March 16, 2006

Dear Fellow Stockholder:

      It is my pleasure to invite you to the Unisys 2006 Annual Meeting of Stockholders. This year’s meeting will be held on Thursday, April 20, 2006, at The Hilton Inn at Penn, which is located at 3600 Sansom Street in Philadelphia, Pennsylvania. The meeting will begin at 9:30 a.m.

      The past year was a challenging one for Unisys. We encountered significant issues in two of our outsourcing operations and faced lower demand than we expected in our technology sales. These factors, plus higher pension accounting expense and an adjustment in our deferred tax assets, resulted in a substantial loss for the year. While these results were disappointing and unacceptable, we have much to be optimistic about as we enter the new year. In 2005, we conducted a comprehensive review of our strategy and business operations to build on our strengths and drive profitable growth going forward. As a result of this review, we announced a far-reaching plan to refocus our business around high-growth market segments, reduce our cost base, divest non-core assets, and enhance our sales and marketing efforts. We saw strong orders growth and cash flow in the fourth quarter. While we have much more work to do to implement the new plan, we are confident that we have laid the foundation for improved results in 2006 and beyond.

      Whether or not you plan to attend the annual meeting, I urge you to take a moment to vote on the items in this year’s proxy statement. Most stockholders have a choice of voting their shares over the Internet, by telephone, or by completing, signing, and returning a proxy card. Voting by any of these means takes only a few minutes, and it will ensure that your shares are represented at the meeting. If you vote over the Internet, you will also be given the opportunity to access future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail. Electronic access saves the company the cost of producing and mailing these documents. I encourage you to take advantage of it.

      I look forward to seeing you at the annual meeting, where you will hear about our results for 2005 and our priorities for 2006.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

April 20, 2006

       Unisys Corporation will hold its 2006 Annual Meeting of Stockholders at The Hilton Inn at Penn, 3600 Sansom Street, Philadelphia, Pennsylvania, on Thursday, April 20, 2006, at 9:30 a.m. to:

      Only record holders of Unisys common stock at the close of business on February 28, 2006 will be entitled to vote at the annual meeting.

Blue Bell, Pennsylvania

March 16, 2006

TABLE OF CONTENTS

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

April 20, 2006

       The Board of Directors of Unisys Corporation solicits your proxy for use at the 2006 Annual Meeting of Stockholders to be held on April 20, 2006 and at any adjournments. At the annual meeting, stockholders will be asked to elect four directors, to ratify the selection of the Company’s independent registered public accountants, and to transact any other business properly brought before the meeting.

      The record date for the annual meeting is February 28, 2006. Only holders of record of Unisys common stock as of the close of business on the record date are entitled to vote at the meeting. On the record date, 342,544,001 shares of common stock were outstanding. The presence, in person or by proxy, of a majority of those shares will constitute a quorum at the meeting.

      This proxy statement, the proxy/voting instruction card and the annual report of Unisys, including the financial statements for 2005, are being mailed and made available on the Internet on or about March 16, 2006.

Required Vote

      Each share of Unisys common stock outstanding on the record date is entitled to one vote on each matter to be voted upon. Under Delaware law and the Company’s Bylaws, directors are elected by a plurality of the votes cast. This means that the nominees receiving the greatest number of votes will be elected. However, as more fully discussed in paragraph 7 of “Corporate Governance Guidelines” on page 8, the Board has adopted a majority voting policy that any nominee who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election must tender his or her resignation. The Board will accept or reject the tendered resignation within 90 days of the annual meeting. Abstentions and broker non-votes are not counted for purposes of the election of directors.

      Ratification of the selection of the Company’s independent registered public accounting firm will require the affirmative vote of a majority of shares present, in person or by proxy, and entitled to vote. Abstentions will be included in the vote totals for this matter and therefore will have the same effect as a negative vote; broker non-votes will not be included in the vote totals and therefore will have no effect on the vote.

Voting Procedures and Revocability of Proxies

      Your vote is important. Shares may be voted at the annual meeting only if you are present in person or represented by proxy. Most stockholders have a choice of voting (a) by completing a proxy/voting instruction card and mailing it in the postage-paid envelope provided, (b) over the Internet or (c) by telephone using a toll-free telephone number. Check the materials you have received to see which options are available to you and to obtain the applicable web site or telephone number. If you elected to receive proxy materials over the Internet, you should have already received e-mail instructions on how to vote electronically. Please be aware that if you vote over the Internet, you may incur costs associated with your

      The telephone and Internet voting procedures are designed to authenticate stockholders’ identities by use of a control number, to allow stockholders to give their voting instructions and to confirm that stockholders’ instructions have been recorded properly. The Company has been advised by counsel that the telephone and Internet voting procedures are consistent with the requirements of applicable law.

