sec document

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H2oB4J+euSLzKPQRWIOlUNkiL5S4svec41Juf+NPdSnyV/v12a68GTk7M2SqpZMk 2y0wN1D+37rxkwHQ7Wx/UA== 0000921895-02-000659.txt : 20021107 0000921895-02-000659.hdr.sgml : 20021107 20021107154004 ACCESSION NUMBER: 0000921895-02-000659 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021202 FILED AS OF DATE: 20021107 EFFECTIVENESS DATE: 20021107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEBFINANCIAL CORP CENTRAL INDEX KEY: 0000085149 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 562043000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-00631 FILM NUMBER: 02812605 BUSINESS ADDRESS: STREET 1: 150 EAST 52ND STREET 21ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128131500 MAIL ADDRESS: STREET 1: 150 EAST 52ND ST STREET 2: 21ST FL CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: ROSES STORES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ROSES HOLDINGS INC DATE OF NAME CHANGE: 19970826 DEF 14A 1 formdef14a04197_12022002.htm sec document

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:

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

WEBFINANCIAL CORPORATION
------------------------
(Name of Registrant as Specified in Its Charter)

-----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required.

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

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

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/ / Fee paid previously with preliminary materials:

/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.

(1) Amount Previously paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

WEBFINANCIAL CORPORATION
--------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 2, 2002
--------------

To the Stockholders:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of WEBFINANCIAL CORPORATION, a Delaware corporation (the "Company"),
will be held at the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP,
located at 505 Park Avenue, New York, New York 10022, on December 2, 2002 at
10:00 A.M., local time, for the following purposes:

1. To elect five members of the board of directors of the Company
to serve until the next annual meeting of stockholders and
until their successors have been duly elected and qualify;

2. To ratify the appointment of Grant Thornton LLP as the
Company's independent auditors for the year ending December 31,
2002; and

3. To transact such other business as may properly be brought
before the Meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on November
4, 2002 as the record date for the Meeting. Only stockholders of record on the
stock transfer books of the Company at the close of business on that date are
entitled to notice of, and to vote at, the Meeting.

By Order of the Board of Directors

Glen M. Kassan
Vice President, Chief Financial Officer
and Secretary

Dated: November 7, 2002
New York, New York

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE
URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE THAT
IS PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.

WEBFINANCIAL CORPORATION
150 EAST 52ND STREET, 21ST FLOOR
NEW YORK, NEW YORK 10022

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

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS

DECEMBER 2, 2002

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

INTRODUCTION

This Proxy Statement is being furnished to stockholders by the Board
of Directors of WEBFINANCIAL CORPORATION, a Delaware corporation (the
"Company"), in connection with the solicitation of the accompanying Proxy for
use at the 2002 Annual Meeting of Stockholders of the Company (the "Meeting") to
be held at the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP,
located at 505 Park Avenue, New York, New York 10022, on December 2, 2002, at
10:00 A.M., local time, or at any adjournment thereof.

The approximate date on which this Proxy Statement and the
accompanying Proxy will first be sent or given to stockholders is November 7,
2002.

At the Meeting, stockholders will be asked: (1) to elect five (5)
members of the board of directors of the Company (the "Board of Directors" or
the "Board") to serve until the next annual meeting of stockholders and until
their successors have been duly elected and qualify; (2) to ratify the
appointment of Grant Thornton LLP as the Company's independent auditors for the
fiscal year ending December 31, 2002; and (3) to transact such other business as
may properly be brought before the Meeting or any adjournment thereof.

RECORD DATE AND VOTING SECURITIES

Only stockholders of record at the close of business on November 4,
2002, the record date (the "Record Date") for the Meeting, will be entitled to
notice of, and to vote at, the Meeting and any adjournment thereof. As of the
close of business on the Record Date, there were 4,366,866 outstanding shares of
the Company's common stock, $.001 par value (the "Common Stock"). Each of such
shares is entitled to one vote. There was no other class of voting securities of
the Company outstanding on that date. A majority of the outstanding shares
presented in person or by proxy is required for a quorum.

VOTING OF PROXIES

Shares of Common Stock represented by Proxies that are properly
executed, duly returned and not revoked will be voted in accordance with the
instructions contained therein. If no specification is indicated on the Proxy,
all such shares will be voted (i) for the election as directors of the persons
who have been nominated by the Board of Directors, (ii) for the ratification of
the appointment of Grant Thornton LLP as the Company's independent auditors for
the year ending December 31, 2002 and (iii) on any other matter the Board is not
aware of a reasonable time before this solicitation that may properly be brought
before the Meeting in accordance with the judgment of the person or persons
voting the Proxies.

