MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT (this "Modification Agreement") is made and
entered into as of August 7, 1997 by and between Steven A. Lambrecht, Greg P.
Lambrecht and Colin A. Jones (collectively "Seller"), William L. Anthony
("Anthony") and Premium Cigars International, Inc. ("PCI"). Seller, Anthony and
PCI are collectively referred to as the Parties.
WHEREAS, the Parties entered an Agreement on June 20, 1997 ("Original
Agreement"), whereby, among other things, Anthony purchased from Seller 66,000
shares of Common Stock, no par value (the "Shares") and PCI granted Anthony an
option to purchase 20,000 shares of Common Stock at the price per share printed
in the Prospectus relating to PCI's initial public offering ("IPO"); and
WHEREAS, the Parties desire to modify the Original Agreement by
rescinding the sale of 65,000 of the Shares and by changing the number and terms
of the stock options grant to Anthony, but otherwise to preserve the terms of
the Original Agreement;
NOW THEREFORE, in consideration of the covenants, agreements,
warranties and representations contained in this Agreement and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
1. Recission of Stock Purchase. Anthony and Seller rescind the sale of
65,000 of the 66,000 shares sold in the Original Agreement and the restructuring
of the sale of the remaining 1,000 Shares to purchase them at a settlement value
of $2.50 per Share or for a total of $2,500. Upon signing this Modification
Agreement, Seller will return to Anthony the remainder of $19,500 in cash and
Anthony will return to Seller the remaining 65,000 Shares as follows:
Anthony returns Cash Repaid to
Shares to Amount Anthony by Amount
--------- ------ ---------- ------
Steve Lambrecht 59,084 Steve Lambrecht $17,726
Greg Lambrecht 2,958 Greg Lambrecht $ 887
Colin Jones 2,958 Colin Jones $ 887
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TOTALS: 65,000 $19,500
2. Modification of Stock Option Grant. PCI and Anthony amend the terms
of the option grant to purchase 20,000 shares in the Original Agreement and PCI
grants Anthony an additional non-qualified option to purchase 136,250 shares of
PCI Common Stock at the price per share printed in the Prospectus relating to
the IPO. The options may be exercised from a date which is one year after the
effective date of the IPO and until a date that is five (5) years after the
effective date of the IPO. Anthony acknowledges that, upon exercise of the
options, in whole or in part, the shares purchased will be restricted shares
within the meaning of Rule 144 pursuant to the Securities Act of 1933, as
amended and that such shares may not be resold unless they are registered or
unless an exemption from registration is available. Anthony also acknowledges
that
the shares underlying the options may not be resold prior to 18 months after the
effective date of the IPO, according to the terms of a separate Lock-Up
Agreement between Anthony and PCI. The terms of the aggregate options to
purchase 156,250 shares shall be more fully set forth in a Stock Option
Agreement between PCI and Anthony and if there is any conflict between the terms
of this Modification Agreement and the terms of the Stock Option Agreement
regarding the options, the terms of the Stock Option Agreement shall control.
3. No Modification of Remaining Terms of Original Agreement. The
Parties agree that, except for the terms expressly rescinded or modified in this
Modification Agreement, all other terms of the Original Agreement shall remain
in full force and effect. Notwithstanding the foregoing, however, should a
conflict exist between the terms of this Modification Agreement and the terms of
this Original Agreement, the terms of this Modification Agreement shall control.
4. Counterparts. This Modification Agreement may be executed in one or
more counterparts and by delivery of a facsimile signature, each of which shall
be considered part and valid acceptance of the agreement.
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The parties have executed this Modification Agreement as of the date
first set forth above.
"SELLER" "Anthony"
/s/ Steven A. Lambrecht /s/ William L. Anthony
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Steven A. Lambrecht William L. Anthony
/s/ Greg P. Lambrecht
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Greg P. Lambrecht
/s/ Colin A. Jones
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Colin A. Jones
PREMIUM CIGARS INTERNATIONAL, INC.
By /s/ Steven A. Lambrecht
-------------------------
Steven A. Lambrecht, President
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