      You may revoke your proxy at any time before it is exercised by writing to the Corporate Secretary of Unisys, by timely delivery of a properly executed later-dated proxy (including an Internet or telephone vote) or by voting in person at the meeting.

      The method by which you vote will in no way limit your right to vote at the meeting if you later decide to attend in person. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the meeting.

      If you properly complete and return your proxy, and do not revoke it, the proxy holders will vote your shares in accordance with your instructions. If your properly completed proxy gives no instructions, the proxy holders will vote your shares FOR the election of directors, FOR the selection of independent registered public accountants, and in their discretion on any other matters that properly come before the annual meeting.

      If you are a participant in the Unisys Savings Plan, the proxy/voting instruction card will serve as voting instructions to the plan trustee for any whole shares of Unisys common stock credited to your account as of February 28, 2006. The trustee will vote those shares in accordance with your instructions if it receives your completed proxy by April 14, 2006. If the proxy is not timely received, or if you give no instructions on a matter to be voted upon, the trustee will vote the shares credited to your account in the same proportion as it votes those shares for which it received proper instructions from other participants.

ELECTION OF DIRECTORS

      The Board of Directors currently consists of 11 members, divided into three classes. One class of directors is elected each year to hold office for a three-year term. The four directors whose terms expire in 2006, Randall J. Hogan, Edwin A. Huston, Leslie F. Kenne and Joseph W. McGrath, have been nominated for reelection. The remaining seven directors will continue to serve as set forth below. Each of the nominees has agreed to serve as a director if elected, and Unisys believes that each nominee will be available to serve. However, the proxy holders have discretionary authority to cast votes for the election of a substitute should any nominee not be available to serve as a director.

           The Board of Directors recommends a vote “FOR” all nominees.

Information Regarding Nominees and Directors

      The names and ages of the nominees and directors, their principal occupations and employment during the past five years, and other information regarding them are as follows.

Board Meetings; Attendance at Annual Meetings

      The Board of Directors held eight meetings in 2005. During 2005, all directors attended at least 75% of the meetings of the Board of Directors and standing Committees on which they served.

      It is the Company’s policy that all directors should attend the annual meeting of stockholders. All of the Company’s directors attended the 2005 annual meeting.

Independence of Directors

      All of the Company’s directors other than Mr. McGrath meet the independence requirements prescribed by the New York Stock Exchange and, in the case of members of the Audit Committee, also meet the audit committee independence requirements prescribed by the SEC. In assessing whether a director has a material relationship with Unisys (either directly or as a partner, stockholder or officer of an organization that has a relationship with Unisys), the Board uses the criteria outlined below in paragraph 2 of “Corporate Governance Guidelines”. All non-employee directors met these criteria in 2005.

Committees

      The Board of Directors has a standing Audit Committee, Compensation Committee, Finance Committee and Nominating and Corporate Governance Committee. The specific functions and responsibilities of each committee are set forth in its charter, which is available on the Company’s Internet web site at www.unisys.com in the Investors section under Corporate

      The Audit Committee assists the Board in its oversight of the integrity of the Company’s financial statements and its financial reporting and disclosure practices, the soundness of its systems of internal financial and accounting controls, the independence and qualifications of its independent registered public accounting firm, the performance of its internal auditors and independent registered public accounting firm, the Company’s compliance with legal and regulatory requirements and the soundness of its ethical and environmental compliance programs. The Audit Committee held 15 meetings in 2005. Its members are Mr. Espe, Ms. Fletcher and Mr. Huston (chair). The Board has determined that each of Mr. Espe, Ms. Fletcher and Mr. Huston is an audit committee financial expert as defined by the SEC.

      The Compensation Committee oversees the compensation of the Company’s executives, the Company’s executive management structure, the compensation-related policies and programs involving the Company’s executive management and the level of benefits of officers and key employees. It also monitors the Company’s diversity programs. The Compensation Committee held five meetings in 2005. Its members are Mr. Duques (chair), Mr. Jones and Mr. Martin.

      The Finance Committee oversees the Company’s financial affairs, including its capital structure, financial arrangements, capital spending and acquisition and disposition plans. It also oversees the management and investment of funds in the pension, savings and welfare benefit plans sponsored by the Company. The Finance Committee held seven meetings in 2005. Its members are Mr. Bolduc (chair), Mr. Espe and Mr. Hogan.

