Intermec, Inc. – ‘424B1’ on 3/10/98

As of:  Tuesday, 3/10/98   ·   Accession #:  898430-98-847   ·   File #:  333-42839

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Prospectus   —   Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Registration Statement on Form S-3                    60    327K 

Document Table of Contents

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                                              FILED PURSUANT TO RULE 424(b)(1)
                                                    REGISTRATION NO. 333-42839

PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 16, 1998  

$200,000,000  

 [LOGO OF UNOVA, INC.]

$100,000,000 6.875% NOTES DUE MARCH 15, 2005  

$100,000,000 7.00% NOTES DUE MARCH 15, 2008 

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

Interest on the Notes is payable on March 15 and September 15 of each year, 
commencing September 15, 1998. The Notes will be redeemable, in whole or in     
part, at the option of the Company at any time at a redemption price equal to   
the greater of (i) 100% of the principal amount of such Notes or (ii) the sum   
of the present values of the remaining scheduled payments of principal and      
interest (not including the portion of any such payments of interest accrued    
as of the redemption date) discounted to the redemption date on a semiannual    
basis (assuming a 360-day year consisting of twelve 30-day months) at the       
Adjusted Treasury Rate (as defined herein), plus, in each case, accrued and     
unpaid interest thereon to the redemption date. The Notes will not be entitled  
to any sinking fund. The Notes will be represented by Global Debt Securities    
registered in the name of The Depository Trust Company ("DTC") or its nominee.  
Beneficial interests in the Global Debt Securities will be shown on, and        
transfer thereof will be effected only through, records maintained by DTC and   
its participants. Except as described herein, Notes in definitive form will     
not be issued. The Notes will be issued only in denominations of $1,000 and     
integral multiples thereof. See "Description of Notes".                         

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

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

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

                                                                [Download Table]

                                   INITIAL PUBLIC    UNDERWRITING   PROCEEDS TO 
                                  OFFERING PRICE(1)   DISCOUNT(2)  COMPANY(1)(3)
                                  -----------------  ------------  -------------
                                                                                
Per Note due 2005................      99.867%          0.625%        99.242%   
Total............................    $99,867,000       $625,000     $99,242,000 
Per Note due 2008................      99.856%          0.650%        99.206%   
Total............................    $99,856,000       $650,000     $99,206,000 

--------                                                                        
(1) Plus accrued interest, if any, from March 11, 1998.                         

(2) The Company has agreed to indemnify the Underwriters against certain        
liabilities, including liabilities under the Securities Act of 1933.    

(3) Before deducting estimated expenses of $550,000 payable by the Company.     

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

The Notes offered hereby are offered severally by the Underwriters, as      
specified herein, subject to receipt and acceptance by them and subject to      
their right to reject any order in whole or in part. It is expected that the    
Notes will be ready for delivery in book-entry form only through the            
facilities of DTC in New York, New York, on or about March 11, 1998, against    
payment therefor in immediately available funds.                                

GOLDMAN, SACHS & CO.                                                            
CREDIT SUISSE FIRST BOSTON        
                                                             J.P. MORGAN & CO.

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

The date of this Prospectus Supplement is March 6, 1998.  

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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT  
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING       
OVER-ALLOTMENT, STABILIZING AND SHORT COVERING TRANSACTIONS IN THE NOTES, AND   
THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A         
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".                            

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THE COMPANY 

GENERAL                                                                         

UNOVA, Inc. (the "Company") is a leading industrial technologies company    
providing customers with innovative solutions for improving their efficiency    
and productivity through its two business segments--Automated Data Systems      
("ADS") and Industrial Automation Systems ("IAS"). ADS principally serves the   
industrial market, providing automated data collection and mobile computing     
products and services. Customers include distribution and transportation        
companies, food and beverage operations, manufacturing industries, health care  
providers and government agencies. IAS primarily serves the worldwide           
automotive, off-road and diesel engine manufacturing industries, providing      
integrated manufacturing systems, body welding and assembly systems and         
precision grinding and abrasive systems. The Company had unaudited pro forma    
revenues of $1.1 billion and $1.4 billion, respectively, for the nine months    
ended September 30, 1997 and for the fiscal year ended December 31, 1996.       

Prior to October 31, 1997, the Company was a wholly-owned subsidiary of     
Western Atlas Inc. ("Western Atlas"). The Company became an independent public  
company on October 31, 1997 when all of its outstanding Common Stock was        
distributed to Western Atlas stockholders in the form of a dividend (the        
"Distribution").                                                                

BUSINESS STRATEGY                                                               

The Company's strategy is to develop products, processes and services that  
help improve productivity and efficiency in a variety of manufacturing and      
distribution applications by offering its customers both single products as     
well as integrated solutions through its two business segments, ADS and IAS.    

Future growth in the ADS and IAS businesses is expected to result from      
expansion of the Company's existing operations and its customer base, and       
through selective acquisitions. In seeking acquisitions, the Company will       
focus on technologies, products and services which enhance customer             
productivity and efficiency, and those that can be characterized as growth      
drivers.                                                                        

The ongoing development of the Company's automated data collection ("ADC")  
and mobile computing activities will depend primarily on the application of     
new technologies and products to maintain its position in this technology-      
driven market. The Company believes it has the necessary technical expertise    
to achieve this goal. Future geographic opportunities have been identified      
outside North America, particularly in Europe, Latin America and Asia, where    
the use of data collection technology is less developed. To capitalize on       
these emerging markets, the Company is expanding its international marketing,   
distribution and support network, and is engaged in an ongoing program to       
locate Company-owned resources in key markets worldwide. In its Industrial      
Automation Systems segment, the Company plans to continue to develop its        
existing customer base by seeking a greater role in customer projects,          
continuing its emphasis on product development and expanding its international  
activities. Both major business segments should be able to grow from            
established positions in their respective markets, often serving customers in   
a multitude of projects which result in repeat business opportunities.          

The Company also intends to increase its presence in market segments where  
it presently holds a smaller market share, such as the body welding and         
assembly systems area and the application of lower-volume flexible              
manufacturing systems and computer-numeric-control machines. In some areas the  
Company also has developed high-precision manufacturing technologies that       
should allow it to establish a presence in growth markets such as micro-        
electronics with its new generation of ultra-high-precision wafer grinders.     

In recent years, cost-cutting needs and quality requirements in the         
automotive industry have affected the Company's relationships with its          
customers. The car makers' trend toward fewer suppliers                         

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has benefited the Company and allowed it to expand its market participation.    
These market-driven changes also have forced many smaller competitors either    
to withdraw from the market or to reduce their role to that of second or third  
tier suppliers. The Company's strategy has been to establish an extensive       
outsourcing network of qualified suppliers in North America and overseas,       
thereby avoiding unnecessary vertical integration and gaining flexibility in    
its market approach.                                                            

PRODUCTS AND SERVICES                                                           

AUTOMATED DATA SYSTEMS                                                        

The Company's ADC and mobile computing systems business is conducted under  
the Intermec, Norand and UBI brand names. Intermec Corporation ("Intermec")     
was acquired in 1991; Norand Corporation ("Norand") and United Barcode          
Industries ("UBI") were acquired early in 1997. All three companies operate as  
one organization serving the global bar code, data collection and mobile        
computing market, which has grown approximately 12% to 15% annually over the    
past five years. The Company's activities in this market represented slightly   
more than 30% of the Company's total revenues in fiscal years 1994, 1995 and    
1996, and were based only on Intermec's results prior to the 1997 acquisitions  
of Norand and UBI. Together, the three companies would have had pro forma       
combined revenues of about $700 million in 1996 and about $520 million in the   
nine months ended September 30, 1997. Intermec accounted for 31%, 34% and 32%   
of the Company's combined revenues in fiscal 1994, 1995 and 1996,               
respectively.                                                                   

ADS' combination of companies and capabilities establishes the Company as a 
leading participant in the emerging logistics automation marketplace.           
Together, they offer a broad range of products which are used to gather,        
organize and transmit selected data from various off-site or in-premise         
locations to central computers or information retrieval systems in order to     
track parts, products and people through manufacturing, distribution and other  
processes.                                                                      

Through its Intermec subsidiary, the Company has been in the forefront of   
many innovations within the bar code and ADC technologies. Its ADC products     
comprise batch and radio frequency ("RF") terminals, hand-held and stationary   
scanners and related software. Intermec entered the bar code market in 1969     
with a contract to create specialized printers for bar code labels, and later   
moved into hand-held scanners. In the late 1970s Intermec developed Code 39,    
the most widely used bar code symbology in the world. The Company also was an   
originator of the use of open operating systems for industrial data collection  
applications, and continues to develop improved bar code label printing         
systems, which provide higher resolution, superior quality and greater label    
flexibility. Some of Intermec's other "firsts" included inventing the first     
stacked bar code symbology; introducing the first high-speed, wide-area         
scanning technology and spread spectrum radio frequency technology to the data  
collection market; and developing 400 dpi bar code label printing technology.   

The Norand acquisition added increased knowledge and capabilities from one  
of the leading originators of wireless data communications using RF technology  
and mobile computing solutions for the logistics market. Mobile computing       
refers to rugged PC-based devices for route accounting, meter reading, field    
services and sales management, rather than general personal or desktop          
computing applications. In combination with wireless communications, mobile     
computing enables remote workers to have access to centralized computer         
applications and databases and to send and receive information through          
wireless networks for improved productivity, efficiency and accuracy of data.   
In the communications area, Norand provides advanced axis point and docking     
station technology, communications software, product configuration and          
ergonomics. This acquisition also expands the Company's offering in RF spread-  
spectrum technology. Norand is credited with inventing the world's first bar    
code scanner in 1971, and developing the first radio data network in 1985. It   
also originated the Pocket RF product category four years later, followed by    
the first pen-based hand-held computer with desktop PC performance in 1993.     

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With the addition of UBI, the Company now also has access to an extensive   
distribution network for ADC products in the expanding European market. UBI     
further provided two major product lines: bar code on-demand printers with      
labels and ribbons and hand-held scanners. These scanners are primarily based   
on "charge coupled device" ("CCD") technology which is an alternative to laser  
scanners in many applications. UBI also provides software that improves laser   
scanning for one- and two-dimensional symbologies. UBI's printer technology     
complements the Company's existing printer offerings with low-end, low cost     
printers and high-end, high speed printers. In addition, UBI provides enhanced  
media-handling systems, such as linerless adhesive labels and software.         

Ongoing product development efforts include advanced communication networks,
further integration of RF technology, application software technologies,        
advances in portable computers and automatic identification technology          
integration. Innovative electronics miniaturization and packaging also have     
enabled the Company to develop pen computing hand-held terminals for            
applications in which traditional keypad or bar code scanner data input is not  
practical. Typical uses for these wireless, durable pen-based, hand-held and    
mobile computers include route accounting for the distribution and package      
handling industries, public works, health care and utilities.                   

INDUSTRIAL AUTOMATION SYSTEMS                                                 

The Company is a major designer, producer and integrator of manufacturing   
technologies, primarily for the global automotive, off-road and diesel engine   
industries, but also for other markets such as electronics and durable goods.   
Products include integrated machining systems for the manufacture of            
powertrain components such as engines, transmissions and connecting rods, and   
chassis components such as steering knuckles, rear axle housings and brake      
calipers; body welding and assembly systems; test and automation equipment for  
integration into production lines; precision grinding and abrasives; the        
redesign, remanufacturing and retooling of installed equipment; and             
design/engineering services.                                                    

INTEGRATED MANUFACTURING SYSTEMS. Through its Lamb, Lamb Technicon and      
Honsberg Lamb operations, the Company designs, integrates and installs          
integrated machining systems for the world's automotive and off-road vehicle    
industries. The integrated manufacturing systems divisions design               
manufacturing solutions for all production volumes of powertrain components--   
primarily engines and transmissions. Integrated manufacturing systems           
accounted for 44%, 38% and 39% of the Company's combined revenues in fiscal     
1994, 1995 and 1996, respectively.                                              

The product lines include computer-numeric-control ("CNC") machines for low-
volume applications (up to 25,000 units of production annually), and modular    
flexible production systems for medium (25,000 to 75,000 units of production    
annually) and high-volume (75,000 to 250,000 units of production annually)      
requirements. The integrated manufacturing systems operations specialize in     
utilizing simultaneous engineering techniques, in conjunction with its          
customers, to develop optimum solutions to complex manufacturing requirements.  
Historically, the Company has specialized in designing solution sets for        
manufacturing cylinder heads, engine blocks and transmission cases. However,    
the retooling of existing systems and the design of manufacturing processes     
for smaller parts also have expanded into growing businesses for the Company    
in recent years.                                                                

The Company's emphasis on engineering has resulted in the advancement of    
machining processes. These upgrades offer lower life-cycle costs and improved   
production performance by reducing unproductive time during operation.          
Innovations also include a high-speed "dry" machining process for precision     
work on aluminum parts without the use of coolants, and better flexibility of   
transfer line systems using less production floor space, providing faster       
throughput at much lower costs. The Company has developed modular flexible      
transfer systems in which parts are mounted on pallet fixtures which transport  
work pieces between work stations faster than guided vehicles could between     
flexible machining systems.                                                     

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Recent additions to the Company's product range include modular machining   
centers that perform continuous high-speed, high-precision machining of cast    
iron, aluminum or magnesium parts. The Duraflex(TM) CNC machine line is         
designed to produce a variety of cylinder heads or engine blocks, in a random-  
run environment, while maintaining close tolerances. The MACH I(TM) dual-       
spindle machine has been designed to improve the efficiency of CNC machines in  
higher-volume production scenarios. The MACH I can complete a machining         
operation, change tools and resume machining, all in less than one second.      

BODY WELDING AND ASSEMBLY SYSTEMS. The Lamb Body Welding and Assembly       
Systems division designs automated systems to assemble and weld high-quality    
automobile and truck bodies as well as other industrial products. The division  
integrates robotic systems, high-precision holding and alignment fixtures and   
high-volume welding equipment to produce components and sub-assemblies for the  
automotive industry, and supplies specialized assembly systems for car bodies.  
It also provides engineering services and advanced electronic design            
technology in the areas of computer simulations and three-dimensional tool      
design. Through its Assembly and Test Systems operations, the division also     
designs and builds specialized assembly and testing equipment and systems for   
a variety of manufacturing applications. Body Welding and Assembly Systems      
accounted for 9%, 8% and 12% of the Company's combined revenues in fiscal       
1994, 1995 and 1996, respectively.                                              

A number of proprietary technologies have been developed for use in         
automotive assembly. Examples are specialized material handling solutions to    
move subassemblies or complete car bodies through the manufacturing process,    
such as overhead non-synchronous gantries. The Company also is recognized for   
its expertise in "hemming", the process of attaching exterior sheet metal to    
the interior frames of doors, hoods, deck lids and similar "hang-ons" or        
"closures". Another solution is called "flexible body framing", a patented      
system which enables consistent, high-precision positioning for final body      
assembly.                                                                       

PRECISION GRINDING AND ABRASIVES. The Company develops and produces         
precision grinding systems and equipment for the global manufacturing market.   
A key area of the Company's expertise is the application of precision           
cylindrical and disc grinding technologies to medium- and high-volume           
production of car engines and transmission components such as camshafts,        
crankshafts or connecting rods. Precision Grinding and Abrasives accounted for  
16%, 20% and 17% of the Company's combined revenues in fiscal 1994, 1995 and    
1996, respectively.                                                             

In response to the automotive industry's need to reduce costs, improve fuel 
consumption and decrease car emissions, the Company provides a full range of    
CNC precision grinding systems that enable car manufacturers to produce car     
engine parts at tight tolerances, increase production throughput and improve    
quality. Among the Company's new developments in precision grinding are a CNC   
machine for grinding the lobes of automotive camshafts. This advanced camlobe   
grinder uses superabrasive cubic boron nitride ("CBN") grinding wheels, which   
are capable of higher grinding speeds, more consistent accuracy, and longer     
effective performance life.                                                     

Other technological innovations include a camshaft lobe grinder for large-  
scale production of soft camshaft applications, centerless grinders for high-   
production parts processing, a new generation of double-disc grinding machines  
used for precision machining of parts with flat and parallel sides and a        
horizontal double-disc grinder for automotive connecting rods. The Company      
also has developed sophisticated software tools for monitoring and controlling  
grinding processes and dressing grinding wheels.                                

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SELECTED COMBINED HISTORICAL FINANCIAL DATA 

The following selected combined historical financial data which relate to   
each of the three years in the period ended December 31, 1996 have been         
derived from combined financial statements audited by Deloitte & Touche LLP,    
independent auditors. The selected combined historical financial data for the   
nine-month periods ended September 30, 1996 and 1997 have been derived from     
unaudited combined financial statements. In the opinion of management, the      
unaudited combined financial statements reflect all adjustments, consisting     
only of normal adjustments, necessary to present fairly the financial position  
of the Company at September 30, 1996 and 1997 and the results of its            
operations for the nine-month periods ended September 30, 1996 and 1997. The    
historical combined financial statements of the Company may not necessarily     
reflect the results of operations or financial position that would have been    
obtained had the Company been a separate, independent company. The historical   
combined results for the nine months ended September 30, 1996 and 1997 are not  
necessarily indicative of results for the entire year. See "Selected Pro Forma  
Combined Financial Data" and "Management's Discussion and Analysis of           
Financial Condition and Results of Operations".                                 

                                                                [Download Table]

                                                                 NINE MONTHS    
                                      YEAR ENDED DECEMBER           ENDED       
                                              31,               SEPTEMBER 30,   
                                     ------------------------  ---------------- 
                                      1994    1995     1996     1996     1997   
                                     ------  ------  --------  ------  -------- 
                                             (DOLLARS IN MILLIONS)              
                                                                 (UNAUDITED)    
                                                                                
OPERATING RESULTS:                                                              
Sales and service revenues.........  $971.1  $942.9  $1,164.7  $814.5  $1,094.1 
                                     ------  ------  --------  ------  -------- 
Operating costs and expenses:                                                   
  Cost of sales ...................   689.9   669.3     841.8   582.7     753.3 
  Selling, general and                                                          
   administrative(1)...............   199.9   194.1     218.7   160.6     235.0 
  Depreciation and amortization....    28.7    26.1      27.0    19.6      30.5 
  In-process research and                                                       
   development charge(2)...........                                       203.3 
                                     ------  ------  --------  ------  -------- 
    Total..........................   918.5   889.5   1,087.5   762.9   1,222.1 
                                     ------  ------  --------  ------  -------- 
Earnings (loss) before interest and                                             
 taxes.............................    52.6    53.4      77.2    51.6    (128.0)
Interest expense--net(3)...........   (15.7)   (9.3)     (7.1)   (5.1)    (12.8)
Taxes on income....................   (15.3)  (17.9)    (28.1)  (18.6)    (25.0)
                                     ------  ------  --------  ------  -------- 
Net earnings (loss)................  $ 21.6  $ 26.2  $   42.0  $ 27.9  $ (165.8)
                                     ======  ======  ========  ======  ======== 
FINANCIAL POSITION (at period end):                                             
Working capital....................  $115.2  $194.7  $  266.0  $222.4  $  114.1 
Total assets.......................   860.8   919.0   1,073.8   942.0   1,350.2 
Equity--investment by Western                                                   
 Atlas.............................   439.4   502.7     574.5   518.6     619.5 
Notes payable and current portion                                               
 of long-term obligations..........    41.7    22.2      27.5    21.3      44.0 
Long-term obligations..............     9.0    14.1      14.5    14.8      17.1 
Allocated portion of Western Atlas                                              
 debt..............................   112.8   112.4     109.6   114.0     230.0 
OTHER DATA:                                                                     
EBITDA(4)..........................  $ 81.3  $ 79.5  $  104.2  $ 71.2  $  105.8 
EBIT(4)............................    52.6    53.4      77.2    51.6      75.3 
Capital expenditures...............    22.5    23.9      22.5    16.4      20.3 
Ratio of earnings to fixed charges.     2.8x    3.9x      5.7x    5.1x      4.2x
Current ratio......................     1.3     1.6       1.6     1.6       1.2 
Total debt as a percentage of total                                             
 capitalization(5).................      27%     23%       21%     22%       32%

-------                                                                         
(1) General and administrative costs include allocated charges from Western     
Atlas of $27.6 million, $19.9 million and $22.2 million for the fiscal  
years ended December 31, 1994, 1995 and 1996, respectively, and $16.3   
million and $12.9 million for the nine-month periods ended September 30,
1996 and 1997, respectively.                                            
(2) The non-cash, non-tax-deductible charge in the nine months ended September  
 30, 1997 is for the value of acquired in-process research and development
activities resulting from the Norand and UBI acquisitions.              
(3) Interest expense includes allocated charges from Western Atlas of $12.1     
  million, $8.4 million and $8.3 million for the fiscal years ended December
 31, 1994, 1995 and 1996, respectively, and $6.3 million and $10.3 million
for the nine-month periods ended September 30, 1996 and 1997,           
respectively.                                                           
(4) EBITDA represents earnings before interest, income taxes, depreciation,     
  amortization and acquired in-process research and development charge. EBIT
 represents earnings before interest, income taxes and acquired in-process
research and development charge. Neither EBITDA nor EBIT is intended to 
represent cash flow or any other measure of performance reported in     
 accordance with generally accepted accounting principles. The Company has
included EBITDA and EBIT as it understands that EBITDA and EBIT are used
by certain investors as measures of a company's ability to service debt.
(5) For purposes of this calculation, each of total debt and total              
capitalization includes both short-term debt and long-term obligations. 

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SELECTED PRO FORMA COMBINED FINANCIAL DATA  

The following unaudited selected pro forma combined financial data of the   
Company give effect to the Company's purchase of Norand and the related         
borrowings. For purposes of the unaudited pro forma operating data, such        
transactions are assumed to have taken place on January 1, 1996. The pro forma  
ratio of earnings to fixed charges gives effect only to the sale of the Notes   
and the application of the net proceeds therefrom. The unaudited selected pro   
forma combined financial data are not necessarily indicative of what the        
results of operations would have been if the transactions had occurred on such  
date. Additionally, it is not predictive of future results of operations. The   
selected pro forma combined financial data set forth below should be read in    
conjunction with the unaudited pro forma statements of operations and other     
financial information incorporated by reference herein.                         

