UNITED STATIONERS INC, S-1/A, 1995-08-15

UNITED STATIONERS INC
S-1/A, 1995-08-15
PAPER & PAPER PRODUCTS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 15, 1995.

REGISTRATION STATEMENT NO. 33-59811

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------

UNITED STATIONERS SUPPLY CO. UNITED STATIONERS INC.
(EXACT NAME OF CO-REGISTRANT AS (EXACT NAME OF CO-REGISTRANT AS
SPECIFIED IN ITS CHARTER) SPECIFIED IN ITS CHARTER)

ILLINOIS 36-2431718 DELAWARE 36-3141189
(STATE OR OTHER (I.R.S. EMPLOYER (STATE OR OTHER (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION JURISDICTION OF IDENTIFICATION
INCORPORATION OR NUMBER) INCORPORATION OR NUMBER)
ORGANIZATION) ORGANIZATION)

5112
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)

2200 EAST GOLF ROAD
DES PLAINES, ILLINOIS 60016-1267
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

----------------

THOMAS W. STURGESS
CHAIRMAN OF THE BOARD
750 N. ST. PAUL STREET, SUITE 1200
DALLAS, TEXAS 75201
(214) 720-1313
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

COPIES TO:
LAWRENCE D. STUART, JR.
WEIL, GOTSHAL & MANGES
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201-6950
(214) 746-7700

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

----------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED PER UNIT (1) PRICE (1) FEE
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<S> <C> <C> <C> <C>
12 3/4% Senior
Subordinated Notes
Due 2005............. $150,000,000 100% $150,000,000 $51,724.14(3)
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Senior Subordinated
Guarantee (2).. -- -- -- --
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f).
(2) The 12 3/4% Senior Subordinated Notes Due 2005 are guaranteed by United
Stationers Inc. on a senior subordinated basis. No additional
consideration will be paid in respect of the Guarantee.
(3) Previously paid in connection with initial filing of Registration
Statement on June 2, 1995.

----------------

THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE CO-REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

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<PAGE>

UNITED STATIONERS SUPPLY CO.
UNITED STATIONERS INC.

CROSS REFERENCE SHEET

PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING THE LOCATION IN
THE PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM S-1

<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND HEADING LOCATION IN PROSPECTUS
-------------------------------- ----------------------
<S> <C>
1.Forepart of the Registration
Statement and Outside Front Cover
Page of Prospectus................. Cover Page of Registration Statement; Outside
Front Cover Page of Prospectus
2.Inside Front and Outside Back Cover
Pages of Prospectus................ Inside Front and Outside Back Cover Pages of
Prospectus
3.Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges. Prospectus Summary; Risk Factors; The Company;
Selected Consolidated Financial Data
4.Use of Proceeds...................... Use of Proceeds
5.Determination of Offering Price...... Not Applicable
6.Dilution............................. Not Applicable
7.Selling Security Holders............. Not Applicable
8.Plan of Distribution................. Front Cover Page of Prospectus; The Exchange
Offer; Plan of Distribution
9.Description of Securities to be
Registered......................... Description of the New Notes
10.Interests of Named Experts and
Counsel............................ Not Applicable
11.Information with Respect to
Co-Registrants .................... Cover Page of Registration Statement; Prospectus
Summary; Risk Factors; The Company; The
Acquisition; Capitalization; Selected
Consolidated Financial Data; Pro Forma Combined
Financial Information; Management's Discussion
and Analysis of Financial Condition and Results
of Operations; Business; Management; Certain
Transactions; Financing the Acquisition;
Description of Capital Stock; Ownership of
Voting Securities; Legal Matters
12.Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................ Not Applicable
</TABLE>
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED AUGUST 15, 1995
PROSPECTUS

LOGO
[LOGO OF UNITED STATIONERS APPEARS HERE]
OFFER FOR ALL OUTSTANDING
12 3/4% SENIOR SUBORDINATED NOTES DUE 2005
IN EXCHANGE FOR
12 3/4% SENIOR SUBORDINATED NOTES DUE 2005
OF
UNITED STATIONERS SUPPLY CO.

--------------

United Stationers Supply Co. (the "Company"), an Illinois corporation which
is the direct operating subsidiary of United Stationers Inc. ("United"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange $1,000 principal amount of its 12
3/4% Senior Subordinated Notes due 2005 (the "New Notes") for each $1,000
principal amount of its 12 3/4% Senior Subordinated Notes due 2005 (the "Old
Notes"), of which an aggregate principal amount of $150,000,000 is outstanding.
The form and terms of the New Notes are identical to the form and terms of the
Old Notes except that (i) interest on the New Notes shall accrue from the last
date on which interest was paid on the Old Notes, (ii) certain provisions
relating to an increase in the stated rate of interest on the Old Notes shall
be eliminated and (iii) the New Notes have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), and will not bear any legends
restricting the transfer thereof. The New Notes will evidence the same debt as
the Old Notes and will be issued pursuant to, and entitled to the benefits of,
the Indenture governing the Old Notes. The New Notes will be fully and
unconditionally guaranteed on a senior subordinated basis (the "Guarantees") by
United and any future domestic Restricted Subsidiary of the Company. The
Exchange Offer is being made in order to satisfy certain contractual
obligations of the Company. See "The Exchange Offer" and "Description of the
New Notes." The Old Notes and the New Notes are sometimes referred to
collectively herein as the "Notes."

Interest on the Notes will be payable semiannually on May 1 and November 1 of
each year, commencing November 1, 1995. The Notes will be redeemable at the
option of the Company, in whole or in part, at any time on or after May 1, 2000
at the redemption prices set forth herein, together with accrued and unpaid
interest, if any, to the date of redemption. In addition, on or prior to May 1,
1998, the Company may redeem up to $50.0 million principal amount of the Notes
with the proceeds of one or more Public Equity Offerings at 112.75% of the
aggregate principal amount thereof, together with accrued and unpaid interest,
if any, to the date of redemption; provided that Notes having an aggregate
principal amount of at least $100.0 million remain outstanding immediately
after any such redemption. Upon the occurrence of a Change of Control, each
holder of the Notes may require the Company to repurchase all or a portion of
such holder's Notes at 101% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of repurchase. If a Change of
Control occurs, there can be no assurance that the agreements controlling the
Company's then-existing Senior Indebtedness would permit the Company to make
payments pursuant to a Change of Control Offer without the prior repayment of
such Senior Indebtedness or that the Company would have available funds
sufficient to purchase all Notes that might be delivered by the holders
thereof. Such limitations may have the effect of delaying or deterring a third-
party takeover of the Company. See "Description of New Notes -- Certain
Covenants" and "--Purchase of Notes Upon a Change of Control."

The Notes and the Guarantees will be subordinated to all Senior Indebtedness
of the Company and Senior Guarantor Indebtedness of each Guarantor,
respectively. After giving pro forma balance sheet effect to the repurchase of
certain preferred stock effected with the proceeds of the Old Notes as if such
transaction had occurred on June 30, 1995, there would have been approximately
$391.6 million of Senior Indebtedness and Senior Guarantor Indebtedness of
United outstanding on such date, substantially all of which represents
Indebtedness or guarantees of Indebtedness under the New Credit Facilities
which is secured by substantially all of the assets of the Company; in
addition, after taking into account approximately $59.8 million of outstanding
letters of credit, there would have been approximately $97.2 million available
to be drawn by the Company as secured Senior Indebtedness under the revolving
credit portion of the New Credit Facilities, which amount would have been
secured Senior Guarantor Indebtedness of United, and there would have been
approximately $231.7 million of Indebtedness of the Company that would have
been pari passu to the New Notes. See "Risk Factors--Limited Practical Value of
Guarantees by United."

The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on , 1995, unless
extended (as so extended, the "Expiration Date"). Tenders of Old Notes may be
withdrawn at any time prior to the Expiration Date. The Exchange Offer is
subject to certain customary conditions. See "The Exchange Offer."

Based on no-action letters issued by the staff of the Securities and Exchange
Commission (the "Commission") to third parties, the Company believes the New
Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by any holder thereof (other than any such holder
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holder's business and such holder has
no arrangement or understanding with any person to participate in the
distribution of such New Notes. Because the Company has not obtained a no-
action letter with respect to the Exchange Offer, there can be no assurance
that the staff of the Commission would make a similar determination with
respect to the resale of the New Notes. See "The Exchange Offer--Purpose and
Effect." Each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of 180 days after the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."

Prior to the Exchange Offer, there has been no public market for the Old
Notes. If a market for the New Notes should develop, the New Notes could trade
at a discount from their principal amount. The Company currently does not
intend to list the New Notes on any securities exchange or to seek approval for
quotation through any automated quotation system and no active public market
for the New Notes is currently anticipated. The Company will pay all the
expenses incident to the Exchange Offer.

The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered for exchange pursuant to the Exchange Offer.

SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH HOLDERS OF OLD
NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.

--------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

--------------

THE DATE OF THIS PROSPECTUS IS AUGUST , 1995.
<PAGE>

AVAILABLE INFORMATION

United is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Commission. Such reports, proxy and information statements and other
information filed by United with the Commission may be inspected and copied at
the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
regional offices at Seven World Trade Center, 13th Floor, New York, New York
10007 and at Northwestern Atrium Center, 500 West Madison Street, 14th Floor,
Chicago, Illinois 60661-2551. Copies of such material can also be obtained from
the principal office of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates.

Regardless of whether United or the Company is subject to Section 13(a) or
15(d) of the Exchange Act, United and the Company will, to the extent permitted
under the Exchange Act, file with the Commission the annual reports, quarterly
reports and other documents which United or the Company would have been
required to file with the Commission pursuant to such Section 13(a) or 15(d) if
United and the Company were so subject, such documents to be filed with the
Commission on or prior to the respective dates (the "Required Filing Dates") by
which United and the Company would have been required so to file such documents
if United and the Company were so subject. United and the Company will also in
any event (x) within 15 days of each Required Filing Date transmit by mail to
all holders of the Notes and file with the trustee under the Indenture copies
of the annual reports, quarterly reports and other documents which United and
the Company would have been required to file with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act if United and the Company were so
subject and (y) if filing such documents by United and the Company with the
Commission is not permitted under the Exchange Act, promptly upon written
request, supply copies of such documents to any prospective holder of the
Notes. In addition, for so long as any of the Old Notes remain outstanding,
United has agreed to make available to any prospective purchaser of the Old
Notes or beneficial owner of the Old Notes in connection with any sale thereof
the information required by paragraph (d)(iv) of Rule 144A under the Securities
Act of 1933, as amended (the "Securities Act").

The Company and United have filed with the Commission a Registration
Statement on Form S-1 (together with all amendments thereto, the "Registration
Statement") under the Securities Act with respect to the New Notes offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits thereto, which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of such materials can also
be obtained at prescribed rates from the Public Reference Section of the
Commission, Washington, D.C. 20549. Statements contained in this Prospectus as
to the contents of any agreement or other document referred to are not
necessarily complete and, in each instance, reference is made to the copy of
such agreement or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference.

UNTIL , 1995 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THE
EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS.

2
<PAGE>

SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements, and
the related notes thereto, included elsewhere in this Prospectus. As used in
this Prospectus, unless the context otherwise requires, (i) references to "ASI"
herein include Associated Stationers, Inc. and the predecessor thereof as
constituted prior to the merger thereof with and into the Company (the
"Subsidiary Merger"), with the Company as the surviving corporation, (ii)
references to "Associated" herein include Associated Holdings, Inc. and ASI and
the respective predecessors thereof as constituted prior to the merger of
Associated with and into United (the "Merger" and, together with the Subsidiary
Merger, the "Mergers"), with United as the surviving corporation, (iii)
references to the "Company" herein include the Company, as the surviving
corporation in the Subsidiary Merger, and its consolidated subsidiaries as
constituted after consummation of the Subsidiary Merger or, prior to the
consummation of the Subsidiary Merger of ASI with and into the Company, the
Company and its consolidated subsidiaries as constituted prior to the
Subsidiary Merger, and (iv) references to "United" herein are to United, as the
surviving corporation in the Merger, and its consolidated subsidiaries
(including the Company) as constituted after consummation of the Merger or,
prior to consummation of the Merger of Associated with and into United, United
and its consolidated subsidiaries (including the Company) as constituted prior
to the Merger. The Company is currently engaged in implementing its
consolidation plan to integrate the two separate office products wholesale
businesses conducted by the Company and ASI prior to the Acquisition (as
hereinafter defined). See "Risk Factors -- Risks Inherent In Implementation of
Consolidation Plan" and "Business -- Consolidation Plan and Benefits of the
Acquisition." Operating data presented herein for 1994 on a pro forma basis
includes calendar year 1994 data for Associated and data for the twelve months
ended November 30, 1994 for United. Operating data presented herein for the six
months ended June 30, 1995 on a pro forma basis includes three months ended
June 30, 1995 data for post-Merger United, three months ended March 31, 1995
data for Associated and three months ended February 28, 1995 for United.
THE COMPANY

OVERVIEW

The Company is the largest office products wholesaler in the United States.
As a result of the merger of the Company with ASI on March 30, 1995, the
Company's net sales on a pro forma basis for calender 1994 were approximately
$2.0 billion and for the six months ended June 30, 1995 were approximately $1.1
billion. Through its extensive office products catalogs, the Company markets a
full line of over 25,000 (post-consolidation) branded and private brand office
and other related business products ("office products"), including traditional
office supplies; office furniture and desk accessories; office machines,
equipment and supplies; computer hardware, peripherals and supplies; and
facilities management supplies, including sanitation products and janitorial
items. These products are offered through a network of 39 (post-consolidation)
strategically located distribution centers to over 14,000 resellers, consisting
principally of commercial dealers and contract stationers, retail dealers,
superstores, mail order companies and mass merchandisers.

Although the office products distribution industry has seen many changes over
the past decade, including the growth of national superstores and a
consolidation among wholesalers, dealers and contract stationers, large
national wholesalers have continued to perform a significant role in the
distribution of office products. For manufacturers, the wholesaler provides
wide market coverage, assumes credit risk, carries inventory and processes
smaller orders than manufacturers can economically service. In addition,
wholesalers provide resellers with prompt service and delivery, a source for
filling small quantity orders and the opportunity to obtain credit, minimize
investment in inventory and access marketing resources and technical support.

3
<PAGE>

COMPETITIVE STRENGTHS

The Company believes that it has a strong competitive position attributable
to a number of factors, including the following:

. Largest Office Products Wholesaler. As the largest office products
wholesaler in the United States, the Company has substantial purchasing
power and can realize significant economies of scale.

. High Level of Customer Service. The Company provides its customers with a
broad product selection, a high degree of product availability,
expeditious distribution and comprehensive customer assistance.

. Diverse Customer Base. With over 14,000 resellers as customers, the
Company has one of the broadest customer bases in the industry.

. State-of-the-Art Distribution Capabilities. The Company's network of 39
(post-consolidation) distribution centers located throughout the United
States employs state-of-the-art technology to efficiently distribute
products to customers.

. Growth of Private Brand Products. The Company offers a growing line of
over 1,300 private brand products under the Universal(TM) brand name,
which the Company believes is the broadest private brand product offering
in the industry.

. Experienced Management Team. The Company's senior management team
comprises individuals who combine many years of experience in the office
products distribution industry, including experience in acquiring and
integrating companies in the office products industry. See "Business --
Competitive Strengths".

BUSINESS STRATEGY

The Company's business strategy is to seek to improve its competitive
position and grow its revenues and profitability through (i) the continuation
of a high level of customer service, (ii) expanding the breadth of both its
product line and its customer base and (iii) continuing an emphasis on cost
effective operations. There can be no assurance that the Company will be able
to effect its business strategy in a timely manner, if at all. See "Business --
Business Strategy".

CONSOLIDATION PLAN AND BENEFITS OF THE ACQUISITION

Consistent with its business strategy, since the consummation of the
Acquisition on March 30, 1995, the Company has been engaged in implementing its
consolidation plan to integrate its business with the business of ASI. Through
the integration of distribution facilities and product lines in a manner
designed to enable the Company to offer its customers better service and
selection, the Company expects to improve its competitive position. In
addition, the Company plans to achieve cost savings and other benefits from the
elimination of redundant or overlapping functions and facilities and by
minimizing overlapping products. Elements of the consolidation plan include (i)
consolidating the product offerings of ASI and the Company by minimizing
overlapping products while at the same time adding more niche products, (ii)
qualifying for improved terms with vendors as a result of placing higher volume
purchases among fewer suppliers, (iii) consolidating distribution centers by
eliminating eight redundant facilities and achieving more efficient operations
in the four market areas that will continue to have two facilities, (iv)
reducing corporate overhead, (v) eliminating redundant sales representatives
and (vi) increasing sales of private brand products and off-shore sourcing of
these and other products. Management anticipates that the implementation of its
consolidation plan should result in significant cost savings and synergies
which will enhance the Company's financial and operational performance.

4
<PAGE>

Management estimates that, upon phase-in of its consolidation plan over a 12-
month period following the Acquisition, the Company expects to realize
approximately $26.0 million per year in savings as a result of a successful
implementation of its consolidation plan, although the Acquisition is also
likely to result in a reduction in the rate of revenue growth for some period
following the Acquisition as a result of the loss of some customers to
competition. See "Risk Factors -- Risk Inherent In Implementation of
Consolidation Plan," "Pro Forma Combined Financial Information" and
"Business -- Consolidation Plan and Benefits of the Acquisition."

THE ACQUISITION

On March 30, 1995, pursuant to an Agreement and Plan of Merger dated as of
February 13, 1995 (the "Merger Agreement"), and in accordance with the terms of
Associated's related Offer to Purchase dated February 21, 1995 (the "Offer to
Purchase"), Associated purchased (together with the Mergers, the "Acquisition")
92.5% of the outstanding shares of common stock, $0.10 par value (the
"Shares"), of United for $15.50 per Share, or approximately $266.6 million in
the aggregate, pursuant to a tender offer (the "Offer") that expired on March
22, 1995. Immediately thereafter, the Mergers were consummated, with Associated
and ASI merging with and into United and the Company, respectively, and United
and the Company continuing as the respective surviving corporations. As a
result of share conversions in the Merger, immediately after the Merger, the
former holders of Associated Common Stock (as hereinafter defined) and warrants
or options to purchase Associated Common Stock owned Shares and warrants or
options to purchase Shares constituting in the aggregate approximately 80% of
the Shares on a fully diluted basis, while pre-Merger holders of Shares (other
than Associated-Owned Shares and Treasury Shares (each as hereinafter defined))
owned in the aggregate approximately 20% of the Shares on a fully diluted
basis. See "The Acquisition."

To finance the Offer, refinance existing debt of ASI, United and the Company,
repurchase United stock options and pay related fees and expenses, Associated,
ASI, United and the Company entered into (i) the New Credit Facilities (as
hereinafter defined) with a group of banks and financial institutions led by
The Chase Manhattan Bank (National Association) ("Chase Bank") providing for
term loan borrowings of $200.0 million and revolving loan borrowings of up to
$300.0 million and (ii) a senior subordinated bridge loan facility with The
Roebling Fund, whose investors comprise a group of banks and financial
institutions, including Chase Bank, in the aggregate principal amount of $130.0
million (the "Subordinated Bridge Facility"). In addition, simultaneously with
the consummation of the Offer, Associated obtained $12.0 million from the sale
of additional shares of Associated Common Stock primarily to certain existing
holders of Associated Common Stock, which proceeds were used to finance part of
the purchase of Shares pursuant to the Offer. The Company used a portion of the
net proceeds of the Old Notes to refinance the Subordinated Bridge Facility.
See "Financing the Acquisition."

5
<PAGE>

The following table sets forth the approximate aggregate sources and uses of
funds necessary to consummate the Acquisition:

<TABLE>
<CAPTION>
SOURCES: (DOLLARS IN THOUSANDS)
<S> <C>
New Credit Facilities (1)......................... $416,537
Subordinated Bridge Facility (2).................. 130,000
Equity Investment................................. 12,000
--------
Total Sources................................... $558,537
========
USES:
Purchase Shares in Offer.......................... $266,629
Refinance Existing Company Debt................... 180,752
Refinance Existing ASI Debt....................... 78,856
Estimated Fees and Expenses (3)................... 29,300
Other (4)......................................... 3,000
--------
Total Uses...................................... $558,537
========
</TABLE>
--------
(1) Borrowings under the New Credit Facilities at the time the Acquisition was
consummated consisted of term loan borrowings of $200.0 million and
revolving loan borrowings of approximately $206.8 million. Also included is
approximately $9.7 million of additional revolving loan borrowings drawn to
pay fees and expenses after consummation of the Acquisition.
(2) Refinanced with a portion of the net proceeds of the Old Notes.
(3) Excludes approximately $2.6 million borrowed by the Company and $3.2
million borrowed by ASI prior to closing of the Offer to pay fees and
expenses in connection with consummation of the Acquisition. These amounts
are included under "Refinance Existing Company Debt" and "Refinance
Existing ASI Debt," respectively, above. Estimated Fees and Expenses
include the discount received by Chase Securities, Inc. ("Chase Securities"
or the "Initial Purchaser") on the Old Notes.
(4) This amount was used to repurchase United stock options. This amount
excludes approximately $3.2 million borrowed by the Company prior to
closing of the Offer to discharge compensation and other liabilities in
connection with consummation of the Acquisition. This latter amount is
included under "Refinance Existing Company Debt" above.

6
<PAGE>

THE EXCHANGE OFFER

The Exchange Offer applies to $150,000,000 aggregate principal amount of the
Old Notes. The form and terms of the New Notes are the same as the form and
terms of the Old Notes except that the New Notes have been registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof. The New Notes will evidence the same debt as the Old Notes and will be
entitled to the benefits of the Indenture pursuant to which the Old Notes were
issued. See "Description of the New Notes."

The Exchange Offer.......... $1,000 principal amount of New Notes in exchange
for each $1,000 principal amount of Old Notes. As
of the date hereof, $150,000,000 aggregate
principal amount of the Old Notes are
outstanding. The terms of the New Notes and the
Old Notes are substantially identical.

Based on an interpretation by the staff of the
Commission set forth in no-action letters issued
to unrelated third parties, the Company believes
that New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by
any person receiving such New Notes, whether or
not such person is the holder (other than any
such holder or such other person which is an
"affiliate" of the Company within the meaning of
Rule 405 promulgated under the Securities Act),
without compliance with the registration and
prospectus delivery provisions of the Securities
Act, provided that (i) such New Notes are
acquired in the ordinary course of business of
such holder or such other person, (ii) neither
the holder nor such other person is engaging in
or intends to engage in a distribution of such
New Notes and (iii) neither such holder nor such
other person has an arrangement or understanding
with any person to participate in the
distribution of such New Notes. See "The Exchange
Offer -- Purpose and Effect."

Following the consummation of the Exchange Offer
(except as set forth in the second paragraph
under "Exchange Offer--Purpose and Effect"),
holders of Old Notes not tendered will not have
any further registration rights and the Old Notes
will continue to be subject to certain
restrictions on transfer. Accordingly, the
liquidity of the market for a holder's Old Notes
could be adversely affected upon consummation of
the Exchange Offer if such holder does not
participate in the Exchange Offer. See "Exchange
Offer--Purpose and Effect."

Registration Agreement...... The Old Notes were sold by the Company on May 3,
1995 in a private placement. In connection
therewith, the Company entered into a
Registration Rights Agreement with the Initial
Purchaser (the "Registration Agreement")
providing for the Exchange Offer. See "The
Exchange Offer -- Purpose and Effect."

7
<PAGE>

Expiration Date............. The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1995, or such later
date and time to which it is extended.

Withdrawal.................. The tender of Old Notes pursuant to the Exchange
Offer may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
Any Old Notes not accepted for exchange for any
reason will be returned without expense to the
tendering holder thereof as promptly as
practicable after the expiration or termination
of the Exchange Offer.

Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain
customary conditions, certain of which may be
waived by the Company. See "The Exchange Offer --
Conditions."

Procedures for Tendering
Old Notes.................. Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile,
together with the Old Notes and any other
required documentation, to the Exchange Agent at
the address set forth herein. By executing the
Letter of Transmittal, each holder will represent
to the Company that, among other things, (i) the
New Notes acquired pursuant to the Exchange Offer
are being obtained in the ordinary course of
business of the person receiving such New Notes,
whether or not such person is the holder, (ii)
neither the holder nor any such other person is
engaging in or intends to engage in a
distribution of such New Notes, (iii) neither the
holder nor any such other person has an
arrangement or understanding with any person to
participate in the distribution of such New Notes
and (iv) neither the holder nor any such other
person is an "affiliate," as defined under Rule
405 promulgated under the Securities Act, of the
Company. Pursuant to the Registration Agreement,
the Company is required to file a registration
statement for a continuous offering pursuant to
Rule 415 under the Securities Act in respect of
the Old Notes of any holder that indicates in the
Letter of Transmittal that it cannot make such
representations to the Company and that it wishes
to have its Old Notes registered under the
Securities Act. See "The Exchange Offer--
Procedures for Tendering."

Acceptance of Old Notes and
Delivery of New Notes...... The Company will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to
5:00 p.m., New York City time, on the Expiration
Date. The New Notes issued pursuant to the
Exchange Offer will be delivered promptly
following the Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."

8
<PAGE>

Exchange Agent.............. The Bank of New York is serving as Exchange Agent
in connection with the Exchange Offer.

Federal Income Tax
Consequences............... The exchange pursuant to the Exchange Offer
should not be a taxable event for federal income
tax purposes. See "Certain Federal Income Tax
Considerations."

USE OF PROCEEDS

There will be no cash proceeds to the Company from the exchange pursuant to
the Exchange Offer. The proceeds received by the Company from the offer of the
Old Notes were used (i) to repay the loan (the "Bridge Loan") under the
Subordinated Bridge Facility (plus accrued interest thereon), (ii) to pay down
the Term Loan Facilities (as hereinafter defined) and (iii) to pay a dividend
to United in an amount sufficient to repurchase all of the outstanding shares
of Series B Preferred Stock (as hereinafter defined), together with accrued and
unpaid dividends thereon. See "Financing the Acquisition."

TERMS OF THE NEW NOTES

Maturity Date............... May 1, 2005.

Interest Payment Dates...... May 1 and November 1 of each year, commencing
November 1, 1995.

Optional Redemption......... The Notes will be redeemable at the option of the
Company at any time on or after May 1, 2000, in
whole or in part, at redemption prices set forth
herein plus accrued and unpaid interest, if any,
to the date of redemption. In addition, on or
prior to May 1, 1998, the Company may redeem up
to $50.0 million aggregate principal amount of
the Notes with the proceeds of one or more Public
Equity Offerings (as hereinafter defined) at
112.75% of the principal amount thereof, together
with accrued and unpaid interest, if any, to the
date of redemption; provided that Notes having an
aggregate principal amount of $100.0 million
remain outstanding immediately after any such
redemption. See "Description of the New Notes --
Optional Redemption."

Change of Control........... Upon the occurrence of a Change of Control (as
defined), each holder of the Notes may require
the Company to repurchase all or a portion of
such holder's Notes at 101% of the principal
amount thereof, together with accrued and unpaid
interest, if any, to the date of repurchase. See
"Description of the New Notes -- Certain
Covenants." If a Change of Control occurs, there
can be no assurance that the agreements
controlling the Company's then-existing Senior
Indebtedness would permit the Company to make
payments pursuant to a Change of Control Offer
without the prior repayment of such Senior
Indebtedness or that the Company would have
available funds sufficient to purchase all Notes
that might be delivered by the

9
<PAGE>

holders thereof. Such limitations may have the
effect of delaying or deterring a third-party
takeover of the Company.

Subordination............... The Notes and the Guarantees will be subordinated
to all Senior Indebtedness of the Company and
Senior Guarantor Indebtedness of each Guarantor,
respectively, which will include, without
limitation, all indebtedness incurred under the
New Credit Facilities. After giving pro forma
balance sheet effect to the repurchase of Series
B Preferred Stock, together with accrued and
unpaid dividends thereon, that was effected with
a portion of the proceeds from the Old Notes as
if such transaction had occurred on June 30,
1995, there would have been approximately $391.6
million of Senior Indebtedness and Senior
Guarantor Indebtedness of United outstanding on
such date, substantially all of which is secured
by substantially all of the assets of the
Company; in addition, after taking into account
approximately $59.8 million of outstanding
letters of credit, there would have been
approximately $97.2 million available to be drawn
by the Company as secured Senior Indebtedness
under the revolving credit portion of the New
Credit Facilities, which amount would have been
secured Senior Guarantor Indebtedness of United,
and approximately $231.7 million of Indebtedness
of the Company that would have been pari passu to
the New Notes. See "Risk Factors -- High
Leverage," "-- Subordination" and "--Limited
Practical Value of Guarantees by United" and
"Capitalization."

Guarantees.................. The Notes will be fully and unconditionally
guaranteed on a senior subordinated basis as to
payment of principal, premium, if any, and
interest by United and by any future domestic
Restricted Subsidiary (as hereinafter defined) of
the Company. The Company has no present intention
to acquire any domestic Restricted Subsidiary.
United conducts no independent operations. Its
only asset is the capital stock of the Company.
See "Risk Factors--Limited Practical Value of
Guarantees by United."

Certain Covenants........... The indenture governing the Notes (as amended,
the "Indenture") contains certain covenants,
including limitations on the incurrence of
indebtedness, the making of restricted payments,
transactions with affiliates, the existence of
liens, disposition of proceeds of asset sales,
the making of guarantees by restricted
subsidiaries, transfers and issuances of stock of
subsidiaries, the imposition of certain payment
restrictions on restricted subsidiaries and
certain mergers and sales of assets. See
"Description of the New Notes -- Certain
Covenants."

Exchange Offer;Registration
Rights..................... Pursuant to the Registration Agreement, United
and the Company have agreed to use their best
efforts to (i) file with

10
<PAGE>

the Securities and Exchange Commission (the
"Commission") on or prior to June 2, 1995, and
cause to become effective on or prior to August
31, 1995, a registration statement (the "Exchange
Offer Registration Statement") with respect to a
registered offer under the Securities Act to
exchange the New Notes for the Old Notes in
accordance with the terms of the Exchange Offer
and (ii) cause such Exchange Offer to be
consummated on or prior to September 30, 1995.

In the event that either (i) the Exchange Offer
Registration Statement is not declared effective
on or prior to August 31, 1995, (ii) the Exchange
Offer is not consummated on or prior to September
30, 1995 or (iii) changes in law or the
applicable interpretation of the Commission staff
do not permit the Company to effect the Exchange
Offer and a shelf registration statement pursuant
to the Securities Act (a "Shelf Registration
Statement") with respect to the Old Notes is not
declared effective under the Securities Act on or
prior to the later of (x) August 31, 1995 and (y)
the 45th calendar day after the publication of
the change in law or interpretation, the interest
rate borne by the Old Notes shall be increased by
one-half of one percent per annum following the
relevant date described in clause (i), (ii) or
(iii), as applicable. The aggregate amount of
such increase from the original interest rate
pursuant to these provisions will in no event
exceed one-half of one percent per annum. See
"The Exchange Offer -- Adjustment to Old Notes."
Such increase will cease to be effective on the
date of effectiveness of the Exchange Offer
Registration Statement, consummation of the
Exchange Offer or the effectiveness of a Shelf
Registration Statement, as the case may be. See
"The Exchange Offer."

RISK FACTORS

Investment in the Notes involves a high degree of risk. For a discussion of
certain considerations relevant to an investment in the Notes, see "Risk
Factors."

11
<PAGE>

SUMMARY FINANCIAL DATA

Set forth below and on the following pages is summary pro forma information
for United and summary historical financial information for United and
Associated. United, which has no operations independent of those of the
Company, fully and unconditionally guarantees the Notes on a senior
subordinated basis. Associated had no operations independent of those of ASI.

UNITED -- PRO FORMA

The unaudited pro forma combined financial data set forth below should be
read in conjunction with the unaudited Pro Forma Combined Financial Statements
included elsewhere herein, which are based on the historical financial
statements of Associated and United after giving effect to: (i) the purchase
accounting and other merger related adjustments relating to the Acquisition and
(ii) the refinancing of certain debt and repurchase of the Series B Preferred
Stock effected with the proceeds of the offering of Old Notes, as described in
the notes thereto. The unaudited pro forma combined financial data is intended
for informational purposes only and is not necessarily indicative of the future
financial position or future results of operations of United after the
Acquisition, or of the financial position or results of operations of United
that would have actually occurred had the Acquisition occurred on the date or
been in effect for the period presented. The unaudited pro forma combined
financial data should be read in conjunction with, and is qualified in its
entirety by, the historical consolidated financial statements of United and
Associated, including the related notes thereto, included elsewhere herein.

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1994 JUNE 30, 1995
---------------------- ----------------------
(DOLLARS IN THOUSANDS) (DOLLARS IN THOUSANDS)
<S> <C> <C>
INCOME STATEMENT DATA (1)(2):
Net sales........................ $1,982,070 $1,104,243
Cost of sales (3)................ 1,535,609 857,928
---------- ----------
Gross profit..................... 446,461 246,315
Warehouse, distribution, selling,
general and administrative ex-
penses (3)...................... 369,545 195,212
---------- ----------
Income from operations........... 76,916 51,103
Interest expense, net (4)........ (48,825) (29,774)
Other income, net................ 86 20
---------- ----------
Income before income taxes....... 28,177 21,349
Income taxes..................... 10,856 8,448
---------- ----------
Net income....................... $ 17,321 $ 12,901
========== ==========
OPERATING AND OTHER DATA (1):
EBITDA (5)....................... $ 109,571 $ 68,720
EBITDA margin (6)................ 5.5% 6.2%
Depreciation and amortization.... $ 32,569 $ 17,597
Capital expenditures, net........ 10,509 4,621
Ratio of EBITDA to interest ex-
pense........................... 2.2x 2.3x
BALANCE SHEET DATA (AT PERIOD
END) (1):
Working capital.................. $ 294,710
Total assets..................... 948,786
Total debt and capital leases
(7)............................. 514,195
Redeemable preferred stock....... 17,200
Redeemable warrants.............. 11,984
Stockholders' equity (excluding
redeemable preferred stock and
redeemable warrants)............ 48,788
</TABLE>
See footnotes on following page.

12
<PAGE>

(1) The unaudited pro forma income statement and operating and other data is
presented giving effect to (i) the Acquisition as if it had been
consummated on January 1, 1994 and (ii) the refinancing of certain debt and
the repurchase of Series B Preferred Stock (including accrued and unpaid
dividends thereon) effected with the proceeds of the Old Notes as if such
refinancing and repurchase had been consummated one month thereafter. The
unaudited pro forma balance sheet data is presented giving effect to the
repurchase of Series B Preferred Stock (including accrued and unpaid
dividends thereon) effected with the proceeds of the Old Notes as if such
transaction had been consummated on June 30, 1995. Although United was the
surviving corporation in the Merger, the transaction was treated as a
reverse acquisition for accounting purposes with Associated as the
acquiring corporation. Accordingly, the pro forma income statement for the
year ended December 31, 1994 combines Associated for its fiscal year ended
December 31, 1994 with United for its twelve month period ended November
30, 1994 (the date of its fiscal quarter ending nearest to December 31,
1994), the pro forma income statement for the six months ended June 30,
1995 combines (i) post-Merger United for the three months ended June 30,
1995, with (ii) Associated for the three months ended March 31, 1995 and
(iii) United for the three months ended February 28, 1995 and the pro forma
balance sheet data as of June 30, 1995 for United include the preliminary
purchase price allocation, which may be revised at a later date, and other
Merger related adjustments. United's historical statement of income
previously reported on a fiscal year ended August 31, 1994 has been
adjusted to reflect the twelve month period ended November 30, 1994.

(2) The pro forma income statement data excludes (i) the extraordinary non-
recurring write-off of approximately $2.4 million ($1.4 million net of tax
benefit of $1.0 million) of financing costs and original issue discount
relating to the retirement of debt, (ii) a non-recurring charge for
restructuring of approximately $9.8 million ($5.9 million net of tax
benefit of $3.9 million), for costs incurred and expected to be incurred in
connection with integration and transition (e.g., severance and the cost of
closing certain facilities operated by Associated prior to the Merger) and
(iii) compensation expense relating to employee stock options of
approximately $1.5 million ($0.9 million net of tax benefit of $0.6
million). Approximately $14.6 million of additional integration and
transition costs (e.g., severance and the cost of closing facilities
operated by United prior to the Merger) will be recorded as additional
costs of the Merger, in accordance with the purchase method of accounting.
The above-referenced restructuring reserve and the purchase accounting
reserve relating to the integration and transition expenses total $24.4
million and are reflected as a reserve in the Pro Forma Combined Balance
Sheet. See "Pro Forma Combined Financial Information."

(3) Includes estimated cost savings of $26.0 million for the year ended
December 31, 1994 and $13.0 million for the six months ended June 30, 1995
that United expects to realize from the actions that management has
committed to undertake pursuant to its consolidation plan that has been
approved by the Board of Directors of the Company, as if the consolidation
plan had been implemented in full as of January 1, 1994. United plans to
implement its consolidation plan over a 12-month period following the
Acquisition. See "Risk Factors -- Risks Inherent in Implementation of
Consolidation Plan" and "Business -- Consolidation Plan and Benefits of the
Acquisition."

(4) Pro forma interest expense is based on historical interest rates in effect
during the year ended December 31, 1994 and the six months ended June 30,
1995 in calculating the basis for variable rates. Average 30-day LIBOR in
effect for the year ended December 31, 1994 ranged from 3.15% to 6.09% and
for the six months ended June 30, 1995 was 6.08%. The average prime rate
during January 1994 was 6.0%. At June 30, 1995, 30-day LIBOR was 6.06% and
the prime rate was 9.0%. If the June 30, 1995 interest rates were used as
base interest rates instead of the historical rates, pro forma interest
expense for United would amount to $55.9 million instead of $48.8 million
for the year ended December 31, 1994. Pro forma interest expense for the
six months ended June 30, 1995 based on historical interest rates for that
period approximates that based on the current interest rates. Each 1/8 of
1% change in the base interest rate for variable rate debt has a $521
thousand effect on annual pro forma interest expense for United. In April
1995, the Company entered into three-year interest rate protection
arrangements totaling $200,000,000 pursuant to which the Company (i) is
protected to the extent that the 3-month LIBOR interest rate exceeds 8.0%
and (ii) is liable to the extent that such interest rate drops below 6.0%.

(5) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt.

13
<PAGE>

EBITDA should not be considered in isolation from or as a substitute for
net income, cash flows from operating activities or other consolidated
income or cash flow statement data prepared in accordance with generally
accepted accounting principles or as a measure of profitability or
liquidity.

(6) EBITDA margin represents EBITDA as a percentage of net sales.

(7) Total debt and capital leases includes current maturities.

UNITED -- HISTORICAL

The summary financial information of United set forth below for each of the
fiscal years in the five-year period ended August 31, 1994 and the seven
months ended March 30, 1995 has been derived from the financial statements of
United, which have been audited by Arthur Andersen LLP, independent public
accountants, for the years ended August 31, 1990 through 1994, and by Ernst &
Young LLP, independent public accountants, for the seven months ended March
30, 1995. Audited financial statements for the fiscal years ended August 31,
1990 and 1991 are not included in this filing. The summary financial
information at and for the seven-month period ended March 31, 1994 is
unaudited and in the opinion of management reflects all adjustments considered
necessary for a fair presentation of such data. The results of operations for
any interim period are not necessarily indicative of results of operations for
the fiscal year and should be read in conjunction with, and is qualified in
its entirety by, "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Historical Results of Operations of United" and
"-- Historical Liquidity and Capital Resources of United" and the financial
statements of United included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, SEVEN MONTHS ENDED
------------------------------------------------------ --------------------
MARCH 31, MARCH 30,
1990 1991 1992 1993 1994 1994 1995
-------- -------- ---------- ---------- ---------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $993,178 $951,109 $1,094,275 $1,470,115 $1,473,024 $871,585 $980,575
Gross profit on sales... 224,230 218,708 245,687 344,519 322,901 195,865 206,718
Operating expenses...... 195,863 195,694 219,285 298,405 286,607 170,420 201,801
Income from operations.. 28,367 23,014 26,402 46,114 36,294 25,445 4,917
Interest expense, net... 7,350 6,082 6,503 9,550 10,461 5,837 7,500
Income before income
taxes.................. 21,361 16,918 20,263 36,919 26,058 19,725 (2,542)
Income taxes............ 8,523 7,008 8,899 15,559 10,309 8,185 4,692
Net income.............. 12,838 9,910 11,364 21,360 15,749 11,540 (7,234)
OPERATING AND OTHER
DATA:
EBITDA (1).............. $ 43,851 $ 41,912 $ 46,645 $ 67,712 $ 57,755 $ 37,665 $17,553
EBITDA margin (2)....... 4.4% 4.4% 4.3% 4.6% 3.9% 4.3% 1.8%
Depreciation and
amortization........... $ 15,140 $ 18,912 $ 19,879 $ 21,243 $ 21,236 $ 12,103 $12,595
Net capital
expenditures........... 15,067 15,765 8,291 29,958 10,499 4,287 7,764
BALANCE SHEET DATA (AT
PERIOD END):
Working capital......... $134,420 $135,347 $ 214,611 $ 216,074 $ 239,827 $297,099 $257,600
Total assets............ 401,661 409,958 601,465 634,786 618,550 608,728 711,839
Total debt and capital
leases(3).............. 73,683 73,123 150,728 150,251 155,803 227,626 233,406
Stockholders'
investment............. 177,777 181,584 223,387 237,697 246,010 243,636 233,125
</TABLE>
-------
(1) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. EBITDA should not be considered in isolation from or as a
substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance
with generally accepted accounting principles or as a measure of
profitability or liquidity.

(2) EBITDA margin represents EBITDA as a percentage of net sales.

(3) Total debt and capital leases includes current maturities but excludes
original issue discount.

14
<PAGE>

ASSOCIATED -- HISTORICAL

The summary financial information of Associated set forth below with respect
to the period from January 31, 1992 (when certain of the assets and certain
liabilities of ASI were acquired (the "Boise Transaction") from the Wholesale
Division of Boise Cascade Office Products Corporation ("BCOP")) through
December 31, 1992 and the years ended December 31, 1993 and 1994 has been
derived from and should be read in conjunction with, and is qualified in its
entirety by, "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Historical Results of Operations of Associated" and
"-- Historical Liquidity and Capital Resources of Associated" and the financial
statements of Associated included elsewhere in this Prospectus, which have been
audited by Arthur Andersen LLP, independent public accountants. The data at and
for the years ended December 31, 1990 and 1991 and the one month ended January
31, 1992 are derived from the unaudited financial statements of BCOP for such
periods. Associated has accounted for the Boise Transaction using the purchase
method of accounting. There are material operational and accounting differences
between BCOP and Associated resulting from the Boise Transaction. Accordingly,
the historical financial data of BCOP may not be comparable in all material
respects with data of Associated. The data at and for the six months ended June
30, 1994 and 1995 are unaudited and in the opinion of management reflect all
adjustments considered necessary for a fair presentation of such data. On March
30, 1995, Associated merged with United. Although United was the surviving
corporation in the Merger, the transaction was treated as a reverse acquisition
for accounting purposes, with Associated as the acquiring corporation.
Therefore, the income statement and operating and other data for the six months
ended June 30, 1995 reflect the financial information of Associated only for
the three months ended March 31, 1995, and the results of post-Merger United
for the three months ended June 30, 1995. The income statement and operating
and other data for the six months ended June 30, 1994 reflect the financial
information of Associated only. The balance sheet data at June 30, 1995 reflect
the consolidated balances of post-Merger United including the preliminary
purchase price allocation, which may be revised at a later date, and other
Merger-related adjustments. The balance sheet data at June 30, 1994 reflect
Associated only.

15
<PAGE>

<TABLE>
<CAPTION>
PREDECESSOR(1) ASSOCIATED
----------------- --------------------------------------------
AT DECEMBER 31, AT JUNE 30,
-------------------------------------------- -----------------
1990(3) 1991(4) 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 60,726 $ 54,373 $ 46,396 $ 57,302 $ 56,454 $ 46,395 $294,710
Total assets............ 151,432 140,756 179,069 190,979 192,479 165,229 948,786
Total debt and capital
leases (10)............ -- -- 78,297 86,350 64,623 62,445 534,364
Redeemable preferred
stock.................. -- -- 18,949 20,996 23,189 22,073 24,345
Redeemable warrants..... -- -- 1,435 1,435 1,650 1,435 11,984
Total stockholders' or
predecessor division
equity................. 102,871 93,642 10,466 11,422 24,775 20,810 48,895
</TABLE>

--------
(1) The capital structure and accounting basis of the assets and liabilities of
the predecessor of ASI, BCOP, differ from those of Associated and ASI.
Accordingly, certain of the financial information for periods before
January 31, 1992 is not comparable to that for periods after January 31,
1992 and therefore is not presented in this table.
(2) The Predecessor operated as a segment of BCOP. BCOP did not allocate income
tax or interest expense to the Predecessor. Accordingly, actual operating
results for the Predecessor reflect only income from operations before
interest expense and income taxes.
(3) Derived from the unaudited financial statements of BCOP at and for the year
ended December 31, 1990.
(4) Derived from the unaudited financial statements of BCOP at and for the year
ended December 31, 1991.
(5) Derived from the unaudited financial statements of BCOP for the one month
ended January 31, 1992.

(6) Includes restructuring charge of $9.8 million for the six months ended June
30, 1995.
(7) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and restructuring charge and extraordinary item, and is
presented because it is commonly used by certain investors and analysts to
analyze and compare companies on the basis of operating performance and to
determine a company's ability to service and incur debt. EBITDA should not
be considered in isolation from or as a substitute for net income, cash
flows from operating activities or other consolidated income or cash flow
statement data prepared in accordance with generally accepted accounting
principles or as a measure of profitability or liquidity.
(8) EBITDA margin represents EBITDA as a percentage of net sales.

(9) Excludes amortization of financing costs.

(10) Total debt and capital leases is defined as long-term debt including
current maturities but excluding original issue discount, plus deferred
obligations due to the holder of the Associated Class B redeemable
preferred stock.

16
<PAGE>

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating an investment in
the Notes offered hereby.

CONSEQUENCES OF FAILURE TO EXCHANGE

Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon and in the
Offering Memorandum dated April 26, 1995, because the Old Notes were issued
pursuant to exemptions from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable state securities
laws. In general, the Old Notes may not be offered or sold unless registered
under the Securities Act and applicable state securities laws, or pursuant to
an exemption therefrom, or in a transaction not subject to the Securities Act
and applicable state securities laws. The Company does not intend to register
the Old Notes under the Securities Act and, after consummation of the Exchange
Offer, will not be obligated to do so except under limited circumstances. See
"The Exchange Offer--Purpose and Effect." Based on an interpretation by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that the New Notes issued pursuant to the Exchange Offer
in exchange for Old Notes may be offered for resale, resold or otherwise
transferred by holders thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holders' business, such holders have no arrangement
with any person to participate in the distribution of such New Notes and
neither such holders nor any such other person is engaging in or intends to
engage in a distribution of such New Notes. Each broker-dealer that receives
New Notes for its own account in exchange for Old Notes, where such Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See "Plan of Distribution." To
the extent that Old Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered and tendered but unaccepted Old Notes could be
adversely affected. See "The Exchange Offer."

HIGH LEVERAGE

As a result of the Acquisition, the refinancing of certain debt and the
repurchase of the Series B Preferred Stock (including accrued and unpaid
dividends thereon) which the Company effected with the proceeds of the Old
Notes, the Company has significant debt and debt service obligations. Assuming
the repurchase of the Series B Preferred Stock had occurred on June 30, 1995,
and after giving effect to the debt, redeemable preferred stock and redeemable
warrants of United "pushed down" to the accounts of the Company, (i) the
Company would have had $521.4 million of long-term indebtedness (including
current maturities), $17.2 million of redeemable preferred stock, $12.0 million
of redeemable warrants, and $48.8 million of common stock and other
stockholders' equity; (ii) the Company would have had a long-term indebtedness
to redeemable preferred stock, redeemable warrants and total stockholders'
equity ratio of 6.7 to 1; and (iii) the Company would have had a long-term
indebtedness, redeemable preferred stock and redeemable warrants to total
stockholders' equity ratio of 11.3 to 1. See "Pro Forma Combined Financial
Information." By contrast, after giving effect to "push-down" accounting, the
Company's historical long-term indebtedness to redeemable preferred stock plus
redeemable warrants plus stockholders' equity ratio as of June 30, 1995 was 6.0
to 1 and its historical long-term indebtedness, redeemable preferred stock and
redeemable warrants to stockholders' equity ratio as of June 30, 1995 was 11.3
to 1.

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<PAGE>

The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including the following: (i) the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, potential acquisition opportunities, general
corporate purposes or other purposes may be impaired; (ii) a substantial
portion of the Company's cash flow from operations must be dedicated to the
payment of principal and interest on its indebtedness; (iii) the Company may be
more vulnerable to economic downturns, may be limited in its ability to
withstand competitive pressures and may have reduced flexibility in responding
to changing business and economic conditions; and (iv) fluctuations in market
interest rates will affect the cost of the Company's borrowings to the extent
not covered by interest rate hedge agreements because interest under the New
Credit Facilities will be payable at variable rates. The Company's ability to
service its indebtedness will be dependent on its future performance, which
will be affected by prevailing economic conditions and financial, business and
other factors, certain of which are beyond the Company's control.

The Company believes that, based upon current levels of operations, it should
be able to meet its debt service obligations, including principal and interest
payments on the Notes, when due. However, if the Company cannot generate
sufficient cash flow from operations to meet its debt service obligations,
defaults may occur thereunder and the Company might be required to refinance
its indebtedness. There is no assurance that refinancings could be effected on
satisfactory terms or would be permitted by the terms of the New Credit
Agreement.

SUBORDINATION

The indebtedness evidenced by the Notes and the Guarantees (including
principal, premium, if any, and interest) will be subordinated in right of
payment to present and future Senior Indebtedness of the Company and Senior
Guarantor Indebtedness of each Guarantor. In the event of the dissolution or
liquidation of United or the Company, or in the case of certain events of
default with respect to the Notes or such Senior Indebtedness or Senior
Guarantor Indebtedness, certain creditors of the Company holding Senior
Indebtedness or of any Guarantor holding Senior Guarantor Indebtedness will be
entitled to be paid in full before any payment is made to holders of the Notes
or the Guarantees. Senior Indebtedness and Senior Guarantor Indebtedness would
currently include, among other things, the debt incurred under the New Credit
Facilities and, in the case of Senior Indebtedness, the Company's current and
future obligations under capitalized leases. After giving pro forma effect to
the repurchase of Series B Preferred Stock, together with accrued and unpaid
dividends thereon, effected with the proceeds of the Old Notes as if such
transaction had occurred on June 30, 1995, there would have been approximately
$391.6 million of Senior Indebtedness and Senior Guarantor Indebtedness of
United outstanding on such date, substantially all of which represents
Indebtedness or guarantees of Indebtedness under the New Credit Facilities
which would have been secured by substantially all of the assets of the
Company; in addition, after taking into account approximately $59.8 million of
outstanding letters of credit, there would have been approximately $97.2
million available to be drawn by the Company as secured Senior Indebtedness
under the revolving credit portion of the New Credit Facilities, which amounts
would have been secured Senior Guarantor Indebtedness of United; and, on a pro
forma basis on such date, Indebtedness pari passu to the Notes would have been
$231.7 million, and there would not have been any Indebtedness subordinated to
the Notes. See "Pro Forma Combined Financial Information." The Indenture does
not prohibit or limit the designation of Indebtedness otherwise permitted to be
incurred as Senior Indebtedness or Senior Guarantor Indebtedness. See
"Description of the New Notes -- Subordination."

LIMITED PRACTICAL VALUE OF GUARANTEES BY UNITED

United unconditionally guarantees, on a senior subordinated basis, all
payments of principal, premium, if any, and interest on the Notes. However,
since at present United's only significant asset is the capital stock of the
Company (and such asset is pledged to the lenders under the New Credit
Facilities), if the Company should be unable to meet its payment obligations
with respect to the Notes, it is unlikely that United would be able to do so.

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<PAGE>

RESTRICTIVE COVENANTS

The Indenture and the credit agreement (as amended, the "New Credit
Agreement") for the New Credit Facilities contain numerous restrictive
covenants that will limit the discretion of management with respect to certain
business matters. These covenants place significant restrictions on, among
other things, the ability of the Company to incur additional indebtedness, to
create liens or other encumbrances, to make certain payments, investments,
loans and guarantees and to sell or otherwise dispose of assets and merge or
consolidate with another entity. The New Credit Agreement also contains a
number of financial covenants that require the Company to meet certain
financial ratios and tests. See "Financing the Acquisition." A failure to
comply with the obligations in the New Credit Agreement or the Indenture could
result in an event of default under the New Credit Agreement, or an Event of
Default (as hereinafter defined) under the Indenture, which, if not cured or
waived, could permit acceleration of the indebtedness thereunder and
acceleration of indebtedness under other instruments that may contain cross-
acceleration or cross-default provisions. Other indebtedness of the Company and
its subsidiaries that may be incurred in the future may contain financial or
other covenants more restrictive than those applicable under the New Credit
Agreement. The New Credit Agreement restricts the prepayment, purchase,
redemption, defeasance or other payment of any of the principal of the Notes so
long as any loans remain outstanding under the New Credit Agreement.

RISKS INHERENT IN IMPLEMENTATION OF CONSOLIDATION PLAN

The Company's future operations and earnings will be largely dependent upon
the Company's ability to integrate the businesses separately conducted by ASI
and the Company prior to the Merger. The Company must, among other things,
eliminate approximately 10,000 overlapping items from its catalogs to be
distributed in the fourth calendar quarter of 1995, close redundant
distribution centers effectively, while at the same time maximizing retention
of the related business, and eliminate certain corporate and sales positions
and otherwise reduce combined administrative costs and expenses. There can be
no assurance that the Company will successfully integrate the former separate
businesses of ASI and the Company, and a failure to do so would have a material
adverse effect on the Company's results of operations and financial condition.
Additionally, although the Company does not currently have any acquisition
plans, the need to focus management's attention on integration of the former
businesses and implementation of the Company's consolidation plan may limit the
Company's ability to successfully pursue acquisitions or other opportunities
related to its business for the foreseeable future.

As discussed under "Business -- Consolidation Plan and Benefits of the
Acquisition" and as presented under "Pro Forma Combined Financial Information,"
management estimates that the Company expects to realize significant cost
savings as a result of a successful implementation of its consolidation plan.
The achievement of these savings is significantly dependent on the successful
implementation of such plan. There can be no assurances, however, that such
savings will be achieved or sustained. In addition, the Company believes that
the Acquisition is likely to result in a reduction in the rate of revenue
growth for some period following the Acquisition as a result of the loss of
customers to competition.

COMPETITION

The Company operates in a highly competitive environment. The Company
competes to obtain reseller purchases both with office products manufacturers
and with other national, regional and specialty wholesalers of office products,
office furniture, computers and related items. A trend toward consolidation has
occurred in recent years throughout the office products industry. Although as
the result of such consolidations at the national full-line wholesale level
only one competitor (S.P. Richards) remains, consolidation of commercial
dealers and contract stationers has also resulted in an increased ability of
those resellers to buy goods directly from manufacturers. In addition, over the
last decade,

19
<PAGE>

office products superstores (which largely buy directly from manufacturers)
have entered virtually every major metropolitan market and commercial dealers,
contract stationers and retail dealers have formed buying groups to purchase
directly from manufacturers on a collective basis. Increased competition in the
office products industry has also led to heightened price awareness among
consumers, making purchasers of commodity type office products extremely price
sensitive and requiring the Company to increase its efforts to convince
resellers of the continuing advantages of its competitive strengths (as
compared to those of manufacturers and other wholesalers), such as marketing
and catalog programs, speed of delivery, and the ability to offer resellers a
broad line of business products from multiple manufacturers with lower minimum
order quantities on a "one-stop shop" basis. See "Business --Competition."

CHANGING END USER DEMANDS

The Company's sales and profitability are largely dependent on its ability to
continually enhance its product offerings to meet changing end user demands.
End users' traditional demands for office products have changed over the last
several years as a result of (i) increased recycling efforts, (ii) efforts by
various businesses to establish "paperless" work environments, (iii) the
widespread use of computers and other technological advances, resulting in the
elimination or reduction in use of traditional office supplies and (iv) a trend
toward non-traditional offices, such as home-offices. The Company's ability to
continually monitor and react to such trends and changes in end user demands
will be necessary to avoid adverse effects on its sales and profitability.

SERVICE INTERRUPTIONS

Substantially all of the Company's shipping, warehouse and maintenance
employees at certain of the Company's facilities in Chicago, Detroit,
Philadelphia, Baltimore, Los Angeles, Minneapolis and New York City are covered
by various collective bargaining agreements, which expire at various times
during the next three years. Although the Company considers its relationships
with its employees to be satisfactory, a prolonged labor dispute could have a
material adverse effect on the Company's business as well as the Company's
results of operations and financial condition. In addition, the Company's
ability to readily deliver its products could be impaired by work stoppages by
its employees. Although the Company has maintained service levels during past
work stoppages by distributing to its customers from unaffected distribution
centers, profitability has been reduced during such periods as a result of
higher distribution costs. The Company's ability to receive and distribute
products is largely dependent on the availability of trucks utilized by both
manufacturers and the Company, and therefore the occurrence of a national
trucking strike could also impair the Company's operations. The Company's
service levels would also be affected in the event of an interruption in
operation of its computers or telecommunications network on a company-wide
scale for an extended period of time, although the Company has developed
contingency plans to limit its exposure. The Company has not experienced any
work stoppages for the financial periods presented herein that had a material
effect on the Company's operations and financial condition.

DEPENDENCE ON KEY PERSONNEL

The Company's continued success largely will depend on the efforts and
abilities of its executive officers and certain other key employees,
particularly Mr. Thomas W. Sturgess, the Company's Chairman of the Board,
President and Chief Executive Officer, Mr. Michael D. Rowsey and Mr. Steven R.
Schwarz, each an Executive Vice President of the Company, and Mr. Daniel H.
Bushell, an Executive Vice President and the Chief Financial Officer of the
Company, the loss of any of whom could have a material adverse effect on the
Company. Although all but Mr. Sturgess have entered into employment agreements
with the Company as described under "Management," the Company is currently
integrating two formerly separate management teams and any officer could choose
to resign at any time. On May 31, 1995, Jeffrey K. Hewson resigned as President
and Chief Executive Officer of United and the

20
<PAGE>

Company, and Thomas W. Sturgess, Chairman of the Board of United and the
Company, assumed such responsibilities. The Company currently does not have any
"key man" life insurance for its key personnel.

CONTROL BY WINGATE PARTNERS

As of the date of this Prospectus, approximately 75% of the outstanding
Shares were controlled by the Voting Trust (as hereinafter defined), the five
trustees of which hold all voting power to vote such Shares and may act by
majority vote of the trustees. Three of the five trustees serve as indirect
general partners of Wingate Partners, L.P. ("Wingate Partners") or Wingate
Partners II, L.P. ("Wingate II"), each of which is a Delaware limited
partnership and a private investment firm located in Dallas, Texas. In
addition, the trustees are obligated to nominate and vote for a board of
directors of United of which directors designated by Wingate Partners comprise
a majority. Four of the current nine directors of United are indirect general
partners of Wingate Partners or Wingate II. The Company is a wholly owned
subsidiary of United. Consequently, Wingate Partners and Wingate II and their
indirect general partners will control United and, through control of United,
the Company and, thus, will have the power to elect a majority of the directors
thereof and to approve any action requiring stockholder approval. See
"Management --Directors and Executive Officers," "Certain Transactions" and
"Ownership of Voting Securities."

FRAUDULENT CONVEYANCE CONSIDERATIONS

Substantially all of the net proceeds of the offering of the Old Notes were
used to refinance the Bridge Loan under the Subordinated Bridge Facility, repay
approximately $6.5 million outstanding under the Term Loan Facilities and pay a
dividend of $7.0 million to United to repurchase the outstanding shares of
Series B Preferred Stock, together with accrued and unpaid dividends thereon.
In addition, pursuant to the Merger, United assumed all of the obligations of
Associated; pursuant to the Subsidiary Merger, the Company assumed all
obligations of ASI; and, pursuant to the Indenture, each future domestic
Restricted Subsidiary of the Company will guarantee the Notes. Accordingly, the
obligations of the Company under the Notes and the obligations of United and
any future Restricted Subsidiary under the Guarantees may be subject to review
under relevant federal and state fraudulent conveyance statutes ("fraudulent
conveyance statutes") in a bankruptcy, reorganization or rehabilitation case or
similar proceeding or a lawsuit by or on behalf of unpaid creditors of the
Company, United or any future Restricted Subsidiary. If a court were to find
under relevant fraudulent conveyance statutes that, at the time of issuance,
incurrence or assumption by any debtor of obligations under the Notes,
Guarantees, the Bridge Loan or the term or revolving loans ("Senior Loans")
under the New Credit Facilities, (a) such debtor incurred such obligation with
the intent of hindering, delaying or defrauding current or future creditors or
(b)(i) such debtor received less than reasonably equivalent value or fair
consideration for incurring such obligation and (ii)(A) was insolvent or was
rendered insolvent by reason of such incurrence, (B) was engaged, or about to
engage, in a business or transaction for which its assets constituted
unreasonably small capital, or (C) intended to incur, or believed that it would
incur, obligations beyond its ability to pay as such obligations matured (as
all of the foregoing terms are defined in or interpreted under such fraudulent
conveyance statutes), such court could subordinate such obligations to
presently existing and future indebtedness of such debtor, as the case may be,
and take other action detrimental to the holders of the Notes, including, under
certain circumstances, invalidating the Notes or the Guarantees.

The measure of insolvency for purposes of the foregoing will vary depending
upon the law of the jurisdiction which is being applied. Generally, however, a
company would be considered insolvent for purposes of the foregoing if, at the
time it incurs any given obligation, the sum of the company's debts (including
unliquidated or contingent debt) is greater than all the company's property at
a fair valuation, or if the present fair saleable value of the company's assets
is less than the amount that will be required to pay its probable liability on
its existing debts (including unliquidated or contingent debt) as they become
absolute and matured.

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<PAGE>

On the basis of the historical financial information of United and Associated
and other factors, management believes that (i) each obligation of each debtor
was and is being incurred for proper purposes and in good faith and (ii) (A)
after giving effect to the Acquisition, the Mergers, the Bridge Loan, the
Senior Loans and related transactions, each such prior or current debtor
received or is receiving reasonably equivalent value and fair consideration for
incurring such obligation and (B) each such prior or current debtor was, is and
will be solvent under the foregoing standards, had, has and will have
sufficient capital for carrying on their businesses, was, is and will be able
to pay their debts as they mature, and had, has and will have sufficient assets
to satisfy any probable money judgment against it in any pending action. There
can be no assurance, however, as to whether a court would concur in such view.

LIQUIDITY OF THE NOTES

The New Notes are being offered to the holders of the Old Notes. Although the
Initial Purchaser currently makes a market in the Old Notes and has informed
the Company that it currently intends to make a market in the New Notes, it is
not obligated to do so, and any such market making may be discontinued at any
time without notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the New Notes. The Company does not
intend to apply for listing of the Notes on any securities exchange or for
quotation through the Nasdaq National Market System.

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<PAGE>

THE EXCHANGE OFFER

PURPOSE AND EFFECT

The Old Notes were sold by the Company on May 3, 1995 in a private placement.
In connection therewith, the Company entered into the Registration Agreement,
which requires that the Company file the Exchange Offer Registration Statement
under the Securities Act with respect to the New Notes and, upon the
effectiveness of such Exchange Offer Registration Statement, offer to the
holders of the Old Notes the opportunity to exchange their Old Notes for a like
principal amount of New Notes, which will be issued without a restrictive
legend and, with the exceptions provided below, may be reoffered and resold by
the holder without registration under the Securities Act. The Registration
Agreement further provides that the Exchange Offer Registration Statement must
be declared effective on or prior to August 31, 1995. Upon the completion of
the Exchange Offer (unless any holder is unable to make the requisite
representations in order to participate in the Exchange Offer), the Company's
obligations with respect to the registration of the Old Notes and the New Notes
will terminate. A copy of the Registration Agreement has been filed as an
exhibit to the Exchange Offer Registration Statement of which this Prospectus
is a part. As a result of the filing and the effectiveness of the Exchange
Offer Registration Statement, certain prospective increases in the interest
rate on the Old Notes provided for in the Registration Agreement and the
Indenture will not occur. Following the consummation of the Exchange Offer
(except as set forth in the paragraph immediately below), Holders of Old Notes
not tendered will not have any further registration rights and the Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for the Old Notes could be adversely affected upon
consummation of the Exchange Offer.

In order to participate in the Exchange Offer, a holder must represent to the
Company, among other things, that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving such New Notes, whether or not such person is the holder, (ii)
neither the holder nor any such other person is engaging in or intends to
engage in a distribution of such New Notes, (iii) neither the holder nor any
such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes, and (iv) neither the holder
nor any such other person is an "affiliate," as defined under Rule 405
promulgated under the Securities Act, of the Company. In the event that any
holder of Old Notes cannot make the requisite representations to the Company in
order to participate in the Exchange Offer, such holder can elect, by so
indicating on the Letter of Transmittal and providing certain additional
necessary information, to have such holder's Old Notes registered in a "shelf"
registration statement on an appropriate form pursuant to Rule 415 under the
Securities Act. In the event that the Company is obligated to file a "shelf"
registration statement, it will be required to keep such "shelf" registration
statement effective for a period of 180 days. Other than as set forth in this
paragraph, no holder will have the right to participate in the "shelf"
registration statement nor otherwise to require that the Company register such
holder's Notes under the Securities Act. See "-- Procedures for Tendering."

Based on an interpretation by the staff of the Commission set forth in no-
action letters issued to third parties, the Company believes that, with the
exceptions set forth below, New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by any person receiving such New Notes, whether or not such person
is the holder (other than any such holder or such other person which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of business of such holder or such other person and neither
such holder nor such other person has an arrangement or understanding with any
person to participate in the distribution of such New Notes. Any holder who
tenders in the Exchange Offer for the purpose of participating in a
distribution of the New Notes cannot rely on such interpretation by the staff
of the Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in

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<PAGE>

connection with a secondary resale transaction. Each broker-dealer that
receives New Notes for its own account in exchange for Old Notes, where such
Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. See "Plan of
Distribution."

CONSEQUENCES OF FAILURE TO EXCHANGE

Following the consummation of the Exchange Offer (except as set forth in the
second paragraph under " -- Purpose and Effect" above), holders of Old Notes
not tendered will not have any further registration rights and the Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for a holder's Old Notes could be adversely
affected upon consummation of the Exchange Offer if such holder does not
participate in the Exchange Offer.

TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this Prospectus and
in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of New
Notes in exchange for each $1,000 principal amount of outstanding Old Notes
accepted in the Exchange Offer. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only
in integral multiples of $1,000 in principal amount.

The form and terms of the New Notes are the same as the form and terms of the
Old Notes except that the New Notes have been registered under the Securities
Act and hence will not bear legends restricting the transfer thereof. The New
Notes will evidence the same debt as the Old Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture pursuant to which the Old
Notes were issued.

As of May 3, 1995, $150,000,000 aggregate principal amount of the Old Notes
was outstanding and there were five registered holders. This Prospectus,
together with the Letter of Transmittal, is being sent to such registered
Holders and to others believed to have beneficial interests in the Old Notes.
Holders of Old Notes do not have any appraisal or dissenters' rights under the
Business Corporation Act of the State of Illinois or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Securities Act and
the rules and regulations of the Commission promulgated thereunder.

The Company shall be deemed to have accepted validly tendered Old Notes when,
as, and if the Company has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering holders for the
purpose of receiving the New Notes from the Company. If any tendered Old Notes
are not accepted for exchange because of an invalid tender, the occurrence of
certain other events set forth herein or otherwise, certificates for any such
unaccepted Old Notes will be returned, without expense, to the tendering holder
thereof as promptly as practicable after the Expiration Date.

Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
" --- Fees and Expenses" below.

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The term "Expiration Date" shall mean 5:00 p.m., New York City time, on ,
1995, unless the Company, in its sole discretion, extends the Exchange Offer,
in which case the term "Expiration Date"

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<PAGE>

shall mean the latest date and time to which the Exchange Offer is extended. In
order to extend the Exchange Offer, the Company will notify the Exchange Agent
and each registered holder of any extension by oral or written notice prior to
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. The Company reserves the right, in its sole
discretion, (i) to delay accepting any Old Notes, to extend the Exchange Offer
or, if any of the conditions set forth below under "-- Conditions" shall not
have been satisfied, to terminate the Exchange Offer, by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, or (ii)
to amend the terms of the Exchange Offer in any manner.

PROCEDURES FOR TENDERING

Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign, and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile to the Exchange Agent
prior to the Expiration Date. In addition, either (i) certificates for such Old
Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of a book-entry transfer (a "Book-
Entry Confirmation") of such Old Notes, if such procedure is available, into
the Exchange Agent's account at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date, or
(iii) the Holder must comply with the guaranteed delivery procedures described
below. To be tendered effectively, the Letter of Transmittal and other required
documents must be received by the Exchange Agent at the address set forth below
under "-- Exchange Agent" prior to the Expiration Date.

The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.

THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES,
OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.

Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company, or other nominee and who wishes to
tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's Old Notes, either make appropriate arrangements to register ownership
of the Old Notes in such beneficial owner's name or obtain a properly completed
bond power from the registered holder. The transfer of registered ownership may
take considerable time.

Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below) unless
Old Notes tendered pursuant thereto are tendered (i) by a registered holder who
has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. In the event that signatures on a Letter of
Transmittal or a notice of withdrawal, as the case may be, are required to be
guaranteed, such guarantee must be by a member firm of a

25
<PAGE>

registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution").

If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered
holder as such registered holder's name appears on such Old Notes.

If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.

All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities, or conditions of
tender as to particular Old Notes. The Company's interpretation of the terms
and conditions of the Exchange Offer (including the instructions in the Letter
of Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends
to notify holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent, nor any other person shall
incur any liability for failure to give such notification. Tenders of Old Notes
will not be deemed to have been made until such defects or irregularities have
been cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering
holders, unless otherwise provided in the Letter of Transmittal, as soon as
practicable following the Expiration Date.

