EXHIBIT 10.34
Exhibit E
BROOKE GROUP LTD.
100 S.E. Second Street, 32nd Floor
Miami, Florida 33131
November 4, 1999
Mr. J. Bryant Kirkland III
100 Jefferson Avenue, Unit # 10015
Miami Beach, Florida 33139
     Dear Mr. Kirkland:
     We are pleased to inform you that Brooke Group Ltd. (the “Company”) has
granted you a nonqualified option (the “Option”) to purchase 45,000 shares of
the Company’s common stock, par value $.10 per share (the “Common Stock”), at a
purchase price of $15 7/16 per share, subject to adjustment (any of the
underlying shares of Common Stock to be issued upon exercise of the Option are
referred to hereinafter as the “Shares”), pursuant to Section 12 hereof and
pursuant to the Company’s 1999 Long-Term Incentive Plan, as may be and is in
effect and as amended from time to time (the “Plan”). This agreement is
conditioned upon the approval of the Plan by the Company’s stockholders and is
subject in all respects to the terms and provisions of the Plan, all of which
terms and provisions are made a part of and incorporated in this agreement as if
they were each expressly set forth herein. In the event of any conflict between
the terms of this agreement and the terms of the Plan, the terms of the Plan
shall control.
     1. The Option may be exercised on or prior to the tenth anniversary of the
date of grant (after which date the Option will, to the extent not previously
exercised, expire), provided the Option shall only vest and become exercisable
as to all of the aggregate shares covered thereby on the fourth anniversary of
the date of this agreement. However, the Option shall earlier vest and become
immediately exercisable upon (i) the occurrence of a “Change in Control” as
defined in Section 6(f) of the Employment Agreement dated as of June 1, 1995, as
amended as of January 1, 1996, by and between Howard M. Lorber and New Valley
Corporation, regardless of whether the Employment Agreement is then in effect
(the “Employment Agreement”), other than any Change in Control arising by reason
of a testamentary bequest by Bennett S. LeBow to or for the benefit of his
surviving spouse of any or all securities of the Company or of New Valley
Corporation beneficially owned by him as of the date of death, so long as,
following the bequest, the event referenced in Section 6(f)(ii) of the
Employment Agreement shall not have occurred, or (ii) the termination of your
employment with the Company due to death or Disability (as defined in Section
2.8 of the Plan).

 

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Mr. J. Bryant Kirkland III
November 4, 1999
Page 2
 
     2. The Option, from and after the date it vests and becomes exercisable
pursuant to Section 1 hereof, may be exercised in whole or in part by delivering
to the Company a written notice of exercise in the form attached hereto as
Exhibit A, specifying the number of the Shares to be purchased and the purchase
price therefor, together with payment of the purchase price of the Shares to be
purchased. The purchase price is to be paid in cash or by delivering shares of
Common Stock already owned by you for at least six months and having a fair
market value on the date of exercise equal to the purchase price of the Option
being exercised, or a combination of such shares and cash.
     In addition, payment of the purchase price of the Shares to be purchased
may also be made by delivering a properly executed notice to the Company,
together with a copy of the irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds necessary to pay the
purchase price, and, if required, the amount of any federal, state or local
withholding taxes.
     No Shares shall be issued until full payment therefor has been made. You
shall have all of the rights of a stockholder of the Company holding the Common
Stock that is subject to the Option (including, if applicable, the right to vote
the Shares and the right to receive dividends thereon), when you have given
written notice of exercise, have paid in full for such Shares and, if requested,
have given the certificate described in Section 9 hereof.
     3. In the event your employment with the Company is terminated for any
reason, the Option shall forthwith terminate, provided that you may exercise any
then unexercised portion of the Option then vested and exercisable pursuant to
Section 1 hereof at any time prior to the earlier of nine months after the
termination of your employment (one year in the event of death or Disability),
or the expiration of the Option.
     4. The Option is not transferable except (i) by will or the applicable laws
of descent and distribution, (ii) as a gift to a foundation, charity or other
not-for-profit organization, or (iii) for transfers to your family members or
trusts or other entities whose beneficiaries are your family members, provided
that such transfer is being made for estate, tax and/or personal planning
purposes.
     5. In the event of your death or Disability, the Option may be exercised by
your personal representative or representatives, or by the person or persons to
whom your rights under the Option shall pass by will or by the applicable laws
of descent and distribution, within the one year period following termination
due to death or Disability.
     6. 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,

 

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Mr. J. Bryant Kirkland III
November 4, 1999
Page 3
 
