Edgar Filing: STEEL PARTNERS II L P

sec document

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

(Amendment No. 2)

Filed by the Registrant / /

Filed by a Party other than the Registrant /X/

Check the appropriate box:

/X/ Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12

SL INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)

THE RORID COMMITTEE
STEEL PARTNERS II, L.P.
WARREN G. LICHTENSTEIN
NEWCASTLE PARTNERS, L.P.
MARK E. SCHWARZ
GLEN KASSAN
JAMES R. HENDERSON
STEVEN WOLOSKY
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required.

/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction
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(2) Aggregate number of securities to which transaction
applies:

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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:

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/ / Fee paid previously with preliminary materials:

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/ / Check box if any part of the fee is offset as provided
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PRELIMINARY COPY SUBJECT TO COMPLETION
DATED DECEMBER 11, 2001

ANNUAL MEETING OF STOCKHOLDERS
OF
SL INDUSTRIES, INC.
-------------------------

PROXY STATEMENT
OF
THE RORID COMMITTEE
-------------------------

PLEASE MAIL THE ENCLOSED GOLD PROXY CARD

The RORID Committee (formerly known as The SL Full Value Committee)
(the "Committee") is the second largest stockholder of SL Industries, Inc., a
Delaware corporation ("SL" or the "Company"). The Committee is writing to you in
connection with the election of directors to SL's Board of Directors at the
annual meeting of stockholders scheduled to be held on January 22, 2002,
including any adjournments or postponements thereof and any meeting which may be
called in lieu thereof (the "Annual Meeting"). The Committee has nominated its
slate of directors in opposition to the incumbent Board of Directors (the "SL
Board"). The Committee believes that SL's historical financial and stock price
performance has significantly trailed its peer group and recent actions of the
SL Board have not been in the best interests of SL's stockholders. As further
described herein, the Committee is convinced that a more thorough investigation
of strategic alternatives, and a greater dedication to maximizing stockholder
value, will only be achieved through the election of the Committee's slate.

This proxy statement (the "Proxy Statement") and the enclosed GOLD
proxy card are being furnished to stockholders of SL by the Committee in
connection with the solicitation of proxies from SL's stockholders to be used at
the Annual Meeting to elect the Committee's nominees, Warren G. Lichtenstein,
Mark E. Schwarz, James R. Henderson, Glen Kassan and Steven Wolosky (the
"Nominees") to the SL Board. As Nominees for director, Messrs. Lichtenstein,
Schwarz, Henderson, Kassan and Wolosky are deemed to be participants in this
proxy solicitation. As members of the soliciting group, Steel Partners II, L.P.
("Steel") and Newcastle Partners, L.P. ("Newcastle") are also deemed to be
participants in the proxy solicitation. The principal executive offices of SL
are located at 520 Fellowship Road, Suite A114, Mt. Laurel, New Jersey 08054.
This Proxy Statement and the GOLD proxy card are first being furnished to SL's
stockholders on or about December __, 2001.

SL has set the record date for determining stockholders entitled to
notice of and to vote at the Annual Meeting as of December 5, 2001 (the "Record
Date"). Stockholders of record at the close of business on the Record Date will
be entitled to one vote at the Annual Meeting for each Share (as defined herein)
held on the Record Date. According to SL, as of the Record Date, there were
5,710,963 shares of common stock, $.20 par value per share (the "Shares"),
outstanding and entitled to vote at the Annual Meeting. The Committee, along
with all of the participants in this solicitation, are the beneficial owners of
an aggregate of 850,800 Shares which represents approximately 14.9% of the
Shares outstanding (based on information publicly disclosed by SL). The
Committee intends to vote such Shares for the election of the Nominees.

THIS SOLICITATION IS BEING MADE BY THE COMMITTEE AND NOT ON BEHALF
OF THE BOARD OF DIRECTORS OR MANAGEMENT OF SL. THE COMMITTEE IS NOT AWARE OF ANY
OTHER MATTERS TO BE BROUGHT BEFORE THE ANNUAL MEETING OTHER THAN THE
RATIFICATION OF THE APPOINTMENT OF THE COMPANY'S AUDITORS. SHOULD OTHER MATTERS,
WHICH THE COMMITTEE IS NOT AWARE OF A REASONABLE TIME BEFORE THIS SOLICITATION,
BE BROUGHT BEFORE THE ANNUAL MEETING, THE PERSONS NAMED AS PROXIES IN THE
ENCLOSED GOLD PROXY CARD WILL VOTE ON SUCH MATTERS IN THEIR DISCRETION.

WE URGE YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR OF THE
ELECTION OF OUR NOMINEES DESCRIBED IN THIS PROXY STATEMENT.

IF YOU HAVE ALREADY SENT A WHITE PROXY CARD TO THE SL BOARD, YOU MAY REVOKE THAT
PROXY AND VOTE AGAINST THE ELECTION OF SL'S NOMINEES BY SIGNING, DATING AND
RETURNING THE ENCLOSED GOLD PROXY CARD. THE LATEST DATED PROXY IS THE ONLY ONE
THAT COUNTS. ANY PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE ANNUAL MEETING BY
DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER DATED PROXY FOR THE ANNUAL
MEETING TO THE COMMITTEE, C/O INNISFREE M&A INCORPORATED WHO IS ASSISTING IN
THIS SOLICITATION, OR TO THE SECRETARY OF SL, OR BY VOTING IN PERSON AT THE
ANNUAL MEETING.

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IMPORTANT

Your vote is important, no matter how many or how few Shares you
own. The Committee urges you to sign, date, and return the enclosed GOLD proxy
card today to vote FOR the election of the Nominees.

The Nominees are committed, subject to their fiduciary duty to SL's
stockholders, to giving all SL's stockholders the opportunity to receive the
maximum value for their Shares. A vote FOR the Nominees will enable you - as the
owners of SL - to send a message to SL's Board that you are committed to
maximizing the value of your Shares.

o If your Shares are registered in your own name, please sign and date
the enclosed GOLD proxy card and return it to the Committee, c/o
Innisfree M&A Incorporated, in the enclosed envelope today.

o If any of your Shares are held in the name of a brokerage firm,
bank, bank nominee or other institution on the Record Date, only it
can vote such Shares and only upon receipt of your specific
instructions. Accordingly, please contact the person responsible for
your account and instruct that person to execute on your behalf the
GOLD proxy card. The Committee urges you to confirm your
instructions in writing to the person responsible for your account
and to provide a copy of such instructions to the Committee, c/o
Innisfree M&A Incorporated, who is assisting in this
solicitation, at the address and telephone numbers set forth below,
and on the back cover of this proxy statement, so that we may be
aware of all instructions and can attempt to ensure that such
instructions are followed.

If you have any questions regarding your proxy,
or need assistance in voting your Shares, please call:

[INNISFREE M&A INCORPORATED LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022

CALL TOLL FREE: (888) 750-5834
BANKERS AND BROKERS CALL COLLECT: (212) 750-5833

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PROPOSAL I - ELECTION OF DIRECTORS

REASONS FOR THE SOLICITATION

We are asking you to elect our Nominees in order to:

o remove five incumbent directors whose interests, we
believe, are not aligned with the interests of SL's
stockholders;

o take action that we believe would give stockholders the
greatest return on their investment; and

o elect representatives who are committed to maximizing
value for all of SL's stockholders.

