Document:

<PAGE>
                                                                     EXHIBIT 4.2

                                BROOKE GROUP LTD.
                       100 S.E. SECOND STREET, 32ND FLOOR
                              MIAMI, FLORIDA 33131

                                December 10, 1999

Mr. Jeffrey S. Podell
c/o Aegis Capital Corp.
70 East Sunrise Highway
Valley Stream, NY  11581

                     RE: NON-EMPLOYEE DIRECTOR STOCK OPTION

Dear Mr. Podell:

         We are pleased to inform you that Brooke Group Ltd. (the "Company") has
granted you a nonqualified option (the "Option") to purchase 10,000 shares of
the Company's common stock, par value $.10 per share (the "Common Stock"), at a
price of $16.75 per share (any of the underlying shares of Common Stock to be
issued upon exercise of the Option are referred to hereinafter as the "Shares").
The Option has been granted to you in your capacity as a non-employee member of
the Board of Directors (the "Board") of the Company, subject to the following
terms and conditions:

         1.       The Option may be exercised on or prior to the tenth
anniversary of the date of grant (at which date the Option will, to the extent
not previously exercised, expire), as follows: (a) as to 3,333 of the Shares, on
and after January 1, 2001; (b) as to an additional 3,333 of the Shares, on and
after January 1, 2002; and (c) as to the final 3,334 of the Shares, on and after
January 1, 2003. Each such installment shall be cumulative and your right of
purchase thereunder shall continue, unless exercised or terminated as herein
provided, through the expiration date of the Option.

         2.       Any installment of the Option, from and after the date it
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, 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 exercise price of the Option
being exercised, or a combination of such shares and cash.

<PAGE>

Mr. Jeffrey S. Podell
December 10, 1999
Page 2

         3.       Except to the extent provided in Section 4 hereof, in the
event your service as a member of the Board is terminated for any reason, the
Option shall forthwith terminate, provided that you may exercise any then
unexercised installments of the Option then exercisable at any time prior to the
earlier of three months after the termination of your service as a member of the
Board or the expiration of the Option.

         4.       In the event of the occurrence of any Change of Control of the
Company (as the term "Change of Control" is defined in Section 5 of the
Restricted Share Agreement, dated as of April 28, 1998, between the Company and
you), all installments of the Option (to the extent not previously exercised)
shall become immediately exercisable at any time prior to the earlier of three
months after the termination of your service as a member of the Board or the
expiration of the Option.

         5.       The Option is not transferable otherwise than by will or by
the applicable laws of descent and distribution and may be exercised during your
lifetime only by you (or in the event of your disability, by your personal
representative or representatives).

         6.       In the event of your death, 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 or distribution.

         7.       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 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.

         8.       You shall not be entitled to receive a cash payment in respect
of the Shares underlying any unexercised installments of the Option on any
dividend payment date for the Common Stock.

         9.       The grant of the Option does not confer on you any right to
continue to serve as a member of the Board of the Company or any of its
subsidiaries or affiliates for any period of time or at any particular rate of
remuneration.

         10.      Unless at the time of the exercise 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

<PAGE>

Mr. Jeffrey S. Podell
December 10, 1999
Page 3

any exercise of the Option, in whole or in part, you agree to execute and
deliver to the Company a certificate to such effect.

         11.      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.

         12.      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.

         13.      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.

<PAGE>

Mr. Jeffrey S. Podell
December 10, 1999
Page 4

         Would you kindly evidence your acceptance of the Option and your
agreement to comply with the provisions hereof by executing this letter 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/ Jeffrey S. Podell
--------------------------------------------
            Jeffrey S. Podell

<PAGE>

                                                                       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
$16.75 per Share, pursuant to the provisions of the stock option granted to me
on December 10, 1999. Enclosed in payment for the Shares is:

                  [ ]      my check in the amount of $ ____________________.

