GOVERNANCE AND COOPERATION AGREEMENT
This Governance and Cooperation Agreement (this "Agreement") is
made
and entered into as of May 20, 2008, by and among Unisys
Corporation, a
Delaware corporation (the "Company"), and MMI Investments, L.P., a
Delaware
limited partnership ("MMI"), MCM Capital Management, LLC, a
Delaware limited
liability company, Clay B. Lifflander and Charles B. McQuade (such
entities and
natural persons, collectively, the "MMI Group" and each,
individually, a
"member" of the MMI Group) which presently are or may be deemed to
be members
of a "group" with respect to the beneficial ownership of the common
stock of
the Company, par value $.01 per share (the "Common Stock"),
pursuant to Rule
13d-5 promulgated by the Securities and Exchange Commission (the
"SEC") under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
RECITALS:
WHEREAS, the Company and the MMI Group have engaged in various
discussions and communications concerning the Company's business,
financial
performance and strategic plans; and
WHEREAS, the Company and the members of the MMI Group have
determined
(i) that the interests of the Company and its stockholders would be
best served
at this time by, among other things, providing for the appointment
of certain
individuals to the Company's board of directors (the "Board") and
(ii) to come
to an agreement with respect to certain matters related to the 2008
annual
meeting of stockholders of the Company (including any adjournment
or
postponement thereof, the "2008 Annual Meeting") and certain other
matters, as
provided in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the
mutual covenants and agreements contained herein, and for other
good and
valuable consideration, the receipt and sufficiency of which are
hereby
acknowledged, the parties hereto, intending to be legally bound
hereby, agree
as follows:
1. BOARD MATTERS; BOARD APPOINTMENTS; 2008 ANNUAL MEETING;
COMMITTEE
APPOINTMENTS.
(a) The Company agrees to appoint Clay B. Lifflander
("Lifflander") and Charles B. McQuade ("McQuade" and, together with
Lifflander,
the "MMI Nominees") to serve as directors of the Board immediately
following
execution of this Agreement. Lifflander will be appointed to
the class of
directors to serve until the 2008 Annual Meeting and thereafter, if
elected, for
a term of three years expiring at the Company's 2011 annual meeting
of
stockholders, and McQuade will be appointed to the class of
directors to serve
for a term expiring at the Company's 2010 annual meeting of
stockholders. The
term of each MMI Nominee is referred to herein, as applicable, as
the "MMI
Nominee Term". At the
2008 Annual Meeting, the Board agrees to nominate
Lifflander for reelection as a director, recommend that the
Company's
shareholders vote to elect Lifflander as a director, will recommend
that the
Company's shareholders vote all proxies in favor of his election
and will
otherwise use reasonable best efforts to cause the election of
Lifflander in
the same manner as any other director nominees of the Board.
The Company will
file a definitive proxy statement with the SEC which includes such
information
regarding Lifflander as is required by federal securities laws in
connection
with his nomination by the Company.
(b) Upon the appointment of the MMI Nominees to the Board, the
size of the Board shall be increased to thirteen (13) directors.
Following the
2008 Annual Meeting, the size of the Board shall not be increased
in excess of
thirteen (13) directors at any time while Lifflander is on the
Board.
(c) If Lifflander is not elected to the Board at the 2008
Annual
Meeting, (i) the MMI Group shall thereafter be entitled to select a
replacement
nominee whom, subject to a determination by the Board's Nominating
& Governance
Committee that such individual is qualified, which may not be
unreasonably
withheld, the Company or the Board will promptly appoint to the
Board to serve
until the Company's 2009 annual meeting of stockholders (the "2009
Annual
Meeting"); and (ii) the Company will nominate any such replacement
nominee for
election to the Board at the 2009 Annual Meeting to serve in place
of
Lifflander for a term which will expire at the Company's 2011
annual meeting of
stockholders. Any
replacement director appointed pursuant to this Section 1(c)
shall also be referred to as an "MMI Nominee" and the term for
which such MMI
Nominee is appointed pursuant to this Section 1(c) shall be
referred to as the
such MMI Nominee's "MMI Nominee Term."
