1997 Non-employee Stock Purchase Plan

EXHIBIT 10.2


800-JR CIGAR, INC.


1997 NON-EMPLOYEE DIRECTORS' STOCK PLAN


1. Purpose. The purpose of this 1997 Non-Employee Directors' Stock Plan (the "Plan") of 800-JR Cigar, Inc., a Delaware corporation (the "Company"), is to advance the interests of the Company and its stockholders by providing a means to attract and retain highly qualified persons to serve as non-employee directors of the Company and to enable such persons to acquire or increase a proprietary interest in the Company, thereby promoting a closer identity of interests between such persons and the Company's stockholders.


2. Definitions. In addition to terms defined elsewhere in the Plan, the following are defined terms under the Plan:


(a) "Board" means the Board of Directors of the Company.


(b) A "Change in Control" shall be deemed to have occurred on:


(i) the date of the acquisition by any "person" (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act),
excluding the Company or any of its subsidiaries or affiliates or
any employee benefit plan sponsored by any of the foregoing, of
beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of 30% or more of either (x) the then outstanding
shares of common stock of the Company or (y) the then outstanding
voting securities entitled to vote generally in the election of
directors; or


(ii) the date the individuals who constitute the Board as of
the date of the Initial Public Offering (the "Incumbent Board")
cease for any reason to constitute at least a majority of the
members of the Board, provided that any individual becoming a
director subsequent to the effective date of this Agreement whose
election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than any individual whose
nomination for election to Board membership was not endorsed by the
Company's management prior to, or at the time of, such individual's
initial nomination for election) shall be, for purposes of this
Agreement, considered as though such person were a member of the
Incumbent Board; or


(iii) the consummation of a merger, consolidation,
recapitalization, reorganization, sale or disposition of all or a
substantial portion of the Company's assets, a reverse stock split
of outstanding voting securities, the issuance of shares


of stock of the Company in connection with the acquisition of the
stock or assets of another entity, provided, however, that a Change
in Control shall not occur under this clause (iii) if consummation
of the transaction would result in at least 70% of the total voting
power represented by the voting securities of the Company (or, if
not the Company, the entity that succeeds to all or substantially
all of the Company's business) outstanding immediately after such
transaction being beneficially owned (within the meaning of Rule
13d-3 promulgated pursuant to the Exchange Act) by at least 75% of
the holders of outstanding voting securities of the Company
immediately prior to the transaction, with the voting power of each
such continuing holder relative to other such continuing holders not
substantially altered in the transaction.


(c) "Deferred Share" means a credit to a Participant's deferral account under Section 7 which represents the right to receive one Share upon settlement of the deferral account. Deferral accounts, and Deferred Shares credited thereto, are maintained solely as bookkeeping entries by the Company evidencing unfunded obligations of the Company.


(d) "Exchange Act" means the Securities Exchange Act of 1934, as amended. References to any provision of the Exchange Act shall be deemed to include rules thereunder and successor provisions and rules thereto.


(e) "Fair Market Value" of a Share on a given date means the fair market value of such Share determined by such methods or procedures as shall be established from time to time by the Board, provided, however, that (i) if the Shares are listed on a national securities exchange or quoted in an interdealer quotation system, the Fair Market Value of such Shares on a given date shall be based upon the last sales price or, if unavailable, the average of the closing bid and asked prices per Share on such date (or, if there was no trading or quotation in the Shares on such date, on the next preceding date on which there was trading or quotation) as provided by one of such organizations, (ii) the "fair market value" of the Shares on the date on which Shares are first issued and sold pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission shall be the Initial Public Offering price of the Shares so issued and sold, as set forth in the first final prospectus used in such offering and (iii) the "fair market value" of the Shares prior to the date of the Initial Public Offering shall be as determined by the Board.


(f) "Initial Public Offering" means an initial public offering of shares in a firm commitment underwriting registered with the Securities and Exchange Commission in compliance with the provisions of the Securities Act of 1933, as amended.


(g) "Option" means the right, granted to a director under Section 6, to purchase a specified number of Shares at the specified exercise price for a specified period of time under the Plan. All Options will be non-qualified stock options.


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(h) "Participant" means a person who, as a non-employee director of the Company, has been granted an Option or Deferred Shares which remain outstanding or who has elected to be paid fees in the form of Shares or Deferred Shares under the Plan.


(i) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and applicable to the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.


(j) "Share" means a share of common stock, $.01 par value, of the Company and such other securities as may be substituted for such Share or such other securities pursuant to Section 8.


3. Shares Available Under the Plan. Subject to adjustment as provided in Section 8, the total number of Shares reserved and available for issuance under the Plan is 100,000. Such Shares may be authorized but unissued Shares, treasury Shares, or Shares acquired in the market for the account of the Participant. For purposes of the Plan, Shares that may be purchased upon exercise of an Option or delivered in settlement of Deferred Shares will not be considered to be available after such Option has been granted or Deferred Share credited, except for purposes of issuance in connection with such Option or Deferred Share; provided, however, that, if an Option expires for any reason without having been exercised in full, the Shares subject to the unexercised portion of such Option will again be available for issuance under the Plan.


4. Administration of the Plan. The Plan will be administered by the Board; provided, however, that any action by the Board relating to the Plan will be taken only if, in addition to any other required vote, such action is approved by the affirmative vote of a majority of those directors who are not then eligible to participate in the Plan.


5. Eligibility. Each director of the Company who, at the time an Option is to be granted under Section 6 or at which fees are to be paid which could be received in the form of Shares or deferred in the form of Deferred Shares under Section 7, is not an employee of the Company or any subsidiary of the Company will be eligible, at such date, to be granted an Option under Section 6 or receive fees in the form of Shares or defer fees in the form of Deferred Shares under Section 7. In addition, any person who, at the time the Company commences an Initial Public Offering, has agreed to become a director upon consummation of the Initial Public Offering will be eligible to be granted an Option under Section 6. No person other than those specified in this Section 5 will be eligible to participate in the Plan.


6. Options. An Option will be automatically granted (i) at the commencement of the Initial Public Offering, to each person who is eligible under Section 5 at that time, and thereafter (ii) at the effective date of initial election to the Board, to each person so elected who is eligible under Section 5 at that date. Notwithstanding the foregoing, any Option granted at the commencement of the Initial Public ...