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-----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, IdHFnMZL7VevLPDv3adW+2fEMLw/iDzsjq5qAEvl79DABeAIiDeCPaCum9JoXx7Q I/Wz/i+1GomlH2/VH6vWMw== 0000921895-04-001788.txt : 20041110 0000921895-04-001788.hdr.sgml : 20041110 20041110164659 ACCESSION NUMBER: 0000921895-04-001788 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20041215 FILED AS OF DATE: 20041110 DATE AS OF CHANGE: 20041110 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: PRE 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-00631 FILM NUMBER: 041133657 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 PRE 14A 1 pre14a04197_12002004.htm sec document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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:
/X/ Preliminary Proxy Statement
/_/ Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/_/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to ss.240.14a-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 15, 2004
--------------

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 _____________________, located at _______________________,
on December 15, 2004 at _______, 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 approve a proposal to amend the Certificate of Incorporation to
effect a reverse split of the Company's common stock such that one new
share of common stock would be issued for up to four shares of
outstanding common stock, as shall be determined by the board of
directors;

3. To approve a proposal to amend the Company's Certificate of
Incorporation to reduce the authorized number of shares of the
Company's common stock from 50,000,000 to no greater than 20,000,000
and to reduce the number of authorized shares of the Company's
preferred stock from 10,000,000 to no greater than 2,000,000, each as
shall be determined by the board of directors, and in each case
subject to the approval of Proposal 2 by the stockholders and the
implementation by the Company of the reverse stock split;

4. To ratify the appointment of Grant Thornton LLP as the Company's
independent auditors for the year ending December 31, 2004; and

5. 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 15, 2004
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 __, 2004
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.

PRELIMINARY COPY SUBJECT TO COMPLETION
DATED NOVEMBER 10, 2004

WEBFINANCIAL CORPORATION
590 MADISON AVENUE, 32ND FLOOR
NEW YORK, NEW YORK 10022

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

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS

DECEMBER 15, 2004

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

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
2004 Annual Meeting of Stockholders of the Company (the "Meeting") to be held at
the _____________________, located at ____________________________, on December
15, 2004, at __________, 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 __, 2004.

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 approve a proposal to
amend the Certificate of Incorporation to effect a reverse split of the
Company's common stock such that one new share of common stock would be issued
for up to four shares of outstanding common stock, as shall be determined by the
Board of Directors; (3) to approve a proposal to amend the Company's Certificate
of Incorporation to reduce the authorized number of shares of the Company's
common stock from 50,000,000 to no greater than 20,000,000 and to reduce the
number of authorized shares of the Company's preferred stock from 10,000,000 to
no greater than 2,000,000, each as shall be determined by the Board of
Directors, and in each case subject to the approval of Proposal 2 by the
stockholders and the implementation by the Company of the Reverse Stock Split;
(4) to ratify the appointment of Grant Thornton LLP as the Company's independent
auditors for the fiscal year ending December 31, 2004; and (5) 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 15, 2004,
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 8,733,732 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 approval of the proposal
to amend the Certificate of Incorporation to effect the reverse stock split,
(iii) for the approval of the proposal to amend the Certificate of Incorporation
to reduce the number of authorized shares of capital stock, (iv) for the
ratification of the appointment of Grant Thornton LLP as the Company's
independent auditors for the year ending December 31, 2004 and (v) 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 $________, 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, the approval of the reverse
stock split, the approval of the reduction in the number of authorized shares of
capital stock 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 (or
withholds in the case of election of directors) 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, votes withheld and broker "non-votes" will be disregarded
and will have no effect on the outcome of such vote.

The reverse stock split and the reduction in the number of authorized
shares of capital stock must be approved by the holders of a majority of the
outstanding Common Stock of the Company. In tabulating the vote on the reverse
stock split and the reduction in the number of authorized shares of capital
stock, abstentions and broker "non-votes" will have the effect of a negative
vote for the reverse stock split and the reduction in the number of authorized
shares of capital stock.

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, the Chief 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
person in the following table is in care of WebFinancial Corporation, 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. 5,652,948 64.7%

Warren G. Lichtenstein 5,655,448(2) 64.8%

Jack L. Howard 42,617(3) *

Joseph L. Mullen 15,962(4) *
c/o Li Moran International, Inc.
611 Broadway, Suite 722
New York, New York 10012

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

Howard Mileaf 955(6) *
64 Brookdale Court
Highland Park, New Jersey 08904

All directors and executive 5,750,326(7) 65.5%
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 security ownership 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) 5,652,948 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 5,652,948 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.

(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 held by directors and the Chief Executive
Officer named in the security ownership table and 25,000 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. The nominees were nominated by the
Nominating and Governance Committee. 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 39 1996

Jack L. Howard 43 1996

Joseph L. Mullen 58 1995

Mark E. Schwarz 44 2001

Howard Mileaf 67 2002

Warren G. Lichtenstein has served as a director of the Company since 1996
and as Chairman and Chief Executive Officer since December 1997. Mr.
Lichtenstein also served as President of the Company from December 1997 through
December 2003. 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 of
Gateway Industries, Inc. ("Gateway"), a provider of database development and Web
site design and development services, since 1994 and as Chairman of the Board
and Chief Executive Officer from 1995 to February 2004. He has served as a
director of SL Industries, Inc. ("SL"), 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 to date. He has served as the Chairman of
the Board and Chief Executive Officer of SL since February 2002. Mr.
Lichtenstein has served as a director and the President and Chief Executive

Officer of Steel Partners, Ltd. ("SPL"), 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 from May 2001 to December 2003. Mr.
Lichtenstein served as President of an entity previously known as Steel Partners
Services, Ltd. ("SPS"), a management and advisory company, from October 1999
through March 2002. SPS provided management services to Steel and other
affiliates of Steel until March 2002, when SPL acquired the rights to provide
certain management services from SPS. He has also served as Chairman of the
Board of Directors of Caribbean Fertilizer Group Ltd. ("Caribbean Fertilizer"),
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 other publicly held companies: Layne Christensen Company, a provider
of products and services for the water, mineral, construction and energy
markets; and United Industrial Corporation ("UIC"), a designer and producer of
defense, training, transportation and energy systems. He also serves as Chairman
of the Board of UIC. Mr. Lichtenstein devotes such time to the Company's
business affairs and operations as he deems necessary to perform his duties,
which changes from time to time, but generally does not exceed 50% of his 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
Chairman of the Board and Chief Executive Officer of Gateway since February
2004, as Vice President of Gateway since December 2001 and as a director of
Gateway since May 1994. Mr. Howard is a director of Pubco Corporation, a
printing supplies and construction equipment manufacturer and distributor. He is
also a director of BNS Co. ("BNS"), a real estate management company. 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, but
generally does not exceed 50% of his 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 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; Nashua Corporation, a specialty paper, label, and printing supplies
manufacturer; Bell Industries, Inc., a provider of computer systems and
services; New Century Equity Holdings Corp., a company formerly engaged in
investing in high-growth companies; and Pizza Inn, Inc., a franchisor and
operator of pizza restaurants. 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. 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, and as its
Chief Executive Officer since January 2003. From October 1998 through April
1999, Mr. Schwarz served as a director of Aydin Corporation ("Aydin"), a defense
electronics manufacturer.

Howard Mileaf has served as a director of the Company since December 2002.
He 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 OF THE BOARD OF DIRECTORS

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

COMPOSITION OF THE BOARD OF DIRECTORS

The Company has determined that three out of its five members of the Board
of Directors meet the current independence standards under (i) the current NASD
rules for The NASDAQ Stock Market ("Nasdaq"), and (ii) the provisions of the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and other rules and
regulations of the Securities and Exchange Commission ("SEC").

MEETINGS

The Board of Directors held five meetings during the fiscal year ended
December 31, 2003. 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.

