FORM 8-K
Securities and Exchange Commission
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 19, 1997
PREMIUM CIGARS INTERNATIONAL, LTD.
(Exact name of registrant as specified in its charter)
Arizona 0-29141 86-0846405
- --------------------------------------------------------------------------------
(State or other (Commission File (IRS Employer
Jurisdiction of Number) Identification
Incorporation Number)
15651 North 83rd Way, Suite 3, Scottsdale, Arizona 85260
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code: (602) 922-8887
<PAGE>
Item 5. Other Events.
A number of changes have occurred in the management of Premium Cigars
International, Ltd. (the "Company"), several of which have been announced in
separate press releases. The Company believes the following summary may be
helpful to investors.
Management Changes. On December 15, 1997, John E. Greenwell became the
Company's President and Chief Operating Officer. At that time, the Board of
Directors agreed that then-current President and Chief Executive Officer Steven
A. Lambrecht would remain as Chief Executive Officer for a transition period.
Mr. Greenwell was appointed Chief Executive Officer effective March 1, 1998 and
Mr. Lambrecht left the Company.
Additional management changes were made to improve the Company's
operations. On January 16, 1998, Colin A. Jones was terminated as Vice President
of International Sales. R. Allen Vaughan resigned as Vice-President of Corporate
Planning and Investor Relations effective January 23, 1998 to pursue another
opportunity. On February 3, 1998, Karissa B. Nisted, the Chief Financial
Officer, left the Company and David S. Hodges, a director and former consultant
to the Company during the initial public offering, was named Chief Financial
Officer with additional responsibility for investor relations. On March 2, 1998,
Greg P. Lambrecht was terminated as Vice President of National Sales and on
March 4, 1998, as Secretary and Treasurer. The Company expects to name a new
Vice President of Sales in the near future. On March 4, 1998, David S. Hodges
was also named Treasurer, Scott I. Lambrecht, prior Assistant Secretary, was
named Secretary and James B. Stanley was named Assistant Secretary.
New Directors. On November 19, 1997, the Board of Directors appointed
Atul Vashistha as the Board's third independent director to fill a vacancy
created on August 7, 1997. Since 1996, Mr. Vashistha has been the Corporate Vice
President of Rural/Metro Corporation, a publicly-traded, $425 million company
which provides medical transportation, personal health management and safety
solutions in 25 states to a population exceeding 20 million. Mr. Vashistha
served Rural/Metro in a variety of marketing and executive management capacities
from 1991 to 1996, culminating in his position as Regional President of the
company's Southern Arizona operations. He holds an M.B.A. from Arizona State
University, where he graduated first in his class, and a B.S. in Engineering
from the Institute of Technology, Benaras Hindu University.
On February 23, 1998, the Board created an additional vacancy within
the range authorized by the Company's shareholders, and appointed John E.
Greenwell as a director, effective March 1, 1998.
<PAGE>
After the changes and additions, the Company's management and Board is:
Management:
-----------
John E. Greenwell, Chief Executive Officer, President, Chief Operating
Officer
David S. Hodges, Chief Financial Officer and Treasurer
Scott I. Lambrecht, Vice President of Operations and Secretary
James B. Stanley, Vice President of Purchasing and Assistant Secretary
Board of Directors:
-------------------
William L. Anthony, Chairman and Independent Director
John E. Greenwell
David S. Hodges
Colin A. Jones
Greg P. Lambrecht
Steven A. Lambrecht
Robert H. Manschot, Independent Director
Atul Vashistha, Independent Director
Settlement of Compensation Disputes
-----------------------------------
Current directors Colin A. Jones, Greg P. Lambrecht and Steven A.
Lambrecht claimed that their employment contracts with the Company entitled them
to receive certain increases in compensation, triggered by the hiring of Mr.
Greenwell at a higher compensation level in December, 1997, but the Company
disagreed with their premise. To settle this dispute and avoid potential
litigation, on March 3, 1998, the Company entered into settlement agreements
with each of Messrs. Jones, Greg Lambrecht and Steve Lambrecht acknowledging the
termination of their employment relationships with the Company. The Company paid
each individual $40,000 in addition to severance compensation of nine months'
salary and other benefits payable under their individual Employment Agreements.
Each of the individuals agreed to extend thier non-compete clauses for an
additional six months for a total of a full year and a half following
termination of employment.
Termination of Rose Hearts, Inc. Distributorship Agreement
----------------------------------------------------------
On February 27, 1998, the Company notified Rose Hearts, Inc. that its
Distributorship Agreement with the Company will terminate on March 28, 1998.
Rose Hearts, Inc. is wholly owned and controlled by Company director Greg P.
Lambrecht.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATED this 5th day of March, 1998
PREMIUM CIGARS INTERNATIONAL, LTD.
By: /s/ John E. Greenwell
-------------------------------------
John E. Greenwell, President,
Chief Executive Officer and Chief
Operating Officer
