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 (Amendment No. )
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 Rule 14a-11(c) or Rule 14a-12
ROSE'S HOLDINGS, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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( ) Fee paid previously with preliminary materials:
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( ) 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
ROSE'S HOLDINGS, INC.
150 East 52nd Street
New York, New York 10022
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of Rose's Holdings, Inc. (the
"Corporation") will be held at the Corporate office 150 East 52nd Street, 21st
Floor, New York, NY 10022 on Tuesday June 15, 1999 at 10:00 a.m. (local time)
for the following purposes:
1. to elect one director of the Corporation;
2. to consider and act upon a proposal to change the name of the
Corporation to WebFinancial Corporation;
3. to ratify the appointment of KPMG LLP, independent accountants, to
audit the books and accounts of the Corporation; and
4. to transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 26,
1999 as the record date for determining stockholders entitled to notice of and
to vote at the meeting.
A proxy and return envelope are enclosed for your convenience.
By order of the Board of Directors,
Jack L. Howard
Vice President and Secretary
April 30, 1999
----------------------------------------------
YOUR VOTE IS IMPORTANT
Please mark, sign, and date the enclosed proxy
card and return it promptly in the enclosed
self-addressed, stamped envelope
----------------------------------------------
<PAGE>
ROSE'S HOLDINGS, INC.
150 East 52nd Street
New York, New York 10022
----------------
This Proxy Statement is furnished to the stockholders of Rose's
Holdings, Inc., a Delaware corporation (the "Corporation"), in connection with
the solicitation of proxies by the Board of Directors for use at the annual
meeting of stockholders of the Corporation to be held on June 15, 1999 and any
adjournment or adjournments thereof (the "Annual Meeting"). A copy of the
notice of meeting accompanies this Proxy Statement. It is anticipated that the
mailing of this Proxy Statement will commence on or about May 5, 1999.
Only holders of securities entitled to vote at the Annual Meeting
at the close of business on April 26, 1999, the record date for the Annual
Meeting, will be entitled to notice of and to vote at the Annual Meeting. On
the record date the Corporation had issued and outstanding 4,336,399 shares of
common stock, $.001 par value (the "Common Stock"), entitled to vote at the
Annual Meeting, each share being entitled to one vote.
Stockholders who execute proxies may revoke them by giving written
notice to the Secretary of the Corporation at any time before such proxies are
voted. Attendance at the Annual Meeting will not have the effect of revoking a
proxy unless the stockholder so attending, in writing, so notifies the
Secretary of the Annual Meeting at any time prior to the voting of the proxy.
The presence, in person or by proxy, of the holders of at least a
majority of the shares of Common Stock outstanding on the record date is
necessary to have a quorum for the Annual Meeting. Abstentions and broker
"non-votes" are counted as present for purposes of determining a quorum. A
broker "non-vote" occurs when a nominee holding shares of Common Stock 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.
The Board of Directors does not know of any matter that is expected
to be presented for consideration at the Annual Meeting, other than those
matters described on the attached Notice and herein. However, if other matters
properly come before the Annual Meeting, the persons named in the accompanying
proxy intend to vote thereon in accordance with their judgment.
The Corporation will bear the cost of the Annual Meeting and the
cost of soliciting proxies, including the cost of mailing the proxy material.
In addition to solicitation by mail, directors, officers, and regular employees
of the Corporation (who will not be specifically compensated for such services)
may solicit proxies by telephone or otherwise. The Corporation has also
retained MacKenzie Partners, Inc. to assist in the solicitation of proxies.
MacKenzie will receive a fee for such services of approximately $7,500 plus
reasonable out-of-pocket expenses, which will be paid by the Corporation.
Arrangements will be made with brokerage houses and other custodians, nominees,
and fiduciaries to forward proxies and proxy material to their principals, and
the Corporation will reimburse them for their expenses.
<PAGE>
All proxies received pursuant to this solicitation will be voted
except as to matters where authority to vote is specifically withheld and,
where a choice is specified as to the proposal, they will be voted in
accordance with such specification. If no instructions are given, the persons
named in the proxy solicited by the Board of Directors of the Corporation
intend to vote for the nominees for election as directors of the Corporation
listed herein and for those matters described on the attached Notice and
herein. With regard to the election of directors, votes cast may be withheld
from each nominee; votes that are withheld will be excluded entirely from the
vote and will have no effect. Abstentions may be specified on all proposals
except the election of directors and will have the same effect as a vote
against a proposal. Abstentions and broker non-votes are not counted as votes
cast on any matter to which they relate.
