Exhibit (a)(1)(viii) AMENDED AND RESTATED OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) of BAIRNCO CORPORATION at $13.50 NET PER SHARE by BZ ACQUISITION CORP. A Wholly Owned Subsidiary of STEEL PARTNERS II, L.P. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, MARCH 16, 2007, UNLESS THE OFFER IS EXTENDED. STOCKHOLDERS OF RECORD OF BAIRNCO CORPORATION (THE "COMPANY") ON MARCH 5, 2007 WILL REMAIN ENTITLED TO RECEIVE THE COMPANY'S DECLARED FIRST QUARTER DIVIDEND OF $0.10 PER SHARE, FOR TOTAL CASH PROCEEDS OF $13.60 PER SHARE PURSUANT TO THE OFFER AND THE DIVIDEND, EVEN IF STOCKHOLDERS TENDER THEIR SHARES PRIOR TO THAT DATE. THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED AS OF FEBRUARY 23, 2007 (THE "MERGER AGREEMENT"), BY AND AMONG STEEL PARTNERS II, L.P. ("STEEL PARTNERS II"), BZ ACQUISITION CORP. (THE "PURCHASER") AND THE COMPANY. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE OFFER AND THE MERGER, AND IT HAS ALSO UNANIMOUSLY: (I) DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE ADVISABLE TO THE STOCKHOLDERS OF THE COMPANY AND (II) RESOLVED TO RECOMMEND THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES TO THE PURCHASER PURSUANT TO THE OFFER. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN BEFORE THE EXPIRATION OF THE OFFER A NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE, WITH THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS (TOGETHER, THE "SHARES"), OF THE COMPANY WHICH, TOGETHER WITH THE SHARES THEN OWNED BY STEEL PARTNERS II, THE PURCHASER AND THEIR AFFILIATES, REPRESENTS AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES OUTSTANDING ON A FULLY DILUTED BASIS. IMPORTANT Any stockholder of the Company desiring to tender Shares in the Offer should either (i) complete and sign the Amended and Restated Letter of Transmittal (the "Letter of Transmittal") or a facsimile thereof in accordance with the instructions in the Letter of Transmittal, and mail or deliver the Letter of Transmittal together with the certificates representing tendered Shares and all other required documents to American Stock Transfer & Trust Company, the Depositary for the Offer, or tender such Shares pursuant to the procedure for book-entry transfer set forth in "The Offer--Section 3--Book-Entry Delivery" or (ii) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. Stockholders whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person if they desire to tender their Shares. The associated preferred stock purchase rights are currently evidenced by the certificates representing the Shares, and by tendering Shares, a stockholder will also tender the associated preferred stock purchase rights. Any stockholder who desires to tender Shares and whose certificates representing such Shares are not immediately available, or who cannot comply with the procedures for book-entry transfer on a timely basis, may tender such Shares pursuant to the guaranteed delivery procedure set forth in "The Offer--Section 3--Guaranteed Delivery". Questions and requests for assistance may be directed to the Information Agent at its address and telephone number set forth on the back cover of this Amended and Restated Offer to Purchase. Additional copies of this Amended and Restated Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other related materials may be obtained from the Information Agent or from brokers, dealers, commercial banks and trust companies. THIS AMENDED AND RESTATED OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION, AND YOU SHOULD CAREFULLY READ BOTH IN THEIR ENTIRETY BEFORE MAKING A DECISION WITH RESPECT TO THE OFFER. March 2, 2007TABLE OF CONTENTS Page ---- Summary Term Sheet....................................................... 1 Introduction............................................................. 6 The Offer................................................................ 8 1. Terms of the Offer.......................................... 8 2. Acceptance for Payment and Payment.......................... 10 3. Procedure for Tendering Shares.............................. 10 4. Withdrawal Rights............................................ 12 5. Certain Tax Considerations................................... 13 6. Price Range of Shares; Dividends............................ 13 7. Possible Effects of the Offer on the Market for the Shares; Stock Exchange Listing; Registration under the Exchange Act................................................ 14 8. Certain Information Concerning the Company.................. 15 9. Certain Information Concerning Steel Partners II and the Purchaser........................................... 18 10. Source and Amount of Funds.................................. 19 11. Background of the Offer..................................... 19 12. Purpose of the Offer; Plans for the Company; Statutory Requirements; Approval of the Merger; Appraisal Rights............................................ 25 13. The Transaction Documents................................... 27 14. Dividends and Distributions................................. 40 15. Conditions of the Offer..................................... 40 16. Certain Legal Matters; Regulatory Approvals................. 42 17. Fees and Expenses........................................... 43 18. Miscellaneous............................................... 44 Schedule I............................................................... S-1 SUMMARY TERM SHEET BZ Acquisition Corp., a wholly owned subsidiary of Steel Partners II, L.P., is offering to purchase all outstanding shares of common stock, par value $0.01 per share, of Bairnco Corporation ("Bairnco") (together with the associated preferred stock purchase rights) for $13.50 net per share in cash, upon the terms and subject to the conditions set forth in this Amended and Restated Offer to Purchase (this "Offer to Purchase") and the related Amended and Restated Letter of Transmittal (the "Letter of Transmittal"). The following are some of the questions you, as a Bairnco stockholder, may have and answers to those questions. This summary term sheet is not meant to be a substitute for the information contained in the remainder of this Offer to Purchase and the related Letter of Transmittal. We urge you to carefully read this entire Offer to Purchase and the related Letter of Transmittal. WHO IS OFFERING TO BUY MY SECURITIES? Our name is BZ Acquisition Corp. We are a Delaware corporation formed to serve as an acquisition vehicle with no current operations other than those incident to the offer. We are a wholly owned subsidiary of Steel Partners II, L.P., a Delaware limited partnership. See "The Offer--Section 9". WHAT SECURITIES ARE YOU OFFERING TO PURCHASE? We are offering to purchase all of the outstanding common stock, par value $0.01 per share, and the associated preferred stock purchase rights, of Bairnco. We refer to one share of Bairnco common stock, together with the associated stock purchase right, as a "share" or "Share". See "Introduction". HOW MUCH ARE YOU OFFERING TO PAY FOR MY SHARES AND WHAT IS THE FORM OF PAYMENT? We are offering to pay you $13.50 per share in cash without brokerage fees, commissions or, except in certain circumstances, transfer taxes. See "Introduction". Initially, on June 22, 2006, we commenced an offer, which we refer to as our original offer, to purchase all of the outstanding shares at a price of $12.00 net per share in cash. We increased the offer price to $13.35 net per share in cash on February 2, 2007 and have now increased the offer price to $13.50 net per share in cash pursuant to our merger agreement with Bairnco. IF I TENDER MY SHARES, WILL I CONTINUE TO BE ENTITLED TO RECEIVE THE $0.10 PER SHARE FIRST QUARTER DIVIDEND DECLARED BY BAIRNCO? If you validly tender your shares as described below, you will still retain ownership of your shares until such time as the offer is successfully consummated and we accept your shares for payment. Accordingly, even if you tender your shares pursuant to the offer prior to Bairnco's March 5, 2007 dividend record date, you will remain entitled to receive Bairnco's declared first quarter dividend of $0.10 per share, for total cash proceeds of $13.60 per share pursuant to the offer and the dividend. See "The Offer--Section 14". DO YOU HAVE THE FINANCIAL RESOURCES TO PAY FOR THE SHARES? Yes. We will need approximately $86.5 million to purchase all Shares pursuant to the offer not already owned by Steel Partners II, L.P., to pay the first quarter dividend and to pay related fees and expenses. As of the date of this Offer to Purchase, Steel Partners II, L.P. had cash and cash equivalents and short-term investments substantially in excess of the approximately $86.5 million required to acquire the Shares and pay the first quarter dividend. Accordingly, the offer is not conditioned upon obtaining financing. See "The Offer--Section 10". IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER? Because the form of payment for your Shares consists solely of cash and the purchase of the Shares is not conditioned upon obtaining financing, we do not think our financial condition is material to your decision whether to tender in the offer. 1 IS THERE AN AGREEMENT GOVERNING THE OFFER? Yes. Bairnco, Steel Partners II and we have entered into a merger agreement, dated as of February 23, 2007. The merger agreement provides, among other things, for the terms and conditions of the offer and our subsequent merger into Bairnco. See "The Offer--Section 13". WHAT DOES THE BOARD OF DIRECTORS OF BAIRNCO THINK OF THE OFFER? The Board of Directors of Bairnco has unanimously approved our merger agreement with Bairnco and the transactions contemplated by the merger agreement, including the offer and the merger, and it has also unanimously: (1) determined that the terms of the offer and the merger are advisable to the stockholders of Bairnco and (2) resolved to recommend that the stockholders of Bairnco accept the offer and tender their shares to us pursuant to the offer. In addition, Bairnco has advised us that the Board of Directors of Bairnco has received an opinion, dated February 23, 2007, from Lazard Freres & Co. LLC, Bairnco's financial advisor, to the effect that, as of the date of its opinion and based on and subject to the factors and assumptions set forth in its opinion, the offer price of $13.50 per Share to be paid to the holders of the shares (other than Steel Partners II, BZ Acquisition Corp. and their respective affiliates or, if applicable, holders of shares as to which dissenter's rights have been perfected) in the offer and the merger pursuant to the merger agreement is fair, from a financial point of view, to such holders. See "Introduction". WHY IS THE OFFER TO PURCHASE BEING AMENDED AND RESTATED? There have been material developments relating to our offer since it was commenced on June 22, 2006, including the execution of the merger agreement and the increase in the offer price, all of which we have reported in amendments to our tender offer statement on Schedule TO that have been filed with the SEC. We have amended and restated our original offer to purchase, letter of transmittal and notice of guaranteed delivery to reflect those developments. See "Introduction". WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER? The offer is conditioned upon, among other things, there being validly tendered and not withdrawn before the expiration of the offer a number of shares which, together with the shares then owned by Steel Partners II, BZ Acquisition Corp. and their affiliates, represents at least a majority of the total number of shares outstanding on a fully diluted basis. We cannot waive this condition unless Bairnco consents to a waiver. The tender offer is also subject to a number of other conditions, which may be waived by us in our reasonable discretion. These conditions are described in "The Offer--Section 15". On August 7, 2006, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, relating to the offer expired. Accordingly, the condition to the offer relating to the expiration of the waiting period under this act has been satisfied. HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER? You have until the expiration date of the offer to tender. The offer currently is scheduled to expire at 5:00 p.m., New York City time, on Friday, March 16, 2007. CAN THE TENDER OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES? Yes. The merger agreement provides that we may extend the tender offer beyond Friday, March 16, 2007, without the consent of Bairnco, under the following circumstances: o if, at any scheduled expiration of the offer, any of the conditions to the offer have not been satisfied or waived, we may extend the offer, in order to permit those conditions to be satisfied, in increments of not more than five business days each, and no more than 20 business days in the aggregate; 2 o we may extend the offer for any period required by any rule, regulation or interpretation of the Securities and Exchange Commission; or o if, at any scheduled expiration of the offer, the number of shares that have been validly tendered and not withdrawn pursuant to the offer, together with the shares then owned by Steel Partners II, BZ Acquisition Corp. and their affiliates, represents more than 50% of the total number of shares outstanding on a fully diluted basis but less than 90% of the outstanding shares, we may extend the offer one or more times for an aggregate of up to 20 business days. In lieu of extending the offer under the circumstances described in the third bullet point above, we may, without the consent of Bairnco, make available a "subsequent offering period" of 10 to 20 business days. A subsequent offering period, which is different from an extension of the tender offer, is an additional period of time, beginning after we have purchased shares tendered during the offer, during which stockholders may tender, but not withdraw, their shares and receive the offer consideration. See "The Offer--Section 1". HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED? If we decide to extend the offer, we will inform American Stock Transfer & Trust Company, the depositary for the offer, of that fact and will make a public announcement of the extension, no later than 9:00 A.M., New York City time, on the next business day after the date the offer was scheduled to expire. See "The Offer--Section 1". CAN THE OFFER BE TERMINATED AND, IF SO, WOULD BAIRNCO BE OBLIGATED TO PAY US A TERMINATION FEE? Under the merger agreement, the offer may be terminated: (1) by mutual written consent of Steel Partners II and Bairnco; (2) if the first acceptance of shares for payment pursuant to the offer has not occurred by May 15, 2007; (3) if a final and non-appealable action by a governmental authority prevents, prohibits or otherwise makes illegal the consummation of the offer or the merger; (4) if Steel Partners II, BZ Acquisition Corp. or Bairnco has materially breached its representations, warranties or covenants; or (5) if the Board of Directors of Bairnco withdraws or modifies, in a manner adverse to Steel Partners II, BZ Acquisition Corp. or any of their affiliates, its approval or recommendation of the merger agreement, the offer or the merger or recommends or approves a competing takeover proposal for Bairnco. Some of these termination events, either alone or combined with the existence and/or acceptance of a competing takeover proposal, would give rise to Bairnco's obligation to pay us a termination fee of $3,500,000 and reimburse us for up to $1,000,000 of our expenses in connection with the offer. See "The Offer--Section 13". HOW DO I TENDER MY SHARES? To tender shares, you must deliver the certificates representing your shares, together with a completed and signed Letter of Transmittal and any other required documents, to American Stock Transfer & Trust Company, the depositary for the offer, not later than the time the offer expires. If your shares are held in street name by your broker, dealer, bank, trust company or other nominee, such nominee can tender your shares through The Depository Trust Company. If you cannot deliver everything required to make a valid tender to the depositary before the expiration of the offer, you may have a limited amount of additional time by having a financial institution (including most banks, savings and loan associations and brokerage houses) that is a member of a recognized Medallion Program approved by The Securities Transfer Association Inc., including the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange, Inc. Medallion Signature Program (MSP), guarantee, pursuant to a Notice of Guaranteed Delivery, that the missing items will be received by the depositary within three business days. However, the depositary must receive the missing items within that three business day period. See "The Offer--Section 3". UNTIL WHAT TIME CAN I WITHDRAW TENDERED SHARES? You can withdraw tendered shares at any time until the offer has expired and, following such expiration, you can withdraw them at any time until we accept shares for payment. You may not, however, withdraw shares tendered during a subsequent offering period, if one is included. See "The Offer--Section 4". 3 HOW DO I WITHDRAW TENDERED SHARES? To withdraw shares, you must deliver a written notice of withdrawal, or a facsimile of one, with the required information to American Stock Transfer & Trust Company while you have the right to withdraw the shares. See "The Offer--Section 4". WHEN AND HOW WILL I BE PAID FOR MY TENDERED SHARES? Subject to the terms and conditions of the offer, we will pay for all validly tendered and not withdrawn shares promptly after the expiration of the offer. See "The Offer--Section 2". We will pay for your validly tendered and not withdrawn shares by depositing the purchase price with American Stock Transfer & Trust Company, which will act as your agent for the purpose of receiving payments from us and transmitting such payments to you. In all cases, payment for tendered shares will be made only after timely receipt by American Stock Transfer & Trust Company of certificates for such shares (or of a confirmation of a book-entry transfer of such shares as described in "The Offer--Section 3--Book-Entry Delivery"), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other required documents for such shares. See "The Offer--Section 2". HAVE ANY STOCKHOLDERS OF BAIRNCO AGREED TO TENDER THEIR SHARES? Yes. All of the members of the Board of Directors of Bairnco and all of Bairnco's senior executive officers, including Luke E. Fichthorn, III, Chairman of the Board and Chief Executive Officer, Kenneth L. Bayne, Vice President and Chief Financial Officer, Larry D. Smith, Vice President, Administration, and Lawrence C. Maingot, Corporate Controller, have entered into a tender and support agreement under which they have agreed to tender their shares in the offer. Together, as of the date of this Offer to Purchase, these individuals own, beneficially or of record, 659,125 shares (excluding stock options), representing approximately 9.0% of Bairnco's outstanding shares. See "Introduction" and "The Offer--Section 13". WILL THE OFFER BE FOLLOWED BY A MERGER IF ALL THE SHARES ARE NOT TENDERED IN THE OFFER? If we accept for payment and pay for a number of shares which, together with the shares then owned by Steel Partners II, BZ Acquisition Corp. and their affiliates, represents at least a majority of the outstanding shares on a fully diluted basis, we will merge with and into Bairnco. Upon consummation of that merger, Steel Partners II will own, directly or indirectly, all of the shares and all remaining stockholders (other than us, Steel Partners II and stockholders properly exercising their appraisal rights) will receive the price per share paid in the offer. See "The Offer--Section 12". IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES? If the offer is successful, we will own a sufficient number of shares to conclude a merger in which all remaining outstanding shares of Bairnco will automatically be converted into the right to receive an amount in cash per share equal to the price per share paid in the offer. Upon consummation of this second-step merger, stockholders who do not tender in the offer (other than those properly exercising their appraisal rights) will receive the same amount of cash per share that they would have received had they tendered their shares in the offer. Therefore, the main difference between tendering and not tendering shares in the offer is that tendering stockholders will be paid earlier. In addition, in connection with the consummation of this merger, stockholders of Bairnco who have neither voted in favor of the merger nor consented thereto in writing, and who otherwise under Delaware law comply with the applicable statutory procedures, will be entitled to receive a judicial determination of the fair value of their shares (exclusive of any element of value arising from the accomplishment or expectation of such merger) and to receive payment of such fair value in cash, together with a fair rate of interest, if any. See "The Offer--Section 12 (Appraisal Rights)" beginning on page 27 of the Offer to Purchase. 4 WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE? On June 14, 2006, the last full business day before the announcement of our intention to commence our original offer, the last reported sales price of Bairnco common stock reported on the New York Stock Exchange was $9.93 per share. On February 23, 2007, the date on which we announced our merger agreement with Bairnco, the last reported sales price of Bairnco common stock reported on the New York Stock Exchange was $13.50 per share. Please obtain a recent quotation for your shares prior to deciding whether or not to tender. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATING IN THE OFFER? In general, your sale of shares pursuant to the offer will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign income or other tax laws. You should consult your tax advisor about the tax consequences to you of participating in the offer in light of your particular circumstances. See "The Offer--Section 5". IF I ALREADY TENDERED MY SHARES IN THE ORIGINAL OFFER, DO I HAVE TO DO ANYTHING NEW? No. Bairnco stockholders do not have to take any action regarding any shares previously validly tendered and not withdrawn. If the offer is completed, these shares will be accepted for payment and such stockholders will receive the offer price of $13.50 per share, net to the seller in cash, without interest, less any applicable withholding taxes. Stockholders of record on March 5, 2007 will also receive the $0.10 per share first quarter dividend declared by Bairnco, payable on March 30, 2007, for total cash proceeds of $13.60 per share pursuant to the offer and the dividend. Stockholders will receive this dividend even if they tender their shares prior to the March 5, 2007 record date. WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER? You can call MacKenzie Partners, Inc., the information agent for the offer, at (212) 929-5500 (collect) or (800) 322-2885 (toll-free). See the back cover of this Offer to Purchase. 