      The Nominating and Corporate Governance Committee identifies and reviews candidates and recommends to the Board of Directors nominees for membership on the Board of Directors. It also oversees the Company’s corporate governance. In identifying candidates for Board membership, the Nominating and Corporate Governance Committee considers a number of factors including independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. In February 2006, the committee recommended, and the Board elected, a new director. As part of the selection process, the committee looked for candidates with a background in information technology or with government, security or sales and marketing experience. The committee retained a third-party search firm to assist in identifying qualified candidates. The committee will consider recommendations on director candidates received from stockholders and other qualified sources. Stockholder recommendations must be in writing and addressed to the Chairman of the Nominating and Corporate Governance Committee, c/o Corporate Secretary, Unisys Corporation, Unisys Way, Blue Bell, Pennsylvania 19424. The Nominating and Corporate Governance Committee held six meetings in 2005. Its members are Dr. Duderstadt (chair), Ms. Fletcher and Mr. Hogan.

Code of Ethics and Business Conduct

      Unisys has a code of ethics, the Unisys Code of Ethics and Business Conduct, that applies to all employees, officers (including the chief executive officer, chief financial officer and controller) and directors. The code is posted on the Company’s Internet web site at www.unisys.com in the Investors section under Corporate Governance and Board of Directors and is also available in print to any stockholder who requests it. The Company intends to post

Corporate Governance Guidelines

      The Board of Directors has adopted Guidelines on Significant Corporate Governance Issues. The full text of these guidelines, as amended through February 9, 2006, is available on the Company’s Internet web site at www.unisys.com in the Investors section under Corporate Governance and Board of Directors and is also available in print to any stockholder who requests it. Among other matters, the guidelines cover the following:

Stock Ownership Guidelines

      Since 1998, the Company has had in place stock ownership guidelines for both directors and elected officers in order to more closely link their interests with those of stockholders. Under the guidelines, directors and elected officers are expected to own, within specified time periods, a specified number of shares of Unisys stock or stock units. Stock options, including vested stock options, do not count toward fulfillment of the ownership guidelines.

Communications with Directors

      Stockholders may send communications to the Board of Directors or to the non-management directors as a group by writing to them c/o Corporate Secretary, Unisys Corporation, Unisys Way, Blue Bell, Pennsylvania 19424. All communications directed to Board members will be delivered to them.

Audit Committee Report

      In performing its oversight responsibilities as defined in its charter, the Audit Committee has reviewed and discussed the audited financial statements and reporting process, including the system of internal controls, with management and with Ernst & Young LLP, the Company’s independent registered public accounting firm. The Committee has also discussed with Ernst & Young LLP the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended. In addition, the Committee has discussed with Ernst & Young LLP their independence and has received from them the written disclosures required by the Independence Standards Board. The Committee has also considered the compatibility of audit-related services, tax services and other non-audit services with the firm’s independence.

      During 2005, the Audit Committee was kept informed of the progress of management’s documentation, testing and evaluation of the Company’s system of internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations and provided oversight to management during the process. At the conclusion of the process, the Committee reviewed a report on the effectiveness of the Company’s internal control over financial reporting.

      Based on these reviews and discussions, the Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2005 for filing with the SEC.

Audit Committee

Matthew J. Espe

Denise K. Fletcher

Edwin A. Huston

Relationship with Independent Registered Public Accounting Firm

      Ernst & Young LLP has billed the Company the following fees for professional services rendered in respect of the years ended December 31, 2005 and 2004 (in millions of dollars):

     Audit fees consist of fees for the audit and review of the Company’s financial statements, statutory audits, comfort letters, consents, assistance with and review of documents filed with the SEC and Section 404 attestation procedures. Audit-related fees consist of fees for employee benefit plan audits, accounting advice regarding specific transactions, and various attestation engagements. Tax fees principally represent fees for tax compliance services. All other fees are for non-prohibited advisory services to the Company’s federal government group.

      The Audit Committee annually reviews and pre-approves the services that may be provided by the independent registered public accounting firm. The committee has also adopted an Audit and Non-Audit Services Pre-Approval Policy that contains a list of pre-approved services, which the committee may revise from time to time. In addition, the Audit Committee has delegated pre-approval authority, up to a fee limitation of $150,000 per service, to the chairman of the committee. The chairman of the committee reports any such pre-approval decision to the Audit Committee at its next scheduled meeting.

