UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e) (210)
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
RG GLOBAL LIFESTYLES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
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Persons who are to respond to the collection of information
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RG GLOBAL LIFESTYLES, INC.
30021 Tomas, Suite 200
Rancho Santa Margarita, CA 92688
(949) 888-9500 - telephone
NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS
To Be Held September 15, 2006
TO OUR SHAREHOLDERS:
You are invited to attend the Annual Meeting of shareholders (the "Meeting") of
RG Global Lifestyles. Inc. (together with its subsidiaries, "we", "us" or
"our"), a California corporation, which will be held on Friday, September 15,
2006, at 10:00 A.M. at the Company's corporate offices at 30021 Tomas, Suite
200, Rancho Santa Margarita, CA 92688 for the following purposes:
1. To elect six (6) directors to hold office for a one year term and until each
of their successors are elected and qualified.
2. The authorization of the Company's 2006 Incentive and Nonstatutory Stock
Option Plan.
4. To ratify the appointment of Beckstead & Watts LLP as independent auditor.
5. To act upon other business as may properly come before the meeting.
All shareholders are cordially invited to attend the Meeting in person. However,
to assure your representation at the Meeting, you are urged to mark, sign, date,
and return the enclosed Proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any shareholder attending
the Meeting may vote in person even if he or she has returned a Proxy.
By Order of the Board of Directors
Louis L. Knickerbocker
Chairman of the Board
Rancho Santa Margarita, California
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING, WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN THE ENCLOSED PROXY CARD AND RETURN
IT PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE.
RG GLOBAL LIFESTYLES, INC.
30021 Tomas, Suite 200
Rancho Santa Margarita, CA 92688
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
To be Held on September 15, 2006
General
An annual report, filed on form 10K-SB, for the fiscal year ended March 31, 2006
is enclosed with this Proxy Statement.
Solicitation of Proxies
The accompanying proxy is furnished in connection with the solicitation of
proxies by the Board of Directors of RG Global Lifestyles, Inc., a California
Corporation (the "Company") for use at the Annual Meeting of Shareholders to be
held at 30021 Tomas, Suite 200, Rancho Santa Margarita, CA 92688 on September
15, 2006 and at any and all adjournments thereof (the "Annual Meeting") for the
purposes set forth in the accompanying Notice of Annual Meeting of Shareholders.
Accompanying this Proxy Statement is the Board of Directors' Proxy for the
Annual Meeting, which you may use to indicate your vote as to the proposals
described in this Proxy Statement. The Company shall mail this Proxy Statement
to its shareholders approximately on August 15, 2006.
Voting Securities
Only shareholders of record as of the close of business on July 25, 2006 (the
"record date") will be entitled to vote at the meeting and any adjournment
thereof. As of July 25, 2006, there were approximately 17,650,000 shares of
common stock of the Company, issued and outstanding and entitled to vote.
Shareholders may vote in person or by proxy. Each holder of shares of common
stock is entitled to one (1) vote for each share of stock held on the proposals
presented in this Proxy Statement. The Company's bylaws provide that a majority
of all the shares of stock entitled to vote, whether present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at the meeting. The enclosed proxy card reflects the number of shares that you
are entitled to vote. Shares of common stock may not be voted cumulatively.
Solicitation of Proxies
The cost of soliciting proxies will be borne by the Company. The Company will
solicit shareholders by mail through its regular employees and will request
banks and brokers and other custodians, nominees and fiduciaries, to solicit
their customers who have stock of the Company registered in the names of such
persons and will reimburse them for reasonable, out-of-pocket costs. In
addition, the Company may use the service of its officers and directors to
solicit proxies, personally or by telephone, without additional compensation.
Voting of Proxies
All valid proxies received prior to the meeting will be voted. The Board of
Directors recommends that you vote by proxy even if you plan to attend the
Annual Meeting. To vote by proxy, you must fill out the enclosed proxy card,
sign and date it, and return it in the enclosed postage-paid envelope. Voting by
proxy will not limit your right to vote at the Annual Meeting if you attend the
Annual Meeting and vote in person. However, if your shares are held in the name
of a bank, broker or other holder of record, you must obtain a proxy executed in
your favor, from the holder of record to be able to vote at the Annual Meeting.
Pursuant to the California Corporations Code only votes cast "FOR" a matter
constitute affirmative votes, except proxies in which a shareholder fails to
make a specification as to whether he votes "FOR", "AGAINST", "ABSTAINS" or
"WITHHOLDS" as to a particular matter shall be considered as a vote "FOR" that
matter. Votes will be tabulated by an inspector of election appointed by the
Board of Directors. Votes in which the shareholder specifies that he is
"WITHHOLDING" or "ABSTAINING" from voting are counted for quorum purposes, but
are not considered as votes "FOR" a particular mater. Broker non-votes (shares
held by a broker or nominee which are represented at the meeting, but with
respect to which the broker or nominee is not empowered to vote on a particular
proposal) are counted for quorum purposes, but are not considered as votes "FOR"
a particular matter.
Revocability of Proxies
All Proxies which are properly completed, signed and returned prior to the
Annual Meeting, and which have not been revoked, will be voted in favor of the
proposals described in this Proxy Statement unless otherwise directed. A
shareholder may revoke his or her Proxy at any time before it is voted either by
filing with the Secretary of the Company, at its principal executive offices, a
written notice of revocation or a duly-executed proxy bearing a later date or by
attending the Annual Meeting and voting in person.
Shareholder Proposals
Proposals of shareholders intended to be presented at the next Annual
Shareholder's Meeting must be received by the Company, at its offices at 30021
Tomas, Suite 200, Rancho Santa Margarita, CA 92688, not later than 120 days
before the Company releases its Proxy Statement to shareholders. Proposals
postmarked after February 28, 2007 shall be considered untimely; provided
however, should the Board of Directors elect to postpone the date of the annual
meeting the deadline for shareholder proposals shall proportionately be
extended. Proposals of shareholders must satisfy the conditions established by
the Securities and Exchange Commission ("SEC") for shareholder proposals to be
included in the Company's Proxy Statement for that meeting.
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of six (6) authorized
directors. A total of six (6) directors will be elected at the Meeting. The
nominees for election are Mr. Louis L. Knickerbocker, Mr. Grant King, Mr. Steve
Ritchie, Mr. Budy Hartono, Mr. Joseph Murray and Mr. Horst Geicke. The persons
named as "Proxies" in the enclosed form of Proxy will vote the shares
represented by all valid returned proxies in accordance with the specifications
of the shareholders returning such proxies. If no choice has been specified by a
shareholder, the shares will be voted FOR the nominees. If at the time of the
Meeting any of the nominees named below should be unable or unwilling to serve,
which event is not expected to occur, the discretionary authority provided in
the proxy will be exercised to vote for such substitute nominee or nominees, if
any, as shall be designated by the Board of Directors. If a quorum is present
and voting, the nominees for directors receiving the highest number of votes
will be elected. Abstentions and broker non-votes will have no effect on the
vote.
DIRECTORS, NOMINEES FOR DIRECTORS AND OFFICERS
The following table sets forth certain information about each of the directors,
nominees for director and officers of the Company and their current positions
with the Company.
NAME AGE POSITION(S) HELD TERM OF OFFICE
- --------------------------- -------------- ---------------------------------------------------------- ----------------------
Louis L. Knickerbocker* 66 Chairman of the Board, CEO 8/2004 to present
Chairman of the Board, CEO 5/1993- 9/2000
of Company's predecessor, L.L. Knickerbocker Co., Inc.
Chairman of the Board, CEO 7/1985 to 5/1993
of Company's predecessor International Beauty Supply,
Ltd.
Grant King* 55 Chief Operations Officer, Director 8/2004 to present
President of various wholly owned subsidiaries of the 9/1996 to 9/2000
Company's predecessor, L.L. Knickerbocker Co., Inc.
William C. Hitchcock 56 Treasurer and Chief Financial Officer (CFO) 8/2004 to present
Steve Ritchie* 63 Director 10/2005 to present
Joseph Murray* 35 Director, Secretary 11/2005 to present
Budy Hartono* 40 Director 8/2004 to present
Horst Geicke* 51 Director 8/2004 to present
CEO, sole Director 4/2004 to 8/2004
RG Global Lifestyles, Inc.
* Denotes a nominee for director.
Louis L. Knickerbocker, Chief Executive Officer and Chairman of the Board, is
experienced in management, sales and marketing, and real estate sales and
finance. He served as Chairman of the Board and Chief Executive Officer of the
Company's predecessors, International Beauty Supply, Ltd. and L.L. Knickerbocker
Co., Inc. L.L. Knickerbocker Co., Inc. completed Chapter 11 Debtor in Possession
reorganization with the US Bankruptcy Court, Central District of California in
2001. From 2001 to 2002 Mr. Knickerbocker served as Chief Financial Officer of
American Bankers. From 2002 to the present Mr. Knickerbocker has served as Chief
Executive Officer of Pinnacle International. Mr. Knickerbocker is a graduate of
Santa Monica College with a major in Economics and is currently a licensed
realtor and broker.
Mr. Knickerbocker devotes approximately thirty hours per week to his duties as
Chief Executive Officer of Pinnacle International. In addition, Mr.
Knickerbocker currently devotes approximately fifty hours per week to his duties
as Chief Executive Officer and Chairman of the Board of the Company.
Grant King, Director and Chief Operations Officer, has served as General Manager
and Managing Director of two major manufacturing and export companies in Bangkok
since 1990. From September 1996 to September 2000 Mr. King served as President
of various wholly owned subsidiaries of the Company's predecessor, L.L.
Knickerbocker Co., Inc. Between October 2000 and June 2004, Mr. King was
managing his own business interests overseas. From 1997 to July 2003, he served
for six years as president and CEO of L.L. Knickerbocker (Thai) Co. Ltd. in
Thailand. He was responsible for the day-to-day operations that included
planning, business development, fiscal controls, and sales and marketing. Mr.
King has had contact with many internationally based public companies and is
well known within the business community of several South East Asian countries.
Currently, Mr. King devotes his professional services entirely to the Company
and is not involved with any other company.
William C. Hitchcock, Chief Financial Officer, holds an LLM in taxation and
international studies from New York University, and a J.D. degree from the
University of California at Davis. Mr. Hitchcock served as a director of
Amerikal International Holdings from February 2004 to July 2004, when it merged
with the Company's predecessor. From July1999 to the present he has owned and
operated a full service tax preparation and tax representation business under
the name Bottom Line Financial, LLC. In addition, he has served as a director of
Al Barker Insurance since September1999. In addition to time spent managing his
tax consulting business, Mr. Hitchcock devotes forty hours per week to his
duties as Chief Financial Officer of the Company.
Horst Geicke, Director, obtained an MBA from Hamburg State University in Germany
in 1977. He was a commodity trader in food in Germany, the UK and Brazil and
then moved to the Far East in 1981. He founded Geicke HK Ltd. in 1981 and
Pacific Alliance Group, which handles corporate finance and fund management, in
1994, and he currently runs these holding companies. He has served as President
of the German Chamber of Commerce in Hong Kong in 1995, 1996, 2003 and 2004 and
has been a Director of the Hong Kong -Thailand Business Council as well as the
German Business Association of Hong Kong since 2002. Mr. Geicke served as the
Company's sole director from April 2004 through July 2004. He has also been a
member of the Advisory committee of the Secretary of Industry of Hong Kong
Government since 2004. Mr. Geicke devotes approximately five hours per month to
his role as a director of the Company.