As further described below, the Committee believes that the election
of the Nominees represents the best means for SL's stockholders to maximize the
value of their Shares. The Committee, as the second largest stockholder of SL,
has a vested interest in the maximization of the value of the Shares.
Additionally, the Committee believes that the Nominees have extensive experience
in private and public investment, corporate governance and business management.
If elected to the Board, the Nominees will use their collective experience to
explore alternatives to maximize stockholder value including, but not limited
to, the sale of the entire company or divesting assets of SL on a tax efficient
basis.

WE BELIEVE THAT SL'S SHARE PRICE OVER THE PAST SEVERAL YEARS DEMONSTRATES THE
BOARD'S FAILURE TO CREATE VALUE FOR ITS STOCKHOLDERS

o According to information contained in management's proxy
statement for the Annual Meeting (the "Management Proxy
Statement"), during the period from July 31, 1995
through December 31, 2000, SL's Share price performance
trailed the S&P Electrical Equipment Group index by
a significant margin.

o According to the Management Proxy Statement, during this
period SL's Share price performance has trailed its peer
group index by 201 percentage points with cumulative
total returns for the S&P Electrical Equipment Group
index of approximately 308% compared to cumulative total
returns for SL's Shares of approximately 107%.

o On December 29, 2000, the date on which SL last compared
its Share price to its peer group indexes as described
above, the Share price closed at $11.44 per Share. On
December [10], 2001, the day prior to the date of this
Proxy Statement, the Share price closed at [$6.55] per
Share, representing a substantial [43%] decrease since
the beginning of 2001.

Due to the Company's lagging Share price, the NYSE has notified the
Company that it is not in compliance with the market capitalization requirements
for continued listing of the Shares on the NYSE. According to the Company's Form
10-Q for the fiscal quarter ended September 30, 2001 (the "September 30 10-Q"),
the Company must submit a plan to the NYSE no later than December 10, 2001
demonstrating how it intends to achieve and sustain compliance. The Committee is
extremely concerned that the potential delisting of the Shares from the NYSE
could adversely effect stockholders' liquidity.

WE BELIEVE THAT THE SL BOARD'S RESTRUCTURING PLAN IS NOT IN THE BEST INTERESTS
OF THE STOCKHOLDERS

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On March 19, 2001, SL announced that it had engaged Credit Suisse
First Boston to explore a sale of SL and solicited transaction proposals from
potential purchasers. However, in a press release issued by SL on November 5,
2001, the SL Board announced that it did not believe that it was in the best
interests of the stockholders to sell the entire company at that time. The SL
Board further disclosed that it is in the process of negotiating the sale of two
subsidiaries of SL. It is the Committee's opinion that SL should be sold in its
entirety at the current time. The Committee is concerned that the potential sale
of these two subsidiaries will be for substantial losses similar to previous
sales of SL business units, as discussed in the September 30 10-Q, and will not
maximize stockholder value for the SL stockholders in the immediate future.

The Committee believes that SL's Share price has suffered as a
result of continued losses, including losses from operations which have already
been discontinued in the current fiscal year.

o According to the September 30 10-Q, SL realized net
losses of approximately $7.5 million for the nine month
period ended September 30, 2001 compared to net income
of approximately $2.1 million for the comparable period
in 2000.

o According to the September 30 10-Q, SL implemented a
plan to restructure certain of its operations including
(i) the closure of the engineering and sales support
facility of its Condor D.C. Power Supplies subsidiary
("Condor"), (ii) the elimination of personnel at
Condor's manufacturing facility in Reynosa, Mexico and
Mexicali, Mexico and headquarters in Oxnard, California,
(iii) the closure of Condor's manufacturing facility in
Reynosa, Mexico, and (iv) the disposition of its SL
Waber business.

o According to the September 30 10-Q, the Company recorded
losses from the Company's restructuring plan of
approximately $8.2 million and $4.1 million in the
second and third fiscal quarters of 2001, respectively.

o According to the September 30 10-Q, the Company expects
to record approximately $1.2 million in losses from the
Company's restructuring plan in the fourth fiscal
quarter of 2001.

o It is the Committee's opinion that the SL Board's
strategy to continue divesting its individual business
units is too late and is not necessarily the best way to
maximize stockholder value.

WE ARE EXTREMELY CONCERNED WITH THE COMPANY'S ABILITY TO CONTINUE AS A GOING
CONCERN

o According to the September 30 10-Q, the Company has
historically financed its operations and growth
primarily with funds generated from operations and
borrowings under its revolving credit facility.
According to the September 30 10-Q, the Company has
exhausted the availability of funds under its credit
facility with $38.8 million of principal outstanding of
the maximum $40 million available under the credit
facility.

o According to the September 30 10-Q, the Company has
advised its banks that it was in default of the
financial covenants in its credit facility at September
30, 2001, and is in discussions with its banks to amend
its financial covenants.

o According to the September 30 10-Q, the Company
previously entered into a waiver and amendment to the
credit facility after failing to comply with certain
financial covenants at March 31, 2001.

o According to the September 30 10-Q, the Company's
independent auditors have advised the Company that
failure to resolve these matters prior to the completion
of their audit of the consolidated financial statements
for 2001 may result in a modification of their report
with respect to the Company's ability to continue as a
going concern.

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o On November 15, 2001, SL announced in a press release
that the SL Board has voted to suspend the Company's
regular semi-annual cash dividend, which would have been
payable in November 2001.

EXECUTIVE OFFICERS OF SL HAVE RECENTLY ENTERED INTO CHANGE IN CONTROL AGREEMENTS
WITH SL INDICATING TO THE COMMITTEE THAT CURRENT MANAGEMENT'S INTERESTS MAY NOT
BE ALIGNED WITH THE INTERESTS OF SL STOCKHOLDERS

In the report of the SL Board Compensation Committee in the
Management Proxy Statement, the Compensation Committee stated that it "believes
that executive compensation should be linked to value delivered to shareholders"
and that the Company's compensation programs have been "designed to provide a
correlation between the financial success of the executive and the
shareholders." On May 1, 2001, the Company entered into change in control
agreements with executive officers Owen Farren, David Nuzzo and Jacob Cherian
which we believe are inconsistent with the Compensation Committee philosophy.
Under the agreements, each of the executive officers will be entitled to receive
two times (2.99 times in the case of Mr. Farren) the average of his combined
annual salary and cash bonus paid for each of the previous three full calendar
years and benefits for up to 24 months (36 months in the case of Mr. Farren) in
the event the executive is terminated by the Company or its successor (other
than for death or disability), or the executive terminates his employment with
the Company or its successor, and either termination occurs within one year
following a "change in control" (as defined in the agreements), or within one
year following execution by the Company of a definitive agreement contemplating
a change in control that occurs, whichever is later. Based on Messrs. Farren's
and Nuzzo's annual salary and cash bonus from 1998 to 2000 as disclosed in the
Management Proxy Statement, they would each be entitled to a lump sum cash
payment of approximately $1,157,000 and $361,000, respectively, upon a change in
control, subject to the provisions of the agreements. We cannot derive an
estimate of the change in control payment Mr. Cherian would be entitled to based
on SL's public filings.

