<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-K/A
(AMENDMENT NO. 1)
-----------------
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
COMMISSION FILE NUMBER 1-2493
-----------------
NEW VALLEY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-5482050
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 S.E. SECOND STREET
MIAMI, FLORIDA 33131
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 579-8000
-----------------
================================================================================
<PAGE> 2
Part III of the Annual Report on Form 10-K of New Valley Corporation
(the "Company") for the year ended December 31, 1997 is amended in its entirety
to add the following information:
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information, as of April 15,
1998, with respect to each person who is a director of the Company. Each
director is a citizen of the United States of America. For information
concerning the executive officers of the Company, see Item 4. "Submission of
Matters to a Vote of Security-Holders; Executive Officers of the Registrant".
<TABLE>
<CAPTION>
DIRECTOR
NAME AND ADDRESS AGE PRINCIPAL OCCUPATION SINCE
---------------- --- -------------------- -----
<S> <C> <C> <C>
Bennett S. LeBow 60 Chairman of the Board December 1987
New Valley Corporation and Chief Executive Officer
100 S.E. Second Street of the Company
Miami, FL 33131
Howard M. Lorber 49 President and Chief Operating January 1991
New Valley Corporation Officer of the Company
100 S.E. Second Street
Miami, FL 33131
Richard J. Lampen 44 Executive Vice President and June 1996
New Valley Corporation General Counsel of the
100 S.E. Second Street Company
Miami, FL 33131
Arnold I. Burns 68 Partner, Proskauer Rose LLP November 1994
Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Ronald J. Kramer 39 Chairman and Chief Executive November 1994
Ladenburg, Thalmann Group Inc. Officer of Ladenburg, Thalmann
590 Madison Avenue Group Inc.
New York, NY 10022
Henry C. Beinstein 55 Executive Director, November 1994
Shulte Roth & Zabel LLP Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY 10022
Barry W. Ridings 46 Managing Director, November 1994
BT Alex. Brown Incorporated BT Alex. Brown Incorporated
1290 Avenue of the Americas
New York, NY 10104
</TABLE>
The Board of Directors of the Company consists of the foregoing seven
directors, six of whom were appointed pursuant to the Joint Plan and
subsequently re-elected at the subsequent Annual Meetings of Shareholders.
Messrs. Beinstein and Ridings (together, the "Shareholder Designees) are deemed
by the Joint Plan to be directors elected pursuant to the Company's Certificate
of Incorporation by holders of the Class A Senior Preferred Shares, voting as a
class, and by the holders of the Class A Senior Preferred Shares and the Class B
Preferred Shares, voting together as a single class, in each
2
<PAGE> 3
case as a results of dividend arrearages thereon. Mr. Lampen was elected as a
director of the Company at the 1996 Annual Meeting.
BUSINESS EXPERIENCE OF DIRECTORS (OTHER THAN EXECUTIVE OFFICERS)
ARNOLD I. BURNS has been a partner of Proskauer Rose LLP ("Proskauer"),
a New York-based law firm, since September 1988. Mr. Burns was an Associate
Attorney General at the United States Department of Justice in 1986 and Deputy
Attorney General from 1986 to 1988.
RONALD J. KRAMER has been Chairman and Chief Executive Officer of
Ladenburg Thalmann Group Inc. ("Ladenburg Group") since June 1995 and Chairman
of the Board and Chief Executive Officer of Ladenburg Thalmann & Co. Inc.
("Ladenburg"), a broker-dealer and investment bank, since December 1995 and an
employee thereof for more than the past five years. Ladenburg Group and
Ladenburg are direct and indirect wholly-owned subsidiaries of the Company. Mr.
Kramer currently serves on the Boards of Directors of Griffon Corporation and
Grand Casinos, Inc.
HENRY C. BEINSTEIN became the Executive Director of Schulte Roth &
Zabel LLP, a New York-based law firm, in August 1997. Prior thereto, Mr.
Beinstein had served as the Managing Director of Milbank, Tweed, Hadley & McCloy
("Milbank"), a New York-based law firm, commencing November 1995. Mr. Beinstein
was the Executive Director of Proskauer from April 1985 through October 1995.
Mr. Beinstein is a certified public accountant in the States of New York and New
Jersey and prior to joining Proskauer was a partner and National Director of
Finance and Administration at Coopers & Lybrand.
