained by the Corporation (other than the USP), would be paid to him
or her during the remainder of the current calendar year and/or the next
following calendar year; and
(3) all or a portion of his or her Annual Incentive
Pay that, absent deferral under this Plan, but giving effect to any
deferral or salary deduction election under any other plan maintained by
the Corporation (other than the USP), would be paid to him/her in the
next following calendar year.
(b) To be effective, a Deferral Election with respect to
salary, sales commissions and/or Annual Incentive Pay must be filed by
the date specified by the Committee, or if no date is specified, by
October 31 of the calendar year immediately preceding the calendar year
in which the amounts to be deferred, absent deferral, would be paid to
the Eligible Executive. Notwithstanding the foregoing, an Eligible
Executive may make a Deferral Election with respect to salary and/or
sales commissions by filing a Deferral Election on or before the date
that is at least three months and one day before the date on which the
amounts to be deferred, absent deferral, would be paid to the Eligible
Executive, provided, however, that an individual who becomes an Eligible
Executive after the effective date of the Plan (as set forth in Section
1.2) may make and file a Deferral Election on or before the date that is
30 days after the date on which he or she becomes an Eligible Executive
with respect to salary and/or sales commissions that, absent deferral,
would be paid to him or her during the remainder of the calendar year in
which he or she becomes an Eligible Executive, with such Deferral
Election becoming effective as soon as administratively practicable.
(c) In addition to the Deferral Elections described in
Section 3.1(a), an Eligible Executive may make a Deferral Election with
respect to Performance Unit Compensation that, absent deferral, would be
paid to the Eligible Executive. To be effective, a Deferral Election
with respect to Performance Unit Compensation must be made in writing by
the Eligible Executive on or before the date that is 12 months and one
day before the date on which the amounts to be deferred, absent
deferral, would be paid to the Executive.
(d) Once made, a Deferral Election shall become effective
upon approval by the Corporate Executive Compensation Department and is
thereafter irrevocable, except to the extent otherwise provided in
Section 6.2. A Deferral Election will be deemed to have been approved
by the Corporate Executive Compensation Department if it is not
disapproved by the Corporate Executive Compensation Department within
ten days of the date on which it is received.
(e) An Eligible Executive's Deferral Election must specify
either a percentage or a certain dollar amount of his or her salary,
sales commissions, and/or Annual Incentive Pay, and/or a percentage of
his or her Performance Unit Compensation, to be deferred under the Plan.
In addition, the Deferral Election must specify the portion of the year,
if less than the full year, to which the Deferral Election is to apply.
Finally, the Deferral Election must specify the date on which payment of
the Eligible Executive's Account Balance is to commence and the manner
in which such payment is to be made.
(1) The Eligible Executive must specify the date as
of which payment of his or her Account Balance is to commence and may
specify that such payment is to commence as of:
(A) his or her termination of active employment
(including as a result of retirement, onset of long term disability or
other reason for termination) with the Corporation; or
(B) a specific date (which may be determined by
reference to the Eligible Executive's termination of employment by
retirement or otherwise) that is at least two years after the end of the
calendar year containing the date on which the amounts to be deferred,
absent deferral, would be paid to the Eligible Executive.
(2) The Eligible Executive must specify the manner in
which payment of his or her Account Balance is to be made and may
specify that such payment is to be made either in a single sum or in
annual installments. If the Eligible Executive is still employed when
such distributions commence, then annual installments may not be for a
period shorter than 2 years nor longer than 5 years.
(3) Notwithstanding the foregoing, an Eligible
Executive may not elect a time of benefit commencement and/or a form of
payment to the extent that such an election would cause any payments to
be made after the March 31 first following the date that is 20 years
after the date of the Eligible Executive's termination of employment (by
retirement or otherwise).
(f) Deferrals of an Eligible Executive's salary shall be
credited to the Plan ratably throughout the year (or, where applicable,
the portion of the year) to which the Deferral Election applies.
Deferrals of an Eligible Executive's Annual Incentive Pay and
Performance Unit Compensation shall be credited in a single sum. Any
deferral will be credited to the Plan as soon as administratively
practicable after the date on which the amount, absent deferral, would
be payable to the Participant.
(g) A Deferral Election with respect to salary shall
expire as of the last day of the calendar year that includes the first
day on which any amount, absent deferral, would be paid to the Eligible
Executive and a Deferral Election with respect to Annual Incentive Pay
or Performance Unit Compensation shall expire as of the date on which
the Annual Incentive Pay or Performance Unit Compensation that is the
subject of the Deferral Election is credited under the Plan.
3.2 OPTIONS FOR STOCK UNITS. A Participant who holds an
option for Corporation common stock that was awarded to him or her under
any plan maintained by the Corporation may elect, to the extent
permitted under that plan or otherwise by the Committee, to convert all
or part of that option to an Option for Stock Units in accordance with
the provisions of this Section 3.2.
(a) ELECTION TO CONVERT OPTION. A Participant can elect to
convert all or a portion of an outstanding option to an Option for Stock
Units by providing written notice to the Corporation, which must be
received by the Corporate Executive Compensation Department, at least
six months before the expiration date of the option. The election must
specify the number of shares of Corporation common stock subject to the
option that are to become subject to the Option for Stock Units. The
election must also specify the date on which the Stock Units to be
credited to the Participant's Account upon the exercise of the Option
for Stock Units are to be paid to the Participant; such date may be (1)
the Participant's termination of active employment (including as a
result of retirement, onset of long term disability or other reason for
termination) with the Corporation or (2) a specific date (which may be
determined by reference to the Participant's termination of employment
(by retirement or otherwise) or by reference to the date of the
Participant's exercise of the Option for Stock Units).
(b) EXERCISE OF OPTIONS FOR STOCK UNITS. A Participant may
not exercise an Option for Stock Units until the expiration of the six-
month period beginning on the date on which the Participant's option is
converted to an Option for Stock Units. Thereafter, but only until the
expiration of the period during which the option that the Participant
converted to an Option for Stock Units could, in accordance with its
original terms be exercised, a Participant may exercise Options for
Stock Units by providing written notice of exercise to the place
designated by the Committee. At the time of the exercise of an Option
for Stock Units, the Participant must certify to the Corporation or its
designee that he or she currently owns shares of Corporation common
stock sufficient to pay the aggregate option price and, if the shares
were acquired for services to the Corporation that he or she has held
those shares for at least six months.
(c) EFFECT OF EXERCISE.
(1) As soon as practicable following receipt of a
Participant's notice of exercise under Section 3.2(b), Stock Units will
be credited to the Participant's Account. The number of Stock Units to
be so credited will be equal to (A) the difference between (i) the
aggregate Fair Market Value (as defined in the Unisys 1990 Long-Term
Incentive Plan) on the date of exercise of the shares of Corporation
common stock relating to the portion of the Option for Stock Units that
the Participant has elected to exercise and (ii) the sum of (a) the
aggregate exercise price and (b) any Social Security, Medicare or state
or local income tax required to be withheld with respect to the
exercise, divided by (B) the Fair Market Value (as defined in the
Unisys 1990 Long-Term Incentive Plan) of a share of Corporation common
stock on the date of exercise.
(2) Notwithstanding a Participant's election of a
payment date under Section 3.2(a), if the Participant exercises an
Option for Stock Units later than two years before the payment date
elected, the Stock Units credited to his or her Account as a result of
the exercise will be paid as soon as practicable after the second
anniversary of the date of exercise.
(d) EFFECT OF TERMINATION OF EMPLOYMENT. If a Participant
terminates employment before exercising an Option for Stock Units, the
Option for Stock Units will remain exercisable to the extent that the
option that the Participant converted to the Option for Stock Units
would have remained exercisable absent conversion. If, however, the
Participant (or his or her Beneficiary) subsequently exercises the
Option for Stock Units after his or her Account Balance has been paid or
has begun to be paid as a result of his or her termination of
employment, the Stock Units acquire upon such exercise will be
distributed immediately. If the Participant (or his or her Beneficiary)
fails to exercise the Option for Stock Units before the date on which
the option that the Participant converted to an Option for Stock Units
would have expired or terminated, then the Participant's (or
Beneficiary's) right to exercise the Option for Stock Units will
likewise terminate.