(d) If at any time during the period from the date of this
Agreement until the end of the applicable MMI Nominee Term: (i)
there shall
occur a vacancy in the Board seat previously occupied by Lifflander
by reason
of his resignation, removal, death or incapacity, then the Company
shall take
all necessary action to promptly fill such vacancy with a person
proposed by
the MMI Group, subject to a determination by the independent
members of the
Board's Nominating and Governance Committee that such individual is
qualified,
which may not be unreasonably withheld; provided that the MMI Group
may choose
not to fill such vacancy; or (ii) there shall occur a vacancy in
the Board seat
previously occupied by McQuade by reason of his resignation,
removal, death or
incapacity, then the Company shall take all necessary action to
promptly fill
such vacancy with a person proposed by the MMI Group, subject to
a
determination by the independent members of the Board's Nominating
and
Governance Committee that such individual is qualified; provided
that if the
independent members of the Board's Nominating and Governance
Committee
determine that such individual is not qualified, the MMI Group
shall propose
three other individuals to fill such vacancy that MMI believes are
qualified
and the Company shall appoint one of such three individuals to
serve as a
replacement director.
Any replacement director appointed pursuant to this
Section 1(d) shall be appointed for the applicable MMI Nominee Term
of the MMI
Nominee replaced and shall also be referred to as an "MMI
Nominee."
(e) The 2008 Annual Meeting shall be held on July 24, 2008, or
within 30 days thereafter. The 2009 Annual Meeting shall be held no
later than
June 1, 2009.
(f) Immediately following the 2008 Annual Meeting, the Board
will appoint McQuade to the Board's Compensation Committee and
Finance Committee
and Lifflander to the Board's Finance Committee and Nominating and
Governance
Committee, and the Board will appoint an MMI Nominee to each
committee of the
Board created after the date of this Agreement, as and when
requested by the
MMI Group. In
addition, in the event the powers of the Board's Audit
Committee
are expanded after the date of this Agreement in any material
respect, the
Board will appoint an MMI Nominee to the Audit Committee, as and
when requested
by the MMI Group
(g) As used in this Agreement, the terms "Affiliate" and
"Associate" shall have the respective meanings set forth in Rule
12b-2
promulgated by the SEC under the Exchange Act; the terms
"beneficial owner" and
"beneficial ownership" shall have the respective meanings as set
forth in Rule
13d-3 promulgated by the SEC under the Exchange Act; and the terms
"person" or
"persons" shall mean any individual, corporation (including
not-for-profit),
general or limited partnership, limited liability company, joint
venture,
estate, trust, association, organization or other entity of any
kind or nature.
(h) At any meeting of the Company's stockholders taking place
while Lifflander (or any replacement of Lifflander appointed
pursuant to
Section 1(d) hereof) is on the Board, MMI shall, and shall cause
each of its
Associates and Affiliates to, be present for quorum purposes and to
vote all
shares of Common Stock that such person is entitled to vote as of
the record
date for such meeting of stockholders (a) in favor of each director
nominated
or recommended by the Board for election at such meeting and (b)
against any
shareholder nominations for director which are not approved and
recommended by
the Board for election at such meeting.