Budy Hartono, Director, spent more than 20 years in executive management for a
regional-based company in South East Asia, overseeing the operations of their
health and beauty business group, where his experience included forecasting,
planning and creative marketing. Since January 2000 he has served as Director of
PT Pacific Image International, a marketing company. Mr. Hartono devotes
approximately five hours per month to his services as a director of the Company.
Steve Ritchie, Director, retired Brig. Gen. USA, Gen. Ritchie became an advisory
board member to the Company in August, 2005 and subsequently became a Director
in October, 2005. Prior to joining the Company in these positions, Mr. Ritchie
had a career in the US Air Force, culminating with the rank of Brigadier
General.
Joseph Murray, Director, VP Operations, Secretary, obtained a B.A in Physics and
a B.A. in Business Administration from Wesleyan University, Bloomington, IL in
1993 and 1994. Prior to joining the Company, Mr. Murray worked for Northrop
Grumman from January 2002 to May 2005 as a mobile technical director; and for
Iway, from June 2001 to December 2002 as Vice President of Technology; and Volt
from January 2000 to July 2001 as a technical lead and project manager.
Currently, Mr. Murray devotes his professional services entirely to the Company
and is not involved with any other company.
There are no family relationships among our directors and executive officers.
Louis L. Knickerbocker was involved with the Company's predecessor when an
involuntary petition for Chapter 11 bankruptcy was filed by certain of its
creditors in 2001. No other director or executive officer has been a director or
executive officer of any business which has filed a bankruptcy petition or had a
bankruptcy petition filed against it during the past five years. No director or
executive officer has been convicted of a criminal offense or is the subject of
a pending criminal proceeding during the past five years. No director or
executive officer has been the subject of any order, judgment or decree of any
court permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities during the past five years. No director or officer has been found by
a court to have violated a federal or state securities or commodities law during
the past five years.
None of our directors or executive officers or their respective immediate family
members or affiliates are indebted to us. As of July 25, 2006, there is no
material proceeding to which any of our directors, executive officers or
affiliates is a party or has a material interest adverse to us.
The Board of Directors Recommends a
Vote in Favor of Each Nominee
MANAGEMENT INFORMATION
Meetings of the Board of Directors
The Board of Directors has not met together as a group in the past year. All
actions have been authorized pursuant to unanimous written consent. A written
consent requires all members to vote affirmatively for the motion and this was
done for all motions placed before the Board.
The following table sets forth certain information regarding the beneficial
ownership of our shares of common stock as of July 25, 2006 (except where
another date is indicated) by:
o each person known by us to beneficially own more than five percent
of our common stock;
o each director and nominee for director;
o each of the named executive officers listed in the Summary
Compensation Table herein; and
o all of our directors and executive officers as a group.
The information provided in the table is based on our records, information filed
with the Securities and Exchange Commission and information provided to us,
except where otherwise noted. Unless otherwise indicated the business address of
each person shown below is 30021 Tomas, Suite 200, Rancho Santa Margarita, CA
92688.
Amount and
Nature of
Name and Address Beneficial Percent Ownership
of Beneficial Owners Ownership (1) as of July 25, 2006
- ----------------------------------------------- -------------- --------------------
Louis L. Knickerbocker 5,148,834(2) 27.1%
Grant King 522,000(3) 2.7%
Horst Geicke 1,086,500 5.7%
William C. Hitchcock 448,000(4) 2.6%
Budy Hartono 2,887,466 15.2%
Joseph Murray 168,000(5) *
Steve Ritchie 100,000 *
All directors and executive officers as a
group (7 individuals) 10,270,800 54.1%
(1) Beneficial ownership is determined pursuant to Rule 13d-3 under the
Act.
(2) Includes options exercisable within 60 days of July 25, 2006 to
purchase 668,000 shares of Company common stock,
(3) Includes options exercisable within 60 days of July 25, 2006 to
purchase 332,000 shares of Company common stock.
(4) Includes options exercisable within 60 days of July 25, 2006 to
purchase 168,000 shares of Company common stock.
(5) Includes options exercisable within 60 days of July 25, 2006 to
purchase 168,000 shares of Company common stock.
* Less than 1%
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on our review of certain reports filed with the Securities and
Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of
1934 (the "1934 Act"), as amended the following reports required to be filed
pursuant to the 1934 Act with respect to transactions in our Common Stock
through March 31, 2006 were untimely: Form 4 Statements reflecting the sale of
common Stock by Grant King and Horst Geicke. In addition, Form 3 Statements were
not filed by either Steve Ritchie or Joseph Murray to reflect the commencement
of their tenures. Form 4 Statements were not filed by either Bruce Thomsen or
Herrie Tantono to reflect the end of their tenures. None of the Company's
officers or directors filed Form 4 Statements with regards to stock option
grants by the Company.
Compensation of Officers and Directors
The following table sets forth the total compensation earned by or paid to our
executive officers for the last three fiscal years.
LONG TERM COMPENSATION
ANNUAL ---------------------------------------
COMPENSATION Awards Payouts
----------------------------------- ---------------------------- --------
Fiscal
Year Other Securities
ending Annual Restricted Underlying LTIP All Other
Name and Title March 31 Salary Bonus Compensation Stock Awards options/SARs Payouts Compensation
--------- -------- ---------- --------------- --------------- ----------- -------- --------------
($) ($) ($) (#) ($) ($)
Lou Knickerbocker, 2006 (3) 0 0 4,008,000*
Chief Executive, 2005 0 0 520,000
Chairman 2004 0 0
Grant King, 2006 0 0 1,992,000*
Chief Operations 2005 0 0 120,000
Officer,
Director 2004 0 0
William C.
Hitchcock, 2006 (4) 36000 0 1,008,000*
Chief Financial 2005 9000 0 280,000
Officer,
Treasurer 2004 0 0
Joseph Murray, 2006 (5) 0 0 1,008,000*
Secretary, 2005 0 0
Director 2004 0 0
Horst Geicke, 2006 0 0
Director 2005 0 0
2004 0 0
Budy Hartono, 2006 0 0
Director 2005 0 0 120,000
2004 0 0
Steve Ritchie, 2006 0 0
Director 2005 0 0 100,000+
2004 0 0
Bruce Thomsen (1) 2006 0 0
2005 0 0 120,000 15,000
2004 0 0
Herrie Tantono (2) 2006 21717 0
2005 43433 0 520,000
2004 0 0
(1) Resigned from Board of Directors on April 26, 2006.
(2) Resigned from all positions with the Company on September 30, 2005.
(3) On May 1, 2006, Mr. Knickerbocker began receiving a salary of $9,155/month.
(4) On May 1, 2006, Mr. Hitchcock's salary increased to $7,500/month.
(5) On May 1, 2006 Mr. Murray began receiving a salary of $7,500/month.
* Options granted pursuant to 2006 Incentive and Nonstatutory Stock Option Plan
+ Options granted are not granted pursuant to a plan of compensation.
Code of Ethics
Our Board of Directors adopted a Code of Ethics that applies to all executive
officers as well as employees of the Company and its subsidiaries. The Code of
Ethics requires that senior management avoid conflicts of interest; maintain the
confidentiality of information relating to our Company; engage in transactions
in shares of our common stock only in compliance with applicable laws and
regulations an the requirements set forth in the code of Ethics; and comply with
other requirements which are intend to ensure that such officers conduct
business in an hones and ethical manner and otherwise act with integrity and in
the best interest of the Company.
Legal Proceedings
Neither the Company nor any of its officers, directors 5% beneficial owners or
nominees for director is party to current or pending legal proceedings which
would be considered adverse to the Company. Louis L. Knickerbocker was involved
with the Company's predecessor when an involuntary petition for Chapter 11
bankruptcy was filed by certain of its creditors in 2001.
Audit Committee
Pursuant to the Sarbanes-Oxley Act of 2002, the Company constituted an Audit
Committee in September 2004 and has adopted the Written Charter of the Audit
Committee, attached as appendix A to the Company's Definitive Proxy Statement
filed September 20,2005. The Audit Committee consists of six members including
an outside Director, an outside financial expert, the Chief Executive Officer,
Chief Financial Officer, Chief Operations Officer and the Secretary of the
Company. The Company's Board of Directors has determined that the Company shall
have one audit committee financial expert serving on its Audit Committee. The
name of this independent audit committee member is David L. Koontz, CPA. David
L. Koontz, CPA, Mr. Koontz previously was employed by O2Diesel Corporation, a
publicly traded company, from July 2003 to August 2005. From September 2002 to
July 2003, he was employed by the AAE Technologies, Inc., an affiliate of O2
Diesel Corporation. From January 2000 to September 2002 Mr. Koontz was self
employed. Mr. Koontz is compensated in the amount of $1500 per month and is
reimbursed for travel and other expenses related to his service as a Member of
the Audit Committee. The remaining members of the audit committee are Budy
Hartono, William C. Hitchcock, Louis L. Knickerbocker, Joseph Murray and Grant
King.
Audit Committee Report
Under the rules of the SEC, this Audit Committee Report is not deemed to be
incorporated by reference by any general statement incorporating this Proxy
Statement by reference into any filings with the SEC.
The Audit Committee has reviewed and discussed the Company's audited financial
statements with Company management including a discussion of the quality, not
just the acceptability, of the accounting principles, the reasonableness of
significant judgments and the clarity of disclosures in the financial statements
and has discussed certain required matters with the Company's independent
auditors, in accordance with Statement of Auditing Standards No.
61(Communication with Audit Committee), as amended by Statement on Auditing
Standards No. 89 (Audit Adjustments) and Statement on Auditing Standards No. 90
(Audit Committee Communications). Our independent accountants also provided to
the Audit Committee the written disclosures and the letter required by
Independent Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and the Audit Committee discussed with the independent accountants
that firm's independence.
The Company's independent auditors also provided written documentation to the
Audit Committee, describing all relationships between the auditors and the
Company that might bear on the auditor's independence as required by
Independence Standards Boards Standard No. 1. The Audit Committee discussed with
the auditors any relationships that may impact their objectivity and
independence and satisfied itself as to the auditor's independence.
Based on the above-mentioned reviews and discussions with management and the
independent auditors, the Audit Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report on Form
10-KSB for the fiscal year ended March 31, 2006. The Audit Committee also
recommended the re-appointment of the independent auditors and the Board
concurred in such recommendation.
Audit Committee
William C. Hitchcock, David Koontz, Louis L. Knickerbocker, Budy
Hartono, Grant King and Joseph Murray
Change in Control
There are no arrangements known to the Company, including any pledge by any
person of securities of the Company, the operation of which may at a subsequent
date result in a change of control of the Company.
Certain Relationships and Related Transactions
The Company's only related party transaction is the month-to-month rental
agreement with Pinnacle International, Inc., a California corporation which is
wholly owned by Louis Knickerbocker ("Pinnacle"), the Chief Executive Officer
and Chairman of the Board of Directors of the Company. The agreement is for
3,000 square feet of office space located at 30021 Tomas, Suite 200, Rancho
Santa Margarita, California 92688 and office support services at a fair market
rate of $6,000 per month. During the fiscal year ended March 31, 2006, the
Company expensed $72,177 of rent to related party under this agreement.
Communications From Security Holders to the Board
Security Holders may communicate with the Board by sending correspondence
addressed to the Board to the Company's Principal Office located at 30021 Tomas,
Suite 200, Rancho Santa Margarita, CA 92688.