The execution of a Proxy will in no way affect a stockholder's right
to attend the Meeting and to vote in person. Any Proxy executed and returned by
a stockholder may be revoked at any time thereafter if written notice of
revocation is given to the Secretary of the Company prior to the vote to be
taken at the Meeting, or by execution of a subsequent proxy that is presented to
the Meeting or if the stockholder attends the Meeting and votes by ballot,
except as to any matter or matters upon which a vote shall have been cast
pursuant to the authority conferred by such Proxy prior to such revocation.

The cost of solicitation of the Proxies being solicited on behalf of
the Board of Directors will be borne by the Company. In addition to the use of
the mails, proxy solicitation may be made by telephone, telegraph and personal
interview by officers, directors and employees of the Company. The Company will,
upon request, reimburse brokerage houses and persons holding Common Stock in the
names of their nominees for their reasonable expenses in sending soliciting
material to their principals.

The Company has retained MacKenzie Partners, Inc. ("MacKenzie") to
solicit proxies at a cost of approximately $5,000, plus certain out-of-pocket
expenses. If the Company requests MacKenzie to perform additional services,
MacKenzie will bill the Company at its usual rate.

VOTING RIGHTS

Holders of each share of Common Stock are entitled to one vote for
each share held on all matters. The holders of a majority of the outstanding
shares of Common Stock, whether present in person or represented by proxy, will
constitute a quorum for the election of directors and the ratification of the
appointment of Grant Thornton LLP, and any other matters that may come before
the Meeting.

Broker "non-votes" and the shares as to which a stockholder abstains
from voting are included for purposes of determining whether a quorum of shares
is present at a meeting. A broker "non-vote" occurs when a nominee holding
shares for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner.

A plurality of the total votes cast by holders of Common Stock
entitled to vote is required for the election of directors. In tabulating the
vote on the election of directors, abstentions and broker "non-votes" will be
disregarded and will have no effect on the outcome of such vote.

-2-

The affirmative vote of a majority of the votes cast by holders of
Common Stock entitled to vote is required to ratify the appointment of Grant
Thornton LLP. In tabulating the votes on the proposal to ratify the appointment
of Grant Thornton LLP, shares as to which a stockholder abstains are considered
shares entitled to vote on the proposal and therefore an abstention would have
the effect of a vote against such proposal. Broker non-votes, however, are not
considered shares entitled to vote on the proposal and are not included in
determining whether the proposal is approved.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth information concerning ownership of
the Company's shares of Common Stock, as of the Record Date, by each person
known by the Company to be the beneficial owner of more than five percent of the
outstanding Common Stock, each director, each executive officer, each nominee
for election as a director and by all directors and executive officers of the
Company as a group. Unless otherwise indicated, the address for each director,
nominee or five percent stockholder is in care of the Company, 150 East 52nd
Street, 21st Floor, New York, New York 10022.

Amount and
Nature of
Beneficial Percent of
Name and Address of Beneficial Owner Ownership(1) Class
- --------------------------------------- ------------- ------------

Steel Partners II, L.P. 1,693,545 38.8%

Warren G. Lichtenstein 1,923,503(2) 41.9%

Jack L. Howard 112,058(3) 2.5%

Joseph L. Mullen 29,720(4) *
c/o Li Moran, Inc.
611 Broadway, Suite 772
New York, New York 10012

Mark E. Schwarz 2,527(5) *
c/o Newcastle Partners, L.P.
200 Crescent Court, Suite 670
Dallas, Texas 75201

Howard Mileaf 0 0
c/o WHX Corp.
110 East 59th Street
New York, New York 10022

-3-

Earle C. May 353,579(6) 8.1%
c/o May Management, Inc.
696 McVey Avenue
Lake Oswego, Oregon 97034

May Management, Inc. 323,600(6) 7.4%
696 McVey Avenue
Lake Oswego, Oregon 97034

All directors and executive 2,467,220(7) 51.8%
officers as a group (seven persons)
- ------------------
* Less than 1%

(1) A person is deemed to be the beneficial owner of voting securities
that can be acquired by such person within 60 days after the Record
Date upon the exercise of options, warrants or convertible
securities. Each beneficial owner's percentage ownership is
determined by assuming that options, warrants or convertible
securities that are held by such person (but not those held by any
other person) and that are currently exercisable (i.e., that are
exercisable within 60 days after the Record Date) have been
exercised. Unless otherwise noted, the Company believes that all
persons named in the table have sole voting and investment power
with respect to all shares beneficially owned by them.

(2) Consists of (i) 2,500 shares of Common Stock owned directly by Mr.
Lichtenstein; (ii) 227,458 shares of Common Stock issuable upon the
exercise of options within 60 days of the Record Date granted to Mr.
Lichtenstein; and (iii) 1,693,545 shares of Common Stock owned by
Steel Partners II, L.P. ("Steel"). Mr. Lichtenstein is the sole
managing member of the general partner of Steel. Mr. Lichtenstein
disclaims beneficial ownership of the shares of Common Stock owned
by Steel except to the extent of his pecuniary interest therein.