COMPENSATION COMMITTEE

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, 2003, the Compensation Committee was composed
of the Company's three independent directors, Howard Mileaf, Mark Schwarz and
Joseph Mullen. The Compensation Committee did not hold any meetings during the
fiscal year ended December 31, 2003. The Board of Directors has adopted a
written charter for the Compensation Committee.

NOMINATING AND GOVERNANCE COMMITTEE

The Nominating and Governance Committee recommends criteria for service as
a director, reviews candidates and recommends appropriate governance practices
and compensation for directors. The Nominating and Governance Committee has
adopted a written charter, which is attached to this Proxy Statement as Annex A.

The members of the Nominating and Governance Committee are Mark Schwarz, Joseph
Mullen and Howard Mileaf. All members of the Company's Nominating and Governance
Committee are independent as independence is defined in Rule 4200(a)(15) of the
NASD listing standards. The Nominating and Governance Committee met one time
during the fiscal year ended December 31, 2003.

The Nominating and Governance Committee considers and makes recommendations
to the Board with respect to the size and composition of the Board and
identifies potential candidates to serve as directors, to the extent there are
vacancies on the Board. The Nominating and Governance Committee considers
recommendations for director nominees from a wide variety of sources, including
members of the Board, business contacts, community leaders, third-party advisory
services and members of management. The Nominating and Governance Committee also
considers stockholder recommendations for director nominees that are properly
received in accordance with the Company's Guidelines For Nominating And
Evaluating Candidates For The Board Of Directors and applicable rules and
regulations of the SEC. The Nominating and Governance Committee does not
evaluate director candidates recommended by stockholders differently than
director candidates recommended by other sources.

In considering Board candidates, the Nominating and Governance Committee
takes into consideration all factors that it deems appropriate, including, but
not limited to, the individual's character, education, experience, knowledge and
skills. The Nominating and Governance Committee will also consider the extent of
the individual's experience in business, education or public service, his or her
ability to bring a desired range of skills, diverse perspectives and experience
to the Board and whether the individual possesses high ethical standards, a
strong sense of professionalism and is capable of serving the interests of
stockholders. In addition to reviewing a candidate's background and
accomplishments, candidates for director nominees are reviewed in the context of
the current composition of the Board and the evolving needs of the Company's
businesses. It is the Board's policy that at all times at least a majority of
its members meet the standards of independence promulgated by the NASD and the
SEC. Additionally, the Nominating and Governance Committee will consider the
number of boards on which the candidate already serves when assessing whether
the candidate has the appropriate time to devote to service on the Board.

Stockholders wishing to bring a nomination for a director candidate prior
to a meeting of stockholders must give written notice to the Corporate
Secretary, WebFinancial Corporation, 590 Madison Avenue, 32nd Floor, New York,
New York 10022, either by personal delivery or by United States mail, postage
prepaid. The stockholder's notice must be received by the Secretary not later
than the close of business on the 120th calendar day prior to the anniversary of
the date on which notice of the prior year's annual meeting of stockholders was
first mailed to stockholders. The stockholder's written notice to the Secretary
shall set forth (a) as to each person whom the stockholder proposes to nominate
for election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including such person's written consent to being named in the proxy statement as
a nominee and to serving as a director if elected; and (b) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the

nomination is made (i) the name and address of such stockholder, as they appear
on the Company's books, and of such beneficial owner, (ii) the class and number
of shares of the Common Stock that are owned beneficially and of record by such
stockholder and such beneficial owner and (iii) a representation that the
stockholder is a holder of record of shares of the Common Stock and intends to
appear in person or by proxy at the meeting of stockholders to propose such
business.

The Nominating and Governance Committee initially evaluates a prospective
nominee on the basis of his or her resume and other background information that
has been made available to the committee. A member of the Nominating and
Governance Committee will contact for further review those candidates who the
committee believes are qualified, who may fulfill a specific Board need and who
would otherwise best make a contribution to the Board. If, after further
discussions with the candidate, and other further review and consideration as
necessary, the Nominating and Governance Committee believes that it has
identified a qualified candidate, it will make a recommendation to the Board.

AUDIT COMMITTEE

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, 2003,
the members of the Audit Committee were Howard Mileaf, Joseph Mullen and Mark
Schwarz. The Board has determined that Howard Mileaf satisfies the "audit
committee financial expert" criteria established by the SEC. The Audit Committee
held five meetings during the fiscal year ended December 31, 2003. 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
updated its written charter for the Audit Committee. The updated charter is
attached to this Proxy Statement as Annex B.

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 2003.

Each director is expected to make reasonable efforts to attend Board
meetings, meetings of committees of which such director is a member and the
Annual Meeting of Stockholders. All of the Company's directors were present at
the Company's 2003 Annual Meeting of Stockholders.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee assists the Board in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing and financial
reporting practices of the Company. During the fiscal year ended December 31,
2003, the Audit Committee met five times.

In discharging its responsibility for oversight of the audit process, the
Audit Committee obtained from the independent auditors, Grant Thornton LLP, a
formal written statement describing any relationships between the auditors and
the Company that might bear on the auditors' independence consistent with the
Independent Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," and discussed with the auditors any relationships that might impact
the auditors' objectivity and independence and satisfied itself as to the
auditors' independence.

The committee discussed and reviewed with the independent auditors the
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and discussed and reviewed the results of
the independent auditors' examination of the financial statements for the year
ended December 31, 2003.

The committee reviewed the audited financial statements of the Company as
of and for the year ended December 31, 2003 with management and the independent
auditors. Management has the responsibility for preparation of the Company's
financial statements and the independent auditors have the responsibility for
examination of those statements.

Based upon the above-mentioned review and discussions with management and
the independent auditors, the committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report on Form
10-KSB for the year ended December 31, 2003, for filing with the SEC.

Submitted by the Audit Committee

Howard Mileaf
Joseph L. Mullen
Mark E. Schwarz

CODE OF CONDUCT AND ETHICS

The Company has adopted a code of conduct and ethics (the "Code") that
applies to all directors, officers and employees and their relatives. The Code
is reasonably designed to deter wrongdoing and promote (i) honest and ethical
conduct, including the ethical handling of actual or apparent conflicts of
interest between personal and professional relationships, (ii) full, fair,
accurate, timely and understandable disclosure in reports and documents filed
with, or submitted to, the regulatory authorities and in other public
communications made by the Company, (iii) compliance with applicable
governmental laws, rules and regulations, (iv) the prompt internal reporting of
violations of the Code to appropriate persons identified in the Code, and (v)
accountability for adherence to the Code. The Code has been filed as an exhibit
to the Company's Annual Report on Form 10-KSB for the year ended December 31,
2003.

MANAGEMENT

EXECUTIVE OFFICERS OF THE COMPANY WHO ARE NOT DIRECTORS

Glen M. Kassan (age 61) has served as Vice President, Chief Financial
Officer and Secretary of the Company since June 2000. He has served as Executive
Vice President of SPL since March 2002. Mr. Kassan served as Executive Vice
President of SPS from June 2001 through March 2002 and Vice President from
October 1999 through May 2001. He has also served as Vice Chairman of the Board
of Directors of Caribbean Fertilizer since June 2000. Mr. Kassan has served as a
director of SPL since January 2002 and as its President since February 2002.
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 UIC. Mr. Kassan
devotes such time to the Company's business affairs and operations as he deems
necessary to perform his duties, which changes from time to time, but generally
does not exceed 50% of his time.

James R. Henderson (age 46) has served as President and Chief Operating
Officer of the Company since December 2003, and was the Vice President of
Operations from September 2000 through December 2003. He has served as a
director of BNS since June 2004 and as a director of Del Global Technologies
Corp., a designer and manufacturer of medical imaging and diagnostic systems,
since November 2003. 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 SPL 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 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 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, which included a tenure as President and Chief Operating
Officer from October 1998 to June 1999. Prior to his employment with Aydin, Mr.
Henderson was employed as an executive with UNISYS Corporation, an e-business
solutions provider. Mr. Henderson devotes such time to the Company's business
affairs and operations as he deems necessary to perform his duties, which
changes from time to time, but generally does not exceed 50% of his 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, 2003, 2002 and 2001 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, 2003.

