NOTE AND WARRANT PURCHASE AGREEMENT
Exhibit
4.1
This
Note
and Warrant Purchase Agreement ("Agreement") is made and entered into as of
November ___, 2005 by and between RG Global Lifestyles, Inc., a California
corporation ("Company"), and ________________, an individual
("Purchaser").
WHEREAS,
the
Company
desires
to sell to the Purchaser, and the Purchaser desires to purchase from
the
Company,
an
unsecured promissory note in the principal amount of $_____________, in the
form
attached hereto as Exhibit
A
("Note").
WHEREAS,
as an inducement for the Purchaser to enter into this Agreement, the Company
shall grant to the Purchaser on the date of this Agreement a warrant to purchase
a number of shares of the Company's common stock, par value $0.001 per share
("Common Stock"), equal to one share per dollar paid as investment in the Note
by Purchaser, vesting in full at twelve months after the date of this Agreement,
at an exercise price equal to the lowest Closing Price for RGBL.OB (as reported
by the OTC:BB) over the twelve months immediately following the date of this
Agreement, in the form attached hereto as Exhibit
B
("Warrant").
NOW,
THEREFORE, in consideration of the foregoing recitals and the representations,
warranties, covenants and agreements set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1.
PURCHASE AND SALE OF NOTES; GRANT OF WARRANTS.
(a)
Purchase and Sale of Note. Simultaneously with the execution and delivery of
this Agreement, the Purchaser shall deliver $_____________ to the Company
against delivery of the Note to the Purchaser by the
Company.
(b)
Grant
of Warrants. On the date of this Agreement, the
Company
shall
grant to the Purchaser, and the Purchaser shall accept from the
Company,
the
Warrant.
2.
CLOSING. The closing of the purchase and sale of the Note shall take place
at
the offices of the Company on the date of this Agreement.
3.
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.
The
Company
hereby
represents and warrants to the Purchaser, as of the date hereof:
(a)
Organization, Good Standing and Qualification. The
Company
is a
corporation duly organized, validly existing and in good standing under the
laws
of the State of California and has all corporate power and authority required
to
(i) carry on its business
as
currently conducted and as proposed to be conducted by the
Company
in its
Company Reports (as defined in Section 3(d)(iii) hereof) and (ii) enter into
this Agreement, the Note and the Warrant and consummate the transactions
contemplated hereby and thereby. Each of the
Company
and its
subsidiaries is qualified to do business
and is
in good standing in each jurisdiction in which the failure to so qualify would
have a Material Adverse Effect on the
Company.
As used
in this Agreement, "Material Adverse Effect" means a material adverse effect
on,
or a material adverse change in, or a series of events which, in the aggregate,
has a material adverse effect on or change in, the business,
financial condition, results of operations, assets or liabilities of the
applicable party and its subsidiaries, taken as a whole.
(b)
Capitalization. As of November ___, 2005, the authorized capital stock of
the
Company
consisted of: (i) 100,000,000 shares of Common Stock, of which ____________
shares are issued and outstanding and (ii) 10,000,000 shares of preferred stock,
par value $0.001 per share, of which none are issued and outstanding. All of
such shares of capital stock have been duly authorized for issuance, and all
of
such shares which are issued and outstanding have been validly issued and are
fully paid, nonassessable and free
of any
liens or encumbrances other than any liens or encumbrances created by or imposed
upon the holders thereof.
(c)
Due
Authorization. All corporate action on the part of the Company necessary for
the
authorization, execution and delivery of, and the performance of all obligations
of the
Company
under,
this Agreement, the Note and the Warrant has been taken, and this Agreement,
the
Note and the Warrant constitute valid and legally binding obligations of the
Company, enforceable against the
Company
in
accordance with their terms, except (i) as may be limited by (A) applicable
bankruptcy,
insolvency, reorganization or others laws of general application relating to
or
affecting the enforcement of creditors' rights generally and (B) the effects
of
rules of law governing the availability of equitable remedies and (ii) as rights
to indemnity or contribution may be limited under federal or state securities
laws or by principles of public policy thereunder.
(d)
SEC
Reports; Financial Statements. The
Company
has
previously furnished or made available to the Purchaser its (i) Annual Report
on
Form 10-KSB for the fiscal year ended Xxxxx 00, 0000, (xx) Definitive Proxy
Statement filed with the Securities and Exchange Commission (the "SEC") on
October ____, 2005 and (iii) all other periodic and current reports filed by
the
Company
with the
SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
since November ___, 2005, in each case, as amended through the date hereof
(collectively, the "Company Reports").