PRINCIPAL STOCKHOLDERS
The only persons known by the Corporation to be the beneficial
owners of more than 5% of the outstanding shares of Common Stock, as of March
31, 1999, are indicated below:
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percentage
Name and Address Ownership of Class
- --------------------------- ------------------ -----------
<S> <C> <C>
Warren G. Lichtenstein 1,320,613(1) 31.2%
150 East 52nd Street
New York, New York 10022
Steel Partners II, L.P. 1,090,655(2) 25.8%
150 East 52nd Street
New York, New York 10022
Earle C. May 768,376(3) 18.2%
4550 Kruse Way #345
Lake Oswego, Oregon 97035
May Management, Inc. 746,015 17.5%
4550 Kruse Way #345
Lake Oswego, Oregon 97035
</TABLE>
- ---------
(1) Includes: (a) 2,500 shares of Common Stock owned by Mr. Lichtenstein; (b)
227,458 shares of Common Stock issuable upon the exercise of options
owned by Mr. Lichtenstein; (c) 1,068,970 shares of Common Stock owned by
Steel Partners II, L.P.; and (d) 21,685 shares of Common Stock issuable
upon the exercise of warrants owned by Steel Partners II, L.P. Mr.
Lichtenstein is the chief executive officer of the general partner of
Steel Partners II, L.P. Mr. Lichtenstein disclaims beneficial ownership
of the shares of Common Stock owned by Steel Partners II, L.P. except to
the extent of his pecuniary interest in such shares of Common Stock,
which is less than the amount disclosed.
(2) Represents 1,068,970 shares of Common Stock and 21,685 shares of Common
Stock issuable upon exercise of warrants.
2
<PAGE>
(3) Includes: (a) 5,865 shares of Common Stock owned by Mr. May; (b) 20,361
shares of Common Stock issuable upon the exercise of options owned by Mr.
May; (c) 50,250 shares of Common Stock owned by May Management, Inc.; and
(d) 691,900 shares of Common Stock held in customer accounts as to which
May Management, Inc. has shared dispositive power. Mr. May is the chief
executive officer and a principal stockholder of May Management, Inc. and
may be deemed to be the beneficial owner of shares owned by May
Management, Inc. or as to which May Management, Inc. has shared
dispositive power.
------------------
Except as noted in the footnotes above, (i) none of such shares is
known by the Corporation to be shares with respect to which the beneficial
owner has the right to acquire beneficial ownership and (ii) the Corporation
believes the beneficial owner listed above has sole voting and investment power
with respect to the shares shown as being beneficially owned by it.
PROPOSAL ONE
ELECTION OF DIRECTOR
At the annual meeting of stockholders held November 4, 1998 (the
"1998 Meeting"), the stockholders of the Corporation voted to eliminate the
Corporation's staggered board system and provide for the annual election of
directors, without reducing the terms of any of the directors then in office
(including those elected at the 1998 Meeting). Although the Board is still
divided into three classes with the term of office of one class expiring each
year and each director holding office for a term expiring at the third annual
meeting of stockholders following his or her election (and until his successor
has been duly elected and qualified), commencing at the Annual Meeting, with
respect to directors whose terms expire at the Annual Meeting, and continuing
at the annual meetings of stockholders to be held in 2000 and 2001, each
director whose term is expiring (and any new nominees for director) shall be
elected for one-year terms only.
Subsequent to the end of the Corporation's fiscal year, which ended
December 31, 1998 ("Fiscal 1998"), N. Hunter Wyche and J. David Rosenberg
resigned from the Board of Directors. At the meeting of the Board on April 20,
1999, the Board appointed James Benenson, Jr. to fill the vacancy left by Mr.
Rosenberg. In addition, Harold Smith informed the Board at the meeting that he
would not stand for reelection at the Annual Meeting. The Board then declined to
nominate a director to stand for election in Mr. Smith's place and voted to
reduce the number of directors from seven to five. Such reduction does not
shorten Mr. Smith's term, which expires at the Annual Meeting. As a result of
the foregoing, at the Annual Meeting, the Board of Directors shall consist of
one director in the class expiring at the Annual Meeting, one director in the
class whose term expires at the annual meeting in 2000 and three directors in
the class whose terms expire at the annual meeting in 2001. Additionally, as
described above, the director elected at the Annual Meeting and all directors
elected at annual meetings following the Annual Meeting, shall be elected for
one-year terms only.