5 To the Stockholders of Bairnco Corporation: INTRODUCTION We, BZ Acquisition Corp. (the "Purchaser" or "we"), a Delaware corporation and wholly owned subsidiary of Steel Partners II, L.P., a Delaware limited partnership ("Steel Partners II"), are offering to purchase all outstanding shares of common stock, par value $0.01 per share (the "Common Stock"), of Bairnco Corporation, a Delaware corporation (the "Company"), and the associated preferred stock purchase rights (the "Rights" and, together with the Common Stock, the "Shares") issued pursuant to the Rights Agreement, dated as of June 22, 2006, as amended as of February 23, 2007, between the Company and Computershare Investor Services, LLC, as the rights agent (the "Rights Agreement"), for $13.50 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in this Amended and Restated Offer to Purchase (this "Offer to Purchase") and the related Amended and Restated Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). Stockholders of record on March 5, 2007 will remain entitled to receive the Company's declared first quarter dividend of $0.10 per Share (the "Dividend"), which is payable on March 30, 2007, for total cash proceeds of $13.60 per Share pursuant to the Offer and the Dividend. Stockholders will receive the Dividend even if they tender their Shares pursuant to the Offer prior to the March 5, 2007 record date. This Offer to Purchase amends and restates our original offer to purchase, dated June 22, 2006 (the "Original Offer to Purchase"), and the Amended and Restated Letter of Transmittal amends and restates the letter of transmittal circulated with the Original Offer to Purchase (the "Original Letter of Transmittal"). Our offer was initially commenced on June 22, 2006 (the "Original Offer"). Stockholders who have Shares registered in their own names and tender directly to American Stock Transfer & Trust Company, the depositary for the Offer (the "Depositary"), will not have to pay brokerage fees or commissions. Stockholders with Shares held in street name by a broker, dealer, bank, trust company or other nominee should consult with their nominee to determine if they charge any transaction fees. Except as set forth in Instruction 6 of the Letter of Transmittal, stockholders will not have to pay transfer taxes on the sale of Shares pursuant to the Offer. We will pay all charges and expenses of the Depositary and MacKenzie Partners, Inc. (the "Information Agent") incurred in connection with the Offer. See "The Offer--Section 17". The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of February 23, 2007 (the "Merger Agreement"), by and among Steel Partners II, the Purchaser and the Company. Pursuant to the Merger Agreement, as promptly as practicable after the completion of the Offer and the satisfaction or waiver of specified conditions, the Purchaser will be merged with and into the Company with the Company continuing as the surviving corporation as a wholly owned subsidiary of Steel Partners II (the "Merger"). At the effective time of the Merger, each Share then outstanding (other than Shares owned by Steel Partners II or the Purchaser, Shares owned by the Company as treasury stock and Shares held by stockholders who properly exercise their appraisal rights) will automatically be converted into the right to receive $13.50 per Share in cash, or any higher price per Share paid in the Offer (such price being referred to herein as the "Offer Price"), without interest and subject to applicable withholding taxes. Stockholders who properly exercise appraisal rights under Delaware law will receive a judicially determined fair value for their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger), which value could be more or less than the Offer Price, together with a fair rate of interest, if any. See "The Offer--Section 12". For a more complete description of the Merger Agreement, see "The Offer--Section 13". THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY: (1) DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE ADVISABLE TO THE STOCKHOLDERS OF THE COMPANY; (2) APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE OFFER AND THE MERGER; AND (3) RESOLVED TO RECOMMEND THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES TO THE PURCHASER PURSUANT TO THE OFFER. The Company Board has resolved that the restrictions against the Purchaser or any of its affiliates and the Company engaging in any business combination as set forth in Section 203 of the Delaware General Corporation Law (the "Delaware Law") are inapplicable to the Merger Agreement, the Offer, the Merger and the other transactions contemplated by the Merger Agreement. 6 The Company has advised us that the Company Board has received an opinion, dated February 23, 2007, from Lazard Freres & Co. LLC ("Lazard"), the Company's financial advisor, to the effect that, as of the date of its opinion and based on and subject to the factors and assumptions set forth in its opinion, the Offer Price to be paid to the holders of the Shares (other than Steel Partners II, BZ Acquisition Corp. and their respective affiliates or, if applicable, holders of Shares as to which dissenter's rights have been perfected) in the Offer and the Merger pursuant to the Merger Agreement is fair, from a financial point of view, to such holders. The full text of Lazard's opinion, which sets forth the assumptions made, matters considered and limitations on the review undertaken, is attached as an exhibit to the Company's amendment to its Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the "Schedule 14D-9"), which has been filed by the Company with the Securities and Exchange Commission (the "SEC") on the date of this Offer to Purchase and will be mailed to the Company's stockholders together with this Offer to Purchase. STOCKHOLDERS ARE URGED TO READ THE OPINION CAREFULLY AND IN ITS ENTIRETY. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn before the Expiration Date (as defined below) a number of Shares which, together with the Shares then owned by Steel Partners II, the Purchaser and their affiliates, represents at least a majority of the total number of Shares outstanding on a fully diluted basis (the "Minimum Condition"). The Offer is also subject to a number of other conditions, which are described in "The Offer--Section 15". The Company has advised us that, as of the date of this Offer to Purchase, (i) 7,293,978 shares of Common Stock are issued and outstanding and (ii) 346,661 shares of Common Stock are reserved for issuance pursuant to outstanding Company options. All of the members of the Company Board and all of the Company's senior executive officers, including Luke E. Fichthorn, III, Chairman of the Board and Chief Executive Officer, Kenneth L. Bayne, Vice President and Chief Financial Officer, Larry D. Smith, Vice President, Administration, and Lawrence C. Maingot, Corporate Controller, have entered into a Tender and Support Agreement, dated as of February 23, 2007, with Steel Partners II (the "Tender and Support Agreement"), under which they have agreed to tender their Shares in the Offer. Together, as of the date of this Offer to Purchase, these individuals own, beneficially or of record, 659,125 Shares (excluding stock options), representing approximately 9.0% of the Company's outstanding Shares (the "Tender and Support Agreement Shares"). In addition, as of the date of this Offer to Purchase, Steel Partners II beneficially owns 1,110,200 Shares, representing approximately 15.2% of the Company's outstanding Shares, in addition to the Tender and Support Agreement Shares it may be deemed to beneficially own. Accordingly, in addition to the Tender and Support Agreement Shares and the other Shares beneficially owned by Steel Partners II, we believe that the Minimum Condition would be satisfied if approximately 2,050,995 Shares are validly tendered pursuant to the Offer and not withdrawn. Although the Original Letter of Transmittal only refers to the Original Offer to Purchase, stockholders using such document to tender their Shares will nevertheless be deemed to be tendering pursuant to the Offer as amended and will receive the Offer Price of $13.50 net per Share in cash if Shares are accepted for payment and paid for by the Purchaser pursuant to the Offer. Unless otherwise indicated, as used herein, the term "Letter of Transmittal" refers to either the Original Letter of Transmittal or the Amended and Restated Letter of Transmittal. Stockholders tendering their Shares according to the guaranteed delivery procedures set forth under "The Offer--Section 3" may do so using either the original Notice of Guaranteed Delivery circulated with the Original Offer to Purchase or the Amended and Restated Notice of Guaranteed Delivery circulated herewith. Unless otherwise indicated, as used herein, the term "Notice of Guaranteed Delivery" refers to either such document. SHARES PREVIOUSLY TENDERED PURSUANT TO THE ORIGINAL OFFER TO PURCHASE AND THE ORIGINAL LETTER OF TRANSMITTAL AND NOT WITHDRAWN CONSTITUTE VALID TENDERS FOR PURPOSES OF THE OFFER AS AMENDED. STOCKHOLDERS WHO HAVE VALIDLY TENDERED AND NOT WITHDRAWN THEIR SHARES ARE NOT REQUIRED TO TAKE ANY FURTHER ACTION WITH RESPECT TO SUCH SHARES IN ORDER TO RECEIVE THE OFFER PRICE OF $13.50 NET PER SHARE IN CASH IF SHARES ARE ACCEPTED FOR PAYMENT AND PAID FOR BY THE PURCHASER PURSUANT TO THE OFFER, EXCEPT AS MAY BE REQUIRED BY THE GUARANTEED DELIVERY PROCEDURES IF SUCH PROCEDURES WERE UTILIZED. SEE "THE OFFER--SECTION 3". IF YOU HAVE NOT ALREADY TENDERED YOUR SHARES, PLEASE DISREGARD THE MATERIALS PREVIOUSLY DELIVERED TO YOU AND USE THE MATERIALS ACCOMPANYING THIS OFFER TO PURCHASE. 7 The purpose of the Offer and the Merger is to acquire control of, and the entire equity interest in, the Company. Under Delaware Law, if we acquire, pursuant to the Offer or otherwise, at least 90% of the outstanding Shares, we would be able to approve the Merger without a vote of the remaining stockholders. If we do not acquire at least 90% of the outstanding Shares, we will have to seek approval of the Merger by the Company's stockholders. In such event, approval of the Merger would require the affirmative vote of holders of a majority of the outstanding Shares. Following the consummation of the Offer, we would own a majority of the outstanding Shares on a fully diluted basis, and would thus be able to approve the Merger without the affirmative vote of any other stockholders. Pursuant to the Merger Agreement, Steel Partners II and Purchaser have terminated and withdrawn their solicitation of written consents from stockholders of the Company (the "Consent Solicitation") for the following purposes: (1) to remove each member of the Company Board and any person (other than those elected by the Consent Solicitation) elected or appointed to the Company Board by such directors to fill any vacancy on the Company Board or any newly-created directorships; (2) to amend the Amended and Restated Bylaws of the Company (the "Bylaws") to fix the number of directors serving on the Company Board at five; (3) to amend the Bylaws to provide that any vacancies on the Company Board resulting from the removal of directors by the stockholders of the Company may only be filled by the stockholders of the Company; and (4) to elect five nominees of Steel Partners II to serve as directors of the Company (or, if any such nominee is unable or unwilling to serve as a director of the Company, any other person designated as a nominee by the remaining nominee or nominees) (the "Steel Partners II Nominees"). THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION, AND YOU SHOULD CAREFULLY READ BOTH IN THEIR ENTIRETY BEFORE YOU MAKE A DECISION WITH RESPECT TO THE OFFER. THE OFFER 1. TERMS OF THE OFFER. Upon the terms and subject to the conditions set forth in the Offer, we will accept for payment and pay for all Shares that are validly tendered before the Expiration Date and not withdrawn. "Expiration Date" means 5:00 p.m., New York City time, on Friday, March 16, 2007, unless extended, in which event "Expiration Date" means the latest time and date at which the Offer, as so extended, shall expire. Our obligation to accept for payment and to pay for Shares validly tendered and not withdrawn prior to the Expiration Date is subject only to the satisfaction of the Minimum Condition and the satisfaction or waiver of the other conditions described in "The Offer--Section 15". The Merger Agreement allows us to extend the Offer beyond the Expiration Date, without the consent of the Company, as follows: (1) if, at the Expiration Date, any of the conditions to our obligation to accept Shares for payment (including, without limitation, the Minimum Condition) has not been satisfied or waived, we may extend the Offer beyond the Expiration Date for a time period reasonably necessary to permit such condition to be satisfied, in increments of not more than five business days each, and no more than 20 business days in the aggregate; (2) we may extend the Offer for any period required by any rule, regulation or interpretation of the SEC applicable to the Offer; or (3) if, at the Expiration Date, the number of Shares that have been validly tendered and not withdrawn pursuant to the Offer, together with any Shares then owned by Steel Partners II, the Purchaser and their affiliates, satisfies the Minimum Condition but represents less than 90% of the outstanding Shares, we may extend the Offer, one or more times, for an aggregate of up to 20 business days. The Merger Agreement also permits us, without the consent of the Company, in lieu of extending the Offer as provided in (3) above, to make available a "subsequent offering period" in accordance with Rule 14d-11 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of 10 to 20 business days. There can be no assurance that we will exercise our right to extend the Offer or include a subsequent offering period. Pursuant to Rule 14d-11 under the Exchange Act, we may include a subsequent offering period so long as, among other things, (1) the Offer remains open for a minimum of 20 business days and has expired, (2) we accept and promptly pay for all Shares validly tendered during the Offer, (3) we announce the results of the Offer, including the approximate number and percentage of Shares deposited in the Offer, no later than 9:00 A.M., New York City time, on the next business day after the Expiration Date and immediately begin the subsequent offering period and (4) we immediately accept and promptly pay for Shares as they are tendered during the subsequent offering period. In addition, we may extend any initial subsequent offering period by any period or periods, provided that the aggregate of the subsequent offering period (including extensions thereof) is no more than 20 business days. No withdrawal rights apply 8 to Shares tendered in a subsequent offering period, and no withdrawal rights apply during a subsequent offering period with respect to Shares previously tendered in the Offer and accepted for payment. The same price paid in the Offer will be paid to stockholders tendering Shares in the Offer or in a subsequent offering period, if one is included. Subject to the applicable rules and regulations of the SEC, we expressly reserve the right to delay acceptance for payment of any Shares (or delay payment for any Shares, regardless of whether such Shares were theretofore accepted for payment) pending the receipt of required governmental consents by giving oral or written notice of such delay to the Depositary and by making a public announcement thereof, as described below. Our right to delay acceptance for payment of, or payment for, any Shares is subject to the applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, which requires the Purchaser to pay the consideration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer. If we extend the Offer, are delayed in accepting for payment or paying for Shares or are unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to our rights under the Offer, the Depositary may, on our behalf, retain all Shares tendered, and such Shares may not be withdrawn except as provided in "The Offer--Section 4". Our reservation of the right to delay acceptance for payment of or payment for Shares is subject to applicable law, which requires that we pay the consideration offered or return the Shares deposited by or on behalf of stockholders promptly after the termination or withdrawal of the Offer. If the Minimum Condition or any of the other conditions to the Offer has not been satisfied by the Expiration Date, we may elect (1) subject to the qualifications described above with respect to the extension of the Offer, to extend the Offer and, subject to applicable withdrawal rights, retain all tendered Shares until the expiration of the Offer, as extended, subject to the terms of the Offer, (2) subject to complying with applicable rules and regulations of the SEC and the terms of the Merger Agreement (including, if necessary, obtaining the prior written consent of the Company), to accept for payment, and pay for, all Shares so tendered and not extend the Offer, or (3) subject to the terms of the Merger Agreement, to terminate the Offer and not accept for payment, or pay for, any Shares and return all tendered Shares to tendering stockholders. Subject to the applicable rules and regulations of the SEC, we expressly reserve the right to waive any of the conditions to the Offer (other than the Minimum Condition), to increase the Offer Price and to make any other changes in the terms of the Offer. However, we may not (1) decrease the Offer Price, (2) change the form of consideration payable in the Offer, (3) decrease the number of Shares sought in the Offer, (4) impose additional conditions to the Offer, (5) extend the Offer beyond the Expiration Date, (6) purchase any Shares pursuant to the Offer that when added to Shares owned by Steel Partners II and its affiliates would represent less than the Minimum Condition or (7) amend any other term or condition of the Offer in any manner adverse to the holders of the Shares, in each case without the prior written consent of the Company. If we decrease the percentage of Shares being sought or increase or decrease the consideration to be paid for Shares pursuant to the Offer, and the Offer is scheduled to expire at any time before the expiration of a period of 10 business days from, and including, the date that notice of such increase or decrease is first published, sent or given in the manner specified below, the Offer will be extended until the expiration of such period of 10 business days. If we make any other material change in the terms of or information concerning the Offer or waive a material condition of the Offer, we will extend the Offer, if required by applicable law, for a period sufficient to allow you to consider the amended terms of the Offer. In a published release, the SEC has stated that in its view an offer must remain open for a minimum period of time following a material change in the terms of such offer. The release states that an offer should remain open for a minimum of five business days from the date the material change is first published, sent or given to stockholders, and that if material changes are made with respect to information that approaches the significance of price and share levels, a minimum of 10 business days may be required to allow adequate dissemination and investor response. "Business day" means any day other than Saturday, Sunday or a U.S. federal holiday and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York City time. Any extension, delay, termination, waiver or amendment of the Offer will be followed as promptly as practicable by a public announcement thereof. Without limiting the manner in which we may choose to make any public announcement, we will have no obligation (except as otherwise required by applicable law) to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. In the case of an 9 extension of the Offer, we will give oral or written notice of the extension to the Depositary and will make a public announcement of such extension no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. During any extension, all Shares previously tendered and not withdrawn will remain subject to the Offer and subject to the right of a tendering stockholder to withdraw Shares. If we elect to include or extend a subsequent offering period, we will make a public announcement of such inclusion or extension no later than 9:00 A.M., New York City time, on the next business day after the Expiration Date or date of termination of any prior subsequent offering period. The Company has provided us with its stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. We will send this Offer to Purchase, the related Letter of Transmittal and other related documents to record holders of Shares and to brokers, dealers, banks, trust companies and other nominees whose names appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the conditions of the Offer, promptly after the Expiration Date, we will accept for payment and pay for all Shares validly tendered and not withdrawn. For a description of our right to terminate the Offer and not accept for payment or pay for Shares, see "The Offer--Section 13" and "The Offer--Section 15". If we increase the consideration to be paid for Shares pursuant to the Offer, we will pay such increased consideration for all Shares purchased pursuant to the Offer. We will pay for Shares accepted for payment pursuant to the Offer by depositing the purchase price with the Depositary, which will act as your agent for the purpose of receiving payments from us and transmitting such payments to you. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in "The Offer--Section 3")), (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and (iii) any other required documents. For a description of the procedure for tendering Shares pursuant to the Offer, see "The Offer--Section 3". Accordingly, payment may be made to tendering stockholders at different times if delivery of the Shares and other required documents occurs at different times. Under no circumstances will we pay interest on the consideration paid for Shares pursuant to the Offer, regardless of any delay in making such payment. For purposes of the Offer, we shall be deemed to have accepted for payment tendered Shares when, as and if we give oral or written notice of our acceptance to the Depositary. We reserve the right to transfer or assign, in whole or from time to time in part, to one or more of our affiliates the right to purchase Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve us of our obligations under the Offer or prejudice your rights to receive payment for Shares validly tendered and accepted for payment. If any tendered Shares are not purchased pursuant to the Offer for any reason, or if certificates are submitted for more Shares than are tendered, certificates for such unpurchased or untendered Shares will be returned (or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to an account maintained at the Book-Entry Transfer Facility), without expense to you, promptly following the expiration or termination of the Offer. 