BARRY W. RIDINGS has been a Managing Director of BT Alex. Brown
Incorporated, an investment banking firm, since March 1990. Mr. Ridings
currently serves on the Board of Directors of TransCor Waste Services, Inc.,
SubMicron Systems Corporation, Norex Industries, Inc., Noodle Kidoodle Inc.,
Search Financial Services Inc. and Telemundo Group, Inc.
3
<PAGE> 4
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation
awarded to, earned by or paid during the past three years to those persons who
were, at December 31, 1997, the Company's Chief Executive Officer and the three
other executive officers whose cash compensation exceeded $100,000
(collectively, the "named executive officers").
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION
SECURITIES
UNDER-
RESTRICTED LYING
NAME STOCK OPTIONS
AND PRINCIPAL POSITION YEAR SALARY BONUS AWARD(S) (#)
---------------------- ---- ------ ----- -------- ---
<S> <C> <C> <C> <C> <C>
Bennett S. LeBow 1997 $2,000,000 -- -- --
Chairman and Chief Executive 1996 2,000,000 -- -- --
Officer 1995 1,894,823 -- -- --
Howard M. Lorber 1997 $1,400,000 $976,544 (2) -- --
President and Chief 1996 1,250,000 300,000 $4,356,000(3) 427,000(4)
Operating Officer 1995 956,376 500,000 -- --
Richard J. Lampen 1997 $ 650,000 -- -- --
Executive Vice President 1996 600,000 $100,000 -- --
and General Counsel(5) 1995 150,000 100,000 -- --
Robert M. Lundgren(6) 1997 $ 108,972 -- -- --
Vice President, Chief 1996 90,000 $ 15,000
Financial Officer and
Treasurer
</TABLE>
- --------------
(1) The aggregate value of perquisites and other personal benefits received
by the named executive officers are not reflected because the amounts
were below the reporting requirements established by the rules of the
Securities and Exchange Commission (the "SEC").
(2) Includes $476,544 paid to Mr. Lorber in connection with the Company's
obligation to reimburse him for taxes relating to the vesting of the
1996 restricted stock award. See "Employment Agreements".
(3) Represents an award of 36,000 Class A Senior Preferred Shares valued
based on the closing price on the date of issuance. Subject to earlier
vesting upon a change of control (as defined), the shares vest in six
equal annual installments commencing on July 1, 1997. The shares are
identical with all other Class A Senior Preferred Shares issued and
outstanding as of July 1, 1996, including undeclared dividends of
$3,776,000 and declared dividends of $1,080,000. Dividends are payable
on the shares provided that such payments will be deferred until the
time of vesting. At December 31, 1997, the shares had a market value of
$3,456,000 (without giving effect to any diminution in value
attributable to the restrictions).
(4) Represents options to purchase 330,000 Common Shares and 97,000 Class B
Preferred Shares granted in 1996.
(5) Mr. Lampen commenced employment with the Company in October 1995. In
1997 and 1996, all of Mr. Lampen's salary and bonus were paid by the
Company, and 25% (or $162,500 and $175,000 in
4
<PAGE> 5
1997 and 1996, respectively) was subsequently reimbursed to the Company
by Brooke. The table reflects 100% of Mr. Lampen's salary and bonus.
(6) Mr. Lundgren resigned from the Company effective January 14, 1998.
The following table sets forth certain information concerning
unexercised options held by the named executive officers as of December 31,
1997.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT DECEMBER 31, 1997 OPTIONS AT DECEMBER 31, 1997
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Howard M. Lorber
Class B Preferred Shares 16,166 80,834 $30,715* $153,585*
Common Shares 55,000 275,000 -- --
</TABLE>
* Calculated using the closing price of $3.75 per Class B Preferred Share
on December 31, 1997 less the option exercise price.
COMPENSATION OF DIRECTORS
In 1997, each non-employee director of the Company received an annual
fee of $35,000 for serving on the Board and a $1,000 fee for attendance at each
meeting of the Board or a committee thereof.
EMPLOYMENT AGREEMENTS
Mr. LeBow is a party to an employment agreement with the Company dated
as of June 1, 1995, as amended effective as of January 1, 1996. The agreement
has an initial term of three years effective as of January 18, 1995 (the
"Effective Date"), with an automatic one year extension on each anniversary of
the Effective Date unless notice of non-extension is given by either party
within the sixty-day period prior to such anniversary date. As of January 1,
1998, Mr. LeBow's annual base salary was $2,000,000. Following termination of
his employment without cause (as defined therein), he would continue to receive
his base salary for a period of 36 months commencing with the next anniversary
of the Effective Date following the termination notice. Following termination of
his employment within two years of a change of control (as defined therein), he
is entitled to receive a lump sum payment equal to 2.99 times his then current
base salary. The Joint Plan provides that the annual compensation paid to Mr.