3.3 PAYMENT OF FICA AND OTHER TAXES. Generally, any FICA or
other taxes that are payable by the Eligible Executive and are required
to be withheld by the Corporation during any period with respect to
amounts deferred under the Plan pursuant to Section 3.1 above during
such period shall be withheld from the compensation otherwise currently
payable to the Eligible Executive during the period. To the extent
that, as a result of a Deferral Election, the compensation currently
payable to an Eligible Executive during any period is insufficient to
permit an amount equal to the FICA and other taxes that are payable by
the Eligible Executive, and required to be withheld by the Corporation,
during that period to be withheld from such current compensation, the
Eligible Executive's Account Balance shall be reduced by an amount equal
to the sum of (a) the difference between the amount of FICA and other
taxes payable by the Eligible Executive, and required to be withheld by
the Corporation, during the period and the amount of compensation
otherwise currently payable to the Eligible Executive during the period
and (b) any additional Federal, state and local income taxes payable by
the Eligible Executive with respect to the reduction in his or her
Account Balance made pursuant to this Section 3.3.
ARTICLE IV
CORPORATION CONTRIBUTIONS
4.1 CORPORATION CONTRIBUTIONS. The Corporation may make
Corporation Contributions to a Participant's Corporation Contributions
Account from time to time.
4.2 VESTING. Participants will vest in their Corporation
Contributions Accounts according to the schedule established by the
Corporation when the Corporation Contribution is made to that
Corporation Contributions Account. If a Participant dies while employed
by the Corporation, the Participant will be fully vested in all his
Corporation Contributions Accounts, if any.
ARTICLE V
TREATMENT OF DEFERRED AMOUNTS
5.1 MEMORANDUM ACCOUNT. The Corporation shall establish on
its books a separate Account for each Participant for each calendar year
in which the Participant defers amounts pursuant to a Deferral Election.
In addition, Corporation Contributions, if any, will be credited to a
Participant's Account and recorded in a separate Corporation
Contributions Account therein. Further, when a Participant acquires any
Deferred Stock Units, those Deferred Stock Units will be credited to his
or her Account. Performance Unit Compensation will be credited to the
Participant's Account as Stock Units. As of each Valuation Date,
incremental amounts determined in accordance with Section 5.2 will be
credited or debited to each Participant's Account. Any payments made to
or on behalf of the Participant and for his or her Beneficiary shall be
debited from the Account. No assets shall be segregated or earmarked in
respect to any Account and no Participant or Beneficiary shall have any
right to assign, transfer, pledge or hypothecate his or her interest or
any portion thereof in his or her Account. The Plan and the crediting
of Accounts hereunder shall not constitute a trust or a funded
arrangement of any sort and shall be merely for the purpose of recording
an unsecured contractual obligation of the Corporation.
5.2 INVESTMENT MEASUREMENT OPTIONS.
(a) Subject to the provisions of this Section 5.2, a
Participant's Account shall be credited or debited with amounts equal to
the amounts that would be earned or lost with respect to the
Participant's Account Balance (including, with respect to Stock Units,
dividend equivalents and other adjustments) if amounts equal to that
Account Balance were actually invested in the Investment Measurement
Options in the manner specified by the Participant.
(b) Each Eligible Executive may elect, at the same time as
a Deferral Election is made, to have one or more of the Investment
Measurement Options applied to current deferrals. Such election with
respect to current deferrals may be changed at any time upon appropriate
notice to the Plan recordkeeper
(c) Subject to the restrictions described in subsection
(e), a Participant may elect to change the manner in which Investment
Measurement Options apply to existing Account Balances. Such an
election will be effective as soon as practicable after the Participant
has provided appropriate notice to the Plan recordkeeper.
(d) Notwithstanding anything to the contrary in the Plan,
Deferred Stock Units credited to a Participant's Account as the result
of the Participant's exercise of an Option for Stock Units or the
deferral of Performance Unit Compensation may not be credited with any
Investment Measurement Option.
(e) The following rules apply to Investment Measurement
Options.
(1) The percentage of a Participant's current
deferrals and/or Account Balance to which a specified Investment
Measurement Option is to be applied must be in integral multiples of one
percent (1%). The Participant may change the specified Investment
Measurement Options which shall apply to his or her Account(s) on any
business day as of which the Plan's recordkeeper is open for business.
Changes in a specified Investment Measurement Option with respect to a
Participant's Account will be effective as soon as administratively
practicable following receipt of the Participant's election.
(2) To the extent that a Participant has not
specified an Investment Measurement Option to apply to all or a portion
of his or her current deferrals and/or Account Balance, the Insurance
Contract Fund or such other fund as designated by the Committee from
time to time shall be deemed to be the applicable Investment Measurement
Option.
(3) The chosen Investment Measurement Option or
Options shall apply to deferred amounts on and after the date on which
such amounts are credited to the Participant's Account.
(f) The Committee shall have the authority to modify the
rules and restrictions relating to Investment Measurement Options
(including the authority to change such Investment Measurement Options
prospectively) as it, in its discretion, deems necessary and in accord
with the investment practices in place under the USP.
ARTICLE VI
PAYMENT OF DEFERRED AMOUNTS
6.1 FORM AND TIME OF PAYMENT. The benefits to which a
Participant or a Beneficiary may be entitled under the Plan shall be
paid in accordance with this Section 6.1.
(a) All payments under the Plan shall be made in cash,
provided, however, that unless otherwise provided by the Committee,
Stock Units shall be paid in shares of Unisys common stock.
(b) Except as otherwise provided in Sections 6.3 and 6.4,
payment of a Participant's Account Balance (other than with respect to
his Deferred Stock Units) shall commence as of the Valuation Date next
following the date or dates specified in the Participant's Deferral
Election or Elections or (where applicable) the Participant's Revised
Election or Elections, provided, however, that where the Participant's
Deferral Election or Elections or (where applicable) the Participant's
Revised Election or Elections specify that payments with respect to a
Participant's Account Balance are to commence as of a specified date or
specified dates not determined by reference to the Participant's
termination of employment and the Participant terminates employment with
the Corporation prior to such date or dates, payment of the portion of
the Participant's Account Balance that was deferred to such date or
dates shall commence as of the Valuation Date next following the
Participant's termination of employment, but in the same form specified
in the Participant's Deferral Election or Elections or (where
applicable) the Participant's Revised Election or Elections.
(c) All payments shall be made in the form or forms
specified in the Participant's Deferral Election or Elections or (where
applicable) the Participant's Revised Election or Elections.
(d) To the extent a Participant has not specified the form
or time of payment of his or her Account Balance, payment will be made
in a single sum as soon as administratively practicable, but within 90
days, after the first Valuation Date following the Participant's
termination of employment (by retirement or otherwise) with the
Corporation.
(e) Where a Participant has elected payment in the form of
annual installments, each installment payment after the initial
installment payment shall be made on or about March 31 of each year
following the year in which the first installment was paid. With
respect to each Deferral Election made by a Participant, the amount of
each annual installment payment to be made to a Participant or
Beneficiary under such Deferral Election shall be determined by dividing
the portion of the Participant's Account Balance attributable to such
Deferral Election as of the latest Valuation Date preceding the date of
payment by the number of installments remaining to be paid under such
Deferral Election.
(f) Notwithstanding any Deferral Election made by the
Participant:
(1) If the Participant terminates employment (by
retirement, by onset of a long term disability or otherwise) before the
specific date as of which a Participant's Account Balance is scheduled
to be paid to the Participant, the Participant's election with respect
to the time of commencement of payment will be accelerated until the
date as of which the Participant terminated employment.
(2) If a Participant terminates employment (by reason
of retirement, long term disability or otherwise) after beginning to
receive any portion of an Account Balance that was to be paid to the
Participant as of a specific date, the remaining Account Balance shall
be distributed in accordance with the distribution election in effect at
the time of the Participant's termination of employment.
(3) If the balance in all of a Participant's Accounts
is less than $25,000 at the time of a Participant's termination of
employment (by retirement or otherwise), the balance in all the
Participant's Accounts shall be paid to the Participant in a single sum.