We believe that the change in control agreements are unwarranted and
a waste of corporate assets in view of SL's disastrous Share price and operating
performance described above. How are these change in control agreements "linked
to value delivered to shareholders"? The executives already receive salaries and
other compensation for their services to SL and would not be required to provide
any special or additional services upon a change in control in return for the
change in control payments. The Committee sees no correlation between the change
in control payments, especially the $1.1 million payment Mr. Farren would be
entitled to, and the financial success of the SL stockholders. As described in
further detail above, SL's Share price has lagged its peer group indexes during
the past five years and has decreased by [43%] since the beginning of 2001.
Additionally, in view of the restructuring losses SL has sustained, the
uncertainty of its ability to continue as a going concern and its failure to
comply with NYSE market capitalization requirements, the Committee believes that
the executives have not earned the potential benefits of the change in control
contracts. The change in control agreements were entered into shortly after the
Committee nominated its slate of directors in February 2001 to challenge the
incumbent Board at the next annual meeting. Under the terms of the change in
control agreements, the election of our slate to the SL Board would constitute a
"change in control." We are extremely concerned that the change in control
agreements were executed in order to provide golden parachutes for SL's
executives rather than incentivizing them to create stockholder value and to
have a chilling effect on the stockholders' rights to elect directors.

WE ALSO QUESTION WHETHER THE INTERESTS OF THE SL BOARD AND MANAGEMENT ARE
ALIGNED WITH THE INTERESTS OF SL STOCKHOLDERS IN VIEW OF THEIR LIMITED OWNERSHIP
OF SECURITIES OF SL

As the beneficial owners of an aggregate of 850,800 Shares, or 14.9%
of the Shares outstanding, we have a significant investment at stake. Of these
850,800 Shares, 623,150 Shares are owned outright by Steel, of which Warren
Lichtenstein is the managing member of its general partner, 10,300 Shares are
owned outright by Mr. Lichtenstein, and 217,350 Shares are owned outright by
Newcastle, of which Mark Schwarz is the sole general partner. Although James
Henderson, Glen Kassan and Steven Wolosky do not own any Shares of SL, in
agreeing to serve as Nominees they are committed to the objectives of the
Committee described herein. We believe that our interests are clearly aligned
with yours. As the second largest stockholder of SL, the Committee has an
interest in maximizing the value of all of SL's Shares and assumes that the
majority of stockholders who are unaffiliated with SL also invested in the
Shares in order to

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receive the maximum value for their Shares. We are committed to maximizing
stockholder value. In contrast, as of November 30, 2001, all of the members of
the SL Board and its executive officers named in the Management Proxy Statement
collectively owned beneficially only 7.2% of the Shares outstanding, and
collectively owned outright less than 1% of the Shares outstanding, based on the
Management Proxy Statement. We believe that the lack of significant actual
ownership of the Shares by the SL Board and management may contribute to the SL
Board's and management's lack of commitment to maximizing the value of the
Shares. Additionally, we believe that the lack of significant actual ownership
of the Shares by the SL Board and management may result in actions taken by SL
that are not always in the best interests of the greater majority of
unaffiliated stockholders. The table set forth below which has been derived from
the Management Proxy Statement contains information regarding the actual
ownership of the Shares by the SL Board and management. Reference is made to
Schedule II of this Proxy Statement which contains information regarding
beneficial ownership of the SL Board and management which has also been derived
from the Management Proxy Statement.

Shares Owned Percentage Shares Beneficially Percentage
Name of Beneficial Owner Outright Owned(1) Owned(2) Owned(1)
------------------------ -------- -------- -------- ---------
J. Dwane Baumgardner........................ 2,000 * 62,677 *
Richard E. Caruso........................... 0 * 11,881 *
Jacob Cherian............................... 394 * 7,644 *
Owen Farren................................. 27,334 * 254,534 4.5%
Charles T. Hopkins.......................... 1,000 * 1,000 *

Judith A. Maynes............................ 0 * 0 *

James E. Morris............................. 0 * 0 *
David R. Nuzzo.............................. 6,762 * 49,512 *

J. Edward Odegaard........................ 2,000 * 2,000 *

Walter I. Rickard .......................... 338 * 12,669 *
Robert J. Sanator........................... 8,000 * 8,000 *

All Directors and Executive 47,828 * 409,917 7.2%
Officers as Group...........................

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* Less than one percent (1%).

(1) Assuming 5,710,963 outstanding Shares, as reported in the Management
Proxy Statement.

(2) Includes Shares subject to immediately exercisable options as
follows: Mr. Baumgardner, 60,677 Shares; Mr. Caruso, 11,881 Shares;
Mr. Cherian, 7,250 Shares; Mr. Farren, 227,200 Shares; Mr. Nuzzo,
42,750 Shares; Mr. Rickard, 12,331 Shares; and all directors and
executive officers as a group, 362,089 Shares.

WE BELIEVE THAT THE SL BOARD MUST PROMPTLY EXPLORE OTHER ALTERNATIVES TO
MAXIMIZE STOCKHOLDER VALUE INCLUDING A SALE OF THE ENTIRE COMPANY

The Committee believes that the value of the Company has not been
maximized by the SL Board and believes that the election of the Nominees
represents the best means for stockholders to have the ability to maximize the
present value of their Shares. Warren Lichtenstein is currently a director of
eight public companies. He also has a track record

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of creating value for stockholders, as described in his biography on page 8 of
this Proxy Statement. Mark Schwarz is a director of four public companies and as
a fund manager has a track record of seeking Board representation in his fund's
portfolio companies and influencing management to maximize stockholder value. If
elected, the Nominees will, subject to their fiduciary duties, explore all
available alternatives to maximize stockholder value including, but not limited
to (i) selling the entire company by means of a merger, tender offer or
otherwise; or (ii) divesting assets of the Company on a tax efficient basis.
Additionally, if elected, the Nominees will retain a nationally recognized
investment banking firm to assist in the review and implementation of the
alternatives that the Nominees believe will maximize stockholder value for all
of the Company's stockholders.

Subject to their fiduciary duties, the Nominees will make their best
effort to maximize stockholder value by pursuing a sale of SL. Although the
Nominees would seek to sell SL to the highest bidder, the Nominees' priority
would be to negotiate and consummate a transaction on the most favorable terms
available to the SL stockholders. The Nominees would work to solicit bids from
potential acquirors, including competitors of SL. In accordance with the
Nominees' fiduciary duties to enter into a sale transaction that would have the
greatest benefit to SL stockholders, bids would be carefully evaluated based on,
among other things, the value of the consideration offered, the ability of the
bidder to finance the bid, the quality of any non-cash consideration offered
(including the financial condition of any bidder offering non-cash
consideration), and the timing and likelihood of consummation of the proposed
transaction in light of any required financing or regulatory approvals. This
process could result in the Nominees' decision to accept a proposal to acquire
SL for a purchase price that is not necessarily the highest price offered.

We wish to provide the stockholders, the true owners of SL, with the
opportunity to elect directors that are unaffiliated with the existing Board. If
all are elected, the Nominees will constitute a majority of the current eight-
member Board. Your vote to elect the Nominees does not constitute a vote in
favor of our value enhancing plans including pursuing a sale of SL to the
highest bidder. Your vote to elect the Nominees will have the legal effect of
replacing five incumbent directors with our Nominees. If the Nominees are
elected to the Board and a transaction involving the sale of SL is proposed by
the Board, stockholders will have an opportunity to vote on such transaction to
the extent required by law.