                                                                [Download Table]

                                            YEAR ENDED     NINE MONTHS ENDED 
                                         DECEMBER 31, 1996 SEPTEMBER 30, 1997
                                         ----------------- ------------------
                                                    (IN MILLIONS)            
                                                                             
Sales and service revenues..............     $1,405.8           $1,130.9     
                                             --------           --------     
Operating costs and expenses:                                                
  Cost of sales.........................        981.8              775.0     
  Selling, general and administrative...        305.9              252.1     
  Depreciation and amortization.........         46.2               33.6     
  Litigation settlement(1)..............          5.1                        
  Cost of restructuring operations(1)...          4.4                        
                                             --------           --------     
    Total costs and expenses                  1,343.4            1,060.7     
                                             --------           --------     
Earnings before interest and taxes......         62.4               70.2     
Interest expense--net(2)................        (15.9)             (15.9)    
Taxes on income.........................        (18.6)             (21.7)    
                                             --------           --------     
Net earnings(2).........................     $   27.9           $   32.6     
                                             ========           ========     
Pro Forma Ratio of Earnings to Fixed                                         
 Charges(3).............................          5.1x               4.3x    

--------                                                                        
(1) Litigation settlement and cost of restructuring operations amounts for the  
  year ended December 31, 1996 are attributable to the historical results of
Norand.                                                                 
(2) After giving effect to the sale of the Notes and the application of the     
net proceeds therefrom, adjusted pro forma net interest expense is $14.8
million for the year ended December 31, 1996 and $14.2 million for the  
nine months ended September 30, 1997, resulting in net earnings of $28.6
  million and $33.6 million for those periods, respectively. The decrease in
  net interest expense results from the estimated effective interest rate on
the Notes compared with the rate applied to Western Atlas allocated debt
in the unadjusted pro forma statements.                                 
(3) This pro forma ratio gives effect to the sale of the Notes and the          
application of the net proceeds therefrom. For the purposes of this     
calculation, earnings consist of earnings before income taxes and the   
charge for acquired in-process research and development, plus fixed     
charges. Fixed charges consist of interest expense on all indebtedness  
(including allocated charges from Western Atlas and debt issuance costs)
and the portion of operating lease rental expense that is representative
of the interest factor. For the nine months ended September 30, 1997,   
fixed charges exceeded earnings, as so defined, by $139.8 million when  
 including the $203.3 million acquired in-process research and development
charge.                                                                 

USE OF PROCEEDS 

The net proceeds to the Company from the sale of the Notes is estimated to  
be approximately $197.9 million. The Company expects to use such proceeds to    
repay short-term indebtedness and for general corporate purposes. See           
"Capitalization".                                                               

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CAPITALIZATION  

The following table sets forth the combined short-term debt and             
capitalization of the Company as of September 30, 1997 (i) on an actual basis,  
(ii) on a pro forma basis giving effect to the Distribution and the related     
borrowings and (iii) on a pro forma basis giving effect to the Distribution     
and the related borrowings and adjusted to give effect to the issuance of the   
Notes offered hereby and the application of the net proceeds therefrom as set   
forth under "Use of Proceeds". The table should be read in conjunction with     
the historical combined financial statements of the Company and related notes   
thereto incorporated by reference herein.                                       

                                                                [Download Table]

                                                        SEPTEMBER 30, 1997     
                                                   ----------------------------
                                                                     PRO FORMA 
                                                   ACTUAL PRO FORMA AS ADJUSTED
                                                   ------ --------- -----------
                                                          (IN MILLIONS)        
                                                                               
Short-term debt:                                                               
  Due to Western Atlas............................ $230.0                      
  Notes payable and current portion of long-term                               
   obligations....................................   44.0  $ 76.1     $ 76.1   
                                                   ------  ------     ------   
    Total short-term debt.........................  274.0    76.1       76.1   
                                                   ------  ------     ------   
Long-term obligations, excluding current portion:                              
  Credit Facility.................................          200.0              
  Notes due 2005..................................                     100.0   
  Notes due 2008..................................                     100.0   
  Other long-term obligations.....................   17.1    17.1       17.1   
                                                   ------  ------     ------   
    Total long-term obligations...................   17.1   217.1      217.1   
                                                   ------  ------     ------   
    Total stockholders' equity(1).................  619.5   619.5      619.5   
                                                   ------  ------     ------   
      Total capitalization(2)..................... $910.6  $912.7     $912.7   
                                                   ======  ======     ======   

--------                                                                        
(1) Actual represents investment by Western Atlas.                              

(2) Includes short-term debt, long-term obligations and stockholders' equity.   

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

The following is a description of the business segments of the Company and a
discussion of the historical combined financial condition and results of        
operations of the Company. This discussion should be read in conjunction with   
the historical combined financial statements of the Company and related notes   
thereto incorporated by reference herein.                                       

GENERAL                                                                         

The Company is a leading industrial technologies company providing customers
with innovative solutions for improving their efficiency and productivity,      
through its two business segments-- Automated Data Systems and Industrial       
Automation Systems.                                                             

Future growth in these businesses is expected to result from expansion of   
the Company's existing operations and its customer base, and through            
acquisitions. In seeking acquisitions, the Company will concentrate on          
technologies, products and services which enhance customer productivity and     
efficiency, and those that can be characterized as growth drivers.              

RESULTS OF OPERATIONS                                                           

Sales and service revenues and segment operating profit for each of the     
three years in the period ended December 31, 1996 and for the nine month        
periods ended September 30, 1996 and 1997 (excluding the $203 million charge    
for acquired in-process research and development described below) were as       
follows:                                                                        

                                                                [Download Table]

                                                                 NINE MONTHS
                                                                    ENDED   
                                                   YEAR ENDED     SEPTEMBER 
                                                  DECEMBER 31,       30,    
                                                ---------------- -----------
                                                1994 1995  1996  1996  1997 
                                                ---- ---- ------ ---- ------
                                                       (IN MILLIONS)        
                                                                            
SALES AND SERVICE REVENUES:                                                 
Industrial Automation Systems.................. $668 $622 $  798 $548 $  633
Automated Data Systems.........................  303  321    367  267    461
                                                ---- ---- ------ ---- ------
Total Sales and Service Revenues............... $971 $943 $1,165 $815 $1,094
                                                ==== ==== ====== ==== ======
SEGMENT OPERATING PROFIT:                                                   
Industrial Automation Systems.................. $ 56 $ 62 $   70 $ 47 $   75
Automated Data Systems.........................   24   13     30   21     16
                                                ---- ---- ------ ---- ------
Total Segment Operating Profit................. $ 80 $ 75 $  100 $ 68 $   91
                                                ==== ==== ====== ==== ======

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER    
30, 1996                                                                        

Total sales and service revenues increased $279 million or 34% for the nine 
months ended September 30, 1997 compared with the corresponding prior period.   
Total segment operating profit increased $23 million or 34% for the nine        
months ended September 30, 1997 compared with the corresponding prior period.   

IAS sales increased $85 million or 16% and related operating profit         
increased $28 million or 60% for the nine months ended September 30, 1997       
compared with the corresponding prior period. The increase in sales for 1997    
was tempered due to the sale of the Company's Material Handling Systems         
division in the fourth quarter of 1996. IAS experiences lower profit margins    
in the early stages of long-term contracts (until the development risks have    
been mitigated). During the first several months of 1997, the integrated        
manufacturing systems operations experienced a higher level of sales and        
profits                                                                         

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from contracts in the final delivery and installation phase. These projects     
contributed to an increase in operating margins for IAS from 8.6% in 1996 to    
11.8% in 1997. Accordingly, IAS backlog declined from $545.2 million at         
December 31, 1996 to $379.4 million at September 30, 1997.                      

ADS sales increased $194 million or 73% while operating profit decreased $5 
million or 24% for the nine months ended September 30, 1997 compared with the   
corresponding prior period. The sales increase is attributable to the           
acquisitions of Norand and UBI. However, the process of integrating the         
formerly separate organizations and the restructuring of these operations to    
focus on core technology areas has caused a temporary negative impact on the    
operating profit of the combined entities. ADS operating margins, which         
declined from 7.9% for the nine months ended September 30, 1996 to 3.5% for     
the nine months ended September 30, 1997, are expected to improve beginning in  
1998 following the completion of the integration and restructuring efforts.     

The Company acquired Norand on March 3, 1997, and UBI on April 4, 1997.     
Norand designs, manufactures and markets mobile computing systems and wireless  
data communications networks using radio frequency technology. Norand's fiscal  
1996 revenues were approximately $235 million. UBI is a European based          
automated data collection company headquartered in Sweden, and had fiscal 1996  
sales of approximately $100 million. These companies are currently being        
integrated into the ADS segment. Both transactions were funded using a          
combination of Western Atlas committed credit facilities, short-term            
uncommitted credit lines and excess cash, and are being accounted for under     
the purchase method of accounting. Accordingly, the acquisition costs           
(approximately $280 million and $107 million for Norand and UBI, respectively)  
have been allocated to the net assets acquired based upon their relative fair   
values. Such allocation resulted in $203 million assigned to acquired in-       
process research and development activities; $156 million assigned to goodwill  
(to be amortized over 25 years using the straight-line method); and $29         
million assigned to other intangibles (to be amortized over periods ranging     
from 4 to 18 years using the straight-line method). During the second quarter   
of 1997, the Company expensed the amounts assigned to acquired in-process       
research and development in accordance with Financial Accounting Standards      
Board Interpretation No. 4.                                                     

The Company acquired the remaining 51% of Honsberg, a German machine tool   
maker, in the second quarter of 1997. The original 49% of Honsberg was          
acquired during 1995. The Company acquired the stamping, engineering, and       
prototyping division of Modern Prototype Company in September 1997.             

Net interest expense was $12.8 million and $5.1 million for the nine months 
ended September 30, 1997 and 1996, respectively. The increase is primarily      
attributable to an increase in the level of Western Atlas allocated debt from   
$114.0 million at September 30, 1996 to $230.0 million at September 30, 1997.   
The increase in allocated debt is primarily due to the 1997 acquisitions of     
Norand and UBI.                                                                 

YEAR ENDED DECEMBER 31, 1996 COMPARED TO 1995                                   

Total sales and service revenues increased $222 million, or 24%, and related
segment operating profit increased $25 million, or 33%, for the year ended      
December 31, 1996 compared with the corresponding prior period.                 

ADS revenues increased by $46 million, or 14%, as a result of the success of
new product introductions and increased deliveries on Intermec's five-year      
purchase agreement with the U.S. Government. Revenues attributable to new       
product introductions rose by $23 million, or 209%, and related unit shipments  
increased 213% over 1995 levels. Revenues under the purchase agreement with     
the U.S. Government increased $16 million, primarily attributable to a 38%      
increase in unit hardware shipments.                                            

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ADS operating profit increased by $17 million in 1996, and operating margins
improved from 4.0% in 1995 to 8.2% in 1996. In 1995 margins were adversely      
impacted by changes in product mix and competitive pressure on pricing of       
certain mature product lines. Approximately one percentage point of the 1996    
increase was due to improved margins on media products (labels and printer      
ribbons), while the remaining improvement resulted from the Company responding  
to factors contributing to the 1995 decrease. The 1995 decrease in margins was  
affected by the cost of a shift from proprietary to open architecture systems   
which caused an approximate two percentage point decrease, while pricing        
pressure contributed to an additional decrease of approximately two percentage  
points.                                                                         

IAS revenues increased by $176 million, or 28%, in 1996, and its operating  
profit increased by 13% to $70 million. Operating margins declined from 10.0%   
in 1995 to 8.8% in 1996 as a result of lower profit recognition in the early    
stages of certain 1996 contracts. Backlog improved to $545 million at December  
31, 1996 compared to $501 million at the prior year-end.                        

Net interest expense decreased from $9.3 million in 1995 to $7.1 million in 
1996 because of lower levels of allocated Western Atlas debt, as well as        
reduced interest income attributable to lower average balances in cash and      
marketable securities.                                                          

YEAR ENDED DECEMBER 31, 1995 COMPARED TO 1994                                   

Total sales and service revenues decreased $28 million, or 3%, and related  
segment operating profit decreased $5 million, or 6%, for the year ended        
December 31, 1995 compared with the corresponding prior period.                 

ADS revenues increased by $18 million, or 6%, in 1995. However, related     
operating profit declined by $11 million, or 46%, and ADS operating margins     
dropped from 7.9% to 4.0% for the reasons discussed above.                      

IAS revenues decreased $46 million, or 7%, and related operating profit     
increased $6 million, or 11%, for the year ended December 31, 1995 compared     
with the corresponding prior period. The decrease in sales and service          
revenues in 1995 compared with 1994 resulted from several large programs with   
automobile customers being completed by the integrated manufacturing systems    
operations and shipped near the end of 1994. The increase in operating profit   
is partially attributable to improvements in the operational performance of     
the Material Handling Systems division in 1995 compared with 1994. This         
division was included with IAS until it was sold in 1996. IAS backlog           
increased to $501 million at December 31, 1995, from $353 million at December   
31, 1994.                                                                       

Net interest expense decreased from $15.7 million in 1994 to $9.3 million in
1995. Allocated Western Atlas debt declined following the sale of 6.9 million   
Western Atlas common shares in September 1994, the proceeds of which ($286      
million) were used primarily to pay down debt.                                  

FOREIGN CURRENCY TRANSACTIONS                                                   

The Company is subject to the effects of international currency fluctuations
due to the global nature of its operations. Currency fluctuations did not have  
a significant impact on operations during the nine months ended September 30,   
1997 and 1996 or fiscal years 1996, 1995 and 1994. It is not possible to        
predict the Company's exposure to foreign currency fluctuations beyond the      
near term because revenues generated from particular foreign jurisdictions      
vary widely over time. The Company hedges transactions from time to time, but   
the amount and volume of such transactions are not material.                    

For fiscal year 1996, the Company derived approximately 18% of its revenues 
and approximately 22% of its operating profits (exclusive of corporate          
overhead) from non-U.S. operations. However, at                                 

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December 31, 1996, identifiable assets attributable to foreign operations       
comprised 14% of total assets (of which the largest components were             
attributable to European operations). Therefore, exposure of identifiable       
assets to foreign currency fluctuations or expropriations is not significant,   
even after considering the 1997 acquisitions of Norand and UBI.                 

LIQUIDITY AND CAPITAL RESOURCES                                                 

The Company has obtained credit facilities with a group of banks which      
permit the Company to borrow in excess of $520 million. These credit            
facilities consist of a $400 million committed credit facility and other        
uncommitted credit facilities. On October 31, 1997, funds borrowed under the    
committed facility were used to pay a $230 million dividend to Western Atlas    
in connection with the Distribution.                                            

At December 31, 1997, the Company had approximately $200 million available  
under its committed credit facilities.                                          

Cash and cash equivalents decreased from $149.5 million at December 31, 1996
to $13.4 million at September 30, 1997 primarily as a result of the Norand      
acquisition.                                                                    

Total debt increased from $151.5 million at December 31, 1996 to $291.2     
million at September 30, 1997 due primarily to an increase in the Western       
Atlas allocated debt attributable to the use of a combination of Western        
Atlas' committed credit facilities and short-term uncommitted credit lines to   
fund the Norand and UBI acquisitions. The remaining increase is primarily       
attributable to capital expenditures and working capital needs of the           
operations.                                                                     

In November and December 1997, the Company entered into agreements to       
purchase $125 million of ten-year U.S. treasury securities at a forward rate,   
maturing March 1998.                                                            

The Company expects that cash flow from operations, along with available    
borrowing capacity, will be adequate to meet working capital requirements. The  
Company does not anticipate any material adverse decline in cash flow from      
operations nor any significant changes in capital expenditures required to      
support ongoing operations.                                                     

INFLATION                                                                       

In the opinion of management, inflation has not been a significant factor in
the markets in which the Company operates and has not had a significant impact  
upon the results of its operations.                                             

FORWARD LOOKING STATEMENTS                                                      

The Company also cautions readers that, in addition to the historical       
information included herein, this Prospectus Supplement and the documents       
incorporated by reference herein include certain forward-looking statements     
and information that are based on management's beliefs as well as on            
assumptions made by and information currently available to management. When     
used in this Prospectus Supplement, the words "expect," "anticipate,"           
"intend," "plan," "believe," "seek," "estimate," and similar expressions are    
intended to identify such forward-looking statements. However, this Prospectus  
Supplement also contains other forward-looking statements. Such statements are  
not guarantees of future performance and involve certain risks, uncertainties   
and assumptions which could cause the Company's future results to differ        
materially from those expressed or implied in any forward-looking statements    
made by or on behalf of the Company. Such factors include, but are not limited  
to, fluctuations in the strength of the automotive market; technological        
developments, particularly in the ADC/Mobile Computing System industry;         
competitive conditions; the availability and cost of materials                  

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and supplies; relations with the Company's employees; the Company's ability to  
manage its operating costs and to integrate acquired businesses in an           
effective manner; general economic conditions; governmental regulations; and    
risks associated with international operations. Any forward-looking statements  
should be considered in light of these factors and other factors described in   
the documents incorporated by reference herein, many of which are beyond the    
Company's ability to control or predict. Readers are cautioned not to put       
undue reliance on forward-looking statements. The Company disclaims any intent  
or obligation to update publicly any forward-looking statements, whether as a   
result of new information, future events or otherwise.                          

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DESCRIPTION OF THE NOTES  

The following sets forth the particular terms of the 6.875% Notes due March 
15, 2005 (the "Notes due 2005") and the 7.00% Notes due March 15, 2008 (the     
"Notes due 2008" and, together with the Notes due 2005, the "Notes") offered    
hereby and supplements and should be read in conjunction with the statements    
in the accompanying Prospectus under the caption "Description of Debt           
Securities". Capitalized terms not otherwise defined herein shall have the      
meanings given to them in the accompanying Prospectus.                          

GENERAL                                                                         

The Notes due 2005 and the Notes due 2008 will be issued under the Senior   
Indenture, which is more fully described in the accompanying Prospectus.        

The Notes due 2005 and the Notes due 2008 will each constitute a separate   
series under the Senior Indenture. The Notes due 2005 will be issued as         
unsecured obligations of the Company in an aggregate principal amount of        
$100,000,000 and will mature on March 15, 2005. The Notes due 2008 will be      
issued as unsecured obligations of the Company in an aggregate principal        
amount of $100,000,000 and will mature on March 15, 2008. The Notes due 2005    
will bear interest at the rate of 6.875% per annum, and the Notes due 2008      
will bear interest at the rate of 7.00% per annum. Because the Company is a     
holding company, the right of the Company to participate in any distribution    
of assets of any subsidiary upon such subsidiary's liquidation or               
reorganization or otherwise is subject to the prior claims of the creditors of  
such subsidiary, except to the extent the Company may itself be recognized as   
a creditor of such subsidiary. Accordingly, the Debt Securities will be         
effectively subordinated to all existing and future liabilities of the          
Company's subsidiaries. As of December 31, 1997, the Company's subsidiaries     
had $52.3 million of outstanding indebtedness.                                  

The Notes will bear interest from March 11, 1998, payable semi-annually in  
arrears on each March 15 and September 15, commencing September 15, 1998, at    
the rate set forth on the cover page of this Prospectus Supplement, to the      
persons in whose names the Notes are registered on the preceding March 1 and    
September 1, respectively.                                                      

The Notes will be represented by a Book-Entry Security that will be         
deposited with, or on behalf of, DTC, the depositary for the Notes, and         
registered in the name of Cede & Co., the nominee of DTC. So long as the Notes  
are represented by Book-Entry Securities, the interest payable on the Notes     
will be paid to Cede & Co., the nominee of DTC, or its registered assigns, as   
the registered owner of the Book-Entry Securities, by wire transfer of          
immediately available funds on each of the applicable interest payment dates,   
not later than 2:30 p.m. Eastern Standard Time. If the Notes are no longer      
represented by Book-Entry Securities, payment of interest may, at the option    
of the Company, be made by check mailed to the address of the person entitled   
thereto. A description of DTC's procedures is set forth in the accompanying     
Prospectus under the heading "Book-Entry Securities".                           

No sinking fund is provided for the Notes.                                  

OPTIONAL REDEMPTION                                                             

The Notes will be redeemable, in whole or in part, at the option of the     
Company at any time at a redemption price equal to the greater of (i) 100% of   
the principal amount of such Notes or (ii) the sum of the present values of     
the remaining scheduled payments of principal and interest thereon (not         
including the portion of any such payments of interest accrued as of the        
redemption date) discounted to the redemption date on a semiannual basis        
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted    
Treasury Rate (determined on the third Business Day preceding such redemption   
date), plus, in each case, accrued and unpaid interest thereon to the           
redemption date.                                                                

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"Adjusted Treasury Rate" means, with respect to any redemption date, the    
rate per annum equal to the semiannual equivalent yield to maturity of the      
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue   
(expressed as a percentage of its principal amount) equal to the Comparable     
Treasury Price for such redemption date, plus 0.20%.                            

"Comparable Treasury Issue" means the United States Treasury security       
selected by a Reference Treasury Dealer as having a maturity comparable to the  
remaining term of the Notes to be redeemed that would be utilized, at the time  
of selection and in accordance with customary financial practice, in pricing    
new issues of corporate debt securities of comparable maturity to the           
remaining term of the Notes.                                                    

"Comparable Treasury Price" means, with respect to any redemption date, the 
average of the Reference Treasury Dealer Quotations for such redemption date.   
"Reference Treasury Dealer Quotations" means, with respect to each Reference    
Treasury Dealer and any redemption date, the average, as determined by the      
Trustee, of the bid and asked prices for the Comparable Treasury Issue          
(expressed in each case as a percentage of its principal amount) quoted in      
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. (New      
York City time) on the third Business Day preceding such redemption date.       

"Reference Treasury Dealer" means each of Goldman, Sachs & Co., J.P. Morgan 
Securities Inc. and Credit Suisse First Boston Corporation and their            
respective successors; provided, however, that if any of the foregoing shall    
cease to be a primary U.S. Government securities dealer in New York City (a     
"Primary Treasury Dealer") or is no longer quoting prices for United States     
Treasury securities, the Company shall substitute therefor another Primary      
Treasury Dealer.                                                                

Notice of any redemption will be mailed at least 30 days but not more than  
60 days before the redemption date to each holder of the Notes to be redeemed.  

Unless the Company defaults in payment of the redemption price, on and after
the redemption date, interest will cease to accrue on the Notes or portions     
thereof called for redemption.                                                  

DEFEASANCE                                                                      

The provisions described under "Description of Debt Securities--Defeasance  
of Offered Debt Securities or Certain Covenants in Certain Circumstances" in    
the accompanying Prospectus are applicable to the Notes.                        

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UNDERWRITING  

Subject to the terms and conditions set forth in the Underwriting Agreement 
and the Pricing Agreement, the Company has agreed to sell to each of the        
Underwriters named below, and each of such Underwriters has severally agreed    
to purchase, the principal amount of the Notes set forth opposite its name      
below:                                                                          

                                                                [Download Table]

                                                    PRINCIPAL    PRINCIPAL  
                                                    AMOUNT OF    AMOUNT OF  
                                                    NOTES DUE    NOTES DUE  
                   UNDERWRITER                         2005         2008    
                   -----------                     ------------ ------------
                                                                            
Goldman, Sachs & Co. ............................. $ 33,333,334 $ 33,333,334
Credit Suisse First Boston Corporation............   33,333,333   33,333,333
J.P. Morgan Securities Inc. ......................   33,333,333   33,333,333
                                                   ------------ ------------
  Total........................................... $100,000,000 $100,000,000
                                                   ============ ============

Under the terms and conditions of the Underwriting Agreement and the Pricing
Agreement, the Underwriters are committed to take and pay for all of the        
Notes, if any are taken.                                                        

The Underwriters propose to offer the Notes in part directly to the public  
at the initial public offering price set forth on the cover page of this        
Prospectus Supplement and in part to certain securities dealers at such price   
less a concession of .375% of the principal amount of the Notes due 2005 and    
.400% of the principal amount of the Notes due 2008. The Underwriters may     
allow, and such dealers may reallow, a concession not to exceed .250% of the    
principal amount of the Notes due 2005 and .250% of the principal amount of     
the Notes due 2008 to certain brokers and dealers. After the Notes are          
released for sale to the public, the offering price and other selling terms     
may from time to time be varied by the Underwriters.                            