3. PROCEDURE FOR TENDERING SHARES. VALID TENDER OF SHARES. To tender Shares pursuant to the Offer, either (i) the Depositary must receive at one of its addresses set forth on the back cover of this Offer to Purchase (a) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by the Letter of Transmittal and (b) certificates for the Shares to be tendered or delivery of such Shares pursuant to the procedures for book-entry transfer described below (and a confirmation of such delivery including an Agent's Message (as defined below) if the tendering stockholder has not delivered a Letter of Transmittal), in each case by the Expiration Date, or (ii) the guaranteed delivery procedure described below must be complied with. 10 THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT YOUR OPTION AND RISK, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, WE RECOMMEND REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IN TIME TO BE RECEIVED PRIOR TO THE EXPIRATION DATE. The tender of Shares pursuant to any one of the procedures described above will constitute your acceptance of the Offer, as well as your representation and warranty that (i) you own the Shares being tendered within the meaning of Rule 14e-4 under the Exchange Act, (ii) the tender of such Shares complies with Rule 14e-4 under the Exchange Act and (iii) you have the full power and authority to tender, sell, assign and transfer the Shares tendered, as specified in the Letter of Transmittal. Our acceptance for payment of Shares tendered by you pursuant to the Offer will constitute a binding agreement between you and us with respect to such Shares, upon the terms and subject to the conditions of the Offer. As of the date of this Offer to Purchase, the Rights do not trade separately. Accordingly, by tendering Common Stock you are automatically tendering a similar number of Rights. BOOK-ENTRY DELIVERY. The Depositary has established an account with respect to the Shares for purposes of the Offer at The Depository Trust Company (the "Book-Entry Transfer Facility"). Any financial institution that is a participant in the system of the Book-Entry Transfer Facility may deliver Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the procedures of the Book-Entry Transfer Facility. However, although delivery of Shares may be effected through book-entry transfer, the Letter of Transmittal (or facsimile thereof) properly completed and duly executed together with any required signature guarantees or an Agent's Message and any other required documents must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase by the Expiration Date, or the guaranteed delivery procedure described below must be complied with. Delivery of the Letter of Transmittal and any other required documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary. "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a book-entry confirmation stating that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that are the subject of such book-entry confirmation that such participant has received, and agrees to be bound by, the terms of the Letter of Transmittal and that the Company may enforce such agreement against such participant. SIGNATURE GUARANTEES. All signatures on a Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) that is a member of a recognized Medallion Program approved by The Securities Transfer Association Inc., including the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange, Inc. Medallion Signature Program (MSP), or any other "eligible guarantor institution" (as such term is defined in Rule 17Ad-15 under the Exchange Act) (each an "Eligible Institution"), unless (i) the Letter of Transmittal is signed by the registered holder(s) of the Shares tendered therewith and such holder(s) has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii) such Shares are tendered for the account of an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. GUARANTEED DELIVERY. If you wish to tender Shares pursuant to the Offer and cannot deliver such Shares and all other required documents to the Depositary by the Expiration Date or cannot complete the procedure for delivery by book-entry transfer on a timely basis, you may nevertheless tender such Shares if all of the following conditions are met: o such tender is made by or through an Eligible Institution; o a properly completed and duly executed Notice of Guaranteed Delivery in the form provided by the Purchaser is received by the Depositary (as provided below) by the Expiration Date; and o the certificates for such Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility), together with a properly completed and 11 duly executed Letter of Transmittal together with any required signature guarantee (or facsimile thereof) or an Agent's Message and any other required documents, are received by the Depositary within three business days after the date of execution of the Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, telex, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice. BACKUP WITHHOLDING. Under the U.S. federal income tax laws, backup withholding will apply to any payments made pursuant to the Offer unless you provide the Depositary with your correct taxpayer identification number and certify that you are not subject to such backup withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. If you are a non-resident alien or foreign entity not subject to backup withholding, you must give the Depositary a completed Form W-8BEN Certificate of Foreign Status before receipt of any payment. APPOINTMENT OF PROXY. By executing a Letter of Transmittal, you irrevocably appoint our designees as your proxies in the manner set forth in the Letter of Transmittal to the full extent of your rights with respect to the Shares tendered and accepted for payment by us (and any and all other Shares or other securities issued or issuable in respect of such Shares on or after February 23, 2007). All such proxies are irrevocable and coupled with an interest in the tendered Shares. Such appointment is effective only upon our acceptance for payment of such Shares. Upon such acceptance for payment, all prior proxies and consents granted by you with respect to such Shares and other securities will, without further action, be revoked, and no subsequent proxies may be given (and, if previously given, will cease to be effective). Our designees will be empowered to exercise all your voting and other rights as they, in their sole discretion, may deem proper at any annual, special or adjourned meeting of the Company's stockholders. We reserve the right to require that, in order for Shares to be deemed validly tendered, immediately upon our acceptance for payment of such Shares, we or our designee must be able to exercise full voting rights with respect to such Shares and other securities (including voting at any meeting of stockholders). The foregoing proxies are effective only upon acceptance for payment of Shares pursuant to the Offer. The Offer does not constitute a solicitation of proxies, absent a purchase of Shares, for any meeting of the Company's stockholders. DETERMINATION OF VALIDITY. We will determine, in our sole discretion, all questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares, and our determination shall be final and binding, subject to the tendering stockholder's right to bring any dispute with respect thereto before a court of competent jurisdiction. We reserve the absolute right to reject any or all tenders of Shares that we determine not to be in proper form or the acceptance for payment of or payment for which may, in the opinion of our counsel, be unlawful. We also reserve the absolute right to waive any defect or irregularity in any tender of Shares. None of Steel Partners II, the Purchaser, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in tenders or waiver of any such defect or irregularity or incur any liability for failure to give any such notification. 4. WITHDRAWAL RIGHTS. You may withdraw tenders of Shares made pursuant to the Offer at any time before the Expiration Date. Thereafter, such tenders may be withdrawn only if such Shares have not been accepted for payment as provided in this Offer to Purchase. If we extend the period of time during which the Offer is open, are delayed in accepting for payment or paying for Shares or are unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to our rights under the Offer, the Depositary may, on our behalf, retain all Shares tendered, and such Shares may not be withdrawn except as otherwise provided in this Section 4. For your withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal with respect to the tendered Shares must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase, and the notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of Shares, if different from that of the person who tendered such Shares. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with (except in the case of Shares tendered by an Eligible 12 Institution) signatures guaranteed by an Eligible Institution must be submitted before the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered holder (if different from that of the tendering stockholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered. However, withdrawn Shares may be retendered by again following one of the procedures described in "The Offer--Section 3" at any time before the Expiration Date. If we include a subsequent offering period (as described in more detail in "The Offer--Section 1") following the Offer, no withdrawal rights will apply to Shares tendered in such subsequent offering period and no withdrawal rights apply during such subsequent offering period with respect to Shares previously tendered in the Offer and accepted for payment. We will determine, in our sole discretion, all questions as to the form and validity (including time of receipt) of any notice of withdrawal, and our determination shall be final and binding, subject to the withdrawing stockholder's right to bring any dispute with respect thereto before a court of competent jurisdiction. None of Steel Partners II, the Purchaser, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or waiver of any such defect or irregularity or incur any liability for failure to give any such notification. 5. CERTAIN TAX CONSIDERATIONS. THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. DUE TO THE INDIVIDUAL NATURE OF TAX CONSEQUENCES, YOU ARE URGED TO CONSULT YOUR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO YOU OF THE OFFER, INCLUDING THE EFFECTS OF APPLICABLE STATE, LOCAL AND OTHER TAX LAWS. The following discussion may not apply to certain stockholders. For example, the following discussion may not apply to you if you acquired your Shares pursuant to the exercise of stock options or other compensation arrangements with the Company, you are not a citizen or resident of the United States or you are otherwise subject to special tax treatment under the Internal Revenue Code of 1986, as amended. Your sale of Shares pursuant to the Offer will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local and other tax laws. In general, if you tender Shares pursuant to the Offer, you will recognize gain or loss equal to the difference between the tax basis of your Shares and the amount of cash received in exchange therefor. Such gain or loss will be capital gain or loss if you hold the Shares as capital assets and will be long-term gain or loss if your holding period for the Shares is more than one year as of the date of the sale of such Shares. A stockholder whose Shares are purchased in the Offer may be subject to backup withholding unless certain information is provided to the Depositary or an exemption applies. See "The Offer--Section 3--Backup Withholding". 6. PRICE RANGE OF SHARES; DIVIDENDS. According to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (the "Company 10-K"), the Shares are traded on the New York Stock Exchange under the symbol BZ. The following table sets forth for the periods indicated the high and low sales prices per Share on the New York Stock Exchange during each quarter presented as reported in published financial sources: Fiscal Year Ended December 31, 2005 High Low -------- -------- First Quarter $ 12.21 $ 10.41 Second Quarter 11.37 9.90 Third Quarter 11.85 10.20 Fourth Quarter 10.81 8.66 2006 First Quarter 10.69 8.70 Second Quarter 12.49 9.89 13 Third Quarter 12.50 11.70 Fourth Quarter 13.70 11.75 2007 First Quarter (through March 1, 2007) 14.10 12.65 According to the Company 10-K and subsequent filings made by the Company with the SEC, the Company declared and paid quarterly cash dividends of $.05 per Share in the first three quarters of fiscal 2004, $.06 per Share in the fourth quarter of fiscal 2004 through the second quarter of fiscal 2006 and $.07 per Share in the third and fourth quarters of fiscal 2006, and has declared a quarterly cash dividend of $.10 per Share payable on March 30, 2007 to stockholders of record on the close of business on March 5, 2007. If we successfully consummate the Offer, we currently intend that no dividends will be declared on the Shares prior to the acquisition of the entire equity interest in the Company pursuant to the Merger. On June 14, 2006, the last full business day before the announcement of our intention to commence the Original Offer, the last reported sales price of the Common Stock reported on the New York Stock Exchange was $9.93 per share. On February 23, 2007, the date on which we announced the Merger Agreement, the last reported sales price of the Common Stock reported on the New York Stock Exchange was $13.50 per share. Please obtain a recent quotation for your Shares prior to deciding whether or not to tender. 7. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE LISTING; REGISTRATION UNDER THE EXCHANGE ACT. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES. If the Offer is consummated, the number of stockholders and Shares that are still in the hands of the public may be so small that there will no longer be an active or liquid public trading market (or, possibly, any public trading market) for Shares held by stockholders other than the Purchaser. We cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Shares or whether such reduction would cause future market prices to be greater or less than the Offer Price. Upon consummation of the Merger, stockholders not tendering their Shares in the Offer (other than those properly exercising their appraisal rights) will receive cash in an amount per Share equal to the Offer Price. Therefore, the main difference between tendering and not tendering Shares in the Offer is that tendering stockholders will be paid earlier. In addition, in connection with the consummation of the Merger, stockholders of the Company who have neither voted in favor of the Merger nor consented thereto in writing, and who otherwise under the Delaware Law comply with the applicable statutory procedures, will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and to receive payment of such fair value in cash, together with a fair rate of interest, if any. STOCK EXCHANGE LISTING. As stated above, the Shares are presently listed on the New York Stock Exchange. The purchase of the Shares by the Purchaser pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and will reduce the number of holders of Shares, which could adversely affect the liquidity and market value of the remaining Shares held by the public. Depending upon the number of Shares tendered to and purchased by the Purchaser in the Offer, the Shares may no longer meet the requirements for continued inclusion on the New York Stock Exchange. In that event, it is possible that the Shares would continue to trade in the over-the-counter market and that price or other quotations would be reported by other sources. The extent of the public market for the Shares and the availability of such quotations would depend, however, upon such factors as the number of stockholders and the aggregate market value of the Shares available in the public market at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act as described below, and other factors. REGISTRATION UNDER THE EXCHANGE ACT. The Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of the Company to the SEC if the Shares are neither listed on a national securities 14 exchange nor held by 300 or more holders of record. Termination of the registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to holders of Shares and to the SEC and would make certain of the provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b), the requirement to furnish a proxy statement pursuant to Section 14(a) in connection with a stockholders meeting and the related requirement to furnish an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Shares. Furthermore, "affiliates" of the Company and persons holding "restricted securities" of the Company may be deprived of the ability to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended (the "Securities Act"). We intend to seek to cause the Company to terminate registration of the Shares under the Exchange Act as soon after consummation of the Offer as the requirements for termination of registration of the Shares are met. 8. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning the Company contained in this Offer to Purchase has been taken from or based upon publicly available documents and records on file with the SEC and other public sources. None of Steel Partners II, the Purchaser, the Information Agent or the Depositary can take responsibility for the accuracy or completeness of the information contained in such documents and records or for any failure by the Company to disclose events which may have occurred or may affect the significance or accuracy of any such information but which are unknown to Steel Partners II, the Purchaser, the Information Agent or the Depositary. According to the Company 10-K, the Company was incorporated in the State of New York on April 19, 1981. Effective September 24, 1991, the Company changed its state of incorporation from New York to Delaware. The principal executive offices of the Company are located at 300 Primera Boulevard, Suite 432, Lake Mary, Florida 32746, and its telephone number is (407) 875-2222. According to the Company 10-K, the Company operates two core businesses - Arlon and Kasco. Arlon businesses design, manufacture, and sell engineered materials and components for the electronic, industrial and commercial markets. These products are based on common technologies in coating, laminating, polymers, and dispersion chemistry. Kasco is a leading provider of meat-room products and maintenance services for the meat and deli departments of supermarkets; restaurants; meat, poultry and fish processing plants; and manufacturers and distributors of electrical saws and cutting equipment throughout North America, Europe, Asia and South America. PREFERRED STOCK PURCHASE RIGHTS. The following description of the Rights is based upon publicly available documents. This description does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is filed as Exhibit 4.1 to the Company's registration statement on Form 8-A12B filed with the SEC on June 23, 2006. On June 22, 2006, the Company entered into the Rights Agreement with Computershare Investors Services (the "Rights Agent"). In connection therewith, the Company Board declared a dividend distribution of one Right for each outstanding share of Common Stock. Upon certain events, each Right will entitle the 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, of the Company (the "Preferred Stock") at a price of $40 per one one-hundredth of a share of Preferred Stock, subject to adjustment (the "Purchase Price"). Initially, the Rights are attached to all Common Stock certificates representing shares then outstanding, and no separate certificates representing the Rights ("Right Certificates") will be distributed. The Rights will separate from the Common Stock and a "Distribution Date" will occur upon the earlier to occur of (I) ten days following the time (the "Stock Acquisition Time") of a public announcement or notice to the Company that a person or group of affiliated or associated persons (an "Acquiring Person") acquired, or obtained the right to acquire, beneficial ownership of 20% or more of the outstanding Common Stock of the Company and (II) ten business days (or, if determined by the Company Board, a specified or unspecified later date) following the commencement or announcement of an intention to make a tender offer or exchange offer which, if successful, would cause the bidder to own 20% of more of the outstanding Common Stock, or, in the event any such commencement or announcement occurred prior to the date of the Rights Agreement, ten business days after the date of the Rights Agreement (or, if determined by the Company Board, a specified or unspecified later date). In its Schedule 14D-9, the Company disclosed that, on July 6, 2006, the Company Board took action to delay the Distribution Date with respect to the Original Offer. 15 The Rights Agreement provides that, until the Distribution Date, (I) the Rights will be transferred with and only with the Common Stock, (II) new Common Stock certificates issued after June 23, 2006, upon transfer, new issuance or reissuance of the Common Stock, will contain a notation incorporating the Rights Agreement by reference and (III) the surrender for transfer of any of the Common Stock certificates outstanding will also constitute the transfer of the Rights associated with the shares of Common Stock represented by such certificate. As soon as practicable following the Distribution Date, separate Right Certificates will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date and such separate Right Certificates alone will evidence the Rights. Except in connection with the issuance of Common Stock pursuant to employee stock plans, options and certain convertible securities, and except as otherwise determined by the Company Board, only shares of Common Stock issued prior to the Distribution Date will be issued with Rights. The Rights are not exercisable until the Distribution Date. The Rights will expire on June 23, 2016, unless earlier redeemed or exchanged by the Company as described below. In the event that, after the Stock Acquisition Time, the Company is acquired in a merger or other business combination transaction or 50% or more of its assets, cash flow or earning power is sold, proper provision shall be made so that each holder of a Right (other than the Acquiring Person) shall 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 would have a market value (as defined in the Rights Agreement) of two times the Purchase Price of the Right. In the event that, after the Stock Acquisition Time, the Company were the surviving corporation of a merger and its Common Stock were changed or exchanged, proper provision shall be made so that each holder of a Right (other than the Acquiring Person) will thereafter have the right to receive upon exercise that number of shares of common stock of the Company having a market value of two times the exercise price of the Right. In the event that a person or group becomes an Acquiring Person, each holder of a Right (other than the Acquiring Person) will thereafter have the right to receive upon exercise that number of shares of Common Stock (or, in certain circumstances, cash, a reduction in the Purchase Price, Preferred Stock, other equity securities of the Company, debt securities of the Company, other property or a combination thereof) having a market value (as defined in the Rights Agreement) of two times the Purchase Price of the Right. Notwithstanding any of the foregoing, following the occurrence of any of the events set forth in this paragraph, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person (or an affiliate, associate or transferee thereof) will be null and void. A person will not be an Acquiring Person if the Company Board determines that such person or group became an Acquiring Person inadvertently and such person or group promptly divests itself of a sufficient number of shares of Common Stock so that such person or group is no longer an Acquiring Person. The Purchase Price payable, and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (I) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock, (II) upon the grant to holders of Preferred Stock of certain rights, option or warrants to subscribe for Preferred Stock or convertible securities at less than the current market price of Preferred Stock or (III) upon the distribution to holders of Preferred Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends or dividends payable in Preferred Stock) or of subscription rights or warrants (other than those referred to above). The number of Rights and number of shares of Preferred Stock issuable upon the exercise of each Right are also subject to adjustment in the event of a stock split, combination or stock dividend on the Common Stock. With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price. No fractional shares of Preferred Stock will be issued (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock which may, upon the election of the Company, be evidenced by depositary receipts) and, in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Stock on the last trading date prior to the date of exercise. 16 At any time prior to the earlier of the Stock Acquisition Time and the Expiration Date (as defined in the Rights Agreement), the Company Board may redeem the Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption Price"). Immediately upon the action of the Company Board ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. At any time after a person becomes an Acquiring Person and prior to the acquisition by such Person of 50% or more of the outstanding shares of Common Stock, the Company Board may exchange the Rights (other than Rights beneficially owned by such Person which have become null and void), in whole or part, at an exchange ratio of one share of Common Stock per Right (subject to adjustment). The Company, at its option, may substitute one-hundredth (subject to adjustment) of a share of Preferred Stock (or other series of substantially similar preferred stock of the Company) for each share of Common Stock to be exchanged. Each share of Preferred Stock purchasable upon exercise of the Rights will have a minimum preferential dividend of $10 per year, but will be entitled to receive, in the aggregate, a dividend of 100 times the dividend declared on the shares of Common Stock. In the event of liquidation, the holders of the shares of Preferred Stock will be entitled to receive a minimum liquidation payment of $10 per share, but will be entitled to receive an aggregate liquidation payment equal to 100 times the payment made per share of Common Stock. Each share of Preferred Stock will have one hundred votes, voting together with the shares of Common Stock. In the event of any merger, consolidation or other transaction in which shares of Common Stock are exchanged, each share of Preferred Stock will be entitled to receive 100 times the amount and type of consideration received per share of Common Stock. The rights of the shares of Preferred Stock as to dividends and liquidation, and in the event of mergers and consolidations, are protected by anti-dilution provisions. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, other than rights resulting from such holder's ownership of shares of Common Stock, including, without limitation, the right to vote or to receive dividends. While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Common Stock (or other consideration) of the Company or for common stock of the acquiring company as set forth above. Other than those provisions relating to the Redemption Price and expiration date of the Rights, any of the provisions of the Rights Agreement may be amended by the Company Board prior to the Stock Acquisition Time. After such time, the provisions of the Rights Agreement may be amended by the Company Board in order to cure any ambiguity, to correct or supplement defective or inconsistent provisions, to shorten or lengthen any time period under the Rights Agreement, to make changes which do not adversely affect the interests of the holders of Rights (excluding the interests of any Acquiring Person) or to shorten or lengthen any time period under the Rights Agreement; provided, however, that no amendment to adjust the time period governing redemption shall be made at such time as the Rights are not redeemable. One Right will be distributed to stockholders of the Company for each share of Common Stock owned of record by them on June 23, 2006. As long as the Rights are attached to shares of Common Stock, the Company will issue one Right with each new share of Common Stock so that all shares of Common Stock will have attached Rights. The Company agreed to reserve the number of shares of Preferred Stock that, as provided in the Rights Agreement, will be sufficient to permit the exercise in full of all outstanding Rights. In connection with its approval of the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, the Company Board approved, and the Company and the Rights Agent entered into, an amendment to the Rights Agreement dated as of February 23, 2007 (the "Rights Amendment"). Pursuant to the Rights Amendment, neither the execution and delivery of the Merger Agreement or the Tender and Support Agreement nor the consummation of the Offer, the Merger or any of the other transactions contemplated thereby will result in (i) Steel Partners II, the Purchaser or any of their respective affiliates becoming an Acquiring Person or (ii) the occurrence of (A) a Distribution Date, (B) the Stock Acquisition Time, (C) a Section 11(a)(ii) Event or (D) a Section 13 Event, in each case as such terms are defined in the Rights Agreement. A tender of Common Stock pursuant to the Offer will also constitute a tender of the Rights. 17 ADDITIONAL INFORMATION. The Company is subject to the informational requirements of the Exchange Act and in accordance therewith files periodic reports, proxy statements and other information with the SEC relating to its business, financial condition and other matters. The Company is required to disclose in such proxy statements certain information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company. Such reports, proxy statements and other information may be inspected at the public reference room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of such material can also be obtained at prescribed rates from the public reference room of the SEC at 100 F Street, N.E., Washington, D.C. 20549, or free of charge at the Web site maintained by the SEC at http://www.sec.gov. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. 9. CERTAIN INFORMATION CONCERNING STEEL PARTNERS II AND THE PURCHASER. We are a Delaware corporation formed on June 15, 2006. Our principal executive offices are located at 590 Madison Avenue, New York, New York 10022. The telephone number of our principal executive offices is (212) 520-2300. We were formed to serve as an acquisition vehicle for Steel Partners II and have no current operations other than those incident to the Offer. We are a wholly owned subsidiary of Steel Partners II. Steel Partners II is a Delaware limited partnership that invests in the securities of small cap companies. Warren G. Lichtenstein is Chairman of the Board, Secretary and the Managing Member of Steel Partners, L.L.C., a Delaware limited liability company ("Partners LLC"), which in turn is the general partner of Steel Partners II. The principal business of Partners LLC is acting as the general partner of Steel Partners II. The principal occupation of Mr. Lichtenstein is investing in the securities of small cap companies. The principal business address of Mr. Lichtenstein, Partners LLC and Steel Partners II is 590 Madison Avenue, New York, New York 10022. Collectively, Steel Partners II and Partners LLC are referred to herein as the "Steel Entities." The business telephone number for each of the Steel Entities and Mr. Lichtenstein is (212) 520-2300. Steel Partners II beneficially owns 1,110,200 Shares, representing approximately 15.2% of the Company's outstanding Shares, in addition to the Tender and Support Agreement Shares it may be deemed to beneficially own. As the general partner of Steel Partners II, Partners LLC may be deemed to beneficially own the 1,110,200 Shares owned by Steel Partners II, representing approximately 15.2% of the Company's outstanding Shares, in addition to the Tender and Support Agreement Shares it may be deemed to beneficially own. As the sole executive officer and managing member of Partners LLC, which in turn is the general partner of Steel Partners II, Mr. Lichtenstein may be deemed to beneficially own the 1,110,200 Shares owned by Steel Partners II, representing approximately 15.2% of the Company's outstanding Shares, in addition to the Tender and Support Agreement Shares he may be deemed to beneficially own. Each of the Steel Entities and Mr. Lichtenstein expressly disclaims beneficial ownership of the Tender and Support Agreement Shares. The name, business address, principal occupation or employment, five-year employment history and citizenship of each director and executive officer of the Steel Entities and the Purchaser and certain other information are set forth on Schedule I hereto. Except as set forth elsewhere in this Offer to Purchase or Schedule I to this Offer to Purchase: (i) none of the Steel Entities, the Purchaser and, to the Steel Entities' and the Purchaser's knowledge, the persons listed in Schedule I hereto or any associate or majority owned subsidiary of the Steel Entities, the Purchaser or of any of the persons so listed, beneficially owns or has a right to acquire any Shares or any other equity securities of the Company; (ii) none of the Steel Entities, the Purchaser and, to the Steel Entities' and the Purchaser's knowledge, the persons or entities referred to in clause (i) above has effected any transaction in the Shares or any other equity securities of the Company during the past 60 days; (iii) none of the Steel Entities, the Purchaser and, to the Steel Entities' and the Purchaser's knowledge, the persons listed in Schedule I to this Offer to Purchase, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company (including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies, consents or authorizations); (iv) during the two years before the date of this Offer to Purchase, there have been no transactions between the Steel Entities, the Purchaser, their respective subsidiaries or, to the Steel Entities' and the Purchaser's knowledge, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and the Company or any of its executive officers, directors or affiliates, on the other hand, that would 18 require reporting under SEC rules and regulations; and (v) during the two years before the date of this Offer to Purchase, there have been no contracts, negotiations or transactions between the Steel Entities, the Purchaser, their respective subsidiaries or, to the Steel Entities' and the Purchaser's knowledge, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and the Company or any of its subsidiaries or affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets. 10. SOURCE AND AMOUNT OF FUNDS. We will need approximately $86.5 million to purchase all of the Shares pursuant to the Offer not already owned by Steel Partners II, to pay the Dividend and to pay related fees and expenses. As of the date of this Offer to Purchase, Steel Partners II had cash and cash equivalents and short-term investments substantially in excess of the approximately $86.5 million required to acquire the Shares and pay the Dividend. The Purchaser intends to obtain all funds needed for the Offer and the Dividend through a capital contribution or a loan from Steel Partners II. Steel Partners II plans to provide the funds for such capital contribution or loan from its available cash, cash equivalents and working capital. The Offer is not subject to any financing condition. 11. BACKGROUND OF THE OFFER. Below is a background description of Steel Partners II's involvement with the Company. Steel Partners II commenced investing in Shares of the Company in July 1996. On February 18, 2003, Steel Partners II filed a Schedule 13D with the SEC indicating it owned 572,600 Shares as of February 13, 2003, representing approximately 7.8% of the Company's then outstanding Shares. Steel Partners II subsequently filed amendments to the Schedule 13D on each of September 8, 2004, September 17, 2004, October 28, 2004 and July 6, 2005 reporting increases in Steel Partners II's ownership position to 661,700, 861,700, 940,400 and 1,057,300 Shares, respectively. From time to time after the Company's announcement of its quarterly earnings, representatives of Steel Partners II and the Company discussed generally the operations of the Company and its financial performance. During one telephone call, representatives of Steel Partners II spoke with Luke E. Fichthorn, III, the Chairman of the Board and Chief Executive Officer of the Company, regarding a potential strategic transaction involving the Company and Steel Partners II (or one of its affiliates). In December 2005, representatives of Steel Partners II had a telephone conversation with Mr. Fichthorn to discuss the Company's 2005 third quarter earnings release. The call included a more in-depth discussion of the Company's business and operations, including issues at the Company's recently opened Arlon Coated Materials San Antonio facility, the Company's defined pension plan and general concerns related to controlling escalating medical costs, as well as suggestions to maximize stockholder value. During this call, Steel Partners II's representatives requested to visit some of the Company's facilities. Steel Partners II continued to evaluate its investment in the Company subsequent to this call. On January 9, 2006, Steel Partners II, which then owned approximately 14.9% of the outstanding Shares, sent a letter to the Company Board requesting the Company Board to (i) adopt a resolution exempting Steel Partners II from the limitations of Section 203 of the Delaware Law and (ii) recommend a proposal for stockholder approval at the next annual meeting of stockholders to amend the Company's charter to elect not to be governed by Section 203. On January 31, 2006, Mr. Fichthorn sent a letter to Warren G. Lichtenstein, Steel Partners II's managing member, informing him of the Company Board's decision to reject Steel Partners II's request and explaining the reasoning behind the Company Board's decision. In his letter, Mr. Fichthorn explained that the Company Board, after careful consideration and consultation with outside counsel, determined that allowing Steel Partners II to purchase shares in excess of the threshold set by Section 203 of the Delaware Law and pursuing action to cause the Company not to be governed by Section 203 of the Delaware Law were not in the best interest of all of the Company's stockholders. The Company therefore did not approve further purchases by Steel Partners II and did not seek to amend the Company's certificate of incorporation. 19 In March 2006, representatives of Steel Partners II again asked to visit certain of the Company's facilities. In response to this request, representatives of Steel Partners II and the Company arranged for representatives of Steel Partners II to visit certain Company facilities. In April 2006, representatives of Steel Partners II toured the Company's Arlon Electronic Materials facility located in Rancho Cucamonga, CA and its Arlon Coated Materials facility located in Santa Ana, CA. Following this visit, Steel Partners II conducted further review of the Company's business and financial performance, and ultimately determined to pursue the Original Offer in order to maximize the value of the Shares. On June 15, 2006, Steel Partners II sent a letter to Mr. Fichthorn informing him of Steel Partners II's intention to commence the Original Offer and requesting a meeting with Mr. Fichthorn and the Company Board to negotiate a definitive merger agreement. The letter stated that, after the Company Board had denied Steel Partners II's request to take the necessary steps to opt out of Section 203 of the Delaware Law, Steel Partners II, having evaluated all of its options, determined that commencing the Original Offer "would be in the best interest of all shareholders and would provide shareholders with immediate liquidity at a significant premium to market." Steel Partners II also issued a press release on that day announcing its intention to commence the Original Offer. The letter and press release were preceded by a telephone call from a representative of Steel Partners II to Mr. Fichthorn informing him of Steel Partners II's intention to commence the Original Offer. On June 16, 2006, the Company issued a press release cautioning the Company's stockholders against tendering, stating that the Company Board would make a recommendation to the Company's stockholders with respect to the Original Offer in a timely manner. On June 22, 2006, Steel Partners II and Purchaser commenced the Original Offer. Also on June 22, 2006, the Company issued a press release announcing its adoption of a shareholder rights plan and its retention of Lazard as its financial adviser and Debevoise & Plimpton LLP as its legal counsel in connection with the Original Offer. On June 26, 2006, Steel Partners II issued a press release responding to the Company's adoption of a shareholder rights plan. On June 28, 2006, the Company filed a Current Report on Form 8-K with the SEC announcing that it had entered into change in control agreements with certain senior executives of the Company, including Kenneth L. Bayne, Larry C. Maingot, Larry D. Smith, Daniel T. Holverson, Elmer G. Pruim, Robert M. Carini, Brian E. Turner and Morgan Ebin. The change in control agreements entitle the executives to severance benefits in cases where their employment with the Company is terminated within 24 months of a change in control of the Company. On July 6, 2006, Steel Partners II's outside legal counsel received a letter from the Company setting forth a list of 19,300 stock options and 16,000 shares of restricted stock that the Company Board had granted to various employees of the Company on June 22, 2006. Also on July 6, 2006, the Company filed a solicitation/recommendation statement with the SEC on Schedule 14D-9 announcing that the Company Board had determined that the Original Offer is inadequate and not in the best interests of the Company's stockholders (other than Steel Partners II and its affiliates) and recommended that the Company's stockholders reject the Original Offer and not tender their Shares. In the afternoon on that day, Steel Partners II received a letter from the Company attaching the Company's press release relating to the Original Offer. On July 21, 2006, Steel Partners II announced the extension of the expiration date of the Original Offer to 5:00 p.m., New York City time, on August 9, 2006. On July 28, 2006, the Company issued a press release announcing its intention to explore possible strategic alternatives, including the possible sale of the Company. 20 On July 31, 2006, a representative of Lazard sent to a representative of Steel Partners II a proposed form of confidentiality agreement for Steel Partners II to sign in order to receive information concerning the business operations of the Company. Steel Partners II determined that it was not advisable for it to sign the confidentiality agreement at that time, as the Company's provision of any material non-public information to Steel Partners II under the terms of the confidentiality agreement could have precluded Steel Partners II from consummating the Original Offer. On August 10, 2006, Steel Partners II announced the extension of the expiration date of the Original Offer to 5:00 p.m., New York City time, on September 8, 2006. On September 11, 2006, Steel Partners II announced the extension of the expiration date of the Original Offer to 5:00 p.m., New York City time, on September 28, 2006. On September 29, 2006, Steel Partners II announced the extension of the expiration date of the Original Offer to 5:00 p.m., New York City time, on October 26, 2006. On October 11, 2006, the Company issued a press release announcing that the Company had completed its review of strategic alternatives and determined to continue to implement its strategic plan. The press release also announced that the Company, through its wholly-owned subsidiary, Kasco Corporation, had purchased certain assets and assumed certain liabilities of Atlanta SharpTech for approximately $14.0 million (subject to purchase price adjustments), using borrowings under the Company's credit facility, which it had just expanded. The press release further stated that Atlanta SharpTech's revenues were approximately $18.5 million for its fiscal year ended June 2006. In mid-October 2006, counsel for Steel Partners II and counsel for the Company had limited discussions on the terms of the confidentiality agreement but did not reach any understanding related thereto. Between October 20 and October 26, 2006, Mr. Lichtenstein and Mr. Fichthorn engaged in several conversations regarding a possible sale of the Company to Steel Partners II and the proposed purchase price. Mr. Fichthorn suggested that the Company Board might be receptive to a transaction at a price significantly higher than $12.00 per Share and orally disclosed to Mr. Lichtenstein that, for the Company's 2007 fiscal year, the Company's operating income was expected to be approximately $15 million and its EBITDA was expected to be in the range of $23-24 million. Mr. Lichtenstein informed Mr. Fichthorn that, because Steel Partners II had not had the opportunity to perform a due diligence investigation of the Company and was concerned about the Company's ability to meet its projected financial results, Steel Partners II would be willing to pay $12.00 per Share in cash plus $1.50 per Share in the form of a contingent promissory note, payment of which would depend on the Company's future financial performance. Mr. Fichthorn rejected the structuring of the transaction in this manner. On October 26, 2006, Mr. Lichtenstein indicated that Steel Partners II would be willing to pay $12.50 per Share in cash in a negotiated transaction, but this proposal was also declined. During these conversations, Mr. Lichtenstein requested that Mr. Fichthorn ask the Company Board to redeem the Company's shareholder rights plan and opt out of Section 203 of the Delaware Law so that the Company's stockholders could have the ability to decide whether they wanted to accept the Original Offer, but this request was denied. On October 27, 2006, Steel Partners II announced the extension of the expiration date of the Original Offer to 5:00 p.m., New York City time, on November 27, 2006. In an effort to reach agreement on an appropriate valuation for the Company, Steel Partners II and the Company entered into a confidentiality agreement on October 31, 2006. The confidentiality agreement provided for the ability of Steel Partners II to conduct a due diligence review of the Company over a 30-day period, which was subsequently extended to December 15, 2006. The terms of the confidentiality agreement also enabled Steel Partners II, in the event the parties were unable to reach agreement, to publicly disclose any material non-public information provided to it by the Company that was reasonably necessary under applicable securities laws to allow Steel Partners II to consummate the Original Offer. 21 On November 3, 2006, Steel Partners II delivered a comprehensive document request list to a representative of Lazard. On November 13, 2006, Steel Partners II received from the Company a CD-ROM containing certain of the information requested by Steel Partners II. Thereafter, during the due diligence review period, Steel Partners II conducted a review of the Company's business and historical and projected financial results, including discussions with representatives of the Company and its financial advisors. Steel Partners II also retained an independent environmental consultant to review environmental studies of the Company's facilities that had been previously prepared for the Company. On November 21, 2006, a representative of Steel Partners II spoke with representatives of Lazard regarding the process that Lazard had undertaken to determine potential purchasers' interests in acquiring the Company. During this discussion, Lazard's representatives indicated that this process did not produce any offers for the acquisition of the entire Company. On November 28, 2006, Steel Partners II announced the extension of the expiration date of the Original Offer to 5:00 p.m., New York City time, on December 29, 2006. On December 6 and 7, 2006, representatives of Steel Partners II visited the Company's executive offices in Lake Mary, Florida for the primary purpose of determining the achievability of the guidance the Company had issued for 2007. During this visit, Steel Partners II's representatives met with Mr. Fichthorn, Kenneth L. Bayne, the Company's Chief Financial Officer, and Lawrence C. Maingot, the Company's Corporate Controller, to discuss, among other things, the assumptions underlying the Company's 2007 financial projections and various concerns expressed by Steel Partners II relating to some of the Company's facilities, including the Arlon Coated Materials San Antonio facility and the Kasco plant in St. Louis. During these meetings, Steel Partners II's representatives also requested to visit the Company's San Antonio and St. Louis facilities. On December 20, 2006, representatives of Steel Partners II spoke with Mr. Fichthorn and indicated that, as a result of Steel Partners II's due diligence findings and its continued concerns about the Company's ability to meet its projected financial results, Steel Partners II would be willing to increase the Original Offer price to a maximum of $12.50 per Share in cash. The increase in the Original Offer price to $12.50 per Share depended upon the Company's willingness to enter into a mutually acceptable merger agreement with Steel Partners II, and was not indicative of the price Steel Partners II was prepared to pay in a non-negotiated transaction, due to the additional costs involved in pursuing a non-negotiated transaction. Among the concerns expressed by Steel Partners II's representatives were: (1) the significant increase in sales and production needed to ramp-up the Company's Chinese facility, which began limited operations in October 2006, from its current operating loss to its projected profitability in view of the Company's prior announcement that production was expected to commence by the end of 2005 and that the facility was expected to be profitable in 2006; (2) continuing production and other problems at the Company's Arlon Coated Materials San Antonio facility; (3) the Company's acquisition of the Atlanta SharpTech business and the challenges faced by the Company in integrating this business with the Company's underperforming Kasco division; (4) the additional change in control contracts given to certain senior executives of the Company following the commencement of the Original Offer; (5) the substantial expenses incurred by the Company in contesting the Original Offer without advancing other strategic alternatives; and (6) the Company's overall poor track record in meeting its stated goals in the past. Mr. Fichthorn said that he would present Steel Partners II's proposal to the Company Board but that he did not expect the Company Board to accept Steel Partners II's increased offer. On December 21, 2006, representatives of Steel Partners II had a telephone conversation with a representative of Lazard regarding Steel Partners II's proposed increase in the Original Offer price to $12.50 per Share in cash in a negotiated transaction. During this conversation, the Lazard representative confirmed that no other offers had been made to purchase the entire Company. On December 27, 2006, Mr. Fichthorn telephoned a representative of Steel Partners II and informed him that the Company Board had turned down Steel Partners II's proposal to pursue a negotiated transaction with the Company at an increased offer price of $12.50 per Share in cash. On December 29, 2006, as a result of the inability to reach agreement with the Company and the Company Board's