(4) Any portion of a Participant's Account Balance
that has not been paid to the Participant as of the date of his or her
death shall be paid to the Participant's Beneficiary in a single sum as
soon as administratively practicable after the Valuation Date following
the date on which the Corporation receives notification of the
Participant's death.
6.2 REVISED ELECTION.
(a) Pursuant to a Revised Election, a Participant may
specify:
(1) a date for the commencement of the payment of the
Participant's Account Balance that is either the date of the
Participant's termination of employment (by retirement or otherwise) or
a date at least one year after the date specified in the Participant's
applicable Deferral Election; and/or
(2) a form of payment that calls for a greater number
of annual installment payments than that specified in the Participant's
applicable Deferral Election, or a number of annual installment payments
where the Participant specified a single sum payment in his or her
applicable Deferral Election.
(3) Notwithstanding the foregoing, an Eligible
Executive may not elect a time of benefit commencement and/or a form of
payment to the extent that such an election would cause any payments to
be made after the March 31 first following the date that is 20 years
after the date of the Eligible Executive's termination of employment.
(b) A Participant may only make three Revised Elections
with respect to each of the Participant's Accounts.
(c) To be effective, a Revised Election must be:
(1) made in writing by the Participant on a form
furnished for such purpose by the Corporate Executive Compensation
Department;
(2) submitted to the Corporate Executive Compensation
Department on or before the date that is three months and one day before
the date on which the portion of the Participant's Account Balance that
is the subject of the Revised Election would, absent the Revised
Election, first become payable; and
(3) approved by the Corporate Executive Compensation
Department. A Revised Election will be deemed to have been approved by
the Corporate Executive Compensation Department if it is not disapproved
by the Corporate Executive Compensation Department within ten days of
the date on which it is received.
6.3 SPECIAL PAYMENTS.
(a) Notwithstanding any other provision of the Plan to the
contrary, a Participant may receive payment of all or a portion of the
balance in one or more of his or her Accounts as soon as
administratively practicable following the receipt by the Corporate
Executive Compensation Department of the Participant's written request
for such payment. The Participant's election may specify the Account or
Accounts from which the payment is to be made.
(b) As a condition of receiving any payment made pursuant
to Subsection 6.3(a), a Participant will be required to pay to the
Corporation an amount equal to eight percent of the amount of the
payment made pursuant to Subsection 6.3(a), which payment shall
generally be deducted from the amount otherwise payable to the
Participant under Subsection 6.3(a), and the Participant will be subject
to suspension of the Participant's further participation in the Plan or
any equivalent plan or plans maintained by the Corporation or a
subsidiary of the Corporation until the last day of the first full
calendar year that follows the date on which the Participant submits his
request for payment under this Subsection 6.3(b).
(c) If a Participant receives a payment of less than the
entire balance in any of his or her Accounts from which payment is being
made pursuant to Subsection 6.3(a), the portion of the Participant's
Account Balance to which each Investment Measurement Option is applied
shall be reduced proportionately so that the Investment Measurement
Options apply to the Participant's Account Balance in the same
percentages immediately before and immediately after the payment.
(d) Notwithstanding any provision of the Plan to the
contrary, in the event the Committee determines that any portion of a
Participant's Account Balance is the subject of a final determination by
the Internal Revenue Service that such portion is includible in the
Participant's taxable income, the Participant's Account Balance shall be
distributed to the extent it is so includible. All income taxes and
related interest and penalties associated with credits to or
distributions from a Participant's Account shall be borne by the
Participant.
6.4 ACCELERATION OF PAYMENT. Notwithstanding any other
provision of this Plan to the contrary, the Committee in its sole
discretion may accelerate the payment of Account Balances to all or any
group of similarly situated Participants or Beneficiaries, whether
before or after the Participants' termination of service, in response to
changes in the tax laws or accounting principles.
ARTICLE VII
MISCELLANEOUS
7.1 AMENDMENT. The Board may modify or amend, in whole or in
part, any of or all the provisions of the Plan, or suspend or terminate
it entirely; provided, however, that any such modification, amendment,
suspension or termination may not, without the Participant's consent,
adversely affect any deferred amount credited to him or her for any
period prior to the effective date of such modification, amendment,
suspension or termination. The Plan shall remain in effect until
terminated pursuant to this provision.
7.2 ADMINISTRATION. The Committee shall have the sole
authority to interpret the Plan and in its discretion to establish and
modify administrative rules for the Plan, including (but not limited to)
establishing rules regarding elections, investments and distributions.
All expenses and costs in connection with the operation of this Plan
shall be borne by the Corporation. The Corporation shall have the right
to deduct from any payment to be made pursuant to this Plan any federal,
state or local taxes required by law to be withheld, and any associated
interest and/or penalties.
7.3 GOVERNING LAW. The Plan shall be construed and its
provisions enforced and administered in accordance with the laws of the
Commonwealth of Pennsylvania except as such laws may be superseded by
the federal law.
7.4 UNFUNDED PLAN. It is intended that the Plan constitute
an "unfunded" plan for deferred compensation. The Corporation may
authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan; provided, however, that, unless the
Corporation otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan. Any
liability of the Corporation to any person with respect to any grant
under the Plan shall be based solely upon any contractual obligations
that may be created pursuant to the Plan. No such obligation of the
Corporation shall be deemed to be secured by any pledge of, or other
encumbrance on, any property of the Corporation.
ARTICLE VIII
TRANSFER OF ACCOUNT BALANCE
8.1 TRANSFER TO DIRECTOR'S PLAN. Notwithstanding any
election of form of payments made hereunder, a Participant who,
following his termination of employment with the Corporation will be
eligible to participate in the Directors' Plan, may elect at any time
prior to the date that is three months and one day before the
Participant's termination of employment to transfer all or any portion
of his Account Balance to the Directors' Plan. Such transfer must occur
prior to the date that payments of the Participant's Account Balance
would otherwise be made, or commence, hereunder. Upon transfer, the
Participant's Account Balance (or the portion thereof transferred) will
be subject to the terms and conditions of the Directors' Plan; provided,
however, that any election of form of payment made under the Directors'
Plan with respect to the amount transferred may not provide for a form
of payment that is in any way more rapid than the form of payment in
effect under this Plan with respect to such amounts immediately prior to
transfer to the Directors' Plan. Valuation of the Account Balance (or
the portion thereof) to be transferred shall be made consistent with the
valuation provisions described in Article V. Upon transfer, the
Participant's (or his or her Beneficiary's) rights hereunder with
respect to the amounts transferred shall cease.
DEFERRED COMPENSATION
PLAN FOR DIRECTORS OF UNISYS CORPORATION
ARTICLE I
PURPOSE & AUTHORITY
1.1 Purpose. The purpose of the Plan is to offer members of the
Board of Directors who are not employees of the Corporation the opportunity
to defer receipt of a portion of their Compensation, under terms advantageous
to both the Director and the Corporation.
1.2 Effective Date. The Board originally approved the Plan on
November 20, 1981, and the Plan was subsequently amended, effective January
1, 1994. This document reflects the Plan as amended and restated effective
September 22, 2000. The terms of this amended and restated Plan shall apply
to all Account Balances and elections made pursuant to the Plan prior to its
amendment.
1.3 Authority. Any decision made or action taken by the
Corporation and any of its officers or employees involved in the
administration of this Plan, or any member of the Board or the Committee
arising out of or in connection with the construction, administration,
interpretation and effect of the Plan shall be within the absolute discretion
of all and each of them, as the case may be, and will be conclusive and
binding on all parties. No member of the Board and no employee of the
Corporation shall be liable for any act or action hereunder, whether of
omission or commission, by any other member or employee or by any agent to
whom duties in connection with the administration of the Plan have been
delegated or, except in circumstances involving the member's or employee's
bad faith, for anything done or omitted to be done by himself or herself.
ARTICLE II
DEFINITIONS
2.1 "Account" means, for any Participant, each memorandum
account established for the Participant under Section 4.1.
2.2 "Account Balance" means, for any Participant as of any date,
the aggregate amount reflected in his or her Account.