                  [ ]      ___________________ 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 an registering
the Shares purchased hereby:

         Number of Certificates
              and Denominations
                                    ------------------------------------------
         Name
                                    ------------------------------------------
         Address

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

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

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

         Social Security
                                    ------------------------------------------

Dated:

                                             Very truly yours,

                                             Jeffrey S. Podell<PAGE>

                                                                     EXHIBIT 4.3

                                BROOKE GROUP LTD.
                       100 S.E. SECOND STREET, 32ND FLOOR
                              MIAMI, FLORIDA 33131

                                December 10, 1999

Ms. Jean E. Sharpe
462 Haines Road
Mount Kisco, NY  10549-4220

                     RE: NON-EMPLOYEE DIRECTOR STOCK OPTION

Dear Ms. Sharpe:

         We are pleased to inform you that Brooke Group Ltd. (the "Company") has
granted you a nonqualified option (the "Option") to purchase 10,000 shares of
the Company's common stock, par value $.10 per share (the "Common Stock"), at a
price of $16.75 per share (any of the underlying shares of Common Stock to be
issued upon exercise of the Option are referred to hereinafter as the "Shares").
The Option has been granted to you in your capacity as a non-employee member of
the Board of Directors (the "Board") of the Company, subject to the following
terms and conditions:

         1.       The Option may be exercised on or prior to the tenth
anniversary of the date of grant (at which date the Option will, to the extent
not previously exercised, expire), as follows: (a) as to 3,333 of the Shares, on
and after January 1, 2001; (b) as to an additional 3,333 of the Shares, on and
after January 1, 2002; and (c) as to the final 3,334 of the Shares, on and after
January 1, 2003. Each such installment shall be cumulative and your right of
purchase thereunder shall continue, unless exercised or terminated as herein
provided, through the expiration date of the Option.

         2.       Any installment of the Option, from and after the date it
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, 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 exercise price of the Option
being exercised, or a combination of such shares and cash.

<PAGE>

Ms. Jean E. Sharpe
December 10, 1999
Page 2

         3.       Except to the extent provided in Section 4 hereof, in the
event your service as a member of the Board is terminated for any reason, the
Option shall forthwith terminate, provided that you may exercise any then
unexercised installments of the Option then exercisable at any time prior to the
earlier of three months after the termination of your service as a member of the
Board or the expiration of the Option.

         4.       In the event of the occurrence of any Change of Control of the
Company (as the term "Change of Control" is defined in Section 5 of the
Restricted Share Agreement, dated as of May 1, 1998, between the Company and
you), all installments of the Option (to the extent not previously exercised)
shall become immediately exercisable at any time prior to the earlier of three
months after the termination of your service as a member of the Board or the
expiration of the Option.

         5.       The Option is not transferable otherwise than by will or by
the applicable laws of descent and distribution and may be exercised during your
lifetime only by you (or in the event of your disability, by your personal
representative or representatives).

         6.       In the event of your death, 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 or distribution.

         7.       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 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.

         8.       You shall not be entitled to receive a cash payment in respect
of the Shares underlying any unexercised installments of the Option on any
dividend payment date for the Common Stock.

         9.       The grant of the Option does not confer on you any right to
continue to serve as a member of the Board of the Company or any of its
subsidiaries or affiliates for any period of time or at any particular rate of
remuneration.

         10.      Unless at the time of the exercise 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

<PAGE>

Ms. Jean E. Sharpe
December 10, 1999
Page 3

any exercise of the Option, in whole or in part, you agree to execute and
deliver to the Company a certificate to such effect.

         11.      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.

         12.      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.

         13.      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.

<PAGE>

Ms. Jean E. Sharpe
December 10, 1999
Page 4

         Would you kindly evidence your acceptance of the Option and your
agreement to comply with the provisions hereof by executing this letter 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/ Jean E. Sharpe
--------------------------------------------
        Jean E. Sharpe

<PAGE>

                                                                       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
$16.75 per Share, pursuant to the provisions of the stock option granted to me
on December 10, 1999. Enclosed in payment for the Shares is:

                  [ ]      my check in the amount of $ ____________________.

                  [ ]      ___________________ 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 an registering
the Shares purchased hereby:

         Number of Certificates
              and Denominations
                                    -------------------------------
         Name
                                    -------------------------------
         Address
                                    -------------------------------

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

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

         Social Security
                                    -------------------------------

Dated:

                                           Very truly yours,

                                           Jean E. Sharpe

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}]]