unwillingness to redeem the Company's shareholder rights plan and opt out of Section 203 of the Delaware Law, Steel 22 Partners II announced that it was filing a preliminary consent solicitation statement with the SEC for the purpose of, among other things, removing and replacing the Company Board and that it had extended the expiration date of the Original Offer to 5:00 p.m., New York City time, on January 29, 2007. Because the proposed increase in the Original Offer price to $12.50 per Share in cash depended upon the Company's willingness to enter into a mutually acceptable merger agreement with Steel Partners II, and the Company Board had not accepted Steel Partners II's proposal, the Original Offer price remained at $12.00 per Share in cash due to the additional costs that Steel Partners II must incur to pursue a non-negotiated transaction. On December 29, 2006, the Company issued a statement in response to Steel Partners II's announcement that it was filing a preliminary consent solicitation statement with the SEC. On January 3, 2007, Steel Partners II sent to the Company a demand to inspect its stockholder list to enable Steel Partners II to communicate with stockholders in connection with the Consent Solicitation. On January 10, 2007, Steel Partners II sent to the Company a request that the Company Board fix a record date for the purpose of determining the stockholders entitled to provide written consents in connection with the Consent Solicitation. Steel Partners II filed a revised preliminary consent solicitation statement relating to the Consent Solicitation with the SEC on January 11, 2007 and filed a definitive consent solicitation statement with the SEC on January 12, 2007. Steel Partners II mailed the definitive consent solicitation statement and accompanying consent card to stockholders on or about January 16, 2007. Also on January 16, 2007, Steel Partners II delivered its consent card to the Company in which it consented to each of the four proposals pursuant to the Consent Solicitation. On January 11, 2007, the Company filed a preliminary consent statement with the SEC. It filed a revised preliminary consent statement on January 23, 2007 and a definitive consent statement on January 24, 2007. On January 16, 2007, the Company distributed a letter to its stockholders relating to the Consent Solicitation. On January 22, 2007, the Company announced that the Company Board set a record date of January 30, 2007 in connection with the Consent Solicitation. On January 23, 2007, Steel Partners II announced that it received notification that the Company Board set January 30, 2007 as the record date for determining stockholders entitled to provide written consents in connection with the Consent Solicitation, and Steel Partners II supplemented its definitive consent solicitation statement accordingly. Also on January 23, 2007, Steel Partners II delivered a letter to the Company nominating the Steel Partners II Nominees for election to the Company Board at the Company's 2007 annual meeting of stockholders, or any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof. On January 24, 2007, Steel Partners II sent a letter to stockholders of the Company with respect to the Consent Solicitation. Steel Partners II also issued a press release containing its letter to stockholders on that date. On January 30, 2007, Steel Partners II announced the extension of the expiration date of the Original Offer to 5:00 p.m., New York City time, on February 23, 2007. On February 1, 2007, the Company distributed a letter to its stockholders and issued a press release in connection therewith. On February 2, 2007, Steel Partners II announced that it had increased the offer price to $13.35 per Share in cash (the "Revised Offer"). Prior to the announcement, a representative of Steel Partners II telephoned Mr. Fichthorn to inform him of the Revised Offer. 23 Later in the day on February 2, 2007, the Company issued a press release responding to the Revised Offer. On February 4, 2007, Mr. Lichtenstein had a telephone conversation with Mr. Fichthorn regarding the Revised Offer. On February 5, 2007, representatives of Steel Partners II delivered a presentation to Institutional Shareholder Services relating to the Consent Solicitation. On February 6, 2007, Mr. Fichthorn contacted Mr. Lichtenstein to discuss the possibility of reaching an agreement as to an increase in the price of the Revised Offer. Mr. Lichtenstein and Mr. Fichthorn determined to explore whether Steel Partners II and the Company could reach an agreement regarding a transaction at a potential price of $13.65 per Share in cash, subject to Steel Partners II conducting certain additional due diligence. Between February 8, 2007 and February 21, 2007, Steel Partners II requested, received from the Company and reviewed additional due diligence information. In addition, in contemplation of a negotiated transaction between the parties, the Company's counsel delivered to Steel Partners II's counsel (1) a proposed amendment to Mr. Fichthorn's employment agreement (the "Employment Agreement Amendment"), entitling Mr. Fichthorn to receive the severance payments provided in his original employment agreement if he terminates his employment for any reason within six months following a change of control of the Company, and (2) the terms of a proposed one-time bonus to all officers, directors and employees of the Company who own unexercised stock options as of the close of business on March 5, 2007 (the record date for the Dividend), whether or not such options are currently exercisable or vested. During this time, the parties and their respective counsel discussed the terms and timing of Mr. Fichthorn's severance payments as a result of the proposed transaction, and Mr. Fichthorn agreed to waive the $0.10 per Share bonus on his unexercised stock options, as well as any gross-up payments related to interest on certain deferred severance payments. On February 8, 2007, Steel Partners II's counsel delivered to the Company's counsel a draft of a proposed merger agreement providing for a negotiated transaction between the parties. Steel Partners II's and the Company's respective counsel exchanged several drafts of the merger agreement and negotiated its terms between February 8, 2007 and February 22, 2007. Also on February 8, 2007, Steel Partners II's environmental consultant visited the Company's Kasco plant located in St. Louis, Missouri. On February 10, 2007, representatives of Steel Partners II toured the Company's Arlon Coated Materials facility located in San Antonio, Texas. On February 13, 2007, Steel Partners II's counsel delivered to the Company's counsel a draft of a proposed tender and support agreement pursuant to which, among other things, all of the members of the Company Board and certain of the Company' senior executive officers would agree to tender their Shares in the Offer and grant Steel Partners II an irrevocable proxy to vote their Shares in favor of the Merger Agreement and the Merger. Steel Partners II's and the Company's respective counsel exchanged several drafts of this agreement and negotiated its terms between February 13, 2007 and February 22, 2007. On February 14, 2007, representatives of Steel Partners II participated in a conference call with representatives of the Company and Grant Thornton LLP, the Company's independent public accountants, to discuss the status of the Company's 2006 audit. Also on February 14, 2007, the Company's counsel advised Steel Partners II's counsel that, at a meeting of the Company Board held on that date, the Company Board had approved the parameters of a transaction with Steel Partners II, although the terms of the transaction, including the price, had not yet been finalized and remained subject to confirmatory due diligence on the part of Steel Partners II. The parties' respective counsel discussed that, in the event that the parties did not reach a definitive agreement by the following day, the Company was required to file an amendment to its Schedule 14D-9 by February 15, 2007 stating the Company Board's position with respect to the Revised Offer. 24 On February 15, 2007, a representative of Steel Partners II informed Mr. Fichthorn that, based on the results of its due diligence to that point and its growing concerns over the Company's ability to achieve its projected financial results for 2007, Steel Partners II was not prepared to proceed with a negotiated transaction at a price of $13.65 per Share in cash and that Steel Partners II required additional access to Company information and employees, including the managers of each of the Company's Arlon Coated Materials, Arlon Electronic Materials and Kasco segments, in order to finalize the terms of a negotiated transaction. On February 15, 2007, the Company filed with the SEC an amendment to its Schedule 14D-9 announcing that the Company Board had determined that the Revised Offer is inadequate and not in the best interests of the Company's stockholders (other than Steel Partners II and its affiliates) and recommended that the Company's stockholders reject the Revised Offer and not tender their Shares. Between February 15, 2007 and February 16, 2007, a representative of Steel Partners II had telephone conversations with each of the Company's three segment managers primarily focused on the Company's ability to meet its projected operating results for 2007. On February 21, 2007, a representative of Steel Partners II informed Mr. Fichthorn that, based on the results of Steel Partners II's due diligence and its concerns that the Company would not be able to achieve its projected financial results for 2007, Steel Partners II was willing to proceed with a negotiated transaction, based on the transaction documents that had been negotiated by the parties' respective counsel, at a price of $13.50 per Share in cash. Mr. Fichthorn said that he would present these terms to the Company Board at its meeting the next day. On February 22, 2007, the Company Board held a meeting to consider Steel Partners II's revised offer. Lazard provided to the Company Board its oral opinion, subsequently confirmed in writing, to the effect that, as of February 23, 2007, and subject to the qualifications and limitations set forth in the written opinion, the Offer Price to be paid to the holders of the Shares (other than Steel Partners II and its affiliates or, if applicable, holders of Shares as to which dissenter's rights have been perfected) in the Offer and the Merger pursuant to the Merger Agreement is fair, from a financial point of view, to such holders. After careful consideration, including a thorough review of the revised offer at an Offer Price of $13.50 net per Share in cash with its financial and legal advisers, the Company Board unanimously (i) determined that the terms of the Offer, the Merger and the Merger Agreement are advisable to the Company's stockholders, (ii) recommended that the Company's stockholders accept the Offer and tender their Shares pursuant to the Offer, (iii) approved, adopted and authorized and, to the extent necessary, ratified and confirmed the Merger Agreement, (iv) approved, adopted and authorized and, to extent necessary, ratified and confirmed the Rights Amendment, (v) approved, adopted and authorized and, to the extent necessary, ratified and confirmed Mr. Fichthorn's employment agreement, including the Employment Agreement Amendment, and each of the payments contemplated thereby and (vi) resolved that the restriction potentially prohibiting the Purchaser or any of its affiliates from engaging in any business combination with the Company pursuant to Section 203 of the Delaware Law is inapplicable to (x) the Merger Agreement, the Offer, the Merger and the other transactions contemplated by the Merger Agreement and (y) the Tender and Support Agreement. As of February 23, 2007, the respective parties to the Merger Agreement and the Tender and Support Agreement executed those agreements, and Steel Partners II and the Company issued a joint press release announcing the signing of the Merger Agreement and the increase in the offer price to $13.50 per Share in cash. Steel Partners II also issued a separate press release announcing the signing of the Merger Agreement and the extension of the expiration date of the Offer to 5:00 p.m., New York City time, on March 16, 2007. In addition, Steel Partners II terminated and withdrew the Consent Solicitation as of February 23, 2007. 12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; STATUTORY REQUIREMENTS; APPROVAL OF THE MERGER; APPRAISAL RIGHTS. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. The Offer is being made pursuant to the Merger Agreement and is intended to facilitate the acquisition of all of the Shares and increase the likelihood that the Merger will be effected. The purpose of the Merger is to acquire all outstanding Shares not purchased pursuant to the Offer. The transaction structure includes the Merger in order to ensure the acquisition by Steel Partners II of all the outstanding Shares. 25 If the Merger is consummated, Steel Partners II's common equity interest in the Company would increase to 100% and Steel Partners II would be entitled to all the benefits resulting from that interest. These benefits include complete management with regard to the future conduct of the Company's business and any increase in its value. Similarly, Steel Partners II will also bear the risk of any losses incurred in the operation of the Company and any decrease in its value. Upon consummation of the Offer, we will be entitled to exercise our rights under the Merger Agreement to obtain pro rata representation, based on the number of Shares purchased pursuant to the Offer, on the Company Board and in no event less than a majority of the Company Board. We intend to exercise this right upon consummation of the Offer and to designate Jack L. Howard, Glen M. Kassan and John J. Quicke, each of whom is affiliated with the Steel Entities, to serve as directors of the Company. Certain information regarding each of these individuals is contained in the amendment to the Schedule 14D-9 filed by the Company with the SEC on the date of this Offer to Purchase. It is also expected that Luke E. Fichthorn, III will resign as Chairman of the Board and Chief Executive Officer at that time. In connection with the Offer, Steel Partners II has reviewed and will continue to review various possible business strategies that it might consider in the event that the Purchaser acquires control of the Company pursuant to the Offer. Following a review of additional information regarding the Company, such changes could include, among other things, changes in the Company's business, operations, personnel, employee benefit plans, corporate structure, capitalization and management. Except as described above or elsewhere in this Offer to Purchase, the Purchaser has no present plans or proposals that would relate to or result in an extraordinary corporate transaction involving the Company or any of its subsidiaries (such as a merger, reorganization, liquidation, relocation of any operations or sale or other transfer of a material amount of assets), any change in the Company Board or management, any material change in the Company's capitalization or dividend policy or any other material change in the Company's corporate structure or business. STATUTORY REQUIREMENTS; APPROVAL OF THE MERGER. Generally, under the Delaware Law, the affirmative vote of the holders of a majority of the outstanding shares of a company's stock entitled to vote thereon is required to adopt and approve a merger agreement and the merger of a company. The Company has represented to us in the Merger Agreement that the execution and delivery of the Merger Agreement and the consummation of the transactions contemplated thereby, including the Offer and the Merger, have been duly and validly authorized and approved by the Company Board and that such approval is sufficient to render inapplicable to the Merger Agreement, the Offer, the Merger and the other transactions contemplated by the Merger Agreement the restriction against Steel Partners II, the Purchaser and the Company, or any of their affiliates, engaging in a business combination as set forth in Section 203 of the Delaware Law. The Company has also represented to us that no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of the Merger Agreement or to consummate the transactions contemplated thereby, other than the requisite approval of the Merger by the stockholders of the Company in accordance with the Delaware Law. In addition, the Company has represented to us in the Merger Agreement that, if required under the Delaware Law, the affirmative vote of the holders (including the Purchaser and its affiliates following the Purchaser's acceptance of Shares for payment under the Offer) of a majority of the outstanding Shares is the only vote of the holders of any class or series of the Company's capital stock necessary to approve the Merger. Therefore, unless the Merger is consummated pursuant to the short-form merger provisions of Section 253 of the Delaware Law described below, the only remaining required corporate action of the Company would be the approval of the Merger Agreement and the Merger by the affirmative vote of the holders of a majority of the outstanding Shares. If we acquire, pursuant to the Offer or otherwise, a number of Shares which, together with the Shares then owned by us, represents at least a majority of the outstanding Shares, we would have sufficient voting power to approve the Merger without the affirmative vote of any other stockholder of the Company. In addition, under Section 253 of the Delaware Law, if we acquire, pursuant to the Offer or otherwise, a number of Shares which, together with the Shares then owned by us, represents at least 90% of the outstanding Shares, we would be able to approve the Merger without a vote of the stockholders. Steel Partners II presently intends to effect a short-form merger if permitted to do so under Section 253 of the Delaware Law. 26 "GOING PRIVATE" TRANSACTIONS. The SEC has adopted Rule 13e-3 promulgated under the Exchange Act ("Rule 13e-3"), which is applicable to certain "going private" transactions and which may under certain circumstances be applicable to the Merger following the purchase of Shares pursuant to the Offer. However, Rule 13e-3 would not be applicable if (1) the Shares are deregistered under the Exchange Act prior to the Merger or (2) the Merger is consummated within one year after the purchase of the Shares pursuant to the Offer and the amount paid per Share in the Merger is at least equal to the Offer Price. We believe that Rule 13e-3 will not be applicable to the Merger because it is anticipated that the Merger will be effectuated within one year following the consummation of the Offer and, in the Merger, stockholders will receive the Offer Price. If applicable, Rule 13e-3 requires, among other things, that certain financial information concerning the Company and certain information relating to the fairness of the proposed transaction and the consideration offered to minority stockholders be filed with the SEC and disclosed to stockholders prior to consummation of the transaction. APPRAISAL RIGHTS. You do not have appraisal rights as a result of the Offer. However, if we consummate the Merger, stockholders of the Company who have neither voted in favor of the Merger nor consented thereto in writing, and who otherwise under the Delaware Law comply with the applicable statutory procedures, will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and to receive payment of such fair value in cash, together with a fair rate of interest, if any (all such Shares collectively, the "Dissenting Shares"). Any such judicial determination of the fair value of the Dissenting Shares could be based upon considerations other than or in addition to the Offer Price and the market value of the Shares. Stockholders should recognize that the value so determined could be higher or lower than the Offer Price. Moreover, we may argue in an appraisal proceeding that, for purposes of such a proceeding, the fair value of the Dissenting Shares is less than the Offer Price. If any holder of Shares who demands appraisal under Section 262 of the Delaware Law fails to perfect, or effectively withdraws or loses his rights to appraisal as provided in the Delaware Law, the Shares of such stockholder will be converted into the right to receive the Offer Price. A stockholder may withdraw his demand for appraisal by delivering to us a written withdrawal of his demand for appraisal and acceptance of the Merger. Failure to follow the steps required by Section 262 of the Delaware Law for perfecting appraisal rights may result in the loss of such rights. The foregoing discussion is not a complete statement of Section 262 of the Delaware Law. 13. THE TRANSACTION DOCUMENTS. THE MERGER AGREEMENT The following is a summary of certain provisions of the Merger Agreement. This summary is qualified in its entirety by reference to the Merger Agreement, which is incorporated herein by reference and a copy of which is filed as an exhibit to the amendment to the Tender Offer Statement on Schedule TO that Steel Partners II and the Purchaser filed with the SEC on February 23, 2007. The Merger Agreement may be examined and copies may be obtained in the manner set forth in Section 8 under "Additional Information." The Merger Agreement has been included to provide stockholders with information regarding its terms. It is not intended to provide any other factual information about Steel Partners II, the Purchaser or the Company. The Merger Agreement contains representations and warranties that the parties to the Merger Agreement made to and solely for the benefit of each other, and the assertions embodied in such representations and warranties are qualified by information contained in confidential disclosure schedules that the parties exchanged in connection with signing the Merger Agreement. Accordingly, stockholders should not rely on such representations and warranties as characterizations of the actual state of facts or circumstances, since they were only made as of the date of the Merger Agreement and are modified in important part by the underlying disclosure schedules. THE OFFER. The Merger Agreement provides that, promptly following the execution and delivery thereof, Steel Partners II will amend, and will cause the Purchaser to amend, their existing tender offer to purchase all of the outstanding Shares to increase the purchase price for the Offer to $13.50 per Share, subject to any applicable withholding for taxes, net to the seller in 27 cash. The Merger Agreement requires Steel Partners II to amend, and Steel Partners II to cause the Purchaser to amend, their existing Offer to Purchase as soon as practicable after the date of the Merger Agreement, but in no event later than five business days (as defined in Rule 14d-1(g)(3) of the Exchange Act) from the date of the Merger Agreement, to reflect the terms set forth in the Merger Agreement, the Minimum Condition and the other conditions set forth in "The Offer--Section 15" and other related terms, and provides for Steel Partners II and the Purchaser to cause the Offer to remain open through March 16, 2007, unless extended pursuant to the terms of the Merger Agreement. As promptly as practicable following the date of the Merger Agreement, Steel Partners II and the Purchaser are obligated to file with the SEC an amendment to their existing Tender Offer Statement on Schedule TO (together with all amendments and supplements thereto, the "Schedule TO") with respect to the Offer that contains or incorporates by reference this Offer to Purchase and forms of the related letter of transmittal and all other ancillary Offer documents. Steel Partners II and the Purchaser will cause these Offer documents to be disseminated to the holders of the Shares as and to the extent required by applicable federal securities laws. SCHEDULE 14D-9. The Merger Agreement provides that, as promptly as practicable following the filing of the amendment to the Schedule TO, the Company will file with the SEC an amendment to its Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, the "Schedule 14D-9") with respect to the Offer, which will contain the recommendation of the Company Board that the stockholders of the Company accept the Offer and tender their Shares to the Purchaser pursuant to the Offer, subject to the no solicitation provisions described below. The Company further agreed to take all steps necessary to cause the amendment to the Schedule 14D-9 to be disseminated to holders of the Shares as and to the extent required by applicable