2.3 "Beneficiary" means the person or persons designated from
time to time in writing by a Participant to receive payments under the Plan
after the death of such Participant or, in the absence of such designation or
in the event that such designated person or persons predeceases the
Participant, the Participant's estate.
2.4 "Board" means the Board of Directors of the Corporation.
2.5 "Committee" means the Corporate Governance and Compensation
Committee of the Board, or such other committee as may be appointed by the
Board to administer the Plan.
2.6 "Compensation" means amounts payable by the Corporation,
absent deferral, with respect to services provided by a Participant to the
Corporation as a Director, including retainer and meeting fees, but shall not
include non-elective stock unit amounts credited, payable or paid under the
Stock Unit Plan.
2.7 "Corporation" means Unisys Corporation.
2.8 "Deferral Election" means an election by an Eligible
Director to defer a portion of his or her Compensation under the Plan, as
described in Section 3.1.
2.9 "Eligible Director" means a member of the Board who is not
an employee of the Corporation.
2.10 "Executives' Plan" means the Unisys Corporation Deferred
Compensation Plan .
2.11 "Investment Measurement Option" means any of the
hypothetical investment alternatives available for determining the additional
amounts to be credited to a Participant's Account under Section 4.2. The
Investment Measurement Options available are all of the investment options
available to eligible participants under the USP other than the Unisys Common
Stock Fund.
2.12 "Participant" means an Eligible Director or former Eligible
Director who has made a Deferral Election and who has not received a
distribution of his or her entire Account Balance.
2.13 "Plan" means the Deferred Compensation Plan for Directors of
Unisys Corporation, as set forth herein and as amended from time to time.
2.14 "Revised Election" means an election made by a Participant,
in accordance with Section 5.2, to change the date as of which payment of his
or her Account Balance is to commence and/or the form in which such payment
is to be made.
2.15 "USP" means the Unisys Savings Plan.
2.16 "Valuation Date" means any business day as of which the
interest of a Participant in each of the Participant's Accounts is valued.
ARTICLE III
DEFERRAL OF COMPENSATION
3.1 Deferral Election.
(a) Prior to or during any calendar year, each Eligible
Director may elect to defer all or a portion of his or her Compensation that,
absent deferral, would be paid to him or her for services rendered during the
following calendar year or the remainder of the current calendar year, as
applicable, by properly completing a Deferral Election form.
(b) To be effective, a Deferral Election must be made in
writing by the Eligible Director on a form furnished by the Secretary of the
Corporation on or before the date that is (I) no later than the December 31
prior to the calendar year to which the Deferral Election applies or (II) at
least three months and one day before the date on which the amounts to be
deferred, absent deferral, would be paid to the Eligible Director, provided,
however, that an individual who becomes an Eligible Director after January 1
of a calendar year may make a Deferral Election with respect to Compensation
that, absent deferral, would be paid to him or her during the remainder of
the
calendar year in which he or she has become an Eligible Director, by filing
the required written election on or before the date that is 30 days after the
date on which he or she becomes an Eligible Director.
(c) Once made, a Deferral Election shall become effective
upon approval by the Secretary of the Corporation and is thereafter
irrevocable, except to the extent otherwise provided in Section 5.2. A
Deferral Election will be deemed to have been approved by the Secretary of
the Corporation if it is not disapproved by the Secretary of the Corporation
within ten days of the date on which it is received.
(d) An Eligible Director's Deferral Election must specify
either a percentage or a certain dollar amount of his or her Compensation to
be deferred under the Plan. In addition, the Deferral Election must specify
the date on which payment of the amount deferred is to commence and the
manner in which such payment is to be made.
(1) The Eligible Director must specify the date as of
which payment of the amount deferred is to commence, subject to Section
5.1(b) hereof, and may specify that such payment is to commence as of:
(A) his or her termination of service as a member of
the Board (including as a result of disability); or
(B) a specific date (which may be determined by
reference to the Eligible Director's termination of service) that is at least
two years after the date on which the initial amounts to be deferred, absent
deferral, would be paid to the Eligible Director.
(2) The Eligible Director must specify the manner in which
payment of his or her Account Balance is to be made and may specify that such
payment is to be made either in a single sum or in annual installments.
(3) Notwithstanding the foregoing, an Eligible Director
may not elect a time of benefit commencement and/or a form of payment to the
extent that such an election would cause any payments to be made after the
March 31 first following the date that is 20 years after the date of the
Eligible Director's termination of service.
(e) Deferrals of an Eligible Director's Compensation shall
be credited to the Plan at the time at which the Compensation, absent
deferral, would be payable to the Participant.
(f) Unless the Deferral Election form specifically provides
otherwise, a Deferral Election shall expire as of the last day of the
calendar year that includes the first day on which any amount, absent
deferral, would be paid to the Eligible Director.
ARTICLE IV
TREATMENT OF DEFERRED AMOUNTS
4.1 Memorandum Account. The Corporation shall establish on its
books a separate Account for each Participant for each calendar year in which
the Participant elects to defer Compensation. Amounts deferred by a
participant pursuant to a Deferral Election shall be credited to the
Participant's Account on the date on which the deferred amounts, absent
deferral, would have been paid to the Participant. In addition, as of each
Valuation Date, incremental amounts determined in accordance with Section 4.2
will be credited or debited to each Participant's Account. Any payments made
to or on behalf of the Participant and for his or her Beneficiary shall be
debited from the Account. No assets shall be segregated or earmarked in
respect to any Account and no Participant or Beneficiary shall have any right
to assign, transfer, pledge or hypothecate his or her interest or any portion
thereof in his or her Account. The Plan and the crediting of Accounts
hereunder shall not constitute a trust or a funded arrangement of any sort
and shall be merely for the purpose of recording an unsecured contractual
obligation of the Corporation.
4.2 Investment Measurement Options.
(a) Subject to the provisions of this Section 4.2, a
Participant's Account shall be credited or debited with amounts equal to the
amounts that would be earned or lost with respect to the Participant's
Account Balance if amounts equal to that Account Balance were actually
invested in the Investment Measurement Options in the manner specified by the
Participant.
(b) Each Eligible Director may elect, at the same time as a
Deferral Election is made, to have one or more of the Investment Measurement
Options applied to current deferrals. Such election with respect to current
deferrals may be changed at any time upon appropriate notice to the Corporate
Executive Compensation Department.
(c) Subject to the restrictions described in Subsection (d),
a Participant may elect to change the manner in which Investment Measurement
Options apply to existing Account Balances. In addition, a Participant may
elect to transfer all or any portion of his/her Account balance to the
Director Stock Unit Plan and such amounts will be credited under that Plan as
Elective Stock Units, subject to the terms and conditions of the Director
Stock Unit Plan. Any election described in this subsection (c) will be
effective upon appropriate notice to the Corporate Executive Compensation
Department.
(d) The following rules apply to Investment Measurement
Options.
(1) The percentage of a Participant's current deferrals
and/or Account Balance to which a specified Investment Measurement Option is
to be applied must be a multiple of one percent (1%). The Participant may
change the specified Investment Measurement Options which shall apply to his
or her Account(s) on any business day as of which the Plan's recordkeeper is
open for business. Changes in a specified Investment Measurement Option with
respect to a Participant's Account will be effective as soon as
administratively practicable following receipt of the Participant's election.
(2) To the extent that a Participant has not specified an
Investment Measurement Option to apply to all or a portion of his or her
current deferrals and/or Account Balance, the Insurance Contract Fund or such
other fund as is designated by the Committee shall be deemed to be the
applicable Investment Measurement Option.
(3) The chosen Investment Measurement Option or Options
shall apply to deferred amounts on and after the date on which such amounts,
absent deferral, would have been paid to the Participant.
(e) The Committee shall have the authority to modify the
rules and restrictions relating to Investment Measurement Options (including
the authority to change such Investment Measurement Options prospectively) as
it, in its discretion, deems necessary and in accord with the investment
practices in place under the USP.
ARTICLE V
PAYMENT OF DEFERRED AMOUNTS
5.1 Form and Time of Payment. The benefits to which a
Participant or a Beneficiary may be entitled under the Plan shall be paid in
accordance with this Section 5.1.