Neither we (nor to our knowledge, any other person on our behalf)
has made or undertaken any analysis or reports as to whether stockholder value
will be maximized as a result of this solicitation or obtained reports from
consultants or other outside parties as to whether the proposals presented
herein would have an effect on stockholder value. There can be no assurance that
stockholder value will be maximized as a result of this solicitation or the
election of the Nominees.

THE NOMINEES

The following information sets forth the name, business address,
present principal occupation, and employment and material occupations,
positions, offices, or employments for the past five years of the Nominees. This
information has been furnished to the Committee by the Nominees. Where no date
is given for the commencement of the indicated office or position, such office
or position was assumed prior to December 1, 1996. Each person listed below is a
citizen of the United States.

Warren G. Lichtenstein (36) has served as the Chairman of the Board,
Secretary and the Managing Member of Steel Partners, L.L.C., the general partner
of Steel, since January 1, 1996. Prior to such time, Mr. Lichtenstein was the
Chairman and a director of Steel Partners, Ltd., the general partner of Steel
Partners Associates, L.P., which was the general partner of Steel, from 1993
until prior to January 1, 1996. Mr. Lichtenstein was the acquisition/risk
arbitrage analyst at Ballantrae Partners, L.P., a private investment partnership
formed to invest in risk arbitrage, special situations and undervalued
companies, from 1988 to 1990. Mr. Lichtenstein has served as a director of
WebFinancial Corporation, a consumer and commercial lender, since 1996 and as
its President and Chief Executive Officer since December 1997. He served as a
director and the Chief Executive Officer of Gateway Industries, Inc., a provider
of database development and Web site design and development services, since 1994
and as the Chairman of the Board since 1995. Mr. Lichtenstein has served as a
director and the President and Chief Executive Officer of CPX Corp., a company
with no significant operating business, since June 1999 and as its Secretary and
Treasurer since May 2001. Mr. Lichtenstein is also a director of the following
publicly held companies: TAB Products Co., a document management company;

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Tandycrafts, Inc., a manufacturer of picture frames and framed art; Puroflow
Incorporated, a designer and manufacturer of precision filtration devices; ECC
International Corp., a manufacturer and marketer of computer-controlled
simulators for training personnel to perform maintenance and operator procedures
on military weapons; United Industrial Corporation, a designer and producer of
defense, training, transportation and energy systems; and US Diagnostic Inc., an
operator of outpatient medical diagnostic imaging and related facilities. He is
a former director of Saratoga Beverage Group, Inc., a beverage manufacturer and
distributor, Alpha Technologies, Inc., an electronics components manufacturer,
Tech-Sym Corporation, an electronics engineering and manufacturing company, and
PLM International, Inc., an equipment leasing company. He also served as a
director of SL from 1993 to 1997. Mr. Lichtenstein served as Chairman of the
Board of Aydin Corporation, a provider of products and systems for the
acquisition and distribution of information over electronic communications
media, from October 5, 1998 until its sale to L-3 Communications Corporation
("L-3") in April 1999 at a price of $13.50 per share, which represents a premium
of approximately 39% over the reported closing price of $9.69 per share the day
preceding the announced transaction with L-3. As of the date hereof, Mr.
Lichtenstein beneficially owned 633,450 Shares, including 623,150 Shares owned
by Steel. The business address of Mr. Lichtenstein is c/o Steel Partners II,
L.P., 150 E. 52nd Street, 21st Floor, New York, New York 10022. For information
regarding Mr. Lichtenstein's purchases and sales of Shares during the past two
years, see Schedule I.

Mark E. Schwarz (41) has served as the sole general partner of
Newcastle, a private investment firm, since 1993. Mr. Schwarz was also Vice
President and Manager of Sandera Capital, L.L.C., a private investment firm
affiliated with Hunt Financial Group, L.L.C., a Dallas-based investment firm
associated with the Lamar Hunt family ("Hunt"), from 1995 to September 1999 and
a securities analyst and portfolio Manager for SCM Advisors, L.L.C., formerly a
Hunt-affiliated registered investment advisor, from May 1993 to 1996. Mr.
Schwarz currently serves as a director of the following companies: WebFinancial
Corporation, a commercial and consumer lender; Nashua Corporation, a specialty
paper, label and printing supplies manufacturer; Bell Industries, Inc., a
computer systems integrator; and Tandycrafts, Inc., a manufacturer of picture
frames and framed art. Mr. Schwarz has also served as Chairman of the Board of
Directors of Hallmark Financial Services, Inc., a property-and-casualty
insurance holding company, since October 2001. From October 1998 through April
1999, Mr. Schwarz served as a director of Aydin Corporation, a
defense-electronics manufacturer. As of the date hereof, Mr. Schwarz
beneficially owned an aggregate of 217,350 Shares, all of which were owned
directly by Newcastle. The business address of Mr. Schwarz is c/o Newcastle
Partners, L.P., 200 Crescent Court, Suite 670, Dallas, Texas 75201. For
information regarding Mr. Schwarz's purchases and sales of Shares during the
past two years, see Schedule I.

James R. Henderson (42) has served as a Vice President of Steel
Partners Services, Ltd., a management and advisory company, since August 1999.
Steel Partners Services Ltd. provides management services to Steel. He has also
served as Vice President of Operations of WebFinancial Corporation, a commercial
and consumer lender, since September 2001. From 1996 to July 1999, Mr. Henderson
was employed in various positions with Aydin Corporation, a defense-electronics
manufacturer, which included a tenure as president and Chief Operating Officer
from October 1998 to June 1999. Prior to his employment with Aydin Corporation,
Mr. Henderson was employed as an executive with UNISYS Corporation, an
e-business solutions provider. Mr. Henderson is a director of ECC International
Corp., a manufacturer and marketer of computer-controlled simulators for
training personnel to perform maintenance and operator procedures on military
weapons. As of the date hereof, Mr. Henderson did not beneficially own any
Shares. Mr. Henderson has not purchased or sold any Shares during the past two
years. The business address of Mr. Henderson is c/o Steel Partners II, L.P., 150
East 52nd Street, 21st Floor, New York, New York 10022.

Glen Kassan (58) has served as Executive Vice President of Steel
Partners Services, Ltd., a management and advisory company, since June 2001 and
Vice President since October 1999. Steel Partners Services, Ltd. provides
management services to Steel. Mr. Kassan has served as Vice President, Chief
Financial Officer and Secretary of Gateway Industries, Inc., a provider of
database development and Web site design and development services, since June
2000. He has also served as Vice President, Chief Financial Officer and
Secretary of WebFinancial Corporation, a commercial and consumer lender, since
June 2000. From 1997 to 1998, Mr. Kassan served as Chairman and Chief Executive
Officer of Long Term Care Services, Inc., a privately owned healthcare services
company which Mr. Kassan co-founded in 1994 and initially served as Vice
Chairman and Chief Financial Officer. Mr. Kassan is currently a director of
Tandycrafts, Inc., a manufacturer of picture frames and framed art, Puroflow
Incorporated, a designer and manufacturer of precision filtration devices, and
the Chairman of the Board of US Diagnostic Inc., an operator of outpatient
diagnostic imaging. As of the date hereof, Mr. Kassan did not beneficially own
any Shares. Mr. Kassan has

-9-

not purchased or sold any Shares during the past two years. The business address
of Mr. Kassan is c/o Steel Partners II, L.P., 150 East 52nd Street, 21st Floor,
New York, New York 10022.