LeBow for services rendered in his capacity as an officer or director of the
Company shall not exceed $2,000,000.
Howard M. Lorber is a party to an employment agreement with the Company
dated June 1, 1995, as amended. The agreement has an initial term of three years
effective as of January 18, 1995 (the "Effective Date"), with an automatic one
year extension on each anniversary of the Effective Date unless notice of
non-extension is given by either party within the sixty-day period prior to such
anniversary date. As of January 1, 1998, Mr. Lorber's annual base salary was
$1,400,000. The Board shall periodically
5
<PAGE> 6
review such base salary and may increase (but not decrease) it from time to
time, in its sole discretion. In addition, the Board may award an annual bonus
to Mr. Lorber at its sole discretion. The Board awarded Mr. Lorber a bonus of
$500,000 for 1997. In January 1998, Mr. Lorber and the Company entered into an
amendment to his employment agreement whereby he is entitled on an annual basis
to receive an additional bonus in an amount necessary to reimburse him, on an
after-tax basis, for all applicable taxes incurred by him during the prior
calendar year as a result of the grant to him, or vesting, of the 1996 award of
36,000 restricted Class A Senior Preferred Shares and options to acquire 330,000
Common Shares and 97,000 Class B Preferred Shares. Mr. Lorber received an
additional bonus of $476,544 in January 1998, which amount Mr. Lorber and the
Company have agreed will constitute full satisfaction of the Company's
obligations under the amendment with respect to 1997. Following termination of
his employment without cause (as defined therein), he would continue to receive
his base salary for a period of 36 months commencing with the next anniversary
of the Effective Date following the termination notice. Following termination of
his employment within two years of a change of control (as defined therein), he
is entitled to receive a lump sum payment equal to 2.99 times the sum of (i) his
then current base salary and (ii) the Bonus Amounts (as defined therein) earned
by him for the twelve-month period ending with the last day of the month
immediately preceding the month in which the termination occurs.
Richard J. Lampen is a party to an employment agreement with the
Company dated September 22, 1995. The agreement has an initial term of two and a
quarter years from October 1, 1995 with automatic renewals after the initial
term for additional one-year terms unless notice of non-renewal is given by
either party within the ninety-day period prior to the termination date. As of
January 1, 1998, his annual base salary was $750,000. In addition, the Board may
award an annual bonus to Mr. Lampen at its sole discretion. The Board shall
review such base salary annually and may increase (but not decrease) it from
time to time, in its sole discretion. Following termination of his employment
without cause (as defined therein), he shall receive severance pay in a lump sum
equal to the amount of his base salary he would have received if he was employed
for one year after termination of his employment term.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not currently have a Compensation Committee. The Board
acts on compensation matters as a committee of the whole. Mr. LeBow has been
Chairman of the Board of the Company since 1988 and Chief Executive Officer
since November 1994, Mr. Lorber was named President and Chief Operating Officer
of the Company in November 1994, Mr. Kramer was named Chairman of the Board and
Chief Executive Officer of Ladenburg Group in June 1995 and Chairman of the
Board and Chief Executive Officer of Ladenburg in December 1995, and Mr. Lampen
was named Executive Vice President and General Counsel of the Company in October
1995.
During 1997, Mr. LeBow was Chairman of the Board, President and Chief
Executive Officer of Brooke (and a member of the Compensation Committee) and
BGLS; and during 1997, Mr. Lampen was Executive Vice President of Brooke and
BGLS.
For information on the interests of Messrs. LeBow, Lorber and Lampen in
Brooke and certain other relationships and transactions, see Item 1. "Business
- -- Significant Shareholders", Item 12. "Security Ownership of Certain Beneficial
Owners and Management", and Item 13. "Certain Relationships and Related
Transactions".
PENSION PLANS
In connection with the Company's sale of its wholly-owned subsidiary,
Western Union Financial Services, Inc. ("FSI"), to First Financial Management
Corporation on November 15, 1994 pursuant to the Joint Plan, the Western Union
Pension Plan (the "Pension Plan") was assumed by FSI and the Company was
released from all obligations thereunder.
None of the current employees of the Company are entitled to any
benefits under the Pension Plan.
