<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
NEW VALLEY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
NEW VALLEY CORPORATION
100 S.E. SECOND STREET
MIAMI, FLORIDA 33131
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 2000
To the Stockholders of New Valley Corporation:
The Annual Meeting of Stockholders of New Valley Corporation, a Delaware
corporation (the "Company"), will be held at The Hyatt Regency Miami, 400 S.E.
Second Avenue, Miami, Florida 33131, on Wednesday, May 24, 2000, at 11:00 a.m.,
local time, or at any postponement or adjournment thereof, for the following
purposes:
1. To elect eight directors to hold office until the next annual
meeting of stockholders and until their successors are elected and
qualified.
2. To approve a proposed New Valley Corporation 2000 Long-Term
Incentive Plan.
3. To approve a proposed New Valley Corporation Non-Employee Directors
Stock Option Program.
4. To transact such other business as may properly be brought before
the meeting or any postponement or adjournment thereof.
Brooke Group Ltd., which owns approximately 55.5% of the Common Shares, has
advised the Company that it intends to vote its Common Shares for these matters.
Therefore, approval of such matters by the stockholders of the Company is
assured.
Every holder of record of Common Shares of the Company at the close of
business on April 17, 2000 is entitled to notice of the meeting and any
adjournments or postponements thereof and to vote, in person or by proxy, one
vote for each Common Share held by such holder. A list of stockholders entitled
to vote at the meeting will be available to any stockholder for any purpose
germane to the meeting during ordinary business hours from May 12, 2000 to May
24, 2000, at the headquarters of the Company located at 100 S.E. Second Street,
32nd Floor, Miami, Florida 33131. A proxy statement, form of proxy and the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999
are enclosed herewith.
By Order of the Board of Directors,
/s/ Bennett S. LeBow
-----------------------------------
Bennett S. LeBow
Chairman of the Board of Directors
Miami, Florida
April 18, 2000
<PAGE> 3
NEW VALLEY CORPORATION
100 S.E. SECOND STREET
MIAMI, FLORIDA 33131
---------------------------
PROXY STATEMENT
---------------------------
INTRODUCTION
The enclosed proxy is solicited on behalf of the Board of Directors of New
Valley Corporation, a Delaware corporation (the "Company"). The proxy is
solicited for use at the annual meeting of stockholders to be held at The Hyatt
Regency Miami, 400 S.E. Second Avenue, Miami, Florida 33131 on Wednesday, May
24, 2000, at 11:00 a.m., local time, and at any postponement or adjournment. The
Company's principal executive offices are located at 100 S.E. Second Street,
32nd Floor, Miami, Florida 33131, and its telephone number is (305) 579-8000.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Every holder of record of Common Shares of the Company at the close of
business on April 17, 2000 is entitled to notice of the meeting and any
adjournments or postponements thereof and to vote, in person or by proxy, one
vote for each Common Share held by such holder. At the record date, the Company
had outstanding 23,159,862 Common Shares. The approximate date on which this
proxy statement, accompanying notice and proxy and the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1999 are first being mailed
to stockholders is on or about April 20, 2000.
Any stockholder giving a proxy in the form accompanying this proxy
statement has the power to revoke the proxy prior to its exercise. A proxy can
be revoked by an instrument of revocation delivered at or prior to the annual
meeting to the secretary of the Company, by a duly executed proxy bearing a date
or time later than the date or time of the proxy being revoked, or at the annual
meeting if the stockholder is present and elects to vote in person. Mere
attendance at the annual meeting will not serve to revoke a proxy. Abstentions
and shares held of record by a broker or its nominee that are voted on any
matter are included in determining the number of votes present. Broker shares
that are not voted on any matter will not be included in determining whether a
quorum is present.
All proxies received and not revoked will be voted as directed. If no
directions are specified, such proxies will be voted FOR the election of the
board's nominees, FOR the approval of the New Valley Corporation 2000 Long-Term
Incentive Plan and FOR the approval of the New Valley Corporation Non-Employee
Directors Stock Option Program. The nominees receiving a plurality of the votes
cast will be elected as directors. The affirmative vote of the majority of votes
present and entitled to vote on the matter at the meeting will be necessary for
approval of any other matters to be considered at the annual meeting. With
respect to the election of directors, shares as to which authority is withheld
and broker shares that are not voted will not be included in determining the
number of votes cast. With respect to other matters, abstentions and broker
shares that are not voted are not treated as present and entitled to vote on the
matter.
As of the record date, Brooke Group Ltd. ("Brooke") owned approximately
55.5% of the Common Shares of the Company. Bennett S. LeBow, the controlling
stockholder of Brooke, is Chairman of the Board and Chief Executive Officer of
the Company.
Brooke has advised the Company that it intends to vote all of its Common
Shares in favor of the election of the eight nominated directors and each of the
other proposals described in this proxy statement. Such action by Brooke will be
sufficient to elect these directors and adopt each of these proposals without
any action on the part of any other holder of Common Shares.
1
<PAGE> 4
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 the Company's Common
Shares, the only class of its voting securities, and Warrants as of the record
date. The number of shares beneficially owned by each beneficial owner listed
below 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 number of shares and percentage of class include shares of
which such beneficial owner has the right to acquire beneficial ownership as
specified in Rule 13d-3(d)(1) under the Securities Exchange Act of 1934.
<TABLE>
<CAPTION>
NUMBER
OF NUMBER
COMMON PERCENTAGE OF PERCENTAGE
NAME AND ADDRESS SHARES OF CLASS WARRANTS OF CLASS
- ---------------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Bennett S. LeBow........................................ 12,849,119(1) 55.5%(2) 3,069,664 17.2%
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
Carl C. Icahn........................................... 1,262,686(3) 5.5%(4) 312,301 1.7%
c/o Icahn Associates Corp.
767 Fifth Avenue
New York, NY 10153
Canyon Capital Advisors LLC............................. 1,142,360(5) 4.9%(6) 57,118 *
Mitchell R. Julis
Joshua S. Friedman
R. Christian B. Evensen
Suite 200
9665 Wilshire Boulevard
Beverly Hills, CA 90212
</TABLE>
- ---------------
* The percentage beneficially owned does not exceed 1% of the class.
(1) Based on Amendment No. 17 to Schedule 13D dated June 7, 1999, filed jointly
by Brooke, BGLS Inc., New Valley Holdings Inc., a direct wholly-owned
subsidiary of BGLS, and Bennett S. LeBow. According to the filing, BGLS
exercises sole voting power and sole dispositive power, subject to the
pledge described below, over 85,603 Common Shares and 1,260,349 Warrants and
New Valley Holdings exercises sole voting power and sole dispositive power,
subject to the pledge, over 12,763,516 Common Shares and 1,809,315 Warrants.
Each of BGLS and New Valley Holdings disclaims beneficial ownership of the
shares beneficially owned by the other under Rule 13d-3 under the Exchange
Act, or for any other purpose. Each of Brooke and Mr. LeBow disclaims
beneficial ownership of these shares under Rule 13d-3, or for any other
purpose. BGLS and New Valley Holdings have pledged their Company shares to
secure BGLS' senior secured notes. The indenture for the notes also provides
for restrictions on affiliated transactions between the Company and Brooke,
BGLS and their affiliates, as well as for restrictions on the use of future
distributions received from the Company.
(2) Assuming exercise of the warrants held by the named individual and entities
only, the percentage of class would be 60.7%. Assuming exercise of all
outstanding warrants, the percentage of class would be 38.8%.
(3) Based on Schedule 13D dated June 4, 1999, filed by Carl C. Icahn and
affiliated entities. These shares include 1,262,686 Common Shares and
311,301 Warrants of which Tortoise Corp. has sole voting power and sole
dispositive power and 20,000 Common Shares and 1,000 Warrants of which
Little Meadows Corp. has sole voting power and sole dispositive power. Both
of these corporations are 100% owned by Mr. Icahn, who has shared voting
power and shared dispositive power over 1,262,686 Common Shares and 312,301
Warrants.
2
<PAGE> 5
(4) Assuming exercise of the warrants held by the named individual only, the
percentage of class would be 6.7%. Assuming exercise of all outstanding
warrants, the percentage of class would be 3.8%.
(5) Based on Schedule 13D dated March 5, 1999, filed by the named individuals
and entities. Canyon Capital Advisors LLC is an investment advisor to
various managed accounts. Capital Advisors LLC is owned in equal shares by
entities controlled by Messrs. Julis, Friedman and Evensen. The named entity
and individuals have reported that, as of March 5, 1999, the entity had sole
power, and the individuals shared power, to vote or to direct the voting and
to dispose or direct the disposition of 1,142,360 Common Shares.
(6) Assuming exercise of the warrants held by the named individuals and entities
only, the percentage of class would be 5.2%. Assuming exercise of all
outstanding warrants, the percentage of class would be 2.9%.
The following table sets forth, as of the record date, the beneficial
ownership of the Common Shares and Warrants by each of the Company's directors
and nominees, each of the executive officers named in the Summary Compensation
Table below and all directors and executive officers as a group. The percentage
of each class includes securities of which such person has the right to acquire
beneficial ownership as specified in Rule 13d-3(d)(1) under the Exchange Act.
Unless otherwise indicated, each person possesses sole voting and investment
power with respect to securities indicated as beneficially owned, and the
business address of each person is 100 S.E. Second Street, Miami, Florida 33131.
<TABLE>
<CAPTION>
NUMBER
OF NUMBER
COMMON PERCENTAGE OF PERCENTAGE
NAME AND ADDRESS SHARES OF CLASS WARRANTS OF CLASS
- ---------------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Bennett S. LeBow(1)(4)..................................... 12,849,119 55.5%(8) 3,069,664 17.2%
Howard M. Lorber(2)(4)..................................... 752,703 3.2%(9) 328,112 1.8%
Richard J. Lampen(4)....................................... 0 -- 0 --
Henry C. Beinstein(3)(5)................................... 11,499 *(10) 172,500 1.0%
Arnold I. Burns(5)......................................... 0 -- 0 --
Ronald J. Kramer(5)........................................ 0 -- 0 --
Barry W. Ridings(5)........................................ 0 -- 0 --
Victor M. Rivas(5) (7)..................................... 106,070 * 0 --
Marc N. Bell(6)............................................ 0 -- 0 --
J. Bryant Kirkland III(6).................................. 0 -- 0 --
All directors and executive officers as a group
(10 persons) ............................................ 13,719,391 58.9% (11) 3,570,276 19.7%
</TABLE>
- ---------------
* The percentage beneficially owned does not exceed 1% of the class.
(1) Includes the BGLS shares and the New Valley Holding shares, as to which Mr.
LeBow disclaims beneficial ownership. See footnote (1) to the preceding
table.
(2) Includes 32,666 Common Shares and 292,000 Warrants subject to employee
stock options exercisable within 60 days of the record date.
(3) Includes 833 Common Shares and 12,500 Warrants beneficially owned by his
spouse, as to which shares Mr. Beinstein disclaims beneficial ownership.
(4) The named individual is a director and an executive officer of the Company.
(5) The named individual is a director of the Company.
(6) The named individual is an executive officer of the Company.
(7) Represents shares subject to employee stock options exercisable within 60
days of the record date.
(8) Assuming exercise of the warrants held by the named individual only, the
percentage of class would be 60.7%. Assuming exercise of all outstanding
warrants, the percentage of class would be 38.8%.
(9) Assuming exercise of the warrants held by the named individual only, the
percentage of class would be 4.6%. Assuming exercise of all outstanding
warrants, the percentage of class would be 2.6%.
(10) Assuming exercise of the warrants held by the named individual only, the
percentage of class would be .8%. Assuming exercise of all outstanding
warrants, the percentage of class would be .4%.
(11) Assuming exercise of the warrants held by the group only, the percentage of
class would be 64.4%. Assuming exercise of all outstanding warrants, the
percentage of class would be 41.8%.
3
<PAGE> 6
NOMINATION AND ELECTION OF DIRECTORS
The Company's by-laws provide that the number of directors shall be not
more than nine and not less than three as shall be determined from time to time
by the board. The board of the Company currently consists of eight directors.
The present term of office of all directors will expire at the annual meeting.
Provided a quorum is present, directors are elected by a plurality of the
votes cast at an election, to serve until the next annual meeting of
stockholders and until their successors are duly elected and qualified. The
nominees for election as directors are discussed below. Although each nominee
presently intends to serve, if any nominee is unable or unwilling to serve, the
board may nominate another person in substitution. In that case, the persons
named as proxies in the accompanying proxy card will vote FOR the election of
the substitute nominee for director.
The board recommends that stockholders vote FOR election of the nominees
named below.
INFORMATION WITH RESPECT TO NOMINEES
The following table sets forth, as of the record date, certain information
as to each of the nominees. Each nominee is a citizen of the United States.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND ADDRESS AGE PRINCIPAL OCCUPATION SINCE
- ---------------- --- ------------------------------- -------------
<S> <C> <C> <C>
Bennett S. LeBow............................. 62 Chairman of the Board and Chief December 1987
New Valley Corporation Executive Officer of the
100 S.E. Second Street Company
Miami, FL 33131
Howard M. Lorber............................. 51 President and Chief Operating January 1991
New Valley Corporation Officer of the Company
100 S.E. Second Street
Miami, FL 33131
Richard J. Lampen............................ 46 Executive Vice President and July 1996
New Valley Corporation General Counsel of the Company
100 S.E. Second Street
Miami, FL 33131
Henry C. Beinstein........................... 57 Executive Director, November 1994
Schulte Roth & Zabel LLP Schulte Roth & Zabel
900 Third Avenue LLP
New York, NY 10022
Arnold I. Burns.............................. 70 Managing Director, Arnhold and November 1994
Arnhold and S. Bleichroeder, Inc. S. Bleichroeder, Inc.
1345 Avenue of the Americas
New York, NY 10105
Ronald J. Kramer............................. 41 Managing Director, Wasserstein November 1994
Wasserstein, Perella & Co., Inc. Perella & Co., Inc.
