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, Ay3JxDv5ln3N9lSuqAhUjwg1RSv1yPS0U+AbpXGrRRL0A6Cz7hUTt8wby3ZcTADX Nqa5sXZUV+l0v4vOKwF1FQ== 0000921895-03-000899.txt : 20031118 0000921895-03-000899.hdr.sgml : 20031118 20031118172038 ACCESSION NUMBER: 0000921895-03-000899 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20031218 FILED AS OF DATE: 20031118 EFFECTIVENESS DATE: 20031118 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEBFINANCIAL CORP CENTRAL INDEX KEY: 0000085149 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS BUSINESS CREDIT INSTITUTION [6159] 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: 031011140 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 HOLDINGS INC DATE OF NAME CHANGE: 19970826 FORMER COMPANY: FORMER CONFORMED NAME: ROSES STORES INC DATE OF NAME CHANGE: 19920703 DEF 14A 1 formdef14a04197_12182003.htm FORM DEF 14A 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 the 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 18, 2003
--------------

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 Marriott Midtown East Courtyard, located at 866 Third
Avenue, New York, New York 10022, on December 18, 2003 at 12:00 noon, 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,
2003; 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
17, 2003 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

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

Dated: November 18, 2003
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
590 MADISON AVENUE, 32ND FLOOR
NEW YORK, NEW YORK 10022

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

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS

DECEMBER 18, 2003

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

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 2003 Annual Meeting of Stockholders of the Company (the "Meeting") to
be held at the Marriott Midtown East Courtyard, located at 866 Third Avenue, New
York, New York 10022, on December 18, 2003, at 12:00 noon, 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 18,
2003.

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, 2003; and (3) to transact such other business as
may properly be brought before the Meeting or any adjournment thereof. The
mailing address of the Company's principal executive offices is 590 Madison
Avenue, 32nd Floor, New York, New York 10022.

RECORD DATE AND VOTING SECURITIES

Only stockholders of record at the close of business on November 17,
2003, 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, 2003 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 $3,750, 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, broker "non-votes" will be disregarded and
will have no effect on the outcome of such vote.

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, abstentions and broker "non-votes" will be disregarded
and will have no effect on the outcome of such vote.

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 as defined in
Item 402(a)(3) of Regulation S-K of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), 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, 590 Madison Avenue, 32nd 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. 1,737,345 39.8%

Warren G. Lichtenstein 1,739,845(2) 39.8%

Jack L. Howard 42,617(3) *

Joseph L. Mullen 15,962(4) *
c/o Li Moran International, Inc.

611 Broadway, Suite 772
New York, New York 10012

Mark E. Schwarz 10,344(5) *
c/o Newcastle Partners, L.P.
300 Crescent Court, Suite 1110
Dallas, Texas 75201

Howard Mileaf 955(6) *
c/o WHX Corp.
110 East 59th Street
New York, New York 10022

All directors and executive 1,859,723(7) 41.9%
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; and (ii) 1,737,345 shares of Common Stock owned by Steel
Partners II, L.P. ("Steel"), which is also separately listed in the
security ownership table. As the sole managing member of the general
partner of Steel, Mr. Lichtenstein has sole voting and investment power
over the 1,737,345 shares owned by 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) 36,417 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; and (iii) 3,200 shares of Common Stock owned by JL Howard,
Inc., a California corporation controlled by Mr. Howard. Mr. Howard and his
spouse have shared voting and investment power over the 3,000 shares owned
in joint tenancy and the 3,200 shares owned by JL Howard, Inc.

(4) Consists of (i) 4,285 shares of Common Stock; and (ii) 11,677 shares of
Common Stock issuable upon the exercise of options within 60 days of the
Record Date.

(5) Consists of 10,344 shares of Common Stock issuable upon the exercise of
options within 60 days of the Record Date.

(6) Consists of 955 shares of Common Stock issuable upon the exercise of
options within 60 days of the Record Date.

(7) Includes the shares and options shown in footnotes (2) to (6) above and
50,000 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. 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 38 1996

Jack L. Howard 42 1996

Joseph L. Mullen 57 1995

Mark E. Schwarz 43 2001

Howard Mileaf 66 2002

WARREN G. LICHTENSTEIN has served as a director of the Company since
1996 and has served as Chief Executive Officer of the Company since December
1997. From December 1997 to November 2003, Mr. Lichtenstein served as President
of the Company. 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, since October 2003, the Chairman of the Board of United
Industrial Corporation, a designer and producer of defense, training,
transportation and energy systems. Mr. Lichtenstein devotes such time to the
business affairs and operations of the Company as he deems necessary to perform
his duties, which changes from time to time.