6
<PAGE> 7
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding all
persons known by the Company to own beneficially more than 5% of any class of
its voting securities as of April 15, 1998.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME AND ADDRESS TITLE OF CLASS SHARES(1) OF CLASS(1)
---------------- -------------- --------- -----------
<S> <C> <C> <C>
Bennett S. LeBow............. Class A Senior Preferred 618,326(2) 57.7%
Brooke Group Ltd. Shares
BGLS Inc.
100 S.E. Second Street
Miami, FL 33131
New Valley Holdings, Inc.
204 Plaza Centre
3505 Silverside Road
Wilmington, DE 19810
Canpartners
Incorporated............... Class A Senior Preferred 57,118(3) 5.3%
Canyon Capital Shares
Management, L.P
Mitchell R. Julis
Joshua S. Friedman
R. Christian B. Evensen
Suite 200
9665 Wilshire Blvd.
Beverly Hills, CA 90212
Bennett S. LeBow............. Class B Preferred Shares 250,885(2) 8.9%
Brooke Group Ltd.
BGLS Inc.
100 S.E. Second Street
Miami, FL 33131
Bennett S. LeBow............. Common Shares 4,094,253(2)(4) 42.3%
Brooke Group Ltd.
BGLS Inc.
100 S.E. Second Street
Miami, FL 33131
New Valley Holdings, Inc.
204 Plaza Centre
3505 Silverside Road
Wilmington, DE 19810
ITT Industries, Inc.......... Common Shares 719,571(5) 7.5%
4 West Red Oak Lane
White Plains, NY 10604
</TABLE>
----------
(1) The number of shares beneficially owned by each beneficial owner listed
above is based upon the numbers reported by such owner in documents
publicly filed with the SEC, publicly available information or
information available to the Company. The percentage of each class is
calculated based on the total number of shares of each class
outstanding on April 15, 1998. The number of
7
<PAGE> 8
shares and percentage of class include shares with respect to which
such beneficial owner has the right to acquire beneficial ownership as
specified in Rule 13d-3(d)(1) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
(2) According to Amendment No. 16 to Schedule 13D dated January 30, 1996,
relating to the Common Shares and Class A Senior Preferred Shares,
filed jointly by Brooke, BGLS, New Valley Holdings Inc., a direct
wholly-owned subsidiary of BGLS ("NV Holdings"), and Bennett S. LeBow,
the beneficial owner of approximately 45% of the common stock of Brooke
and the Chairman of the Board and Chief Executive Officer of the
Company, and Amendment No. 1 to Schedule 13D dated January 30, 1996,
relating to the Class B Preferred Shares, filed jointly by the
foregoing persons (except for NV Holdings), BGLS exercises sole voting
power and sole dispositive power over, subject to the Pledge (as
defined below): (i) 19,748 Common Shares (less than 1% of such class);
and (ii) 250,885 Class B Preferred Shares (approximately 8.9% of such
class) (collectively, the "BGLS Shares"), and NV Holdings exercises
sole voting power and sole dispositive power over, subject to the
Pledge (as defined below): (i) 3,969,962 Common Shares (approximately
41.4% of such class); and (ii) 618,326 Class A Senior Preferred Shares
(approximately 57.7% of such class) (collectively, the "NV Holdings
Shares"). Each of BGLS and NV Holdings disclaims beneficial ownership
of the shares beneficially owned by the other under Rule 13d-3
promulgated under the Exchange Act ("Rule 13d-3"), or for any other
purpose. Each of Brooke and Mr. LeBow disclaims beneficial ownership of
the BGLS Shares and NV Holdings Shares under Rule 13d-3, or for any
other purpose.
Pursuant to the indenture (the "Indenture") relating to BGLS' 15.75%
Series B Senior Secured Notes due 2001 (the "Series B Notes"), BGLS has
pledged the BGLS Shares, and NV Holdings has pledged the NV Holdings
Shares (such pledges being referred to herein collectively as the
"Pledge"), to secure the Series B Notes. The Indenture also provides
for restrictions on certain affiliated transactions between the Company
and Brooke, BGLS and their affiliates, as well as for certain
restrictions on the use of future distributions received from the
Company.
For information on interests in and positions held with Brooke and its
affiliates by Mr. LeBow and other directors and officers of the Company
as well as voting and other provisions applicable to Brooke pursuant to
the terms of the Joint Plan, see Item 1. "Business - Bankruptcy
Reorganization" and "-- Significant Shareholders" and Item 11.