federal securities laws. CONSENT SOLICITATION; ANNUAL MEETING. The Merger Agreement provides that, as promptly as practicable after the date thereof, Steel Partners II and the Purchaser will terminate the Consent Solicitation and amend their consent statement filed with the SEC to provide for such termination, and in no event will Steel Partners II, the Purchaser or any of their affiliates take any action to replace the members of the Company Board, by stockholder meeting, consent solicitation or otherwise, other than pursuant to the terms of the Merger Agreement. However, nothing contained in the Merger Agreement prevents Steel Partners II, the Purchaser or any of their affiliates from taking any such action to replace the members of the Company Board at any time following the earlier of the termination of the Merger Agreement and the time of the first acceptance for payment of Shares pursuant to the Offer. The Company agreed to take all required action to postpone its 2007 annual meeting of stockholders until no earlier than May 10, 2007. COMPANY BOARD. Immediately upon the purchase of and payment for Shares by the Purchaser or any of its affiliates pursuant to the Offer following satisfaction of the Minimum Condition, Steel Partners II will be entitled to designate such number of directors, rounded up to the next whole number, on the Company Board as is equal to the product obtained by multiplying the total number of directors on the Company Board by the percentage that the number of Shares so purchased and paid for bears to the total number of Shares then outstanding, but in no event less than a majority of the number of directors. In furtherance thereof, the Company and the Company Board will, after the purchase of and payment for Shares by the Purchaser or any of its affiliates pursuant to the Offer, upon request of the Purchaser, immediately increase the size of the Company Board, secure the resignations of such number of directors or remove such number of directors, or any combination of the foregoing, as is necessary to enable Steel Partners II's designees to be elected to the Company Board and will cause Steel Partners II's designees to be so elected. In the event that the Purchaser requests the resignation of directors of the Company pursuant to the immediately preceding sentence, the Company will cause such directors of the Company to resign as may be designated by the Purchaser in a writing delivered to the Company. Immediately upon the first purchase of and payment for Shares by the Purchaser or any of its affiliates pursuant to the Offer, the Company will, if requested by Steel Partners II, also cause directors designated by Steel Partners II to constitute at least the same percentage (rounded up to the next whole number) of each committee of the Company Board as is on the Company Board. Notwithstanding the foregoing, if Shares are purchased pursuant to the Offer, the Company will use its reasonable efforts to assure that there will be until the effective time of the Merger (the "Effective Time") at least two of the members of the Company Board who are directors on the date of the Merger Agreement and are not employees of the Company (each a "Continuing Director"). If at any time prior to the Effective Time, only one Continuing Director is in office for any reason, the Company Board will be entitled to appoint a person who is not an officer or employee of the Company or any subsidiary designated by the remaining Continuing Director to fill such vacancy (and such person shall be 28 deemed to be a Continuing Director for all purposes of the Merger Agreement), and if at any time prior to the Effective Time no Continuing Directors then remain, the other directors of the Company then in office will use their reasonable efforts to designate two persons to fill such vacancies who are not officers or employees or affiliates of the Company, its subsidiaries, Steel Partners II, the Purchaser or any of their respective affiliates (and such persons will be deemed to be Continuing Directors for all purposes of the Merger Agreement). The Company will promptly take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under the preceding paragraph, including mailing to stockholders together with the amendment to the Schedule 14D-9 the information required by such Section 14(f) and Rule 14f-1 as is necessary to enable Steel Partners II's designees to be elected to the Company Board. Steel Partners II and the Purchaser will supply the Company and be solely responsible for any information with respect to them and their nominees, officers, directors and affiliates required by such Section 14(f) and Rule 14f-1. THE MERGER. Upon the terms and subject to the conditions of the Merger Agreement, the Merger will be consummated in accordance with the Delaware Law. At the Effective Time, upon the terms and subject to the conditions of the Merger Agreement, the Purchaser will be merged with and into the Company in accordance with the Delaware Law, the separate existence of the Purchaser will cease and the Company, as the surviving corporation in the Merger (the "Surviving Corporation"), will continue its corporate existence under the laws of the State of Delaware as a wholly-owned subsidiary of the direct parent of the Purchaser immediately prior to the Effective Time. CONVERSION OF SECURITIES. At the Effective Time, by virtue of the Merger and without any action on the part of the holders of any securities of the Purchaser or the Company, each issued and outstanding Share (other than Shares owned by Merger Sub or its direct parent or owned by the Company as treasury stock, which Shares will be cancelled, and Shares owned by stockholders who properly exercise their appraisal rights under the Delaware Law) will automatically be converted into the right to receive the Offer Price in cash, payable, without interest, to the holder of such Share upon surrender of the certificate that formerly evidenced such Share. All such Shares, when so converted, will no longer be outstanding and will automatically be cancelled and retired and will cease to exist, and each holder of a certificate representing any such Shares will cease to have any rights with respect thereto, except the right to receive the Offer Price therefor upon the surrender of such certificate. Also at the Effective Time, each issued and outstanding share of common stock of the Purchaser will be converted into one share of common stock of the Surviving Corporation. OPTIONS AND RESTRICTED STOCK. With respect to all outstanding options to purchase Shares (the "Company Options") granted under the Company's 1990 Stock Plan and 2000 Stock Incentive Plan (the "Company Option Plans") or otherwise, whether or not then vested, immediately prior to the consummation of the Offer, each holder of a Company Option will be entitled to receive from the Company, and will receive, in settlement of each Company Option a Cash Amount. The "Cash Amount" will be equal to the net amount of (A) the product of (i) the excess, if any, of the Offer Price over the exercise price per share of such Company Option immediately prior to the consummation of the Offer, multiplied by (ii) the number of shares subject to such Company Option, less (B) any applicable withholdings for taxes. If the exercise price per share of any Company Option equals or exceeds the Offer Price, the Cash Amount therefore will be zero. Notwithstanding the foregoing, payment of the Cash Amount is subject to written acknowledgement, in a form reasonably acceptable to Steel Partners II, consenting to the foregoing arrangement and that no further payment is due to such holder on account of any Company Option and all of such holder's rights under such Company Options have terminated. In addition to the Cash Amount, the Company Board has approved the payment of one-time bonuses to each officer, director and employee of the Company who owns any unexercised Company Options as of the close of business on March 5, 2007 (the record date for the Dividend), whether or not such Company Options are currently exercisable or vested. Pursuant to a waiver agreement entered into by the Company and Mr. Fichthorn, Mr. Fichthorn waived his right to receive this bonus payment of $0.10 per option held by him. Immediately prior to the consummation of the Offer, except as otherwise provided above, all rights under any Company Option and any provision of the Company Option Plans and any other plan, program or arrangement providing for 29 the issuance or grant of any other interest in respect of the capital stock of the Company will be cancelled. The Company will use reasonable efforts to ensure that, immediately prior to, as of and after the consummation of the Offer, except as otherwise provided above, no person will have any right under the Company Option Plans or any other plan, program or arrangement with respect to securities of the Company, the Surviving Corporation or any of their respective subsidiaries. Prior to the consummation of the Offer, the Company will use reasonable efforts to cause to be effected any necessary amendments to the Company Option Plans and any other resolutions, consents or notices, in a form reasonably acceptable to Steel Partners II, required under any of the Company Option Plans or any Company Options to give effect to the foregoing provisions. The Merger Agreement further provides that the Company will take all actions necessary to cause all shares of restricted stock of the Company to become fully vested immediately prior to the consummation of the Offer and will make all required withholdings in connection therewith under applicable tax laws. These shares of restricted stock may be tendered in the Offer and acquired by the Purchaser pursuant to the Offer. CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS. Subject to the provisions on indemnification described below, at and after the Effective Time, until amended, (i) the Certificate of Incorporation of the Surviving Corporation will be identical to the Certificate of Incorporation of the Purchaser in effect at the Effective Time and (ii) the Bylaws of the Surviving Corporation will be identical to the Bylaws of the Purchaser in effect at the Effective Time. At and after the Effective Time, the directors of the Purchaser immediately prior to the Effective Time will be the directors of the Surviving Corporation, and the officers of the Purchaser immediately prior to the Effective Time will be the officers of the Surviving Corporation, except as the Purchaser otherwise provides in writing, in each case until their successors are elected or appointed and qualified. If, at the Effective Time, a vacancy exists on the Board of Directors or in any office of the Surviving Corporation, that vacancy may thereafter be filled in the manner provided by law. REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has made customary representations and warranties to Steel Partners II and the Purchaser relating to the following: o the due organization and good standing of the Company; o the Company's capitalization; o the authorization and binding effect of the Merger Agreement and other transaction documents; o governmental approvals required to consummate the transactions contemplated by the Merger Agreement; o no conflicts with the Company's organizational documents, material contracts and applicable laws; o the Company's SEC filings and financial statements; o absence of material changes in the Company's business; o absence of undisclosed liabilities; o permits; o litigation; o material contracts; 30 o intellectual property; o employee benefit plans; o taxes; o the Company's financial advisor and fairness opinion received; o stockholder approval required for the Merger; o environmental matters; o Company disclosures in the Offer documents, including the Schedule 14D-9; and o the Company's shareholder rights plan. Steel Partners II and the Purchaser have also made customary representations and warranties to the Company relating to the following: o their due organization and good standing; o the authorization and binding effect of the Merger Agreement and other transaction documents; o governmental approvals required to consummate the transactions contemplated by the Merger Agreement; o no conflicts with their organizational documents, material contracts and applicable laws; o no finders or investment bankers employed; o their disclosures in the Offer documents; o their financing for the Offer and the Merger; o litigation; and o no prior activities of the Purchaser. CONDUCT OF BUSINESS OF THE COMPANY. Unless Steel Partners II otherwise agrees in writing or except as expressly provided by the Merger Agreement, including the Company's disclosure schedules, during the period from the date of the Merger Agreement to the Effective Time, the Company has agreed that (i) the Company and its subsidiaries will conduct their respective businesses in the ordinary course and consistent with past practice and (ii) the Company will use its reasonable efforts to preserve intact its business organization, to keep available the services of its and its subsidiaries' officers and employees, to maintain satisfactory relationships with all persons with whom it and its subsidiaries do business, and to preserve the possession, control and condition of all of its and its subsidiaries' assets. Specifically, except as expressly provided by the Merger Agreement, including the Company's disclosure schedules, during the period from the date of the Merger Agreement to the Effective Time, the Company has agreed that neither the Company nor any of its subsidiaries will, without the prior written consent of Steel Partners II: o amend or propose to amend its Certificate of Incorporation or Bylaws (or comparable governing instruments); 31 o authorize for issuance, issue, grant, sell, pledge or dispose of any shares of, or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any shares of, its capital stock or other securities or equity interests or any voting debt, including any securities convertible into or exchangeable for shares of stock of any class, except for the issuance of Shares pursuant to the exercise of stock options outstanding on the date of the Merger Agreement in accordance with their present terms; o split, combine or reclassify any shares of its capital stock or equity interests or declare, pay or set aside any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock or equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any shares of its capital stock or other securities or equity interests, other than dividends and distributions to the Company or one of its wholly-owned subsidiaries and the Dividend; o (a) create, incur, assume, forgive or make any changes to the terms or collateral of any debt or receivables, or any employee or officer loans or advances, except in the ordinary course of business consistent with past practice or incurrences that constitute a refinancing of existing obligations on terms that are no less favorable to the Company than the existing terms; (b) except in the ordinary course of business consistent with past practice, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, indirectly, contingently or otherwise) for the obligations of any person; (c) except in accordance with its fiscal year 2007 capital expenditure budget, make any capital expenditures in excess of $250,000; (d) make any loans, advances or capital contributions to, or investments in, any other person (other than customary travel, relocation or business advances to employees); (e) acquire the stock or assets of, or merge or consolidate with, any other person; (f) voluntarily incur any material liability or obligation (absolute, accrued, contingent or otherwise) other than in the ordinary course of business consistent with past practice; or (g) sell, transfer, mortgage, pledge, encumber or otherwise dispose of, or agree to sell, transfer, mortgage, pledge, encumber or otherwise dispose of, any material assets or properties (real, personal or mixed, tangible or intangible) other than to secure debt permitted under clause (a) above or other than in the ordinary course of business consistent with past practice; o increase in any manner the wages, salaries, bonus, compensation or other benefits of any of its officers or employees or enter into, establish, amend or terminate any employment, consulting, retention, change in control, collective bargaining, bonus or other incentive compensation, profit sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, termination, deferred compensation or other compensation or benefit plan, policy, agreement, trust, fund or other arrangement with, for or in respect of any officer, director, employee, agent, consultant or affiliate other than as required by applicable law or pursuant to the terms of agreements in effect on the date of the Merger Agreement or in the ordinary course of business consistent with past practice with employees (other than officers) of the Company or any of its subsidiaries or enter into or engage in any agreement, arrangement or transaction with any of its directors, officers, employees or affiliates, except for expense reimbursements, and current compensation and benefits, in the ordinary course of business consistent with past practice or as permitted under the terms of the Merger Agreement; o (i) commence any litigation or other proceedings with any governmental authority or other person or (ii) make or rescind any election relating to taxes except to the extent consistent with prior practice, settle any material claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to taxes, file any amended tax return or claim for refund, change any method of accounting or make any other material change in its accounting or tax policies, but in each case only if such action could reasonably be expected to have a material adverse effect on the Company, and in each case except as required by applicable law or generally accepted accounting principles; 32 o adopt or amend any resolution or agreement concerning indemnification of its directors, officers, employees or agents; o materially modify or amend, or terminate, any material contract, or waive, release or assign any material rights or claims thereunder, except, in each case, in the ordinary course of business consistent with past practice; o modify, amend or terminate, or waive, release or assign any material rights or claims with respect to, any confidentiality agreement or non-competition agreement to which the Company or any of its subsidiaries is a party; o establish any subsidiary or enter into any new line of business; o enter into any lease, contract or agreement pursuant to which the Company or any of its subsidiaries is obligated to pay or incur obligations of more than $250,000 per year, other than leases contemplated in connection with the Company's fiscal year 2007 capital expenditure budget or other leases, contracts or agreements in the ordinary course of business consistent with past practice; o permit any material insurance policy naming the Company or any of its subsidiaries as a beneficiary or a loss payee to be cancelled or terminated without notice to and consent by Steel Partners II, unless the Company uses reasonable efforts to maintain substantially similar insurance coverage as is currently in place; o revalue any of its assets or make any change in accounting methods, principles or practices, except as required by generally accepted accounting principles; o fail to make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the rules and regulations promulgated thereunder; o discharge any obligations (including accounts payable) other than intercompany obligations or other obligations discharged on a timely basis in the ordinary course of business consistent with past practice; o close or materially reduce the Company's or any subsidiary's activities, or effect any material layoff at any of the Company's or any subsidiary's facilities; or o authorize any of, or agree to commit to do any of, the foregoing actions. SPECIAL MEETING; PROXY STATEMENT. As promptly as practicable after the Purchaser has purchased sufficient Shares pursuant to the Offer to satisfy the Minimum Condition, if required by applicable law in order to consummate the Merger, the Company, acting through the Company Board, has agreed, in accordance with applicable law, that it will: o (A) duly call, give notice of, convene and hold a special meeting of its stockholders (the "Special Meeting") for the purposes of considering and taking action upon the approval and adoption of the Merger and the Merger Agreement; (B) subject to the no solicitation provisions described below, declare advisable and recommend to its stockholders that they approve the Merger and adopt the Merger Agreement, and include disclosure regarding the approval of the Company Board. The Company agrees that its obligation to hold the Special Meeting will not be affected by the commencement, public proposal, public disclosure or communication to the Company or any other person of any Company Takeover Proposal (as such term is defined below) or the withdrawal or modification by the Company Board of its approval or recommendation of the Offer, the Merger or the Merger Agreement; and 33 o prepare and file with the SEC a preliminary proxy or information statement relating to the Merger and the Merger Agreement and obtain and furnish the information required to be included by the SEC therein and, after consultation with Steel Partners II, respond promptly to any comments made by the SEC with respect to the preliminary proxy or information statement and cause a definitive proxy or information statement, including any amendments or supplements thereto (the "Proxy Statement"), to be mailed to its stockholders at the earliest practicable date. Steel Partners II has agreed that it will vote, or cause to be voted, all of the Shares acquired in the Offer or otherwise then owned by it or the Purchaser in favor of the approval and adoption of the Merger and the Merger Agreement. Notwithstanding the foregoing, the Merger Agreement provides that in the event that Steel Partners II and the Purchaser acquire that number of Shares which, together with the Shares they already own, constitute in the aggregate at least 90% of the outstanding Shares, pursuant to the Offer or otherwise, the parties to the Merger Agreement will take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after such acquisition, without a meeting of stockholders of the Company, in accordance with the short-form merger provisions of Section 253 of the Delaware Law. NO SOLICITATION. The Merger Agreement provides that, except as otherwise provided below, the Company will not, directly or indirectly, and will not, directly or indirectly, authorize or permit any officer, director, employee, agent or representative of the Company to, (i) solicit, encourage, initiate or facilitate the making, submission or announcement of any Company Takeover Proposal, (ii) furnish any non-public information regarding the Company to any person (other than Steel Partners II, the Purchaser, any of their respective affiliates or any of their respective representatives) in connection with or in response to a Company Takeover Proposal or an inquiry that the Company believes in good faith could reasonably be expected to lead to a Company Takeover Proposal, (iii) engage in discussions or negotiations with any person with respect to any Company Takeover Proposal, except as to the existence of these provisions, (iv) withdraw or modify, or propose publicly to withdraw or modify, in a manner adverse to Steel Partners II, the Purchaser or any of their respective affiliates, the approval or recommendation by the Company Board of the Offer, the Merger Agreement or the Merger, (v) approve or recommend, or propose publicly to approve or recommend, any Company Takeover Proposal or (vi) cause the Company to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each, a "Company Acquisition Agreement") related to any Company Takeover Proposal. For purposes of the Merger Agreement, "Company Takeover Proposal" means (other than the transactions contemplated by the Merger Agreement) any inquiry, proposal or offer from any person relating to (1) any direct or indirect acquisition or purchase of assets representing 10% or more of the assets of the Company or any of its subsidiaries, (2) any issuance, sale or other disposition of (including by way of merger, consolidation, business combination, share exchange, joint venture or any similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such securities) representing 10% or more of the voting power of the Company, (3) any tender offer, exchange offer