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EXHIBIT 4.1
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (this "Agreement") is entered into as of May
1, 1998 by and between Brooke Group Ltd., a Delaware corporation (the
"Company"), and X. Xxxxxx Enterprises, Inc., a Florida corporation (the
"Consultant").
RECITALS:
WHEREAS, the Company, from time to time, may require certain services,
and the Consultant is able and willing to provide such services under the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties mutually agree as follows:
TERMS:
1. Consulting Period. From the date of this Agreement until April
30, 2004 (the "Consulting Period"), the Company agrees to retain the Consultant
to act as a consultant to the Company and the Consultant agrees to accept such
engagement and to provide consulting services to the Company, upon the terms and
subject to the conditions set forth herein.
2. Consulting Fee. In consideration of the Consultant's services
and other obligations hereunder, the Company shall pay the Consultant
twenty-four (24) quarterly payments of $94,000 each or such greater or lesser
amount which, when taxed at the highest individual marginal federal income tax
rate, will yield to Consultant's shareholder(s) $57,500 after payment of such
taxes with respect to such amount (each a "Quarterly Payment") (the aggregate of
all Quarterly Payments is hereafter referred to as the "Consulting Fee"),
payable on the first business day of February, May, August and November in each
year, commencing May 1, 1998. The Company may pre-pay any or all such Quarterly
Payments, at any time and from time to time, at a discount rate of ten (10%)
percent per annum. Any payments which are not paid when due shall bear interest
at the rate of ten (10%) per annum until paid.
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(a) At the Company's option, the Company may make any
Quarterly Payment in the form of shares of Company
common stock (or such other marketable security as
the Company may reasonably determine) (the "Tendered
Securities") valued for this purpose (subject to the
provisions set forth below) at the closing price on
the trading day preceding any Quarterly Payment due
date. Such shares will be fully paid and
non-assessable and will be listed on any securities
exchange on which the common stock is then listed and
will, when delivered to you, be fully registered
under an effective Registration Statement under the
Securities Act of 1933, as amended.
(b) Upon receipt of Tendered Securities, the Consultant
may liquidate such Tendered Securities in a
commercially reasonable manner within ten (10) days
after receipt. If they are so liquidated, the
Consultant shall provide the Company with an
accounting within ten (10) days from the last trade
date of Tendered Securities, relevant to each
Quarterly Payment. If they are so liquidated, the
proceeds from such sale and any dividends or other
distributions received on the shares, less any
reasonable and customary brokerage fees paid in
connection with such sale ("Net Proceeds"), shall
equal the amount of the Quarterly Payment. The
negative difference between the amount of a Quarterly
Payment due and the Net Proceeds (if any) shall be
paid by the Company within two (2) business days of
receipt of the accounting. The positive difference
between the amount of a Quarterly Payment due and the
Net Proceeds (if any) shall be a credit against the
next Quarterly Payment. If there is a positive
difference after the last Quarterly Payment, then the
Consultant will refund the difference to the Company
with the final accounting.
(c) If the Company elects to make any Quarterly Payment
in Tendered Securities, the Tendered Securities will
be delivered to an account which the Consultant
designates, in writing, prior to any pay date. The
Tendered Securities will be registered under the
Securities Act of 1933 (the "Act"),
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and so long as the Consultant does not become an
affiliate of the Company, within the meaning of Rule
405 of the Act, the Tendered Securities may be resold
by it without registration under the Act.
3. Duties and Responsibilities. The Consultant agrees to be
available during the Consulting Period for such consultation and advice
concerning the business and affairs of the Company and its affiliates as may be
reasonably requested by the executive officers of the Company from time to time
subject to the availability of the Consultant. Any failure of the Company to
request such services shall not terminate this Agreement or alter, change, or
diminish the obligations of the Company to the Consultant hereunder. The
Consultant is an independent contractor of the Company and is not an employee or
agent of the Company nor entitled to any benefits, privileges or reimbursements
given or extended by the Company to its employees.
4. Restrictive Covenant. In consideration of the foregoing, the
Consultant agrees that from the date of this Agreement until April 30, 2004, for
any reason, the Consultant (including its officers, directors and shareholders)
shall not, directly or indirectly, engage in any business which competes with
the Company's existing business (the "Business") in any county in any state in
which the Company or any of its direct or indirect subsidiaries (collectively,
the "Companies") conducts Business during the Consulting Period; provided,
however, that, the beneficial ownership of less than five percent of the shares
of stock of any corporation having a class of equity securities actively traded
on a national securities exchange or over-the-counter market shall not be
deemed, in and of itself, to violate the prohibitions of this Section.