LONG-TERM
ANNUAL COMPENSATION COMPENSATION
SECURITIES ALL OTHER
NAME AND PRINCIPAL FISCAL UNDERLYING COMPENSATION
POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)(1)
- -------- ---- --------- -------- ---------- ------
Warren Lichtenstein, 2003 -- -- -- 310,000
Chairman and Chief
Executive Officer
2002 -- -- -- 310,000
2001 -- -- -- 310,000
- --------------------

(1) Represents aggregate management fees earned by SPL (for 2003 and a portion
of 2002) and SPS (for a portion of 2002 and 2001), 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."

STOCK OPTIONS

None of the Company's executive officers were granted any stock options
during the fiscal year ended December 31, 2003 nor did Mr. Lichtenstein hold any
stock options as of December 31, 2003.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

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

The Board of Directors authorized the payment to each of the Company's
non-employee directors a retainer fee of $3,000 per quarter in cash for his
services as a director during 2003 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 2003
pursuant to the terms of the Long Term Stock Incentive Plan (the "Plan").
Officers who are directors do not receive annual or per meeting compensation.
Howard Mileaf, as Chairman of the Company's audit committee, receives

chairmanship fees of $2,500 per quarter. During 2003, the Company's non-employee
directors were also paid $10,000 each for their review of the Company's
registration statement on Form SB-2 related to the Company's subscription rights
offering completed in August 2004.

EQUITY COMPENSATION PLAN INFORMATION

NUMBER OF SECURITIES REMAINING
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE AVAILABLE FOR FUTURE ISSUANCE
BE ISSUED UPON EXERCISE PRICE OF UNDER EQUITY COMPENSATION PLANS
EXERCISE OF OUTSTANDING OUTSTANDING (EXCLUDING SECURITIES REFLECTED IN
OPTIONS OPTIONS COLUMN (A))

PLAN CATEGORY (A) (B) (C)

Equity compensation 92,976 $4.48 902,774
plans approved by
security holders(1)

Equity compensation 0 0 0
plans not approved by
security holders

Total 92,976 $4.48 902,774

- --------------------------------
(1) Consists of the Plan.

EMPLOYMENT AGREEMENTS

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

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, 2003, there was compliance with
all Section 16(a) filing requirements applicable to its officers, directors and
greater-than ten percent stockholders.

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
SPS (and subsequently assigned to SPL), SPL 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 SPL harmless from and against any obligation, liability, cost or damage
resulting from SPL's actions under the terms of the Management Agreement, except
to the extent occasioned by gross negligence or willful misconduct of SPL's
officers, directors or employees.

Pursuant to an Employee Allocation Agreement between WebBank and SPS (and
subsequently assigned to SPL) dated March 15, 2001 (the "First Allocation
Agreement"), James Henderson, an employee of SPL and an executive officer of the
Company, performed services in the area of management, accounting and finances,
and identified business opportunities, and such other services reasonably
requested by WebBank. Effective October 1, 2004, WebBank and SPL entered into a
new Employee Allocation Agreement (the "Second Allocation Agreement") pursuant
to which Mr. Henderson continues to perform the same services for WebBank. In
consideration of the services performed by Mr. Henderson under the Second
Allocation Agreement, Mr. Henderson's salary and the cost of certain other
benefits are allocated between WebBank and SPL based on the percentage of time
devoted by Mr. Henderson to WebBank matters. Unless agreed to by both parties in
writing, the amount paid by WebBank to SPL under the Second Allocation Agreement
in any calendar year may not exceed $100,000. The Second 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 First Allocation Agreement was SPS. As of March 26, 2002, the
Management Agreement and the First Allocation Agreement described above were
assigned by SPS to SPL and the employees of SPS became employees of SPL. Warren
Lichtenstein, the Company's Chairman and Chief Executive Officer, is an
affiliate of SPL based on his ownership of SPL, directly and through Steel, and
by virtue of his positions as Chairman, President and Chief Executive Officer of
SPL. 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 SPL 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,
SPL charges the Company a fixed monthly fee totaling $310,000 per annum,
adjustable annually upon agreement of the Company and SPL. In consideration of
the services provided under the First Allocation Agreement, SPL charged WebBank
$100,000 per annum during the previous two fiscal years. The fees payable by
WebBank are included in the fees payable by the Company under the Management
Agreement. The Company believes that the cost of obtaining the type and quality
of services rendered by SPL under the Management Agreement and the First and
Second Allocation Agreements 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, 2003, SPL billed the Company fees
with respect to fiscal 2003 of $310,000, for services rendered under the
Management Agreement. Included in these fees was $100,000 paid by WebBank for
services rendered under the First Allocation Agreement. During the fiscal year

ended December 31, 2002, SPL and SPS billed the Company fees with respect to
fiscal 2002 of $232,500 and $77,500, respectively, for services rendered under
the Management Agreement. Included in these fees was $100,000 paid by WebBank
for services rendered under the First 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 a
former employee of WebBank. During 2003, Rockland was paid $255,000 in cash
management fees and earned $1,019,000 in total management fees under the terms
of the Rockland Agreement. During 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. Management
fees are paid quarterly and accrued monthly by WebBank. Notices of termination
have been issued with respect to the Rockland Agreement and other accounts
receivable factoring and service arrangements, and Rockland has exercised its
right to purchase the receivables portfolio subject to the Rockland Agreement.
The termination notice and deadline to exercise the purchase option have been
extended until December 31, 2004.

PROPOSAL II--REVERSE STOCK SPLIT

INTRODUCTION

The Board of Directors of the Company has unanimously approved, subject to
stockholder approval solicited hereby, a proposal to amend the Company's
Certificate of Incorporation authorizing a reverse split of the outstanding
shares of Common Stock, such that for every number of common shares up to four
held by a stockholder, as determined by the Board, such holder would be entitled
to one post-split common share (the "Reverse Stock Split"). Fractional shares
would be treated as provided below, and outstanding options to purchase Common
Stock would be adjusted accordingly. The Reverse Stock Split would become
effective upon the filing with the Secretary of State of Delaware an amendment
to the Company's Certificate of Incorporation. Approval of the proposal would
give the Board discretionary authority to implement the Reverse Stock Split for
a 24-month period, until December 15, 2006.

The purpose of the Reverse Stock Split is to increase the market value of
the Common Stock. The Board intends to effect the Reverse Stock Split only if it
believes that a decrease in the number of shares outstanding may increase the
per share market price of the Common Stock and improve the trading market for
the Common Stock. If the Reverse Stock Split is authorized by the stockholders,
the Board will have the discretion to implement only one during the next 24
months, or effect no Reverse Stock Split at all. The Board has not specified the
exact ratio of the Reverse Stock Split, other than the maximum of one-for-four,
in order to give it latitude. If the trading price of the Common Stock increases
due to factors, in the Board's sole discretion, other than the Reverse Stock
Split, the Reverse Stock Split may not be implemented by the Board.

Approval of the proposed amendment to the Company's Certificate of
Incorporation to effect the Reverse Stock Split requires the affirmative vote of
the holders of a majority of the outstanding shares of the Company's Common
Stock as of the Record Date. By voting to approve the proposed amendment, the
Company's stockholders will be authorizing the Board of Directors, without
further stockholder approval, to determine the ratio of the Reverse Stock Split
so long as the ratio does not exceed one-for-four. In connection with any
determination to effect a Reverse Stock Split, the Board of Directors will
select the Reverse Stock Split ratio that it believes will result in the
greatest marketability of the Company's Common Stock based on prevailing market
conditions. No further action on the part of the Company's stockholders will be
required for the Board to select the Reverse Stock Split ratio or to either
effect or abandon the Reverse Stock Split. If no Reverse Stock Split is effected
by December 15, 2006, the Board of Directors' authority to effect the Reverse
Stock Split will terminate. In addition, by voting to approve the proposed
amendment, the Company's stockholders will be authorizing the Company's officers
to make immaterial changes to the proposed amendment as the Company's officers
executing the amendment may deem appropriate.