(a) All payments under the Plan shall be made in cash.
(b) Except as otherwise provided in Sections 5.3 and 5.4,
payment of a Participant's Account Balance shall commence as of the Valuation
Date next following the date or dates specified in the Participant's Deferral
Election or Elections or (where applicable) the Participant's Revised
Election or Elections; provided, however, that where the Participant's
Deferral Election or Elections or (where applicable) the Participant's
Revised Election or Elections specify that payments with respect to a
Participant's Account Balance are to commence as of a specified date or
specified dates not determined by reference to the Participant's retirement
or other termination of service and the Participant terminates service with
the Corporation prior to such date or dates, payment of the portion of the
Participant's Account Balance that was deferred to such date or dates shall
commence as of the Valuation Date next following the Participant's
termination of service, but in the same form specified in the Participant's
Deferral Election or Elections or (where applicable) the Participant's
Revised Election or Elections.
(c) All payments shall be made in the form or forms
specified in the Participant's Deferral Election or Elections or (where
applicable) the Participant's Revised Election or Elections.
(d) To the extent a Participant has not specified the form
or time of payment of all or a part of his or her Account Balance, payment of
the amounts not specified will be made in a single sum as soon as
administratively practicable, but within 90 days, after the first Valuation
Date following the Participant's termination of service as a Director.
(e) Where a Participant has elected payment in the form of
annual installments, each installment payment after the initial installment
payment shall be made on or about March 31 of each year following the year in
which the first installment was paid. With respect to each Deferral Election
made by a Participant, the amount of each annual installment payment to be
made to a Participant under such Deferral Election shall be determined by
dividing the portion of the Participant's Account Balance covered by such
Deferral Election as of the latest Valuation Date preceding the date of
payment by the number of installments remaining to be paid under such
Deferral Election.
(f) Notwithstanding any Deferral Election made by the
Participant:
(1) If the Participant terminates service as a Director
before the specific date as of which a Participant's Account Balance is
scheduled to be paid to the Participant, the Participant's election with
respect to the time of commencement of payment will be accelerated to the
date as of which the Participant terminated service as a director.
(2) If a Participant terminates service as a Director
after beginning to receive any portion of an Account Balance that was to be
paid to the Participant as of a specific date, the remaining Account Balance
shall be distributed in accordance with the distribution election in effect
at the time of the Participant's termination of service as a Director.
(3) If the balance in all of a Participant's Accounts is
less than a minimum amount established by the Committee at the time of a
Participant's termination of service as a Director, the balance in all the
Participant's Accounts shall be paid to the Participant in a single sum.
(4) Any portion of a Participant's Account Balance that
has not been paid to the Participant as of the date of his or her death shall
be paid to the Participant's Beneficiary in a single sum as soon as
administratively practicable after the Valuation Date following the date on
which the Corporation receives notification of the Participant's death.
5.2 Revised Election.
(a) Pursuant to a Revised Election, a Participant may
specify:
(1) a date for the commencement of the payment of the
Participant's Account Balance that is either the date of the Participant's
termination of service as a Director or a date at least one year after the
date specified in the Participant's applicable Deferral Election; and/or
(2) a form of payment that calls for a greater number of
annual installment payments than that specified in the Participant's
applicable Deferral Election, or a number of annual installment payments
where the Participant specified a single sum payment in his or her applicable
Deferral Election.
(3) Notwithstanding the foregoing, a Participant may not
elect a time of benefit commencement and/or a form of payment to the extent
that such an election would cause any payments to be made after the March 31
first following the date that is 20 years after the date of the Eligible
Executive's termination of service as a Director.
(b) A Participant may only make three Revised Elections with
respect to each of the Participant's Accounts.
(c) To be effective, a Revised Election must be:
(1) made in writing by the Participant on a form furnished
for such purpose by the Corporate Executive Compensation Department;
(2) submitted to the Corporate Executive Compensation
Department on or before the date that is three months and one day before the
date on which the portion of the Participant's Account Balance that is the
subject of the Revised Election would, absent the Revised Election, first
become payable; and
(3) approved by the Corporate Executive Compensation
Department. A Revised Election will be deemed to have been approved by the
Corporate Executive Compensation Department if it is not disapproved by the
Corporate Executive Compensation Department within ten days of the date on
which it is received.
5.3 Special Payment.
(a) Notwithstanding any other provision of the Plan to the
Contrary, a Participant may receive payment of all or a portion of his or her
Account Balance as soon as administratively practicable following the receipt
by the Secretary of the Corporation of the Participant's written request for
such payment.
(b) As a condition of receiving any payment made pursuant to
Subsection 5.3(a), a Participant will be subject to, as a penalty, payment to
the Company of an amount equal to eight percent of the amount of the payment
made pursuant to Subsection 5.3(a) and suspension of the Participant's
further participation in the Plan, the Unisys Corporation Director Stock Unit
Plan, or any equivalent plan or plans maintained by the Corporation or a
subsidiary of the Corporation for the entire full calendar year that follows
the date on which the Participant submits to the Secretary of the Corporation
his or her request for payment pursuant to Subsection 5.3(a). The payment to
the Company shall generally be deducted from the amount otherwise payable to
the Participant under Subsection 5.3(a).
(c) If a Participant receives a payment of less than his or
her entire Account Balance pursuant to Subsection 5.3(a), the portion of the
Participant's Account Balance to which each Investment Measurement Option is
applied shall be reduced proportionately so that the Investment Measurement
Options apply to the Participant's Account Balance in the same percentage
immediately before and immediately after the payment.
(d) Notwithstanding any provision of the Plan to the
contrary, in the event the Committee determines that any portion of a
Participant's Account Balance is the subject of a determination by the
Internal Revenue Service that such portion is includible in the Participant's
taxable income, the Participant's Account Balance shall be distributed to the
extent it is so includible. All income taxes and related interest and
penalties associated with credits to or distributions from a Participant's
Account shall be borne by the Participant.
5.4 Acceleration of Payment. Notwithstanding any other
provision of this Plan to the contrary, the Committee in its sole discretion
may accelerate the payment of Account Balances to all or any group of
similarly situated Participants or Beneficiaries, whether before or after the
Participant's termination of service, in response to changes in the tax laws
or accounting principles.
ARTICLE VI
MISCELLANEOUS
6.1 Amendment. The Board may modify or amend, in whole or in
part, any of or all the provisions of the Plan, or suspend or terminate it
entirely; provided, however, that any such modification, amendment,
suspension or termination may not, without the Participant's consent,
adversely affect any deferred amount credited to him or her for any period
prior to the effective date of such modification, amendment, suspension or
termination. The Plan shall remain in effect until terminated pursuant to
this provision.
6.2 Administration. The Committee shall have the sole authority
to interpret the Plan and in its discretion to establish and modify
administrative rules for the Plan. All expenses and costs in connection with
the operation of this Plan shall be borne by the Corporation. The
Corporation shall have the right to deduct from any payment to be made
pursuant to this Plan any federal, state or local taxes required by law to be
withheld, and any associated interest and/or penalties.
6.3 Governing Law. The Plan shall be construed and its
provisions enforced and administered in accordance with the laws of the
Commonwealth of Pennsylvania except as such laws may be superseded by the
federal law.
ARTICLE VII
TRANSFER OF ACCOUNT BALANCE
7.1 Transfer of Executives' Plan Accounts. Notwithstanding any
other provision of the Plan to the contrary, a Director who is a former
employee of Unisys Corporation and who is a participant in the Executives'
Plan may elect to transfer any or all of his/her account balance in the
Executives' Plan into this Plan. Upon transfer, such amounts shall be
subject to the terms and conditions of this Plan, provided that all elections
previously made under the Executives' Plan with respect to such amounts shall
continue in effect until otherwise modified hereunder. Notwithstanding the
payment election provision described in Article V hereof, in no event may a
Director elect a form of payment with respect to amounts transferred from the
Executives' Plan that is any more rapid than the form of payment in effect
under the Executives' Plan at the time of such transfer.