(3) Consists of (i) 30,150 shares of Common Stock owned directly by Mr.
Howard; (ii) 3,000 shares of Common Stock owned by Mr. Howard in
joint tenancy with his spouse; (iii) 3,200 shares of Common Stock
owned by JL Howard, Inc., a California corporation controlled by Mr.
Howard; and (iv) 75,708 shares of Common Stock issuable upon the
exercise of options within 60 days of the Record Date granted to Mr.
Howard.

(4) Consists of (i) 4,285 shares of Common Stock; and (ii) 25,435 shares
of Common Stock issuable upon the exercise of options within 60 days
of the Record Date.

(5) Consists of 2,527 shares of Common Stock issuable upon the exercise
of options within 60 days of the Record Date.

(6) Consists of (i) 9,618 shares of Common Stock owned directly by Mr.
May; (ii) 20,361 shares of Common Stock issuable upon the exercise
of options within 60 days of the Record Date granted to Mr. May;
(iii) 6,300 shares of Common Stock owned by May Management, Inc.;
and (iv) 317,300 shares of Common Stock held in customer accounts as

-4-

to which May Management, Inc. has shared dispositive power. Mr. May
is the Chief Executive Officer and a principal stockholder of May
Management, Inc. and may be deemed to be the beneficial owner of
shares owned by May Management, Inc. or as to which May Management,
Inc. has shared dispositive power. Mr. May disclaims beneficial
ownership of the shares of Common Stock held by May Management, Inc.
except to the extent of his pecuniary interest therein. This
information is based on information provided by Mr. May.

(7) Includes the shares and options shown in footnotes (2) to (6) above
and 45,833 shares of Common Stock issuable upon the exercise of
options within 60 days of the Record Date held by executive officers
who are not specifically named in the security ownership table.

PROPOSAL I--ELECTION OF DIRECTORS

NOMINEES

Unless otherwise specified, all Proxies received will be voted in
favor of the election of the persons named below as directors of the Company, to
serve until the next Annual Meeting of Stockholders of the Company and until
their successors shall be duly elected and qualify. Earle May is not standing
for re-election. Management has no reason to believe that any of the nominees
will be unable or unwilling to serve as a director, if elected. Should any of
the nominees not remain a candidate for election at the date of the Meeting, the
Proxies will be voted in favor of those nominees who remain candidates and may
be voted for substitute nominees selected by the Board of Directors.

The names, principal occupation of and certain other information
about each of the nominees are set forth below.

First Year
Name Age Became Director
- --------------------------------------------------------------------------------

Warren G. Lichtenstein 37 1996

Jack L. Howard 41 1996

Joseph L. Mullen 53 1995

Mark E. Schwarz 42 2001

Howard Mileaf 65 Not
Applicable

-5-

WARREN G. LICHTENSTEIN has served as a director of the Company since
1996 and has served as President and Chief Executive Officer of the Company
since December 1997. Mr. Lichtenstein has served as the Chairman of the Board,
Secretary and the Managing Member of Steel Partners, L.L.C., the general partner
of Steel, since January 1, 1996. Prior to such time, Mr. Lichtenstein was the
Chairman and a director of Steel Partners, Ltd., the general partner of Steel
Partners Associates, L.P., which was the general partner of Steel, from 1993
until prior to January 1, 1996. Mr. Lichtenstein was the acquisition/risk
arbitrage analyst at Ballantrae Partners, L.P., a private investment partnership
formed to invest in risk arbitrage, special situations and undervalued
companies, from 1988 to 1990. Mr. Lichtenstein has served as a director and
Chief Executive Officer of Gateway Industries, Inc., a provider of database
development and Web site design and development services, since 1994 and as
Chairman of the Board since 1995. Mr. Lichtenstein has served as a director of
SL Industries, Inc., a designer and producer of proprietary advanced systems and
equipment for the power and data quality industry, from 1993 to 1997 and since
January 2002. He has served as Chairman of the Board and Chief Executive Officer
of SL Industries, Inc. since February 2002. Mr. Lichtenstein has served as a
director and the President and Chief Executive Officer of Steel Partners, Ltd.,
a management and advisory company that provides management services to Steel and
other affiliates of Steel, since June 1999 and as its Secretary and Treasurer
since May 2001. He has also served as Chairman of the Board of Directors of
Caribbean Fertilizer Group Ltd., a private company engaged in the production of
agricultural products in Puerto Rico and Jamaica, since June 2000. Mr.
Lichtenstein is also a director of the following publicly held companies:
Tandycrafts, Inc., a manufacturer of picture frames and framed art; Puroflow
Incorporated, a designer and manufacturer of precision filtration devices; ECC
International Corp., a manufacturer and marketer of computer-controlled
simulators for training personnel to perform maintenance and operator procedures
on military weapons; and United Industrial Corporation, a designer and producer
of defense, training, transportation and energy systems.

