AMENDMENT TO THE BYLAWS
                                       OF
                       PREMIUM CIGARS INTERNATIONAL, LTD.

                                  July 30, 1997


         Pursuant to a Board of Directors resolution on July 30, 1997 the Bylaws
of Premium Cigars International, Ltd. are hereby amended as follows:

         ARTICLE III of the Bylaws is amended by adding Section 14:

         Section 14.  Independent Director Approval of Certain Transactions.

         a.       Definition of Independent Director. An "Independent  Director"
                  is member of the Corporation's Board of Directors who:

                  1.       is not an officer or employee of the Corporation, its
                           subsidiaries  or their  affiliates or associates  and
                           has  not  been  an   officer  or   employee   of  the
                           Corporation,  its subsidiaries or their affiliates or
                           associates within the last two years; and

                  2.       is not a  "Promoter"  of the  Corporation,  which  is
                           defined as:

                           a.       a person who alone,  or in conjunction  with
                                    one  or  more  other  persons,  directly  or
                                    indirectly  took the  initiative in founding
                                    or organizing  the  Corporation  or controls
                                    the Corporation;

                           b.       a  person  who,   directly  or   indirectly,
                                    receives  as   consideration   for  services
                                    and/or property rendered,  five percent (5%)
                                    or more of any  class  of the  Corporation's
                                    equity  securities  or five  percent (5%) or
                                    more of the  proceeds  from  the sale of any
                                    class    of   the    Corporation's    equity
                                    securities;

                           c.       a person who: (i) is an officer or director;
                                    or (ii) anyone who  legally or  beneficially
                                    owns,  directly or indirectly,  five percent
                                    (5%)   or   more   of  any   class   of  the
                                    Corporation's equity securities;

                           d.       a person who is an affiliate or an associate
                                    of a person  specified in  subsections a, b,
                                    or c.

                           e.       "Promoter"  does not  include:  (i) a person
                                    who receives  securities or proceeds  solely
                                    as underwriting  compensation if that person
                                    otherwise falls outside of the definition of
                                    a   promoter   in  a,  b,  or  c;   (ii)  an
                                    unaffiliated institutional investor.

                  3.       Does not have a  material  business  or  professional
                           relationship  with  the  Corporation  or  any  of its
                           affiliates or associates. For purposes of determining
                           whether   or   not   a   business   or   professional
                           relationship  is material,  the gross revenue derived
                           by the Independent Director from the Corporation, its
                           affiliates  and associates  shall be deemed  material
                           per  se  if it  exceeds  five  percent  (5%)  of  the
                           Independent  Director's:  (i) annual  gross  revenue,
                           derived from all sources,  during  either of the last
                           two years;  or (ii) net worth, on a fair market value
                           basis.

         b.       Requirement  to Maintain At Least Two  Independent  Directors.
                  The  Corporation  shall,  at all times,  maintain at least two
                  Independent Directors on the Board of Directors.

         c.       Policy  Regarding  Resolution  of Conflicts  of Interest.  The
                  Corporation  shall follow the following  policy  regarding all
                  related-party  transactions and to loans or the forgiveness of
                  loans, whether or not to a related-party:

                  (i)      the   Corporation   will  not  enter  any   material,
                           transaction  or loan  with a  related  or  affiliated
                           party unless the transaction or loan is on terms that
                           are no less  favorable  to the  Corporation  than the
                           Corporation   could   obtain  from  an  unrelated  or
                           unaffiliated third party; and

                  (ii)     a majority of the  Independent  Directors who have no
                           interest in the transactions  must review and approve
                           transactions  involving  related parties or conflicts
                           of interest  after having been given  access,  at the
                           Corporation's  expense, to the Corporation's  counsel
                           or to their own independent legal counsel; and

                  (iii)    when there are only two Independent  Directors,  both
                           directors must approve the transaction.