The Notes are a new issue of securities with no established trading market. 
The Company has been advised by the Underwriters that the Underwriters intend   
to make a market in the Notes but are not obligated to do so and may            
discontinue market making at any time without notice. No assurance can be       
given as to the liquidity of the trading market for the Notes.                  

In connection with the offering, the Underwriters may purchase and sell the 
Notes in the open market. These transactions may include over-allotment and     
stabilizing transactions and purchases to cover short positions created by the  
Underwriters in connection with the offering. Stabilizing transactions consist  
of certain bids or purchases for the purpose of preventing or retarding a       
decline in the market price of the Notes; and short positions created by the    
Underwriters involve the sale by the Underwriters of a greater number of Notes  
than they are required to purchase from the Company in the offering. The        
Underwriters also may impose a penalty bid, whereby selling concessions         
allowed to broker-dealers in respect of the securities sold in the offering     
may be reclaimed by the Underwriters if such Notes are repurchased by the       
Underwriters in stabilizing or covering transactions. These activities may      
stabilize, maintain or otherwise affect the market price of the Notes, which    
may be higher than the price that might otherwise prevail in the open market;   
and these activities, if commenced, may be discontinued at any time. These      
transactions may be effected in the over-the-counter market or otherwise.       

The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.            

In the ordinary course of their business, the Underwriters and certain of   
their affiliates have engaged, and may in the future engage, in commercial      
banking and investment banking transactions with the Company and affiliates of  
the Company. A portion of the net proceeds from this offering is expected to    
be used to reduce borrowings under the Credit Facility, under which Credit      
Suisse First Boston Corporation and Morgan Guaranty Trust Company of New York,  
an affiliate of J.P. Morgan                                                     

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Securities Inc., are lenders. See "Use of Proceeds". Accordingly, this          
offering will be made in accordance with Rule 2710(c)(8) of the Conduct Rules   
of the National Association of Securities Dealers, Inc. The Underwriters will   
not receive any financial benefit in connection with this offering other than   
the underwriting discount.                                                      

VALIDITY OF THE NOTES 

The validity of the Notes offered hereby will be passed upon for the Company
by Norman L. Roberts, Esq., Senior Vice President and General Counsel of the    
Company, and for the Underwriters by Sullivan & Cromwell, Los Angeles,          
California. Mr. Roberts beneficially owns 8,715 shares of Common Stock and      
holds options to purchase 100,000 additional shares of Common Stock.            

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$600,000,000

UNOVA, INC. 
COMMON STOCK, PREFERRED STOCK,
DEPOSITARY SHARES, DEBT SECURITIES AND WARRANTS 

 UNOVA, Inc. (the "Company") may offer from time to time (i) common stock, par
value $.01 per share ("Common Stock"), (ii) one or more series of Preferred     
Stock, par value $.01 per share ("Preferred Stock"), which may be evidenced by  
Depository Shares (as defined herein), (iii) one or more series of debt         
securities ("Debt Securities"), consisting of debentures, notes and/or other    
unsecured evidences of indebtedness, which may be unsubordinated ("Senior Debt  
Securities") or subordinated ("Subordinated Debt Securities") to certain other  
obligations of the Company, and (iv) warrants to purchase Debt Securities,      
Preferred Stock, Common Stock or Depositary Shares ("Warrants," and together    
with the Common Stock, Preferred Stock, Depositary Shares and Debt Securities,  
"Securities"), at an aggregate initial offering price not to exceed             
$600,000,000 (or its equivalent in another currency or currency unit based on   
the exchange rate at the time of sale) in amounts, at prices and on terms to be 
determined at the time of offering. Securities may be offered, separately or    
together, in separate series, in amounts, at prices and on terms to be set      
forth in one or more supplements to this Prospectus (each a "Prospectus         
Supplement").                                                                   

The specific terms of the Securities in respect to which this Prospectus is 
being delivered will be set forth in the applicable Prospectus Supplement and   
will include, where applicable (i) in the case of Common Stock, the number of   
shares; (ii) in the case of Preferred Stock, the specific serial designation,   
the number of shares, any dividend, redemption, liquidation, conversion,        
exchange, sinking fund, voting and other rights, if any, and whether interests  
in such Preferred Stock will be evidenced by Depositary Shares and, if so, the  
identity of the Depositary; (iii) in the case of Debt Securities, whether they  
are Senior or Subordinated Debt Securities and subordination terms, if any, the 
specific designation, aggregate principal amount, the currency or currency unit 
in which payments are to be made, denominations, maturity, premium, if any,     
rate (which may be fixed or variable) and time of payment of interest, if any,  
terms for redemption at the option of the Company or the holder, if any, terms  
for sinking fund payments, if any, and, in the case of Subordinated Debt        
Securities, conversion or exchange rights, if any; and (iv) in the case of      
Warrants, the duration, offering price, exercise price and detachability of     
such Warrants, as well as a description of the Common Stock, Preferred Stock,   
Depositary Shares or Debt Securities issuable upon such exercise. Unless        
otherwise specified in the applicable Prospectus Supplement, Securities other   
than Common Stock will be issued in permanent global form and Common Stock will 
be issued through the Company's direct registration system.                     

The Common Stock is listed on the New York Stock Exchange (the "NYSE") under
the symbol "UNA". Any Common Stock offered will be listed, subject to notice of 
issuance, on such exchange. The applicable Prospectus Supplement will also      
contain information, where applicable, as to any other listing on a securities  
exchange of Securities covered by such Prospectus Supplement.                   

The Company may sell Securities to or through one or more underwriters, and 
also may sell Securities directly to other purchasers or through agents. The    
accompanying Prospectus Supplement sets forth the names of any underwriters or  
agents involved in the sale of the Securities in respect of which this          
Prospectus is being delivered, the number or principal amounts, if any, to be   
purchased by underwriters and the compensation, if any, of such underwriters or 
agents. See "Plan of Distribution". No Securities may be sold without delivery  
of the applicable Prospectus Supplement describing the method and terms of the  
offering of such series of Securities.                                          

----------- 

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND    
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE    
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES 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 JANUARY 16, 1998.  

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AVAILABLE INFORMATION 

The Company is subject to the informational requirements of the Securities  
Exchange Act of 1934, as amended (together with the rules and regulations       
thereunder, the "Exchange Act"), and in accordance therewith, files reports,    
proxy statements and other information with the Securities and Exchange         
Commission (the "Commission"). Reports, proxy statements and other information  
filed by the Company can be inspected and copied at the public reference        
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,  
D.C. 20549 and at the Commission's Regional Offices in New York (7 World Trade  
Center, 13th Floor, New York, New York 10048) and Chicago (Citicorp Center,     
500 West Madison Street, Suite 1400, Chicago, Illinois 60661) and copies of     
such materials can be obtained from the Public Reference Section of the         
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed     
rates. Such material is also available from the Commission through the          
Internet at http://www.sec.gov. The Common Stock is listed on the NYSE.         
Reports, proxy statements and other information relating to the Company can     
also be inspected at the offices of the NYSE, 20 Broad Street, New York, New    
York 10005.                                                                     

The Company has filed with the Commission a registration statement on Form  
S-3 (the "Registration Statement") (of which this Prospectus is a part) under   
the Securities Act of 1933, as amended (the "Securities Act") with respect to   
the Securities. This Prospectus does not contain all of the information set     
forth in the Registration Statement, certain portions of which have been        
omitted as permitted by the rules and regulations of the Commission.            
Statements contained in this Prospectus as to the contents of any contract or   
other documents are not necessarily complete, and in each instance reference    
is made to the copy of such contract or other document filed as an exhibit to   
the Registration Statement, each such statement being qualified in all          
respects by such reference and the exhibits and schedules thereto. For further  
information regarding the Company and the Securities, reference is hereby made  
to the Registration Statement and such exhibits and schedules which may be      
obtained from the Commission at its principal office in Washington, D.C. upon   
payment of the fees prescribed by the Commission.                               

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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

The following documents filed by the Company with the Commission (File No.  
001-13279) under Section 13(a) or 15(d) of the Exchange Act are hereby          
incorporated by reference in this Prospectus:                                   

a. The Company's Registration Statement on Form 10, filed on August 18,     
  1997, as amended by Amendment No. 1 thereto filed on October 1, 1997 and
Amendment No. 2 thereto filed on October 22, 1997 (as so amended, the 
"Form 10").                                                           

b. The Company's Quarterly Report on Form 10-Q for the quarter ended        
  September 30, 1997, as originally filed on November 26, 1997, as amended
by the Company's Report on Form 10-Q/A filed on January 15, 1998.     

c. The Company's Current Report on Form 8-K filed on December 24, 1997.     

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or  
15(d) of the Exchange Act subsequent to the date hereof and prior to the        
termination of the offering of any Securities are hereby incorporated by        
reference into this Prospectus and shall be deemed a part hereof from the date  
of filing of such documents.                                                    

Any statement contained herein, in any supplement hereto or in a document   
incorporated or deemed to be incorporated by reference herein shall be deemed   
to be modified or superseded for purposes of the Registration Statement and     
this Prospectus to the extent that a statement contained herein, in any         
supplement hereto or in any subsequently filed document which also is or is     
deemed to be incorporated by reference herein modifies or supersedes such       
statement. Any such statement so modified or superseded shall not be deemed,    
except as so modified or superseded, to constitute a part of the Registration   
Statement, this Prospectus or any supplement hereto.                            

Copies of all documents which are incorporated herein by reference (not     
including the exhibits to such documents, unless such exhibits are              
specifically incorporated by reference in such documents) will be provided      
without charge to each person, including any beneficial owner, to whom this     
Prospectus is delivered upon written or oral request. Requests should be        
directed by mail, addressed to UNOVA, Inc., 360 North Crescent Drive, Beverly   
Hills, California 90210, Attention: Investor Relations Office, by telephone to  
(310) 888-2583, or by electronic mail to pubrel@unova.com. This information     
may also be requested through the Company's website on the Internet at          
http://www.unova.com.                                                           

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THE COMPANY 

The Company is a leading industrial technologies company providing customers
with innovative solutions for improving their efficiency and productivity       
through its two business segments--Automated Data Systems ("ADS") and           
Industrial Automation Systems ("IAS"). Automated Data Systems principally       
serves the industrial market, providing automated data collection and mobile    
computing products and services. Customers include distribution and             
transportation companies, food and beverage operations, manufacturing           
industries, health care providers and government agencies. Industrial           
Automation Systems primarily serves the worldwide automotive, off-road and      
diesel engine manufacturing industries, providing integrated machining          
systems, body welding and assembly systems and precision grinding and abrasive  
systems.                                                                        

Prior to October 31, 1997, the Company was a wholly-owned subsidiary of     
Western Atlas Inc. ("Western Atlas"). The Company became an independent public  
company on October 31, 1997 (the "Distribution Date") upon the distribution,    
in the form of a dividend, of all outstanding Common Stock to shareholders of   
Western Atlas.                                                                  

The Company's principal executive offices are located at 360 North Crescent 
Drive, Beverly Hills, California 90210, and its telephone number at such        
address is (310) 888-2500.                                                      

USE OF PROCEEDS 

Unless otherwise indicated in an accompanying Prospectus Supplement, the    
Company intends to use the net proceeds from the sale of the Securities for     
general corporate purposes, including, without limitation, capital              
expenditures, possible future acquisitions, repurchases of capital stock,       
refinancing of outstanding indebtedness and working capital requirements.       

RATIO OF EARNINGS TO FIXED CHARGES  

The ratio of earnings to fixed charges of the Company for each of the two   
years ended July 31, 1993, the five months ended December 31, 1993, each of     
the three years ended December 31, 1996 and the nine months ended September     
30, 1997 were as follows:                                                       

                                                                [Download Table]

                          YEAR ENDED    FIVE MONTHS    YEAR ENDED    NINE MONTHS 
                           JULY 31,        ENDED      DECEMBER 31,      ENDED    
                          ----------    DECEMBER 31, -------------- SEPTEMBER 30,
                          1992   1993       1993     1994 1995 1996     1997     
                          -----  -----  ------------ ---- ---- ---- -------------
                                                                                 
Ratio of Earnings to                                                             
 Fixed Charges...........   4.5    6.4      0.2      2.8  3.9  5.7       4.2     

For the purpose of computing this ratio, earnings consist of earnings before
income taxes, cumulative effect of a change in accounting principle and the     
charge for acquired in-process research and development, plus fixed charges.    
Fixed charges consist of interest expense on all indebtedness (including        
allocated charges from Western Atlas) and the portion of operating lease        
rental expense that is representative of the interest factor. For the five      
months ended December 31, 1993, fixed charges exceeded earnings, as so          
defined, by $5.1 million. For the nine months ended September 30, 1997, fixed   
charges exceeded earnings, as so defined, by $140.8 million when including the  
$203.3 million acquired in-process research and development charge.             

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DESCRIPTION OF COMMON STOCK 

The following summaries of certain provisions of the Certificate of         
Incorporation (the "Certificate"), and By-laws of the Company (the "By-laws")   
(and the Rights Agreement (as defined below)) do not purport to be complete     
and are qualified in their entirety by reference to such instruments, each of   
which is incorporated by reference as an exhibit to the Registration Statement  
of which this Prospectus is a part.                                             

AUTHORIZED CAPITAL                                                              

The Company's authorized capital stock consists of 250,000,000 shares of    
Common Stock and 50,000,000 shares of Preferred Stock. Each outstanding share   
of Common Stock currently has attached to it one preferred share purchase       
right (a "Right") issued pursuant to a Share Purchase Rights Plan (the "Rights  
Plan"). Each Right entitles its registered holder to purchase from the Company  
one one-hundredth of a share of Series A Junior Participating Preferred Stock,  
par value $.01 per share ("Series A Preferred Stock") as described under "--    
Rights Plan" below.                                                             

As of October 31, 1997, there were 54,510,193 shares of Common Stock and no 
shares of Preferred Stock issued and outstanding. As of October 31, 1997,       
there were 11,000,000 shares of Common Stock reserved for issuance under        
various benefit plans.                                                          

GENERAL                                                                         

The holders of Common Stock will be entitled to one vote for each share on  
all matters voted on by shareholders, including elections of directors, and,    
except as otherwise required by law or provided in any resolution adopted by    
the Board of Directors of the Company (the "Board") with respect to any series  
of Preferred Stock, the holders of such shares exclusively will possess all     
voting power. The Certificate does not provide for cumulative voting in the     
election of directors. Subject to any preferential rights of any outstanding    
series of Preferred Stock created by the Board from time to time, the holders   
of Common Stock will be entitled to such dividends as may be declared from      
time to time by the Board from funds available therefor, and upon liquidation   
will be entitled to receive pro rata all assets of the Company available for    
distribution to such holders.                                                   

The Company maintains a direct registration system ("DRS") for the Common   
Stock. The DRS permits each shareholder to maintain the registration of his or  
her shares of Common Stock in his or her own name without the need for the      
Company to issue, or for the shareholder to maintain or store, a physical       
stock certificate. Under the DRS, a shareholder receives an account statement   
at least annually from the Transfer Agent for the Common Stock, ChaseMellon     
Shareholder Services, LLC (the "Transfer Agent"), indicating the number of      
shares in the shareholder's account. Any shareholder who elects to receive a    
physical certificate evidencing his or her shares of Common Stock may obtain a  
certificate at no charge by contacting the Transfer Agent. The shareholder may  
also request that the shares be electronically transferred to the               
shareholder's brokerage account.                                                

RIGHTS PLAN                                                                     

The Board has adopted the Rights Plan under which the Board declared a      
dividend of one Right for each outstanding share of Common Stock. Each share    
of Common Stock has attached to it (as described below) an associated Right.    
Rights are issuable in respect of all shares of Common Stock issued prior to    
the earliest of (i) the Rights Distribution Date (as defined below), (ii) the   
date on which the Rights are redeemed or exchanged as discussed below or (iii)  
September 24, 2007. Each Right entitles the registered holder to purchase from  
the Company one one-hundredth of a share of Series A Preferred Stock, at a      
price of $70 (the "Purchase Price"), subject to adjustment. The terms of the    
Rights are set forth in a Rights Agreement (the "Rights Agreement") between     
the Company and The Chase Manhattan Bank, as Rights Agent (the "Rights          
Agent").                                                                        

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The Rights Agreement provides that, until the Rights Distribution Date (or  
earlier redemption or expiration of the Rights), the Rights will be             
transferred with and only with the shares of Common Stock. The "Rights          
Distribution Date" is the earlier to occur of (i) ten days following a public   
announcement that a person or group of affiliated or associated persons (an     
"Acquiring Person") has acquired beneficial ownership of 15 percent or more of  
the outstanding shares of Common Stock or (ii) ten business days (or such       
later date as may be determined by action of the Board prior to such time as    
any person or group of affiliated persons becomes an Acquiring Person)          
following the commencement of, or announcement of an intention to make, a       
tender offer or exchange offer, the consummation of which would result in the   
beneficial ownership by a person or group of 15 percent or more of the          
outstanding shares of Common Stock. As soon as practicable following the        
Rights Distribution Date, separate certificates evidencing the Rights ("Right   
Certificates") will be mailed to holders of record of the shares of Common      
Stock as of the close of business on the Rights Distribution Date and such      
separate Rights Certificates alone will evidence the Rights.                    

In the event that any person or group of affiliated or associated persons   
becomes an Acquiring Person, each holder of a Right, other than Rights          
beneficially owned by the Acquiring Person (which will thereafter be void),     
will thereafter have the right to receive upon exercise that number of shares   
of Common Stock having a market value of two times the exercise price of the    
Right. At any time prior to the time a person or group of affiliated or         
associated persons becomes an Acquiring Person, the Board may redeem the        
Rights in whole, but not in part, at a price of $.01 per Right (the             
"Redemption Price"). The redemption of the Rights may be made effective at      
such time on such basis with such conditions as the Board in its sole           
discretion may establish.                                                       

If the Rights are not redeemed as provided above and in the event that the  
Company is acquired in a merger or other business combination transaction or    
50 percent or more of its consolidated assets or earning power are sold after   
a person or group has become an Acquiring Person, each holder of a Right will   
thereafter have the right to receive, upon the exercise thereof at the then     
current exercise price of the Right, that number of shares of common stock of   
the acquiring company which at the time of such transaction will have a market  
value of two times the exercise price of the Right.                             

At any time after any person or group becomes an Acquiring Person and prior 
to the acquisition by such person or group of 50 percent or more of the         
outstanding shares of Common Stock, the Board may exchange the Rights (other    
than Rights owned by such person or group which will have become void), in      
whole or in part, at an exchange ratio of one share of Common Stock, or one-    
hundredth of a share of Series A Preferred Stock, per Right (subject to         
adjustment).                                                                    

Shares of Series A Preferred Stock which are purchasable under the Rights   
Plan will not be redeemable. Each Share of Series A Preferred Stock will be     
entitled to an aggregate dividend of 100 times the dividend declared per share  
of Common Stock, but in no event shall such minimum preferential quarterly      
payment be less than $1 per share. In the event of liquidation, the holders of  
the shares of Series A Preferred Stock will be entitled to an aggregate         
payment of 100 times the payment made per share of Common Stock, but in no      
event shall they receive less than $100 per share. Each share of Series A       
Preferred Stock will have 100 votes, voting together with the shares of Common  
Stock. Finally, in the event of any merger, consolidation, or other             
transaction in which shares of Common Stock are exchanged, each share of        
Series A Preferred Stock will be entitled to receive 100 times the amount       
received per share of Common Stock. These rights are protected by customary     
antidilution provisions.                                                        

Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of the Company, including, without limitation, the right to    
vote or to receive dividends. While the distribution of the Rights is not       
taxable, shareholders may recognize taxable income upon the occurrence of       
subsequent events--for example, upon the redemption, sale, or other             
disposition of the Rights, or upon                                              

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the Rights becoming exercisable with respect to an acquiror's stock whether or  
not exercised. The Rights will expire on September 24, 2007 (the "Final         
Expiration Date"), unless the Final Expiration Date is extended or unless the   
Rights are earlier redeemed or exchanged by the Company.                        

As of the Distribution Date, two subsidiaries of Unitrin, Inc. ("Unitrin")  
owned 23.6 percent of the outstanding shares of Common Stock. The Rights Plan   
does not affect the Unitrin companies so long as they do not purchase           
additional shares of Common Stock or their shares are not transferred to a      
third party or group which would thereby beneficially own 15 percent or more    
of the outstanding shares of Common Stock.                                      

The terms of the Rights may be amended by the Board without the consent of  
the holders of the Rights, including an amendment to lower the 15 percent       
thresholds described above to not less than the greater of (i) the sum of .001  
percent and the largest percentage of the outstanding Common Stock then known   
to the Company to be beneficially owned by any person or group or affiliated    
or associated persons (other than Unitrin, Inc. and its subsidiaries) and (ii)  
10 percent, except that from and after such time as any person or group of      
affiliated or associated persons becomes an Acquiring Person no such amendment  
may adversely affect the interest of the holders of the Rights.                 

The Rights have certain anti-takeover effects. The Rights will cause        
substantial dilution to a person or group that attempts to acquire the Company  
without conditioning the offer on the Rights being redeemed or a substantial    
number of Rights being acquired.                                                

This summary description of the Rights does not purport to be complete and  
is qualified in its entirety by reference to the Rights Agreement, which is     
incorporated by reference as an exhibit to the Registration Statement of which  
this Prospectus is a part.                                                      

OTHER PROVISIONS                                                                

The Certificate, the By-laws and Delaware law contain certain provisions    
that could make more difficult the acquisition of the Company by means of a     
tender offer, a proxy contest or otherwise. The description set forth below is  
intended as a summary only and is qualified in its entirety by reference to     
the Certificate and the By-laws, which are incorporated by reference as         
exhibits to the Registration Statement of which this Prospectus is a part.      

Classified Board                                                              

The Certificate and By-laws provide that the Board will be divided into     
three classes of directors, with the classes to be as nearly equal in number    
as possible. The Certificate and the By-laws provide that, of the initial       
directors of the Company, approximately one-third will continue to serve until  
the 1999 Annual Meeting of Shareholders, approximately one-third will continue  
to serve until the 2000 Annual Meeting of Shareholders, and approximately one-  
third will continue to serve until the 2001 Annual Meeting of Shareholders.     

The classification of directors will have the effect of making it more      
difficult for shareholders to change the composition of the Board. At least     
two annual meetings of shareholders, instead of one, will generally be          
required to effect a change in a majority of the Board. Such a delay may help   
ensure that the Company's directors, if confronted by a holder attempting to    
force a proxy contest, a tender or exchange offer, or an extraordinary          
corporate transaction, would have sufficient time to review the proposal as     
well as any available alternatives to the proposal and to act in what they      
believe to be the best interest of the shareholders. The classification         
provisions will apply to every election of directors, however, regardless of    
whether a change in the composition of the Board would be beneficial to the     
Company and its shareholders and whether or not a majority of the Company's     
shareholders believe that such a change would be desirable.                     