JACK L. HOWARD has served as a director of the Company since 1996
and as its Vice President since December 1997. From December 1997 to May 2000,
Mr. Howard also served as Secretary, Treasurer and Chief Financial Officer of
the Company. For more than the past five years, Mr. Howard has been a registered
principal of Mutual Securities, Inc., a registered broker-dealer. He served as
Vice President of Gateway Industries, Inc. since December 2001 and as a director
since May 1994. Mr. Howard is a director of the following publicly held
companies: Pubco Corporation, a printing supplies and construction equipment
manufacturer and distributor; and Castelle, a maker and marketer of application
server appliances.

JOSEPH L. MULLEN has served as a director of the Company since 1995.
Since January 1994, Mr. Mullen has served as Managing Partner of Li Moran
International, a management consulting company, and has functioned as a senior
officer overseeing the merchandise and marketing departments for such companies
as Leewards Creative Crafts Inc., Office Depot of Warsaw, Poland and Camelot
Music. Mr. Mullen is currently serving as Vice President, General Merchandising
Manager-Hard Line of Retail Exchange.com, Inc., a business-to-business Internet
company that operates an online marketplace for excess consumer goods.

-6-

MARK E. SCHWARZ has served as a director of the Company since July
2001. He has served as the general partner, directly or through entities which
he controls, of Newcastle Partners, L.P., a private investment firm, since 1993.
Mr. Schwarz was also Vice President and Manager of Sandera Capital, L.L.C., a
private investment firm affiliated with Hunt Financial Group, L.L.C., a
Dallas-based investment firm associated with the Lamar Hunt family ("Hunt"),
from 1995 to September 1999 and a securities analyst and portfolio Manager for
SCM Advisors, L.L.C., formerly a Hunt-affiliated registered investment advisor,
from May 1993 to 1996. Mr. Schwarz currently serves as a director of the
following companies: SL Industries, Inc.; Nashua Corporation, a specialty paper,
label, and printing supplies manufacturer; Bell Industries, Inc., a computer
systems integrator; and Tandycrafts, Inc. Mr. Schwarz has also served as
Chairman of the Board of Directors of Hallmark Financial Services, Inc., a
property and casualty insurance holding company, since October 2001. From
October 1998 through April 1999, Mr. Schwarz served as a director of Aydin
Corporation, a defense electronics manufacturer.

HOWARD MILEAF has been a director of Neuberger Berman Mutual Funds
since 1985. He has served as a director of WHX Corporation, a NYSE listed
holding company, since August 2002. From May 1993 to December 2001, Mr. Mileaf
served as Vice President and General Counsel of WHX Corporation.

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

EARLE C. MAY, who is not standing for re-election at the Meeting,
has served as a director of the Company since July 1997. Mr. May has been an
executive officer of May Management, Inc., an investment management firm, since
1968. Mr. May is also a director of Meadow Valley Corp., a heavy construction
contractor.

RECOMMENDATION

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES.

MEETINGS

The Board of Directors held three meetings during the fiscal year
ended December 31, 2001. All the members of the Board of Directors attended at
least 75% of the meetings, with the exception of James Benenson, a former
director of the Company, who did not attend the one meeting that was held during
the period for which he was a director. From time to time, the members of the
Board of Directors act by unanimous written consent pursuant to the laws of the
State of Delaware.

The Board of Directors has a Compensation Committee which
administers the Company's stock option plan and makes recommendations concerning
salaries and incentive compensation for employees of and consultants to the
Company. During the fiscal year ended December 31, 2001, the Compensation
Committee was composed of Earle C. May (Chairman), Joseph Mullen and James
Benenson. The Compensation Committee did not hold any meetings during the year
ended December 31, 2001.

-7-

The Board of Directors does not have a Nominating Committee, the
customary functions of which are performed by the entire Board of Directors.

The Board of Directors has an Audit Committee, which reviews the
Company's financial statements and accounting policies, resolves potential
conflicts of interest, receives and reviews the recommendations of the Company's
independent auditors and confers with the Company's independent auditors with
respect to the training and supervision of internal accounting personnel and the
adequacy of internal accounting controls. During the fiscal year ended December
31, 2001, the members of the Audit Committee were Earle C. May (Chairman),
Joseph L. Mullen and James Benenson. Mark Schwarz replaced Mr. Benenson on the
Audit Committee after he was elected to the Board in July 2001. The Audit
Committee held one meeting during the year ended December 31, 2001. All members
of the Company's Audit Committee are independent as independence is defined in
Rule 4200(a)(15) of the NASD listing standards. The Board of Directors has
adopted a written charter for the Audit Committee which was included in the
Company's proxy statement for its 2001 annual meeting of stockholders. The
Company is in the process of drafting a new charter for the Audit Committee that
complies with The Sarbanes-Oxley Act of 2002.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board has furnished the following report
on its activities with respect to its oversight responsibilities during the
fiscal year ended December 31, 2001. The report is not deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission ("SEC")
or subject to the SEC's proxy rules or to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the report
shall not be deemed incorporated by reference into any prior or subsequent
filing by the Company under the Securities Act of 1933, as amended, or the
Exchange Act, except to the extent that the Company specifically incorporates it
by reference to such filing.