PROPOSAL 2
2006 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN
This 2006 Incentive and Nonstatutory Stock Option Plan (the "Plan"), attached
hereto as Appendix A, is intended to further the growth and financial success of
R.G. Global Lifestyles, Inc. (the "Company") by providing additional incentives
to selected employees, directors, and consultants to the Company or parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended
(the "Code") (such parent corporations and subsidiary corporations hereinafter
collectively referred to as "Affiliates") so that such employees and consultants
may acquire or increase their proprietary interest in the Company. Stock options
granted under the Plan (hereinafter "Options") may be either "Incentive Stock
Options," as defined in Section 422A of the Code and any regulations promulgated
under said Section, or "Nonstatutory Options" at the discretion of the Board of
Directors of the Company (the "Board") and as reflected in the respective
written stock option agreements granted pursuant hereto.
The Board of Directors of the Company has unanimously approved and recommends to
the shareholders that they approve the proposal to adopt the Company's 2006
Incentive and Nonstatutory Stock Option Plan ("Plan") covering 10,000,000 shares
of the Company's Common Stock, which is greater than 50%of the Common Stock
currently issued and outstanding. The Board of Directors believes it is in the
Company's and its shareholders' best interests to approve the new 2006 Plan, as
it will provide sufficient shares to enable the Board to utilize stock based
incentive compensation for both current and future employees of the Company,
directors and other providers of services to the Company. A copy of the 2006
Plan is attached hereto as Exhibit A.
The proposed 2006 Plan will be adopted upon receiving the affirmative vote of
holders of a majority of the shares present or represented by proxy at the
Meeting.
The Board of Directors Unanimously Recommends a
Vote in Favor of Proposal Number 2
At July 25, 2006 the closing market price of the Company's shares was $0.70
SUMMARY OF THE PLAN
The following is a summary of the provisions of the Plan.
Administration
The Plan shall be administered by the Board of Directors of the Company;
provided however, that the Board may delegate such administration to a committee
of not fewer than three (3) members (the "Committee"), at least two (2) of whom
are members of the Board and all of whom are disinterested administrators, as
contemplated by Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended ("Rule 16b-3"); and provided further, that the foregoing
requirement for disinterested administrators shall not apply prior to the date
of the first registration of any of the securities of the Company under the
Securities Act of 1933, as amended.
Eligibility
The persons who shall be eligible to receive Options shall be employees,
directors, or consultants of the Company or any of its Affiliates ("Optionees").
The term consultant shall mean any person who is engaged by the Company to
render services and is compensated for such services, and any director of the
Company whether or not compensated for such services; provided that, if the
Company registers any of its securities pursuant to the Securities Act of 1933,
as amended (the "Act"), the term consultant shall thereafter not include
directors who are not compensated for their services or are paid only a director
fee by the Company.
The Plan authorizes the granting of both incentive stock options, as defined
under Section 422 of the Internal Revenue Code of 1986 ("ISO"), and
non-statutory stock options ("NQO") to purchase Common Stock. All employees of
the Company and its affiliates are eligible to participate in the Plan. The Plan
also authorizes the granting of NQO's to non-employee Directors and others
performing services to the Company.
Any Option granted to a person who at the time the Option is granted owns stock
possessing more than ten percent (10%) of the total combined voting power of
value of all classes of stock of the Company, or of any Affiliate, ("Ten Percent
Holder") shall have an Option Price of no less than one hundred ten percent
(110%) of the fair market value of the common stock as of the date of grant.
Incentive Stock Options granted to a person who at the time the Option is
granted is not a Ten Percent Holder shall have an Option price of no less than
one hundred percent (100%) of the fair market value of the common stock as of
the date of grant. Nonstatutory Options granted to a person who at the time the
Option is granted is not a Ten Percent Holder shall have an Option Price
determined by the Board as of the date of grant.
No option granted pursuant to the Plan is transferable otherwise than by will or
the laws of descent and distribution. If there is a stock split, stock dividend,
or other relevant change affecting the Company's shares, appropriate adjustments
would be made in the number of shares that could be issued in the future and in
the number of shares and price under all outstanding grants made before the
event. Future options may also cover such shares as may cease to be under option
by reason of total or partial expiration, termination or voluntary surrender of
an option.
The aggregate fair market value (determined at the time an option is granted) of
the Common Stock with respect to which ISO's are exercisable for the first time
by any person during any calendar year under the Plan shall not exceed $300,000.
Any Option granted to an Employee of the Company shall become exercisable over a
period of no longer than five (5) years, and no less than twenty percent (20%)
of the shares covered thereby shall become exercisable annually. No Option shall
be exercisable, in whole or in part, prior to one (1) year from the date it is
granted unless the Board shall specifically determine otherwise, as provided
herein. In no event shall any Option be exercisable after the expiration of five
(5) years from the date it is granted. Unless otherwise specified by the Board
or the Committee in the resolution authorizing such option, the date of grant of
an Option shall be deemed to be the date upon which the Board or the Committee
authorizes the granting of such Option.
FEDERAL INCOME TAX CONSEQUENCES
The holder of an ISO does not realize taxable income upon the grant or upon the
exercise of the option (although the option spread is an item of tax preference
income potentially subject to the alternative minimum tax). If the stock
acquired upon exercise of the options sold or otherwise disposed of within two
(2) years from the option grant date or within one year from the exercise date
then, in general, gain realized on the sale is treated as ordinary income to the
extent of the option spread at the exercise date, and the Company receives a
corresponding deduction. Any remaining gain is treated as capital gain. If the
stock is held for at least two (2) years from the grant date and one year from
the exercise date, then gain or loss realized upon the sale will be capital gain
or loss and the Company will not be entitled to a deduction. A special basis
adjustment applies to reduce the gain for alternative minimum tax purposes.
An optionee does not realize taxable income upon the grant of an NQO. In
general, the holder of a NQO realizes ordinary income in an amount equal to the
difference between the exercise price and the market value on the date of
exercise. The Company is entitled to an expense deduction at the same time and
in a corresponding amount.
The following options have been issued pursuant to the 2006 Plan as of July 25,
2006:
- -------------------------------------- ---------------- ---------------- ----------------- ---------------- ----------------
Options issued to: Date of Grant Number of Exercise price Vesting dates Expiration
------------- ---------- -------------- ------------- ----------
Name and Position options dates
------- -----
- -------------------------------------- ---------------- ---------------- ----------------- ---------------- ----------------
Louis L. Knickerbocker May 3, 2006 4,008,000 $0.94 Monthly over May 3, 2011
two years from
date of grant.
- -------------------------------------- ---------------- ---------------- ----------------- ---------------- ----------------
William C. Hitchcock May 3, 2006 1,008,000 $0.50 Monthly over May 3, 2011
two years from
date of grant.
- -------------------------------------- ---------------- ---------------- ----------------- ---------------- ----------------
Grant King May 3, 2006 1,992,000 $0.50 Monthly over May 3, 2011
two years from
date of grant.
- -------------------------------------- ---------------- ---------------- ----------------- ---------------- ----------------
Joseph Murray May 3, 2006 1,008,000 $0.50 Monthly over May 3, 2011
two years from
date of grant.
- -------------------------------------- ---------------- ---------------- ----------------- ---------------- ----------------
Scott Olson May 3, 2006 201,600 $0.50 Monthly over May 3, 2011
two years from
date of grant.
- -------------------------------------- ---------------- ---------------- ----------------- ---------------- ----------------
Executives Officers as a Group 8,016,000
- -------------------------------------- ---------------- ---------------- ----------------- ---------------- ----------------
Non-Executive Officer Director Group 0
- -------------------------------------- ---------------- ---------------- ----------------- ---------------- ----------------
Non-Executive Officer Employee and 201,600
Consultant Group
- -------------------------------------- ---------------- ---------------- ----------------- ---------------- ----------------
Total issued 8,217,600
- -------------------------------------- ---------------- ---------------- ----------------- ---------------- ----------------
PROPOSAL NO. 3
RATIFICATION OF AUDIT COMMITTEE'S SELECTION OF BECKSTEAD & WATTS LLP AS OUR
INDEPENDENT AUDITOR FOR FISCAL 2006-2007
The Audit Committee has appointed the firm of Beckstead & Watts, LLP as the
independent auditor to audit the accountants of R G Global Lifestyles, Inc. and
its subsidiaries for the year 2006. This firm has audited the accountants and
records of R G Global Lifestyles, Inc. and its subsidiaries since April 2004.
Representatives of Beckstead & Watts LLP are invited to attend the Annual
Meeting and to respond to appropriate questions, and they will have the
opportunity to make a statement if they wish.
In the event shareholders fail to ratify the appointment of Beckstead & Watts,
LLP the Audit Committee will reconsider this appointment. Even if the
appointment is ratified, the Audit Committee, in its discretion, may direct the
appointment of a different independent auditor at any time during the year if
the Audit Committee determines that such a change would be in the interests of R
G Global Lifestyles, Inc. and its shareholders.
The affirmative vote of the holders of a majority of the Company's common stock
represented and voting at the meeting either in person or by proxy will be
required to for approval of this proposal. Neither abstentions nor broker
non-votes shall have any effect on the outcome of this vote.
The Board of Directors Unanimously Recommends a
Vote in Favor of Proposal Number 3
RELEVANT INFORMATION
Audit Committee Charter
The Company's Board of Directors has adopted a written charter for the Audit
Committee, which established operating guidelines for the Audit Committee. A
copy of the Charter of the Audit Committee is attached as Appendix A to the
Company's Definitive Proxy Statement on September 20, 2005.
Beckstead & Watts, LLP, Certified Public Accountants ("Beckstead")
Beckstead was our independent auditor and examined our financial statements for
the fiscal years ending March 31, 2005 and March 31, 2006. Beckstead performed
the services listed below and was paid the fees listed below for the fiscal
years ended March 31, 2005 and March 31, 2006.
Kellogg and Anderson, Certified Public Accountants ("Kellogg")
Kellogg was our tax advisor for the fiscal years ending March 31, 2006 and March
31, 2005. Kellogg performed services listed below and was paid the fees listed
below for the fiscal years ending March 31, 2006 and March 31, 2005.
Audit Fees
Beckstead was paid aggregate fees of approximately $90,000 for the fiscal year
ended March 31, 2005 and approximately $83,500 for the fiscal year ended March
31, 2006 for professional services rendered for the audit of our annual
financial statements and for the reviews of the financial statements included in
our quarterly reports on Form 10-QSB during these fiscal years.
Audit Related Fees
Beckstead was not paid additional fees for either of the fiscal years March 31,
2005 or March 31, 2006 for assurance and related services reasonably related to
the performance of the audit or review of our financial statements.
Tax Fees
Kellogg was paid fees of $5,000 for the fiscal year ended March 31, 2005, and
fees of $8,177.50 for the fiscal year ended March 31, 2006 for professional
services rendered for tax compliance, tax advice and tax planning during these
fiscal years.
All Other Fees
Kellogg was not paid any other fees for professional services during the fiscal
years ended March 31, 2005 and March 31, 2006.
Beckstead was not paid any other fees for professional services during the
fiscal year ended March 31, 2005, however, Beckstead was paid $5,000 for
professional services in connection with the accounting for the distribution of
Amerikal Neutraceutical Corporation , the Company's former wholly owned
subsidiary, during the fiscal year ended March 31, 2006.
Audit Committee
Pursuant to the requirements of the Sarbanes-Oxley Act of 2002, the Company
constituted an Audit Committee in September 2004. The audit committee consists
of six (6) members, including one outside Director, an outside financial expert,
the CFO, CEO, COO and the Secretary of the Company. The Audit Committee
functions independently of Management of the Company, pursuant to its Charter,
and there is no delegation of audit committee responsibilities to management.