Steven Wolosky (46) has been a partner of Olshan Grundman Frome
Rosenzweig & Wolosky LLP, counsel to Steel, for more than five years. Mr.
Wolosky is also Assistant Secretary of WHX Corporation, a NYSE listed holding
company and a director of CPX Corp., a company with no significant operating
business. As of the date hereof, Mr. Wolosky did not beneficially own any
Shares. Mr. Wolosky has not purchased or sold any Shares during the past two
years. The business address of Mr. Wolosky is c/o Olshan Grundman Frome
Rosenzweig & Wolosky LLP, 505 Park Avenue, New York, New York 10022.

The Nominees will not receive any compensation from the Committee
for their services as directors of SL. On February 15, 2001, Steel, Newcastle
and the Nominees (collectively, the "Group") entered into a Joint Filing
Agreement (the "Joint Filing Agreement") in which, among other things, (i) they
agreed to the joint filing on behalf of each of them of statements on Schedule
13D with respect to Shares of SL, (ii) they agreed to form the Committee for the
purpose of soliciting proxies or written consents for the election of the
Nominees, or any other person(s) nominated by Steel, to the SL Board at the next
annual meeting of stockholders, and (iii) Steel agreed to bear all expenses
incurred in connection with the Group's activities, including approved expenses
incurred by any of the parties in the solicitation of proxies or written
consents by the Committee.

Other than as stated above, there are no arrangements or
understandings between the Committee and each Nominee or any other person or
persons pursuant to which the nominations described herein are to be made, other
than the consent by each of the Nominees to serve as a director of SL if elected
as such at the Annual Meeting. The Nominees have not been convicted in any
criminal proceedings (excluding traffic violations or similar misdemeanors) over
the past ten years. Except as provided for under "Legal Proceedings" herein,
none of the Nominees is a party adverse to SL or any of its subsidiaries or has
a material interest adverse to SL or any of its subsidiaries in any material
pending legal proceedings.

The Committee does not expect that the Nominees will be unable to
stand for election, but, in the event that such persons are unable to serve or
for good cause will not serve, the Shares represented by the enclosed GOLD proxy
card will be voted for substitute nominees. In addition, the Committee reserves
the right to nominate substitute persons if SL makes or announces any changes to
its Bylaws or takes or announces any other action that has, or if consummated
would have, the effect of disqualifying the Nominees. In any such case, Shares
represented by the enclosed GOLD proxy card will be voted for such substitute
nominees. Notwithstanding the Committee's ability to vote proxies for substitute
nominees, the enclosed GOLD proxy can only be voted for up to five of the eight
directors being elected at the Annual Meeting.

YOU ARE URGED TO VOTE FOR THE ELECTION OF THE NOMINEES ON THE ENCLOSED GOLD
PROXY CARD.

PROPOSAL 2 - APPOINTMENT OF INDEPENDENT AUDITORS

The Committee has no objection to the ratification of the
appointment of Arthur Andersen LLP as independent accountants for SL for the
fiscal year ending December 31, 2002. Please see the Management Proxy Statement
for a description of this proposal.

VOTING AND PROXY PROCEDURES

Only stockholders of record on the Record Date will be entitled to
notice of and to vote at the Annual Meeting. Each Share is entitled to one vote.
Stockholders who sell Shares before the Record Date (or acquire them without
voting rights after the Record Date) may not vote such Shares. Stockholders of
record on the Record Date will retain their voting rights in connection with the
Annual Meeting even if they sell such Shares after the Record Date. Based on

-10-

publicly available information, the Committee believes that the only outstanding
class of securities of SL entitled to vote at the Annual Meeting are the Shares.

Shares represented by properly executed GOLD proxy cards will be
voted at the Annual Meeting as marked and, in the absence of specific
instructions, will be voted FOR the election of the Nominees to the Board, FOR
the proposal to ratify the appointment of Arthur Andersen LLP as independent
accountants of SL for the fiscal year ending December 31, 2002, and in the
discretion of the persons named as proxies on all other matters as may properly
come before the Annual Meeting. Directors are elected by a plurality of the
votes cast and the nominees who receive the most votes will be elected (assuming
a quorum is present). To be approved, the proposal to ratify the appointment of
auditors must receive a majority of the votes cast (assuming a quorum is
present). Broker non-votes, described below, and abstentions will be counted
only for the purpose of determining whether a quorum is present at the Annual
Meeting. An abstention from voting will be tabulated as a vote withheld on the
election, but will not be considered in determining whether each of the nominees
has received a plurality of the votes cast at the Annual Meeting and will not be
counted either "for" or "against" the ratification of auditors. Proxies relating
to "street name" Shares that are voted by brokers only on some of the proposals
will not be entitled to vote on any proposal which the broker does not have
discretionary voting power and has not received instructions from the beneficial
owner ("broker non-votes").

We are asking you to elect our five Nominees who, if elected, will
constitute a majority of the eight-member Board. The enclosed GOLD proxy card
may only be voted for our five Nominees and does not confer voting power with
respect to the remaining three directorships.

Stockholders of SL may revoke their proxies at any time prior to
exercise by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute revocation
of a proxy) or by delivering a written notice of revocation. The delivery of a
subsequently dated proxy which is properly completed will constitute a
revocation of any earlier proxy. The revocation may be delivered either to the
Committee in care of Innisfree M&A Incorporated at the address set forth on
the back cover of this Proxy Statement or to SL at 520 Fellowship Road, Suite
A114, Mt. Laurel, New Jersey 08054 or any other address provided by SL. Although
a revocation is effective if delivered to SL, the Committee requests that either
the original or photostatic copies of all revocations be mailed to the Committee
in care of Innisfree M&A Incorporated at the address set forth on the back
cover of this Proxy Statement so that the Committee will be aware of all
revocations and can more accurately determine if and when proxies have been
received from the holders of record on the Record Date of a majority of the
outstanding Shares.

IF YOU WISH TO VOTE FOR THE ELECTION OF THE NOMINEES TO THE SL BOARD, PLEASE
SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED GOLD PROXY CARD IN THE POSTAGE-PAID
ENVELOPE PROVIDED.

SOLICITATION OF PROXIES

The solicitation of proxies pursuant to this Proxy Statement is
being made by the Committee. Proxies may be solicited by mail, facsimile,
telephone, telegraph, in person and by advertisements.

The Committee has entered into an agreement with Innisfree M&A
Incorporated for solicitation and advisory services in connection with this
solicitation, for which Innisfree M&A Incorporated will receive a fee not to
exceed $50,000, together with reimbursement for its reasonable out-of-pocket
expenses, and will be indemnified against certain liabilities and expenses,
including certain liabilities under the federal securities laws. Innisfree
M&A Incorporated will solicit proxies from individuals, brokers, banks, bank
nominees and other institutional holders. The Committee has requested banks,
brokerage houses and other custodians, nominees and fiduciaries to forward all
solicitation materials to the beneficial owners of the Shares they hold of
record. The Committee will reimburse these record holders for their reasonable
out-of-pocket expenses in so doing. It is anticipated that Innisfree M&A
Incorporated will employ approximately [25] persons to solicit SL's stockholders
for the Annual Meeting.

