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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, CVRp2ZuTi4tCgjBdSI5gi4bKXNXpeNlyMlKPFy35+fwdbEkEWFha6Qh+jwSOLPpa GQZvPZm2kwJO5OV7IaMmbw== 0000921895-05-001955.txt : 20051122 0000921895-05-001955.hdr.sgml : 20051122 20051122155018 ACCESSION NUMBER: 0000921895-05-001955 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20051214 FILED AS OF DATE: 20051122 DATE AS OF CHANGE: 20051122 EFFECTIVENESS DATE: 20051122 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEBFINANCIAL CORP CENTRAL INDEX KEY: 0000085149 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS BUSINESS CREDIT INSTITUTION [6159] IRS NUMBER: 562043000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-00631 FILM NUMBER: 051221371 BUSINESS ADDRESS: STREET 1: 150 EAST 52ND STREET 21ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128131500 MAIL ADDRESS: STREET 1: 150 EAST 52ND ST STREET 2: 21ST FL CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: ROSES HOLDINGS INC DATE OF NAME CHANGE: 19970826 FORMER COMPANY: FORMER CONFORMED NAME: ROSES STORES INC DATE OF NAME CHANGE: 19920703 DEF 14A 1 def14a04197001_12142005.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:
/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material 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 14, 2005
--------------

To the stockholders:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of WEBFINANCIAL CORPORATION, a Delaware corporation (the "Company"),
will be held at the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP,
located at Park Avenue Tower, 65 East 55th Street, New York, New York 10022, on
December 14, 2005 at 3:00 p.m., local time, for the following purposes:

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

2. To ratify the appointment of Grant Thornton LLP as the
Company's independent auditors for the year ending December
31, 2005; and

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

The board of directors has fixed the close of business on November 9,
2005 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 22, 2005
New York, New York

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

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

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

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS

DECEMBER 14, 2005

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

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
2005 Annual Meeting of Stockholders of the Company (the "Meeting") to be held at
the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP, located at Park
Avenue Tower, 65 East 55th Street, New York, New York 10022, on December 14,
2005, at 3:00 p.m., local time, or at any adjournment thereof.

The approximate date on which this Proxy Statement and the accompanying
Proxy will first be sent or given to stockholders is November 22, 2005.

At the Meeting, stockholders will be asked: (1) to elect five (5)
members of the board of directors of the Company (the "Board of Directors" or
the "Board") to serve until the next annual meeting of stockholders and until
their successors have been duly elected and qualify; (2) to ratify the
appointment of Grant Thornton LLP as the Company's independent auditors for the
fiscal year ending December 31, 2005; and (3) to transact such other business as
may properly be brought before the Meeting or any adjournment thereof. The
mailing address of the Company's principal executive offices is 590 Madison
Avenue, 32nd Floor, New York, New York 10022.

RECORD DATE AND VOTING SECURITIES

Only stockholders of record at the close of business on November 9,
2005, 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 2,183,366 outstanding shares of
the Company's common stock, $.001 par value (the "Common Stock"). Each of such
shares is entitled to one vote. There was no other class of voting securities of
the Company outstanding on that date. A majority of the outstanding shares
presented in person or by proxy is required for a quorum.

VOTING OF PROXIES

Shares of Common Stock represented by Proxies that are properly
executed, duly returned and not revoked will be voted in accordance with the
instructions contained therein. If no specification is indicated on the Proxy,
all such shares will be voted (i) for the election as directors of the persons
who have been nominated by the Board of Directors, (ii) for the ratification of
the appointment of Grant Thornton LLP as the Company's independent auditors for
the year ending December 31, 2005 and (iii) on any other matter the Board is not
aware of a reasonable time before this solicitation that may properly be brought
before the Meeting in accordance with the judgment of the person or persons
voting the Proxies.

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

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

The Company has retained MacKenzie Partners, Inc. ("MacKenzie") to
solicit proxies at a cost of approximately $3,000.00, 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 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 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 590 Madison Avenue, 32nd Floor, New York, New
York 10022. The Company effected a 1-for-4 reverse stock split on April 5, 2005.
Accordingly, all stock and option amounts contained in this Proxy Statement have
been adjusted to take into account and reflect this reverse stock split.

AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
- ------------------------------------ ------------ ----------

Steel Partners II, L.P. 1,589,800 72.8%

Warren G. Lichtenstein 1,590,425(2) 72.8%

James R. Henderson 0 0%

Jack L. Howard 10,654(3) *

Joseph L. Mullen 3,993(4) *
c/o Li Moran International, Inc.
611 Broadway, Suite 722
New York, New York 10012

Mark E. Schwarz 2,587(5) *
c/o Newcastle Capital Management, L.P.
300 Crescent Court, Suite 1110
Dallas, Texas 75201

Howard Mileaf 239(6) *
64 Brookdale Court
Highland Park, New Jersey 08904

All directors and executive 17,473(7) *
officers as a group (six 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) 625 shares of Common Stock owned directly by Mr.
Lichtenstein; and (ii) 1,589,800 shares of Common Stock owned by Steel
Partners II, L.P. ("Steel"), which is also separately listed in the
security ownership table. As the sole managing member of the general
partner of Steel, Mr. Lichtenstein has sole voting and investment power
over the 1,589,800 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) 9,104 shares of Common Stock owned directly by Mr.
Howard; (ii) 750 shares of Common Stock owned by Mr. Howard in joint
tenancy with his spouse; and (iii) 800 shares of Common Stock owned by
JL Howard, Inc., a California corporation controlled by Mr. Howard.

(4) Consists of (i) 1,071 shares of Common Stock; and (ii) 2,922 shares of
Common Stock issuable upon the exercise of options within 60 days of
the Record Date.

(5) Consists of 2,587 shares of Common Stock issuable upon the exercise of
options within 60 days of the Record Date.

(6) Consists of 239 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.

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

Jack L. Howard 44 1996

James R. Henderson 47 2005

Joseph L. Mullen 59 1995

Mark E. Schwarz 45 2001

Howard Mileaf 68 2002

JACK L. HOWARD has served as Chairman of the Board since June 2005, 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. Mr. Howard has served as the Vice President
and Vice Chairman of Steel Partners, Ltd. ("SPL"), a management and advisory
company that provides management services to Steel and its affiliates, since
December 2003. He has served as Chairman of the Board and Chief Executive
Officer of Gateway Industries, Inc. ("Gateway"), a provider of database
development and web site design and development services, 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, WHX Corporation
("WHX"), a holding company and CoSine Communications, Inc., a global
telecommunications equipment supplier. 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.

JAMES R. HENDERSON has served as a director and Chief Executive Officer
of the Company since June 2005, as President and Chief Operating Officer of the
Company since November 2003, and was the Vice President of Operations from
September 2000 through December 2003. He has served as a director of the WebBank
subsidiary since March 2002 and was the acting Chief Executive Officer from
November 2004 to May 2005. He has served as a director and Chief Operating
Officer of the WebFinancial Holding Corporation subsidiary since January 2000.
He has served as a director of BNS since June 2004 and as a director and
Chairman of Del Global Technologies Corp., a designer and manufacturer of
medical imaging and diagnostic systems, since November 2003 and May 2005,
respectively. Mr. Henderson has served as a Vice President of SPL and its
predecessor since August 1999. He has also served as President of Gateway since
December 2001. Mr. Henderson served as a director of ECC International Corp., a
manufacturer and marketer of computer-controlled simulators for training
personnel to perform maintenance and operator procedures on military weapons,
from December 1999 to September 2003 and as acting Chief Executive Officer from
July 2002 to March 2003. 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, 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 former Chief Executive Officer and Chairman. 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.

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; Pizza Inn, Inc., a franchisor and operator
of pizza restaurants; and Vesta Insurance Group, Inc., a holding company for a
group of insurance companies. 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, 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
served as a director of WHX from August 2002 to August 2005. From May 1993 to
December 2001, Mr. Mileaf served as Vice President and General Counsel of WHX.

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 two meetings during the fiscal year ended
December 31, 2004. 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.

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 2004.