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The classification provisions could also have the effect of discouraging a  
third party from initiating a proxy contest, making a tender offer or           
otherwise attempting to obtain control of the Company, even though such an      
attempt might be beneficial to the Company and its shareholders. The            
classification of the Board could thus increase the likelihood that incumbent   
directors will retain their positions. In addition, because the classification  
provisions may discourage accumulations of large blocks of the Company's stock  
by purchasers whose objective is to take control of the Company and remove a    
majority of the Board, the classification of the Board could tend to reduce     
the likelihood of fluctuations in the market price of the Common Stock that     
might result from accumulations of large blocks for such a purpose.             
Accordingly, shareholders could be deprived of certain opportunities to sell    
their shares of Common Stock at a higher market price than might otherwise be   
the case.                                                                       

Number of Directors; Removal; Filling Vacancies                               

The Certificate provides that, subject to any rights of holders of Preferred
Stock to elect additional directors under specified circumstances, the number   
of directors will be fixed from time to time exclusively pursuant to a          
resolution adopted by the Board. In addition, the By-laws provide that,         
subject to any rights of holders of Preferred Stock, and unless the Board       
otherwise determines, any vacancies will be filled only by the affirmative      
vote of a majority of the remaining directors, though less than a quorum.       
Accordingly, the Board could prevent any shareholder from enlarging the Board   
and filling the new directorships with such shareholder's own nominees.         

Under Delaware law, unless otherwise provided in the Certificate, directors 
serving on a classified board may only be removed by the shareholders for       
cause. In addition, the Certificate and the By-laws provide that directors may  
be removed only for cause and only upon the affirmative vote of holders of at   
least 80 percent of the voting power of all the then outstanding shares of      
stock entitled to vote generally in the election of directors ("Voting          
Stock"), voting together as a single class.                                     

No Shareholder Action by Written Consent; Special Meetings                    

The Certificate and the By-laws provide that, subject to the rights of any  
holders of Preferred Stock to elect additional directors under specified        
circumstances, shareholder action can be taken only at an annual or special     
meeting of shareholders and prohibit shareholder action by written consent in   
lieu of a meeting. The By-laws provide that special meetings of shareholders    
can be called only upon a written request stating the purpose of such meeting   
delivered to the Chairman of the Board, the President (if any) or the           
Secretary, signed by a majority of the Board or by resolution of the Board or   
the Executive Committee (if any). Shareholders are not permitted to call a      
special meeting or to require that the Board call a special meeting of          
shareholders. Moreover, the business permitted to be conducted at any special   
meeting of shareholders is limited to the business brought before the meeting   
pursuant to the notice of meeting given by the Company.                         

The provisions of the Certificate and the By-laws prohibiting shareholder   
action by written consent may have the effect of delaying consideration of a    
shareholder proposal until the next annual meeting unless a special meeting is  
called at the request of a majority of the Board or by resolution of the Board  
or the Executive Committee thereof. These provisions would also prevent the     
holders of a majority of the voting power of the Voting Stock from              
unilaterally using the written consent procedure to take shareholder action     
and from taking action by consent. Moreover, a shareholder could not force      
shareholder consideration of a proposal over the opposition of the Chairman     
and the Board by calling a special meeting of shareholders prior to the time    
the Chairman or a majority of the Board believes such consideration to be       
appropriate.                                                                    

Fair Price Provision                                                          

Article IX of the Certificate ("Article IX") places certain limitations on  
the Company's ability to effect a Business Combination with an Interested       
Shareholder (as each such term is defined therein).                             

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Definitions. Article IX confers upon a majority of the Whole Board, or, if a
majority of the Whole Board does not consist of Continuing Directors (as        
hereinafter defined), a majority of the then Continuing Directors, the power    
and duty to determine, on the basis of information known after reasonable       
inquiry, the applicability of certain defined terms used in Article IX as well  
as all other facts necessary to determine compliance with Article IX. A         
summary of the definitions of certain of these terms follows.                   

An "Interested Shareholder" is any person (other than the Company or a      
subsidiary) who or which is (a) the beneficial owner (as defined below) of ten  
percent or more of the voting power of the outstanding Voting Stock, or (b) an  
"Affiliate" or an "Associate" (as defined in Article IX) of the Company or at   
any time within the two-year period immediately prior to the date in question   
was the beneficial owner of 10 percent or more of the voting power of the then  
outstanding Voting Stock, or (c) an assignee of or has otherwise succeeded to   
any shares of Voting Stock which were at any time within the two-year period    
immediately prior to the date in question Beneficially Owned (as defined        
below) by a person described in (a) or (b) above (other than shares acquired    
through a public offering). Notwithstanding the foregoing, neither Unitrin nor  
any of its subsidiaries will be an Interested Shareholder as long as such       
entities in the aggregate beneficially own less than 12,658,000 shares of       
Common Stock.                                                                   

A person is the "beneficial owner" of, or "Beneficially Owns," any shares of
Voting Stock which such person or any of its Affiliates or Associates (as       
defined in Article IX) directly or indirectly owns or has the right to acquire  
or vote or which are beneficially owned by any member of any group of such      
persons having any agreement, arrangement or understanding for the purpose of   
acquiring, holding, voting or disposing of any shares of Voting Stock.          

A "Business Combination" includes the following transactions: (a) a merger  
or consolidation of the Company or any of its subsidiaries with an Interested   
Shareholder or any corporation (whether or not itself an Interested             
Shareholder) which is, or after such merger or consolidation would be, an       
Affiliate of such Interested Shareholder; (b) the sale or other disposition     
(in one transaction or a series of transactions) by the Company or any of its   
subsidiaries of assets having an aggregate "Fair Market Value" (as defined in   
Article IX) of $10 million or more if an Interested Shareholder or any          
Affiliate or Associate of an Interested Shareholder is a party to the           
transaction; (c) the issuance or transfer (in one transaction or a series of    
transactions) of any securities of the Company or of any of its subsidiaries    
to an Interested Shareholder or any Affiliate or Associate of an Interested     
Shareholder in exchange for cash or property (including stock or other          
securities) having an aggregate Fair Market Value of $10 million or more; (d)   
the adoption of any plan or proposal for the liquidation or dissolution of the  
Company proposed by or on behalf of an Interested Shareholder or any Affiliate  
or Associate of an Interested Shareholder; (e) any reclassification of          
securities, recapitalization, merger with a subsidiary or other transaction     
which has the effect, directly or indirectly, of increasing the proportionate   
share of the outstanding stock of any class of the Company or any of its        
subsidiaries Beneficially Owned by an Interested Shareholder or any Affiliate   
or Associate of an Interested Shareholder.                                      

A "Continuing Director" is any member of the Company's Board, who is not    
affiliated with the Interested Shareholder in question and was a director of    
the Company prior to the time such Interested Shareholder became an Interested  
Shareholder, and any director who is thereafter appointed to fill any vacancy   
on the Company's Board or who is elected and who, in either event, is not       
affiliated with an Interested Shareholder and in connection with his or her     
initial assumption of office was recommended by a majority of the Continuing    
Directors then on the Company's Board.                                          

Shareholder Vote Required for Certain Business Combinations. Article IX     
requires the approval of the holders of 80 percent of the voting power of all   
of the then outstanding shares of the Voting Stock, voting together as a        
single class, as a condition to Business Combinations, except in cases in       
which one of the two alternatives described under "-- Exceptions to Higher      
Vote Requirement" were                                                          

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applicable and were satisfied. In the event that either of such alternatives    
were applicable and satisfied with respect to the particular Business           
Combination, the affirmative vote otherwise required by Delaware law and the    
other provisions of the Certificate and by the terms of any class or series of  
stock of the Company which might be outstanding at the time of the Business     
Combination would apply. Thus, depending upon the circumstances, Article IX     
may require an 80 percent shareholder vote for a Business Combination in cases  
in which either a majority vote or no vote would presently be required under    
Delaware law.                                                                   

Even if an Interested Shareholder could obtain an 80 percent affirmative    
shareholder vote in favor of a Business Combination under Delaware law, such    
Business Combination may nevertheless (depending upon its nature) require       
approval by the Company's Board prior to its submission to a shareholder vote   
(such would be the case, for instance, with respect to a merger or              
consolidation involving the Company). In that case, the Interested Shareholder  
could not effect such Business Combination, regardless of its ability to        
assure an 80 percent shareholder vote, without Board action. Further, even      
were an Interested Shareholder able to obtain votes sufficient to effect a      
repeal of such provisions, it could not, under the Certificate, exercise its    
power by written consent or compel the Board to call a special meeting of       
shareholders for the purpose of voting on such repeal. As discussed above, as   
a result of the classified board provisions in the Certificate, an interested   
shareholder could not be assured of gaining control of the Board until at       
least two shareholder meetings had been held. In addition, Section 203 of the   
Delaware General Corporation Law ("Section 203"), which restricts second-step   
mergers with "Interested Shareholders" (and is described more fully below),     
might also operate to prevent an Interested Shareholder from effecting a        
Business Combination.                                                           

Exceptions to Higher Vote Requirement. In the case of a Business Combination
that involved the receipt of cash or other consideration by the Company's       
shareholders, solely in their capacity as shareholders, the 80 percent          
affirmative shareholder vote requirement would not apply if either (a) the      
Business Combination were approved by a majority of the Continuing Directors    
of the Company (in order for this condition to be satisfied there must be at    
least three Continuing Directors), or (b) all of the requirements described in  
paragraphs (1), (2) and (3) below were satisfied.                               

If the Business Combination did not involve the receipt of consideration by 
the Company's shareholders solely as shareholders (e.g., because it took the    
form of a sale of assets or an original issuance of the Company's securities    
to an Interested Shareholder), only approval by a majority of the Continuing    
Directors would avoid the requirement for such 80 percent shareholder vote,     
although, as noted above, such Business Combination might, depending upon the   
circumstances, otherwise require a lesser or no shareholder vote. If there      
were fewer than three Continuing Directors, such Business Combination would     
necessarily require such 80 percent shareholder vote. On the other hand,        
approval by a majority of the Continuing Directors would, with respect to any   
Business Combination, avoid both the 80 percent shareholder vote requirement    
and the need to satisfy all of the requirements described below.                

As noted above, under Delaware law a particular Business Combination may,   
depending upon its nature, require approval of the Board and/or less-than-80-   
percent shareholder approval. Neither the approval of such Business             
Combination by a majority of the Continuing Directors nor the satisfaction of   
the form of consideration, minimum price and procedural requirements of         
Article IX with respect to such Business Combination would supersede such       
other approval requirements of Delaware law or any class voting requirements    
with respect to any series or class of stock of the Company then outstanding.   
It also would not supersede the requirements of Section 203, discussed below.   
Rather, such approval or satisfaction of such form of consideration, minimum    
price and procedural requirements would eliminate only the requirement for the  
80 percent shareholder vote otherwise required by Article IX.                   

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In order to avoid the requirement of an 80 percent shareholder vote or      
approval by a majority of the Continuing Directors in the case of a Business    
Combination that involved the receipt of cash or other consideration by the     
Company's shareholders, the following conditions must be met:                   

(1) Form of Consideration Requirement. The consideration to be received 
by holders of a particular class (or series) of capital stock in the        
Business Combination would be required to be either cash or the same type   
of consideration used by the Interested Shareholder and its Affiliates in   
acquiring the largest portion of their interest in such class (or series)   
of capital stock. If the Interested Shareholder and its Affiliates have not 
previously purchased any shares of such class (or series) of capital stock, 
the consideration paid to holders of shares of that class (or series) in    
the Business Combination would be required to be cash.                      

 (2) Minimum Price Requirements. The aggregate of (x) the cash and (y) the
Fair Market Value, as of the date of consummation of the Business           
Combination (the "Consummation Date"), of any consideration other than cash 
to be received per share by holders of Common Stock, in the Business        
Combination would have to be at least equal to the higher of (i) the        
highest per share price paid by the Interested Shareholder or any of its    
Affiliates in acquiring any shares of Common Stock during the two years     
immediately prior to the date of the first public announcement of the       
proposal of the Business Combination (the "Announcement Date") or in any    
transaction in which the Interested Shareholder became an Interested        
Shareholder (whichever is higher), plus interest compounded annually from   
the first date on which the Interested Shareholder became an Interested     
Shareholder (the "Determination Date") through the Consummation Date at the 
publicly announced base rate of interest of Morgan Guaranty Trust Company   
of New York, or such other major bank headquartered in New York, New York,  
as may be selected by the Continuing Directors, from time to time in effect 
in New York, New York, less the aggregate dividends paid on each share of   
Common Stock from the Determination Date through the Consummation Date up   
to but not exceeding the amount of interest so payable per share of Common  
Stock, and (ii) the Fair Market Value per share of Common Stock on the      
Announcement Date or the Determination Date, as the case may be, whichever  
is higher.                                                                  

The higher of (i) and (ii) above would have to be paid in respect of all    
outstanding shares of Common Stock, whether or not the Interested Shareholder   
or any of its Affiliates had previously acquired any shares of Common Stock.    
If the Interested Shareholder and its Affiliates did not purchase any shares    
of Common Stock, as the case may be, during the two-year period prior to the    
Announcement Date or in the transaction in which the Interested Shareholder     
became an Interested Shareholder (e.g., if the Interested Shareholder became    
an Interested Shareholder by purchasing shares of any then-outstanding class    
of voting Preferred Stock), the minimum price would be as determined under      
(ii). Under (i), interest and dividends would be computed from the              
Determination Date whether the highest price during the two-year period prior   
to the Announcement Date were higher than the price paid in the transaction on  
the Determination Date or vice versa and whether the Determination Date         
occurred before or after the beginning of such two-year period. Thus, for       
instance, if the highest price per share paid by the Interested Shareholder     
and its Affiliates during such two-year period was higher than the price paid   
in the transaction on the Determination Date and the Determination Date         
occurred before the beginning of such two-year period, interest and dividends   
would nevertheless be required to be computed on such highest price from the    
Determination Date. Since (ii) does not include an interest factor, if (ii)     
exceeded (i) no interest would be included in computing the per share amount    
required to be paid in the Business Combination.                                

The following example illustrates the application of the form of            
consideration and minimum price requirements to a Business Combination with an  
Interested Shareholder acting alone which (x) acquired in the open market,      
during the two-year period prior to the Announcement Date, 4.9 percent of the   
outstanding Common Stock (the only then outstanding class of Voting Stock),     
for which its highest per share price was $40, (y) became an Interested         
Shareholder by purchasing 45 percent                                            

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of the outstanding Common Stock in a cash tender offer at $50 per share, and    
(z) then announced a proposed Business Combination with the Company at a time   
when the Common Stock was trading at $55 per share:                             

(i) highest price paid by the Interested Shareholder per share of Common
Stock during the two-year period prior to the Announcement Date ($40) or on 
the Determination Date in the transaction in which the Interested           
Shareholder became such ($50), whichever is higher (i.e., $50), plus the    
net amount (assumed herein to be $2) representing interest (on $50), less   
dividends paid or declared (if ultimately paid) per share of Common Stock,  
from the Determination Date through the Consummation Date: $52.             

(ii) Fair Market Value per share of Common Stock on the Announcement    
Date: $55.                                                                  

Accordingly, in the above example, in order to comply with Article IX's     
minimum price requirements, the Interested Shareholder would be required to     
pay at least $55 per share (the higher of the two alternatives above) and, in   
order to comply with Article IX's form of consideration requirement, such       
price would have to be paid in cash.                                            

The per share prices and interest assumptions used in the foregoing example 
were selected for illustrative purposes only and are not intended, and should   
not be treated, as estimates of future prices of Common Stock or future         
interest rates. Such prices and interest rates will be determined in the        
marketplace and cannot be predicted.                                            

As indicated above, no shares of Preferred Stock are outstanding and the    
Board has no present plans to issue any such shares, other than the shares      
reserved for issuance in connection with the Rights Plan. If shares of any      
series of Preferred Stock were in the future issued with voting rights and      
were outstanding at the time of consummation of the Business Combination, then  
unless such series were excluded from the provisions of Article IX by the       
terms of the resolution authorizing such series, the payments to holders of     
shares of such series of Preferred Stock would have to be at least equal to     
the higher of (x) the highest per share price determined with respect to such   
series in the same manner as described above with respect to Common Stock, and  
(y) the highest preferential amount per share to which the holders of such      
class or series of Preferred Stock would be entitled in the event of a          
voluntary or involuntary liquidation, dissolution or winding up of the          
Company. The minimum price requirement would have to be met with respect to     
each class or series of outstanding Voting Stock whether or not the Interested  
Shareholder was a beneficial owner of shares of that class or series prior to   
the Business Combination.                                                       

Under the minimum price requirements, the Fair Market Value of non-cash     
consideration to be received by holders of shares of any class of Voting Stock  
in a Business Combination is to be determined as of the Consummation Date.      
Where the definitive terms of such non-cash consideration were established in   
advance of the Consummation Date, intervening adverse developments, either in   
the economy or the market generally or in the financial condition or business   
of the Interested Shareholder, could result in a decline in the originally      
anticipated Fair Market Value of such consideration, so that, on the date       
scheduled for its consummation, the Business Combination, which had             
theretofore been considered as not requiring an 80 percent shareholder vote or  
approval by a majority of the Continuing Directors (i.e., because it was        
expected to satisfy the minimum price requirements and it satisfied the form    
of consideration and procedural requirements), could not be consummated         
because it had not received such vote or approval (even if it had received any  
less-than-80-percent shareholder vote required by Delaware law, and any         
separate class vote required by the terms of any class or series of then-       
outstanding stock of the Company) and did not, in fact, meet the minimum price  
requirements on such date. However, an Interested Shareholder could avoid such  
a situation by establishing, in advance, terms for the Business Combination     
whereby the non-cash consideration was to be finalized by reference to its      
Fair Market Value on the Consummation Date. Such an approach, which has in      
fact been used in connection with mergers and similar second-step               

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transactions in the past, would ensure that the Interested Shareholder would    
bear the risk of a decline in the Fair Market Value of the offered              
consideration prior to the consummation of the Business Combination. Article    
IX uses the Consummation Date as the determination date of the Fair Market      
Value of non-cash consideration to be paid in a Business Combination in order   
to ensure that the Interested Shareholder uses this approach so that the        
Interested Shareholder, and not the other shareholders, would bear this risk.   
In addition, since the minimum price requirements call for a determination to   
be made with respect to interest at the base rate compounded, and dividends     
per share paid, through the Consummation Date, in a particular case it might    
not be possible to determine with certainty whether, at the time a Business     
Combination was submitted for shareholder approval, it would ultimately         
satisfy the minimum price requirements on the Consummation Date. Accordingly,   
it might not be possible to determine with certainty whether the Business       
Combination would require an 80 percent shareholder vote or the lesser vote     
otherwise applicable under Delaware law and, until the Consummation Date,       
there might be uncertainty as to whether the Business Combination, if it in     
fact received less than an 80 percent affirmative shareholder vote, could be    
consummated under Article IX. This uncertainty could deter an Interested        
Shareholder who did not own (and was not assured of obtaining the affirmative   
votes of) 80 percent of the voting power of the Voting Stock from going         
forward with a Business Combination that had not been approved by a majority    
of the Continuing Directors. However, the Company considers that it is          
appropriate, for the reasons indicated above, to use the Consummation Date as   
the determination date with respect to the minimum price requirements of        
Article IX and that this will benefit shareholders by encouraging the           
Interested Shareholder to negotiate with the Continuing Directors (and to       
refrain from taking action which would result in there being fewer than three   
Continuing Directors) and obtain their approval of the Business Combination,    
since such approval would avoid the applicability of both the 80 percent        
shareholder approval requirement and the minimum price requirement.             

(3) Procedural Requirements. In order to avoid the requirement of an 80 
percent affirmative shareholder vote or approval by a majority of the       
Continuing Directors, after an Interested Shareholder became an Interested  
Shareholder and prior to the Consummation Date, all of the following        
procedural requirements, as well as the form of consideration and minimum   
price requirements, must be complied with.                                  

The first procedural requirement would be that the Company, after the       
Determination Date, not have failed to pay full quarterly dividends on any      
then-outstanding Preferred Stock and not have reduced the rate of dividends     
paid on Common Stock, unless such failure or reduction was approved by a        
majority of the Continuing Directors. This provision is designed to prevent an  
Interested Shareholder from attempting to depress the market price of the       
Voting Stock prior to proposing a Business Combination by reducing dividends    
thereon, and thereby reducing the consideration required to be paid pursuant    
to the minimum price requirements of Article IX.                                

The second procedural requirement would be that the Interested Shareholder  
and its Affiliates not have acquired any additional shares of the Voting        
Stock, directly from Company, or otherwise, in any transaction subsequent to    
the transaction pursuant to which the Interested Shareholder became an          
Interested Shareholder (other than any such acquisition pursuant to a stock     
split or similar transaction that does not increase the Interested              
Shareholder's proportionate share of any class or series of stock of the        
Company). This provision is intended to prevent an Interested Shareholder from  
purchasing additional shares of Voting Stock at prices which are lower than     
those set by the minimum price requirements of Article IX. Since all of the     
forms of consideration, minimum price and procedural requirements must be       
satisfied in order for the Interested Shareholder to avoid the need for either  
an 80 percent affirmative shareholder vote or the approval of a majority of     
any Continuing Directors, an effect of this provision, where the Interested     
Shareholder or any of its Affiliates acquired additional shares of Voting       
Stock after the Interested Shareholder became an Interested Shareholder, is     
that the Interested Shareholder could only acquire all of the Voting Stock by   
means of a Business Combination                                                 

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if such Business Combination either satisfied the 80 percent shareholder        
approval requirements or were approved by a majority of the Continuing          
Directors.                                                                      

The third procedural requirement would be that the Interested Shareholder   
and its Affiliates not have received, at any time after the Interested          
Shareholder became an Interested Shareholder, whether in connection with the    
Business Combination or otherwise, the benefit of any loans or other financial  
assistance or tax advantages provided by the Company (other than                
proportionately, solely in its capacity as a shareholder). This provision is    
intended to deter an Interested Shareholder from self-dealing or otherwise      
taking advantage of its equity position in the Company by using the Company's   
resources to finance the Business Combination or otherwise for its own          
purposes in a manner not proportionately available to all shareholders.         