-11-

The entire expense of soliciting proxies is being borne by the
Committee. If the Nominees are elected to the SL Board, the Committee intends to
seek reimbursement of the costs of this solicitation from SL. Unless otherwise
required by law, the Committee does not currently intend to submit the question
of reimbursement of the costs of this solicitation to a stockholder vote. Costs
of this solicitation of proxies are currently estimated to be approximately
[$25,000]. The Committee estimates that through the date hereof, its expenses in
connection with this solicitation are approximately $[1,500].

PARTICIPANT INFORMATION

The general partner of Steel is Steel Partners, L.L.C. ("Steel
LLC"), a Delaware limited liability company. The principal business of Steel is
investing in the securities of small-cap companies. The principal business
address of Steel and Steel LLC is 150 East 52nd Street, 21st Floor, New York,
New York 10022. Warren G. Lichtenstein is Chairman of the Board, Secretary and
the Managing Member of Steel LLC. James Henderson and Glen Kassan are Vice
Presidents of Steel Partners Services, Ltd., an affiliate of Steel. As of the
date hereof, Steel is the beneficial owner of 623,150 Shares. Steel LLC does not
beneficially own any Shares on the date hereof, except by virtue of its role in
Steel. For information regarding purchases and sales of Shares during the past
two years by Steel, see Schedule I.

Newcastle is a Texas limited partnership. The principal business of
Newcastle is the purchase, sale, exchange, acquisition and holding of investment
securities. The principal business address of Newcastle is 200 Crescent Court,
Suite 670, Dallas, Texas 75201. Mark E. Schwarz is the sole general partner of
Newcastle. As of the date hereof, Newcastle is the beneficial owner of 217,350
Shares. For information regarding the purchases and sales of Shares during the
past two years by Newcastle, see Schedule I.

The Board of Directors of SL has a single class of directors. At
each annual meeting of stockholders, the directors are elected to a one-year
term. The Nominees, if elected, would serve as directors until the next annual
meeting of stockholders and until the due election and qualification of their
successors. The Committee has no reason to believe any of the Nominees will be
disqualified or unable or unwilling to serve if elected.

LEGAL PROCEEDINGS

On October 23, 2001, Steel filed an action in the Superior Court of
New Jersey Chancery Division, Morris County, to compel SL to hold its annual
meeting of stockholders on December 19, 2001. Section 14A:5-2 of the New Jersey
Business Corporation Act permits the Superior Court to compel an annual meeting
of stockholders upon application of any stockholder if there is a failure to
hold an annual meeting of stockholders for a period of 13 months after the
corporation's last annual meeting. Steel believes that SL has not held an annual
meeting of stockholders since November 9, 1999. On November 9, 2001, Steel and
SL stipulated that an annual meeting of stockholders of SL will be convened on
January 22, 2002 at which time only the following matters will be voted upon by
the stockholders: (i) the election of no more than eight (8) directors; (ii) the
ratification of the appointment of an accounting firm; and (iii) such other
matters which properly may come before the meeting. None of the Nominees are
otherwise adverse to SL or any of its subsidiaries in any material pending legal
proceedings.

CERTAIN TRANSACTIONS BETWEEN THE COMMITTEE AND SL

Except as set forth in this Proxy Statement (including the Schedules
hereto), neither the Committee nor any of the other participants in this
solicitation, or any of their respective associates: (i) directly or indirectly
beneficially owns any Shares or any securities of SL; (ii) has had any
relationship with SL in any capacity other than as a stockholder, or is or has
been a party to any transactions, or series of similar transactions, or was
indebted to SL during the past year with respect to any Shares of SL; or (iii)
knows of any transactions during the past year, currently proposed transactions,
or series of similar transactions, to which SL or any of its subsidiaries was or
is to be a party, in which the amount involved exceeds $60,000 and in which any
of them or their respective affiliates had, or will have, a direct or indirect
material interest. In addition, other than as set forth herein, there are no
contracts, arrangements or understandings entered into by the Committee or any
other participant in this solicitation or any of their respective associates
within the past year with any person with respect to any of SL's securities,
including, but not limited to, joint

-12-

ventures, loan or option arrangements, puts or calls, guarantees against loss or
guarantees of profit, division of losses or profits, or the giving or
withholding of proxies.

Except as set forth in this Proxy Statement (including the Schedules
hereto), neither the Committee nor any of the other participants in this
solicitation, or any of their respective associates, has entered into any
agreement or understanding with any person with respect to (i) any future
employment by SL or its affiliates or (ii) any future transactions to which SL
or any of its affiliates will or may be a party. However, the Committee has
reviewed, and will continue to review, on the basis of publicly available
information, various possible business strategies that it might consider in the
event that the Nominees are elected to the Board.

OTHER MATTERS AND ADDITIONAL INFORMATION

The Committee is unaware of any other matters to be considered at
the Annual Meeting other than the ratification of the appointment of the
Company's auditors. However, should other matters, which the Committee is not
aware of a reasonable time before this solicitation, be brought before the
Annual Meeting, the persons named as proxies on the enclosed GOLD proxy card
will vote on such matters in their discretion.

-13-

The information concerning SL contained in this Proxy Statement and
the Schedules attached hereto has been taken from, or is based upon, publicly
available information.

THE RORID COMMITTEE

December __, 2001

-14-

SCHEDULE I
----------

TRANSACTIONS IN THE SHARES DURING THE PAST TWO YEARS
----------------------------------------------------

Shares of Common Stock Price Per Date of
Purchased Share Purchase
--------- ----- --------

STEEL PARTNERS II, L.P.
-----------------------

4,000 $10.73250 10/06/00
500 $10.79000 10/12/00
16,000 $10.78090 10/17/00
18,400 $10.08230 10/18/00
9,200 $10.80000 10/25/00
2,000 $10.55000 11/22/00
1,500 $11.00830 11/27/00
100 $10.95000 11/30/00
7,500 $10.82080 12/04/00
9,800 $10.99900 12/05/00
2,000 $11.05000 12/06/00
200 $10.86250 12/11/00
6,000 $10.85440 12/12/00
4,700 $10.76010 12/13/00
2,600 $10.71590 12/14/00
1,000 $10.98750 12/15/00
500 $10.86250 12/18/00
700 $10.98750 12/20/00
1,500 $10.34170 12/22/00
5,100 $10.67500 12/26/00
3,500 $11.22860 12/28/00
2,500 $11.45000 12/29/00
18,300 $11.10460 01/04/01
1,800 $11.05000 01/05/01
3,500 $10.92500 01/08/01

-15-

200 $10.80000 01/11/01
500 $11.05000 01/18/01
2,500 $11.28750 01/22/01
15,600 $11.30000 01/23/01
6,500 $11.75460 02/02/01
17,000 $5.70820 09/28/01
10,000 $4.99000 10/08/01
30,000 $3.78000 10/09/01
26,150 $4.61720 10/11/01
2,500 $5.10200 10/12/01
33,500 $4.99990 10/19/01
1,000 $5.03000 10/22/01