(e)
Valid
Issuance of Stock.
(i)
Valid
Issuance. The Shares have been duly and validly reserved for issuance and,
upon
issuance, sale and delivery in accordance with the terms of the Warrant, as
the
case may be, will be duly and validly issued, fully paid, nonassessable and
free
of
preemptive rights binding on the
Company.
(ii)
Compliance with Securities Laws. The Warrant will be issued to the Purchaser
in
compliance with applicable exemptions from (A) the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the "Securities
Act") and (B) the registration and qualification requirements of all applicable
securities laws of the states of the United
States.
(f)
Non-Contravention. The execution, delivery and performance by the Company of
this Agreement, the Notes and the Warrant, and the consummation by the
Company
of the
transactions contemplated hereby and thereby, do not: (i) contravene or conflict
with the Company's Certificate of Incorporation, as amended (the "Certificate"),
or the Company's By-Laws; (ii) constitute a violation of any provision of any
federal, state, local or foreign law or rule, regulation or requirement binding
upon or applicable to the
Company
or any
of its subsidiaries; (iii) constitute a violation of any rule, regulation or
requirement of the National Association of Securities Dealers, Inc. ("NASD");
or
(iv) constitute a default or require any consent under, give rise to any right
of termination, cancellation or acceleration of, or to a loss of any benefit
to
which the
Company
or any
of its subsidiaries is entitled under, or result in the creation or imposition
of any lien, claim or encumbrance on any assets of the
Company
or any
such subsidiary under, any contract to which the
Company
or such
subsidiary is a party or any permit, license or similar right relating to
the
Company
or such
subsidiary or by which the
Company
or such
subsidiary may be bound or affected, except any such default, consent, right
of
termination, cancellation or acceleration, loss or lien, claim or encumbrance
which, individually or in the aggregate, would not have a Material Adverse
Effect on the
Company.
(g)
Litigation. Except as disclosed in the
Company
Reports,
there is no action, suit, proceeding, claim, arbitration or investigation (each,
an "Action") pending or, to the Company's best knowledge, threatened: (i)
against the
Company
or any
of its subsidiaries, or any officer, director or employee of the
Company
or any
of its subsidiaries in connection with such officer's, director's or employee's
relationship with, or actions taken on behalf of, the Company or such
subsidiary; or (ii) against the
Company
or any
of its subsidiaries, or any officer, director or employee of the
Company
or any
of its subsidiaries that seeks to prevent, enjoin, alter or delay any of the
transactions contemplated by this Agreement.
(h)
Registration Rights. Except as provided in the Warrant, the
Company
has not
granted or agreed to grant to Purchaser any rights (including piggyback
registration rights) to have any securities of the
Company
registered with the SEC or registered or qualified with any other governmental
authority.
(i)
Brokers and Finders. The
Company
has not
incurred any obligation or liability, contingent or otherwise, for brokerage
or
finders' fees or agents' commissions or other similar payment in connection
with
this Agreement or any of the transactions contemplated hereby.
4.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby represents
and warrants to the
Company,
as of
the date hereof, that:
(a)
Purchase for Own Account. The Warrant and shares involved will be acquired
for
investment for the Purchaser's own account, not as a nominee or agent, and
not
with a view to the public resale or distribution thereof within the meaning
of
the Securities Act, and the Purchaser has no present intention of selling,
granting any participation in or otherwise distributing the same. The Purchaser
has not been formed for the specific purpose of acquiring the
Warrant.
(b)
Investment Experience. The Purchaser understands that the acquisition of the
Warrant and shares involves substantial risk. The Purchaser has experience
as an
investor in securities of companies and acknowledges that it is able to fend
for
itself, can bear the economic risk of its investment in any of the Note, Warrant
and shares and has such knowledge and experience in financial or business
matters
that it is capable of evaluating the merits and risks of its investment in
any
of the Notes, the Warrants and the shares and protecting its own interests
in
connection with this investment.
(c)
Accredited Investor Status. The Purchaser is an "accredited investor" within
the
meaning of Regulation D promulgated under the Securities Act.