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. Three of the Company's directors were present at
the Company's 2004 Annual Meeting of Stockholders.

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, 2004, 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, 2004. 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 was included as Annex A to the
Company's Proxy Statement in connection with the 2004 Annual Meeting of
Stockholders. 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 did not hold any meetings during the fiscal year ended December 31,
2004.

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, 2004, 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, 2004. All
members of the Company's Audit Committee are independent as independence is
defined in Rule 4200(a)(15) of the NASD listing standards. The Board of
Directors has adopted a written charter for the Audit Committee, which was
included as Annex B to the Company's Proxy Statement in connection with the
Company's 2004 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, 2004, 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, 2004.

The committee reviewed the audited financial statements of the Company
as of and for the year ended December 31, 2004 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, 2004, 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 62) 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 and its predecessor since June 2001 and as Vice President
of its predecessor from October 1999 through May 2001. Mr. Kassan has served as
a director of SL since January 2002 and as its President from February 2002 to
August 2005. Mr. Kassan also currently serves as Vice Chairman of the Board of
Directors, Chief Executive Officer and Secretary of WHX. Mr. Kassan is currently
a director of United Industrial Corporation, a company principally focused on
the design, production and support of defense systems and a manufacturer of
combustion equipment for biomass and refuse fuels. Mr. Kassan has served as Vice
Chairman of the Board of Directors of Caribbean Fertilizer Group Ltd., a private
company engaged in the production and distribution of agricultural products in
Puerto Rico and Jamaica, since June 2000. 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.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

The following table sets forth information concerning the compensation
paid by the Company during the fiscal years ended December 31, 2004, 2003 and
2002 to Warren G. Lichtenstein, the Company's former 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, 2004.

ANNUAL COMPENSATION LONG-TERM
----------------------- COMPENSATION
SECURITIES ALL OTHER
NAME AND PRINCIPAL UNDERLYING COMPENSATION
POSITION FISCAL YEAR SALARY($) BONUS($) OPTIONS(#) ($)(1)
- ---------------------- -------------- ----------- ----------- ------------ ------------

Warren Lichtenstein, 2004 -- -- -- 310,000
Former Chairman and
Chief Executive
Officer(2)

2003 -- -- -- 310,000

2002 -- -- -- 310,000

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

(1) Represents aggregate management fees earned by SPL (for 2004, 2003 and
a portion of 2002) and Steel Partners Services, Ltd. ("SPS"), a
predecessor of SPL (for a portion of 2002), 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."

(2) Mr. Lichtenstein resigned from his position as a director and Chief
Executive Officer of the Company in June 2005.

STOCK OPTIONS

None of the Company's executive officers were granted any stock options
during the fiscal year ended December 31, 2004 nor did Mr. Lichtenstein hold any
stock options as of December 31, 2004.

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.

During 2004 and through March 31, 2005, members of the Board of
Directors who were non-employee directors received a retainer fee of $3,000 per
quarter in cash for their services as a director, as well as 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 was held on the same day as a Board
meeting), subject to any elections which may have been made by any directors
pursuant to the terms of the Long Term Stock Incentive Plan (the "Plan").
Effective April 1, 2005, the Board of Directors, at the recommendation of the
Compensation Committee, increased the non-employee director retainer fee to
$5,000 per quarter and changed the committee meeting fee to $500 per meeting,
irrespective of whether such committee meeting is held on the same day as a
Board meeting, subject to any elections which may be made by any directors
pursuant to the terms of the Plan. Officers who are directors do not receive a
retainer fee or per meeting compensation. Howard Mileaf, as chairman of the
Audit Committee, receives an additional chairman's fee of $2,500 per quarter.