or other transaction in which, if consummated, any person or "group" (as that term is defined under the Exchange Act) would acquire beneficial ownership (as that term is defined in Rule 13d-3 under the Exchange Act), or the right to acquire beneficial ownership, of 10% or more of the outstanding voting capital stock of the Company, or (4) any merger, consolidation, share exchange, business combination, recapitalization, liquidation or dissolution involving the Company or any of its subsidiaries. In addition, for purposes of the Merger Agreement, a "Company Superior Offer" means a Company Takeover Proposal on terms that the Company Board determines, in good faith, based upon consultations with its outside legal counsel and its financial advisor, if consummated, are more favorable to the Company's stockholders than the Merger Agreement, the Offer and the Merger and is reasonably likely to be consummated, taking into account all legal, financial (including, without limitation, any financing contingencies) and regulatory aspects of the offer and the person making the offer. Notwithstanding the restrictions contained in the first paragraph under "No Solicitation" above, nothing in the Merger Agreement prohibits or limits (A) the Company, or the Company Board, prior to the time of the first acceptance of Shares for payment pursuant to the Offer, from furnishing non-public information regarding the Company to, or entering into discussions or negotiations with, any person in response to an unsolicited, bona fide written Company Takeover Proposal that the Company Board concludes in good faith (after consultation with its financial advisor) could reasonably be expected to constitute a Company 34 Superior Offer if (1) the Company has not violated any of the restrictions contained in the first paragraph above in connection with such Company Takeover Proposal, (2) the Company Board determines in good faith, after consultation with its outside legal counsel, that such action with respect to such Company Takeover Proposal is consistent with its fiduciary duties to the stockholders of the Company under applicable law, (3) the Company receives from such person an executed confidentiality agreement with provisions not substantially more favorable to such person than those contained in the Company's confidentiality agreement with Steel Partners II, and (4) the Company furnishes such non-public information to such person and to Steel Partners II at substantially the same time (to the extent such non-public information has not been previously furnished by the Company to Steel Partners II); or (B) the Company from complying with Rules l4d-9 and 14e-2 promulgated under the Exchange Act with regard to any Company Takeover Proposal. The Merger Agreement obligates the Company to notify Steel Partners II as promptly as practicable (and in any event within two business days) of the receipt by the Company, or any of its representatives, of any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations relating to any Company Takeover Proposal (including providing the identity of the person making or submitting such Company Takeover Proposal or request, and a summary of the material terms and conditions thereof, if the Company Takeover Proposal or request is not in writing, or a copy of the Company Takeover Proposal or request and any related draft Company Acquisition Agreements if it is in writing). The Company must keep Steel Partners II informed on a current basis of the status of any such discussions or negotiations and of any modifications to such inquiries, proposals or offers. The Company agreed that it will not terminate, waive, amend or modify, or release any person from, any provision of any standstill or confidentiality agreement to which it is a party and that relates to a Company Takeover Proposal, and the Company agreed to use reasonable efforts to enforce the provisions of any such agreement. The Merger Agreement requires the Company to immediately cease and cause to be terminated any discussions or negotiations with any parties with respect to any Company Takeover Proposal and to take reasonable steps to inform its representatives of the obligations undertaken under these no solicitation provisions. Notwithstanding anything in the Merger Agreement to the contrary, the Company Board may, at any time prior to the first acceptance of Shares for payment pursuant to the Offer (subject to the Company's compliance with the above no solicitation provisions): (i) withdraw or modify its approval or recommendation of the Offer, the Merger Agreement or the Merger or (ii) approve or recommend a Company Superior Offer if, in the case of both clause (i) and (ii) above: (A) an unsolicited, bona fide written offer is made to the Company (and not withdrawn) by a third party for a Company Takeover Proposal; (B) the Company Board determines in good faith, after consultation with its financial advisor, that such offer constitutes a Company Superior Offer; and (C) following consultation with outside legal counsel, the Company Board determines in good faith that the withdrawal or modification of its approval or recommendation of the Offer, the Merger Agreement or the Merger is consistent with its fiduciary duties to the stockholders of the Company under applicable law, but only, in the case of both clause (i) and (ii) above, (x) after providing written notice to Steel Partners II (a "Notice of Superior Offer") advising Steel Partners II that the Company Board has received a Company Superior Offer, specifying the material terms and conditions of such Company Superior Offer (and including with such notice any draft Company Acquisition Agreement) and identifying the person or persons making such Company Superior Offer, and (y) if Steel Partners II, or one of its affiliates, does not, within three business days of its receipt of the Notice of Superior Offer, make an offer that the Company Board determines in good faith, after consultation with its financial advisor, to be at least as favorable to the Company's stockholders as the Company Superior Offer. During that three business day period, the Company must, and must use reasonable efforts to cause its financial and legal advisors to, negotiate in good faith with Steel Partners II and its affiliates (to the extent they wish to negotiate) to enable Steel Partners II or its affiliate to make such an offer. INDEMNIFICATION AND INSURANCE. The Merger Agreement requires the Certificate of Incorporation and Bylaws of the Surviving Corporation to contain provisions no less favorable with respect to indemnification than are set forth in the Certificate of Incorporation and Bylaws, respectively, of the Company. These provisions may not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect adversely the rights of individuals who, at or prior to the Effective Time, were directors, officers, employees, fiduciaries or agents of the Company or any of its subsidiaries. The Merger Agreement provides that, after the Effective Time, the Surviving Corporation will, to the fullest extent permitted under applicable law, indemnify and hold harmless each present and former director and officer of the Company and each of its subsidiaries (collectively, the "Indemnified 35 Parties") against all costs and expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), whether civil, criminal, administrative or investigative, arising out of or pertaining to any action or omission, in his or her capacity as an officer, director, employee, fiduciary or agent of the Company or any of its subsidiaries, occurring at or before the Effective Time, to the same extent as provided in the Certificate of Incorporation or Bylaws of the Company. In the event of any such claim, action, suit, proceeding or investigation, (i) the Surviving Corporation will pay the reasonable fees and expenses of counsel selected by the Indemnified Parties, which counsel must be reasonably satisfactory to the Surviving Corporation, promptly after statements therefor are received (provided the applicable Indemnified Party provides an undertaking to repay all advanced expenses if it is finally judicially determined that such Indemnified Party is not entitled to indemnification) and (ii) the Surviving Corporation will cooperate in the defense of any such matter. However, the Surviving Corporation will not be liable for any settlement effected without its prior written consent (which consent may not be unreasonably withheld or delayed). In addition, the Surviving Corporation will not be obligated to pay the fees and expenses of more than one counsel (selected by a plurality of the applicable Indemnified Parties) for all Indemnified Parties in any jurisdiction with respect to any single action except to the extent that two or more of such Indemnified Parties have conflicting interests in the outcome of such action. Further, in the event that any claim for indemnification is asserted or made within such six-year period, all rights to indemnification in respect of such claim will continue until the disposition of such claim. The Merger Agreement also provides that the Company will purchase at or prior to the consummation of the Offer, and the Surviving Corporation will maintain in effect, tail policies to the Company's current directors' and officers' liability insurance, which tail policies (i) will be effective for a period of six years after the Effective Time with respect to claims arising from acts or omissions occurring prior to the Effective Time with respect to those persons who are currently covered by the Company's directors' and officers' liability insurance and (ii) will contain terms with respect to coverage and amount no less favorable, in the aggregate, than those of such policy or policies as in effect on the date of the Merger Agreement. Notwithstanding the foregoing, if the tail policies described above cannot be obtained or can only be obtained by paying aggregate premiums in excess of 225% of the aggregate annual amount currently paid by the Company for such coverage, the Surviving Corporation will only be required to provide as much coverage as can be obtained by paying aggregate premiums equal to 225% of the aggregate annual amount currently paid by the Company for such coverage. EMPLOYEE MATTERS. The Merger Agreement provides that, from and after the Effective Time, Steel Partners II will, and will cause the Surviving Corporation to, honor all Company employee benefit plans in accordance with their terms as in effect immediately before the consummation of the Offer, but nothing prohibits Steel Partners II or the Surviving Corporation from amending or terminating any such Company employee benefit plan in accordance with its terms at any time or from time to time thereafter. CONDITIONS TO THE MERGER. The respective obligations of the parties to the Merger Agreement to effect the Merger are subject to the fulfillment or waiver at or prior to the Effective Time of the following conditions: o The requisite approval of the Merger by the Company's stockholders has been obtained. o No order, statute, rule, regulation, executive order, stay, decree, judgment or injunction has been enacted, entered, promulgated or enforced by any court or other governmental authority since the date of the Merger Agreement, which prohibits or prevents the consummation of the Merger and which has not been vacated, dismissed or withdrawn prior to the Effective Time. The Company and Steel Partners II will use their reasonable efforts to have any of the foregoing vacated, dismissed or withdrawn by the Effective Time. o Steel Partners II, the Purchaser or any affiliate of either of them has purchased Shares pursuant to the Offer that together with Shares otherwise owned by Steel Partners II and its affiliates represent at least the Minimum Condition. o Any "subsequent offering period" has expired. 36 In addition, the obligations of Steel Partners II and the Purchaser to effect the Merger are subject to the fulfillment at or prior to the Effective Time of the condition, which may be waived by Steel Partners II, that all material consents required in connection with the Merger Agreement or the transactions contemplated thereby have been obtained and are in full force and effect. TERMINATION. The Merger Agreement may be terminated and the Offer, the Merger and the other transactions contemplated thereby may be abandoned at any time prior to the time of the first acceptance of Shares for payment pursuant to the Offer ("First Acceptance Time") as follows: o by mutual written consent of Steel Partners II and the Company; o by either Steel Partners II or the Company, if the First Acceptance Time has not occurred on or before May 15, 2007. However, this right to terminate the Merger Agreement is not available to any party whose failure to fulfill any obligation under the Merger Agreement has been the cause of, or resulted in, the failure of the First Acceptance Time to occur on or before that date; o by either Steel Partners II or the Company, if any governmental authority has enacted, issued, promulgated, enforced or entered any legally binding injunction, order, decree or ruling (whether temporary, preliminary or permanent) or taken any other action (including the failure to have taken an action) which has become final and non-appealable and has the effect of making consummation of the Offer or the Merger illegal or otherwise preventing or prohibiting consummation of the Offer or the Merger; o by Steel Partners II, if neither Steel Partners II nor the Purchaser is in material breach of any of its representations, warranties or covenants under the Merger Agreement, and if (i) any of the representations or warranties of the Company in the Merger Agreement become untrue or inaccurate in a manner that would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Company, (ii) there has been a material breach on the part of the Company of any of its covenants or agreements in the Merger Agreement and such breach (if curable) has not been cured within 20 days after written notice to the Company or (iii) the Company has breached in any material respect any of the no solicitation provisions of the Merger Agreement; o by the Company, if the Company is not in material breach of any of its representations, warranties or covenants under the Merger Agreement, and if (i) any of the representations or warranties of Steel Partners II or the Purchaser in the Merger Agreement become untrue or inaccurate in a manner that would reasonably be expected to have a material adverse effect on the ability of Steel Partners II or the Purchaser to consummate the transactions contemplated by the Merger Agreement, or (ii) either Steel Partners II or the Purchaser has failed to perform in any material respect its obligations or to comply in any material respect with its agreements or covenants to be performed or complied with by it under the Merger Agreement, and such breach (if curable) has not been cured within 20 days after written notice to Steel Partners II; o by Steel Partners II, if the Company Board has (i) withdrawn or modified, in a manner adverse to Steel Partners II, the Purchaser or any of their respective affiliates, its approval or recommendation of the Offer, the Merger Agreement or the Merger or (ii) recommended or approved, or proposed publicly to recommend or approve, any Company Takeover Proposal or any Company Acquisition Agreement relating to any Company Takeover Proposal or (iii) resolved to do any of the foregoing; or o by the Company, if the Company Board has withdrawn or modified in a manner adverse to Steel Partners II, the Purchaser or any of their respective affiliates its approval or recommendation of the Offer, the Merger Agreement or the Merger in compliance with the no solicitation provisions of the Merger Agreement. Concurrently with such termination, the Company must pay to Steel Partners II the Company Termination Fee and the Termination Expenses (as such terms are defined below). 37 In the event of the termination of the Merger Agreement in accordance with the foregoing terms, the Merger Agreement will become void, and there will be no liability under the Merger Agreement on the part of any party thereto (except that specified sections of the Merger Agreement will survive any such termination), but nothing will relieve any party from liability for any breach of any of its representations, warranties, covenants or agreements set forth in the Merger Agreement prior to such termination. FEES AND EXPENSES. The Merger Agreement states that, except as otherwise provided below, all expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby will be paid by the party incurring such expenses, whether or not the Offer, the Merger or any other related transaction is consummated. However, if the Merger Agreement is terminated: o by Steel Partners II or the Company because the First Acceptance Time has not occurred by May 15, 2007, if (A) at any time prior to such termination a Company Takeover Proposal has been publicly announced or has been made or submitted to the Company and (B) concurrently with such termination or within 12 months after the termination date the Company or any of its subsidiaries enters into a definitive agreement with respect to, or consummates, any Company Takeover Proposal, then the Company will pay Steel Partners II the Company Termination Fee and the Termination Expenses; o by Steel Partners II as a result of a material breach of the Company's representations, warranties or covenants, then (A) the Company will pay Steel Partners II the Termination Expenses and (B) if, concurrently with such termination or within 12 months after the termination date the Company or any of its subsidiaries enters into a definitive agreement with respect to, or consummates, any Company Takeover Proposal, then the Company will also pay Steel Partners II the Company Termination Fee; o by Steel Partners II because the Company Board has withdrawn or modified its approval or recommendation of the Offer, the Merger Agreement or the Merger or recommended or approved any Company Takeover Proposal, then the Company will pay Steel Partners II the Company Termination Fee and the Termination Expenses; or o by the Company because the Company Board has withdrawn or modified its approval or recommendation of the Offer, the Merger Agreement or the Merger , then the Company will pay Steel Partners II the Company Termination Fee and the Termination Expenses concurrently with such termination. For purposes of the Merger Agreement, (i) "Company Termination Fee" means an amount equal to $3,500,000 and (ii) "Termination Expenses" means an amount, not to exceed $1,000,000, equal to the reasonably documented expenses of Steel Partners II, the Purchaser and their respective affiliates. For purposes of the above fee and expense provisions, a "Company Takeover Proposal" has the meaning set forth under "No Solicitation" above, except that references to "10%" in such definition are replaced by "50%", although the sale, in whatever form (whether by merger, consolidation, stock or asset sale, joint venture or otherwise), of all or a material part of any segment of the Company will be deemed to constitute a "Company Takeover Proposal". In the event that the Company fails to pay the Company Termination Fee or any Termination Expenses when due, the Company will reimburse Steel Partners II, in addition to the Termination Expenses and not subject to any cap or limit, for all reasonable costs and expenses actually incurred or accrued by Steel Partners II (including reasonable fees and expenses of counsel) in connection with the collection of these amounts. Notwithstanding anything to the contrary in the Merger Agreement, if the Merger Agreement is terminated under any of the circumstances as a result of which Steel Partners II is entitled to receive payment of the Company Termination Fee and/or Termination Expenses, Steel Partners II's right to receive payment of the Company Termination Fee and/or 38 Termination Expenses will be the exclusive remedy of Steel Partners II and the Purchaser for the loss suffered as a result of any such termination of the Merger Agreement, and upon payment of the Company Termination Fee and/or Termination Expenses, the Company will have no further liability or obligation relating to or arising out of the Merger Agreement (with limited exceptions) if the Merger Agreement is terminated under any of such circumstances. CONSENT OF CONTINUING DIRECTORS TO TERMINATION, AMENDMENTS OR WAIVERS. Following the election of Steel Partners II's designees to the Company Board after the consummation of the Offer and prior to the Effective Time, (i) any amendment or termination of the Merger Agreement by the Company, (ii) any extension or waiver by the Company of the time for the performance of any of the obligations or other acts of Steel Partners II or the Purchaser under the Merger Agreement, or (iii) any waiver of any of the Company's rights thereunder or any other action that could adversely effect in any material respect the rights of the Company's stockholders thereunder will, in any such case, require the concurrence of a majority of the directors of the Company then in office who neither were designated by Steel Partners II nor are employees of the Company. ASSIGNMENT. The Merger Agreement allows Steel Partners II to assign any or all of its rights or delegate any or all of its obligations thereunder, and also permits Steel Partners II to transfer, sell or otherwise dispose of all or any part of its interest in the Purchaser, to any of its affiliates without the Company's prior written consent. The Company may not assign or delegate any of its rights or obligations under the Merger Agreement without Steel Partners II's prior written consent. TENDER AND SUPPORT AGREEMENT The following is a summary of certain provisions of the Tender and Support Agreement. This summary is qualified in its entirety by reference to the Tender and Support Agreement, which is incorporated herein by reference and a copy of which is filed as an exhibit to the amendment to the Tender Offer Statement on Schedule TO that Steel Partners II and the Purchaser filed with the SEC on February 23, 2007. The Tender and Support Agreement may be examined and copies may be obtained in the manner set forth in Section 8 under "Additional Information." All of the members of the Company Board and all of the Company's senior executive officers have entered into the Tender and Support Agreement, under which they have agreed to tender all of their Shares, whether now owned or hereafter acquired ("Subject Shares"), pursuant to the Offer, and not to withdraw any of their Subject Shares from the Offer unless the Tender and Support Agreement has been terminated under the circumstances described below. The directors and executive officers who have entered into the Tender and Support Agreement are: Luke E. Fichthorn, III, Chairman of the Board and Chief Executive Officer; Kenneth L. Bayne, Vice President and Chief Financial Officer; Larry D. Smith, Vice President, Administration; Lawrence C. Maingot, Corporate Controller; and Gerald L. DeGood, Charles T. Foley, James A. Wolf and William F. Yelverton, directors of the Company (each, a "Securityholder"). Together, as of the date of this Offer to Purchase, these Securityholders own, beneficially or of record, 659,125 Shares (excluding stock options), representing approximately 9.0% of the Company's outstanding Shares. The Tender and Support Agreement further provides that, at every meeting of the stockholders of the Company called, and at every adjournment or postponement thereof, each Securityholder will, or will cause the holder of record on any applicable record date to, vote his Subject Shares (to the extent that any of such Securityholder's Subject Shares are not purchased in the Offer) (i) in favor of the adoption of the Merger Agreement and the transactions contemplated thereby, (ii) against (A) any agreement or Company action regarding any Company Takeover Proposal, (B) any liquidation, dissolution, recapitalization, extraordinary dividend or other significant corporate reorganization of the Company or any of its subsidiaries, (C) any agreement or Company action that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or (D) any agreement or Company action that would reasonably be expected to prevent, impede, interfere with or delay the transactions contemplated by the Merger Agreement or that would reasonably be expected to dilute the benefits to Steel Partners II and its affiliates of the transactions contemplated by the Merger Agreement and (iii) in favor of any other matter necessary for consummation of the transactions contemplated by the Merger Agreement, which is considered at any such meeting of stockholders. By entering into the Tender and Support Agreement, each Securityholder thereby granted to Steel Partners II an irrevocable proxy to vote his Subject Shares in the manner provided above. This irrevocable proxy will be revoked automatically upon the termination of the Tender and Support Agreement in accordance with its terms. 