In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding subsequent to
the Expiration Date or, as set forth below under
" -- Conditions," to terminate the Exchange Offer and, to the extent permitted
by applicable law, purchase Old Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
could differ from the terms of the Exchange Offer.

By tendering, each holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the holder, (ii) neither the holder nor
any such other person is engaged in or intends to engage in a distribution of
such New Notes, (iii) neither the holder nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such New Notes, and (iv) neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of the Company.

In the event that any holder of Old Notes cannot make the requisite
representations to the Company in order to participate in the Exchange Offer,
such holder can elect, by so indicating on the Letter of Transmittal and
providing certain additional necessary information, to have such holder's Old
Notes registered in a "shelf" registration statement on an appropriate form
pursuant to Rule 415 under the Securities Act. Such election must be made by
the Expiration Date in order for such holder to participate in the "shelf"
registration.

26
<PAGE>

In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the Book-
Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering Holder thereof (or, in the case of
Old Notes tendered by book-entry transfer into the Exchange Agent's account at
the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such non-exchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration or termination of the Exchange Offer.

BOOK-ENTRY TRANSFER

The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer to transfer such Old Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of Old
Notes may be effected through book-entry transfer at the Book-Entry Transfer
Facility, the Letter of Transmittal or facsimile thereof, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address set forth
below under "-- Exchange Agent" on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.

GUARANTEED DELIVERY PROCEDURES

If a registered holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the
Exchange Agent received from such Eligible Institution a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
telegram, telex, facsimile transmission, mail or hand delivery), setting forth
the name and address of the holder of Old Notes and the amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent, and (iii) the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and all other documents required by the Letter of Transmittal, are
received by the Exchange Agent within three NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.

WITHDRAWAL RIGHTS

Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.

For a withdrawal of a tender of Old Notes to be effective, a written,
telegraphic, telex, or facsimile transmission notice of withdrawal must be
received by the Exchange Agent at its address set forth

27
<PAGE>

under " -- Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the holder
in the same manner as the original signature on the Letter of Transmittal by
which such Old Notes were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee register the transfer of such Old Notes into the name of the person
withdrawing the tender, and (iv) specify the name in which any such Old Notes
are to be registered, if different from that of the Depositor. All questions as
to the validity, form, and eligibility (including time of receipt) of such
notices will be determined by the Company, whose determination shall be final
and binding on all parties. Any Old Notes so withdrawn will be deemed not to
have been validity tendered for exchange for purposes of the Exchange Offer.
Any Old Notes which have been tendered for exchange but which are not exchanged
for any reason will be returned to the holder thereof without cost to such
holder as soon as practicable after withdrawal, rejection of tender, or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under "--Procedures for
Tendering" above at any time on or prior to the Expiration Date.

CONDITIONS

Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept Old Notes for exchange, or to issue New Notes in
exchange for Old Notes, and may terminate or amend the Exchange Offer as
provided herein, if at any time before the acceptance of such Old Notes for
exchange any of the following events shall occur:

(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission, (i) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transactions contemplated by the Exchange Offer, or assessing or seeking
any damages as a result thereof, or (ii) resulting in a material delay in
the ability of the Company to accept for exchange or exchange some or all
of the Old Notes pursuant to the Exchange Offer, or any statute, rule,
regulation, order, interpretation or injunction shall be sought, proposed,
introduced, enacted, promulgated or deemed applicable to the Exchange Offer
or any of the transactions contemplated by the Exchange Offer by any
government or governmental authority, domestic or foreign, or any action
shall have been taken, proposed or threatened, by any government or
governmental authority or agency or court, domestic or foreign, that in the
sole judgment of the Company, might directly or indirectly result in any of
the consequences referred to in clauses (i), (ii) above or, in the sole
judgment of the Company, might otherwise make it inadvisable to proceed
with the Exchange Offer; or

(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or the over-the-counter market, (ii) any limitation by
any governmental agency or authority which adversely affects the ability of
the Company to complete the transactions contemplated by the Exchange
Offer, (iii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation by any
governmental agency or authority which adversely affects the extension of
credit or (iv) a commencement of a war, armed hostilities or other similar
international calamity directly or indirectly involving the United States,
or, in the case of any of the foregoing existing at the time of the
commencement of the Exchange Offer, a material acceleration or worsening
thereof;

which, in the reasonable judgment of the Company in any case, and regardless of
the circumstances (including any action by the Company) giving rise to any such
condition, makes it inadvisable to proceed with the Exchange Offer and/or with
such acceptance for exchange or with such exchange.

28
<PAGE>

If the Company determines, in its reasonable discretion, that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering holders, (ii) extend
the Exchange Offer and retain all Old Notes tendered prior to the Expiration
Date, subject, however, to the rights of holders to withdraw such Old Notes
(see "Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all validly tendered Old Notes which
have not been withdrawn. If such waiver constitutes a material change to the
Exchange Offer, the Company will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the registered holders, and
the Company will extend the Exchange Offer for a period of five to 10 business
days, depending upon the significance of the waiver and the manner of
disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such five to 10 business day period.

The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its reasonable discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time.

ADJUSTMENT TO OLD NOTES

Pursuant to the Registration Agreement, United and the Company have agreed to
use their best efforts to (i) cause to become effective on or prior to August
31, 1995, the Exchange Offer Registration Statement with respect to a
registered offer under the Securities Act to exchange the New Notes for the Old
Notes in accordance with the terms of the Exchange Offer and (ii) cause such
Exchange Offer to be consummated on or prior to September 30, 1995.

In the event that either (i) the Exchange Offer Registration Statement is not
declared effective on or prior to August 31, 1995, (ii) the Exchange Offer is
not consummated on or prior to September 30, 1995 or (iii) changes in law or
the applicable interpretation of the Commission staff do not permit the Company
to effect the Exchange Offer and a Shelf Registration Statement with respect to
the Old Notes is not declared effective under the Securities Act on or prior to
the later of (x) August 31, 1995 and (y) the 45th calendar day after the
publication of the change in law or interpretation, the interest rate borne by
the Old Notes shall be increased by one-half of one percent per annum following
the relevant date described in clause (i), (ii) or (iii), as applicable. The
aggregate amount of such increase from the original interest rate pursuant to
these provisions will in no event exceed one-half of one percent per annum.
Such increase will cease to be effective on the date of effectiveness of the
Exchange Offer Registration Statement, consummation of the Exchange Offer or
the effectiveness of a Shelf Registration Statement, as the case may be.

ASSISTANCE

All executed Letters of Transmittal should be directed to the Exchange Agent.
Questions and requests for assistance and requests for additional copies of
this Prospectus, the Letter of Transmittal and other related documents should
be directed to the Exchange Agent as provided below.

29
<PAGE>

EXCHANGE AGENT

The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions, requests for assistance and requests for additional copies of
this Prospectus or of the Letter of Transmittal should be directed to the
Exchange Agent addressed as follows:

THE BANK OF NEW YORK

By Registered or Certified Facsimile Transmission By Hand/Overnight
Mail: Number: Delivery:
(212) 571-3080

101 Barclay Street - 7E (For Eligible Institutions 101 Barclay Street
New York, New York 10286 Only) Corporate Trust Services
Attn: Reorganization Confirm by Telphone: Window
Section (212) 815-2742 Ground Level
New York, New York 10286
Attn: Reorganization
Section

For Information Call:
(212) 815-6333

FEES AND EXPENSES

The Company will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail, however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.

The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be $
which includes fees and expenses of the Trustee, accounting, legal, printing,
and related fees and expenses.

TRANSFER TAXES

Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith, except that holders who instruct
the Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.

30
<PAGE>

THE COMPANY

The Company is the largest office products wholesaler in the United States.
As a result of the Merger of the Company with ASI on March 30, 1995, the
Company's net sales on a pro forma basis for 1994 were approximately $2.0
billion and for the six months ended June 30, 1995 were approximately $1.1
billion. Through its extensive office products catalogs, the Company markets a
full line of over 25,000 (post-consolidation) branded and private brand office
products, including traditional office supplies; office furniture and desk
accessories; office machines, equipment and supplies; computer hardware,
peripherals and supplies; and facilities management supplies, including
sanitation products and janitorial items. These products are offered through a
network of 39 (post-consolidation) strategically located distribution centers
to over 14,000 resellers, consisting principally of commercial dealers and
contract stationers, retail dealers, superstores, mail order companies and
mass merchandisers.

Although the office products distribution industry has seen many changes
over the past decade, including the growth of national superstores and a
consolidation among wholesalers, dealers and contract stationers, large
national wholesalers have continued to perform a significant role in the
distribution of office products. For manufacturers, the wholesaler provides
wide market coverage, assumes credit risk, carries inventory and processes
smaller orders than manufacturers can economically service. In addition,
wholesalers provide resellers with prompt service and delivery, a source for
filing small quantity orders and the opportunity to obtain credit, minimize
investment in inventory and access marketing resources and technical support.

The Company is currently engaged in implementing its consolidation plan to
integrate the two separate office products wholesale businesses conducted by
the Company and ASI prior to the Acquisition. See "Business -- Consolidation
Plan and Benefits of the Acquisition" and "Risk Factors --Risks Inherent in
Implementation of Consolidation Plan." The Company is a wholly owned
subsidiary of United, which has no operations independent of those of the
Company.

United is a holding company with no independent operations. United's only
significant asset is the stock of the Company.

The Company was incorporated in Illinois in 1922, and United was
incorporated in Delaware in 1981. The principal executive offices of the
Company and United are each located at 2200 East Golf Road, Des Plaines,
Illinois 66016-1267, telephone number (708) 699-5000.

USE OF PROCEEDS

There will be no cash proceeds to the Company or United from the exchange
pursuant to the Exchange Offer. The net proceeds to the Company from the sale
of the Old Notes were $144.5 million (after approximately $5.5 million in
estimated fees and expenses related to the offering). Such net proceeds were
used (i) to repay the Bridge Loan, scheduled to mature on March 29, 1996, in
the principal amount of $130.0 million, plus accrued interest thereon (at an
annual rate of 13%) of approximately $1.6 million, (ii) to repay approximately
$4.1 million of the outstanding amounts under the Tranche A Facility (as
hereinafter defined), scheduled to mature on March 31, 2000, plus accrued
interest thereon (at an annual rate of 8.9%) of approximately $0.02 million,
(iii) to repay approximately $2.4 million of the outstanding Tranche B
Facility (as hereinafter defined), scheduled to mature on February 28, 2002,
plus accrued interest thereon (at an annual rate of 9.4%) of approximately
$0.01 million, (iv) to pay a dividend to United in the aggregate amount of
$7.0 million to repurchase the Series B Preferred Stock of United, together
with accrued and unpaid dividends thereon and (v) for general corporate
purposes. The lenders under the Bridge Loan were The Roebling Fund, a
statutory business trust, and Chase Bank, each of which is an affiliate of the
Initial Purchaser. The lenders under the Term Loan Facility and the Revolving
Credit Facility also include Chase Bank. For further information regarding the
Bridge Loan and the New Credit Facilities, see "Financing the Acquisition."

31
<PAGE>

THE ACQUISITION

On March 30, 1995, pursuant to the Merger Agreement and in accordance with
the terms of the Offer to Purchase, Associated purchased 92.5% of the
outstanding Shares at a purchase price of $15.50 per share, or approximately
$266.6 million in the aggregate, pursuant to the Offer that expired on March
22, 1995. On March 30, 1995, at the time (the "Effective Time") the Mergers
were consummated, Associated and ASI merged with and into United and the
Company, respectively, and United and the Company continued as the respective
surviving corporations. For a discussion of the financing of the Acquisition,
see "Financing the Acquisition" and "Ownership of Voting Securities."

At the Effective Time of the Merger, (i) each Share (other than those Shares
owned by Associated or its affiliates (the "Associated-Owned Shares"), Shares
held by United or its subsidiaries (the "Treasury Shares") (which were
canceled) and Shares as to which statutory appraisal rights were validly
exercised and perfected in respect of the Merger and not withdrawn (the
"Dissenting Shares")) remained outstanding and unaffected by the Merger, (ii)
each share of Class A Common Stock, $0.01 par value, and Class B Common Stock,
$0.01 par value (collectively, the "Associated Common Stock"), of Associated
outstanding immediately prior to the Merger was converted into 3.446286 Shares
and each warrant or option to acquire shares of Associated Common Stock
outstanding immediately prior to the Merger was converted into the right to
purchase 3.446286 Shares for each share of Associated Common Stock into which
such warrant or option was exercisable immediately prior to the Merger, (iii)
each outstanding share of Class A Preferred Stock, $0.01 par value, of
Associated was converted into one share of Series A Preferred Stock, $0.01 par
value (the "Series A Preferred Stock"), of United, (iv) each outstanding share
of Class B Preferred Stock, $0.01 par value, of Associated was converted into
one share of Series B Preferred Stock, $0.01 par value (the "Series B Preferred
Stock"), of United, and (v) each outstanding share of Class C Preferred Stock,
$0.01 par value, of Associated was converted into one share of Series C
Preferred Stock, $0.01 par value (the "Series C Preferred Stock"), of United.
In addition, prior to consummation of the Merger, the Company made adjustments
to all stock options held by executive officers and directors of United such
that such options were redeemed at the Effective Time, with the holders thereof
being entitled to receive cash in settlement thereof. As used herein, the term
"Shares" includes shares of Nonvoting Common Stock, $0.01 par value, of United,
which are immediately convertible into Shares for no additional consideration.

Immediately following the Merger, the number of outstanding Shares was
5,998,117 (or 6,973,720 on a fully-diluted basis), of which (i) the former
holders of Associated Common Stock and warrants or options to purchase
Associated Common Stock in the aggregate owned 4,603,373 Shares constituting
approximately 76.7% of the outstanding Shares and outstanding warrants or
options for 975,603 Shares (collectively 80.0% on a fully-diluted basis) and
(ii) pre-Merger holders of Shares (other than Associated-Owned Shares and
Treasury Shares) in the aggregate owned 1,394,744 Shares constituting
approximately 23.3% of the outstanding Shares (or 20.0% on a fully-diluted
basis).

Upon consummation of the Merger, seven of the nine directors of United
serving prior thereto were replaced by nominees designated by Associated. Such
directors designated by Associated comprise the persons who were the directors
of Associated prior to the Acquisition. See "Management."

Prior to the Acquisition, Associated, through its wholly owned subsidiary,
ASI, was engaged in the wholesale distribution of a broad line of office
products. Associated and ASI were formed in January 1992 and August 1991,
respectively, by Wingate Partners.

32
<PAGE>

CAPITALIZATION

The following table sets forth the historical debt and capitalization of
United as of June 30, 1995 and as adjusted as of June 30, 1995 to give pro
forma effect to the repurchase of all of the outstanding shares of Series B
Preferred Stock, together with accrued and unpaid dividends thereon, with a
portion of the proceeds from the Old Notes. See "Use of Proceeds." United,
which has no operations independent of those of the Company, unconditionally
guarantees the Notes on a senior subordinated basis. The table should be read
in conjunction with "Pro Forma Combined Financial Information."

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
AT JUNE 30, 1995 AT JUNE 30, 1995
---------------- ----------------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Current maturities of long-term debt......... $ 24,614 $ 24,614
-------- --------
Long-term debt, excluding current maturities:
Revolving Credit Facility.................. $135,708 $142,960
Term Loan Facilities....................... 171,731 171,731
Senior Subordinated Notes.................. 150,000 150,000
Other Long-Term Debt....................... 32,142 32,142
-------- --------
Total long-term debt..................... $489,581 496,833
-------- --------
Redeemable preferred stock:
Series A................................... 7,113 7,113
Series B................................... 6,893 --
Series C................................... 10,339 10,087
-------- --------
Total redeemable preferred stock......... 24,345 17,200
-------- --------
Redeemable warrants.......................... 11,984 11,984
-------- --------
Total stockholders' equity................... 48,895 48,788
-------- --------
Total capitalization (including current
maturities of long-term debt)............... $574,805 $574,805
======== ========
</TABLE>

33
<PAGE>

PRO FORMA COMBINED FINANCIAL INFORMATION

The accompanying unaudited Pro Forma Combined Financial Statements are based
on the historical financial statements of Associated and United after giving
effect to (i) the purchase accounting and other merger related adjustments
relating to the Acquisition and (ii) the issuance and sale of the Old Notes and
the application of the net proceeds therefrom to repay in full the Bridge Loan
incurred in connection with the Acquisition and to repurchase all of the
outstanding shares of Series B Preferred Stock, together with accrued and
unpaid dividends thereon, and to reduce outstanding amounts borrowed under the
Term Loan Facilities to the extent of the remaining net proceeds, all as
described in Notes to Pro Forma Combined Financial Information. The Pro Forma
Balance Sheet is presented giving effect to the repurchase of the Series B
Preferred Stock, together with accrued and unpaid dividends thereon, effected
with a portion of the proceeds from the Old Notes, and payment of a cash
dividend on the Series C Preferred Stock as if all such transactions had been
consummated on June 30, 1995. The Pro Forma Combined Income Statements for the
year ended December 31, 1994 and the six months ended June 30, 1995 are
presented giving effect to (i) the Acquisition as if it had been consummated on
January 1, 1994 and (ii) the refinancing of certain debt and repurchase of the
Series B Preferred Stock, together with accrued and unpaid dividends thereon,
effected with a portion of the proceeds from the Old Notes, and payment of a
cash dividend on the Series C Preferred Stock as if all such transactions had
been consummated one month after consummation of the Acquisition.

Although United was the surviving corporation in the Merger, the transaction
was treated as a reverse acquisition for accounting purposes with Associated as
the acquiring corporation. Accordingly, the Pro Forma Balance Sheet as of June
30, 1995 for United reflects the balances of post-Merger United, including the
preliminary purchase price allocation, which may be revised at a later date,
and other Merger-related adjustments, the Pro Forma Combined Income Statement
for the year ended December 31, 1994 combines Associated for its fiscal year
ended December 31, 1994 with United for its twelve month period ended November
30, 1994 and the Pro Forma Combined Income Statement for the six months ended
June 30, 1995 combines (i) post-Merger United for the three months ended June
30, 1995, with (ii) Associated for the three months ended March 31, 1995 and
(iii) United for the three months ended February 28, 1995. United's historical
statement of income previously reported on a fiscal year ended August 31, 1994
has been adjusted to reflect the twelve month period ended November 30, 1994.

The unaudited Pro Forma Combined Financial Statements are intended for
informational purposes only and are not necessarily indicative of the future
financial position or future results of operations of United after the
Acquisition, or of the financial position or results of operations of United
that would have actually occurred had the Acquisition occurred on the date or
been in effect for the period presented.

Pro forma interest expense included in the Pro Forma Combined Income
Statement is based on historical interest rates in effect during the year ended
December 31, 1994 and the six months ended June 30, 1995 in calculating the
basis for variable rates. Average 30-day LIBOR in effect for the year ended
December 31, 1994 ranged from 3.15% to 6.09% and for the six months ended June
30, 1995 was 6.08%. The average prime rate during January 1994 was 6.0%. In
comparison, at June 30, 1995, the prime rate was 9.0% and 30-day LIBOR was
6.06%. If the June 30, 1995 interest rates were used as base interest rates
instead of the historical rates, pro forma interest expense for United would
amount to $55.9 million instead of $48.8 million for the year ended December
31, 1994. Pro forma interest expense for the six months ended June 30, 1995
based on historical interest rates for that period approximates that based on
the current interest rates. Each 1/8 of 1% change in the base interest rate for
variable rate debt has a $521 thousand effect on annual pro forma interest
expense for United. In April 1995, the Company entered into three-year interest
rate protection arrangements totaling $200,000,000 pursuant to which the
Company (i) is protected to the extent that the 3-month LIBOR interest rate
exceeds 8.0% and (ii) is liable to the extent that such interest rate drops
below 6.0%.

The Pro Forma Combined Income Statement excludes (i) the extraordinary non-
recurring write-off of approximately $2.4 million ($1.4 million net of tax
benefit of $1.0 million) of financing costs and original issue discount
relating to debt retired, (ii) a non-recurring charge for restructuring of
approximately $9.8 million ($5.9 million net of tax benefit of $3.9 million)
for costs expected to be incurred in connection with integration and transition
(e.g., severance and the cost of closing certain facilities operated by
Associated prior to the Merger) and (iii) compensation expense relating to
employee stock options of approximately $1.5 million ($0.9 million net of tax
benefit of $0.6 million). Pro forma net income available to common stockholders
and net income per common and common equivalent share exclude the charge to
retained earnings to adjust Redeemable Warrants to the put value, due to the
non-recurring nature of this charge.

The unaudited Pro Forma Combined Financial Statements and the accompanying
notes should be read in conjunction with, and are qualified in their entirety
by, the historical consolidated financial statements of United and Associated,
including the related notes thereto, included elsewhere herein.

34
<PAGE>

UNITED STATIONERS INC.

PRO FORMA BALANCE SHEET

JUNE 30, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
UNITED
STATIONERS INC.
AT JUNE 30, PRO FORMA PRO
1995 ADJUSTMENTS FORMA
--------------- ----------- --------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............. $ 12,514 $ -- $ 12,514
Accounts receivable.................... 229,677 -- 229,677
Inventories............................ 338,171 -- 338,171
Other current assets................... 37,438 -- 37,438
-------- ------ --------
Total current assets................. 617,800 -- 617,800
Property, plant and equipment............ 217,122 -- 217,122
Goodwill................................. 73,421 -- 73,421
Other assets............................. 40,443 -- 40,443
-------- ------ --------
TOTAL ASSETS............................. $948,786 $ -- $948,786
======== ====== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................... $163,587 $ -- $163,587
Accrued and other current liabilities.. 134,889 -- 134,889
Short-term debt and current maturities
of
long-term debt........................ 24,614 -- 24,614
-------- ------ --------
Total current liabilities............ 323,090 -- 323,090
Deferred income taxes.................... 30,722 -- 30,722
Other liabilities........................ 20,169 -- 20,169
Total long-term debt..................... 489,581 7,252 (a) 496,833
Total redeemable preferred stock......... 24,345 (7,145)(b) 17,200
Redeemable warrants...................... 11,984 -- 11,984
Stockholders' equity..................... 48,895 (107)(c) 48,788
-------- ------ --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY.................................. $948,786 $ -- $948,786
======== ====== ========
</TABLE>

See accompanying notes to Pro Forma Combined Financial Information.

35
<PAGE>

ASSOCIATED HOLDINGS, INC. AND UNITED STATIONERS INC.

PRO FORMA COMBINED INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
ASSOCIATED UNITED
HOLDINGS, INC. STATIONERS INC.
FOR THE YEAR FOR THE TWELVE
ENDED MONTHS ENDED
DECEMBER 31, NOVEMBER 30, PRO FORMA PRO FORMA
1994 1994 ADJUSTMENTS COMBINED
-------------- --------------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales............... $ 477,445 $1,504,625 $ -- $1,982,070
Cost of sales........... 357,276 1,181,541 (3,208)(d) 1,535,609
--------- ---------- ------- ----------
Gross profit............ 120,169 323,084 3,208 446,461
Warehouse, distribution,
selling, general and
administrative
expenses............... 102,048 284,484 (16,987)(e) 369,545
--------- ---------- ------- ----------
Income from operations.. 18,121 38,600 20,195 76,916
Interest expense, net... (7,725) (11,155) (29,945)(f) (48,825)
Other income, net....... -- 86 -- 86
--------- ---------- ------- ----------
Income before income
taxes.................. 10,396 27,531 (9,750) 28,177
Income taxes............ 3,993 10,763 (3,900)(g) 10,856
--------- ---------- ------- ----------
Net income.............. 6,403 16,768 (5,850) 17,321
Preferred Stock
dividends issued and
accrued................ 2,193 -- (566)(h) 1,627
--------- ---------- ------- ----------
Net income available to
common stockholders.... $ 4,210 $ 16,768 $(5,284) $ 15,694
========= ========== ======= ==========
Net income per common
and common equivalent
share:
Primary............... $ 3.51 $ 0.90 $ 2.29
========= ========== ==========
Fully diluted......... $ 3.49 $ 0.90 $ 2.29
========= ========== ==========
Weighted average common
and common equivalent
shares:
Primary............... 1,199,000 18,589,209 6,844,597
========= ========== ==========
Fully diluted......... 1,205,000 18,589,209 6,844,597
========= ========== ==========
OPERATING AND OTHER
DATA:
EBITDA*............... $ 23,505 $ 60,100 $25,966 $ 109,571
EBITDA margin**....... 4.9% 4.0% -- 5.5%
Depreciation and
amortization***...... $ 5,384 $ 21,414 $ 5,771 $ 32,569
Capital expenditures,
net.................. 554 9,955 -- 10,509
Ratio of EBITDA to
interest expense..... 3.0x 5.3x -- 2.2x
Ratio of earnings to
fixed charges****..... 2.2x 3.0x -- 1.5x
</TABLE>
--------

* EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. EBITDA should not be considered in isolation from or as a
substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance
with generally accepted accounting principles or as a measure of
profitability or liquidity.

** EBITDA margin represents EBITDA as a percentage of net sales.

*** Excludes amortization of financing costs.

**** For purposes of calculating the ratio of earnings to fixed charges,
earnings represent income before income taxes plus fixed charges. Fixed
charges consist of interest expense, net of interest income, including
amortization of discount and financing costs and one-third of the
operating rental expense which Management believes is representative of
the interest component of rent expense.

See accompanying notes to Pro Forma Combined Financial Information.

36
<PAGE>

ASSOCIATED HOLDINGS, INC. AND UNITED STATIONERS INC.
PRO FORMA COMBINED INCOME STATEMENT

FOR THE SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
ASSOCIATED UNITED
HOLDINGS, INC. STATIONERS INC.
FOR THE FOR THE THREE
SIX MONTHS MONTHS ENDED
ENDED JUNE 30, FEBRUARY 28, PRO FORMA PRO FORMA
1995* 1995 ADJUSTMENTS COMBINED
-------------- --------------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales............... $ 672,603 $ 431,640 $ -- $1,104,243
Cost of sales........... 518,521 341,011 (1,604)(d) 857,928
--------- ---------- ------- ----------
Gross profit............ 154,082 90,629 1,604 246,315
Warehouse, distribution,
selling, general
and administrative
expenses............... 131,519 75,191 (11,438)(i) 195,272
Restructuring charge.... 9,759 -- (9,759)(j) --
--------- ---------- ------- ----------
Income (loss) from
operations............. 12,804 15,438 22,801 51,043
Interest expense, net... (17,469) (3,191) (9,114)(k) (29,774)
Other income, net....... -- 20 -- 20
--------- ---------- ------- ----------
Income (loss) before
income taxes and
extraordinary item..... (4,665) 12,267 13,747 21,349
Income taxes (benefit).. (1,956) 4,905 5,499 (g) 8,448
--------- ---------- ------- ----------
Income (loss) before
extraordinary item..... (2,709) 7,362 8,248 12,901
Extraordinary item...... (1,449) -- 1,449 (l) --
--------- ---------- ------- ----------
Net income (loss)....... (4,158) 7,362 $ 9,697 12,901
Preferred Stock
dividends issued and
accrued................ 1,156 -- (332)(h) 824
--------- ---------- ------- ----------
Net income (loss)
available to common
stockholders $ (5,314) $ 7,362 $10,029 $ 12,077
========= ========== ======= ==========
Net income (loss) per
common and common
equivalent share
(primary and fully
diluted):
Income (loss) before
extraordinary item.... $ (0.83) $ 0.40 $ 1.75
Extraordinary item..... (0.31) -- --
--------- ---------- ----------
Net income (loss) per
common and common
equivalent share...... $ (1.14) $ 0.40 $ 1.75
========= ========== ==========
Weighted average common
and common equivalent
shares:
Primary................ 4,676,887 18,595,600 6,894,076
========= ========== ==========
Fully diluted.......... 4,676,887 18,595,600 6,898,757
========= ========== ==========
OPERATING AND OTHER
DATA:
EBITDA**............... $ 31,702 $ 20,855 $15,986 $ 68,543
EBITDA margin***....... 4.7% 4.8% -- 6.2%
Depreciation and
amortization****...... $ 9,139 $ 5,397 $ 2,884 $ 17,420
Capital expenditures,
net................... 1,559 3,062 -- $ 4,621
Ratio of EBITDA to
interest expense...... 1.8x 6.5x -- 2.3x
Ratio of earnings to
fixed charges*****.... 1.3x 4.2x -- 1.7x
</TABLE>
--------

* Now doing business as United Stationers Inc. Includes results of
operations for Associated only for the three months ended March 31, 1995
and post-Merger United for the three months ended June 30, 1995.

** EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and restructuring charge and extraordinary item and is
presented because it is commonly used by certain investors and analysts
to analyze and compare companies on the basis of operating performance
and to determine a company's ability to service and incur debt. EBITDA
should not be considered in isolation from or as a substitute for net
income, cash flows from operating activities or other consolidated
income or cash flow statement data prepared in accordance with generally
accepted accounting principles or as a measure of profitability or
liquidity.

*** EBITDA margin represents EBITDA as a percentage of net sales.

**** Excludes amortization of financing costs.

***** For purposes of calculating the ratio of earnings to fixed charges,
earnings represent income before income taxes and extraordinary item
plus restructuring and fixed charges. Fixed charges consist of interest
expense, net of interest income, including amortization of discount and
financing costs and one-third of the operating rental expense which
Management believes is representative of the interest component of rent
expense.

See accompanying notes to Pro Forma Combined Financial Information.

37
<PAGE>

ASSOCIATED HOLDINGS, INC. AND UNITED STATIONERS INC.

NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
(UNAUDITED)

The Pro Forma Combined Financial Statements have been prepared giving
effect to the following:

(1) Associated acquired 92.5% of United's outstanding Shares for $15.50 per
Share, or an aggregate of approximately $266.6 million.

(2) Outstanding options to purchase United's Shares were retired for $15.50
per share less the exercise price, or an aggregate of approximately
$3.0 million.

(3) Certain pre-Merger stockholders of Associated purchased 340,158 new
shares of Associated Common Stock for $12.0 million prior to the
Merger.

(4) As a result of the Acquisition, stockholders of United whose Shares
were not acquired in the Offer hold a 20.0% ownership interest in
United after the Merger on a fully diluted basis. Chase Manhattan
Investment Holdings, Inc. ("CMIHI") received a 2.0% ownership interest
in United on a fully diluted basis and received an additional 2.0%
ownership interest shortly after the issuance of the Old Notes. The
remaining 76.0% of Shares of United on a fully diluted basis were
allocated pro rata to pre-Merger holders of Associated Common Stock and
warrants or options exercisable for Associated Common Stock. Shares of
Associated Common Stock were converted into Shares of United in the
Merger.

(5) The total purchase price for United, including the ownership interest
held by the pre-Merger stockholders of United, based on the per share
price of $15.50, plus transaction costs of $6.2 million was
approximately $294.5 million. The purchase price has been preliminarily
allocated to the net assets of United based on estimated fair values at
the date of acquisition with the excess of cost over fair value
allocated to goodwill. The purchase price allocation to property, plant
and equipment is amortized over the estimated useful lives ranging from
3 to 40 years. Goodwill is amortized over 40 years.

The total purchase price of United by Associated and its allocation to
assets and liabilities acquired on a preliminary basis is as follows:

<TABLE>
<S> <C>
Purchase price:
Price of United Shares purchased by Associated................ $ 266,629
Fair value of United Shares not acquired in Offer............. 21,618
Transaction costs ............................................ 6,225
---------
Total purchase price........................................ $ 294,472
=========
Allocation of purchase price on a preliminary basis:
Current assets................................................ $ 509,610
Property, plant and equipment................................. 178,005
Goodwill...................................................... 71,076
Other assets.................................................. 9,253
Liabilities assumed........................................... (473,472)
---------
Total purchase price........................................ $ 294,472
=========
</TABLE>

(6) The accrual by United on a pre-Merger basis of severance payments to be
made to United's management personnel under existing employment
contracts is assumed to have totaled $17.9 million. The non-recurring
charge to net income recorded by United on a pre-Merger basis (i.e., in
the period immediately preceding the period covered by the Pro Forma
Combined Income Statement) for severance payments under employment
contracts, insurance benefits under employment contracts, legal,
accounting and other professional services fees, the retirement of
outstanding options to purchase Shares of United, and fees for letters
of credit related to severance payments and other costs is assumed to
have totaled $17.1 million, net of the tax benefit.

38
<PAGE>

ASSOCIATED HOLDINGS, INC. AND UNITED STATIONERS INC.

NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION -- (CONTINUED)
(UNAUDITED)
(7) For purposes of determining the put value of Lender Warrants
("Redeemable Warrants") and the value of employee stock options
("Options"), the quoted market price of Shares of United at the date of
the Acquisition is assumed to have been $15.50 per share.

(8) The net proceeds from the offering of Old Notes are assumed to have been
used to refinance the Subordinated Bridge Facility in full, to reduce
outstanding amounts under the Term Loan Facilities and to repurchase all
outstanding shares of Series B Preferred Stock, including accrued and
unpaid dividends thereon.

(9) Pro forma interest expense has been calculated based upon pro forma debt
levels and the applicable interest rates. The Subordinated Bridge
Facility, which carries a variable interest rate based on the prime
rate, is assumed to be outstanding for one month after the consummation
of the Merger. Pro forma interest expense on the Subordinated Bridge
Facility was calculated using an average prime rate of 6.0%. One month
after the closing date, the Subordinated Bridge Facility is assumed to
have been refinanced with a portion of the proceeds from the Old Notes
carrying an assumed fixed interest rate of 12.75%. For the Term Loan
Facilities and the Revolving Credit Facility, pro forma interest expense
was calculated on a monthly basis using as a base interest rate the
average historical 30-day LIBOR in effect for the month. Average monthly
LIBOR in effect for the year ended December 31, 1994 ranged from 3.15%
to 6.09% and for the six months ended June 30, 1995 was 6.08%. Using 30-
day LIBOR and the prime rate each as of June 30, 1995 (6.06% and 9.0%,
respectively) as the base interest rates would increase pro forma
interest expense by $7.1 million for the year ended December 31, 1994.
Pro forma interest expense for the six months ended June 30, 1995 based
on historical interest rates for that period approximates that based on
the current interest rates. Each 1/8 of 1% change in the base interest
rate for variable rate debt has a $521 thousand effect on annual pro
forma interest expense.

(10) Estimated cost savings of $26 million that the Company expects to
realize from the actions that Management has committed to undertake
pursuant to its consolidation plan that has been approved by the Board
of Directors of the Company have been reflected in the Pro Forma
Combined Income Statement as if the Company's consolidation plan had
been implemented in full as of January 1, 1994. The Company plans to
implement its consolidation plan over a 12-month period following the
Acquisition. See footnotes (d), (e) and (i) below. See "Business --
Consolidation Plan and Benefits of the Acquisition" and "Risk
Factors -- Risks Inherent in Implementation of Consolidation Plan."

(11) Income taxes have been provided for all adjustments at an assumed rate
of 40.0%.

(12) In computing per share information, dividends on preferred stock are
assumed to have been paid in preferred shares at the rate of 13.0% per
annum for Series A Preferred Stock and 10.0% per annum for Series B
and Series C Preferred Stock. Series B Preferred Stock is assumed to
have been outstanding for only one month. The preferred stock
dividends reduce the net income available to common stockholders by
$1.6 million for the year ended December 31, 1994 and $0.8 million for
the six months ended June 30, 1995.

(13) Payment of cash dividends of approximately $0.3 million on the Series
C Preferred Stock in connection with the repurchase of the Series B
Preferred Stock.

39
<PAGE>

ASSOCIATED HOLDINGS, INC. AND UNITED STATIONERS INC.

NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION -- (CONTINUED)
(UNAUDITED)

Pro forma adjustments have been made to the Pro Forma Balance Sheet to
reflect the following (in thousands):

(a) Adjusts the long-term debt for the following:

<TABLE>
<S> <C>
Retirement of Old Notes....................................... $(150,000)
Issuance of New Notes......................................... 150,000
Increase in Revolving Credit Facility to pay for repurchase of
Series B Preferred Stock and dividend on Series C Preferred
Stock........................................................ 7,252
---------
$ 7,252
=========

(b) Reflects repurchase of Series B Preferred Stock, together with accrued
and unpaid dividends thereon, and payment of quarterly dividend on the
Series C Preferred Stock:

Repurchase of Series B Preferred Stock........................ $(6,893)
Cash dividend on Series C Preferred Stock..................... (252)
---------
$(7,145)
=========
</TABLE>

Pro forma adjustments have been made to the Pro Forma Combined Income
Statement to reflect the following (in thousands):

(d) Reflects estimated cost savings due to an increase in credits
received from vendors as a result of increased purchase volumes with such
vendors.

(e) Reflects (i) estimated cost savings as a result of actions that
United expects to undertake pursuant to a plan that has been approved by
the Board of Directors of the Company and (ii) incremental depreciation and
amortization. United's plan to achieve the cost savings includes
eliminating eight redundant distribution centers, reducing corporate
overhead and eliminating redundant sales representatives. The Company is
committed to effect this plan within one year of the acquisition. See "Risk
Factors -- Risks Inherent in Implementation of Consolidation Plan."

<TABLE>
<S> <C>
Decrease in selling expenses due to reductions in combined
sales force................................................... $ (3,840)
Decrease in warehouse and distribution expenses due to closing
of duplicate facilities....................................... (8,873)
Decrease in general and administrative expenses due to
elimination of duplicate corporate overhead................... (10,045)
--------
Aggregate decrease in expenses................................. (22,758)
Incremental amortization of goodwill........................... 662
Incremental depreciation of plant, property and equipment...... 5,109
--------
$(16,987)
========
</TABLE>

40
<PAGE>

ASSOCIATED HOLDINGS, INC. AND UNITED STATIONERS INC.

NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION -- (CONCLUDED)
(UNAUDITED)

(f) Adjusts interest expense for the following:

<TABLE>
<S> <C>
Incremental interest expense on debt........................... $(28,737)
Amortization of financing costs and original issue discount
relating to retired debt...................................... 1,277
Incremental amortization of financing costs.................... (1,621)
Accretion of interest on liability recorded relating to
severance payments to be made to United's management personnel
under existing employment contracts........................... (864)
--------
$(29,945)
========
</TABLE>
(g) Reflects income tax effect of the pro forma adjustments.

(h) Reflects adjustment of preferred stock dividends to reflect
repurchase of Series B Preferred Stock.

(i) Reflects (i) estimated cost savings as a result of actions that
United expects to undertake pursuant to a plan that has been approved by
the Board of Directors of the Company and (ii) incremental depreciation and
amortization. United's plan to achieve the cost savings includes
eliminating eight redundant distribution centers, reducing corporate
overhead and eliminating redundant sales representatives and eliminating
the effect of compensation expense relating to employee stock options. The
Company is committed to effect this plan within one year of the
acquisition. See "Risk Factors -- Risks Inherent In Implementation of
Consolidation Plan."

<TABLE>
<S> <C>
Decrease in selling expenses due to reductions in combined
sales force................................................... $ (1,920)
Decrease in warehouse and distribution expenses due to closing
of duplicate facilities....................................... (4,436)
Decrease in general and administrative expenses due to
elimination of duplicate corporate overhead................... (5,022)
--------
Aggregate decrease in expenses................................. (11,378)
Incremental amortization of goodwill........................... 165
Incremental depreciation of plant, property and equipment...... 1,277
Compensation expense related to employee stock options......... (1,502)
--------
$(11,438)
========
</TABLE>
(j) Eliminates effect of a non-recurring charge for restructuring costs
expected to be incurred in connection with integration and transition
(e.g., severance and the cost of closing certain facilities operated by
Associated prior to the Merger).

(k) Adjusts interest expense for the following:

<TABLE>
<S> <C>
Incremental interest expense on debt............................ $(8,887)
Amortization of financing costs and original issue discount
relating to retired debt....................................... 319
Incremental amortization of financing costs..................... (330)
Accretion of interest on liability recorded relating to
severance payments to be made to United's management personnel
under existing employment contracts............................ (216)
-------
$(9,114)
=======
</TABLE>

(l) Eliminates effect of the non-recurring write-off of financing costs
and original issue discount relating to debt which was retired.

41
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

Set forth below and on the next page is selected historical financial
information for United and Associated. United, which has no operations
independent of the Company, unconditionally guarantees the Notes on a senior
subordinated basis. Associated had no operations independent of those of ASI.

UNITED -- HISTORICAL

The selected consolidated financial information of United set forth below
for each of the fiscal years in the five-year period ended August 31, 1994 and
the seven months ended March 30, 1995 has been derived from the financial
statements of United, which have been audited by Arthur Andersen LLP,
independent public accountants, for the years ended August 31, 1990 through
1994, and by Ernst & Young LLP, independent public accountants, for the seven
months ended March 30, 1995. Audited financial statements for the fiscal years
ended August 31, 1990 and 1991 are not included in this filing. The summary
financial information at and for the seven-month period ended March 31, 1994
is unaudited and in the opinion of management reflects all adjustments
considered necessary for a fair presentation of such data. The results of
operations for any interim period are not necessarily indicative of results of
operations for the fiscal year and should be read in conjunction with, and is
qualified in its entirety by, "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Historical Results of
Operations of United" and "-- Historical Liquidity and Capital Resources of
United" and the financial statements of United included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED AUGUST 31, ENDED
------------------------------------------------------ --------------------
MARCH 31, MARCH 30,
1990 1991 1992 1993 1994 1994 1995
-------- -------- ---------- ---------- ---------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $993,178 $951,109 $1,094,275 $1,470,115 $1,473,024 $871,585 $980,575
Cost of sales........... 768,948 732,401 848,588 1,125,596 1,150,123 675,720 773,857
-------- -------- ---------- ---------- ---------- -------- --------
Gross profit on sales.. 224,230 218,708 245,687 344,519 322,901 195,865 206,718
Operating expenses...... 195,863 195,694 219,285 298,405 286,607 170,420 174,021
Merger Related Costs.... -- -- -- -- -- -- 27,780
-------- -------- ---------- ---------- ---------- -------- --------
Income from operations. 28,367 23,014 26,402 46,114 36,294 25,445 4,917
Interest expense, net... 7,350 6,082 6,503 9,550 10,461 5,837 7,500
Other income (expense),
net.................... 344 (14) 364 355 225 117 41
-------- -------- ---------- ---------- ---------- -------- --------
Income before income
taxes................. 21,361 16,918 20,263 36,919 26,058 19,725 (2,542)
Income taxes............ 8,523 7,008 8,899 15,559 10,309 8,185 4,692
-------- -------- ---------- ---------- ---------- -------- --------
Net income............. $ 12,838 $ 9,910 $ 11,364 $ 21,360 $ 15,749 $ 11,540 $ (7,234)
======== ======== ========== ========== ========== ======== ========
Net income per common
share.................. $ 0.83 $ 0.64 $ 0.71 $ 1.15 $ 0.85 $ 0.62 $ (0.39)
Cash dividends declared
per share.............. 0.40 0.40 0.40 0.40 0.40 0.30 0.30
OPERATING AND OTHER
DATA:
EBITDA (1).............. $ 43,851 $ 41,912 $ 46,645 $ 67,712 $ 57,755 $ 37,665 $ 17,553
EBITDA margin (2)....... 4.4% 4.4% 4.3% 4.6% 3.9% 4.3% 1.8%
Depreciation and
amortization........... $ 15,140 $ 18,912 $ 19,879 $ 21,243 $ 21,236 $ 12,103 $ 12,595
Net capital
expenditures........... 15,067 15,765 8,291 29,958 10,499 4,287 7,764
Ratio of earnings to
fixed charges (3)...... 3.5x 3.3x 3.4x 4.0x 3.0x 3.8x 0.7x
BALANCE SHEET DATA (AT
PERIOD END):
Working capital......... $134,420 $135,347 $ 214,611 $ 216,074 $ 239,827 $297,099 $257,600
Total assets............ 401,661 409,958 601,465 634,786 618,550 608,728 711,839
Total debt and capital
leases(4).............. 73,683 73,123 150,728 150,251 155,803 227,626 233,406
Stockholders'
investment............. 177,777 181,584 223,387 237,697 246,010 243,636 233,125
</TABLE>
--------
(1) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. EBITDA should not be considered in isolation from or as a
substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance
with generally accepted accounting principles or as a measure of
profitability or liquidity.
(2) EBITDA margin represents EBITDA as a percentage of net sales.
(3) For purposes of calculating the ratio of earnings to fixed charges,
earnings represent income before income taxes plus fixed charges. Fixed
charges consist of interest expense, net, including amortization of
discount and financing costs and one-third of the operating rental expense
which management believes is representative of the interest component of
rent expense.
(4) Total Debt and Capital Leases is defined as long-term debt including
current maturities but excluding original issue discount.

42
<PAGE>

ASSOCIATED -- HISTORICAL

The selected consolidated financial information of Associated set forth
below with respect to the period from January 31, 1992 (when certain of the
assets and certain liabilities of ASI were acquired from the Wholesale
Division of BCOP) through December 31, 1992 and the years ended December 31,
1993 and 1994 has been derived from and should be read in conjunction with,
and is qualified in its entirety by, "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Historical Results of
Operations of Associated" and "-- Historical Liquidity and Capital Resources
of Associated" and the financial statements of Associated included elsewhere
in this Prospectus, which have been audited by Arthur Andersen LLP,
independent public accountants. The data at and for the years ended December
31, 1990 and 1991 and the one month ended January 31, 1992 are derived from
the unaudited financial statements of BCOP for such periods. Associated has
accounted for the Boise Transaction using the purchase method of accounting.
There are material operational and accounting differences between BCOP and
Associated resulting from the Boise Transaction. Accordingly, the historical
financial data of BCOP may not be comparable in all material respects with
data of Associated. The data at and for the six months ended June 30, 1994 and
1995 are unaudited and in the opinion of management reflect all adjustments
considered necessary for a fair presentation of such data. On March 30, 1995,
Associated was merged with United. Although United was the surviving
corporation in the Merger, the transaction was treated as a reverse
acquisition for accounting purposes, with Associated as the acquiring
corporation. Therefore, the income statement and operating and other data for
the six months ended June 30, 1995 reflect the financial information of
Associated only for the three months ended March 31, 1995, and the results of
post-Merger United for the three months ended June 30, 1995. The income
statement and operating and other data for the six months ended June 30, 1994
reflect the financial information of Associated only. The balance sheet data
at June 30, 1995 reflect the consolidated balances of post-Merger United. The
balance sheet data at June 30, 1994 reflect Associated only.

<TABLE>
<CAPTION>
PREDECESSOR(1)(2) ASSOCIATED
------------------------------- ---------------------------------------------------
JANUARY 1 JANUARY 31
YEAR ENDED TO TO YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JANUARY 31, DECEMBER 31, DECEMBER 31, JUNE 30,
------------------ ----------- ------------ ------------------ ------------------
1990(3) 1991(4) 1992(5) 1992 1993 1994 1994 1995
-------- -------- ----------- ------------ -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT (DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA) PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $443,547 $411,343 $39,016 $365,944 $462,531 $477,445 $233,829 $672,603
Cost of goods sold...... 331,223 308,090 29,874 276,546 350,251 357,276 176,271 518,521
-------- -------- ------- -------- -------- -------- -------- --------
Gross profit........... 112,324 103,253 9,142 89,398 112,280 120,169 57,558 154,082
Operating expenses(6)... 90,773 88,374 7,723 79,045 101,302 102,048 51,440 141,278
-------- -------- ------- -------- -------- -------- -------- --------
Income from operations. $ 21,551 $ 14,879 $ 1,419 10,353 10,978 18,121 6,118 12,804
======== ======== =======
Interest expense........ -- -- -- 5,626 7,235 7,725 4,046 17,469
-------- -------- -------- -------- --------
Income (loss) before
income taxes and
extraordinary item.... -- -- -- 4,727 3,743 10,396 2,072 (4,665)
Income taxes (benefit).. -- -- -- 1,777 781 3,993 796 (1,956)
-------- -------- -------- -------- --------
Income (loss) before ex-
traordinary item....... -- -- -- 2,950 2,962 6,403 1,276 (2,709)
Extraordinary item...... -- -- -- -- -- -- -- (1,449)
-------- -------- -------- -------- --------
Net income (loss)...... -- -- -- $ 2,950 $ 2,962 $ 6,403 $ 1,276 $ (4,158)
======== ======== ======== ======== ========
Fully diluted earnings
per common share....... -- -- -- $ 1.32 $ 0.78 $ 3.51 $ 0.05 $ (1.14)
Cash dividends declared
per share.............. -- -- -- -- -- -- -- --
OPERATING AND OTHER
DATA:
EBITDA (7).............. $ 24,511 $ 18,028 $ 1,661 $ 14,875 $ 16,481 $ 23,505 $ 8,561 $ 31,702
EBITDA margin (8)....... 5.5% 4.4% 4.3% 4.1% 3.6% 4.9% 3.7% 4.7%
Depreciation and
amortization (9)....... $ 2,960 $ 3,149 $ 242 $4,522 $5,503 $5,384 $ 2,443 $ 9,139
Capital expenditures,
net.................... 8,129 273 (36) 4,289 3,273 554 336 1,559
Ratio of earnings to
fixed charges (10)..... -- -- -- 1.76x 1.46x 2.20x 1.4x 1.3x
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR(1) ASSOCIATED
----------------- --------------------------------------------
AT DECEMBER 31, AT JUNE 30,
-------------------------------------------- -----------------
1990(3) 1991(4) 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 60,726 $ 54,373 $ 46,396 $ 57,302 $ 56,454 $ 46,395 $294,710
Total assets............ 151,432 140,756 179,069 190,979 192,479 165,229 984,786
Total debt and capital
leases (11)............ -- -- 78,297 86,350 64,623 62,445 534,364
Redeemable preferred
stock.................. -- -- 18,949 20,996 23,189 22,073 24,345
Redeemable warrants..... -- -- 1,435 1,435 1,650 1,435 11,984
Total stockholders' or
predecessor division
equity................. 102,871 93,642 10,466 11,422 24,775 20,810 48,895
</TABLE>
-------
(1) The capital structure and accounting basis of the assets and liabilities
of the predecessor of ASI, BCOP, differ from those of Associated and ASI.
Accordingly, certain of the financial information for periods before
January 31, 1992 is not comparable to that for periods after January 31,
1992 and therefore is not presented in this table.
(2) The Predecessor operated as a segment of BCOP. BCOP did not allocate
income tax or interest expense to the Predecessor. Accordingly, actual
operating results for the Predecessor reflect only income from operations
before interest expense and income taxes.
(3) Derived from the unaudited financial statements of BCOP at and for the
year ended December 31, 1990.
(4) Derived from the unaudited financial statements of BCOP at and for the
year ended December 31, 1991.

43
<PAGE>

(5) Derived from the unaudited financial statements of BCOP for the one month
ended January 31, 1992.

(9) Excludes amortization of financing costs.

(10) For purposes of calculating the ratio of earnings to fixed charges,
earnings represent income before income taxes and extraordinary item plus
restructuring and fixed charges. Fixed charges consist of interest
expense, net, including amortization of discount and financing costs and
one-third of the operating rental expense which management believes is
representative of the interest component of rent expense.

(11) Total debt and capital leases is defined as long-term debt including
current maturities but excluding original issue discount, plus deferred
obligations due to the holder of the Associated Class B redeemable
preferred stock.

44
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Except as otherwise indicated, the following discussion and analysis of the
results of operations and financial condition of United and Associated covers
periods before completion of the Acquisition. Accordingly, the discussion and
analysis of such periods do not reflect the significant impact that the
Acquisition and the financing thereof will have on United after the Merger. See
"Pro Forma Combined Financial Information" and "Business -- Consolidation Plan
and Benefits of the Acquisition." United, which has no operations independent
of those of the Company, fully and unconditionally guarantees the Notes on a
senior subordinated basis. Associated had no operations independent of those of
ASI.

HISTORICAL RESULTS OF OPERATIONS OF UNITED

General

The Company was incorporated in 1922 under the name Utility Supply Co. and
has operated under its present name since 1960. As part of the Company's
business strategy, United acquired Stationers Distributing Company, Inc.
("SDC") in June 1992 in order to increase its share of the office products
wholesale market. On March 30, 1995, Associated and United consummated the
Acquisition.

United's results of operations, expressed as the percentage which each line
item represents of total net sales, for each of its fiscal years 1992, 1993 and
1994 and the seven-month periods ended March 31, 1994 and March 30, 1995, are
set forth below:

<TABLE>
<CAPTION>
FOR THE
SEVEN MONTHS
YEAR ENDED ENDED
AUGUST 31, -------------------
------------------- MARCH 31, MARCH 30,
1992 1993 1994 1994 1995
----- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
NET SALES............................. 100.0% 100.0% 100.0% 100.0% 100.0%
COST OF SALES......................... 77.5 76.6 78.1 77.5 78.9
----- ----- ----- ----- -----
Gross Profit on Sales................ 22.5 23.4 21.9 22.5 21.1
OPERATING EXPENSES:
Warehousing, Marketing and
Administrative Expenses............. 19.5 20.3 19.4 19.6 17.7
Restructuring Charge................. 0.6 -- -- -- --
Merger-Related Costs................. -- -- -- -- 2.9
----- ----- ----- ----- -----
Income from Operations............... 2.4 3.1 2.5 2.9 0.5
OTHER INCOME (EXPENSES)
Interest Expense..................... (0.6) (0.6) (0.7) (0.8) (0.8)
Interest Income...................... -- -- -- -- --
Other, Net........................... -- -- -- -- --
----- ----- ----- ----- -----
Income (Loss) Before Income taxes.... 1.8 2.5 1.8 2.3 (0.3)
INCOME TAXES.......................... 0.8 1.0 0.7 0.9 0.4
----- ----- ----- ----- -----
Net Income (Loss).................... 1.0% 1.5% 1.1% 1.4% (0.7)%
===== ===== ===== ===== =====
</TABLE>

Comparison of the Seven Months Ended March 30, 1995 and March 31, 1994

Net Sales. Net sales were $980.6 million for the seven months ended March 30,
1995, a 12.5% increase from net sales of $871.6 million in the comparable
period in 1994. The primary reason for the increase is growth in unit volume.

Gross Profit on Sales. Gross profit as a percent of net sales was 21.1% for
the seven months ended March 30, 1995, compared with 22.5% in the comparable
period in 1994. This lower margin rate is primarily the result of a shift in
the sale of products to items that have lower gross margins and is consistent
with the margin rate achieved in the latter half of United's fiscal year ended
August 31, 1994.

Operating Expenses. Operating expenses as a percent of net sales increased to
20.6% in the seven month period ended March 30, 1995 from 19.6% in the
comparable period in 1994. The increase is primarily attributable to $27.8
million ($18.5 million net of tax benefit of $9.3 million) of merger-related

45
<PAGE>

costs consisting of severance payments under employment contracts; insurance
benefits under employment contracts; legal, accounting and other professional
services fees; the retirement of stock options; and fees for letters of credit
related to employment contracts and other costs. Operating expenses as a
percent of net sales prior to the merger-related costs were 17.7% for the seven
month period ended March 30, 1995. This decline from the comparable period in
1994 is a result of savings in employee-related payroll and freight expenses.

Income From Operations. Income from operations as a percent of net sales was
0.5% in the seven month period ended March 30, 1995, compared with 2.9% in the
comparable period in 1994. The decrease was attributable to the merger-related
costs discussed under "Operating Expenses" above. Income from operations as a
percent of net sales was 3.3% in the seven month period ended March 30, 1995,
excluding the merger-related costs.

Interest Expense. Interest expense was $7.6 million for the seven month
period ended March 30, 1995, compared with $6.1 million for the same period in
1994. The increase was due to higher interest expense from increased debt to
meet working capital and other capital expenditure needs and higher interest
rates on borrowings.

Income Before Income Taxes. Income (loss) before income taxes as a percent of
net sales was a loss of 0.3% in the seven month period ended March 30, 1995,
compared to income of 2.3% in the comparable period of 1994. The decrease in
income before income taxes was attributable to the factors stated above.

Income Taxes. The effective tax rate for the seven month period ended March
30, 1995 was (184.6%), compared with 41.5% for the seven month period ended
March 31, 1994. The increase is primarily due to non-deductible merger related
costs and the non-deductible amortization of goodwill.

Net Income. Net income (loss) was a loss of $7.2 million for the seven month
period ended March 30, 1995, compared with income of $11.5 million for the same
period in 1994. Net income (loss) per share was a loss of $0.39 in the seven
month period ended March 30, 1995, compared with income of $0.62 for the same
period in 1994, due to the factors set forth above.

Comparison of the Fiscal Years Ended August 31, 1994 and 1993

Net Sales. Net sales increased to $1,473.0 million in fiscal 1994 from
$1,470.1 million in fiscal 1993, a 0.2% increase reflecting a slight increase
in unit volume. Sales in the early part of fiscal 1994 were affected by a
temporary drop in in-stock service levels and the discontinuing of nearly
12,000 items as a final step in the consolidation process of the June 1992
acquisition of SDC. Sales were also negatively impacted by the SDC acquisition-
related operational disruptions in the west and southwest regions. Sales grew
in the fourth quarter by 3.4%, reversing the decline experienced in the prior
two quarters.

Gross Profit on Sales. Gross profit on sales decreased to $322.9 million in
fiscal 1994 from $344.5 million in fiscal 1993, a 6.3% decrease, due
principally to a decrease in gross margin. Gross margin decreased to 21.9% in
fiscal 1994 from 23.4% in fiscal 1993. The decline primarily reflects higher
levels of rebates and volume allowances earned by United's customers as a
result of ongoing consolidations. Gross margins over the last half of fiscal
1994 were relatively stable reflecting the slowing pace of dealer
consolidations. In addition, gross margin was affected by a LIFO charge (an
increase to "cost of sales") of $2.2 million in fiscal 1994 versus LIFO income
(a decrease to "cost of sales") of $4.7 million in fiscal 1993, and a shift in
the sale of products to items that have lower gross margins.

Operating Expenses. Operating expenses decreased to $286.6 million in fiscal
1994 from $298.4 million in fiscal 1993, a 4.0% decrease. Operating expenses as
a percentage of net sales decreased to 19.4% in fiscal 1994 from 20.3% in
fiscal 1993. The decrease is the result of streamlining United's work processes
and reducing payroll and freight expense.

Income From Operations. Income from operations decreased to $36.3 million in
fiscal 1994 from $46.1 million in fiscal 1993, a 21.3% decrease, and as a
percentage of net sales was 2.5% in fiscal 1994, compared with 3.1% in fiscal
1993, for the reasons stated above.

46
<PAGE>

Interest Expense. Interest expense increased to $10.7 million in fiscal 1994
from $9.8 million in fiscal 1993, an 8.9% increase, primarily due to additional
debt incurred to support working capital and other capital expenditures.

Income Before Income Taxes. Income before income taxes decreased to $26.1
million in fiscal 1994 from $36.9 million in fiscal 1993, a 29.4% decrease, for
the reasons stated above.

Certain interim expense and inventory estimates are recognized throughout the
fiscal year relating to shrinkage, inflation and product mix. The results of
the year-end close and physical inventory reflected a favorable adjustment with
respect to such estimates, resulting in approximately $0.5 million of
additional net income, which is reflected in the fourth quarter of fiscal 1994.

Income Taxes. Income taxes decreased to $10.3 million in fiscal 1994 from
$15.6 million in fiscal 1993, a $5.3 million decrease. The effective tax rates
for 1994 and 1993 were 39.6% and 42.1%, respectively. The decrease is primarily
due to the liquidation of a foreign subsidiary and a decrease in the effective
state income tax rate, offset by an increase in the non-deductible losses in
United's foreign operation and the non-deductible amortization of goodwill.

Net Income. Net income decreased to $15.7 million in 1994 from $21.4 million
in 1993, a decrease of $5.7 million, or 26.3%. Net income as a percentage of
net sales decreased to 1.1% in 1994 from 1.5% in 1993 for the reasons stated
above.

Comparison of the Fiscal Years Ended August 31, 1993 and 1992

Net Sales. Net sales increased to $1,470.1 million in fiscal 1993 from
$1,094.3 million in fiscal 1992, a 34.3% increase. This increase was due to an
increase in sales volume substantially attributable to the June 1992
acquisition of SDC.

Gross Profit on Sales. Gross profit on sales increased to $344.5 million in
fiscal 1993 from $245.7 million in fiscal 1992, a 40.2% increase, due to an
increase in sales and gross margin. Gross margin increased to 23.4% in fiscal
1993 from 22.5% in fiscal 1992, caused by LIFO income (a decrease to "cost of
sales") of $4.7 million in fiscal 1993 versus a LIFO charge (an increase to
"cost of sales") of $2.7 million in fiscal 1992 and a favorable product mix.

Operating Expenses. Operating expenses increased to $298.4 million in fiscal
1993 from $219.3 million in fiscal 1992, a 36.1% increase. Operating expenses
as a percentage of net sales increased to 20.3% in fiscal 1993 from 20.1% in
fiscal 1992. This increase was the result of higher expense levels associated
with offering a free-freight marketing program to customers and costs related
to temporarily managing the separate product offerings of United and SDC. In
addition, United incurred delays in its SDC acquisition-related facilities
consolidations, which resulted in additional expenses. Operating expenses for
1992 include a $5.9 million pre-tax restructuring charge related to severance
payments and the closing of certain United facilities associated with the
acquisition of SDC.

Income From Operations. Income from operations increased to $46.1 million in
fiscal 1993 from $26.4 million in fiscal 1992, a 74.7% increase, and as a
percentage of net sales was 3.1% in fiscal 1993, compared with 2.4% in fiscal
1992, for the reasons stated above.

Interest Expense. Interest expense increased to $9.8 million in fiscal 1993
from $7.0 in fiscal 1992, a 41.1% increase, primarily due to the full-year
impact of the additional debt incurred in connection with the acquisition of
SDC and the debt required to meet working capital and other capital expenditure
needs.

Income Before Income Taxes. Income before income taxes increased to $36.9
million in fiscal 1993 from $20.3 million in fiscal 1992, an 82.2% increase,
for the reasons stated above.

Certain interim expense and inventory estimates are recognized throughout the
fiscal year relating to shrinkage, inflation and product mix. The results of
the year-end close and physical inventory reflected a favorable adjustment with
respect to such estimates, resulting in approximately $2.6 million of
additional net income, which is reflected in the fourth quarter of fiscal 1993.

Income Taxes. Income taxes increased to $15.6 million in fiscal 1993 from
$8.9 million in fiscal 1992, a $6.7 million increase. The effective tax rates
for the fiscal years ending August 31, 1993 and August 31, 1992 were 42.1% and
43.9%, respectively. The decrease is primarily due to a decline in the non-
deductible losses in United's foreign operation and a decrease in the effective
state tax rate, offset by an increase in the federal tax rate.

47
<PAGE>

Net Income. Net income increased to $21.4 million in 1993 from $11.4 million
in 1992, an increase of $10.0 million, or 88.0%. Net income as a percentage of
net sales increased to 1.5% in 1993 from 1.0% in 1992 for the reasons stated
above.

HISTORICAL RESULTS OF OPERATIONS OF ASSOCIATED

General

Associated was formed by an investor group led by Wingate Partners in 1992 to
effect the Boise Transaction, in which Associated purchased the wholesale
office products operations of BCOP for approximately $87.1 million. The Boise
Transaction was consummated through a combination of bank debt and equity
financing.

As part of Associated's strategy to increase sales, management has worked to
expand Associated's geographical presence in order to increase market share. In
1992, Associated acquired Lynn-Edwards Corp. ("Lynn Edwards"), a regional west
coast office products wholesaler, for approximately $2.4 million, plus assumed
liabilities of approximately $7.2 million (the "Lynn-Edwards Acquisition"). The
Lynn-Edwards Acquisition added two distribution facilities. Associated also
opened two new distribution facilities in 1992 and 1993 in the Chicago and
Baltimore metropolitan markets, respectively. On March 30, 1995, Associated and
United consummated the Acquisition.

IN ORDER TO MAKE APPROPRIATE COMPARISONS FOR THE RESULTS OF OPERATIONS FOR
THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994 AND FACILITATE A MORE MEANINGFUL
DISCUSSION, THE ACTUAL RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 1995 (WHICH
REFLECT THE RESULTS OF ASSOCIATED ONLY FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND RESULTS OF POST-MERGER UNITED FOR THE THREE MONTHS ENDED JUNE 30,
1995) ARE COMPARED TO THE RESULTS OF ASSOCIATED ONLY FOR THE THREE MONTHS ENDED
MARCH 31, 1994 AND COMBINED RESULTS OF ASSOCIATED AND UNITED FOR THE THREE
MONTHS ENDED JUNE 30, 1994. THE COMBINED RESULTS INCLUDED IN THE RESULTS OF
OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1994 ARE REFLECTED ON AN
HISTORICAL COST BASIS OF ACCOUNTING AND EXCLUDE THE ESTIMATED COST SAVINGS,
INCREASED DEPRECIATION EXPENSE AND GOODWILL AMORTIZATION, INCREASED INTEREST
EXPENSE AND LOWER PREFERRED STOCK DIVIDENDS INCLUDED IN THE POST-MERGER RESULTS
REFLECTED IN THE SIX MONTHS ENDED JUNE 30, 1995 AND REFLECTED IN THE PRO FORMA
FINANCIAL INFORMATION INCLUDED ELSEWHERE IN THIS PROSPECTUS. CONSEQUENTLY, SUCH
COMBINED PRE-MERGER RESULTS ARE NOT DIRECTLY COMPARABLE TO THE POST-MERGER
RESULTS REFLECTED IN THE SIX MONTHS ENDED JUNE 30, 1995. THE COMBINED PRE-
MERGER RESULTS REFLECTED IN THE SIX MONTHS ENDED JUNE 30, 1994 ARE INTENDED FOR
INFORMATIONAL PURPOSES ONLY AND ARE NOT NECESSARILY INDICATIVE OF THE RESULTS
THAT WOULD HAVE ACTUALLY OCCURRED HAD THE ACQUISITION BEEN IN EFFECT FOR THE
COMBINED PRE-MERGER PERIOD PRESENTED.

48
<PAGE>

The following table demonstrates the method used in constructing the results
reflected in the six months ended June 30, 1994:

<TABLE>
<CAPTION>
ASSOCIATED UNITED
HOLDINGS, INC. STATIONERS INC.
SIX MONTHS THREE MONTHS SIX MONTHS ENDED JUNE 30,
ENDED ENDED --------------------------
JUNE 30, 1994 JUNE 30, 1994 1994 1995
-------------- --------------- ------------ ------------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Net sales............... $233,829 $357,181 $591,010 $672,603
Gross profit............ 57,558 78,713 136,271 154,082
Warehouse, distribution,
selling and
administrative
expenses............... 51,440 73,392 124,832 131,519
Restructuring charge.... -- -- -- 9,759
Total operating ex-
penses................. 51,440 73,392 124,832 141,278
Income from operations.. 6,118 5,321 11,439 12,804
Interest expense, net... 4,046 2,789 6,835 17,469
Income (loss) before in-
come taxes and extraor-
dinary item............ 2,072 2,532 4,604 (4,665)
Income taxes (benefit).. 796 781 1,577 (1,956)
Income (loss) before ex-
traordinary item....... 1,276 1,751 3,027 (2,709)
Extraordinary item...... -- -- -- (1,449)
Net income (loss)....... 1,276 1,751 3,027 (4,158)
Preferred dividends is-
sued and accrued....... (1,077) -- (1,077) (1,156)
Net income (loss) at-
tributable to common
shareholders........... 199 1,751 1,950 (5,314)
</TABLE>

Associated's results of operations, expressed as the percentage which each
line item represents of total net sales, for each of the periods ended December
31, 1992, 1993 and 1994 and the six months ended June 30, 1994 and 1995, are
set forth below:

<TABLE>
<CAPTION>
11 MONTHS
FROM YEAR ENDED SIX MONTHS
INCEPTION DECEMBER ENDED
THROUGH 31, JUNE 30,
DECEMBER 31, ------------ ------------
1992 1993 1994 1994* 1995
------------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
NET SALES............................ 100.0% 100.0% 100.0% 100.0% 100.0%
COST OF GOODS SOLD................... 75.6 75.7 74.8 76.9 77.1
----- ----- ----- ----- -----
Gross profit....................... 24.4 24.3 25.2 23.1 22.9
OPERATING EXPENSES:
Warehouse and distribution expenses. 16.5 17.0 16.3 13.8 12.2
Selling, general and administrative
expenses........................... 5.1 4.9 5.1 7.4 7.4
Restructuring charge................ -- -- -- -- 1.4
----- ----- ----- ----- -----
Income from operations............. 2.8 2.4 3.8 1.9 1.9
INTEREST EXPENSE..................... 1.5 1.6 1.6 1.1 2.6
----- ----- ----- ----- -----
Income (loss) before income taxes
and extraordinary item............ 1.3 0.8 2.2 0.8 (0.7)
INCOME TAXES (BENEFIT)............... 0.5 0.2 0.9 0.3 (0.3)
Extraordinary item................. -- -- -- -- (0.2)
----- ----- ----- ----- -----
Net income (loss).................. 0.8% 0.6% 1.3% 0.5% (0.6)%
===== ===== ===== ===== =====
</TABLE>
--------

* Reflect the results of Associated only for the three months ended March 31,
1994 and combined results of Associated and United for the three months
ended June 30, 1994, as shown in the preceding table.

49
<PAGE>

Comparison of the Six Months Ended June 30, 1995 and 1994

Net Sales. Net sales were $672.6 million for the first six months of 1995, a
13.8% increase over net sales of $591.0 million in the comparable period in
1994. The increase in net sales is primarily the result of changes in unit
volume rather than changes in prices.

Gross Profit. Gross profit as a percent of net sales decreased to 22.9% in
the first six months of 1995 from 23.1% in the comparable period of 1994. The
lower margin rate reflects a shift in product mix.

Operating Expenses. Operating expenses as a percent of net sales decreased to
21.0% in the first six months of 1995 from 21.2% in the first six months of
1994. The actual results for the six months ended June 30, 1995 include the
impact of a restructuring charge of $9.8 million ($5.9 million net of tax
benefit of $3.9 million) in the first quarter of 1995. The restructuring charge
includes severance costs totaling $3.0 million. The restructuring plan
specifies that certain distribution, sales, and corporate positions,
approximately 90 former Associated positions in total, will be eliminated
substantially within a one-year period. As of June 30, 1995, approximately 20
employees had been terminated with the related benefits of approximately $0.2
million charged against the reserve. The restructuring charge also includes
distribution center closing costs totaling $4.7 million and stockkeeping unit
reduction costs totaling $2.1 million. The restructuring plan specifies the
closing of five of the former Associated's distribution centers which are now
redundant and the elimination of overlapping inventory items from the Company's
catalogs substantially within a one-year period. Distribution center closing
costs include (i) the net occupancy costs of leased facilities after they are
vacated until expiration of leases and (ii) the losses on the sale of owned
facilities and the facilities' furniture, fixtures, and equipment. Stockkeeping
unit reduction costs include losses on the sale of inventory items which have
been discontinued solely as a result of the Acquisition and Merger. As of June
30, 1995, no amounts relating to distribution center closing costs or the
reduction of stockkeeping units have been charged against the reserve.