The Audit Committee met four (4) times during the fiscal year ended March 31,
2006, and met twice during the fiscal year ended March 31, 2006. The Audit
Committee has four (4) scheduled meetings for the fiscal year ended March 31,
2007. During Audit Committee meetings, by vote of the majority of members of the
Committee, various members were assigned to investigate and report to the
Committee regarding different areas of internal controls and accounting
oversight matters. The Internal Controls Memorandum was divided among all
members, for review, response, discussion and eventual compilation. This
Internal Controls Memorandum has been reviewed and updated by members of the
Audit Committee four (4) times since the inception of the Company, including
once on March 2006.
Among the policies and procedures adopted by the Audit Committee is the
requirement that Mr. David Koontz, CPA, outside financial expert to the Audit
Committee, is charged with the responsibility for investigation, contact, and
negotiation with the independent auditor regarding audit and review fees
incurred during the fiscal year. In accordance with the requirements of
paragraph (c) (7) (i) of Rule 2-01 of Reg S-X, Mr. Koontz made all necessary
contact, inquiry, and recommendations to the Audit Committee, in order to enable
the Committee to approve all (100%) of the independent auditing fees and
quarterly review fees, in advance, for the conduct of the audit for the fiscal
year ended March 31, 2006, and for the quarterly reviews for the periods ending
June 30, September 30, and December 31, 2006. Subsequent to the association of
Mr. Koontz as the outside Financial Expert, no part of the pre-approval policies
and procedures for the foregoing specified services has been delegated to
management. Mr. Koontz was further consulted in connection with the Audit
Committee's review and recommendations to management concerning the proposed
distribution of the Amerikal Nutraceutical subsidiary to a group of shareholders
effective as of October 1, 2005.
OTHER MATTERS
We have not received notice of and do not expect any matters to be presented for
vote at the meeting, other than the proposals described in this Proxy Statement.
If you grant a proxy, the person named as proxy holder, Christen Currie, or
their nominees or substitutes, will have the discretion to vote your shares on
any additional matters properly presented for a vote at the meeting. If for any
unforeseen reason, any of our nominees are not available as a candidate for
director, the proxy holder will vote your proxy for such other candidate or
candidates nominated by our Board.
By Order of the Board of Directors
Louis L.Knickerbocker
Chairman of the Board
Rancho Santa Margarita, California
July 28, 2006
APPENDIX A
R.G. GLOBAL LIFESTYLES, INC.
2006 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN
1. Purpose
This Incentive and Nonstatutory Stock Option Plan (the "Plan") is
intended to further the growth and financial success of R.G. Global Lifestyles,
Inc. (the "Corporation") by providing additional incentives to selected
employees, directors, and consultants to the Corporation or parent corporation
or subsidiary corporation of the Corporation as those terms are defined in
Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code") (such parent corporations and subsidiary corporations hereinafter
collectively referred to as "Affiliates") so that such employees and consultants
may acquire or increase their proprietary interest in the Corporation. Stock
options granted under the Plan (hereinafter "Options") may be either "Incentive
Stock Options," as defined in Section 422A of the Code and any regulations
promulgated under said Section, or "Nonstatutory Options" at the discretion of
the Board of Directors of the Corporation (the "Board") and as reflected in the
respective written stock option agreements granted pursuant hereto.
2. Administration
The Plan shall be administered by the Board of Directors of the
Corporation; provided however, that the Board may delegate such administration
to a committee of not fewer than three (3) members (the "Committee"), at least
two (2) of whom are members of the Board and all of whom are disinterested
administrators, as contemplated by Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3"); and provided further, that the
foregoing requirement for disinterested administrators shall not apply prior to
the date of the first registration of any of the securities of the Corporation
under the Securities Act of 1933, as amended.
Subject to the provisions of the Plan, the Board and/or the Committee
shall have authority to (a) grant, in its discretion, Incentive Stock Options in
accordance with Section 422A of the Code or Nonstatutory Options; (b) determine
in good faith the fair market value of the stock covered by an Option; (c)
determine which eligible persons shall be granted Options and the number of
shares to be covered thereby and the term thereof; (d) construe and interpret
the Plan; (e) promulgate, amend and rescind rules and regulations relating to
its administration, and correct defects, omissions, and inconsistencies in the
Plan or any Option; (f) consistent with the Plan and with the consent of the
optionee, as appropriate, amend any outstanding Option or amend the exercise
date or dates thereof; (g) determine the duration and purpose of leaves of
absence which may be granted to option holders without constituting termination
of their employment for the purpose of the Plan; and (h) make all other
determinations necessary or advisable for the Plan's administration. The
interpretation and construction by the Board of any provisions of the Plan or of
any Option it shall be conclusive and final. No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option.
1
3. Eligibility
The persons who shall be eligible to receive Options shall be
employees, directors, or consultants of the Corporation or any of its Affiliates
("Optionees"). The term consultant shall mean any person who is engaged by the
Corporation to render services and is compensated for such services, and any
director of the Corporation whether or not compensated for such services;
provided that, if the Corporation registers any of its securities pursuant to
the Securities Act of 1933, as amended (the "Act"), the term consultant shall
thereafter not include directors who are not compensated for their services or
are paid only a director fee by the Corporation.
(a) Incentive Stock Options. Incentive Stock Options may only
be issued to employees of the Corporation or its Affiliates. Incentive Stock
Options may be granted to officers, whether or not they are directors, but a
director shall not be granted an Incentive Stock Option unless such director is
also an employee of the Corporation. Payment of a director fee shall not be
sufficient to constitute employment by the Corporation. Any grant of option to
an officer or director of the Corporation subsequent to the first registration
of any of the securities of the Corporation under the Act shall comply with the
requirements of Rule 16b-3. An optionee may hold more than one Option.
The Corporation shall not grant an Incentive Stock Option
under the Plan to any employee if such grant would result in such employee
holding the right to exercise for the first time in any one calendar year, under
all options granted to such employee under the Plan or any other stock option
plan maintained by the Corporation or any Affiliate, with respect to shares of
stock having an aggregate fair market value, determined as of the date of the
Option is granted, in excess of three hundred thousand dollars ($300,000).
Should it be determined that an Incentive Stock Option granted under the Plan
exceeds such maximum for any reason other than a failure in good faith to value
the stock subject to such option, the excess portion of such option shall be
considered a Nonstatutory Option. If, for any reason, an entire option does not
qualify as an Incentive Stock Option by reason of exceeding such maximum, such
option shall be considered a Nonstatutory Option.
(b) Nonstatutory Option. The provisions of the foregoing
Section 3(a) shall not apply to any option designated as a "Nonstatutory Stock
Option Agreement" or which sets forth the intention of the parties that the
option be a Nonstatutory Option.
4. Stock
The stock subject to Options shall be the shares of the Corporation's
authorized but unissued or reacquired Common Stock (the "Stock").
2
(a) Number of Shares. Subject to adjustment as provided in
Paragraph 5(h) of this Plan, the total number of shares of Stock which may be
purchased through exercise of Options granted under this Plan shall not exceed
ten million (10,000,000) shares. If any Option shall for any reason terminate or
expire, any shares allocated thereto but remaining unpurchased upon such
expiration or termination shall again be available for the grant of Options with
respect thereto under this Plan as though no Option had been granted with
respect to such shares.
(b) Reservation of Shares. The Corporation shall reserve and
keep available at all times during the term of the Plan such number of shares as
shall be sufficient to satisfy the requirements of the Plan. If, after
reasonable efforts, which efforts shall not include the registration of the Plan
or Options under the Act, the Corporation is unable to obtain authority from any
applicable regulatory body, which authorization is deemed necessary by legal
counsel for the Corporation for the lawful issuance of shares hereunder, the
Corporation shall be relieved of any liability with respect to its failure to
issue and sell the shares for which such requisite authority was so deemed
necessary unless and until such authority is obtained.
5. Terms and Conditions of Options
Options granted hereunder shall be evidenced by agreements between the
Corporation and the respective Optionees, in such form and substance as the
Board or Committee shall from time to time approve. Such agreements need not be
identical, and in each case may include such provisions as the Board or
Committee may determine, but all such agreements shall be subject to and limited
by the following terms and conditions:
(a) Number of Shares: Each Option shall state the number of
shares to which it pertains.
(b) Option Price: Each Option shall state the Option Price,
which shall be determined as follows:
(i) Any Option granted to a person who at the time
the Option is granted owns (or is deemed to own pursuant to Section 424(d) of
the Code) stock possessing more than ten percent (10%) of the total combined
voting power of value of all classes of stock of the Corporation, or of any
Affiliate, ("Ten Percent Holder") shall have an Option Price of no less than one
hundred ten percent (110%) of the fair market value of the common stock as of
the date of grant; and
(ii) Incentive Stock Options granted to a person who
at the time the Option is granted is not a Ten Percent Holder shall have an
Option price of no less than one hundred percent (100%) of the fair market value
of the common stock as of the date of grant.
(iii) Nonstatutory Options granted to a person who at
the time the Option is granted is not a Ten Percent Holder shall have an Option
Price determined by the Board as of the date of grant.
3
For the purposes of this paragraph 5(b), the fair market value
shall be as determined by the Board, in good faith, which determination shall be
conclusive and binding; provided however, that if there is a public market for
such stock, the fair market value per share shall be the average of the bid and
asked prices (or the closing price if such stock is listed on the NASDAQ
National Market System) on the date of grant of the Option, or if listed on a
stock exchange, the closing price on such exchange on such date of grant.
(c) Medium and Time of Payment: To the extent permissible by applicable law, the
Option price shall be paid, at the discretion of the Board, at either the time
of grant or the time of exercise of the Option (i) in cash or by check, (ii) by
delivery of other common stock of the Corporation, provided such tendered stock
was not acquired directly or indirectly from the Corporation, or, if acquired
from the Corporation, has been held by the Optionee for more than six (6)
months, (iii) by the Optionee's promissory note in a form satisfactory to the
Corporation and bearing interest at a rate determined by the Board, in its sole
discretion, but in no event less than 6% per annum, (iv) by the surrender of the
Option (or a portion hereof) in accordance with the terms hereof but without
payment in cash (a "Cashless Exercise"), (v) with any combination of (i) and
(iv), or (iv) such other form of legal consideration permitted by State law as
may be acceptable to the Board.
The number of shares of Common Stock issuable in respect of a Cashless Exercise
shall be computed using the following formula:
X = Y (A-B)
-------
A
Where:
X = the number of shares of Common Stock to be issued to the
Holder in respect of a Cashless Exercise
Y = the number of shares of Common Stock purchasable under the
Option or, if only a portion of the Option is being exercised, the portion of
the Option being canceled in connection with such Cashless Exercise (at the date
of such calculation)
A = the Fair Market Value (as defined below) of one share of
the Corporation's Common Stock (at the date of such calculation)
B = Option Exercise Price (as adjusted to the date of such
calculation).
(d) Term and Exercise of Options: Any Option granted to an
Employee of the Corporation shall become exercisable over a period of no longer
than five (5) years, and no less than twenty percent (20%) of the shares covered
thereby shall become exercisable annually. No Option shall be exercisable, in
whole or in part, prior to one (1) year from the date it is granted unless the
Board shall specifically determine otherwise, as provided herein. In no event
shall any Option be exercisable after the expiration of five (5) years from the
date it is granted. Unless otherwise specified by the Board or the Committee in
the resolution authorizing such option, the date of grant of an Option shall be
deemed to be the date upon which the Board or the Committee authorizes the
granting of such Option.
4
Each Option shall be exercisable to the nearest whole share,
in installments or otherwise, as the respective option agreements may provide.
During the lifetime of an Optionee, the Option shall be exercisable only by the
Optionee and shall not be assignable or transferable by the Optionee, and no
other person shall acquire any rights therein. To the extent not exercised,
installments (if more than one) shall accumulate, but shall be exercisable, in
whole or in part, only during the period for exercise as stated in the option
agreement, whether or not other installments are then exercisable.
(e) Termination of Status as Employee, Director, or
Consultant: If Optionee's status as an employee, director, or consultant shall
terminate for any reason other than Optionee's death, then the Optionee (or if
the Optionee shall die after such termination, but prior to exercise, Optionee's
personal representative or the person entitled to succeed to the Option) shall
have the right to exercise any vested Options, in whole or in part, at any time
within thirty (30) days after such termination (or in the event Optionee's
termination was caused by permanent disability (within the meaning of Section
22(e)(3) of the Code) this 30-day period shall be extended to six (6) months) or
the remaining term of the Option, whichever is the lesser; provided, however,
that with respect to Nonstatutory Options, the Board may specify such longer
period, not to exceed six (6) months, for exercise following termination as the
Board deems reasonable and appropriate. The Option may be exercised only with
respect to installments that the Optionee could have exercised at the date of
termination of employment. Nothing contained herein or in any Option granted
pursuant hereto shall be construed to affect or restrict in any way the right of
the Corporation to terminate the employee of an Optionee with or without cause.
(f) Death of Optionee: If an Optionee dies while employed or
engaged as a director or consultant by the Corporation or an Affiliate, the
portion of such Optionee's Option or Options which were exercisable at the date
of death may be exercised, in whole or in part, by the estate of the decedent or
by a person succeeding to the right to exercise such Option or Options, at any
time within the remaining term of the Option, but only to the extent, that
Optionee could have exercised the Option as of the date of Optionee's death;
provided, in any case, that the Option may be so exercised only to the extent
that the Option has not previously been exercised by Optionee.
(g) Nontransferability of Option: No Option shall be
transferable by the Optionee, except by will or by the laws of descent and
distribution.
(h) Recapitalization: Subject to any required action by the
stockholders, the number of shares of common stock covered by each outstanding
Option, and the price per share thereof set forth in each such Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of common stock of the Corporation resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, or any other
increase or decrease in the number of such shares affected without receipt of
consideration by the Corporation.
5
Subject to any required action by the stockholders, if the
Corporation shall be the surviving entity in any merger or consolidation, each
outstanding Option thereafter shall pertain to and apply to the securities to
which a holder of shares of common stock equal to the shares subject to the
Option would have been entitled by reason of such merger or consolidation. A
dissolution or liquidation of the Corporation or a merger or consolidation in
which the Corporation is not the surviving entity shall cause each outstanding
Option to terminate on the effective date of such dissolution, liquidation,
merger or consolidation. In such event, if the entity which shall be the
surviving entity does not tender to Optionee an offer, for which it has no
obligation to do so, to substitute for any unexercised Option a stock option or
capital stock of such surviving entity, as applicable, which on an equitable
basis shall provide the Optionee with substantially the same economic benefit as
such unexercised Option, then the Board may grant to such Optionee, but shall
not be obligated to do so, the right for a period commencing thirty (30) days
prior to and ending immediately prior to such dissolution, liquidation, merger
or consolidation or during the remaining term of the Option, whichever is the
lesser, to exercise any unexpired Option or Options, without regard to the
installment provisions of Paragraph 5(d) of this Plan; provided, that any such
right granted shall be granted to all Optionees not receiving an offer to
substitute on a consistent basis, and provided further, that any such exercise
shall be subject to the consummation of such dissolution, liquidation, merger or
consolidation.
In the event of a change in the common stock of the
Corporation as presently constituted, which is limited to a change of all of its
authorized shares without par value into the same number of shares with a par
value, the shares resulting from any such change shall be deemed to be the
common stock within the meaning of this Plan.
To the extent that the foregoing adjustments relate to stock
or securities of the Corporation, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided in this Paragraph 5(h), the Optionee shall have no
rights by reason of any subdivision or consolidation of shares of stock or any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class, and the number or price of shares of
common stock subject to any Option shall not be affected by, and no adjustment
shall be made by reason of, any dissolution, liquidation, merger or
consolidation, or any issue by the Corporation of shares of stock of any class
or securities convertible into shares of stock of any class.
The grant of an Option pursuant to the Plan shall not affect
in any way the right or power of the Corporation to make any adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve, or liquidate or to sell or
transfer all or any part of its business or assets.
(i) Rights as a Stockholder: An Optionee shall have no rights
as a stockholder with respect to any shares covered by an Option until the date
of the issuance of a stock certificate to Optionee for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
expressly provided in Paragraph 5(h) hereof.
6
(j) Modification, Acceleration, Extension, and Renewal of
Options: Subject to the terms and conditions and within the limitations of the
Plan, the Board may modify an Option, or once an Option is exercisable,
accelerate the rate at which it may be exercised, and may extend or renew
outstanding Options granted under the Plan or accept the surrender of
outstanding Options (to the extent not theretofore exercised) and authorize the
granting of new Options in substitution for such Options, provided such action
is permissible under Section 422A of the Code and state law.
Notwithstanding the foregoing provisions of this Paragraph
5(j), however, no modification of an Option shall, without the consent of the
Optionee, alter to the Optionee's detriment or impair any rights or obligations
under any Option theretofore granted under the Plan.
(k) Investment Intent: Unless and until the issuance and sale
of the shares subject to the Plan are registered under the Act, each Option
under the Plan shall provide that the purchases of stock thereunder shall be for
investment purposes and not with a view to, or for resale in connection with,
any distribution thereof. Further, unless the issuance and sale of the stock
have been registered under the Act, each Option shall provide that no shares
shall be purchased upon the exercise of such Option unless and until (i) any
then applicable requirements of state and federal laws and regulatory agencies
shall have been fully complied with to the satisfaction of the Corporation and
its counsel, and (ii) if requested to do so by the Corporation, the person
exercising the Option shall (i) give written assurances as to knowledge and
experience of such person (or a representative employed by such person) in
financial and business matters and the ability of such person (or
representative) to evaluate the merits and risks of exercising the Option, and
(ii) execute and deliver to the Corporation a letter of investment intent, all
in such form and substance as the Corporation may require. If shares are issued
upon exercise of an Option without registration under the Act, subsequent
registration of such shares shall relieve the purchaser thereof of any
investment restrictions or representations made upon the exercise of such
Options.
(l) Exercise Before Exercise Date: At the discretion of the
Board, the Option may, but need not, include a provision whereby the Optionee
may elect to exercise all or any portion of the Option prior to the stated
exercise date of the Option or any installment thereof. Any shares so purchased
prior to the stated exercise date shall be subject to repurchase by the
Corporation upon termination of Optionee's employment as contemplated by
Paragraphs 5(e), 5(f) and 5(g) hereof prior to the exercise date stated in the
Option and such other restrictions and conditions as the Board or Committee may
deem advisable.
(m) Other Provisions: The Option agreements authorized under
this Plan shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the Options, as the Board or the Committee
shall deem advisable. Shares shall not be issued pursuant to the exercise of an
Option, if the exercise of such Option or the issuance of shares thereunder
would violate, in the opinion of legal counsel for the Corporation, the
provisions of any applicable law or the rules or regulations of any applicable
governmental or administrative agency or body, such as the Act, the Securities
Exchange Act of 1934, the rules promulgated under the foregoing or the rules and
regulations of any exchange upon which the shares of the Corporation are listed.
7
6. Availability of Information
During the term of the Plan and any additional period during which an
Option granted pursuant to the Plan shall be exercisable, the Corporation shall
make available, not later than one hundred and twenty (120) days following the
close of each of its fiscal years, such financial and other information
regarding the Corporation as is required by the bylaws of the Corporation and
applicable law to be furnished in an annual report to the stockholders of the
Corporation.
7. Effectiveness of Plan; Expiration
Subject to approval by the stockholders of the Corporation, this Plan
shall be deemed effective as of the date it is adopted by the Board. The Plan
shall expire on March 31, 2011, but such expiration shall not affect the
validity of outstanding Options.
8. Amendment and Termination of the Plan
The Board may, insofar as permitted by law, from time to time, with
respect to any shares at the time not subject to Options, suspend or terminate
the Plan or revise or amend it in any respect whatsoever, except that without
the approval of the stockholders of the Corporation, no such revision or
amendment shall (i) increase the number of shares subject to the Plan, (ii)
decrease the price at which Options may be granted, (iii) materially increase
the benefits to Optionees, or (iv) change the class of persons eligible to
receive Options under this Plan; provided, however, no such action shall alter
or impair the rights and obligations under any Option outstanding as of the date
thereof without the written consent of the Optionee thereunder. No Option may be
granted while the Plan is suspended or after it is terminated, but the rights
and obligations under any Option granted while the Plan is in effect shall not
be impaired by suspension or termination of the Plan.
9. Indemnification of Board
In addition to such other rights or indemnifications as they may have
as directors or otherwise, and to the extent allowed by applicable law, the
members of the Board and the Committee shall be indemnified by the Corporation
against the reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any claim, action, suit
or proceeding, or in connection with any appeal thereof, to which they or any of
them may be a party by reason of any action taken, or failure to act, under or
in connection with the Plan or any Option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Corporation) or paid by them in
satisfaction of a judgment in any such claim, action, suit or proceeding, except
in any case in relation to matters as to which it shall be adjudged in such
claim, action, suit or proceeding that such Board member is liable for
negligence or misconduct in the performance of his or her duties; provided that
within sixty (60) days after institution of any such action, suit or Board
proceeding the member involved shall offer the Corporation, in writing, the
opportunity, at its own expense, to handle and defend the same.
8
10. Application of Funds
The proceeds received by the Corporation from the sale of common stock
pursuant to the exercise of Options will be used for general corporate purposes.
11. No Obligation to Exercise Option
The granting of an Option shall impose no obligation upon the Optionee
to exercise such Option.
12. Notices
All notice, requests, demand, and other communications pursuant this
Plan shall be in writing and shall be deemed to have been duly given on the date
of service if served personally on the party to whom notice is to be given, or
on the third day following the mailing thereof to the party to whom notice is to
be given, by first class mail, registered or certified, postage prepaid.
13. Securities Law and Other Restrictions.
Notwithstanding any other provision of the Plan or any agreements entered into
pursuant to the Plan, the Corporation will not be required to issue any shares
of Common Stock under this Plan, and an Optionee may not sell, assign, transfer
or otherwise dispose of shares of Common Stock issued pursuant to Incentive
Awards granted under the Plan, unless (a) there is in effect with respect to
such shares a registration statement under the Securities Act and any applicable
securities laws of a state or foreign jurisdiction or an exemption from such
registration under the Securities Act of 1933 and applicable state or foreign
securities laws, and (b) there has been obtained any other consent, approval or
permit from any other U.S. or foreign regulatory body which the Committee, in
its sole discretion, deems necessary or advisable. The Corporation may condition
such issuance, sale or transfer upon the receipt of any representations or
agreements from the parties involved, and the placement of any legends on
certificates representing shares of Common Stock, as may be deemed necessary or
advisable by the Corporation in order to comply with such securities law or
other restrictions.