NEWCASTLE PARTNERS, L.P.
------------------------

10,000 $10.8725 02/04/00
5,000 $10.6750 02/09/00
4,700 $10.5600 02/11/00
10,000 $10.5600 02/11/00
300 $10.5600 02/14/00
9,000 $10.4944 02/14/00
4,000 $10.4350 02/16/00
800 $10.4350 02/17/00
200 $10.4350 02/18/00
3,000 $10.1750 03/13/00
15,000 $10.1333 03/14/00
2,700 $9.9250 03/15/00
3,000 $9.9250 03/17/00
1,000 $9.9250 03/20/00
10,000 $9.9875 03/28/00
5,000 $9.7375 04/11/00
6,500 $9.8625 04/14/00

-16-

4,000 $9.5188 05/11/00
2,000 $9.4250 05/12/00
3,000 $9.4250 05/15/00
2,000 $9.8000 06/26/00
2,000 $9.8000 07/03/00
2,000 $9.4875 07/05/00
3,000 $9.4667 07/07/00
4,000 $10.4250 12/22/00
4,000 $11.4100 06/01/01
500 $11.4000 06/04/01
100 $11.4000 06/05/01
300 $11.4000 06/06/01
1,000 $11.4000 06/07/01
1,000 $11.4000 06/08/01
900 $11.4000 06/11/01
1,200 $11.4100 06/15/01
6,000 $7.4363 07/30/01
10,000 $7.5500 08/01/01
2,000 $7.5000 08/01/01
10,000 $7.6000 08/06/01
5,000 $7.7410 09/17/01
26,150 $4.6178 10/11/01
2,500 $5.1080 10/12/01
33,500 $5.0003 10/19/01
1,000 $5.0450 10/22/01

-17-

WARREN G. LICHTENSTEIN
----------------------

NONE(1)

MARK E. SCHWARZ
---------------

NONE(2)

JAMES R. HENDERSON
------------------

NONE

GLEN KASSAN
-----------

NONE

STEVEN WOLOSKY
--------------

NONE
--------
(1) By virtue of his position with Steel Partners II, L.P., Mr.
Lichtenstein has the power to vote and dispose of SL's Shares owned
by Steel Partners II, L.P. Accordingly, Mr. Lichtenstein is
considered the beneficial owner of the Shares of SL owned by Steel
Partners II, L.P.

(2) By virtue of his position with Newcastle Partners, L.P., Mr. Schwarz
has the power to vote and dispose of SL's Shares owned by Newcastle
Partners, L.P. Accordingly, Mr. Schwarz is considered the beneficial
owner of the Shares of SL owned by Newcastle Partners, L.P.

-18-

SCHEDULE II
-----------

SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
-----------------------------------------------------------

THE FOLLOWING IS BASED SOLELY ON INFORMATION PROVIDED IN THE MANAGEMENT PROXY
STATEMENT:

The following table sets forth certain information regarding
ownership of the shares, as of November 30, 2001 (except as otherwise noted),
by: (i) each person or entity (including such person's or entity's address) who
is known by SL to own beneficially more than five percent of the Company's
shares, (ii) each of the Company's Directors and nominees for Director who
beneficially owns shares, (iii) each Named Executive Officer and current
executive officer who beneficially owns shares, and (iv) all executive officers
and Directors as a group. The information presented in the table is based upon
the most recent filings with the Securities and Exchange Commission by such
persons or upon information otherwise provided by such persons to SL.

The address of each person who is an officer or director of SL is
520 Fellowship Road, Suite A-114, Mt. Laurel, NJ 08054.

Number of
Shares
Beneficially
Name of Beneficial Owner Owned(1) Percentage Owned
------------------------ -------- ----------------
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401................... 296,400(2) 5.2%

The Gabelli Funds
One Corporate Center
Rye, NY 10580-1435....................... 1,400,720(3) 24.5%

Oaktree Capital Management, LLC
333 South Grand Avenue
28th Floor
Los Angeles, CA 90071.................... 525,000(4) 9.2%

Steel Partners II, L.P.
150 E. 52nd Street
21st Floor
New York, NY 10022....................... 850,800(5) 14.9%

J. Dwane Baumgardner..................... 62,677(6) *

Richard E. Caruso........................ 11,881(7) *

Jacob Cherian............................ 7,644(8) *

Owen Farren.............................. 254,534(9) 4.5%

Charles T. Hopkins....................... 1,000 *

Judith A. Maynes......................... 0 *

James E. Morris (10)..................... 0 *

David R. Nuzzo........................... 49,512(11) *

-19-

J. Edward Odegaard............................... 2,000(12) *

Walter I. Rickard ............................... 12,669(13) *

Robert J. Sanator................................ 8,000 *

All Directors and Executive Officers as a Group.. 409,917(14) 7.2%

---------------------------------------------------------------
* Less than one percent (1%).

(1) Beneficial ownership is based on 5,710,963 outstanding shares of
Common Stock as of November 30, 2001. Under applicable rules
promulgated under the Securities and Exchange Act of 1934, as
amended, a person is deemed to be the beneficial owner of shares of
Common Stock if, among other things, he or she directly or
indirectly has or shares voting power or investment power with
respect to such shares. A person is also considered to beneficially
own shares of Common Stock which he or she does not actually own but
has the right to acquire presently or within the next 60 days, by
exercise of stock options or otherwise.

(2) Based upon a Schedule 13F-HR dated September 30, 2001, filed with
the Securities and Exchange Commission by Dimensional Fund Advisors
Inc. ("Dimensional"). Dimensional, a registered investment advisor,
is deemed to have beneficial ownership of 296,400 shares, all of
which shares are held in portfolios of DFA Investment Dimensions
Group Inc., a registered open-end investment company, or in series
of the DFA Investment Trust Company, a Delaware business trust, or
the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, all of which
Dimensional serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.

(3) Based upon a Schedule 13D/A Amendment No. 17 dated November 15,
2001, filed with the Securities and Exchange Commission by Gabelli
Funds LLC ("Gabelli Funds"). Gabelli Group Capital Partners, Inc.
("Gabelli Partners") makes investments for its own account and is
the parent company of Gabelli Asset Management Inc. ("GAMI"). Mario
J. Gabelli is the Chairman of the Board of Directors, Chief
Executive Officer and majority shareholder of Gabelli Partners.
GAMI, a public company listed on the New York Stock Exchange, is the
parent company of a variety of companies engaged in the securities
business, including (i) GAMCO Investors, Inc. ("GAMCO"), a
wholly-owned subsidiary of GAMI, an investment adviser registered
under the Investment Advisers Act of 1940, as amended ("Advisers
Act"), which provides discretionary managed account services for
employee benefit plans, private investors, endowments, foundations
and others; (ii) Gabelli Advisers, Inc. ("Gabelli Advisers"), a
subsidiary of GAMI, which provides discretionary advisory services
to The Gabelli Westwood Mighty Mitessm Fund; (iii) Gabelli
Performance Partnership L.P. ("GPP"), a limited partnership whose
primary business purpose is investing in securities (Mario J.
Gabelli is the general partner and a portfolio manager for GPP);
(iv) Gabelli International Limited ("GIL"), a corporation whose
primary business purpose is investing in a portfolio of equity
securities and securities convertible into, or exchangeable for,
equity securities offered primarily to persons who are neither
citizens nor residents of the United States; and (v) Gabelli Funds,
LLC, an investment adviser registered under the Advisers Act which
presently provides discretionary managed account services for
various registered investment companies.