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

      The Audit Committee has selected the firm of Ernst & Young LLP as the independent registered public accounting firm to audit the Company’s books and accounts for the year ending December 31, 2006. Ernst & Young LLP has served as the Company’s independent registered public accounting firm since 1986. Its representatives will be present at the annual meeting and will have the opportunity to make a statement if they desire to do so and to respond to appropriate questions asked by stockholders.

      The Board of Directors considers Ernst & Young LLP to be well qualified to serve as the independent registered public accounting firm for Unisys. If, however, stockholders do not ratify the selection of Ernst & Young LLP, the appointment will be reconsidered.

      The Board of Directors recommends a vote “FOR” the proposal to ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2006.

EQUITY COMPENSATION PLAN INFORMATION

      The following table sets forth information as of December 31, 2005 with respect to compensation plans under which Unisys common stock is authorized for issuance.

SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      Shown below is information with respect to persons or groups that beneficially own more than five percent of Unisys common stock. This information is derived from Schedules 13G filed by such persons or groups in 2006.

EXECUTIVE COMPENSATION

Summary Compensation Table

      The following table sets forth information concerning the annual and long-term compensation paid to the chairman, the chief executive officer and the other three most highly compensated executive officers of Unisys in 2005 (the “Named Officers”) for services rendered in all capacities to Unisys for 2005, 2004 and 2003.

Option Grants in Last Fiscal Year

      The following table sets forth information on grants of stock options during 2005 to the Named Officers. No stock appreciation rights were granted during 2005.

Option Exercises and Fiscal Year-End Values

      The following table sets forth information with respect to option exercises during 2005 and unexercised stock options held by the Named Officers at December 31, 2005.

Pension Plans

      The table below shows the aggregate annual amounts at age 62 that would be received from the Unisys Pension Plan (the “Pension Plan”), the Supplemental Executive Retirement Income Plan (the “Supplemental Plan”) and the Elected Officer Pension Plan (the “Officer Plan”).

      The Pension Plan and Supplemental Plan generally are available to all employees located in the United States. The Officer Plan is available to officers, including the Named Officers, who satisfy certain minimum service requirements. The aggregate pension amount payable under the Officer Plan is offset by benefits paid under the Pension Plan, the Supplemental Plan and any applicable subsidiary plan. The amounts shown in the table are computed on a single life annuity basis and are subject to a reduction equal to 50% of the participant’s primary social security benefit.

      Final Average Compensation generally corresponds to the amounts shown in the Summary Compensation Table under the headings Salary and Bonus. However, Final Average Compensation is calculated using the individual’s highest 60 consecutive months of compensation out of the final 120 months of employment and thus will differ somewhat from the amounts shown in the Summary Compensation Table. Final Average Compensation for the Named Officers as of March 1, 2006 is as follows: J. W. McGrath — $748,503; P. Blackmore — $490,909; J. B. Wallace — $537,333; J.B. Haugen — $532,000. Full years of credited service under the pension plans for the Named Officers as of March 1, 2006 are as follows: J. W. McGrath — seven years; P. Blackmore — one year; J. B. Wallace — six years; J.B. Haugen — nine years.

      The Company has established two grantor trusts relating to the Supplemental Plan and the Officer Plan. If a change in control of the Company occurs, the Company is required to fund the trusts in an amount equal to the present value of the accrued pension benefits under the Supplemental Plan and the Officer Plan.

      Pursuant to the employment agreement described below, Lawrence A. Weinbach is vested in an annual pension benefit of $1,000,000.

Employment Agreements

      On April 6, 2004, the Company entered into a new employment agreement with Lawrence A. Weinbach, covering the terms and conditions of Mr. Weinbach’s employment for

      Effective February 1, 2006, the Company and Mr. Weinbach entered into a consulting agreement. The consulting agreement provides for Mr. Weinbach to provide such consulting services to Unisys as are requested by its Board of Directors or its Chairman during the period beginning February 1, 2006 and ending February 1, 2007. The agreement provides for Mr. Weinbach to bill the Company at the rate of $8,000 per day for his services. The Board may, in its discretion, pay Mr. Weinbach an additional fee at the conclusion of the agreement based on the value of the services he provides, but in no event may the total amount paid to Mr. Weinbach under the agreement exceed $1,000,000.

      On December 22, 2004, the Company and Joseph W. McGrath signed an employment agreement covering the terms and conditions of Mr. McGrath’s employment as President and Chief Executive Officer for the period from January 1, 2005 through December 31, 2007. The agreement provides for a minimum base salary of $900,000 per year, subject to periodic review by the Compensation Committee. Mr. McGrath is eligible to receive an annual bonus award at a target bonus level of not less than 100% of base salary. The actual bonus payable, if any, will be

Change in Control Employment Agreements

      The Company has entered into change in control employment agreements with its executive officers including the Named Officers. The agreements are intended to retain the services of these executives and provide for continuity of management in the event of any actual or threatened change in control. A change in control is generally defined as (i) the acquisition of 20% or more of Unisys common stock, (ii) a change in the majority of the Board of Directors unless approved by the incumbent directors (other than as a result of a contested election) and (iii) certain reorganizations, mergers, consolidations, liquidations or dissolutions. Each agreement has a term ending on the third anniversary of the date of the change in control. These agreements, which are the same in substance for each executive, provide that in the event of a change in control each executive will have specific rights and receive certain benefits. Those benefits include the right to continue in the Company’s employ during the term, performing comparable duties to those being performed immediately prior to the change in control and at compensation and benefit levels that are at least equal to the compensation and benefit levels in effect immediately prior to the change in control. Upon a termination of employment under certain circumstances following a change in control, the terminated executive will be entitled to receive special termination benefits, including a lump-sum payment equal to three years base salary and bonus and the actuarial value of the pension benefit the executive would have accrued had the executive remained employed for three years following the termination date. The special termination benefits are payable if the Company terminates the executive without cause, the executive terminates employment for certain enumerated reasons (including a reduction in the executive’s compensation or responsibilities or a change in the executive’s job location), or the executive voluntarily terminates employment for any reason during the 30-day period following the first anniversary of the date of the change in control. If any payment or distribution by the Company to the executive is determined to be subject to the excise tax imposed by section 4999 of the Internal Revenue Code, the executive is entitled to receive a payment on an after-tax basis equal to the excise tax imposed. The executive is under no obligation to mitigate amounts payable under these agreements, and to the extent the executive has a separate employment agreement with the Company with conflicting rights, the executive is allowed the greater entitlement.

Transactions with Management

      During 2005, the law firm Pepper Hamilton LLP, which has represented Unisys on a variety of matters for approximately 20 years, provided legal services to Unisys for fees of approximately $144,000. The husband of Nancy Straus Sundheim is a partner in that firm. Ms. Sundheim has been Senior Vice President, General Counsel and Secretary of Unisys since 2001.

      During 2005, ProBusiness Services, Inc. provided payroll services to Unisys for fees of approximately $549,000. ProBusiness, which has provided payroll services to Unisys since 1999, was acquired by Automatic Data Processing, Inc. (ADP) in 2003. Mr. Weinbach’s brother is Chairman and Chief Executive Officer of ADP.

Compensation of Directors

      In 2005, the Company’s non-employee directors received an annual retainer of $50,000, an annual attendance fee of $10,000 for regularly scheduled Board and committee meetings and a meeting fee of $1,500 for attendance at certain additional Board and committee meetings. Chairmen of committees other than the audit committee also received an annual $5,000 retainer. The annual retainer for the chair of the audit committee was $20,000. During 2005, each non-employee director also received an option to purchase 12,000 shares of Unisys common stock. The annual retainers and annual attendance fee were paid in monthly installments, with 50% of each installment paid in cash and 50% in the form of common stock equivalent units. The value of each stock unit at any point in time is equal to the value of one share of Unisys common stock. Stock units are recorded in a memorandum account maintained for each director. A director’s stock unit account is payable in Unisys common stock, either upon termination of service or on a date specified by the director, at the director’s option. Directors do not have the right to vote with respect to any stock units.

      In February 2006, the Board determined that the annual retainer, annual meeting attendance fee, retainers for chairs of committees and fee for attendance at additional meetings set forth above will continue in 2006. However, these fees will now be payable 100% in cash. The Board also approved the payment of an additional $100,000 annual retainer to the non-executive Chairman of the Board. Prior to February 2006, the Chairman of the Board had been an employee of the Company. The Board also approved an annual grant to each non-employee director of restricted stock units having a value of $100,000 (based on the fair market value of Unisys common stock on the date of grant). Accordingly, on February 9, 2006 each non-employee director received a grant of 15,397 restricted stock units. The restricted stock units vest in three annual installments beginning one year after the date of grant and will be settled in shares of Unisys common stock. The grant of restricted stock units was made in lieu of stock option grants.