* * * * *
The foregoing Incentive and Nonstatutory Stock Option Plan was duly
adopted and approved by the Board of Directors on May 3, 2006, subject to
shareholder ratification within twelve months.
-------------------------------
Louis L. Knickerbocker, Chairman & CEO
9
NONSTATUTORY STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made and entered into as of this ____
day of ______________, ____, by and between RG Global Lifestyles, Inc.
("Corporation"), and ________________________________ (referred to herein as the
"Optionee"), with reference to the following recitals of facts:
WHEREAS, the Board has authorized the granting to Optionee of a
nonstatutory stock option ("Option") to purchase shares of common stock of the
Corporation (the "Shares") upon the terms and conditions hereinafter stated; and
WHEREAS, the Board and stockholders of the Corporation have heretofore
adopted a 2006Incentive and Nonstatutory Stock Option Plan (the "Plan"),
pursuant to which this Option is being granted;
WHEREAS, it is the intention of the parties that this Option be a
Nonstatutory Stock Option;
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto agree as follows:
1. Shares; Price. The Corporation hereby grants to Optionee the right
to purchase, upon and subject to the terms and conditions herein stated,
___________ Shares for cash (or other consideration acceptable to the Board of
Directors of the Corporation, in their sole and absolute discretion) at the
price of $____ per Share, such price being determined in accordance with the
Plan.
2. Term of Option; Continuation of Employment. This Option shall
expire, and all rights hereunder to purchase the Shares shall terminate, five
(5) years from the date hereof. This Option shall earlier terminate subject to
Paragraphs 5 and 6 hereof if, and as of the date, Optionee ceases to be an
employee, director, or consultant of the Corporation. Nothing contained herein
shall be construed to interfere in any way with the right of the Corporation to
terminate the employment or engagement, as applicable, of Optionee or to
increase or decrease the compensation of Optionee from the rate in existence at
the date hereof.
3. Vesting of Option. Subject to the provisions of Paragraphs 5 and 6
hereof, this Option shall vest and become exercisable during the term of
Optionee's employment or engagement in whole or in part beginning on the date of
this Agreement.
4. Exercise. This Option shall be exercised by delivery to the Corporation of
(a) a written notice of exercise stating the number of Shares being purchased
(in whole shares only) and such other information set forth on the form of
Notice of Exercise attached hereto as Appendix A, (b) a check or cash in the
amount of the purchase price of the Shares covered by the notice, (c) by the
surrender of the Option (or a portion hereof) in accordance with the terms
hereof but without payment in cash (a "Cashless Exercise"), and (d) a written
statement as provided for in Paragraph 11 hereof. This Option shall not be
assignable or transferable, except by will or by the laws of descent and
distribution, and shall be exercisable only by Optionee during his or her
lifetime.
10
The number of shares of Common Stock issuable in respect of a Cashless Exercise
shall be computed using the following formula:
X = Y (A-B)
------
A
Where:
X = the number of shares of Common Stock to be issued to the
Holder in respect of a Cashless Exercise
Y = the number of shares of Common Stock purchasable under the
Option or, if only a portion of the Option is being exercised, the portion of
the Option being canceled in connection with such Cashless Exercise (at the date
of such calculation)
A = the Fair Market Value (as defined below) of one share of
the Corporation's Common Stock (at the date of such calculation)
B = Option Exercise Price (as adjusted to the date of such
calculation).
5. Termination of Employment or Engagement. If Optionee shall cease to
serve as an employee, director, or consultant of the Corporation for any reason,
whether voluntarily or involuntarily, other than by his or her death or the
conclusion of the term of a written consulting agreement, provided such term
exceeds one year, Optionee shall have the right at any time within thirty (30)
days after date Optionee ceases to be an employee, director, or consultant of
the Corporation, or the remaining term of this Option, whichever is the lesser,
to exercise in whole or in part this Option to the extent, but only to the
extent, that this Option was exercisable as of the last day of employment or
engagement, as applicable, and had not previously been exercised; provided,
however, that if Optionee's termination of employment or engagement was caused
by permanent disability disabled (within the meaning of Section 22(e)(3) of the
Code), the foregoing thirty (30) day period shall be extended to six (6) months.
Notwithstanding anything herein to the contrary, all rights
under this Option shall expire in any event on the date specified in Paragraph 2
hereof.
6. Death of Optionee. If the Optionee shall die while an employee,
director, or consultant of the Corporation, Optionee's personal representative
or the person entitled to Optionee's rights hereunder may at any time during the
remaining term of this Option, exercise this Option and purchase Shares to the
extent, but only to the extent, that Optionee could have exercised this Option
as of the date of Optionee's death; provided, in any case, that this Option may
be so exercised only to the extent that this Option has not previously been
exercised by Optionee.
7. No Rights as Stockholder. Optionee shall have no rights as a
stockholder with respect to the Shares covered by any installment of this Option
until the date of the issuance of a stock certificate to Optionee, and no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such stock certificate or certificates are issued except as
provided in Paragraph 8 hereof.
11
8. Recapitalization. Subject to any required action by the stockholders
of the Corporation, the number of Shares covered by this Option, and the price
per Share thereof, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, or any other
increase or decrease in the number of such shares affected without receipt of
consideration by the Corporation; provided however that the conversion of any
convertible securities of the Corporation shall not be deemed having been
"effected without receipt of consideration by the Corporation."
In the event of a proposed dissolution or liquidation of the
Corporation, a merger or consolidation in which the Corporation is not the
surviving entity, or a sale of all or substantially all of the assets of the
Corporation, this Option shall terminate immediately prior to the consummation
of such proposed action, unless otherwise provided by the Board. The Board may,
at its sole and absolute discretion and without obligation, declare that this
Option shall terminate as of a date fixed by the Board and grant Optionee the
right for a period commencing thirty (30) days prior to and ending immediately
prior to such date, or during the remaining term of this Option, whichever
occurs sooner, to exercise this Option as to all or any part of the Shares,
without regard to the installment provision of Paragraph 3; provided, however,
that such exercise shall be subject to the consummation of such dissolution,
liquidation, merger, consolidation or sale.
Subject to any required action by the stockholders of the Corporation,
if the Corporation shall be the surviving entity in any merger or consolidation,
this Option thereafter shall pertain to and apply to the securities to which a
holder of Shares equal to the Shares subject to this Option would have been
entitled by reason of such merger or consolidation, and the vesting provisions
of Section 3 shall continue to apply.
In the event of a change in the Shares of the Corporation as presently
constituted, which is limited to a change of all of its authorized Shares
without par value into the same number of Shares with a par value, the Shares
resulting from any such change shall be deemed to be the Shares within the
meaning of this Agreement.
To the extent that the foregoing adjustments relate to shares or
securities of the Corporation, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided, Optionee shall have no rights by
reason of any subdivision or consolidation of share of stock of any class or the
payment of any stock dividend or any other increase or decrease in the number of
shares of stock of any class, and the number and price of shares subject to this
Option shall not be affected by, and no adjustments shall be made by reason of,
any dissolution, liquidation, merger or consolidation, or any issue by the
Corporation of shares of stock of any class or securities convertible into
shares of stock of any class.
The grant of this Option shall not affect in any way the right or power
of the Corporation to make adjustments, reclassifications, reorganizations or
changes in its capital or business structure or to merge, consolidate, dissolve
or liquidate or to sell or transfer all or any part of its business or assets.
12
9. Taxation upon Exercise of Option. Optionee understands that, upon
exercise of this Option, Optionee may recognize income, for federal and state
income tax purposes, in an amount equal to the amount by which the fair market
value of the Shares, determined as of the date of exercise, exceeds the exercise
price. The acceptance of the Shares by Optionee shall constitute an agreement by
Optionee to report such income in accordance with then applicable law and to
cooperate with Corporation in establishing the amount of such income and
corresponding deduction to the Corporation for its income tax purposes.
Withholding for federal or state income and employment tax purposes will be
made, if and as required by law, from Optionee's then current compensation, or,
if such current compensation is insufficient to satisfy withholding tax
liability, the Corporation may require Optionee to make cash payment to cover
such liability as a condition of the exercise of this Option.
10. Modification, Extension and Renewal of Options. The Board may
modify, extend or renew this Option or accept the surrender thereof (to the
extent not theretofore exercised) and authorize the granting of a new option in
substitution therefore (to the extent not theretofore exercised), subject at all
times to the Plan. Notwithstanding the foregoing provisions of this Paragraph
10, no modification shall, without the consent of the Optionee, alter to the
Optionee's detriment or impair any rights of Optionee hereunder.
11. Investment Intent; Restrictions on Transfer. Optionee represents
and agrees that if Optionee exercises this Option in whole or in part, Optionee
will in each case acquire the Shares upon such exercise for the purpose of
investment and not with a view to, or for resale in connection with, any
distribution thereof; and that upon such exercise of this Option in whole or in
part, Optionee (or any person or persons entitled to exercise this Option under
the provisions of Paragraphs 5 and 6 hereof) shall furnish to the Corporation a
written statement to such effect, satisfactory to the Corporation in form and
substance. The Corporation, at its option, may include a legend on each
certificate representing Shares issued pursuant to any exercise of this Option,
stating in effect that such Shares have not been registered under the Securities
Act of 1933, as amended (the "Act"), and that the transferability thereof is
restricted. If the Shares represented by this Option are registered under the
Act, either before or after the exercise of this Option in whole or in part, the
Optionee shall be relieved of the foregoing investment representation and
agreement and shall not be required to furnish the Corporation with the
foregoing written statement.
Optionee further represents that Optionee has had access to the
financial statements or books and records of the Corporation, has had the
opportunity to ask questions of the Corporation concerning its business,
operations and financial condition, and to obtain additional information
reasonably necessary to verify the accuracy of such information, and further
represents that Optionee has either such experience and knowledge in investment,
financial and business matters or has investments similar to the stock of the
Corporation such that Optionee is capable of evaluating the merits and risks
thereof and has the capacity to protect his or her own interest in connection
therewith.
13
12. Registration Rights.
a. Piggyback Registration Rights. If the Corporation at any
time proposes to register any of its securities under the Act under an S-8
Registration Statement, it will each such time give written notice to all
holders of outstanding or exercised options of its intention so to do. Upon the
written request of a holder or holders of any such outstanding or exercised
options given within thirty (30) days after receipt of any such notice, the
Corporation will use its best efforts to cause all such outstanding or exercised
options, the holders of which shall have so requested registration thereof, to
be registered under the Act (with the securities which the Corporation at the
time propose to register), all to the extent requisite to permit the sale or
other disposition by the prospective Sellers of the outstanding or exercised
options so registered; provided, however, that the Corporation may, as a
condition precedent to its effecting such registration, require each prospective
Seller to agree with the Corporation and the managing underwriter or
underwriters of the offering to be made by the Corporation in connection with
such registration that such Seller will not sell any securities of the same
class or convertible into the same class as those registered by the Corporation
(including any class into which the securities registered by the Corporation are
convertible) for such reasonable period after such registration becomes
effective as shall then be specified in writing by such underwriter or
underwriters if in the opinion of such underwriter or underwriters the
Corporation's offering would be materially adversely affected in the absence of
such an agreement.
b. Procedures. In connection with the registration of any securities
pursuant to Section 12.a. hereof, the Corporation and the Optionee covenant and
agree as follows:
(i) The Corporation shall pay all costs, fees, and
expenses incurred by the Corporation and the Optionee in connection with the
Registration Statement and the offering thereunder including, without
limitation, the Corporation's legal fees and expenses of counsel, accounting
fees, printing expenses, and blue sky fees and expenses (but excluding discounts
or selling commissions of any underwriter or broker dealer acting on behalf of
the Corporation or the Optionee).