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 Pubco Corporation, a printing
supplies and construction equipment manufacturer and distributor. Mr. Howard
devotes such time to the business affairs and operations of the Company as he
deems necessary to perform his duties, which changes from time to time.

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, Inc., 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.

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 Pizza Inn, Inc., a franchisor and food and supply
distributor. Mr. Schwarz has served as a director and Chief Executive Officer
and President of Geoworks Corporation, an entity with no significant business
operations, since May 2003. He 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 and as its Chief Executive Officer
since January 2003. 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.

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, 2002. 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, 2002, the Compensation
Committee was composed of former director Earle C. May (Chairman) and Joseph
Mullen. Howard Mileaf and Mark Schwarz replaced Mr. May on the Compensation
Committee after they were elected to the Board in December 2002. The
Compensation Committee did not hold any meetings during the fiscal year ended
December 31, 2002.

On November 11, 2003, the Board of Directors formed the Nominating
and Governance Committee, the primary functions of which are to (i) identify,
review and evaluate individuals qualified to become Board members and recommend
nominees for each annual meeting of the Company's stockholders; (ii) ensure that
the Audit, Compensation and Nominating and Governance Committees of the Board
shall have the benefit of qualified and experienced independent directors; (iii)
serve as a focal point for communication between Board candidates, non-committee
Board members and the Company's management; and (iv) develop and recommend to
the Board a set of effective corporate governance policies and procedures
applicable to the Company. The Nominating and Governance Committee is composed
of Mark Schwarz, Joseph Mullen and Howard Mileaf. While the Nominating and
Governance Committee will consider nominees recommended by stockholders, it has
not actively solicited recommendations from stockholders for nominees, nor has
it established any procedures for this purpose.

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, 2002, the members of the Audit Committee were Earle C. May (Chairman),
Joseph Mullen and Mark Schwarz. Howard Mileaf replaced Mr. May on the Audit
Committee after he was elected to the Board in December 2002. The Audit
Committee held four meetings during the fiscal year ended December 31, 2002. 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 submitting to the Audit Committee
for consideration a new Audit Committee charter that complies with the latest
updates of The Sarbanes-Oxley Act of 2002 and the new NASDAQ listing standards.

All the current members of the Board of Directors attended at least
75% of the aggregate of the total number of meetings held by the Board and the
total number of meetings held by all committees of the Board during fiscal 2002,
with the exception of Joseph Mullen who was absent from one meeting of the Board
and two meetings of the Audit Committee.

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, 2002. 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
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, 2002. 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, 2002.

Submitted by the Audit Committee

Howard Mileaf
Joseph L. Mullen
Mark E. Schwarz

MANAGEMENT

EXECUTIVE OFFICERS OF THE COMPANY WHO ARE NOT DIRECTORS

GLEN M. KASSAN (age 60) 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 an entity previously known as Steel Partners
Services, Ltd., a management and advisory company, from June 2001 through March
2002 and Vice President from October 1999 through May 2001. Steel Partners
Services, Ltd. 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 Steel Partners Services, Ltd. 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 United Industrial
Corporation. Mr. Kassan devotes such time to the business affairs and operations
of the Company as he deems necessary to perform his duties, which changes from
time to time.

JAMES R. HENDERSON (age 45) has served as President and Chief
Operating Officer of the Company since November 2003 and 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 Steel Partners Services, Ltd.
from August 1999 through March 2002. He has also served as President of Gateway
Industries, Inc. since December 2001. Mr. Henderson served as a director and
acting Chief Executive Officer of ECC International Corp., a manufacturer and
marketer of computer controlled simulators for training personnel to perform
maintenance and operator procedures on military weapons, from December 1999 and
July 2002, respectively, until September 2003. He has served as a director of SL
Industries, Inc. since January 2002. From January 2001 to August 2001, Mr.
Henderson served as President of MDM Technologies, Inc., a direct mail and
marketing company that was principally controlled by the Company's Chief
Executive Officer and Chairman. 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. Mr.
Henderson devotes such time to the business affairs and operations of the
Company as he deems necessary to perform his duties, which changes from time to
time.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

The following table sets forth information concerning the
compensation paid by the Company during the fiscal years ended December 31,
2002, 2001 and 2000 to the Company's Chief Executive Officer. No other executive
officer of the Company received annual compensation in excess of $100,000 during
the fiscal year ended December 31, 2002.