      Directors have the opportunity to defer until termination of service, or until a specified date, all or a portion of their cash fees. Any deferred cash amounts, and earnings or losses thereon, are recorded in a memorandum account maintained for each director. The right to receive future payments of deferred cash accounts is an unsecured claim against the Company’s general assets. Directors who are employees of the Company do not receive any cash, stock units, stock options or restricted stock units for their services as directors.

REPORT OF THE COMPENSATION COMMITTEE

Role of the Committee

      The Compensation Committee oversees the Company’s executive compensation program. In this capacity, the Committee regularly reviews and approves the Company’s executive compensation strategy and principles to ensure that they are aligned with the Company’s business strategy and objectives and with stockholder interests. The responsibilities of the Committee, as delineated in its charter, include reviewing and approving goals and objectives relevant to the compensation of the chief executive officer, evaluating the performance of the chief executive officer in light of those goals and making recommendations to the independent members of the Board concerning the compensation level of the chief executive officer; reviewing and approving compensation levels of the other elected officers; considering management succession and related matters; and administering the Company’s incentive plans, including its executive variable compensation plan and its long-term incentive plan. To assist in carrying out its responsibilities, the Committee regularly receives reports and recommendations from management and from an outside compensation consultant. The Committee also may consult with legal, accounting or other advisors, as appropriate, in accordance with the authority granted to it in its charter. The Committee annually reviews the charter and revises it as appropriate.

Compensation Philosophy

      The Company’s executive compensation program is designed to attract and retain executives responsible for the Company’s long-term success, to reward executives for achieving both financial and strategic company goals, to align executive and stockholder interests through long-term, equity-based plans and to provide a compensation package that recognizes individual contributions as well as overall business results. As a result, a substantial portion of each executive’s total compensation is intended to be variable and to be tied closely to the achievement of specific business objectives and corporate financial goals, as well as the attainment of the executive’s individual performance objectives.

      The Company’s executive compensation program also takes into account the compensation practices of companies with which Unisys competes or could compete for executive talent. In establishing total annual compensation for executive officers, the Committee reviews total annual compensation, as well as each component of total compensation, against executive compensation benchmarking data prepared by the Committee’s outside compensation consultant. The benchmark data reflect median compensation levels for persons holding comparable positions at the benchmark companies. These benchmark companies are principally in the businesses of systems integration and consulting, information technology outsourcing, infrastructure services, and hardware technology.

      In addition to reviewing executive officers’ compensation against the benchmark data, the Committee also solicits input from the Company’s president and chief executive officer regarding total compensation for those executives reporting directly to him.

Principal Components of Executive Compensation

      The principal elements of the Company’s executive compensation program consist of both annual and long-term programs and include base salary, annual variable cash incentives and

Base Salary

      Base salaries for elected officers are initially determined by evaluating the responsibilities of the position held and the experience of the individual and comparing such salaries to the benchmark compensation data. Increases in salary are based on the Committee’s evaluation of such factors as the level of responsibility, individual performance, pay levels of both the executive in question and other similarly situated executives, and the benchmark compensation data.

Variable Incentive Compensation

      During 2005, all of the Company’s elected officers participated in the Company’s executive variable compensation plan. This plan’s stated purpose is to motivate and reward elected officers and other key executives for the attainment of corporate and/or individual performance goals. Under the plan, the Committee has the discretion to determine the conditions (including performance objectives) applicable to annual award payments and the amounts of such awards.

      Incentive compensation awards payable under the plan are based on (1) a participant’s target annual incentive, (2) the amount of funding the Company makes available for the plan and (3) individual performance. Individual targets for elected officers are approved by the Committee and take into account the benchmark data. For 2005, target award amounts, which are typically stated as a percentage of base salary, ranged from 45% to 75% for elected officers other than the chairman and the chief executive officer. Assuming funding is available, actual award amounts can range from zero to 150% of target, depending upon corporate and individual performance.

      Funding for the executive variable incentive plan depends upon the degree to which the Company and, in some instances, the executive’s business unit, achieves performance targets approved by the Committee at the beginning of each year. For 2005, the Committee determined that awards under the plan would be funded only if the Company made its earnings per share target for the year. Assuming available funding, the amount of awards would then depend upon the degree to which additional corporate financial goals were met and upon the Committee’s assessment of the individual’s performance. The Company did not meet its earnings per share target for 2005. Therefore, except for guaranteed awards to newly hired executives, no variable incentive awards for 2005 were made to participants under the plan. Mr. Blackmore joined the Company as an Executive Vice President in February 2005. In connection with his employment, he was guaranteed a bonus in the amount of $224,658 for 2005.