Operating expenses as a percent of net sales before the restructuring charge
were 19.6% in the first six months of 1995. The decrease in operating expenses
as a percent of net sales before the restructuring charge is primarily due to
increased operating efficiencies and improved productivity, partially offset by
Merger related compensation expense relating to an increase in the value of
employee stock options of approximately $1.5 million ($0.9 million net of tax
benefit of $0.6 million).

Income from Operations. Income from operations as a percent of net sales was
1.9% in the first six months of 1995 (after the restructuring charge) compared
with 1.9% in the first six months of 1994.

Interest Expense. Interest expense as a percent of net sales was 2.6% in the
first six months of 1995 compared to 1.1% in the comparable period in 1994. The
increase reflects additional debt needed to consummate the Merger.

Income (Loss) Before Income Taxes and Extraordinary Item. Income (loss)
before income taxes and extraordinary item as a percent of net sales was a
negative 0.7% in the first six months of 1995 compared to a positive 0.8% in
the first six months of 1994. Net income (loss) before extraordinary items and
preferred stock dividends was a negative $2.7 million in the first quarter of
1995 compared to a positive $3.0 million in the first six months of 1994. An
extraordinary item, the loss on early retirement of debt related to the Merger
of $2.4 million ($1.4 million after tax benefit), was recognized in the first
quarter of 1995. The net income (loss) was a negative $4.2 million in the first
six months of 1995 compared to a positive $3.0 million in the comparable period
in 1994. The net income (loss) attributable to common stock after the
extraordinary item was a negative $5.3 million in the first six months of 1995
compared to a positive $2.0 million in the first six months of 1994.

Comparison of the Years Ended December 31, 1994 and 1993

Net Sales. Net sales increased to $477.4 million in 1994 from $462.5 million
in 1993, a 3.2% increase, primarily as a result of inclusion in 1994 of the
full year of sales from Associated's new Baltimore distribution facility and
increased unit sales volume to existing Associated customers as, in

50
<PAGE>

management's estimation, Associated's customers channeled more of their
purchasing through Associated with the goal of reducing their internal
inventory levels.

Gross Profit. Gross profit increased to $120.2 million in 1994 from $112.3
million in 1993, a 7.0% increase, primarily due to increased unit volume as
well as Associated's lower net cost of goods, as a percentage of sales,
resulting from increased allowances granted to Associated by its suppliers.
Management of Associated believes improvement in vendor allowances was due to
competition among Associated's vendors that resulted in increased purchasing
leverage. The increase in gross profit also resulted in part from Associated's
increased forward-buying efforts, as management better identified and utilized
product pricing opportunities available in the marketplace. Gross profit
increases were partially offset by increased allowances extended by Associated
to its customers in response to increased competition.

Warehouse and Distribution Expenses. Warehouse and distribution expenses
decreased to $77.9 million in 1994 from $78.5 million in 1993, a 0.8% decrease,
due to management's increased emphasis on improved productivity through
manpower planning programs including (i) staggered work hours, (ii) personnel
redeployment and (iii) operational analysis. An additional contributor to this
decrease was the reduction in delivery costs, as a percentage of net sales,
through the continued evaluation and refinement of delivery routes.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $24.2 million in 1994 from $22.8 million
in 1993, a 6.0% increase, mostly attributable to lump-sum incentive awards
earned in 1994 by employees and management based on Associated's increased
level of profitability.

Income From Operations. Income from operations increased to $18.1 million in
1994 from $11.0 million in 1993, a 65.1% increase, and as a percentage of net
sales was 3.8% in 1994, compared with 2.4% in 1993, for the reasons stated
above.

Interest Expense. Interest expense increased to $7.7 million in 1994 from
$7.2 million in 1993, a 6.8% increase, as a result of an increase in the
weighted average interest rate on the Old Associated Revolver (as hereinafter
defined) in effect during the year from 7.75% in 1993 to 8.90% in 1994, which
was offset in part by a reduction in average revolving debt balances to $39.6
million in 1994 from $46.9 million in 1993.

Income Before Income Taxes. Income before income taxes increased to $10.4
million in 1994 from $3.7 million in 1993, a 177.7% increase, for the reasons
stated above.

Income Taxes. Income taxes increased to $4.0 million in 1994 from $0.8
million in 1993, a $3.2 million increase. The effective tax rates for 1994 and
1993 were 38.4% and 20.9%, respectively. The increase in rate was due primarily
to the effect of the change in the amount of tax valuation allowances.

Net Income. Net income increased to $6.4 million in 1994 from $3.0 million in
1993, an increase of $3.4 million, or 116.2%. Net income as a percentage of net
sales increased to 1.3% in 1994 from 0.6% in 1993 for the reasons stated above.

Comparison of Year Ended December 31, 1993
and the Eleven Month Period From Inception Through December 31, 1992

Net Sales. Net sales increased to $462.5 million in 1993 from $365.9 million
for the eleven month period ended December 31, 1992. This increase was due to
the inclusion of a full year of Associated operations in 1993, an increase in
sales volume attributable to the October 1992 acquisition of Lynn-Edwards and
an increase in unit sales volume to both existing and new Associated customers.

Gross Profit. Gross profit increased to $112.3 million in 1993 from $89.4
million for the eleven month period ended December 31, 1992, but remained
relatively stable as a percentage of net sales at 24.3% in 1993 compared to
24.4% for the eleven month period ending December 31, 1992. The integration of
Lynn-Edwards was accomplished without significant deterioration in gross margin
as management focused on cost containment and inventory assimilation.

Warehouse and Distribution Expenses. Warehouse and distribution expenses
increased to $78.5 million in 1993 from $60.6 million for the eleven month
period ended December 31, 1992, primarily due to the inclusion of a full year
of expenses of Associated's operations in 1993 and the Lynn-Edwards

51
<PAGE>

Acquisition. Additional expenses were incurred as management and general
staffing were increased during the assimilation of Lynn-Edwards's operations.

Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased to $22.8 million in 1993 from $18.5 million
for the eleven month period ended December 31, 1992, primarily due to the
inclusion of a full year of Associated's operations and the Lynn-Edwards
Acquisition, increased staffing requirements related to the Lynn-Edwards
Acquisition and a non-recurring customer sales promotion held in 1993.

Income from Operations. Income from operations increased to $11.0 million in
1993 from $10.4 million for the eleven month period ended December 31, 1992,
and as a percentage of net sales was 2.4% in 1993, compared with 2.8% for the
eleven month period ending December 31, 1992 for the reasons stated above.

Interest Expense. Interest expense increased to $7.2 million in 1993 from
$5.6 million for the eleven month period ended December 31, 1992, primarily due
to the full-year impact of additional debt incurred in connection with the
Lynn-Edwards Acquisition and indebtedness incurred to meet working capital and
capital expenditure needs. This expense was offset, in part, by lower weighted
average interest rates on the Old Associated Revolver (as hereinafter defined)
in effect during the year, which declined from 8.0% for the eleven month period
ended December 31, 1992 to 7.75% in 1993.

Income Before Income Taxes. Income before income taxes decreased to $3.7
million in 1993 from $4.7 million for the eleven month period ended December
31, 1992 for the reasons stated above.

Income Taxes. The effective tax rates for the years ended December 31, 1993
and for the eleven month period ended December 31, 1992 were 20.9% and 37.6%,
respectively. The decrease was primarily due to lower required provisions in
1993.

Net income. Net income remained level at $3.0 million for 1993 and the eleven
month period ended December 31, 1992 and as a percentage of net sales decreased
to 0.6% in 1993 from 0.8% for the eleven month period ended December 31, 1992
for the reasons stated above.

HISTORICAL LIQUIDITY AND CAPITAL RESOURCES OF UNITED

United is a holding company and, as a result, United's primary source of
funds is cash generated from operating activities of its operating subsidiary,
the Company, and bank borrowings by the Company. United's statement of cash
flows for the periods indicated is summarized below.

<TABLE>
<CAPTION>
SEVEN MONTHS
ENDED
------------------
YEAR ENDED AUGUST 31, MARCH MARCH
------------------------- 31, 30,
1992 1993 1994 1994 1995
------- ------- ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net Cash Provided by (Used in)
Operating Activities........... $(2,538) $36,002 $ 8,108 $(55,757) $(47,553)
Net Cash Used in Investing
Activities..................... (45,629) (29,958) (10,499) (4,287) (7,764)
Net Cash Provided by (Used in)
Financing Activities........... 48,542 (10,097) 1,422 62,514 62,912
</TABLE>

Operating Activities. The decrease in net cash used in operating activities
from $55.8 million in the seven months ended March 31, 1994 to $47.6 million in
the seven months ended March 30, 1995 is primarily due to increases in accounts
payable and accrued liabilities partially offset by an increase to inventory.

Investing Activities. The increase in net cash used in investing activities
from $4.3 million in the seven months ended March 31, 1994 to $7.8 million in
the seven months ended March 30, 1995 is primarily due to the acquisition of
property, plant, and equipment.

Financing Activities. The increase in net cash provided by financing
activities from $62.5 million in the seven months ended March 31, 1994 to $62.9
million in the seven months ended March 30, 1995 is primarily due to increases
in short-term debt partially offset by an increase in payments on long-term
obligations.

52
<PAGE>

The decrease in net cash provided by operations from $36.0 million in fiscal
1993 to $8.1 million in fiscal 1994 was primarily attributable to a decrease in
accounts payable and accrued liabilities as well as lower net income in 1994,
partially offset by a decrease in accounts receivable and inventory. The
substantial increase in net cash provided by operations from a use of cash of
$2.5 million in fiscal 1992 to $36.0 million of cash being provided in fiscal
1993 was primarily the result of an increase in accrued liabilities, net
income, accounts payable, deferred taxes and inventory, partially offset by an
increase in accounts receivable.

Net cash used in investing activities declined from $30.0 million in fiscal
1993 to $10.5 million in fiscal 1994, as a result of a commensurate decline in
capital expenditures. The $30.0 million of capital expenditures in fiscal 1993
includes the purchase of $16.0 million of computer and related hardware. Net
cash used in investing activities in fiscal 1992 included $37.3 million of cash
as part of the purchase price of SDC. Net capital expenditures in fiscal 1994,
1993, and 1992 were $10.5 million, $30.0 million and $8.2 million,
respectively.

Net cash of $1.4 million was provided by financing activities in fiscal 1994
as compared to a net use of cash in financing activities in fiscal 1993 of
$10.1 million. Net cash provided by financing activities in fiscal 1992
primarily reflects additional debt to finance the acquisition of SDC.

The Company's credit agreement ("Old Company Credit Agreement") in effect
prior to consummation of the Offer consisted of a $130.0 million reducing
revolving credit facility ("Old Company Revolver") and a $30.0 million term
loan (the "Old Company Term Loan") (collectively, the "Old Company Credit
Facilities"). The Old Company Revolver provided for revolving credit loans up
to the amount of the commitment, which reduced upon quarterly decreases to
$83.6 million at maturity. The borrowing capacity under the Old Company
Revolver at March 30, 1995 was $119.3 million versus the total borrowed at
March 31, 1994 of $123.0 million. Interest was payable at varying rates in the
Old Company Credit Agreement. The Old Company Revolver was to mature on August
31, 1997. The Old Company Term Loan was payable on September 30, 1995. As of
March 30, 1995, borrowings outstanding under the Old Company Term Loan were
$30.0 million. In addition, prior to the consummation of the Offer the Company
borrowed $6.0 million pursuant to a $30.0 million revolving line of credit
("Overline Facility"). Debt maturities (other than amounts borrowed under the
Old Company Credit Facilities) were as follows: $6.3 million in fiscal 1995,
$7.4 million in fiscal 1996, $8.2 million in fiscal 1997 and $8.8 million in
fiscal 1998. The Old Company Credit Facilities and the Overline Facility were
refinanced as part of the Acquisition. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Post-Merger
Liquidity and Capital Resources."

HISTORICAL LIQUIDITY AND CAPITAL RESOURCES OF ASSOCIATED

Associated was a holding company and, as a result, Associated's primary
source of funds was cash generated from operating activities of its operating
subsidiary, ASI, and bank borrowings by ASI. The Old Associated Credit
Agreement (as hereinafter defined) included restrictions on the ability of ASI
to transfer cash to Associated which could be used by Associated to pay cash
dividends on its redeemable preferred stock. Associated's statement of cash
flows for the periods indicated is summarized below.

<TABLE>
<CAPTION>
11 MONTH
PERIOD FROM SIX MONTHS
INCEPTION ENDED
THROUGH YEAR ENDED JUNE 30,
DECEMBER 31, ------------------ -------------------
1992 1993 1994 1994 1995
------------ -------- -------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net Cash Provided by
(Used in) Operating
Activities.............. $ 19,759 $(18,192) $ 13,636 $ 15,512 $ 49,121
Net Cash Used in
Investing Activities.... (96,796) (3,276) (554) (336) (259,833)
Net Cash Provided by
(Used in) Financing
Activities.............. 85,290 14,203 (12,224) (14,855) 221,377
</TABLE>

53
<PAGE>

Operating Activities. The increase in net cash provided by operating
activities from $15.5 million in the first six months of 1994 to $49.1 million
in the first six months of 1995 is primarily due to a decrease in inventory
partially offset by an increase in accounts payable and reflects the additional
net cash provided by the operating activities acquired from United as a result
of the Acquisition on March 30, 1995.

Investing Activities. The net cash used in investing activities for the six
months ended June 30, 1995 reflects the acquisition of United on March 30,
1995.

Financing Activities. The net cash provided by financing activities for the
six months ended June 30, 1995 reflects the issuance of debt to finance the
acquisition of United.

Net cash provided by operating activities for 1994 increased to $13.6 million
from a use of cash of $18.2 million in 1993. This increase in 1994 was
principally due to an increase in accounts payable, a lesser increase in
inventory levels and an increase in net income. Associated used $18.2 million
of cash in operations in 1993 as compared to operating activities being a
source of cash of $19.8 million in 1992. The decrease primarily was attributed
to (i) a reduction in accounts payable in 1993 and (ii) an increase in
inventory in 1993 due to a full year of Associated's operations, additional
inventory to support the Lynn-Edwards Acquisition and an overall increase in
sales volume. During the eleven months ended December 31, 1992, Associated
deferred payment on purchases from or services rendered in the amount of $9.0
million pursuant to a transition services agreement. During 1994, Associated
settled the obligation by issuing 58,653 shares of Associated Common Stock.

Net cash used in investing activities in 1994 was $0.6 million, reflecting
capital expenditures necessary to maintain existing assets. Net cash used in
investing activities in 1993 was $3.3 million stemming mostly from capital
expenditures in connection with the opening of the new Baltimore facility and
those expenditures related to the assimilation of the Lynn-Edwards Acquisition.
Net cash used in investing activities in 1992 was $96.8 million which primarily
consisted of $82.1 million of cash used for the acquisition of certain BCOP
assets. In addition, $2.7 million was incurred to effect the Lynn-Edwards
Acquisition. In 1993, the selling stockholders of Lynn-Edwards returned $0.3
million of the $2.7 million to Associated pursuant to a subsequent agreement
between the parties as to the purchase price of Lynn-Edwards. Capital
expenditures in 1992 were $4.3 million. A total of $7.7 million of acquisition
costs were incurred in 1992 in connection with the Lynn-Edwards Acquisition and
the Boise Transaction.

Net cash used in financing activities in 1994 was $12.2 million which was
attributable to the pay down of debt under the Old Associated Credit Facilities
(as hereinafter defined). Net cash provided by financing activities in 1993 was
$14.2 million due to $11.5 million of borrowings under the Old Associated
Credit Facilities and an equipment loan and cash overdrafts of $6.1 million due
to timing of payroll, partially offset by scheduled principal payments of $3.4
million. Net cash provided by financing activities in 1992 was $85.3 million
which reflects the initial capitalization of Associated in connection with its
formation and additional debt incurred to finance the Lynn-Edwards Acquisition.
Borrowings under the Old Associated Credit Facilities in 1992 were partially
offset by scheduled amortization payments of $8.1 million.

Associated's credit agreement ("Old Associated Credit Agreement") in effect
prior to consummation of the Offer consisted of a $65.0 million revolving
credit facility ("Old Associated Revolver"), a $20.0 million term loan, Tranche
A, and a $10.0 million term loan, Tranche B (together, the "Old Associated Term
Loans") (collectively, the "Old Associated Credit Facilities"). The Old
Associated Revolver provided for revolving credit loans up to the amount of the
commitment, based on eligible receivables and inventory, as defined in the Old
Associated Credit Agreement. The borrowing capacity under the Old Associated
Revolver at December 31, 1994 was $62.5 million versus the total borrowed at
December 31, 1994 of $39.9 million. Interest was payable at a rate per annum
of 1.75% plus the higher of either the prime rate or 0.5% plus the federal
funds rate, as defined in the Old Associated Credit Agreement. The Old
Associated Revolver was to mature on January 31, 1997. Prepayments were
required when cash flow, as defined in the Old Associated Credit Agreement,
exceeded specified levels. Term Loan Tranches A and B were payable in 57 and 24
monthly installments commencing on April 30, 1992 and January 31, 1997,
respectively. As of December 31,

54
<PAGE>

1994, total borrowings under the Old Associated Term Loans, excluding original
issue discount, were $21.0 million. Debt maturities, excluding the original
issue discount, were as follows: $5.9 million in 1995, $7.0 million in 1996,
$46.3 million in 1997 and $5.5 million in 1998. The Old Associated Credit
Facilities were refinanced as part of the Acquisition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Post-Merger Liquidity and Capital Resources."

POST-MERGER LIQUIDITY AND CAPITAL RESOURCES

In connection with consummation of the Acquisition, Associated received an
equity investment of $12.0 million primarily from existing stockholders and
borrowed an aggregate of $416.5 million under the New Credit Facilities and
$130.0 million under the Subordinated Bridge Facility, all as described under
"Financing the Acquisition." The proceeds of these investments and borrowings
were used to (i) finance the purchase of Shares pursuant to the Offer, (ii)
refinance certain existing indebtedness of Associated (including all amounts
outstanding under the existing Old Associated Credit Facilities) and certain
indebtedness of United and the Company (including all amounts outstanding under
the existing Old Company Credit Facilities), (iii) redeem United stock options
and (iv) pay fees and expenses relating to the Acquisition.

The New Credit Facilities consist of a Tranche A Facility providing for a
$125.0 million term loan requiring repayment in 20 quarterly installments, a
Tranche B Facility providing for a $75.0 million term loan requiring repayment
in 28 quarterly installments and a Revolving Credit Facility in the aggregate
amount of $300.0 million. The New Credit Agreement contains restrictions on,
among other things, dividends by the Company to United. For a more detailed
description of the payment and other terms of the New Credit Facilities, see
"Financing the Acquisition -- Loan Facilities -- New Credit Facilities."
Including amounts borrowed to consummate the Acquisition, total scheduled
mandatory principal payments due on long-term debt from 1995 through 2000 are
expected to be $156.3 million.

Quarterly dividends currently accrue on United's three outstanding series of
the Merger Preferred Stock (as hereinafter defined) at the respective rates of
10.0% (for Series A) and 9.0% (for Series B and C) per annum (or, when
dividends are not paid in cash, 13.0% (for Series A) and 10.0% (for Series B
and C)), and may be paid in the form of additional shares of the respective
series of Merger Preferred Stock (except, in the case of the Series C Preferred
Stock, for dividends payable after January 31, 1999). Based upon the Company's
anticipated operating results and the requirements under the New Credit
Agreement and the Indenture, management expects to pay dividends on the Merger
Preferred Stock when such dividends become due and payable in kind (rather than
in cash) for the foreseeable future. On July 28, 1995, the Company paid a
dividend to United in an aggregate amount of $7.0 million to repurchase all the
outstanding shares of Series B Preferred Stock, together with accrued and
unpaid dividends thereon, with a portion of the proceeds from the Old Notes.
See "Certain Transactions--Repurchase of Series B Preferred Stock." In
connection with such repurchase, the Company paid a dividend to United in an
amount sufficient for United to pay a quarterly dividend of approximately $0.3
million in cash on the Series C Preferred Stock in accordance with the terms of
United's Restated Certificate of Incorporation (as hereinafter defined).

The New Credit Facilities permit capital expenditures for the Company of up
to $12.0 million for the post-merger portion of its fiscal year ending December
31, 1995. Capital expenditures will be financed from internally generated funds
and the New Credit Facilities.

Management anticipates making changes in the operations of the Company and
ASI as conducted prior to the Acquisition as described under "Business --
Consolidation Plan and Benefits of the Acquisition." Based on internally
generated funds and the expected results of these changes, management believes
that United's cash on hand, anticipated funds generated from operations and
available borrowings under the New Credit Facilities will be sufficient to meet
the short term and long term operating and capital needs of United after the
Acquisition as well as to service its debt in accordance with its terms. There
is, however, no assurance this will be accomplished.

55
<PAGE>

INFLATION AND CHANGING PRICES

Inflation during the last three years has not been a significant factor to
operations. United's business is not generally governed by contracts that
establish prices substantially in advance of the receipt of goods or services.
As suppliers increase their prices for merchandise to United, United generally
seeks to increase its prices to its customers.

SEASONALITY

Although the Company's sales are generally relatively level throughout the
year, the Company's sales vary to the extent of seasonal differences in the
buying patterns of end users who purchase office products. In particular, the
Company's sales are generally higher than average during the months of January
through March when many offices begin operating under new annual budgets.

The Company experiences significant seasonality in terms of its capital
needs, with highest requirements in December and January reflecting a build up
in inventory prior to the peak sales period. In 1994, on a pro forma basis as
if the Acquisition occurred on January 1, 1994, outstanding balances on the
revolving credit facilities of the Company ranged between $236 million in
January to $138 million in September. The Company believes that its current
availability under the Revolving Credit Facility is sufficient to satisfy such
seasonal capital needs for the foreseeable future.

56
<PAGE>

BUSINESS

OVERVIEW

The Company is the largest office products wholesaler in the United States.
As a result of the Merger of the Company with ASI on March 30, 1995, the
Company's net sales on a pro forma basis for 1994 were approximately $2.0
billion for the year ended December 31, 1994 and $1.1 billion for the six
months ended June 30, 1995. Through its extensive office products catalogs, the
Company markets a full line of over 25,000 (post-consolidation) branded and
private brand products, including traditional office supplies; office furniture
and desk accessories; office machines, equipment and supplies; computer
hardware, peripherals and supplies; and facilities management supplies,
including sanitation products and janitorial items. These products are offered
through a network of 39 (post-consolidation) strategically located distribution
centers to over 14,000 resellers, consisting principally of commercial dealers
and contract stationers, retail dealers, superstores, mail order companies and
mass merchandisers.

The Company is currently engaged in implementing its consolidation plan to
integrate the two separate office products wholesale businesses conducted by
the Company and ASI prior to the Acquisition. See "Business--Consolidation Plan
and Benefits of the Acquisition" and "Risk Factors--Risks Inherent in
Implementation of Consolidation Plan." The Company was originally incorporated
under the name Utility Supply Co. in 1922 and has operated under its present
name since 1960.

COMPETITIVE STRENGTHS

The Company believes that it has a strong competitive position attributable
to a number of factors, including the following:

Largest Office Products Wholesaler. As the largest office products wholesaler
in the United States, the Company has substantial purchasing power and can
realize significant economies of scale. The Company obtains products from over
500 manufacturers, for many of whom the Company believes it is a significant
customer. The Company's size also enables it to seek cost-effective sourcing of
product in the United States and, in many cases, worldwide. In addition, The
Company's size allows it to maintain a broad and deep product selection,
permitting resellers to hold less inventory while still providing end users
with a high level of service.

High Level of Customer Service. The Company provides its customers with a
broad product selection, a high degree of product availability, expeditious
distribution and comprehensive customer assistance. The Company seeks to base
its business decisions on an "If I were the customer. . ." approach. With over
25,000 products being offered, the Company believes that it has the broadest
selection of office products available in the industry, enabling resellers in
most cases to do "one-stop shopping" for all of their office products needs.
The Company's broad product selection, inventory procurement and management
procedures and state-of-the-art distribution facilities enable it to achieve an
order fill rate in excess of 90%. The Company's management information systems
have been designed, in part, to enable Management to monitor five key measures
of customer satisfaction: fill rate, order accuracy, inventory accuracy, on-
time delivery and accessibility to customers. The Company

57
<PAGE>

makes substantially all of its orders nationwide available by next day delivery
to assist resellers in successfully meeting end users' demands. The Company
publishes a wide array of product catalogs ranging from its full-line catalogs
to custom specialty catalogs to meet end user needs for information on specific
product offerings. Most of these product catalogs are custom imprinted with
particular resellers' names, which enables the reseller to distribute the
catalogs directly to its customers and garner repeat orders. In addition, the
Company provides its customers with a variety of support services such as its
"wrap and pack" program which offers resellers the option to receive orders
packaged in accordance with the specifications of particular end users. This
service allows resellers to lower their inventory investment and minimize
double handling costs while allowing them to continue to offer a wide product
range. The Company also offers a furniture set-up program in which the Company
delivers furniture directly to consumers on the reseller's behalf, thereby
enabling the reseller to offer a wide range of furniture on a cost-effective
basis.

The Company also provides its resellers a variety of electronic order entry
systems, pricing software programs and business management and marketing
training programs. For instance, the Company maintains electronic data
interchange ("EDI") systems that link the Company to selected resellers, and
multifaceted interactive order systems that link the Company to selected
resellers and such resellers to their ultimate end users. The Company's
sophisticated electronic management systems enable dealers to manage critical
business functions including order entry, purchasing, pricing, accounts
receivable, accounts payable and inventory control. The Company's matrix
pricing software program permits resellers to identify the optimum pricing mix
between high and low margin items, thereby enabling resellers to enhance their
operating margins. The Company's specialized business management programs
enhance particular resellers' ability to increase profits by providing a higher
level of service to the end user while the Company's marketing training
programs are designed to instruct resellers on how to market to the end user
based upon a total cost of procurement approach rather than focusing on
specific product prices. The Company continually reviews additional services
that might be helpful to its customers.

Diverse Customer Base. With over 14,000 resellers as customers, the Company
has one of the broadest customer bases in the industry. The Company's customers
include full-line office products resellers, such as commercial dealers and
contract stationers, retail dealers, office products superstores, mail order
companies and mass merchandisers, as well as specialized resellers, such as
office furniture, janitorial and computer dealers. No single reseller accounted
for more than 3.2% of the Company's net sales in 1994 on a pro forma basis. The
Company plans to continue to expand its customer base by (i) maintaining and
building its business with commercial dealers and contract stationers who,
through consolidation, continue to increase in size, (ii) developing additional
programs for marketing and buying groups that represent groups of dealers,
(iii) expanding relationships with the major office products superstore chains
and (iv) continuing to focus on niche markets, including specialty dealers
(e.g., furniture, janitorial and computer dealers) and particular end users
(e.g., healthcare, legal, financial and advertising specialty businesses).

State-of-the-Art Distribution Capabilities. The Company's network of 39
(post-consolidation) distribution centers located throughout the United States
employs state-of-the-art technology to efficiently distribute products to
customers. For example, as described above, the Company has developed EDI
capabilities that link the Company to the majority of its resellers and
multifaceted interactive order systems that link the Company to selected
resellers and such resellers to the ultimate end user. In 1994 on a pro forma
basis, approximately 85% of all of the Company's orders were received
electronically. The Company also uses a proprietary computer-based system to
enhance fill rates by automatically searching alternative distribution centers
for products and routing those products for shipment. In addition, the
Company's advanced communication system with many of its resellers is intended
to enhance the Company's ability to efficiently manage and distribute its
inventory.

Growth of Private Brand Products. The Company offers a growing line of over
1,300 private brand products under the Universal brand name, which the Company
believes is the broadest private brand

58
<PAGE>

product offering in the industry. Universal brand products represented
approximately 9% of the Company's net sales in 1994 on a pro forma basis. Prior
to the Merger, the Universal private brand line was offered only by the Company
but will now also be marketed to ASI's customers. The Company believes its
private brand products offer significant benefits both to the reseller, by
providing an alternative to branded products that offers similar quality at a
moderate price, and to the manufacturer, by enabling the manufacturer to
increase sales without diluting its brand name pricing structure. The Company
sees significant opportunity to expand its private brand product line in the
future. To further develop the Universal brand, the Company recently opened a
trading company in Hong Kong to facilitate the global purchasing of products.

Experienced Management Team. The Company's senior management team comprises
individuals who combine many years of experience in the office products
distribution industry. Management also has had significant experience in
acquiring and integrating companies in the office products industry through the
SDC Acquisition by United and the Lynn-Edwards Acquisition by Associated, each
in 1992.

BUSINESS STRATEGY

High Level of Customer Service. Customer service has been an important factor
in the Company's business strategy in the increasingly competitive office
products industry. The Company intends to continue its efforts to differentiate
itself from competitors by providing its customers with a broad product
selection, a high degree of product availability, expeditious distribution and
a variety of customer services. The Company plans to accomplish these goals by
continuing to (i) offer one of the broadest product selections available in the
industry, (ii) achieve high fill rates to assure availability of product to its
resellers, (iii) offer next day delivery on substantially all of its orders and
(iv) assist its resellers by offering electronic order entry systems, pricing
software programs and business management and marketing training programs, as
well as continually reviewing additional support services which might be
helpful to resellers. In addition, because resellers sell directly to end
users, the Company has also focused on the needs of the end user by designing
informative, user-friendly catalogs and marketing programs to assist the
reseller's sales efforts.

Expanding Product Line and Customer Base. The Company's product line
expansion plans include growing its ancillary product lines, such as office
furniture, computer hardware, peripherals and supplies and facilities
management supplies, which the Company believes allow it to gain incremental
sales from its existing resellers and thereby strengthen its position with
resellers as a "one-stop shop." In addition, ancillary products allow the
Company to enter additional distribution channels and, by adding new types of
resellers beyond full-line office products dealers alone, to expand its
customer base. The Company also plans to continue to expand its customer base
by developing additional programs for marketing and buying groups, expanding
relationships with superstore chains and maintaining and building its business
with commercial dealers and contract stationers. The Company also expects to
expand its private brand product offerings within these new product lines and
to begin marketing private brand items to ASI's customers. In addition, the
Company plans to evaluate opportunities for growth in market share in
connection with the trend toward direct delivery of products to end users
through arrangements with various resellers seeking to minimize inventory
investment. The Company believes that there is opportunity to capture a portion
of the sizeable percentage of total shipments by office products manufacturers
currently sold directly to resellers or end users without wholesaler
involvement.

Cost Effective Operations. The Company intends to continue to actively seek
cost reductions at both the corporate and operating levels in order to continue
to operate in a cost effective manner.

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Examples of such cost reductions include (i) reduced merchandise costs through
suppliers' incentives, (ii) continued efforts to increase inventory turnover
without lowering service levels, (iii) reduced payroll and benefits costs
through improved labor allocation, (iv) reduced freight costs through ongoing
refinements to delivery systems, (v) increased sourcing of certain products
off-shore, (vi) continued development of computer systems and (vii)
streamlining of work practices and procedures.

CONSOLIDATION PLAN AND BENEFITS OF THE ACQUISITION

Consistent with its business strategy, since the consummation of the
Acquisition on March 30, 1995 the Company has been engaged in implementing its
consolidation plan to integrate its business with the business of ASI. Through
the integration of distribution facilities and product lines in a manner
designed to enable the Company to offer its customers increased service and
product availability, the Company expects to improve its competitive position.
In addition, the Company plans to achieve cost savings and other benefits from
the elimination of redundant or overlapping functions and facilities and by
minimizing overlapping products.

In implementing its consolidation plan, another critical objective will be to
maintain and enhance customer relationships, service and marketing programs of
the combined businesses. Management believes that the Company's experience
integrating the SDC Acquisition in 1992, together with ASI's experience
integrating the Lynn-Edwards Acquisition in 1992, will enhance the Company's
ability to implement its strategy while maintaining competitive levels of
customer service.

Management anticipates that the implementation of its consolidation strategy
should result in significant cost savings and synergies which will enhance the
Company's financial and operational performance. Management estimates that,
upon phase-in of its consolidation plan over a 12-month period following the
Acquisition, the Company expects to realize approximately $26.0 million per
year in savings as a result of a successful implementation of its consolidation
plan, although the Acquisition is likely to result in a reduction in the rate
of revenue growth for some period following the Acquisition as a result of the
loss of some customers to competition. See "Risk Factors -- Risks Inherent in
Implementation of Consolidation Plan" and "Pro Forma Combined Financial
Information."

Consolidate Number of Product Offerings and Increase Volume. Management plans
to consolidate the Company's product offerings by eliminating approximately
10,000 overlapping items from the catalogs that management expects will be
distributed in the fourth calendar quarter of 1995, while at the same time
adding more niche products, including more specialty items. In addition,
following the Acquisition, the Company is expected to have substantially
greater sales volume than either ASI or the Company separately prior to the
Acquisition. Management believes that the Company will benefit by being able to
(i) qualify for improved terms with vendors as a result of placing higher
volume purchases among fewer suppliers, (ii) offer a more diverse product line,
thereby enhancing end user purchasing options and (iii) achieve higher fill
rates as a result of greater inventory and warehousing capacity.

Consolidate Distribution Centers. Management has identified eight redundant
distribution centers between ASI and the Company prior to the Merger and plans
to close such redundant facilities within 12 months of the Merger. Management
currently estimates that the first facility will be closed in October of 1995.
Management believes that the Company will benefit by achieving cost reductions
arising from the elimination of such facilities. After the elimination of such
redundant distribution centers, the aggregate number of distribution centers
will be 39, which is greater than the number of distribution centers operated
by either company separately. Management believes that such increased number of
the Company's distribution centers and, in some markets, the proximity of
distribution centers to each other, ultimately will improve service levels and
make additional inventory available through the Company's automated inventory
management system and, as a result, improve the delivery services of the
Company. In addition, the Company intends to achieve cost savings from more
efficient operation post-Merger of two distributions centers in each of the
Chicago, Sacramento, Nashville and

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<PAGE>

Minneapolis/St. Paul market areas, where the size of existing facilities
requires, or demand is sufficient to support, multiple facilities.

Reduce Corporate Overhead. Management has identified a number of corporate
positions which it believes can be eliminated in the Company and plans to
eliminate such positions and to close Associated's corporate headquarters.
Additionally, management plans to eliminate redundant sales positions where
customer coverage overlaps. Management believes that the Company will benefit
by realizing savings (phased in over a 12-month period) from reduced payroll,
benefits and other related expenses derived from (i) the elimination of such
positions, (ii) the closing of Associated's corporate headquarters and (iii)
the consolidation of legal, audit and tax consulting functions of Associated
and United prior to the Merger. Management has specifically identified 330
employees to be terminated, each of their job classifications or functions, and
their location. Sales representatives and headquarter employees have been given
termination notices. Distribution center employees will specifically be
notified prior to the closing of their respective distribution centers. In
addition, the Company has begun modifying and consolidating its computer
systems.

Expand Private Brand Products and Off-Shore Sourcing. Because of the cost
advantages and popularity of United's Universal private brand products,
management plans to market both the Universal line and off-shore sourced
products to ASI's customers as well as use the combined volume of the Company
after the Merger to enhance the Company's ability, when appropriate, to
introduce new private brand products and, as appropriate, to source certain
additional products off-shore. Management believes that the Company will
benefit from such strategy by increasing sales of private brand and off-shore
products, which should provide higher profit margins to both resellers and the
Company.

THE OFFICE PRODUCTS DISTRIBUTION INDUSTRY

The Company operates in a large, fragmented and rapidly consolidating
industry. The office products distribution industry consists of several
different channels by which office products are distributed from the
manufacturer to the end user. These channels include both routes in which
resellers buy through wholesalers and routes in which resellers purchase
directly from manufacturers. Due to consolidation, the distinct boundaries that
once clearly defined distribution channels have become blurred. The industry
today consists principally of wholesalers, commercial dealers and contract
stationers, retail dealers, office products superstores, mail order companies
and mass merchandisers.

Wholesalers. Wholesalers purchase products directly from manufacturers and
sell them directly to resellers who, in turn, sell the products to end users.
The wholesale segment of the office products distribution industry consists of
national, specialty and regional wholesalers. The two national wholesalers
(i.e., the Company and S.P. Richards) compete with a full product offering and
extensive marketing and distribution services for their reseller customers.
Specialty wholesalers focus on limited product lines such as computer supplies,
legal supplies, medical filing systems, office furniture or janitorial
products. Regional wholesalers generally offer a full range of office products
and marketing services on a smaller scale and within a much more limited
geographic area than national wholesalers.

For manufacturers, the wholesaler provides wide market coverage, assumes
credit risk, carries inventory and processes smaller orders than manufacturers
can economically service. Wholesalers also provide resellers with prompt
service and delivery, a source for placing small quantity orders and the
opportunity to obtain credit, minimize investment in inventory and access
marketing resources and technical support. In order for resellers, such as
superstores, to perform these functions themselves, a source of significant
capital is generally required for both investment in systems and additional
distribution facilities, as well as for the working capital requirements needed
to establish appropriate inventory levels.

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Office products wholesalers compete not only with other wholesalers but also
with office products manufacturers. See "Business -- Competition" and "Risk
Factors -- Competition." A sizeable percentage of total shipments by office
products manufacturers are currently sold directly to resellers or end users
without wholesaler involvement.

Commercial Dealers and Contract Stationers. The most significant reseller
channel for office product distribution continues to be commercial dealers and
contract stationers who serve medium- and large-sized business customers
through the use of catalogs and sales forces. These resellers typically stock
products in distribution centers and deliver them to customers on a next-day
basis against orders received electronically, by telephone or fax, or taken by
a salesperson on the customer's premises. Major commercial dealers and contract
stationers purchase in large quantities directly from manufacturers, rely upon
wholesalers for inventory backup and product breadth and offer significant
volume-related discounts and a high level of service to their customers.

Retail Dealers. Retail office products dealers typically serve small- and
medium-sized businesses, home offices and individuals. For many years, retail
dealers consisted principally of a large number of independent dealers,
operating one or a few relatively small stores in a single local area. During
the last decade, however, the office products retail market has undergone
significant change, including the elimination or consolidation of many retail
dealers, as a result of the emergence and rapid growth of discount office
supply retailers, which are known as superstores. To compete with the lower
prices generally offered by superstores, many independent retail dealers have
joined marketing or buying groups to negotiate on a collective basis directly
with manufacturers and wholesalers.

Office Products Superstores. Superstores employ a warehouse format, are
typically open for business seven days a week, stock a large number and broad
range of items in inventory (typically in the range of 5,000 products),
purchase in volume and typically take delivery at their stores for the most
part direct from manufacturers and offer many of their products at discounts
from manufacturers' list prices. Virtually every major metropolitan area in the
United States is now served by at least one, and most by several, office
products superstores, and the three largest superstore companies (Office Depot,
OfficeMax and Staples) operate and advertise nationally with stores in many
metropolitan areas. Superstores also purchase from wholesalers for "fill-in"
needs and to fill customer orders from special wholesaler catalogs made
available to end users in certain superstores when the superstore does not
carry an item. This allows the superstores to expand the range of products
offered without increasing their on hand inventory levels.

Mail Order Companies. Mail order marketers of office products typically serve
small and medium-sized business customers and home offices. While their
procurement and order fulfillment functions are similar to contract stationers,
they rely exclusively on catalogs and other database marketing programs, rather
than direct sales forces, to sell their product offerings. Their operations are
based upon large, proprietary customer data bases and sophisticated circulation
strategies drawn from consumer marketing programs. Mail order companies
purchase both from wholesalers and manufacturers.

Mass Merchandisers. The mass market retailers (e.g., Sears, Wal-Mart
Stores/Sam's Club, Price/Costco, Kmart and Target) have recently taken a
growing interest in office products. Office supplies is one of many categories
of products more typically available in these stores.

PRODUCTS

The Company markets a broad array of products, which include traditional
office supplies; office furniture and desk accessories; office machines,
equipment and supplies; computer hardware, peripherals and supplies; and
facilities management supplies. The Company's core business continues to be
traditional office supplies, which includes both brand-name products and the
Company's private brand products marketed under the Universal name. As part of
the Company's business strategy to

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acquire incremental sales and increase market share through ancillary product
offerings, the Company began to focus on niche markets in fiscal year 1991 and
has expanded steadily upon this concept since then. A furniture division was
established to offer national delivery and product "set-up" capabilities to
office products dealers as well as to attract new furniture dealers. The
Company's sale of this division's items such as leather chairs, wooden and
steel desks and computer furniture has enabled it to become the nation's
largest office furniture wholesaler, with the Company currently offering nearly
3,000 furniture items from 80 different manufacturers. The Company's "Pro-
Image" program enables resellers with no previous expertise to provide high-end
furniture and office design services to end users. Another one of the Company's
niche markets is business presentation products. The Company also sells
computers, printers, modems, monitors and supplies with major brand names
through its MicroUnited Division. Additionally, the Company offers its
"Signature Image" program, which provides traditional office products resellers
with access into the advertising products market (such as imprinted and logo
items). The Company's newest product line encompasses the facilities management
supplies market, which includes janitorial and sanitation supplies, specialty
mailroom and warehouse items, kitchen and cafeteria items, first aid products
and ergonomic products designed to enhance worker productivity, comfort and
safety.

CUSTOMERS

The Company principally sells to resellers of office products, consisting
primarily of commercial dealers and contract stationers, retail dealers,
superstores, mail order companies and mass merchandisers. In addition, the
Company sells to office furniture dealers, computer resellers and janitorial
and sanitation supply distributors. In 1994 on a pro forma basis, no single
reseller accounted for more than 3.2% of the Company's consolidated net sales.

Commercial dealers and contract stationers are the most significant reseller
channel for office product distribution and typically serve large businesses,
institutions and government agencies. Through consolidation, these dealers are
getting larger and becoming even more important to the Company. Commercial
dealers and contract stationers remain one of the Company's fastest growing
customers classes.

The number of retail dealers has been declining for some time as the result
of individual retail dealers' inability to successfully compete with the
growing number of superstores and, more recently, as a result of dealerships
being acquired and brought under an umbrella of common ownership. However, many
retail office products dealers continue to thrive, adapting to the highly
competitive environment with the help of resources the Company offers. Many
retail dealers, commercial dealers and contract stationers have joined forces
in marketing or buying groups in order to increase purchasing leverage. The
Company believes it is the leading wholesale source for many of these groups,
providing not only merchandise but also special programs that enable these
dealers to take advantage of their combined strengths.

While the Company maintains and builds its business with commercial dealers
and contract stationers and retail dealers, it has also initiated relationships
with most major office products superstore chains. The Company sells
superstores commodity items as "fill-ins" when they are out of stock. In
addition, the Company has installed order stations in many superstores that
display the Company's catalogs thereby allowing end users to order products
from the Company through the superstore that the superstore does not carry in
stock.

Through its furniture division, the Company offers middle-grade office
furniture to both office products and office furniture dealers. The Company
also provides computer-related products to most categories of computer
resellers through its MicroUnited division and sells janitorial products to
sanitation supply distributors. The Company provides marketing materials and
professional expertise to meet the various needs of these specialized
resellers.

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<PAGE>

MARKETING AND CUSTOMER SUPPORT

The Company concentrates its marketing efforts on providing value-added
services to resellers. The Company distributes products that are generally
available at similar prices from multiple sources, and most of its customers
purchase their products from more than one source. As a result, the Company
seeks to differentiate itself from its competitors through broad product
offerings, a high degree of product availability, a variety of customer
services and expeditious distribution capabilities.

In addition to emphasizing its broad product line, extensive inventory,
computer integration and national distribution capabilities, the Company's
marketing programs have relied upon two additional major components. First, the
Company produces an extensive array of catalogs for commercial dealers,
contract stationers and retail dealers that are usually custom imprinted with
each resellers' name and sold to these resellers who, in turn, distribute the
catalogs to their customers. Second, the Company provides its resellers with a
variety of dealer support and marketing services, including business management
systems, promotional programs and price services. These services are designed
to aid the reseller in differentiating itself from its competitors by
addressing the steps in the consumer's procurement process.

Currently, substantially all of the Company's products are sold through its
comprehensive office product catalogs and flyers. These materials include full
line catalogs, promotional pieces and specialty catalogs for the legal,
financial, healthcare, office furniture, facilities management and advertising
specialty markets. Catalogs also are provided for a variety of end user
markets, including: annual General Line Catalogs listing 25,000 items; an
annual office furniture catalog featuring furniture and accessories; an Office
Impressions catalog featuring the Company's private-brand furniture; a
quarterly Concept 90 catalog offering approximately 1,000 high-volume commodity
products; Office Saver and Flexi Flyer promotional pieces targeted at deep
discount markets; annual Universal and Universal Plus catalogs promoting the
Company's private-brand merchandise; an annual Computer Products Catalog
offering hardware, peripherals and supplies; an annual Computer Concepts
catalog; Specialty Market catalogs targeting healthcare, legal, financial and
advertising specialty businesses; an annual Facilities Management Supply
catalog featuring janitorial and sanitation supplies and ergonomic products; a
business presentation products catalog; and Access, a new promotional flyer
offering related office products distributed to end users on behalf of
resellers. Because commercial dealers, contract stationers and retail dealers
typically distribute only one wholesaler's catalogs in order to streamline
order entry, the Company attempts to maximize the distribution of its catalogs
by offering advertising credits to resellers, based on the volume of products
purchased, which can be used to offset the cost of catalogs.

To assist its resellers with pricing, the Company offers a matrix pricing
software program. Traditionally, resellers have priced products on a discount
from list price basis. With the advent of the superstore, pricing has shifted
towards a net pricing approach, whereby the superstore sells certain products
at significant discounts, assuming that it can recapture the discounts through
the sale of other higher margin products. The Company's matrix pricing program
provides the reseller with a tool to assist it in identifying the optimum
pricing mix between high and low margin items and, as a result, enables the
reseller to enhance its operating margins.

The Company provides sales representatives and managers of selected resellers
the opportunity to participate in marketing training programs sponsored by it.
Similar to its matrix pricing software, the Company's training programs are
designed to instruct the resellers in how to market to the end user based upon
a total cost of procurement approach, and thereby to minimize the focus on
specific product prices. Since the inception of the Company's program, over
3,000 individuals have attended such training programs.

The Company offers to its resellers a variety of electronic order entry
systems and business management and marketing programs which enhance the
reseller's ability to manage its business

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profitably. For instance, the Company maintains EDI systems that link the
Company to selected resellers, and multifaceted interactive order systems that
link the Company to selected resellers and such resellers to the ultimate end
user. The Company's most sophisticated electronic management system enables
dealers to manage critical business functions including order entry,
purchasing, pricing, accounts receivable, accounts payable and inventory
control. In July 1993, the Company entered into a joint venture with a software
developer, investing approximately $0.9 million as of February 28, 1995 for its
45% equity interest in a new corporation called United Business Computers, Inc.
to enhance, market and support PC-based dealer operating systems compatible
with the Company's system. The Company estimates that in 1994 on a pro forma
basis, approximately 85% of its orders were received electronically.

In addition to the Company's Pro-Image and Signature Image business
management and marketing programs described above, the Company also offers
resellers its "Desk Top Marketing" software program, which enables the reseller
to identify potential customers in a given market based upon parameters
selected by the reseller. The Company also offers, on an exclusive basis, the
Customer Self-Service program, which allows the reseller to provide end users
with on-line access to such reseller's computer for ordering, product inquiries
and promotion information.

DISTRIBUTION

Management has determined that, as a result of the Merger, eight of the
Company's 47 current regional distribution centers are redundant and,
accordingly, plans to close such redundant facilities within 12 months of the
Merger. As a result, the Company will have a network of 39 (post-consolidation)
regional distribution centers located in 35 metropolitan areas in 24 states,
most of which will carry the Company's full line of inventory. In addition, the
Company intends to achieve cost savings from the more efficient operation post-
Merger of two distribution centers in each of four market areas, where size of
existing facilities requires, or demand is sufficient to support, multiple
facilities. For a discussion of the benefits arising from the elimination of
such facilities, see "Business -- Consolidation Plan and Benefits of the
Acquisition."

The Company supplements its regional distribution centers with local
distribution points throughout the United States that serve as reshipment
points for orders filled at the regional distribution centers. The Company
utilizes over 500 trucks owned, leased or contracted for by the Company to
enable direct delivery from the regional distribution centers and local
distribution points to resellers.

The Company's distribution capabilities are augmented by its proprietary,
computer-based system. If a reseller places an order for an item that is out of
stock at the Company location which usually serves the particular reseller, the
Company's system will automatically search for the item at two alternative
distribution centers. If the item is available at an alternative location, the
system will automatically forward the order to that alternate location, which
will then coordinate shipping with the primary facility and provide a single
on-time delivery to the reseller. The system effectively provides the Company
with added inventory support, which enables it to provide higher service levels
to the reseller, to reduce back orders and to minimize time spent searching for
merchandise substitutes, all of which contribute to the Company's high fill
rate and efficient levels of inventory balances. See "Risk Factors -- Service
Interruptions."

Another service offered by the Company to selected resellers is its "wrap and
pack" program, which allows resellers the option to receive orders in
accordance with the specifications of particular end users. For example, when a
reseller receives orders from a number of separate end users, the Company
groups and wraps the items separately by end user so that the reseller need
only deliver the package. The "wrap and pack" program is attractive to
resellers because it eliminates the need to break down case shipments and to
repackage the orders before delivering them to the end user.

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MERCHANDISING AND PURCHASING

The Company utilizes over 500 suppliers of its products. As a centralized
corporate function, the Company's merchandising department interviews and
selects suppliers and products for inclusion in the catalogs. Selection is
based upon end user acceptance and demand for the product and the
manufacturer's total service, price and product quality offering. In 1994 on a
pro forma basis, no supplier accounted for more than 9.4% of the Company's
aggregate purchases. The Company believes it is a significant customer for many
vendors.

The Company, like many other wholesalers, has a centrally controlled,
computerized forward buying program under which the Company, from time to time,
purchases items of inventory in advance of its specific needs when favorable
purchasing opportunities present themselves.

COMPETITION

The Company competes with office products manufacturers and with other
national, regional and specialty wholesalers of office products, office
furniture, computers and related items. Most wholesale distributors of office
products conduct operations regionally and locally, sometimes with limited
product lines such as writing instruments or computer products. Other
wholesalers, including the Company, carry a full line of business products.
Manufacturers typically sell their products through a variety of distribution
channels, including business products wholesalers and resellers.

Competition between the Company and manufacturers is based primarily upon net
pricing, minimum order quantity and product availability. Although
manufacturers may provide lower prices to resellers than the Company does, the
Company's marketing and catalog programs, combined with speed of delivery and
its ability to offer resellers a broad line of business products from multiple
manufacturers on a "one-stop shop" basis and with lower minimum order
quantities, are important factors in enabling the Company to compete
effectively. Competition between the Company and other wholesalers is based
primarily on net pricing to resellers, breadth of product lines, availability
of products, speed of delivery to resellers, fill rates and the quality of its
marketing and other services. The Company believes it is competitive in each of
these areas.

A trend toward consolidation has occurred in recent years throughout the
office products industry. Although at the national wholesale level only one
competitor (S.P. Richards) remains, consolidation of commercial dealers and
contract stationers has also resulted in an increased ability of those
resellers to buy goods directly from manufacturers. In addition, over the last
decade, office products superstores (which largely buy directly from
manufacturers but offer fewer items than the Company) have entered virtually
every major metropolitan market and dealers and contract stationers have formed
buying groups to purchase directly from manufacturers on a collective basis.
Increased competition in the office products industry has also led to
heightened price awareness among consumers, making commodity type office
products extremely price sensitive and requiring the Company to increase its
efforts to convince resellers of the continuing advantages of its competitive
strengths (as compared to those of manufacturers and other wholesalers), such
as marketing and catalog programs, speed of delivery, and the ability to offer
resellers a broad line of business products from multiple manufacturers with
lower minimum order quantities on a "one-stop shop" basis. See "Risk Factors --
Competition."

EMPLOYEES

At August 3, 1995, the Company employed approximately 4,713 persons in the
aggregate. Management has determined that as a result of the Merger, certain
warehouse, corporate and sales positions within the Company will be eliminated.
For a discussion of management's plans with respect to the elimination of such
positions and the resulting expected benefits to the Company, see "Business

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-- Consolidation Plan and Benefits of the Acquisition -- Consolidate
Distribution Centers," and "-- Reduce Corporate Overhead."

The Company considers its relationships with its employees to be
satisfactory. Substantially all of the shipping, warehouse and maintenance
employees at certain of the Chicago, Detroit, Philadelphia, Baltimore, Los
Angeles, Minneapolis and New York City facilities are covered by various
collective bargaining agreements. The agreements expire at various times during
the next three years. See "Risk Factors -- Service Interruptions."

LEGAL PROCEEDINGS

The Company is involved in legal proceedings arising in the ordinary course
of its business. The Company is not involved in any legal proceeding that it
believes will result, individually or in the aggregate, in a material adverse
effect upon its financial condition or results of operations.

PROPERTIES

The Company considers its properties to be suitable and adequate for their
intended uses. These properties consist of the following:

Executive Offices. The Company's office facility in Des Plaines, Illinois has
approximately 135,800 square feet of office and storage space. In September
1993, approximately 47,000 square feet of office space located in Mount
Prospect, Illinois was leased by the Company. This lease expires in four years,
with an option to renew for two five-year terms.

The Company currently leases 20,568 square feet of office space in Itasca,
Illinois which previously served as Associated's corporate headquarters and
7,095 square feet of office space in Pittsburgh, Pennsylvania as a sales
office. As a result of the closing of Associated's corporate headquarters, the
Company plans to terminate the lease in Itasca, Illinois.

Local Distribution Points. The Company also operates 28 local distribution
points. Two are leased by the Company; the other local distribution points are
operated through cross-docking arrangements with third party distribution
companies.

Canadian Office. The Company currently leases a sales office in Woodbridge,
Ontario (7,000 sq. ft.). This lease expires August 31, 1995 with an option to
renew for one additional year.

Hong Kong Trading Office. United Stationers Hong Kong Limited leases 1,500
square feet for a trading office in Hong Kong with the lease expiring on
October 14, 1995.

Distribution Centers. The Company presently operates 47 distribution centers
in 24 states, with eight scheduled for closing in the near future as part of
the Company's consolidation plan. The following table sets forth information
regarding the principal leased and owned properties.

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<TABLE>
<CAPTION>
APPROXIMATE
SQUARE FEET
---------------
METROPOLITAN DATE OF LEASE
STATE CITY AREA SERVED OWNED LEASED EXPIRATION(2)
----- ------------------- --------------------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
Arizona................. Tempe Phoenix -- 110,000 3/31/01
California.............. City of Industry(1) Los Angeles -- 99,999 4/30/96
California.............. City of Industry Los Angeles 344,487 125,000 5/31/98
California.............. Sacramento Sacramento -- 150,207 5/30/03(3)
California.............. Sacramento Sacramento -- 263,000 7/31/08
Colorado................ Denver(1) Denver 104,244 -- --
Colorado................ Denver Denver -- 132,618 8/31/95
Florida................. Hialeah(1) Miami -- 94,080 12/31/99
Florida................. Jacksonville Jacksonville 95,500 -- --
Florida................. Tampa Tampa 128,000 -- --
Florida................. Ft. Lauderdale Miami -- 151,500 7/31/03
Georgia................. Smyrna(1) Atlanta 129,396 -- --
Georgia................. Norcross Atlanta 287,700 -- --
Illinois................ Carol Stream Chicago -- 139,444 6/30/97
Illinois................ Forest Park Chicago 222,280 106,000 11/30/95
Illinois................ Greenville St. Louis 210,000 -- --
Indiana................. Indianapolis Indianapolis 128,000 -- --
Louisiana............... Harahan New Orleans -- 104,385 3/31/10
Maryland................ Elkridge(1) Baltimore/Wash., D.C. -- 84,000 7/15/04
Maryland................ Harmans Baltimore/Wash., D.C. 323,980 170,000 2/29/96
Massachusetts........... Woburn Boston 372,000 -- --
Michigan................ Livonia Detroit 229,700 33,500 8/31/96
Minnesota............... Brooklyn Park Minneapolis/St. Paul 127,480 -- --
Minnesota............... Eagan Minneapolis/St. Paul 210,468 -- --
Missouri................ Kansas City Kansas City -- 77,244 5/31/00
New Jersey.............. Edison New York 257,578 133,177 6/30/98
New Jersey.............. Pennsauken Philadelphia 231,000 25,316 3/31/96
New York................ Coxsackie Albany 256,600 -- --
North Carolina.......... Charlotte Charlotte 104,000 -- --
North Carolina.......... Charlotte(1) Charlotte -- 81,726 7/31/97
Ohio.................... Cincinnati Cincinnati 108,778 -- --
Ohio.................... Columbus Columbus -- 126,665 8/31/99
Ohio.................... Cincinnati(1) Cincinnati -- 81,400 12/31/95
Ohio.................... Twinsburg Cleveland 206,136 -- --
Ohio.................... Valley View(1) Cleveland 233,508 -- --
Oklahoma................ Tulsa Tulsa 75,100 22,500 12/31/97
Oregon.................. Portland Portland -- 65,850 2/28/97
Tennessee............... Memphis Memphis -- 78,280 3/31/10
Tennessee............... Nashville Nashville -- 66,000 4/30/98
Tennessee............... Nashville Nashville -- 59,250 9/30/95
Texas................... Dallas Dallas 223,230 159,873 9/30/99
Texas................... Houston Houston -- 143,859 6/30/96
Texas................... Lubbock Lubbock -- 58,725 4/27/98
Texas................... San Antonio San Antonio -- 63,098 3/31/10
Utah.................... Salt Lake City Salt Lake City -- 89,324 9/30/99
Washington.............. Tukwila Seattle -- 144,031 3/31/97
Wisconsin............... Milwaukee Milwaukee 67,300 -- --
</TABLE>
--------
(1) The Company plans to close the indicated eight facilities within 12 months
of the Merger. See "Business -- Consolidation Plan and Benefits of the
Acquisition."
(2) Except as specifically indicated, with respect to facilities subject to
more than one lease, references are to the earliest possible expiration
date.
(3) A portion of the lease covering 30,947 square feet of such property expires
on March 31, 1996.

The Company also owns 54,500 square feet of warehouse space in Jacksonville,
Florida, which it subleases to a third party.

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<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

In connection with the consummation of the Acquisition, seven of the nine
directors of United and all but one of the five directors of the Company
serving prior thereto were replaced by nominees designated by Associated. The
directors of United designated by Associated comprise the persons who were the
directors of Associated prior to the Acquisition. In addition, certain persons
serving as executive officers of the Company or Associated prior to the Merger
will no longer be serving in such capacity.

Set forth below is certain information with respect to those individuals who
are currently serving as members of the Boards of Directors and as executive
officers of United and the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ---------------------------------------------------
<C> <C> <S>
Thomas W. Sturgess 44 Director, Chairman of the Board, President and
Chief Executive Officer of United and the Company
Michael D. Rowsey 42 Director and Executive Vice President of United and
the Company
Steven R. Schwarz 41 Director of the Company; Executive Vice President
of United and the Company
Daniel H. Bushell 43 Director of the Company; Executive Vice President,
Chief Financial Officer and Secretary of United
and the Company
Gary G. Miller 45 Director of United; Assistant Secretary of United
and the Company
James T. Callier, Jr. 60 Director of United
Daniel J. Good 54 Director of United
Frederick B. Hegi, Jr. 51 Director of United
Jeffrey K. Hewson 51 Director of United and the Company
James A. Johnson 41 Director of United; Assistant Secretary of United
and the Company
Joel D. Spungin 56 Director of United
</TABLE>

Set forth below is a description of the backgrounds of the directors and
executive officers of United and the Company. There is no family relationship
between any directors or executive officers of United or the Company.

THOMAS W. STURGESS became President and Chief Executive Officer of United and
the Company on May 31, 1995 and Chairman of the Board of Directors of United
and the Company upon consummation of the Offer. Prior to the Merger, Mr.
Sturgess served as Chairman of the Board and Chief Executive Officer of
Associated since January 1992 and had been Chairman of the Board and Chief
Executive Officer of ASI since December 1994. Mr. Sturgess has served since
1987 as a general partner of various entities affiliated with Wingate Partners
("Wingate entities"), including the indirect general partner of each of Wingate
Partners and Wingate II. Mr. Sturgess currently serves as Chairman of the Board
of Redman Industries, Inc., a manufactured housing producer ("Redman"), as well
as RBPI Holding Corporation, a manufacturer and distributor of aluminum and
vinyl windows ("RBPI"). He is a director of Loomis Armored Inc., a provider of
armored car and related services ("Loomis"), AmeriStat Mobile Medical Services,
Inc., a provider of ambulance services ("AmeriStat"), and Century Products
Company, a manufacturer and distributor of baby seats and other juvenile
products ("Century Products").

MICHAEL D. ROWSEY was elected to the Board of Directors of United and the
Company upon consummation of the Offer and became Executive Vice President of
United and the Company upon consummation of the Merger. Prior to the Merger,
Mr. Rowsey had been a director of Associated since 1992 and President and Chief
Operating Officer of Associated since January 1992. From 1979 to

69
<PAGE>

January 1992, Mr. Rowsey served in various capacities with BCOP, most recently
as the North Regional Manager.

STEVEN R. SCHWARZ was elected to the Board of Directors of the Company upon
consummation of the Offer and became Executive Vice President of United and the
Company upon consummation of the Merger. Prior thereto, he was Senior Vice
President, Marketing of United since June 1992 and had previously been Senior
Vice President, General Manager, MicroUnited since 1990 and Vice President,
General Manager, MicroUnited since September 1989. He had held a staff position
in the same capacity since February 1987.

DANIEL H. BUSHELL became Executive Vice President and Secretary of the
Company and United on June 27, 1995, and was elected to the Board of Directors
of the Company upon consummation of the Offer and became Chief Financial
Officer of United and the Company upon consummation of the Merger. Mr. Bushell
served as Vice President of the Company and Assistant Secretary of the Company
and United from consummation of the Merger until June 27, 1995. Prior thereto,
Mr. Bushell had been Chief Administrative and Chief Financial Officer of
Associated and ASI since January 1992. From 1978 to January 1992, Mr. Bushell
served in various capacities with ACE Hardware Corporation, most recently as
Vice President of Finance.

GARY G. MILLER was elected to the Board of Directors of United upon
consummation of the Offer and became Assistant Secretary of United and the
Company on June 27, 1995. Mr. Miller served as Vice President and Secretary of
the Company and United from consummation of the Merger until June 27, 1995.
Prior thereto, Mr. Miller had been a director of Associated since 1992 and Vice
President and Secretary of Associated since January 1992. Mr. Miller also
currently serves as President of Cumberland Capital Corporation ("Cumberland"),
a private investment firm which is located in Fort Worth, Texas and is a
stockholder of United. In addition, from 1977 to December 1993, Mr. Miller
served as Executive Vice President, Chief Financial Officer and a director of
AFG Industries, Inc., and its parent company, Clarity Holdings Corp. He is
Chairman of the Board of CFData Corp., a nationwide provider of check
collection and check verification services and is Vice President, Finance and
Administration of Fore Star Golf, Inc., which was formed in 1993 to own and
operate golf facilities.

JAMES T. CALLIER, JR. was elected to the Board of Directors of United upon
consummation of the Offer. Prior to the Merger, he had been a director of
Associated since 1992. Mr. Callier is an indirect general partner of Wingate
Partners, and has served as President of Callier Consulting, Inc., an
investment management firm, since 1985. Mr. Callier currently serves as
Chairman of the Board of Century Products, as a director of Redman, RBPI and
Loomis and as an advisory director of Wingate II.

DANIEL J. GOOD was elected to the Board of Directors of United upon
consummation of the Offer. Prior to the Merger, he had been a director of
Associated since 1992. Mr. Good is Chairman of Good Capital Co., Inc. ("Good
Capital"), a private investment firm and investment advisory firm founded in
1989 and located in Lake Forest, Illinois, which is a stockholder of United.
Mr. Good is also Vice Chairman of Golden Cat Corporation, a producer and
distributor of cat care products and a producer of industrial absorbent
materials. Mr. Good serves on the Board of Directors of Supercuts, Inc. Prior
to founding Good Capital, Mr. Good was managing director of the Merchant
Banking Group of Shearson Lehman Hutton, Inc.

FREDERICK B. HEGI, JR. was elected to the Board of Directors of United upon
consummation of the Offer. Prior to the Merger, he had been a director of
Associated since 1992. Mr. Hegi is a general partner of various Wingate
entities, including the indirect general partner of each of Wingate Partners
and Wingate II. Since May 1982, Mr. Hegi has served as President of Valley View
Capital Corporation, a private investment firm. Mr. Hegi also currently serves
as Chairman of the Board of Loomis Holding Corporation, the parent corporation
of Loomis, Tahoka First Bancorp, Inc., a bank holding company, and Cedar Creek
Bancshares, Inc., a bank holding company, and as a director of RBPI, Century
Products, Lone Star Technologies, Inc., a diversified company engaged in the
manufacturing of steel pipe and in commercial banking services, Cattle
Resources, Inc., a manufacturer of animal feeds and operator of commercial
cattle feedlots and various funds managed by InterWest Partners.

70
<PAGE>

JEFFREY K. HEWSON served as President and Chief Executive Officer of United
and the Company from consummation of the Merger until May 31, 1995. Prior
thereto, he was President and Chief Operating Officer of United and the Company
since April 1991. He had been Executive Vice President of United and the
Company since March 1990. Prior to that, he had been President of ACCO
International's U.S. Division since 1989 and President of its Canadian Division
since 1987. ACCO International is a manufacturer of traditional office products
and a subsidiary of American Brands, Inc., which is a global consumer products
holding company.

JAMES A. JOHNSON was elected to the Board of Directors of United upon
consummation of the Merger. Prior to the Merger, he had been a director of
Associated since 1992. Mr. Johnson is a general partner of various Wingate
entities, including the indirect general partner of each of Wingate Partners
and Wingate II. From 1980 until he joined Wingate Partners in 1990, Mr. Johnson
served as a Principal of Booz-Allen & Hamilton, an international management
consulting firm. Mr. Johnson currently serves as a director of Century Products
and AmeriStat.

JOEL D. SPUNGIN has served as a member of the Board of Directors of United
since 1972 and prior to the consummation of the Offer was a member of the Board
of Directors of the Company, and Chairman of the Board of Directors of United
and the Company and prior to the Merger was Chief Executive Officer of United
and the Company since August 1988. From October 1989 until April 1991, he was
also President of United and the Company. Prior to that, since March 1987, Mr.
Spungin was Vice Chairman of the Board and Chief Executive Officer of United
and the Company. Previously, since August 1981, Mr. Spungin was President and
Chief Operating Officer of United and the Company. He also serves as a director
of AAR Corp.

Approximately 75% of the Shares expected to be outstanding on the date of
this Prospectus are held in a voting trust (the "Voting Trust") pursuant to a
Voting Trust Agreement dated as of January 31, 1992, as amended by the First
Amendment to Voting Trust Agreement dated as of March 30, 1995 (the "Voting
Trust Agreement"). The trustees of the Voting Trust are Thomas W. Sturgess,
Frederick B. Hegi, Jr., James A. Johnson, Daniel J. Good and Gary G. Miller.
The trustees of the Voting Trust hold all voting power to vote the Shares held
in the Voting Trust and may act by a majority vote of the trustees. The
trustees agree to vote all Shares in trust to elect a board of directors of
United with (i) a least one representative designated by Good Capital, (ii) at
least one representative designated by ASI Partners, L.P., the general partner
of which is Cumberland, (iii) at least one representative designated by certain
key executives (consisting of Messrs. Rowsey, Eberspacher, Schleppe and L.
Miller) of United and (iv) such number of directors designated by Wingate
Partners as will represent a majority of the total number of directors. The
Voting Trust terminates on January 31, 2002 or upon the consummation of an
underwritten public offering of the Shares which meets certain criteria
specified in the Voting Trust Agreement. The Voting Trust Agreement does not
apply to the election of directors of the Company, although by virtue of the
power to elect the directors of United the trustees of the Voting Trust will
indirectly have the power to elect the directors of the Company. Officers of
United and the Company are elected by their respective Boards of Directors and
hold office until their respective successors are duly elected and qualified.

United's Restated Certificate of Incorporation (as hereinafter defined)
provides that the Board of Directors of United shall be divided into three
classes, each class as nearly equal in number as possible, and each term
consistent of three years. The Directors currently in each class are as
follows: Class I (having terms expiring in 1996) -- Messrs. Good, Johnson and
Hewson; Class II (having terms expiring in 1997) -- Messrs. Sturgess, Hegi and
Rowsey; and Class III (having terms expiring in 1998) -- Messrs. G. Miller,
Callier and Spungin.

Certain directors of United who are not officers or employees of United or
the Company currently receive an annual retainer fee of $18,000, plus a fee of
$1,000 for each board meeting attended and a fee of $600 for each committee
meeting attended. An additional fee of $250 per committee meeting is

71
<PAGE>

currently paid to the chairman of each committee. When United's business
requires an overnight stay for a board or committee meeting, an additional $600
is currently paid. Certain of such fees may be deferred under the Directors'
Deferred Compensation Plan. United also has a retirement program for its
outside directors who have served at least one year as a director. Under the
program, directors are entitled to receive, upon their retirement from the
board after the age of 65, 50.0% of their last annual retainer per year of
service for those directors with less than seven years of service and 100.0% of
their last annual retainer per year of service as a director for those with
seven or more years of service. In addition, all directors are reimbursed for
travel expenses incurred in attending meetings. United also maintains a term
life insurance policy in the amount of $100,000 for the benefit of each
director. United is in the process of evaluating the extent to which the fees
and other benefits currently received by directors of United and the Company
will be retained, modified or terminated for directors of United and the
Company after the Merger.