The Audit Committee has reviewed and discussed the audited financial
statements with the management of the Company and has discussed matters required
to be discussed by SAS 61 (Codification of Statements on Auditing Standards, AU
Section 380) with Grant Thornton LLP, the Company's independent auditors for the
fiscal year ended December 31, 2001. The Audit Committee has received the
written disclosures and the letter from Grant Thornton LLP, as required by the
Independent Standards Board Standard No. 1, and has discussed with Grant
Thornton LLP the independence of Grant Thornton LLP. Based on the review and
discussions involving the foregoing, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Company's annual report for the fiscal year ended December 31, 2001.

Submitted by the Audit Committee

Joseph L. Mullen
Mark E. Schwarz

-8-

MANAGEMENT

EXECUTIVE OFFICERS OF THE COMPANY WHO ARE NOT DIRECTORS

GLEN M. KASSAN (age 59) has served as Vice President, Chief
Financial Officer and Secretary of the Company since June 2000. He has been an
Executive Vice President of Steel Partners, Ltd., a management and advisory
company, since March 2002. Steel Partners, Ltd. has provided management services
to Steel and other affiliates of Steel since March 2002. Mr. Kassan served as
Executive Vice President of Steel Partners Services, Ltd. ("SPS"), a management
and advisory company, from June 2001 through March 2002 and Vice President from
October 1999 through May 2001. SPS provided management services to Steel and
other affiliates of Steel until March 2002, when Steel Partners, Ltd. acquired
the rights to provide certain management services from SPS. He has also served
as Vice Chairman of the Board of Directors of Caribbean Fertilizer Group Ltd.
since June 2000. Mr. Kassan is a director and has served as President of SL
Industries, Inc. since January 2002 and February 2002, respectively. From 1997
to 1998, Mr. Kassan served as Chairman and Chief Executive Officer of Long Term
Care Services, Inc., a privately owned healthcare services company which Mr.
Kassan co-founded in 1994 and initially served as Vice Chairman and Chief
Financial Officer. Mr. Kassan is currently a director of Tandycrafts, Inc.;
Puroflow Incorporated; and United Industrial Corporation. He is the Chairman of
the Board of US Diagnostic Inc., an operator of outpatient diagnostic imaging.

JAMES R. HENDERSON (age 44) has served as Vice President of
Operations of the Company since September 2000. He has also served as a director
of the WebBank subsidiary since March 2002 and a director and Chief Operating
Officer of the WebFinancial Holding Corporation subsidiary since January 2000.
Mr. Henderson has served as a Vice President of Steel Partners, Ltd. since March
2002. Mr. Henderson served as a Vice President of SPS from August 1999 through
March 2002. He has also served as President of Gateway Industries, Inc. since
December 2001. Mr. Henderson has served as a director since December 1999 and
acting Chief Executive Officer since July 2002 of ECC International Corp. He has
served as a director of SL Industries, Inc. since January 2002. From 1996 to
July 1999, Mr. Henderson was employed in various positions with Aydin
Corporation which included a tenure as President and Chief Operating Officer
from October 1998 to June 1999. Prior to his employment with Aydin Corporation,
Mr. Henderson was employed as an executive with UNISYS Corporation, an
e-business solutions provider.

-9-

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

No executive officer received annual compensation, long term or
other, in excess of $100,000 during 2001, 2000 and 1999. For information
relating to the management functions performed by SPS, an entity controlled by
Warren G. Lichtenstein, please see "Certain Relationships and Related
Transactions."

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE

No executive officer exercised any options during the fiscal year
ended December 31, 2001. The following table shows the number and value of
options held as of December 31, 2001 by the Chief Executive Officer.

AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION VALUES

Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-the-Money
FY-End(#) Options at FY-End($)(1)

Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------

Warren G. Lichtenstein 227,458/0 0/0

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

(1) Based on the market value, as reported on the NASDAQ Small Cap
Market of $2.67 per share of Common Stock, at December 31, 2001.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Officers of the Company do not receive annual compensation.
Day-to-day management functions are performed by Steel Partners, Ltd. Please see
"Certain Relationships and Related Transactions" for a description of the
contractual arrangement between the Company and Steel Partners, Ltd.