Long-Term Incentive Awards

      Long-term incentives are designed to align the interests of executives with those of stockholders. In 2005, long-term incentives generally took the form of stock option awards. In determining the size of stock option grants to elected officers, the Committee considers the number of shares available for grant under the Company’s long-term incentive plan, the potential dilutive impact of grants and the appropriate allocation of grants among elected officers and all other eligible employees. The Committee also considers the benchmark data in

      The options granted to the Named Officers in 2005 are set forth at page 16. Options granted in February 2005 have a term of five years and were originally scheduled to vest in three equal annual installments beginning one year after the date of grant. On September 23, 2005, the Committee approved the acceleration of the vesting of these and all other outstanding stock options. The acceleration eliminates future compensation expense associated with these options that the Company would otherwise recognize in its income statement upon its adoption of the new accounting rule that requires the expensing of stock options. In addition to these stock option grants, on December 19, 2005, the Committee granted stock options to certain of the Company’s key employees in furtherance of the Company’s plan to incent these employees to execute the turnaround of the Company. The December grants have a term of five years, are immediately exercisable, and prohibit the recipient from selling the shares acquired upon exercise for a period of two years from the date of grant.

      All stock options granted by the Company during 2005 were granted as nonqualified stock options with an exercise price equal to the fair market value of Unisys common stock on the date of grant. Accordingly, these grants will have value only if the market price of the common stock increases after the grant date.

Compensation of the Chief Executive Officer and the Chairman

Chief Executive Officer

      On January 1, 2005, Joseph W. McGrath, who had been the Company’s President and Chief Operating Officer, became President and Chief Executive Officer. In anticipation of this, the Company and Mr. McGrath entered into the employment agreement described on pages 18-19. The terms and conditions of the agreement were approved by the Committee after considering Mr. McGrath’s previous performance at Unisys, his previous compensation levels and the benchmarking data. Under the agreement, Mr. McGrath is entitled to a minimum base salary of $900,000 per year, subject to periodic review by the Committee. The agreement also provides for Mr. McGrath to participate in the executive variable compensation plan, with a target bonus of not less than 100% of annual salary. The actual amount of bonus paid, if any, is to be determined by the Board in its sole discretion after receiving a recommendation from the Committee. For the reasons set forth above under “Variable Incentive Compensation”, no bonus was paid under the executive variable compensation plan to Mr. McGrath for 2005.

      In 2005, Mr. McGrath was granted the stock options described on page 16. The grants were based on the criteria outlined above.

Chairman

      On April 6, 2004, the Company and Lawrence A. Weinbach, the Company’s Chairman of the Board during 2005, entered into the employment agreement described at pages 17-18. Under this employment agreement, in 2005 Mr. Weinbach was entitled to a base salary of $1,000,000 for his services as Chairman. In his previous role as Chairman and Chief Executive Officer, his base salary was $1,400,000, which had been his base salary since 2003. Under the agreement, Mr. Weinbach was also eligible for a bonus for 2005 at a target of 100% of base salary, with the actual amount of bonus paid to be determined by the Committee in its sole discretion, based upon such factors as the Committee deemed appropriate. For the reasons set

      In February 2005, Mr. Weinbach was granted the stock options described on page 16. Additionally, pursuant to his employment agreement, Mr. Weinbach was granted 128,123 restricted stock units on February 9, 2005. Performance goals established by the Committee for this award related to Mr. Weinbach’s role with respect to the operation of the Board, advising the chief executive officer, assisting with resolving certain of the Company’s challenging client engagements, furthering the Company’s acquisition/divestiture strategy, and enhancing business development. Because the Committee determined that these goals had been met, the award vested in full on February 1, 2006.

Deductibility of Executive Compensation

      Section 162(m) of the Internal Revenue Code imposes a $1 million annual limit on the amount of compensation that may be deducted by the Company with respect to each Named Officer employed as of the last day of the applicable year. The limitation does not apply to compensation based on the attainment of objective performance goals.

      The Company’s 2003 Long-Term Incentive and Equity Compensation Plan, approved by the Company’s stockholders at the 2003 annual meeting, permits the Committee to design compensation awards to Named Officers that will meet the requirements of section 162(m) of the Internal Revenue Code. The Committee may grant awards under the plan that meet the requirements of section 162(m) of the Internal Revenue Code at such times as the Committee believes that such awards are in the best interests of the Company. The Committee has considered the impact of the deduction limitation and has determined that it is not in the best interests of the Company or its stockholders to base compensation solely on objective performance criteria. Rather, the Committee believes that it should retain the flexibility to base compensation on its subjective evaluation of performance as well as on the attainment of objective goals.

Compensation Committee

Henry C. Duques

Clayton M. Jones

Theodore E. Martin

STOCK PERFORMANCE GRAPH

      The following graph compares the yearly percentage change in the cumulative total stockholder return on Unisys common stock during the five fiscal years ended December 31, 2005 with the cumulative total return on the Standard & Poor’s 500 Stock Index, Standard & Poor’s 500 Computer Hardware Index and the Standard & Poor’s 500 IT Services Index. The comparison assumes $100 was invested on December 31, 2000 in Unisys common stock and in each of such indices and assumes reinvestment of any dividends.

GENERAL MATTERS

Policy on Confidential Voting

      It is the Company’s policy that all stockholder proxies, ballots and voting materials that identify the vote of a specific stockholder shall, if requested by that stockholder on such proxy, ballot or materials, be kept permanently confidential and shall not be disclosed to the Company, its affiliates, directors, officers and employees or to any third parties, except as may be required by law, to pursue or defend legal proceedings or to carry out the purpose of, or as permitted by, the policy. Under the policy, vote tabulators and inspectors of election are to be independent parties who are unaffiliated with and are not employees of the Company. The policy provides that it may, under certain circumstances, be suspended in the event of a proxy solicitation in opposition to a solicitation of management. The Company may at any time be informed whether or not a particular stockholder has voted. Comments written on proxies or ballots, together with the name and address of the commenting stockholder, will also be made available to the Company.

Stockholder Proposals and Nominations

      Stockholder proposals submitted to the Company for inclusion in the proxy materials for the 2007 annual meeting of stockholders must be received by the Company by November 16, 2006.

      Any stockholder who intends to present a proposal at the 2007 annual meeting and has not sought to include the proposal in the Company’s proxy materials must deliver notice of the proposal to the Company no later than January 20, 2007.

      Any stockholder who intends to make a nomination for the Board of Directors at the 2007 annual meeting must deliver a notice to the Company no later than January 26, 2007 setting forth (i) the name, age, business and residence addresses of each nominee, (ii) the principal occupation or employment of each nominee, (iii) the number of shares of Unisys capital stock beneficially owned by each nominee, (iv) a statement that the nominee is willing to be nominated and (v) any other information concerning each nominee that would be required by the SEC in a proxy statement soliciting proxies for the election of the nominee.

Electronic Access to Proxy Materials and Annual Report

      This proxy statement and the 2005 annual report are available on the Company’s Internet site at www.unisys.com/go/proxy and www.unisys.com/go/annual. Most stockholders can elect to view future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail and thus can save the Company the cost of producing and mailing these documents. If you vote your shares over the Internet this year, you will be given the opportunity to choose electronic access at the time you vote. Most stockholders who choose electronic access will receive an e-mail next year containing the Internet address to access the proxy statement and annual report. Your choice will remain in effect until you cancel it. You do not have to elect Internet access each year.

Householding of Proxy Statement and Annual Report

      This year, a number of brokers with accountholders who are owners of Unisys common stock will be “householding” our proxy materials. This means that only one copy of this proxy statement and the 2005 annual report may have been sent to you and the other Unisys

      If your household has received only one copy of our proxy statement and annual report, and you would prefer to receive separate copies of these documents, either now or in the future, please call us at 215-986-5777, or write us at Investor Relations, A2-15, Unisys Corporation, Unisys Way, Blue Bell, PA 19424-0001. We will deliver separate copies promptly. If you are now receiving multiple copies of our proxy materials and would like to have only one copy of these documents delivered to your household in the future, please contact us in the same manner.

Other Matters

      At the date of this proxy statement, the Board of Directors knows of no matter that will be presented for consideration at the annual meeting other than those described in this proxy statement. If any other matter properly comes before the annual meeting, the persons appointed as proxies will vote thereon in their discretion.

      The Company will bear the cost of soliciting proxies. Such cost will include charges by brokers and other custodians, nominees and fiduciaries for forwarding proxies and proxy material to the beneficial owners of Unisys common stock. Solicitation may also be made personally or by telephone by the Company’s directors, officers and regular employees without additional compensation. In addition, the Company has retained Morrow & Co., Inc. to assist in the solicitation of proxies for a fee of approximately $9,500, plus expenses.

Dated: March 16, 2006