Adjustments to the Company's financial statements to reflect the Reverse
Stock Split are expected to be minimal. The expected immediate effect in the
market would be an increase in the trading price per share, and a decrease in
the number of post-amendment shares involved in a trade of shares that would
have been involved in an identical trade.

PURPOSE OF THE REVERSE STOCK SPLIT

There are several reasons why the Board of Directors recommends that the
Company's stockholders approve the Reverse Stock Split, including the following:

o To improve the marketability and liquidity of the Company's Common
Stock; and

o To increase the per share market price of the Company's Common Stock.

The Company believes that a higher price per share of the Company's Common
Stock could improve the marketability of the Common Stock. The Company believes
that the current per share price level of the Company's Common Stock has reduced
the effective marketability of the Common Stock because of the reluctance of
many leading brokerage firms to recommend low-priced stock to their clients.
Some investors view low-priced stock as speculative and unattractive. In
addition, a variety of brokerage house policies and practices tend to discourage
individual brokers within those firms from dealing in low-priced stock. Such
policies and practices pertain to the payment of brokers' commissions and to the
time-consuming procedures that function to make the handling of low-priced
stocks unattractive to brokers from an economic standpoint.

Because brokerage commissions on low-priced stock generally represent a
higher percentage of the stock price than commissions on higher-priced stocks,
the current per share price of the Company's Common Stock results in individual
stockholders paying transaction costs (commission, markups or markdowns) that
represent a higher percentage of their total share value than would be the case
if the per share price of the Company's Common Stock was substantially higher.
This factor may also limit the willingness of institutions to purchase the
Company's Common Stock at its current market price.

Although any increase in the market price of the Company's Common Stock
resulting from the Reverse Stock Split may be proportionately less than the
decrease in the number of shares outstanding, the proposed Reverse Stock Split
could result in a market price that would be high enough for the shares of the
Company's Common Stock to overcome the reluctance, policies and practices of
brokerage firms and investors referred to above and to diminish the adverse
impact of correspondingly higher trading commissions for the shares. No
assurance can be given, however, that the Company's Common Stock will trade at a
higher price or that the Company will be successful in improving the
marketability and liquidity of its Common Stock after the Reverse Stock Split.

RISKS ASSOCIATED WITH THE REVERSE STOCK SPLIT

There can be no assurance that the Reverse Stock Split would have the
desired effects on the Company's Common Stock. Specifically, there can be no
assurance that the foregoing effects would occur following the Reverse Stock
Split, that the market price of the Company's Common Stock immediately after
implementation of the proposed Reverse Stock Split would be maintained for any
period of time, or that, assuming the maximum ratio of a one-for-four stock
split, such market would approximate four times the market price before the
proposed Reverse Stock Split. Even though a Reverse Stock Split, by itself, does

not impact a company's assets or prospects, reverse stock splits can result in a
decrease in the aggregate market value of a company's equity capital. The Board
of Directors, however, believes that this risk is off-set by the prospect that
the Reverse Stock Split may, by increasing the per share price, make an
investment in the Common Stock more attractive for certain investors. While it
is expected that the reduction in the outstanding shares of Common Stock will
increase the market price of the Common Stock, there are no assurances that the
Reverse Stock Split will increase the market price of the Common Stock by a
multiple equal to the number of pre-split shares in the Reverse Stock Split
ratio or result in any permanent increase in the market price (which can be
dependent upon many factors, including, but not limited to, the Company's
business and financial performance and prospects). Should the market price
decline after the Reverse Stock Split, the percentage decline may be greater,
due to the smaller number of shares outstanding, than it would have been prior
to the Reverse Stock Split. In some cases the stock price of companies that have
effected reverse stock splits has subsequently declined back to pre-reverse
split levels.

There are other reasons why the Reverse Stock Split may be perceived
negatively in the marketplace. In addition to the fact that the number of shares
available for trading are reduced, which generally has the effect of reducing
liquidity, round lots (i.e., lots in multiples of 100 shares) may be converted
into odd lots due to the split, which may in turn increase transaction costs for
stockholders. Further, the Reverse Stock Split can have a negative effect on
employee retention and recruitment by potentially reducing the number of shares
that the Company could offer in option grants and other stock-based awards. The
Company cannot guarantee that the market price of the Common Stock immediately
after the effective date of the proposed Reverse Stock Split will be maintained
for any period of time or that the ratio of post- and pre-split shares will
remain the same after the Reverse Stock Split is effected, or that the Reverse
Stock Split will not have an adverse effect on the stock price due to the
reduced number of shares outstanding after the Reverse Stock Split.

PRINCIPAL EFFECTS OF THE REVERSE STOCK SPLIT

If the stockholders approve the proposal to authorize the Board of
Directors to implement the Reverse Stock Split and the Board decides to
implement the Reverse Stock Split prior to December 15, 2006, the Company will
amend the existing provision of the Certificate of Incorporation relating to the
Company's authorized capital. Accordingly, Article Fourth of the Certificate of
Incorporation, depending on the Reverse Stock Split ratio selected by the Board,
will read as provided in Annex C.

If the stockholders approve the Reverse Stock Split, the appropriate
amendment to the Company's Certificate of Incorporation would become effective
upon the Board's decision to implement the Reverse Stock Split and the filing of
an amendment to the Certificate of Incorporation with the Secretary of State of
Delaware. The proposed Reverse Stock Split will not affect any stockholder's
proportionate equity interest in the Company or the rights, preferences,
privileges or priorities of any stockholder, other than an adjustment which may
occur due to payment for fractional shares. The proposed Reverse Stock Split
will not affect the total stockholders' equity of the Company or any components
of stockholders' equity as reflected on the financial statements of the Company
except (i) to change the numbers of the issued and outstanding shares of Common

Stock and (ii) for an adjustment which will occur due to the costs incurred by
the Company in connection with this Proxy Statement and the implementation of
the Reverse Stock Split. In addition, the conversion ratios and exercise prices,
to the extent applicable, of the Company's outstanding stock options, will be
proportionately adjusted upon the consummation of the Reverse Stock Split. The
$0.001 per share par value of the Common Stock will not be affected by the
proposed amendment.

EXCHANGE OF SHARES; NO FRACTIONAL SHARES

Pursuant to the Reverse Stock Split, depending on the Reverse Stock Split
ratio selected by the Board of Directors, every number of shares up to four of
issued Common Stock would be converted and reclassified into one share of
post-split Common Stock. No certificates or scrip representing fractional share
interests in the Common Stock will be issued, and no such fractional share
interest will entitle the holder thereof to any rights as a stockholder of the
Company. In lieu of any such fractional share interest, upon surrender of the
certificates representing a holder's Common Stock, such holder shall be paid
cash by the Company in an amount equal to the product of such fraction
multiplied by the average closing sale prices of the Common Stock (as adjusted
to reflect the Reverse Stock Split) for the 10 trading days immediately before
the effective date of the Reverse Stock Split (the "Split Effective Date") (or,
in the event the Common Stock is not so traded on the Split Effective Date, such
closing price on the next preceding day on which such stock is traded). All
shares held by a stockholder will be aggregated, and one new stock certificate
will be issued, unless the stockholder otherwise notifies the transfer agent.
The proposed Reverse Stock Split would become effective immediately on the Split
Effective Date. Stockholders will be notified on or after the Split Effective
Date that the Reverse Stock Split has been effected. The Company's transfer
agent, Wachovia Bank, N.A., will act as the Company's exchange agent (the
"Exchange Agent") for stockholders in implementing the exchange of their
certificates.

As soon as practicable after the Split Effective Date, stockholders will be
notified and provided the opportunity (but shall not be obligated) to surrender
their certificates to the Exchange Agent in exchange for certificates
representing post-split Common Stock. Stockholders will not receive certificates
for shares of post-split Common Stock unless and until the certificates
representing their shares of pre-split Common Stock are surrendered and they
provide such evidence of ownership of such shares as the Company or the Exchange
Agent may require. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE OR
FORWARD THEIR CERTIFICATES TO THE EXCHANGE AGENT UNTIL THEY HAVE RECEIVED NOTICE
FROM THE COMPANY THAT THE REVERSE STOCK SPLIT HAS BECOME EFFECTIVE. Beginning on
the Split Effective Date, each certificate representing shares of the Company's
pre-split Common Stock will be deemed for all corporate purposes to evidence
ownership of the appropriate number of shares of post-split Common Stock.

No service charge shall be payable by stockholders in connection with the
exchange of certificates, all costs of which will be borne and paid by the
Company.

OPTIONS, BENEFIT PLANS, WARRANTS AND OTHER SECURITIES

If the Reverse Stock Split is implemented, outstanding and unexercised
options, warrants and other securities convertible into, or exercisable or
exchangeable for, shares of the Company's Common Stock would be automatically
converted into an economically equivalent option, warrant or other security to
purchase shares of the Common Stock by decreasing the number of shares
underlying the option, warrant, or other security and increasing the exercise
price appropriately. For example, if the Reverse Stock Split ratio was
one-for-four, an option, warrant or other security to purchase 160 shares of the
Company's Common Stock at an exercise price of $1.00 per share would become an
option, warrant or other security to purchase 40 shares of the Company's Common
Stock at an exercise price of $4.00 per share.

RIGHTS AND PREFERENCES OF SHARES OF WEBFINANCIAL STOCK

With the exception of the number of shares issued and outstanding, the
rights and preferences of outstanding shares of the Company's Common Stock prior
and subsequent to the Reverse Stock Split would remain the same. Holders of the
Company's Common Stock would continue to have no preemptive rights. Following
the Reverse Stock Split, each full share of the Company's Common Stock resulting
from the Reverse Stock Split would entitle the holder thereof to one vote per
share and would otherwise be identical to the shares of the Company's Common
Stock immediately prior to the Reverse Stock Split.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of certain material federal income tax
consequences of the Reverse Stock Split; however, this does not purport to be a
complete discussion of all of the possible federal income tax consequences of
the Reverse Stock Split. It does not discuss any state, local, foreign or
minimum income or other U.S. federal tax consequences. Also, it does not address
the tax consequences to stockholders who are subject to special tax rules, such
as banks, insurance companies, regulated investment companies, personal holding
companies, foreign entities, nonresident alien individuals, broker-dealers and
tax-exempt entities. This discussion is based on the provisions of the United
States federal income tax law as of the date hereof, which is subject to change
retroactively as well as prospectively. This summary also assumes that the
pre-split shares were, and the post-split shares will be, held as "capital
assets," as defined in the Internal Revenue Code of 1986, as amended (generally,
property held for investment). Tax treatment may vary depending upon particular
facts and circumstances. Accordingly, each stockholder should consult with his
or her own tax advisor concerning the effects of the Reverse Stock Split.

Each stockholder should recognize no gain or loss upon the exchange of
pre-split shares for post-split shares pursuant to the Reverse Stock Split
(except to the extent of any cash received in lieu of a fraction of a post-split
share). Cash payments in lieu of a fractional post-split share should be treated
as if the fractional share were issued and then redeemed by the Company for
cash. Each stockholder should then recognize capital gain or loss equal to the
difference, if any, between the amount of cash received and the basis in the
fractional share. It is not anticipated that these payments will be subject to
backup withholding.

The aggregate tax basis of the post-split shares received in the Reverse
Stock Split (including any fraction of a post-split share deemed to have been
received) will be the same as the aggregate tax basis in the pre-split shares
exchanged. The holding period for the post-split shares will include the period
during which the pre-split shares surrendered in the Reverse Stock Split were
held.

The Company believes that the Reverse Stock Split will qualify as a
"recapitalization" under Section 368(a)(1)(E) of the Internal Revenue Code. As a
result, the Company will not recognize any gain or loss as a result of the
Reverse Stock Split.

APPRAISAL RIGHTS

No appraisal rights are available under the Delaware General Corporation
Law or under the Company's Certificate of Incorporation or By-laws to any
stockholder who dissents from the proposal to approve the amendment to the
Company's Certificate of Incorporation to effect the Reverse Stock Split.

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE REVERSE STOCK SPLIT.

PROPOSAL III--REDUCTION OF AUTHORIZED CAPITAL STOCK

INTRODUCTION

The Board of Directors has unanimously approved, subject to stockholder
approval, a proposal to amend the Company's Certificate of Incorporation (the
"Authorized Share Amendment"), substantially in the form of Annex C to this
Proxy Statement, to effect a reduction in the number of shares of Common Stock
and preferred stock, $.001 par value (the "Preferred Stock"), the Company is
authorized to issue, contingent upon implementation of the Reverse Stock Split
that is the subject of Proposal II. Currently, the Company is authorized to
issue up to 50,000,000 shares of Common Stock and 10,000,000 shares of Preferred
Stock. The Authorized Share Amendment would reduce those numbers to no greater
than 20,000,000 shares of Common Stock and no greater than 2,000,000 shares of
Preferred Stock, as determined the Board. If the stockholders do not approve the
Reverse Stock Split, or if the Board determines not to implement the Reverse
Stock Split, then the Company will not reduce its authorized shares of capital
stock.

PURPOSES OF THE REDUCTION IN AUTHORIZED SHARES

The principal purpose of the reduction in the number of shares of Common
Stock and Preferred Stock the Company is authorized to issue is to prevent a
significant increase in the Company's Delaware franchise tax liability that
would occur in the event the Reverse Stock Split is implemented and the number
of authorized shares is not reduced. The grant of authority to the Board of
Directors to reduce the number of shares of authorized capital stock, within the
limits described in this proposal, would give the Board of Directors the
flexibility to keep the Company's Delaware franchise tax liability at or below
current levels. The reduction in the authorized capital stock simultaneously
with the Reverse Stock Split would also reduce the potential for substantial
dilution to the stockholders as a result of the change in the Company's capital
structure after implementation of the Reverse Stock Split.

REDUCTION IN AUTHORIZED SHARES NOT PROPORTIONAL TO REVERSE STOCK SPLIT

The reduction in authorized shares of capital stock will not be directly
proportional to the Reverse Stock Split. The Board has determined to reduce the
authorized shares within the limits described herein because, in its business
judgment, these numbers of authorized shares provide adequate flexibility to the
Company in engaging in future capital raising transactions, acquisitions or
other transactions which might require the issuance of Common Stock and
Preferred Stock, while at the same time limiting the potential of substantial
dilution to the Company's current stockholders.

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AUTHORIZED SHARE
AMENDMENT.

PROPOSAL IV--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, 2004.
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 2003

Audit Fees.

The aggregate fees billed for each of the last two fiscal years of 2003 and
2002 for professional services rendered by Grant Thornton LLP for the audit of
the annual financial statements of the Company and its subsidiary WebBank and
the review of the financial statements included in the Company's Forms 10-QSB
for such fiscal years were approximately $140,000 and $66,000, respectively.

Audit-Related Fees.

The aggregate fees billed for each of the last two fiscal years of 2003 and
2002 for assurance and related services rendered by Grant Thornton LLP were
approximately $0 and $2,700, respectively. The services rendered in 2002
involved review of internal control procedures.

Tax Fees.

The aggregate fees billed for each of the last two fiscal years of 2003 and
2002 for professional services rendered by Grant Thornton LLP for tax
compliance, tax advice and tax planning for the Company and its subsidiary
WebBank were approximately $9,000 and $7,400, respectively.

All Other Fees.

No fees were billed for each of the last two fiscal years of 2003 and 2002
for products and services of Grant Thornton LLP, other than the services
reported above.

PRE-APPROVAL POLICIES AND PROCEDURES

All audit and non-audit services to be performed by the Company's
independent auditors must be approved in advance by the Audit Committee.
Consistent with applicable law, limited amounts of services, other than audit,
review or attest services, may be approved by one or more members of the Audit

Committee pursuant to authority delegated by the Audit Committee, provided each
such approved service is reported to the full Audit Committee at its next
meeting.

All of the engagements and fees for the Company's fiscal year ended
December 31, 2003 were approved by the Audit Committee. In connection with the
audit of the Company's Financial Statements for the fiscal year ended December
31, 2003, Grant Thornton LLP only used full-time, permanent employees.

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 OF THE BOARD OF DIRECTORS

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, 2004.

PROCEDURES FOR CONTACTING DIRECTORS

The Company has adopted a procedure by which stockholders may send
communications as defined within Item 7(h) of Schedule 14A under the Exchange
Act to one or more directors by writing to such director(s) or to the whole
Board care of the Corporate Secretary, WebFinancial Corporation, 590 Madison
Avenue, 32nd Floor, New York, New York 10022. Any such communications will be
promptly distributed by the Secretary to such individual director(s) or to all
directors if addressed to the whole Board.

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 2003 Annual Report for
the year ended December 31, 2003, which contains certified financial statements
of the Company for the year ended December 31, 2003.

ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2003
(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 2005 Annual Meeting of
Stockholders must be received by the Company at its principal office in New
York, New York no later than ______, 2005. 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 2005 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 __________, 2005, 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 __, 2004

PRELIMINARY COPY SUBJECT TO COMPLETION
DATED NOVEMBER 10, 2004

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

WEBFINANCIAL CORPORATION

PROXY -- ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 15, 2004

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 2004 Annual Meeting of
Stockholders of the Company to be held at ___________________________, located
at ____________________________, on December 15, 2004 at _____, local time, or
at any adjournment or adjournments thereof.

The undersigned hereby instructs said proxies or their substitutes:

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
2005 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.

APPROVAL OF REVERSE STOCK SPLIT:

To authorize the Board of Directors to amend the Company's Certificate of
Incorporation to effect a reverse stock split of the Company's Common Stock.

_____ FOR _____ AGAINST _____ ABSTAIN

APPROVAL OF A REDUCTION IN THE NUMBER OF AUTHORIZED SHARES OF CAPITAL STOCK:

To authorize the Board of Directors to amend the Company's Certificate of
Incorporation to reduce the number of authorized shares of Capital Stock.

_____ FOR _____ AGAINST _____ ABSTAIN

TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS:

To ratify the appointment of Grant Thornton LLP as the Company's
independent auditors for the year ending December 31, 2004.

_____ FOR _____ AGAINST _____ ABSTAIN

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,
TO APPROVE THE REVERSE STOCK SPLIT, TO APPROVE THE REDUCTION IN THE NUMBER OF
AUTHORIZED SHARES OF CAPITAL STOCK 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: _______________________, 2004
_____________________________ (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.

ANNEX A
-------

CHARTER
OF
THE NOMINATING AND GOVERNANCE COMMITTEE

OF WEBFINANCIAL CORPORATION

A. PURPOSE

The primary objectives of the Nominating and Governance Committee (the
"Committee") are to assist the Board of Directors (the "Board") of WebFinancial
Corporation (the "Company") by: (i) identifying, reviewing and evaluating
individuals qualified to become Board members and recommending nominees for each
annual meeting of the Company's stockholders; (ii) ensuring that the Audit,
Compensation and Nominating and Governance Committees of the Board shall have
the benefit of qualified and experienced independent directors; (iii) serving as
a focal point for communication between Board candidates, non-committee Board
members and the Company's management; and (iv) developing and recommending to
the Board a set of effective corporate governance policies and procedures
applicable to the Company.

B. ORGANIZATION

The Committee shall consist of three or more directors, each of whom shall
satisfy the applicable independence requirements of The Nasdaq Stock Market and
any other regulatory requirements.

Committee members shall be elected by the Board at a meeting of the Board
of Directors; members shall serve until their successors shall be duly elected
and qualified. The Committee's chairperson shall be designated by the full Board
or, if it does not do so, the Committee members shall elect a Chairman by vote
of a majority of the full Committee.

The Committee may form and delegate authority to subcommittees when
appropriate.

C. MEETINGS

The Committee will meet no less than one time per year. Special meetings
may be convened as required. The Chairman of the Committee will preside at each
meeting and, in consultation with the other members of the Committee, will set
the frequency and length of each meeting and the agenda of items to be addressed
at each meeting. The Chairman of the Committee shall ensure that the agenda for
each meeting is circulated to each Committee member in advance of the meeting.

D. RESPONSIBILITIES

The Committee has the following duties:

General

1. Develop principles of corporate governance and recommend them to the
Board for its approval;

2. Review periodically the principles of corporate governance approved by
the Board to insure that they remain relevant and there is compliance with them;

3. Review periodically the Certificate of Incorporation and By-Laws of the
Company and recommend to the Board changes thereto in respect of good corporate
governance;

4. Review and reassess the adequacy of the Charter annually and recommend
any changes to the Board for approval;

Board Composition

5. Identify potential candidates for membership on the Board; the Committee
shall have the sole authority to retain and terminate any search firm used to
identify candidates for the Board;

6. Gather information on such candidates, conduct inquiries into the
backgrounds and qualifications of such candidates, and conduct interviews and
meetings with such candidates or their references;

7. Make recommendations to the Board regarding overall Board composition
and makeup, including having a majority of independent directors on the Board;

8. Make recommendations to the Board to ensure that the Board has the
proper expertise and its membership consists of persons with sufficiently
diverse backgrounds;

9. Make recommendations to the Board with regard to the criteria for
selection of Board members;

10. Assist the Board in planning for continuity on the Board as existing
Board members retire or rotate off the Board;

11. Review and recommend to the Board an appropriate course of action upon
the resignation of current Board members;

Board Committees

12. Periodically review the composition of each Board committee;

13. Recommend to the Board persons to be members of Board committees;

Executive Officers

14. Make recommendations to the Board with regard to a succession plan for
the Principal Executive Officer in case of his resignation, retirement or death;

15. Make recommendations and assist the Board in succession planning for
other executive officers;

Stockholders

16. Review the procedures and communication plans for stockholder meetings
to ensure that the rights of stockholders are fully protected, that required
information concerning the Company is adequately presented and that the meeting
promotes effective communication between the Company and its stockholders on
matters of importance;

17. Recommend to the Board ways and means for the Board and management of
the Company to communicate with stockholders between annual meetings of the
stockholders;

Conflicts of Interest

18. Pre-approve consulting agreements of Board members for conflicts of
interest;

19. Clear actual and potential conflicts of interest a Board member may
have and issue to a Board member having an actual or potential conflict of
interest instructions on how to conduct him/herself in matters before the Board
that may pertain to such a conflict;

20. Adopt and revise as necessary a Conflicts of Interest Policy and
oversee its implementation;

General

21. Have the authority to obtain advice and assistance from internal or
external legal, accounting or other advisors in connection with the performance
of its duties and responsibilities; and

22. Take such other actions regarding the manner of governance of the
Company, including the adoption of principles of corporate governance, or that
are otherwise within the Committee's scope of duties, from time to time that are
in the best interests of the Company and its stockholders, as the Committee
shall deem appropriate.