(d)
Restricted Securities. The Purchaser understands that (i) the Warrant and the
shares are characterized as "restricted securities" under the Securities Act,
inasmuch as they are being acquired from the
Company
in a
transaction not involving a public offering and (ii) under the Securities Act
and applicable rules and regulations thereunder, such securities may be resold
without registration under the Securities Act only in certain limited
circumstances. The Purchaser is familiar with Rule 144 under the Securities
Act,
as presently in effect, and understands the resale limitations imposed thereby
and by the Securities Act.
5.
MISCELLANEOUS.
(a)
Legends. The Warrant and certificates for the shares will bear a legend in
substantially the following form:
"The
shares represented hereby have not been registered
under
the
Securities Act of 1933, as amended, and may not be
transferred
or otherwise disposed of unless they have been
registered
under such Act or pursuant to an exemption from
registration
under such Act."
Furthermore,
the
Company
shall
place on each Warrant and each certificate for the shares any legend required
by
applicable state securities laws. In addition, the Purchaser agrees that
the
Company
may
place stop transfer orders with its transfer agent with respect to such
certificates. The legend set forth above shall be removed by the
Company
from any
certificate evidencing the shares upon delivery to the
Company
of an
opinion by counsel, reasonably satisfactory to the
Company,
that a
registration statement under the Securities Act is at that time in effect with
respect to the legended security or that such security can be freely transferred
in a public sale without such a registration statement being in effect and
that
such transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the
Company
issued
the Shares.
(b)
Governing Law. This Agreement shall be governed by and construed under the
internal laws of the State of California, without reference to principles of
conflict of laws or choice of laws.
(c)
Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(d)
Amendments and Waivers. This Agreement may be amended and the observance of
any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the
Company
and the
Purchaser.
(e)
Severability. If any provision of this Agreement is held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement
and
the balance of the Agreement shall be interpreted as if such provision were
so
excluded and shall be enforceable in accordance with its terms.
(f)
Entire Agreement. This Agreement, together with all exhibits and schedules
hereto, constitutes the entire agreement and understanding of the parties with
respect to the subject matter hereof and supersedes any and all prior
negotiations, correspondence, agreements, understandings, duties or obligations
between the parties with respect to the subject matter hereof.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
and year first above written.
RG
Global
Lifestyles, Inc.
Xxx
Xxxxxxxxxxxxx
Chief
Executive Officer
PURCHASER
EXHIBIT
A
PROMISSORY
NOTE
RG
Global
Lifestyles, Inc.
8.0%
Unsecured Promissory Note
Due
November ___, 2006
| U.S. $_______________ | November ___, 2005 |
FOR
VALUE
RECEIVED, the undersigned, RG Global Lifestyles, Inc., a California corporation
("Borrower"), hereby promises to pay to ______________, an individual
("Lender"),
the
principal sum of _________________ Dollars ($____________) ("Principal Sum"),
or
such lesser amount as may then be outstanding, together with accrued but unpaid
interest thereon, on November ____, 2006 ("Maturity Date"). Interest on the
outstanding Principal Sum shall be at a rate of 8.0% per annum ("Interest").
If
all or a portion of the Principal Sum or Interest shall not be paid when due
(whether at its stated maturity, by acceleration or otherwise), the Borrower
hereby promises to pay, on demand, interest on such overdue amount from and
including the due date to, but excluding, the date such amount is paid in full
at 11% per annum (and until the date such overdue amount is paid in full,
"Interest" on such overdue amount shall mean interest at such
rate).
This
Note
is being delivered pursuant to that certain Note and Warrant Purchase Agreement,
dated as of November ___, 2005, between the Borrower and the Lender
(the
"Note and Warrant Purchase Agreement"). All capitalized terms used but not
otherwise defined herein shall have the meaning ascribed to such terms in the
Note and Warrant Purchase Agreement.
1.
Payment.
Payment
of the Principal Sum and Interest on the Maturity Date shall be made by
certified or bank cashier's check
payable
to the Lender
at the
Lender's principal address, or by bank wire transfer, in immediately available
funds, to the account so specified, in lawful money
of the
United States of America. The Borrower may prepay this Note at any time, without
premium or penalty, in whole or in part, with accrued interest to the date
of
such payment on the amount prepaid. If the Maturity Date occurs on a date that
is not a Business
Day then
the Principal Sum or Interest then due shall be paid on the next succeeding
Business
Day.