EXECUTIVE COMPENSATION FOR UNITED

Compensation for executive officers of United and the Company is currently
governed by plans and other arrangements established by United for the benefit
of the employees of both United and the Company. United is in the process of
evaluating the extent to which the benefit plans and arrangements and other
matters relating to executive compensation described below that were in effect
for officers and employees of United and the Company prior to the Merger will
be retained, modified or terminated for officers and employees of United and
the Company after the Merger.

Compensation Table. The following table sets forth the compensation paid
during United's last three fiscal years to the Chief Executive Officer and each
of the four most highly compensated officers of United in all capacities in
which they served at the end of United's fiscal year ended August 31, 1994.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------- ----------------------------
AWARDS
------------------
LONG-
OTHER TERM
ANNUAL RESTRICTED OPTIONS INCENTIVE ALL OTHER
COMPEN- STOCK (NUMBER PLAN COMPEN-
NAME AND FISCAL SALARY SATION AWARDS OF PAYOUTS SATION
PRINCIPAL POSITION YEAR (1) BONUS (2) (4) SHARES) (5) (2)(6)
------------------ ------ -------- -------- -------- ---------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joel D. Spungin 1994 $431,667 $ -- $ (3) $ -- 45,000 $41,198 $11,416
Chairman and Chief 1993 420,500 201,344 (3) -- -- 37,683 13,243
Executive Officer 1992 401,975 262,006 -- -- 30,000 12,088 --
Jeffrey K. Hewson 1994 309,167 -- (3) -- 38,000 23,169 5,076
President and Chief 1993 286,250 119,074 (3) -- -- 14,283 6,382
Operating Officer 1992 268,750 158,125 -- 85,000 50,000 -- --
Ronald W. Weissman 1994 216,500 19,530 (3) -- -- 12,902 5,199
Executive Vice President 1993 213,750 74,810 (3) -- -- 14,833 7,378
1992 207,500 107,625 -- -- 7,500 4,489 --
Allen B. Kravis 1994 188,469 -- (3) -- 21,000 11,451 4,559
Sr. Vice Pres., Chief 1993 175,250 65,260 (3) -- -- 9,834 6,494
Financial Officer 1992 158,583 81,488 -- 21,250 25,000 2,105 --
Steven R. Schwarz 1994 181,890 15,818 (3) -- 21,000 9,677 822
Sr. Vice President 1993 169,875 57,279 (3) -- -- 8,226 2,861
1992 152,250 66,500 -- 34,375 15,000 918 --
</TABLE>
--------
(1) Includes compensation amounts earned during the fiscal year but deferred
pursuant to Section 401(k) of the Internal Revenue Code under United's
Profit Sharing PluSavings Plan.

72
<PAGE>

(2) Disclosure of "Other Annual Compensation" and "All Other Compensation" is
not required for the fiscal year ended August 31, 1992.
(3) No amounts of "Other Annual Compensation" were paid to any named executive
officer, except for perquisites and other personal benefits which for each
executive officer did not exceed the lesser of $50,000 or 10.0% of such
individual's salary and bonus for the indicated fiscal year.
(4) Restricted stock awards are valued at the market price on date of grant.
Grants are made under the 1981 Stock Incentive Award Plan, and include tax
withholding rights which permit the officer to elect to have shares
withheld to satisfy federal, state and local tax withholding requirements
when the shares become unrestricted, generally three years after the grant
date. Dividends are paid on restricted shares at the same rate paid to all
shareholders. On August 31, 1994, Mr. Schwarz held 2,500 shares of
restricted stock valued at year-end market value for Shares of $9.50 per
share, or a total value of $23,750.
(5) Includes payments from Executive Bonus Plan (as hereinafter defined) of
awards earned in prior years payable in three annual installments as shown
below. Awards are partly (30.0%) in cash and partly (70.0%) in Share Units
(as hereinafter defined) which are converted to and paid out in common
stock. Cash payments include earnings on the cash amounts based on United's
return on equity or the treasury bill rate. Stock payments are valued at
the stock price as of the date of the award of Share Units:

<TABLE>
<CAPTION>
SPUNGIN HEWSON WEISSMAN KRAVIS SCHWARZ
------- ------ -------- ------ -------
<S> <C> <C> <C> <C> <C>
1994:
Cash................................ $15,789 $8,885 $4,975 $4,402 $3,730
Stock............................... 25,409 14,284 7,927 7,049 5,947
1993:
Cash................................ 13,224 4,478 5,173 3,328 2,687
Stock............................... 24,460 9,805 9,659 6,506 5,539
1992:
Cash................................ 5,059 -- 1,878 880 386
Stock............................... 7,029 -- 2,611 1,225 532
</TABLE>
(6) Includes premiums paid during 1994 for Split Dollar Life, Group Life and
Accidental Death insurance policies (Mr. Spungin $11,416, Mr. Hewson
$5,076, Mr. Weissman, $5,199, Mr. Kravis $4,559 and Mr. Schwarz $822).
United made no contributions to its Profit Sharing PluSavings Plan for the
indicated officers during 1994.

Option Grants. Options were granted during United's fiscal year ended August
31, 1994 to all of the executives named in United's Summary Compensation Table
on October 22, 1993 and August 24, 1994, all of which were redeemed upon
consummation of the Merger. The following table contains information concerning
such grants:

73
<PAGE>

OPTION GRANTS DURING LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
OPTIONS TOTAL OPTIONS ANNUAL RATES OF STOCK
GRANTED GRANTED TO PRICE APPRECIATION FOR
(NUMBER OF EMPLOYEES EXERCISE OR OPTION TERM (5)
SHARES) IN FISCAL YEAR BASE PRICE EXPIRATION -----------------------
NAME (1) (4) (PER SHARE) DATE 5% 10%
---- ---------- -------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Joel D. Spungin 25,000(2) 6.2% $16.25 10/21/99 $138,164 $313,447
20,000(3) 5.0% 10.00 08/23/98 43,101 92,820
Jeffrey K. Hewson 20,000(2) 5.0% 16.25 10/21/99 110,531 250,757
18,000(3) 4.5% 10.00 08/23/98 38,791 83,538
Ronald W. Weissman -0- -- -- -- -- --
Allen B. Kravis 12,000(2) 3.0% 16.25 10/21/99 66,319 150,454
9,000(3) 2.2% 10.00 08/23/98 19,396 41,769
Steven R. Schwarz 12,000(2) 3.0% 16.25 10/21/99 66,319 150,454
9,000(3) 2.2% 10.00 08/23/98 19,396 41,769
</TABLE>
--------
(1) Options were granted under the 1981 Stock Incentive Award Plan at market
price on the date of grant.
(2) Options granted October 22, 1993 became exercisable in four equal annual
increments commencing October 21, 1994.
(3) Options granted August 24, 1994 became exercisable in three equal annual
increments commencing August 23, 1995.
(4) Based on 401,050 options granted to employees during the fiscal year.
(5) The amounts under the columns labeled "5%" and "10%" are included pursuant
to certain rules of the Commission, and are not intended to forecast future
appreciation, if any, in the price of the Shares. The actual value of the
options will vary in accordance with the market price of the Shares; any
such variance will affect all stockholders commensurately.

The following table contains information concerning option exercises during
United's fiscal year ended August 31, 1994 by each of the named executive
officers and the fiscal year end values:

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL YEAR- OPTIONS AT FISCAL
SHARES END YEAR-END (1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joel D. Spungin -- $ -- 88,310 67,800 $6,192 $4,128
Jeffrey K. Hewson -- -- 47,000 71,000 8,310 5,540
Ronald W. Weissman -- -- 71,610 12,500 5,160 3,440
Allen B. Kravis -- -- 44,750 38,000 3,840 2,560
Steven R. Schwarz -- -- 26,450 35,000 3,870 2,580
</TABLE>
--------
(1) The values given are based on the closing price of the Shares on August 31,
1994 which was $9.50, less the exercise price, before payment of applicable
income taxes.

Bonus Plans. A Management Incentive Plan ("MIP") provides annual incentive
compensation opportunities to officers and other upper management level
participants based on United's performance, region or division performance, and
personal performance. Under the MIP, annual targets are set by the Board of
Directors and bonuses are awarded under a formula based on percentage
attainment of the targets. The incentive awards for the Chief Executive Officer
("CEO"), Chief Operating

74
<PAGE>

Officer ("COO") and Chief Financial Officer ("CFO") are based solely on the
earnings performance of United. If United fails to produce minimum targeted
results, no incentives are paid to the CEO, COO or CFO. For fiscal year 1994,
United failed to meet the targets set by the Compensation Committee;
therefore, no bonuses were earned by the executive officers based on United's
performance although certain officers (other than the CEO, COO and CFO) did
earn bonuses based on personal performance targets.

United's Executive Bonus Plan ("EBP") applied to the Company's officers
prior to the Merger. While the EBP provided annual incentive opportunity, it
also focuses on long-term results. Annual targets were established by the
Compensation Committee measured by return on equity ("ROE") or the treasury
bill rate. Bonus awards were made annually, if earned, based on the percentage
achievement of targets set, with 50% of the awards deferred and paid over a
three-year period. Of the deferred amounts, approximately 30% is in cash to be
paid in three annual installments. The deferred cash portion was to increase
based on the subsequent ROE performance. The other 70% of the deferred award
was converted to "Share Units" having a value equal to the market price of one
share of Common Stock. Thus the value of the Share Units rises and falls in
response to market fluctuations. The Share Units are converted into Shares
upon distribution in three annual increments. For fiscal year 1994, no bonuses
were earned under the EBP because United failed to meet the ROE target set by
the Compensation Committee.

Based on amendments to the MIP and the EBP completed shortly before the
execution of the Merger Agreement, amounts accrued under the EBP in respect of
Messrs. Spungin, Hewson, Weissman, Kravis and Schwarz (collectively, the
"Protected Employees") were paid out based on United's performance through the
date of the consummation of the Offer for the portion of the plan year through
the last day of the month in which the Merger occurred and amounts accrued
through March 30, 1995 under the MIP in respect of the Protected Employees
have not been paid as of August 11, 1995 (such amounts are guaranteed under
the Bonus Trust Agreement (as hereinafter defined)). In addition, amounts
shall be paid out for the balance of the plan year under the MIP at 100% of
the financial targets under that plan. The Bonus Trust Agreement (as
hereinafter defined) secures the amount reasonably estimated by United to be
owed to the Protected Employees of United with respect to the EBP and MIP with
respect to the current fiscal year. The amount of the bonus under the MIP for
the post-Merger remainder of the current fiscal year was established at 100%
of the bonus opportunity for each of the Protected Employees. The amount of
the bonus to which each Protected Employee was entitled for the pre-Merger
portion of the current fiscal year was established, in accordance with the
terms of the MIP, at 150% of the bonus opportunity under such plan. These
bonus payments are expected to be made by the trustee under the Bonus Trust
Agreement on or before October 1995. Following the payment of all bonuses, the
trust created by the Bonus Trust Agreement shall terminate.

United adopted a severance plan for the officers of the Company shortly
before the execution of the Merger Agreement which provides a severance
payment of one year's base salary if an officer is terminated without cause or
leaves after remaining for the full transition period requested by United.

Prior to the consummation of the Offer, United, as settlor, entered into an
irrevocable trust agreement (the "Benefits Trust Agreement") with American
National Bank and Trust Company of Chicago, as trustee (the "Benefits
Trustee"). The Benefits Trust Agreement secures the payment of all amounts
owed to certain employees under their amended employment contracts, certain
obligations of United to provide post-employment medical benefits, certain
severance benefits to former employees, and related costs. Under the terms of
the Benefits Trust Agreement and the Merger Agreement, United has caused an
irrevocable letter of credit in the initial amount of $24.0 million to be
furnished to the Benefits Trustee by Chase Bank. Each compensation or benefit
payment by the Benefits Trustee reduces the amount of the letter of credit. To
the extent that United makes payments of compensation and benefits covered by
the Benefits Trust Agreement or otherwise satisfies its obligation to these
current and former employees (or, in some cases, their eligible dependents or
surviving beneficiaries) and obtains a waiver from such persons, the letter of
credit will be reduced as provided in such waiver.

75
<PAGE>

Prior to the consummation of the Offer, United, as settlor, entered into an
irrevocable trust agreement (the "Bonus Trust Agreement") with the Benefits
Trustee. The Bonus Trust Agreement secures the amount reasonably estimated by
United to be owed to certain employees for amounts accrued and to be accrued
under the MIP. Under the terms of the Bonus Trust Agreement, United has caused
an irrevocable letter of credit in the amount of approximately $3.4 million
(the "Bonus LOC") to be furnished by Chase Bank to the Benefits Trustee. The
Benefits Trustee will draw on the Bonus LOC (without the necessity of a default
by United) on October 16, 1995 to make distributions to trust beneficiaries for
amounts accrued through the date of the Merger under United's MIP, unless such
amounts have been previously paid. After this one-time distribution, the trust
will be closed.

Spungin Employment Contract. Prior to the execution and delivery of the
Merger Agreement, Joel D. Spungin had an employment and consulting agreement
under which Mr. Spungin was to be employed at a salary of not less than
$425,000, plus participation in all bonus, stock options and other benefit
plans generally available to executive officers of United.

United has amended the employment agreement with Mr. Spungin, effective as of
the consummation of the Offer. On March 20, 1995, Mr. Spungin resigned his
offices with United and was relieved of all duties thereto, except that he
remains an employee of United, and shall, subject to nomination and election,
serve as a member of the Board of Directors of United. His term of employment
will continue until August 31, 1995, unless terminated by either Mr. Spungin or
United. Mr. Spungin will continue to be paid his current employee benefits and
salary until August 31, 1995. On September 1, 1995, Mr. Spungin shall become an
executive consultant to United for a period of 11 years in accordance with the
terms of his amended employment agreement. Mr. Spungin will act as a consultant
to Thomas W. Sturgess, chairman of the board of directors of United and the
Company, through August 31, 1996, and will continue to serve on the board of
directors of United, for which he will receive no additional fees. United shall
pay the sum of $2,276,209 to Mr. Spungin on September 1, 1995, and for the
period of September 1, 1995 through August 31, 1996, United shall pay Mr.
Spungin $530,000 in equal or nearly equal monthly installments. Beginning on
September 1, 1996 and continuing until the end of the consulting term, United
shall make a monthly payment of approximately $34,269.63 to Mr. Spungin
amounting to a total of $6,918,565.

Mr. Spungin and his spouse will receive coverage under United's present
medical plan for their lives, subject to a $1,000,000 lifetime maximum payment
limit in the aggregate for each of them. United is not permitted to terminate
such coverage without also terminating United's medical plan. If Mr. Spungin or
his spouse lose their medical coverage on account of a termination of United's
medical plan or United's failure to provide such medical coverage, (i) United
will pay premiums not to exceed, in the aggregate, $242,701 (such amount shall
not be applied against the $1,000,000 per person lifetime maximum) for
individual insurance coverage until Mr. Spungin and his spouse become eligible
for Medicare, (ii) United will pay premiums for Medicare supplemental policies
for the remainder of their lives (such amount shall not be applied against the
$1,000,000 per person lifetime maximum) and (iii) at any time Mr. Spungin and
his spouse are not reimbursed for medical expenses under such individual
insurance policies, United will pay or reimburse such medical expenses incurred
by Mr. Spungin and his spouse up to a $1,000,000 lifetime maximum payment for
each of them. If United fails to obtain an individual insurance policy within
30 days after termination of United's medical plan, it shall then pay Mr.
Spungin the sum of $242,701 in addition to expenses which may be paid under his
$1,000,000 million lifetime maximum benefit referred to in clause (iii) above.
United's obligation to provide such medical payments may be satisfied by
payments made under the Benefits Trust Agreement.

A failure by Mr. Spungin to render services to United or his disability shall
not cause a forfeiture of his entitlement to any amount or benefit under his
employment agreement. Upon Mr. Spungin's death, his spouse shall receive the
remainder of the salary and consulting payments due.

If United breaches any of its obligations to Mr. Spungin, he may resign and
remain entitled to the amounts under his employment agreement. Further, if
United fails to make any payment to which Mr.

76
<PAGE>

Spungin is entitled when due, all the unpaid consulting payments and fringe
benefits shall become payable immediately. Substantially all of United's
obligations are secured by the Benefits Trust Agreement.

Hewson Employment Contract. Mr. Hewson resigned as President and Chief
Executive Officer of United and the Company on May 31, 1995. Effective as of
the consummation of the Offer, United amended the employment agreement with Mr.
Hewson to, among other matters, reduce his term of employment to not more than
one year, eliminate his consulting term and provide for additional bonuses. In
recognition of Mr. Hewson's efforts prior to the consummation of the Offer and
his expected responsibilities following the consummation of the Offer, United
agreed to make a single payment of $875,000 to Mr. Hewson on September 26, 1995
(180 days after the consummation of the Offer). On the expiration of Mr.
Hewson's term of employment, he became entitled to receive an aggregate amount
equal to $1,575,000, which, except in limited circumstances, will commence with
an initial payment of $650,370 and the remainder payable monthly in equal
installments of $26,418.

Mr. Hewson and his spouse (and their eligible dependent children) became
entitled, upon the termination of Mr. Hewson's employment, to post-employment
medical coverage under United's medical plan until he reaches age 65 and his
spouse will also continue to be covered until she reaches age 65, subject to a
$1,000,000 maximum benefit payment limit, in the aggregate. United is not
permitted to terminate such coverage without also terminating United's medical
plan. If such plan is terminated, Mr. Hewson will be entitled to receive until
age 65 (but for not more than 18 months) (i) monthly payments equal to the
conversion premium under such plan and (ii) reimbursements for medical expenses
not covered by any insurance policy up to an aggregate of $300,000 for Mr.
Hewson and his eligible dependents, subject to an aggregate limit of $700,000
for all officers referred to as "contract officers" under the medical plan.

Other Executive Employment Contracts. Prior to the execution and delivery of
the Merger Agreement, employment and consulting agreements were also entered
into with Ronald W. Weissman, Allen B. Kravis, Steven R. Schwarz, Robert H.
Cornell, Otis H. Halleen, Jerold A. Hecktman and Ted S. Rzeszuto. The
agreements generally provide for annual compensation of not less than the
officer's salary at the time the employment agreement was made, plus
participation in all bonus, stock option and other benefit plans generally
available to executive officers of United. The existing employment agreements
with Messrs. Schwarz, Cornell, Halleen, Hecktman and Rzeszuto were amended or
restated, effective as of the consummation of the Offer to, among other
matters, reduce the term for which United is obligated to employ these officers
and to encourage these officers not to voluntarily resign during the
transitional period following the consummation of the Offer. Existing letters
describing Ergin Uskup's terms of employment have been substituted by a new
employment agreement which is intended to encourage Mr. Uskup not to
voluntarily resign for the one-year period following the consummation of the
Offer.

Each amendment provides that the term of employment shall be limited to one
year following the consummation of the Offer unless, within 30 days after the
consummation of the Offer, United notifies the officer of an earlier date of
termination. Further, each amendment eliminates the four-year consulting term
previously included in the employment agreements. Upon completion of the term
of employment, each officer (other than Mr. Uskup) shall be entitled to a bonus
equal to two times his highest annual compensation (including salary,
retirement benefit accruals and incentive compensation) paid or accrued during
the preceding five years, except the officer shall not be entitled to such
bonus if he voluntarily resigns without good reason (as defined in the
employment agreement, as amended) or is terminated by United for breach of a
fiduciary duty to United. Upon completion of his term of employment, Mr. Uskup
shall be entitled to receive a bonus equal to his annual salary. The stay
bonuses

77
<PAGE>

are secured as an obligation of the trust under the Benefits Trust Agreement.
Jeffrey K. Hewson, Steven R. Schwarz, Robert H. Cornell, Otis H. Halleen, Ted
S. Rzeszuto, Jerold A. Hecktman and Ergin Uskup are entitled to receive stay
bonuses of $1,575,000, $678,227, $602,985, $589,210, $511,297, $492,050 and
$175,000, respectively. The aggregate amount of stay bonuses under all
amendments to the employment agreements is $5,520,066.

As to certain current and former officers, amendments preclude United from
eliminating their eligibility for retiree medical coverage under United's
medical plan so long as United maintains such plan. In the event such medical
plan is terminated, United shall provide each officer with a monthly amount
equivalent to the current monthly premium under United's group medical plan to
convert to an individual medical policy for a period not to exceed 18 months.
This transition medical coverage also applies to Melvin L. Hecktman, James A.
Pribel and certain former employees currently entitled to retiree medical
coverage. In addition, for not more than 18 months, the covered officers and
their eligible dependents would be entitled to reimbursement of medical
expenses which are not covered by such individual medical policy or other
medical insurance, up to an aggregate of $300,000 for each such officer and his
dependents, subject to an aggregate limit of $700,000 for all of the covered
officers and their dependents.

The amendments also update the employment agreements to reflect the salary
and employee benefits to which the officers are currently entitled. The
amendments also set forth a procedure for an officer to exercise his right to
resign for good reason (as defined in the employment agreement, as amended) or
for United to terminate his employment for a breach of his fiduciary duty.

Profit Sharing PluSavings Plan. United has a qualified Profit Sharing
PluSavings Plan (the "Profit Sharing Plan") in which all salaried employees and
certain hourly paid employees of United and its subsidiaries are eligible to
participate following completion of six consecutive months of employment. The
Profit Sharing Plan provides for annual contributions by United in an amount
determined by the Board of Directors of United. The Profit Sharing Plan
consists of a "Basic Contribution," "Excess Contribution" and "Matching
Contributions." The Basic Contribution is allocated based on the ratio of each
participant's earnings to the earnings of all participants for the year.
Allocations under the Excess Contribution are based upon participants' earnings
in excess of 85% of the Social Security Taxable Wage Base. The portion vested
under the Basic Contribution described above will be immediately fully vested
in the participant's account. The portion described under the Excess
Contribution vests 10% each year for the first four years and 20% per year
thereafter, until fully vested after seven years. Upon retirement, death or
disability, a participant or his beneficiary is entitled to the entire amount
of his account. A participant whose employment terminates for any reason other
than retirement, death or disability is entitled to only the vested portion of
his account. The plan also permits employees to have contributions made as
401(k) salary deferrals on their behalf and to make after-tax voluntary
contributions.

United did not make any contribution to the Profit Sharing Plan for the year
ended August 31, 1994 (except for the Matching Contributions described below).

The Profit Sharing Plan provides that United may match employee contributions
made as 401(k) salary deferrals. United is contributing $.25 for each $1.00 of
pre-tax employee contributions, on contributions up to 4% of eligible wages.
For the fiscal year ended August 31, 1994, United paid $494,347 in matching
contributions.

Pension Plans. United maintains a noncontributory pension plan covering
officers of United and the Company (the "Pension Plan"). Employees are eligible
to participate following the conclusion of twelve consecutive months of
employment and the attainment of age 21. The Pension Plan provides for annual
retirement benefits at age 65 equal to one percent of an employee's career-
average annual

78
<PAGE>

compensation (as reported to the Internal Revenue Service) multiplied by the
number of years of credited service up to a maximum of 40 years; however, an
employee's annual compensation for each year of service prior to September
1989, is deemed to be the compensation earned by such employee during the
twelve month period ending on August 31, 1989. An employee's pension rights
fully vest after five years of service. These benefits are in addition to
normal Social Security retirement benefits. Alternative benefit options of
early retirement, joint and survivor annuity, and disability are also
available. All such options are of actuarially equivalent value to the basic
pension. The normal retirement age under this plan is 65.

The following table sets forth the estimated annual benefits upon retirement
at age 65 under the Pension Plan to the five executive officers individually
named in United's Summary Compensation Table (calculated on the basis of
estimated years of service at retirement age and levels of compensation paid in
calendar year 1994, assuming 5.5% compounded annual increases):

<TABLE>
<CAPTION>
ESTIMATED
ANNUAL
PENSION AT
NAME OF PARTICIPANT RETIREMENT
------------------- ----------
<S> <C>
Joel D. Spungin................................................ $150,493
Jeffrey K. Hewson.............................................. 37,607
Ronald W. Weissman............................................. 65,071
Allen B. Kravis................................................ 43,813
Steven R. Schwarz.............................................. 85,042
</TABLE>

As of August 31, 1994, the credited years of service under the Pension Plan
for the five individuals named were as follows: Mr. Spungin, 36 years; Mr.
Hewson, 4 years; Mr. Weissman, 26 years; Mr. Kravis, 19 years and Mr. Schwarz,
17 years.

United's contributions to the Pension Plan are not allocated to the accounts
of the individual participants.

In connection with the Merger, the Pension Plan was amended to provide that
the actuarial factors employed by the plan may not be adjusted in a manner that
would reduce lump sum benefits payable under the Pension Plan.

United also maintains a number of retirement benefit plans for its employees
who are covered under collective bargaining agreements.

Supplemental Benefits Plan. The Board of Directors of United has adopted a
nonqualified unfunded program ("Supplemental Benefits Plan") to provide for the
payment to individuals of benefits which would otherwise be payable under
United's Pension Plan and Profit Sharing Plan but which may not be paid under
such plans due to limits imposed by Sections 401(a)(17) and 415 of the Internal
Revenue Code. In addition, the plan also provides that a participant in the
plan who has reached 40 years of service and age 65, but continues as an
employee (for example, under a consulting agreement) would be able to elect to
receive, upon retirement, the lump sum amount to which he or she would have
been entitled had retirement begun at age 65. As of September 1, 1994, Messrs.
Spungin, Hewson, Weissman, Kravis and Schwarz would be entitled to receive
potential annual pension payments, pursuant to the Supplemental Benefits Plan,
of approximately $93,089, $109,434, $4,303, $17,625 and $79,031 respectively,
commencing at normal retirement age.

Amendments to Medical Plan. United amended its medical plan shortly before
the execution of the Merger Agreement. United's medical plan was amended to
generally provide that: (i) the plan cannot be changed or terminated with
respect to certain designated officers or early retirees; and (ii) certain
designated officers (upon termination of employment) and early retirees and
their spouses can continue

79
<PAGE>

to participate in the medical plan until age 65 under the same general terms
and conditions applicable to active employees, subject to an aggregate maximum
benefit limit of $250,000 for each early retiree and $1,000,000 for certain
designated officers. The medical plan was also amended to provide that, in the
event of its termination, United will provide certain funds to designated
individuals for a specified period of time for the purpose of (i) obtaining
health insurance; and (ii) reimbursing such individuals for medical expenses in
the event of their uninsurability or catastrophic illness.

Compensation Committee Interlock and Insider Participation. Compensation
decisions for executive officers of United and the Company for the fiscal year
ending August 31, 1994 were made by the compensation committee of the Board of
Directors of United consisting of E. David Coolidge III (Chairman), Jack J.
Crocker, David R. Smith, Jack Twyman and, upon the retirement of Jack J.
Crocker in January 1994, Douglas K. Chapman. None of such persons was during
such fiscal year, or was formerly, an officer or employee of United or the
Company. Mr. Coolidge is the Managing Partner of William Blair & Company, which
from time to time has rendered investment banking and related services to
United, for which United has paid customary fees. After the Merger, the Company
does not expect to have a compensation committee or other committee of the
Board of Directors of United or the Company performing similar functions.
Decisions concerning compensation of executive officers are expected to be made
by the Board of Directors of the Company which will include Thomas W. Sturgess,
Daniel H. Bushell and Michael D. Rowsey, each of whom is an executive officer
of United and the Company.

EXECUTIVE COMPENSATION FOR ASSOCIATED

Cash Compensation. The following table sets forth all cash compensation paid
by ASI, as well as certain other compensation paid as accrued, during
Associated's last three fiscal years to the Chief Executive Officer and each of
the four most highly compensated officers of Associated in all capacities in
which they served at the end of Associated's fiscal year ended December 31,
1994.

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<PAGE>

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION(1)
------------------ ------ -------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Thomas W. Sturgess(2)... 1994 $ 0 $ 0 $ 0 $ 0
Chairman of the Board
and 1993 0 0 0 0
Chief Executive Officer 1992 0 0 0 0
Edward R. Simon, Jr.(3). 1994 171,358 0 --(4) 1,750
Former Chairman of the
Board 1993 291,684 0 100,744(5) 4,290
and Chief Executive
Officer of ASI 1992 0 0 0 0
Michael D. Rowsey....... 1994 211,752 85,000 --(4) 3,220
President and Chief 1993 209,748 0 --(4) 4,447
Operating Officer 1992 186,758 15,000 51,310(5) 2,537
Daniel J. Schleppe...... 1994 184,848 36,969 --(4) 2,812
Vice President 1993 183,318 0 0 3,883
1992 163,834 7,500 0 2,221
Daniel H. Bushell....... 1994 181,728 80,000 --(4) 2,764
Chief Administrative
Officer and 1993 179,730 0 0 3,803
Chief Financial Officer 1992 155,848 15,000 --(4) 2,156
Robert W. Eberspacher... 1994 169,074 42,585 21,997(6) 2,572
Vice President 1993 163,668 0 0 3,460
1992 145,608 9,000 55,038(5) 1,967
</TABLE>
--------
(1) Reflects (a) term life insurance premiums paid by Associated on behalf of
such individuals and (b) amounts contributed on behalf of such individuals
to the Associated Profit Sharing and Savings Plan.
(2) Mr. Sturgess was elected Chairman of the Board and Chief Executive Officer
of Associated effective January 1992. Although Mr. Sturgess did not receive
a salary for his services to Associated, he serves as a general partner of
various Wingate entities including the indirect general partner of Wingate
Partners. Wingate Partners earned annual management fees from Associated of
$350,000, $210,000 and $320,833 with respect to fiscal years 1994, 1993 and
1992, respectively, for providing management services to Associated
pursuant to an Investment Banking Fee and Management Agreement described
below under "Certain Transactions -- Management Agreements." None of the
compensation received by Mr. Sturgess from Wingate Partners is specifically
allocated based upon services provided by him to Associated.
(3) Mr. Simon resigned as Chairman of the Board and Chief Executive Officer of
ASI effective December 18, 1994.
(4) Amounts do not exceed the lesser of $50,000 or 10.0% of the individual's
salary and bonus for the indicated fiscal year.
(5) Amounts represent relocation expenses paid by Associated on behalf of such
executives.
(6) Includes $1,997 and $20,000 paid by Associated as reimbursement for spousal
travel expenses and club membership dues, respectively, on behalf of Mr.
Eberspacher.

Employment Agreements. Prior to the consummation of the Merger, Associated
entered into employment agreements with the following former executive officers
of Associated pursuant to which such executives have agreed to serve in the
capacities and for the salaries listed below. Such employment agreements are
now obligations of United.

81
<PAGE>

<TABLE>
<CAPTION>
EMPLOYEE POSITION SALARY
-------- ------------------------------------------ --------
<C> <S> <C>
Michael D. Rowsey....... President and Chief Operating Officer of
Associated and ASI $200,000
Daniel J. Schleppe...... Executive Vice President of Associated and
ASI 175,000
Daniel H. Bushell....... Chief Administrative and Chief Financial
Officer of Associated and ASI 170,000
Robert W. Eberspacher... Vice President, Northern Operations of ASI 155,000
Duane J. Ratay.......... Vice President, Corporate Operations of
ASI 125,112
Lawrence E. Miller...... Vice President of Marketing of ASI 125,000
</TABLE>

Such salaries are subject to increase at the discretion of the Board of
Directors of United. In addition, the agreements provide for payment of an
annual bonus to such executives, based on the performance of United and such
executive's performance, in such amount, if any, as determined in good faith by
the Board of Directors of United. The agreements were initially scheduled to
terminate on January 31, 1995, but by their terms have been extended on a year
to year basis until terminated in writing by either party at least sixty (60)
days prior to the end of such term. If, prior to expiration, such employee's
employment is terminated by United other than for cause, such executive will be
entitled to a continuation of base salary and benefits for one year after
termination.

Stock Option Plan. Associated adopted the Associated Holdings, Inc. 1992
Management Stock Option Plan (the "Management Stock Option Plan") pursuant to
which incentive and non-qualified stock options could be issued to certain of
its officers, key employees and directors. A total of 86,735 shares of
Associated Common Stock was reserved for issuance under the Management Stock
Option Plan. In connection with the Merger, United assumed all of the
obligations of Associated under the Management Stock Option Plan, with an
aggregate of 202,962 Shares being authorized for issuance under the plan.

The Management Stock Option Plan, as amended, is administered by the Board of
Directors of United, although the plan provides that the Board of Directors of
United may designate an option committee to administer the plan. Options
outstanding under the Management Stock Option Plan as of the Merger Date became
exercisable for a number of Shares equal to the number of such Shares that
would have been received in respect of such option if it had been exercised
immediately prior to the Effective Time. See "The Acquisition."

Under the Management Stock Option Plan, certain executive officers, key
employees and directors are eligible to receive incentive and non-qualified
options to purchase shares of Associated Common Stock. Subject to restrictions
contained in the Management Stock Option Plan, stock options are exercisable at
such time and on such terms as the Board of Directors of Associated determined.
The exercise price of any option granted pursuant to the Management Stock
Option Plan is not permitted to be less than the fair market value per Share on
the date of grant, as determined by the board of directors of United. Subject
to certain additional limitations, no option by its terms was permitted to be
exercisable after the expiration of ten years from the date of grant, or such
other period (in the case of non-qualified options) or such shorter period (in
the case of incentive options) as the Board of Directors of United in its sole
discretion may determine. Stock options are not transferable, except by legal
will and by the laws of descent and distribution.

An optionee under the Management Stock Option Plan must pay the full option
price upon exercise of an option (i) in cash, (ii) with the consent of the
Board of Directors of United, by delivering Shares already owned by such
optionee (including Shares to be received upon exercise of the option) and
having a fair market value at least equal to the exercise price or (iii) in any
combination of the foregoing. United may require the optionee to satisfy
federal tax withholding obligations with respect to the exercise of options by
(i) additional withholding from the employee's salary, (ii) requiring the
optionee to pay in cash or (iii) reducing the number of Shares to be issued
(except in the case of incentive options).

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<PAGE>

As of the date of this Prospectus, options to purchase an aggregate of
105,047 Shares subject to the terms and conditions of the Management Stock
Option Plan are outstanding. In addition, in accordance with the terms of
Executive Stock Purchase Agreements ("Executive Purchase Agreements") pursuant
to which Messrs. Rowsey, Schleppe, Eberspacher and L. Miller purchased shares
of Associated Common Stock and Associated Class A Preferred Stock and which
United assumed in the Merger, United is obligated to issue options exercisable
for an aggregate of 72,248 Shares to such executives by January 31, 1996 so
long as such executives continue to be employed by the Company at the time of
issuance. Accordingly, United has reserved an additional 72,248 Shares for
issuance upon exercise of options to be granted in accordance with the
Executive Purchase Agreements. The outstanding options have an exercise price
of $2.90 per Share and vest in four equal annual installments beginning on the
first anniversary of the date of grant. Of the options granted under the
Management Stock Option Plan, options representing an aggregate of 77,306
Shares have been granted to the named executive officers of Associated, as
follows:

<TABLE>
<CAPTION>
EMPLOYEE
STOCK
OPTIONS
(NUMBER
OF
NAME SHARES)
--------------------------------------------------------------- --------
<S> <C>
Michael D. Rowsey.............................................. 22,254
Daniel J. Schleppe............................................. 18,928
Daniel H. Bushell.............................................. 18,928(1)
Robert W. Eberspacher.......................................... 17,196
</TABLE>
--------
(1) Does not include the additional option approved by the Board of Directors
of Associated described below.

The above options were granted effective January 31, 1992. The number of
Shares subject to such options are subject to reduction to the extent Wingate
Partners and its affiliates do not achieve certain internal rates of return on
their investment in United and, unless certain internal rates of return to
Wingate Partners and its affiliates are met, such options automatically
terminate (and any Shares previously acquired on exercise of such options are
deemed canceled). Such options terminate in any event on January 31, 1999.

Prior to the consummation of the Offer, the Board of Directors of Associated
approved (i) the grant of an additional option exercisable for an aggregate of
18,928 Shares at an exercise price of $2.90 per Share to Mr. Bushell and (ii)
the establishment of a bonus pool consisting of an aggregate of up to $150,000
which was awarded to Messrs. Rowsey and Bushell in connection with the
consummation of the Offer.

Compensation Committee Interlocks and Insider Participation. During
Associated's fiscal year ended December 31, 1994, Associated had no
Compensation Committee or other committee of the Board of Directors performing
similar functions. Decisions concerning compensation of executive officers were
made during such fiscal year by the Board of Directors of Associated, which
included Thomas W. Sturgess and Michael D. Rowsey, each of whom was an
executive officer of Associated.

CERTAIN TRANSACTIONS

CERTAIN AGREEMENTS REGARDING THE SHARES

In connection with the Boise Transaction in 1991, Messrs. Rowsey, Schleppe,
Eberspacher and L. Miller purchased shares of Associated Common Stock pursuant
to the Executive Purchase Agreements, which agreements, as now in effect after
the Merger, (i) require, under certain circumstances, that United issue options
exercisable for an aggregate of 72,248 Shares by January 31, 1996 to such
executives (see "Management -- Executive Compensation for Associated -- 1992
Stock

83
<PAGE>

Option Plan"), (ii) allow each executive to cause United to repurchase (subject
to cash availability and lending restrictions) such executive's Shares in the
event of such executive's death, retirement or disability at the fair market
value thereof at the time of repurchase and (iii) enable United to repurchase
an executive's Shares upon such executive's death, retirement, disability or
termination of employment at the net book value thereof at the date of such
termination.

Associated, Wingate Partners, Cumberland, ASI Partners, L.P., Good Capital,
Boise Cascade Corporation ("Boise Cascade") and certain other holders of
Associated Common Stock (including Messrs. Rowsey, Schleppe, Eberspacher and L.
Miller) entered into the Associated Holdings, Inc. Stockholders Agreement,
dated as of January 31, 1992 (the "Stockholders Agreement"), which was
terminated as of the date of the Merger. The Stockholders Agreement provided
for, among other things, certain restrictions on transfer of Shares held by the
parties to the agreement and preemptive rights with respect to certain
issuances by United of Shares. Pursuant to the Stockholders Agreement, parties
thereto purchased Associated Common Stock offered in connection with the Offer.
See "Financing the Acquisition -- Equity Investment."

Also in connection with the Boise Transaction, Associated, on January 31,
1992, entered into a registration rights agreement (the "Stockholders
Registration Rights Agreement") with Wingate Partners, Cumberland, ASI
Partners, L.P., Good Capital, Boise and certain other holders of Associated
Common Stock (including Messrs. Rowsey, Schleppe, Eberspacher and L. Miller)
pursuant to which it granted to such stockholders certain rights with respect
to registration under the Securities Act of shares of Associated Common Stock
held by them. United assumed the obligation of Associated under the Stockholder
Registration Rights Agreement by operation of law in connection with the Merger
and such agreement has been amended accordingly. Under the amended agreement, a
holder of 20.0% of the Shares subject to the agreement can, in certain
circumstances, require United to effect up to three registrations of all or
part of such holder's Shares. United is not required to honor any request to
register Shares if the request is received either prior to March 30, 1996 or
less than 300 days following the effective date of any previous registration
statement filed in connection with any such request. Upon receipt of a written
request to register a holder's Shares, United must send notice to the other
holders subject to the agreement and permit them to also request to have their
respective Shares registered under the Securities Act. Registrations effected
at the request of the holders will be at the expense of United (excluding
underwriting discounts and commissions).

Prior to the Merger, substantially all shares of Associated Common Stock were
held in the Voting Trust pursuant to the Voting Trust Agreement. As of the
Effective Time, the Voting Trust Agreement was amended to govern Shares held by
the parties thereto in substantially the same manner as such agreement
previously governed shares of Associated Common Stock. The trustees of the
Voting Trust are Thomas W. Sturgess, Frederick B. Hegi, Jr., James A. Johnson,
Daniel J. Good and Gary G. Miller. The trustees of the Voting Trust hold all
voting power to vote the Shares held in the Voting Trust and may act by a
majority vote of the trustees. The trustees agree to vote all of the Shares
held in trust to elect a board of directors of United with (i) a least one
representative designated by Good Capital, (ii) at least one representative
designated by ASI Partners, L.P., the sole general partner of which is
Cumberland (iii) at least one representative designated by certain former key
executives (consisting of Messrs. Rowsey, Eberspacher, Schleppe and L. Miller)
of Associated and (iv) such number of directors that will represent a majority
of the total number of directors designated by Wingate Partners. The Voting
Trust terminates on January 31, 2005 or upon the consummation of an
underwritten public offering of the Shares which meets certain criteria
specified in the Voting Trust Agreement. The Voting Trust Agreement does not
apply to the election of directors of the Company. Officers of United and the
Company are elected by their respective boards of directors and hold office
until their respective successors are duly elected and qualified.

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<PAGE>

BOISE WARRANTS

In connection with the Boise Transaction, Associated entered into a warrant
agreement with Boise Cascade pursuant to which it issued to Boise Cascade
warrants (the "Boise Warrants") entitling the holder thereof to acquire an
aggregate of 23,129 shares of Associated Common Stock for an exercise price of
$1.00 per share. Associated amended the Boise Warrants prior to the Merger Date
to apply to the Shares in the same manner as they formerly applied to
Associated Common Stock. Accordingly, the holder thereof is presently entitled
to acquire an aggregate of 77,104 Shares for an exercise price of $0.29 per
Share. On July 28, 1995, Wingate Partners, Wingate II, Wingate Affiliates,
L.P., Wingate Affiliates II, L.P., and certain affiliates of Cumberland and
Daniel J. Good purchased from Boise Cascade all of the outstanding Boise
Warrants for an aggregate purchase price of approximately $1.2 million. See "--
Repurchase of Series B Preferred Stock." The following is a summary of the
material terms of the Boise Warrants:

The Boise Warrants contain customary antidilution provisions and are
exercisable through January 31, 2002. In addition, United is entitled to
repurchase the Boise Warrants at any time after the repurchase or redemption of
all outstanding shares of Series B Preferred Stock at an aggregate purchase
price which would provide Boise Cascade with a yield from issue of at least 15%
on its investment in the Series B Preferred Stock (including the related
preferred stock of Associated prior to the Merger), giving effect to dividends
received by Boise Cascade.

The Boise Warrants provide the holders with certain "tag along rights" which
entitle such holders to participate, on a pro rata basis, in certain sales of
Shares by Wingate Partners, Cumberland, Good Capital or any other controlling
stockholder of United. Pursuant to the Boise Warrants, Wingate Partners has
been granted certain "go along rights" which are triggered (subject to certain
exceptions) in the event (i) Wingate Partners sells 100% of its equity interest
in United in a private offering, (ii) all or substantially all of the assets of
United are sold and the proceeds of such sale are distributed to the
stockholders of United or (iii) United participates in a merger or
consolidation. In the event Wingate Partners exercises its "go along rights" in
connection with the occurrence of one of the events described above, each
holder of Boise Warrants would become obligated to sell all Boise Warrants and
Shares held by such holders in the applicable transaction and to vote all
Shares in favor of such transaction.

The holders of the Boise Warrants are entitled, pursuant to the terms of the
Boise Warrants, to preemptive rights with respect to certain issuances of
Shares by United. The Boise Warrants also contain certain covenants and
agreements with respect to, among other things, (i) transactions with
affiliates (other than certain specified transactions with Wingate Partners,
Cumberland and Good Capital), (ii) certain mergers, reorganizations,
recapitalization and other events with respect to the Shares, (iii) the
repurchase or redemption of Shares, (iv) changes of the fiscal year of United,
(v) the taking of actions that would cause United or any subsidiary of United
to own less than 80% of any subsidiary of United, (vi) delivery of financial
statements of United, (vii) board observation rights for meetings of the Boards
of Directors of United and its subsidiaries and (viii) indemnification.
Associated obtained the consent of Boise Cascade to the consummation of the
Offer, the Merger and the transactions contemplated thereby. In connection with
the issuance of the Boise Warrants, Associated entered into the Stockholder
Registration Rights Agreement with the holders of the Boise Warrants among
others.

LENDER WARRANTS

In connection with the Boise Transaction, Associated entered into a warrant
agreement with CMIHI (as amended and in effect from time to time, the "Lender
Warrant Agreement") pursuant to which it issued to CMIHI and certain of
Associated's senior lenders warrants (the "Lender Warrants") entitling the
holders thereof to acquire an aggregate of 150,340 shares of Associated Common
Stock (or, at

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such holder's option, nonvoting common stock of Associated) for an exercise
price of $0.01 per share. The Lender Warrants were issued in two tranches
representing an aggregate of 34,694 shares of Associated Common Stock (the
"Tranche A Warrants") and 115,646 shares of Associated Common Stock (the
"Tranche B Warrants"), respectively.

In connection with the purchase by Associated of Lynn-Edwards in 1992, the
Tranche B Warrant holders received additional Tranche B Warrants exercisable
for an additional 39,878 shares of Associated Common Stock. In addition, an
antidilution adjustment mechanism in the Lender Warrant Agreement caused the
holders of the Tranche A and Tranche B Warrants to be entitled to purchase an
additional 2,017 and 9,040 shares of Associated Common Stock, respectively, on
a pro rata basis as an adjustment relating to the issuance of shares of
Associated Common Stock to Boise.

The Tranche A and Tranche B Warrants were assumed by United upon consummation
of the Merger and now allow the holders thereof to acquire an aggregate of
122,316 and 549,644 Shares (or, at such holder's option, shares of Nonvoting
Common Stock), respectively, at an exercise price of $0.0029 per share;
provided, however, that the exercise price shall never be less than par value
of the Shares or Nonvoting Common Stock, as applicable. Prior to the Merger,
Wingate Partners, Wingate II, Wingate Affiliates, L.P., Wingate Affiliates II,
L.P. and Daniel J. Good purchased from one of Associated's former senior
lenders Tranche B Warrants exercisable for an aggregate of 238,795 Shares for
an aggregate of approximately $1.7 million.

The following is a summary of the material terms of the Lender Warrants:

The Lender Warrants contain customary antidilution provisions and are
exercisable through January 31, 2001. In addition, United is entitled to
repurchase the Lender Warrants at any time after January 31, 1999 at the
greater of the then fair market value of the Shares (less the applicable
exercise price for the Lender Warrants) or the Equity Value (which is defined
generally as (i) five times United's and its consolidated subsidiaries'
earnings before interest, taxes and depreciation and amortization minus (ii)
non-convertible debt of United and its consolidated subsidiaries minus (iii)
preferred stock of United plus (iv) cash and cash equivalents). In the event
United repurchases Lender Warrants or Shares pursuant to the call option
granted under the Lender Warrants and, within twelve months after the date of
such repurchase, United, any subsidiary of United, or Wingate Partners,
Cumberland or Good Capital or their subsidiaries, or affiliates (but excluding
any limited partners of Wingate Partners as such) or associates has entered
into any contract relating to a merger of United or sale of all or
substantially all of the assets of United or any subsidiary of United (a "Look
Back Event"), then United is required to make a payment to each holder whose
Lender Warrants or Shares were repurchased in an amount generally equal to (i)
the excess of the fair market value of the consideration received by United,
the subsidiaries and the stockholders of United (on a per share basis) in
connection with the Look Back Event over (ii) the sum of (a) the amount paid to
such holder pursuant to the exercise by United of its call option plus (b)
imputed interest on such amount through the date of repurchase at the base rate
under United's existing senior credit agreement.

The Lender Warrants also contain certain put rights which require United to
repurchase such Lender Warrants upon the earlier of January 31, 1997 or the
occurrence of certain extraordinary corporate events. The purchase price
payable by United or the Company upon the exercise of the put rights is the
greater of the then fair market value of the Shares (less the applicable
exercise price of the Lender Warrants) or the Equity Value. Because Associated
refinanced all of its existing indebtedness in connection with the Acquisition
(including its indebtedness under old Associated Term Loans), the Lender
Warrants were amended to provide that no put rights may be exercised thereunder
until February 10, 1996.

The Lender Warrants provide the holders with certain "tag along rights" which
entitle such holders to participate, on a pro rata basis, in certain sales of
Shares by Wingate Partners, Cumberland, Boise

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<PAGE>

Cascade, Good Capital or any of their subsidiaries, affiliates (but excluding
any limited partners of Wingate as such) or associates. Pursuant to the Lender
Warrants, Wingate Partners has been granted certain "go along rights" which are
triggered (subject to certain exceptions) in the event (i) Wingate Partners
sells 100% of its equity interest in United in a private offering, (ii) all or
substantially all of the assets of United are sold and the proceeds of such
sale are distributed to the stockholders of United or (iii) United participates
in a merger or consolidation. In the event Wingate Partners exercises its "go
along rights" in connection with the occurrence of one of the events described
above, each holder of Lender Warrants would become obligated to sell all Lender
Warrants and Shares held by such holders in the applicable transaction and to
vote all Shares in favor of such transaction.

The Lender Warrants contain a mechanism whereby after the Lender Warrants (or
a portion thereof) have been sold pursuant to the put rights, tag along rights,
or go along rights under the Lender Warrants (provided that such events have
occurred prior to January 31, 1999), each holder of Tranche B Warrants is
required to refund to United a portion of the aggregate amount earned by such
holder on its Tranche B Warrant investment (the "Refunded Amount"). The
Refunded Amount is only required to be paid in the event the amount earned by
all holders of the Tranche B Warrants exceeds $6,500,000 and such holders
received an internal rate of return on their investment represented by the
Tranche B portion of the Old Associated Term Loans of at least 25%. The
Refunded Amount ranges from 10.0% of amounts earned on the Tranche B Warrants
to 40% of such amounts, depending upon the amount by which the aggregate amount
earned by all holders of the Tranche B Warrants exceeds $6,500,000 and the
internal rate of return received by such holders on their investment
represented by the Tranche B portion of the Old Associated Term Loans exceeds
25%.

Pursuant to the terms of the Lender Warrants, if, at any time, United does
not have securities registered under Section 12(b) or 12(g) of the Exchange Act
and is not required to file reports under Section 15(d) of the Exchange Act,
the holders of the Lender Warrants will be entitled to preemptive rights with
respect to certain issuances of Shares by United and to board observation
rights for meetings of the boards of directors of United and its subsidiaries.
The Lender Warrants also contain certain covenants and agreements with respect
to, among other things, (i) transactions with affiliates (other than the
payment of a limited amount of management fees to Wingate Partners, Cumberland
and Good Capital), (ii) certain mergers, reorganizations, recapitalization and
other events with respect to the Shares, (iii) the redemption of Shares, (iv)
changes of the fiscal year of United, (v) the taking of actions that would
cause United or any subsidiary of United to own less than 80% of any subsidiary
of United, except that United and each subsidiary of United may own a
percentage of the stock of any such subsidiary not lower than the percentage
owned at the effective time of the Merger, (vi) delivery of financial
statements of United, and (vii) indemnification.

In connection with the issuance of the Lender Warrants, Associated, on
January 31, 1992, entered into a registration rights agreement (the "Lender
Registration Rights Agreement") with the holders of the Lender Warrants
pursuant to which it granted to such holders certain rights with respect to
registration under the Securities Act of shares of Associated Common Stock
issuable to them upon exercise of the Lender Warrants. United assumed the
obligations of Associated under the Lender Registration Rights Agreement by
operation of law in connection with the Merger and such agreement has been
amended accordingly. Pursuant to the amended agreement, United agreed to use
its best efforts to effect a "shelf" registration of all Shares issuable or
issued upon exercise of the Lender Warrants and subject to the agreement as
promptly as practicable following the sixtieth day after the Merger. In
addition, the holders of a majority of the Shares issuable or issued upon
exercise of the Lender Warrants and subject to the agreement will be able to
require United, after consummation of a public offering of Shares meeting
certain specified criteria, and after satisfaction of certain other conditions,
to effect up to five registrations of all or part of the Shares held by them.
United is not required to honor any request to register Shares if the request
is received less than 300 days following the effective date of any previous
registration statement filed in connection with any such request. Upon

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receipt of a written request to register a holder's Shares, United must send
notice to the other holders subject to the agreement and permit them to also
request to have their respective Shares registered under the Securities Act.
Registrations effected at the request of the holders will be at the expense of
United (excluding underwriting discounts and commissions).

MANAGEMENT AGREEMENTS

Pursuant to an Investment Banking Fee and Management Agreement dated as of
January 31, 1992 among Associated, ASI and Wingate Partners, Wingate Partners
provided certain financial advisory services to Associated and ASI in
connection with the Boise Transaction, in exchange for a one-time fee of
$500,000 (which was paid in January 1992 upon the consummation of the Boise
Transaction). United assumed the obligation of Associated under such agreement
by operation of law in connection with the Merger and such agreement has been
amended accordingly. Pursuant to the amended agreement Wingate Partners has
agreed to provide certain oversight and monitoring services to United and the
Company and their subsidiaries, in exchange for an annual fee of up to
$725,000, payment (but not accrual) of which is subject to restrictions under
the New Credit Agreement related to certain United performance criteria. At the
Effective Time, United paid aggregate fees to Wingate Partners of $2.3 million
for services rendered in connection with the Acquisition. Pursuant to the
$350,000 annual fee limit previously in effect under such agreement, Wingate
Partners earned an aggregate of $350,000, $210,000 and $320,833 with respect to
each of Associated's fiscal years ended 1994, 1993 and 1992, respectively, for
such oversight and monitoring services. Under the amended agreement, United is
obligated to reimburse Wingate Partners for its out-of-pocket expenses and
indemnify Wingate Partners and its affiliates from loss in connection with
these services. The agreement expires on January 31, 2002, provided that the
agreement continues in effect on a year to year basis thereafter unless
terminated in writing by one of the parties at least 180 days before the
expiration of the primary term or any subsequent yearly term.

Pursuant to an Investment Banking Fee and Management Agreement dated as of
January 31, 1992 among Associated, ASI and Cumberland, Cumberland provided
certain financial advisory services to Associated and ASI in connection with
the Boise Transaction, in exchange for a one-time fee of $500,000 (which was
paid in January 1992 upon consummation of the Boise Transaction). United
assumed the obligation of Associated under such agreement by operation of law
in connection with the Merger and such agreement has been amended accordingly.
Pursuant to the amended agreement, Cumberland has agreed to provide certain
oversight and monitoring services to United and the Company and their
subsidiaries, in exchange for (i) an annual fee of up to $137,500, payment (but
not accrual) of which is subject to restrictions under the New Credit Agreement
related to certain United performance criteria and (ii) previously issued
shares of Associated Common Stock that converted in the Merger into 77,063
Shares. Subject to certain exceptions, the issuance of such Shares is subject
to rescission if the agreement is terminated before January 31, 2002. At the
Effective Time, United paid aggregate fees to Cumberland of $100,000 for
services rendered in connection with the Acquisition. Pursuant to the $75,000
annual fee limit previously in effect under such agreement, Cumberland earned
$75,000, $45,000 and $68,750 with respect to each of Associated's fiscal years
ended 1994, 1993 and 1992, respectively, for such oversight and monitoring
services. United is also obligated to reimburse Cumberland for its out-of-
pocket expenses and indemnify Cumberland and its affiliates from loss in
connection with these services. The agreement expires on January 31, 2002,
provided that the agreement continues in effect on a year to year basis
thereafter unless terminated in writing by one of the parties at least 180 days
before the expiration of the primary term or any subsequent yearly term.

Pursuant to an Investment Banking Fee and Management Agreement dated as of
January 31, 1992 among Associated, ASI and Good Capital, Good Capital provided
financial advisory services to Associated and ASI in connection with the Boise
Transaction in exchange for 31,480 shares of Associated Common Stock and 185
shares of Associated class A preferred stock. United assumed the

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obligations of Associated under such agreement by operation of law in
connection with the Merger and such agreement has been amended accordingly.
Pursuant to the amended agreement, Good Capital has agreed to provide certain
oversight and monitoring services to United and the Company and their
subsidiaries, in exchange for (i) an annual fee of up to $137,500, payment (but
not accrual) of which is subject to restrictions under the New Credit Agreement
related to certain United performance criteria and (ii) previously issued
shares of Associated Common Stock that converted in the Merger into 77,063
Shares. Subject to certain exceptions, the issuance of such Shares are subject
to rescission if the agreement is terminated before January 31, 2002. At the
Effective Time, United paid aggregate fees to Good Capital of $100,000 for
services rendered in connection with the Acquisition. Pursuant to the $75,000
annual fee limit previously in effect under such agreement, Good Capital earned
an aggregate of $75,000, $45,000 and $68,750 in each of Associated's fiscal
years ended 1994, 1993 and 1992, respectively, of which Associated has paid
Good Capital $45,000, $45,000 and $68,750, respectively, for such oversight and
monitoring services. United is also obligated to reimburse Good Capital for its
out-of-pocket expenses and indemnify Good Capital and its affiliates from loss
in connection with these services. The agreement expires on January 31, 2002,
provided that the agreement continues in effect thereafter on a year to year
basis unless terminated in writing by one of the parties at least 180 days
before the expiration of the primary term or any subsequent yearly term.

CERTAIN INTERESTS OF CHASE BANK

Chase Bank has certain interests in the Acquisition and in the Company in
addition to its affiliate, Chase Securities which served as the Initial
Purchaser of the Old Notes and received a discount in the amount of $4.5
million.

Upon consummation of the sale of the Old Notes, CMIHI, an affiliate of Chase
Bank, beneficially owned 9.85% of the Shares outstanding as a result of its
ownership of (i) certain Lender Warrants received in connection with the Boise
Transaction that entitle CMIHI to purchase 237,748 Shares for $0.01 per Share,
(ii) 240,023 shares of Nonvoting Common Stock purchased or received in
connection with the Acquisition and (iii) 139,474 shares of Nonvoting Common
Stock issued to CMIHI upon consummation of the sale of the Old Notes. See
"Certain Transactions -- Lender Warrants" and "Financing the Acquisition --
Loan Facilities -- New Credit Facilities."

Chase Securities served as financial advisor to Associated in connection with
the Acquisition. Chase Bank is the agent and a lender under the New Credit
Facilities. In addition, in connection with the Offer, Chase Securities served
as dealer manager and Chase Bank served as depositary for tendered Shares. A
substantial portion of the net proceeds of the Old Notes were used to repay the
Bridge Loan and a portion of the remainder was used to prepay loans under the
Term Loan Facilities. See "Use of Proceeds." The lenders under the Bridge Loan
were Chase Bank, an affiliate of the Initial Purchaser, and The Roebling Fund,
a statutory business trust, of which Chase Bank serves as manager and is a
substantial beneficial owner. In all such capacities, Chase Bank and its
affiliates received or will receive an aggregate of approximately $23.3 million
in fees (although certain of such fees were shared with other members of the
lending groups) and had certain of their expenses reimbursed.

REPURCHASE OF SERIES B PREFERRED STOCK

On July 28, 1995, United consummated the repurchase (the "Repurchase") of all
of the outstanding shares of the Series B Preferred Stock, together with
accrued and unpaid dividends thereon, from Boise Cascade for an aggregate
purchase price of $7.0 million. In order to enable United to consummate the
Repurchase, the Company paid a dividend to United in the amount of $7.0
million, as permitted under the New Credit Facilities and the Indenture. In
addition, the Company also paid a dividend to United in an amount sufficient to
enable United to pay a cash dividend on the Series C Preferred Stock of
approximately $0.3 million in accordance with the terms of United's Restated
Certificate of Incorporation (as hereinafter defined) as a result of the
Repurchase.

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In connection with the Repurchase, Wingate Partners, Wingate II, Wingate
Affiliates, L.P., Wingate Affiliates II, L.P., and certain affiliates of
Cumberland and Daniel J. Good purchased from Boise Cascade an aggregate of
195,528 Shares and Boise Warrants exercisable for an aggregate of 77,104 Shares
for an aggregate purchase price of approximately $1.8 million and $1.2 million,
respectively.

MISCELLANEOUS

Melvin L. Hecktman, who resigned as vice chairman of United effective
September 1, 1993, had a consulting agreement with United by which Mr.
Hecktman, until February 28, 1995, received annual compensation of $275,000,
plus participation in all bonus and other benefit plans generally available to
executive officers of United. The amount of his consulting compensation was
subject to reduction by the amount of compensation he may receive from new
employment. Under the terms of the consulting agreement, Mr. Hecktman was to
render such advisory and consulting services as requested by United. Mr.
Hecktman was restricted from disclosing proprietary materials and confidential
information. In addition, Mr. Hecktman was restricted from being employed by or
consulting with any competing firm during the consulting period.

Mr. Coolidge, a director of the Company until consummation of the Merger, is
the Managing Partner of William Blair & Company, which from time to time has
rendered investment banking and related services to United, for which United
has paid customary fees (including a fee of approximately $2.0 million in
connection with investment banking services and a fairness opinion rendered in
connection with the Acquisition).

FINANCING THE ACQUISITION

GENERAL

The total amount of funds required by Associated to consummate the
Acquisition, redeem United stock options, refinance certain existing
indebtedness of the Company, United and ASI and pay related fees and expenses
was approximately $558.5 million. In connection with the Acquisition, aggregate
proceeds of approximately $416.5 million under the New Credit Facilities,
together with the $130.0 million in proceeds of the Bridge Loan under the
Subordinated Bridge Facility, were used to (i) to finance the purchase of
Shares pursuant to the Offer, (ii) refinance certain existing indebtedness of
ASI, United and the Company, (iv) repurchase United stock options and (v) pay
certain of the fees, expenses and financing costs relating to the Acquisition.
In addition, simultaneously with the consummation of the Offer, Associated
obtained $12.0 million from the sale of additional shares of Associated Common
Stock primarily to certain existing holders of Associated Common Stock or
warrants to purchase the same that was used to finance part of the purchase of
Shares pursuant to the Offer. See "Financing the Acquisition -- Equity
Investment." The aggregate proceeds under the New Credit Facilities consist of
$125.0 million under the Tranche A Facility (as hereinafter defined), $75.0
million under the Tranche B Facility (as hereinafter defined) and approximately
$216.5 million under the Revolving Credit Facility.

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The following table sets forth the approximate amounts and sources and uses
of funds that were necessary to consummate the Offer and the Merger:

<TABLE>
<CAPTION>
(DOLLARS
IN
THOUSANDS)
<S> <C>
Sources:
New Credit Facilities(1)........................................... $416,537
Subordinated Bridge Facility (2)................................... 130,000
Equity Investment.................................................. 12,000
--------
Total Sources.................................................. $558,537
========
Uses:
Purchase Shares.................................................... $266,629
Refinance Existing Company Debt.................................... 180,752
Refinance Existing ASI Debt........................................ 78,856
Estimated Fees and Expenses (3).................................... 29,300
Other (4).......................................................... 3,000
--------
Total Uses..................................................... $558,537
========
</TABLE>
--------
(1) Includes borrowings of approximately $206.8 million at the time of
consummation of the Acquisition and an additional approximately $9.7
million of additional revolving loan borrowings used to pay fees and
expenses after the Acquisition.

(2) Refinanced with a portion of the net proceeds of the Old Notes.
(3) Excludes approximately $2.6 million borrowed by the Company and $3.2
million borrowed by ASI prior to closing of the Offer to pay fees and
expenses in connection with consummation of the Acquisition. These amounts
are included under "Refinance Existing Company Debt" and "Refinance
Existing ASI Debt," respectively, above. Estimated Fees and Expenses
include the Initial Purchaser's discount.

(4) This amount was used to repurchase United stock options. This amount
excludes approximately $3.2 million borrowed by the Company prior to
closing of the Offer to discharge compensation and other liabilities in
connection with consummation of the Acquisition. This latter amount is
included under "Refinance Existing Company Debt" above.

LOAN FACILITIES

New Credit Facilities. Immediately prior to acceptance for payment of Shares
in the Offer, Associated and ASI entered into the New Credit Agreement with
Chase Bank, as agent, and a group of banks and financial institutions
(including Chase Bank, the "Senior Lenders"), providing for (a) a tranche A
term loan facility (the "Tranche A Facility") in an aggregate principal amount
of $125,000,000, (b) a tranche B term loan facility in an aggregate principal
amount of $75,000,000 (the "Tranche B Facility" and, together with the Tranche
A Facility, the "Term Loan Facilities") and (c) a revolving credit facility
(the "Revolving Credit Facility" and, together with the Term Loan Facilities,
the "New Credit Facilities") in an aggregate principal amount of up to
$300,000,000, including a $90,000,000 sublimit available for issuance of
letters of credit. Upon consummation of the Mergers, the obligations of
Associated and ASI in respect of the New Credit Agreement were assumed by
United and the Company, respectively.

The following is a summary of the principal terms of the New Credit
Agreement, which summary does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, all the provisions of the New
Credit Agreement, a copy of which is available upon request to the Company. See
"Available Information."

The loans outstanding under the Term Loan Facilities and the Revolving Credit
Facility bear interest, at the Company's option, equal to (i) the Base Rate (as
hereinafter defined) plus 2.25% (if the Tranche B Facility) or 1.75% (if either
the Tranche A Facility or the Revolving Credit Facility) or (ii)

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LIBOR (as defined), based on one, two, three or six month periods, provided
that until the date 90 days after the Merger Date, each interest period shall
be one month and shall be coterminous with other outstanding LIBOR loans, plus
3.25% (if the Tranche B Facility) or 2.75% (if the Tranche A Facility or the
Revolving Credit Facility), with the applicable margins for all but the Tranche
B Facility being subject to reductions based on a debt to cash flow ratio test.

Amounts outstanding under the Tranche A Facility are required to be repaid in
20 consecutive quarterly installments, the first four of which (each in the
aggregate principal amount of $3,750,000) will be due on the last day of each
of the first four calendar quarters commencing with the quarter ending June 30,
1995. Subsequent quarterly payments under the Tranche A Facility are each in
the aggregate principal amount of $6,250,000 for each of the eight consecutive
calendar quarters commencing with the quarter ending June 30, 1996 and
$7,500,000 for each of the eight consecutive calendar quarters commencing with
the quarter ending June 30, 1998. Amounts outstanding under the Tranche B
Facility will be repaid in 28 consecutive quarterly installments, the first
twenty of which (in the aggregate principal amount of $250,000 each) will be
due on the last day of each of the first twenty calendar quarters commencing
with the quarter ending June 30, 1995. The remaining eight installments in the
aggregate principal amount of $8,750,000 each will be due on the last day of
each calendar quarter commencing with the quarter ending June 30, 2000. The
final installments under the Tranche A Facility and the Tranche B Facility will
be payable on March 31, 2000 and March 31, 2002, respectively. The Revolving
Credit Facility will mature on March 31, 2000. A portion of the proceeds from
the Old Notes was used to prepay approximately $4.1 million (plus interest
accrued thereon) of amounts outstanding under the Tranche A Facility and
approximately $2.4 million (plus interest accrued thereon) of amounts
outstanding under the Tranche B Facility.

The Revolving Credit Facility is subject to (i) a borrowing base equal to 80%
of Eligible Receivables (as defined in the New Credit Agreement) plus 50% of
Eligible Inventory (as defined in the New Credit Agreement) (provided that no
more than 60% or, during certain periods 65%, of the Borrowing Base may be
attributable to Eligible Inventory) plus the aggregate amount of cover for
Letter of Credit Liabilities (as defined) and (ii) the requirement that, for
each fiscal year commencing January 1, 1996, the Company must repay revolving
loans so that for a consecutive period of 30 days in each fiscal year the
aggregate revolving loans do not exceed $200,000,000.

Loans under the Term Loan Facilities and the Revolving Credit Facility may be
prepaid at any time and are subject to certain mandatory prepayments out of (i)
net proceeds in excess of $15,000,000 received from the issuance of equity by
the Company or any of its subsidiaries after the Merger Date, (ii) net proceeds
from certain asset sales in excess of $10,000,000 and (iii) 50% of the
Company's Excess Cash Flow (as defined) if the Debt to Cash Flow Ratio (as
defined) as of the last day of the fiscal year is less than 3 to 1 and
otherwise 75% of the Company's Excess Cash Flow. Optional prepayments under the
Term Loan Facilities will be applied, pro rata to loans outstanding under the
Tranche A Facility and the Tranche B Facility (pro rata to the remaining
installments). Mandatory prepayments will be applied first, pro rata to loans
outstanding under the Tranche A Facility and the Tranche B Facility (pro rata
to the remaining installments), and second, to the permanent reduction of
commitments (and the payment of loans outstanding) under, the Revolving Credit
Facility.

The Term Loan Facilities and the Revolving Credit Facility are guaranteed, on
a joint and several basis, by United and will be guaranteed by all of the
direct and indirect domestic subsidiaries of the Company (if any).

The Term Loan Facilities and the Revolving Credit Facility are secured by
perfected first priority pledges of the stock of the Company, all of the stock
of the domestic direct and indirect subsidiaries of the Company and certain of
the stock of all of the foreign direct and indirect subsidiaries of the Company
and security interests in and liens upon all accounts receivable, inventory,
contract rights and other personal and real property of the Company and its
domestic subsidiaries.

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The New Credit Agreement contains representations and warranties, affirmative
and negative covenants and events of default customary for financings of the
type.

United and the Company are obligated under the New Credit Agreement to pay
the costs and expenses arising in connection with the preparation, execution,
and delivery of the New Credit Agreement and to indemnify the Senior Lenders
(and their respective officers, directors, employees and affiliates) against
certain liabilities in connection with the Acquisition and the New Credit
Facilities.

At the closing of the Offer, 40,471 shares of Associated nonvoting common
stock were issued to CMIHI (which shares converted into 139,474 shares of
Nonvoting Common Stock in the Merger). Upon consummation of the offering of the
Old Notes, 139,474 additional shares of Nonvoting Common Stock (representing an
additional 2% of the Shares on a fully diluted basis) were issued to CMIHI.

Subordinated Bridge Facility. Immediately prior to the acceptance for payment
of Shares in the Offer, Associated and ASI entered into the Subordinated Bridge
Facility with The Roebling Fund, as agent and lender, and Chase Bank, as
lender, providing for the Bridge Loan to ASI in an aggregate principal amount
of $130,000,000. Upon consummation of the Mergers, the obligations of
Associated and ASI in respect of the Subordinated Bridge Facility were assumed
by United and the Company, respectively. The Subordinated Bridge Facility
(together with approximately $1.6 million in accrued and unpaid interest
thereon) was refinanced in full from a portion of the proceeds of the sale of
the Old Notes. See "Use of Proceeds."

EQUITY INVESTMENT

Associated obtained $12,000,000 from the sale of additional shares of
Associated Common Stock prior to the consummation of the Offer to Wingate
Partners, Wingate II, certain affiliates thereof, CMIHI, Daniel J. Good, ASI
Partners, L.P., ASI Partners II, L.P. and others, which amount was used to
finance part of the purchase of Shares pursuant to the Offer.