One director is to be elected at the Annual Meeting. The Board has
nominated Jack L. Howard to be re-elected for a one-year term, expiring at the
annual meeting in 2000. After the election of one director at the Annual
Meeting, the Corporation will have five directors, including the four
continuing directors whose present terms extend beyond the Annual Meeting.
Holders of proxies solicited by this Proxy Statement will vote the proxies
received by them as directed on the proxy
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<PAGE>
card or, if no direction is made, for the election of the Board's nominee. If
the Board's nominee should become unavailable for any reason, which the Board
does not anticipate, proxy holders will vote for a nominee designated by the
present Board to fill the vacancy at or prior to the Annual Meeting. The
director will be elected by a plurality of the votes cast. The information
concerning the nominee and each director continuing in office has been
furnished by them to the Corporation. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR THE NOMINEE.
The name of, principal occupation of and certain additional
information about the nominee and each of the four current directors with
unexpired terms (as of the date of the Annual Meeting) are set forth below.
NOMINEE FOR DIRECTOR
NAME AND AGE OCCUPATION AND OTHER DIRECTORSHIPS
Jack L. Howard (37) Mr. Howard has served as a director of
(term expires 1999) the Corporation since 1996 and as Vice
President, Secretary, and Treasurer of
the Corporation since 1997. Mr. Howard
has been a registered principal of Mutual
Securities, Inc., a stock brokerage firm,
since prior to 1993. He is a director of
Gateway Industries, Inc.
CONTINUING DIRECTORS
James Benenson, Jr. (63) Mr. Benenson has been Chairman of Vesper
(term expires 2000) Corporation and Arrowhead Holdings
Corporation, both diversified holding
companies, since 1979 and 1983,
respectively. Prior to such time, Mr.
Benenson served in various capacities
with F. Eberstadt & Co., Walker, Hart &
Co. and James Benenson & Co. Mr. Benenson
has served as a director of the
Corporation since March 1999.
Warren G. Lichtenstein (33) Mr. Lichtenstein has served as a director
(term expires 2001) of the Corporation since 1996 and as
President and chief executive officer of
the Corporation since 1997. Mr.
Lichtenstein has been chief executive
officer of the general partner of Steel
Partners II, LP, a private investment
firm, since 1993 and Chairman of Steel
Partners Services, Ltd., a private
investment firm, since 1993. Mr.
Lichtenstein was Executive Vice President
of Alpha Technologies Group, Inc., a
manufacturer of electronic components,
from September 1994 through September
1995. Mr. Lichtenstein is a director of
Saratoga Spring Water Corporation Inc.
and PLM International, Inc. and; Chairman
of Aydin Corporation, and Gateway
Industries, Inc. ("Gateway"). Gateway was
the sole
4
<PAGE>
stockholder of Marsel Mirror and Glass
Products, Inc. ("Marsel") from November
1995 to December 1996. Mr. Lichtenstein
served as President of Marsel from its
formation as an acquisition subsidiary
until the acquisition was consummated.
Thereafter, Marsel appointed a President
who had no prior affiliation with
Gateway. Mr. Lichtenstein served as
Marsel's sole director until Gateway
disposed of its interest in Marsel.
Marsel filed for protection under Chapter
11 of the United States Bankruptcy Code
shortly following Gateway's disposition
of Marsel.
Earle C. May (80) Mr. May has served as a director of the
(term expires 2001) Corporation since 1997. Mr. May has been
an executive officer of May Management,
Inc., an investment management firm,
since prior to 1993.
Joseph L. Mullen (52) Mr. Mullen has served as a director of
(term expires 2001) the Corporation since 1995. Since January
1994, Mr. Mullen has served as Managing
Partner of Li Moran International, a
management consulting company, and has
functioned as a senior officer overseeing
the merchandise and marketing departments
for such companies as Leewards Creative
Crafts Inc., Office Depot of Warsaw,
Poland and Rose's Stores, Inc. From
January 1994 to July 1994, Mr. Mullen
served as Senior Vice President for
Leewards Creative Crafts Inc., a national
retail chain specializing in crafts.
Prior to January 1994, Mr. Mullen was
employed by Hills Department Stores, Inc.
("Hills") for approximately 23 years and
held a variety of positions, including
Vice President Hardlines. Hills filed for
protection under Chapter 11 of the United
States Bankruptcy Code on February 4,
1991, while Mr. Mullen was employed by
Hills.