Includes the following shares deemed to be owned beneficially by the
following affiliates (the "Gabelli Affiliates"): 75,000 shares held
by GAMCO; 1,070,720 shares held by GIL; 25,000 shares held by
Gabelli Foundation, Inc. ("Foundation"), a private foundation; 1,000
shares held by Mario J. Gabelli; 60,000 shares held by Gabelli
Advisers; and 107,000 shares held by GPP. Each of the Gabelli
Affiliates claims sole voting and dispositive power over the shares
held by it. The foregoing persons do not admit to constituting a
group within the meaning of Section 13(d) of the Securities Exchange
Act. Mario J. Gabelli is the Chief Investment Officer of each of the
Gabelli Affiliates; the majority stockholder and Chairman of the
Board of Directors and Chief Executive Officer of Gabelli Partners
and GAMI; the President, a Trustee and the Investment Manager

-20-

of the Foundation; and the portfolio manager for GPP. The general
partner of GPP is MJG Associates, Inc., the sole shareholder,
director and employee of which is Mario J. Gabelli. GAMCO, Gabelli
Advisors, and Gabelli Funds, each has its principal business office
at One Corporate Center, Rye, New York 10580. GPP has its principal
business office at 401 Theodore Fremd Ave., Rye, New York 10580. GIL
has its principal business office at c/o Fortis Fund Services
(Cayman) Limited, Grand Pavillion, Commercial Centre, 802 West Bay
Road, Grand Cayman, British West Indies. The Foundation has its
principal offices at 165 West Liberty Street, Reno, Nevada 89501.

(4) Based upon a Schedule 13F-HR dated June 30, 2001, filed with the
Securities and Exchange Commission by Oaktree Capital Management,
LLC, a California limited liability company ("Oaktree"). Oaktree is
deemed to have beneficial ownership of 525,000. The principal
business of Oaktree is providing investment advice and management
services to institutional and individual investors. Oaktree's
General Partner is OCM Principal Opportunities Fund, L.P., a
Delaware limited partnership.

(5) Consists of 623,150 shares owned directly by Steel Partners II,
L.P., ("Steel Partners II"), 10,300 shares owned by Warren G.
Lichtenstein, Chief Executive Officer of Steel Partners, L.L.C.,
which is the general partner of Steel Partners II, and 217,350
shares owned by Newcastle Partners, L.P. which has entered into a
voting agreement with Steel Partners II.

(6) Includes 60,677 shares which Mr. Baumgardner has the right to
acquire at any time upon exercise of stock options.

(7) Includes 11,881 shares, which Mr. Caruso has the right to acquire at
any time upon exercise of stock options.

(8) Includes 394 shares beneficially owned by Mr. Cherian as a
participant in the Company's Savings & Pension Plan and 7,250
shares which Mr. Cherian has the right to acquire at any time upon
exercise of stock options.

(9) Includes 69 shares owned jointly by Mr. Farren and his wife, who
share voting and investment power, 6,200 shares held in an IRA for
Mr. Farren, 21,065 shares beneficially owned as a participant in the
Company's Savings and Pension Plan, and 227,200 shares which Mr.
Farren has the right to acquire, at any time, upon the exercise of
stock options.

(10) In connection with his retirement, Mr. Morris resigned as an
executive officer on December 31, 2000.

(11) Includes 2,263 shares beneficially owned by Mr. Nuzzo as a
participant in the Company's Savings and Pension Plan, and 42,750
shares which Mr. Nuzzo has the right to acquire at any time upon
exercise of stock options.

(12) Shares owned jointly by Mr. Odegaard and his wife, who share voting
and investment power.

(13) Includes 12,331 shares which Mr. Rickard has the right to acquire at
any time upon exercise of stock options.

(14) Includes 362,089 shares issuable upon exercise of options.

-21-

IMPORTANT

Tell your Board what you think! Your vote is important. No matter
how many Shares you own, please give Steel your proxy FOR the election of the
Nominees by taking three steps:

1. SIGNING the enclosed GOLD proxy card,

2. DATING the enclosed GOLD proxy card, and

3. MAILING the enclosed GOLD proxy card TODAY in the
envelope provided (no postage is required if mailed in
the United States).

If any of your Shares are held in the name of a brokerage firm,
bank, bank nominee or other institution, only it can vote such Shares and only
upon receipt of your specific instructions. Accordingly, please contact the
person responsible for your account and instruct that person to execute the GOLD
proxy card representing your Shares. The Committee urges you to confirm in
writing your instructions to the Committee in care of Innisfree M&A
Incorporated at the address provided below so that the Committee will be aware
of all instructions given and can attempt to ensure that such instructions are
followed.

If you have any questions or require any additional information
concerning this Proxy Statement, please contact Innisfree M&A Incorporated
at the address set forth below.

[INNISFREE M&A INCORPORATED LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022

CALL TOLL FREE: (888) 750-5834
BANKERS AND BROKERS CALL COLLECT: (212) 750-5833

-22-

PRELIMINARY COPY SUBJECT TO COMPLETION
DATED DECEMBER 11, 2001

SL INDUSTRIES, INC. ANNUAL MEETING OF STOCKHOLDERS

THIS PROXY IS SOLICITED ON BEHALF OF THE RORID COMMITTEE

The undersigned appoints Warren G. Lichtenstein and Mark E. Schwarz and each of
them, attorneys and agents with full power of substitution to vote all shares of
common stock of SL Industries, Inc. (the "Company") which the undersigned would
be entitled to vote if personally present at the Annual Meeting of Stockholders
of the Company, and including at any adjournments or postponements thereof and
at any meeting called in lieu thereof, as follows:

1. ELECTION OF DIRECTORS:

A TOTAL OF EIGHT DIRECTORS WILL BE ELECTED AT THE ANNUAL MEETING OF
STOCKHOLDERS OF THE COMPANY. THIS PROXY CAN ONLY BE VOTED FOR UP TO
FIVE OF THE EIGHT DIRECTORS BEING ELECTED AT THE ANNUAL MEETING.
ACCORDINGLY, THIS PROXY DOES NOT CONFER VOTING POWER WITH RESPECT TO
THE THREE REMAINING DIRECTORSHIPS.

FOR WITHHOLD FOR ALL
ALL ALL Except nominee(s)
Nominees: Warren Lichtenstein, Mark written below
Schwarz, James Henderson, Glen Kassan, [ ] [ ] [ ]
and Steven Wolosky _____________________
_____________________
_____________________
_____________________

2. RATIFICATION OF APPOINTMENT FOR AGAINST ABSTAIN
OF INDEPENDENT AUDITORS: [ ] [ ] [ ]

3. In their discretion with respect to any other matters as may
properly come before the Annual Meeting.

The undersigned hereby revokes any other proxy or proxies heretofore
given to vote or act with respect to the shares of Common Stock of the Company
held by the undersigned, and hereby ratifies and confirms all action the herein
named attorneys and proxies, their substitutes, or any of them may lawfully take
by virtue hereof. If properly executed, this proxy will be voted as directed
above. IF NO DIRECTION IS INDICATED WITH RESPECT TO THE ABOVE PROPOSALS, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES, OR ANY SUBSTITUTIONS
THERETO, AND FOR THE RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS.

This proxy will be valid until the sooner of one year from the date
indicated below and the completion of the Annual Meeting.

DATED: _________________________________, 2001.

PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY.

-------------------------------------------------------
(Signature)

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(Signature, if held jointly)

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(Title)

WHEN SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH SIGNING.

IMPORTANT: PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY!