MFP Technology Services Inc.

Oct. 5, 1993

INQUIRY LETTER

JONES, DAY, REAVIS & POGUE

3500 ONE PEACHTREE CENTER, 303 PEACHTREE STREET

ATLANTA, GEORGIA 30308-3242

TELEPHONE(404) 521-3939

July 28, 1993

3496:mlc

977249-012-001

BY FACSIMILE AND OVERNIGHT DELIVERY

David A. Sirignano, Esq.

Chief, Office of Tender Offers

Division of Corporation Finance

Securities and Exchange Commission

450 Fifth Street NW

Washington, DC 20549

Dear Mr. Sirignano:

As a result of a telephone conversation on July 27 with Jacob Fien-Helfman, Esq. of the Office of Tender Offers, we are writing to request that the Division of Corporation Finance (the "Division") confirm that, in the Staffs view, the features of the modified Dutch auction third-party tender offer (the "Offer") described herein comply with Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or alternatively, that the Division would not recommend enforcement action if the Offer were conducted as described herein.

Background

We represent MFP Technology Services Inc. (the "Purchaser"), a leading North American equipment leasing and remarketing company, in connection with the proposed acquisition (the "Acquisition") of certain commercial lease assets (the "Purchased Assets") of the finance affiliates (the "Finance Companies") of Unisys Corporation (the "Manufacturer"). In 1991, certain lease receivables and other lease assets were transferred from the Finance Companies to a grantor trust (the "Trust") which issued fixed rate lease-receivables backed certificates (the "Certificates") to a limited number of institutional investors (the "Holders") pursuant to Regulation D. One of the Finance Companies services the lease contracts for the Trust pursuant to a Pooling and Servicing Agreement. When issued, the Certificates had a final scheduled distribution date of January 15, 1997. By virtue of the pass-through nature of the Trust, approximately 2/3 of the original aggregate face amount of the Certificates has been paid to Holders as principal distributions. The Certificates are rated in the highest category by a nationally recognized statistical rating organization. Neither the Certificates nor any other securities of the Trust are registered under Section 12 of the Exchange Act, nor does the Trust file periodic reports pursuant to Section 15(d) of the Exchange Act.

The Acquisition is only feasible if the Purchaser acquires all right, title and interest in the Purchased Assets, including the assets of the Trust and the servicing rights thereto. Inasmuch the Pooling and Servicing Agreement does not provide for the redemption of the Certificates at this time, the Purchaser proposes to acquire 100% of the outstanding Certificates directly from the owners thereof, and immediately thereafter terminate the Trust and the Pooling and Servicing Agreement.

The Proposed Offer

The Purchaser proposes to acquire 100% of the outstanding Certificates through the Offer, which is designed to be an all-or-none, modified Dutch auction tender offer as described below. Each tendering Holder will specify the price at which the tender is made and the Purchaser will pay each Holder the highest price at which any Certificates are tendered and accepted by the Purchaser, even if higher than the price at which such Certificate is tendered. As a result of the all-or-none nature of the Offer, Holders are not subject to proration risk. As a practical matter, the highest tender price set by any Holder will determine the price paid to all Holders unless the Purchaser determines that such price is higher than is acceptable to the Purchaser or any Holder declines to tender all of its Certificates. In such event, no Certificates will be purchased in the Offer and the Acquisition will not be consummated.

The Certificates are held by less than 30 investors, all of whom are institutions which are accredited investors within the meaning of Regulation D. The Offer will be disseminated directly to such Holders by overnight courier or facsimile delivery without other public announcement. To the extent possible, the Dealer Manager for the Offer will also contact all beneficial Holders by telephone.

Although the Offer will remain legally open for 20 business days pursuant to Rule 14e-1(b), it is anticipated that all of the Holders will tender their Certificates substantially sooner. Upon receiving valid tenders for 100% of the Certificates (or, if later, the initially scheduled Expiration Date), the Purchaser will determine the highest price at which any Certificates have been tendered and, if such price is acceptable to the Purchaser, will promptly notify each Holder (i) that such price has been established as the purchase price (the "Purchase Price"), (ii) if such notice is given more than 10 business days following the commencement of the Offer, that the Offer will remain open for 10 business days following such notice, and (iii) that each Holder will have the right to withdraw Certificates previously tendered until the earlier of (a) five business days after the date of such notice, or (b) such Holders acceptance of the Offer at the Purchase Price. Upon the acceptance by all the Holders of the Offer at the Purchase Price (or, if later, the Expiration Date if all the Certificates have been tendered and not withdrawn) and subject to the conditions of the Offer, the Purchaser will accept the Certificates for payment and remit payment to the Holders.

The conditions to the Offer will include, among other things (i) the valid tender of 100% of the Certificates; (ii) the Purchase Agreement relating to the Acquisition shall remain in full force and effect, (iii) the conditions to the Acquisition set forth in the Purchase Agreement, and (iv) customary tender offer conditions.

Analysis

We are aware that traditionally the Division has not permitted Dutch auction tender offers by third-party offerors other than affiliates of the issuer in limited circumstances. Kettle Restaurants, Inc. Employee Stock Ownership Plan (letter dated February 18, 1989). However, in our view the proposed Offer does not implicate the normal policy concerns with respect to Dutch auction tender offers by third parties as a result of the "all-or-none" structure of the Offer, the limited number and sophisticated nature of the offerees, and the notice and withdrawal provisions described herein.