5
<PAGE>
Beneficial Ownership of Directors and Management
Set forth below is certain information concerning the beneficial
ownership of Common Stock as of December 31, 1998 by (a) the Corporation's
directors, (b) the executive officers named in the Summary Compensation Table
below, and (c) all current directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name Ownership(1) of Class
---- ------------ ---------
<S> <C> <C>
Warren G. Lichtenstein 1,320,613(2) 31.2%
Jack L. Howard 169,458 4.0%
Earle C. May 768,376(3) 18.2%
Joseph L. Mullen 20,361 *
Harold Smith 20,361 *
All current directors and executive
officers as a group (five persons) 2,299,169 54.4%
</TABLE>
- ---------
* Less than 1% of the outstanding Common Stock.
(1) Includes shares subject to warrants and options that are exercisable as
follows: Mr. Lichtenstein 227,458 shares; Mr. Howard -- 139,958 shares;
Mr. May -- 20,361 shares; Mr. Mullen--20,361 shares; Mr. Smith --
20,361 shares; and all directors and executive officers as a group --
428,499 shares.
(2) Includes 1,068,970 shares of Common Stock and 21,685 shares subject to
warrants that are owned by Steel Partners II, L.P. Mr. Lichtenstein is
chief executive officer of the general partner of Steel Partners II,
L.P. Mr. Lichtenstein disclaims beneficial ownership of the shares of
Common Stock owned by Steel Partners II, L.P., except to the extent of
his pecuniary interest in such shares of Common Stock, which is less
than the amount disclosed.
(3) Includes 50,250 shares of Common Stock owned by May Management, Inc. and
691,900 shares of Common Stock held in customer accounts as to which
May Management, Inc. has shared dispositive power. Mr. May is the chief
executive officer and a principal stockholder of May Management, Inc.
and may be deemed to be the beneficial owner of shares owned by May
Management, Inc. or as to which May Management, Inc. has shared
dispositive power.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Under the Securities Exchange Act of 1934 (the "Exchange Act"), the
Corporation's directors, executive officers, and any persons holding more than
10% of any class of the Corporation's equity securities registered pursuant to
Section 12 of the Exchange Act are required to report their ownership of such
equity securities, and any changes in that ownership, on a timely basis to the
Securities and Exchange Commission. The Corporation believes that all such
reports required
6
<PAGE>
to be filed during the Fiscal 1998 were filed on a timely basis. The
Corporation's belief is based solely on its review of Forms 3, 4, and 5 and
amendments thereto furnished to the Corporation during, and with respect to,
Fiscal 1998 by persons known to be subject to Section 16 of the Exchange Act.
Board Committees and Membership
In Fiscal 1998, the members of the Compensation Committee of the
Board of Directors were N. Hunter Wyche (Chairman), J. David Rosenberg, and
Harold Smith. The Compensation Committee held five meetings during Fiscal 1998.
Subsequent to the end of Fiscal 1998, Messrs.Wyche and Rosenberg resigned from
the Board of Directors, and the Board appointed James Benenson, Jr. and Earle
C. May to the Compensation Committee, with Mr. May serving as Chairman. Mr.
Smith's term as a director expires at the Annual Meeting, and he has informed
the Board of his intention not to stand for reelection. Upon the expiration of
Mr. Smith's term as a director, the Board will appoint another director to take
his place on the Compensation Committee. Duties of the Compensation Committee
include: reviewing management compensation programs; reviewing and approving
compensation changes for senior executive officers; and administering
management stock option and incentive plans.
The members of the Audit Committee of the Board of Directors in
Fiscal 1998 were Messrs. Rosenberg (Chairman), Mullen, and Smith. The Audit
Committee held one meeting during Fiscal 1998. The Board has appointed Mr.
Smith as Chairman of the Audit Committee to replace Mr. Rosenberg and named Mr.
May to the Committee for fiscal 1999. Upon the expiration of Mr. Smith's term
as a director, the Board will appoint another director to take his place on the
Audit Committee. Duties of the Audit Committee include: recommending
independent certified public accountants; reviewing the scope of the audit
examinations, including fees and staffing; reviewing the independence of the
auditors; reviewing findings and recommendations of auditors and management's
response; and reviewing the internal audit and control functions.
The Board does not have a nominating committee or an executive
committee. In Fiscal 1998, the Board of Directors held seven meetings and
committees of the Board held a total of five meetings. During Fiscal 1998, all
of the directors attended at least 75% of the aggregate of all meetings of the
Board of Directors and the committees of the Board of Directors on which such
director served.