ARTICLE VIII
CHANGE IN CONTROL
8.1 Withdrawal Election.
(a) Notwithstanding any other provision of the Plan to the
contrary, in the event of a "change in control," as defined below, each
Participant may elect to receive a single sum payment of all or any portion
of his/her account balance. Such election shall only be effective if
delivered to the Secretary of the Corporation within the ninety-day period
immediately following the date of the occurrence of the change in control.
(b) If an election is timely made, the Participant(or
Beneficiary) will be entitled to receive, as soon as practicable after the
expiration of the ninety-day period, an amount equal to (1) the full value or
any portion thereof of the Account Balance minus (2) an early withdrawal
penalty equal to 8% of the total value of (1). The Committee, upon advice of
counsel, may modify the early withdrawal penalty described above in any way
it
deems appropriate and consistent with the purposes of the Plan.
8.2 Litigation Expenses. If litigation is brought by a
Participant or Beneficiary after a change in control to enforce or interpret
any provision of the Plan, the Corporation to the extent permitted by
applicable law shall reimburse the Participant (or Beneficiary) for the
reasonable fees and disbursements of counsel incurred in such litigation.
8.3 Change in Control Definition. For purposes of this Article
VIII, a "change in control" shall have the same meaning as is ascribed to
that term under the 1990 Long-Term Incentive Plan, or any successor plan
designated by the Committee.
UNISYS CORPORATION
DIRECTOR STOCK UNIT PLAN
1. Purpose. The purpose of the Unisys Corporation Director Stock
Unit Plan (the "Plan") is to provide a vehicle through which all or a portion
of the remuneration paid to Directors of Unisys Corporation (the
"Corporation") who are not employees of the Corporation may be paid in a form
which (1) more closely aligns directors' and stockholders' interests and (ii)
permits Directors to defer recognition of income until termination of service
with the Corporation.
2. Effective Date. The Board of Directors (the "Board") approved the
Plan on November 21, 1991. The Plan has been amended and restated from time
to time since its original adoption and the effective date of this amended
and restated Plan is September 22, 2000.
3. Definitions.
(A) "Account" means, for any Director, each memorandum account
established for the Director under Section 7.
(B) "Beneficiary" means the person or persons designated from
time to time in writing by a participating Director to receive payments after
the death of such Director or, in the absence of any such designation or in
the event that such designated person or persons shall predecease such
Director, his/her estate.
(C) "Board" shall mean the Board of Directors of the
Corporation.
(D) "Change in Control" shall have the same meaning as is
ascribed to that term under the 1990 Long-Term Incentive Plan, or any
successor stock option plan.
(E) "Committee" means the Corporate Governance and Compensation
Committee of the Board.
(F) "Compensation" includes remuneration (other than that paid
in accordance with Section 4(B) hereof) for services as a Director, including
Directors' retainer fees ("Retainer Fees")and Board and Committee meeting
fees ("Meeting Fees").
(G) "Compensation Payment Date" means, with respect to a
Retainer Fee, the first business day of the month for which such monthly
Retainer Fee or Meeting Fee is due and payable or such other date as may be
designated by the Board or Committee from time to time as the payment date
for Retainer Fees or Meeting Fees. If Unisys Common Stock is not traded on
such date, the Compensation Payment Date shall be the next preceding trading
day.
(H) "Corporation" means Unisys Corporation.
(I) "Deferred Compensation" means the amount the Director elects
to defer pursuant to Section 4(A) hereof.
(J) "Director" means a member of the Board who is not an
employee of the Corporation.
(K) "Fair Market Value" means, on any date, the sales price of a
share of Unisys Common Stock as of the official close of the New York Stock
Exchange at 4:00 p.m. U.S. Eastern Standard Time on such date
(L) "Option for Stock Units" means an option, created pursuant
to a Director's election in accordance with Section 6 that, if exercised by
the Director, will result in the crediting of Stock Units to the Director's
Account.
(M) "Stock Units" means Unisys common stock-equivalent units,
which may be awarded pursuant to the Plan as Elective or Non-elective Stock
Units or may be credited to a Director's Account as a result of the
Director's exercise of an Option for Stock Units. Stock Units also include
Frozen Stock Units held under the Directors Deferred Compensation Plan and
transferred to this Plan effective July 25, 1996.
(N) "Stock Unit Award Value" means the dollar amount of the
Retainer Fee or Meeting Fee, as established by the Board from time to time,
payable on a Compensation Payment Date.
(O) "Valuation Date" means any business day as of which the
value of a Director's Accounts are determined.
4. Crediting of Stock Units.
(A) \ Elective Stock Units. Prior to or during any calendar
year, a Director may elect (i) to defer all or a portion of his or her cash
Compensation that would be paid to him for services rendered during the
following calendar year or for the remainder of the current calendar year, as
applicable, and (ii) to be credited in lieu of such amount with Stock Units.
(B) Non-Elective Stock Unit Awards. On the Compensation Payment
Date, each Director's Account shall be credited with Stock Units equal to the
Stock Unit Award Value. The Board shall have the discretion to make
additional Stock Unit awards at such times and in such amounts as it deems
appropriate.
(C) Amount Credited. The number of Stock Units to be credited
to a Director's Account under Sections 4(A) and (B) shall be the quotient of
(a) divided by (b) where (a) equals the Deferred Compensation or Stock Unit
Award Value, as applicable, and (b) equals the Fair Market Value on the
Compensation Payment Date.
(D) Transfer of Previously Deferred Amounts. Upon the election
of a Director, all or any portion of a Director's Account held under the
terms of the Deferred Compensation Plan for Directors of Unisys Corporation
may be transferred and credited under this Plan as Elective Stock Units,
based on the Fair Market Value on the date of transfer. Payment of a
Director's Stock Units credited to the Plan under this Section 4(D) shall be
made in accordance with the Director's original deferral election, subject to
any subsequent elections permitted under this Plan.
5. Elections.
(A) A Director's election to defer Compensation shall be
executed in writing on a form furnished by the Secretary of the Corporation
on or before the date that is (I) no later than December 31 of the year
preceding the calendar year to which the election applies or (II) at least
three months and one day before the date on which the Retainer Fee or Meeting
Fee to be deferred, absent deferral, would be paid to the Director, provided,
however, that an individual who becomes a Director after January 1 of a
calendar year may make an Election with respect to Compensation that has not
been paid and, absent deferral, would be paid to him or her during the
remainder of the calendar year in which he or she has become a Director, by
executing the required written election on or before the date that is 30 days
after the date on which he or she becomes a Director. The election must
specify that the Director desires to be credited Stock Units in lieu of
receiving his/her Compensation in cash.
(B) An election, once made, shall be irrevocable with respect to
Compensation payable for the calendar year or years to which it applies.
(C) An election must specify either a percentage or a certain
dollar amount of the Compensation to be deferred under the Plan.
(D) Any amounts distributed under the Plan on or after April 26,
2000 shall be distributed in the form of shares of common stock of the
Corporation.
(E) An election shall specify the date on which payment of the
amount deferred is to commence, subject to Sections 9 and 10 hereof, and may
specify that such payment is to commence as of:
(1) the Director's termination of service as a member of
the Board (including as a result of disability); or
(2) a specific date (which may be determined by reference
to the Director's termination of service) that is at least two years after
the date on which the initial amounts to be deferred, absent deferral, would
be paid to the Director.
(F) The Director must specify the manner in which payment of his
or her Account is to be made and may specify that such payment is to be made
either in a single sum or in annual installments.
(G) Notwithstanding the foregoing, a Director may not elect a
time of benefit commencement and/or a form of payment to the extent that such
an election would cause any payments to be made after the March 31 first
following the date that is 20 years after the date of the Director's
termination of service.
(H) Deferrals of a Director's Compensation shall be credited to
the Plan at the time at which the Compensation, absent deferral, would
otherwise be payable to the Director.
(I) Unless the Election form specifically provides otherwise, an
Election shall expire as of the last day of the calendar year that includes
the first day on which any compensation, absent deferral, would be paid to
the Director.
(J) Additional payment elections with respect to Non- Elective
Stock Unit Awards may be provided if deemed necessary and appropriate by
the Committee.