Annual Compensation Long-Term
Compensation
Securities All Other
Fiscal Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) Options(#) ($)(1)
- --------------------------- ---- --------- -------- ---------- ------

Warren Lichtenstein, 2002 -- -- -- 310,000
Chairman and Chief
Executive Officer
2001 -- -- -- 310,000
2000 -- -- -- 310,000
- --------------------

(1) Represents aggregate management fees earned by Steel Partners, Ltd. (for a
portion of 2002) and Steel Partners Services, Ltd. (for a portion of 2002
and for 2001 and 2000), entities controlled by Warren Lichtenstein, from
the Company. For information relating to the management functions performed
by such entities, 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, 2002. The following table shows the number and value of
options held as of December 31, 2002 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 211,145/0 0/0

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

(1) Based on the market value, as reported on the NASDAQ SmallCap Market, of
$2.71 per share of Common Stock at December 31, 2002 and an average
exercise price of $3.91 per share.

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 2002 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 2002. Pursuant to the terms of the Long Term Stock Incentive Plan (the
"Plan"), all 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, with the exception of
Earle May who received such fees in cash. The current directors hold an
aggregate of 22,976 options to purchase Common Stock of the Company at exercise
prices ranging from $1.50 to $3.03 per share. Officers who are not directors do
not receive annual or per meeting compensation. The chairman of the Audit
Committee receives 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 Mark Schwarz (Chairman),
Joseph Mullen and Howard Mileaf. 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 2002.

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."

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 ("MG Group Index"), assuming the investment of $100 in the Company's
Common Stock on December 31, 1997, and reinvestment of all dividends.

[Performance Graph]

Fiscal Year Ending

Company/Index/Market 12/31/1997 12/31/1998 12/31/1999 12/29/2000 12/31/2001 12/31/2002

WebFinancial Corporation 100.00 355.56 368.59 140.74 158.22 160.59

MG Group Index 100.00 115.87 152.41 170.46 133.20 111.76

NASDAQ Market Index 100.00 141.04 248.76 156.35 124.64 86.94

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 greater-than ten percent 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, 2002, there was
compliance with all Section 16(a) filing requirements applicable to its
officers, directors and greater-than ten percent stockholders, with the
exception of (i) Steel and Warren Lichtenstein whose acquisition of Common Stock
in one transaction was inadvertently reported late on a Form 4, (ii) Mark
Schwarz whose award of stock options on nine occasions during fiscal 2002 in
lieu of meeting fees and retainer fees in his capacity as a director was
inadvertently reported late on a Form 5, (iii) Joseph Mullen whose award of
stock options on six occasions during fiscal 2002 in lieu of meeting fees and
retainer fees in his capacity as a director was inadvertently reported late on a
Form 5, and (iv) Howard Mileaf whose award of stock options on two occasions
during fiscal 2002 in lieu of meeting fees and retainer fees in his capacity as
a director was inadvertently reported late on a Form 5.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to a management agreement (the "Management Agreement"),
approved by a majority of the Company's disinterested directors, between the
Company and an entity previously known as Steel Partners Services, Ltd. ("SPS")
(and subsequently assigned to Steel Partners, Ltd. ("New Ltd.")), New Ltd.
provides the Company with office space and certain management, consulting and
advisory services. The Management Agreement is automatically renewable on an
annual basis unless terminated by either party, 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.

Pursuant to an employee allocation agreement (the "Employee
Allocation Agreement") between WebBank and SPS (and subsequently assigned to New
Ltd.), Jim Henderson, an employee of New Ltd. and executive officer of the
Company, performs services in the area of management, accounting and finances
and such other services as are reasonably requested by WebBank. The Employee
Allocation Agreement will continue in force until terminated by either of the
parties upon 30 days written notice.

Prior to March 26, 2002, the original counterparty to both the
Management Agreement and the Employee Allocation Agreement was SPS. As of March
26, 2002, the Management Agreement and the Employee Allocation Agreement
described above were assigned by SPS to New Ltd. and the employees of SPS became
employees of New Ltd. Warren Lichtenstein, the Company's Chief Executive
Officer, is an affiliate of New Ltd. based on his ownership of New Ltd.,
directly and through Steel, and by virtue of his positions as Chairman,
President and Chief Executive Officer of New 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 New Ltd. owned by Steel
(except to the extent of his pecuniary interest in such shares of Common Stock).