"Business
Day"
shall mean any day other than Saturday, Sunday or any day upon which banks
are
authorized or required to be closed.
2.
Default and Remedies.
(a)
If
any of the following events or conditions (each an "Event of Default") shall
occur and be continuing:
(i)
the
Borrower shall fail to pay the Principal Sum when and as the same shall become
due and payable, whether at its stated maturity, by acceleration or
otherwise;
(ii)
the
Borrower shall fail to pay any Interest when and as the same shall become due
and payable, whether at its stated maturity, by acceleration or
otherwise;
(iii)
the
Borrower fails to grant and deliver the Warrant in accordance with the terms
of
the Note and Warrant Purchase Agreement;
(iv)
an
involuntary proceeding shall be commenced or an involuntary petition shall
be
filed in a court of competent jurisdiction seeking (A) relief in respect of
the
Borrower, or of a substantial part of the property or assets of the Borrower,
under Title 11 of the United
States
Code, as
now constituted or hereafter amended, or any successor to or replacement of
such
statute, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (B) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Borrower or for a substantial part of the properties or assets of the Borrower
or (C) the winding-up, liquidation or dissolution of the Borrower; and such
proceeding or petition shall continue undismissed for 90 days or an order or
decree approving or ordering any of the foregoing shall be entered;
or
(v)
the
Borrower (A) voluntarily commences any proceeding or files any petition seeking
relief under Title 11 of the United
States
Code, as
now constituted or hereafter amended, or any successor to or replacement of
such
statute, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (B) consents to, or fails to contest
in
a timely and appropriate manner, the commencement against of any proceeding
or
the filing of any petition described in clause (v) above, (C) applies for or
consents to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or for a substantial part
of
the properties or assets of the Borrower, (D) files an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(E)
makes a general assignment for the benefit of creditors, (F) becomes unable,
admits in writing its inability or fails generally to pay its debts as they
become due or (G) takes any action for the purpose of effecting any of the
foregoing;
then,
(x)
in the case of an Event of Default specified in clause (a)(i), (ii), or (iii)
above, the Lender
may, at
any time during the continuance of such Event of Default, by written notice
to
the Borrower, declare the entire outstanding Principal Sum, together with all
accrued and unpaid Interest, to be due and payable and (y) in the case of an
Event of Default specified in clauses (a)(iv) or (v) above, the entire
outstanding Principal Sum, together with all accrued and unpaid Interest, shall
automatically forthwith become due and payable without presentment, protest
or
notice of any kind, all of which are hereby expressly waived by the
Borrower.
(b)
Subject to the other terms of this Note, if an Event of Default occurs and
is
continuing, the Lender
may
pursue any available remedy to collect the payment of the Principal Sum or
Interest or to enforce the performance of any provision of this Note. If an
Event of Default occurs and is continuing, the Lender
may
proceed to protect and enforce its rights by any action at law, suit in equity
or other appropriate proceeding. In the case of a default in the payment of
the
Principal Sum or Interest, the Borrower will pay to the Lender
such
further amount as shall be sufficient to cover the costs and expenses of
collection, including, without limitation, reasonable attorneys' fees, expenses
and disbursements.
3.
Notices
All
notices, instructions and other communications given hereunder or in
connection herewith shall be in writing. Any such notice, instruction or
communication shall be sent to:
If
to the
Borrower to: RG Global Lifestyles, Inc.
30021
Xxxxx, Xxxxx 000
Xxxxxx
Xxxxx Xxxxxxxxx, XX 00000
Attention:
Chief Operating Officer
Facsimile:
(000) 000-0000
If
to the
Lender
to:
Facsimile:
4.
Miscellaneous.
This
Note
shall be construed and enforced in accordance with the laws of the State of
California, without regard to its conflicts of laws rules. The Borrower waives
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default and enforcement
of this Note. The Borrower hereby irrevocably and unconditionally submits,
for
itself and its property, to the non-exclusive jurisdiction of the courts of
the
State of California and of the United
States
District
Court for the District of California, and any appellate court of such courts,
in
any action or proceeding arising out of or relating to this Note, or for
recognition or enforcement of any judgment, and the Borrower hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such California court (or, to the
extent permitted by law, in such federal court). The Borrower agrees that a
final, unappealable judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or
in any other manner provided by law. Nothing in this Note shall affect any
right
that the Lender
may
otherwise have to bring any action or proceeding relating to this Note against
the Borrower or its properties in the courts of any jurisdiction.