FEES AND EXPENSES

An aggregate of approximately $35.1 million of fees and expenses was incurred
by Associated and United in connection with the Acquisition. Such amounts
include usual and customary fees and expenses for accounting, lending,
financial advisory, dealer-manager, legal, printing, appraisal, consulting and
related services, a substantial portion of which have been paid to Chase Bank
and its affiliates. See "Certain Transactions -- Certain Interests of Chase
Bank."

DESCRIPTION OF CAPITAL STOCK

CAPITAL STOCK OF UNITED

The authorized capital stock of United consists of 46,500,000 shares,
consisting of (a) 1,500,000 shares of a class designated as Preferred Stock,
$0.01 par value (the "Preferred Stock"), (b) 40,000,000 shares of a class
designated as Common Stock, par value $0.10 per share (the "Common Stock"), and
(c) 5,000,000 shares of a class designated as Nonvoting Common Stock, $0.01 par
value (the "Nonvoting Common Stock"). Of the authorized shares of capital
stock, 5,648,935 shares of Common Stock, 379,497 shares of Nonvoting Common
Stock and an aggregate of 15,338.8323 shares of Preferred Stock, consisting of
5,000 shares of Series A Preferred Stock, no shares of Series B Preferred
Stock, and 10,338.8323 shares of Series C Preferred Stock (the Series A, Series
B and Series C Preferred Stock being collectively referred to herein as the
"Merger Preferred Stock"), are outstanding as of the date of this Prospectus.
On July 28, 1995, the Company paid a dividend to United in an aggregate amount
of $7.0 million to repurchase all of the outstanding shares of Series B
Preferred Stock, plus all accrued and unpaid dividends thereon, from a portion
of the proceeds of the Old Notes. See "Certain Transactions --Repurchase of
Series B Preferred Stock."

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<PAGE>

The following is a summary of the terms of Merger Preferred Stock. Such
summary does not purport to be complete and is qualified in its entirety by
reference to United's restated certificate of incorporation, as amended (the
"Restated Certificate of Incorporation"), a copy of which is available upon
request to the Company. See "Available Information."

Dividends. The holders of Series A Preferred Stock are entitled to receive
dividends at a rate of 10% per annum applied to a dividend base per share of
$1,000 (the "Dividend Base") payable on April 30, July 31, October 31 and
January 31 (each a "Dividend Payment Date") of each year, subject as described
below under "Description of Capital Stock -- Capital Stock of United --
Dividend and Redemption Restrictions." If United fails to pay a dividend in
cash on any Dividend Payment Date or fails to make any redemption payment when
due, the dividend rate shall be retroactively increased to 13% per annum and
shall remain at such rate until the failure is cured.

The holders of Series B Preferred Stock and Series C Preferred Stock are
entitled to receive dividends at a rate of 9% per annum applied to the Dividend
Base, payable on each Dividend Payment Date, subject as described below under
"Description of Capital Stock -- Capital Stock of United --Dividend and
Redemption Restrictions." In the event United fails to pay a dividend in cash
on the Series B or Series C Preferred Stock on any Dividend Payment Date or
fails to make any redemption payment in respect of the Series B or Series C
Preferred Stock when due, the dividend rate thereon shall retroactively be
increased to 10% per annum and shall remain at such rate until such failure is
cured.

The dividends on the Merger Preferred Stock are cumulative and shall accrue,
whether or not declared or restricted by the terms of any loan agreements and
regardless of whether there are funds legally available for payment of the
dividends. In the discretion of the Board of Directors of United, the dividends
may be payable in cash or in additional shares of the same class of Merger
Preferred Stock. Dividends on the Series C Preferred Stock may be payable in
additional shares of Series C Preferred Stock only for Dividend Payment Dates
occurring on or prior to January 31, 1999.

If at any time United fails to pay any dividends on the Dividend Payment Date
or United fails to redeem the requisite number of shares of a series of Merger
Preferred Stock (the "Defaulted Series"), United shall not (a) declare or pay
any dividend on any Junior Shares (as defined below) or make any payment on
account of, or set apart money for, a sinking or other analogous fund, for the
purchase, redemption or other retirement of any Junior Shares or make any
distribution with respect thereto (other than in Junior Shares); (b) purchase
any shares of a Defaulted Series (except for a consideration payable in Junior
Shares) or redeem fewer than all of the shares of the Defaulted Series
outstanding; or (c) permit any subsidiary of United to purchase any Junior
Shares or permit any subsidiary to purchase fewer than all of the shares of the
Defaulted Series then outstanding, unless, at the time of such dividend,
payment, distribution, purchase or redemption, all accrued and unpaid dividends
on shares of the Defaulted Series are contemporaneously paid in full in cash or
additional shares of the Defaulted Series and all shares of the Defaulted
Series which the Company so failed to redeem are contemporaneously redeemed.

United also may not take any of the actions specified in (a), (b) or (c) in
the previous paragraph in respect of the Series B or Series C Preferred Stock
in excess of $1 million for all such actions unless at the time such action is
taken: (i) United has redeemed for cash all shares of Series B and Series C
Preferred Stock, if any, which have been issued to the holders of Series B and
Series C Preferred Stock, respectively, as in-kind dividends; (ii) United and
its wholly-owned subsidiaries, on a consolidated basis, have common equity
computed in accordance with generally accepted accounting principles after
giving effect to any purchases, redemptions, payments, distributions or
disbursements under (a), (b) or (c) above, of at least $26 million; (iii) if
any such purchases, redemptions, payments, distributions or disbursements
specified in (a), (b) or (c) above are to be made after July 31, 1999, then all
shares of Series B Preferred Stock shall have been redeemed or otherwise
retired; and (iv) if any such purchases,

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<PAGE>

redemptions, payments, distributions or disbursements specified in (a), (b) or
(c) above are to be made on or after the dates required for redemptions of
shares of Series C Preferred Stock specified below, then that portion of such
Series C Preferred Stock so required to be redeemed as of such dates shall have
been redeemed or otherwise retired. Notwithstanding the previous sentence,
nothing in this paragraph limits United's obligation to make payments or
disbursements for any amount it is obligated to pay under or pursuant to the
Lender Warrants; and nothing in this paragraph limits United or its
subsidiaries from repurchasing Shares or options to purchase Shares held by any
employee of United or its subsidiaries in connection with the termination of
such employee's employment.

Redemption. United will be required to redeem all shares of the Series A
Preferred Stock and Series B Preferred Stock on July 31, 1999 and to redeem the
Series C Preferred Stock on January 31, 2002 each for the sum of $1,000 per
share plus the aggregate of accrued and unpaid dividends to such date, subject
to appropriate adjustments in the event of a stock split, reverse stock split
or similar transaction (the "Redemption Price"), subject as described below
under "Description of Capital Stock-- Capital Stock of United -- Dividend and
Redemption Restrictions." The Series C Preferred Stock redemptions will be
required to be made in four quarterly installments on April 30, 2001, July 31,
2001, October 31, 2001 and January 31, 2002.

In the event of a Cash-Out Event (as hereinafter defined) and, in such event,
at the request of a holder of Merger Preferred Stock, United will be required
to redeem all of such holder's shares of preferred stock then outstanding at
the Redemption Price, subject as described below under "Description of Capital
Stock -- Capital Stock of United -- Dividend and Redemption Restrictions." If
pursuant to the sale or Change in Control (as hereinafter defined) of United,
the holders of Shares receive cash, Shares or common stock or other securities
of any corporation that is the successor to substantially all of the business
or assets of United or the ultimate parent of such successor which is (or will,
upon distribution thereof, be) listed on the New York Stock Exchange or the
American Stock Exchange, or approved for quotation on the Nasdaq National
Market ("Marketable Securities") or a combination thereof, then, United may at
its option and in lieu of the cash redemption described in the previous
sentence, redeem the Merger Preferred Stock by converting each share into cash,
Marketable Securities or a combination thereof, in the same proportions
received by the holders of Shares, the value of which shall equal the
Redemption Price. "Cash-Out Event" means the occurrence of a Business Sale, a
Change in Control, a Qualified Public Offering or a Recapitalization. In the
case of the Series C Preferred Stock, "Cash-Out Event" shall also include the
expiration of the agreement between the Company (as successor to ASI) and
Affiliated Computer Services, Inc. providing for the furnishing of information
systems services for the Company (as successor to ASI), or the early
termination of such agreement for any reason other than termination of such
agreement by Affiliated Computer Services, Inc. For purposes of the foregoing,
"Business Sale" means a transaction or a series of transactions, whether
effected by sale or exchange of securities or assets, merger or consolidation,
or otherwise, that results in the sale of United or its business to any person
(i) who, immediately prior to the contemplated transaction, does not own in
excess of 5.0% of the Shares on a fully diluted and converted basis (a "5.0%
Owner"), (ii) who is not controlling, controlled by or under common control
with United or any such 5.0% Owner and (iii) who is not the spouse or
descendant of any such 5.0% Owner or a trust for the benefit of such 5.0% Owner
or such other persons ("Independent Third Party") or group of Independent Third
Parties, pursuant to which such Independent Third Party or group of Independent
Third Parties would acquire (a) capital stock of United possessing the voting
power under normal circumstances to elect a majority of the Board or (b) all or
substantially all of United's assets determined on a consolidated basis;
"Change in Control" means an occurrence by which Wingate Partners and its
affiliates and Cumberland and its affiliates shall have collectively sold or
otherwise disposed of and received the pecuniary benefit of 33 1/3% of the
Shares legally or beneficially owned by them collectively as of January 31,
1992, subject to appropriate adjustment in the event of a stock split, reverse
stock split or similar transaction and excluding any sales or other
dispositions made by any of them to employees of United or of any of its
subsidiaries of up to 10.0% of such holdings; "Qualified

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Public Offering" means a sale in a public offering or series of public
offerings, registered under the Securities Act, of Shares; provided, however,
that such offering or series of offerings shall not be deemed to be a Qualified
Public Offering unless such offering or offerings shall have resulted in (A)(i)
public ownership of not less than 20.0% of the Shares of United on a fully-
diluted basis (which such Shares are listed upon the New York Stock Exchange,
the American Stock Exchange or are approved for quotation on the Nasdaq
National Market), and (ii) such offering or offerings shall have resulted in
receipt by United of aggregate cash proceeds (after deduction of underwriter
discounts and the costs associated with such offering or offerings) of at least
$37.5 million, or (B) the holders of Shares of United receive, as a result of
such offering or offerings, cash, Marketable Securities or a combination
thereof valued at not less than $1.0 million; and "Recapitalization" means a
recapitalization of United pursuant to which the holders of Shares of United
receive cash, securities (other than shares junior to the Series B or Series C
Preferred Stock), property or other assets and such consideration is valued at
not less than $1.0 million.

United may, at its option, redeem any portion or all of any series of the
Merger Preferred Stock outstanding at the Redemption Price. Any such redemption
of shares of Series A Preferred Stock must be made ratably among the holders of
Series A Preferred Stock, and any redemption of shares of Series B Preferred
Stock or Series C Preferred Stock must be made ratably among the holders of
both Series B and Series C Preferred Stock.

Exchange Notes. Provided United has paid all accrued dividends on the
outstanding shares of Series A Preferred Stock, United may redeem all shares of
Series A Preferred Stock then outstanding in exchange for subordinated notes
that shall have a maturity date of July 31, 1999 and shall bear interest at the
rate of 10.0% for interest paid in cash or 13.0% for interest paid in kind
("Series A Exchange Notes"). The Series A Exchange Notes issued to each holder
shall be in an aggregate principal amount equal to the Redemption Price.

Provided United has redeemed any outstanding shares of Series A Preferred
Stock and has paid all accrued dividends on the outstanding shares of Series B
and Series C Preferred Stock, United may redeem all shares of Series B and
Series C Preferred Stock in exchange for respective subordinated notes (the
"Series B Exchange Notes" and the "Series C Exchange Notes," respectively). The
Series B Exchange Notes will have a maturity date of July 31, 1999 and the
Series C Exchange Notes will mature on January 31, 2002, with any payments on
the Series C Exchange Notes to be in four equal installments on April 30, 2001,
July 31, 2001, October 31, 2001, and January 31, 2002. Both Series B and Series
C Exchange Notes shall bear interest at the rate of 11.0% for interest paid in
cash or 12.0% for interest paid in kind. The Series B and Series C Exchange
Notes issued to each holder shall be in an aggregate principal amount equal to
the Redemption Price of the redeemed shares.

Payments on the Series A, Series B and Series C Exchange Notes will be
subordinated to any obligations of United for borrowed money (including all
amounts owing under the Guarantees and the New Credit Facilities) and, in the
case only of the Series B and Series C Exchange Notes, will be subordinated to
Series A Exchange Notes.

Voting Rights. Holders of shares of Merger Preferred Stock generally will
have no voting rights. However, United shall not, without the affirmative vote
or written consent of the holders of at least 51.0% of all outstanding shares
of a series of Merger Preferred Stock voting separately as a series (the
"Affected Series") (a) amend any provision of the certificate of incorporation
or by-laws of United in any manner which adversely (and, in the case of the
Series A Preferred Stock only, materially) affects the relative rights,
preferences, qualifications, powers, limitations or restrictions of the
Affected Series; (b) either (i) in the case of Series A Preferred Stock,
increase the authorized number of shares of Preferred Stock, or authorize,
issue or otherwise create securities convertible into any shares of capital
stock of United other than Junior Shares, or (ii) in the case of Series B or
Series C Preferred Stock,

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increase the authorized number of shares of capital stock of United, or
authorize, issue or otherwise create securities convertible into any shares of
capital stock of the corporation other than Series A (only for purposes of
paying dividends in kind on Series A Preferred Stock), Series B or Series C
Preferred Stock, Common Stock or Junior Shares; or (c) voluntarily effect any
reclassification of the Affected Series.

Whenever dividends on any series of Merger Preferred Stock are in arrears in
an amount equal to at least six quarterly dividends (an "Impaired Series"), (i)
the number of members of the Board of Directors of United shall be increased by
one for each Impaired Series and (ii) the holders of each Impaired Series
(voting separately as a series) will have the exclusive right to vote for and
elect one additional director of United. The right of the Impaired Series to
vote for an additional director shall terminate when all accrued and unpaid
dividends on the Impaired Series have been declared and paid in cash or in-kind
or set apart for payment.

Liquidation Preferences. In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of United, the holders of the Merger
Preferred Stock shall be entitled to receive an amount equal to the Redemption
Price of such shares held by them in preference to and in priority over any
distributions upon Junior Shares. If the assets of United are not sufficient to
pay in full the Redemption Price to holders of Series A Preferred Stock, the
holders of all such shares shall share ratably (to the exclusion of any other
holders of capital stock) in such distribution of assets. If the assets of
United are not sufficient to pay in full the Redemption Price to holders of
Series B and Series C Preferred Stock, after payment in full of the Redemption
Price of the Series A Preferred Stock, the holders of all such shares shall
share ratably (to the exclusion of any other holders of capital stock) in such
distribution of assets.

"Junior Shares" means with respect to the priority of any class or series of
Preferred Stock, shares of Common Stock or shares of any other series or class
of Preferred Stock of United which are designated as junior to such series in
United's certificate of incorporation or any amendment thereto, or in the
resolution designating the class or series of such Preferred Stock and any
warrants, options or other rights to acquire or purchase such securities. The
shares of Series B and Series C Preferred Stock are Junior Shares in relation
to the Series A Preferred Stock. Any shares of additional Preferred Stock,
regardless of designation, shall be deemed Junior Shares in relation to the
Series A, Series B and Series C Preferred Stock.

Dividend and Redemption Restrictions. Notwithstanding the foregoing, no
dividend payment or redemption may be made with respect to any Merger Preferred
Stock if such payment or redemption would contravene the provisions of the
Restated Certificate of Incorporation, the Debt Agreements or any law or
regulation. "Debt Agreements" is defined to mean the New Credit Facilities, the
Indenture for the Notes and any agreements evidencing any renewal, extension,
refinancing, refunding or replacement thereof.

CAPITAL STOCK OF THE COMPANY

The authorized capital stock of the Company consists of 890,000 shares of
common stock, par value $1.00 per share, 880,000 of which are outstanding and
owned beneficially and of record by United.

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OWNERSHIP OF VOTING SECURITIES

All of the issued and outstanding capital stock of the Company is owned
beneficially and of record by United. The following table sets forth, based on
information available to the Company as of , 1995, certain information
regarding the beneficial ownership of the Common Stock and the Series A,
Series B and Series C Preferred Stock of United as of the date of this
Prospectus by (i) each person who is known to United to beneficially own more
than 5% of any class of United's capital stock, (ii) each of the directors of
United and the Company, (iii) each named executive officer identified under
" Management -- Executive Compensation for United" or under "Management --
Executive Compensation for Associated," except to the extent no longer
serving as an officer or employee of United or the Company, and (iv) all
current directors and executive officers of United and the Company as a group.
See "Financing the Acquisition."

<TABLE>
<CAPTION>
SERIES A SERIES B SERIES C
COMMON STOCK (1) PREFERRED (2) PREFERRED (2)(8) PREFERRED (2)
---------------------- ------------------ -------------------- ---------------
DIRECTORS, EXECUTIVE PERCENT NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT
OFFICERS AND NUMBER OF OF OF OF OF OF OF
5.0% STOCKHOLDERS OF SHARES CLASS(3) SHARES CLASS(3) SHARES CLASS(3) SHARES CLASS(3)
-------------------- --------- -------- ------ -------- -------- --------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wingate Partners, L.P... 3,011,398(4) 50.86% 3,148(5) 62.96% -- --% -- --%
750 N. St. Paul Street
Suite 1200
Dallas, Texas 75201
ASI Partners, L.P....... 898,360(6) 15.88 1,212(7) 24.24 -- -- -- --
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Cumberland Capital 898,360(6) 15.88 1,212(7) 24.24 -- -- -- --
Corporation............
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Chase Manhattan 617,245(9) 9.85 -- -- -- -- -- --
Investment Holdings,
Inc....................
1 Chase Manhattan Plaza
New York, New York
10081
Affiliated Computer -- -- -- -- -- -- 10,086 100.00
Services, Inc..........
2828 North Haskell
Avenue
Dallas, Texas 75204
Thomas W. Sturgess (10). -- -- -- -- -- -- -- --
Gary G. Miller (11)..... -- -- -- -- -- -- -- --
Daniel J. Good.......... 102,434(12) 1.81 -- -- -- -- -- --
Jeffrey K. Hewson....... 1,038 * -- -- -- -- -- --
Michael D. Rowsey (13).. 58,968(14) * 55 1.09 -- -- -- --
Daniel J. Schleppe (13). 56,474(15) * 55 1.09 -- -- -- --
Steven R. Schwarz....... 315 * -- -- -- -- -- --
Daniel H. Bushell....... 23,965(16) * -- -- -- -- -- --
James T. Callier, Jr. -- -- -- -- -- --
(10)................... -- --
Frederick B. Hegi, Jr. -- -- -- -- -- --
(10)................... -- --
James A. 15 * -- -- -- --
Johnson(10)(13)........ 9,585 *
Joel D. Spungin......... 6,686(17) * -- -- -- -- -- --
Robert W. Eberspacher 55 1.09 -- -- -- --
(13)................... 55,175(18) *
All current directors
and executive officers
as a group
(11 persons) (10)-(18). 202,992(19) 3.56 70 1.39 -- -- -- --
</TABLE>
-------
* Represents less than 1.0%.
(1) All Shares shown in the table, other than Shares beneficially owned by
CMIHI and Messrs. Hewson, Schwarz and Spungin are held in the Voting
Trust. See "Certain Transactions -- Certain Agreements Regarding the
Shares." The trustees of the Voting Trust are Messrs. Sturgess, Hegi,
Johnson, Good and G. Miller.
(2) Except under limited circumstances, the holders of the Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock are not
entitled to vote. See "Description of Capital Stock -- Capital Stock of
United -- Voting Rights."
(3) For purposes of calculating the beneficial ownership of each stockholder,
it was assumed (in accordance with the Commission's definition of
"beneficial ownership") that such stockholder had exercised all options
or warrants by which such stockholder had the right, within 60 days
following , 1995, to acquire shares of such class of stock.

(4) Includes (i) 2,134,289 Shares owned by Wingate Partners, (ii) 558,687
Shares owned by Wingate II, (iii) 37,047 Shares owned by Wingate
Affiliates and (iv) 9,817 Shares owned by Wingate Affiliates II, L.P.
Also includes Lender Warrants exercisable for an aggregate of 209,490
Shares (or shares of Nonvoting Common Stock, at the holder's option)
purchased by such entities from one of Associated's former senior
lenders, and Boise Warrants exercisable for an aggregate of 62,069 shares
purchased by such entities from Boise Cascade.

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(5) Includes (i) 3,094 Shares owned by Wingate Partners and (ii) 54 Shares
owned by Wingate Affiliates.

(6) Includes (i) 715,201 Shares owned by ASI Partners, L.P., (ii) 78,152
Shares owned by ASI Partners II, L.P., 20,042 Shares owned by ASI
Partners III, L.P. and (iii) 77,063 Shares owned by Cumberland.
Cumberland serves as the general partner of each of ASI Partners, L.P.,
ASI Partners II, L.P. and ASI Partners III, L.P. Also includes Boise
Warrants exercisable for an aggregate of 7,903 Shares purchased by ASI
Partners III, L.P. from Boise Cascade.
(7) Includes 1,212 shares of Series A Preferred Stock owned by ASI Partners,
L.P., as to which Cumberland serves as general partner.

(8) On July 28, 1995, United repurchased all of the outstanding shares of the
Series B Preferred Stock, including accrued and unpaid dividends thereon,
from Boise Cascade for an aggregate purchase price of $7.0 million. See
"Certain Transactions -- Repurchase of Series B Preferred Stock."

(9) Consists of 237,748 Shares (or shares of Nonvoting Common Stock, at the
holder's option) issuable upon exercise of Lender Warrants which are
immediately exercisable at $0.0029 per Share, 240,023 shares of Nonvoting
Common Stock held by such holder and 139,474 shares of Nonvoting Common
Stock that were issued upon consummation of the sale of the Old Notes.
Subject to certain restrictions, the Nonvoting Common Stock is
convertible at any time at the option of the holder into Shares for no
additional consideration. See "Certain Transactions -- Lender Warrants"
and "Financing the Acquisition -- Loan Facilities -- New Credit
Facilities."
(10) Does not include shares owned by Wingate Partners, Wingate II, Wingate
Affiliates or Wingate Affiliates II, L.P. Each of Messrs. Sturgess, Hegi
and Callier is a general partner of Wingate Affiliates, and an indirect
general partner of Wingate Partners and, accordingly, may be deemed to
beneficially own the Shares owned of record by Wingate Partners and
Wingate Affiliates. Each of Messrs. Sturgess, Hegi and Johnson is a
general partner of Wingate Affiliates II, L.P. and an indirect general
partner of Wingate II and, accordingly, may be deemed to beneficially own
the Shares owned of record by Wingate II and Wingate Affiliates II, L.P.

(11) Does not include shares owned by ASI Partners, L.P., ASI Partners II,
L.P., ASI Partners III, L.P. or Cumberland. Mr. Miller is President and a
stockholder of Cumberland and, accordingly, may be deemed to beneficially
own the shares owned of record by ASI Partners, L.P., ASI Partners II,
L.P., ASI Partners III, L.P. and Cumberland.

(12) Includes Lender Warrants exercisable for an aggregate of 21,377 Shares
(or shares of Nonvoting Common Stock, at the holder's option) purchased
by Mr. Good from one of Associated's former senior lenders. Does not
include 181,950 Shares owned by Good Capital or 18,086 Shares and Boise
Warrants exercisable for an aggregate of 7,132 Shares owned by the Julie
Good Mora Grantor Trust and the Laura Good Stathos Grantor Trust. Mr.
Good is Chairman and a controlling stockholder of Good Capital and
trustee of each of the Julie Good Mora Grantor Trust and Laura Good
Stathos Grantor Trust and, accordingly, may be deemed to beneficially own
the shares owned of record by Good Capital, the Julie Good Mora Grantor
Trust and the Laura Good Stathos Grantor Trust.
(13) Includes shares owned directly and by an individual retirement account
for the sole benefit of such individual.
(14) Includes (i) 42,278 Shares owned by or for the benefit of Mr. Rowsey and
(ii) 16,690 Shares issuable upon exercise of options which are, subject
to certain restrictions described under""Management -- Executive
Compensation for Associated -- 1992 Stock Option Plan," imme-diately
exercisable at $2.90 per share.
(15) Includes (i) 42,278 Shares owned by or for the benefit of Mr. Schleppe
and (ii) 14,196 Shares issuable upon exercise of options which are,
subject to certain restrictions, immediately exercisable at $2.90 per
share.
(16) Includes (i) 9,769 Shares owned by or for the benefit of Mr. Bushell and
(ii) 14,196 Shares issuable upon exercise of options which are, subject
to certain restrictions, immediately exercisable at $2.90 per share.
(17) Includes (i) 3,217 Shares owned by Mr. Spungin, (ii) an aggregate of
2,918 Shares owned by trusts and a partnership under Mr. Spungin's
direction and (iii) an aggregate of 551 Shares owned by relatives of Mr.
Spungin.
(18) Includes (i) 42,278 Shares owned by or for the benefit of Mr. Eberspacher
and (ii) 12,897 Shares issuable upon exercise of options which are,
subject to certain restrictions, immediately exercisable at $2.90 per
share.
(19) Includes an aggregate of (i) 150,729 Shares owned by the current
directors and executive officers of United and the Company, (ii) 30,886
Shares issuable upon exercise of options which are, subject to certain
restrictions, immediately exercisable at $2.90 per share and (iii) 21,377
Shares issuable upon exercise of a Lender Warrant owned by a director of
United.

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DESCRIPTION OF THE NEW NOTES

The New Notes will be issued under an Indenture dated as of May 3, 1995, as
amended by the First Supplemental Indenture dated as of July 28, 1995 (as
amended, the "Indenture") among the Company, United, as Guarantor, and The Bank
of New York, as trustee (the "Trustee"), a copy of the form of which is
available upon request to the Company. See "Available Information." On July 28,
1995, the Company, United and the Trustee entered into the First Supplemental
Indenture. The First Supplemental Indenture extended the time period during
which the Company or United was permitted to repurchase the Series B Preferred
Stock, together with accrued and unpaid dividends thereon, to 90 days following
the Closing Date. United repurchased all of the outstanding Series B Preferred
Stock, together with accrued and unpaid dividends thereon, on July 28, 1995 for
an aggregate purchase price of $7.0 million. See "Certain Transactions--
Repurchase of Series B Preferred Stock." The Old Notes were also issued
pursuant to the Indenture. Upon the effectiveness of the Exchange Offer
Registration Statement, the Indenture will be subject to and governed by the
Trust Indenture Act. The following summary of the material provisions of the
Indenture does not purport to be complete, and where reference is made to
particular provisions of the Indenture, such provisions, including the
definitions of certain terms, are qualified in their entirety by reference to
all of the provisions of the Indenture and those terms made a part of the
Indenture by the Trust Indenture Act. For definitions of certain capitalized
terms used in the following summary, see "Description of the New Notes --
Certain Definitions." References in this "Description of the New Notes" to the
Company or United are to United Stationers Supply Co. or United Stationers
Inc., respectively, excluding any subsidiaries thereof, and their successors.

GENERAL

The Notes will mature on May 1, 2005, will be limited to $150,000,000
aggregate principal amount at any one time outstanding (including any New Notes
that may be issued from time to time in exchange for the Old Notes as described
under "The Exchange Offer") and will be unsecured senior subordinated
obligations of the Company. Each Note will bear interest at the rate set forth
on the cover page hereof from May 3, 1995 or from the most recent interest
payment date to which interest has been paid, payable semi-annually on May 1
and November 1 in each year, commencing November 1, 1995, to the Person in
whose name the Note (or any predecessor Note) is registered at the close of
business on the April 15 or the October 15 next preceding such interest payment
date. For a description of the circumstances under which the interest rate on
the Old Notes may be increased from the rate set forth on the cover page of
this Prospectus, see "The Exchange Offer -- Adjustment to Old Notes."

Principal of (and premium, if any, on) and interest on the Notes will be
payable, and the Notes will be exchangeable and transferable, at the office or
agency of the Company in the City of New York maintained for such purposes
(which initially will be the office of the Trustee maintained at 101 Barclay
Street, 21st Floor, New York, New York 10286 Attention: Corporate Trust
Administration); provided, however, that payment of principal or interest may
be made at the option of the Company by check mailed to the Person entitled
thereto as shown on the security register. The Notes will be issued only in
fully registered form without coupons, in denominations of $1,000 and any
integral multiple thereof. No service charge will be made for any registration
of transfer, exchange or redemption of Notes, except in certain circumstances
for any tax or other governmental charge that may be imposed in connection
therewith.

Initially, the Company was permitted to issue only the Old Notes; however,
the Company may issue New Notes in exchange for a like principal amount of Old
Notes in connection with the Exchange Offer. Upon any such exchange the Old
Notes so exchanged shall be cancelled and shall no longer be deemed outstanding
for any purpose. In no event shall the aggregate principal amount of Old Notes
and New Notes outstanding exceed $150,000,000. The Old Notes and the New Notes
shall be one class for all purposes under the Indenture, including, without
limitation, amendments, waivers,

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redemptions, Change of Control Offers, and Offers, and for purposes of this
"Description of the New Notes," all references herein to "Notes" shall be
deemed to refer collectively to Old Notes and New Notes, unless the context
otherwise requires.

OPTIONAL REDEMPTION

The Notes will be subject to redemption at any time on or after May 1, 2000,
at the option of the Company, in whole or in part, on not less than 30 nor more
than 60 days' prior notice in amounts of $1,000 or an integral multiple thereof
at the following redemption prices (expressed as percentages of the principal
amount), if redeemed during the 12-month period beginning May 1 of the years
indicated below:

<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2000.............................................................. 106.375%
2001.............................................................. 104.781%
2002.............................................................. 103.188%
2003.............................................................. 101.594%
</TABLE>

and thereafter at 100.0% of the principal amount, in each case together with
accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on relevant record dates to receive interest due on
relevant interest payment dates).

In addition, at any time or from time to time prior to May 1, 1998, the
Company may redeem Notes having a principal amount of up to $50.0 million
within 180 days following one or more Public Equity Offerings with the net
proceeds of such offerings at a redemption price equal to 112.75% of the
principal amount thereof, together with accrued and unpaid interest, if any, to
the date of redemption (subject to the right of holders of record on relevant
record dates to receive interest due on relevant interest payment dates);
provided that immediately after giving effect to each such redemption, at least
$100.0 million aggregate principal amount of the Notes remain outstanding.

If less than all of the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed pro rata, by lot or by any other
method the Trustee shall deem fair and reasonable.

SINKING FUND

The Notes will not be entitled to the benefit of any sinking fund or other
mandatory redemption obligation prior to maturity.

SUBORDINATION

The payment of the principal of (and premium, if any, on) and interest on,
the Notes will be subordinated, as set forth in the Indenture, in right of
payment to the prior payment in full of all Senior Indebtedness in cash or in
any other form acceptable to the holders of Senior Indebtedness (or such
payment shall be duly provided for to the satisfaction of the holders of the
Senior Indebtedness). The Notes will be senior subordinated indebtedness of the
Company ranking pari passu with all other existing and future senior
subordinated indebtedness of the Company and senior to all existing and future
Subordinated Indebtedness of the Company.

During the continuance of any default in the payment of any Senior
Indebtedness beyond any applicable grace period, no payment (other than
payments previously made pursuant to the provisions described under
"Description of Notes -- Defeasance or Covenant Defeasance of Indenture") or
distribution of any assets of the Company of any kind or character shall be
made by the Company on account of principal of (and premium, if any, on) or
interest on, the Notes or on account of the purchase, redemption, defeasance or
other acquisition of the Notes (other than such payments or distributions as
may be agreed to by the lenders under the Senior Bank Facility in accordance
with the terms of the Senior Bank Facility) unless and until such default shall
have been cured or waived or shall have ceased to exist or the Senior
Indebtedness with respect to which such payment default shall have occurred
shall have been discharged or paid in full in cash or in any other form
acceptable to the holders of such Senior Indebtedness (or such payment shall be
duly provided for to the satisfaction of the holders of

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the Senior Indebtedness), after which the Company shall resume making any and
all required payments in respect of the Notes, including any missed payments.

During the continuance of any non-payment event of default with respect to
any Designated Senior Indebtedness (as such event of default is defined in the
instrument creating or evidencing such Designated Senior Indebtedness) pursuant
to which the maturity thereof may be accelerated (a "Non-payment Default") and
after receipt by the Trustee and the Company from a representative of the
holders of such Designated Senior Indebtedness of written notice of such event
of default, no payment (other than payments previously made pursuant to the
provisions described under "Description of Notes -- Defeasance or Covenant
Defeasance of Indenture") or distribution of any assets of the Company of any
kind or character (other than such payments or distributions as may be agreed
to by the holders of such Designated Senior Indebtedness in accordance with the
terms of the agreement governing such Designated Senior Indebtedness) shall be
made by the Company on account of any principal of (and premium, if any, on) or
interest on the Notes or on account of the purchase, redemption, defeasance or
other acquisition of the Notes for the period specified below (the "Payment
Blockage Period").

The Payment Blockage Period shall commence upon the receipt of notice of the
Non-payment Default by the Trustee from a Representative of the holder of any
Designated Senior Indebtedness and shall end on the earliest of (i) the first
date on which 179 days shall have elapsed since the receipt of such written
notice, (ii) the date on which such Non-payment Default is cured, waived or
ceases to exist or on which such Designated Senior Indebtedness is discharged
or paid in full in cash or in any other manner acceptable to the holders of
Designated Senior Indebtedness (as determined in accordance with the terms of
the agreement governing such Designated Senior Indebtedness) (or the date on
which payment shall be duly provided for to the satisfaction of the holders of
such Designated Senior Indebtedness) or (iii) the date on which such Payment
Blockage Period shall have been terminated by written notice to the Company or
the Trustee from the Representative of, or the holders of at least a majority
in principal amount of, the Designated Senior Indebtedness initiating such
Payment Blockage Period, after which, in the case of clause (i), (ii) and
(iii), the Company shall resume making any and all required payments in respect
of the Notes, including any missed payments. In no event will a Payment
Blockage Period extend beyond 179 days from the date of the receipt by the
Company or the Trustee of the notice initiating such Payment Blockage Period
(such 179-day period referred to as the "Initial Period"). Any number of
notices of Non-payment Defaults may be given during the Initial Period;
provided that during any 365 consecutive day period, only one such period
during which payment of principal of, or interest on, the Notes may not be made
may be commenced, and the duration of such period may not exceed 179 days. No
Non-payment Default with respect to Designated Senior Indebtedness which
existed or was continuing on the date of the commencement of any Payment
Blockage Period will be, or can be, made the basis for the commencement of a
second Payment Blockage Period, whether or not within a period of 365
consecutive days, unless such event of default has been cured or waived for a
period of not less than 90 consecutive days.

If the Company fails to make any payment on the Notes when due or within any
applicable grace period, whether or not on account of the subordination
provisions referred to above, such failure would constitute an Event of Default
under the Indenture and would enable the holders of the Notes to accelerate the
maturity thereof. See "Description of the New Notes -- Events of Default."

The Indenture provides that, in the event of any insolvency, bankruptcy or
reorganization case or proceeding, or any receivership, liquidation, or other
similar case or proceeding, relative to the Company or to its creditors, as
such, or to its assets, or any liquidation, dissolution or other winding up of
the Company, whether voluntary or involuntary, or any assignment for the
benefit of creditors or any other marshalling of assets or liabilities of the
Company, all Senior Indebtedness must be paid in full in cash

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or in any other form acceptable to the holders of Senior Indebtedness (or such
payment shall be duly provided for to the satisfaction of the holders of Senior
Indebtedness), before any payment or distribution is made on account of the
principal of, premium, if any, or interest on the Notes.

By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the Notes, and funds which would be
otherwise payable to the holders of the Notes will be paid to the holders of
the Senior Indebtedness to the extent necessary to pay the Senior Indebtedness
in full in cash or in any other form acceptable to the holders of Senior
Indebtedness, and the Company may be unable to meet its obligations fully with
respect to the Notes.

"Senior Indebtedness" means the principal of, premium, if any, and interest
(including interest accruing after the filing of a petition initiating any
proceeding under any state, federal or foreign bankruptcy law whether or not
allowable as a claim in such proceeding) on any Indebtedness of the Company
(except as otherwise provided in this definition), whether outstanding on the
Closing Date or thereafter created, incurred or assumed, unless, in the case of
any particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Notes. Without
limiting the generality of the foregoing, "Senior Indebtedness" shall include
the principal of (and premium, if any) and interest (including interest
accruing after the filing of a petition initiating any proceeding under any
state, federal or foreign bankruptcy laws whether or not allowable as a claim
in such proceeding) and all other obligations of every nature of the Company
from time to time owed under the Senior Bank Facility (including, without
limitation, agency fees, commitment fees and letter of credit fees); provided,
however, that any Indebtedness under any refinancing, refunding or replacement
of the Senior Bank Facility shall not constitute Senior Indebtedness to the
extent that the Indebtedness thereunder is by its express terms subordinate to
any other Indebtedness of the Company. Notwithstanding the foregoing, "Senior
Indebtedness" shall not include any of the following (whether or not
constituting Indebtedness under the Indenture): (i) Indebtedness evidenced by
the Notes, (ii) Indebtedness that, by its express terms, is subordinate or
junior in right of payment to any Indebtedness of the Company, (iii)
Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11 United States Code, is without recourse to the
Company, (iv) Indebtedness which is represented by Redeemable Capital Stock,
(v) any liability for foreign, federal, state, local or other taxes owed or
owing by the Company, (vi) Indebtedness of the Company to a Subsidiary, and
(vii) any trade payables.

"Designated Senior Indebtedness" means (i) all Senior Indebtedness under the
Senior Bank Facility; and (ii) any other Senior Indebtedness outstanding in a
principal amount of at least $50 million, and which is specifically designated
by the Company in the agreement governing or the instrument evidencing such
Senior Indebtedness as "Designated Senior Indebtedness."

GUARANTEES

Payment of the Notes is guaranteed by United on a senior subordinated basis
and will be guaranteed on a senior subordinated basis by any newly formed
domestic Restricted Subsidiary of the Company created or acquired after the
Closing Date. The Company has no present intention to form any domestic
Restricted Subsidiary.

Each Guarantee of the Notes will be an unsecured senior subordinated
obligation of the Guarantor, ranking pari passu with, or senior in right of
payment to, all other existing and future indebtedness of such Guarantor that
is expressly subordinated to Senior Guarantor Indebtedness of such Guarantor.
The Indebtedness of any Guarantor evidenced by its Guarantee will be
subordinated to Senior Guarantor Indebtedness of such Guarantor to the same
extent as the Notes are subordinated to Senior Indebtedness, and during any
period when payment on the Notes is prohibited pursuant to the subordination
provisions of the Indenture, payment on any Guarantee will be similarly
prohibited.

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"Senior Guarantor Indebtedness" means, with respect to any Guarantor, the
principal of, premium, if any, and interest (including interest accruing after
the filing of a petition initiating any proceeding under any state, federal or
foreign bankruptcy laws whether or not allowable as a claim in such proceeding)
on any Indebtedness of such Guarantor (except as otherwise provided in this
definition), whether outstanding on the Closing Date or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to such Guarantor's Guarantee of the Notes. Without limiting
the generality of the foregoing, "Senior Guarantor Indebtedness" shall include
the principal of (and premium, if any) and interest (including interest
accruing after the filing of a petition initiating any proceeding under any
state, federal or foreign bankruptcy laws whether or not allowable as a claim
in such proceeding) and all other obligations of every nature of any Guarantor
from time to time owed under the Senior Bank Facility; provided, however, that
any Indebtedness under any refinancing, refunding or replacement of the Senior
Bank Facility shall not constitute Senior Guarantor Indebtedness to the extent
that the Indebtedness thereunder is by its express terms subordinate to any
other Indebtedness of any Guarantor. Notwithstanding the foregoing, "Senior
Guarantor Indebtedness" shall not include any of the following (whether or not
constituting Indebtedness under the Indenture): (i) Indebtedness evidenced by
the Guarantees of the Notes, (ii) Indebtedness that, by its express terms, is
subordinate or junior in right of payment to any Indebtedness of any Guarantor,
(iii) Indebtedness which when incurred and without respect to any election
under Section 1111(b) of Title 11 United States Code, is without recourse to
any Guarantor, (iv) Indebtedness which is represented by Redeemable Capital
Stock, (v) any liability for foreign, federal, state, local or other taxes owed
or owing by any Guarantor, (vi) Indebtedness of any Guarantor to a Subsidiary,
and (vii) any trade payables.

"Designated Senior Guarantor Indebtedness" means (i) all Senior Guarantor
Indebtedness under the Senior Bank Facility; and (ii) any other Senior
Guarantor Indebtedness outstanding in a principal amount of at least $50
million, and which is specifically designated by the Guarantor in the agreement
governing or the instrument evidencing such Senior Guarantor Indebtedness as
"Designated Senior Guarantor Indebtedness."

Each Guarantor shall not, and (except in the case of United) the Company will
not permit any Guarantor to, in a single transaction or through a series of
related transactions, merge or consolidate with or into any other corporation
(other than the Company or any Restricted Wholly Owned Subsidiary) or other
entity, sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of such Guarantor's properties and assets on a Consolidated
basis to any entity (other than the Company or any Restricted Wholly Owned
Subsidiary) unless at the time and after giving effect thereto: (i) either
(1) such Guarantor shall be the continuing corporation or partnership or (2)
the entity (if other than such Guarantor) formed by such consolidation or into
which such Guarantor is merged or the entity which acquires by sale,
assignment, conveyance, transfer, lease or disposition the properties and
assets of such Guarantor shall be a corporation duly organized and validly
existing under the laws of the United States, any state thereof or the District
of Columbia and shall expressly assume by a supplemental indenture, executed
and delivered to the Trustee, all the obligations of such Guarantor under its
Guarantee of the Notes and the Indenture; (ii) immediately before and
immediately after giving effect to such transaction or transactions, no Default
or Event of Default shall have occurred and be continuing; and (iii) such
Guarantor shall have delivered to the Trustee an Officers' Certificate and an
opinion of counsel in form and substance reasonably satisfactory to the
Trustee, each stating that such consolidation, merger, sale, assignment,
conveyance, transfer, lease or disposition and such supplemental indenture
comply with the Indenture, and thereafter all obligations of the predecessor
shall terminate; provided that the foregoing shall not apply to any Guarantor
(other than United) if (A) immediately after such merger, consolidation, sale,
assignment, conveyance, transfer, lease or other disposition, the Person
surviving such merger or consolidation or the assignee, conveyee, transferee,
lessee or recipient of such other disposition is not a Subsidiary and (B) the
"Limitation on Sale of Assets" covenant of the Indenture is complied with in
connection with such transaction.

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In the event of any transaction described in and complying with the
conditions listed in the immediately preceding paragraph in which any Guarantor
is not the continuing corporation, the successor Person formed or remaining
shall succeed to, and be substituted for, and may exercise every right and
power of, such Guarantor and the Guarantor will be discharged from all
obligations and covenants under the Indenture and its Guarantee.

After giving pro forma balance sheet effect to the repurchase of the Series B
Preferred Stock, including accrued and unpaid dividends thereon, effected with
the proceeds of the Old Notes as if such transaction had occurred on June 30,
1995, there would have been approximately $332.6 million of Senior Indebtedness
of the Company (all of which would have been Designated Senior Indebtedness)
and approximately $332.6 million of Senior Guarantor Indebtedness of United
(all of which would have been Designated Senior Guarantor Indebtedness)
outstanding on such date, substantially all of which represents Indebtedness or
guarantees of Indebtedness under the New Credit Facilities which is secured by
substantially all of the assets of the Company and United, respectively; in
addition, after taking into account approximately $59.8 million of outstanding
letters of credit, there would have been approximately $97.2 million available
to be drawn by the Company as secured Senior Indebtedness under the revolving
credit portion of the New Credit Facilities (all of which would have been
Designated Senior Indebtedness), which amount would have been secured Senior
Guarantor Indebtedness of United (all of which would have been Designated
Senior Guarantor Indebtedness); and there would have been approximately $231.7
million of Indebtedness of the Company that would have been pari passu to the
New Notes. See "Risk Factors -- Subordination" and "-- Limited Practical Value
of Guarantees by United," "Capitalization" and "Pro Forma Combined Financial
Information."

CERTAIN COVENANTS

The Indenture contains, among others, the covenants described below.

Limitation on Incurrence of Indebtedness. (a) The Company will not, and will
not permit any of its Restricted Subsidiaries to, create, issue, assume, incur,
guarantee, or otherwise in any manner become directly or indirectly liable for
(collectively, "incur") any Indebtedness (including any Acquired Indebtedness);
provided that the Company may incur Indebtedness (including any Acquired
Indebtedness) if (A) the Consolidated Fixed Charge Coverage Ratio of the
Company for the four full fiscal quarters immediately preceding the incurrence
of such Indebtedness taken as one period (and after giving pro forma effect to
(i) if the computation of the Consolidated Fixed Charge Coverage Ratio is made
on any date prior to the end of the four full fiscal quarters immediately
following the effective date of the Merger, the consummation of the Merger and
the financing related thereto (but excluding any anticipated savings, whether
or not related thereto), including the issuance of the Notes as though they had
been issued and outstanding at the effective time of the Merger and the
incurrence of indebtedness under the Senior Bank Facility and, in each case,
the application of the proceeds thereof, as though such transaction had
occurred on the first day of the four full fiscal quarters commencing
immediately prior to the effective date of the Merger, (ii) the incurrence of
such Indebtedness and the application of the net proceeds therefrom, including
to refinance other Indebtedness, as if such Indebtedness was incurred, and the
application of such proceeds occurred, at the beginning of such four-quarter
period; (iii) the incurrence, repayment or retirement of any other Indebtedness
by the Company and its Restricted Subsidiaries since the first day of such
four-quarter period as if such Indebtedness was incurred, repaid or retired at
the beginning of such four-quarter period (except that, in making such
computation, the amount of Indebtedness outstanding under any revolving credit
facility shall be computed based upon the average daily balance of such
Indebtedness during such four-quarter period); (iv) in the case of Acquired
Indebtedness, the related acquisition as if such acquisition occurred at the
beginning of such four-quarter period; and (v) any acquisition or disposition
by the Company or its Restricted Subsidiaries of any company or any business or
any assets out of the ordinary course of business, whether by merger, stock
purchase or sale or asset purchase or sale, as if such acquisition or
disposition, as the case may be, occurred at the beginning of such four-quarter
period, and any related incurrence or repayment of Indebtedness, in each case
since the first day of such four-quarter

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period, assuming such acquisition or disposition had been consummated on the
first day of such four-quarter period) is (x) for the period from the Closing
Date through May 3, 1998 at least equal to 2.00:1.00 and (y) thereafter at
least equal to 2.25:1.00 and (B) if such Indebtedness is Subordinated
Indebtedness, such Indebtedness shall have an Average Life to Stated Maturity
longer than the Average Life to Stated Maturity of the Notes and a final Stated
Maturity of principal later than the final Stated Maturity of principal of the
Notes.

(b) The foregoing limitation will not apply to the incurrence of any of the
following (collectively, "Permitted Indebtedness"):

(i) Indebtedness of the Company (x) outstanding at any time in an
aggregate principal amount not to exceed an amount equal to $200 million
minus all principal amounts actually repaid under the term loan portion of
the Senior Bank Facility, including any such amount repaid as provided
under the "Limitation on Sale of Assets" covenant described below, and (y)
outstanding at any time in an aggregate amount equal to the greater of (I)
the Borrowing Base and (II) $300 million;

(ii) subject to the "Limitation on Guarantees of Indebtedness" covenant,
Guarantees by Restricted Subsidiaries of Senior Indebtedness of the
Company; provided that such Indebtedness of the Company is incurred in
compliance with the provisions of the Indenture;

(iii) Indebtedness of the Company pursuant to the Notes and Indebtedness
of any Guarantor pursuant to its Guarantee of the Notes;

(iv) Indebtedness of the Company outstanding on the Closing Date;

(v) Indebtedness of the Company owing to a Restricted Wholly Owned
Subsidiary, provided that any such Indebtedness (x) is made pursuant to an
intercompany note in the form attached to the Indenture and (y) is
subordinated in right of payment to the prior payment and performance of
the Company's obligations under the Notes, if applicable; provided further
that (A) any disposition, pledge or transfer of any such Indebtedness to a
Person (other than a disposition, pledge or transfer to a Restricted Wholly
Owned Subsidiary or a pledge to or for the benefit of any holder of Senior
Indebtedness) or (B) any transaction pursuant to which such Restricted
Wholly Owned Subsidiary ceases to be a Restricted Wholly Owned Subsidiary
shall be deemed to be an incurrence of such Indebtedness by the Company not
permitted by this clause (v);

(vi) Indebtedness of a Restricted Wholly Owned Subsidiary owing to the
Company or to a Restricted Wholly Owned Subsidiary; provided that, with
respect to Indebtedness owing to any Restricted Wholly Owned Subsidiary,
(x) any such Indebtedness is made pursuant to an intercompany note in the
form attached to the Indenture and (y) any such Indebtedness shall be
subordinated in right of payment to the payment and performance of such
Subsidiary's obligations under its Guarantee of the Notes, if applicable;
provided further that (A) any disposition, pledge or transfer of any such
Indebtedness to a Person (other than a disposition, pledge or transfer to
the Company or a Restricted Wholly Owned Subsidiary or a pledge to or for
the benefit of any holder of Senior Indebtedness) shall be deemed to be an
incurrence of such Indebtedness by the obligor not permitted by this clause
(vi), and (B) any transaction pursuant to which any Restricted Wholly Owned
Subsidiary, which has Indebtedness owing to the Company or any other
Restricted Wholly Owned Subsidiary, ceases to be a Restricted Wholly Owned
Subsidiary shall be deemed to be an incurrence of Indebtedness by such
Subsidiary that is not permitted by this clause (vi);

(vii) any renewals, extensions, substitutions, refundings, refinancings
or replacements (collectively, a "refinancing") of any Indebtedness
described in clauses (iii) and (iv) of this paragraph (b) (including any
successive refinancings), so long as the aggregate principal amount of
Indebtedness represented thereby is not increased by such refinancing,
except by an amount equal to the lesser of (x) the stated amount of any
premium, interest or other payment required to be paid in connection with
such a refinancing pursuant to the terms of the Indebtedness being
refinanced or (y) the amount of premium, interest or other payment actually
paid at such time to refinance the Indebtedness, plus, in either case, the
amount of expenses incurred in connection

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with such refinancing; provided that in the case of Pari Passu Indebtedness
or Subordinated Indebtedness, (A) such new Indebtedness does not have a
shorter Average Life to Stated Maturity or a final Stated Maturity of
principal earlier than the Indebtedness being refinanced, (B) in the case
of Pari Passu Indebtedness, such new Indebtedness is pari passu with, or
subordinated to, the Notes and (C) in the case of Subordinated
Indebtedness, such new Indebtedness is subordinated to the Notes at least
to the same extent as the Indebtedness being refinanced; and provided
further that in no event may Indebtedness of the Company be refinanced with
Indebtedness of any Restricted Subsidiary pursuant to this clause (vii);

(viii) Indebtedness of the Company consisting of Capitalized Lease
Obligations or purchase money obligations, in addition to that described in
clauses (i) through (vii) of this paragraph (b), not to exceed $10 million
outstanding at any one time in the aggregate;

(ix) Indebtedness of the Company (whether or not constituting purchase
money obligations or Capitalized Lease Obligations) not to exceed $20
million at any one time outstanding; and

(x) Indebtedness of the Company consisting of bona fide Interest Rate
Agreements designed to protect the Company from, or control the exposure of
the Company to, fluctuations in interest rates in respect of Indebtedness.

Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly:

(i) declare or pay any dividend on, or make any distribution to holders
of, any shares of its Capital Stock (other than dividends or distributions
payable solely in shares of its Qualified Capital Stock or in options,
warrants or other rights to acquire such Qualified Capital Stock and other
than dividends and distributions paid to the Company);

(ii) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, any shares of the Capital Stock of United, the Company or
any Restricted Subsidiary (other than any Restricted Wholly Owned
Subsidiary) or options, warrants or other rights to acquire such Capital
Stock;

(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to the relevant scheduled
principal payment, sinking fund or maturity, any Subordinated Indebtedness;
or

(iv) make any Investment in any Person, including, without limitation,
any Unrestricted Subsidiary (other than any Permitted Investments)

(the foregoing actions described in clauses (i) through (iv), collectively,
"Restricted Payments") unless after giving effect to the proposed Restricted
Payment (the amount of any such Restricted Payment, if other than cash, as
determined in good faith by the Board of Directors of the Company, such
determination to be conclusive and evidenced by a Board Resolution), (A) no
Default or Event of Default shall have occurred and be continuing and such
Restricted Payment shall not cause or constitute any of the foregoing; (B)
immediately before and immediately after giving effect to such transaction on a
pro forma basis, the Company could incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under the "Limitation on Indebtedness"
covenant; and (C) the aggregate amount of all such Restricted Payments declared
or made after the Closing Date (including such Restricted Payment) does not
exceed the sum of:

(I) 50% of the aggregate cumulative Consolidated Net Income (or, if such
aggregate cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss) of the Company accrued on a cumulative basis during the period
(taken as one accounting period) beginning on the date of the Merger and
ending on the last day of the Company's last fiscal quarter ending prior to
the date of the Restricted Payment;

(II) the aggregate Net Cash Proceeds received after the Closing Date by
the Company from the issuance or sale (other than to any of its
Subsidiaries) of its shares of Qualified Capital Stock

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or any options, warrants or rights to purchase such shares of Qualified
Capital Stock (less the value of any equity security referred to (and
determined in accordance with) the parenthetical in clause (a)(i) of the
definition of Consolidated Interest Expense);

(III) the aggregate Net Cash Proceeds received after the Closing Date by
the Company (other than from any of its Subsidiaries) upon the exercise of
any options, warrants or rights to purchase shares of Qualified Capital
Stock of the Company;

(IV) the aggregate Net Cash Proceeds received after the Closing Date by
the Company from Indebtedness of the Company or Redeemable Capital Stock of
the Company that has been converted into or exchanged for Qualified Capital
Stock of the Company (or options, warrants or rights to purchase such
Qualified Capital Stock), to the extent such Indebtedness of the Company or
Redeemable Capital Stock of the Company was originally incurred or issued
for cash, plus the aggregate Net Cash Proceeds received by the Company at
the time of such conversion or exchange;

(V) without duplication of any of the foregoing, 100% of the aggregate
Net Cash Proceeds received by the Company as a capital contribution from
United; plus

(VI) to the extent not included in Consolidated Net Income, the net
reduction (received by the Company or any Restricted Subsidiary in cash) in
Investments (other than Permitted Investments) made by the Company and the
Restricted Subsidiaries since the Closing Date, not to exceed, in the case
of any Investments in any Person, the amount of Investments (other than
Permitted Investments) made by the Company and the Restricted Subsidiaries
in such Person since the Closing Date.

(b) Notwithstanding the foregoing, and in the case of clauses (ii), (iii),
(iv), (v), (vi), (vii), (viii) and (ix) below, so long as there is no Default
or Event of Default continuing, the foregoing provisions shall not prohibit
the following actions:

(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would be
permitted by the provisions of paragraph (a) of this "Limitation on
Restricted Payments" covenant (such payment shall be deemed to have been
paid on such date of declaration for purposes of the calculation required
by paragraph (a) of this "Limitation on Restricted Payments" covenant);

(ii) the repurchase, redemption, or other acquisition or retirement of
any shares of any class of Capital Stock of the Company or warrants,
options or other rights to acquire such stock in exchange for, or out of
the Net Cash Proceeds of a substantially concurrent issue and sale (other
than to a Subsidiary) for cash of, any Qualified Capital Stock of the
Company or warrants, options or other rights to acquire such stock;

(iii) any repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or out of the net proceeds of a substantially
concurrent issuance and sale (other than to a Subsidiary) for cash of, any
Qualified Capital Stock of the Company or warrants, options or other rights
to acquire such stock;

(iv) the repurchase, redemption, defeasance, retirement or other
acquisition for value or payment of principal of any Subordinated
Indebtedness through the issuance of Indebtedness meeting the requirements
of clause (vii) of paragraph (b) of the "Limitation on Indebtedness"
covenant;

(v) the repurchase, redemption, acquisition or retirement of shares of
Capital Stock of United or options, warrants or other rights to purchase
such shares held by officers or employees or former officers or employees
of United and the Subsidiaries (or their estates or beneficiaries), upon
death, disability, retirement, or termination of employment, pursuant to
the terms of any employee stock option or stock purchase plan or agreement
under which such shares were acquired; provided that the aggregate
consideration paid for all such shares following the Closing Date does not
exceed $600,000 in any fiscal year of the Company; and provided further
that the amount by which $600,000

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exceeds the amount so used in any fiscal year of the Company shall be
available to be so used in subsequent fiscal years of the Company,
notwithstanding the immediately preceding proviso;

(vi) payments to United, to the extent used by United to pay its
operating and administrative expenses including, without limitation,
directors' fees, legal and audit expenses, Commission compliance expenses
and corporate franchise and other taxes, not to exceed $500,000 in any
fiscal year of the Company;

(vii) payments to United, not to exceed $250,000 in the aggregate after
the Closing Date, to the extent used by United to make cash payments to
holders of its Capital Stock in lieu of the issuance of fractional shares
of Capital Stock and to redeem or repurchase stock purchase or similar
rights issued as a shareholder rights device;

(viii) payments to United of up to $1,000,000 in any fiscal year of the
Company, to the extent used by United to satisfy its payment obligations
under the Management Services Agreements; and

(ix) the payment of dividends or the making of distributions to United,
within 90 days of the Closing Date, to the extent that United, within such
90 days, uses such dividends and distributions to redeem or repurchase all
or any portion of United's Series B Preferred Stock that is outstanding on
the Closing Date (plus any shares of Series B Preferred Stock issued as
dividends or accrued and unpaid dividends on such outstanding shares after
the Closing Date and prior to such redemption or repurchase); and the
purchase by the Company of all or any portion of United's Series B
Preferred Stock that is outstanding on the Closing Date (plus any shares of
Series B Preferred Stock issued as dividends or accrued and unpaid
dividends on such outstanding shares after the Closing Date and prior to
such purchase), within 90 days of the Closing Date; provided that the
aggregate amount of all such payments by the Company under this clause (ix)
shall not exceed $7.0 million.

The actions described in clauses (i) through (iii) and clauses (v) through
(vii) of this paragraph (b) shall be Restricted Payments that shall be
permitted to be taken in accordance with this paragraph (b) but shall reduce
the amount that would otherwise be available for Restricted Payments under
clause (C) of paragraph (a) of this "Limitation on Restricted Payments"
covenant (provided that any dividend paid pursuant to clause (i) of this
paragraph (b) shall reduce the amount that would otherwise be available under
clause (C) of paragraph (a) of this "Limitation on Restricted Payments"
covenant when declared, but not also when paid pursuant to such clause (i))
and the actions described in clauses (iv), (viii) and (ix) of this paragraph
(b) shall be permitted to be taken in accordance with this paragraph and shall
not reduce the amount that would otherwise be available for Restricted
Payments under clause (C) of paragraph (a).

Limitation on Transactions with Affiliates. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or suffer to exist any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange or
lease of assets or property or the rendering of any services) with any
Affiliate of the Company (other than a Restricted Wholly Owned Subsidiary of
the Company) unless (i) such transaction or series of transactions is in
writing on terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than would be available in a comparable
transaction in arm's-length dealings with an unrelated third party, (ii) with
respect to any such transaction or series of transactions involving aggregate
payments in excess of $1.0 million, the Company delivers an officers'
certificate to the Trustee certifying that such transaction or series of
related transactions complies with clause (i) above and such transaction or
series of related transactions has been approved by the Board of Directors of
the Company, and (iii) with respect to a transaction or series of related
transactions involving aggregate value in excess of $5.0 million, the Company
delivers to the Trustee an opinion of an independent investment banking firm
of national standing stating that the transaction or series of transactions is
fair to the Company or such Restricted Subsidiary from a financial point of
view.

The foregoing shall not apply to the performance of obligations under the
Management Service Agreements and the Employment Contracts, in each case as in
effect on the Closing Date.

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Limitation on Senior Subordinated Indebtedness. The Company and each
Guarantor will not, directly or indirectly, incur or otherwise permit to exist
any Indebtedness that is subordinate in right of payment to any Indebtedness
of the Company or such Guarantor, as the case may be, unless such Indebtedness
is also pari passu with the Notes or the Guarantee of the Notes by such
Guarantor, as the case may be, or subordinate in right of payment to the Notes
or such Guarantee of the Notes, as the case may be, to at least the same
extent as the Notes or such Guarantee are subordinate in right of payment to
Senior Indebtedness or Senior Guarantor Indebtedness, as the case may be, as
set forth in the Indenture.

Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, incur, assume or suffer to
exist any Lien of any kind upon any of its property or assets (including any
shares of Capital Stock or Indebtedness of any Restricted Subsidiary), owned
on the Closing Date or acquired after the Closing Date, or any income or
profits therefrom, except if the Notes (or the Guarantee of the Notes, in the
case of Liens on properties or assets of a Restricted Subsidiary that is a
Guarantor) and all other amounts due under the Indenture are directly secured
equally and ratably with (or prior to in the case of Liens with respect to
Subordinated Indebtedness) the obligation or liability secured by such Lien,
excluding, however, from the operation of the foregoing any of the following:

(a) any Lien existing as of the Closing Date;

(b) any Lien arising by reason of (i) any judgment, decree or order of
any court, so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have
expired; (ii) taxes, assessments or other governmental charges not yet
delinquent or which are being contested in good faith; (iii) security for
payment of workers' compensation or other insurance; (iv) good faith
deposits in connection with tenders, leases or contracts (other than
contracts for the payment of money); (v) zoning restrictions, easements,
licenses, reservations, provisions, covenants, conditions, waivers,
restrictions on the use of property or minor irregularities of title (and
with respect to leasehold interests, mortgages, obligations, liens and
other encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased property,
with or without consent of the lessee), none of which materially impairs
the use of any property or assets material to the operation of the business
of the Company or any Restricted Subsidiary or the value of such property
or assets for the purpose of such business; (vi) deposits to secure public
or statutory obligations, or in lieu of surety or appeal bonds with respect
to matters not yet finally determined and being contested in good faith by
negotiations or by appropriate proceedings which suspend the collection
thereof; or (vii) operation of law in favor of mechanics, materialmen,
laborers, employees or suppliers, incurred in the ordinary course of
business for sums which are not yet delinquent or are being contested in
good faith by negotiations or by appropriate proceedings which suspend the
collection thereof;

(c) any Lien now or hereafter existing on property of the Company or any
Guarantor securing Senior Indebtedness or Senior Guarantor Indebtedness, as
the case may be, of such Person;

(d) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by the Company, which Indebtedness is permitted under the
"Limitation on Indebtedness" covenant; provided that any such Lien only
extends to the assets that were subject to such Lien securing such Acquired
Indebtedness prior to the related acquisition; and

(e) any extension, renewal, refinancing or replacement, in whole or in
part, of any Lien described in the foregoing clauses (a) through (d) so
long as the amount of property or assets subject to such Lien is not
increased thereby.

Limitation on Sale of Assets. (a) The Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, consummate an
Asset Sale unless (i) at least 75% of the proceeds

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from such Asset Sale are received in cash and (ii) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset Sale at
least equal to the Fair Market Value of the shares or assets sold.

(b) If all or a portion of the Net Cash Proceeds of any Asset Sale is not
applied to repay permanently any Senior Indebtedness or Senior Guarantor
Indebtedness then outstanding as required by the terms thereof, and the Company
determines not to apply such Net Cash Proceeds to the prepayment of such Senior
Indebtedness or Senior Guarantor Indebtedness or if no such Senior Indebtedness
or Senior Guarantor Indebtedness is then outstanding, then the Company may,
within 12 months of the Asset Sale, invest (or enter into a written, legally
binding commitment to invest, provided that the investment provided for in such
commitment is actually made within 24 months of the Asset Sale) the Net Cash
Proceeds in other properties and assets that will be used in the businesses of
the Company existing on the Closing Date or in any company having such
properties and assets. The amount of such Net Cash Proceeds neither used to
permanently repay or prepay Senior Indebtedness or Senior Guarantor
Indebtedness nor used or invested as set forth in this paragraph (b)
constitutes "Excess Proceeds."

(c) When the aggregate amount of Excess Proceeds equals $10.0 million or
more, the Company shall, within 15 Business Days: make an offer (an "Offer") to
purchase, for cash, at 100% of the principal amount thereof, plus accrued and
unpaid interest to the repurchase date (the "Repurchase Date"), in accordance
with the procedures set forth in the Indenture the maximum principal amount
(expressed as a multiple of $1,000) of Notes that may be purchased out of an
amount (the "Note Amount") equal to the product of such Excess Proceeds
multiplied by a fraction, the numerator of which is the outstanding principal
amount of the Notes, and the denominator of which is the sum of the outstanding
principal amount of the Notes and any Pari Passu Indebtedness that is required
to be repurchased under the instrument governing such Pari Passu Indebtedness
and (ii) to the extent required by such Pari Passu Indebtedness, the Company
shall make an offer to purchase or, if required by the terms of such Pari Passu
Indebtedness, otherwise repurchase or redeem Pari Passu Indebtedness (a "Pari
Passu Repayment") in an amount (the "Pari Passu Debt Amount") equal to the
excess of the Excess Proceeds over the Note Amount; provided that in no event
shall the Pari Passu Debt Amount exceed the principal amount of such Pari Passu
Indebtedness plus the amount of any premium, if any, and accrued and unpaid
interest required to be paid to repurchase such Pari Passu Indebtedness. To the
extent that the aggregate principal amount of and accrued but unpaid interest
with respect to the Notes tendered pursuant to the Offer is less than the Note
Amount relating thereto or the aggregate amount of Pari Passu Indebtedness that
is purchased is less than the Pari Passu Debt Amount, the Company may use such
amounts not necessary to purchase the tendered Notes and the Pari Passu
Indebtedness required to be purchased for any purpose not prohibited by the
Indenture. Upon completion of the purchase of all the Notes tendered pursuant
to an Offer and the purchase of the Pari Passu Indebtedness pursuant to a Pari
Passu Repayment, the amount of Excess Proceeds, if any, shall be reset at zero.

The Company will comply with the applicable tender offer rules, including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws and
regulations in connection with an Offer.

Limitation on Issuances of Guarantees of Indebtedness. (a) The Company will
not permit any Restricted Subsidiary to incur any Guaranteed Debt, other than
Guaranteed Debt in respect of Senior Indebtedness of the Company; provided
that, concurrently with the incurrence of such Guaranteed Debt by any
Restricted Subsidiary, the Restricted Subsidiary incurring such Guaranteed Debt
(if it is not a Guarantor) shall execute a supplemental indenture setting forth
such Restricted Subsidiary's senior subordinated guarantee of the Notes, such
guarantee to be on the same terms as United's Guarantee of the Notes. Neither
the Company nor any Guarantor shall be required to make a notation on the Notes
or the Guarantees to reflect such Guarantee. In connection with such Guarantee
of the Notes, such Restricted Subsidiary shall waive, and agree that it will
not in any manner whatsoever claim or take the

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benefit or advantage of, any rights or reimbursement, indemnity or subrogation
or any other rights against the Company or any Guarantor as a result of any
payment by such Restricted Subsidiary with respect to such Guaranteed Debt.

(b) United will not incur any Guaranteed Debt with respect to any Pari Passu
Indebtedness or Subordinated Indebtedness unless such Guaranteed Debt is
subordinated (at least to the extent that Notes are subordinated in right of
payment to Senior Indebtedness) in right of payment to (or, in the case of
Guaranteed Debt with respect to Pari Passu Indebtedness, is pari passu in right
of payment with) United's Guarantee of the Notes.

(c) The Company will cause each of its domestic Restricted Subsidiaries,
other than the Joint Venture, promptly upon becoming a Restricted Subsidiary,
to execute a supplemental indenture providing for a Guarantee of the Notes on
the same terms as United's Guarantee of the Notes, including, without
limitation, the waiver and agreement referred to in the last sentence of
paragraph (a) above. Neither the Company nor any Guarantor shall be required to
make a notation on the Notes or the Guarantees to reflect such Guarantee.

Limitation on Subsidiary Capital Stock. The Company will not transfer, and
will not permit the transfer or issuance of, any Capital Stock of any
Restricted Subsidiary (including options, warrants or other rights to purchase
shares of such Capital Stock) except for (i) Capital Stock issued to and held
by the Company or a Restricted Wholly Owned Subsidiary, (ii) Capital Stock
issued by a Person prior to the time (A) such Person becomes a Restricted
Subsidiary, (B) such Person merges with or into a Restricted Subsidiary or (C)
a Restricted Subsidiary merges with or into such Person; provided that such
Capital Stock was not issued or incurred by such Person in anticipation of the
type of transaction contemplated by subclause (A), (B) or (C), (iii) the
transfer of all of the Capital Stock of a Restricted Subsidiary or (iv) the
issuance or transfer of directors' qualifying shares or a de minimis number of
shares required to be held by foreign nationals, in each case to the extent
required by applicable law. The foregoing shall not prohibit the pledge of any
shares of Capital Stock permitted under the "Limitation on Liens" covenant.

Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends, in cash or otherwise, or make any
other distribution on or in respect of its Capital Stock, (ii) pay any
Indebtedness owed to the Company or any other Restricted Subsidiary, (iii) make
any loans or advances to, or Investments in, the Company or any other
Restricted Subsidiary or (iv) transfer any of its properties or assets to the
Company or any other Restricted Subsidiary, except in any such case (1) any
encumbrance or restriction pursuant to an agreement in effect on the Closing
Date (2) any encumbrance or restriction, with respect to a Person that becomes
a Subsidiary after the Closing Date, in existence at the time such Person
becomes a Subsidiary and not incurred in connection with, or in contemplation
of, such Person becoming a Subsidiary; (3) any encumbrance or restriction
existing under any agreement that extends, renews, refinances or replaces the
agreements containing the encumbrances or restrictions in the foregoing clauses
(1) and (2), or in this clause (3), provided that the terms and conditions of
any such encumbrances or restrictions are not materially less favorable to the
Holders of the Notes than those under or pursuant to the agreement so extended,
renewed, refinanced or replaced; (4) any encumbrance or restriction created
pursuant to an asset sale agreement, stock sale agreement or similar instrument
pursuant to which a bona-fide Asset Sale the proceeds of which are applied as
provided in the Indenture is to be consummated, so long as such restriction or
encumbrance shall apply only to the assets subject to such Asset Sale and shall
be effective only for a period from the execution and delivery of such
agreement or instrument through the earlier of the consummation of such Asset
Sale or the termination of such agreement or instrument; (5) customary non-
assignment provisions of any lease governing any leasehold interest of the
Company or any Restricted Subsidiaries; (6) to the extent required by the
Indenture; and (7) any encumbrance or restriction existing under or by reason
of applicable law.

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Purchase of Notes upon a Change of Control. If a Change of Control shall
occur at any time, then each holder of Notes shall have the right to require
that the Company purchase such holder's Notes in whole or in part in integral
multiples of $1,000, at a purchase price (the "Change of Control Purchase
Price") in cash in an amount equal to 101% of the principal amount of such
Notes, plus accrued and unpaid interest, if any, to the date of purchase (the
"Change of Control Purchase Date"), pursuant to the offer described below (the
"Change of Control Offer") and the other procedures set forth in the Indenture.

Within 15 days following any Change of Control, the Company shall notify the
Trustee thereof and give written notice of such Change of Control to each
holder of Notes by first-class mail, postage prepaid, at his address appearing
in the security register, stating, among other things, (i) the purchase price
and the purchase date which shall be a Business Day no earlier than 30 days nor
later than 60 days from the date such notice is mailed, or such later date as
is necessary to comply with requirements under the Exchange Act; (ii) that any
Note not tendered will continue to accrue interest; (iii) that, unless the
Company defaults in the payment of the purchase price, any Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Purchase Date; and (iv) certain other procedures
that a holder of Notes must follow to accept a Change of Control Offer or to
withdraw such acceptance.

If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the Notes that might be delivered by holders of the
Notes seeking to accept the Change of Control Offer. The Senior Bank Facility
prohibits the purchase of the Notes by the Company prior to full repayment of
Indebtedness thereunder and, upon a Change of Control, all amounts outstanding
under the Senior Bank Facility may become due and payable. There can be no
assurance that, in the event of a Change in Control, the Company will be able
to obtain the necessary consents from the lenders under the Senior Bank
Facility to consummate a Change of Control Offer. The failure of the Company to
make or consummate the Change of Control Offer or pay the Change of Control
Purchase Price when due would result in an Event of Default and would give the
Trustee and the holders of the Notes the rights described under "Description of
Notes -- Events of Default," subject to the subordination provisions of the
Indenture.

"Change of Control" is defined in the Indenture to mean the occurrence of any
of the following events: (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more of the
Permitted Holders, becomes the ultimate "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than
50% of the voting power of the total outstanding Voting Stock of United (or any
successor) or the Company (or any successor) voting as one class; (ii) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of United or the Company (together
with any new directors whose election to such Board of Directors or whose
nomination for election by the shareholders of such Person, was approved by a
vote of 66 2/3% of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority of
such Board of Directors then in office; (iii) United or the Company conveys,
transfers, or leases or otherwise disposes of all or substantially all of its
assets to any Person (other than one or more of the Permitted Holders); (iv)
United (or any successor) or the Company (or any successor) is liquidated or
dissolved or adopts a plan of liquidation or dissolution other than in a
transaction which complies with the provisions described under "Description of
Notes -- Consolidation, Merger, Sale of Assets"; and (v) the failure of United
(or any successor) to "beneficially own" 100% of the voting power of the total
outstanding Voting Stock of the Company (or any successor).

The phrase "all or substantially all" as used in the definition of "Change of
Control" has not been interpreted under New York law (which is the governing
law of the Indenture) to represent a specific quantitative test. As a
consequence, in the event the holders of the Notes elected to exercise their

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rights under the Indenture and the Company elected to contest such election,
there could be no assurance as to how a court interpreting New York law would
interpret such phrase.

The existence of a Holder's right to require the Company to purchase such
Holder's Notes upon a Change of Control may deter a third party from acquiring
the Company in a transaction which constitutes a Change of Control.

The Company will comply with the applicable tender offer rules, including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws or
regulations in connection with a Change of Control Offer.

United will not, and will not permit any Subsidiary to, create or permit to
exist or become effective any restriction (other than restrictions in effect on
the Closing Date with respect to Indebtedness outstanding on the Closing Date
and refinancings thereof and customary default provisions) that would
materially impair the ability of the Company to make a Change of Control Offer
to purchase the Notes or, if such Change of Control Offer is made, to pay for
the Notes tendered for purchase.

Provision of Financial Statements. Whether or not United or the Company is
subject to Section 13(a) or 15(d) of the Exchange Act, United and the Company
will, to the extent permitted under the Exchange Act, deliver to the Commission
for filing the annual reports, quarterly reports and other documents which
United and the Company would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) if United and the Company were so
subject, such documents to be filed with the Commission on or prior to the
respective dates (the "Required Filing Dates") by which United and the Company
would have been required to so file such documents if United and the Company
were so subject (subject to a five day grace period). United and the Company
will also in any event (x) within 15 days of each Required Filing Date (subject
to a five day grace period) (i) transmit by mail to all Holders, as their names
and addresses appear in the security register, without cost to such Holders and
(ii) file with the Trustee copies of the annual reports, quarterly reports and
other documents which United and the Company would have been required to file
with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act if
United and the Company were subject to such Sections and (y) if filing such
documents by United and the Company with the Commission is not permitted under
the Exchange Act, promptly upon written request, supply copies of such
documents to any prospective Holder at United's and the Company's cost

CONSOLIDATION, MERGER, SALE OF ASSETS

The Company shall not, in a single transaction or through a series of related
transactions, consolidate with or merge with or into any other Person or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially
all of its properties and assets as an entirety to any Person or group of
affiliated Persons (and the Company will not permit any Restricted Subsidiary
to enter into any such transaction or transactions if such transaction or
transactions, in the aggregate, would result in the sale, assignment,
conveyance, transfer, lease or disposal of all or substantially all of the
properties and assets of the Company and its Restricted Subsidiaries on a
Consolidated basis to any other Person or group of affiliated Persons) unless
at the time and after giving effect thereto: (i) either (a) the Company shall
be the continuing corporation or (b) the Person (if other than the Company)
formed by such consolidation or into which the Company or such Subsidiary is
merged or the Person which acquires by sale, assignment, conveyance, transfer,
lease or disposition of all or substantially all of the properties and assets
of the Company or such Subsidiary, as the case may be, substantially as an
entirety (the "Surviving Entity") shall be a corporation duly organized and
validly existing under the laws of the United States of America, any state
thereof or the District of Columbia and such Person shall expressly assume, by
a supplemental indenture executed and delivered to the Trustee, all the
obligations of the Company under the Notes and the Indenture, and the Indenture
shall remain in full force and effect; (ii) immediately before and immediately
after giving effect to such transaction or transactions, no Default

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or Event of Default shall have occurred and be continuing; (iii) immediately
after giving effect to such transaction on a pro forma basis, the Consolidated
Net Worth of the Company (or of the Surviving Entity if other than the
Company), is equal to or greater than the Consolidated Net Worth of the Company
immediately prior to such transaction or transactions; (iv) immediately before
and immediately after giving effect to such transaction on a pro forma basis
(on the assumption that the transaction occurred on the first day of the four-
quarter period immediately prior to the consummation of such transaction with
the appropriate adjustments with respect to the transaction being included in
such pro forma calculation), the Company (or the Surviving Entity if other than
the Company), could incur at least $1.00 of additional Indebtedness under the
"Limitation on Indebtedness" covenant (other than Permitted Indebtedness); and
(v) the Company or the Surviving Entity shall have delivered, or caused to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an opinion of counsel, each to the effect
that such consolidation, merger, transfer, sale, assignment, conveyance, lease
or other transaction and the supplemental indenture in respect thereto comply
with the Indenture and that all conditions precedent herein provided for
relating to such transaction have been complied with.

In the event of any transaction described in and complying with the
conditions listed in the immediately preceding paragraph in which the Company
is not the continuing corporation, the successor Person formed or remaining
shall succeed to, and be substituted for, and may exercise every right and
power of the Company and the Company will be discharged from all obligations
and covenants under the Indenture and the Notes.

EVENTS OF DEFAULT

The following will be "Events of Default" under the Indenture:

(i) failure to pay any interest on any Note when it becomes due and
payable, and such failure shall continue for a period of 30 days;

(ii) failure to pay the principal of (or premium, if any, on) any Note at
its Maturity (upon acceleration, optional or mandatory redemption, required
repurchase or otherwise);

(iii) (a) failure to perform, or breach of, any covenant or agreement of
the Company, United or any Guarantor under the Indenture (other than a
default in the performance of, or breach of, a covenant or agreement which
is specifically dealt with in clause (i) or (ii) or in clauses (b), (c) and
(d) of this clause (iii)), and such default or breach shall continue for a
period of 30 days after written notice of such failure has been given, by
certified mail, (x) to the Company by the Trustee or (y) to the Company and
the Trustee by the holders of at least 25% in aggregate principal amount of
the outstanding Notes, specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default" under
the Indenture; (b) default in the performance or breach of the provisions
described under "Description of Notes -- Consolidation, Merger, Sale of
Assets"; (c) the Company shall have failed to make or consummate an Offer
in accordance with the provisions of the "Limitation on Sale of Assets"
covenant; or (d) the Company shall have failed to make or consummate a
Change of Control Offer in accordance with the provisions of the "Purchase
of Notes Upon a Change of Control" covenant;

(iv) one or more defaults shall have occurred under any agreements,
indentures or instruments under which the Company or any Restricted
Subsidiary then has outstanding Indebtedness in excess of $10 million
principal amount in the aggregate and, if not already matured at its final
maturity in accordance with its terms, such Indebtedness shall have been
accelerated;

(v) any Guarantee shall for any reason cease to be, or shall be asserted
in writing by such Guarantor, United or the Company not to be, in full
force and effect and enforceable in accordance with its terms or any
Subsidiary shall fail to Guarantee the Notes as required by the "Limitation
on Issuances of Guarantees of Indebtedness" covenant;

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(vi) one or more judgments, orders or decrees for the payment of money in
excess of $10 million, either individually or in the aggregate (net of
amounts covered by insurance, bond, surety or similar instrument), shall be
entered against the Company, United or any Restricted Subsidiary, or any of
their respective properties, and shall not be discharged and either (a) any
creditor shall have commenced an enforcement proceeding upon such judgment,
order or decree or (b) there shall have been a period of 60 consecutive
days during which a stay of enforcement of such judgment or order, by
reason of an appeal or otherwise, shall not be in effect;

(vii) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of the Company,
United or any Significant Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy Law or (b) a decree or order adjudging the
Company, United or any Significant Subsidiary bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company, United or any Significant Subsidiary under any
applicable federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the Company, United or any Significant Subsidiary or of any substantial
part of their respective properties, or ordering the winding up or
liquidation of their affairs, and any such decree or order for relief shall
continue to be in effect, or any such other decree or order shall be
unstayed and in effect, for a period of 60 consecutive days; or

(viii) (a) the Company, United or any Significant Subsidiary commences a
voluntary case or proceeding under any applicable Bankruptcy Law or any
other case or proceeding to be adjudicated bankrupt or insolvent, (b) the
Company, United or any Significant Subsidiary consents to the entry of a
decree or order for relief in respect of the Company, United or any
Significant Subsidiary in an involuntary case or proceeding under any
applicable Bankruptcy Law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, (c) the Company, United or any
Significant Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, (d) the
Company, United or any Significant Subsidiary (x) consents to the filing of
such petition or the appointment of, or taking possession by, a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
of the Company, United or any Significant Subsidiary or of any substantial
part of their respective properties or (y) makes an assignment for the
benefit of creditors or (e) the Company, United or any Significant
Subsidiary takes any corporate action in furtherance of any such actions in
this paragraph (viii).

If an Event of Default (other than as specified in clauses (vii) and (viii)
of the prior paragraph) shall occur and be continuing, the Trustee or the
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding may, and the Trustee at the request of such Holders shall, declare
all unpaid principal of (and premium, if any, on) and accrued interest on all
the Notes to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the Holders of the Notes); provided
that so long as the Senior Bank Facility is in effect, such declaration shall
not become effective until the earlier of (a) five business days after receipt
of such notice of acceleration from the Holders or the Trustee by the agent
under the Senior Bank Facility or (b) acceleration of the Indebtedness under
the Senior Bank Facility. Thereupon such principal shall become immediately
due and payable, and the Trustee may, at its discretion, proceed to protect
and enforce the rights of the holders of Notes by appropriate judicial
proceeding. If an Event of Default specified in clause (vii) or (viii) of the
prior paragraph occurs, then all the Notes shall ipso facto become and be
immediately due and payable, in an amount equal to the principal amount of the
Notes, together with accrued and unpaid interest, if any, to the date the
Notes become due and payable, without any declaration or other act on the part
of the Trustee or any Holder.

After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of Notes outstanding, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if (a) the Company has paid or deposited with the Trustee a sum
sufficient to pay

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(i) all sums paid or advanced by the Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (ii) all overdue interest on all Notes, and (iii) to
the extent that payment of such interest is lawful, interest upon overdue
interest at the rate borne by the Notes; and (b) all Events of Default, other
than the non-payment of principal of the Notes which has become due solely by
such declaration of acceleration, have been cured or waived; and (c) the
rescission will not conflict with any judgment or decree.

The Holders of not less than a majority in aggregate principal amount of the
Notes outstanding may on behalf of the Holders of all the Notes waive any past
defaults under the Indenture and its consequences, except a default in the
payment of the principal of (and premium, if any, on) or interest on any Note,
or in respect of a covenant or provision which under the Indenture cannot be
modified or amended without the consent of the Holder of each Note outstanding.

The Company is also required to notify the Trustee within five business days
of the occurrence of any Default.

The Trust Indenture Act contains limitations on the rights of the Trustee,
should it become a creditor of the Company or any Guarantor, to obtain payment
of claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions; provided that if it acquires any conflicting
interest, it must eliminate such conflict upon the occurrence of an Event of
Default or else resign.

DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE

The Company may, at its option and at any time, elect to have the obligations
of the Company and each Guarantor and any other obligor upon the Notes, if any,
discharged with respect to the outstanding Notes ("defeasance"). Such
defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Notes, except for (i)
the rights of holders of outstanding Notes to receive payments in respect of
the principal of (and premium, if any, on) and interest on such Notes when such
payments are due, (ii) the Company's obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes, and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights,
powers, trusts, duties and immunities of the Trustee, and (iv) the defeasance
provisions of the Indenture. In addition, the Company may, at its option and at
any time, elect to have the obligations of the Company and each Guarantor
released with respect to certain covenants that are described in the Indenture
("covenant defeasance") and any omission to comply with such obligations shall
not constitute a Default or an Event of Default with respect to the Notes. In
the event covenant defeasance occurs, certain events (not including non-
payment, enforceability of any Guarantee, bankruptcy and insolvency events)
described in "Description of Notes -- Events of Default" will no longer
constitute an Event of Default with respect to the Notes.

In order to exercise either defeasance or covenant defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders of the Notes, cash in United States dollars, U.S. Government
Obligations (as defined in the Indenture), or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay and discharge the principal of (and
premium, if any, on) and interest on the outstanding Notes on the Stated
Maturity of such principal or installment of principal (or, if specified by the
Company in an Officers' Certificate delivered to the Trustee at the time of
such deposit, any date upon which the Company would be entitled to redeem all
Notes outstanding); (ii) in the case of defeasance, the Company shall have
delivered to the Trustee an opinion of independent counsel in the United States
stating that since the Closing Date (A) the Company has received from, or there
has been published by, the Internal Revenue Service a ruling or (B) there has
been a change in the applicable federal income tax law, in either case to the
effect that, and based thereon such opinion of counsel in

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the United States shall confirm that, the holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
of such defeasance had not occurred; (iii) in the case of covenant defeasance,
the Company shall have delivered to the Trustee an opinion of independent
counsel in the United States to the effect that the holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax purposes
as a result of such covenant defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred; (iv) no Default or
Event of Default shall have occurred and be continuing on the date of such
deposit; (v) such defeasance or covenant defeasance shall not cause the Trustee
to have a conflicting interest with respect to any securities of the Company or
any Guarantor; (vi) such defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under, the Indenture or any
other material agreement or instrument to which the Company or any Guarantor is
a party or by which it is bound; (vii) the Company shall have delivered to the
Trustee an opinion of independent counsel to the effect that (A) the trust
funds will not be subject to any rights of holders of Senior Indebtedness or
Senior Guarantor Indebtedness, including, without limitation, those arising
under the Indenture and (B) after the 123rd day following the deposit, the
trust funds will not be subject to the avoidance under any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally; (viii) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the holders of the Notes or any Guarantee over the
other creditors of the Company or any Guarantor or with the intent of
defeating, hindering, delaying or defrauding creditors of the Company, any
Guarantor or others; (ix) no event or condition shall exist that would prohibit
the Company from making payments of the principal of (and premium, if any on)
and interest on the Notes on the date of such deposit; and (x) the Company
shall have delivered to the Trustee an Officers' Certificate and an opinion of
counsel, each stating that all conditions precedent provided for relating to
either defeasance or covenant defeasance, as the case may be, have been
complied with.

SATISFACTION AND DISCHARGE

The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (a) either (i) all the Notes theretofore authenticated and delivered
(other than lost, stolen or destroyed Notes which have been replaced or paid)
have been delivered to the Trustee for cancellation or (ii) all Notes not
theretofore delivered to the Trustee for cancellation (x) have become due and
payable, (y) will become due and payable at their Stated Maturity within one
year or (z) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company, and the Company or any
Guarantor has irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire Indebtedness on
the Notes not theretofore delivered to the Trustee for cancellation, including
principal of (and premium, if any, on) and accrued interest at such Stated
Maturity or redemption date; (b) the Company or any Guarantor has paid or
caused to be paid all other sums payable under the Indenture by the Company and
each Guarantor; and (c) the Company has delivered to the Trustee an Officers'
Certificate and an opinion of counsel each stating that (i) all conditions
precedent under the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with and (ii) such satisfaction and discharge will
not result in a breach or violation of, or constitute a default under, the
Indenture or any other material agreement or instrument to which the Company or
any Guarantor is a party or by which the Company or any Guarantor is bound.

MODIFICATIONS AND AMENDMENTS

Without the consent of any Holders, the Company, the Guarantors and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental to the Indenture for any of

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the following purposes: (1) to add to the covenants of the Company and the
Guarantors for the benefit of the Holders, or to surrender any right or power
therein conferred upon the Company and the Guarantors; (2) to add additional
Events of Default; (3) to evidence and provide for the acceptance of the
appointment under the Indenture by a successor Trustee; (4) to secure the
Notes; (5) to cure any ambiguity, to correct or supplement any provision in the
Indenture which may be defective or inconsistent with any other provision in
the Indenture, or to make any other provisions with respect to matters or
questions arising under the Indenture, provided that such actions pursuant to
this clause shall not adversely affect the interests of the Holders in any
material respect; or (6) to comply with any requirements of the Commission in
order to effect and maintain the qualification of the Indenture under the Trust
Indenture Act; provided that certain legal opinions and Officers' Certificates
are delivered.

Modifications and amendments of the Indenture may be made by the Company, the
Guarantors and the Trustee with the consent of the Holders of not less than a
majority in aggregate outstanding principal amount of the Notes; provided,
however, that no such modification or amendment may, without the consent of the
holder of each outstanding Note affected thereby: (i) change the Stated
Maturity of the principal of, or any installment of interest on, any Note or
reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or change the coin or currency in
which the principal of any Note or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof; (ii) amend, change or modify
the obligation of the Company to make and consummate an Offer with respect to
any Asset Sale or Asset Sales in accordance with the "Limitation on Sale of
Assets" covenant or the obligation of the Company to make and consummate a
Change of Control Offer in the event of a Change of Control in accordance with
the "Purchase of Notes upon a Change of Control" covenant, including, without
limitation, amending, changing or modifying any definitions with respect
thereto; (iii) reduce the percentage in principal amount of outstanding Notes,
the consent of whose holders is required for any such modifications and
amendments, or the consent of whose holders is required for any waiver; (iv)
modify any of the provisions relating to supplemental indentures requiring the
consent of holders or relating to the waiver of past defaults or relating to
the waiver of certain covenants, except to increase the percentage of
outstanding Notes required for such actions or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the holder of each of each Note affected thereby; (v) except as otherwise
permitted under "Description of the New Notes -- Consolidation, Merger, Sale of
Assets," consent to the assignment or transfer by the Company or any Guarantor
of any of its rights and obligations under the Indenture; or (vi) amend or
modify any of the provisions of the Indenture relating to the subordination of
the Notes or any Guarantee in any manner adverse to the holders of the Notes.

GOVERNING LAW

The Indenture, the Notes and the Guarantees are governed by, and construed in
accordance with the laws of the State of New York, without giving effect to the
conflicts of law principles thereof.

CERTAIN DEFINITIONS

"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Restricted Subsidiary or (ii) assumed in connection
with the acquisition of assets from such Person. Acquired Indebtedness shall be
deemed to be incurred on the date of the related acquisition of assets from any
Person or the date the acquired Person becomes a Subsidiary.

"Affiliate" means, with respect to any specified Person, (i) any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person or (ii) any other Person that owns,
directly or indirectly, 10% or more of such specified Person's Capital Stock or
any executive officer or director of any such specified Person or other Person
or, with respect to any natural Person, any person having a relationship with
such Person by blood, marriage or adoption

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not more remote than first cousin. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing. Notwithstanding any of the foregoing, for purposes of the Indenture,
The Chase Manhattan Corporation and its subsidiaries shall be deemed not to be
an Affiliate of United, the Company or any Subsidiary.

"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
Sale and Leaseback Transaction) (collectively, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (i) any Capital
Stock of any Subsidiary; (ii) all or substantially all of the properties and
assets of any division or line of business of the Company or any Restricted
Subsidiary; or (iii) any other properties or assets of the Company or any
Restricted Subsidiary, other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" shall not include (x) any
transfer of properties or assets (A) that is governed by the first paragraph
under "-- Consolidation, Merger, Sale of Assets" or (B) that is by the Company
to any Restricted Wholly Owned Subsidiary, or by any Restricted Wholly Owned
Subsidiary to the Company or any Restricted Wholly Owned Subsidiary in
accordance with the terms of the Indenture or (y) transfers of properties and
assets listed on Schedule I to the Indenture.

"Average Life to Stated Maturity" means, as of the date of determination with
respect to any Indebtedness, the quotient obtained by dividing (i) the sum of
the products of (a) the number of years from the date of determination to the
date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal payment by
(ii) the sum of all such principal payments.

"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization
or relief of debtors or any amendment to, succession to or change in any such
law.

"Borrowing Base" means, as of any date, an amount equal to the sum of (a) 80%
of the face amount of all accounts receivable of the Company and its Restricted
Subsidiaries as of such date and (b) 50% of the book value (calculated on a
FIFO basis) of all inventory owned by the Company and its Restricted
Subsidiaries as of such date, all calculated on a consolidated basis and in
accordance with GAAP. To the extent that information is not available as to the
amount of accounts receivable or inventory as of a specific date, the Company
may utilize the most recent available quarterly or annual financial report for
purposes of calculating the Borrowing Base.

"Capital Lease Obligation" means any obligations of the Company and its
Restricted Subsidiaries on a Consolidated basis under any capital lease of real
or personal property which, in accordance with GAAP, has been recorded as a
capitalized lease obligation.

"Capital Stock" of any Person means any and all shares, interests,
participations, partnership interests or other equivalents (however designated)
of such Person's capital stock.

"Closing Date" means May 3, 1995.

"Consolidated Fixed Charge Coverage Ratio" of the Company means, for any
period, the ratio of (a) the sum of Consolidated Net Income (Loss),
Consolidated Interest Expense, Consolidated Income Tax Expense and Consolidated
Non-cash Charges deducted in computing Consolidated Net Income (Loss) in each
case, for such period, of the Company and its Restricted Subsidiaries on a
Consolidated basis, all determined in accordance with GAAP to (b) the sum of
Consolidated Interest Expense for such period and cash and non-cash dividends
required to be paid or accrued on any Preferred Stock of

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the Company and its Restricted Subsidiaries during such period; provided that
(i) in making such computation, the Consolidated Interest Expense attributable
to interest on any Indebtedness computed on a pro forma basis and (A) bearing a
floating interest rate, shall be computed as if the rate in effect on the date
of computation had been the applicable rate for the entire period and (B) which
was not outstanding during the period for which the computation is being made
but which bears at the option of the Company, a fixed or floating rate of
interest, shall be computed by applying at the option of the Company, either
the fixed or floating rate and (ii) in making such computation, the
Consolidated Interest Expense of the Company and its Restricted Subsidiaries
attributable to interest on any Indebtedness under a revolving credit facility
computed on a pro forma basis shall be computed based upon the average daily
balance of such Indebtedness during the applicable period.

"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes of the Company and its
Restricted Subsidiaries for such period as determined in accordance with GAAP
on a Consolidated basis.

"Consolidated Interest Expense" of the Company means, without duplication,
for any period, the sum of (a) the interest expense of the Company and its
Restricted Subsidiaries for such period, on a Consolidated basis, including,
without limitation, (i) amortization of debt discount (other than debt discount
attributable solely to a discount in the purchase price of Indebtedness sold
with an equity security, to the extent of the amount of the value reasonably
attributed in good faith to such equity security at the time of such sale and
reflected in an Officers' Certificate delivered promptly thereafter to the
Trustee), (ii) the net cost under Interest Rate Agreements (including
amortization of discounts), (iii) the interest portion of any deferred payment
obligation, (iv) accrued interest and (v) the amortization of deferred
financing costs, plus (b) (i) the interest component of the Capital Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Company
during such period and (ii) all capitalized interest of the Company and its
Restricted Subsidiaries, less (c) the amortization of any deferred financing
costs incurred with respect to the issuance of the Notes or the borrowings
under the Senior Bank Facility, to the extent paid prior to or on the Closing
Date, in each case as determined in accordance with GAAP on a Consolidated
basis.

"Consolidated Net Income (Loss)" of the Company means, for any period, the
Consolidated net income (or loss) of the Company and its Restricted
Subsidiaries for such period as determined in accordance with GAAP, adjusted,
to the extent included in calculating such net income (loss), by excluding,
without duplication, (i) all extraordinary gains or losses (less all fees and
expenses relating thereto), (ii) the portion of net income (or loss) of the
Company and its Restricted Subsidiaries allocable to minority interests in
unconsolidated Persons to the extent that cash dividends or distributions have
not actually been received by the Company or one of its Restricted
Subsidiaries, (iii) net income (or loss) of any Person combined with the
Company or any of its Restricted Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (iv) any gain or
loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (v) net gains (or losses), less all fees and expenses relating
thereto, in respect of dispositions of assets other than in the ordinary course
of business and the net income of any Unrestricted Subsidiary, except to the
extent paid to the Company or any Restricted Subsidiary in cash as a dividend
or distribution or (vi) the net income of any Restricted Subsidiary to the
extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulations
applicable to such Restricted Subsidiary or its stockholders.

"Consolidated Net Worth" of any Person means the Consolidated stockholders'
equity (excluding Redeemable Capital Stock) of such Person and its subsidiaries
(or, in the case of United or the Company, the Restricted Subsidiaries), as
determined in accordance with GAAP on a Consolidated basis.

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"Consolidated Non-cash Charges" of the Company means, for any period, the
aggregate depreciation, amortization and other non-cash charges of the Company
and its Restricted Subsidiaries on a Consolidated basis reducing the
Consolidated Net Income of the Company and its Restricted Subsidiaries for such
period, as determined in accordance with GAAP (excluding any non-cash charge
which requires an accrual or reserve for cash charges for any future period).

"Consolidation" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its subsidiaries (or, in the case of United
or the Company, the Restricted Subsidiaries) if and to the extent the accounts
of such Person and each of its subsidiaries (or, in the case of United or the
Company, the Restricted Subsidiaries) would normally be consolidated with those
of such Person, all in accordance with GAAP. The term "Consolidated" shall have
a similar meaning.

"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.

"Employment Agreements" means the several employment agreements, dated on or
prior to the Closing Date, between or among United and/or the Company and each
of Joel D. Spungin, Jeffrey K. Hewson, Ronald W. Weissman, Allen B. Kravis,
Steven R. Schwarz, Robert H. Cornell, Otis H. Halleen, Jerold A Hecktman, Ted
S. Rzeszuto, Michael D. Rowsey, Daniel J. Schleppe, Daniel H. Bushell, Robert
D. Eberspacher, Duane J. Ratay and Lawrence E. Miller.

"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing
buyer under no compulsion to buy as determined by the Board of Directors in
good faith and evidenced by a resolution of the Board of Directors.

"GAAP" or "Generally Accepted Accounting Principles" means generally accepted
accounting principles in the United States, consistently applied, which are in
effect at the time any given calculation is made.

"Guarantee" means the guarantee by any Guarantor of the Company's Indenture
Obligations pursuant to a guarantee given in accordance with the Indenture.

"Guaranteed Debt" of any Person means, without duplication, all Indebtedness
of any other Person guaranteed directly or indirectly in any manner by such
Person through an agreement (i) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness, (ii)
to purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make payment
of such Indebtedness or to assure the holder of such Indebtedness against loss,
(iii) to supply funds to, or in any other manner invest in, the debtor
(including any agreement to pay for property or services without requiring that
such property be received or such services be rendered), (iv) to maintain
working capital or equity capital of the debtor, or otherwise to maintain the
net worth, solvency or other financial condition of the debtor or (v) otherwise
to assure a creditor against loss; provided that the term "guarantee" shall not
include endorsements for collection or deposit, in either case in the ordinary
course of business.

"Guarantor" means United and each Restricted Subsidiary that is organized
under the laws of the United States or any state or territory thereof,
including the District of Columbia, other than the Joint Venture.

"Indebtedness" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables, but including,
without limitation, all obligations, contingent or otherwise, of such Person in
connection with any letters of credit issued under letter of credit facilities,
acceptance facilities or other similar facilities now or hereafter outstanding,
if, and to the extent, any of the foregoing would

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<PAGE>

appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, (ii) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), but excluding trade payables arising
in the ordinary course of business, (iv) all obligations under Interest Rate
Agreements of such Person, (v) all Capital Lease Obligations of such Person,
(vi) all Indebtedness referred to in clauses (i) through (v) above of other
Persons and all dividends of other Persons, the payment of which is secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien, upon or with respect to property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, (vii) all Guaranteed Debt of such Person and
(viii) all Redeemable Capital Stock valued at the greater of its voluntary or
involuntary maximum fixed repurchase price. For purposes hereof, the "maximum
fixed repurchase price" of any Redeemable Capital Stock which does not have a
fixed repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
the Indenture, and if such price is based upon, or measured by, the Fair Market
Value of such Redeemable Capital Stock, such Fair Market Value shall be
determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock.

"Interest Rate Agreements" means one or more of the following agreements
which shall be entered into by one or more financial institutions: interest
rate protection agreements (including, without limitation, interest rate swaps,
caps, floors, collars and similar arrangements) and/or other types of interest
rate hedging agreements from time to time.

"Investments" means, with respect to any Person, directly or indirectly, any
advance, loan (including guarantees), or other extension of credit or capital
contribution to (by means of any transfer of cash or other property to others
or any payment for property or services for the account or use of others), or
any purchase, acquisition or ownership by such Person of any Capital Stock,
bonds, notes, debentures or other securities issued by, any other Person and
all other items that would be classified as investments on a balance sheet
prepared in accordance with GAAP. In addition, the Fair Market Value of the net
assets of any Restricted Subsidiary at the time that such Restricted Subsidiary
is designated an Unrestricted Subsidiary shall be deemed to be an "Investment"
made by the Company in such Unrestricted Subsidiary. The amount of any non-cash
Investment shall be equal to the Fair Market Value of the assets invested, as
determined in good faith by (i) in the case of any Investment in excess of
$500,000, the Board of Directors of the Company (provided that such
determination is evidenced by a Board Resolution) or (ii) in any other case, an
executive officer of the Company.

"Joint Venture" means United Business Computers, Inc., a Delaware
corporation.

"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable,
now owned or hereafter acquired.

"Management Services Agreements" means the several investment banking fee and
management agreements dated on or prior to the Closing Date, among United, the
Company and Wingate Partners L.P., Cumberland Capital Corporation and Good
Capital Co., Inc., as amended to the Closing Date.

"Maturity" when used with respect to any Note means the date on which the
principal of such Note becomes due and payable as therein provided or as
provided in the Indenture, whether at Stated Maturity, the Repurchase Date or
the redemption date and whether by declaration of acceleration, Offer in
respect of Excess Proceeds, Change of Control, call for redemption or
otherwise.

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<PAGE>

"Merger" means, collectively, the merger of Associated with and into United
and the merger of ASI with and into the Company.

"Net Cash Proceeds" means (a) with respect to any Asset Sale by any Person,
the proceeds thereof in the form of cash or Temporary Cash Investments
including payments in respect of deferred payment obligations when received in
the form of, or stock or other assets when disposed for, cash or Temporary Cash
Investments (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary) net of (i) brokerage
commissions and other actual fees and expenses (including fees and expenses of
counsel and investment bankers) related to such Asset Sale, (ii) provisions for
all taxes payable as a result of such Asset Sale, (iii) payments made to retire
Indebtedness where payment of such Indebtedness is secured by the assets or
properties the subject of such Asset Sale, (iv) amounts required to be paid to
any Person (other than the Company or any Restricted Subsidiary) owning a
beneficial interest in the assets subject to the Asset Sale and (v) appropriate
amounts to be provided by the Company or any Restricted Subsidiary, as the case
may be, as a reserve, in accordance with GAAP or, until no longer required by
contract with the buyer, as required by contract with the buyer, against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected
in an Officers' Certificate delivered to the Trustee and (b) with respect to
any issuance or sale of Capital Stock or options, warrants or rights to
purchase Capital Stock or Indebtedness or Capital Stock that have been
converted into or exchanged for Capital Stock, the proceeds of such issuance or
sale in the form of cash or Temporary Cash Investments, including payments in
respect of deferred payment obligations when received in the form of, or stock
or other assets when disposed for, cash or Temporary Cash Investments (except
to the extent that such obligations are financed or sold with recourse to the
Company or any Restricted Subsidiary), net of attorneys' fees, accountants'
fees and brokerage, consultation, underwriting and other fees and expenses
actually incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.

"Pari Passu Indebtedness" means any Indebtedness of the Company or a
Guarantor that is pari passu in right of payment to the Notes or a Guarantee of
the Notes, as the case may be.

"Permitted Holders" means Wingate Partners, L.P., Wingate Partners II, L.P.,
Wingate Affiliates, L.P., and Wingate Affiliates II, L.P. (collectively,
"Wingate Partners"), ASI Partners, L.P., ASI Partners II, L.P., Cumberland
Capital Corporation, Good Capital Co., Inc., Daniel J. Good, Boise Cascade
Corporation, Chase Manhattan Investment Holdings, Inc., James A. Johnson,
Michael D. Rowsey, Daniel J. Schleppe, Daniel H. Bushell and Robert W.
Eberspacher, all such Persons being stockholders of United on the Closing Date,
together with (i) the direct and indirect general partners of Wingate Partners
and (ii) any entity controlled by Wingate Partners, in each case on April 26,
1995.

"Permitted Investment" means (i) investments in the Company or any Restricted
Wholly Owned Subsidiary or any Person which, as a result of such Investment,
becomes a Restricted Wholly Owned Subsidiary; (ii) Indebtedness of the Company
or a Restricted Subsidiary described under clauses (v) and (vi) of the
definition of "Permitted Indebtedness"; (iii) Temporary Cash Investments; (iv)
Investments acquired by the Company or any Restricted Subsidiary in connection
with an Asset Sale permitted under the "Limitation on Sale of Assets" covenant
to the extent such Investments are non-cash proceeds as permitted under such
covenant; (v) guarantees of Indebtedness otherwise permitted by the Indenture;
(vi) Investments in existence on the Closing Date; (vii) customer advances not
to exceed $250,000 at any one time outstanding; (viii) travel and relocation
loans and advances made to employees in the ordinary course of business not to
exceed $200,000 at any one time outstanding; (ix) Investments received in
settlement of defaulted receivables or in connection with the bankruptcy or

124
<PAGE>

reorganization of suppliers and customers and in connection with the settlement
of other disputes with customers and suppliers arising in the ordinary course
of business; and (x) additional Investments not to exceed $1 million at any one
time outstanding.

"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivisions thereof.

"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred stock whether now outstanding, or issued after the Closing
Date, and including, without limitation, all classes and series of preferred or
preference stock.

"Public Equity Offering" means a bona-fide underwritten sale to the public of
Common Stock of the Company or of United, to the extent that the net cash
proceeds thereof are paid to the Company as a capital contribution, pursuant to
a registration statement (other than Form S-8 or a registration statement
relating to securities issuable by any benefit plan of United, the Company or
any Subsidiary) that is declared effective by the Securities and Exchange
Commission.

"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.

"Redeemable Capital Stock" means any Capital Stock that, either by its terms
or by the terms of any security into which it is convertible or exchangeable or
otherwise, is or upon the happening of an event or passage of time would be,
required to be redeemed prior to any Stated Maturity of the principal of the
Notes or is redeemable at the option of the holder thereof at any time prior to
any such Stated Maturity.

"Representative" means, with respect to any Designated Senior Indebtedness or
Designated Senior Guarantor Indebtedness, the indenture trustee or other
trustee, agent or representative in respect of such Indebtedness; provided that
if, and so long as, any such Indebtedness lacks such a representative, then the
"Representative" with respect to such Indebtedness shall be the holders of a
majority in outstanding principal amount (or, if no amounts thereunder are
outstanding, the committed amounts) of such Indebtedness.

"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.

"Sale and Leaseback Transaction" means any transaction or series of related
transactions pursuant to which the Company or a Restricted Subsidiary sells or
transfers any property or asset in connection with the leasing, or the resale
against installment payments, of such property or asset to the seller or
transferor.

"Senior Bank Facility" means the Senior Bank Facility, each dated as of March
30, 1995, among the Company, United, the subsidiaries of the Company, if any,
identified on the signature pages thereof under the caption "Subsidiary
Guarantors," the lenders named therein and Chase Bank, as agent, including a
term loan made pursuant to the term loan agreement, a revolving credit loan
made pursuant to the revolving credit loan agreement, and any ancillary
documents executed in connection therewith, as such agreements may be amended,
renewed, extended, substituted, refinanced, restructured, replaced,
supplemented or otherwise modified from time to time (including, without
limitation, any successive renewals, extensions, substitutions, refinancings,
restructuring, replacements, supplementations or other modifications of the
foregoing, including the addition of new lenders or agents). For purposes of
the Indenture, "Senior Bank Facility" shall include any amendments, renewals,
extensions, substitutions, refinancings, restructuring, replacements,
supplements or any other modifications that increase the principal amount of
the Indebtedness or the commitments to lend thereunder; provided that, for
purposes of the definition of "Permitted Indebtedness," no such increase

125
<PAGE>

may result in the principal amount of Indebtedness under the Credit Agreement
exceeding the amount permitted by subparagraphs (b)(i) and (b)(ii) of the
"Limitation on Indebtedness" covenant; and provided further that there shall at
any time be only one instrument that constitutes the "Senior Bank Facility"
under the Indenture. The Senior Bank Facility on the date hereof consists of
the New Credit Facilities referred to elsewhere in this Prospectus.

"Significant Subsidiary" means, at any date of determination any Restricted
Subsidiary that, together with its Subsidiaries, (i) for the most recent fiscal
year of the Company, accounted for more than 10% of the Consolidated revenues
of the Company or (ii) as of the end of such fiscal year, was the owner of more
than 10% of the Consolidated assets of the Company, all as set forth on the
most recently available Consolidated financial statements of the Company for
such fiscal year.

"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon, means the dates specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest is due and payable.

"Subordinated Indebtedness" means Indebtedness of the Company or a Guarantor
subordinated in right of payment to the Notes or a Guarantee of the Notes, as
the case may be.

"Subsidiary" means any Person a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries.

"Temporary Cash Investments" means (i) any evidence of Indebtedness with a
maturity of one year or less and issued by the United States of America, or an
instrumentality or agency thereof and guaranteed fully as to principal,
premium, if any, and interest by the United States of America, (ii) any
certificate of deposit with a maturity of one year or less and issued by, or a
time deposit of, a commercial banking institution that is a member of the
Federal Reserve System and that has combined capital and surplus and undivided
profits of not less than $500,000,000 whose debt has a rating, at the time as
of which any investment therein is made, of "P-1" (or higher) according to
Moody's Investors Service, Inc. ("Moody's") or any successor rating agency or
"A-1" (or higher) according to Standard and Poor's Corporation ("S&P") or any
successor rating agency, (iii) commercial paper with a maturity of one year or
less and issued by a corporation (other than an Affiliate or Subsidiary of
United) organized and existing under the laws of any state of the United States
of America or the District of Columbia with a rating, at the time as of which
any investment therein is made, of "P-1" (or higher) according to Moody's or
"A-1" (or higher) according to S&P and (iv) any money market deposit accounts
issued or offered by a domestic commercial bank having capital and surplus in
excess of $500,000,000.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.

"Unrestricted Subsidiary" means (1) any Subsidiary which at the time of
determination shall be designated an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below), (2) any Subsidiary
of an Unrestricted Subsidiary, and (3) United Stationers Hong Kong Limited and
United Worldwide Limited, each of which is a corporation organized under the
laws of Hong Kong. The Board of Directors of the Company may designate any
Subsidiary (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary so long as (a) neither the Company nor any Restricted
Subsidiary is directly or indirectly liable for any Indebtedness of such
Subsidiary (except pursuant to a guarantee that, if it had been made after such
designation, would have been permitted to be made under the "Limitation on
Restricted Payments" covenant, including permitted Investments), (b) no default
with respect to any Indebtedness of such Subsidiary would permit (upon notice,
lapse of time or otherwise) any holder of any other Indebtedness of the Company
or any Restricted Subsidiary having a principal amount of $10 million or more
to declare a default on such other Indebtedness or cause the payment thereof to
be accelerated or payable prior to its stated maturity, (c) neither the Company
nor any Restricted Subsidiary has, prior to the date of such designation, made
an Investment in such Subsidiary unless the amount of such Investment, if it
had been made after the date of such designation, would have been permitted
under the "Limitation on

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<PAGE>

Restricted Payments" covenant (including Permitted Investments), (d) neither
the Company nor any Restricted Subsidiary has a contract, agreement,
arrangement, understanding or obligation of any kind, whether written or oral,
with such Subsidiary other than those that might be obtained at the time from
Persons who are not Affiliates of the Company. Any such designation by the
Board of Directors of the Company shall be evidenced to the Trustee by filing a
Board Resolution with the Trustee giving effect to such designation and, for
purposes of the "Limitation on Restricted Payments" covenant, shall constitute
the making of an Investment in such Unrestricted Subsidiary as provided under
the definition of Investment. The Board of Directors of the Company may
designate any Unrestricted Subsidiary as a Restricted Subsidiary if immediately
after giving effect to such designation there would be no Default or Event of
Default under the Indenture and the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the "Limitation on
Indebtedness" covenant.

"Voting Stock" means stock of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation (irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).

"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock of which
(other than directors' qualifying shares or a de minimus number of shares
required, under applicable law, to be owned by foreign nationals) is owned by
the Company or another Wholly Owned Subsidiary; and "Restricted Wholly Owned
Subsidiary" means a Wholly Owned Subsidiary that is a Restricted Subsidiary.

127
<PAGE>

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Notes for New Notes, but does
not purport to be a complete analysis of all potential tax effects. The
discussion is based upon the Internal Revenue Code of 1986, as amended,
Treasury regulations, Internal Revenue Service rulings and pronouncements and
judicial decisions now in effect, all of which are subject to change at any
time by legislative, judicial or administrative action. Any such changes may be
applied retroactively in a manner that could adversely affect a holder of the
New Notes. The description does not consider the effect of any applicable
foreign, state, local or other tax laws or estate or gift tax considerations.

EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO HIM OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.

EXCHANGE OF OLD NOTES FOR NEW NOTES

The exchange of Old Notes for New Notes pursuant to the Exchange Offer should
not constitute a material modification of the terms of the Old Notes and,
therefore, such exchange should not constitute an exchange for federal income
tax purposes. Accordingly, such exchange should have no federal income tax
consequences to holders of Old Notes.

PLAN OF DISTRIBUTION

Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 180 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, for 90 days following the later of (i) the effective date of the
Registration Statement and (ii) the first date upon which the New Notes were
bona fide offered to the public, all dealers effecting transactions in the New
Notes may be required to deliver a prospectus.

The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or though brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

For a period of 180 days after the Expiration Date the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that

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<PAGE>

requests such documents in the Letter of Transmittal. The Company has agreed to
pay all expenses incident to the Exchange Offer other than commissions or
concessions of any brokers or dealers.

LEGAL MATTERS

Certain legal matters in connection with the New Notes will be passed upon
for United and the Company by Weil, Gotshal & Manges, a partnership including
professional corporations, Dallas, Texas.

EXPERTS

The consolidated financial statements of United as of August 31, 1993 and
1994 and for the years ended August 31, 1992, 1993 and 1994 included in this
Prospectus and the consolidated financial statements of Associated as of
December 31, 1993 and 1994 and from inception, January 31, 1992, through
December 31, 1992 and for the years ended December 31, 1993 and 1994 included
in this Prospectus have been audited by Arthur Andersen LLP, and the
consolidated financial statements of United as of March 30, 1995 and for the
seven months ended March 30, 1995 included in this Prospectus have been audited
by Ernst & Young LLP, independent public accountants, as indicated in their
respective reports with respect thereto, and are included herein in reliance
upon the authority of said firms as experts in accounting and auditing.

129
<PAGE>

INDEX TO FINANCIAL STATEMENTS

UNITED STATIONERS INC. AND SUBSIDIARIES

<TABLE>
<S> <C>
Report of Independent Auditors............................................ F-2
Report of Independent Public Accountants.................................. F-3
Consolidated Balance Sheets as of August 31, 1993, August 31, 1994 and
March 30, 1995........................................................... F-4
Consolidated Statements of Operations for the years ended August 31, 1992,
August 31, 1993, August 31, 1994 and for the seven months ended March 31,
1994 (unaudited) and March 30, 1995...................................... F-6
Consolidated Statements of Changes in Stockholders' Investment for the
years ended August 31, 1992, August 31, 1993, August 31, 1994 and for the
seven months ended March 30, 1995........................................ F-7
Consolidated Statements of Cash Flows for the years ended August 31, 1992,
August 31, 1993, August 31, 1994 and for the seven months ended March 31,
1994 (unaudited) and March 30, 1995...................................... F-8
Notes to Consolidated Financial Statements................................ F-9

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

Report of Independent Public Accountants.................................. F-19
Consolidated Balance Sheets as of December 31, 1993 and 1994.............. F-20
Consolidated Statements of Income for the Period from Inception, January
31, 1992, through December 31, 1992 and for the Years Ended December 31,
1993 and 1994............................................................ F-21
Consolidated Statements of Stockholders' Equity for the Period from
Inception, January 31, 1992, through December 31, 1992 and for the Years
Ended December 31, 1993 and 1994 ........................................ F-22
Consolidated Statements of Cash Flows for the Period from Inception,
January 31, 1992, through December 31, 1992 and for the Years Ended
December 31, 1993 and 1994............................................... F-23
Notes to Consolidated Financial Statements................................ F-24
Supplemental Consolidated Quarterly Financial Information (unaudited)..... F-36
Condensed Consolidated Balance Sheets as of June 30, 1995 (unaudited) and
December 31, 1994 (audited).............................................. F-37
Condensed Consolidated Statements of Operations for the Six Months Ended
June 30, 1995 (unaudited) and June 30, 1994 (unaudited).................. F-38
Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1995 (unaudited) and June 30, 1994 (unaudited).................. F-39
Notes to Condensed Consolidated Financial Statements...................... F-40
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT AUDITORS

To the Stockholders and Board of
Directors of United Stationers Inc. :

We have audited the accompanying consolidated balance sheet of UNITED
STATIONERS INC. and SUBSIDIARY as of March 30, 1995 and the related
consolidated statements of operations, changes in stockholders' investment and
cash flows for the seven months then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of United Stationers
Inc. and Subsidiary at March 30, 1995 and the consolidated results of their
operations and their cash flows for the seven months then ended in conformity
with generally accepted accounting principles.

/s/ Ernst & Young LLP

Chicago, Illinois
June 27, 1995

F-2
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of
Directors of United Stationers Inc. :

We have audited the accompanying consolidated balance sheets of UNITED
STATIONERS INC. (a Delaware Corporation) AND SUBSIDIARIES as of August 31, 1993
and 1994, and the related consolidated statements of income, changes in
stockholders' investment and cash flows for fiscal years ended August 31, 1992,
1993 and 1994. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of United
Stationers Inc. and Subsidiaries as of August 31, 1993 and 1994, and the
results of its operations and its cash flows for the fiscal years ended August
31, 1992, 1993 and 1994, in conformity with generally accepted accounting
principles.

/s/ Arthur Andersen LLP

Chicago, Illinois,
October 6, 1994.

F-3
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
AUG. 31,
----------------- MARCH 30,
ASSETS 1993 1994 1995
------ -------- -------- ---------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents........................ $ 7,889 $ 6,920 $ 14,515
Accounts receivable, less reserves for doubtful
accounts of $3,964 in 1993, $4,010 in 1994 and
$4,775 in 1995.................................. 188,396 187,565 188,672
Inventories...................................... 229,760 225,794 306,741
Deferred income taxes and prepaid expenses....... 16,426 15,512 22,987
-------- -------- --------
Total current assets........................... $442,471 $435,791 $532,915
-------- -------- --------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land and buildings............................... $ 90,147 $ 92,099 $ 92,907
Fixtures and equipment........................... 144,625 151,793 152,059
Leasehold improvements........................... 46 36 85
-------- -------- --------
Total property, plant and equipment............ $234,818 $243,928 $245,051
Less -- Accumulated depreciation and amortization
................................................ 97,182 114,364 118,219
-------- -------- --------
Net property, plant and equipment.............. $137,636 $129,564 $126,832
-------- -------- --------
GOODWILL, NET...................................... $ 43,484 $ 42,369 $ 41,719
-------- -------- --------
OTHER ASSETS....................................... $ 11,195 $ 10,826 $ 10,373
-------- -------- --------
Total assets................................... $634,786 $618,550 $711,839
======== ======== ========
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.

F-4
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
AUG. 31,
------------------ MARCH 30,
LIABILITIES AND STOCKHOLDERS' INVESTMENT 1993 1994 1995
---------------------------------------- -------- -------- ---------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Short-term debt and current maturities of long-
term obligations.............................. $ 3,448 $ 6,338 $ 43,501
Accounts payable............................... 150,374 121,793 146,222
Accrued expenses............................... 69,175 65,055 77,219
Accrued income taxes........................... 3,400 2,778 8,373
-------- -------- --------
Total current liabilities.................... $226,397 $195,964 $275,315
-------- -------- --------
DEFERRED INCOME TAXES............................ $ 14,484 $ 17,427 $ 13,494
-------- -------- --------
LONG-TERM OBLIGATIONS:
Long-term debt................................. $146,735 $149,465 $173,933
Other liabilities.............................. 9,473 9,684 15,972
-------- -------- --------
Total long-term obligations.................. $156,208 $159,149 $189,905
-------- -------- --------
STOCKHOLDERS' INVESTMENT:
Preferred stock, no par value, authorized
1,500,000 shares, no shares issued or
outstanding................................... $ -- $ -- $ --
Common stock, $0.10 par value, authorized
40,000,000 shares, issued 18,586,627 shares in
1993, 18,592,054 shares in 1994 and 18,610,929
shares in 1995................................ 1,859 1,859 1,861
Capital in excess of par value................. 91,687 91,729 91,912
Retained earnings.............................. 144,292 152,448 139,495
Less -- 9,993 shares, 1,828 shares and 14,347
shares of common stock in treasury at cost in
1993, 1994 and 1995, respectively............. (141) (26) (143)
-------- -------- --------
Total stockholders' investment............... $237,697 $246,010 $233,125
-------- -------- --------
Total liabilities and stockholders'
investment.................................. $634,786 $618,550 $711,839
======== ======== ========
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.

F-5
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED AUG. 31, SEVEN MONTHS ENDED
---------------------------------- -----------------------
MARCH 31, MARCH 30,
1992 1993 1994 1994 1995
---------- ---------- ---------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES............... $1,094,275 $1,470,115 $1,473,024 $ 871,585 $ 980,575
COST OF SALES........... 848,588 1,125,596 1,150,123 675,720 773,857
---------- ---------- ---------- ---------- ----------
Gross profit on
sales............... $ 245,687 $ 344,519 $ 322,901 $ 195,865 $ 206,718
---------- ---------- ---------- ---------- ----------
OPERATING EXPENSE:
Warehousing, marketing
and administrative
expenses............. $ 213,372 $ 298,405 $ 286,607 $ 170,420 $ 174,021
Merger-related costs.. -- -- -- -- 27,780
Restructuring charge.. 5,913 -- -- -- --
---------- ---------- ---------- ---------- ----------
Total operating
expenses........... $ 219,285 $ 298,405 $ 286,607 $ 170,420 $ 201,801
---------- ---------- ---------- ---------- ----------
Income from
operations......... $ 26,402 $ 46,114 $ 36,294 $ 25,445 $ 4,917
---------- ---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense...... $ (6,980) $ (9,849) $ (10,722) $ (6,095) $ (7,640)
Interest income....... 477 299 261 258 140
Other, net............ 364 355 225 117 41
---------- ---------- ---------- ---------- ----------
Total other income
(expense).......... $ (6,139) $ (9,195) $ (10,236) $ (5,720) $ (7,459)
---------- ---------- ---------- ---------- ----------
Income before income
taxes.............. $ 20,263 $ 36,919 $ 26,058 $ 19,725 $ (2,542)
INCOME TAXES............ 8,899 15,559 10,309 8,185 4,692
---------- ---------- ---------- ---------- ----------
Net Income.......... $ 11,364 $ 21,360 $ 15,749 $ 11,540 $ (7,234)
========== ========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING............ 16,088,450 18,559,600 18,587,282 18,585,451 18,593,614
========== ========== ========== ========== ==========
NET INCOME PER COMMON
SHARE.................. $ 0.71 $ 1.15 $ 0.85 $ 0.62 $ (0.39)
========== ========== ========== ========== ==========
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-6
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
CAPITAL
IN
NUMBER OF EXCESS TOTAL
COMMON COMMON OF PAR RETAINED TREASURY STOCKHOLDERS'
SHARES STOCK VALUE EARNINGS STOCK INVESTMENT
---------- ------ ------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, AUGUST 31,
1991................... 15,535,013 $1,554 $54,557 $125,704 $(231) $181,584
Net Income............ -- -- -- 11,364 -- 11,364
Issuance of common
shares............... 3,016,169 301 36,643 -- -- 36,944
Cash dividends--$0.40
per share on common
stock................ -- -- -- (6,535) -- (6,535)
Disposition of
treasury stock....... -- -- -- -- 30 30
---------- ------ ------- -------- ----- --------
BALANCE, AUGUST 31,
1992................... 18,551,182 $1,855 $91,200 $130,533 $(201) $223,387
Net Income............ -- -- -- 21,360 -- 21,360
Issuance of common
shares............... 35,445 4 487 -- -- 491
Cash dividends--$0.40
per share on common
stock................ -- -- -- (7,601) -- (7,601)
Disposition of
treasury stock....... -- -- -- -- 60 60
---------- ------ ------- -------- ----- --------
BALANCE, AUGUST 31,
1993................... 18,586,627 $1,859 $91,687 $144,292 $(141) $237,697
Net Income............ -- -- -- 15,749 -- 15,749
Issuance of common
shares............... 5,427 -- 42 -- -- 42
Cash dividends--$0.40
per share on common
stock................ -- -- -- (7,593) -- (7,593)
Disposition of
treasury stock....... -- -- -- -- 115 115
---------- ------ ------- -------- ----- --------
BALANCE, AUGUST 31,
1994................... 18,592,054 $1,859 $91,729 $152,448 $ (26) $246,010
Net Loss.............. -- -- -- (7,234) -- (7,234)
Issuance of common
shares............... 18,875 2 183 -- -- 185
Cash dividends--$0.30
per share on common
stock................ -- -- -- (5,719) -- (5,719)
Acquisition of
treasury stock....... -- -- -- -- (117) (117)
---------- ------ ------- -------- ----- --------
BALANCE, MARCH 30, 1995. 18,610,929 $1,861 $91,912 $139,495 $(143) $233,125
========== ====== ======= ======== ===== ========
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-7
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED AUG. 31, SEVEN MONTHS ENDED
---------------------------- ---------------------
MARCH 31, MARCH 30,
1992 1993 1994 1994 1995
-------- -------- -------- ----------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income............ $ 11,364 $ 21,360 $ 15,749 $ 11,540 $ (7,234)
Adjustments to
reconcile net income
to net cash provided
by (used in)
operating activities,
net of SDC purchase
in 1992--
Loss on sale of
fixed assets....... $ 55 $ 476 $ 579 $ 494 $ 200
Depreciation and
amortization....... 19,879 21,243 21,236 12,103 12,595
(Decrease)/increase
in deferred taxes.. (8,240) 2,261 2,943 1,298 (3,933)
Increase/(decrease)
in accounts
payable............ 7,195 15,259 (28,581) (64,918) 24,429
(Decrease)/increase
in accrued
liabilities........ (2,896) 3,655 (7,522) (14,407) 17,260
(Increase)/decrease
in accounts
receivable......... (12,681) (20,016) 831 8,062 (1,107)
(Increase)/decrease
in inventories..... (15,776) (7,353) 3,966 (7,818) (80,947)
Decrease in prepaid
expenses........... 3,940 1,392 914 (752) (7,475)
Increase in other
assets............. (5,378) (2,275) (2,007) (1,359) (1,341)
-------- -------- -------- -------- --------
Total adjustments. $(13,902) 14,642 $ (7,641) $(67,297) $(40,319)
-------- -------- -------- -------- --------
Net cash provided
by (used in)
operating
activities....... $ (2,538) $ 36,002 $ 8,108 $(55,757) $(47,553)
-------- -------- -------- -------- --------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Acquisition of
property, plant and
equipment............ $ (8,342) $(30,008) $(10,719) $ (4,487) $ (7,799)
Proceeds from
disposition of
property, plant and
equipment............ 51 50 220 200 35
Payment for purchase
of SDC, net of cash
acquired of $2,480... (37,338) -- -- -- --
-------- -------- -------- -------- --------
Net cash used in
investing
activities....... $(45,629) $(29,958) $(10,499) $ (4,287) $ (7,764)
-------- -------- -------- -------- --------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Increase/(decrease) in
short-term debt...... $ 1,636 $ (481) $ (2,855) $ 33 $ 5,660
Payments on long-term
obligations.......... (4,213) (4,537) (1,533) (1,269) (4,541)
Additions to long-term
obligations.......... 57,460 1,971 13,246 69,348 67,444
Issuance of common
shares............... 164 491 42 25 185
Payment of dividends.. (6,535) (7,601) (7,593) (5,738) (5,719)
Disposition of
treasury stock....... 30 60 115 115 (117)
-------- -------- -------- -------- --------
Net cash provided
by (used in)
financing
activities....... $ 48,542 $(10,097) $ 1,422 $ 62,514 $ 62,912
-------- -------- -------- -------- --------
NET INCREASE/(DECREASE)
IN CASH AND CASH
EQUIVALENTS............ $ 375 $ (4,053) $ (969) $ 2,470 $ 7,595
CASH AND CASH
EQUIVALENTS at the
beginning of the year.. 11,567 11,942 7,889 7,889 6,920
-------- -------- -------- -------- --------
CASH AND CASH
EQUIVALENTS at the end
of the year............ $ 11,942 $ 7,889 $ 6,920 $ 10,359 $ 14,515
======== ======== ======== ======== ========
Supplemental Disclosures
of Cash Flow
Information:
Cash paid during the
year for:
Interest (net of
amount
capitalized)....... $ 6,722 $ 8,972 $ 10,199 $ 5,943 $ 6,851
Income taxes........ 14,489 18,395 6,229 6,054 9,257
-------- -------- -------- -------- --------
Supplemental Schedule of
Noncash Investing and
Financing Activities:
Fair value of assets
acquired............. $175,359 $ -- $ -- $ -- $ --
Cash paid............. (39,818) -- -- -- --
Common stock issued... (36,780) -- -- -- --
-------- -------- -------- -------- --------
Liabilities
assumed/incurred....... $ 98,761 $ -- $ -- $ -- $ --
-------- -------- -------- -------- --------
Investment in business
venture................ $ -- $ 742 $ -- $ -- $ --
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-8
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUBSEQUENT EVENT

On March 30, 1995, pursuant to an Agreement and Plan of Merger, dated as of
February 13, 1995 (the "Merger Agreement"), between Associated Holdings, Inc.,
a Delaware corporation ("Associated") and United Stationers Inc., a Delaware
corporation (the "Company") and Associated's related Offer to Purchase dated
February 21, 1995 (the "Offer"), Associated purchased 17,201,839 shares of
Common Stock, $0.10 par value (the "Shares"), of the Company at a purchase
price of $15.50 per share, or approximately $266.6 million, from the Company's
stockholders. On March 30, 1995, pursuant to the terms of the Merger Agreement,
Associated was merged with and into the Company, with the Company surviving
(the "Merger"), and immediately thereafter, Associated Stationers, Inc., a
Delaware corporation and wholly owned subsidiary of Associated ("ASI") was
merged with and into United Stationers Supply Co., an Illinois corporation and
wholly owned subsidiary of the Company ("USSC"), with USSC surviving. The
acquisition of the Shares by Associated pursuant to the Offer together with the
Merger is referred to herein as the "Acquisition." Although the Company was the
surviving corporation in the Merger, the transaction was treated as a reverse
acquisition for accounting purposes with Associated as the acquiring
corporation.

Immediately following the Merger, the number of outstanding Shares was
5,998,117 (or 6,973,720 on a fully diluted basis), of which (i) the former
holders of Class A Common Stock, $0.01 par value, and Class B Common Stock,
$0.01 par value, of Associated ("Associated Common Stock") and warrants or
options to purchase Associated Common Stock in the aggregate owned 4,603,373
Shares constituting approximately 76.8% of the outstanding Shares and
outstanding warrants or options for 975,603 Shares (collectively 80.0% on a
fully diluted basis) and (ii) pre-Merger holders of Shares (other than
Associated-owned Shares and treasury Shares) in the aggregate owned 1,394,744
Shares constituting approximately 23.2% of the outstanding Shares (or 20.0% on
a fully diluted basis). As used in this paragraph, the term "Shares" includes
shares of Nonvoting Common Stock, $0.01 par value, of the Company, which are
immediately convertible into Shares for no additional consideration.

To finance the Offer, refinance existing debt of ASI, the Company and USSC,
repurchase stock options and pay related fees and expenses, Associated, ASI,
USSC and the Company entered into (i) new credit facilities ("New Credit
Facilities") with a group of banks and financial institutions providing for
term loan borrowings of $200.0 million and revolving loan borrowings of up to
$300.0 million and (ii) a senior subordinated bridge loan facility in the
aggregate principal amount of $130.0 million (the "Subordinated Bridge
Facility"). In addition, simultaneously with the consummation of the Offer,
Associated obtained $12.0 million from the sale of additional shares of
Associated Common Stock, which proceeds were used to finance the purchase of a
portion of the Shares pursuant to the Offer.

On May 3, 1995, USSC completed the issuance of $150.0 million of 12 3/4%
Senior Subordinated Notes (the "Notes") due 2005. The net proceeds of the Notes
(after discount and fees of approximately $5.5 million) were used to pay
certain expenses, to repay the $130.0 million Subordinated Bridge Facility
(together with $1.6 million in accrued and unpaid interest thereon), to repay a
portion of the Tranche A and Tranche B term loans (totaling approximately $6.5
million) and provide working capital. In the event the necessary consents are
obtained, the Company expects to repurchase the Series B Preferred Stock,
together with accrued and unpaid dividends thereon (approximately $7.0
million).

The New Credit Facilities contain certain financial covenants covering the
Company and its subsidiaries on a consolidated basis, including, without
limitation, covenants relating to tangible net worth, capitalization, fixed
charge coverage, capital expenditures and payment of dividends by the Company.

F-9
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Effective for 1995, the Company changed its fiscal year from a year end of
August 31 to December 31. The financial statements included herein represent
the final financial statements of the Company through the date of the
consummation of the Merger. Future financial statements of the Company will
reflect Associated and its acquisition of the Company, and will be on the basis
of a December 31 fiscal year end.

As part of the Merger, the Company incurred approximately $27.8 million of
merger-related costs. The amount consisted of severance payments under
employment contracts ($9.6 million); insurance benefits under employment
contracts ($7.4 million); legal, accounting and other professional services
fees ($5.2 million); retirement of stock options ($3.0 million); and fees for
letters of credit related to employment contracts and other costs ($2.6
million).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of United
Stationers Inc. and its wholly owned subsidiaries ("the Company"). Investments
in 20% to 50% owned companies are accounted for by the equity method. All
significant intercompany accounts and transactions have been eliminated in
consolidation. Certain prior-year amounts have been reclassified to conform
with current-year presentations.

Revenue Recognition

Sales and provisions for estimated sales returns and allowances are recorded
at the time of shipment.

Cash and Cash Equivalents

Investments in low-risk instruments which have an original maturity of three
months or less are considered to be cash equivalents. Cash equivalents are
stated at cost which approximates market value. The Company's cash equivalent
policy conforms to the requirements of Financial Accounting Standard No. 95.

Inventories

Inventories constituting approximately 82% of total inventories at August 31,
1993, August 31, 1994 and March 30, 1995 have been valued under the last-in,
first-out (LIFO) method with the remainder of the inventory valued under the
first-in, first-out (FIFO) method. Inventory valued under the FIFO and LIFO
accounting methods are recorded at the lower of cost or market. If the lower of
FIFO cost or market method of inventory accounting had been used by the Company
for all inventories, merchandise inventories would have been approximately
$16,679,000, $18,854,000 and $21,797,000 higher than reported at August 31,
1993, 1994 and March 30, 1995, respectively.

In 1994, liquidations of certain LIFO inventories had the effect of
increasing net earnings by $830,000 or $0.04 per share.

Depreciation and Amortization

Depreciation and amortization are determined by using the straight-line
method over the estimated useful lives of the assets.

F-10
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The estimated useful life assigned to fixtures and equipment is from two to
10 years; the estimated useful life assigned to buildings does not exceed 40
years; leasehold improvements and assets under capital leases are amortized
over the lesser of their useful lives or the term of the applicable lease.

Goodwill reflecting the excess of cost over the value of net assets of
businesses acquired is being amortized on a straight-line basis over 40 years.
The cumulative amount of goodwill amortized at August 31, 1993, 1994 and March
30, 1995 is $1,200,000, $2,315,000 and $2,965,000, respectively.

Software Capitalization

The Company capitalizes major internal and external systems development costs
determined to have benefits for future periods. Amortization expense is
recognized over the periods in which the benefits are realized, generally not
to exceed three years. Systems development costs capitalized were $4,202,000,
$1,955,000, $2,166,000 and $1,896,000 in 1992, 1993, 1994 and 1995,
respectively. Amortization expense was $3,384,000, $2,946,000, $2,376,000 and
$1,795,000 in 1992, 1993, 1994 and 1995, respectively.

Fair Value of Financial Instruments

The Company's financial instruments consist primarily of cash and cash
equivalents, trade receivables, trade payables and debt instruments. The book
value of cash and cash equivalents, trade receivables and trade payables are
considered to be representative of their respective fair values.

Borrowings under the Company's Reducing Revolving Credit and Term Loan
Agreement are considered to be at fair market value. The Company had
approximately $66.1 million, $62.7 million and $62.4 million of long-term debt
(excluding borrowings under the Company's Reducing Revolving Credit and Term
Loan Agreement) outstanding as of August 31, 1993, 1994 and March 30, 1995,
respectively. The approximate fair value was $68.0 million, $59.8 million and
$61.3 million as of August 31, 1993, 1994 and March 30, 1995, respectively. The
fair value is based on the current rates offered to the Company for debt of
similar maturities. The fair values on the long-term debt financial instruments
are not necessarily indicative of the amounts that would be realized in a
current market exchange and exclude any liquidation or origination costs.

Foreign Currency Translation

All assets and liabilities of the Company's foreign operations are translated
at current exchange rates. Revenues and expenses are translated at average
exchange rates for the year in accordance with Statement of Financial
Accounting Standard No. 52. The amounts for all years presented were
immaterial.

Earnings Per Share

Earnings per share and the effect on earnings per share of potentially
dilutive stock options are computed by the treasury stock method. This
computation takes into account the weighted average number of shares
outstanding during each year, outstanding stock options and their exercise
prices, and the market price of the stock throughout the year. The exercise of
outstanding stock options would not result in a material dilution of earnings
per share.

F-11
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

3. BUSINESS COMBINATION AND RESTRUCTURING CHARGE

On June 24, 1992, the Company acquired all of the outstanding capital stock
of SDC Distributing Corp., parent of Stationers Distributing Company, Inc.
("SDC"). The results of operations of SDC have been included in the Company's
consolidated financial statements since June 25, 1992.

The following summarized unaudited pro forma results of operations for the
years ended August 31, 1991 and 1992 assume the acquisition occurred at the
beginning of the respective periods. These pro forma results have been prepared
for comparative purposes only and do not purport to be indicative of the
results of operations that actually would have resulted had the combination
been in effect on the dates indicated, or which may result in the future.
<TABLE>
<CAPTION>
1991 1992
---------- ----------
(IN THOUSANDS OF
DOLLARS, EXCEPT SHARE
DATA) (UNAUDITED)
<S> <C> <C>
Net Sales........................................... $1,378,734 $1,445,900
Net Income.......................................... 14,070 20,444
Net Income per Share................................ 0.76 1.10
</TABLE>

In the fourth quarter of 1992, the Company recorded a $5.9 million pre-tax
restructuring charge related to severance payments and closing of certain
facilities associated with the acquisition.