39 Except as otherwise provided under the Tender and Support Agreement or under the Merger Agreement, each Securityholder agreed not to, directly or indirectly, (i) transfer (which term includes any sale, assignment, gift, pledge, hypothecation or other disposition), or consent to or permit any such transfer of, any or all of his Subject Shares, or any interest therein, or create or permit to exist any lien on any of his Subject Shares, (ii) enter into any contract, agreement, arrangement or understanding with respect to any transfer of his Subject Shares or any interest therein, (iii) grant or permit the grant of any proxy, power of attorney or other authorization in or with respect to his Subject Shares, (iv) deposit or permit the deposit of his Subject Shares into a voting trust or enter into a voting agreement or arrangement with respect to his Subject Shares or (v) take or permit any other action that would in any way restrict, limit or interfere with the performance of his obligations under the Tender and Support Agreement or the transactions contemplated thereby or otherwise make any of his representations or warranties therein untrue or incorrect. Each Securityholder agreed to comply with the no solicitation provisions under the Merger Agreement. However, nothing in the Tender and Support Agreement in any way restricts any officer or director of the Company in the exercise of his or her fiduciary duties as an officer or director of the Company. Each Securityholder also agreed not to exercise any appraisal rights or dissenter's rights in respect of his Subject Shares which may arise with respect to the Merger. The Tender and Support Agreement will terminate automatically, without any notice or other action by any person, upon the earlier of (i) the termination of the Merger Agreement in accordance with its terms and (ii) the Effective Time. 14. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that, during the period from the date of the Merger Agreement to the effective time of the Merger, neither the Company nor any of its subsidiaries will, without the prior written consent of Steel Partners II, split, combine or reclassify any shares of its capital stock or equity interests or declare, pay or set aside any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock or equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any shares of its capital stock or other securities or equity interests, other than dividends and distributions to the Company or one of its wholly-owned subsidiaries and the Dividend. If you validly tender your Shares in accordance with the procedures described in this Offer to Purchase, you will still retain ownership of your Shares until such time as the Offer is successfully consummated and we accept the Shares for payment. Accordingly, even if you tender your Shares pursuant to the Offer prior to the Company's March 5, 2007 Dividend record date, you will remain entitled to receive the Dividend, for total cash proceeds of $13.60 per Share pursuant to the Offer and the Dividend. 15. CONDITIONS OF THE OFFER. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn before the Expiration Date a number of Shares which, together with the Shares then owned by Steel Partners II, the Purchaser and their affiliates, represents at least a majority of the total number of Shares outstanding on a fully diluted basis (the "Minimum Condition"). Notwithstanding any other provision of the Offer, we will not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange Act (relating to our obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for any Shares tendered pursuant to the Offer if (i) the Minimum Condition has not been satisfied at any scheduled expiration date of the Offer or (ii) immediately prior to the expiration of the Offer, any of the following conditions exists: (a) there has been entered, enforced, instituted or issued by any governmental authority any legally binding judgment, order, temporary restraining order, temporary or permanent injunction, ruling, proceeding, action, suit, charge or decree which: (i) makes illegal, prevents, restrains or prohibits the making of the Offer, the acceptance for payment of, or payment 40 for, any Shares by Steel Partners II, the Purchaser or any other affiliate of Steel Partners II, or the consummation of the Merger or any of the other transactions contemplated by the Merger Agreement; (ii) prohibits or limits the ownership or operation by the Company, Steel Partners II or any of their respective subsidiaries or affiliates of all or a material portion of the business or assets of the Company, Steel Partners II or any of their respective subsidiaries or affiliates; (iii) imposes limitations on the ability of Steel Partners II, the Purchaser or any other affiliate of Steel Partners II to exercise full rights of ownership of any Shares, including, without limitation, the right to vote any Shares acquired pursuant to the Offer or otherwise on all matters presented to the Company's stockholders, including, without limitation, the approval and adoption of the Merger Agreement and the Merger; (iv) would reasonably be expected to require divestiture by Steel Partners II, the Purchaser or any other affiliate of Steel Partners II of any Shares; or (v) otherwise would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Company or on the ability of Steel Partners II or the Purchaser to consummate the transactions contemplated by the Merger Agreement; (b) there has been any statute, law, rule, regulation, order, injunction, judgment or decree enacted, enforced, promulgated or issued by any governmental authority, or deemed by any governmental authority applicable to (i) Steel Partners II, the Company or any subsidiary or affiliate of Steel Partners II or the Company or (ii) any transaction contemplated by the Merger Agreement, which is reasonably likely to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; (c) there has occurred any changes, conditions, events or developments that would have, or be reasonably likely to have, individually or in the aggregate, a material adverse effect on the Company; (d) there has occurred (i) any general suspension of, or limitation on prices for, trading in securities on the New York Stock Exchange, other than a shortening of trading hours or any coordinated trading halt triggered solely as a result of a specified increase or decrease in a market index, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, or (iii) any limitation (whether or not mandatory) on the extension of credit by banks or other lending institutions in the United States or a disruption of or material adverse change in either the syndication market for credit facilities or the financial, banking or capital markets; (e) the Company Board has (i) withdrawn or modified, in a manner adverse to Steel Partners II, the Purchaser or any of their respective affiliates, its approval or recommendation of the Offer, the Merger Agreement or the Merger, (ii) approved or recommended, or proposed publicly to approve or recommend, any Company Takeover Proposal or any Company Acquisition Agreement relating to any Company Takeover Proposal or (iii) resolved to do any of the foregoing; (f) the representations and warranties of the Company (i) set forth in the Merger Agreement (other than the representations as to the Company's capitalization and its authorization of the Merger Agreement) shall not be true and correct, and the failure of those representations and warranties to be so true and correct (without giving effect to any limitation as to "materiality" or "material adverse effect" set forth therein) would be reasonably expected to have, individually or in the aggregate, a material adverse effect on the Company and (ii) as to the Company's capitalization and its authorization of the Merger Agreement shall not be true and correct, in each case on the date of the Merger Agreement and as of the expiration of the Offer, as if made at and as of that date (except to the extent expressly made as of an earlier date, in which case as of that earlier date) (it being understood that, for purposes of determining the accuracy of such representations and warranties, any update of or modification to the Company's disclosure schedules made or purported to have been made after the date of the Merger Agreement will be disregarded); (g) the Company has failed to perform in any material respect its obligations or to comply in any material respect with its agreements or covenants to be performed or complied with by it under the Merger Agreement; (h) the Merger Agreement has been terminated in accordance with its terms; (i) there has been instituted or is pending any stockholder derivative litigation or stockholder class action litigation against the Company, any of its subsidiaries or its executive officers or directors, which, after taking into account any then existing director and officer insurance coverage, would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Company; 41 (j) the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), has not expired or been terminated. On August 7, 2006, the waiting period under the HSR Act relating to the Offer expired. Accordingly, this condition to the Offer has been satisfied; (k) all material consents required in connection with the Merger Agreement or the transactions contemplated thereby (other than any consent related to the Company's secured credit facility with Bank of America, N.A.) have not been obtained or are not in full force and effect, and the failure to so obtain or have in effect such consents could reasonably be expected to have, in the aggregate, a material adverse effect on the Company; or (l) the Company has not filed with the SEC its Annual Report on Form 10-K for the fiscal year ended December 31, 2006. The foregoing conditions are for the sole benefit of Steel Partners II and the Purchaser and may be asserted by Steel Partners II or the Purchaser regardless of the circumstances giving rise to any such condition or may be waived by Steel Partners II or the Purchaser in whole or in part at any time and from time to time in their reasonable discretion. The failure by Steel Partners II or the Purchaser at any time to exercise any of the foregoing rights will not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and other circumstances will not be deemed a waiver with respect to any other facts and circumstances; and each such right will be deemed an ongoing right that may be asserted at any time and from time to time. 16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS. GENERAL. Based on our examination of publicly available information filed by the Company with the SEC and other publicly available information concerning the Company, other than under the HSR Act, we are not aware of any governmental license or regulatory permit that appears to be material to the Company's business that might be adversely affected by our acquisition of Shares pursuant to the Offer or, except as set forth below, of any approval or other action by any government or governmental administrative or regulatory authority or agency, domestic or foreign, that would be required for our acquisition or ownership of Shares pursuant to the Offer. Should any such approval or other action be required or desirable, we currently contemplate that, except as described below under "State Takeover Statutes", such approval or other action will be sought. There can be no assurance that any such approval or other action, if needed, would be obtained (with or without substantial conditions) or that if such approvals were not obtained or such other actions were not taken adverse consequences might not result to the Company's business or certain parts of the Company's business might not have to be disposed of, any of which could cause a failure of a condition to the Offer, which could cause us to elect to terminate the Offer without the purchase of Shares thereunder. Our obligation under the Offer to accept for payment and pay for Shares is subject to the conditions set forth in "The Offer--Section 15". ANTITRUST. Under the HSR Act and the rules and regulations that have been issued by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated until certain information and documentary material has been furnished for review by the Antitrust Division and the FTC and certain waiting period requirements have been satisfied. The acquisition of Shares pursuant to the Offer is subject to these requirements. In connection with the Original Offer, we filed a Premerger Notification and Report Form with the Antitrust Division and the FTC. Under the HSR Act, the purchase of Shares in the Offer may not be completed until the expiration of a 15-calendar-day waiting period following the filing by the Purchaser of the Premerger Notification and Report Form with the FTC and Antitrust Division, unless the waiting period is earlier terminated by the FTC and the Antitrust Division or we receive a Request for Additional Information and Documentary Material from the Antitrust Division or the FTC prior to that time. If either the FTC or the Antitrust Division were to issue a Request for Additional Information and Documentary Material to us, the waiting period with respect to the Offer would expire at 11:59 p.m., Eastern time, on the tenth calendar day after the date of our substantial compliance with that request. Thereafter, the waiting period could be extended only by court order or with our consent. The additional 10-calendar-day waiting period may be terminated sooner by the FTC and the Antitrust Division. Although the Company is required to file certain information and documentary material with the Antitrust Division and the FTC in connection with the Offer, neither the Company's failure to make those filings nor the issuance to the Company by the FTC or the Antitrust Division of a Request for Additional Information and Documentary Material will extend the waiting period with respect to the Offer. 42 The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions, such as our acquisition of Shares in the Offer and the Merger. At any time before or after our purchase of Shares, the Antitrust Division or the FTC could take such action under the antitrust laws that either deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares in the Offer, the divestiture of Shares purchased pursuant to the Offer or the divestiture of substantial assets of the Company or any of its subsidiaries. State antitrust authorities and attorneys general, as well as private parties, in certain circumstances may bring legal action under the antitrust laws seeking to enjoin the Offer or to impose conditions on the Offer. On August 7, 2006, the waiting period under the HSR Act relating to the Offer expired. Accordingly, the condition to the Offer relating to the expiration of the waiting period under the HSR Act has been satisfied. STATE TAKEOVER STATUTES. A number of states have adopted laws which purport, to varying degrees, to apply to attempts to acquire corporations that are incorporated in, or which have substantial assets, stockholders, principal executive offices or principal places of business or whose business operations otherwise have substantial economic effects in, such states. The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted such laws. Except as described herein, we do not know whether any of these laws will, by their terms, apply to the Offer or the Merger, and we have not complied with any such laws. To the extent that certain provisions of these laws purport to apply to the Offer or the Merger, we believe that there are reasonable bases for contesting such laws. If any government official or third party seeks to apply any state takeover law to the Offer or the Merger, we will take such action as then appears desirable, which action may include challenging the applicability or validity of such statute in appropriate court proceedings. If it is asserted that one or more state takeover statutes is applicable to the Offer or the Merger and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or the Merger, we might be required to file certain information with, or to receive approvals from, the relevant state authorities or holders of Shares, and we may be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer or the Merger. In such case, we may not be obligated to accept for payment or pay for any tendered Shares. See "The Offer--Section 15". Under the Merger Agreement, the Company has agreed that, if any state takeover statute becomes applicable to the transactions contemplated by the Merger Agreement, the Company and the members of the Company Board will grant such approvals and take such actions as are necessary so that the transactions contemplated by the Merger Agreement may be consummated as promptly as practicable on the terms and conditions contemplated thereby and otherwise act to eliminate the effect of any takeover statute on any of the transactions contemplated by the Merger Agreement. 17. FEES AND EXPENSES. We have retained MacKenzie Partners, Inc. to act as the Information Agent and American Stock Transfer & Trust Company to act as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telegraph and personal interviews and may request brokers, dealers, banks, trust companies and other nominees to forward materials relating to the Offer to beneficial owners. The Information Agent and the Depositary each will receive reasonable and customary compensation for their respective services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection therewith, including certain liabilities under the U.S. federal securities laws. We will not pay any fees or commissions to any broker or dealer or any other person (other than the Information Agent and the Depositary) for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, banks, trust companies and other nominees will, upon request, be reimbursed by us for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. 43 18. MISCELLANEOUS. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. However, we may, in our sole discretion, take such action as we may deem necessary to make the Offer in any such jurisdiction and extend the Offer to holders of Shares in such jurisdiction. No person has been authorized to give any information or make any representation on behalf of Steel Partners II or the Purchaser not contained in this Offer to Purchase or in the Letter of Transmittal and, if given or made, such information or representation must not be relied upon as having been authorized. We have filed with the SEC a Tender Offer Statement on Schedule TO, as amended, together with exhibits, pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional information with respect to the Offer. The Schedule TO and any amendments thereto, including exhibits, may be examined and copies may be obtained from the offices of the SEC in the manner described in "The Offer--Section 8" of this Offer to Purchase. BZ ACQUISITION CORP. March 2, 2007 44 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF THE STEEL ENTITIES AND THE PURCHASER Warren G. Lichtenstein is the sole executive officer and director of the Steel Entities and the Purchaser. The current principal occupation or employment and material occupations, positions, offices or employment for the past five years of Mr. Lichtenstein are set forth below. The business address of Mr. Lichtenstein is care of Steel Partners II, L.P., 590 Madison Avenue, New York, New York 10022. Except as provided in the Offer to Purchase, Mr. Lichtenstein has not, during the past five years, (i) been convicted in a criminal proceeding or (ii) been a party to any judicial or administrative proceeding that resulted in a judgment, decree or final order enjoining him from future violations of, or prohibiting activities subject to, U.S. federal or state securities laws, or a finding of any violation of U.S. federal or state securities laws. Mr. Lichtenstein is a citizen of the United States. Current Principal Occupation or Name Age Employment and Five-year Employment History - ---- --- -------------------------------------------------- Warren G. Lichtenstein 41 Mr. Lichtenstein co-founded Steel Partners II, L.P. in 1993. He has been Managing Member of Steel Partners, L.L.C., which has been the general partner of Steel Partners II, L.P., since January 1, 1996. He has served as the President, Chief Executive Officer and a director of Steel Partners, Ltd., a management and advisory company that provides management services to Steel Partners II, L.P. and its affiliates, since June 1999. He is also a Co-Founder of Steel Partners Japan Strategic Fund, a private investment partnership investing in Japan, and Steel Partners China Access Fund I LP, a private equity partnership investing in China. Mr. Lichtenstein has been a director (currently Chairman of the Board) of United Industrial Corporation, a company principally focused on the design, production and support of defense systems, since May 2001. Mr. Lichtenstein has been a director (currently Chairman of the Board) of SL Industries, Inc., a designer and manufacturer of power electronics, power motion equipment, power protection equipment, and teleprotection and specialized communication equipment, since January 2002 and served as Chief Executive Officer from February 2002 to August 2005. He has served as Chairman of the Board of WHX Corporation, a holding company, since July 2005. Mr. Lichtenstein has been a director of KT&G Corporation, South Korea's largest tobacco company, since March 2006. Mr. Lichtenstein was a director of Layne Christensen Company, a provider of products and services for the water, mineral, construction and energy markets, from January 2004 to October 2006. He served as a director of WebFinancial Corporation, a consumer and commercial lender, from 1996 to June 2005, as Chairman and Chief Executive Officer from December 1997 to June 2005 and as President from December 1997 to December 2003. Prior to the formation of Steel Partners II, L.P. in 1993, Mr. Lichtenstein co-founded Steel Partners, L.P., an investment partnership, in 1990 and co-managed its business and operations. From 1988 to 1990, Mr. Lichtenstein was an acquisition/arbitrage analyst with Ballantrae Partners, L.P., which invested in risk arbitrage, special situations, and undervalued companies. From 1987 to 1988, he was an analyst at Para Partners, L.P., a partnership that invested in arbitrage and related situations. Mr. Lichtenstein has previously served as a director of the following companies: Alpha Technologies Group, Inc., Aydin Corporation (Chairman), BKF Capital Group Inc., CPX Corp. (f/k/a CellPro, Incorporated), ECC International Corporation, Gateway Industries, Inc., Layne Christensen Company, PLM International, Inc. Puroflow Incorporated, Saratoga Beverage Group, Inc., Synercom S-1 Technology, Inc., TAB Products Co., Tech-Sym Corporation, U.S. Diagnostic Labs, Inc. and Tandycrafts Inc. Mr. Lichtenstein graduated from the University of Pennsylvania with a B.A. in Economics. S-2 Facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal and certificates for Shares and any other required documents should be sent to the Depositary at one of the addresses set forth below: The Depositary for the Offer is: AST American Stock Transfer & Trust Company BY MAIL OR OVERNIGHT BY HAND: COURIER: BY FACSIMILE: American Stock Transfer & (FOR ELIGIBLE INSTITUTIONS American Stock Transfer Trust Company ONLY) & Trust Company Operations Center (718) 234-5001 Attn: Reorganization Attn: Reorganization Department Department CONFIRM FACSIMILE 59 Maiden Lane 6201 15th Avenue TRANSMISSION: Concourse Level Brooklyn, NY 11219 (BY TELEPHONE ONLY) New York, NY 10038 Toll Free: (877) 248-6417 If you have questions or need additional copies of this Offer to Purchase and the Letter of Transmittal, you can call the Information Agent at its address and telephone numbers set forth below. You may also contact your broker, dealer, bank, trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: MacKenzie Partners, Inc. 105 Madison Avenue New York, New York (212) 929-5500 (call collect) or Call Toll-Free (800) 322-2885 bairnco@mackenziepartners.com
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SC TO-T/A Filing
Bairnco Inactive SC TO-T/AThird party tender offer statement (amended)
Filed: 2 Mar 07, 12:00am