If
any
provision of this Note shall be held invalid or unenforceable by any court
of
competent jurisdiction, that holding shall not invalidate or render
unenforceable any other provision hereof.
This
Note
may not be changed, amended or modified except by agreement in writing signed
by
the Borrower and the Lender.
IN
WITNESS WHEREOF, the Borrower has caused this Note to be signed on its behalf,
in its corporate name, by its duly authorized officer as an instrument under
seal, as of the day and year first above written.
RG
Global
Lifestyles,Inc.
Xxx
Xxxxxxxxxxxxx
Chief
Executive Officer
EXHIBIT
B
COMMON
STOCK WARRANT
THIS
COMMON STOCK WARRANT AND ANY SECURITIES ISSUABLE UPON THE EXERCISE OR CONVERSION
OF THIS COMMON STOCK WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
THEY HAVE BEEN REGISTERED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.
Issued:
November ___, 0000
Xxxxxxx
to Purchase ___________ Shares of Common Stock
Expiration
Date: November ___, 2010
RG
Global
Lifestyles, Inc., a California corporation ("Company"), hereby certifies that,
for value received, __________________, an individual (“Investor”), or any
transferee to whom this warrant ("Warrant") is properly transferred ("Holder"),
is entitled, on the terms set forth below, to purchase from the Company at
any
time until 5:00 p.m., PCT, on November ____, , 2010 ("Expiration Date")
______________ fully paid and nonassessable shares of the Common Stock, par
value $0.001 per share ("Common Stock"), of the
Company,
at a
price per share equal to the lowest Closing Price for RGBL.OB (as reported
by
the OTC:BB) over the twelve months immediately following the date of this
Agreement ("Purchase Price").
This
Warrant is being issued pursuant to the Note and Warrant Purchase Agreement
dated November ___, 2005 between the
Company
and
Investor (the "Note and Warrant Purchase Agreement").
1.
Exercise of Warrant; Conversion of Warrant; Transfer of Warrant.
(a)
Exercise of Warrant. At any time after November ___, 2006 (“Vesting Date”), and
prior to 5:00 p.m. on the Expiration Date, the rights represented by this
Warrant may be exercised by the Holder, in whole or in part, upon surrender
of
this Warrant to the
Company,
together with an executed Notice of Exercise or Conversion, substantially in
the
form
attached hereto as Exhibit
1,
at the
Company's primary executive office, with payment by check
to
the
Company
of the
amount obtained by multiplying the number of shares of Common Stock with respect
to which this Warrant is being exercised by the Purchase Price.
(b)
Conversion of Warrant (Cashless Exercise). In addition to, and without limiting,
any other rights of the Holder hereunder, the Holder may elect to convert this
Warrant, in whole or in part, into shares of Common Stock at any time after
the
Vesting Date and prior to 5:00 p.m. on the Expiration Date by surrendering
this
Warrant to the
Company,
together with an executed Notice of Exercise or Conversion substantially in
the
form attached hereto as Exhibit A, at the Company's primary executive office.
Upon receipt of such notice and surrender of the Warrant by the Holder, or
on
such later date as specified in the Notice of Exercise or Conversion, the
Company shall deliver to the Holder within a reasonable time, without payment
by
the Holder of any cash
or other
consideration, that number of shares of Common Stock 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.
|
Y
= the
number of shares of Common Stock with respect to which this Warrant
is being converted.
A
= the
Fair Market Value, as defined below, of one share of Common Stock.
B
=
Purchase Price.
If
the
Common Stock is traded on the Nasdaq National Market, the Fair Market Value
of
one share of Common Stock shall be the closing price quoted on the Nasdaq
National Market, as published in The Wall Street Journal on the date of
determination of Fair Market Value. If the Common Stock is not traded on the
Nasdaq National Market, but is traded on an exchange or over-the-counter, the
Fair Market Value of one share of Common Stock shall be the closing price quoted
on the exchange on which the Common Stock is listed or the average of the
closing bid and asked prices of the Common Stock quoted in the Over-the-Counter
Market Summary, whichever is applicable, on the date of determination of Fair
Market Value. In all other cases, the Fair Market Value of one share of Common
Stock shall be determined in good faith by the Company's Board of Directors
("Board").