ANNEX B
-------

CHARTER

THE AUDIT COMMITTEE

OF WEBFINANCIAL CORPORATION

November 2004

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

PURPOSE OF THE AUDIT COMMITTEE

The Audit Committee (the "Committee") is a committee of the Board of
Directors (the "Board") of WebFinancial Corporation (the "Company") established
for the purpose of overseeing the accounting and financial reporting processes
of the Company and audits of its financial statements.

The purposes of the Committee shall be to assist the Board in fulfilling
its oversight responsibilities to the stockholders, potential stockholders, the
investment community, and others, with respect to: (i) the integrity of the
Company's financial statements; (ii) the Company's compliance with legal and
regulatory requirements; (iii) the independent auditors' qualifications and
independence; and (iv) the performance of the Company's internal audit function
and independent auditors.

The Committee shall serve as an independent and objective party to monitor
the Company's financial reporting process and internal control system. In so
doing, the Committee shall maintain free and open communication between the
Committee, the independent auditors, and the management of the Company. In
discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities and personnel of the Company and to engage, determine funding for,
and obtain advice and assistance from independent counsel and other advisors as
the Committee deems necessary to carry out its duties. The Company shall also
provide funding for ordinary administrative expenses of the Committee that the
Committee deems necessary or appropriate in carrying out its duties.

COMPOSITION AND MEMBERSHIP REQUIREMENTS

The Board shall appoint the Committee and shall designate its Chairman. The
Committee shall consist of at least three independent directors, each of whom
shall satisfy the independence requirements of The Nasdaq Stock Market

("Nasdaq"), the Securities and Exchange Commission (the "SEC"), and applicable
law, including the Sarbanes-Oxley Act of 2002 and the regulations thereunder
(the "Act"). Each appointed director shall be independent of the management of
the Company, both directly and indirectly, and free from any relationship that,
in the opinion of the Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee. In particular, the members
will not have any compensatory relationship with, or receive any form of
compensation from, the Company other than as a director or Board committee
member, accept any consulting, advisory or other compensatory fee from the
Company or be an affiliated person of the Company or any subsidiary of the
Company.

The Committee members shall be financially literate and have the knowledge
and experience required to fulfill their responsibilities, as specified in the
Nasdaq requirements. At least one member of the Committee shall have past
employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or background
which results in that individual's financial sophistication, including being or
having been a chief executive officer, a chief financial officer or other senior
officer with financial oversight responsibilities. The identity of such
member(s) shall be disclosed in periodic filings as required by the SEC. The
Committee members shall satisfy all other requirements of the Nasdaq, the SEC
and the Act.

COMMITTEE MEETINGS

1. Committee Meetings. The Committee shall meet as a committee at least
quarterly, or more frequently as circumstances require, either in person or by
telephone conference call. The Committee shall maintain minutes of meetings and
report to the Board on significant results of the foregoing activities.

2. Meetings with Independent Auditors. The Committee shall meet with the
independent auditors at least four times during each year and at such other
times that the Chairman may deem necessary or appropriate for any reason,
including at the request of the independent auditors.

3. Separate Meetings. The Committee should meet privately in executive
session at least annually with the independent auditors, and at the request of
the independent auditors or the internal auditors, shall meet privately in
executive session with either of them.

4. Availability. The Committee shall make itself available to meet with
management of the Company to discuss any matters that it or management deems
appropriate, and shall be available to the independent auditors during the year
for consultation purposes.

COMMITTEE RESPONSIBILITIES AND DUTIES

The following shall be the principal recurring processes of the Committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate:

1. Review and Oversight Procedures.

a. Review of Charter. The Committee shall review and reassess the
adequacy of this Charter at least annually, propose changes to this Charter to
the Board for its approval as necessary, and have this Charter published at
least every three (3) years in accordance with SEC regulations.

b. Review of Filings, Financial Statements and other Disclosures.

(i) The Committee shall review with management (including
the principal accounting officers of the Company) and the independent auditors,
prior to filing, the filings required to be made by the Company with the SEC on
an annual and quarterly basis, as well as any other required interim reports,
filings or documents that contain financial information about the Company. The
Committee shall specifically review the results of the annual audit of the
Company's consolidated financial statements prior to the filing thereof,
including the Company's disclosures under "Management's Discussion and Analysis
of Financial Condition and Results of Operations," any appropriate matters
regarding the clarity of the disclosures in such financial statements,
accounting principles, practices and judgments and the independent auditors'
opinion as to the quality thereof, and any other matters required to be
communicated to the Committee by the independent auditors under generally
accepted auditing standards. The Committee shall cause the independent auditors
to conduct a SAS 71 Interim Financial Review prior to each filing of the
Company's Form 10-Q.

(ii) While the fundamental responsibility for the Company's
financial statements and disclosures rests with management and the independent
auditors, the Committee must review: (a) major issues regarding accounting
principles and financial statement presentations, including any significant
changes in the Company's selection or application of accounting principles, and
major issues as to the adequacy of the Company's internal controls and any
special audit steps adopted in light of material control deficiencies; (b)
analyses prepared by management and/or the independent auditors setting forth
significant financial reporting issues and judgments made in connection with the
preparation of the financial statements, including analyses of the effects of
alternative GAAP methods on the financial statements; (c) the effect of
regulatory and accounting initiatives, as well as off-balance sheet structures,
on the financial statements of the Company; and (d) the type and presentation of
information to be included in earnings press releases (paying particular
attention to any use of "pro forma," or "adjusted" non-GAAP, information), as
well as review of any financial information and earnings guidance provided to
analysts and rating agencies.

(iii)The Committee shall review analyses and significant
findings by the independent auditors with respect to financial reporting issues
and judgments made in connection therewith, including (a) analyses of the
effects of alternative generally accepted auditing standards, (b) any material

difficulties or problems with any audit work, (c) any restrictions on the scope
of the independent auditors' activities or access to requested information, (d)
any significant disagreements with management and the independent auditors and
any accounting adjustments noted or proposed by the independent auditors, but
not accepted by management, (e) any communications between the independent
auditing team and the firm's national office respecting material auditing or
accounting issues presented by the engagement, (f) any management or internal
control letter issues raised, or proposed to be raised, by the independent
auditors to the Company, and (g) any major issue as to the adequacy of the
Company's internal controls and specific audit steps adopted in light of
material control deficiencies. This review should also include discussion of the
responsibilities, budget and staffing of the Company's internal audit function.

c. Committee Oversight of Internal Audit. The Committee shall ensure
that the Company has an internal audit function to provide management and the
Committee with ongoing assessments. The Committee shall also review and concur
in the appointment, replacement or dismissal of the head of the Company's
internal auditing department.

d. Annual Performance Evaluation. The Committee shall perform an
annual self-evaluation of the Committee's performance.