The Board of Directors authorized the payment to each of the
Company's non-employee directors of a retainer fee of $3,000 per quarter in cash
for his services as a director during 2001 and meeting fees of $1,000 per
meeting of the Board and $500 per meeting of a committee of the Board ($375 to
the extent such committee meeting is held on the same day as a Board meeting)
during 2001 pursuant to the terms of the Long Term Stock Incentive Plan (the
"Plan"). Pursuant to the Plan, two of the three non-employee directors entitled
to such fees elected to receive their fees in stock options in lieu of cash,
with exercise prices based on the market price of the Common Stock on the date
of grant. The current directors hold an aggregate of 351,489 options to purchase
Common Stock of the Company at exercise prices ranging from $2.55 to $4.68 per
share. A former non-employee director also received such fees. Officers who are

-10-

not directors do not receive annual or per meeting compensation. Earle May, as
chairman of the audit committee, received cash compensation of $2,500 per
quarter.

EQUITY COMPENSATION PLAN INFORMATION

Number of Number of securities
securities to be Weighted- remaining available for
issued upon average exercise future issuance under equity
exercise of price of compensation plans
outstanding outstanding (excluding securities
options options reflected in column (a))

Plan Category (a) (b) (c)
------------- --- --- ---

Equity compensation 470,972 $4.13 531,171
plans approved by
security holders(1)

Equity compensation 0 0 0
plans not approved by
security holders

Total 470,972 $4.13 531,171

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

(1) Consists of the Plan and warrants issued to stockholders in 1995
relating to the Company's bankruptcy filing in 1993.

EMPLOYMENT AGREEMENTS

The Company currently has no employment agreements, compensatory
plans or arrangements with any executive officer.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is composed of Earle May and Joseph
Mullen. No interlocking relationship exists between any member of the Company's
Compensation Committee and any member of any other Company's Board of Directors
or compensation committee. No interlocking relationship existed between any
member of the Company's Board of Directors and any member of any other company's
board of directors or other compensation committee in 2001.

-11-

BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

SEC regulations require the disclosure of the compensation policies
applicable to executive officers in the form of a report by the compensation
committee of the Board of Directors (or a report of the full Board of Directors
in the absence of a compensation committee). As noted above, the Company pays no
compensation to its executive officers. As a result, the Board of Directors has
not considered a compensation policy for its executive officers and has not
included a report with this Proxy Statement.

TRANSACTIONS WITH MANAGEMENT AND OTHERS

See "Certain Relationships and Related Transactions."

-12-

STOCK PERFORMANCE GRAPH

The graph below compares the cumulative total stockholder return on
the Common Stock of the Company with the cumulative total return on the Nasdaq
Market Value Index and the Media General Financial Services Credit Services
Index, assuming the investment of $100 in the Company's Common Stock on January
31, 1997, and reinvestment of all dividends.

FISCAL YEAR ENDING
----------------------------------------------------------------
COMPANY/INDEX/MARKET 1/31/1997 1/29/1998 12/31/1998 12/31/1999 12/29/2000 12/31/2001

WebFinancial Corporation 100.00 100.00 304.57 315.74 120.56 135.53
Credit Services 100.00 131.38 153.77 202.27 226.22 176.77
NASDAQ Market Index 100.00 117.79 159.57 281.45 176.90 141.01

-13-

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company's officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership on Form 3 and
changes in ownership on Form 4 or Form 5 with the SEC. Such officers, directors
and 10% stockholders are also required by SEC rules to furnish the Company with
copies of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by
it, or written representations from certain reporting persons, the Company
believes that, during the fiscal year ended December 31, 2001, there was
compliance with all Section 16(a) filing requirements applicable to its
officers, directors and 10% stockholders.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to a Management Agreement approved by a majority of the
Company's disinterested directors, SPS provided the Company with office space
and certain management, consulting and advisory services. The Management
Agreement is automatically renewed on an annual basis until terminated by either
party, at any time and for any reason, upon at least 60 days written notice. The
Management Agreement also provides that the Company shall indemnify, save and
hold SPS harmless from and against any obligation, liability, cost or damage
resulting from SPS's actions under the terms of the Management Agreement, except
to the extent occasioned by gross negligence or willful misconduct of SPS's
officers, directors or employees. In consideration of the services rendered by
SPS, the Company paid to SPS a fixed monthly fee, adjustable annually upon
agreement of the Company and SPS. During the fiscal years ended December 31,
2001 and 2000, SPS received fees of $231,000 and $310,000, respectively, from
the Company. These payments represented in excess of five percent of the
Company's consolidated gross revenues and Steel Partners, Ltd.'s consolidated
gross revenues for the applicable fiscal years. The Company believes that the
cost of obtaining the type and quality of services rendered by SPS under the
Management Agreement was no less favorable than the cost at which the Company
could obtain from unaffiliated entities.