(ii) The Corporation shall take all necessary action
which may be reasonably required in qualifying or registering the securities
included in the Registration Statement for offering and sale under the
securities or blue sky laws of all states reasonably requested by Optionee,
provided that the Corporation shall not be obligated to qualify as a foreign
corporation to do business under the laws of any such jurisdiction.
(iii) The Corporation shall indemnify Optionee and
each person, if any, who controls Optionee within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act of 1934 (the "Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from the Registration Statement.
(iv) The Corporation shall, as soon as practicable
after the effective date of the Registration Statement, and in any event within
fifteen (15) months thereafter, make "generally available to its security
holders" (within the meaning of Rule 158 under the Act) an earnings statement
(which need not be audited) complying with Section 11(a) of the Act and covering
a period of at least twelve (12) consecutive months beginning after the
effective date of the Registration Statement.
14
(v) The Corporation shall (A) deliver promptly to
Optionee and its counsel, upon request, copies of all correspondence between the
Commission and the Corporation, its counsel, or auditors and all memoranda
relating to discussions with the Commission or its staff with respect to the
Registration Statement; and (B) permit Optionee and its counsel to perform such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the Registration Statement, as it deems reasonably
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. Such investigation shall include, but
not be limited to, access to financial and accounting information and
opportunities to discuss the business of the Corporation with the Corporation's
officers and independent auditors, all to such reasonable extent, at such
reasonable times and as often as Optionee and its counsel shall reasonably
request.
(vi) The Corporation shall cause all securities of
Optionee registered pursuant to a Registration Statement to be listed on any
national securities exchange or quoted on any automated quotation system on
which similar securities of the Corporation are listed or quoted.
13. Stand-off Agreement. Optionee agrees that in connection with any
registration of the Corporation's securities, that upon the request of the
Corporation or any underwriter managing an underwritten offering of the
Corporation's securities, that Optionee shall not sell, short any sale of, loan,
grant an option for, or otherwise dispose of any of the Shares (other than
Shares included in the offering) without the prior written consent of the
Corporation or such managing underwriter, as applicable, for a period of at
least one hundred eighty (180) days following the effective date of registration
of such offering.
14. Notices. Any notice required to be given pursuant to this Option or
the Plan shall be in writing and shall be deemed to be delivered upon receipt
or, in the case of notices by the Corporation, five (5) days after deposit in
the US. mail, postage prepaid, addressed to Optionee at the address last
provided to the Corporation by Optionee for his or her employee records.
The remainder of this page intentionally left blank.
15
15. Agreement Subject to Plan; Applicable Law. This Agreement is made
pursuant to the Plan and shall be interpreted to comply therewith. A copy of
such Plan is available to Optionee, at no charge, at the principal office of the
Corporation. Any provision of this Agreement inconsistent with the Plan shall be
considered void and replaced with the applicable provision of the Plan. This
Agreement has been granted, executed and delivered in the State of California,
and the interpretation and enforcement shall be governed by the laws thereof and
subject to the exclusive jurisdiction of the courts therein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
RG GLOBAL LIFESTYLES, INC.
--------------------------------
BY: LOUIS L. KNICKERBOCKER
ITS: CEO
--------------------------------
, Optionee
16
Appendix A
NOTICE OF EXERCISE
- ----------------
- ---------------
- ----------------
--------------------
(date)
Re: Nonstatutory Stock Option
Notice is hereby given pursuant to Section 4 of my Nonstatutory Stock
Option Agreement that I elect to purchase the number of shares set forth below
at the exercise price set forth in my option agreement:
Stock Option dated: ______________________
Number of shares being purchased: ______________________
Option Exercise Price: $____________________
A check in the amount of the aggregate price of the shares being
purchased is attached;
or in the instance of a cashless exercise:
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Option for, and to purchase thereunder,
_________________ shares of the Corporation's common stock provided for therein
and requests that certificates for such Option Shares be issued in the name
below, and, if said number of Option Shares shall not be all the shares of
Common Stock purchasable thereunder, that a new Option for the balance remaining
of the shares of Common Stock purchasable under the within Optiont be registered
in the name of the undersigned Optioneer or his or her assignee as below
indicated and delivered to the address stated below.
I hereby confirm that such shares are being acquired by me for my own
account for investment purposes, and not with a view to, or for resale in
connection with, any distribution thereof.
Further, I understand that, as a result of this exercise of rights, I
will recognize income in an amount equal to the amount by which the fair market
value of the Shares exceeds the exercise price. I agree to report such income in
accordance with then applicable law and to cooperate with Corporation in
establishing the withholding and corresponding deduction to the Corporation for
its income tax purposes.
17
I agree to provide to the Corporation such additional documents or
information as may be required pursuant to the Corporation's 2006 Incentive and
Nonstatutory Stock Option Plan.
-------------------------
(Signature)
-------------------------
(Name of Optionee)
18
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT is made and entered into as of
this ____ day of ______________, 2005, by and between
_________________________("Corporation"), and ________________________________
(referred to herein as the "Optionee"), with reference to the following recitals
of facts:
WHEREAS, the Board has authorized the granting to Optionee of an
incentive stock option ("Option") to purchase shares of common stock of the
Corporation (the "Shares") upon the terms and conditions hereinafter stated; and
WHEREAS, the Board and stockholders of the Corporation have heretofore
adopted a 2005 Incentive and Nonstatutory Stock Option Plan (the "Plan"),
pursuant to which this Option is being granted;
WHEREAS, it is the intention of the parties that this Option be an
Incentive Stock Option (a Qualified Stock Option);
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto agree as follows:
1. Shares; Price. The Corporation hereby grants to Optionee the right
to purchase, upon and subject to the terms and conditions herein stated, _______
Shares for cash (or other consideration acceptable to the Board of Directors of
the Corporation, in their sole and absolute discretion) at the price of $____
per Share, such price being not less than the fair market value per share of the
Shares covered by these Options as of the date hereof and as determined by the
Board of Directors of the Corporation.
2. Term of Option; Continuation of Employment. This Option shall
expire, and all rights hereunder to purchase the Shares shall terminate, five
(5) years from the date hereof. This Option shall earlier terminate subject to
Paragraphs 5 and 6 hereof if, and as of the date, Optionee ceases to be an
employee of the Corporation. Nothing contained herein shall be construed to
interfere in any way with the right of the Corporation to terminate the
employment or engagement, as applicable, of Optionee or to increase or decrease
the compensation of Optionee from the rate in existence at the date hereof.
3. Vesting of Option. Subject to the provisions of Paragraphs 5 and 6
hereof, this Option shall vest and become exercisable during the term of
Optionee's employment or engagement in whole or in part beginning on the date of
this Agreement.
4. Exercise. This Option shall be exercised by delivery to the Corporation of
(a) a written notice of exercise stating the number of Shares being purchased
(in whole shares only) and such other information set forth on the form of
Notice of Exercise attached hereto as Appendix A, (b) a check or cash in the
amount of the purchase price of the Shares covered by the notice, (c) by the
surrender of the Option (or a portion hereof) in accordance with the terms
hereof but without payment in cash (a "Cashless Exercise"), and (d) a written
statement as provided for in Paragraph 11 hereof. This Option shall not be
assignable or transferable, except by will or by the laws of descent and
distribution, and shall be exercisable only by Optionee during his or her
lifetime.
The number of shares of Common Stock issuable in respect of a Cashless Exercise
shall be computed using the following formula:
X = Y (A-B)
------
A
Where:
X = the number of shares of Common Stock to be issued to the
Holder in respect of a Cashless Exercise
Y = the number of shares of Common Stock purchasable under the
Option or, if only a portion of the Option is being exercised, the portion of
the Option being canceled in connection with such Cashless Exercise (at the date
of such calculation)
A = the Fair Market Value (as defined below) of one share of
the Corporation's Common Stock (at the date of such calculation)
B = Option Exercise Price (as adjusted to the date of such
calculation).
5. Termination of Employment or Engagement. If Optionee shall cease to
serve as an employee of the Corporation for any reason, whether voluntarily or
involuntarily, other than by his or her death or the conclusion of the term of a
written consulting agreement, provided such term exceeds one year, Optionee
shall have the right at any time within thirty (30) days after date Optionee
ceases to be an employee of the Corporation, or the remaining term of this
Option, whichever is the lesser, to exercise in whole or in part this Option to
the extent, but only to the extent, that this Option was exercisable as of the
last day of employment or engagement, as applicable, and had not previously been
exercised; provided, however, that if Optionee's termination of employment or
engagement was caused by permanent disability (within the meaning of Section
22(e)(3) of the Code), the foregoing thirty (30) day period shall be extended to
six (6) months; or
Notwithstanding anything herein to the contrary, all rights
under this Option shall expire in any event on the date specified in Paragraph 2
hereof.
6. Death of Optionee. If the Optionee shall die while an employee of
the Corporation, Optionee's personal representative or the person entitled to
Optionee's rights hereunder may at any time during the remaining term of this
Option, exercise this Option and purchase Shares to the extent, but only to the
extent, that Optionee could have exercised this Option as of the date of
Optionee's death; provided, in any case, that this Option may be so exercised
only to the extent that this option has not previously been exercised by
Optionee.
7. No Rights as Stockholder. Optionee shall have no rights as a
stockholder with respect to the Shares covered by any installment of this Option
until the date of the issuance of a stock certificate to Optionee, and no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such stock certificate or certificates are issued except as
provided in Paragraph 8 hereof.
8. Recapitalization. Subject to any required action by the stockholders
of the Corporation, the number of Shares covered by this Option, and the price
per Share thereof, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, or any other
increase or decrease in the number of such shares affected without receipt of
consideration by the Corporation; provided however that the conversion of any
convertible securities of the Corporation shall not be deemed having been
"effected without receipt of consideration by the Corporation."
In the event of a proposed dissolution or liquidation of the
Corporation, a merger or consolidation in which the Corporation is not the
surviving entity, or a sale of all or substantially all of the assets of the
Corporation, this Option shall terminate immediately prior to the consummation
of such proposed action, unless otherwise provided by the Board. The Board may,
at its sole and absolute discretion and without obligation, declare that this
Option shall terminate as of a date fixed by the Board and grant Optionee the
right for a period commencing thirty (30) days prior to and ending immediately
prior to such date, or during the remaining term of this Option, whichever
occurs sooner, to exercise this Option as to all or any part of the Shares,
without regard to the installment provision of Paragraph 3; provided, however,
that such exercise shall be subject to the consummation of such dissolution,
liquidation, merger, consolidation or sale.
Subject to any required action by the stockholders of the Corporation,
if the Corporation shall be the surviving entity in any merger or consolidation,
this Option thereafter shall pertain to and apply to the securities to which a
holder of Shares equal to the Shares subject to this Option would have been
entitled by reason of such merger or consolidation, and the vesting provisions
of Section 3 shall continue to apply.
In the event of a change in the Shares of the Corporation as presently
constituted, which is limited to a change of all of its authorized Shares
without par value into the same number of Shares with a par value, the Shares
resulting from any such change shall be deemed to be the Shares within the
meaning of this Agreement.
To the extent that the foregoing adjustments relate to shares or
securities of the Corporation, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided, Optionee shall have no rights by
reason of any subdivision or consolidation of share of stock of any class or the
payment of any stock dividend or any other increase or decrease in the number of
shares of stock of any class, and the number and price of shares subject to this
Option shall not be affected by, and no adjustments shall be made by reason of,
any dissolution, liquidation, merger or consolidation, or any issue by the
Corporation of shares of stock of any class or securities convertible into
shares of stock of any class.