Messrs. Rosenberg and Wyche, who resigned from the Board after the
end of Fiscal 1998 as described above, were each compensated for the remainder
of their terms and have agreed to serve as advisors to the Board of Directors
for the six month period following their resignations.
7
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Cash and Other Compensation
The following table sets forth all the compensation earned for
services rendered in all capacities, during the fiscal years indicated, by the
person who served as chief executive officer of the Corporation and the other
most highly compensated executive officer during Fiscal 1998 (collectively, the
"Named Executives").
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------------------- ------------------------- ---------
Other
Annual Restricted Options/ LTIP All Other
Name and Compen- Stock SARs Payouts Compen-
Principal Position Year Salary ($) Bonus ($) sation ($) Award(s) ($) (#)(1) ($) sation ($)
- -------------------- ------ ------------ ----------- ------------ -------------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Warren G. 1998 -- -- -- -- 211,145 -- --
Lichtenstein (1) 1997 -- -- -- -- 16,313 -- --
President and chief
executive officer
Jack L. Howard (2) 1998 -- -- -- -- 123,645 -- --
Vice President and 1997 -- -- -- -- 16,313 -- --
chief financial officer
</TABLE>
---------
(1) Mr. Lichtenstein was elected President and chief executive officer of the
Corporation on December 2, 1997. During fiscal 1997, Mr. Lichtenstein
received no compensation for acting as President and chief executive
officer of the Corporation, although, for his services as a director, Mr.
Lichtenstein received the same compensation as other directors until his
election. See "Director Compensation" below. In Fiscal 1998, Mr.
Lichtenstein was granted options in respect of his service as President and
chief executive officer. See "Stock Options" and "REPORT OF THE
COMPENSATION COMMITTEE--Compensation of Chief Executive Officer and Chief
Financial Officer" below.
(2) Mr. Howard was elected Vice President and chief financial officer of the
Corporation on December 2, 1997. During fiscal 1997, Mr. Howard received no
compensation for acting as Vice President and chief financial officer of
the Corporation although, for his services as a director, Mr. Howard
received the same compensation as other directors until his election. See
"Director Compensation" below. In Fiscal 1998, Mr. Howard was granted
options in respect of his service as Vice President and chief financial
officer. See "Stock Options" and "REPORT OF THE COMPENSATION
COMMITTEE--Compensation of Chief Executive Officer and Chief Financial
Officer" below.
8
<PAGE>
Stock Options
The following table sets forth information with respect to options
granted to the Named Executives during Fiscal 1998. No stock appreciation
rights were granted to the Named Executives during Fiscal 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock
Price Appreciation
Individual Grants for Option Term (3)
----------------- -------------------
Percent of
Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base
Options in Fiscal Price Expiration
Name Granted(1) Year(2) ($/Sh) Date 5%($) 10%($)
- ------------------------ ------------ ------------ --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Warren G. Lichtenstein 5,882 1.8% 3.12 2/2/03 5,070 11,246
5,263 1.6% 3.50 5/1/03 5,070 11,246
50,000 (4) 14.9% 3.94 6/25/03 54,427 120,270
100,000 (4) 29.9% 3.58 6/25/03 98,909 218,563
50,000 14.9% 4.68 8/25/03 64,650 142,859
Jack L. Howard 5,882 1.8% 3.12 2/2/03 5,070 11,246
5,263 1.6% 3.50 5/1/03 5,070 11,246
50,000 (4) 14.9% 3.58 6/25/03 49,454 120,270
50,000 (4) 14.9% 3.58 6/25/03 49,454 109,281
12,500 3.7% 4.68 8/25/03 16,162 35,715
</TABLE>
- ---------
(1) All of the options were granted in respect of Mr. Lichtenstein's and Mr.
Howard's service as executive officers of the Corporation. See "REPORT OF
THE COMPENSATION COMMITTEE--Compensation of the Chief Executive Officer
and Chief Financial Officer" below.
(2) Based on an aggregate of 334,790 options granted to all employees during
Fiscal 1998. Options vest immediately unless otherwise noted.
(3) In accordance with rules promulgated by the Securities and Exchange
Commission, the potential realizable value of these grants (on a pre-tax
basis) assumes that the Common Stock gains 5% or 10% in value per year,
compounded over the five-year life of the options. These are assumed
rates of appreciation and are not intended to forecast future
appreciation of the Common Stock. The actual future value of the options
will depend on the market value of the Corporation's Common Stock. All
references to number of shares and price have been adjusted to reflect
the Corporation's 1-for-2 reverse stock split on November 20, 1998.