In consideration of the services rendered under the Management
Agreement, New Ltd. currently charges the Company a fixed monthly fee totaling
$310,000 per annum, adjustable annually upon agreement of the Company and New
Ltd. As part of such $310,000, in consideration of the services provided under
the Employee Allocation Agreement, New Ltd. currently charges WebBank $100,000
per annum. The Company believes that the cost of obtaining the type and quality
of services rendered by New Ltd. under the Management Agreement and Employee
Allocation Agreement is no less favorable than the cost at which the Company and
WebBank, respectively, could obtain from unaffiliated entities.

During the fiscal year ended December 31, 2002, SPS and New Ltd.
billed fees with respect to fiscal 2002 of $77,500 and $232,500, respectively,
to the Company for services rendered under the Management Agreement. These
payments in the aggregate represented in excess of five percent of the Company's
consolidated gross revenues for the fiscal year. The fees earned by each of SPS
and New Ltd. represented in excess of five percent of SPS's and New Ltd.' s
consolidated gross revenues, respectively, for the fiscal year. During the
fiscal year ended December 31, 2002, New Ltd. billed fees of $100,000 to WebBank
for services rendered under the Employee Allocation Agreement. The fees payable
by WebBank are included in the fees payable by the Company under the Management
Agreement.

Pursuant to a sourcing and servicing agreement (the "Rockland
Agreement") between WebBank and Rockland Credit Finance LLC ("Rockland"),
Rockland performs both sourcing and servicing functions on behalf of WebBank
related to WebBank's accounts receivable factoring program. John Fox, the owner
of Rockland, is employed by WebBank in the capacity of Sr. Vice President -
Credit. During fiscal 2002, the first year of the Rockland Agreement, Rockland
was paid $56,000 in cash management fees and earned $571,000 in total management
fees under the terms of the Rockland Agreement. For the first nine months of
fiscal 2003, Rockland was paid $255,417 in cash management fees and earned
$797,000 in total management fees under the terms of the Rockland Agreement.
Management fees are paid quarterly and accrued monthly by WebBank.

Pursuant to a sourcing and servicing agreement (the "Inova
Agreement") dated March 7, 2003 between WebBank and Inova Capital Group LLC
("Inova"), Inova performs both sourcing and servicing functions on behalf of
WebBank related to WebBank's accounts receivable factoring program. Larry
Fletcher, an owner of Inova, is employed by WebBank in the capacity of Sr. Vice
President - Credit. For the first nine months of fiscal 2003, Inova was paid $0
in cash management fees and earned $28,000 in total management fees under the
terms of the Inova Agreement. Management fees are paid quarterly and accrued
monthly by WebBank.

PROPOSAL II--RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS

The Audit Committee has appointed Grant Thornton LLP as the
Company's independent public accountants for the fiscal year ending December 31,
2003. Although the selection of auditors does not require ratification, the
Audit Committee 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 Audit Committee 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 2002

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,
2002 and the review of the financial statements included in the Company's Forms
10-Q for such fiscal year were approximately $62,900.

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, 2002.

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, 2002 were approximately $9,500.

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, 2003.

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 2002 Annual Report
for the year ended December 31, 2002, which contains certified financial
statements of the Company for the year ended December 31, 2002.

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, 2002
(WITHOUT EXHIBITS), INCLUDING THE COMPANY'S CERTIFIED FINANCIAL STATEMENTS, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BY WRITING TO THE CORPORATE
SECRETARY, WEBFINANCIAL CORPORATION, 590 MADISON AVENUE, 32ND 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 2004 Annual Meeting
of Stockholders must be received by the Company at its principal office in New
York, New York no later than July 21, 2004. Such proposals should be addressed
to the Corporate Secretary, WebFinancial Corporation, 590 Madison Avenue, 32nd
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. With respect to the Company's 2004 Annual
Meeting of Stockholders, if the Company is not provided notice of a stockholder
proposal, which has not been timely submitted, for inclusion in the Company's
proxy statement by October 4, 2004, the Company will be permitted to use its
discretionary voting authority as outlined above.

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 18, 2003

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

WEBFINANCIAL CORPORATION

Proxy -- Annual Meeting of Stockholders
December 18, 2003

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 2003 Annual
Meeting of Stockholders of the Company to be held at the Marriott Midtown East
Courtyard, located at 866 Third Avenue, New York, New York 10022, on December
18, 2003 at 12:00 noon, 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 2004 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: ______________________ , 2003

______________________________ (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-----