6. Options for Stock Units. A Director who holds an option for
Corporation common stock that was awarded to him or her under any plan
maintained by the Corporation may elect, to the extent permitted under that
plan or otherwise by the Committee, to convert all or part of that option to
an Option for Stock Units in accordance with the provisions of this Section
6.
(a) Election to Convert Option. A Director can elect to convert
all or a portion of an outstanding option to an Option for Stock Units by
providing written notice to the Corporation, which must be received by the
Corporate Executive Compensation Department, at least six months before the
expiration date of the option. The election must specify the number of
shares of Corporation common stock subject to the option that are to become
subject to the Option for Stock Units. The election must also specify the
date on which the Stock Units to be credited to the Director's Account upon
the exercise of the Option for Stock Units are to be paid to the Director;
such date may be (1) the Director's termination of service or (2) a specific
date (which may be determined by reference to the Director's termination of
service or by reference to the date of the Director's exercise of the Option
for Stock Units).
(b) Exercise of Options for Stock Units. A Director may not
exercise an Option for Stock Units until the expiration of the six-month
period beginning on the date on which the Director's option is converted to
an Option for Stock Units. Thereafter, but only until the expiration of the
period during which the option that the Director converted to an Option for
Stock Units could, in accordance with its original terms be exercised, a
Director may exercise Options for Stock Units by providing written notice of
exercise to the place designated by the Committee. At the time of the
exercise of an Option for Stock Units, the Director must certify to the
Corporation or its designee that he or she currently owns shares of
Corporation common stock sufficient to pay the aggregate option price and, if
the shares were acquired for services to the Corporation that he or she has
held those shares for at least six months.
(c) Effect of Exercise.
(1) As soon as practicable following receipt of a
Director's notice of exercise under Section 6(b), Stock Units will be
credited to the Director's Account. The number of Stock Units to be so
credited will be equal to (A) the difference between (i) the aggregate Fair
Market Value (as defined in the Directors Stock Option Plan) on the date of
exercise of the shares of Corporation common stock relating to the portion of
the Option for Stock Units that the Director has elected to exercise and (ii)
the sum of (a) the aggregate exercise price and (b) any Social Security,
Medicare or state or local income tax required to be withheld with respect to
the exercise, divided by (B) the Fair Market Value (as defined in Directors
Stock Option Plan) of a share of Corporation common stock on the date of
exercise.
(2) Notwithstanding a Director's election of a payment
date under Section 6(a), if the Director exercises an Option for Stock Units
later than two years before the payment date elected, the Stock Units
credited to his or her Account as a result of the exercise will be paid as
soon as practicable after the second anniversary of the date of exercise.
(d) Effect of Termination of Service. If a Director
terminates service before exercising an Option for Stock Units, the Option
for Stock Units will remain exercisable to the extent that the option that
the Director converted to the Option for Stock Units would have remained
exercisable absent conversion. If, however, the Director (or his or her
Beneficiary) subsequently exercises the Option for Stock Units after his or
her Account Balance has been paid or has begun to be paid as a result of his
or her termination of service, the Stock Units acquired upon such exercise
will be distributed immediately. If the Director (or his or her Beneficiary)
fails to exercise the Option for Stock Units before the date on which the
option that the Director converted to an Option for Stock Units would have
expired or terminated, then the Director's (or Beneficiary's) right to
exercise the Option for Stock Units will likewise terminate.
7. Memorandum Account. The Corporation shall establish on its books
a separate memorandum account for each Director for each year in which Stock
Units are awarded to the Director. Stock Units, dividends and other
adjustments shall be credited to the account and payments made to the
Director or Beneficiary shall be debited to the account. No assets shall be
segregated or earmarked in respect of any amounts credited to the Account and
no Director shall have any right to assign, transfer, pledge or hypothecate
his or her interest or any portion thereof in his or her Account. The Plan
and the crediting of Accounts hereunder shall not constitute a trust and
shall be merely for the purpose of recording an unsecured contractual
obligation.
8. Dividends and Other Adjustments. If the Corporation shall issue a
stock dividend on the common stock, stock dividend equivalents shall be
credited to the Account, as of the dividend payment date, as Stock Units in
the same amount as the stock dividends to which the Director would have been
entitled if the Stock Units were shares of common stock. Cash dividends, if
any, shall be credited to the Account, as of the dividend payment date, in
the form of Stock Units determined in the manner set forth in Section 4(C)
hereof based on the Fair Market Value of the Common Stock on the dividend
payment date. The Account shall be appropriately adjusted to reflect splits,
reverse splits, or comparable changes to the Corporation's common stock.
9. Distribution of Accounts.
(A) Payment Election. Except as otherwise provided in Section
10, payment of an Account shall commence as of the Valuation Date next
following the date or dates specified in the Election or Elections or (where
applicable) the Revised Election or Elections; provided, however, that where
the Election or Elections or (where applicable) the Revised Election or
Elections specify that payments with respect to an Account are to commence as
of a specified date or specified dates not determined by reference to the
Director's termination of service and the Director terminates service prior
to such date or dates, payment of the portion of the Director's Account that
was to commence on such date or dates shall commence as of the Valuation Date
next following the Director's termination of service, but in the same form
specified in the Director's Election or Elections or (where applicable) the
Revised Election or Elections.
(1) All payments shall be made in the form or forms
specified in the Election or Elections or (where applicable) the Revised
Election or Elections.
(2) To the extent a Director has not specified the form or
time of payment of all or a part of his or her Account, payment of the
amounts not specified will be made in a single sum as soon as
administratively practicable, but within 90 days, after the first Valuation
Date following the Director's termination of service as a Director.
(3) Where a Director has elected payment in the form of
annual installments, each installment payment after the initial installment
payment shall be made on or about March 31 of each year following the year in
which the first installment was paid. With respect to each Election made by
a Director, the amount of each annual installment payment to be made to the
Director shall be determined by dividing the portion of the Director's
Account covered by such Election as of the latest Valuation Date preceding
the date of payment by the number of installments remaining to be paid under
such Election.
(4) Notwithstanding any election made by a Director, any
portion of a Director's Account that has not been paid to the Director as of
the date of his or her death shall be paid to the Director's Beneficiary in a
single sum as soon as administratively practicable, but within 90 days
following the Valuation Date on which the Corporation receives notification
of the Director's death.
(B) Revised Election.
(1) Pursuant to a Revised Election, a Director may specify:
(I) a date for the commencement of the payment of
the Director's Account that is after the date specified in the Director's
Election; and/or
(II) a form of payment that calls for a greater
number of annual installment payments than that specified in the Director's
Election, or a number of annual installment payments where the Director
specified a single sum payment in his or her Election; and/or
(III) Notwithstanding the foregoing, a Director may
not elect a time of benefit commencement and/or a form of payment to the
extent that such an election would cause any payments to be made after the
March 31 first following the date that is 20 years after the date of the
Director's termination of service as a Director.
(2) To be effective, a Revised Election must be:
(I) made in writing by the Director on a form
furnished for such purpose by the Secretary of the Corporation;
(II) submitted to the Secretary of the Corporation on
or before the date that is three months and one day before the date on which
the portion of the Director's Account that is the subject of the Revised
Election would, absent the Revised Election, first become payable; and
(III) approved by the Secretary of the Corporation. A
Revised Election will be deemed to have been approved by the Secretary of the
Corporation if it is not disapproved by the Secretary of the Corporation
within ten days of the date on which it is received.
(3) A Director may only make three revised elections with
respect to each of his or her accounts.
(C) Valuation of Account. In determining the amount to be paid
upon termination of service, the cash value of a Director's Account shall
equal the product of the number of Stock Units credited to the Account
multiplied by the Fair Market Value as of the applicable Valuation Date. The
value of Stock Units payable in stock shall equal shares of Unisys Common
Stock equal to the number of whole Stock Units. The value of fractional
Stock Units shall be paid in cash. The amount of each annual installment
payment shall be determined by dividing the value determined in according
with the preceding sentence as of the date of the installment payment by the
number of installments remaining to be paid.
(D) No Early Withdrawals. No early withdrawal of a Director's
Account shall be permitted. Except as provided in Section 9 hereof or as
provided in an Election or Revised Election, distribution of a Director's
Account may be made only upon termination of service as a Director.