4. LONG-TERM DEBT

Long-term debt consists of the following amounts (in thousands of dollars):

<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Mortgages, 9,0% to 12.5%, due in installments until
2002, secured by the Regional Distribution Centers
in Livonia, Michigan; Pennsauken, New Jersey;
Dallas, Texas; Woburn, Massachusetts; and The City
of Industry, California............................ $ 13,615 $ 13,182 $ 12,908
Industrial development bonds, interest at 69% of
prime, maturing in 2015, secured by land, buildings
and certain equipment located in Edison, New
Jersey............................................. 8,000 8,000 8,000
Industrial development bonds, at market interest
rates, maturing at various dates through 2011...... 14,300 14,300 14,300
Industrial development bonds, at 66% to 79% of
prime, maturing at various dates through 2005...... 15,500 15,500 15,500
Unsecured loan, at 9.65%, maturing at various dates
through 1998....................................... 14,300 11,450 11,450
Other long-term debt................................ 356 303 276
Term Loan........................................... 30,000 30,000 30,000
Revolver............................................ 54,000 63,000 125,000
-------- -------- --------
$150,071 $155,735 $217,434
-------- -------- --------
Less--current maturities............................ 3,336 6,270 43,501
-------- -------- --------
$146,735 $149,465 $173,933
======== ======== ========
</TABLE>

The prevailing prime interest rate at August 31, 1993, August 31, 1994 and
March 30, 1995 was 6.0%, 7.8% and 9.0%, respectively.

F-12
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company has a $160.0 million Reducing Revolving Credit and Term Loan
Agreement ("Credit Agreement") with a group of seven lenders (the "Lenders").
The Credit Agreement consists of a $130.0 million revolving credit facility
("Revolver") and a $30.0 million term loan ("Term Loan"). Proceeds are used to
finance working capital requirements and capital expenditures of the Company.

The Revolver provides for revolving credit loans up to the amount of the
commitment until August 31, 1997, at the Company's option. The initial $130.0
million commitment decreases to $83.6 million as of August 31, 1997 based on
quarterly decreases which began in May 1994 as specified in the Credit
Agreement. As of August 31, 1994, the Revolver commitment is $126.0 million.
Under the terms of the Credit Agreement, the Company is required to pay a
facility fee of 3/16 of 1% of the total available Revolver. The Term Loan (as
amended) matures on September 30, 1995 (or earlier upon certain subsequent
offerings by the Company of debt or equity). The Term Loan can be prepaid
without penalty. Interest on both loans is payable at varying rates provided
for in the Credit Agreement.

On February 28, 1995, the Company entered into a $30.0 million line of
credit with a major bank. This credit facility was entered into to meet
seasonal requirements after the Revolver and Term Loan was fully utilized, and
bore interest at agreed upon market rates. The Company had $6.0 million
outstanding under this agreement immediately prior to the Merger. This
agreement was terminated in connection with the Merger.

The Credit Agreement contains certain financial covenants covering the
Company and its subsidiary on a consolidated basis, including, without
limitation, covenants relating to the consolidated current ratio, tangible net
worth, capitalization, fixed charge coverage, capital expenditures and payment
of dividends by the Company.

The net book value of assets subject to secured mortgages and industrial
development bonds as of August 31, 1993 and 1994 was $28,962,000 and
$28,610,000, respectively.

Maturities of long-term debt (excluding amounts borrowed under the Credit
Agreement), for the following periods as indicated, are as follows (in
thousands of dollars):

<TABLE>
<CAPTION>
YEAR (EXCEPT 1995) AMOUNT
------------------ -------
<S> <C>
Nine Months Ending December 31, 1995............................. $ 6,125
1996............................................................. 8,167
1997............................................................. 8,218
1998............................................................. 8,824
1999............................................................. 6,129
Later years...................................................... 24,971
-------
$62,434
=======
</TABLE>

As part of the Merger, approximately $180 million of debt at March 30, 1995
was refinanced. The refinanced debt consisted of various mortgages, the
Edison, New Jersey industrial development bonds, the private placement loan,
and the Term Loan and Revolver.

5. PENSION PLANS AND POSTRETIREMENT BENEFITS

The Company has pension plans in effect for substantially all employees.
Non-contributory plans covering non-union employees provide pension benefits
that are based on years of credited service and a percentage of annual
compensation. Non-contributory plans covering union members generally

F-13
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
provide benefits of stated amounts based on years of service. The Company funds
the plans in accordance with current tax laws.

The Company also has a non-contributory, non-qualified plan ("Supplemental
Benefits Plan") in effect for certain executives. The Company has not funded
this plan.

Pension expense in 1992, 1993, 1994 and 1995 was approximately $866,000,
$1,269,000, $1,755,000, $1,707,000, respectively.

The following table sets forth the plans' funded status at August 31, 1993,
August 31, 1994 and March 30, 1995 (in thousands of dollars):

<TABLE>
<CAPTION>
SUPPLEMENTAL
PENSION PLANS BENEFIT PLANS
------------------------- ---------------------
1993 1994 1995 1993 1994 1995(1)
------- ------- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Actuarial Present Value of
Benefits Obligation
Vested benefits............. $15,063 $15,215 $16,446 $ 442 $ 549 $ 0
Non-vested benefits......... 1,702 1,887 1,682 4 16 0
------- ------- ------- ----- ----- ---
Accumulated benefits
obligation................... $16,765 $17,102 $18,128 $ 446 $ 565 $ 0
Effect of projected future
compensation levels.......... 2,356 2,982 2,511 119 328 0
------- ------- ------- ----- ----- ---
Projected benefits obligation. $19,121 $20,084 $20,639 $ 565 $ 893 $ 0
Plan assets at fair value..... 20,875 21,000 22,683 -- -- 0
------- ------- ------- ----- ----- ---
Projected benefits obligation
less than (in excess of) plan
assets....................... $ 1,754 $ 916 $ 2,044 $(565) $(893) $ 0
Unrecognized net gain due to
past experience different
from assumptions............. (279) 266 (914) (9) 189 0
Unrecognized prior service
cost......................... 1,270 1,347 1,101 160 131 0
Unrecognized net obligation
(asset) at September 1, 1985
to be amortized over 3 to 12
years in 1994 and 4 to 13
years in 1993................ (561) (467) (412) 120 90 0
------- ------- ------- ----- ----- ---
Prepaid (accrued) pension
liability recognized in
Consolidated Balance
Sheets..................... $ 2,184 $ 2,062 $ 1,819 $(294) $(483) $ 0
======= ======= ======= ===== ===== ===
</TABLE>
--------
(1) The Supplemental Benefit Plan was funded and paid out as a result of the
merger.

The plans' assets consist of debt securities, equity securities and
government securities. Net periodic pension cost for 1992, 1993, 1994 and 1995
for pension and supplemental benefits plans includes the following components
(in thousands of dollars):

<TABLE>
<CAPTION>
1992 1993 1994 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Service cost--benefits earned during the
period........................................ $1,055 $1,293 $1,863 $1,084
Interest cost on projected benefits obligation. 952 1,209 1,436 909
Actual return on assets........................ (983) (3,235) 263 (780)
Net amortization and deferral.................. (158) 2,002 (1,807) 494
------ ------ ------ ------
Net periodic pension cost.................... $ 866 $1,269 $1,755 $1,707
====== ====== ====== ======
</TABLE>

The projected benefit obligations for 1992, 1993, 1994 and 1995 were
determined using an assumed discount rate of 7.5%, 7.25%, 7.5% and 7.5%,
respectively. In 1992, 1993, 1994 and 1995,

F-14
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the assumed rate of compensation increase ranged from 0% to 5.5%. The expected
long-term rate of return on assets used in determining net periodic pension
cost was 7.5%.

The Company provides an unfunded health care plan to substantially all
retired non-union employees and their dependents. Eligibility requirements are
based on the individual's age (minimum age of 55), years of service and hire
date. The benefits are subject to retiree contributions, deductibles, co-
payment provisions and other limitations.

During the first quarter of 1994, the Company adopted Statement of Financial
Accounting Standard No. 106 (SFAS 106), "Employer's Accounting for
Postretirement Benefits Other Than Pensions." SFAS 106 requires companies to
accrue the expected cost of postretirement health care and life insurance
benefits throughout the employee's active service period. Previously,
postretirement health care costs were recognized as claims were paid. The
Company elected to amortize the unfunded Accumulated Postretirement Benefit
Obligation (APBO) over 20 years.

The assumed health care average cost trend rate used in measuring the APBO at
March 30, 1995 was 11.0% in 1995 and 3% in 1996 and beyond. Beginning in 1996,
retirees will pay the difference between actual plan costs and the portion of
cost paid by the Company which is limited to a cost trend rate of 3%. The
assumed discount rate was 7.75%. A 1% increase in the care cost trend rate
would increase the APBO as of March 30, 1995 by approximately $339,000 and the
sum of the 1995 annual service cost and interest cost by approximately $35,000.

The cost of postretirement health care benefits for the year ended August 31,
1994 and seven months ended March 30, 1995 are as follows (in thousands of
dollars):

<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Service cost.................................................... $246 $109
Interest on accumulated benefits obligation..................... 146 106
Amortization of transition obligation........................... 100 58
---- ----
Net postretirement benefit cost............................... $492 $273
==== ====
</TABLE>

The following table sets forth the amounts recognized in the Company's
Balance Sheet at August 31, 1994 and March 30, 1995 (in thousands of dollars):

<TABLE>
<CAPTION>
AUG. 31, MARCH 30,
1994 1995
-------- ---------
<S> <C> <C>
Retirees.............................................. $ (601) $ (781)
Other active plan participants........................ (1,634) (1,758)
------- -------
Total APBO............................................ $(2,235) $(2,539)
Unrecognized transition obligation.................... 1,897 1,838
Unrecognized net (gain)............................... (76) 63
------- -------
Accrued postretirement benefit obligation............. $ (414) $ (638)
======= =======
</TABLE>

Prior to 1994, the cost of providing postretirement health care benefits net
of retiree contributions was $33,396 in 1992 and $46,777 in 1993.

The Company has a qualified Profit Sharing Plan in which all salaried
employees and certain hourly paid employees of the Company are eligible to
participate upon completion of six consecutive months of employment. The Profit
Sharing Plan provides for annual contributions by the Company in an amount

F-15
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
determined by the Board of Directors. The Plan also permits employees to have
contributions made as 401(k) salary deferrals on their behalf and to make
after-tax voluntary contributions. The Plan provides that the Company may match
employee contributions as 401(k) salary deferrals. Company contributions to the
Plan for both profit sharing and matching of employee contributions were
approximately $1.0 million in 1992, $1.4 million in 1993, $0.5 million in 1994
and $0.8 million in 1995.

6. STOCK INCENTIVE PLANS

As a result of the change in control of the Company, the Company paid out
approximately $3.0 million to option holders representing the difference
between the tender offer price of the stock ($15.50 per share) and the option
exercise price. The amount was included in merger-related costs in 1995.

Under the Directors' Stock Option Plan, the Company granted options for 7,500
shares at a price of $19.25 per share in 1993, 7,500 shares at a price of
$15.25 per share in 1994 and 7,500 shares at a price of $13.75 per share in
1995. The Directors' Option Plan provides for the granting of options covering
up to 100,000 shares of the Company's common stock, subject to anti-dilution
adjustments. Options are exercisable at any time after they are granted, but
for not more than ten years after the option's grant. As of the period ended
1993, 1994, and 1995, 45,500, 41,000 and 0 options, respectively, were
outstanding at a price range of $8.75 to $22.13 per share.

During fiscal 1995, options for a total of 100,000 shares at $10.50 were
granted to certain officers. The grant was approved at the 1995 Annual Meeting
held in January.

Under the Company's 1981 Stock Incentive Award Plan, options outstanding had
an exercisable life of either five, six or ten years from the date of grant.
The Company granted certain officers 16,700 and 15,000 shares of restricted
stock in 1991 and 1992, respectively. There have been no restricted stock
grants since 1992. The grants of restricted shares resulted in deferred
compensation expense of $699,000 of which $185,000, $132,000, $39,000 and
$16,000 was recognized in 1992, 1993, 1994 and 1995, respectively. The
unrecognized portion of deferred compensation was $55,000, $16,000 and $0 as of
August 31, 1993, August 31, 1994 and March 30, 1995, respectively. Under the
terms of the grant, the stock does not vest to the employee until completion of
three years of employment after the date of grant. The 1981 Stock Incentive
Award Plan was terminated by the Company's Board of Directors on March 30,
1995.

In 1989, the Board of Directors terminated the 1985 Non-qualified Stock
Option Plan so that no further stock options would be issued under this plan.
The termination of the plan did not affect the options previously granted and
outstanding. No option could have been exercised more than ten years after its
grant.

F-16
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following table summarizes the transactions of the 1981 and 1985 Option
Plans for 1993, 1994 and 1995.

<TABLE>
<CAPTION>
1981 STOCK INCENTIVE
AWARD PLAN
(EXCLUDING RESTRICTED OPTION PRICE OPTION PRICE OPTION PRICE
STOCK) 1993 RANGE 1994 RANGE 1995 RANGE
--------------------- ------- ------------- --------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at
beginning of the
period................. 995,520 $ 8.64-$19.39 891,350 $ 8.64-$19.39 1,135,060 $ 8.64-$19.39
Granted................. 18,000 $13.75-$14.00 401,050 $10.00-$16.25 100,000 $10.50
Exercised............... (37,040) $ 8.64-$17.48 (3,520) $ 8.64-$13.75 (22,860) $ 8.64-$ 9.29
Cancelled............... (85,130) $ 8.64-$19.39 (153,820) $ 8.64-$19.39 (1,212,200) $ 8.64-$19.39
------- --------- ----------
Options outstanding at
end of the period...... 891,350 1,135,060 --
======= ========= ==========
<CAPTION>
1985 NON-QUALIFIED OPTION PRICE OPTION PRICE OPTION PRICE
STOCK OPTION PLAN 1993 RANGE 1994 RANGE 1995 RANGE
------------------------ ------- ------------- --------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at
beginning of the
period................. 143,000 $14.78-$18.09 109,500 $14.78-$18.09 109,500 $14.78-$18.09
Granted................. -- -- -- -- -- --
Exercised............... (5,000) $18.09 -- -- -- --
Cancelled(1)............ (28,500) $14.78-$18.09 -- -- (109,500) $14.78-$18.09
------- --------- ----------
Options outstanding at
end of the period...... 109,500 109,500 --
======= ========= ==========
</TABLE>
--------
(1) As a result in change in control of the Company, the Company paid out to
option holders the difference between the tender offer price of the stock
($15.50 per share) and the option exercise price. The total amount was
included in merger-related costs in 1995.

7. LEASES

The Company has entered into several non-cancelable long-term leases on
property and equipment. Future minimum lease payments for non-cancelable leases
in effect at March 30, 1995 having initial remaining terms of more than one
year are as follows (in thousands of dollars):

<TABLE>
<CAPTION>
OPERATING LEASES
---------------------------
LEASE SUBLEASE NET LEASE
YEAR (EXCEPT 1995) PAYMENTS INCOME PAYMENTS
------------------ -------- -------- ---------
<S> <C> <C> <C>
Nine months ending December 31, 1995................ $ 9,165 $ 617 $ 8,548
1996................................................ 9,894 269 9,625
1997................................................ 7,712 199 7,513
1998................................................ 5,811 146 5,665
1999................................................ 4,275 61 4,214
Later years......................................... 14,263 -- 14,263
------- ------ -------
Total minimum lease payments........................ $51,120 $1,292 $49,828
======= ====== =======
</TABLE>

Rental expense for all operating leases was approximately $11,546,000,
$14,917,000, $13,549,000 and $7,731,000 in 1992, 1993, 1994 and 1995,
respectively.

8. INCOME TAXES

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standard No. 109, "Accounting for Income Taxes," which was
adopted in 1992.

The Company does not intend to provide Federal income taxes on the
undistributed earnings for its foreign subsidiaries. The Company's policy is to
leave the income in the country of origin until such time as all Federal income
tax due upon its distribution will be fully offset by foreign tax credits. As
of March 30, 1995, neither foreign subsidiary had undistributed earnings.

F-17
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)

The Company provides for income taxes at statutory rates based on income
reported for financial statement purposes. A summary of income tax expense is
shown below (in thousands of dollars):

<TABLE>
<CAPTION>
1992 1993 1994 1995
------- ------- ------- --------
<S> <C> <C> <C> <C>
Taxes currently payable
Federal.................................. $ 8,565 $ 7,972 $ 7,059 $ 14,122
Other tax credits........................ (37) (10) (5) --
State.................................... 2,501 2,274 1,591 2,584
Prepaid and deferred taxes................. (2,130) 5,323 1,664 (12,014)
------- ------- ------- --------
$ 8,899 $15,559 $10,309 $ 4,692
======= ======= ======= ========
</TABLE>

The deferred tax assets and liabilities result from timing differences in the
recognition of certain income and expense items for financial and tax
accounting purposes. The sources of these differences and the related tax
effects were as follows (in thousands of dollars):

<TABLE>
<CAPTION>
AUGUST 31, 1993 AUGUST 31, 1994 MARCH 30, 1995
------------------- ------------------- -------------------
ASSETS LIABILITIES ASSETS LIABILITIES ASSETS LIABILITIES
------- ----------- ------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Reserves for returns,
rebates and allowances. $14,250 $ -- $14,593 $ -- $18,869 $ --
Reserves for direct
acquisition costs...... 3,887 -- 1,700 -- 1,477 --
Reserves for
restructuring charges.. 1,720 -- 332 -- 10 --
Merger-related costs.... -- -- -- -- 6,737 --
Reserves for worker's
compensation insurance. 3,818 -- 3,905 -- 3,814 --
Accelerated
depreciation........... -- 15,252 -- 17,360 -- 17,716
Software capitalization. -- 1,913 -- 1,595 -- 1,465
Inventory reserves and
related purchase
accounting differences. -- 7,738 -- 7,143 -- 6,142
All other............... 3,613 1,836 4,843 2,472 4,554 2,629
------- ------- ------- ------- ------- -------
Total................... $27,288 $26,739 $25,373 $28,570 $35,461 $27,952
======= ======= ======= ======= ======= =======
</TABLE>

In the consolidated balance sheets, these deferred assets and deferred
liabilities are classified as deferred tax assets or deferred income tax
liabilities, based on the classification of the related asset or liability for
financial reporting. A deferred tax liability or asset that is not related to
an asset or liability for financial reporting, including deferred tax assets
related to carryforwards, are classified according to the expected reversal
date of the temporary difference.

A valuation allowance of $1,504,000 was recorded at August 31, 1993. No
valuation allowance was recorded in 1994 or 1995.

The table below records the differences between the statutory income tax rate
and the Company's effective income tax rate:

<TABLE>
<CAPTION>
1992 1993 1994 1995
---- ---- ---- ------
<S> <C> <C> <C> <C>
Statutory Federal income tax......................... 34.0% 34.7% 35.0% 35.0%
State income taxes, net of the Federal income tax
benefit............................................. 6.6 6.1 4.8 (4.9)
Losses from foreign subsidiaries..................... 3.3 1.3 1.9 --
Liquidation of a foreign subsidiary.................. -- -- (3.9) --
Non-deductible goodwill amortization................. -- .9 1.5 (9.0)
Other, net........................................... -- (.9) .3 (205.7)
---- ---- ---- ------
Effective income tax rate............................ 43.9% 42.1% 39.6% 184.6%
==== ==== ==== ======
</TABLE>

F-18
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Associated Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of ASSOCIATED
HOLDINGS, INC. (a Delaware corporation) AND SUBSIDIARY as of December 31, 1993
and 1994, and the related consolidated statements of income, stockholders'
equity and cash flows from inception, January 31, 1992 through December 31,
1992, and for the years ended December 31, 1993 and 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Associated
Holdings, Inc. and subsidiary as of December 31, 1993 and 1994, and the results
of their operations and their cash flows from inception, January 31, 1992,
through December 31, 1992, and for the years ended December 31, 1993 and 1994
in conformity with generally accepted accounting principles.

Arthur Andersen LLP

Chicago, Illinois,
January 23, 1995 (except with
respect to the matters discussed
in Note 14 as to which the date
is February 13, 1995)

F-19
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
ASSETS 1993 1994
------ -------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash....................................................... $ 991 $ 1,849
Accounts receivable, less allowance for doubtful accounts
of $4,058 and $4,036, respectively........................ 35,320 35,180
Vendor and other receivables............................... 9,691 9,959
Inventories................................................ 82,618 88,197
Other current assets....................................... 3,053 3,795
-------- --------
Total current assets..................................... 131,673 138,980
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land....................................................... 7,327 7,315
Buildings.................................................. 27,990 27,976
Machinery and equipment.................................... 18,829 18,875
Furniture and fixtures..................................... 4,226 4,111
-------- --------
58,372 58,277
Less -- Accumulated depreciation and amortization.......... 8,747 12,830
-------- --------
Net property, plant and equipment........................ 49,625 45,447
-------- --------
OTHER LONG-TERM ASSETS....................................... 9,681 8,052
-------- --------
$190,979 $192,479
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Cash overdrafts............................................ $ 9,145 $ 9,597
Current maturities of long-term debt....................... 4,828 5,901
Accounts payable........................................... 41,400 44,754
Accrued liabilities........................................ 16,734 18,994
Other current liabilities.................................. 2,264 3,280
-------- --------
Total current liabilities................................ 74,371 82,526
-------- --------
LONG-TERM OBLIGATIONS:
Long-term debt, less current maturities.................... 71,940 58,279
Deferred obligations and other long-term liabilities....... 10,815 2,060
-------- --------
Total long-term obligations.............................. 82,755 60,339
-------- --------
REDEEMABLE PREFERRED STOCK (Note 7):
Preferred Stock A, $0.01 par value; 15,000 authorized;
5,000 issued and outstanding; 1,138 and 1,788,
respectively, accrued..................................... 6,138 6,788
Preferred Stock B, $0.01 par value; 15,000 authorized;
5,943 and 6,560, respectively, issued and outstanding..... 5,943 6,560
Preferred Stock C, $0.01 par value; 15,000 authorized;
8,915 and 9,841, respectively, issued and outstanding..... 8,915 9,841
-------- --------
20,996 23,189
-------- --------
REDEEMABLE WARRANTS (Note 8)................................. 1,435 1,650
-------- --------
STOCKHOLDERS' EQUITY (Note 9):
Additional preferred stock, $0.01 par value; 200,000
authorized; 0 issued and outstanding...................... -- --
Common Stock Class A, $0.01 par value; 5,000,000
authorized; 896,258, and 954,911 respectively, issued and
outstanding; 0 and 5,435, respectively, accrued........... 9 10
Common Nonvoting Stock Class B, $0.01 par value; 5,000,000
authorized; 0 issued and outstanding...................... -- --
Capital in excess of par................................... 8,766 17,879
Warrants outstanding and accrued........................... 231 260
Retained earnings.......................................... 2,416 6,626
-------- --------
Total stockholders' equity............................... 11,422 24,775
-------- --------
$190,979 $192,479
======== ========
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-20
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR ENDED
THROUGH DECEMBER 31,
DECEMBER 31, -----------------
1992 1993 1994
------------ -------- --------
<S> <C> <C> <C>
NET SALES....................................... $365,944 $462,531 $477,445
COST OF GOODS SOLD.............................. 276,546 350,251 357,276
-------- -------- --------
Gross profit................................ 89,398 112,280 120,169
-------- -------- --------
OPERATING EXPENSES:
Warehouse and distribution expenses........... 60,593 78,482 77,859
Selling, general and administrative expenses.. 18,452 22,820 24,189
-------- -------- --------
79,045 101,302 102,048
-------- -------- --------
Income from operations...................... 10,353 10,978 18,121
INTEREST EXPENSE................................ 5,626 7,235 7,725
-------- -------- --------
Income before income taxes.................. 4,727 3,743 10,396
INCOME TAXES.................................... 1,777 781 3,993
-------- -------- --------
Net income.................................. 2,950 2,962 6,403
PREFERRED STOCK DIVIDENDS ISSUED AND ACCRUED.... 1,449 2,047 2,193
-------- -------- --------
Net income attributable to common
stockholders' equity....................... $ 1,501 $ 915 $ 4,210
======== ======== ========
EARNINGS PER COMMON AND DILUTIVE COMMON
EQUIVALENT SHARE............................... $ 1.32 $ 0.78 $ 3.51
======== ======== ========
EARNINGS PER COMMON SHARE -- ASSUMING FULL
DILUTION....................................... $ 1.32 $ 0.78 $ 3.49
======== ======== ========
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-21
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
REDEEMABLE NUMBER CAPITAL
PREFERRED STOCK REDEEMABLE OF IN TOTAL
-------------------- WARRANTS COMMON COMMON EXCESS WARRANTS RETAINED STOCKHOLDERS'
A B C TOTAL OUTSTANDING SHARES STOCK OF PAR OUTSTANDING EARNINGS EQUITY
------ ------ ------ ------- ----------- ------- ------ ------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
JANUARY 31, 1992... $5,000 $5,000 $7,500 $17,500 $1,000 896,258 $ 9 $ 7,778 $231 $ -- $ 8,018
Net income........ -- -- -- -- -- -- -- -- -- 2,950 2,950
Stock dividends
issued ($75.00
per share)....... -- 384 577 961 -- -- -- -- -- (961) (961)
Stock dividends
accrued (97.50
per share)....... 488 -- -- 488 -- -- -- -- -- (488) (488)
Payment on notes
receivable from
stockholders..... -- -- -- -- -- -- -- 947 -- -- 947
Issuance of
warrants......... -- -- -- -- 435 -- -- -- -- -- --
------ ------ ------ ------- ------ ------- --- ------- ---- ------ -------
DECEMBER 31, 1992.. 5,488 5,384 8,077 18,949 1,435 896,258 9 8,725 231 1,501 10,466
Net income........ -- -- -- -- -- -- -- -- -- 2,962 2,962
Stock dividends
issued ($100.00
per share)....... -- 559 838 1,397 -- -- -- -- -- (1,397) (1,397)
Stock dividends
accrued ($130.00
per share)....... 650 -- -- 650 -- -- -- -- -- (650) (650)
Payment on notes
receivable from
stockholders..... -- -- -- -- -- -- -- 41 -- -- 41
------ ------ ------ ------- ------ ------- --- ------- ---- ------ -------
DECEMBER 31, 1993.. 6,138 5,943 8,915 20,996 1,435 896,258 9 8,766 231 2,416 11,422
Net income........ -- -- -- -- -- -- -- -- -- 6,403 6,403
Stock dividends
issued ($100.00
per share)....... -- 617 926 1,543 -- -- -- -- -- (1,543) (1,543)
Stock dividends
accrued ($130.00
per share)....... 650 -- -- 650 -- -- -- -- -- (650) (650)
Payment on notes
receivable from
stockholders..... -- -- -- -- -- -- -- 51 -- -- 51
Issuance of common
shares........... -- -- -- -- -- 58,653 1 8,999 -- -- 9,000
Common shares
accrued.......... -- -- -- -- -- 5,435 -- 63 -- -- 63
Warrants accrued.. -- -- -- -- 215 -- -- -- 29 -- 29
------ ------ ------ ------- ------ ------- --- ------- ---- ------ -------
DECEMBER 31, 1994.. $6,788 $6,560 $9,841 $23,189 $1,650 960,346 $10 $17,879 $260 $6,626 $24,775
====== ====== ====== ======= ====== ======= === ======= ==== ====== =======
</TABLE>

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-22
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR ENDED
THROUGH DECEMBER 31,
DECEMBER 31, ----------------
1992 1993 1994
------------ ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................... $ 2,950 $ 2,962 $ 6,403
------- ------- -------
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities--
Depreciation and amortization............... 5,366 6,475 6,356
Services provided under transition services
agreement.................................. 9,000 -- --
Provision for noncurrent taxes.............. 1,605 167 250
Common shares accrued....................... -- -- 63
Warrants accrued............................ -- -- 244
Changes in assets and liabilities, net of
effects from purchase of Lynn-Edwards for
the eleven months ended December 31, 1992--
(Increase) decrease in accounts
receivable............................... 7,582 (879) 140
Increase in vendor and other receivables.. (6,322) (2,368) (268)
Increase in inventory..................... (11,111) (14,998) (5,579)
Increase in other assets.................. (616) (3,990) (598)
Increase (decrease) in accounts payable... 10,988 (5,493) 3,354
Increase in accrued liabilities........... 4,740 1,381 2,260
(Decrease) increase in other liabilities.. (4,423) (1,449) 1,011
------- ------- -------
Total adjustments....................... 16,809 (21,154) 7,233
------- ------- -------
Net cash provided by (used in) operating
activities............................. 19,759 (18,192) 13,636
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of net assets of BCOP (Note 1).... (82,122) -- --
Acquisition of net assets of Lynn-Edwards
(Note 1)..................................... (2,673) 313 --
Acquisition costs............................. (7,712) (67) --
Capital expenditures.......................... (4,289) (3,273) (554)
Other......................................... -- (249) --
------- ------- -------
Net cash used in investing activities... (96,796) (3,276) (554)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial capitalization--
Revolver.................................... 36,081 -- --
Long-term debt.............................. 30,000 -- --
Issuance of common and preferred stock...... 19,325 -- --
Net borrowings (repayment) under revolver..... 2,230 9,500 (7,900)
Increase in cash overdrafts................... 1,787 6,108 452
Principal payments on debt.................... (8,067) (3,446) (4,827)
Borrowings under financing agreements......... 2,987 2,000 --
Collections from stockholders................. 947 41 51
------- ------- -------
Net cash provided by (used in) financing
activities............................. 85,290 14,203 (12,224)
------- ------- -------
NET CHANGE IN CASH.............................. 8,253 (7,265) 858
CASH, beginning of period....................... 3 8,256 991
------- ------- -------
CASH, end of period............................. $ 8,256 $ 991 $ 1,849
======= ======= =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-23
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1994 AND 1993
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA )

1. BASIS OF PRESENTATION:
Associated Holdings, Inc. ("AHI") and Associated Stationers, Inc. ("ASI"), a
wholly owned subsidiary of AHI, both Delaware corporations (collectively the
"Company"), were formed to acquire certain assets and assume certain
liabilities (the "Acquisition") of the Wholesale Division of Boise Cascade
Office Products Corporation ("BCOP").

The Acquisition was consummated effective January 31, 1992, for approximately
$87,122, of which $82,122 was paid in cash and $5,000 was paid in preferred
stock. The transaction was accounted for using the purchase method of
accounting. Accordingly, the purchase price was allocated to acquired assets
and liabilities based on their fair market values as of January 31, 1992, as
follows:

<TABLE>
<S> <C>
Cash and accounts receivable..................................... $36,774
Inventory........................................................ 50,324
Other current assets............................................. 277
Property, plant and equipment.................................... 49,150
Accounts payable................................................. (30,624)
Accrued expenses and other liabilities........................... (18,779)
-------
$87,122
=======
</TABLE>

On October 27, 1992, L. E. Acquisition Corp., a wholly owned subsidiary of
ASI and a Delaware corporation, acquired all of the outstanding capital stock
of Lynn-Edwards Corp. ("Lynn-Edwards"), a privately held office products
wholesaler, for approximately $2,360. Lynn-Edwards was headquartered in
Sacramento, California, and operated distribution centers in Sacramento and Los
Angeles, California. On October 28, 1992, the L. E. Acquisition Corp. name was
relinquished and the Lynn-Edwards Corp. name was assumed.

The acquisition of Lynn-Edwards was effective as of September 30, 1992. The
acquisition has been accounted for as a purchase transaction and, accordingly,
the purchase price was allocated to assets and liabilities based on their
estimated fair market values as of the effective date of the transaction. At
October 1, 1992, the allocation was based on preliminary estimates of the fair
value of the net assets. In July, 1993, agreement was reached with the selling
shareholders of Lynn-Edwards regarding the final purchase price. The excess of
the purchase price over the estimated fair value of net tangible assets
acquired of $5,242 is being amortized on a straight-line basis over 40 years.
On March 23, 1994, Lynn-Edwards was merged into ASI.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements include AHI and its wholly owned
subsidiary, ASI. The consolidated financial statements include Lynn-Edwards in
the results of operations since its acquisition date. All significant
intercompany accounts and transactions have been eliminated.

Certain prior-year amounts have been reclassified to conform to the
presentation adopted by the Company in 1995.

Cash and Cash Equivalents

Cash equivalents are composed of highly liquid investments with an original
maturity of three months or less. As a result of the Company's cash management
system, checks issued but not

F-24
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
presented to the banks for payment may create negative book cash balances. Such
negative balances are classified as bank overdrafts.

Inventory

All inventory is purchased in a state ready for resale to customers and is
considered finished goods. Inventory is stated at the lower of cost or market.
Cost is determined using the first-in, first-out ("FIFO") method for all
inventory.

Property, Plant and Equipment

Property and equipment purchased by the Company through the acquisitions
referred to in Note 1 are stated at fair market value on the date of
acquisition as prescribed by the purchase method of accounting. Subsequent
purchases of property and equipment are stated at cost.

Depreciation and amortization are determined by using the straight-line
method over the estimated useful lives of the fixed assets. The following
useful lives are used for recording depreciation for financial reporting
purposes:

<TABLE>
<S> <C>
Buildings......................... 40 years
Machinery and equipment........... 3-15 years
Furniture and fixtures............ 3-10 years
Assets held under capital lease... Lesser of useful lives or term of lease
</TABLE>

Repairs and maintenance are charged to expense as incurred.

Software Capitalization

Significant system development costs determined to have benefits for future
periods are capitalized at cost. Software costs and software development costs
of $513, $767 and $780 as of December 31, 1992, 1993 and 1994, respectively,
were capitalized and subject to amortization. Amortization expense is
recognized over the periods in which benefits are realized, generally not to
exceed five years. Amortization expense for the eleven months ended December
31, 1992 and for the years ended December 31, 1993 and 1994, was $88, $128 and
$157, respectively. Capitalized software, net of accumulated amortization, as
of December 31, 1993 and 1994, was $551 and $407, respectively.

Intangibles

Intangible assets, included in other long-term assets on the accompanying
consolidated balance sheets, consist principally of excess purchase price over
net tangible assets of businesses acquired ("goodwill"). Goodwill is amortized
on a straight-line basis over periods not exceeding 40 years. The Company
continually evaluates whether events or circumstances have occurred indicating
that the remaining estimated useful life of goodwill may not be appropriate.
When factors indicate that goodwill should be evaluated for possible
impairment, the Company uses an estimate of the acquired business' undiscounted
future operating income compared to the carrying value of goodwill to determine
if a write-off is necessary. Gross goodwill as of December 31, 1993 and 1994
was $5,242. Accumulated goodwill amortization as of December 31, 1993 and 1994,
was $164 and $295, respectively.

The Company incurred legal and other direct costs in connection with the
issuance of its outstanding debt. These transaction costs of $4,217 and $2,945
at December 31, 1993 and 1994, respectively, net of accumulated amortization,
are included in other long-term assets. Accumulated transaction cost
amortization as of December 31, 1993 and 1994, was $2,034 and $3,306,
respectively. These costs are being amortized over the weighted average term of
the related outstanding debt.

F-25
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Income Taxes

Effective January 31, 1992, the Company adopted Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes." Accordingly, the
Company records a provision for income taxes using the "liability" method of
accounting for income taxes. Deferred tax assets and liabilities, less an
appropriate valuation allowance, are recorded for all temporary differences
between financial and tax reporting and are the result of differences in the
timing of recognition of certain income and expense items for financial and tax
accounting purposes. Deferred tax expense (benefit) results from the net
changes during the year in the deferred tax assets and liabilities and the
valuation allowance.

3. DEBT:

Long-term debt consists of the following as of December 31, 1993 and 1994:

<TABLE>
<CAPTION>
1993 1994
------- -------
<S> <C> <C>
Revolver................................................. $47,810 $39,910
Term loan--
Tranche A, due in installments until December, 1996.... 15,000 11,000
Tranche B, due in installments from January, 1997
until December, 1998.................................. 10,000 10,000
Original issue discount -- tranche B..................... (582) (443)
Capital lease obligation, 8.87% interest rate............ 2,540 2,052
Equipment loan, 7.99% interest rate...................... 2,000 1,661
------- -------
76,768 64,180
Less -- Current maturities............................... (4,828) (5,901)
------- -------
$71,940 $58,279
======= =======
</TABLE>

In connection with the Acquisition, and as amended in connection with the
acquisition of Lynn-Edwards, the Company entered into a $95,000 Second Amended
and Restated Credit Agreement ("Credit Agreement"). The Credit Agreement
consists of a $65,000 revolving credit facility ("Revolver"), a $20,000 term
loan, Tranche A, and a $10,000 term loan, Tranche B ("Term Loan"). The proceeds
of the Revolver and the Term Loan were used to fund the Acquisition, to fund
the purchase of the outstanding capital stock of Lynn-Edwards, to pay off
certain indebtedness of Lynn-Edwards at the acquisition date and to pay
expenses related to these two transactions. In addition, proceeds were used to
finance the working capital requirements of the combined companies.

The Revolver provides for revolving credit loans up to the amount of the
commitment based on eligible receivables and inventory, as defined in the
Credit Agreement. Interest is payable at a rate per annum of 1 3/4% plus the
higher of either the prime rate or 1/2% plus the federal funds rate, as
defined. The Revolver terminates on January 31, 1997. Prepayments are required
when cash flow, as defined, exceeds specified levels. The Revolver interest
rates and outstanding amounts during the year and at the end of the year are as
follows:

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR ENDED
THROUGH DECEMBER 31,
DECEMBER 31, ----------------
1992 1993 1994
------------ ------- -------
<S> <C> <C> <C>
Interest rate at end of year............... 7.75% 7.75% 10.25%
Weighted average interest
rate during year.......................... 8.00% 7.75% 8.90%
Average amount outstanding
during year............................... $26,811 $46,864 $39,556
Maximum month-end balance
during year............................... 36,081 58,510 53,810
======= ======= =======
</TABLE>

F-26
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Term loan tranche A is payable in 57 monthly installments which commenced on
April 30, 1992. Interest is payable at a rate per annum of 2% plus the higher
of either the prime rate or 1/2% plus the federal funds rate, as defined. The
weighted average interest rate was 8.25%, 8.00% and 9.15% during the eleven
months ended December 31, 1992 and the years 1993 and 1994, respectively. The
interest rate was 8.00% and 10.50% at December 31, 1993 and 1994, respectively.

Term loan tranche B is payable in 24 monthly installments, commencing on
January 31, 1997. Interest is payable at a rate per annum of 5% plus the higher
of either the prime rate or 1/2% plus the federal funds rate, as defined. The
weighted average interest rate was 11.25%, 11.00% and 12.15% during the eleven
months ended December 31, 1992 and the years 1993 and 1994, respectively. The
interest rate was 11.00% and 13.50% at December 31, 1993 and 1994,
respectively.

The Credit Agreement contains certain covenants and provisions which, among
others, include restrictions on dividend payments, required levels of total
capital, required ratio of current assets to current liabilities and
restrictions on capital expenditures. Borrowings under the Credit Agreement are
collateralized by substantially all of the real and personal property of the
Company.

The Company entered into a capital lease in December, 1992, for substantially
all of the equipment at the Carol Stream warehouse facility. As of December 31,
1993 and 1994, assets recorded under this capital lease were approximately
$3,002 with related accumulated amortization of $425 and $726, respectively. As
of December 31, 1993 and 1994, total obligations under this capital lease were
$2,540 and $2,052, respectively, of which $488 and $534 is recorded as a
current liability, respectively. The lease agreement contains certain financial
covenants and provisions, including a maximum level of debt to tangible net
worth, a required level of tangible net worth, and a ratio of cash flow, as
defined, to the current portion of long-term debt.

In 1993, Lynn-Edwards entered into a $2,000 term loan to finance the purchase
of capital equipment. The loan agreement contains certain financial covenants
and provisions, including a maximum level of debt to tangible net worth, a
required level of tangible net worth and a ratio of cash flow, as defined, to
current portion of long-term debt. The loan is amortized over 60 equal
installments.

Debt maturities, excluding the original issue discount, for the five years
following the period ended December 31, 1994, are as follows:

Maturities of long-term debt in 1997 include a balance under the Revolver of
$39,910.

Fair Market Value of Financial Instruments

The carrying value of cash and cash equivalents and short-term debt
approximates fair value because of the short-term maturity of the instruments.
Management believes that the fair value of the Revolver and Term Loan
approximates its carrying value as of December 31, 1993 and 1994, respectively,
because the interest rate on the debt is a floating rate tied to the prime
rate.

F-27
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. LEASE OBLIGATIONS:

The Company leases certain facilities under noncancelable operating leases
expiring through July, 2004, with various renewal options.

The following table shows future minimum annual lease commitments on
noncancelable operating leases. The table excludes real estate taxes,
insurance, maintenance and other costs related to the properties which are paid
by the Company.

<TABLE>
<S> <C>
1995........................................................... $ 2,696
1996........................................................... 2,498
1997........................................................... 1,940
1998........................................................... 1,568
1999........................................................... 1,449
Thereafter..................................................... 3,804
-------
Total minimum lease payments................................... $13,955
=======
</TABLE>

Rent expense for operating leases was approximately $1,590 for the eleven
months ended December 31, 1992, and $2,711 and $2,952 for the years ended
December 31, 1993 and 1994, respectively.

5. RETIREMENT BENEFITS:

Defined Contribution Plan

The ASI Profit Sharing and Savings Plan ("the Plan") is a Section 401(k) plan
with a discretionary profit sharing component which commenced on April 1, 1992.
The Plan and the trust established pursuant to the Plan are intended to meet
the requirements of the Employee Retirement Income Security Act of 1974
("ERISA") and qualify under Sections 401(a) and 501(a) of the Internal Revenue
Code of 1986, as amended. The Plan covers substantially all full-time employees
of the Company. Pursuant to the Plan, the Company matched employee
contributions in the amount of $0.50 for each $1.00 contributed through July,
1993, and $0.25 for each $1.00 contributed subsequently, up to an employee
contribution maximum of 6.0% of compensation, as defined. The expense under the
above plan was $256 for the eleven months ended December 31, 1992 and $435 and
$277 for the years ended December 31, 1993 and 1994, respectively.

Postretirement Benefits

In December, 1990, the Financial Accounting Standards Board ("FASB") issued
Standard No. 106, "Accounting for Postretirement Benefits Other Than Pensions."
This standard requires that the expected cost of these postemployment benefits
be charged to expense during the years that the employees render service. The
Company does not offer postretirement benefits to its employees.

F-28
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES:

At January 31, 1992, the date of the Acquisition, the Company had a net
deferred tax asset primarily due to the higher tax basis allocated to the net
assets acquired, including intangible assets and certain reserves. A valuation
allowance was established at the date of the Acquisition for the entire amount
of the net deferred tax asset.

For the eleven months ended December 31, 1992, and the years ended December
31, 1993 and 1994, and components of the provision for income taxes were as
follows:

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEARS ENDED
THROUGH DECEMBER 31,
DECEMBER 31, ---------------
1992 1993 1994
------------ ------- ------
<S> <C> <C> <C>
Currently payable--
Federal...................................... $ 1,584 $ 227 $3,090
State........................................ 193 554 903
------- ------- ------
Total currently payable.................... 1,777 781 3,993
------- ------- ------
Deferred, net--
Federal...................................... 1,107 1,012 166
State........................................ 163 148 24
Valuation allowance reduction................ (1,270) (1,160) (190)
------- ------- ------
Total deferred, net........................ -- -- --
------- ------- ------
Provision for income taxes..................... $ 1,777 $ 781 $3,993
======= ======= ======
</TABLE>

The components of the deferred income tax provision (benefit) were as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1992 1993 1994
------- ------- -------
<S> <C> <C> <C>
Accelerated tax depreciation...................... $ 308 $ (42) $ (266)
Amortization of intangible assets................. 822 897 897
Acquisition accruals.............................. 1,130 415 297
Sales discounts and deferred revenue.............. (119) (297) (1,014)
Other............................................. (871) 187 276
Valuation allowance reduction..................... (1,270) (1,160) (190)
------- ------- -------
Provision (benefit) for deferred income taxes..... $ -- $ -- $ --
======= ======= =======
</TABLE>

F-29
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Reconciliations of the statutory federal income tax rates to the effective
income tax rates were as follows:

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
THROUGH
DECEMBER 31, YEARS ENDED DECEMBER 31,
--------------- -------------------------------
1992 1993 1994
--------------- --------------- --------------
% OF % OF % OF
PRETAX PRETAX PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
------- ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Tax provision based on the
federal statutory rate......... $ 1,607 34.0% $ 1,273 34.0% $3,535 34.0%
State and local income taxes --
net of federal income tax
benefit........................ 197 4.2 492 13.2 607 5.8
Reserves........................ 1,243 26.3 176 4.7 41 .4
Valuation allowance reduction... (1,270) (26.9) (1,160) (31.0) (190) (1.8)
------- ----- ------- ----- ------ ----
Provision for income taxes...... $ 1,777 37.6% $ 781 20.9% $3,993 38.4%
======= ===== ======= ===== ====== ====
</TABLE>

The amounts of deferred tax assets and deferred tax liabilities at December
31, 1993 and 1994 were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1993 1994
-------------------- --------------------
ASSETS LIABILITIES ASSETS LIABILITIES
------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Depreciation and amortization.... $ -- $ 603 $ -- $390
Intangible assets................ 2,766 -- 1,869 --
Allowance for doubtful accounts.. 1,598 -- 1,664 --
Inventory reserves and
adjustments..................... 1,433 -- 1,264 --
Accrued expenses................. 4,577 608 4,566 --
------- ------ ------- ----
10,374 1,211 9,363 390
Valuation allowance.............. (9,163) -- (8,973) --
------- ------ ------- ----

Total.......................... $ 1,211 $1,211 $ 390 $390
======= ====== ======= ====
</TABLE>

7. REDEEMABLE PREFERRED STOCK:

AHI has 245,000 authorized shares of preferred stock (nonvoting), consisting
of 15,000 shares of $0.01 par value Class A preferred stock, 15,000 shares of
$0.01 par value Class B preferred stock, 15,000 shares of $0.01 par value Class
C preferred stock, and 200,000 shares of $0.01 par value Additional preferred
stock. All preferred stock issued at the date of inception was valued at the
amount of cash paid or assets received for the stock at $1,000 per share. As of
December 31, 1993 and 1994, there were 5,000 shares of Class A preferred stock
issued and outstanding, and 1,138 and 1,788 shares which have been accrued as
dividends but not issued, respectively. As of December 31, 1993 and 1994, there
were 5,943 and 6,560 shares of Class B preferred stock and 8,915 and 9,841
shares of Class C preferred stock issued and outstanding, respectively. There
were no shares of Additional preferred stock issued and outstanding as of
December 31, 1993 or 1994. These shares are senior in preference to the common
stock of the Company.

Class A preferred stock must be redeemed by the Company on July 31, 1999.
Dividends are cumulative at a rate of 10% per annum, payable quarterly on April
30, July 31, October 31 and January 31. In the event that the Company does not
pay dividends in cash, the dividend rate increases to 13%

F-30
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
per annum and is payable in stock. Class B and C preferred stock are junior in
relation to the Class A preferred stock. During the eleven months ended
December 31, 1992, 488 shares of Class A preferred stock were accrued but not
issued. During each of the years ended December 31, 1993 and 1994, 650 shares
of Class A preferred stock were accrued but not issued.

Class B preferred stock must be redeemed by the Company on July 31, 1999.
Class C preferred stock is redeemable in four equal quarterly installments on
April 30, 2001, July 31, 2001, October 31, 2001, and January 31, 2002.
Dividends for both Class B and C are cumulative at a rate of 9% per annum.
Dividends are payable quarterly on April 30, July 31, October 31 and January
31. In the event that the Company does not pay dividends in cash, the dividend
rate increases to 10% per annum and is payable in stock. During the eleven
months ended December 31, 1992, noncash dividends were declared and issued for
both Class B and C preferred stock in the amount of 384 and 577 shares,
respectively. During the year ended December 31, 1993, noncash dividends were
declared and issued for both Class B and C preferred stock in the amount of 559
and 838 shares, respectively. During the year ended December 31, 1994, noncash
dividends were declared and issued for both Class B and C preferred stock in
the amount of 617 and 926 shares, respectively.

Redemption of preferred stock, for the five years following the period ended
December 31, 1994, are as follows:

All classes of preferred stock may be redeemed at the option of the issuer at
any time. All classes of preferred stock have a redemption and liquidation
value of $1,000 per share plus the aggregate of accrued and unpaid dividends on
such shares to date.

8. REDEEMABLE WARRANTS:

The Company has 190,218 warrants ("Lender Warrants") outstanding as of
December 31, 1993 and 1994, which allow the holders thereof to buy shares of
AHI common stock at an exercise price of $0.01 per share. Of the Lender
Warrants, 150,340 were valued at the date of inception at the negotiated amount
of $6.65 per warrant while the remaining 39,878 warrants were valued at $10.92
per warrant. In addition, 18,821 additional Lender Warrants have been accrued
but not issued, as of December 31, 1994. The exercise period expires January
31, 2002. These warrants were valued at $11.43 per warrant.

The Lender Warrants contain certain put rights which allow the holders
thereof to put the Warrants to AHI upon the earlier of January 31, 1997 or the
occurrence of certain extraordinary corporate events. The purchase price
payable upon the exercise of the put rights is the greater of the then fair
market value or equity value of the warrants, as defined, less the applicable
exercise price of the warrants. Payment of the Lender Warrants can only occur
after repayment of all debt outstanding under the Credit Agreement or with the
consent of the lenders and/or agent under the Credit Agreement.

9. STOCKHOLDERS' EQUITY:

Common Stock and Warrants

AHI has 10,000,000 authorized shares of common stock, consisting of 5,000,000
shares of $0.01 par value Class A voting common stock and 5,000,000 shares of
$0.01 par value Class B nonvoting common stock. Each holder of Class A common
stock is entitled to one vote for each share of common stock held of record by
such holder. No dividends on common shares were accrued or paid for the

F-31
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
eleven months ended December 31, 1992, or for the years ended December 31,
1993 and 1994. All common stock issued at the date of inception was valued at
the amount of cash paid for the stock or, in the case of services rendered or
to be rendered, at $10.00 per share.

As of December 31, 1993 and 1994, the Company has 23,129 warrants
outstanding which allow the holders to buy shares of AHI common stock at an
exercise price of $1 per share. At the date of inception, these warrants were
valued at $10.00 per warrant. In addition, 2,506 warrants have been accrued
but not issued, as of December 31, 1994. These warrants were valued at $11.43
per warrant. The exercise period expires January 31, 2002.

Earnings Per Share

The Company presents earnings per share on both a primary and fully diluted
basis. Earnings per common and dilutive common equivalent share amounts were
computed by dividing net income, after deducting dividends on preferred stock,
by the weighted average number of common and dilutive common equivalent shares
outstanding during the period. The weighted average number of shares includes
the dilutive effect of warrants computed using the treasury stock method, as
well as the common shares that would result from the conversion of the
deferred obligation related to the TS Agreement.

Earnings per common share assuming full dilution amounts were computed by
dividing net income, after deducting dividends on preferred stock, by the
weighted average number of fully diluted common shares outstanding during the
period. The weighted average number of shares includes the dilutive effect of
warrants computed using the treasury stock method, as well as the common
shares that would result from the conversion of the deferred obligation
related to the TS Agreement.

For the eleven months ended December 31, 1992, and the year ended December
31, 1993 employee stock options (discussed in Note 9) were not included in
either the weighted average number of common and dilutive common equivalent
shares or the weighted average shares on a fully diluted basis, as they would
have an anti-dilutive result. For the year ended December 31, 1994, the stock
options of one employee were included in the weighted average share
computations, as they had a dilutive result. The remainder of the employee
stock options were not included in the weighted average share computations for
the year ended December 31, 1994, as they would have an anti-dilutive effect.

The net income, preferred stock dividends and shares used to compute primary
and fully diluted earnings per share are presented in the following table.

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR ENDED
THROUGH DECEMBER 31,
DECEMBER 31, -------------
1992 1993 1994
------------ ------ ------
<S> <C> <C> <C>
PRIMARY
Net Income........................................ $2,950 $2,962 $6,403
Preferred stock dividends issued and accrued...... 1,449 2,047 2,193
------ ------ ------
Net income attributable to common stockholders'
equity........................................... $1,501 $ 915 $4,210
====== ====== ======
Average number of common and dilutive common
equivalent shares................................ 1,139 1,171 1,199
FULLY DILUTED
Net income........................................ $2,950 $2,962 $6,403
Preferred stock dividends issued and accrued...... 1,449 2,047 2,193
------ ------ ------
Net income attributable to common stockholders'
equity........................................... $1,501 $ 915 $4,210
====== ====== ======
Average number of shares, assuming full dilution.. 1,139 1,171 1,205
</TABLE>

F-32
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. EMPLOYEE STOCK OPTION AND AWARD PLANS:

On January 31, 1992, the stockholders of AHI approved the adoption of the AHI
1992 Management Stock Option Plan (the "Plan"). The purpose of the Plan is to
promote the interests of the Company and its shareholders by providing the
officers and other key employees with additional incentive and the opportunity
through stock ownership to increase their proprietary interest in the Company
and their personal interest in its continued success. As of December 31, 1994,
86,735 shares of common stock have been authorized for grant under the Plan.

Under the terms of the Plan, the option price at the time any option is
granted will not be less than the fair market value per share. The shares
granted to date have an exercise price of $10 per share and vest at a rate of
25% annually, subject to certain internal rate of return hurdles. As of
December 31, 1994, six persons held such options. No options were exercisable
as of December 31, 1994. Changes in stock options outstanding were as follows:

<TABLE>
<CAPTION>
SHARES
-------
<S> <C>
Granted as of the date of Inception.............................. 21,684
Granted........................................................ 31,585
Exercised...................................................... --
Expired or terminated.......................................... --
-------
Granted as of December 31, 1992.................................. 53,269
Granted........................................................ --
Exercised...................................................... --
Expired or terminated.......................................... --
-------
Granted as of December 31, 1993.................................. 53,269
Granted........................................................ 4,163
Exercised...................................................... --
Expired or terminated.......................................... (25,904)
-------
Granted as of December 31, 1994.................................. 31,528
=======
</TABLE>

11. SUPPLEMENTAL CASH FLOW DISCLOSURES:

In addition to the information provided in the statement of cash flows, the
following are supplemental disclosures of cash flow information for the eleven
months ended December 31, 1992 and the twelve months ended December 31, 1993
and 1994;

<TABLE>
<CAPTION>
1992 1993 1994
------ ------ ------
<S> <C> <C> <C>
Cash paid during the year for--
Interest.......................................... $4,694 $6,119 $6,588
Income taxes...................................... 135 630 2,118
====== ====== ======
</TABLE>

The following are supplemental disclosures of noncash investing and financing
activities for the eleven months ended December 31, 1992 and the twelve months
ended December 31, 1993 and 1994;

. In 1992, the Company issued common stock warrants, valued at $435, in
connection with the acquisition of Lynn-Edwards.

. On January 31, 1992, the Company issued common stock warrants valued at
$1,231 for services rendered in connection with the Acquisition.

. On January 31, 1992, the Company issued common stock valued at $462 for
services to be rendered to ASI through 2002.

F-33
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

. On January 31, 1992, the Company issued common stock valued at $315 for
services rendered in connection with the Acquisition.

. On January 31, 1992, the Company issued Class A preferred stock valued at
$185 for services rendered in connection with the Acquisition.

. On January 31, 1992, the Company issued Class B preferred stock valued at
$5,000 as partial payment for the Acquisition.

. In 1994, the Company issued $9,000 of common stock to retire a $9,000
deferred obligation related to a Transition Services Agreement ("TS
Agreement").

. In 1994, the Company accrued $63 for common stock shares to be issued at
less than fair market value.

. In 1994, the Company accrued $244 for warrants which have an exercise
price less than the fair market value of the common stock.

12. TRANSACTIONS WITH RELATED PARTIES:

The Company has management and advisory services agreements with three
investor groups which own the majority of AHI's Class A common and Class A
preferred stock. These investor groups provided certain financial advisory
services to the Company in connection with the Acquisition in exchange for an
aggregate of $1.0 million; 31,480 shares of AHI Class A common stock with a
recorded value of $315,000; and 185 shares of AHI Class A preferred stock with
a recorded value of $185,000.

In addition, these same investor groups provide certain oversight and
monitoring services to the Company, in exchange for management fees and out-of-
pocket expenses. The expense related to the above agreements was $475 and $90
of out-of-pocket expenses for the eleven months ended December 31, 1992, $283
and $47 of out-of-pocket expenses for the year ended December 31, 1993 and $500
and $68 of out-of-pocket expenses for the year ended December 31, 1994.
Pursuant to the Credit Agreement, the aggregate payments under these agreements
cannot exceed $500 per year plus reasonable out-of-pocket expenses.

In addition, on January 31, 1992, two of these same investor groups received
an aggregate of 46,258 shares of AHI Class A common stock (shares can be
rescinded if the agreement is terminated prior to January 31, 2002) as deferred
compensation for future services. The deferred compensation related to these
shares had a recorded value of $463,000 at January 31, 1992 and were fully
amortized during the 11 month period ended December 31, 1992.

On January 31, 1992, the Company entered into the TS Agreement with the
holder of the Class B preferred stock (nonvoting). The TS Agreement stipulated
that the Company receive certain services for between two months and two years
from January 31, 1992. The services included dual facility services (including
inventory purchases), information systems services and freight consolidation
services. In return, the Company made monthly payments, as defined. Under this
agreement, the Company purchased services of $21,000 (including inventory
purchases of $13,175) during the eleven months ended December 31, 1992 and
$1,980 and $825 during the twelve months ended December 31, 1993 and 1994,
respectively. The TS Agreement also allowed for deferment of up to $9,000 in
payments. During the eleven months ended December 31, 1992, the Company
deferred $9,000 in payments. This deferred obligation is recorded in deferred
obligations and other long-term liabilities on the balance sheet at December
31, 1993.

During 1994, per the TS Agreement, the Company settled the obligation by
issuing 58,653 shares of AHI Class A common stock to the holder of the Class B
preferred stock.

F-34
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)

The holder of the Class B preferred stock is also a supplier to the Company.
The total inventory purchases from this supplier were $17,963 during the eleven
months ended December 31, 1992 and $21,903 and $26,728 during the twelve months
ended December 31, 1993 and 1994, respectively. As of December 31, 1993 and
1994, $1,413 and $2,293 were due to this supplier and recorded in trade
accounts payable.

The holder of the Class B preferred stock is also a customer of the Company.
Net sales to this customer were $11,860 during the eleven months ended December
31, 1992 and $19,153 and $33,447 during the twelve months ended December 31,
1993 and 1994, respectively. Accounts receivable from this customer were $145
and $299 as of December 31, 1993 and 1994, respectively.

On January 31, 1992, the Company entered into a data processing facilities
management agreement with the holder of the Class C preferred stock
(nonvoting). The agreement expires in July 2002, and has minimum monthly
payments which began in August 1992, ranging from $522 to $689. Payments
pursuant to the above agreement were $3,023 for the eleven months ended
December 31, 1992 and $10,336 and $10,630 for the twelve months ended December
31, 1993 and 1994, respectively. The Company had prepaid $956 and $1,934 as of
December 31, 1993 and 1994, respectively, for future services. In addition,
$1,755 and $1,931 was accrued as of December 31, 1993 and 1994, respectively,
for services provided which had not yet been billed. At December 31, 1994, the
remaining aggregate minimum monthly payments over the term of the agreement
were $50,078.

Per the agreement, in the event the agreement is terminated for cause by the
holder of the Class C preferred stock prior to expiration, the Company agrees
to pay 80% of the remaining minimum monthly charges. In the event the agreement
is terminated by the Company, the Company agrees to pay the lesser of $11,000
or 80% of the remaining minimum monthly charges, as well as the redemption or
purchase of the Class C preferred stock as discussed in Note 7.

13. CONCENTRATION OF CREDIT RISK:

The Company's principal customers are in the retail office supply industry.
Their financial position has been considered in determining the Company's
allowance for doubtful accounts.

14. SUBSEQUENT EVENT:

On February 13, 1995, AHI and United Stationers Inc. ("USI") entered into a
Merger Agreement. Under the terms of the Merger Agreement, the current
shareholders of USI would receive $15.50 per share for 92.5% of their shares
and the remaining 7.5% of their shares would represent (in aggregate) 20% of
the common stock of the combined entity, which will continue to be publicly
traded.

In connection with the possible merger, ASI paid commitment fees to a lender
subsequent to December 31, 1994.

F-35
<PAGE>

ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY

SUPPLEMENTAL CONSOLIDATED
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Summarized quarterly financial information for the two years ended December
31, 1994 is as follows:

<TABLE>
<CAPTION>
QUARTER
------------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
<S> <C> <C> <C> <C>
FISCAL YEAR 1993
Net sales............................... $115,936 $105,226 $124,993 $116,376
Gross profit on sales................... 28,115 24,749 30,804 28,612
Net income (loss)....................... 596 (1,293) 3,218 441
Earnings (loss) per share............... 0.08 (1.54) 2.31 (0.07)
FISCAL YEAR 1994
Net sales............................... $123,850 $109,979 $120,982 $122,634
Gross profit on sales................... 29,688 27,870 31,273 31,338
Net income (loss)....................... 742 534 2,703 2,424
Earnings (loss) per share............... 0.18 (0.01) 1.79 1.55
</TABLE>

F-36
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)

CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
ASSETS 1994 1995
------ ------------ -----------
(AUDITED) (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents........................... $ 1,849 $ 12,514
Accounts receivable, net............................ 45,139 229,677
Inventories......................................... 88,197 338,171
Other current assets................................ 3,795 37,438
-------- --------
Total Current Assets.............................. $138,980 $617,800
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost................ $ 58,277 $237,648
Less--Accumulated depreciation and amortization..... (12,830) (20,526)
-------- --------
Net Property, Plant and Equipment................. $ 45,447 $217,122
-------- --------
GOODWILL, NET......................................... $ 4,948 $ 73,421
-------- --------
OTHER ASSETS, NET..................................... $ 3,104 $ 40,443
-------- --------
TOTAL ASSETS.......................................... $192,479 $948,786
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Short-term debt and current maturities of long-term
obligations........................................ $ 5,901 $ 24,614
Accounts payable.................................... 54,351 163,587
Accrued liabilities................................. 22,274 134,889
-------- --------
Total Current Liabilities......................... $ 82,526 $323,090
-------- --------
DEFERRED TAXES........................................ $ 2,060 $ 30,722
-------- --------
LONG-TERM OBLIGATIONS:
Senior Revolver Loan................................ $ 39,910 $135,708
Senior Subordinated Notes........................... 150,000
Senior Term Loan--Tranche A......................... 6,000 100,378
Senior Term Loan--Tranche B......................... 9,557 71,353
Other Long-Term Debt................................ 32,142
Other Long-Term Liabilities......................... 2,812 20,169
-------- --------
TOTAL LONG-TERM OBLIGATIONS........................... $ 58,279 $509,750
-------- --------
REDEEMABLE PREFERRED STOCK............................ $ 23,189 $ 24,345
-------- --------
REDEEMABLE WARRANTS................................... $ 1,650 $ 11,984
-------- --------
STOCKHOLDERS' EQUITY.................................. $ 24,775 $ 48,895
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY.............. $192,479 $948,786
======== ========
</TABLE>

The accompanying notes to condensed consolidated financial
statements are an integral part of these balance sheets.

F-37
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
---------------------------
JUNE 30, 1994 JUNE 30, 1995
------------- -------------
<S> <C> <C>
NET SALES......................................... $233,829 $672,603
COST OF GOODS SOLD................................ 176,271 518,521
--------- ---------
Gross profit.................................. $ 57,558 $154,082
--------- ---------
OPERATING EXPENSES:
Warehousing, marketing and administrative
expenses....................................... $ 51,440 $131,519
Restructuring charge (Note 1)................... 9,759
--------- ---------
Total operating expenses...................... $ 51,440 $141,278
--------- ---------
Income from operations........................ $ 6,118 $ 12,804
INTEREST EXPENSE, net............................. 4,046 17,469
--------- ---------
Income (loss) before income taxes and
extraordinary item............................. $ 2,072 $ (4,665)
INCOME TAXES (BENEFIT)............................ 796 (1,956)
--------- ---------
Income (loss) before extraordinary item....... $ 1,276 $ (2,709)
EXTRAORDINARY ITEM--loss on early retirement of
debt, net of taxes ($967) (Note 1).............. (1,449)
--------- ---------
NET INCOME (LOSS)................................. $ 1,276 $ (4,158)
PREFERRED STOCK DIVIDENDS ISSUED AND ACCRUED...... 1,077 1,156
--------- ---------
Net income (loss) attributable to common
shareholders................................. $ 199 $ (5,314)
========= =========
Net Income (Loss) Per Common and Common Equivalent
Share (Primary and Fully Diluted):
Income (loss) before extraordinary item......... $ .05 $ (.83)
Extraordinary item.............................. (.31)
--------- ---------
Net income (loss) per common and common
equivalent share............................. $ .05 $ (1.14)
========= =========
Average Number of Common Shares Used in Primary
Calculation...................................... 4,091,822 4,676,887
========= =========
Average Number of Common Shares Used in Fully
Diluted Calculation.............................. 4,136,895 4,676,887
========= =========
</TABLE>

The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.

F-38
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
---------------------------
JUNE 30, 1994 JUNE 30, 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities...... $ 15,512 $ 49,121
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of the Company--net of cash acquired
of approximately $14,500........................ $ $(258,274)
Capital expenditures............................. (336) (1,559)
-------- ---------
Net cash used in investing activities.......... $ (336) $(259,833)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of debt................................. $ $ 686,789
Retirements and payments of debt................. (2,000) (398,903)
Net repayment under revolver..................... (12,500) (52,900)
Financing costs.................................. (25,288)
Issuance of common stock......................... 12,000
Other............................................ (355) (321)
-------- ---------
Net cash provided by (used in) financing
activities.................................... $(14,855) $ 221,377
-------- ---------
NET CHANGE IN CASH................................. $ 321 $ 10,665
Cash and Cash Equivalents, beginning of period..... 991 1,849
-------- ---------
Cash and Cash Equivalents, end of period........... $ 1,312 $ 12,514
======== =========
Other Cash Flow Information
Cash payments during the six month period for:
Income taxes paid.............................. $ 804 $ 3,824
Interest paid.................................. 3,342 11,571
Noncash investing and financing activities:
Common stock issued in exchange for services
related to financing the acquisition of the
Company....................................... $ 4,600
Common stock issued to retire a deferred
obligation related to an agreement for
contracted services........................... $ 9,000
</TABLE>

The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.

F-39
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(1) BUSINESS COMBINATION AND RESTRUCTURING CHARGE

Immediately following the Merger, the number of outstanding Shares was
5,998,077 (or 6,973,720 on a fully diluted basis), of which (i) the former
holders of Class A Common Stock, $0.01 par value, and Class B Common Stock,
$0.01 par value, of Associated ("Associated Common Stock") and warrants or
options to purchase Associated Common Stock in the aggregate owned 4,603,333
Shares constituting approximately 76.7% of the outstanding Shares and
outstanding warrants or options for 975,643 Shares (collectively 80.0% on a
fully diluted basis) and (ii) pre-Merger holders of Shares (other than
Associated-owned Shares and treasury Shares) in the aggregate owned 1,394,744
Shares constituting approximately 23.3% of the outstanding Shares (or 20.0% on
a fully diluted basis). As used in this paragraph, the term "Shares" includes
shares of Nonvoting Common Stock, $0.01 par value, of the Company, which are
immediately convertible into Shares for no additional consideration.

On May 3, 1995, USSC completed the issuance of $150.0 million of 12 3/4%
Senior Subordinated Notes (the "Notes") due 2005. The net proceeds of the Notes
(after discount and fees of approximately $5.5 million) were used to pay
certain expenses, to repay the $130.0 million Subordinated Bridge Facility
(together with $1.6 million in accrued and unpaid interest thereon), to repay a
portion of the Tranche A and Tranche B term loans (totaling approximately $6.5
million), to repurchase the Series B Preferred Stock, together with accrued and
unpaid dividends thereon, for an aggregate amount of $7.0 million, and to
provide working capital.

Although the Company was the surviving corporation in the Merger, the
transaction was treated as a reverse acquisition for accounting purposes with
Associated as the acquiring corporation. The total purchase price of
approximately $293.4 million was allocated to assets and liabilities of the
Company based on the estimated fair value as of the date of acquisition. The
allocation was based on preliminary estimates which may be revised at a later
date. The excess of consideration paid over the estimated

F-40
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

fair value of net assets acquired in the amount of $68.9 million has been
recorded as goodwill and is being amortized on a straight-line basis over 40
years.

Effective for 1995, the Company changed its fiscal year from a year-end of
August 31 to December 31. A report on Form 8-K was filed on April 26, 1995,
reporting that the Company had changed its fiscal year end to December 31. A
Form 10-K was filed by the Company on June 27, 1995 which included audited
financial statements for the period from September 1, 1994 through March 30,
1995, the date on which the Merger was consummated.

The Condensed Consolidated Balance Sheet reflects the post-Merger Company as
of June 30, 1995 and a preliminary allocation of the purchase price which may
be revised at a later date. The Condensed Consolidated Balance Sheet as of
December 31, 1994 reflects Associated only. The Condensed Consolidated
Statements of Operations and Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1995 reflect the results of operations and
cash flows for Associated only for the three months ended March 31, 1995, and
the post-Merger Company for the three months ended June 30, 1995. The Condensed
Consolidated Statements of Operations and Condensed Consolidated Statements of
Cash Flows for the six months ended June 30, 1994 reflect the results of
operations and cash flows of Associated only.