31 West 52nd Street
New York, NY 10021
Barry W. Ridings............................. 48 Managing Director, November 1994
Lazard Freres & Co. LLC Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, NY 10020
Victor M. Rivas.............................. 56 Chairman and Chief Executive October 1999
Ladenburg Thalmann & Co. Inc. Officer of Ladenburg Thalmann
590 Madison Avenue & Co. Inc.
New York, NY 10022
</TABLE>
4
<PAGE> 7
BENNETT S. LEBOW has been Chairman of the Board of the Company since
January 1988 and Chief Executive Officer since November 1994 and currently holds
various positions with the Company's subsidiaries. Since June 1990, Mr. LeBow
has been the Chairman of the Board, President and Chief Executive Officer of
Brooke, a New York Stock Exchange-listed holding company, and since October 1986
has been a director of Brooke. Since November 1990, he has been Chairman of the
Board, President and Chief Executive Officer of BGLS, which directly or
indirectly holds Brooke's equity interests in several private and public
companies. Mr. LeBow has been a director of Liggett Group Inc., a manufacturer
and seller of cigarettes, since June 1990. Liggett is a wholly-owned subsidiary
of BGLS.
HOWARD M. LORBER has been President and Chief Operating Officer of the
Company since November 1994. Mr. Lorber has been Chairman of the Board of
Hallman & Lorber Assoc., Inc., consultants and actuaries to qualified pension
and profit sharing plans, and various of its affiliates since 1975. Mr. Lorber
has been a stockholder and a registered representative of Aegis Capital Corp., a
broker-dealer and a member firm of the National Association of Securities
Dealers, since 1984; Chairman of the Board of Directors since 1987 and Chief
Executive Officer since November 1993 of Nathan's Famous, Inc., a chain of fast
food restaurants; a consultant to Brooke and Liggett since January 1994; a
director and member of the audit committee of United Capital Corp., a real
estate investment and diversified manufacturing company, since May 1991; a
director and member of the audit committee of Prime Hospitality Corp., a company
doing business in the lodging industry, since May 1994; and a director of PLM
International Inc., a leasing company, since January 1999.
RICHARD J. LAMPEN has been the Executive Vice President and General Counsel
of the Company since October 1995. Since July 1996, Mr. Lampen has served as
Executive Vice President of Brooke and BGLS and since November 1998 as President
and Chief Executive Officer of CDSI Holdings Inc., a marketer of an inventory
control system in which the Company also has a controlling interest. Mr. Lampen
has been a director of Thinking Machines Corporation, a developer and marketer
of data mining and knowledge discovery software in which the Company has a
controlling interest, since February 1996; a director of CDSI, since January
1997; and a director of Panaco, Inc., an independent oil and gas exploration and
production company, since February 1999. From May 1992 to September 1995, Mr.
Lampen was a partner at Steel Hector & Davis, a law firm located in Miami,
Florida. From January 1991 to April 1992, Mr. Lampen was a Managing Director at
Salomon Brothers Inc, an investment bank, and was an employee at Salomon
Brothers Inc from 1986 to April 1992. Mr. Lampen has served as a director of a
number of other companies, including U.S. Can Corporation, The International
Bank of Miami, N.A. and Spec's Music Inc., as well as a court-appointed
independent director of Trump Plaza Funding, Inc.
HENRY C. BEINSTEIN became the Executive Director of Schulte Roth & Zabel
LLP, a New York-based law firm, in August 1997. Before that, Mr. Beinstein had
served as the Managing Director of Milbank, Tweed, Hadley & McCloy LLP, a New
York-based law firm, commencing November 1995. Mr. Beinstein was the Executive
Director of Proskauer Rose LLP, a New York-based law firm, from April 1985
through October 1995. Mr. Beinstein is a certified public accountant in New York
and New Jersey and prior to joining Proskauer was a partner and National
Director of Finance and Administration at Coopers & Lybrand.
ARNOLD I. BURNS has been a Managing Director at Arnhold and S.
Bleichroeder, Inc., an investment bank, since February 1999. Mr. Burns was a
partner of Proskauer Rose LLP from September 1988 to January 1999. Mr. Burns was
Associate Attorney General of the United States in 1986 and Deputy Attorney
General from 1986 to 1988.
RONALD J. KRAMER has been a Managing Director at Wasserstein Perella & Co.,
Inc., an investment bank, since July 1999. Mr. Kramer was the Chairman of the
Board and Chief Executive Officer of Ladenburg Thalmann & Co. Inc., a
broker-dealer and investment bank, from December 1995 to July 1999. Ladenburg is
an indirect wholly-owned subsidiary of the Company. Mr. Kramer currently serves
as a director of Griffon Corporation, Lakes Gaming, Inc. and TMP Worldwide Inc.
BARRY W. RIDINGS has been a Managing Director at Lazard Freres LLC since
June 1999. Mr. Ridings was a Managing Director of Deutsche Banc Alex. Brown, an
investment bank, from March 1990 to June 1999. Mr. Ridings currently serves as a
director of Noodle Kidoodle Inc. and Furr's Restaurant Group Inc.
5
<PAGE> 8
VICTOR M. RIVAS has been Chairman and Chief Executive Officer of Ladenburg
since July 1999, and an employee of that firm since September 1997. Prior to
joining Ladenburg, Mr. Rivas served as an officer of the brokerage firms of
Rickel & Associates, Inc. from March 1997 to September 1997 and Janssen-Meyers
Associates, L.P. from January 1996 to March 1997. Mr. Rivas had previously
served as Chairman of the Board and Chief Executive Officer of Conquest
Industries Inc. and its subsidiary, Conquest Airlines Corp.
BOARD OF DIRECTORS AND COMMITTEES
During 1999, the Board held three meetings. Each director attended at least
75% of the aggregate number of meetings of the Board and of each committee of
which he was a member held during such period. During that period, the executive
committee, currently composed of Messrs. LeBow, as Chairman, Lorber and Burns,
acted by written consent seven times and the audit committee, currently composed
of Messrs. Beinstein, Burns and Ridings, met twice.
The executive committee exercises, in the intervals between meetings of the
Board, all the powers of the board in the management and affairs of the Company.
The audit committee reviews, with the Company's independent auditors,
matters relating to the scope and plan of the audit, the adequacy of internal
controls and the preparation of financial statements, and reports and makes
recommendations to the board with respect thereto.
The stock plan committee, currently composed of Messrs. Beinstein and
Ridings, administers the Company's 2000 Long-Term Incentive Plan.
In November 1994, the Board determined not to have a separate compensation
committee and to act on compensation matters as a committee of the whole. For
information on the compensation of the Company's executive officers, see "Board
Report on Executive Compensation". The Company does not have a nominating
committee.
6
<PAGE> 9
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, 1999, the Company's Chief Executive Officer and the other executive
officers whose cash compensation exceeded $100,000 (collectively, the "named
executive officers").
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------- -----------------------
SECURITIES
UNDER-
OTHER RESTRICTED LYING
NAME AND ANNUAL STOCK OPTIONS
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) (#)
------------------ ---- ---------- -------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bennett S. LeBow............................. 1999 $2,000,000 -- $56,946(2) -- --
Chairman and Chief Executive 1998 2,000,000 -- -- --
Officer 1997 2,000,000 -- -- --
Howard M. Lorber............................. 1999 1,650,000 $500,000 82,500(2) -- --
President and Chief Operating 1998 1,400,000 250,000 -- --
Officer 1997 1,400,000 976,544(3) -- --
Richard J. Lampen............................ 1999 750,000 -- -- --
Executive Vice President and 1998 750,000 750,000 -- --
General Counsel(4) 1997 650,000 -- -- --
Marc N. Bell................................. 1999 300,000 -- -- --
Vice President, Associate 1998 300,000 300,000 -- --
General Counsel and Secretary(5)
J. Bryant Kirkland III....................... 1999 250,000 -- -- --
Vice President, Chief Financial 1998 200,000 200,000 -- --
Office and Treasurer(6)
</TABLE>
- ---------------
(1) Unless otherwise stated, 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 SEC
rules.
(2) Represents allowances paid by the Company to an entity affiliated with Mr.
LeBow and to Mr. Lorber for lodging and related business expenses.
(3) Includes $476,544 paid to Mr. Lorber under the Company's obligation to
reimburse him for taxes relating to the vesting of a 1996 restricted stock
award. See "Employment Agreements."
(4) The table reflects 100% of Mr. Lampen's salary and bonus, all of which are
paid by the Company, and includes his salary and bonus from the Company and
a bonus of $500,000 awarded by Brooke for 1998. Of Mr. Lampen's salary and
bonus from the Company, 25% (or $187,500 in 1999, $250,000 in 1998 and
$162,500 in 1997) and all of the 1998 bonus from Brooke have been reimbursed
to the Company by Brooke.
(5) In February 1998, Mr. Bell was appointed a Vice President of the Company.
The table reflects 100% of Mr. Bell's salary and bonus, all of which are
paid by Brooke. Of Mr. Bell's salary and bonus from Brooke, $150,000 in 1999
and $200,000 in 1998 has been reimbursed to Brooke by the Company.
(6) In January 1998, Mr. Kirkland was appointed a Vice President of the Company.
The table reflects 100% of Mr. Kirkland's salary and bonus, all of which are
paid by the Company, and includes his salary and bonus from the Company and
a bonus of $200,000 awarded by Brooke for 1998. Of Mr. Kirkland's salary and
bonus from the Company, 25% (or $62,500 in 1999 and $66,666 in 1998) and all
of the 1998 bonus from Brooke have been reimbursed to the Company by Brooke.
7
<PAGE> 10
The following table sets forth certain information concerning unexercised
options held by the named executive officers as of December 31, 1999. There were
no stock options exercised by the named executive officers during 1999.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Howard M. Lorber
Common Shares........................................ 32,666 32,667 $166,405* $166,405*
Warrants............................................. 292,000 292,000
</TABLE>
- ---------------
* Calculated using the closing price of $4.625 per Common Share and $.6875 per
Warrant on December 31, 1999 less the option exercise price.
COMPENSATION OF DIRECTORS
In 1999, each non-employee director of the Company received an annual fee
of $35,000 for serving on the board of directors, an annual fee of $60,000 for
serving on the executive committee thereof and a $1,000 fee for attendance at
each meeting of the board of directors or a committee thereof other than the
executive committee. Each director is reimbursed for reasonable out-of-pocket
expenses incurred in serving on the board.
EMPLOYMENT AGREEMENTS
Bennett S. 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 had an initial term of three years effective as of January 18, 1995,
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 60-day period
before this date. As of January 1, 2000, Mr. LeBow's annual base salary was $2
million. Following termination of his employment without cause, 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,
he would receive a lump sum payment equal to 2.99 times his then current base
salary.
Howard M. Lorber is a party to an employment agreement with the Company
dated June 1, 1995. The agreement had an initial term of three years effective
as of January 18, 1995, with an automatic one-year extension on each anniversary
of the effective date unless notice of non-extension is given by either party
within 60 days before this date. As of January 1, 2000, Mr. Lorber's annual base
salary was $1.65 million. The Board must periodically review this 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 in its sole
discretion. The board awarded Mr. Lorber a bonus of $500,000 for 1999. In
January 1998, Mr. Lorber and the Company entered into an amendment to his
employment agreement under which he is entitled to receive an additional annual
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. Following termination of his employment without cause,
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, he would receive a lump sum payment equal to 2.99 times the
sum of his then current base salary and the bonus amounts earned by him for the
twelve-month period ending with the last day of the month immediately before the
month in which the termination occurs.
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<PAGE> 11
Richard J. Lampen is a party to an employment agreement with the Company
dated September 22, 1995. The agreement had 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 90-day period before the termination date. As of January 1, 2000, his
annual base salary was $750,000. In addition, the Board may award an annual
bonus to Mr. Lampen in its sole discretion. The Board may increase but not
decrease Mr. Lampen's base salary from time to time in its sole discretion.
Following termination of his employment without cause, he would 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.
J. Bryant Kirkland III is a party to an employment agreement with the
Company dated August 1, 1999. The agreement has an initial term of one year from
August 1, 1999 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, 2000, his
annual base salary was $250,000. In addition, the Board of Directors may award
an annual bonus to Mr. Kirkland in its sole discretion. The Board may increase
(but not decrease) Mr. Kirkland's base salary from time to time in its sole
discretion. Following termination of his employment without cause, Mr. Kirkland
would 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. During 1999, Messrs.
LeBow, Lorber, Lampen, Kramer (until July 1999) and Rivas served as an officer
or employee of the Company or its subsidiaries.
BOARD REPORT ON EXECUTIVE COMPENSATION
The policy of the Company regarding the compensation of its executive
officers is to maintain a total compensation program competitive with comparable
companies so as to attract and retain highly qualified personnel.
In June 1995, the Company entered into employment agreements with Messrs.
LeBow and Lorber, after it had engaged an independent executive compensation
advisor to advise as to their compensation. In addition, the Company had
appointed Messrs. Burns, Ridings and a former director as members of an ad hoc
committee to review the advisor's report and make a recommendation to the board
on their compensation. The committee evaluated various factors, including the
roles of Messrs. LeBow and Lorber in effecting recent material transactions
entered into by the Company, their prior services to the Company, and the
compensation levels of other senior executive officers at comparable companies
performing comparable services. In determining the appropriate compensation
level for Mr. LeBow's employment agreement, the board, after a review of such
matters, including the recommendation of the committee and the report of the
advisor, accepted the recommendation of the committee. First, the board noted
that the Company's bankruptcy plan provided that the compensation paid to Mr.
LeBow for services rendered in his capacity as an officer or director of the
Company could not exceed $2,000,000 per year, and that these restrictions were
extensively discussed during the Company's reorganization proceedings. The board
of directors then determined, based upon additional recommendations of the
committee and the advisor's report, that:
- the Company had been relying on a temporary exemption from registration
pursuant to Rule 3a-2 under the Investment Company Act of 1940;
- implementation of the Company's strategy of acquisitions and dispositions
in connection therewith would involve complex matters requiring dedicated
senior management;
- Mr. LeBow possessed substantial experience in acquiring and managing
operating companies;
- the proposed annual compensation level of $2,000,000 for Mr. LeBow was
reasonable compared to the compensation levels of other chief executive
officers at comparable companies performing comparable services; and
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<PAGE> 12
- because Mr. LeBow's compensation was limited to $2,000,000 per year under
the Company's bankruptcy plan, as indicated above, Mr. LeBow would not
receive any bonus or other payment based upon the Company's performance.
(These provisions of the bankruptcy plan terminated upon consummation of
the Company's recapitalization in June 1999.)
In determining the compensation levels of the Company's other executive
officers, the board of directors reviews the officer's prior experience,
including in acquiring and managing operating companies, and the officer's
contribution to the Company's strategy in the area. The board also compares the
salary of the officer with the compensation levels of other executive officers
performing comparable services, both in the Company and of comparable companies.
The employment agreements of certain executive officers provide for the payment
of bonuses at the sole discretion of the board. Based on various factors, Mr.
Lorber was awarded a bonus of $500,000 by the board for 1999.
In 1993, Section 162(m) was added to the Internal Revenue Code. This
section generally provides that no publicly held company may deduct compensation
in excess of $1 million paid in any taxable year to its chief executive officer
or any of its four other highest paid officers unless:
- the compensation is payable solely on account of the attainment of
performance goals;
- the performance goals are determined by a compensation committee of two
or more outside directors;
- the material terms under which compensation is to be paid are disclosed
to and approved by the stockholders of the Company; and
- the compensation committee certifies that the performance goals were met.
This limitation is applicable to compensation paid by the Company to
certain of its executive officers. The effect of the Code Section 162(m)
limitation is substantially mitigated by the Company's net operating losses,
although the amount of any deduction disallowed under Code Section 162(m) could
increase the Company's alternative minimum tax by up to 2% of such disallowed
amount.
The foregoing information is provided by the board of directors.
Henry C. Beinstein
Arnold I. Burns
Ronald J. Kramer
Richard J. Lampen
Bennett S. LeBow
Howard M. Lorber
Barry W. Ridings
Victor M. Rivas
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<PAGE> 13
PERFORMANCE GRAPH
The following graph compares the total annual return of the Company's
Common Shares, the S&P 500 Index, the S&P SmallCap 600 Index, and the NASDAQ
Composite Index for the five years ended December 31, 1999. The graph assumes
the value of the investment in the Common Shares and each index was $100 on
December 31, 1994 and that all dividends were reinvested. No dividends were paid
on Common Shares in the years indicated below. Because of the Company's
emergence in 1995 from bankruptcy and the Company's subsequent acquisitions and
dispositions, the Company does not believe that it can reasonably identify a
"peer group". In lieu thereof, it has included statistical information with
respect to companies in the S&P 500 Index, the S&P SmallCap 600 Index and the
NASDAQ Composite Index. Stock prices are adjusted for stock splits and the 1999
recapitalization.
<TABLE>
<CAPTION>
NEW VALLEY
CORPORATION S&P 500 S&P SMALLCAP 600 NASDAQ COMPOSITE
----------- ------- ---------------- ----------------
<S> <C> <C> <C> <C>
12/94 100 100 100 100
12/95 288 137 129 140
12/96 70 168 157 173
12/97 27 224 197 211
12/98 25 287 194 296
12/99 36 347 218 551
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Lorber, a director and executive officer of the Company, is a
stockholder and registered representative of Aegis, a broker-dealer that has
performed services for the Company and its subsidiaries since before January 1,
1999. During 1999, Aegis received commissions and other income in the aggregate
amount of approximately $59,000. Aegis, in the ordinary course of its business
in 1999, engaged in brokerage activities with Ladenburg on customary terms. Mr.
Lorber is also Chairman of the Board of Hallman & Lorber and its affiliates, and
serves as a consultant to Brooke and Liggett and is a stockholder of Brooke.
During 1999, Hallman & Lorber and its affiliates received ordinary and customary
insurance commissions aggregating approximately $158,000 on various insurance
policies issued for the Company and its affiliates.
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 approximately $307,000
under this agreement for 1999.
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<PAGE> 14
In September 1998, the Company made a one-year $950,000 loan to BGLS
bearing interest at 14% per annum which has been repaid in full.
Until January 1999, Mr. Burns, a director of the Company, was a partner of
Proskauer Rose LLP, 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 1999 did not exceed five percent of the law
firm's revenues.
During 1999, Arnhold and S. Bleichroeder, Inc., of which Mr. Burns is a
Managing Director, provided investment banking services to the Company in
connection with the sale of an interest in Ladenburg to Berliner
Effektengesellschaft AG. The fees received for such services in 1999 did not
exceed five percent of the investment bank's revenues.
In February 1998, the Company and Apollo Real Estate Investment Fund III,
L.P. organized Western Realty Development LLC to make real estate and other
investments in Russia. The Company agreed, among other things, to contribute to
Western Realty Development the Russian real estate assets of its subsidiary
BrookeMil Ltd., and Apollo agreed to contribute $65 million. Western Realty
Development has made a $30 million participating loan to Western Tobacco
Investments LLC, which holds the interest of Brooke (Overseas) Ltd., a
subsidiary of Brooke, in Liggett-Ducat Ltd. The loan is payable out of a 30%
profits interest in the entity.
See "Item 3. Legal Proceedings", as well as Note 10 to the Company's
Consolidated Financial Statements, in the accompanying annual report, for
information concerning pending lawsuits relating to the Company's purchase of
BrookeMil Ltd. from Brooke (Overseas) Ltd. in January 1997.
APPROVAL OF NEW VALLEY CORPORATION 2000 LONG-TERM INCENTIVE PLAN
The board has approved and the Company has adopted, subject to stockholder
approval, the New Valley Corporation 2000 Long-Term Incentive Plan. A general
description of the basic features of the plan is set forth below. This
description is qualified in its entirety by reference to the full text of the
plan included as Appendix A to this proxy statement.
PURPOSE
The purpose of the plan is to promote the interests of the Company, its
subsidiaries and its stockholders by enabling the Company to attract, retain and
motivate officers, employees and consultants and to align the interests of those
individuals and the Company's stockholders. To do this, the plan offers
equity-based opportunities to provide such persons with a proprietary interest
in maximizing the growth, profitability and overall success of the Company and
its subsidiaries.
NUMBER OF SHARES
The maximum number of Common Shares as to which awards may be granted will
not exceed 2,500,000 shares. During any calendar year, no individual may be
granted stock options under the plan to acquire more than 1,250,000 Common
Shares. In addition, during the term of the plan, each individual participant
may not receive awards of stock options, stock appreciation rights and/or
restricted shares in excess of 1,250,000 shares. These limits are subject to
proportional adjustment to reflect stock changes, such as stock dividends and
stock splits.
If any awards expire or terminate unexercised, the Common Shares allocable
to the unexercised or terminated portion will again be available for awards
under the plan, subject to limitations.
ADMINISTRATION
The administration, interpretation and operation of the plan will be vested
in a committee of the board. Members of the committee will serve at the pleasure
of the board, which may at any time remove or add members to it. No member of
the committee will be eligible to receive an award under the plan. The day-to-
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<PAGE> 15
day administration of the plan may be carried out by officers and employees of
the Company designated by the committee. The board has designated its stock plan
committee to administer the Plan.
ELIGIBILITY
All officers, employees and consultants of the Company and its subsidiaries
are eligible to receive awards under the plan. Awards under the plan will be
made by the committee. Awards will be made pursuant to individual award
agreements between the Company and each participant.
AWARDS UNDER THE PLAN
Introduction. Awards under the plan may consist of stock options, stock
appreciation rights or restricted shares, each of which is described below. All
awards will be evidenced by an agreement approved by the committee. In the
discretion of the committee, an eligible employee may receive awards from one or
more of the categories described below, and more than one award may be granted
to an eligible employee. In the event of any change in the outstanding Common
Shares of the Company by reason of certain stock changes, including without
limitation stock dividends and stock splits, the terms of awards and number of
shares of any outstanding award may be equitably adjusted by the board in its
sole discretion. Except as set forth below under "2000 Stock Option Grants Under
the Plan," no determination has been made as to future awards which may be
granted under the plan, although it is anticipated that future recipients of
awards may include current executive officers of the Company and its
subsidiaries.
Stock Options and Stock Appreciation Rights. A stock option is an award
that entitles a participant to purchase Common Shares at a price fixed at the
time the option is granted. Stock options granted under the plan may be in the
form of incentive stock options, which qualify for special tax treatment, or
non-qualified stock options, and may be granted alone or in addition to other
awards under the plan, or in tandem with stock appreciation rights ("SARs").
SARs entitle a participant to receive, upon exercise, cash, restricted
shares or unrestricted Common Shares, or any combination thereof, as provided in
the relevant award agreement, with a value equal to the difference between:
- the fair market value on the exercise date of the shares with respect to
which an SAR is exercised and
- the fair market value on the date the SAR was granted,
multiplied by the number of Common Shares for which the SAR has been exercised.
No SAR may be exercised until six months after its grant or prior to the
exercisability of the stock option with which it is granted in tandem, whichever
is later.
The exercise price and other terms and conditions of options will be
determined by the committee at the time of grant, and in the case of incentive
stock options, the exercise price will not be less than 100 percent of the fair
market value of the Common Shares on the date of the grant. No term of any
incentive stock options may exceed ten years after grant. An option or SAR grant
under the plan does not provide an optionee any rights as a shareholder. These
rights will accrue only as to shares actually purchased through the exercise of
an option or the settlement of an SAR.
An option or SAR grant under the plan may, if determined by the committee,
include the payment of dividend equivalents. Under such an award, the
participant would receive a payment equal to the amount of any dividend or other
distribution that would have been paid on the shares covered by the award had
the covered shares been issued and outstanding on the dividend record date.
Exercise of an option or an SAR will result in the cancellation of the
related option or SAR to the extent of the number of shares in respect of which
such option or SAR has been exercised. Unless otherwise determined by the
committee or provided in the relevant award agreement, stock options become
exercisable over a three-year period from the date of grant with 33 1/3% vesting
on each anniversary of the grant in that time period.
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<PAGE> 16
Payment for shares issuable on exercise of an option may be made either in
cash or, if permitted by the committee, by tendering a fully-secured promissory
note or Common Shares owned by a participant for at least six months with a fair
market value at the date of exercise equal to the portion of the exercise price
not paid in cash. The committee may also allow participants to simultaneously
exercise acquired stock options and sell the Common Shares under a "cashless
exercise" arrangement.
Restricted Share Awards. Restricted share awards are grants of Common
Shares made to a participant subject to conditions established by the committee
in the relevant award agreement. The restricted shares become unrestricted only
in accordance with the conditions and vesting schedule, if any, provided in the
relevant award agreement, but in no event may restricted shares vest before six
months after the date of grant. A participant may not sell or otherwise dispose
of restricted stock until the conditions imposed by the committee have been
satisfied. Restricted share awards under the plan may be granted alone or in
addition to other awards under the plan. Restricted shares that vest will be
reissued as unrestricted Common Shares.
Each participant who receives a grant of restricted shares will have the
right to receive all dividends and vote or execute proxies for such shares. Any
stock dividends will be treated as additional restricted shares.
FORFEITURE UPON TERMINATION
Unless otherwise provided in the relevant award agreement or in a
participant's then-effective employment agreement, if a participant's employment
is terminated for any reason, any unexercisable option or SAR will be forfeited
and canceled by the Company. The participant's right to exercise any
then-exercisable option or SAR will terminate 90 days after the date of
termination, but not beyond the stated term of such stock option or SAR.
However, the committee may, to the extent options and/or SARs were exercisable
on the date of termination, extend these periods, but not beyond the stated term
of such option and/or SAR. If a participant dies, becomes totally disabled or
retires, he or she, or his or her estate or other legal representative, to the
extent the options or SARs are exercisable immediately prior to the date of
death, total disability or retirement, will be entitled to exercise any stock
options or SARs for one year, but not beyond the stated term of such option or
SAR.
If a participant's employment is terminated for any reason other than due
to death, total disability or retirement before the satisfaction and/or lapse of
the restrictions, terms and conditions, applicable to any grant of restricted
shares, the restricted shares will be immediately forfeited. However, the
committee may, in its sole discretion, determine within 90 days after
termination that all or a portion of the restricted shares should not be
forfeited. In the case of death, total disability or retirement, the
participant, or his or her estate or other legal representatives, will become
100% vested in any restricted shares as of the date of termination.
AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The board of directors may suspend or terminate the plan at any time and
may amend the plan at any time as it deems advisable to insure that awards
conform to or otherwise reflect changes in applicable law or regulations, or
otherwise as it may deem to be in the best interests of the Company or any
subsidiary. No amendment, suspension or termination by the board of directors
may materially adversely affect the rights of any award without the consent of
the grantee, or make any change that would disqualify the plan from the benefits
or entitlements to deductions provided under Sections 422 and 162(m) of the
Internal Revenue Code.
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
Incentive Stock Options. Stock options granted under the plan may be
incentive stock options (within the meaning of Section 422 of the Internal
Revenue Code) or non-qualified stock options. Upon the grant of an incentive
stock option, the optionee will not recognize any income. No income is
recognized by the optionee upon the exercise of an incentive stock option if the
holding period requirements contained in the plan and in the Code are met. These
include the requirement that the optionee remain an employee of the Company or a
subsidiary during the period beginning with the date of the grant and ending on
the day three months (one year if the optionee becomes disabled) before the date
the option is exercised. The optionee must increase his or her alternative
minimum taxable income for the taxable year in which he or she exercised the
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<PAGE> 17
incentive stock option by the amount that would have been ordinary income had
the option not been an incentive stock option.
Upon the subsequent disposition of shares acquired upon the exercise of an
incentive stock option, the federal income tax consequences will depend upon
when the disposition occurs and the type of disposition. If the shares are
disposed of after the second anniversary of the date of grant of the option and
after the end of the one-year period beginning on the day after the shares are
issued to the optionee, any gain or loss realized upon the disposition will be
long-term capital gain or loss, and the Company will not be entitled to any
income tax deduction in respect of the option or its exercise. For purposes of
determining the amount of the gain or loss, the optionee's tax basis in the
shares will be the option price.
Generally, if the shares are disposed of within these periods, the excess
of the amount realized up to the fair market value of the shares on the exercise
date over the option price will be compensation taxable to the optionee as
ordinary income. In this case, the Company will be entitled to a deduction,
subject to the provisions of Section 162(m) of the Code discussed below under
the caption "Limits on Deductions", equal to the amount of ordinary income
realized by the optionee.
If an optionee has not remained an employee of the Company during the
period beginning with the grant of an incentive stock option and ending on the
day three months (one year if the optionee becomes disabled) before the date the
option is exercised, the exercise of the option will be treated as the exercise
of a non-qualified stock option with the tax consequences described below.
Non-Qualified Stock Options. Upon the grant of a non-qualified stock
option, an optionee will not recognize any income. At the time a nonqualified
option is exercised, the optionee will recognize compensation taxable as
ordinary income, and the Company will be entitled to a deduction, subject to the
provisions of Section 162(m) of the Code discussed below under the caption
"Limits on Deductions", in an amount equal to the difference between the fair
market value on the exercise date of the shares acquired and the option price.
Upon a subsequent disposition of the shares, the optionee will recognize long-or
short-term capital gain or loss, depending upon the holding period of the
shares. For purposes of determining the amount of the gain or loss, the
optionee's tax basis in the shares will be the fair market value of the shares
on the exercise date.
If an optionee elects to tender Common Shares in partial or full payment of
the option price for shares to be acquired through the exercise of an option,
generally the optionee will not recognize any gain or loss on such tendered
shares. However, if the shares tendered were previously acquired upon the
exercise of an incentive stock option, and exercise occurs within two years
after the date of grant of the option or one year after the tendered shares were
acquired, the tender will be a taxable disposition with the tax consequences
described above under the caption "Incentive Stock Options" for taxable
dispositions within two years after the date of grant of the option or within
one year after shares are acquired upon the exercise of an incentive stock
option.
If the optionee tenders shares upon an exercise of an option that would
result in the receipt of compensation by the optionee, the optionee will
recognize compensation taxable as ordinary income. In this case, the Company
will be entitled to a deduction, subject to the provisions of Section 162(m) of
the Code discussed below under the caption "Limits on Deductions", in an amount
equal only to the fair market value of the number of shares received by the
optionee upon exercise in excess of the number of tendered shares, less any cash
paid by the optionee.
Stock Appreciation Rights. Generally, upon the grant of a stock
appreciation right, an optionee will not realize any income. At the time a stock
appreciation right is exercised, an optionee will realize compensation taxable
as ordinary income, and the Company will be entitled to a deduction, in an
amount equal to any cash received before applicable withholding plus the fair
market value on the exercise date of any Common Shares received. The optionee's
tax basis in shares received upon the exercise of a stock appreciation right
will be the fair market value of such shares on the exercise date and the
holding period of such shares for capital gain purposes will begin on such date.
Restricted Stock. An employee will not realize any income upon an award of
restricted stock. At the time the terms and conditions applicable to a share of
restricted stock are satisfied, an employee will realize
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<PAGE> 18
compensation taxable as ordinary income, and the Company will be entitled to a
deduction, equal to the then fair market value of the unrestricted Common Shares
received by the employee. The employee's tax basis for any such Common Shares
would be their fair market value on the date such terms and conditions are
satisfied.
An employee who receives an award of shares of restricted stock may
irrevocably elect under Section 83(b) of the Code to report compensation taxable
as ordinary income, and the Company will be entitled to a corresponding
deduction, in an amount equal to the fair market value of the shares of
restricted stock determined without regard to any restrictions on the date of
the transfer of the shares to the employee. The election must be made by the
employee not later than 30 days after the date of such award. If the election is
made, no income would be recognized by the employee, and the Company will not be
entitled to a corresponding deduction, at the time the applicable terms and
conditions are satisfied. The employee's tax basis for the shares of restricted
stock received would be the fair market value of the restricted stock determined
without regard to any restrictions on the date of the award. If an employee
makes this election and subsequently all or part of the award is forfeited, the
employee will not be entitled to a deduction as a result of the forfeiture.
Limits on Deductions. Under Section 162(m) of the Code, the amount of
compensation paid to the chief executive officer and the four other most highly
paid executive officers of the Company in the year for which a deduction is
claimed by the Company (including its subsidiaries) is limited to $1,000,000 per
person in any year. However, compensation which is performance-based will be
excluded for purposes of calculating the amount of compensation subject to this
limitation. The ability of the Company to claim a deduction for compensation
paid to any other executive officer or employee of the Company is not affected
by this provision.
The Company has structured the plan so that compensation for which the
Company may claim a deduction in connection with the exercise of non-qualified
stock options and related SARs and the disposition by an optionee of shares
acquired upon the exercise of incentive stock options may be performance-based
within the meaning of Section 162(m). However, the Company's deduction for any
payments to holders of options equal to the amount of any dividends or similar
distributions with respect to the Common Shares underlying the unexercised
portion of the options will be subject to the limitations on deductibility under
Section 162(m). Because the restricted share awards under the plan are not
deemed to be performance-based under Section 162(m), amounts for which the
Company may claim a deduction upon the lapse of any restrictions on such
restricted share awards will be subject to the limitations on deductibility
under Section 162(m).
The recognition by an employee of compensation income with respect to a
grant or an award under the Plan will be subject to withholding for federal
income and employment tax purposes. If an employee, to the extent permitted by
the terms of a grant or award, uses Common Shares to satisfy the federal income
and employment tax withholding obligation, or any similar withholding obligation
for state and local tax obligations, the employee will recognize a capital gain
or loss, short-term or long-term, depending on the tax basis and holding period
for the shares.
2000 STOCK OPTION GRANTS UNDER THE PLAN
On March 22, 2000, the Company granted under the plan incentive and
non-qualified stock options to purchase a total of 1,196,299 Common Shares. The
grant of these options is conditioned upon the approval of the plan by the
Company's stockholders at the annual meeting. The recipients of the options were
approximately 160 employees of Ladenburg, including Mr. Rivas who was granted
options for 265,176 Common Shares. The exercise price of the options was $3 7/8
per share, the fair market value on the date of grant. The options have terms of
between seven and ten years and vest over periods of three to five years after
the date of grant. However, the options will earlier vest and become immediately
exercisable upon the termination of the option holder's employment due to death
or disability. Upon the termination of the option holder's employment for any
other reason, any then unexercisable portion of the options will be forfeited
and cancelled by the Company. The option holder's right to exercise will
terminate 90 days after his or her date of termination, but not beyond the
stated term of the option. If an option holder dies or becomes disabled, the
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<PAGE> 19
option holder, or his or her estate or other legal representative, will be
entitled to exercise the option for a one-year period following the date of his
or her death or disability, but not beyond the stated term of the option.
---------------------
At the record date, the total number of outstanding Common Shares was
23,159,862 shares. The closing price of the Common Shares on April 17, 2000, on
the NASD OTC Electronic Bulletin Board was $3 per share.
EFFECTIVE DATE
The plan became effective on January 19, 2000, the date of its adoption by
the board of directors, subject to stockholder approval. The plan will terminate
on December 31, 2009, except with respect to awards then outstanding.
Thereafter, no further awards will be granted under the plan unless the plan is
extended by the board of directors.
APPROVAL OF THE PLAN
To become effective, the plan must be approved by the affirmative vote of a
majority of the votes cast at the annual meeting on this proposal by the holders
of the Common Shares entitled to vote.
The board recommends a vote FOR approval of the plan.
APPROVAL OF NEW VALLEY CORPORATION NON-EMPLOYEE DIRECTORS
STOCK OPTION PROGRAM
In January 2000 the board approved and the Company adopted, subject to
approval by the Company's stockholders, the New Valley Corporation Non-Employee
Directors Stock Option Program. A general description of the basic features of
the program is set forth below. This description is qualified in its entirety by
reference to the full text of the program included as Appendix B to this proxy
statement.
The program is designed to attract, retain and motivate individuals who the
Company believes are capable of making significant contributions to the board
and the Company generally, and to align their interests with those of the
stockholders.
The program authorizes the issuance of up to 200,000 Common Shares, subject
to proportional adjustment to reflect stock changes, such as stock dividends and
stock splits.
Under the program, each non-employee director of the Company will receive,
subject to the approval of the program by the Company's stockholders, upon the
later of the adoption of the program by the Company, and the date such
individual becomes a non-employee director, an option to acquire 10,000 Common
Shares. In addition, commencing with the annual meeting of the Company's
stockholders occurring in 2001, and with respect to each later annual meeting of
the Company's stockholders occurring during the term of the program, an option
to acquire an additional 5,000 Common Shares will be granted automatically to
each non-employee director upon his or her re-election to the Board. However,
any individual who becomes a non-employee director within 90 days prior to the
date of an annual meeting will not be entitled to receive an option to acquire
an additional 5,000 Common Shares with respect to the annual meeting of the
Company immediately following the date such individual became a non-employee
director.
The exercise price per share for each option awarded under the program will
equal the fair market value of a Common Share on the date of grant. Each option
will become exercisable on the first anniversary of the date of grant of any
such option and will expire on the tenth anniversary of such date. If a
non-employee director resigns voluntarily from the board or is removed for
cause, any option held by such director, if then unexercisable, will be
forfeited and cancelled by the Company or, if then exercisable, must be
exercised within 90 days after any the resignation or removal. If the
non-employee director is removed without cause, any option held by the director,
if then exercisable, will become fully exercisable and all of the exercisable
options held by the non-employee director must be exercised within two years
after the removal.
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The program will be administered by the board. The board will have the full
and final authority to interpret the program and to adopt and amend rules and
regulations for the administration of the program as it deems desirable. In
addition, the board has the right to amend or terminate the program, subject to
certain restrictions. The program will continue in effect until it is terminated
by action of the board or the Company's stockholders.
All options granted under the program will be non-qualified stock options.
Upon the grant of a non-qualified option, a non-employee director will not
recognize any taxable income. At the time a non-qualified stock option is
exercised, a non-employee director will recognize ordinary income, and the
Company will be entitled to a deduction, in an amount equal to the difference
between the fair market value on the exercise date of the shares acquired and
the option price. Upon a subsequent disposition of the shares, the non-employee
director will recognize long-term or short-term capital gain or loss, depending
on the holding period of the shares.
On January 19, 2000, each of the four non-employee directors of the
Company, Henry C. Beinstein, Arnold I. Burns, Ronald J. Kramer and Barry W.
Ridings, were granted options under the program to purchase 10,000 Common
Shares. The grant of these options is conditioned upon the approval of the
program by the Company's stockholders at the annual meeting. The exercise price
of the options was $4 11/16 per share, the fair market value on the date of
grant.
To become effective, the program must be approved by the affirmative vote
of a majority of the votes cast at the annual meeting on this proposal by the
holders of the Common Shares entitled to vote.
The board recommends a vote FOR approval of the program.
RELATIONSHIP WITH INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP has been the independent auditors for the
Company since March 1995 and will serve in that capacity for the 2000 fiscal
year unless the board of directors deems it advisable to make a substitution. It
is expected that one or more representatives of such firm will attend the annual
meeting and be available to respond to any questions. These representatives will
be given an opportunity to make statements at the annual meeting if they so
desire.
MISCELLANEOUS
ANNUAL REPORT
The Company has mailed, with this proxy statement, copies of the annual
report to each stockholder as of the record date. IF A STOCKHOLDER REQUIRES AN
ADDITIONAL COPY OF THE ANNUAL REPORT, THE COMPANY WILL PROVIDE ONE, WITHOUT
CHARGE, ON THE WRITTEN REQUEST OF ANY SUCH STOCKHOLDER ADDRESSED TO THE
COMPANY'S SECRETARY AT NEW VALLEY CORPORATION, 100 S.E. SECOND STREET, 32ND
FLOOR, MIAMI, FLORIDA 33131.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, as well as persons who own more than 10% of a registered
class of the Company's equity securities, to file reports of initial beneficial
ownership and changes in beneficial ownership on Forms 3, 4 and 5 with the SEC.
These persons are also required by SEC regulations to furnish the Company with
copies of all reports that they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during and with respect to the fiscal year ended December 31, 1999,
all reporting persons have timely complied with all filing requirements
applicable to them.
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STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2001 annual
meeting of stockholders of the Company pursuant to Rule 14a-8 of the Exchange
Act must be received by the Company at its principal executive offices, 100 S.E.
Second Street, 32nd Floor, Miami, Florida 33131, Attention: Marc N. Bell,
Secretary, on or before December 21, 2000 in order to be eligible for inclusion
in the Company's proxy statement relating to that meeting. Notice of a
stockholder proposal submitted outside the processes of Rule 14a-8 will be
considered untimely unless submitted by March 6, 2001.
OTHER MATTERS
All information in this proxy statement concerning the capital stock of the
Company has been adjusted to give effect to the consummation of the Company's
plan of recapitalization on June 4, 1999.
The cost of this solicitation of proxies will be borne by the Company. In
addition to the use of the mails, some of the directors, officers and regular
employees of the Company may, without additional compensation, solicit proxies
personally or by telephone. The Company will reimburse brokerage houses, banks
and other custodians, nominees and fiduciaries for expenses incurred in
forwarding soliciting material to the beneficial owners of Common Shares.
The board of directors knows of no other matters which will be presented at
the annual meeting. If, however, any other matter is properly presented at the
annual meeting, the proxy solicited by this proxy statement will be voted on
such matters in accordance with the judgment of the person or persons holding
such proxy.
By Order of the Board of Directors,
/s/ Bennett S. LeBow
-----------------------------------
Bennett S. LeBow
Chairman of the Board of Directors
Date: April 18, 2000
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APPENDIX A
NEW VALLEY CORPORATION
2000 LONG-TERM INCENTIVE PLAN
1. PURPOSE. The purpose of the 2000 Long-Term Incentive Plan (the "Plan")
is to further and promote the interests of New Valley Corporation (the
"Company"), its Subsidiaries and its shareholders by enabling the Company and
its Subsidiaries to attract, retain and motivate officers, employees and
consultants or those who will become officers, employees or consultants, and to
align the interests of those individuals and the Company's shareholders. To do
this, the Plan offers equity-based opportunities providing such officers,
employees and consultants with a proprietary interest in maximizing the growth,
profitability and overall success of the Company and its Subsidiaries.
2. DEFINITIONS. For purposes of the Plan, the following terms shall have
the meanings set forth below:
2.1 "AWARD" means an award or grant made to a Participant under
Sections 6, 7 and/or 8 of the Plan.
2.2 "AWARD AGREEMENT" means the agreement executed by a Participant
pursuant to Sections 3.2 and 15.6 of the Plan in connection with the
granting of an Award.
2.3 "BOARD" means the Board of Directors of the Company, as
constituted from time to time.
2.4 "CODE" means the Internal Revenue Code of 1986, as in effect and
as amended from time to time, or any successor statute thereto, together
with any rules, regulations and interpretations promulgated thereunder or
with respect thereto.
2.5 "COMMITTEE" means the committee of the Board established to
administer the Plan, as described in Section 3 of the Plan.
2.6 "COMMON STOCK" means the Common Shares, par value $.01 per share,
of the Company or any security of the Company issued by the Company in
substitution or exchange therefor.
2.7 "COMPANY" means New Valley Corporation, a Delaware corporation, or
any successor corporation to New Valley Corporation.
2.8 "DISABILITY" means disability as defined in the Participant's
Award Agreement or then effective employment agreement, or if the
Participant's Award Agreement does not define disability, or if the
Participant is not then a party to an effective employment agreement with
the Company which defines disability, "Disability" means disability as
determined by the Committee in accordance with standards and procedures
similar to those under the Company's long-term disability plan, if any.
Subject to the first sentence of this Section 2.8, at any time that the
Company does not maintain a long-term disability plan, "Disability" shall
mean any physical or mental disability which is determined to be total and
permanent by a physician selected in good faith by the Company.
2.9 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as in
effect and as amended from time to time, or any successor statute thereto,
together with any rules, regulations and interpretations promulgated
thereunder or with respect thereto.
2.10 "FAIR MARKET VALUE" means on, or with respect to, any given
date(s), the closing price of the Common Stock, as reported on NASDAQ or
the NASD OTC Electronic Bulletin Board or by the National Quotation Bureau
or on a national securities exchange, as the case may be, or, if the Common
Stock was not traded on such date(s), on the next preceding day or days on
which the Common Stock was traded. If at any time such prices are
unavailable, the Fair Market Value of a share of the Common Stock shall be
determined in good faith by the Committee.
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2.11 "INCENTIVE STOCK OPTION" means any stock option granted pursuant
to the provisions of Section 6 of the Plan (and the relevant Award
Agreement) that is intended to be (and is specifically designated as) an
"incentive stock option" within the meaning of Section 422 of the Code.
2.12 "NON-QUALIFIED STOCK OPTION" means any stock option granted
pursuant to the provisions of Section 6 of the Plan (and the relevant Award
Agreement) that is not (and is specifically designated as not being) an
Incentive Stock Option.
2.13 "PARTICIPANT" means any individual who is selected from time to
time under Section 5 to receive an Award under the Plan.
2.14 "PLAN" means the New Valley Corporation 2000 Long-Term Incentive
Plan, as set forth herein and as in effect and as amended from time to time
(together with any rules and regulations promulgated by the Committee with
respect thereto).
2.15 "RESTRICTED SHARES" means the restricted shares of Common Stock
granted pursuant to the provisions of Section 8 of the Plan and the
relevant Award Agreement.
2.16 "RETIREMENT" means the voluntary retirement by the Participant
from active employment with the Company and its Subsidiaries on or after
the attainment of (i) age 65, or (ii) 60, with the consent of the Board.
2.17 "STOCK APPRECIATION RIGHT" means an Award described in Section
7.2 of the Plan and granted pursuant to the provisions of Section 7 of the
Plan.
2.18 "SUBSIDIARY(IES)" means any corporation (other than the Company)
in an unbroken chain of corporations, including and beginning with the
Company, if each of such corporations, other than the last corporation in
the unbroken chain, owns, directly or indirectly, more than fifty percent
(50%) of the voting stock in one of the other corporations in such chain,
or any "subsidiary" of the Company as defined in Rule 405 under the
Securities Act of 1933, as amended.
3. ADMINISTRATION.
3.1 THE COMMITTEE. The Plan shall be administered by the Committee.
The Committee shall be appointed from time to time by the Board and shall
be comprised of not less than two (2) of the then members of the Board who
are Outside Directors (within the meaning of Code Section 162(m) and the
regulations promulgated thereunder) of the Company. No member of the
Committee shall be eligible to receive awards under the Plan. Consistent
with the Bylaws of the Company, members of the Committee shall serve at the
pleasure of the Board and the Board, subject to the immediately preceding
sentence, may at any time and from time to time remove members from, or add
members to, the Committee.
3.2 PLAN ADMINISTRATION AND PLAN RULES. The Committee is authorized
to construe and interpret the Plan and to promulgate, amend and rescind
rules and regulations relating to the implementation, administration and
maintenance of the Plan. Subject to the terms and conditions of the Plan,
the Committee shall make all determinations necessary or advisable for the
implementation, administration and maintenance of the Plan including,
without limitation, (a) selecting the Plan's Participants, (b) making
Awards in such amounts and form as the Committee shall determine, (c)
imposing such restrictions, terms and conditions upon such Awards as the
Committee shall deem appropriate, and (d) correcting any technical
defect(s) or technical omission(s), or reconciling any technical
inconsistency(ies), in the Plan and/or any Award Agreement. The Committee
may designate persons other than members of the Committee to carry out the
day-to-day ministerial administration of the Plan under such conditions and
limitations as it may prescribe, except that the Committee shall not
delegate its authority with regard to the selection for participation in
the Plan and/or the granting of any Awards to Participants. The Committee's
determinations under the Plan need not be uniform and may be made
selectively among Participants, whether or not such Participants are
similarly situated. Any determination, decision or action of the Committee
in connection with the construction, interpretation, administration,
implementation or maintenance of the Plan shall be final, conclusive and
binding upon all Participants and any person(s) claiming under or through
any Participants. The Company shall effect the
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granting of Awards under the Plan, in accordance with the determinations
made by the Committee, by execution of written agreements and/or other
instruments in such form as is approved by the Committee.
3.3 LIABILITY LIMITATION. Neither the Board nor the Committee, nor
any member of either, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in
connection with the Plan (or any Award Agreement), and the members of the
Board and the Committee shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or
expense (including, without limitation, attorneys' fees) arising or
resulting therefrom to the fullest extent permitted by law and/or under any
directors and officers liability insurance coverage which may be in effect
from time to time.
4. TERM OF PLAN/COMMON STOCK SUBJECT TO PLAN.
4.1 TERM. The Plan shall terminate on December 31, 2009, except with
respect to Awards then outstanding. After such date no further Awards shall
be granted under the Plan.
4.2 COMMON STOCK. The maximum number of shares of Common Stock in
respect of which Awards may be granted or paid out under the Plan, subject
to adjustment as provided in Section 13.2 of the Plan, shall not exceed
2,500,000 shares. In the event of a change in the Common Stock of the
Company that is limited to a change in the designation thereof to "Capital
Stock" or other similar designation, or to a change in the par value
thereof, or from par value to no par value, without increase or decrease in
the number of issued shares, the shares resulting from any such change
shall be deemed to be the Common Stock for purposes of the Plan. Common
Stock which may be issued under the Plan may be either authorized and
unissued shares or issued shares which have been reacquired by the Company
(in the open-market or in private transactions) and which are being held as
treasury shares. No fractional shares of Common Stock shall be issued under
the Plan.
4.3 COMPUTATION OF AVAILABLE SHARES. For the purpose of computing the
total number of shares of Common Stock available for Awards under the Plan,
there shall be counted against the limitations set forth in Section 4.2 of
the Plan the maximum number of shares of Common Stock potentially subject
to issuance upon exercise or settlement of Awards granted under Sections 6
and 7 of the Plan, and the number of shares of Common Stock issued under
grants of Restricted Shares pursuant to Section 8 of the Plan, in each case
determined as of the date on which such Awards are granted. If any Awards
expire unexercised or are forfeited, surrendered, cancelled, terminated or
settled in cash in lieu of Common Stock, the shares of Common Stock which
were theretofore subject (or potentially subject) to such Awards shall
again be available for Awards under the Plan to the extent of such
expiration, forfeiture, surrender, cancellation, termination or settlement
of such Awards.
5. ELIGIBILITY. Individuals eligible for Awards under the Plan shall
consist of all officers, employees and consultants, or those who will become
such officers, employees or consultants, of the Company and/or its Subsidiaries
who are responsible for the management, growth and protection of the business of
the Company and/or its Subsidiaries or whose performance or contribution, in the
sole discretion of the Committee, benefits or will benefit the Company.
6. STOCK OPTIONS.
6.1 TERMS AND CONDITIONS. Stock options granted under the Plan shall
be in respect of Common Stock and may be in the form of Incentive Stock
Options, or Non-Qualified Stock Options (sometimes referred to collectively
herein as the "Stock Option(s)"). Such Stock Options shall be subject to
the terms and conditions set forth in this Section 6 and any additional
terms and conditions, not inconsistent with the express terms and
provisions of the Plan, as the Committee shall set forth in the relevant
Award Agreement.
6.2 GRANT. Stock Options may be granted under the Plan in such form
as the Committee may from time to time approve. Stock Options may be
granted alone or in addition to other Awards under the Plan or in tandem
with Stock Appreciation Rights. Special provisions shall apply to Incentive
Stock Options granted to any employee who owns (within the meaning of
Section 422(b)(6) of the Code)
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more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or its parent corporation or any subsidiary
of the Company, within the meaning of Sections 424(e) and (f) of the Code
(a "10% Shareholder").
6.3 EXERCISE PRICE. The exercise price per share of Common Stock
subject to a Stock Option shall be determined by the Committee, including,
without limitation, a determination based on a formula determined by the
Committee; provided, however, that the exercise price of an Incentive Stock
Option shall not be less than one hundred percent (100%) of the Fair Market
Value of the Common Stock on the date of the grant of such Incentive Stock
Option; provided, further, however, that, in the case of a 10% Shareholder,
the exercise price of an Incentive Stock Option shall not be less than one
hundred ten percent (110%) of the Fair Market Value of the Common Stock on
the date of grant.
6.4 TERM. The term of each Stock Option shall be such period of time
as is fixed by the Committee; provided, however, that the term of any
Incentive Stock Option shall not exceed ten (10) years (five (5) years, in
the case of a 10% Shareholder) after the date immediately preceding the
date on which the Incentive Stock Option is granted.
6.5 METHOD OF EXERCISE. A Stock Option may be exercised, in whole or
in part, by giving written notice of exercise to the Secretary of the
Company, or the Secretary's designee, specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the
exercise price in cash, by certified check, bank draft or money order
payable to the order of the Company or, if permitted by the Committee (in
its sole discretion) and applicable law, by delivery of, alone or in
conjunction with a partial cash or instrument payment, (a) a fully-secured
promissory note or notes, (b) shares of Common Stock already owned by the
Participant for at least six (6) months, or (c) some other form of payment
acceptable to the Committee. The Committee may also permit Participants
(either on a selective or group basis) to simultaneously exercise Stock
Options and sell the shares of Common Stock thereby acquired, pursuant to a
"cashless exercise" arrangement or program, selected by and approved of in
all respects in advance by the Committee. Payment instruments shall be
received by the Company subject to collection. The proceeds received by the
Company upon exercise of any Stock Option may be used by the Company for
general corporate purposes. Any portion of a Stock Option that is exercised
may not be exercised again.
6.6 EXERCISABILITY. In respect of any Stock Option granted under the
Plan, unless otherwise provided in the Award Agreement or in the
Participant's employment agreement in respect of any such Stock Option,
such Stock Option shall become exercisable as to the aggregate number of
shares of Common Stock underlying such Stock Option, as determined on the
date of grant, as follows:
- 33%, on the first anniversary of the date of grant of the Stock
Option, provided the Participant is then employed by the Company
and/or one of its Subsidiaries;
- 66%, on the second anniversary of the date of grant of the Stock
Option, provided the Participant is then employed by the Company
and/or one of its Subsidiaries; and
- 100%, on the third anniversary of the date of grant of the Stock
Option, provided the Participant is then employed by the Company
and/or one of its Subsidiaries.
6.7 TANDEM GRANTS. If Non-Qualified Stock Options and Stock
Appreciation Rights are granted in tandem, as designated in the relevant
Award Agreements, the right of a Participant to exercise any such tandem
Stock Option shall terminate to the extent that the shares of Common Stock
subject to such Stock Option are used to calculate amounts or shares
receivable upon the exercise of the related tandem Stock Appreciation
Right.
7. STOCK APPRECIATION RIGHTS.
7.1 TERMS AND CONDITIONS. The grant of Stock Appreciation Rights
under the Plan shall be subject to the terms and conditions set forth in
this Section 7 and any additional terms and conditions, not inconsistent
with the express terms and provisions of the Plan, as the Committee shall
set forth in the relevant Award Agreement.
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7.2 STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is an Award
granted with respect to a specified number of shares of Common Stock
entitling a Participant to receive an amount equal to the excess of the
Fair Market Value of a share of Common Stock on the date of exercise over
the Fair Market Value of a share of Common Stock on the date of grant of
the Stock Appreciation Right, multiplied by the number of shares of Common
Stock with respect to which the Stock Appreciation Right shall have been
exercised.
7.3 GRANT. A Stock Appreciation Right may be granted in addition to
any other Award under the Plan or in tandem with or independent of a
Non-Qualified Stock Option.
7.4 DATE OF EXERCISABILITY. Unless otherwise provided in the
Participant's employment agreement or the Award Agreement in respect of any
Stock Appreciation Right, a Stock Appreciation Right may be exercised by a
Participant, in accordance with and subject to all of the procedures
established by the Committee, in whole or in part at any time and from time
to time during its specified term. Notwithstanding the preceding sentence,
in no event shall a Stock Appreciation Right be exercisable prior to the
date which is six (6) months after the date on which the Stock Appreciation
Right was granted or prior to the exercisability of any Non-Qualified Stock
Option with which it is granted in tandem. The Committee may also provide,
as set forth in the relevant Award Agreement and without limitation, that
some Stock Appreciation Rights shall be automatically exercised and settled
on one or more fixed dates specified therein by the Committee.
7.5 FORM OF PAYMENT. Upon exercise of a Stock Appreciation Right,
payment may be made in cash, in Restricted Shares or in shares of
unrestricted Common Stock, or in any combination thereof, as the Committee,
in its sole discretion, shall determine and provide in the relevant Award
Agreement.
7.6 TANDEM GRANT. The right of a Participant to exercise a tandem
Stock Appreciation Right shall terminate to the extent such Participant
exercises the Non-Qualified Stock Option to which such Stock Appreciation
Right is related.
8. RESTRICTED SHARES.
8.1 TERMS AND CONDITIONS. Grants of Restricted Shares shall be
subject to the terms and conditions set forth in this Section 8 and any
additional terms and conditions, not inconsistent with the express terms
and provisions of the Plan, as the Committee shall set forth in the
relevant Award Agreement. Restricted Shares may be granted alone or in
addition to any other Awards under the Plan. Subject to the terms of the
Plan, the Committee shall determine the number of Restricted Shares to be
granted to a Participant and the Committee may provide or impose different
terms and conditions on any particular Restricted Share grant made to any
Participant. With respect to each Participant receiving an Award of
Restricted Shares, there shall be issued a stock certificate (or
certificates) in respect of such Restricted Shares. Such stock
certificate(s) shall be registered in the name of such Participant, shall
be accompanied by a stock power duly executed by such Participant, and
shall bear, among other required legends, the following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including,
without limitation, forfeiture events) contained in the New Valley
Corporation 2000 Long-Term Incentive Plan and an Award Agreement entered
into between the registered owner hereof and New Valley Corporation.
Copies of such Plan and Award Agreement are on file in the office of the
Secretary of New Valley Corporation, 100 S.E. Second Street, Miami
Florida 33131. New Valley Corporation will furnish to the recordholder
of the certificate, without charge and upon written request at its
principal place of business, a copy of such Plan and Award Agreement.
New Valley Corporation reserves the right to refuse to record the
transfer of this certificate until all such restrictions are satisfied,
all such terms are complied with and all such conditions are satisfied."
Such stock certificate evidencing such shares shall, in the sole discretion of
the Committee, be deposited with and held in custody by the Company until the
restrictions thereon shall have lapsed and all of the terms and conditions
applicable to such grant shall have been satisfied.
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8.2 RESTRICTED SHARE GRANTS. A grant of Restricted Shares is an Award
of shares of Common Stock granted to a Participant, subject to such
restrictions, terms and conditions as the Committee deems appropriate,
including, without limitation, (a) restrictions on the sale, assignment,
transfer, hypothecation or other disposition of such shares, (b) the
requirement that the Participant deposit such shares with the Company while
such shares are subject to such restrictions, and (c) the requirement that
such shares be forfeited upon termination of employment for specified
reasons within a specified period of time or for other reasons (including,
without limitation, the failure to achieve designated performance goals).
8.3 RESTRICTION PERIOD. In accordance with Sections 8.1 and 8.2 of
the Plan and unless otherwise determined by the Committee (in its sole
discretion) at any time and from time to time, Restricted Shares shall only
become unrestricted and vested in the Participant in accordance with such
vesting schedule relating to such Restricted Shares, if any, as the
Committee may establish in the relevant Award Agreement (the "Restriction
Period"). Notwithstanding the preceding sentence, in no event shall the
Restriction Period be less than six (6) months after the date of grant.
During the Restriction Period, such stock shall be and remain unvested and
a Participant may not sell, assign, transfer, pledge, encumber or otherwise
dispose of or hypothecate such Award. Upon satisfaction of the vesting
schedule and any other applicable restrictions, terms and conditions, the
Participant shall be entitled to receive payment of the Restricted Shares
or a portion thereof, as the case may be, as provided in Section 8.4 of the
Plan.
8.4 PAYMENT OF RESTRICTED SHARE GRANTS. After the satisfaction and/or
lapse of the restrictions, terms and conditions established by the
Committee in respect of a grant of Restricted Shares, a new certificate,
without the legend set forth in Section 8.1 of the Plan, for the number of
shares of Common Stock which are no longer subject to such restrictions,
terms and conditions shall, as soon as practicable thereafter, be delivered
to the Participant.
8.5 SHAREHOLDER RIGHTS. A Participant shall have, with respect to the
shares of Common Stock underlying a grant of Restricted Shares, all of the
rights of a shareholder of such stock (except as such rights are limited or
restricted under the Plan or in the relevant Award Agreement). Any stock
dividends paid in respect of unvested Restricted Shares shall be treated as
additional Restricted Shares and shall be subject to the same restrictions
and other terms and conditions that apply to the unvested Restricted Shares
in respect of which such stock dividends are issued.
9. DEFERRAL ELECTIONS/TAX REIMBURSEMENTS/OTHER PROVISIONS.
9.1 DEFERRALS. The Committee may permit a Participant to elect to
defer receipt of any payment of cash or any delivery of shares of Common
Stock that would otherwise be due to such Participant by virtue of the
exercise, earn out or settlement of any Award made under the Plan. If any
such election is permitted, the Committee shall establish rules and
procedures for such deferrals, including, without limitation, the payment
or crediting of reasonable interest on such deferred amounts credited in
cash, and the payment or crediting of dividend equivalents in respect of
deferrals credited in units of Common Stock. The Committee may also provide
in the relevant Award Agreement for a tax reimbursement cash payment to be
made by the Company in favor of any Participant in connection with the tax
consequences resulting from the grant, exercise, settlement, or earn out of
any Award made under the Plan.
9.2 MAXIMUM YEARLY AWARDS. The maximum annual Common Stock amounts in
this Section 9.2 are subject to adjustment under Section 13.2 and are
subject to the Plan maximum under Section 4.2. Each individual Participant
may not receive in any calendar year Awards of Options or Stock
Appreciation Rights exceeding 1,250,000 underlying shares of Common Stock.
In addition, during the Term of the Plan, each individual Participant may
not receive Awards of Options, Stock Appreciation Rights and/or Restricted
Shares exceeding one-half of the maximum number of shares of Common Stock
in respect of which Awards may be granted or paid out under the Plan as
provided in Section 4.2.
10. DIVIDEND EQUIVALENTS. In addition to the provisions of Section 8.5 of
the Plan, Awards of Stock Options, and/or Stock Appreciation Rights, may, in the
sole discretion of the Committee and if provided for in the relevant Award
Agreement, earn dividend equivalents. In respect of any such Award which is
outstanding on a dividend record date for Common Stock, the Participant shall be
credited with an amount
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equal to the amount of cash or stock dividends that would have been paid on the
shares of Common Stock covered by such Award had such covered shares been issued
and outstanding on such dividend record date. The Committee shall establish such
rules and procedures governing the crediting of such dividend equivalents,
including, without limitation, the amount, the timing, form of payment and
payment contingencies and/or restrictions of such dividend equivalents, as it
deems appropriate or necessary.
11. TERMINATION OF EMPLOYMENT.
11.1 GENERAL. Except as is otherwise provided (a) in the relevant
Award Agreement as determined by the Committee (in its sole discretion), or
(b) in the Participant's then effective employment agreement, if any, the
following terms and conditions shall apply as appropriate and as not
inconsistent with the terms and conditions, if any, contained in such Award
Agreement and/or such employment agreement:
11.1.1 OPTIONS/SARS. If a Participant's employment with the
Company terminates for any reason any then unexercisable Stock Options
and/or Stock Appreciation Rights shall be forfeited and cancelled by the
Company. Except as otherwise provided in this Section 11.1.1, if a
Participant's employment with the Company and its Subsidiaries
terminates for any reason, such Participant's rights, if any, to
exercise any then exercisable Stock Options and/or Stock Appreciation
Rights, if any, shall terminate ninety (90) days after the date of such
termination (but not beyond the stated term of any such Stock Option
and/or Stock Appreciation Right as determined under Sections 6.4 and
7.4) and thereafter such Stock Options or Stock Appreciation Rights
shall be forfeited and cancelled by the Company. The Committee, in its
sole discretion, may determine that any such Participant's Stock Options
and/or Stock Appreciation Rights, if any, to the extent exercisable
immediately prior to any termination of employment (other than a
termination due to death, Retirement or Disability), may remain
exercisable for an additional specified time period after such ninety
(90) day period expires (subject to any other applicable terms and
provisions of the Plan and the relevant Award Agreement), but not beyond
the stated term of any such Stock Option and/or Stock Appreciation
Right. If any termination of employment is due to death, Retirement or
Disability, a Participant (and such Participant's estate, designated
beneficiary or other legal representative, as the case may be and as
determined by the Committee) shall have the right, to the extent
exercisable immediately prior to any such termination, to exercise such
Stock Options and/or Stock Appreciation Rights, if any, at any time
within the one (1) year period following such termination due to death,
Retirement or Disability (but not beyond the term of any such Stock
Option and/or Stock Appreciation Right as determined under Sections 6.4
and 7.4).
11.1.2 RESTRICTED SHARES. If a Participant's employment with the
Company and its Subsidiaries terminates for any reason (other than due
to Disability, Retirement or death) prior to the satisfaction and/or
lapse of the restrictions, terms and conditions applicable to a grant of
Restricted Shares, such Restricted Shares shall immediately be cancelled
and the Participant (and such Participant's estate, designated
beneficiary or other legal representative) shall forfeit any rights or
interests in and with respect to any such Restricted Shares.
Notwithstanding anything to the contrary in this Section 11, the
Committee, in its sole discretion, may determine, prior to or within
ninety (90) days after the date of such termination, that all or a
portion of any such Participant's Restricted Shares shall not be so
cancelled and forfeited. If the Participant's employment terminates due
to death, Disability or Retirement, the Participant shall become 100%
vested in any such Participant's restricted Shares as of the date of any
such termination.
12. NON-TRANSFERABILITY OF AWARDS. Unless otherwise provided in the Award
Agreement, no Award under the Plan or any Award Agreement, and no rights or
interests herein or therein, shall or may be assigned, transferred, sold,
exchanged, encumbered, pledged, or otherwise hypothecated or disposed of by a
Participant or any beneficiary(ies) of any Participant, except by testamentary
disposition by the Participant or the laws of intestate succession. No such
interest shall be subject to execution, attachment or similar legal process,
including, without limitation, seizure for the payment of the Participant's
debts, judgements, alimony, or
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separate maintenance. Unless otherwise provided in the Award Agreement, during
the lifetime of a Participant, Stock Options and Stock Appreciation Rights are
exercisable only by the Participant.
13. CHANGES IN CAPITALIZATION AND OTHER MATTERS.
13.1 NO CORPORATE ACTION RESTRICTION. The existence of the Plan, any
Award Agreement and/or the Awards granted hereunder shall not limit, affect
or restrict in any way the right or power of the Board or the shareholders
of the Company to make or authorize (a) any adjustment, recapitalization,
reorganization or other change in the Company's or any Subsidiary's capital
structure or its business, (b) any merger, consolidation or change in the
ownership of the Company or any Subsidiary, (c) any issue of bonds,
debentures, capital, preferred or prior preference stocks ahead of or
affecting the Company's or any Subsidiary's capital stock or the rights
thereof, (d) any dissolution or liquidation of the Company or any
Subsidiary, (e) any sale or transfer of all or any part of the Company's or
any Subsidiary's assets or business, or (f) any other corporate act or
proceeding by the Company or any Subsidiary. No Participant, beneficiary or
any other person shall have any claim against any member of the Board or
the Committee, the Company or any Subsidiary, or any employees, officers or
agents of the Company or any subsidiary, as a result of any such action.
13.2 RECAPITALIZATION ADJUSTMENTS. In the event of any change in
capitalization affecting the Common Stock of the Company, including,
without limitation, a stock dividend or other distribution, stock split,
reverse stock split, recapitalization, consolidation, subdivision,
split-up, spin-off, split-off, combination or exchange of shares or other
form of reorganization or recapitalization, or any other change affecting
the Common Stock, the Board shall authorize and make such proportionate
adjustments, if any, as the Board deems appropriate to reflect such change,
including, without limitation, with respect to the aggregate number of
shares of the Common Stock for which Awards in respect thereof may be
granted under the Plan, the maximum number of shares of the Common Stock
which may be granted or awarded to any Participant, the number of shares of
the Common Stock covered by each outstanding Award, and the exercise price
or other price per share of Common Stock in respect of outstanding Awards.
13.3 CERTAIN MERGERS.
13.3.1 If the Company enters into or is involved in any merger,
reorganization or other business combination with any person or entity
(such merger, reorganization or other business combination to be
referred to herein as a "Merger Event") and as a result of any such
Merger Event the Company will be or is the surviving corporation, a
Participant shall be entitled, as of the date of the execution of the
agreement evidencing the Merger Event (the "Execution Date") and with
respect to both exercisable and unexercisable Stock Options and/or Stock
Appreciation Rights (but only to the extent not previously exercised),
to receive substitute stock options and/or stock appreciation rights in
respect of the shares of the surviving corporation on such terms and
conditions, as to the number of shares, pricing and otherwise, which
shall substantially preserve the value, rights and benefits of any
affected Stock Options or Stock Appreciation Rights granted hereunder as
of the date of the consummation of the Merger Event. Notwithstanding
anything to the contrary in this Section 13.3, if any Merger Event
occurs, the Company shall have the right, but not the obligation, to pay
to each affected Participant an amount in cash or certified check equal
to the excess of the Fair Market Value of the Common Stock underlying
any affected unexercised Stock Options or Stock Appreciation Rights as
of the Execution Date (whether then exercisable or not) over the
aggregate exercise price of such unexercised Stock Options and/or Stock
Appreciation Rights, as the case may be.