"Executive Compensation - Compensation Committee Interlocks and Insider
Participation".
(3) Canyon Capital Management, L.P. ("CCM") is an investment advisor to
various managed accounts. Canpartners Incorporated is the general
partner of CCM, and Messrs. Julis, Friedman and Evensen own 100% of
Canpartners Incorporated. The named entities and individuals have
reported that, as of March 20, 1998, they have shared power to vote or
to direct the voting and shared power to dispose or direct the
disposition of 57,118 Class A Senior Preferred Shares.
(4) Of such Common Shares, 104,543 represent shares which could be acquired
by conversion of the Class B Preferred Shares held by BGLS (the
"Derivative Common Shares"), as to which shares Mr. LeBow disclaims
beneficial ownership.
(5) ITT Industries, Inc. (as the successor in interest to ITT Corporation)
has reported that, as of May 15, 1991, it had sole power to vote or to
direct the voting and sole power to dispose or direct the disposition
of 719,571 Common Shares.
8
<PAGE> 9
The following table sets forth, as of April 15, 1998, the beneficial
ownership of the Company's equity securities by (i) each of the Company's
directors, (ii) each of the named executive officers and (iii) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME TITLE OF CLASS SHARES(1) CLASS(1)
---- -------------- --------- ----------
<S> <C> <C> <C>
Bennett S. LeBow(2)(5)........... Class A Senior Preferred 618,326 57.7%
Shares
Class B Preferred Shares 250,885 8.9%
Common Shares 4,094,253 42.3%
Howard M. Lorber(3)(5)........... Class A Senior Preferred 36,000 3.4%
Shares
Class B Preferred Shares 16,166 (*)
Common Shares 55,375 (*)
Richard J. Lampen(5)............. Class A Senior Preferred 0 ---
Shares
Class B Preferred Shares 0 ---
Common Shares 0 ---
Ronald J. Kramer(6).............. Class A Senior Preferred 0 ---
Shares
Class B Preferred Shares 0 ---
Common Shares 0 ---
Arnold I. Burns(6)............... Class A Senior Preferred 0 ---
Shares
Class B Preferred Shares 0 ---
Common Shares 0 ---
Henry C. Beinstein(4)(6)......... Class A Senior Preferred 0 ---
Shares
Class B Preferred Shares 34,500 1.3%
Common Shares 14,376 (*)
Barry W. Ridings(6).............. Class A Senior Preferred 0 ---
Shares
Class B Preferred Shares 0 ---
Common Shares 0 ---
Robert M. Lundgren(7)............ Class A Senior Preferred 0 ---
Shares
Class B Preferred Shares 0 ---
Common Shares 0 ---
All directors and executive
as a group (9 persons) (2)..... Class A Senior Preferred 654,326 61.1%
Shares
Class B Preferred Shares 301,551 10.7%
Common Shares 4,164,004 42.7%
</TABLE>
- ----------
(*) The percentage of shares beneficially owned does not exceed .1% of the
class of securities noted.
9
<PAGE> 10
(1) The percentage of each class is calculated based on the total number of
shares of each class outstanding on April 15, 1998. Includes shares
with respect to which such person has the right to acquire beneficial
ownership as specified in Rule 13d-3(d)(1) of the Exchange Act.
(2) Includes the BGLS Shares, the NV Holding Shares and the Derivative
Common Shares, as to which shares Mr. LeBow disclaims beneficial
ownership. See footnotes (2) and (4) to the preceding table.
(3) Mr. Lorber possesses voting power over his Class A Senior Preferred
Shares. See Item 11. "Executive Compensation -- Summary Compensation
Table". All of the Class B Preferred Shares and 55,000 of the Common
Shares represent shares that are subject to employee stock options
exercisable within 60 days of April 15, 1998. Of the Common Shares,
375 are held in a Keogh Plan for the benefit of Mr. Lorber.
(4) Includes 2,500 Class B Preferred Shares held in an individual
retirement account for his spouse, as to which shares Mr. Beinstein
disclaims beneficial ownership. Includes 14,376 Common Shares which
could be acquired by conversion of the Class B Preferred Shares. Mr.
Beinstein disclaims beneficial ownership over 1,041 of these Common
Shares, as such shares relate to the Class B Preferred Shares
beneficially owned by his spouse.
(5) The named individual is a director and an executive officer of the
Company.
(6) The named individual is a director of the Company.