Pursuant to an Employee Allocation Agreement between WebBank, a
subsidiary of the Company, and SPS dated March 15, 2001, James Henderson, a
former employee of SPS and an executive officer of the Company, performs
services in the area of management, accounting and finances and such other
services as reasonably requested by WebBank. In consideration of the services
provided, WebBank shall pay SPS $100,000 per annum. During the fiscal year ended
December 31, 2001, SPS received fees of $79,000. The fees received by SPS are
part of the fees that SPS received pursuant to the Management Agreement referred
to in the preceding paragraph. The agreement will continue in force until
terminated by either of the parties upon 30 days prior notice. The Company and
WebBank believe that the cost of obtaining the type and quality of services
rendered by Mr. Henderson under the Employee Allocation Agreement was no less
favorable than the cost at which the Company could obtain from unaffiliated
entities.

-14-

SPS is owned by an entity which is controlled by Warren
Lichtenstein, the Company's Chairman of the Board and Chief Executive Officer.
As of March 26, 2002, the Management Agreement and the Employee Allocation
Agreement described above were assigned by SPS to Steel Partners, Ltd. and the
employees of SPS became employees of the Steel Partners Services Division of
Steel Partners, Ltd. Warren Lichtenstein, the Company's President and Chief
Executive Officer, is an affiliate of Steel Partners, Ltd. based on his
ownership of Steel Partners, Ltd., directly and through Steel, and by virtue of
his positions as Chairman, President and Chief Executive Officer of Steel
Partners, Ltd. Mr. Lichtenstein is the sole managing member of the general
partner of Steel. Mr. Lichtenstein disclaims beneficial ownership of the shares
of Common Stock of Steel Partners, Ltd. owned by Steel (except to the extent of
his pecuniary interest in such shares of Common Stock).

-15-

PROPOSAL II--RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS

On May 1, 2000, the Company dismissed KPMG LLP ("KPMG"), as its
independent accountants. The audit reports of KPMG on the consolidated financial
statements of the Company as of December 31, 1999 and 1998, and for the year
ended December 31, 1999, the eleven-month period ended December 31, 1998 and the
year ended January 31, 1998 did not contain any adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope, or
accounting principles. The Board of Directors participated in and approved the
decision to change independent accountants.

In connection with the audits of the Company's consolidated
financial statements for each of the two fiscal years ended December 31, 1999
and 1998, and in the subsequent interim period through May 1, 2000, there were
no "disagreements," as that term is defined in the instructions to Form 8-K and
the regulations applicable to Item 4 of Form 8-K, with KPMG on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which "disagreements," if not resolved to their
satisfaction would have caused them to make reference in connection with their
opinion on the subject matter of the "disagreement" in their report.

KPMG has furnished the Company with a letter addressed to the SEC
stating that it agrees with the above statements, except that KPMG did not agree
or disagree with the reference to the Board of Directors participating in and
approving the decision to change independent auditors.

The Company engaged Grant Thornton LLP as the Company's auditors on
May 4, 2000. The Company has not consulted with Grant Thornton LLP during the
two fiscal years prior to May 4, 2000 concerning the application of accounting
principles or any issues relating to accounting, auditing or financial
reporting.

The Board of Directors has appointed Grant Thornton LLP as the
Company's independent public accountants for the fiscal year ending December 31,
2002. Although the selection of auditors does not require ratification, the
Board of Directors has directed that the appointment of Grant Thornton LLP be
submitted to stockholders for ratification due to the significance of such
appointment. If stockholders do not ratify the appointment of Grant Thornton
LLP, the Board of Directors will consider the appointment of other certified
public accountants. The approval of the proposal to ratify the appointment of
Grant Thornton LLP requires the affirmative vote of a majority of the votes cast
by holders of the Common Stock.

FEES BILLED TO COMPANY BY GRANT THORNTON LLP DURING FISCAL 2001

AUDIT FEES: The aggregate fees billed for professional services
rendered by Grant Thornton LLP for the audit of the annual financial statements
of the Company and its subsidiary WebBank for the fiscal year ended December 31,
2001 and the review of the financial statements included in the Company's Forms
10-Q for such fiscal year were approximately $52,500.

-16-

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES: No
fees were billed for professional services rendered by Grant Thornton LLP for
financial information systems design and implementation services for the fiscal
year ended December 31, 2001.

ALL OTHER FEES: The aggregate fees billed for services rendered by
Grant Thornton LLP, other than the services referred to above, for the fiscal
year ended December 31, 2001 were approximately $19,000.

The Audit Committee has considered whether the provision by Grant
Thornton LLP of the services covered by the fees other than the audit fees is
compatible with maintaining Grant Thornton's independence and believes that it
is compatible.

The Company does not expect a representative of Grant Thornton LLP
to be present at the Meeting.

RECOMMENDATION

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
YEAR ENDING DECEMBER 31, 2002.