5. Confidentiality. The Consultant agrees that at all times
during and after the Consulting Period, the Consultant shall: (a) hold in
confidence and refrain from disclosing to any other party all information of a
private, proprietary or confidential nature, of or concerning the Companies and
their business ("Confidential Information"); (b) use the Confidential
Information solely in connection with its consulting relationship with the
Companies and for no other purpose; (c) take all precautions reasonably
necessary to ensure that the Confidential Information shall not be shown, copied
or disclosed to third parties, without the prior written consent of the
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Company; and (d) observe all security policies implemented by the Companies from
time to time with respect to the Confidential Information. In the event that the
Consultant is ordered to disclose any Confidential Information, whether in a
legal or regulatory proceeding or otherwise, the Consultant shall provide the
Secretary of the Company with prompt notice of such request or order so that the
Companies may seek to prevent disclosure in the case of any disclosure, the
Consultant shall disclose only that portion of the Confidential Information that
it is ordered or directed to disclose. Confidential Information shall not
include any information generally available in the public domain prior to
disclosure thereof.
6. Acknowledgments of the Parties. The parties agree and
acknowledge that the restrictions contained in Sections 4 and 5 are reasonable
in scope and duration and are necessary to protect the Companies. If any
provision of Sections 4 or 5 as applied to any party or to any circumstance is
adjudged by a court of competent jurisdiction to be invalid or unenforceable,
the same shall in no way affect any other circumstance or the validity or
enforceability of any other provisions of this Agreement. If any such provision,
or any part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision, and/or to delete specific words or phrases, and in its reduced
form such provision shall then be enforceable and shall be enforced.
7. Release. The Consultant hereby releases and forever discharges
the Company, New Valley Corporation and their respective officers, directors and
affiliates (collectively, the "Released Parties") from any and all actions,
causes of actions, contracts, claims and demands (collectively, "Actions"),
which the Consultant and its officers, directors and shareholders had or now
have or may have against the Released Parties for any matter arising through the
date hereof, including, but not limited to, claims based on the Age
Discrimination in Employment Act of 1967 (including the Older Workers Benefit
Protection Act), the Employee Retirement Income Security Act of 1974, the
Florida Civil Rights Act of 1992, the Dade County Equal Opportunity Ordinance,
or any common law, public policy, contract (whether oral or written, express or
implied) or tort law, and any other local, state or federal law, regulation or
ordinance having any bearing whatsoever on the terms and conditions of the
Consultant's employment. The foregoing
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release shall not affect the Company's obligations pursuant to this Agreement.
8. Indemnification. The Consultant will be indemnified by the
relevant company to the fullest extent permitted by law for any liability or
claim asserted or made against the Consultant to the extent based upon the
Consultant serving as an officer, director, employee or consultant of the
Company, New Valley Corporation or any affiliate thereof.
9. Termination. The Consultant's services under this Agreement
shall terminate upon the completion of the Consulting Period, unless further
extended by mutual agreement of the parties.
10. Notices. All notices, requests, claims, demands or other
communications under this Agreement shall be in writing and shall be deemed to
have been effectively given when delivered personally, when dispatched by
electronic facsimile transmission (with receipt thereof electronically
confirmed) or one day after having been sent by guaranteed overnight delivery to
the parties at the following addresses (or such other address for a party as
shall be specified by like notice):
To the Company:
Xxxx X. Xxxx, Esq.
Brooke Group Ltd.
000 X.X. 0xx Xxxxxx - 00xx Xx.
Xxxxx, Xxxxxxx 00000
(000) 000-0000
Fax: (000) 000-0000
To the Consultant:
Xxxxxx X. Xxxxxx, President
X. Xxxxxx Enterprises, Inc.
00000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
(000) 000-0000
Fax: (000) 000-0000
11. Amendment; Waiver. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by the parties.
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12. Assignment. This Agreement, and the Consultant's rights and
obligations hereunder, may not be assigned by it. The Company may assign its
rights, together with its obligations hereunder, to any successor thereto,
provided any such assignee acknowledges its assumption of all such rights and
obligations.
13. Severability; Survival. In the event that any provision of
this Agreement is found to be void and unenforceable by a court of competent
jurisdiction, then such unenforceable provision shall be deemed modified so as
to be enforceable (or if not subject to modification then eliminated herefrom)
for the purpose of those procedures to the extent necessary to permit the
remaining provisions to be enforced.
14. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
15. Governing Law. This Agreement shall be construed in accordance
with and governed for all purposes by the laws of the State of Florida
applicable to contracts executed and to be wholly performed within such state.
Any action under this Agreement shall be brought in a court of competent
jurisdiction located in Miami-Dade County, Florida.
16. Agency. Nothing herein shall imply or shall be deemed to imply
an agency relationship between the Consultant and the Company.
17. Entire Agreement; Authority. This Agreement contains the
entire understanding of the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings (oral or written) between
the parties with respect to such subject matter. Each signator represents that
this Agreement constitutes a valid and binding agreement on it and that each is
fully authorized to execute and deliver this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BROOKE GROUP LTD.
By: /s/ Xxxxxxx X. XxXxx
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Name: Xxxxxxx X. XxXxx
Title: Chairman and Chief
Executive Officer
X. XXXXXX ENTERPRISES, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: President
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