9. Accelerated Payment.
(A) Change in Control.
(1) Notwithstanding any other provision of the Plan to the
contrary, in the event of a "change in control," each Director may elect to
receive a single sum payment of all or any portion of his or her Stock Unit
Account balance. Such election shall only be effective if delivered to the
Secretary of the Corporation within the ninety-day period immediately
following the date of the occurrence of the change in control.
(2) If an election is timely made, the Director (or
Beneficiary) will be entitled to receive, as soon as practicable after the
expiration of the ninety-day period, an amount equal to (a) the full value or
any portion thereof of the Stock Unit Account minus (b) an early withdrawal
penalty equal to 8% of the total value of (a). The Committee, upon advice of
counsel, may modify the early withdrawal penalty described above in any way
it deems appropriate and consistent with the purposes of the Plan.
(3) If litigation is brought by the Director or the
Beneficiary after a change in control to enforce or interpret any provision
of the Plan, the Corporation to the extent permitted by applicable law shall
reimburse the Director (or Beneficiary) for the reasonable fees and
disbursements of counsel incurred in such litigation.
(B) Change in Circumstances. Notwithstanding any other
provision of this Plan to the contrary, the Committee in its sole discretion
may accelerate the payment of Stock Units Accounts to all or any group of
similarly situated Directors or Beneficiaries, whether before or after the
Director's termination of service, in response to changes in the tax laws or
accounting principles.
10. Amendment and Termination. The Board may modify or amend, in
whole or in part, any or all of the provisions of the Plan, or suspend or
terminate it entirely; provided, however, that any such modification,
amendment, suspension or termination may not, without the participating
Director's consent, adversely affect any amount credited to his/her Account
for any period prior to the effective date of such modification, amendment,
suspension or termination. The Plan shall remain in effect until terminated
pursuant to this provision.
11. Administration. The Plan shall be administered by the Committee.
Any decision made or action taken by the Committee arising out of or in
connection with the construction, administration, interpretation, or effect
of the Plan shall be within the absolute discretion of the Committee and
shall be conclusive and binding on all parties.
12. Expenses and Taxes. All expenses and costs in connection with the
operation of this Plan shall be borne by the Corporation. The Corporation
shall have the right to deduct from any payment to be made pursuant to this
Plan any federal, state or local taxes required by law to be withheld.
13. Governing Law. The Plan shall be construed and its provisions
enforced and administered in accordance with the laws of the Commonwealth of
Pennsylvania except as such laws may be superseded by any federal law.
14. SEC Rule 16b. The Plan is intended to comply with SEC Rule 16b-3
as adopted by the Securities and Exchange Commission effective November 1,
1996, and as amended thereafter, and the Committee is authorized to interpret
the Plan, modify the Plan and/or adopt rules pursuant to the Plan in order to
comply with Rule 16b-3 or such other exemptions as may be applicable.
Specifically, the Committee may delay payment of accounts which have been
deferred or credited for a period of less than six months as of the payment
date.
UNISYS CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
(Millions, except share data)
2000 1999
----------- -----------
Basic Earnings Per Common Share
Income before extraordinary items $ 205.7 $ 378.4
Less dividends on preferred shares ( 36.7)
----------- -----------
Income available to common stockholders
before extraordinary items 205.7 341.7
Extraordinary items ( 19.8) ( 12.1)
----------- -----------
Net income available to common stockholders $ 185.9 $ 329.6
=========== ===========
Weighted average shares 312,473,220 279,677,558
=========== ===========
Basic earnings per share
Before extraordinary items $ .66 $ 1.22
Extraordinary items (.06) (.04)
----------- -----------
Total $ .60 $ 1.18
=========== ===========
Diluted Earnings Per Common Share
Income available to common stockholders
before extraordinary items $ 205.7 $ 341.7
Plus impact of assumed conversions
Interest expense on 8 1/4% Convertible
Notes due 2006, net of tax .3
----------- -----------
Income available to common stockholders
plus assumed conversions before
extraordinary items 205.7 342.0
Extraordinary items ( 19.8) ( 12.1)
----------- -----------
Net income available to common stockholders $ 185.9 $ 329.9
=========== ===========
Weighted average shares 312,473,220 279,677,558
Plus incremental shares from assumed
conversions
Employee stock plans 4,065,766 10,796,201
8 1/4% Convertible Notes due 2006 1,090,473
Preferred stock 1,169,000
----------- -----------
Adjusted weighted average shares 316,538,986 292,733,232
=========== ===========
Diluted earnings per share
Before extraordinary items $ .65 $ 1.17
Extraordinary items (.06) (.04)
----------- -----------
Total $ .59 $ 1.13
=========== ===========
The average shares listed below were not included in the computation of diluted
earnings per share because to do so would have been antidilutive for the periods
presented.
Series A preferred stock 25,862,243
UNISYS CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
(Millions, except share data)
2000 1999
----------- -----------
Basic Earnings Per Common Share
Income before extraordinary item $ 42.9 $ 150.5
Less dividends on preferred shares ( 1.9)
----------- -----------
Income available to common stockholders
before extraordinary item 42.9 148.6
Extraordinary item ( 12.1)
----------- -----------
Net income available to common stockholders $ 42.9 $ 136.5
=========== ===========
Weighted average shares 313,744,279 302,182,675
=========== ===========
Basic earnings per share
Before extraordinary item $ .14 $ .49
Extraordinary item (.04)
----------- -----------
Total $ .14 $ .45
=========== ===========
Diluted Earnings Per Common Share
Income available to common stockholders
before extraordinary item $ 42.9 $ 148.6
Extraordinary item ( 12.1)
----------- -----------
Net income available to common stockholders $ 42.9 $ 136.5
=========== ===========
Weighted average shares 313,744,279 302,182,675
Plus incremental shares from assumed
conversions
Employee stock plans 1,771,865 11,492,800
Preferred stock 866,000
----------- -----------
Adjusted weighted average shares 315,516,144 314,541,475
=========== ===========
Diluted earnings per share
Before extraordinary item $ .14 $ .47
Extraordinary item (.04)
----------- -----------
Total $ .14 $ .43
=========== ===========
The average shares listed below were not included in the computation of diluted
earnings per share because to do so would have been antidilutive for the periods
presented.
Series A preferred stock 3,895,078
UNISYS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED)
($ in millions)
Nine
Months
Ended Years Ended December 31
Sept. 30, ---------------------------------
2000 1999 1998 1997 1996 1995
-------- ---- ---- ---- ---- ----
Fixed charges
Interest expense $ 57.7 $127.8 $171.7 $233.2 $249.7 $202.1
Interest capitalized during
the period 8.9 3.6 - - - -
Amortization of debt issuance
expenses 2.6 4.1 4.6 6.7 6.3 5.1
Portion of rental expense
representative of interest 34.7 46.3 49.1 51.8 59.8 65.9
------ ------ ------ ------ ------ ------
Total Fixed Charges 103.9 181.8 225.4 291.7 315.8 273.1
------ ------ ------ ------ ------ ------
Earnings
Income (loss) from continuing
operations before income taxes 311.7 770.3 594.2 (748.1) 80.2 (786.0)
Add (deduct) share of loss
(income) of associated
companies (17.7) 8.9 (.3) 5.9 (4.9) 5.0
------ ------ ------ ------ ------- ------
Subtotal 294.0 779.2 593.9 (742.2) 75.3 (781.0)
------ ------ ------ ------ ------- ------
Fixed charges per above 103.9 181.8 225.4 291.7 315.8 273.1
Less interest capitalized during
the period (8.9) (3.6) - - - -
------ ------ ------ ------ ------ -------
Total earnings (loss) $389.0 $957.4 $819.3 $(450.5)$391.1$(507.9)
====== ====== ====== ======= ====== =======
Ratio of earnings to fixed
charges 3.74 5.27 3.63 * 1.24 *
====== ====== ====== ======= ====== =======
* Earnings for the years ended December 31, 1997 and 1995 were inadequate
to cover fixed charges by approximately $742.2 and $781.0 million,
respectively.
5