combination or exchange of shares or other form of reorganization or
recapitalization, or any other change affecting the Common Stock, the aggregate
number of shares of Common Stock covered by the Option and the exercise price
per share of Common Stock subject to the Option shall be proportionately
adjusted by the Company.
     7. The grant of the Option does not confer on you any right to continue in
the employ of the Company or any of its subsidiaries or affiliates or interfere
in any way with the right of the Company or its subsidiaries or affiliates to
terminate the term of your employment.
     8. The Company shall require as a condition to the exercise of any portion
of the Option that you pay to the Company, or make other arrangements regarding
the payment of, any federal state or local taxes required by law to be withheld
as a result of such exercise.
     9. Unless at the time of the exercise of any portion of the Option a
registration statement under the Securities Act of 1933, as amended (the “Act”),
is in effect as to the Shares, the Shares shall be acquired for investment and
not for sale or distribution, and if the Company so requests, upon any exercise
of the Option, in whole or in part, you agree to execute and deliver to the
Company a reasonable certificate to such effect.
     10. You understand and acknowledge that: (i) any Shares purchased by you
upon exercise of the Option may be required to be held indefinitely unless such
Shares are subsequently registered under the Act or an exemption from such
registration is available; (ii) any sales of such Shares made in reliance upon
Rule 144 promulgated under the Act may be made only in accordance with the terms
and conditions of that Rule (which, under certain circumstances, restrict the
number of shares which may be sold and the manner in which shares may be sold);
(iii) certificates for Shares to be issued to you hereunder shall bear a legend
to the effect that the Shares have not been registered under the Act and that
the Shares may not be sold, hypothecated or otherwise transferred in the absence
of an effective registration statement under the Act relating thereto or an
opinion of counsel satisfactory to the Company that such registration is not
required; and (iv) the Company shall place an appropriate “stop transfer” order
with its transfer agent with respect to such Shares.
     11. In the event of the payment of any dividends or other distributions in
respect of the Common Stock on or after the date hereof, through and including
the tenth anniversary of the date of grant, you shall receive, within ten days
of the payment of such dividend or distribution, a payment equal to the amount
of any such dividends or other distributions that would have been paid to you
had you been at the record date for such dividends or other distributions a
shareholder of the Shares issuable upon exercise of any then unexercised portion
of the Option, whether vested or unvested. Notwithstanding the prior sentence,
dividends or distributions in respect of Shares that are paid to you prior to
the date of approval of the Plan by the Company’s stockholders shall be promptly
repaid by you to the Company, with interest at Citibank N.A.’s prime interest
rate, if such approval is not obtained.

 

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Mr. J. Bryant Kirkland III
November 4, 1999
Page 4
 
     12. The Committee administering the Plan shall have the right, on or prior
to the date of the approval of the Plan by the Company’s stockholders, to
increase the exercise price of the Option based on current market conditions or
other factors deemed relevant by the Committee, provided that the exercise price
shall not exceed the Fair Market Value (as defined in the Plan) of the Shares on
the date of approval of the Plan by the Company’s stockholders.
     13. The Company represents and warrants to you as follows: (i) this
agreement and the grant of the Option hereunder have been authorized by all
necessary corporate action by the Company and this letter agreement is a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms; (ii) the grant of the Option to you on the terms set
forth herein will be exempt from the provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended, pursuant to Rule 16b-3(d)
thereunder; (iii) the Company will obtain, at its expense, any regulatory
approvals necessary or advisable in connection with the grant of the Option or
the issuance of the Shares; and (iv) the Company currently has reserved and
available, and will continue to have reserved and available during the term of
the Option, sufficient authorized and issued shares of its Common Stock for
issuance upon exercise of the Option.
     14. Promptly following the date hereof, the Company shall use its best
efforts to file and keep in effect a Registration Statement on Form S-8, Form
S-3 or other applicable form to register under the Act the Shares issuable to
you upon exercise of the Option and the resale thereof by you.
     15. This letter agreement contains all the understandings between the
Company and you pertaining to the matters referred to herein, and supercedes all
undertakings and agreements, whether oral or in writing, previously entered into
by the Company and you with respect hereto. No provision of this letter
agreement may be amended or waived unless such amendment or waiver is agreed to
in writing signed by you and a duly authorized officer of the Company. No waiver
by the Company or you of any breach by the other party hereto of any condition
or provision of this letter agreement to be performed by such other party shall
be deemed a waiver of a similar or dissimilar condition or provision at the same
time, any prior time or any subsequent time. If any provision of this letter
agreement or the application of any such provision to any party or circumstances
shall be determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this letter agreement or the
application of such provision to such person or circumstances other than those
to which it is so determined to be invalid and unenforceable, shall not be
affected thereby, and each provision hereof shall be validated and shall be
enforced to the fullest extent permitted by law. This letter agreement will be
governed by and construed in accordance with the laws of the State of Delaware,
without regard to its conflicts of laws principles. This letter agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

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Mr. J. Bryant Kirkland III
November 4, 1999
Page 5
 
     Would you kindly evidence your acceptance of the Option and your agreement
to comply with the provisions hereof by executing this letter agreement in the
space provided below.

            Very truly yours,

BROOKE GROUP LTD.
      By:   /s/ Bennett S. LeBow         Bennett S. LeBow        Chairman,
President and Chief Executive Officer     

AGREED TO AND ACCEPTED:
/s/ J. Bryant Kirkland III          
J. Bryant Kirkland III

 

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EXHIBIT A
Brooke Group Ltd.
100 S. E. Second Street, 32nd Floor
Miami, Florida 33131
Gentlemen:
     Notice is hereby given of my election to purchase ___ shares of Common
Stock, $.10 par value (the “Shares”), of Brooke Group Ltd., at a price of $___
per Share, pursuant to the provisions of the stock option granted to me on
November 4, 1999. Enclosed in payment for the Shares is:

          o   my check in the amount of $                    .

          o                        Shares having a total value of
$                    , such value being based on the closing price(s) of the
Shares on the date hereof.

     The following information is supplied for use in issuing and registering
the Shares purchased hereby:

     
Number of Certificates
   
and Denominations
 
 
 
   
Name
 
 
 
   
Address
 
 
 
   
 
 
 
 
   
 
 
 
 
   
Social Security No.
 
 
 
   
Dated:
  Very truly yours,
 
   
 
  J. Bryant Kirkland III