(4) The options are exercisable in eight equal installments, each vesting on
the first business day of each quarter, commencing August 1, 1998.
9
<PAGE>
The following table sets forth information with respect to options
held as of December 31, 1998 by the Named Executives. No options were exercised
by the Named Executives of the Company during Fiscal 1998.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised Options In-the-Money Options at Fiscal
at Fiscal Year-End(#) Year-End($)(1)
------------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
Warren G. Lichtenstein 114,958 112,500 253,277 286,875
Jack L. Howard 64,958 75,000 165,527 200,250
</TABLE>
- ---------
(1) The value of in-the-money options assumes the closing sales price of the
Common Stock underlying the options as of December 31, 1998 ($6.25).
Compensation Committee Interlocks and Insider Participation
During Fiscal 1998, the Compensation Committee consisted of Messrs.
Wyche (Chairman), May and Smith. None of the members of the Compensation
Committee served as a member of the compensation committee of another entity
during Fiscal 1998.
Director Compensation
Effective July 22, 1997, the compensation of the non-employee
directors of the Corporation was reduced by the Board of Directors by 25% to
provide for an annual retainer fee (the "Retainer Fee") of $18,000 per year,
plus a meeting fee (a "Meeting Fee") for each meeting (i) of the Board of
Directors (in the amount of $1,125 per meeting for attendance in person or
$562.50 for attendance by telephone), (ii) of a committee of the Board of
Directors that does not meet on the same day as a meeting of the Board of
Directors (in the amount of $1,125 per meeting), and (iii) of a committee of
the Board of Directors that meets on the same day as the Board of Directors (in
the amount of $375 per meeting). Pursuant to the Corporation's Long-Term
Incentive Stock Plan, approved by the stockholders at the 1997 annual meeting,
beginning with the fiscal 1997 Retainer Fee and Meeting Fees were payable, at
the election of each director, in the form of cash, grants ("Stock Awards") of
Common Stock, and options to purchase Common Stock ("Options"), provided that a
director electing to receive Stock Awards or Options had to elect to receive
his Retainer Fee in such forms and could elect to receive his Meeting Fees in
such forms.
On January 15, 1999, the stock compensation of the non-employee
directors of the Corporation for the fiscal year ending December 31, 1999 was
set as follows: a Retainer Fee of $12,000 per year which is paid in the form of
Common Stock; plus Meeting Fees, in the form of cash or stock, for each meeting
(regardless of attendance in person or by telephone) (i) of the Board of
Directors (in the amount of $1,000 per meeting), (ii) of a committee of the
Board of Directors that does not meet on the same day as a meeting of the Board
of Directors (in the amount of $1,000 per meeting), and (iii) of a committee of
the Board of Directors that meets on the same day as the Board
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<PAGE>
of Directors (in the amount of $500 per meeting). Directors are reimbursed for
their actual travel and other expenses.
Pursuant to the Long-Term Incentive Stock Plan: (i) Options are
valued using the Black-Scholes option pricing model and such assumptions as the
Corporation, in its sole discretion, deems reasonable; (ii) the exercise price
of the Options will be, and Stock Awards will be valued using, the closing
price of the Common Stock on the date of grant or issuance or deemed date of
grant or issuance; (iii) a director's entitlement to receive Options will vest,
and will be granted or issued, or deemed to be granted or issued, on the first
day of the quarter as to which the Retainer Fee is payable; and (iv) options
will terminate on the fifth anniversary of the date of issuance and will
survive termination of membership on the Board of Directors of the Corporation.
Certain Relationships and Related Transactions
As of March 31, 1998, the Corporation sub-sub-leased from Gateway
Industries, Inc. office space on a non-exclusive basis for use as corporate
headquarters or for other corporate uses. Under terms of this sub-sub-lease,
the Corporation is obligated to pay one-third of all amounts payable, as billed
to Gateway under the master sub-lease. Gateway Industries, Inc.'s sub-lease for
the space is with Steel Partners II, L.P. ("Steel"), as sub-landlord. Warren
Lichtenstein, a director and the President and chief executive officer of the
Corporation, beneficially owns more than 10% of the outstanding voting stock of
Gateway Industries, Inc. and is the chief executive officer of the general
partner of Steel. The rent payable by the Corporation is approximately $2,700
per month. The sub-sub-lease runs through March 30, 2001, but may be terminated
by either party on 30 days' notice.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee determines the Corporation's executive
compensation policies. The Compensation Committee determines the compensation
of the Corporation's executive officers and administers the Corporation's
incentive and stock option plans.