2. STANDSTILL. For a
period commencing upon the date hereof and ending on the
later of (i) the date Lifflander (or any replacement of Lifflander
appointed
pursuant to Section 1(d) hereof) shall cease to be a director of
the Company
and (ii) September 15, 2008, no member of the MMI Group nor any of
its
Affiliates, without the prior written consent of the Board, will,
directly or
indirectly, do any of the following provided that this Section 2
shall not
limit any member of the MMI Group from non-public communications
with the Board
and further shall not apply to actions taken by an MMI Nominee in
his capacity
as a director while serving as a member of the Board:
(a) acquire, offer or
agree to acquire (except by way of stock
dividends or other distributions or offerings made available to
holders of
voting securities of the Company generally on a pro rata basis),
directly or
indirectly, whether by purchase, tender or exchange offer, through
the
acquisition of control of another person or entity, by joining a
partnership,
limited partnership, syndicate or other "group" (within the meaning
of Section
13(d)(3) of the Exchange Act), through swap or hedging transactions
or
otherwise, any voting securities of the Company or any voting
rights decoupled
from the underlying voting securities, if such acquisition, offer
to acquire or
agreement to acquire would result in MMI (together with any other
person or
entity, partnership, limited partnership, syndicate or other group)
owning,
controlling or otherwise having any ownership or economic interest
in more than
twenty percent (20%) of the outstanding shares of Common Stock;
(b) sell, offer or agree to sell, directly or indirectly,
through swap or hedging transactions or otherwise, whether by
purchase, tender
or exchange offer, through the acquisition of control of another
person or
entity, by joining a partnership, limited partnership, syndicate or
other
group, any voting securities of the Company or any voting rights
decoupled from
the underlying voting securities held by MMI or its Affiliates or
Associates to
any third party, if such sale, offer to sell or agreement to sell
would result
in such third party, together with its Affiliates and Associates,
having an
ownership or economic interest in more than ten percent (10%) of
the
outstanding shares of Common Stock; provided that nothing in this
Section 2(b)
shall restrict any member of the MMI Group from engaging in open
market
transactions, transactions with broker dealers in the ordinary
course of their
business or transactions with entities that are permitted to and do
file
Statements on Schedule 13G with respect to the Common Stock so long
as such
member of the MMI Group does not have any knowledge of any plan or
intention on
the part of the buyer to control or seek to control, or otherwise
actively
influence the Board or management of, the Company;
(c) (i) engage, or in any way participate, directly or
indirectly, in any "solicitation" (as such term is defined in Rule
14a-1(l)
promulgated by the SEC under Exchange Act ) of proxies or consents,
(ii) seek
to advise, encourage or influence any person or entity with respect
to the
voting of any voting securities of the Company, (iii) initiate,
propose or
otherwise "solicit" (as such term is defined in Rule 14a-1(l)
promulgated by
the SEC under the Exchange Act) stockholders of the Company for the
approval of
stockholder proposals or other business to be considered at a
stockholders
meeting, or (iv) induce or attempt to induce any other person or
entity to
initiate any such stockholder proposal; provided that nothing in
this Section
2(c) shall limit the ability of the MMI Group to communicate to any
third
party, including through the issuance of a public statement, how it
intends to
vote the shares of Common Stock beneficially owned by it on any
matter put to
the stockholders of the Company for their approval;
(d) form, join or in any way participate in a partnership,
syndicate, or other group, including without limitation any "group"
as defined
under Section 13(d)(3) of the Exchange Act, with respect to any
voting
securities of the Company, other than the MMI Group or a group that
includes
only some or all of the persons or entities identified as
"Reporting Persons"
(or Affiliates thereof) in MMI's statement on Schedule 13D/A filed
with the
SEC on February 20, 2008;
(e) deposit any Company voting securities in any voting trust
or
subject any Company voting securities to any arrangement or
agreement with
respect to the voting thereof, except as expressly set forth in
this Agreement;
(f) seek, alone or in concert with others, (1) to call a
meeting
of stockholders or solicit consents from stockholders or conduct a
nonbinding
referendum of stockholders, (2) to obtain representation on the
Board except as
expressly permitted in this Agreement, (3) to effect the removal of
any member
of the Board, (4) to make a stockholder proposal at any meeting of
the
stockholders of the Company, (5) to make a request for a list of
the Company's
stockholders, or (6) to amend any provision of the Company's
certificate of
incorporation or bylaws;
(g) effect or seek to effect (including, without limitation, by
entering into any negotiations, agreements or understandings
whether or not
legally enforceable with any person), offer or propose to effect,
cause or
participate in, or in any way assist or facilitate any other person