The fourth procedural requirement would be that a proxy or information      
statement disclosing the terms and conditions of the Business Combination and   
complying with the requirements of the proxy rules promulgated under the        
Exchange Act or any replacement legislation be mailed to all shareholders of    
the Company at least 30 days prior to the consummation of the Business          
Combination, whether or not such proxy or information statement is required to  
be mailed pursuant to the Exchange Act or any such replacement legislation.     
This provision is intended to ensure that shareholders will be fully informed   
of the terms and conditions of the Business Combinations even if the            
Interested Shareholder were not otherwise required by law to disclose such      
information to shareholders.                                                    

The final procedural requirements would be that the Interested Shareholder  
have supplied the Company with all information requested by the Continuing      
Directors pursuant to Article IX. Under Article IX, the Continuing Directors    
have the right to request information as to the beneficial ownership of stock   
by the Interested Shareholder and other factual matters relating to the         
applicability and effect of Article IX.                                         

Advance Notice Provisions for Shareholder Nominations and Shareholder         
Proposals                                                                       

The By-laws establish an advance notice procedure for shareholders to make  
nominations of candidates for election as directors, or bring other business    
before an annual meeting of shareholders of the Company (the "Shareholder       
Notice Procedure").                                                             

The Shareholder Notice Procedure provides that only persons who are         
nominated by, or at the direction of, the Board, or by a shareholder who has    
given timely written notice to the Secretary of the Company prior to the        
meeting at which directors are to be elected, will be eligible for election as  
directors of the Company. The Shareholder Notice Procedure provides that at an  
annual meeting only such business may be conducted as has been brought before   
the meeting by, or at the direction of, the Chairman or the Board or by a       
shareholder who has given timely written notice to the Secretary of the         
Company of such shareholder's intention to bring such business before such      
meeting. Under the Shareholder Notice Procedure, for notice of shareholder      
nominations to be made at an annual meeting to be timely, such notice must be   
received by the Company not less than 70 days nor more than 90 days prior to    
the first anniversary of the previous year's annual meeting (or if the date of  
the annual meeting is advanced by more than 20 days, or delayed by more than    
70 days, from such anniversary date, not earlier than the 90th day prior to     
such meeting and not later than the later of (x) the 70th day prior to such     
meeting and (y) the 10th day after public announcement of the date of such      
meeting is first made). Notwithstanding the foregoing, in the event that the    
number of directors to be elected is increased and there is no public           
announcement naming all of the nominees for director or specifying the size of  
the increased Board made by the Company at least 80 days prior to the first     
anniversary of the preceding year's annual meeting, a shareholder's notice      
will be timely, but only with respect to nominees for any new positions         
created by such increase, if it is received by the Company not later than the   
10th day after such public announcement is first made by the Company. Under     
the Shareholder Notice Procedure, for notice of a shareholder nomination to be  
made at a special meeting                                                       

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at which directors are to be elected to be timely, such notice must be          
received by the Company not earlier than the 90th day before such meeting and   
not later than the later of (x) the 70th day prior to such meeting and (y) the  
10th day after public announcement of the date of such meeting is first made.   

Under the Shareholder Notice Procedure, a shareholder's notice to the       
Company proposing to nominate a person for election as a director must contain  
certain information, including, without limitation, the identity and address    
of the nominating shareholder, the class and number of shares of stock of the   
Company which are owned by such shareholder, and all information regarding the  
proposed nominee that would be required to be included in a proxy statement     
soliciting proxies for the proposed nominee. Under the Shareholder Notice       
Procedure, a shareholder's notice relating to the conduct of business other     
than the nomination of directors must contain certain information about such    
business and about the principal shareholders, including, without limitation,   
a brief description of the business the shareholder proposes to bring before    
the meeting, the reasons for conducting such business at such meeting, the      
name and address of such shareholder, the class and number of shares of stock   
of the Company beneficially owned by such shareholder, and any material         
interest of such shareholder in the business so proposed. If the Chairman of    
the Board or other officer presiding at a meeting determines that a person was  
not nominated, or other business was not brought before the meeting, in         
accordance with the Shareholder Notice Procedure, such person will not be       
eligible for election as a director, or such business will not be conducted at  
such as the case may be.                                                        

By requiring advance notice of nominations by shareholders, the Shareholder 
Notice Procedure will afford the Board an opportunity to consider the           
qualifications of the proposed nominees and, to the extent deemed necessary or  
desirable by the Board, to inform shareholders about such qualifications. By    
requiring advance notice of other proposed business, the Shareholder Notice     
Procedure will also provide a more orderly procedure for conducting annual      
meetings of shareholders and, to the extent deemed necessary or desirable by    
the Board, will provide the Board with an opportunity to inform shareholders,   
prior to such meetings, of any business proposed to be conducted at such        
meetings, together with any recommendations as to the Board's position          
regarding action to be taken with respect to such business, so that             
shareholders can better decide whether to attend such a meeting or to grant a   
proxy regarding the disposition of any such business.                           

Although the By-laws do not give the Board any power to approve or          
disapprove shareholder nominations for the election of directors or proposals   
for action, they may have the effect of precluding a contest for the election   
of directors or the consideration of shareholder proposals if the proper        
procedures are not followed, and of discouraging or deterring a third party     
from conducting a solicitation of proxies to elect its own slate of directors   
or to approve its own proposal, without regard to whether consideration of      
such nominees or proposals might be harmful or beneficial to the Company and    
its shareholders.                                                               

AMENDMENT OF CERTAIN PROVISIONS OF THE CERTIFICATE AND BY-LAWS                  

Under Delaware law, the shareholders have the right to adopt, amend or      
repeal the by-laws and, with the approval of the board of directors, the        
certificate of incorporation of a corporation. In addition, if the certificate  
of incorporation so provides, the by-laws may be adopted, amended or repealed   
by the board of directors. The Certificate provides that the affirmative vote   
of the holders of at least 80 percent of the voting power of the outstanding    
shares of voting stock, voting together as a single class, is required to       
amend provisions of the Certificate relating to the prohibition of shareholder  
action without a meeting; the number, election and term of the Company's        
directors; or the removal of directors. The vote of the holders of a majority   
of the voting power of the outstanding shares of voting stock is required to    
amend all other provisions of the Certificate. The Certificate further          
provides that the By-laws may be amended by the Board or by the affirmative     
vote of the holders of at least 80 percent of the voting power of the           
outstanding shares of voting stock, voting together as a single class. These    
80 percent voting requirements will have the effect of making more difficult    
any                                                                             

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amendment by shareholders of the By-laws or of any of the provisions of the     
Certificate described above, even if a majority of the Company's shareholders   
believe that such amendment would be in their best interests.                   

ANTITAKEOVER LEGISLATION                                                        

Section 203 provides that, subject to certain exceptions specified therein, 
a corporation shall not engage in any business combination with any             
"interested shareholder" for a three-year period following the date that such   
shareholder becomes an interested shareholder unless (i) prior to such date,    
the board of directors of the corporation approved either the business          
combination or the transaction which resulted in the shareholder becoming an    
interested shareholder, (ii) upon consummation of the transaction which         
resulted in the shareholder becoming an interested shareholder, the interested  
shareholder owned at least 85 percent of the voting stock of the corporation    
outstanding at the time the transaction commenced (excluding certain shares),   
or (iii) on or subsequent to such date, the business combination is approved    
by the board of directors of the corporation and by the affirmative vote of at  
least 66 2/3 percent of the outstanding voting stock which is not owned by the  
interested shareholder. Except as specified in Section 203, an interested       
shareholder is defined to include (x) any person that is the owner of 15        
percent or more of the outstanding voting stock of the corporation, or is an    
affiliate or associate of the corporation and was the owner of 15 percent or    
more of the outstanding voting stock of the corporation, at any time within     
three years immediately prior to the relevant date and (y) the affiliates and   
associates of any such person.                                                  

Under certain circumstances, Section 203 makes it more difficult for a      
person who would be an "interested shareholder" to effect various business      
combinations with a corporation for a three-year period, although the           
shareholders may elect to exclude a corporation from the restrictions imposed   
thereunder. The Certificate does not exclude the Company from the restrictions  
imposed under Section 203 of the Delaware Law. It is anticipated that the       
provisions of Section 203 may encourage companies interested in acquiring the   
Company to negotiate in advance with the Board, since the shareholder approval  
requirement would be avoided if a majority of the directors then in office      
approve, prior to the time the shareholder becomes an interested shareholder,   
either the business combination or the transaction which results in the         
shareholder becoming an interested shareholder.                                 

RELATIONSHIP OF ARTICLE IX TO SECTION 203                                       

Each of Article IX and Section 203 should encourage persons interested in   
acquiring the Company to negotiate in advance with the Board since the higher   
shareholder voting requirements imposed would not be invoked if, (i) in the     
case of Article IX, such person obtains the approval of a majority of the       
Continuing Directors for the proposed business combination transaction, and     
(ii) in the case of Section 203, such person, prior to acquiring 15 percent of  
the Company's voting stock, obtains the approval of the Board for such stock    
acquisition or for the proposed business combination transaction (unless such   
person acquires 85 percent or more of the Company's voting stock in such        
transaction excluding certain shares as described above). As stated above, in   
the event of a proposed acquisition of the Company, the Board believes that     
the interests of the Company's shareholders will best be served by a            
transaction that results from negotiations based upon careful consideration of  
the proposed terms, such as the price to be paid to minority shareholders, the  
form of consideration paid and tax effects of the transaction.                  

The protection afforded the remaining shareholders by Section 203 is        
stronger in some respects than the protection that would be afforded by         
Article IX in situations in which the provisions of both apply. This is         
because, unless the requisite Board or shareholder approval is obtained or the  
acquiror succeeds in obtaining at least 85% of the target corporation's voting  
stock in the initial transaction, Section 203 would prevent any of the          
specified business combination transactions which could be used by an acquiror  
to eliminate such remaining shareholders, use the assets of the company to      
finance its                                                                     

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acquisition or otherwise abuse its equity position from occurring for a period  
of three years thereafter, whereas Article IX would merely require that the     
specified minimum price and procedural conditions be satisfied. Nonetheless,    
Article IX has been included in the Certificate for several reasons.            

First, the term "Business Combination" is defined differently in Article IX 
than it is in Section 203 and, as a result, Article IX may afford protection    
to the Company's shareholders in certain situations in which Section 203 would  
not apply. In addition, Article IX would apply to transactions with or for the  
benefit of any person (together with such person's affiliates and associates)   
beneficially owning 10 percent of the Company's voting stock while Section 203  
would only apply to transactions involving persons (together with their         
affiliates and associates) beneficially owning 15 percent or more of the        
Company's voting stock.                                                         

Second, although the constitutionality of Section 203 has so far been upheld
in the courts, it is possible that a higher court might yet find Section 203    
to be unconstitutional. If Section 203 were to be challenged and struck down    
as unconstitutional prior to or in connection with any acquisition of the       
Company, Article IX would continue to afford its protections to shareholders.   

Neither Article IX nor Section 203 will prevent a hostile takeover of the   
Company. They may, however, make more difficult or discourage a takeover of     
the Company or the acquisition of control of the Company by a significant       
shareholder and thus the removal of incumbent management. Such effect will be   
enhanced by the fact that the Company will have a Rights Plan. Some             
shareholders may find this disadvantageous in that they may not be afforded     
the opportunity to participate in takeovers which are not approved by the       
Continuing Directors but in which they might receive, for at least some of      
their shares, a substantial premium above the market price at the time of a     
tender offer or other acquisition transaction. Article IX should not prevent    
or discourage transactions in which the acquiring person is willing to          
negotiate in good faith with the Board and is prepared to pay the same price    
to all shareholders of each class of the Company's voting stock.                

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DESCRIPTION OF PREFERRED STOCK  

The following summary of the Preferred Stock does not purport to be complete
and is qualified in its entirety by reference to the Certificate or the         
applicable Certificate of Designations of Preferred Stock (each a "Preferred    
Stock Designation"), the form of which is filed as, or will be incorporated by  
reference as, an exhibit to the Registration Statement of which this            
Prospectus is a part in connection with the issuance of such series of          
Preferred Stock.                                                                

The following summary of the Preferred Stock relates to certain terms and   
conditions applicable to the Preferred Stock as a class. The particular terms   
of any series of Preferred Stock will be described in the applicable            
Prospectus Supplement. If so indicated in such Prospectus Supplement, the       
terms of any such series may differ from the terms set forth below.             

GENERAL                                                                         

The Certificate authorizes the Board to establish one or more series of     
Preferred Stock and to determine, with respect to any series of Preferred       
Stock, the terms and rights of such series, including (i) the designation of    
the series, (ii) the number of shares of the series, which number the Board     
may thereafter (except where otherwise provided in the Preferred Stock          
Designation) increase or decrease (but not below the number of shares thereof   
then outstanding), (iii) whether dividends, if any, will be cumulative or       
noncumulative and the dividend rate of the series, (iv) the dates at which      
dividends, if any, will be payable, (v) the redemption rights and price or      
prices, if any, for shares of the series, (vi) the terms and amounts of any     
sinking fund provided for the purchase or redemption of shares of the series,   
(vii) the amounts payable on shares of the series in the event of any           
voluntary or involuntary liquidation, dissolution or winding up of the affairs  
of the Company, (viii) whether the shares of the series will be convertible     
into shares of any other class or series, or any other security, of the         
Company or any other corporation, and, if so, the specification of such other   
class or series or such other security, the conversion price or prices or rate  
or rates, any adjustments thereof, the date or dates as of which such shares    
shall be convertible and all other terms and conditions upon which such         
conversion may be made, (ix) restrictions on the issuance of shares of the      
same series or of any other class or series, and (x) the voting rights, if      
any, of the holders of such series.                                             

The authorized shares of Preferred Stock, as well as shares of Common Stock,
will be available for issuance without further action by the Company's          
shareholders, unless such action is required by applicable law or the rules of  
any stock exchange or automated quotation system on which the Company's         
securities may be listed or traded. The NYSE currently requires shareholder     
approval as a prerequisite to listing shares in several instances, including    
where the present or potential issuance of shares could result in an increase   
in the number of shares of common stock, or in the amount of voting securities  
outstanding, of at least 20 percent. If the approval of the Company's           
shareholders is not required for the issuance of shares of Preferred Stock or   
Common Stock, the Board may determine not to seek shareholder approval.         

Each series of Preferred Stock will have the dividend, liquidation,         
redemption and voting rights set forth below unless otherwise described in an   
applicable Prospectus Supplement relating to such series of Preferred Stock.    
The applicable Prospectus Supplement will describe the following terms of the   
series of Preferred Stock in respect of which this Prospectus is being          
delivered: (1) the designation of such series and the number of shares          
offered; (2) the amount of the liquidation preference per share (or the method  
of calculation of such amount); (3) the initial public offering price at which  
shares of such series will be issued; (4) the dividend rate (or the method of   
calculation of such rate) applicable to such series, the dates on which         
dividends will be payable and the dates from which dividends will commence to   
cumulate, if any; (5) any redemption or sinking fund provisions; (6) any        
conversion or exchange rights; (7) any additional voting and other rights,      
preferences, privileges, qualifications, limitations and restrictions, if any;  
(8) any listing of such series on any securities exchange; (9) the              

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relative ranking and preferences of such series as to dividend rights and       
rights upon any liquidation, dissolution or winding up of the affairs of the    
Company; and (10) any other terms of such series.                               

No shares of Preferred Stock are currently outstanding. Shares of Preferred 
Stock, upon issuance against full payment of the purchase price therefor, will  
be fully paid and nonassessable. The liquidation preference of any series of    
Preferred Stock is not indicative of the price at which shares of such series   
of Preferred Stock will actually trade on or after the date of issuance.        

Although the Board has no intention at the present time of doing so, it     
could issue a series of Preferred Stock that could, depending on the terms of   
such series, impede the completion of a merger, tender offer or other takeover  
attempt. The Board will make any determination to issue such shares based on    
its judgment as to the best interests of the Company and its shareholders. The  
Board, in so acting, could issue Preferred Stock having terms that could        
discourage an acquisition attempt through which an acquirer may be able to      
change the composition of the Board, including a tender offer or other          
transaction that some, or a majority, of the Company's shareholders might       
believe to be in their best interests or in which shareholders might receive a  
premium for their stock over the then current market price of such stock.       

RANK                                                                            

Each series of Preferred Stock will, with respect to dividend rights and    
rights upon liquidation, dissolution or winding up of the Company, rank prior   
or superior to the Common Stock. All shares of each series of Preferred Stock   
will be of equal rank with each other. Subject to the foregoing and the terms   
of any particular series of Preferred Stock, series of Preferred Stock may      
vary as to priority within that class.                                          

DIVIDENDS                                                                       

Holders of each series of Preferred Stock will be entitled to receive, when,
as and if declared by the Board out of funds of the Company legally available   
for payment, cash dividends, payable at such date or dates and at such rate or  
rates per share as described in the applicable Prospectus Supplement. Such      
rate or rates may be fixed or variable or both.                                 

Unless otherwise specified in the applicable Prospectus Supplement,         
dividends shall be cumulative and the dividends on such shares will accrue      
from and after the date set forth in the applicable Prospectus Supplement. If   
dividends on a series of Preferred Stock are noncumulative and if the Board     
fails to declare a dividend in respect of a dividend period with respect to     
such series, then holders of such Preferred Stock will have no right to         
receive a dividend in respect of such dividend period, and the Company will     
have no obligation to pay the dividend for such period, whether or not          
dividends are declared with respect to any future dividend payment dates.       

No full dividends may be declared or paid or set apart for payment on       
Preferred Stock of the Company of any series ranking, as to dividends, on a     
parity with or junior to the series of Preferred Stock offered by the           
applicable Prospectus Supplement for any period unless full dividends for the   
immediately preceding dividend period on such series of Preferred Stock         
(including any accumulation in respect of unpaid dividends for prior dividend   
periods, unless otherwise specified in the applicable Prospectus Supplement)    
have been or contemporaneously are declared and paid or declared and a sum      
sufficient for the payment thereof is set apart for such payment. When          
dividends are not so paid in full (or a sum sufficient for such full payment    
is not so set apart) upon such series of Preferred Stock and any other series   
of Preferred Stock of the Company ranking on a parity, as to dividends, with    
such series of Preferred Stock, dividends upon such series of Preferred Stock   
and dividends on such other series of Preferred Stock ranking on a parity with  
such series of Preferred Stock will be declared pro rata so that the amount of  
dividends declared per share on such series of Preferred Stock and such other   
series of Preferred Stock ranking on a parity with such series of Preferred     
Stock will in all cases                                                         

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bear to each other the same ratio that accrued dividends for the then-current   
dividend period per share on such series of Preferred Stock (including any      
accumulation in respect of unpaid dividends for prior dividend periods, unless  
otherwise specified in the applicable Prospectus Supplement) and accrued        
dividends, including required or permitted accumulations, if any, on shares of  
such other series of Preferred Stock, bear to each other. No interest, or sum   
of money in lieu of interest, will be payable in respect of any dividend        
payment on such series Preferred Stock that may be in arrears. Unless full      
dividends on the series of series of Preferred Stock offered by the applicable  
Prospectus Supplement have been declared and paid or set apart for payment for  
the immediately preceding dividend period (including any accumulation in        
respect of unpaid dividends for prior dividend periods, unless otherwise        
specified in the applicable Prospectus Supplement), (a) no cash dividend or     
distribution (other than in shares of stock ranking junior to such series of    
Preferred Stock) may be declared, set aside for payment or paid on junior       
stock (including Common Stock), (b) the Company may not, directly or            
indirectly, repurchase, redeem or otherwise acquire any shares of junior stock  
(or pay any monies into a sinking fund for the redemption of any such shares)   
except by conversion into or exchange for junior stock, and (c) the Company     
may not, directly or indirectly, repurchase, redeem or otherwise acquire any    
series of Preferred Stock ranking on parity as to dividends (or pay any monies  
into a sinking fund for the redemption of any shares of any such stock)         
otherwise than pursuant to pro rata offers to purchase or a concurrent          
redemption of all, or a pro rata portion, of the outstanding Preferred Stock    
and any other series of Preferred Stock of the Company ranking on parity as to  
dividends (except by conversion into or exchange for junior stock).             

Any dividend payment made on a series of Preferred Stock will first be      
credited against the earliest accrued but unpaid dividend due with respect to   
shares of such series that remains payable.                                     

REDEMPTION                                                                      

The terms, if any, on which Preferred Stock of any series may be redeemed   
will be set forth in the applicable Prospectus Supplement. All shares of        
Preferred Stock redeemed, purchased or otherwise acquired by the Company        
(including shares surrendered for conversion or exchange) shall be canceled     
and thereupon restored to the status of authorized but unissued shares of       
Preferred Stock, undesignated as to series.                                     

LIQUIDATION                                                                     

In the event of a liquidation, dissolution or winding up of the affairs of  
the Company, voluntary or involuntary, the holders of a series of Preferred     
Stock will be entitled, subject to the rights of creditors, but before any      
distribution or payment to the holders of Common Stock or any other junior      
stock, to receive a liquidating distribution in the amount of the liquidation   
preference per share as set forth in the applicable Prospectus Supplement,      
plus accrued and unpaid dividends for the then-current dividend period          
(including any accumulation in respect of unpaid dividends for prior dividend   
periods, if dividends on such series are cumulative, unless otherwise           
specified in the applicable Prospectus Supplement). If the amounts available    
for distribution upon liquidation, dissolution or winding up of the affairs of  
the Company are not sufficient to satisfy the full liquidation rights of all    
the outstanding Preferred Stock and all stock ranking on a parity with such     
Preferred Stock, then the holders of each series of such stock will share       
ratably in any such distribution of assets in proportion to the full            
respective preferential amount (which in the case of Preferred Stock may        
include accumulated dividends) to which they are entitled. After payment of     
the full amount of the liquidation preference, the holders of Preferred Stock   
will not be entitled to any further participation in any distribution of        
assets by the Company.                                                          

VOTING                                                                          

Unless otherwise specified in the applicable Prospectus Supplement, each    
series of Preferred Stock shall have no voting rights except in the event that  
an amount equal to six quarterly dividend                                       

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payments on such series of Preferred Stock shall have accrued and be unpaid.    
In such event, the holders of each series of Preferred Stock shall have the     
right to one vote per share, voting separately as a class together with         
holders of shares of any series of Preferred Stock upon which like voting       
rights have been conferred and are exercisable ("Voting Parity Stock"), to      
elect two members of the Board of Directors, each member to be in addition to   
the then authorized number of directors, at the next annual meeting of          
stockholders and thereafter until dividends on such series of Preferred Stock   
have been paid in full for four consecutive dividend periods, including the     
last preceding period. Such directors shall hold office for a term expiring     
(subject to the earlier payment, or declaration and setting aside for payment,  
of dividends on such series of Preferred Stock for four consecutive dividend    
periods) at the next annual meeting of stockholders. Additionally, unless       
specified in the applicable prospectus supplement, without the affirmative      
vote of the holders of two-thirds of the shares of a series of Preferred Stock  
issued by the Company then outstanding (voting separately as a class together   
with any Voting Parity Stock), the Company may not, either directly or          
indirectly or through merger or consolidation with any other corporation, (i)   
authorize, create or issue, or increase the authorized or issued amount, of     
any class or series of stock ranking prior to the shares of Preferred Stock in  
rights or preferences or (ii) approve any amendment of (or otherwise alter or   
repeal), the Certificate or the applicable Preferred Stock Designation which    
would materially and adversely change the specific terms of such series of      
Preferred Stock. An amendment which increases the number of authorized shares   
of or authorizes the creation or issuance of other classes or series of         
Preferred Stock ranking junior to or on a parity with a series of Preferred     
Stock with respect to the payment of dividends or distribution of assets upon   
liquidation, dissolution or winding up, or substitutes the surviving entity in  
a merger, consolidation, reorganization or other business combination for the   
Company, shall not be considered to be such an adverse change.                  