2. Independent Auditors.

a. Committee Oversight of Independent Auditors. The Committee shall
have the sole authority regarding, and shall be directly responsible for, the
appointment, compensation, oversight, termination and replacement of, as well as
funding for, the independent auditors for the purpose of preparing or issuing an
audit report or related work, or any non-audit work, subject, if applicable, to
stockholder ratification. The independent auditors shall report directly to the
Committee, and are ultimately accountable to the Committee and the Board.

b. Independent Auditors' Independence. The Committee shall annually
request from the independent auditors, a formal written statement delineating
all relationships between the independent auditors and the Company, including
fees paid by the Company to the independent auditors, in accordance with the
SEC, the Nasdaq and the Act's requirements; actively engage in a dialogue with
the independent auditors regarding all relationships between the independent
auditors and management of the Company that in the Committee's judgment (or the
independent auditors' judgment) may reasonably be thought to bear on the
independence of the independent auditors; and take appropriate action in
response to the independent auditor's report to satisfy itself of the
independent auditors' independence.

c. Pre-Approval of Independent Auditors' Fees. The Committee shall
pre-approve all auditing services and non-auditing services provided to the
Company by the independent auditors. Such approval may be given at the beginning
of each year up to a pre-established amount to be determined by the Committee.
Any permitted non-audit services not included in the pre-approved category shall
be approved prior to the commencement of any such services.

d. Independent Auditors' Report on Practices. The independent auditors
shall report promptly to the Committee (a) all critical accounting policies and
practices to be used; (b) all alternative treatments of financial information,

ramifications of such treatment, and the treatment preferred by the accounting
firm; and (c) all material written communications between the independent
auditors' firm and Company management. The independent auditors shall also
report on generally accepted accounting principles adopted by the accounting
profession, the Company's compliance therewith, and the effect of unusual or
extraordinary transactions. The independent auditors must discuss their
judgments about the quality and content of the Company's accounting principles
with the Committee.

e. Quality Control of Independent Auditors. On an annual basis, the
Committee shall obtain a report from the independent auditors describing (i) the
independent auditors' internal quality-control procedures, and (ii) any material
issues raised by the most recent internal quality-control review, or peer
review, of the firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting one or
more independent audits carried out by such firm, and any steps taken to deal
with any such issues. The Committee shall then present its conclusions with
respect to the independent auditors to the full Board.

f. Rotation of Independent Auditors. The Committee shall annually (i)
assess the qualifications, performance and independence of the independent
auditors and the lead (or coordinating) audit partner (or other audit partner
having primary responsibility for the audit); (ii) take any actions necessary to
ensure the rotations not less than every five (5) years of the audit partner;
and (iii) consider whether, in order to ensure continuing auditor independence,
the independent accounting firm should be rotated on a regular basis.

g. Hiring Policies. The Committee shall establish clear hiring
policies for the Company's hiring of employees or former employees of the
independent auditors, after consultation with management.

h. Audit Problems. The Committee shall review with the independent
auditors any audit problem or difficulties and management's response.

3. Legal Compliance.

a. Review of Disclosures by Officers. The Committee shall review
disclosures made by the Company's principal executive officer(s) and principal
financial officer(s) regarding compliance with their certification obligations
under the Act, including the Company's disclosure controls and procedures and
internal controls for financial reporting.

b. Fraud. The Committee shall discuss with management and the
independent auditors any fraud disclosed to the Committee, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls.

c. Related Party Transactions. The Committee shall be responsible for
reviewing and approving all related party transactions involving the Company and
any director, executive officer, other employee, or family member.

d. Compliance with Code of Conduct and Ethics. The Committee shall
review the Company's Code of Conduct and Ethics. The Committee shall, on behalf
of the Board and stockholders of the Company, satisfy itself that the Company's
Code of Conduct and Ethics is strictly adhered to by its officers, directors and
employees.

4. Other Committee Activities.

a. Earnings Press Releases. The Committee shall discuss earnings press
releases, as well as financial information and earnings guidance provided to
analysis and rating agencies.

b. Complaint Procedures. The Committee shall establish procedures for
the receipt, retention and treatment of complaints received by the Company
regarding the Company's accounting, internal accounting controls and auditing
matters and for the confidential, anonymous submissions by employees of the
Company of concerns relating to questionable accounting or auditing matters.

c. Committee Reports. The Committee shall prepare reports to
stockholders as required by the SEC's proxy rules to be included in the
Company's annual proxy statement, or, if the Company does not file a proxy
statement, in the Company's Annual Report filed on Form 10-K with the SEC.

d. Other. The Committee shall have the power and authority to perform
any other activities consistent with this Charter, the Company's by-laws, and
governing law, as the Committee or the Board deems necessary or appropriate.

LIMITATION

Nothing in this Charter is intended to alter in any way the standard of conduct
required of any of the directors of the Company under the Delaware General
Corporation Law, as amended, and this Charter does not impose, nor shall it be
interpreted to impose, any duty on any director greater than, or in addition to,
the duties or standards established by the Delaware General Corporation Law or
applicable requirements of federal law or the Nasdaq.

ANNEX C
-------

CERTIFICATE OF AMENDMENT

OF THE

CERTIFICATE OF INCORPORATION

WEBFINANCIAL CORPORATION

Under Section 242 of the Delaware General Corporation Law

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

It is hereby certified that:

1. The name of the corporation is WebFinancial Corporation (the
"Corporation").

2. The Certificate of Incorporation of the Corporation is hereby amended by
amending and restating Article FOURTH thereof as follows:

"FOURTH: (a) The Corporation shall have the authority to
issue an aggregate of ___ Million (__________) shares of
capital stock. The authorized capital stock shall be divided
into common stock (the "Common Stock") and preferred stock
(the "Preferred Stock"). The Common Stock of the Corporation
shall consist of ___ Million (_______) shares, par value
$.001 per share. The Preferred Stock of the Corporation
shall consist of ___ Million (_______) shares, par value
$.001 per share.

(b) No stockholder of the Corporation shall by reason of his
holding of shares of any class or series have any preemptive
or preferential right to purchase or subscribe for any
shares of any class or series of stock of the Corporation,
now or hereafter authorized, or any securities convertible
into or carrying options or warrants to purchase any shares
of any class or series of stock of the Corporation, now or
hereafter authorized, other than such rights, if any, as the
Board of Directors, in its discretion from time to time may
grant and at such price as the Board of Directors may fix.

(c) Upon this Certificate of Amendment becoming effective
pursuant to the General Corporation Law of the State of
Delaware (the "Effective Date"), the Corporation shall

implement a reverse stock split of its Common Stock (the
"Reverse Split"), whereby every _____ (__) shares of Common
Stock issued and outstanding of record immediately prior to
the Effective Date ("Old Common Stock") shall be
automatically reclassified as, and converted into, one (1)
share of Common Stock ("New Common Stock").

(d) Notwithstanding the provisions of section (c) above, no
fractional shares of New Common Stock shall be issued in
connection with the Reverse Split. In lieu of issuing
fractional shares in the Reverse Split, each holder shall be
paid cash by the Corporation in an amount equal to the
product of such fraction multiplied by the average closing
sale prices of the Common Stock (as adjusted to reflect the
Reverse Split) for the 10 trading days immediately before
the Effective Date (or, in the event the Common Stock is not
so traded on the Effective Date, such closing price on the
next preceding day on which such stock is traded).

(e) Each stock certificate that immediately prior to the
Effective Date represented shares of Old Common Stock shall,
from and after the Effective Date, automatically and without
the necessity of presenting the same for exchange, represent
that number of whole shares of New Common Stock into which
the shares of Old Common Stock represented by such
certificate shall have been reclassified; provided, however,
that each holder of record of a certificate that represented
shares of Old Common Stock shall receive upon surrender of
such certificate a new certificate representing the number
of whole shares of New Common Stock into which the shares of
Old Common Stock represented by such certificate shall have
been reclassified.

(f) Except as may be provided in this Certificate of
Incorporation or in a designation with respect to Preferred
Stock, the holders of shares of New Common Stock shall have
the exclusive right to vote on all matters on which a holder
of Common Stock shall be entitled to vote at all meetings of
the stockholders of the Corporation and shall be entitled to
one vote for each share of New Common Stock entitled to vote
at such meeting."

3. The amendment of the Certificate of Incorporation herein
certified has been duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware
and by the affirmative vote of the holders of a majority of the
capital stock of the Corporation at a meeting duly noticed and
conducted in accordance with the By-Laws of the Corporation.

[THE REST OF THIS PAGE IS INTENTIONALLY BLANK]

IN WITNESS WHEREOF, the Corporation has caused this Certificate
of Amendment of Certificate of Incorporation to be executed on this
___ day of ____________, ____.

WEBFINANCIAL CORPORATION

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Name:
Title:

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