Compensation Policies
Set forth below is a description of the executive compensation
policies of the Compensation Committee. It is expected that the Compensation
Committee will continue these policies as the Corporation continues to attempt
to locate, purchase, and operate other businesses.
The executive compensation policies of the Compensation Committee
are based on three fundamental goals: (i) to attract and retain corporate
officers and other key employees who are considered to be essential to the
competitive repositioning of the Corporation; (ii) to ensure that an
appropriate relationship exists between annual bonus compensation and the
performance of the Corporation; and (iii) to ensure that an appropriate
relationship exists between executive compensation and the creation of
stockholder value. These policies are implemented through determinations as to
base salary, standards for determination of annual bonus compensation, and
awards of equity compensation.
Compensation of Chief Executive Officer and Chief Financial Officer
Mr. Lichtenstein receives no cash compensation for his service as
President and chief executive officer of the Corporation. However, on February
2, 1998 he was granted non-qualified
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stock options for 5,882 shares at an exercise price of $3.125 per share and on
May 1, 1998 he was granted non-qualified stock options for 5,263 shares at an
exercise price of $3.50 per share. Then, at the meeting of the Compensation
Committee on June 25, 1998, options for a total of 150,000 shares were granted
to Mr. Lichtenstein in respect of his service as chief executive officer for
the two-year period beginning August 1, 1998. The options vest in equal
quarterly installments of 18,750 shares, commencing August 1, 1998, and
terminate on June 25, 2003. Of the total, 50,000 options were granted as
incentive stock options under the Corporation's Long Term Stock Incentive Plan,
with an exercise price of $3.94 per share, and the remaining 100,000 options
were granted as non-qualified stock options under the Corporation's New Equity
Compensation Plan (actually an older plan) with an exercise price of $3.58 per
share. At the meeting of the Compensation Committee on August 25, 1998,
non-qualified stock options for an additional 50,000 shares at an exercise
price of $4.68 per share were granted to Mr. Lichtenstein under the
Corporation's New Equity Compensation Plan.
Also at the meeting of the Compensation Committee on June 25, 1998,
options for a total of 100,000 shares were granted to Mr. Howard in respect of
his service as chief financial officer for the two-year period beginning August
1, 1998. The options vest in equal quarterly installments of 18,750 shares,
commencing August 1, 1998, and terminate on June 25, 2003. Of the total, 50,000
options were granted as incentive stock options under the Corporation's Long
Term Stock Incentive Plan, with an exercise price of $3.94 per share, and the
remaining 100,000 options were granted as non-qualified stock options under the
Corporation's New Equity Compensation Plan (actually an older plan) with an
exercise price of $3.58 per share. At the meeting of the Compensation Committee
on August 25, 1998, non-qualified stock options for an additional 50,000 shares
at an exercise price of $4.68 per share were granted to Mr. Howard under the
Corporation's New Equity Compensation Plan. Mr. Lichtenstein and Mr. Howard are
the only executive officers of the Corporation.
At the 1998 Annual Meeting, the stockholders approved the merger of
the Corporation's two compensation plans.
Compensation Committee Members
Earle C. May (Chairman)
Harold Smith
James Benenson, Jr.
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Performance Graph
The following graph shows a comparison of the cumulative total
returns for the Corporation, the NASDAQ Composite index, and the Media General
Industry Group (comprised of credit services). The graph assumes that the value
of the investment in the Corporation and each index was $100 on May 3, 1995
(the initial listing date of the stock of the Corporation's predecessor after
its reorganization under Chapter 11 of the United States Bankruptcy Code), and
that all dividends were reinvested.
COMPARE CUMULATIVE TOTAL RETURN
AMONG ROSES HOLDINGS, INC.,
NASDAQ COMPOSITE INDEX AND MG GROUP INDEX
<GRAPHIC OMITTED>
[Plot points for performance chart]
Roses SIC NASDAQ
Holdings, CODE COMPOSITE
Inc. INDEX INDEX
-------- ------ ---------
5/3/95 100 100 100
1/31/96 50.89 126.68 118.12
1/31/97 58.28 181.8 152.3
1/31/98 58.28 238.84 178.73
12/31/98 177.51 279.56 242.14
ASSUMES $100 INVESTED MAY 3, 1995
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDED DEC. 31, 1998
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PROPOSAL TWO
PROPOSAL TO AMEND THE CORPORATION'S
CHARTER TO CHANGE THE NAME OF THE CORPORATION
The Board of Directors has unanimously adopted resolutions
declaring the advisability of, and submits to the stockholders for approval, an
amendment (the "Name Amendment") to the Corporation's Amended and Restated
Certificate of Incorporation changing the name of the Corporation from Rose's
Holdings, Inc. to WebFinancial Corporation.