As more fully described under "Description of Depositary Shares" below, if  
the Company elects to issue Depositary Shares, each representing a fraction of  
a share of a series of the Preferred Stock, each such Depositary Share will,    
in effect, be entitled to such fraction of a vote per Depositary Share.         

CONVERSION OR EXCHANGE                                                          

The terms, if any, on which Preferred Stock of any series may be converted  
into or exchanged for another class or series of Securities will be set forth   
in the applicable Prospectus Supplement.                                        

OTHER RIGHTS                                                                    

The shares of a series of Preferred Stock may have such preferences, voting 
powers or relative, participating, optional or other special rights as may be   
set forth in the applicable Prospectus Supplement, the Certificate (including   
the applicable Preferred Stock Designation) or as otherwise required by law.    
The holders of Preferred Stock will not have any preemptive rights to           
subscribe to any securities of the Company.                                     

TITLE                                                                           

The Company, the transfer agent and registrar for a series of Preferred     
Stock, and any agent of the Company or the transfer agent and registrar may     
treat the registered owner of such Preferred Stock as the absolute owner        
thereof (whether or not any payment in respect of such Preferred Stock shall    
be overdue and notwithstanding any notice to the contrary) for the purpose of   
making payment and for all other purposes. See "Book-Entry Securities" below.   

TRANSFER AGENT AND REGISTRAR                                                    

The transfer agent and registrar for each series of Preferred Stock will be 
named in the applicable Prospectus Supplement.                                  

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DESCRIPTION OF DEPOSITARY SHARES  

The following summary of each Deposit Agreement, the Depositary Shares and  
the Depositary Receipts (each as defined below) does not purport to be          
complete and is qualified in its entirety by reference to the Deposit           
Agreement and Depositary Receipts with respect to the Depositary Shares         
relating to any particular series of Preferred Stock, the forms of which are    
filed as, or will be incorporated by reference as, exhibits to the              
Registration Statement of which this Prospectus is a part in connection with    
the issuance of such Depositary Shares.                                         

The following summary of the Deposit Agreement, the Depositary Shares and   
the Depositary Receipts relates to certain terms and conditions applicable to   
such Securities generally. The particular terms of any series of Depositary     
Shares will be described in the applicable Prospectus Supplement. If so         
indicated in such Prospectus Supplement, the terms of any such series may       
differ from the terms set forth below.                                          

GENERAL                                                                         

The Company may, at its option, elect to offer fractional interests in      
shares of Preferred Stock, rather than shares of Preferred Stock. If the        
Company elects to do so, it will provide for the issuance by a Depositary (as   
described below) to the public of receipts for Depositary Shares, each of       
which will represent a fractional interest (to be set forth in the applicable   
Prospectus Supplement) of a share of Preferred Stock.                           

The shares of any series of the Preferred Stock underlying any Depositary   
Shares will be deposited under a separate Deposit Agreement (each, a "Deposit   
Agreement") between the Company and a bank or trust company selected by the     
Company with respect to such series, having its principal office in the United  
States and having a combined capital and surplus of at least $50,000,000 (with  
respect to such series, the "Depositary"). The applicable Prospectus            
Supplement relating to a series of Depositary Shares will set forth the name    
and address of the Depositary. Subject to the terms of the applicable Deposit   
Agreement, each owner of a Depositary Share will be entitled, in proportion to  
the applicable fractional interest in a share of the Preferred Stock            
underlying such Depositary Share, to all the rights and preferences of such     
Preferred Stock (including dividend, voting, redemption, conversion, exchange   
and liquidation rights).                                                        

Depositary Shares will be evidenced by depositary receipts issued pursuant  
to the applicable Deposit Agreement (the "Depositary Receipts").                

Pending the preparation of definitive engraved Depositary Receipts, a       
Depositary may, upon the Company's written order, issue temporary Depositary    
Receipts substantially identical to (and entitling the holders thereof to all   
the rights pertaining to) the definitive Depositary Receipts but not in         
definitive form. Definitive Depositary Receipts will be prepared without        
unreasonable delay, and the temporary Depositary Receipts will be exchangeable  
for definitive Depositary Receipts at the Company's expense and without charge  
thereof.                                                                        

DIVIDENDS AND OTHER DISTRIBUTIONS                                               

The Depositary will distribute all cash dividends or other cash             
distributions received by the Depositary in respect of the Preferred Stock to   
the record holders of Depositary Shares relating to such Preferred Stock pro    
rata in proportion to the numbers of such Depositary Shares owned by such       
holders on the relevant record date; provided, however, that in the case the    
Company or Depositary shall be required to withhold any cash dividend or other  
cash distribution on account of taxes, the amount made available for            
distribution shall be reduced accordingly. The Depositary will distribute only  
such amount, however, as can be distributed without attributing to any holder   
of Depositary Shares a                                                          

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fraction of one cent, and any balance not so distributed will be added to and   
treated as part of the next succeeding distribution to record holders of such   
Depositary Shares.                                                              

In the event of a distribution other than in cash, the Depositary will      
distribute property received by it to the record holders of Depositary Shares   
entitled thereto, unless the Depositary determines that it is not feasible to   
make such distribution, in which case the Depositary may, with the Company's    
approval, adopt such method as it deems equitable and practicable for the       
purpose of effecting such distribution, including the sale of such property     
and the distribution of the net proceeds from such sale to such holders.        

Each Deposit Agreement will also contain provisions relating to the manner  
in which any subscription or similar rights offered by the Company to holders   
of the Preferred Stock of the applicable series will be made available to       
holders of Depositary Shares.                                                   

WITHDRAWAL OF PREFERRED STOCK                                                   

Upon surrender of Depositary Receipts at the office of the Depositary       
(unless the related Depositary Shares have previously been called for           
redemption), the holder of the Depositary Shares evidenced thereby will be      
entitled to delivery at such office, to or upon such holder's order, of the     
number of whole shares of the related series of Preferred Stock and any money   
and other property, if any, represented by such Depositary Shares. Holders of   
Depositary Shares will be entitled to receive whole shares of the related       
series of Preferred Stock on the basis set forth in the applicable Prospectus   
Supplement, but holders of such whole shares of such Preferred Stock will not   
thereafter be entitled to receive Depositary Shares in exchange therefor. If    
the Depositary Receipts delivered by the holder evidence a number of            
Depositary Shares in excess of the number of Depositary Shares representing     
the number of whole shares of the related series of Preferred Stock or Series   
A Junior Preferred Stock to be withdrawn, the Depositary will deliver to such   
holder at the same time a new Depositary Receipt evidencing such excess number  
of Depositary Shares.                                                           

REDEMPTION OF DEPOSITARY SHARES                                                 

The terms, if any, on which the Depositary Shares relating to the Preferred 
Stock of any series may be redeemed will be set forth in the applicable         
Prospectus Supplement.                                                          

VOTING THE UNDERLYING SECURITIES                                                

Upon receipt of notice of any meeting at which the holders of the Preferred 
Stock of any series are entitled to vote, the applicable Depositary will mail   
the information contained in such notice of meeting to the record holders of    
the Depositary Shares relating to such series of Preferred Stock. Each record   
holder of such Depositary Shares on the record date (which will be the same     
date as the record date for the Preferred Stock) will be entitled to instruct   
the Depositary as to the exercise of the voting rights pertaining to the        
number of shares of Preferred Stock underlying such holder's Depositary         
Shares. The Depositary will endeavor, insofar as practicable, to vote the       
number of whole shares of Preferred Stock underlying such Depositary Shares in  
accordance with such instructions, and the Company will agree to take all       
action that may be deemed necessary by the Depositary in order to enable the    
Depositary to do so. To the extent the Depositary does not receive specific     
instructions from the holders of Depositary Shares relating to such Preferred   
Stock, it will abstain from voting such shares of Preferred Stock, unless       
otherwise indicated by the holders of such Depositary Shares.                   

AMENDMENT AND TERMINATION OF DEPOSITARY AGREEMENT                               

The form of Depositary Receipt evidencing the Depositary Shares and any     
provision of the applicable Deposit Agreement may at any time be amended by     
agreement between the Company and                                               

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the Depositary. However, any amendment that materially and adversely alters     
the rights of the existing holders of Depositary Shares will not be effective   
unless such amendment has been approved by the record holders of at least a     
majority of the Depositary Shares then outstanding. A Deposit Agreement may be  
terminated by the Company or the Depositary only if (i) all outstanding         
Depositary Shares relating thereto have been redeemed or otherwise reacquired   
by the Company, (ii) all Preferred Stock has been withdrawn or (iii) there has  
been a final distribution in respect of the Preferred Stock of the applicable   
series in connection with any liquidation, dissolution or winding up of the     
Company and such distribution has been distributed to the holders of the        
related Depositary Shares.                                                      

CHARGES OF DEPOSITARY                                                           

The Company will pay all transfer and other taxes and governmental charges  
arising solely from the existence of any depositary arrangements. The Company   
will pay all charges of each Depositary in connection with the initial deposit  
of the Preferred Stock of any series and any redemption of such Preferred       
Stock. Holders of Depositary Shares will be required to pay any other transfer  
and other taxes and governmental charges and such other charges as are          
expressly provided in the Deposit Agreement to be for their accounts.           

MISCELLANEOUS                                                                   

Each Depositary will forward to the holders of the applicable Depositary    
Shares all reports and communications from the Company that are delivered to    
such Depositary and that the Company is required to furnish the holders of the  
Preferred Stock of the applicable series.                                       

Neither any Depositary nor the Company will be liable if it is prevented or 
delayed by law or any circumstance beyond its control in performing its         
obligations under any Deposit Agreement. The obligations of the Company and     
each Depositary under any Deposit Agreement will be limited to performance in   
good faith of their duties thereunder and they will not be obligated to         
prosecute or defend any legal proceeding in respect of any Depositary Shares    
or Preferred Stock unless indemnity satisfactory to them is furnished. They     
may rely upon written advice of counsel or accountants, or information          
provided by persons presenting Preferred Stock for deposit, holders of          
Depositary Shares or other persons believed by it to be competent and on        
documents believed by them to be genuine.                                       

RESIGNATION AND REMOVAL OF DEPOSITARY                                           

A Depositary may resign at any time by delivering to the Company notice of  
its election to do so, and the Company may at any time remove a Depositary,     
and such resignation or removal will take effect upon the appointment of a      
successor Depositary and its acceptance of such appointment. Such successor     
Depositary must be appointed within 60 days after delivery of the notice of     
resignation or removal and must be a bank or trust company having its           
principal office in the United States and having a combined capital and         
surplus of at least $50,000,000.                                                

TITLE                                                                           

The Company, each Depositary and any agent of the Company or the applicable 
Depositary may treat the registered owner of any Depositary Share as the        
absolute owner thereof (whether or not any payment in respect of such           
Depositary Share shall be overdue and notwithstanding any notice to the         
contrary) for the purpose of making payment and for all other purposes. See     
"Book-Entry Securities" below.                                                  

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DESCRIPTION OF DEBT SECURITIES  

GENERAL                                                                         

The following summary of the Indentures (as defined below) and the Debt     
Securities (as defined below) does not purport to be complete and is qualified  
in its entirety by reference to the applicable Indenture pursuant to which      
such Debt Securities are issued, which Indentures are filed as exhibits to the  
Registration Statement of which this Prospectus is a part.                      

The following summary of the Indentures and the Debt Securities relates to  
certain terms and conditions applicable to the Debt Securities generally. The   
particular terms of any series of Debt Securities will be described in the      
applicable Prospectus Supplement. If so indicated in such Prospectus            
Supplement, the terms of any such series may differ from the terms set forth    
below.                                                                          

Senior Debt Securities (the "Senior Debt Securities") are to be issued under
an Indenture (the "Senior Indenture"), to be entered into by the Company and    
The First National Bank of Chicago, as Trustee (the "Senior Trustee").          
Subordinated Debt Securities (the "Subordinated Debt Securities" and, together  
with the Senior Debt Securities, "Debt Securities") are to be issued under an   
Indenture (the "Subordinated Indenture" and, together with the Senior           
Indenture, the "Indentures") to be entered into by the Company and The Bank of  
New York, as Trustee (the "Subordinated Trustee," and together with the Senior  
Trustee, the "Trustees"). The following summaries of certain provisions of the  
Senior Debt Securities, the Subordinated Debt Securities, the Senior Indenture  
and the Subordinated Indenture, as modified or superseded by the applicable     
Prospectus Supplement, are brief summaries of certain provisions thereof, do    
not purport to be complete and are subject to, and are qualified in their       
entirety by reference to, all the provisions of the Indenture applicable to a   
particular series of Debt Securities (the "Applicable Indenture"), including    
the definitions therein of certain terms. Whenever particular provisions or     
defined terms in one or both of the Indentures are referred to, such            
provisions or defined terms are incorporated herein by reference. Section       
references used herein are references to the Applicable Indenture. Capitalized  
terms not otherwise defined herein shall have the meaning given to them in the  
Applicable Indenture.                                                           

The Indentures do not limit the amount of Debt Securities that may be issued
thereunder and Debt Securities may be issued thereunder from time to time in    
one or more series. (Section 310) The Senior Debt Securities will be unsecured  
and unsubordinated obligations of the Company. Because the Company is a         
holding company, the right of the Company to participate in any distribution    
of assets of any subsidiary upon such subsidiary's liquidation or               
reorganization or otherwise is subject to the prior claims of the creditors of  
such subsidiary, except to the extent the Company may itself be recognized as   
a creditor of such subsidiary. Accordingly the Debt Securities will be          
effectively subordinated to all existing and future liabilities of the          
Company's subsidiaries. In addition to such amount, the principal subsidiaries  
of the Company have guaranteed the Company's obligations under its $400         
million committed credit facility. The Indentures also do not preclude the      
Company's subsidiaries from incurring additional indebtedness.                  

Unless otherwise indicated in the applicable Prospectus Supplement,         
principal of, premium, if any, and interest on the Debt Securities will be      
payable, and the transfer of Debt Securities will be registrable, at the        
office or agency to be maintained by the Company in The City of New York and    
at any other office or agency maintained by the Company for such purpose.       
(Sections 301, 305 and 1002) The Debt Securities will be issued only in fully   
registered form without coupons and, unless otherwise indicated in the          
applicable Prospectus Supplement, in denominations of $1,000 or integral        
multiples thereof. (Section 302) As described under "Book-Entry Securities"     
below, the Debt Securities of a series may be issued in the form of one or      
more Book-Entry Securities ("Book-Entry Securities") that will be deposited     
with or on behalf of a Depositary, which will be a clearing agent registered    
under                                                                           

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the Exchange Act. No service charge will be made for any registration of        
transfer or exchange of the Debt Securities, but the Company may require        
payment of a sum sufficient to cover any tax or other governmental charge       
imposed in connection therewith. (Section 305)                                  

Reference is made to the applicable Prospectus Supplement for the following 
terms of the Debt Securities offered thereby (the "Offered Debt Securities"):   
(1) the title of the Offered Debt Securities; (2) any limit on the aggregate    
principal amount of the Offered Debt Securities; (3) the person or entity to    
whom any interest on the Offered Debt Securities shall be payable, if other     
than the person in whose name that Security (or one or more Predecessor         
Securities) is registered at the close of business on the Regular Record Date   
for such interest; (4) the date or dates on which the principal of and          
premium, if any, on the Offered Debt Securities is payable or the method of     
determination thereof; (5) the rate or rates at which the Offered Debt          
Securities shall bear interest, if any, or the method of calculating such rate  
or rates of interest, the date or dates from which any such interest shall      
accrue or the method by which such date or dates shall be determined, the       
Interest Payment Dates on which any such interest shall be payable and the      
Regular Record Date for interest payable on any Interest Payment Date; (6) the  
place or places where the principal of, premium, if any, and interest on the    
Offered Debt Securities shall be payable; (7) the period or periods within      
which, the price or prices at which, the currency or currencies (including      
currency units) in which and the other terms and conditions upon which the      
Offered Debt Securities may be redeemed, in whole or in part, at the option of  
the Company; (8) the obligation, if any, of the Company to redeem or purchase   
the Offered Debt Securities pursuant to any sinking fund or analogous           
provisions or at the option of a holder thereof and the period or periods       
within which, the price or prices at which and the other terms and conditions   
upon which the Offered Debt Securities shall be redeemed or purchased, in       
whole or in part, pursuant to such obligation; (9) if other than denominations  
of $1,000 and any integral multiple thereof, the denominations in which the     
Offered Debt Securities shall be issuable; (10) the currency, currencies or     
currency units in which payment of the principal of and any premium and         
interest on any Offered Debt Securities shall be payable if other than the      
currency of the United States of America and the manner of determining the      
equivalent thereof in the currency of the United States of America; (11) if     
the amount of payments of principal of or any premium or interest on any        
Offered Debt Securities may be determined with reference to an index, formula   
or other method, the index, formula or other method by which such amounts       
shall be determined; (12) if the principal of or any premium or interest on     
any Offered Debt Securities is to be payable, at the election of the Company    
or a holder thereof, in one or more currencies or currency units other than     
that or those in which the Debt Securities are stated to be payable, the        
currency, currencies or currency units in which payment of the principal of     
and any premium and interest on the Offered Debt Securities as to which such    
election is made shall be payable, and the periods within which and the other   
terms and conditions upon which such election is to be made; (13) if other      
than the principal amount thereof, the portion of the principal amount of the   
Offered Debt Securities which shall be payable upon declaration of              
acceleration of the maturity thereof or the method by which such portion may    
be determined; (14) the applicability of the provisions described under "--     
Defeasance of Offered Debt Securities or Certain Covenants in Certain           
Circumstances"; (15) if the Offered Debt Securities will be issuable only in    
the form of a Book-Entry Security as described under "--Book-Entry Debt         
Securities", the Depositary or its nominee with respect to the Offered Debt     
Securities and the circumstances under which the Book-Entry Security may be     
registered for transfer or exchange or authenticated and delivered in the name  
of a person or entity other than the Depositary or its nominee; (16) any        
additional, modified or different covenants applicable to the Offered Debt      
Securities; (17) in the case of the Subordinated Indenture, the applicability   
of the provisions described in "Conversion or Exchange"; and (18) any other     
terms of the Offered Debt Securities. (Section 301)                             

The Debt Securities may be issued under the Indentures as Original Issue    
Discount Debt Securities to be offered and sold at a substantial discount       
below their stated principal amount. Special Federal income tax, accounting     
and other considerations applicable thereto will be described in the            

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Prospectus Supplement relating thereto. "Original Issue Discount Debt           
Security" means any Debt Security which provides for an amount less than the    
principal amount thereof to be due and payable upon a declaration of            
acceleration of the maturity thereof upon the occurrence and continuance of an  
Event of Default. (Section 101)                                                 

If the purchase price of any of the Debt Securities is payable in one or    
more foreign currencies or currency units, if any Debt Securities are           
denominated in one or more foreign currencies or currency units or if the       
principal of, premium, if any, or interest, if any, on any Debt Securities is   
payable in one or more foreign currencies or currency units, the restrictions,  
elections, material U.S. Federal income tax considerations and other            
information with respect to such issue of Debt Securities and such foreign      
currency or currency units will be set forth in the applicable Prospectus       
Supplement.                                                                     

If any index is used to determine the amount of payments of principal of,   
premium, if any, or interest, if any, on any series of Debt Securities,         
material U.S. Federal income tax, accounting and other considerations           
applicable thereto will be described in the applicable Prospectus Supplement.   

SUBORDINATION OF THE SUBORDINATED DEBT SECURITIES                               

The payment of the principal of and premium, if any, and interest on, and   
any payments on the repurchase of, Subordinated Debt Securities will, to the    
extent set forth in the Subordinated Indenture, be subordinated in right of     
payment to the prior payment in full of all Senior Debt (as defined below).     
Upon any payment or distribution of assets to creditors upon any liquidation,   
dissolution, winding up, reorganization, assignment for the benefit of          
creditors, marshalling of assets or any bankruptcy, insolvency or similar       
proceedings of the Company, the holders of all Senior Debt will first be        
entitled to receive payment in full of all amounts due or to become due         
thereon before the holders of Subordinated Debt Securities will be entitled to  
receive any payment in respect of the principal of or premium, if any, or       
interest on, or repurchase of, the Subordinated Debt Securities. In the event   
of the acceleration of the maturity of any Subordinated Debt Securities, the    
holders of all Senior Debt will first be entitled to receive payment in full    
of all amounts due or to become due thereon before the holders of the           
Subordinated Debt Securities will be entitled to receive any payment upon the   
principal of or premium, if any, or interest on, or repurchase of, the          
Subordinated Debt Securities. No payments on account of principal, premium, if  
any, interest, or any repurchase in respect of Subordinated Debt Securities     
may be made if there shall have occurred and be continuing a default in any     
payment with respect to Senior Debt, or an event of default with respect to     
any Senior Debt permitting the holders thereof to accelerate the maturity       
thereof. (Article Thirteen of the Subordinated Indenture)                       

By reason of such subordination, in the event of insolvency, creditors of   
the Company who are not holders of Senior Debt or of Subordinated Debt          
Securities may recover less, ratably, than holders of Senior Debt and may       
recover more, ratably, than the holders of Subordinated Debt Securities.        

"Senior Debt" is defined to mean without duplication, the principal, premium
(if any) and unpaid interest on all present and future (i) indebtedness of the  
Company for borrowed money, (ii) obligations of the Company evidenced by        
bonds, debentures, notes or similar instruments, (iii) indebtedness incurred,   
assumed or guaranteed by the Company in connection with the acquisition by it   
or a Subsidiary of any business, properties or assets (except purchase-money    
indebtedness classified as accounts payable under generally accepted            
accounting principles), (iv) obligations of the Company as lessee under leases  
required to be capitalized on the balance sheet of the lessee under generally   
accepted accounting principles, (v) reimbursement obligations of the Company    
in respect of letters of credit relating to indebtedness or other obligations   
of the Company that qualify as indebtedness or obligations of the kind          
referred to in clauses (i) through (iv) above, and (vi) obligations of the      
Company under direct or indirect guaranties in respect of, and obligations      
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to     
assure a creditor against loss in respect of, indebtedness or                   

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obligations of others of the kinds referred to in clauses (i) through (v)       
above, in each case unless in the instrument creating or evidencing the         
indebtedness or obligation or pursuant to which the same is outstanding it is   
provided that such indebtedness or obligation is not superior in right of       
payment to Senior Debt Securities. (Section 101 of the Subordinated Indenture)  

The applicable Prospectus Supplement may further describe the provisions, if
any, applicable to the subordination of the Subordinated Debt Securities of a   
particular series.                                                              

CONVERSION OR EXCHANGE                                                          

To the extent indicated in the applicable Prospectus Supplement, the        
Subordinated Debt Securities of any series may be convertible or exchangeable   
into other Debt Securities or Common Stock, Preferred Stock or Depositary       
Shares. The specific terms on which Subordinated Debt Securities of any series  
may be so converted or exchanged will be set forth in the applicable            
Prospectus Supplement. Such terms may include provisions for conversion or      
exchange, either mandatory, at the option of the holder, or at the option of    
the Company, in which case the amount or number of Securities to be received    
by the holders of Subordinated Debt Securities would be calculated as of a      
time and in the manner stated in the applicable Prospectus Supplement.          