The actual results for the six months ended June 30, 1995 include a
restructuring charge of $9.8 million ($5.9 million net of tax benefit of $3.9
million). The restructuring charge includes severance costs totaling $3.0
million. The restructuring plan specifies that certain distribution, sales, and
corporate positions, approximately 90 former Associated positions in total,
will be eliminated substantially within a one-year period. As of June 30, 1995
approximately 20 employees have been terminated with the related benefits of
approximately $0.2 million charged against the reserve. The restructuring
charge also includes distribution center closing costs totaling $4.7 million
and stockkeeping unit reduction costs totaling $2.1 million. The restructuring
plan specifies the closing of five of the former Associated's distribution
centers which are now redundant and the elimination of overlapping inventory
items from the Company's catalogs substantially within a one-year period.
Distribution center closing costs include (i) the net occupancy costs of leased
facilities after they are vacated until expiration of leases and (ii) the
losses on the sale of owned facilities and the facilities' furniture, fixtures,
and equipment. Stockkeeping unit reduction costs include losses on the sale of
inventory items which have been discontinued solely as a result of the
acquisition and Merger. As of June 30, 1995, no amounts relating to
distribution center closing costs or the reduction of stockkeeping units have
been charged against the reserve.

The actual results for the six months ended June 30, 1995 also include
compensation expense relating to an increase in the value of employee stock
options of approximately $1.5 million, ($0.9 million net of tax benefit of $0.6
million) as a result of the Acquisition and Merger and an extraordinary write-
off of approximately $2.4 million ($1.4 million net of tax benefit of $1.0
million) of financing costs and original issue discount relating to the debt
retired.

The following summarized unaudited pro forma operating data for the six
months ended June 30, 1995 and 1994 is presented giving effect to the
Acquisition as if it had been consummated at the beginning of the respective
periods and, therefore, reflects the results of the Company and Associated on a
consolidated basis for the period from January 1, 1995 through June 30, 1995
and January 1, 1994 through June 30, 1994, respectively. These pro forma
results have been prepared for comparative purposes only and do not purport to
be indicative of the results of operations that actually would have resulted
had the combination been in effect on the dates indicated, or which may result
in the future. The pro forma results exclude one-time non-recurring charges or
credits directly attributable to the transaction. The estimated cost savings
that the Company expects to realize ($26.0 million on a total year basis and
$6.5 million on a quarterly basis) pursuant to its consolidation plan that has
been approved by the Board of Directors of the Company have been reflected in
the pro forma results as if the Company's consolidation plan had been
implemented in full for the periods reflected. The Company plans to implement
its consolidation plan over a 12-month period following the Acquisition.

F-41
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The pro forma income statement adjustments consisted of (i) estimated cost
savings of $13.0 million that the Company expects to realize, (ii) increased
depreciation expense resulting from the write-up of certain fixed assets to
fair value, (iii) additional incremental goodwill amortization, (iv) additional
incremental interest expense due to debt issued, net of debt retired, (v)
reduction in preferred stock dividends due to the assumed retirement of the
Series B Preferred Stock, which the Company repurchased on July 28, 1995.

<TABLE>
<CAPTION>
PRO FORMA SIX MONTHS
ENDED JUNE 30,
---------------------
1994 1995
---------- ----------
(IN THOUSANDS OF
DOLLARS, EXCEPT SHARE
DATA) (UNAUDITED)
<S> <C> <C>
Net sales............................................. $ 971,079 $1,122,501
Net income............................................ $ 5,065 $ 14,829
Preferred stock dividends issued and accrued.......... $ 795 $ 883
Net income available to common stockholders........... $ 4,270 $ 13,946
Net income per common and common equivalent share:
Primary............................................. $ 0.62 $ 2.02
Fully diluted....................................... $ 0.62 $ 2.02
Weighted average number of common shares outstanding:
Primary............................................. 6,894,597 6,894,076
Fully diluted....................................... 6,894,597 6,898,757
*EBITDA............................................... $ 48,576 $ 70,712
</TABLE>
--------

* EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service
and incur debt. EBITDA should not be considered in isolation from or as
a substitute for net income, cash flows from operating activities or
other consolidated income or cash flow statement data prepared in
accordance with generally accepted accounting principles or as a measure
of profitability or liquidity. EBITDA includes a LIFO charge of $1.6
million and $2.2 million for the six months ended June 30, 1994 and
1995, respectively.

These pro forma results have been prepared for comparative purposes only and
do not purport to be indicative of the results of operations that actually
would have resulted had the combination been in effect on the dates indicated,
or which may result in the future.

(2) CHANGE IN ACCOUNTING PRINCIPLES

Effective January 1, 1995, Associated changed its method of accounting for
the cost of inventory from the FIFO method to the LIFO method. Associated made
this change in contemplation of its acquisition of the Company (accounted for
as a reverse acquisition) so that its method would conform to that of the
Company. Associated believes that in an inflationary environment the LIFO
method provides a better matching of current costs and current revenues and
that earnings reported under the LIFO method are more easily compared to that
of other companies in the wholesale industry where the LIFO method is common.
This change resulted in a charge to pre-tax income of approximately $2.2
million ($1.3 million net of tax benefit) or $0.28 per common and common
equivalent share for the six months ended June 30, 1995. The charge to pre-tax
income was approximately $1.7 million ($1.0 million net of tax benefit) or
$0.14 per common and common equivalent share for the three months ended June
30, 1995. The cumulative effect of this accounting change for years prior to
1995 is not determinable, nor are the pro forma effects of retroactive
application of the LIFO method to prior years.

F-42
<PAGE>

UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)

(3) BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements are unaudited,
except for the Associated Consolidated Balance Sheet as of December 31, 1994,
which is condensed from the audited Consolidated Balance Sheet of Associated at
that date. Certain prior-year amounts have been reclassified to conform with
current-year presentations. These financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of the Company's management, the condensed
consolidated financial statements for the unaudited interim periods presented
include all adjustments necessary to fairly present the results of such interim
periods and the financial position as of the end of said periods. Other than
the restructuring charge, the extraordinary item and the compensation expense
relating to employee stock options, these adjustments were of a normal
recurring nature and did not have a material impact on the financial statements
presented. Certain interim expense and inventory estimates are recognized
throughout the fiscal year relating to marginal income tax rates, shrinkage,
inflation and product mix. Any appropriate adjustments to reflect actual
experience, which historically have been immaterial, will be recognized in the
fourth quarter.

(4) NET INCOME (LOSS) ATTRIBUTABLE TO COMMON AND COMMON EQUIVALENT SHARES

Net income (loss) per common and common equivalent shares is based on net
income (loss) after preferred stock dividend requirements. Net income per
common and common equivalent share for the six months ended June 30, 1994 on a
primary and fully diluted basis are computed using the weighted average number
of shares outstanding adjusted for the effect of stock options and warrants
considered to be dilutive common stock equivalents. For the six months ended
June 30, 1995, the stock options and warrants were excluded from the
calculation of net loss attributable to common and common equivalent shares as
they would be anti-dilutive. The number of common and common equivalent shares
from before the Merger have been adjusted to reflect the post-Merger capital
structure.

(5) SUBSEQUENT EVENT

On July 28, 1995, the Company repurchased all the Series B Preferred Stock,
6,724.4 shares, together with accrued and unpaid dividends thereon. The
repurchase price was $7.0 million.

F-43
<PAGE>

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR UNITED. THIS PROSPEC-
TUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION OF THE NEW NOTES IN ANY JU-
RISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICI-
TATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF THE
NEW NOTES HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS NOT BEEN A CHANGE IN FACTS SET FORTH IN THIS PROSPECTUS OR IN THE
AFFAIRS OF UNITED OR THE COMPANY SINCE THE DATE HEREOF.

-----------------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Summary................................................................... 3
Risk Factors.............................................................. 17
The Exchange Offer........................................................ 23
The Company............................................................... 31
Use of Proceeds........................................................... 31
The Acquisition........................................................... 32
Capitalization............................................................ 33
Pro Forma Combined Financial Information.................................. 34
Selected Consolidated Financial Data...................................... 42
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 45
Business.................................................................. 57
Management................................................................ 69
Certain Transactions...................................................... 83
Financing the Acquisition................................................. 90
Description of Capital Stock.............................................. 93
Ownership of Voting Securities............................................ 98
Description of the New Notes.............................................. 100
Certain Federal Income Tax Considerations................................. 128
Plan of Distribution...................................................... 128
Legal Matters............................................................. 129
Experts................................................................... 129
Index to Financial Statements............................................. F-1
</TABLE>

-------------------------------------------------------------------------------
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$150,000,000

[LOGO OF UNITED STATIONERS APPEARS HERE]

UNITED STATIONERS SUPPLY CO.

UNITED STATIONERS INC.

12 3/4% SENIOR SUBORDINATED
NOTES DUE 2005

--------------------------
PROSPECTUS
--------------------------

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses payable in connection with the
offering of the securities to be registered and offered hereby. All of such
expenses are estimates, other than the registration fee payable to the
Securities and Exchange Commission.

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.............. $51,724.14
Printing and Engraving Expenses..................................
Legal Fees and Expenses..........................................
Accounting Fees and Expenses.....................................
Miscellaneous....................................................
----------
Total.......................................................... $
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Articles of Incorporation and the By-laws of the Company and the Restated
Certificate of Incorporation and Bylaws of United provide for the
indemnification of directors and officers to the fullest extent permitted by
the Business Corporation Act of the State of Illinois ("IBCA") and the General
Corporation Law of the State of Delaware ("DGCL"), respectively. Pursuant to
Section 8.75 of the IBCA, the Company generally has the power to indemnify its
present and former directors and officers against expenses incurred by them in
connection with any suit to which such directors and officers are, or are
threatened to be made, a party by reason of their serving in such positions, so
long as they acted in good faith and in a manner they reasonably believed to be
in, or not opposed to, the best interests of the Company, and with respect to
any criminal action, they had no reasonable cause to believe their conduct was
unlawful. Pursuant to the provisions of Section 145 of the DGCL, United has the
power to indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit, or processing
(other than an action by or in the right of United) by reason of the fact that
he is or was a director, officer, employee, or agent of United against any and
all expenses, judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with such action, suit, or proceeding. The
power to indemnify applies only if such person acted in good faith and in a
manner he reasonably believed to be in the best interest, or not opposed to the
best interest, of United and with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful.

Indemnification is not available if such person has been adjudged to have
been liable to the Company or United, unless and only to the extent the court
in which such action was brought determines that, despite the adjudication of
liability, but in view of all the circumstances, the person is reasonably and
fairly entitled to indemnification for such expenses as the court shall deem
proper. The Company and United have the power to purchase and maintain
insurance for such persons. The statutes also expressly provides that the power
to indemnify authorized thereby is not exclusive of any rights granted under
any bylaw, agreement, vote of shareholders or disinterested directors, or
otherwise.

The above discussion of the Articles of Incorporation and By-laws of the
Company, the Restated Certificate of Incorporation and Bylaws of United and of
Section 8.75 of the IBCA and Section 145 of the DGCL is not intended to be
exhaustive and is qualified in its entirety by such Articles of Incorporation
and By-laws of the Company, such Restated Certificate of Incorporation and
Bylaws of United, and the IBCA and DGCL.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
or United pursuant to the foregoing

II-1
<PAGE>

provisions, or otherwise, the Company and United has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company or United of expenses incurred or paid by a
director, officer or controlling person thereof in the successful defense of
any action, suit or proceeding) is asserted by a director, officer or
controlling person in connection with the securities being registered, the
Company and United will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On May 3, 1995, the Company sold $150,000,000 aggregate principal amount of
12 3/4% Senior Subordinated Notes due 2005 (the "Old Notes") in a private
placement in reliance on Rule 144A under the Securities Act, at a price equal
to 100% of the stated principal amount of such Old Notes.

Exemption from registration with respect to the above-described sale was
claimed under Section 4(2) of the Securities Act regarding transactions by an
issuer not involving any public offering.

ITEM 16. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES.

(A) EXHIBITS
<TABLE>
<C> <C> <S>
3.1 -- Articles of Incorporation of the Company, as amended (1).
3.2 -- By-Laws of the Company (1).
3.3 -- Restated Certificate of Incorporation of United (Exhibit 3(a) to
United's Report on Form 10-K dated November 19, 1987) (6).
3.4 -- Certificate of Ownership and Merger merging Associated into United
(4).
3.5 -- Restated Bylaws of United (2).
4.1 -- Indenture, dated as of May 3, 1995, among the Company, as Issuer,
United, as Guarantor, and The Bank of New York, as Trustee (4).
4.2 -- Form of Old Note (included in Exhibit 4.1, Exhibit A) (4).
4.3 -- Form of New Note (included in Exhibit 4.1, Exhibit A) (4).
4.4 -- First Supplemental Indenture, dated as of July 28, 1995, among the
Company, United, as Guarantor, and The Bank of New York, as Trustee
(2).
5 -- Opinion of Weil, Gotshal & Manges as to the securities registered
hereby (3).
9.1 -- Voting Trust Agreement, dated as of January 31, 1992, among United,
the stockholders party thereto and Messrs. Sturgess, Hegi, Miller,
Good and Johnson, as voting trustees (1).
9.2 -- First Amendment to Voting Trust Agreement, dated as of March 30,
1995, among United, the stockholders party thereto and Messrs.
Sturgess, Hegi, Miller, Good and Johnson, as voting trustees (1).
9.3 -- Letter agreement, dated March 30, 1995, between United (as
successor-in-interest to Associated) and Boise Cascade regarding
the Voting Trust Agreement (1).
10.1 -- Credit Agreement, dated as of March 30, 1995, among the Company,
United, certain Lenders named therein and Chase Bank, as Agent and
Lender (4).
10.2 -- Waiver and Amendment No. 1, dated as of April 13, 1995, among the
Company, United, each of the lenders party thereto and Chase Bank
(1).
</TABLE>

II-2
<PAGE>

<TABLE>
<C> <C> <S>
10.3 -- Assumption Agreement, dated as of March 30, 1995, among the
Company, United and Chase Bank, as agent (included in Exhibit
10.1, Exhibit F) (4).
10.4 -- Form of Revolving Credit Note, issuable under the Credit
Agreement (included in Exhibit 10.1, Exhibit A-1) (4).
10.5 -- Form of Tranche A Term Loan Note, issuable under the Credit
Agreement (included in Exhibit 10.1, Exhibit A-2) (4).
10.6 -- Form of Tranche B Term Loan Note, issuable under the Credit
Agreement (included in Exhibit 10.1, Exhibit A-3) (4).
10.7 -- Security Agreement, dated as of March 30, 1995, between the
Company and Chase Bank, as agent (included in Exhibit 10.1,
Exhibit C) (4).
10.8 -- Form of Indenture of Mortgage, Assignment of Rents, Security
Agreement and Fixture Filing, dated as of March 30, 1995, by the
Company in favor of Chase Bank (included in Exhibit 10.1, Exhibit
E) (4).
10.9 -- Registration Rights Agreement, dated as of April 26, 1995, among
the Company, United and the Initial Purchaser (1).
10.10 -- Purchase Agreement, dated April 26, 1995, among the Company,
United and the Initial Purchaser (1).
10.11 -- Registration Rights Agreement, dated as of January 31, 1992,
between United (as successor-in-interest to Associated) and CMIHI
(included in Exhibit 10.14, Annex 2) (1).
10.12 -- Amendment No. 1 to Registration Rights Agreement, dated as of
March 30, 1995, among United (as successor-in-interest to
Associated), CMIHI and certain other holders of Lender Warrants
(1).
10.13 -- Amended and Restated Registration Rights Agreement, dated as of
March 30, 1995, among United (as successor-in-interest to
Associated), Wingate Partners, Cumberland Capital Corporation,
Good Capital Co., Inc., Boise Cascade and certain other United
stockholders (1).
10.14 -- Warrant Agreement, dated as of January 31, 1992, among United (as
successor-in-interest to Associated), the Company (as successor-
in-interest to ASI) and CMIHI (1).
10.15 -- Amendment No. 1 to Warrant Agreement, dated as of October 27,
1992, among United (as successor-in-interest to Associated), the
Company (as successor-in-interest to ASI), CMIHI and the other
parties thereto (1).
10.16 -- Amendment No. 2 to Warrant Agreement, dated as of March 30, 1995,
among United (as successor-in-interest to Associated), the Company
(as successor-in-interest to ASI), CMIHI and the other parties
thereto (1).
10.17 -- Warrant Agreement, dated as of January 31, 1992, between United
(as successor-in-interest to Associated) and Boise Cascade (1).
10.18 -- Amendment No. 1 to Warrant Agreement, dated as of March 30, 1995,
between United (as successor-in-interest to Associated) and Boise
Cascade (1).
10.19 -- Investment Banking Fee and Management Agreements, dated as of
January 31, 1992, among United, the Company and each of Wingate
Partners, Cumberland Capital Corporation and Good Capital Co.,
Inc. (1).
10.20 -- Amendment No. 1 to Investment Banking Fee and Management
Agreements, dated as of March 30, 1995, among the Company, United
and each of Wingate Partners, Cumberland Capital Corporation and
Good Capital Co., Inc. (1).
</TABLE>

II-3
<PAGE>

<TABLE>
<C> <C> <S>
10.21 -- Employment Agreements, dated as of January 31, 1992, among United
(as successor-in-interest to Associated), the Company (as
successor-in-interest to ASI) and each of Michael D. Rowsey,
Robert W. Eberspacher, Lawrence E. Miller, Daniel J. Schleppe,
Duane J. Ratay and Daniel H. Bushell (1).
10.22 -- 1992 Management Stock Option Plan, dated as of January 31, 1992
(1).
10.23 -- Amendment No. 1 to 1992 Management Stock Option Plan, dated as of
March 30, 1995 (1).
10.24 -- Letter agreements, dated January 31, 1992, between United (as
successor-in-interest to Associated) and each of Michael D.
Rowsey, Robert W. Eberspacher, Lawrence E. Miller, Daniel J.
Schleppe, Duane J. Ratay and Daniel H. Bushell regarding grants of
stock options (1).
10.25 -- Amendment to Stock Option Grants, dated as of March 30, 1995,
between United (as successor-in-interest to Associated) and each
of Michael D. Rowsey, Robert W. Eberspacher, Lawrence E. Miller,
Daniel J. Schleppe, Duane J. Ratay and Daniel H. Bushell (1).
10.26 -- Executive Stock Purchase Agreements, dated as of January 31, 1992,
among United (as successor-in-interest to Associated) Wingate
Partners, ASI Partners, L.P. and each of Michael D. Rowsey, Robert
W. Eberspacher, Lawrence E. Miller and Daniel J. Schleppe (1).
10.27 -- First Amendments to Executive Stock Purchase Agreements, dated as
of March 30, 1995, among United (as successor-in-interest to
Associated) Wingate Partners, ASI Partners, L.P. and each of
Michael D. Rowsey, Robert W. Eberspacher, Lawrence E. Miller and
Daniel J. Schleppe (1).
10.28 -- Agreement for Data Processing Services, dated January 31, 1992,
between the Company (as successor-in-interest to ASI) and
Affiliated Computer Services, Inc. (3).
10.29 -- Lease Agreement, dated as of March 4, 1988, between Crow-Alameda
Limited Partnership and Stationers Distributing Company, Inc., as
amended (1).
10.30 -- Industrial Real Estate Lease, dated as of May 17, 1993, among
Majestic Realty Co. and Patrician Associates, Inc., as landlord,
and United Stationers Supply Co., as tenant (1).
10.31 -- Standard Industrial Lease, dated as of March 15, 1991, between
Shelley B. & Barbara Detrik and Lynn Edwards Corp. (1).
10.32 -- Lease Agreement, dated as of January 12, 1993, as amended, among
Stationers Antelope Joint Venture, AVP Trust, Adon V. Panattoni
and Yolanda M. Panattoni, as landlord, and United Stationers
Supply Co., as tenant (1).
10.33 -- Lease, dated as of February 1, 1993, between CMB Florida Four
Limited Partnership and United Stationers Supply Co., as amended
(1).
10.34 -- Standard Industrial Lease, dated March 2, 1992, between Carol
Point Builders I and Associated Stationers, Inc. (1).
10.35 -- Lease, dated March 22, 1973, between National Boulevard Bank of
Chicago, as trustee under Trust Agreement dated March 15, 1973 and
known as Trust No. 4722, and United Supply Company, as amended
(1).
10.36 -- Lease Agreement, dated July 20, 1993, between OTR, acting as the
duly authorized nominee of the Board of the State Teachers
Retirement System of Ohio, and United Stationers Supply Co., as
amended (1).
10.37 -- Lease Agreement, dated as of December 20, 1988, between Corporate
Property Associates 8, L.P., and Stationers Distributing Company,
Inc., as amended (1).
</TABLE>

II-4
<PAGE>

<TABLE>
<C> <C> <S>
10.38 -- Industrial Lease, dated as of February 22, 1988, between Northtown
Devco and Stationers Distributing Company, as amended (1).
10.39 -- Lease, dated as of April 17, 1989, between Isaac Heller and United
Stationers Supply Co., as amended (1).
10.40 -- Lease Agreement, dated as of May 10, 1984, between Westbelt
Business Park Joint Venture and Boise Cascade Corporation, as
amended (1).
10.41 -- Lease, dated as of January 19, 1981, between Propco, Inc. and
Crown Zellerbach Corporation, as amended (1).
10.42 -- Lease Agreement, dated as of December 20, 1988, between Corporate
Property Associates 8, L.P., and Stationers Distributing Company,
Inc., as amended (1).
10.43 -- Lease Agreement, dated as of August 17, 1981, between Gulf United
Corporation and Crown Zellerbach Corporation, as amended (1).
10.44 -- Lease Agreement, dated as of March 31, 1978, among Gillich O.
Traughber and J.T. Cruin, Joint Venturers, and Boise Cascade
Corporation, as amended (1).
10.45 -- Lease Agreement, dated November 7, 1988, between Dalwere II
Associates and Stationers Distributing Company, Inc., as amended
(1).
10.46 -- Lease Agreement, dated November 7, 1988, between Central East
Dallas Development Limited Partnership and Stationers Distributing
Company, Inc., as amended (1).
10.47 -- Lease Agreement, dated as of March 17, 1989, between Special Asset
Management Company of Texas, Inc., and Stationers Distributing
Company, Inc., as amended (1).
10.48 -- Sublease, dated January 9, 1992, between Shadrall Associates and
Stationers Distributing Company, Inc. (1).
10.49 -- Lease Agreement, dated as of December 20, 1988, between Corporate
Property Associates 8, L.P., and Stationers Distributing Company,
Inc., as amended (1).
10.50 -- Industrial Lease, dated as of June 12, 1989, between Stationers
Distributing Company, Inc. and Dual Asset Fund V, as amended (1).
10.51 -- Lease Agreement, dated as of July, 1994, between Bettilyon
Mortgage Loan Company and United Stationers Supply Co. (1).
10.52 -- Agreement of Lease, dated as of January 5, 1994, between the
Estate of James Campbell, deceased, and United Stationers Supply
Co. (1).
10.53 -- First Amendment to Agreement for Data Processing Services, dated
as of , 1995, between the Company and Affiliated Computer
Services, Inc. (3).
10.54 -- Executive Bonus Plan (Exhibit 10(a)(i)(F) to United's Report on
Form 10-K dated November 17, 1988) (6).
10.55 -- Amendment to Executive Bonus Plan adopted February 13, 1995 (5).
10.56 -- Supplemental Benefits Plan as amended and restated as of July 13,
1988 (Exhibit 10(a)(H)(1) to United's Report on Form 10-K dated
November 17, 1988) (6).
10.57 -- Management Incentive Plan (Exhibit 10(a)(i)(L) to Registrant's
Report of Form 10-K dated November 17, 1988) (6).
10.58 -- Amendment to Management Incentive Plan (Exhibit 10(a)(i)(C)(1) to
United's Report on Form 10-K dated November 23, 1994) (6).
10.59 -- Amendment to Management Incentive Plan adopted February 13, 1995
(5).
10.60 -- Profit Sharing PluSavings Plan (Exhibit 10(a)(i)(F)(2)(f) to
United's Report on Form 10-K dated November 20, 1989) (6).
</TABLE>

II-5
<PAGE>

<TABLE>
<C> <C> <S>
10.61 -- United Stationers Supply Co. Pension Plan as amended (See United's
Reports on Form 10-K for the fiscal years ended August 31, 1985,
1986, 1987 and 1989) (6).
10.62 -- Amendment to Pension Plan adopted February 10, 1995 (5).
10.63 -- Amended and Restated Employment and Consulting Agreement dated
April 15, 1993 between United, the Company and Joel D. Spungin
(Exhibit 10(b) to United's Report on Form 10-K dated November 22,
1993) (6).
10.64 -- Amendment dated February 13, 1995 to the Amended and Restated
Employment and Consulting Agreement between United, the Company
and Joel D. Spungin (5).
10.65 -- Form of Employment and Consulting Agreement between United, the
Company and certain executive officers (Exhibit 10(j) to United's
Report on Form 10-K dated November 19, 1987) (6).
10.66 -- Amendment dated February 13, 1995 to Employment and Consulting
Agreement between United, the Company and Jerold A. Hecktman (5).
10.67 -- Amendment dated February 13, 1995 to Employment and Consulting
Agreement between United, the Company and Ted S. Rzeszuto (5).
10.68 -- Amendment dated February 13, 1995 to Employment and Consulting
Agreement between United, the Company and Otis H. Halleen (5).
10.69 -- Amendment dated February 13, 1995 to Employment and Consulting
Agreement between United, the Company and Robert H. Cornell (5).
10.70 -- Amendment dated February 13, 1995 to Employment and Consulting
Agreement between United, the Company and Steven R. Schwarz (5).
10.71 -- Employment and Consulting Agreement dated March 1, 1990 between
United, the Company and Jeffrey K. Hewson (Exhibit 10(l) to
United's Report on Form 10-K dated November 20, 1990) (6).
10.72 -- Amendment dated April 10, 1991 of Employment and Consulting
Agreement between United, the Company and Jeffrey K. Hewson
(Exhibit 10(l)(i) to United's Report on Form 10-K dated November
25, 1991) (6).
10.73 -- Amendment dated September 1, 1994 of Hewson Employment and
Consulting Agreement (Exhibit 10(e)(ii) to United's Report on Form
10-K dated November 23, 1994) (6).
10.74 -- Amendment to Employment and Consulting Agreement dated February
13, 1995 between United, the Company and Jeffrey K. Hewson (5).
10.75 -- Severance Agreement between United, the Company and James A.
Pribel dated February 13, 1995 (5).
10.76 -- Letter Agreement dated February 13, 1995 between United and Ergin
Uskup (5).
10.77 -- Form of Director's Agreement to Cash Out and Cancel Stock Options
dated February 13, 1995 (Exhibit 10.53 to United's Form 10-K dated
June 27, 1995) (6).
10.78 -- Form of Employee's Agreement to Cash Out and Cancel Stock Options
dated February 13, 1995 (Exhibit 10.54 to United's Form 10-K dated
June 27, 1995) (6).
10.79 -- USI Employee Benefits Trust Agreement dated March 21, 1995 between
United and American National Bank and Trust Company of Chicago as
Trustee (5).
10.80 -- USI Bonus Benefits Trust Agreement dated March 21, 1995 between
United and American National Bank and Trust Company of Chicago as
Trustee (5).
10.81 -- Certificate of Insurance covering directors' and officers'
liability insurance effective November 1, 1994 through November 1,
1995 (Exhibit 10.57 to United's Form 10-K dated June 27, 1995)
(6).
</TABLE>

II-6
<PAGE>

<TABLE>
<C> <C> <S>
10.82 -- Amendment to Medical Plan Document for United (5).
10.83 -- United Severance Plan, adopted February 10, 1995 (5).
10.84 -- Securities Purchase Agreement, dated as of July 28, 1995, among
United, Boise Cascade, Wingate Partners, Wingate II, Wingate
Affiliates, L.P., Wingate Affiliates II, L.P., ASI Partners III,
L.P., the Julie Good Mora Grantor Trust and the Laura Good Stathos
Grantor Trust (3).
21 -- Subsidiaries of the Company (1).
23.1 -- Consent of Weil, Gotshal & Manges (included in the opinion filed
as Exhibit 5 to the Registration Statement) (3).
23.2 -- Consent of Arthur Andersen LLP, independent certified public
accountants (2).
23.3 -- Consent of Arthur Andersen LLP, independent certified public
accountants (2).
23.4 -- Consent of Ernst & Young LLP, independent certified public
accountants (2).
24 -- Form T-1 of The Bank of New York, as Trustee under the Indenture
filed as Exhibit 4.1 (2).
99 -- Preferability Letter of Ernst & Young LLP, independent certified
public accountants, relating to change in accounting methods (1).
</TABLE>
--------
(1) Previously filed.
(2) Filed herewith.
(3) To be filed by amendment.
*(4) Incorporated by reference to United's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1995.
*(5) Incorporated by reference to United's Schedule 14D-9 dated February 21,
1995.
*(6) Incorporated by reference to other prior filings of United as indicated.

* For Exchange Act filings, see Commission File No. 0-10653.

(B) FINANCIAL STATEMENT SCHEDULES

All schedules have been omitted since the required information is either not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or the notes thereto.

ITEM 17. UNDERTAKINGS.

(a) See Item 14.

(b) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of time it was declared effective.

(2) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which,

II-7
<PAGE>

individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement; and

(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(4) If the registrant is a foreign private issuer, to file a post-
effective amendment to the registration statement to include any financial
statements required by Rule 3-19 of Regulation S-X at the start of any
delayed offering or throughout a continuous offering.

II-8
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY AND UNITED
HAVE EACH DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DALLAS, STATE OF
TEXAS, ON THE 15TH DAY OF AUGUST, 1995.

United Stationers Supply Co.

/s/ Thomas W. Sturgess
By:__________________________________
Thomas W. Sturgess Chairman of the
Board

United Stationers Inc.

/s/ Thomas W. Sturgess
By:__________________________________
Thomas W. Sturgess Chairman of the
Board

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.

SIGNATURE TITLE DATE

/s/ Thomas W. Sturgess Chairman, President
------------------------------------- and Chief Executive August 15, 1995
THOMAS W. STURGESS Officer of United
and the Company
(principal
executive officer
of the Company and
United)

* Executive Vice August 15, 1995
------------------------------------- President, Chief
DANIEL H. BUSHELL Financial Officer
and Secretary of
United and the
Company; Director
of the Company
(principal
financial and
accounting officer
of the Company and
United)

* Director of United August 15, 1995
------------------------------------- and the Company
MICHAEL D. ROWSEY

II-9
<PAGE>

SIGNATURE TITLE DATE

* Director of the
------------------------------------- Company August 15, 1995
STEVEN R. SCHWARZ

* Director of United August 15, 1995
-------------------------------------
FREDERICK B. HEGI, JR.

* Director of United August 15, 1995
-------------------------------------
JAMES A. JOHNSON

* Director of United August 15, 1995
-------------------------------------
GARY G. MILLER

* /s/ Thomas W. Sturgess
-------------------------------------
THOMAS W. STURGESS
ATTORNEY-IN-FACT

II-10

<PAGE>

EXHIBIT 3.5

RESTATED BYLAWS
OF
UNITED STATIONERS INC.

Effective as of June 27, 1995

TABLE OF CONTENTS
-----------------

Page
----

ARTICLE I
OFFICES

SECTION 1. REGISTERED OFFICE............................. 1
SECTION 2. OTHER OFFICES................................. 1

ARTICLE II
MEETING OF STOCKHOLDERS

SECTION 1. PLACE OF MEETINGS............................. 1
SECTION 2. ANNUAL MEETING................................ 1
SECTION 3. NOTICE OF ANNUAL MEETING...................... 2
SECTION 4. BUSINESS AT ANNUAL MEETINGS................... 2
SECTION 5. LIST OF STOCKHOLDERS.......................... 2
SECTION 6. SPECIAL MEETINGS OF STOCKHOLDERS.............. 2
SECTION 7. PROCEDURE AT STOCKHOLDERS'
MEETINGS...................................... 2
SECTION 8. QUORUM........................................ 3
SECTION 9. MAJORITY VOTE................................. 3
SECTION 10. PROXIES AND VOTING OF SHARES.................. 3
SECTION 11. INFORMAL ACTION BY STOCKHOLDERS............... 3

ARTICLE III
DIRECTORS

SECTION 1. NUMBER, TENURE AND QUALIFICATIONS............. 4
SECTION 2. NOMINATIONS................................... 4
SECTION 3. RESIGNATIONS.................................. 4
SECTION 4. FILLING OF VACANCIES.......................... 4
SECTION 5. GENERAL POWERS................................ 4
SECTION 6. PLACE OF MEETINGS............................. 4
SECTION 7. FIRST MEETING OF NEW BOARD.................... 4
SECTION 8. REGULAR MEETINGS.............................. 5
SECTION 9. SPECIAL MEETINGS.............................. 5
SECTION 10. QUORUM........................................ 5

(i)
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SECTION 11. INFORMAL ACTION BY DIRECTORS.................. 5
SECTION 12. TELEPHONE MEETINGS............................ 6
SECTION 13. DESIGNATION OF COMMITTEES..................... 6
SECTION 14. ABSENCE OF A COMMITTEE MEMBER................. 6
SECTION 15. POWERS OF COMMITTEE........................... 6
SECTION 16. RECORD OF PROCEEDINGS......................... 7
SECTION 17. IN GENERAL.................................... 7

ARTICLE IV
NOTICES TO STOCKHOLDERS AND DIRECTORS

SECTION 1. NOTICE........................................ 7
SECTION 2. WAIVER OF NOTICE.............................. 7

ARTICLE V
OFFICERS

SECTION 1. NUMBER AND TITLE.............................. 8
SECTION 2. ELECTION AND QUALIFICATION.................... 8
SECTION 3. APPOINTMENT OF ADDITIONAL
OFFICERS...................................... 8
SECTION 4. COMPENSATION.................................. 8
SECTION 5. TERM OF OFFICE, REMOVAL AND
VACANCIES..................................... 8
SECTION 6. RESIGNATIONS.................................. 8
SECTION 7. THE CHAIRMAN OF THE BOARD OF
DIRECTORS..................................... 9
SECTION 7A. THE VICE CHAIRMAN OF THE BOARD OF
DIRECTORS..................................... 9
SECTION 8. THE PRESIDENT................................. 9
SECTION 9. THE VICE PRESIDENTS........................... 10
SECTION 10. THE SECRETARY................................. 10
SECTION 11. ASSISTANT SECRETARIES......................... 10
SECTION 12. THE TREASURER................................. 10
SECTION 13. BOND.......................................... 11
SECTION 14. ASSISTANT TREASURERS.......................... 11

ARTICLE VI
STOCK AND STOCKHOLDERS

SECTION 1. CERTIFICATE OF STOCK.......................... 11
SECTION 2. CLASSES AND SERIES............................ 12
SECTION 3. SIGNATURES.................................... 12
SECTION 4. LOST CERTIFICATES............................. 12
SECTION 5. TRANSFERS OF STOCK............................ 13
SECTION 6. FIXING RECORD DATE............................ 13
SECTION 7. REGISTERED STOCKHOLDERS....................... 13

(ii)
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ARTICLE VII
INDEMNIFICATION

SECTION 1. OBLIGATION TO INDEMNIFY....................... 14
SECTION 2. CONTRACT RIGHT................................ 16
SECTION 3. INDEMNITY OF OTHERS........................... 16
SECTION 4. NON-EXCLUSIVITY............................... 17
SECTION 5. REPORTS....................................... 17
SECTION 6. SEVERABILITY.................................. 17

ARTICLE VIII

SECTION 1. DIVIDENDS..................................... 17
SECTION 2. RESERVES...................................... 17
SECTION 3. ANNUAL STATEMENT.............................. 18
SECTION 4. CHECKS........................................ 18
SECTION 5. FISCAL YEAR................................... 18
SECTION 6. SEAL.......................................... 18

(iii)
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ARTICLE I

OFFICES

SECTION 1. REGISTERED OFFICE. The registered office shall being the City
of Wilmington, County of New Castle, State of Delaware.

SECTION 2. OTHER OFFICES. The corporation may also have offices at such
other places both within and without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation may
require.

ARTICLE II

MEETING OF STOCKHOLDERS

SECTION 1. PLACE OF MEETINGS. All meetings of the stockholders for the
election of directors shall be held in the Chicago metropolitan area, State of
Illinois, at such place as may be fixed from time to time by the board of
directors; at least ten (10) days' notice shall be given to the stockholders of
the place so fixed or, in the event of the failure of the board of directors to
fix such place, at the principal executive office of the corporation. Meetings
of stockholders for any other purpose may be held at such time and place, within
or without the State of Delaware, as may be filed from time to time by the board
of directors or as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.

SECTION 2. ANNUAL MEETING. The annual meetings of stockholders shall be
held on the second Wednesday in May if not a legal holiday, and if a legal
holiday, then on the next secular day following, at 2:00 P.M., or at such other
date and time as shall be designated from time to time by the board of directors
and stated in the notice of the meeting or in a duly executed waiver of notice
thereof, at which the stockholders shall elect by a plurality vote persons to
the board of directors, and transact such other business as may properly be
brought before the meeting. The meeting may be adjourned from time to time and
place to place until its business is completed. If the election of directors
shall not be held on the day designated herein for any annual meeting, or at any
adjournment thereof, the board
<PAGE>

of directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as may be convenient.

SECTION 3. NOTICE OF ANNUAL MEETING. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the date of the meeting.

SECTION 4. BUSINESS AT ANNUAL MEETINGS. The business to be conducted at
annual meetings of the corporation shall be as provided in the certificate of
incorporation.

SECTION 5. LIST OF STOCKHOLDERS. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten (10) days before
every meeting of stockholders entitled to vote at the meeting, arrange in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the Chicago metropolitan area, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place where the meeting during the whole time thereof, and may
be inspected by any stockholder who is present.

SECTION 6. SPECIAL MEETINGS OF STOCKHOLDERS. Special meetings of the
stockholders of the corporation shall be held as provided in the certificate of
incorporation.

SECTION 7. PROCEDURE AT STOCKHOLDERS' MEETINGS. The order of business and
all other matters of procedure at every meeting of the stockholders may be
determined by the presiding officer. The board of directors may appoint two or
more inspectors of election to serve at every meeting of the stockholders at
which directors are to be elected. In the absence of such appointment by the
board of directors, the presiding officer may appoint one or more inspectors of
election to serve at any such meeting.

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SECTION 8. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally notice.

SECTION 9. MAJORITY VOTE. When a quorum is present at any meeting, the
vote of the holders of a majority of the stock having voting power, present in
person or represented by proxy, shall decide any question brought before such
meeting, unless the question is one upon which by express provision of statute
or of the certificate of incorporation, a different vote is required, in which
case such express provision shall govern and control the decision of such
question.

SECTION 10. PROXIES AND VOTING OF SHARES. At any meeting of the
stockholders, every stockholder having the right to vote shall be entitled to
vote in person, or by proxy appointed by an instrument in writing subscribed by
such stockholder and bearing a date not more than three (3) years prior to said
meeting, unless said instrument provides for a longer period. Each stockholder
shall have one vote for each share of stock having voting power, registered in
his name on the books of the corporation. Unless the transfer books of the
corporation shall have been closed or a date shall have been fixed as a record
date for the termination of its stockholders entitled to vote, no share of stock
transferred on the books of the corporation within twenty (20) days next
preceding such election of directors.

SECTION 11. INFORMAL ACTION BY STOCKHOLDERS. Informal actions by the
stockholders of the corporation may be taken as provided in the certificate of
incorporation.

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ARTICLE III

DIRECTORS

SECTION 1. NUMBER, TENURE AND QUALIFICATIONS. The tenure and qualifications
of directors on the board of directors of the corporation shall be as provided
in the certificate of incorporation. The number of directors which shall
constitute the whole Board shall be nine, but such number may be increased or
decreased from time to time by amendment of these by-laws.

SECTION 2. NOMINATIONS. Nominations for election to the board of directors
shall be as provided in the certificate of incorporation.

SECTION 3. RESIGNATIONS. Any director may resign at any time by giving
written notice to the board of directors, the chairman of the board of
directors, the president or the secretary of the corporation. Such resignation
shall take effect at the time specified therein; and, unless tendered to take
effect upon acceptance thereof, the acceptance of such resignation shall not be
necessary to make it effective.

SECTION 4. FILLING OF VACANCIES. Filling of vacancies on the board of
directors of the corporation shall be accomplished as provided in the
certificate of incorporation.

SECTION 5. GENERAL POWERS. The Business and affairs of the corporation
shall be managed by or under the direction of the board of directors which may
not be statute or by the certificate of incorporation of by these by-laws
directed or required to be exercised or done by the stockholders.

MEETINGS OF THE BOARD OF DIRECTORS

SECTION 6. PLACE OF MEETINGS. The board of directors of the corporation may
hold meetings, both regular and special, either within or without the State of
Delaware.

SECTION 7. FIRST MEETING OF NEW BOARD. The first meeting of the board of
directors after each election of new directors thereto shall be held at such
time and place be specified in a notice given as provided in these bylaws for
special meetings of the board of directors, or as shall be

4
<PAGE>

specified in a written waiver of notice signed by all of the directors.

SECTION 8. REGULAR MEETINGS. Regular meetings of the board of directors may
be held without notice at such time and at such place as shall from time to time
be determined by the board.

SECTION 9. SPECIAL MEETINGS. Special meetings of the board may be called by
the chairman of the board of directors upon such notice as he deems appropriate.
In the absence of the chairman or a vacancy in the office of chairman or if the
chairman is unable or refuses to act, the president (or any other officer of the
corporation upon the request in writing of two (2) or more directors) may call a
special meeting of the board of directors, notice of which shall be given to
each director at his usual place of business, or at such other address as shall
have been furnished by him for the purpose. Such notice shall be given at least
forty-eight (48) hours before the meeting by telephone or by being personally
delivered, mailed or telegraphed. Such notice need not include a statement of
the business to be transacted at, or the purpose of, any such meeting.

SECTION 10. QUORUM. At all meetings of the board, a majority of the total
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum shall be present at any meeting of the board of
directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present. The term "total number of directors" as used in these bylaws
means the total number of directors which the corporation would have if there
were no vacancies.

SECTION 11. INFORMAL ACTION BY DIRECTORS. Unless otherwise restricted by
the certificate of incorporation or these bylaws, any action required or
permitted to be taken at any meeting of the board of directors or of any
committee thereof may be taken without a meeting if all members of the board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board or committee.

5
<PAGE>

SECTION 12. TELEPHONE MEETINGS. Unless otherwise restricted by the
certificate of incorporation or these bylaws, members of the board of directors,
or any committee designated by the board of directors, may participate in a
meeting of the board of directors, or any committee, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.

COMMITTEES OF DIRECTORS

SECTION 13. DESIGNATION OF COMMITTEES. The board of directors may, by
resolution passed by a majority of the whole board of directors, designate one
or more committees, each committee to consist of two or more of the directors of
the corporation. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee.

SECTION 14. ABSENCE OF A COMMITTEE MEMBER. In the absence or
disqualification of any member of a committee or committees or in the event that
any such member is unable or refuses to act, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such member.

SECTION 15. POWERS OF COMMITTEE. Any such committee, to the extent provided
in the resolution of the board of directors, shall have any may exercise all the
powers and authority of the board of directors in the management of the business
and affairs of the corporation and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to amending the certificate of
incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders, the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
bylaws of the corporation; and, unless the resolution, the certification of
incorporation or any provision of these bylaws expressly so provides, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance

6
<PAGE>

of stock or to adopt a certificate of ownership and merger. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the board of directors.

SECTION 16. RECORD OF PROCEEDINGS. Each committee shall keep regular
minutes of its proceedings and report the same to the board of directors when
required.

COMPENSATION OF DIRECTORS

SECTION 17. IN GENERAL. The directors may be paid their expenses, if any,
of attendance at each meeting of the board of directors and may be paid a fixed
sum for attendance at each meeting of the board of directors from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.

ARTICLE IV

NOTICES TO STOCKHOLDERS AND DIRECTORS

SECTION 1. NOTICE. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail or telegraph, addressed
to such director or stockholder, at such address as appears on the records of
the corporation, with postage thereon prepaid, and such notice shall be deemed
to be given at the time when the same shall be deposited in the United States
mail or telegraphed, as the case may be. Notice to directors may also be given
as provided in Section 9 of Article III.

SECTION 2. WAIVER OF NOTICE. The officers of the corporation shall be
chosen by the board of directors and shall be a chairman of the board, a
president, a vice president, a secretary and a treasurer. The board of directors
may also choose a vice chairman of the board, additional vice presidents and one
or more assistant secretaries and assistant treasurers.

7
<PAGE>

ARTICLE V

OFFICERS

SECTION 1. NUMBER AND TITLE. The officers of the corporation shall be
chosen by the board of directors and shall be a chairman of the board, a
president, a vice president, a secretary and a treasurer. The board of directors
may also choose a vice chairman of the board, additional vice presidents and one
or more assistant secretaries and assistant treasurers.

SECTION 2. ELECTION AND QUALIFICATION. The board of directors at its first
meeting after each annual meeting of stockholders shall choose a chairman of the
board, a president, one or more vice presidents, a secretary and a treasurer. No
officer need be a member of the board. If the election of officers is not held
at such meeting, such election shall be held as soon thereafter as may be
convenient. Vacancies may be filled or new offices created and filled at any
meeting of the board of directors.

SECTION 3. APPOINTMENT OF ADDITIONAL OFFICERS. The board of directors at
its first meeting after each annual meeting of stockholders shall choose a
chairman of the board, a president, one or more vice presidents, a secretary and
a treasurer. No officer need be a member of the board. If the election of
officers is not held at such meeting, such election shall be held as soon
thereafter as may be convenient. Vacancies may be filled or new offices created
and filled at any meeting of the board of directors.

SECTION 4. COMPENSATION. The salaries and other compensation of all
officers and agents of the corporation shall be fixed by the board of directors.

SECTION 5. TERM OF OFFICE, REMOVAL AND VACANCIES. The officers of the
corporation shall hold office until their successors are chosen and qualify or
until their deaths, resignations or removal. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation may be filled by the board of directors.

SECTION 6. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the board of directors, the chairman of the board of
directors, the president or the

8
<PAGE>

secretary of the corporation. Such resignation shall take effect at the time
specified in the written notice; and, unless the resignation is tendered only to
take effect upon acceptance thereof, the acceptance of such resignation shall
not be necessary to make the resignation effective.

SECTION 7. THE CHAIRMAN OF THE BOARD OF DIRECTORS. The chairman of the
board of directors may be the chief executive officer of the corporation, except
as otherwise prescribed by the board of directors; shall preside at all meetings
of the stockholders, of the board of directors and of the executive committee,
if any, and shall designate the acting secretary for such meetings to take the
minutes thereof for delivery to the secretary; may execute contracts in the name
of the corporation and appoint and discharge agents and employees of the
corporation; and shall be ex-officio a member of all committees.

SECTION 7A. THE VICE CHAIRMAN OF THE BOARD OF DIRECTORS. The vice chairman
of the board may be the chief executive officer of the corporation and, if so
designated by the board of directors, shall have the general direction of the
affairs of the corporation, except as otherwise prescribed by the board of
directors, shall, in the event that the chairman of the board is absent or has
allowed the office of chairman of the board to be vacated, or is unable or
refuses to act, perform the duties of the chairman of the board. The vice
chairman of the board may execute contracts in the name of the corporation and
appoint and discharge agents and employees of the corporation and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe. The vice chairman of the board shall be ex-officio a
member of all committees.

SECTION 8. THE PRESIDENT. The president shall be the chief operating
officer of the corporation, and as such shall direct the operations of the
corporation. The president shall assume such other duties as the board of
directors may assign from time to time. In the event that the chairman of the
board and the vice chairman of the board each are one of the following: absent,
or has allowed the office of chairman or vice chairman to be vacated, or is
unable or refuses to act; the president shall perform all duties and functions
of the chairman of the board. The president may sign, with the secretary,
assistant secretary, treasurer, or assistant treasurer, certificates for shares
of the corporation, and may sign any policies, deeds,

9
<PAGE>

mortgages, bonds, contracts, or other instruments which the board of directors
have authorized to be executed except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors or by these by-
laws to some other officer or agent of the corporation, or shall be required by
law to be otherwise signed or executed; appoint and discharge agents and
employees of the corporation, and in general, shall perform all duties incident
to the office of president. The president shall be ex-officio a member of all
committees.

SECTION 9. THE VICE PRESIDENTS. The vice presidents in the order of their
seniority, unless otherwise determined by the board of directors, shall in the
event that the president is absent, or has allowed the office of president to be
vacated, or is unable or refuses to act, perform the duties of the president.
The vice presidents shall perform such other duties and have such other powers
as the board of directors may from time to time prescribe.

SECTION 10. THE SECRETARY. The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required; shall give, or cause to be given, notice of
all meetings of the stockholders by the board of directors, the chairman of the
board or president, under whose supervision the secretary shall be; and shall
keep in safe custody the corporate seal of the corporation and when authorized
by the board of directors, shall affix the same to any instrument requiring it
and when so affixed, it shall be attested by the signature of the secretary or
by the signature of any assistant secretary.

SECTION 11. ASSISTANT SECRETARIES. The assistant secretaries in the order
of their seniority shall, in the event that the secretary is absent, or has
allowed the office of secretary to be vacated, or is unable or unwilling to act,
perform the duties and exercise the powers of the secretary. They shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.

SECTION 12. THE TREASURER. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and

10
<PAGE>

disbursements in books belonging to the corporation and shall deposit all money
and other valuable effects in the name and to the credit al the corporation in
such depositories as may be designated by the board of directors. The treasurer
shall disburse the funds of the corporation as may be ordered by the board of
directors, taking proper vouchers for such disbursements, and shall render to
the president and the board of directors, at its regular meetings, or when the
board of directors so requires, an account of all such person's transactions as
treasurer and of the financial condition of the corporation.

SECTION 13. BOND. If required by the board of directors,the treasurer shall
give the corporation a bond (which shall be renewed as required from time to
time) in such sum and with such surety or sureties as shall be satisfactory to
the board of directors for the faithful performance of the duties of the office
and for the restoration or removal from office of the treasurer, of all books,
resignation, retirement or removal from office of the treasurer, of all books,
papers, vouchers, money and other property of whatever kind in the possession or
under the control of the treasurer belonging to the corporation.

SECTION 14. ASSISTANT TREASURERS. The assistant treasurers, in the order of
their seniority, unless otherwise determined by the board of directors, shall in
the event the treasurer is absent, or has allowed the office of treasurer to be
vacated, or is unable or refuses to act, perform the duties and exercise the
powers of the treasurer. They shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.

ARTICLE VI

STOCK AND STOCKHOLDERS

SECTION 1. CERTIFICATE OF STOCK. Every holder of stock in the corporation
shall be entitled to have a certificate, signed by, or in the name of, the
corporation by the chairman of the board, or the president or a vice president
and the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, registered in such stockholder's name, certifying
the number of shares owned by such holder in the corporation.

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<PAGE>

SECTION 2. CLASSES AND SERIES. If the corporation shall be authorized to
issue more than one class of stock or more than one series of any class, the
powers, assignations, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights shall be set forth in full or summarized on the face or back of the
certificate which the corporation shall issue to represent such class or series
of stock, provided that, in lieu of the foregoing requirements, there may be set
forth on the face or back of the certificate which the corporation shall issue
to represent such class or series of stock, a statement that the corporation
will furnish, without charge, to each stockholders who so requests, the powers,
designations, preferences and relative participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.

SECTION 3. SIGNATURES. Where a certificate is countersigned (i) by a
transfer agent other than the corporation or its employee, or (ii) by a
registrar other than the corporation or its employee, any of or all the
signatures on the certificate of the officers of the corporation may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be an officer, transfer agent or registrar before such certificate is issued,
it may be issued by the corporation with the same effect as if such person were
such officer, transfer agent or registrar at the date of issue.

SECTION 4. LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates thereto fore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of the fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or such owner's legal representation, to advertise the same in
such manner as it shall require and/or give the corporation a bond in such sum
as it may direct as indemnity against any claim that may be

12
<PAGE>

made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.

SECTION 5. TRANSFERS OF STOCK. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.

SECTION 6. FIXING RECORD DATE. The board of directors may close the stock
transfer books of the corporation for a period not exceeding sixty (60) days
preceding the date of any meeting of stockholders or the date for payment of any
dividend or other distribution or the date for the allotment of rights or the
date when any change or conversion or exchange of capital stock shall go into
effect or for a period of not exceeding sixty (60) days in connection with the
obtaining the consent of stockholders for any purpose. In lieu of closing the
stock transfer books as aforesaid, the board of directors may fix in advance a
date, not exceeding sixty (60) days preceding the date of any meeting of
stockholders, or the date for the payment of any dividend, or other distribution
or the date for the allotment of rights, or the date when any change or
conversion or exchange of capital stock shall go into effect, or a date in
connection with obtaining such consent, as a record date for the determination
of the stockholders entitled to notice of, and to vote at, any such meeting, and
any adjournment thereof, or entitled to receive payment of any such dividend, or
other distribution or to any such allotment or rights, or to exercise the rights
in respect of any such change, conversion or exchange of capital stock, or to
give such consent, and in such case such stockholders and only such stockholders
as shall be stockholders of record on the date so fixed shall be entitled to
such notice of, and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or other distribution, or to receive such
allotment or rights, or to exercise such rights, or to give such consent, as the
case may be, notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid.

SECTION 7. REGISTERED STOCKHOLDERS. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of

13
<PAGE>

shares to receive dividends, and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of shares,
and shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.

ARTICLE VII

INDEMNIFICATION

SECTION 1. OBLIGATION TO INDEMNIFY. The Corporation shall indemnify and
advance expenses to the fullest extent permitted by applicable law to each
person (and, where applicable, the person's intestate estate, the legal or
personal representative of the person, the estate of such person and such
person's legatees and heirs) who is or has served as a director, officer,
employee, agent or trustee of an employee benefit plan for:

(i) the Corporation;

(ii) any predecessor of the Corporation; or

(iii) any other corporation, partnership, joint venture, trust or enterprise
who served at the request of the Corporation or any predecessor of the
Corporation and who may be indemnified pursuant to the provisions of
the Delaware General Corporation Law.

(a) Construction and Presumption Favoring Indemnification. In
-----------------------------------------------------
connection with each claim for indemnification, this Article shall be liberally
construed in favor of indemnification and there shall be a rebuttable
presumption that the claimant is entitled to such indemnification and the
Corporation shall bear the burden of proving by a preponderance of the evidence
that the claimant is not so entitled to indemnification.

(b) Advancement of Expenses. The advancement of expenses shall be
-----------------------
made upon receipt by the Corporation of an undertaking by or on behalf of the
person seeking

14
<PAGE>

indemnification to repay such amounts./1/ The required undertaking can be in
the form of a written unsecured promise by such person stating that in the event
it is determined by a court of competent jurisdiction that the Corporation is
not permitted by law to indemnify the expenses of the person, then the
Corporation shall be repaid for the advancement of expenses. Further, the
person shall be allowed their choice of counsel and all reasonable fees and
expenses, including attorneys' fees and expenses, shall be paid no later than
thirty days after the tender of a statement of expense.

(c) Enforcement of Indemnification Right. If a claim under this
------------------------------------
Article VII is not paid in full by the Corporation within thirty (30) days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall also be
entitled to be paid for any and all expenses incurred in prosecuting such claim.
Neither of the following shall be a defense to any such action nor create a
presumption that the claimant has not met the applicable standards of conduct:

(i) The failure of the Corporation (including its board of directors,
independent counsel or its shareholders) to have made a determination
prior to the commencement of such action that indemnification of the
claimant is proper.

(ii) An actual determination by the Corporation (including its board of
directors, independent legal counsel, or its shareholders) that the
claimant was not entitled to indemnification.

-------------------------

/1/"Expenses: shall refer to all disbursements, costs or expenses reasonably
incurred by the person directly or indirectly in connection with an event from
which indemnification is or may be sought, including, but not limited to, fees
and disbursements of counsel, accountants or other experts employed in
connection with any indemnifiable event, including all such expenses,
distributions and costs of investigation incurred in connection with or prior to
the initiation of any proceeding related to an indemnifiable event.

15
<PAGE>

(d) Defense to Enforcement. It shall be a defense to any action for
----------------------
indemnity under this Article VII that the claimant has not met the standards of
conduct which made it permissible for the Corporation to indemnify the claimant
for the amount claimed. The burden of proving this defense shall be on the
Corporation. The defense provided by this subparagraph (d) shall not apply to
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where any required undertaking to
repay advanced amounts has been tendered to the Corporation.

(e) Confidentiality.
---------------

(i) Any finding by the board of directors, independent legal counsel or
the shareholders that a person asserting a claim for indemnification
pursuant to this Article VII is not entitled to such indemnification,
and any information which may support such finding, shall be held by
the board of directors, independent legal counsel and the shareholders
in confidence except to the extent disclosure is compelled by law and
shall not otherwise be disclosed to any third party.

(ii) If the Corporation, the board of directors, independent legal counsel
or the shareholders are requested or required (by questions,
interrogatories, requests for information or documents, subpoena or
other process) to disclose any such confidential information (and
shall only disclose that which is required to be disclosed), including
without limitation, seeking a protective order at the Corporation's
expense.

SECTION 2. CONTRACT RIGHT. The foregoing provision of this Article VII
shall be deemed to be a contract between the Corporation and each person who
serves in the capacity described herein at any time while this Article VII is in
effect, and any repeal or modification of this Article VII shall not impair or
otherwise affect any rights or obligations then existing with respect to any
state of facts then or theretofore existing or any action, suit or proceeding
theretofore or thereafter brought based in whole or in part upon any such state
of facts.

SECTION 3. INDEMNITY OF OTHERS. The board of directors in its discretion
shall have power on behalf of

16
<PAGE>

the Corporation to enter into agreements to indemnify any person made a party to
any action, suit or proceeding by reason of the fact that he, his testator or
intestate, legal or personal representative, legatees or heirs is or was an
employee, agent or otherwise acting on behalf of the Corporation or predecessor
of the Corporation or serving at the request of the Corporation or its
predecessor, as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise.

SECTION 4. NON-EXCLUSIVITY. The rights of indemnification and advancement
of expenses provided by this Article VII shall not be deemed exclusive of any
rights not provided in this Article VII to which any person may otherwise be
entitled.

SECTION 5. REPORTS. The Corporation shall report to its shareholders any
payment of indemnity or advancement of expenses pursuant to this Article VII to
the extent required by applicable law.

SECTION 6. SEVERABILITY. If for any reason a provision of this Article VII
shall be deemed invalid or is unenforceable, the corporation shall remain
obligated to indemnify and advance expenses subject to all those provisions of
this Article which are not invalid or unenforceable.

ARTICLE VIII

SECTION 1. DIVIDENDS. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.

SECTION 2. RESERVES. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.

17
<PAGE>

SECTION 3. ANNUAL STATEMENT. The board of directors shall present at each
annual meeting and when called for by vote of the stockholders at any special
meeting of the stockholders, a full and clear statement of the business and
condition of the corporation.

SECTION 4. CHECKS. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.

SECTION 5. FISCAL YEAR. The fiscal year of the corporation shall end on
December 31 in each year, or such other date as the board of directors may from
time to time designate.

SECTION 6. SEAL. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.

ARTICLE IX

Subject to the provisions of the certificate of incorporation, these by-
laws may be altered, amended or repealed at any regular meeting of the
stockholders (or at any special meeting thereof duly called for that purpose) by
a majority vote of the shares represented and entitled to vote at such meeting;
provided that in the notice of such special meeting notice of such purpose shall
be given. Subject to the laws of the State of Delaware, the certificate of
incorporation and these by-laws, the board of directors may by majority vote of
those present at any meeting at which a quorum is present alter, amend or repeal
these by-laws, or enact such other by-laws as in their judgment may be advisable
for the regulation of the conduct of the affairs of the corporation.

<PAGE>

EXHIBIT 4.4

================================================================================

UNITED STATIONERS SUPPLY CO.,

as Issuer

UNITED STATIONERS INC.,

as Guarantor

AND

THE BANK OF NEW YORK,

as Trustee

------------------------

FIRST SUPPLEMENTAL INDENTURE

Dated as of July 28, 1995

Indenture

Dated as of May 3, 1995

-------------------------

$150,000,000

12 3/4% Senior Subordinated Notes

due 2005

================================================================================

<PAGE>

FIRST SUPPLEMENTAL INDENTURE dated as of July 28, 1995, among UNITED
STATIONERS SUPPLY CO., an Illinois corporation (the "Company"), UNITED
-------
STATIONERS INC., a Delaware corporation ("United"), and THE BANK OF NEW YORK, as
------
Trustee (the "Trustee").
-------

WHEREAS, the Company and United have heretofore executed and delivered
to the Trustee an Indenture dated as of May 3, 1995 (the "Indenture") providing
---------
for the issuance of $150,000,000 aggregate principal amount of the Company's 12-
3/4% Senior Subordinated Notes due 2005 (the "Securities");
----------

WHEREAS, the Company, United and the Trustee desire by this First
Supplemental Indenture, pursuant to and as contemplated by Section 901(6) of the
Indenture, to amend certain provisions therein;

WHEREAS, the execution and delivery of this First Supplemental
Indenture has been authorized by resolutions of the Boards of Directors of the
Company and United; and

WHEREAS, all conditions and requirements necessary to make this First
Supplemental Indenture a valid, binding and legal instrument in accordance with
its terms have been performed and fulfilled by the parties hereto and the
execution and delivery thereof have been in all respects duly authorized by the
parties hereto.

NOW, THEREFORE, in consideration of the above premises, each party
agrees, for the benefit of the others and for the equal and ratable benefit of
the Holders of the Securities, as follows:

ARTICLE ONE

AMENDMENTS

Section 101. Amendments. Section 1012(b)(ix) of the Indenture is
----------
hereby amended and restated in its entirety to read as follows:

"(ix) the payment of dividends or the making of distributions to
United, within 90 days of the Closing Date, to the extent that United,
within such 90 days, uses such dividends and distributions to redeem or
repurchase all or any portion of United's Series B Preferred Stock that is
outstanding on the Closing Date

2
<PAGE>

(plus any shares of Series B Preferred Stock issued as dividends or accrued
and unpaid dividends on such outstanding shares after the Closing Date and
prior to such redemption or repurchase); and the purchase by the Company of
all or any portion of United's Series B Preferred Stock that is outstanding
on the Closing Date (plus any shares of Series B Preferred Stock issued as
dividends or accrued and unpaid dividends on such outstanding shares after
the Closing Date and prior to such purchase), within 90 days of the Closing
Date; provided that the aggregate amount of all such payments by the
--------
Company under this clause (ix) shall not exceed $7.0 million."

ARTICLE TWO

MISCELLANEOUS PROVISIONS

Section 201. Terms Defined. For all purposes of this First
-------------
Supplemental Indenture, except as otherwise defined or unless the context
otherwise requires, terms used in capitalized form in this First Supplemental
Indenture and defined in the Indenture have the meanings specified in the
Indenture.

Section 202. Indenture. Except as amended hereby, the Indenture and
---------
the Securities are in all respects ratified and confirmed and all the terms
shall remain in full force and effect.

Section 203. Governing Law. This First Supplemental Indenture shall
-------------
be governed by and construed in accordance with the law of the State of New York
applicable to contracts to be performed entirely in that State.

Section 204. Successors. All agreements of the Company and United
----------
in this First Supplemental Indenture and the Securities shall bind their
successors. All agreements of the Trustee in this First Supplemental Indenture
shall bind its successors.

Section 205. Multiple Counterparts. The parties may sign multiple
---------------------
counterparts of this First Supplemental Indenture. Each signed counterpart
shall be deemed an original, but all of them together represent the same
agreement.

3
<PAGE>

Section 206. Trustee Disclaimer. The Trustee accepts the amendment
------------------
of the Indenture effected by this First Supplemental Indenture and agrees to
execute the trust created by the Indenture as hereby amended, but only upon the
terms and conditions set forth in the Indenture, including the terms and
provisions defining and limiting the liabilities and responsibilities of the
Trustee, which terms and provisions shall in like manner define and limit its
liabilities and responsibilities in the performance of the trust created by the
Indenture as hereby amended, and without limiting the generality of the
foregoing, the Trustee shall not be responsible in any manner whatsoever for or
with respect to any of the recitals or statements contained herein, all of which
recitals or statements are made solely by the Company and United, or for or with
respect to (i) the validity or sufficiency of this First Supplemental Indenture
or any of the terms or provisions hereof, (ii) the proper authorization hereof
by the Company and United by corporate action or otherwise, (iii) the due
execution hereof by the Company and United or (iv) the consequences (direct or
indirect and whether deliberate or inadvertent) of any amendment herein provided
for, and the Trustee makes no representation with respect to any such matters.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

4
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.

UNITED STATIONERS SUPPLY CO.,
as Issuer

By: /s/ Daniel H. Bushell
----------------------------
Title: Executive Vice
President - Chief
Financial Officer

Attest: /s/ James A. Pribel
----------------------------
Title: JAMES A. PRIBEL
TREASURER

UNITED STATIONERS INC.,
as Guarantor

By: /s/ Daniel H. Bushell
----------------------------
Title: Executive Vice
President - Chief
Financial Officer

Attest: /s/ James A. Pribel
----------------------------
Title: JAMES A. PRIBEL
TREASURER

THE BANK OF NEW YORK,
as Trustee

By: /s/ Mary La Gumina
----------------------------
Title: MARY LA GUMINA
ASSISTANT VICE PRESIDENT

Attest: /s/ Stephen J. Giurlando
----------------------------
Title: STEPHEN J. GIURLANDO
ASSISTANT VICE PRESIDENT

<PAGE>

Exhibit 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report on the consolidated financial statements of United Stationers Inc. as of
August 31, 1993 and 1994 and for the years ended August 31, 1992, 1993 and 1994
and to the reference to our Firm under the caption "Experts" included in this
registration statement.

/s/ ARTHUR ANDERSEN LLP

Chicago, Illinois

August 15, 1995

<PAGE>

Exhibit 23.3

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report on the consolidated financial statements of Associated Holdings, Inc. as
of December 31, 1993 and 1994 and from inception, January 31, 1992, through
December 31, 1992 and for the years ended December 31, 1993 and 1994 and to the
reference to our Firm under the caption "Experts" included in this registration
statement.

/s/ ARTHUR ANDERSEN LLP

Chicago, Illinois

August 15, 1995

<PAGE>

Exhibit 23.4

CONSENT

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated June 27, 1995, with respect to the consolidated
financial statements of United Stationers Inc. as of and for the seven months
ended March 30, 1995 included in Amendment No. 2 to the Registration Statement
(Form S-1 No. 33-59811) and related Offer for All Outstanding 12-3/4% Senior
Subordinated Notes due 2005 In Exchange for 12-3/4% Senior Subordinated Notes
due 2005 of United Stationers Supply Co.

/s/ ERNST & YOUNG LLP

ERNST & YOUNG LLP

August 10, 1995

<PAGE>

EXHIBIT 24
================================================================================
FORM T-1

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|

------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)

New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)

48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)

------------------------
UNITED STATIONERS SUPPLY CO.
(Exact name of obligor as specified in its charter)

Illinois 36-2431718
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)

2200 East Golf Road
Des Plaines, Illinois 60016-1267
(Address of principal executive offices) (Zip code)

------------------------
UNITED STATIONERS INC.
(Exact name of guarantor as specified in its charter)

Delaware 36-3141189
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)

2200 East Golf Road
Des Plaines, Illinois 60016-1267
(Address of principal executive offices) (Zip code)

------------------------
12-3/4% Senior Subordinated Notes Due 2005
(Title of the indenture securities)

================================================================================
<PAGE>

1. General information. Furnish the following information as to the Trustee:

(a) Name and address of each examining or supervising authority to which
it is subject.

--------------------------------------------------------------------------------
Name Address
--------------------------------------------------------------------------------

Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203

Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045

Federal Deposit Insurance Corporation Washington, D.C. 20549

New York Clearing House Association New York, New York

(b) Whether it is authorized to exercise corporate trust powers.

Yes.

2. Affiliations with Obligors.

If any of the obligors is an affiliate of the trustee, describe each such
affiliation.

None. (See Note on page 3.)

16. List of Exhibits.

Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.

1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)

4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
<PAGE>

6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)

7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.

NOTE

Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.

Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
<PAGE>

SIGNATURE

Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 7th day of August, 1995.

THE BANK OF NEW YORK

By: /s/ MARY LAGUMINA
-------------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
<PAGE>

EXHIBIT 7
---------

Consolidated Report of Condition of

THE BANK OF NEW YORK

of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a
member of the Federal Reserve System, at the close of business March 31, 1995,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.

Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 3,575,856
Interest-bearing balances .......... 747,540
Securities:
Held-to-maturity securities ........ 1,283,680
Available-for-sale securities ...... 1,615,292
Federal funds sold in domestic
offices of the bank ................ 5,577,896
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ........................... 24,763,265
LESS: Allowance for loan and
lease losses ..................... 532,411
LESS: Allocated transfer risk
reserve ........................... 28,558
Loans and leases, net of unearned
income, allowance, and reserve 24,202,296
Assets held in trading accounts ...... 1,502,750
Premises and fixed assets (including
capitalized leases) ................ 618,958
Other real estate owned .............. 47,755
Investments in unconsolidated
subsidiaries and associated
companies .......................... 184,149
Customers' liability to this bank on
acceptances outstanding ............ 1,018,696
Intangible assets .................... 101,149
Other assets ......................... 1,227,291
-----------
Total assets ......................... $41,703,316
===========
LIABILITIES
Deposits:
In domestic offices ................ $18,543,633
Noninterest-bearing ................ 6,949,896
Interest-bearing ................... 11,593,737
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 11,303,075
Noninterest-bearing ................ 65,927
Interest-bearing ................... 11,237,148

Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 1,327,537
Securities sold under agreements
to repurchase .................... 37,400
Demand notes issued to the U.S.
Treasury ........................... 97,827
Trading liabilities .................. 1,349,293
Other borrowed money:
With original maturity of one year
or less .......................... 2,027,148
With original maturity of more than
one year ......................... 313,877
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,018,848
Subordinated notes and debentures .... 1,056,320
Other liabilities .................... 1,435,093
-----------
Total liabilities .................... 38,510,051
-----------
EQUITY CAPITAL
Common stock ......................... 942,284
Surplus .............................. 525,666
Undivided profits and capital
reserves ........................... 1,753,592
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... ( 22,501)
Cumulative foreign currency transla-
tion adjustments ................... ( 5,776)
-----------
Total equity capital ................. 3,193,265
-----------
Total liabilities and equity
capital ............................ $41,703,316
===========
</TABLE>

I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.

Robert E. Keilman

We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.

Thomas A. Renyi ++
J. Carter Bacot ++ Directors
Alan R. Griffith ++