The grant of this Option shall not affect in any way the right or power
of the Corporation to make adjustments, reclassifications, reorganizations or
changes in its capital or business structure or to merge, consolidate, dissolve
or liquidate or to sell or transfer all or any part of its business or assets.
9. Taxation upon Exercise of Option. Optionee understands that, upon
exercise of this Option, Optionee may recognize income, for federal and state
income tax purposes, in an amount equal to the amount by which the fair market
value of the Shares, determined as of the date of exercise, exceeds the exercise
price. The acceptance of the Shares by Optionee shall constitute an agreement by
Optionee to report such income in accordance with then applicable law and to
cooperate with Corporation in establishing the amount of such income and
corresponding deduction to the Corporation for its income tax purposes.
Withholding for federal or state income and employment tax purposes will be
made, if and as required by law, from Optionee's then current compensation, or,
if such current compensation is insufficient to satisfy withholding tax
liability, the Corporation may require Optionee to make cash payment to cover
such liability as a condition of the exercise of this Option.
10. Modification, Extension and Renewal of Options. The Board may
modify, extend or renew this Option or accept the surrender thereof (to the
extent not theretofore exercised) and authorize the granting of a new option in
substitution therefore (to the extent not theretofore exercised), subject at all
times to the Plan. Notwithstanding the foregoing provisions of this Paragraph
10, no modification shall, without the consent of the Optionee, alter to the
Optionee's detriment or impair any rights of Optionee hereunder.
11. Investment Intent; Restrictions on Transfer. Optionee represents
and agrees that if Optionee exercises this Option in whole or in part, Optionee
will in each case acquire the Shares upon such exercise for the purpose of
investment and not with a view to, or for resale in connection with, any
distribution thereof; and that upon such exercise of this Option in whole or in
part, Optionee (or any person or persons entitled to exercise this Option under
the provisions of Paragraphs 5 and 6 hereof) shall furnish to the Corporation a
written statement to such effect, satisfactory to the Corporation in form and
substance. The Corporation, at its option, may include a legend on each
certificate representing Shares issued pursuant to any exercise of this Option,
stating in effect that such Shares have not been registered under the Securities
Act of 1933, as amended (the "Act"), and that the transferability thereof is
restricted. If the Shares represented by this Option are registered under the
Act, either before or after the exercise of this Option in whole or in part, the
Optionee shall be relieved of the foregoing investment representation and
agreement and shall not be required to furnish the Corporation with the
foregoing written statement.
Optionee further represents that optionee has had access to the
financial statements or books and records of the Corporation, has had the
opportunity to ask questions of the Corporation concerning its business,
operations and financial condition, and to obtain additional information
reasonably necessary to verify the accuracy of such information, and further
represents that Optionee (either such experience and knowledge in investment,
financial and business matters in investments similar to the stock of the
Corporation that Optionee is capable of evaluating the merits and risks thereof
and has the capacity to protect his or her own interest in connection therewith.
12. Registration Rights.
a. Piggyback Registration Rights. If the Corporation at any
time proposes to register any of its securities under the Act under an S-8
Registration Statement, it will each such time give written notice to all
holders of outstanding or exercised options of its intention so to do. Upon the
written request of a holder or holders of any such outstanding or exercised
options given within thirty (30) days after receipt of any such notice, the
Corporation will use its best efforts to cause all such outstanding or exercised
options, the holders of which shall have so requested registration thereof, to
be registered under the Act (with the securities which the Corporation at the
time propose to register), all to the extent requisite to permit the sale or
other disposition by the prospective Sellers of the outstanding or exercised
options so registered; provided, however, that the Corporation may, as a
condition precedent to its effecting such registration, require each prospective
Seller to agree with the Corporation and the managing underwriter or
underwriters of the offering to be made by the Corporation in connection with
such registration that such Seller will not sell any securities of the same
class or convertible into the same class as those registered by the Corporation
(including any class into which the securities registered by the Corporation are
convertible) for such reasonable period after such registration becomes
effective as shall then be specified in writing by such underwriter or
underwriters if in the opinion of such underwriter or underwriters the
Corporation's offering would be materially adversely affected in the absence of
such an agreement.
b. Procedures. In connection with the registration of any
securities pursuant to Section 12.a. hereof, the Corporation and the Optionee
covenant and agree as follows:
(i) The Corporation shall pay all costs, fees, and
expenses incurred by the Corporation and the Optionee in connection with the
Registration Statement and the offering thereunder including, without
limitation, the Corporation's legal fees and expenses of counsel, accounting
fees, printing expenses, and blue sky fees and expenses (but excluding discounts
or selling commissions of any underwriter or broker dealer acting on behalf of
the Corporation or the Optionee).
(ii) The Corporation shall take all necessary action
which may be reasonably required in qualifying or registering the securities
included in the Registration Statement for offering and sale under the
securities or blue sky laws of all states reasonably requested by Optionee,
provided that the Corporation shall not be obligated to qualify as a foreign
corporation to do business under the laws of any such jurisdiction.
(iii) The Corporation shall indemnify Optionee and
each person, if any, who controls Optionee within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act of 1934 (the "Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from the Registration Statement.
(iv) The Corporation shall, as soon as practicable
after the effective date of the Registration Statement, and in any event within
fifteen (15) months thereafter, make "generally available to its security
holders" (within the meaning of Rule 158 under the Act) an earnings statement
(which need not be audited) complying with Section 11(a) of the Act and covering
a period of at least twelve (12) consecutive months beginning after the
effective date of the Registration Statement.
(v) The Corporation shall (A) deliver promptly to
Optionee and its counsel, upon request, copies of all correspondence between the
Commission and the Corporation, its counsel, or auditors and all memoranda
relating to discussions with the Commission or its staff with respect to the
Registration Statement; and (B) permit Optionee and its counsel to perform such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the Registration Statement, as it deems reasonably
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. Such investigation shall include, but
not be limited to, access to financial and accounting information and
opportunities to discuss the business of the Corporation with the Corporation's
officers and independent auditors, all to such reasonable extent, at such
reasonable times and as often as Optionee and its counsel shall reasonably
request. (vi) The Corporation shall cause all securities of Optionee registered
pursuant to a Registration Statement to be listed on any national securities
exchange or quoted on any automated quotation system on which similar securities
of the Corporation are listed or quoted.
13. Stand-off Agreement. Optionee agrees that in connection with any
registration of the Corporation's securities, that upon the request of the
Corporation or any underwriter managing an underwritten offering of the
Corporation's securities, that Optionee shall not sell, short any sale of, loan,
grant an option for, or otherwise dispose of any of the Shares (other than
Shares included in the offering) without the prior written consent of the
Corporation or such managing underwriter, as applicable, for a period of at
least one hundred eighty (180) days following the effective date of registration
of such offering.
14. Notices. Any notice required to be given pursuant to this Option or
the Plan shall be in writing and shall be deemed to be delivered upon receipt
or, in the case of notices by the Corporation, five (5) days after deposit in
the US. mail, postage prepaid, addressed to Optionee at the address last
provided to the Corporation by Optionee for his or her employee records.
15. Agreement Subject to Plan; Applicable Law. This Agreement is made
pursuant to the Plan and shall be interpreted to comply therewith. A copy of
such Plan is available to Optionee, at no charge, at the principal office of the
Corporation. Any provision of this Agreement inconsistent with the Plan shall be
considered void and replaced with the applicable provision of the Plan. This
Agreement has been granted, executed and delivered in the State of California,
and the interpretation and enforcement shall be governed by the laws thereof and
subject to the exclusive jurisdiction of the courts therein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
--------------------------------
BY:
ITS:
--------------------------------
, Optionee
Appendix A
NOTICE OF EXERCISE
================
- ----------------
--------------------
(date)
Re: Incentive Stock Option
Notice is hereby given pursuant to Section 4 of my Incentive Stock
Option Agreement that I elect to purchase the number of shares set forth below
at the exercise price set forth in my option agreement:
Stock Option dated: _________________
Number of shares being purchased: _________________
Option Exercise Price: $_____________________
A check in the amount of the aggregate price of the shares being
purchased is attached;
or in the instance of a cashless exercise:
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Option for, and to purchase thereunder,
_________________ shares of the Corporation's common stock provided for therein
and requests that certificates for such Option Shares be issued in the name
below, and, if said number of Option Shares shall not be all the shares of
Common Stock purchasable thereunder, that a new Option for the balance remaining
of the shares of Common Stock purchasable under the within Option be registered
in the name of the undersigned Optioneer or his or her assignee as below
indicated and delivered to the address stated below.
I hereby confirm that such shares are being acquired by me for my own
account for investment purposes, and not with a view to, or for resale in
connection with, any distribution thereof.
Further, I understand that, as a result of this exercise of rights, I
will recognize income in an amount equal to the amount by which the fair market
value of the Shares exceeds the exercise price. I agree to report such income in
accordance with then applicable law and to cooperate with Corporation in
establishing the withholding and corresponding deduction to the Corporation for
its income tax purposes.
I agree to provide to the Corporation such additional documents or
information as may be required pursuant to the Corporation's 2005 Incentive and
Nonstatutory Stock Option Plan.
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(Signature)
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(Name of Optionee)
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
RG GLOBAL LIFESTYLES, INC.
The undersigned hereby appoints Christen Currie as Proxy with full power of
substitution to vote all the shares of common stock which the undersigned would
be entitled to vote if personally present at the Special Meeting of Shareholders
to be held on September 15, 2006 at 10:00 a.m. at 30021 Tomas, Suite 200, Rancho
Santa Margarita, CA 92688 or at any adjournment thereof, and upon any and all
matters which may properly be brought before the meeting or any adjournments
thereof, hereby revoking all former proxies.
Election of Directors
The nominees for the Board of Directors are:
Louis L. Knickerbocker Steve Ritchie Horst Geicke
Joseph Murray Grant King Budy Hartono
Instruction: To withhold authority to vote for any individual nominee, write the
nominee's name on the space provided below:
- --------------------------------------------------
The Board of Directors recommends a vote FOR Proposal 1, 2 and 3 and a
ratification of Proposal 4.
1. To elect six (6) directors to hold office for a one year term or until each of their successors
are elected and qualified (except as marked to the contrary above).
|_| FOR |_| AGAINST |_| ABSTAINS |_| WITHHOLDS
2. To approve the 2006 Incentive and Nonstatutory Stock Option Plan
|_| FOR |_| AGAINST |_| ABSTAINS |_| WITHHOLDS
3. To ratify the appointment of Beckstead & Watts as the independent auditor of the Company.
|_| FOR |_| AGAINST |_| ABSTAINS |_| WITHHOLDS
4. To withhold the proxy's discretionary vote on Your behalf with
regards to any other matters that are properly presented for a vote
at the meeting, please mark the box below.
|_| WITHHOLDS
This Proxy, when properly executed, will be voted in the matter directed herein
by the undersigned shareholder. If no direction is made, this Proxy will be
voted FOR each of the proposals.
Dated: , 2006
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- --------------------------------
Signature of Shareholder
- --------------------------------
Signature of Shareholder
Please date and sign exactly as your name(s) appears hereon. If the shares are
registered in more than one name, each joint owner or fiduciary should sign
personally. When signing as executor, administrator, trustee or guardian give
full titles. Only authorized officers should sign for a corporation.