13.3.2 If, in the case of a Merger Event in which the Company will
not be, or is not, the surviving corporation, and the Company determines
not to make the cash or certified check payment described in Section
13.3.1 of the Plan, the Company shall compel and obligate, as a
condition of the consummation of the Merger Event, the surviving or
resulting corporation and/or the other party to the Merger Event, as
necessary, or any parent, subsidiary or acquiring corporation thereof,
to grant, with respect to both exercisable and unexercisable Stock
Options and/or Stock Appreciation Rights (but only to the extent not
previously exercised), substitute stock options or stock appreciation
rights in respect of the shares of common or other capital stock of such
surviving or resulting corporation
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on such terms and conditions, as to the number of shares, pricing and
otherwise, which shall substantially preserve the value, rights and
benefits of any affected Stock Options and/or Stock Appreciation Rights
previously granted hereunder as of the date of the consummation of the
Merger Event.
13.3.3 Upon receipt by any affected Participant of any such cash,
certified check, or substitute stock options or stock appreciation
rights as a result of any such Merger Event, such Participant's affected
Stock Options and/or Stock Appreciation Rights for which such cash,
certified check or substitute awards was received shall be thereupon
cancelled without the need for obtaining the consent of any such
affected Participant.
13.3.4 The foregoing adjustments and the manner of application of
the foregoing provisions, including, without limitation, the issuance of
any substitute stock options and/or stock appreciation rights, shall be
determined in good faith by the Committee in its sole discretion. Any
such adjustment may provide for the elimination of fractional shares.
14. AMENDMENT, SUSPENSION AND TERMINATION.
14.1 IN GENERAL. The Board may suspend or terminate the Plan (or any
portion thereof) at any time and may amend the Plan at any time and from
time to time in such respects as the Board may deem advisable to insure
that any and all Awards conform to or otherwise reflect any change in
applicable laws or regulations, or to permit the Company or the
Participants to benefit from any change in applicable laws or regulations,
or in any other respect the Board may deem to be in the best interests of
the Company or any Subsidiary. No such amendment, suspension or termination
shall (x) materially adversely effect the rights of any Participant under
any outstanding Stock Options, Stock Appreciation Rights, or Restricted
Share grants, without the consent of such Participant, or (y) make any
change that would disqualify the Plan, or any other plan of the Company or
any Subsidiary intended to be so qualified, from the benefits provided
under Section 422 of the Code, or any successor provisions thereto.
14.2 AWARD AGREEMENT MODIFICATIONS. The Committee may (in its sole
discretion) amend or modify at any time and from time to time the terms and
provisions of any outstanding Stock Options, Stock Appreciation Rights, or
Restricted Share grants, in any manner to the extent that the Committee
under the Plan or any Award Agreement could have initially determined the
restrictions, terms and provisions of such Stock Options, Stock
Appreciation Rights, and/or Restricted Share grants, including, without
limitation, changing or accelerating (a) the date or dates as of which such
Stock Options or Stock Appreciation Rights shall become exercisable, or (b)
the date or dates as of which such Restricted Share grants shall become
vested. No such amendment or modification shall, however, materially
adversely affect the rights of any Participant under any such Award without
the consent of such Participant.
15. MISCELLANEOUS.
15.1 TAX WITHHOLDING. The Company shall have the right to deduct from
any payment or settlement under the Plan, including, without limitation,
the exercise of any Stock Option or Stock Appreciation Right, or the
delivery, transfer or vesting of any Common Stock or Restricted Shares, any
federal, state, local or other taxes of any kind which the Committee, in
its sole discretion, deems necessary to be withheld to comply with the Code
and/or any other applicable law, rule or regulation. If the Committee, in
its sole discretion, permits shares of Common Stock to be used to satisfy
any such tax withholding, such Common Stock shall be valued based on the
Fair Market Value of such stock as of the date the tax withholding is
required to be made, such date to be determined by the Committee. The
Committee may establish rules limiting the use of Common Stock to meet
withholding requirements by Participants who are subject to Section 16 of
the Exchange Act.
15.2 NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan, the
granting of any Award, nor the execution of any Award Agreement, shall
confer upon any employee of the Company or any Subsidiary any right to
continued employment with the Company or any Subsidiary, as the case may
be,
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nor shall it interfere in any way with the right, if any, of the Company or
any Subsidiary to terminate the employment of any employee at any time for
any reason.
15.3 UNFUNDED PLAN. The Plan shall be unfunded and the Company shall
not be required to segregate any assets in connection with any Awards under
the Plan. Any liability of the Company to any person with respect to any
Award under the Plan or any Award Agreement shall be based solely upon the
contractual obligations that may be created as a result of the Plan or any
such Award or Award Agreement. No such obligation of the Company shall be
deemed to be secured by any pledge of, encumbrance on, or other interest
in, any property or asset of the Company or any Subsidiary. Nothing
contained in the Plan or any Award Agreement shall be construed as creating
in respect of any Participant (or beneficiary thereof or any other person)
any equity or other interest of any kind in any assets of the Company or
any Subsidiary or creating a trust of any kind or a fiduciary relationship
of any kind between the Company, any Subsidiary and/or any such
Participant, any beneficiary thereof or any other person.
15.4 OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Payments and
other benefits received by a Participant under an Award made pursuant to
the Plan shall not be deemed a part of a Participant's compensation for
purposes of the determination of benefits under any other employee welfare
or benefit plans or arrangements, if any, provided by the Company or any
Subsidiary unless expressly provided in such other plans or arrangements,
or except where the Board expressly determines in writing that inclusion of
an Award or portion of an Award should be included to accurately reflect
competitive compensation practices or to recognize that an Award has been
made in lieu of a portion of competitive annual base salary or other cash
compensation. Awards under the Plan may be made in addition to, in
combination with, or as alternatives to, grants, awards or payments under
any other plans or arrangements of the Company or its Subsidiaries. The
existence of the Plan notwithstanding, the Company or any Subsidiary may
adopt such other compensation plans or programs and additional compensation
arrangements as it deems necessary to attract, retain and motivate
employees.
15.5 LISTING, REGISTRATION AND OTHER LEGAL COMPLIANCE. No Awards or
shares of the Common Stock shall be required to be issued or granted under
the Plan unless legal counsel for the Company shall be satisfied that such
issuance or grant will be in compliance with all applicable federal and
state securities laws and regulations and any other applicable laws or
regulations. The Committee may require, as a condition of any payment or
share issuance, that certain agreements, undertakings, representations,
certificates, and/or information, as the Committee may deem necessary or
advisable, be executed or provided to the Company to assure compliance with
all such applicable laws or regulations. Certificates for shares of the
Restricted Shares and/or Common Stock delivered under the Plan may be
subject to such stock-transfer orders and such other restrictions as the
Committee may deem advisable under the rules, regulations, or other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the Common Stock is then listed, and any applicable federal or
state securities law. In addition, if, at any time specified herein (or in
any Award Agreement or otherwise) for (a) the making of any Award, or the
making of any determination, (b) the issuance or other distribution of
Restricted Shares and/or Common Stock, or (c) the payment of amounts to or
through a Participant with respect to any Award, any law, rule, regulation
or other requirement of any governmental authority or agency shall require
either the Company, any Subsidiary or any Participant (or any estate,
designated beneficiary or other legal representative thereof) to take any
action in connection with any such determination, any such shares to be
issued or distributed, any such payment, or the making of any such
determination, as the case may be, shall be deferred until such required
action is taken. With respect to persons subject to Section 16 of the
Exchange Act, transactions under the Plan are intended to comply with all
applicable conditions of SEC Rule 16b-3. To the extent any provision of the
Plan or any action by the administrators of the Plan fails to so comply
with such rule, it shall be deemed null and void, to the extent permitted
by law and deemed advisable by the Committee.
15.6 AWARD AGREEMENTS. Each Participant receiving an Award under the
Plan shall enter into an Award Agreement with the Company in a form
specified by the Committee. Each such Participant shall agree to the
restrictions, terms and conditions of the Award set forth therein and in
the Plan.
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15.7 DESIGNATION OF BENEFICIARY. Each Participant to whom an Award
has been made under the Plan may designate a beneficiary or beneficiaries
to exercise any option or to receive any payment which under the terms of
the Plan and the relevant Award Agreement may become exercisable or payable
on or after the Participant's death. At any time, and from time to time,
any such designation may be changed or cancelled by the Participant without
the consent of any such beneficiary. Any such designation, change or
cancellation must be on a form provided for that purpose by the Committee
and shall not be effective until received by the Committee. If no
beneficiary has been designated by a deceased Participant, or if the
designated beneficiaries have predeceased the Participant, the beneficiary
shall be the Participant's estate. If the Participant designates more than
one beneficiary, any payments under the Plan to such beneficiaries shall be
made in equal shares unless the Participant has expressly designated
otherwise, in which case the payments shall be made in the shares
designated by the Participant.
15.8 LEAVES OF ABSENCE/TRANSFERS. The Committee shall have the power
to promulgate rules and regulations and to make determinations, as it deems
appropriate, under the Plan in respect of any leave of absence from the
Company or any Subsidiary granted to a Participant. Without limiting the
generality of the foregoing, the Committee may determine whether any such
leave of absence shall be treated as if the Participant has terminated
employment with the Company or any such Subsidiary. If a Participant
transfers within the Company, or to or from any Subsidiary, such
Participant shall not be deemed to have terminated employment as a result
of such transfers.
15.9 LOANS. Subject to applicable law, the Committee may provide,
pursuant to Plan rules, for the Company or any Subsidiary to make loans to
Participants to finance the exercise price of any Stock Options, as well as
the withholding obligation under Section 15.1 of the Plan and/or the
estimated or actual taxes payable by the Participant as a result of the
exercise of such Stock Option and the Committee may prescribe the terms and
conditions of any such loan.
15.10 GOVERNING LAW. The Plan and all actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of
Delaware, without reference to the principles of conflict of laws thereof.
Any titles and headings herein are for reference purposes only, and shall
in no way limit, define or otherwise affect the meaning, construction or
interpretation of any provisions of the Plan.
15.11 EFFECTIVE DATE. The Plan shall be effective upon its approval
by the Board and adoption by the Company, subject to the approval of the
Plan by the Company's shareholders in accordance with Sections 162(m) and
422 of the Code.
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APPENDIX B
NEW VALLEY CORPORATION
NON-EMPLOYEE DIRECTORS STOCK OPTION PROGRAM
1. PURPOSE. The purpose of the New Valley Corporation Non-Employee
Directors Stock Option Program (the "Program") is to promote the interests of
New Valley Corporation (the "Company") and its stockholders by strengthening the
Company's ability to attract and retain the services of experienced and
knowledgeable non-employee directors through grants of non-qualified stock
options to acquire the Company's Common Stock. In addition, such grants will
reinforce the alignment of the interests of such directors with those of the
Company's stockholders.
2. DEFINITIONS. For purposes of the Program, the following terms shall
have the meanings set forth below:
"ANNUAL MEETING" means the annual meeting of the Company's
stockholders for any fiscal year as determined under the Company's By-Laws.
"AWARD AGREEMENT" means the option agreement executed by each of
Eligible Director pursuant to Section 8.2 of the Program in connection with
the granting of Options hereunder.
"BOARD" means the Board of Directors of the Company, as constituted
from time to time.
"CODE" means the Internal Revenue Code of 1986, as in effect from time
to time, or any successor statute thereto, together with any rules,
regulations and interpretations promulgated thereunder or with respect
thereto.
"COMMON STOCK" means the Common Shares, par value $.01 per share, of
the Company or any security of the Company issued by the Company in
substitution or exchange therefor.
"COMPANY" means New Valley Corporation, a Delaware corporation, or any
successor corporation to New Valley Corporation.
"DISABILITY" means any physical or mental disability of an Eligible
Director which is determined to be total and permanent by a physician
selected by the Company and reasonably satisfactory to such Eligible
Director (or such Eligible Director's legal representative).
"ELIGIBLE DIRECTOR" means any Non-Employee Director of the Company who
becomes a member of the Board.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as in effect
and as amended from time to time, or any successor statute thereto,
together with any rules, regulations and interpretations promulgated
thereunder or with respect thereto.
"FAIR MARKET VALUE" means on, or with respect to, any given date(s),
the closing price of the Common Stock as reported on NASDAQ or the NASD OTC
Electronic Bulletin Board or by the National Quotation Bureau or on a
national securities exchange, as the case may be, or, if the Common Stock
was not traded on such date(s), on the next preceding day or days on which
the Common Stock is traded. If at any time such prices are unavailable, the
Fair Market Value of a share of the Common Stock shall be determined in
good faith by the Board.
"GRANT DATE" means the date on which any Option is granted pursuant to
Sections 4.2 or 4.3 below.
"INVOLUNTARY TERMINATION" means any termination of an Eligible
Director's membership on the Board other than a Voluntary Termination or a
removal from the Board for cause.
"NON-EMPLOYEE DIRECTOR" means any director of the Company who is not,
and who has not been for at least one year preceding the commencement of
his or her membership on the Board, an employee of the Company, or any
parent or subsidiary companies of the Company.
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"PROGRAM" means the New Valley Corporation Non-Employee Directors
Stock Option Program, as set forth herein.
"OPTION(S)" means the stock option(s) to acquire shares of Common
Stock granted pursuant to the provisions of Section 4 of the Program and
the relevant Award Agreement.
"SEC" means the Securities and Exchange Commission, or any successor
governmental agency.