It is our understanding that the Divisions position on third-party Dutch auction tender offers is based upon the language of Rule 14d-6(e)(1)(iii) which requires disclosure of the type and amount of consideration in third party tender offer materials. See Piper, Berman & Notelovitz, The Emerging Pole of Dutch Auctions, 3 Insights (August 1989) number 8, p. 17. Rule 14d-6, however, is only applicable to registered equity securities. Pursuant to Rule 14d-1(a), the Offer would not be subject to Regulation 14D since the Certificates are not registered equity securities pursuant to Section 12 of the Exchange Act, but would be subject to Regulation 14E. ¹

To the extent the Divisions position on third-party Dutch auction tender offers is based on Rule 14e-1, we believe the proposed Offer complies with the Rule and provides sufficient safeguards for investor protection. Rule 14e-1(b) prohibits an increase or decrease in the consideration offered unless the tender offer remains open for 10 business days from the date that notice of such increase or decrease is first given to security holders. The determination of the Purchase Price pursuant to the modified Dutch auction procedure of the Offer could be deemed an increase in consideration. Accordingly, the Offer will be held open for 10 business days upon determination of the Purchase Price. The Purchase Price notice will be disseminated by overnight or facsimile delivery to all Holders and by telephonic notice to the extent possible. In addition, Holders would be granted the withdrawal rights described above if for any reason they desired to reject an offer at a higher price than they had initially tendered their Certificates. These procedures should ensure adequate dissemination under the Rule, particularly in view of the all-or-none condition of the Offer and the sophisticated nature of the offerees. Unlike partial tenders, Holders face no proration risk in the Offer. As a result of the all-or-none condition, Holders are not faced with the risk of holding a minority interest in an entity controlled by the Purchaser.

There is no established trading market for the Certificates. The Dutch auction process is designed to establish a price sufficient to acquire all the Certificates in the most efficient method possible in the absence of such a market for the Certificates. A single price all-or-none offer, even if at a substantial premium to intrinsic value, is likely to encourage strategic behavior by hold-outs as a result of the all-or-none condition. The Purchaser may be forced to increase the Offer several times as a result of such strategic behavior, or forego the Acquisition in its entirety. Likewise, it would be pointless to provide a price range for the Offer because of the all-or-none nature of the Offer. The ultimate Purchase Price would be expected to equal the maximum acceptable price in the range, since Holders would have no reason to tender at any lower price. The Dutch auction process is intended to result in a market clearing price without the delay involved in multiple increases in the price offered.

Request

In light of the foregoing, we respectfully request that the Division confirm that the Offer as described above would comply with Regulation 14E, or alternatively, that the Division would not recommend that the Commission take enforcement action if the Offer were to be conducted as described herein.

The Offer is proposed to commence within the next week. Time is of the essence in addressing these issues and commencing the Offer because of the scheduled expiration of certain leases to be acquired. Accordingly, we respectfully request your prompt attention to this request with a view toward discussing your views on the matter informally by telephone as soon as possible, but prior to the end of the week. Please contact the undersigned at (404) 581-8411 or Eliot W. Robinson at (404) 581-8245 as soon as you are ready to discuss the matter, or with any questions you may have.

In compliance with Release Nos. 33-6269 (December 5, 1980) and 33-5127 (January 25, 1971), we are submitting an original and seven (7) copies of this letter by overnight delivery service and the specific subsection of the statute to which this letter pertains is indicated on the upper right-hand corner of the first page of this letter and each copy.

Very truly yours,

Lizanne Thomas

ATMAIN Doc: 26130.2

STAFF REPLY LETTER

October 5, 1993

RESPONSE OF THE OFFICE OF TENDER OFFERS

DIVISION OF CORPORATION FINANCE

Re: MFP Technology Services Inc. (the "Purchaser")

Incoming letter dated July 28, 1993

The staff notes that, as structured, the Offer would not comply with the standards established by the Commission for modified Dutch Auction tender offers, including the need to specify a maximum price to be paid in the Offer. It is also noted that the Division has not permitted third party bidders to take advantage of the modified dutch auction pricing mechanism. Nevertheless, on the basis of the facts presented, especially noting the terms of the tender offer, the disclosures to be provided to each offeree and the procedural safeguards to be followed, this Division will not recommend that the Commission take enforcement action pursuant to Rule 14e-1(b) if the Purchaser conducts the Offer in the manner described in your letter. In reaching this determination, we have placed particular emphasis on the following factors:

(1) the Certificates are held by less than 30 investors ("Holders") who are institutions which are accredited investors within the meaning of Regulation D;

(2) there is no established trading market for the Certificates;

(3) as a result of the all-or-none nature of the Offer, Holders are not subject to proration risk;

(4) the initial Offer to Purchase disclosure document will contain an undertaking that the Offer will remain open for no less than 20 business days pursuant to Rule 14e-1(a) and will remain open for no less than 10 business days from the date that a fixed dollar amount Offer Price is determined and disclosure regarding the fixed dollar Offer Price is disseminated by overnight or facsimile delivery to all Holders, in satisfaction of the requirements of Rule 14e-1(b);

(5) after the fixed dollar amount Offer Price is determined, each Holder will have the right to withdraw Certificates previously tendered until the earlier of (a) five business days after the date of such notice, or (b) such holders acceptance of the Offer at the Purchase Price.

The foregoing position is a staff position regarding enforcement action only and should not be understood to express any legal conclusions regarding the applicability of statutory or regulatory provisions of the federal securities laws. The position is based solely on the representations that you have made; any different facts or conditions might require a different conclusion.

Finally, your attention is directed to the antifraud and anti-manipulation provisions of the Exchange Act, particularly Sections 9(a), 10(b) and 14(e), and Rule 10b-5 thereunder. Responsibility for compliance with these and any other applicable provisions of the federal securities laws must rest with the bidder and its agents and other persons involved in the making of and management of the Offer.

Sincerely,

L. Jacob Fien-Helfman, Special Counsel

Office of Tender Offers

SEC_CODE_REF_0090001192884