(7) The named individual resigned as an executive officer of the Company in
January 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Lorber, a director and executive officer of the Company, is a
stockholder and registered representative of Aegis Capital Corp. ("Aegis"), a
broker-dealer that has performed services for the Company and its affiliates
since before January 1, 1997. During 1997, Aegis received commission and other
income in the aggregate amount of approximately $522,000. Aegis, in the ordinary
course of its business in 1997, engaged in brokerage activities with Ladenburg
on customary terms. Mr. Lorber is also Chairman of the Board and Chief Executive
Officer of Hallman & Lorber and its affiliates, and serves as a consultant to
Brooke and BGLS and is a stockholder of Brooke. During 1997, Hallman & Lorber
and its affiliates received ordinary and customary insurance commissions
aggregating approximately $133,000 on various insurance policies issued for the
Company and its affiliates.
On December 18, 1996, the Company loaned to BGLS $990,000 under a
short-term promissory note due January 31, 1997 and bearing interest at 14%. On
January 2, 1997, the Company loaned to BGLS an additional $975,000 under another
short-term promissory note due January 31, 1997 and bearing interest at 14%.
Both loans including interest were repaid on January 31, 1997.
On January 31, 1997, the Company acquired the BML Shares, representing
99.1% of the shares of the common stock of BML. The Company paid BOL a purchase
price of $55 million, consisting of $21.5 million in cash and a $33.5 million 9%
promissory note of the Company. The note has been paid in full. See Item 1.
"Business -- BrookeMil Ltd.", as well as Notes 3 and 10 to the Company's
Consolidated Financial Statements for information concerning the transaction and
a pending lawsuit relating to the Company's purchase of the BML Shares.
In 1995, the Company and Brooke entered into an expense sharing
agreement pursuant to which certain lease, legal and administrative expenses are
allocated to the entity incurring the expense. The Company expensed $312,000
under this agreement for the year ended December 31, 1997.
10
<PAGE> 11
Mr. Ressler, a former director of the Company, is Chairman of the Board
and the beneficial owner of more than 10% of the shares of MAI Systems
Corporation ("MAI"), which in 1996 entered into certain arrangements with
Ladenburg, whereby MAI has sold computer and software products and has been
providing related professional and support services to Ladenburg. During 1997,
Ladenburg paid MAI, in the aggregate, approximately $610,000 for such products
and services. In addition, during 1997, Ladenburg paid another company
controlled by the former director, approximately $143,000 for communications
consulting services.
In March 1997, the Company acquired a membership interest in
Orchard/JFAX Investors, LLC, of which the former director serves as a managing
member, for $1 million. The LLC holds a controlling interest in a provider of
telecommunication services.
In February 1998, the Company and Apollo organized Western Realty to
make real estate and other investments in Russia. In connection with the
formation of Western Realty, New Valley agreed, among other things, to
contribute to Western Realty the real estate assets of BML, and Apollo agreed to
contribute up to $58 million. Western Realty has agreed to invest $20 million
for a 30% profits interest in a company organized by BOL which will, among other
things, acquire an interest in an industrial site and manufacturing facility
being constructed on the outskirts of Moscow by a subsidiary of BOL. For
additional information concerning Western Realty, see Item 1. "Business -
BrookeMil Ltd. - Western Realty", as well as Note 3 to the Company's
Consolidated Financial Statements.
Mr. Burns, a director of the Company, is a partner of Proskauer, a law
firm which has been engaged to perform legal services for the Company in the
past and which may be so engaged in the future. The fees received for such legal
services in 1997 did not exceed five percent of the law firm's revenues.
During 1997, Mr. Beinstein, a director of the Company, served as the
Managing Director of Milbank, a law firm which has been engaged to perform legal
services for the Company in the past and which may be so engaged in the future.
The fees received for such legal services in 1997 did not exceed five percent of
the law firm's revenues.
For information concerning certain agreements and transactions between
the Company and Brooke relating to RJR Nabisco, see Item 7. "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Recent Developments - The Company's Investment in RJR Nabisco" and Notes 5 and
18 to the Company's Consolidated Financial Statements.
See, also, Item 11. "Executive Compensation - Compensation Committee
Interlocks and Insider Participation".
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrants have duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.
NEW VALLEY CORPORATION
(REGISTRANT)
By: /s/ Richard J. Lampen
-------------------------------------
Richard J. Lampen
Executive Vice President
Date: April 30, 1998
12
