CAPITAL CONTRIBUTION AGREEMENT
THIS CAPITAL CONTRIBUTION AGREEMENT ("Agreement") is made and entered
into as of August 8, 1997 by and among Premium Cigars International, Inc.
("PCI") and certain undersigned shareholders ("Contributing Shareholders"). PCI
and Contributing Shareholders are collectively referred to herein as the
Parties.
WHEREAS, PCI has filed a registration statement relating to an initial
public offering ("IPO") of its shares of Common Stock;
WHEREAS, although the IPO will not register shares held by the
Contributing Shareholders' for resale, it will create a public market for PCI's
shares of Common Stock in which Contributing Shareholders will eventually be
able to trade their shares;
WHEREAS, to complete the IPO, PCI's underwriter intends to register and
sell shares in merit review states which impose requirements set forth in
certain NASAA Statements of Policy;
WHEREAS, the NASAA Statement of Policy Regarding Promoters' Equity
Investment requires a certain minimum contribution of cash and tangible assets
by promoters and certain states reviewing PCI's registration statement have
required that PCI demonstrate compliance with the Statement of Policy;
WHEREAS, the total of all cash and tangible assets contributed by
promoters is less than the NASAA Statement of Policy requirement;
WHEREAS, the Contributing Shareholders desire to contribute sufficient
cash to PCI's paid-in capital to meet the requirements of the NASAA Statement of
Policy;
NOW THEREFORE, in consideration of the covenants, agreements,
warranties and representations contained in this Agreement, the Parties agree as
follows:
1. Status as a Promoter. Each Contributing Shareholder is a "Promoter"
as that term is Defined in Section II.O. of the NASAA Statement of Policy
Regarding Corporate Securities Definitions, because each Shareholder is either:
a. a person, who alone or in conjunction with one or more
other persons, directly or indirectly, took the initiative in
founding or organizing PCI or who controls PCI; or
b. a person who, directly or indirectly, received, as
consideration for services and/or property rendered, five
percent (5%) or more of PCI's outstanding shares of Common
Stock; or
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c. a person who is either an officer, director, the legal or
beneficial direct or indirect owner of five percent (5%) or
more of PCI's shares of Common Stock or a person who is an
affiliate or associate of the persons in a., b. or c.; and
d. is not a person who received shares of Common Stock solely
for underwriting compensation and is not an unaffiliated
institutional investor who purchased shares of PCI's common
stock more than one year prior to this Agreement.
2. Additional Paid-In Capital. The Contributing Shareholders agree,
upon the execution of this Agreement, to immediately deliver ONE HUNDRED FIFTY
THOUSAND DOLLARS ($150,000) to PCI in immediately available funds. The funds
shall be paid by the Contributing Shareholders out of the Contributing
Shareholders' personal funds as set forth on Exhibit A. Each Contributing
Shareholder warrants and represents that he has not made any pledge of, or
otherwise encumbered his shares in the process of obtaining the funds for this
contribution, nor created any expectation of any equity interest in PCI to any
third party relating to this transaction. The Parties agree that the number of
shares held by each Contributing Shareholder shall not change, that PCI shall
have no obligation whatsoever to repay the capital contribution specified in
this paragraph, nor to issue to the Contributing Shareholders any other
consideration.
3. Counterparts. This 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 Capital Contribution Agreement as of the
date first set forth above.
"Contributing Shareholders" "PCI"
PREMIUM CIGARS INTERNATIONAL, INC.
/s/ Xxxxxx X. Xxxxxxxxx By:/s/ Xxxxxx X. Xxxxxxxxx
---------------------------- ---------------------------------
Xxxxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxxxxx, Chief Executive Officer
/s/ Xxxx X. Xxxxxxxxx
----------------------------
Xxxx X. Xxxxxxxxx
/s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx
/s/ Xxxxx X. Charleston
----------------------------
Xxxxx X. Charleston
/s/ Xxxxx X. Xxxxxxx
----------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxx
----------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxx
----------------------------
Xxxxxx X. Xxxxxxx
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EXHIBIT A
SCHEDULE OF CONTRIBUTING SHAREHOLDERS
Contributing Shareholder Amount
------------------------ ------
Xxxxxx X. Xxxxxxxxx $ 47,333
Xxxx X. Xxxxxxxxx $ 39,371
Xxxxx X. Xxxxx $ 37,871
Xxxxx X. Charleston $ 9,000
Xxxxx X. Xxxxxxx $ 2,625
Xxxx X. Xxxxxx $ 7,500
Xxxxxx X. Xxxxxxx $ 6,300
--------
TOTAL: $150,000
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