CERTAIN COVENANTS OF THE COMPANY APPLICABLE TO SENIOR DEBT SECURITIES           

Limitation on Liens                                                           

Unless otherwise indicated in the applicable Prospectus Supplement, the     
holders of Senior Debt Securities (but not Subordinated Debt Securities) will   
have the benefit of the "Limitation on Liens" covenant described below. The     
"Limitation on Liens" covenant provides that the Company will not, and will     
not permit any Restricted Subsidiary (as defined below) to, create, incur,      
issue, assume or guarantee any indebtedness for money borrowed ("Debt")         
secured by a Mortgage (as defined below) upon any Operating Property (as        
defined below), or upon shares of capital stock or Debt issued by any           
Restricted Subsidiary and owned by the Company or any Restricted Subsidiary,    
whether owned at the date of the Senior Indenture or thereafter acquired,       
without effectively providing concurrently that the Senior Debt Securities of   
each series then outstanding are secured equally and ratably with or, at the    
option of the Company, prior to such Debt so long as such Debt shall be so      
secured.                                                                        

The foregoing restriction shall not apply to, and there shall be excluded   
from Debt in any computation under such restriction, Debt secured by (i)        
Mortgages on any property existing at the time of the acquisition thereof;      
(ii) Mortgages on property of a corporation existing at the time such           
corporation is merged into or consolidated with the Company or a Restricted     
Subsidiary or at the time of a sale, lease or other disposition of the          
properties of such corporation (or a division thereof) as an entirety or        
substantially as an entirety to the Company or a Restricted Subsidiary,         
provided that any such Mortgage does not extend to any property owned by the    
Company or any Restricted Subsidiary immediately prior to such merger,          
consolidation, sale, lease or disposition; (iii) Mortgages on property of a     
corporation existing at the time such corporation becomes a Restricted          
Subsidiary; (iv) Mortgages in favor of the Company or a Restricted Subsidiary;  
(v) Mortgages to secure all or part of the cost of acquisition, construction,   
development or improvement of the underlying property, or to secure Debt        
incurred to provide funds for any such purpose, provided that the commitment    
of the creditor to extend the credit secured by any such Mortgage shall have    
been obtained not later than 365 days after the later of (a) the completion of  
the acquisition, construction, development or improvement of such property or   
(b) the placing in operation of such property; (vi) Mortgages in favor of the   
United States of America or any State thereof, or any department, agency or     
instrumentality or political subdivision thereof, to secure partial, progress,  
advance or other payments; and (vii) Mortgages existing on the date of the      
Senior Indenture or any extension, renewal, replacement or refunding of any     
Debt secured by a Mortgage existing on the date of the Senior Indenture or      
referred to in clauses (i) to (iii) or                                          

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(v), provided that the principal amount of Debt secured thereby and not         
otherwise authorized by clauses (i) to (iii) or (v) shall not exceed the        
principal amount of Debt, plus any premium or fee payable in connection with    
any such extension, renewal, replacement or refunding, so secured at the time   
of such extension, renewal, replacement or refunding. (Section 1008 of the      
Senior Indenture)                                                               

Notwithstanding the restrictions described above, the Company and its       
Restricted Subsidiaries may create, incur, issue, assume or guarantee Debt      
secured by Mortgages without equally and ratably securing the Senior Debt       
Securities of each series then outstanding if, at the time of such creation,    
incurrence, issuance, assumption or guarantee, after giving effect thereto and  
to the retirement of any Debt which is concurrently being retired, the          
aggregate amount of all outstanding Debt secured by Mortgages which would       
otherwise be subject to such restrictions (other than any Debt secured by       
Mortgages permitted as described in clauses (i) through (vii) of the            
immediately preceding paragraph) plus all Attributable Debt in respect of Sale  
and Leaseback Transactions (as defined below) with respect to Operating         
Properties (with the exception of such transactions which are permitted under   
clauses (i) through (iv) of the second sentence under "--Limitation on Sale     
and Leaseback Transactions" below) does not exceed the greater of (i) 10% of    
Consolidated Net Assets (as defined below) and (ii) $150 million.               

Limitation on Sale and Leaseback Transactions                                 

Unless otherwise indicated in the applicable Prospectus Supplement, the     
holders of Senior Debt Securities (but not Subordinated Debt Securities) will   
have the benefit of the "Limitation on Sale and Leaseback Transactions"         
covenant described below. The "Limitation on Sale and Leaseback Transactions"   
covenant provides that the Company will not, and will not permit any            
Restricted Subsidiary to, enter into any Sale and Leaseback Transaction with    
respect to any Operating Property unless: (i) the Sale and Leaseback            
Transaction is solely with the Company or another Restricted Subsidiary; (ii)   
the lease is for a period not in excess of twenty- four months, including       
renewals; (iii) the Company or such Restricted Subsidiary would (at the time    
of entering into such arrangement) be entitled as described in clauses (i)      
through (vii) of the second preceding paragraph, without equally and ratably    
securing the Senior Debt Securities of each series then outstanding, to         
create, incur, issue, assume or guarantee Debt secured by a Mortgage on such    
Operating Property in the amount of the Attributable Debt arising from such     
Sale and Leaseback Transaction; (iv) the Company or such Restricted             
Subsidiary, within 365 days after the sale of such Operating Property in        
connection with such Sale and Leaseback Transaction is completed, applies an    
amount equal to the greater of (A) the net proceeds of the sale of such         
Operating Property or (B) the fair market value of such Operating Property to   
(1) the retirement of Debt Securities, other Funded Debt (as defined below) of  
the Company ranking on a parity with the Senior Debt Securities or Funded Debt  
of a Restricted Subsidiary or (2) the purchase of Operating Property; or (v)    
the Attributable Debt of the Company and its Restricted Subsidiaries in         
respect of such Sale and Leaseback Transaction and all other Sale and           
Leaseback Transactions entered into after the date of the Senior Indenture      
(other than any such Sale and Leaseback Transactions as would be permitted as   
described in clauses (i) through (iv) of this sentence), plus the aggregate     
principal amount of Debt secured by Mortgages on Operating Properties then      
outstanding (not including any such Debt secured by Mortgages described in      
clauses (i) through (vii) of the second preceding paragraph) which do not       
equally and ratably secure such outstanding Senior Debt Securities (or secure   
such outstanding Senior Debt Securities on a basis that is prior to other Debt  
secured thereby), would not exceed the greater of (i) 10% of Consolidated Net   
Assets and (ii) $150 million.                                                   

Certain Definitions                                                           

"Attributable Debt," in respect of any Sale and Leaseback Transaction,      
means, as of the time of determination, the total obligation (discounted to     
present value at the rate per annum equal to the                                

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discount rate which would be applicable to a capital lease obligation with      
like term in accordance with generally accepted accounting principles) of the   
lessee for rental payments (other than amounts required to be paid on account   
of property taxes, maintenance, repairs, insurance, water rates and other       
items which do not constitute payments for property rights) during the          
remaining portion of the initial term of the lease included in such Sale and    
Leaseback Transaction.                                                          

"Consolidated Net Assets" means the aggregate amount of assets (less        
applicable reserves and other properly deductible items) after deducting        
therefrom (i) all current liabilities (excluding any indebtedness for money     
borrowed having a maturity of less than 12 months from the date of the most     
recent consolidated balance sheet of the Company but which by its terms is      
renewable or extendable beyond 12 months from such date at the option of the    
borrower), and (ii) all Investments in Unrestricted Subsidiaries, all as set    
forth on the most recent consolidated balance sheet of the Company and          
computed in accordance with generally accepted accounting principles.           

"Funded Debt" means all Debt having a maturity of more than 12 months from  
the date as of which the determination is made or having a maturity of 12       
months or less but by its terms being renewable or extendable beyond 12 months  
from such date at the option of the borrower, but excluding any such Debt owed  
to the Company or a Restricted Subsidiary.                                      

"Mortgage" means, with respect to any property or assets, any mortgage or   
deed of trust, pledge, hypothecation, assignment, security interest, lien,      
encumbrance, or other security arrangement of any kind or nature whatsoever on  
or with respect to such property or assets (including any conditional sale or   
other title retention agreement having substantially the same economic effect   
as any of the foregoing).                                                       

"Operating Property" means any real property or equipment located within the
United States and owned by, or leased to, the Company or any of its             
Subsidiaries that has a net book value (after deduction of accumulated          
depreciation) in excess of 1.0% of Consolidated Net Assets.                     

"Restricted Subsidiary" means any Subsidiary of the Company that owns any   
Operating Property.                                                             

"Sale and Leaseback Transaction" means any arrangement with any person      
providing for the leasing to the Company or any Subsidiary of any Operating     
Property, which Operating Property has been or is to be sold or transferred by  
the Company or such Subsidiary to such person.                                  

"Subsidiary" means any corporation of which at least a majority of the      
outstanding stock having by the terms thereof ordinary voting power for the     
election of directors of such corporation (irrespective of whether or not at    
the time stock of any other class or classes of such corporation shall have or  
might have voting power by reason of the happening of any contingency) is at    
the time directly or indirectly owned by the Company, or by one or more other   
Subsidiaries, or by the Company and one or more other Subsidiaries.             

"Unrestricted Subsidiary" means any Subsidiary of the Company that is not a 
Restricted Subsidiary.                                                          

Unless otherwise indicated in the applicable Prospectus Supplement, the     
Indentures do not limit the amount of Debt that may be incurred by the Company  
or its Subsidiaries or contain covenants specifically designed to protect       
holders of Debt Securities in the event of a highly leveraged transaction,      
restructuring, change in control, merger or similar transaction involving the   
Company that may adversely affect holders of Debt Securities.                   

EVENTS OF DEFAULT                                                               

Any one of the following events will constitute an Event of Default under   
the Indentures with respect to Debt Securities of any series: (a) failure to    
pay any interest on any Debt Security of that                                   

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series when due, continued for 30 days; (b) failure to pay principal of or any  
premium on any Debt Security of that series when due; (c) failure to deposit    
any sinking fund payment, when due, in respect of any Debt Security of that     
series; (d) failure to perform, or breach of, any covenant or warranty of the   
Company in the Indenture with respect to Debt Securities of that series         
continued for 90 days after written notice as provided in the Indenture; (e) a  
default under any indebtedness for money borrowed by the Company or any         
Subsidiary if (A) such default either (1) results from the failure to pay the   
principal of any such indebtedness at its stated maturity or (2) relates to an  
obligation other than the obligation to pay the principal of such indebtedness  
at its stated maturity and results in such indebtedness becoming or being       
declared due and payable prior to the date on which it would otherwise become   
due and payable, (B) the principal amount of such indebtedness, together with   
the principal amount of any other such indebtedness in default for failure to   
pay principal at stated maturity or the maturity of which has been so           
accelerated, aggregates $50 million or more at any one time outstanding and     
(C) such indebtedness is not discharged, or such acceleration is not rescinded  
or annulled, within 30 days after written notice as provided in the Indenture;  
(f) certain events of bankruptcy, insolvency or reorganization of the Company;  
or (g) any other Event of Default provided with respect to Debt Securities of   
that series. (Section 501)                                                      

If an Event of Default (other than an Event of Default described in clause
(f) of the preceding paragraph) with respect to the Debt Securities of any      
series at the time Outstanding shall occur and be continuing, either the        
Trustee or the Holders of at least 25% in aggregate principal amount of the     
Outstanding Debt Securities of that series may accelerate the maturity of all   
Debt Securities of that series; provided, however, that after such              
acceleration, but before a judgment or decree based on acceleration, the        
Holders of a majority in aggregate principal amount of the Outstanding Debt     
Securities of that series may, under certain circumstances, rescind and annul   
such acceleration if all Events of Default, other than the non-payment of       
accelerated principal, have been cured or waived as provided in the Applicable  
Indenture. If an Event of Default described in clause (f) of the immediately    
preceding paragraph occurs, the Outstanding Debt Securities will ipso facto     
become immediately due and payable without any declaration or other act on the  
part of the Trustee or any Holder. (Section 502)                                

Reference is made to the applicable Prospectus Supplement relating to any   
series of Offered Debt Securities that are Original Issue Discount Debt         
Securities for the particular provisions relating to acceleration of the        
Stated Maturity of a portion of the principal amount of such series of          
Original Issue Discount Debt Securities upon the occurrence of an Event of      
Default and the continuation thereof.                                           

Each Indenture provides that, subject to the duty of the Trustee under such 
Indenture during default to act with the required standard of care, such        
Trustee will be under no obligation to exercise any of its rights or powers     
under such Indenture at the request or direction of any of the holders of Debt  
Securities, unless such holders shall have offered to the Trustee reasonable    
indemnity. (Section 603) Subject to such provisions for the indemnification of  
the Trustee and to certain other conditions, the holders of a majority in       
aggregate principal amount of the Outstanding Debt Securities of any series     
will have the right to direct the time, method and place of conducting any      
proceeding for any remedy available to the Trustee under the Applicable         
Indenture, or exercising any trust or power conferred on such Trustee, with     
respect to the Debt Securities of that series. (Section 512)                    

No holder of Debt Securities of any series will have any right to institute 
any proceeding with respect to the Applicable Indenture or for any remedy       
thereunder, unless such holder shall have previously given to the Trustee       
under such Indenture written notice of a continuing Event of Default and        
unless the holders of at least 25% in principal amount of the Outstanding Debt  
Securities of that series shall have made written request, and offered          
reasonable indemnity, to such Trustee to institute such proceeding as trustee,  
and such Trustee shall not have received from the holders of a majority in      
aggregate principal amount of the Outstanding Debt Securities of that series a  
direction inconsistent with such request and shall have failed to institute     
such proceeding within 60 days. (Section 507)                                   

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However, such limitations do not apply to a suit instituted by a holder of      
Debt Securities for enforcement of payment of the principal of and premium, if  
any, or interest on such Debt Securities on or after the respective due dates   
expressed in such Debt Securities. (Section 508)                                

The Company is required to furnish to the Trustee under each Indenture      
annually a statement as to the performance by the Company of certain of its     
obligations under such Indenture and as to any default in such performance.     
(Section 1004)                                                                  

MODIFICATION AND WAIVER                                                         

Modifications and amendments of the Indentures may be made by the Company   
and the respective Trustees without the consent of the holders of any of the    
Debt Securities in order (i) to evidence the succession of another entity to    
the Company and the assumption of the covenants and obligations of the Company  
under the Debt Securities and the Indentures by such successor to the Company;  
(ii) to add to the covenants of the Company for the benefit of the holders of   
all or any series of Debt Securities or to surrender any right or power         
conferred on the Company by the Indentures; (iii) to add additional Events of   
Default with respect to any series of Debt Securities; (iv) to add to or        
change any provisions to such extent as may be necessary to permit or           
facilitate the issuance of Debt Securities in bearer form or to facilitate the  
issuance of Book-Entry Securities; (v) to add to, change or eliminate any       
provision affecting only Debt Securities not yet issued; (vi) to secure the     
Debt Securities; (vii) to establish the form or terms of Debt Securities of     
any series; (viii) to evidence and provide for successor Trustees or to add or  
change any provisions to such extent as may be necessary to provide for or      
facilitate the appointment of a separate Trustee or Trustees for specific       
series of Debt Securities; (ix) to permit payment in respect of Debt            
Securities in bearer form or coupons in the United States to the extent         
allowed by law; (x) to cure any ambiguity, to correct or supplement any         
mistaken or inconsistent provisions or to make any other provisions with        
respect to matters or questions arising under the Indentures, provided that     
any such action does not adversely affect in any material respect the           
interests of any holder of Debt Securities of any series then outstanding       
under the Applicable Indenture. (Section 901)                                   

Modifications and amendments of each Indenture also may be made by the      
Company and the Trustee under such Indenture with the consent of the holders    
of not less than a majority in principal amount of the Outstanding Debt         
Securities of each series issued under such Indenture and adversely affected    
by the modification or amendments; provided, however, that no such              
modification or amendment may, without the consent of the holders of all Debt   
Securities under such Indenture affected thereby, (i) change the Stated         
Maturity of the principal amount of, or any installment of principal of or      
interest on, any Debt Security; (ii) reduce the principal amount of, or the     
premium, if any, or (except as otherwise provided in the applicable Prospectus  
Supplement) interest on any Debt Security (including in the case of an          
Original Issue Discount Debt Security the amount payable upon acceleration of   
the maturity thereof); (iii) change the place or currency of payment of         
principal of, premium, if any, or interest on any Debt Security; (iv) impair    
the right to institute suit for the enforcement of any payment on any Debt      
Security on or after the Stated Maturity thereof (or in the case of             
redemption, on or after the Redemption Date); (v) adversely affect any right    
of the holders to require the Company to repurchase Debt Securities; (vi) in    
the case of Subordinated Debt Securities, adversely affect any right to         
convert such Debt Securities or modify the subordination provisions in a        
manner adverse to the holders of the Debt Securities in any material respect;   
or (vii) reduce the percentage in principal amount of Outstanding Debt          
Securities of any series, the consent of whose holders is required for          
modification or amendment of the Applicable Indenture or for waiver of          
compliance with certain provisions of the Applicable Indenture or for waiver    
of certain defaults. (Section 902)                                              

The holders of at least a majority in principal amount of the Outstanding   
Debt Securities of any series may, on behalf of all holders of Debt Securities  
of that series, waive compliance by the                                         

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Company with certain restrictive provisions of the Applicable Indenture.        
(Section 1010) The holders of not less than a majority in aggregate principal   
amount of the Outstanding Debt Securities of any series may, on behalf of all   
holders of Debt Securities of that series, waive any past default under the     
Applicable Indenture, except a default in the payment of principal, premium,    
if any, or interest or in respect of a covenant or provision of the Applicable  
Indenture that cannot be modified or amended without the consent of the holder  
of each Outstanding Debt Security of such series affected thereby. (Section     
513)                                                                            

CONSOLIDATION, MERGER AND SALE OF ASSETS                                        

Each Indenture provides that the Company may not consolidate with or merge  
with or into any other entity or transfer or lease its assets substantially as  
an entirety to any entity, unless (i) either the Company is the continuing      
corporation, or any successor or purchaser is a corporation, partnership or     
trust validly organized under the laws of the United States of America, any     
State thereof or the District of Columbia, and any such successor or purchaser  
expressly assumes the Company's obligations on the Debt Securities under a      
supplemental indenture, (ii) immediately after giving effect to the             
transaction, no Event of Default thereunder, and no event which, after notice   
or lapse of time or both, would become an Event of Default thereunder, shall    
have occurred and be continuing, (iii) in the case of the Senior Indenture, if  
properties or assets of the Company become subject to a Mortgage not permitted  
by the Senior Indenture, the Company or such successor entity, as the case may  
be, takes such steps as shall be necessary effectively to secure the Senior     
Debt Securities equally and ratably with (or prior to) all Debt secured         
thereby, and (iv) if a supplemental indenture is to be executed in connection   
with such consolidation, merger, transfer or lease, the Company has delivered   
to the Trustee under such Indenture an officers' certificate and an opinion of  
counsel stating compliance with these provisions. (Section 801)                 

DEFEASANCE OF OFFERED DEBT SECURITIES OR CERTAIN COVENANTS IN CERTAIN           
CIRCUMSTANCES                                                                   

Defeasance and Discharge                                                      

The Indentures provide that the terms of any series of Debt Securities may  
provide that the Company, at the Company's option, will be discharged from any  
and all obligations in respect of the Debt Securities of such series (except    
for certain obligations to register the transfer or exchange of Debt            
Securities of such series, to replace stolen, destroyed, lost or mutilated      
Debt Securities of such series, to maintain paying agencies and to hold moneys  
for payment in trust) upon the deposit with the applicable Trustee, in trust,   
of money and/or U.S. Government Obligations which, through the payment of       
interest and principal thereof in accordance with their terms, will provide     
money in an amount sufficient to pay any installment of principal, premium, if  
any, and interest on, and any mandatory sinking fund payments in respect of,    
the Debt Securities of such series on the Stated Maturity of such payments in   
accordance with the terms of the Applicable Indenture and such Debt             
Securities. Such discharge may only occur if, among other things, the Company   
has delivered to the Trustee an opinion of counsel to the effect that the       
Company has received from, or there has been published by, the United States    
Internal Revenue Service a ruling, or there has been a change in tax law, in    
either case to the effect that such discharge will not be deemed, or result     
in, a taxable event with respect to holders of the Debt Securities of such      
series. (Sections 1302 and 1304 of the Senior Indenture and Sections 1502 and   
1504 of the Subordinated Indenture)                                             

Defeasance of Certain Covenants Applicable to the Senior Debt Securities      

The Senior Indenture provides that the terms of any series of Senior Debt   
Securities may provide the Company with the option to be released from certain  
restrictive covenants described in this Prospectus under "--Certain Covenants   
of the Company Applicable to Senior Debt                                        

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Securities--Limitations on Liens", "--Certain Covenants of the Company          
Applicable to Senior Debt Securities--Limitation on Sale and Leaseback          
Transactions" and the Indentures provide that the terms of any series of Debt   
Securities may provide the Company with the option to be released from the      
restrictive covenant described in the Prospectus under "--Consolidation,        
Merger and Sale of Assets". The Company, in order to exercise such option,      
will be required to deposit with the Trustee money and/or U.S. Government       
Obligations which, through the payment of interest and principal thereof in     
accordance with their terms, will provide money in an amount sufficient to pay  
principal, premium, if any, and interest on, and any mandatory sinking fund     
payments in respect of, the Debt Securities of such series on the Stated        
Maturity of such payments in accordance with the terms of the Applicable        
Indenture and such Debt Securities. The Company will also be required to        
deliver to the applicable Trustee an opinion of counsel to the effect that the  
deposit and related covenant defeasance will not cause the holders of the Debt  
Securities of such series to recognize income, gain or loss for federal income  
tax purposes. (Sections 1303 and 1304 of the Senior Indenture and Sections      
1503 and 1504 of the Subordinated Indenture)                                    

In the event the Company exercises this option and the Debt Securities of   
such series are declared due and payable because of the occurrence of any       
Event of Default, the amount of money and U.S. Government Obligations on        
deposit with the applicable Trustee will be sufficient to pay amounts due on    
the Debt Securities of such series at the time of their Stated Maturity but     
may not be sufficient to pay amounts due on the Debt Securities of such series  
at the time of the acceleration resulting from such Event of Default. However,  
the Company shall remain liable for such payments.                              

The applicable Prospectus Supplement will state if any defeasance provisions
will apply to the Offered Debt Securities.                                      

TRUSTEES                                                                        

The First National Bank of Chicago is the Trustee under the Senior Indenture
and The Bank of New York is the Trustee under the Subordinated Indenture. Each  
Trustee may resign or be removed with respect to one or more series of Debt     
Securities under the Applicable Indenture and a successor Trustee may be        
appointed to act with respect to such series. (Section 610). In the event that  
two or more persons are acting as Trustee with respect to different series of   
Debt Securities, each such Trustee shall be a Trustee of a trust under the      
related Indenture separate and apart from the trust administered by any other   
such Trustee (Section 611), and any action described herein to be taken by the  
"Trustee" may then be taken by each such Trustee with respect to, and only      
with respect to, the one or more series of Securities for which it is Trustee.  