The Corporation was formed in 1997 to act as a holding company for
Rose's Stores, Inc., an owner/operator of general merchandise discount stores
founded in 1927 in Henderson, North Carolina ("Stores"). The Stores operating
subsidiary was sold to Variety Wholesalers, Inc. on December 2, 1997 and since
such sale, the Corporation has not conducted any operations in that line of
business, nor does the Corporation have any present intent to engage in such
line of business in the future.
In August 1998, the Corporation acquired an indirect 90% interest
in WebBank Corporation, a Utah industrial loan corporation ("WebBank"), and
formed Praxis Investment Advisors Inc. (of which it also owns 90%), a
California-based company that engages in the research and development of
financial products. In addition, the Corporation continues to seek additional
acquisitions and/or merger transactions in which to employ its cash. The Board
believes that the Corporation's break with its discount retail store history is
complete, and that it is now appropriate to adopt a name more in keeping with
the Corporation's current and potential lines of business. In that connection,
the Board has reserved the name "WebFinancial Corporation" in Delaware, the
Corporation's jurisdiction of organization.
The affirmative vote of the holders of a majority of the Common
Stock present, or represented, and entitled to vote at the Annual Meeting, at
which a quorum is present, is required to approve the Name Amendment. If the
Name Amendment is approved by the stockholders, it will become effective upon
the filing of a Certificate of Amendment in accordance with the Delaware
General Corporation Law. THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
VOTE IN FAVOR OF THE PROPOSAL APPROVING THE NAME AMENDMENT.
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PROPOSAL THREE
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP, independent
certified public accountants, to audit the books and records of the Corporation
for the current year. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE IN FAVOR OF THE PROPOSAL TO CONFIRM SUCH APPOINTMENT.
Representatives of KPMG LLP are expected to be available by
telephone during the Annual Meeting to respond to appropriate questions and
will be given the opportunity to make a statement if they desire to do so.
STOCKHOLDER PROPOSALS
If a stockholder notifies the Corporation after March 21, 2000 of
an intent to present a proposal at the Corporation's 2000 Annual Meeting, the
Corporation will have the right to exercise its discretionary voting authority
with respect to such proposal, if presented at the meeting, without including
information regarding such proposal in its proxy materials. Stockholders of the
Corporation wishing to include proposals in the proxy material in relation to
the 2000 Annual Meeting must submit the same in writing so as to be received at
the executive offices of the Corporation on or before January 6, 2000. Such
proposals must also meet the other requirements of the rules of the Securities
and Exchange Commission relating to stockholders' proposals.
By Order of the Board of Directors,
Jack L. Howard
Secretary
April 30, 1999
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ROSE'S HOLDINGS, INC.
PROXY
The undersigned appoints Warren G. Lichtenstein and Jack L. Howard, and either
of them, with power of substitution, to represent and to vote on behalf of the
undersigned all of the shares of Rose's Holdings, Inc. (the "Corporation") that
the undersigned is entitled to vote at the annual meeting of stockholders to be
held at the Corporation's principal executive offices at 150 East 52nd Street,
New York, New York 10022, on Tuesday, June 15, 1999 at 10:00 A.M., and at any
adjournment or adjournments thereof, hereby revoking all proxies heretofore
given with respect to such stock, upon the following proposals more fully
described in the notice of, and proxy statement relating to, the meeting
(receipt whereof is hereby acknowledged).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR (1), (2) AND (3).
1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY to
except as marked to the contrary below [ ] vote for all nominees listed below[ ]
Jack L. Howard
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name in the space provided below.)
-----------------------------------------------------------------
2. PROPOSAL TO AMEND THE CORPORATION'S CHARTER TO CHANGE THE NAME OF THE
CORPORATION
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT AUDITORS
OF THE CORPORATION
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion upon such other matters as may properly come before the
meeting.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS (1), (2) AND (3).
Please sign exactly as your name appears on your stock certificates. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee, or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
---------------------------
Signature
---------------------------
Signature if held jointly
DATED: , 1999
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Please return in the enclosed postage paid envelope.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