EQUITY COMPENSATION PLAN INFORMATION

NUMBER OF SECURITIES REMAINING
NUMBER OF SECURITIES WEIGHTED-AVERAGE AVAILABLE FOR FUTURE ISSUANCE
TO 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 plans 11,998 $11.60 236,944
approved by security
holders(1)

Equity compensation plans not 0 0 0
approved by security holders

Total 11,998 $11.60 236,944

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

(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, 2004, 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 former 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 and Second Allocation
Agreements, 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, 2004, SPL billed the Company
fees with respect to fiscal 2004 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 and Second Allocation Agreements. 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. 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 performed both sourcing and servicing functions on behalf of WebBank
related to WebBank's former accounts receivable factoring program. John Fox, the
owner of Rockland, is a former employee of WebBank. During 2003 and 2004,
Rockland earned $1,019,000 and $1,188,000, respectively, in total management
fees under the terms of the Rockland Agreement. Management fees were paid
quarterly and accrued monthly by WebBank. Notices of termination were issued
with respect to the Rockland Agreement and other accounts receivable factoring
and service arrangements. On December 30, 2004, Rockland exercised its option to
purchase from WebBank a portfolio of accounts receivable (the "Receivables") in
connection with the termination of the Rockland Agreement between WebBank and
Rockland. The Receivables were purchased at book value from WebBank pursuant to
that certain Asset Purchase and Assignment and Assumption Agreement for an
aggregate purchase price of $5,791,395.41, subject to certain specified
adjustments. Specifically, Rockland purchased specified factoring accounts held
by WebBank, all of WebBank's right, title and interest under specified factoring
agreements and participation agreements and other agreements, arrangements,
commitments and understandings related thereto or to the Receivables, all of
which were acquired by WebBank pursuant to the Rockland Agreement (the
"Contracts"). Rockland also assumed and agreed to pay and perform all
obligations of WebBank under the Contracts and otherwise in respect of the
purchased assets arising on and after the closing date.

PROPOSAL II--RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS

The Audit Committee has appointed Grant Thornton LLP as the Company's
independent public accountants for the fiscal year ending December 31, 2005.
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 2004

AUDIT FEES.

The aggregate fees billed for each of the last two fiscal years of 2004
and 2003 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 $118,000, respectively.

AUDIT-RELATED FEES.

The aggregate fees billed for each of the last two fiscal years of 2004
and 2003 for assurance and related services rendered by Grant Thornton LLP were
approximately $52,000 and $22,000, respectively, related to the Company's common
stock subscription rights offering.

TAX FEES.

The aggregate fees billed for each of the last two fiscal years of 2004
and 2003 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 $8,000 and $9,000, respectively.

ALL OTHER FEES.

No fees were billed for each of the last two fiscal years of 2004 and
2003 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, 2004 were approved by the Audit Committee. In connection with the
audit of the Company's Financial Statements for the fiscal year ended December
31, 2004, 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, 2005.

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 2004 Annual Report for
the year ended December 31, 2004, which contains certified financial statements
of the Company for the year ended December 31, 2004.

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, 2004
(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 2006 Annual Meeting
of Stockholders must be received by the Company at its principal office in New
York, New York no later than July 25, 2006. 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 2006 Annual
Meeting of Stockholders, if the Company is not provided notice of a stockholder
proposal, which has not been timely submitted, for inclusion in the Company's
proxy statement by October 8, 2006, 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 22, 2005

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

WEBFINANCIAL CORPORATION

PROXY -- ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 14, 2005

The undersigned, a stockholder of WebFinancial Corporation, a Delaware
corporation (the "Company"), does hereby appoint Jack L. Howard and James R.
Henderson, 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 2005 Annual Meeting of
Stockholders of the Company to be held at the offices of Olshan Grundman Frome
Rosenzweig & Wolosky LLP, located at Park Avenue Tower, 65 East 55th Street, New
York, New York 10022, on December 14, 2005 at 3:00 p.m., local time, or at any
adjournment or adjournments thereof.

The undersigned hereby instructs said proxies or their substitutes:

ELECTION OF DIRECTORS:

The election of Jack L. Howard, James R. Henderson, Joseph L. Mullen,
Mark E. Schwarz and Howard Mileaf to the Board of Directors, to serve until the
2006 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.

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS:

To ratify the appointment of Grant Thornton LLP as the Company's independent
auditors for the year ending December 31, 2005.

______ 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 THE
COMPANY'S DIRECTOR NOMINEES 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: _______________________, 2005
_____________________________ (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.

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