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DESCRIPTION OF WARRANTS 

The following summary of each Warrant Agreement, the Warrants and the       
Warrant Certificates (as defined below) does not purport to be complete and is  
qualified in its entirety by reference to the Warrant Agreement with respect    
to the Warrants of any particular series, which are or will be incorporated by  
reference as exhibits to the Registration Statement of which this Prospectus    
is a part in connection with the issuance of such Warrants.                     

The following summary of the Warrant Agreements, the Warrants and the       
Warrant Certificates relates to certain terms and conditions applicable to the  
Warrants generally. The particular terms of any series of Warrants will be      
described in the applicable Prospectus Supplement. If so indicated in such      
Prospectus Supplement, the terms of any such series may differ from the terms   
set forth below.                                                                

GENERAL                                                                         

The Company may issue Warrants for the purchase of Debt Securities,         
Preferred Stock, Depositary Shares or Common Stock. Warrants may be issued      
independently or together with Debt Securities, Preferred Stock, Depositary     
Shares or Common Stock, and may be attached to or separate from such            
Securities.                                                                     

Each series of Warrants will be evidenced by certificates (the "Warrant     
Certificates") issued pursuant to a separate Warrant Agreement to be entered    
into between the Company and a bank selected by the Company with respect to     
such series, having its principal office in the United States and having        
combined capital and surplus of at least $50,000,000 (with respect to such      
series, the "Warrant Agreement"). The applicable Prospectus Supplement          
relating to a series of Warrants will set forth the name and address of the     
Warrant Agent.                                                                  

The applicable Prospectus Supplement will describe the terms of the series  
of Warrants in respect of which this Prospectus is being delivered, including:  
(1) the offering price; (2) the currency for which such Warrants may be         
purchased; (3) if applicable, the designation and terms of the Securities with  
which the Warrants are issued and the number of Warrants issued with each such  
Security or each principal amount of such Security; (4) if applicable, the      
date on and after which the Warrants and the related Securities will be         
separately transferable; (5) in the case of Warrants to purchase Debt           
Securities, the principal amount of Debt Securities purchasable upon exercise   
of one Warrant and the price at and currency in which such principal amount of  
Debt Securities may be purchased upon such exercise and, in the case of         
Warrants to purchase Preferred Stock, Depositary Shares or Common Stock, the    
number of Depositary Shares or shares of Preferred Stock or Common Stock, as    
the case may be, purchasable upon the exercise of one Warrant and the price at  
which such shares may be purchased upon such exercise; (6) the date on which    
the right to exercise the Warrants will commence and the date on which such     
right or rights will expire (the "Expiration Date"); (7) certain federal        
income tax consequences of holding or exercising such Warrants; (8) the terms   
of the Securities issuable upon exercise of such Warrants; and (9) any other    
terms of the Warrants.                                                          

Warrant Certificates may be exchanged for new Warrant Certificates of       
different denominations, may be presented for registration of transfer, and     
may be exercised at the corporate trust office of the Warrant Agent or any      
other office indicated in the applicable Prospectus Supplement. If the          
Warrants are not separately transferrable from the Securities with which they   
were issued, such exchange may take place only in connection with an exchange   
of the certificates representing such related Securities. Prior to the          
exercise of their Warrants, holders of Warrants will not have any of the        
rights of holders of the Securities purchasable upon such exercise, including,  
in the case of Warrants to purchase Debt Securities, the right to receive       
payments of principal of, premium, if any, or interest, if any, on the Debt     
Securities purchasable upon such exercise or to enforce covenants in the        
applicable Indenture or, in the case of Warrants to purchase Preferred Stock,   
Depositary Shares or Common Stock, the right to                                 

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receive dividends, if any, or payments upon the liquidation, dissolution or     
winding up of the Company or to exercise voting rights, if any.                 

EXERCISE OF WARRANTS                                                            

Each Warrant will entitle the holder to purchase the Securities specified in
the applicable Prospectus Supplement at the exercise price set forth in, or     
calculated as described in, the applicable Prospectus Supplement. Unless        
otherwise specified in the applicable Prospectus Supplement, Warrants may be    
exercised at any time up to 5:00 P.M. New York time on the Expiration Date set  
forth in such Prospectus Supplement. After the close of business on the         
Expiration Date, unexercised Warrants will become void.                         

Warrants may be exercised by delivery of the Warrant Certificate            
representing the Warrants to be exercised together with certain information,    
and payment to the Warrant Agent in immediately available funds, as provided    
in the applicable Prospectus Supplement of the amount required to purchase the  
Securities purchasable upon such exercise. The information required to be       
delivered will be set forth on the reverse side of the Warrant Certificate and  
in the applicable Prospectus Supplement. Upon receipt of such payment and the   
Warrant Certificate properly completed and duly executed at the corporate       
trust office of the Warrant Agent or any other office indicated in the          
applicable Prospectus Supplement, the Company will, in the time period          
provided by the applicable Warrant Agreement, issue and deliver the Securities  
purchasable upon such exercise. If fewer than all of the Warrants represented   
by such Warrant Certificate are exercised, a new Warrant Certificate will be    
issued for the remaining amount of Warrants.                                    

If so indicated in the applicable Prospectus Supplement, Securities may be  
surrendered as all or part of the exercise price for Warrants.                  

ANTIDILUTION PROVISIONS                                                         

In the case of Warrants to purchase Common Stock, the exercise price payable
and the number of shares of Common Stock purchasable upon the exercise of each  
Warrant will be subject to adjustment in certain events. No fractional shares   
will be issued upon exercise of Warrants, but the Company will pay cash value   
of any fractional shares otherwise issuable.                                    

MODIFICATION                                                                    

Any Warrant Agreement and the terms of the related Warrants may be amended  
by the Company and the applicable Warrant Agent by executing a supplemental     
warrant agreement (a "Supplemental Agreement"), without the consent of the      
holders of any such Warrants, for the purpose of (i) curing any ambiguity, or   
curing, correcting or supplementing any defective or inconsistent provision     
contained therein, or making any other provisions with respect to matters or    
questions arising under the Warrant Agreement that is not inconsistent with     
the provisions of the Warrant Agreement or the Warrant Certificates, (ii)       
evidencing the succession of another corporation to the Company and the         
assumption by any such successor of the covenants of the Company contained in   
such Warrant Agreement and the Warrants, (iii) appointing a successor Warrant   
Agent, (iv) evidencing and providing for the acceptance of appointment by a     
successor Warrant Agent with respect to the Warrants, (v) adding to the         
covenants of the Company for the benefit of the holders of such Warrants or     
surrendering any right or power conferred upon the Company under the Warrant    
Agreement, (vi) issuing Warrants in definitive form, if such Warrants are       
initially issued in the form of Global Securities, or (vii) amending the        
Warrant Agreement and the Warrants in any manner that the Company may deem to   
be necessary or desirable and that will not adversely affect the interests of   
the holders of such Warrants in any material respect.                           

The Company and the Warrant Agent may also amend any Warrant Agreement and  
the terms of the related Warrants by executing a Supplemental Agreement with    
the consent of the holders of not                                               

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less than a majority in number of the unexercised Warrants affected by such     
amendment, for the purpose of adding any provisions to or modifying in any      
manner or eliminating any of the provisions of such Warrant Agreement or of     
modifying in any manner the rights of the holders of such Warrants, except      
that no such amendment that (i) changes the number or amount of Securities      
purchasable upon exercise of such Warrants so as to reduce the number or        
amount of Securities receivable upon such exercise, (ii) shortens the period    
of time during which the Warrants may be exercised, (iii) otherwise adversely   
affects the exercise rights of the holders of such Warrants in any material     
respect, or (iv) reduces the number of unexercised Warrants the consent of      
holders of which is required for amendment of the Warrant Agreement or the      
related Warrants, may be made without the consent of each holder affected       
thereby.                                                                        

CONSOLIDATION, MERGER AND SALE OF ASSETS                                        

Each Warrant Agreement will provide that the Company may consolidate or     
merge with or into any other Company or sell, lease, transfer or convey all or  
substantially all of its assets to any other Company, provided that (i) either  
the Company must be the continuing corporation, or the corporation (if other    
than the Company) that is formed by or results from any such consolidation or   
merger or that receives such assets must be a corporation organized and         
existing under the laws of the United States of America or a state thereof and  
must assume the obligations of the Company with respect to all the unexercised  
Warrants and the performance and observance of all of the covenants and         
conditions of the applicable Warrant Agreement to be performed or observed by   
the Company and (ii) the Company or such successor corporation, as the case     
may be, must not immediately be in default under such Warrant Agreement.        

ENFORCEABILITY OF RIGHTS BY HOLDERS OF WARRANTS                                 

Each Warrant Agent will act solely as the agent of the Company under the    
applicable Warrant Agreement and will not assume any obligation or              
relationship of agency or trust for or with any holder of any Warrant. A        
single bank or trust company may act as Warrant Agent for more than one issue   
of Warrants. A Warrant Agent will have no duty or responsibility in case of     
any default by the Company in the performance of its obligations under the      
applicable Warrant Agreement or Warrant including, without limitation, any      
duty or responsibility to initiate any proceedings at law or otherwise or to    
make any demand upon the Company. Any holder of a Warrant may, without the      
consent of the related Warrant Agent or the holder of any other Warrant,        
enforce by appropriate legal action, in and for its own behalf, its right to    
exercise, and receive the Securities purchasable upon exercise of, its          
Warrants.                                                                       

RESIGNATION AND APPOINTMENT OF WARRANT AGENT                                    

A Warrant Agent shall be provided by the Company until all the Warrants     
issued have been exercised or expired in accordance with their terms. The       
Warrant Agent may resign at any time by giving the Company notice of its        
election and the Company may at any time remove a Warrant Agent, and such       
resignation or removal shall take effect upon the appointment of a successor    
Warrant Agent and its acceptance of such appointment. The Warrant Agent and     
any successor Warrant Agent shall be a bank or trust company having its office  
or agent's office in the United States and having a combined capital and        
surplus of at least $50,000,000.                                                

TITLE                                                                           

The Company, the Warrant Agents and any agent of the Company or the         
applicable Warrant Agent may treat the registered holder of any Warrant         
Certificate as the absolute owner of the Warrants evidenced thereby             
(notwithstanding any notice to the contrary) for any purpose and as the person  
entitled to exercise the rights attaching to the Warrants requested thereby,    
any notice to the contrary notwithstanding. See "Book-Entry Securities" below.  

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BOOK-ENTRY SECURITIES 

Unless otherwise specified in the applicable Prospectus Supplement,         
Securities other than Common Stock will be issued in the form of one or more    
book-entry certificates (collectively, with respect to each series or issue of  
Securities, the "Book-Entry Security") registered in the name of a depositary   
or a nominee of a depositary. Unless otherwise specified in the applicable      
Prospectus Supplement, the depositary will be The Depository Trust Company      
("DTC"). The Company has been informed by DTC that its nominee will be Cede &   
Co. ("Cede"). Accordingly, Cede is expected to be the initial registered        
holder of all Securities that are issued in book-entry form. No person that     
acquires a beneficial interest in such Securities will be entitled to receive   
a certificate representing such person's interest in the Securities except as   
set forth herein or in the applicable Prospectus Supplement. Unless and until   
definitive Securities are issued under the limited circumstances described      
below, all references to actions by holders of Securities issued in book-entry  
form shall refer to actions taken by DTC upon instructions from its             
Participants (as defined below), and all references herein to payments and      
notices to holders shall refer to payments and notices to DTC or Cede, as the   
registered holder of such Securities.                                           

DTC has informed the Company that it is a limited purpose trust company     
organized under the New York Banking Law, a "banking organization" within the   
meaning of the New York Banking Law, a member of the Federal Reserve System, a  
"clearing company" within the meaning of the New York Uniform Commercial Code   
and a "clearing agency" registered pursuant to Section 17A of the Exchange      
Act, and that it was created to hold securities for its participating           
organizations ("Participants") and to facilitate the clearance and settlement   
of securities transactions among Participants through electronic book-entry,    
thereby eliminating the need for physical movement of certificates.             
Participants include securities brokers and dealers, banks, trust companies     
and clearing corporations, and may include certain other organizations.         
Indirect access to the DTC system also is available to others such as banks,    
brokers, dealers and trust companies that clear through or maintain a           
custodial relationship with a Participant, either directly or indirectly        
("Indirect Participants").                                                      

Persons that are not Participants or Indirect Participants but desire to    
purchase, sell or otherwise transfer ownership of, or other interests in,       
Securities may do so only through Participants and Indirect Participants.       
Under a book-entry format, Holders may experience some delay in their receipt   
of payments, as such payments will be forwarded by the agent designated by the  
Company to Cede, as nominee for DTC. DTC will forward such payments to its      
Participants, which thereafter will forward them to Indirect Participants or    
Holders. Holders will not be recognized by the applicable registrar, transfer   
agent, Trustee, Depositary or Warrant Agent as registered holders of the        
Securities entitled to the benefits of the Certificate or the applicable        
Indenture, Deposit Agreement or Warrant Agreement. Beneficial owners that are   
not Participants will be permitted to exercise their rights as such only        
indirectly through and subject to the procedures of Participants and, if        
applicable, Indirect Participants.                                              

Under the rules, regulations and procedures creating and affecting DTC and  
its operations as currently in effect (the "Rules"), DTC will be required to    
make book-entry transfers of Securities among Participants and to receive and   
transmit payments to Participants. Participants and Indirect Participants with  
which beneficial owners of Securities have accounts with respect to the         
Securities similarly are required by the Rules to make book-entry transfers     
and receive and transmit such payments on behalf of their respective account    
holders.                                                                        

Because DTC can act only on behalf of Participants, who in turn act only on 
behalf of Participants or Indirect Participants, and on behalf of certain       
banks, trust companies and other persons approved by it, the ability of a       
beneficial owner of Securities issued in book-entry form to pledge such         
Securities to persons or entities that do not participate in the DTC system,    
or to otherwise act with respect to such Securities, may be limited due to the  
unavailability of physical certificates for such Securities.                    

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DTC has advised the Company that DTC will take any action permitted to be   
taken by a registered holder of any Securities under the Certificate or the     
applicable Indenture, Deposit Agreement or Warrant Agreement only at the        
direction of one or more Participants to whose accounts with DTC such           
Securities are credited.                                                        

Unless otherwise specified in the applicable Prospectus Supplement, a Book- 
Entry Security will be exchangeable for the relevant definitive Securities      
registered in the names of persons other than DTC or its nominee only if (i)    
DTC notifies the Company that it is unwilling or unable to continue as          
depository for such Book-Entry Security or if at any time DTC ceases to be a    
clearing agency registered under the Exchange Act at a time when DTC is         
required to be so registered in order to act as such depository, (ii) the       
Company executes and delivers to the applicable registrar, transfer agent,      
Trustee, Depositary and/or Warrant Agent an order complying with the            
requirements of the Certificate or the applicable Indenture, Deposit Agreement  
and/or Warrant Agreement that such Book-Entry Security shall be so              
exchangeable or (iii) there has occurred and is continuing a default in the     
payment of any amount due in respect of the Securities or, in the case of Debt  
Securities, an Event of Default or an event that, with the giving of notice or  
lapse of time, or both, would constitute an Event of Default with respect to    
such Debt Securities. Any Book-Entry Security that is exchangeable pursuant to  
the preceding sentence will be exchangeable for Securities registered in such   
names as DTC directs.                                                           

Upon the occurrence of any event described in the immediately preceding     
paragraph, DTC is generally required to notify all Participants of the          
availability through DTC of definitive Securities. Upon surrender by DTC of     
the Book-Entry Security representing the Securities and delivery of             
instructions for re-registration, the registrar, transfer agent, Trustee,       
Depositary or Warrant Agent, as the case may be, will reissue the Securities    
as definitive Securities, and thereafter such persons will recognize the        
holders of such definitive Securities as registered holders of Securities       
entitled to the benefits of the Certificate or the applicable Indenture,        
Deposit Agreement and/or Warrant Agreement.                                     

Except as described above a Book-Entry Security may not be transferred      
except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or   
another nominee of DTC or to a successor depositary appointed by the Company.   
Except as described above, DTC may not sell, assign, transfer or otherwise      
convey any beneficial interest in a Book-Entry Security evidencing all or part  
of any Securities unless such beneficial interest is in an amount equal to an   
authorized denomination for such Securities.                                    

None of the Company, the Trustees, any registrar and transfer agent, any    
Warrant Agent or any Depositary, or any agent of any of them, will have any     
responsibility or liability for any aspect of DTC's or any Participant's        
records relating to, or for payments made on account of, beneficial interests   
in a Book-Entry Security, or for maintaining, supervising or reviewing any      
records relating to such beneficial interests.                                  

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PLAN OF DISTRIBUTION  

The Company may sell the Securities to one or more underwriters for public  
offering and sale by them or may sell the Securities to investors directly or   
through agents, which agents may be affiliated with the Company. Any such       
underwriter or agent involved in the offer and sale of the Securities will be   
named in the applicable Prospectus Supplement.                                  

Sales of Securities offered pursuant to any applicable Prospectus Supplement
may be effected from time to time in one or more transactions at a fixed price  
or prices which may be changed, at prices related to the prevailing market      
prices at the time of sale or at negotiated prices. The Company also may, from  
time to time, authorize underwriters acting as the Company's agents to offer    
and sell the Securities upon the terms and conditions set forth in the          
applicable Prospectus Supplement. In connection with the sale of Securities,    
underwriters may be deemed to have received compensation from the Company in    
the form of underwriting discounts or commissions and may also receive          
commissions from purchasers of Securities for whom they may act as agent.       
Underwriters may sell Securities to or though dealers, and such dealers may     
receive compensation in the form of discounts, concessions or commissions from  
the underwriters and/or commissions from purchasers of Securities for whom      
they may act as agent.                                                          

Any underwriting compensation paid by the Company to underwriters or agents 
in connection with the offering of Securities, and any discounts, concessions   
or commissions allowed by underwriters to participating dealers, will be set    
forth in the applicable Prospectus Supplement. Underwriters, dealers and        
agents participating in the distribution of the Securities may be deemed to be  
underwriters, and any discounts, concessions or commissions received by them    
and any profit realized by them on resale of the Securities may be deemed to    
be underwriting discounts and commissions under the Securities Act.             
Underwriters, dealers and agents may be entitled, under agreements entered      
into with the Company, to indemnification against and contribution toward       
certain civil liabilities, including liabilities under the Securities Act. Any  
such indemnification arrangements will be described in the applicable           
Prospectus Supplement.                                                          

Unless otherwise specified in the applicable Prospectus Supplement, each    
class or series of Securities will be a new issue with no established trading   
market. The Company may elect to list any class or series of Securities on any  
exchange, but is not obligated to do so. It is possible that one or more        
underwriters may make a market in a class or series of Securities, but will     
not be obligated to do so and may discontinue any market making at any time     
without notice. No assurance can be given as to the liquidity of the trading    
market for the Securities.                                                      

Certain of the underwriters, agents and their affiliates may be customers   
of, engage in transactions with and perform services from the Company in the    
ordinary course of business.                                                    

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VALIDITY OF SECURITIES  

The validity of any Securities will be passed upon for the Company by Norman
L. Roberts, Esq., Senior Vice President and General Counsel of the Company,     
and for any underwriters or agents by Sullivan & Cromwell, Los Angeles,         
California. Mr. Roberts beneficially owns 8,715 shares of Common Stock and      
holds options to purchase 100,000 additional shares of Common Stock.            

EXPERTS 

The combined financial statements incorporated in this Prospectus by        
reference from the Company's Registration Statement on Form 10 filed on August  
18, 1997, as amended by Amendment No. 1 thereto filed on October 1, 1997 and    
Amendment No. 2 thereto filed on October 22, 1997 have been audited by          
Deloitte & Touche LLP, independent auditors, as stated in their report, which   
is incorporated herein by reference, and have been so incorporated in reliance  
upon the report of such firm given upon their authority as experts in           
accounting and auditing. The August 31, 1996 consolidated financial statements  
of Norand Corporation incorporated in this Prospectus by reference from the     
Company's Registration Statement on Form 10 filed on August 18, 1997, as        
amended by Amendment No. 1 thereto filed on October 1, 1997 and Amendment No.   
2 thereto filed on October 22, 1997 have been audited by Arthur Andersen LLP,   
independent public accountants, as stated in their report, which is             
incorporated herein by reference, and have been so incorporated in reliance     
upon the report of such firm given upon their authority as experts in           
accounting and auditing.                                                        

41  

424B1
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY        
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR     
THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS      
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT   
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF    
AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS      
PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO    
BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION    
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE          
PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY           
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE      
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED  
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.             

----------- 

TABLE OF CONTENTS 
PROSPECTUS SUPPLEMENT 

                                                                [Download Table]

                                                                         PAGE 
                                                                         -----
                                                                              
The Company.............................................................   S-3
Selected Combined Historical Financial Data.............................   S-7
Selected Pro Forma Combined Financial Data..............................   S-8
Use of Proceeds.........................................................   S-8
Capitalization..........................................................   S-9
Management's Discussion and Analysis of Financial Condition and Results       
 of Operations..........................................................  S-10
Description of the Notes................................................  S-15
Underwriting............................................................  S-17
Validity of the Notes...................................................  S-18
                                  PROSPECTUS                                  
Available Information...................................................     2
Incorporation of Certain Documents by Reference.........................     3
The Company.............................................................     4
Use of Proceeds.........................................................     4
Ratio of Earnings to Fixed Charges......................................     4
Description of Common Stock.............................................     5
Description of Preferred Stock..........................................    18
Description of Depositary Shares........................................    22
Description of Debt Securities..........................................    25
Description of Warrants.................................................    35
Book-Entry Securities...................................................    38
Plan of Distribution....................................................    40
Validity of Securities..................................................    41
Experts.................................................................    41

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$200,000,000  

UNOVA, INC. 

$100,000,000  
6.875% NOTES DUE MARCH 15, 2005 

$100,000,000  
7.00% NOTES DUE MARCH 15, 2008  

----------- 

[LOGO OF UNOVA, INC]    

----------- 

GOLDMAN, SACHS & CO.  

CREDIT SUISSE FIRST BOSTON  

J.P. MORGAN & CO. 

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B1’ Filing		Date		First		Last			Other Filings
		3/15/08		1		60
		9/24/07		23		25
		3/15/05		1		60
		9/15/98		1		15
		3/11/98		1		15
Filed on:		3/10/98
		3/6/98		1					SC 13G/A
		1/16/98		1		19
		1/15/98		21					10-Q/A,  S-3/A
		12/31/97		13		15			10-K405
		12/24/97		21					8-K
		11/26/97		21					10-Q
		10/31/97		3		23			3/A
		10/22/97		21		59			10-12B/A
		10/1/97		21		59			10-12B/A
		9/30/97		3		22			10-Q,  10-Q/A
		8/18/97		21		59			10-12B
		4/4/97		11
		3/3/97		11
		12/31/96		3		22
		9/30/96		7		12
		8/31/96		59
		1/1/96		8
		12/31/95		7		12
		12/31/94		7		12
		12/31/93		22
		7/31/93		22
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