"VOLUNTARY TERMINATION" means a termination of an Eligible Director's
membership on the Board due to, or as a result of, any such Eligible
Director's resignation from the Board (other than due to death, Disability
or retirement) or refusal (other than due to death, Disability or
retirement) to stand for election to the Board after having been nominated
by the Board.
3. TERM OF THE PROGRAM/COMMON STOCK SUBJECT TO THE PROGRAM/ADMINISTRATION.
3.1 The Program shall continue in effect until it is terminated by
action of the Board or the Company's stockholders, but any such termination
shall not affect the terms of any then outstanding Options. The maximum
number of shares of Common Stock in respect of which Option grants may be
made under the Program, subject to adjustment as provided in Section 6.2 of
the Program, shall be 200,000 shares. Such shares shall be shares currently
authorized but unissued or currently held or subsequently acquired by the
Company as treasury shares, including without limitation, shares purchased
by the Company in the open market or in private transactions. If any Option
granted under the Program expires, is forfeited or terminates for any
reason, the shares of Common Stock subject to, but not delivered under, any
such Option may again become available for the grant of other Options under
the Program.
3.2 The Program shall be administered by the Board. The Board shall
have the power to interpret and construe the terms and provisions of the
Program, to determine questions that arise thereunder, to designate persons
to carry out the day-to-day ministerial administration of the Program and
to adopt and amend such rules and regulations for administering the Program
as the Board deems necessary or desirable. Any interpretation or
determination by the Board hereunder shall be final and binding on all
persons claiming under the Program and/or an Award Agreement.
4. NON-QUALIFIED STOCK OPTION GRANTS.
4.1 All Options granted under the Program shall be nonstatutory
options and are not intended to qualify under Section 422 of the Code as
"incentive stock options."
4.2 An Option to acquire 10,000 shares of Common Stock (as adjusted
pursuant to Section 6.2 of the Program) shall be granted automatically upon
the adoption of the Program by the Company to each then Eligible Director
(subject to the approval of the Program by the Company's stockholders). An
individual who becomes an Eligible Director at any time after the adoption
of the Program by the Company shall automatically receive (subject to the
approval of the Program by the Company's stockholders) an Option to acquire
10,000 shares of Common Stock (as adjusted pursuant to Section 6.2 of the
Program) on the date such individual becomes an Eligible Director.
4.3 Commencing with the annual meeting of the Company's stockholders
occurring in 2001, and with respect to each annual meeting of the Company
occurring thereafter during the term of the Program, an Option to acquire
an additional 5,000 shares of Common Stock (as adjusted pursuant to Section
6.2 of the Program) shall be granted automatically to each Eligible
Director upon his or her re-election to the Board; provided, however, that
any individual who becomes an Eligible Director within ninety (90) days
prior to the date of any such annual meeting shall not be entitled to
receive an Option pursuant to this Section 4.3 with respect to the annual
meeting of the Company immediately following the date such individual
became an Eligible Director.
4.4 The per share Option exercise price for each Option granted under
the Program shall be the Fair Market Value of the Common Stock on Grant
Date.
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4.5 Upon becoming exercisable in accordance with Section 4.7 of the
Program, the exercisable portion of an Option may be exercised in whole or
in part at any time and from time to time during the Option Period (as
defined in Section 4.7 of the Program) by giving written notice, signed by
the person exercising the Option, to the Secretary of the Company stating
the number of shares of Common Stock in respect of which the Option is
being exercised, accompanied by payment in full of the aggregate Option
exercise price for the shares of Common Stock to be acquired. The date both
such notice and payment are received by the office of the Secretary of the
Company shall be the date of exercise of the Option as to such number of
shares of Common Stock. No Option may be exercised at any time in respect
of a fractional share.
4.6 Payment of the aggregate Option exercise price may be made in cash
or by certified, cashier's or personal check. Payment may also be made in
whole or in part by the transfer to the Company of shares of Common Stock
already owned by an Eligible Director for at least six months and having a
fair market value equal to all or a portion of the Option exercise price at
the time of such exercise. All payment instruments are accepted subject to
collection.
4.7 Each Option shall become exercisable on the first anniversary of
its Grant Date and shall expire ten years after its Grant Date (the "Option
Period"), but shall be subject to earlier termination as follows:
4.7.1 In the event of a Voluntary Termination or a removal from the
Board for cause, the then outstanding unexercisable Options of such
Eligible Director shall automatically expire on the effective date of
any such termination and the then outstanding exercisable Options of
such Eligible Director shall automatically expire ninety (90) days after
the effective date of any such termination.
4.7.2 In the event of an Involuntary Termination, the then
outstanding Options of such Eligible Director shall become exercisable,
to the full extent of the number of Option Shares remaining covered by
such Options, regardless of whether such Options were previously
exercisable, and each such Option shall expire two (2) years after the
date of any such termination or on the expiration of the Option Period,
whichever is earlier.
4.7.3 Exercise of a deceased Eligible Director's Options that are
exercisable on the date of the Eligible Director's death shall be
effected, as determined by the Board in its sole discretion, by (a) the
estate of such Eligible Director, or (b) the person or persons
determined pursuant to Section 8.3.
4.8 Neither the Eligible Director, nor an Eligible Director's
successor or successors in interest, shall have any rights as a stockholder
of the Company with respect to any shares of Common Stock subject to an
Option granted to any such Eligible Director until the date of issuance of
a stock certificate in respect of such shares of Common Stock. Neither the
Program, nor the granting of an Option, nor any other action taken pursuant
to the Program shall constitute or be evidence of any agreement or
understanding, express or implied, that an Eligible Director has a right to
continue as a director of the Company for any period of time or at any
particular rate of remuneration.
5. INCOME TAX LIABILITY. All taxes, if any, in respect of any Option(s)
granted hereunder to the Eligible Director shall be the sole responsibility of
and shall be paid by the Eligible Director.
6. CHANGES IN CAPITALIZATION AND OTHER MATTERS.
6.1 The existence of the Program, any Award Agreement and/or the
grants made hereunder shall not limit, affect or restrict in any way the
right or power of the Board or the stockholders of the Company to make or
authorize (a) any adjustment, recapitalization, reorganization or other
change in the Company's or any subsidiary's capital structure or its
business, (b) any merger, consolidation or change in the ownership of the
Company or any subsidiary, (c) any issue of bonds, debentures, capital,
preferred or prior preference stocks ahead of or affecting the Company's or
any subsidiary's capital stock or the rights thereof, (d) any dissolution
or liquidation of the Company or any subsidiary, (e) any sale or transfer
of all or any part of the Company's or any subsidiary's assets or business,
or (f) any other
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corporate act or proceeding by the Company or any subsidiary. An Eligible
Director, any beneficiary(ies) of any such Eligible Director and/or any
other person shall not have any claim against any member of the Board or
any committee thereof, the Company or any subsidiary, or any employees,
officers or agents of the Company or any subsidiary, as a result of any
such action.
6.2 In the event of any change in capitalization affecting the Common
Stock of the Company, including, without limitation, a stock dividend or
other distribution, stock split, reverse stock split, recapitalization,
consolidation, subdivision, split-up, spin-off, split-off, combination or
exchange of shares or other form of reorganization or recapitalization, or
any other change affecting the Common Stock, proportionate adjustments
shall be made to reflect such change, including, without limitation, with
respect to the aggregate number and class of shares of the Common Stock
subject to and authorized by the Program, the number and class of shares of
Common Stock in respect of which an Option may be granted to an Eligible
Director under the Program as provided in Section 4, the number and class
of shares subject to each outstanding Option, and the per share exercise
price specified for each outstanding Option.
7. AMENDMENT; TERMINATION. The Board may suspend or terminate the Program
(or any portion thereof) at any time and may amend the Program at any time and
from time to time in such respects as the Board may deem advisable. In addition,
no such amendment, suspension or termination shall be effective if it would
materially adversely effect the rights of any Eligible Director in respect of
any outstanding Option, without the consent of such Eligible Director.
8. MISCELLANEOUS.
8.1 No Options or Common Stock shall be issued under the Program
unless legal counsel for the Company shall be satisfied that any such
issuance will be in compliance with all applicable federal and state
securities laws and regulations and any other applicable laws or
regulations. The Company may require, as a condition of any payment or
share issuance, that certain agreements, undertakings, representations,
certificates, and/or information, as the Company may deem necessary or
advisable, be executed or provided to the Company to assure compliance with
all such applicable laws or regulations. Certificates for any Options
and/or Common Stock delivered under the Program may be subject to such
stock-transfer orders and such other restrictions as the Company may deem
advisable under the rules, regulations, or other requirements of the SEC,
any stock exchange upon which the Common Stock is then listed, and any
applicable federal or state securities law. In addition, if, at any time
specified herein (or in any Award Agreement) for the issuance or other
distribution of any Options and/or Common Stock, or the payment of amounts
to any Eligible Director, any law, rule, regulation or other requirement of
any governmental authority or agency shall require either the Company, any
subsidiary or any Eligible Director (or any estate, designated beneficiary
or other legal representative thereof) to take any action in connection
therewith, any such issuance or distribution, or any such payment, as the
case may be, shall be deferred until such required action is taken. The
Program and all transactions under the Program are intended to comply with
all applicable conditions of SEC Rule 16b-3 or any successor rule thereto
under the Exchange Act. To the extent any provision of the Program fails to
so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Company.
8.2 Each Eligible Director shall enter into an Award Agreement with
the Company in a form specified by the Company. Each such Eligible Director
shall agree therein to the restrictions, terms and conditions set forth in
such Award Agreement and/or the Program.
8.3 Each Eligible Director may designate a beneficiary or
beneficiaries to exercise any Option or to receive any payment which under
the terms of the Program and the relevant Award Agreement may become
exercisable or payable on or after the Eligible Director's death. At any
time, and from time to time, any such designation may be changed or
cancelled by the Eligible Director without the consent of any such
beneficiary. Any such designation, change or cancellation must be on a form
provided for that purpose by the Company and shall not be effective until
received by the Company. If no beneficiary has been designated by a
deceased Eligible Director, or if the designated beneficiaries have
predeceased the Eligible Director, the beneficiary shall be the Eligible
Director's estate. If the Eligible Director designates
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<PAGE> 37
more than one beneficiary, any payments under the Program to such
beneficiaries shall be made in equal shares unless the Eligible Director
has expressly designated otherwise, in which case the payments shall be
made in the shares designated by the Eligible Director.
8.4 Unless otherwise provided in the Award Agreement, awards under the
Program and any Award Agreement, and any rights or interests herein or
therein, shall not be assigned, transferred, sold, exchanged, or otherwise
disposed of in any way at any time by any Eligible Director (or any
beneficiary(ies) of any Eligible Director), other than by testamentary
disposition by the Eligible Director intestate succession. Any such award,
Award Agreement, rights or interests shall not be pledged, encumbered or
otherwise hypothecated in any way at any time by any Eligible Director (or
any beneficiary(ies) of any Eligible Director). Any such award, Award
Agreement, rights or interests shall not be subject to execution,
attachment or similar legal process. Any attempt to sell, exchange,
transfer, assign, pledge, encumber, or otherwise dispose of or hypothecate
in any way any such awards, rights or interests, or the levy of any
execution, attachment or similar legal process thereon, contrary to the
terms of this Program shall be null and void and without legal force or
effect.
8.5 The Program and all actions taken thereunder shall be governed by
and construed in accordance with the laws of the State of Delaware, without
reference to the principles of conflict of laws thereof. Any titles and
headings herein are for reference purposes only, and shall in no way limit,
define or otherwise affect the meaning, construction or interpretation of
any provisions of the Program.
8.6 The Program shall be effective upon its approval by the Board and
adoption by the Company, subject to the approval of the Program by the
Company's stockholders.
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<PAGE> 38
NEW VALLEY CORPORATION
PROXY
SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE 2000 ANNUAL MEETING OF
STOCKHOLDERS OF NEW VALLEY CORPORATION
The undersigned record holder of Common Shares, $.01 per value, of New
Valley Corporation (the "Company") hereby constitutes and appoints each of Marc
N. Bell and J. Bryant Kirkland III, attorney and proxy of the undersigned, with
power of substitution, to attend, vote and act for the undersigned at the 2000
Annual Meeting of Stockholders of the Company, a Delaware corporation, to be
held at The Hyatt Regency Miami, 400 S.E. Second Avenue, Miami, Florida 33131 on
Wednesday, May 24, 2000 at 11:00 a.m. local time, and at any adjournments or
postponements thereof, with respect to the following on the reverse side of this
proxy card and, in their discretion, on such other matters as may properly come
before the meeting and at any adjournments or postponements thereof.
(TO BE CONTINUED AND SIGNED ON THE REVERSE SIDE)
[x] PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE.
Item 1. Election of Directors:
FOR all nominees named at right (except as indicated to the
contrary) [ ]
WITHHOLD AUTHORITY to vote for all nominees named at right [ ]
Nominees: Bennett S. LeBow, Howard M. Lorber, Richard J. Lampen,
Henry C. Beinstein, Arnold I. Burns, Ronald J. Kramer,
Barry W. Ridings and Victor M. Rivas.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
Item 2. Proposal to approve New Valley Corporation 2000 Long-Term
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Item 3. Proposal to approve New Valley Corporation Non-Employee Directors
Stock Option Program.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
If not otherwise directed, this proxy will be voted FOR the election of
the nominees, FOR the approval of the Long-Term Incentive Plan and FOR the
non-Employee Directors Stock Option Program.
The Board of Directors recommends a vote FOR all nominees in Item 1
and FOR the approval of Items 2 and 3.
PLEASE DATE, SIGN AND MAIL AT ONCE IN THE ENCLOSED POSTPAID ENVELOPE.
Signature _____________________ Date _____________
Signature _____________________ Date _____________
IF HELD JOINTLY
NOTE: Please sign exactly as your name appears hereon. If signing as attorney,
administrator, trustee, guardian or the like, please give full title as such. If
signing for a corporation, please give your title.