-17-

ANNUAL REPORT

All stockholders of record as of the Record Date have been sent, or
are concurrently herewith being sent, a copy of the Company's 2001 Annual Report
for the year ended December 31, 2001, which contains certified financial
statements of the Company for the year ended December 31, 2001.

ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001
(WITHOUT EXHIBITS), AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BY
WRITING TO THE CORPORATE SECRETARY, WEBFINANCIAL CORPORATION, 150 EAST 52ND
STREET, 21ST FLOOR, NEW YORK, NEW YORK 10022.

STOCKHOLDER PROPOSALS

Stockholder proposals made in accordance with Rule 14a-8 under the
Exchange Act and intended to be presented at the Company's 2003 Annual Meeting
of Stockholders must be received by the Company at its principal office in New
York, New York within a reasonable time before the Company begins to print and
mail its proxy materials. The Company will inform stockholders of such date
either in a report filed with the SEC and/or a press release. Such proposals
should be addressed to the Corporate Secretary, WebFinancial Corporation, 150
East 52nd Street, 21st Floor, New York, New York 10022.

On May 21, 1998, the SEC adopted an amendment to Rule 14a-4, as
promulgated under the Exchange Act. The amendment to Rule 14a-4(c)(1) governs
the Company's use of its discretionary proxy voting authority with respect to a
stockholder proposal which is not addressed in the Company's proxy statement.
The new amendment provides that if a proponent of a proposal fails to notify the
Company at least 45 days prior to the month and day of mailing of the prior
year's proxy statement, then the Company will be allowed to use its
discretionary voting authority when the proposal is raised at the meeting,
without any discussion of the matter in the proxy statement. If during the prior
year the Company did not hold an annual meeting, or if the date of the annual
meeting has changed more than 30 days from the prior year, then notice must not
have been received a reasonable time before the Company mails its proxy
materials in order for the Company to be allowed to use its discretionary voting
authority when the proposal is raised.

As of the date of this Proxy Statement, management knows of no
matters other than those set forth herein which will be presented for
consideration at the Meeting.

Glen M. Kassan
Vice President, Chief Financial Officer
and Secretary
November 7, 2002

-18-

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

WEBFINANCIAL CORPORATION

Proxy -- Annual Meeting of Stockholders
December 2, 2002

The undersigned, a stockholder of WebFinancial Corporation, a
Delaware corporation (the "Company"), does hereby appoint Warren G. Lichtenstein
and Jack L. Howard, and each of them, the true and lawful attorneys and proxies
with full power of substitution, for and in the name, place and stead of the
undersigned, to vote all of the shares of Common Stock of the Company which the
undersigned would be entitled to vote if personally present at the 2002 Annual
Meeting of Stockholders of the Company to be held at the offices of Olshan
Grundman Frome Rosenzweig & Wolosky LLP, located at 505 Park Avenue, New
York, New York 10022, on December 2, 2002 at 10:00 A.M., local time, or at any
adjournment or adjournments thereof.

The undersigned hereby instructs said proxies or their substitutes:

1. ELECTION OF DIRECTORS:

The election of Warren G. Lichtenstein, Jack L. Howard, Joseph L.
Mullen, Mark E. Schwarz and Howard Mileaf to the Board of Directors, to serve
until the 2003 Annual Meeting of Stockholders and until their respective
successors are elected and shall qualify.

WITHHOLD AUTHORITY
FOR ALL TO VOTE FOR ALL
NOMINEES _____ NOMINEES _____ ________________________________

________________________________

________________________________
TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE(S),
PRINT NAME(S) ABOVE.

2. TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS:

______ FOR _____ AGAINST _____ ABSTAIN

3. DISCRETIONARY AUTHORITY:

In their discretion, the proxies are authorized to vote upon such
other and further business as may properly come before the meeting.

THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS
HEREINBEFORE GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO
ELECT DIRECTORS, AND TO RATIFY THE APPOINTMENT OF GRANT THORNTON LLP AS THE
COMPANY'S INDEPENDENT AUDITORS.

The undersigned hereby revokes any proxy or proxies heretofore
given, and ratifies and confirms that all the proxies appointed hereby, or any
of them, or their substitutes, may lawfully do or cause to be done by virtue
hereof.

Dated: _______________________, 2002

_____________________________ (L.S.)

_____________________________ (L.S.)
Signature(s)

NOTE: PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR
HEREON. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE INDICATE THE CAPACITY IN WHICH
SIGNING. WHEN SIGNING AS JOINT TENANTS, ALL PARTIES IN THE
JOINT TENANCY MUST SIGN. WHEN A PROXY IS GIVEN BY A
CORPORATION, IT SHOULD BE SIGNED WITH FULL CORPORATE NAME BY
A DULY AUTHORIZED OFFICER.

PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY IN THE
ENVELOPE PROVIDED FOR THIS PURPOSE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.

-----END PRIVACY-ENHANCED MESSAGE-----