(c)
Partial Exercise. Upon any partial exercise or conversion, the Company will
issue to the Holder a new Warrant for the number of shares of Common Stock
as to
which this Warrant was not exercised or converted.
(d)
Fractional Shares. No fractional shares of Common Stock shall be issued upon
any
exercise or conversion of this Warrant. Instead of any fractional share which
would otherwise be issuable upon exercise or conversion, the
Company
shall
pay a cash
amount
in respect of each fractional share at a price equal to an amount calculated
by
multiplying such fractional share (calculated to the nearest 1/100th of a share)
by the Fair Market Value of a share of Common Stock on the date of exercise
or
conversion, as applicable, minus the Purchase Price. Payment of such amount
shall be made in cash
or by
check
payable
to the order of the Holder at the time of delivery of any certificate or
certificates arising upon such exercise or conversion.
(e)
Taxes. The
Company
will not
be required to pay any tax
imposed
in connection with any transfer involved in the issuance of a Warrant or a
certificate for shares of Common Stock in any name other than that of the Holder
hereof, and in such case, the
Company
will not
be required to issue or deliver any stock certificate or Warrant until such
tax
is
paid.
(f)
Transfer of Warrant. Transfer of this Warrant to a third party shall be effected
by execution and delivery of the Notice of Assignment attached hereto as
Exhibit
2
and
surrender of this Warrant for registration of transfer of this Warrant at the
primary executive office of the
Company,
together with funds sufficient to pay any applicable transfer tax.
Upon
receipt of the duly executed Notice of Assignment and the necessary transfer
tax
funds,
if any, the Company, at its expense, shall execute and deliver, in the name
of
the designated transferee or transferees, one or more new Warrants representing
the right to purchase a like aggregate number of shares of Common
Stock.
2.
Antidilution Provisions.
(a)
Reorganization, Reclassification or Recapitalization of the Company. In case
of
(i) a capital reorganization, reclassification or recapitalization of the
Company's capital stock (other than in the cases referred to in Section 2(c)
hereof), (ii) the Company's consolidation
or
merger with or into another corporation in which the
Company
is not
the surviving entity, or a merger in which the
Company
is the
surviving entity but the shares of the Company's capital stock outstanding
immediately prior to the merger are converted, by virtue of the merger, into
other property, whether in the form of securities, cash
or
otherwise, or (iii) the sale or transfer of all or substantially all of the
Company's assets, then, as part of such reorganization, reclassification,
recapitalization, merger, consolidation,
sale or
transfer, lawful provision shall be made so that there shall thereafter be
deliverable upon the exercise of this Warrant or any portion thereof (in lieu
of
or in addition to the number of shares of Common Stock theretofore deliverable,
as appropriate) and without payment of any additional consideration, the number
of shares of stock or other securities of property to which the holder of the
number of shares of Common Stock which would otherwise have been deliverable
upon the exercise or conversion of this Warrant or any portion thereof at the
time of such reorganization, reclassification, recapitalization, consolidation,
merger,
sale or transfer would have been entitled to receive in such reorganization,
reclassification, recapitalization, consolidation,
merger,
sale or transfer. This Section 2(a) shall apply to successive reorganizations,
reclassifications, recapitalizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation that are
at
the time receivable upon the exercise or conversion of this Warrant or any
portion thereof. If the per share consideration payable to the Holder for shares
of Common Stock in connection with any transaction described in this Section
2(a) is in a form other than cash
or
marketable securities, then the value of such consideration shall be determined
in good faith by the Board.
(b)
Splits and Combinations. If the
Company
at any
time or from time to time after the date of this Warrant subdivides any of
its
outstanding shares of Common Stock into a greater number of shares, the Purchase
Price in effect immediately prior to such subdivision shall be proportionately
reduced, and, conversely, if the outstanding shares of Common Stock are combined
into a smaller number of shares, the Purchase Price in effect immediately prior
to such combination shall be proportionately increased.
(c)
Reclassifications. If the
Company
reclassifies or otherwise changes any of the securities into which this Warrant
may be convertible into the same or a different number of securities of any
other class or classes, this Warrant shall thereafter be convertible into such
number and kind of securities as would have been issuable as the result of
such
change with respect to the securities into which this Warrant was convertible
immediately prior to such reclassification or other change and the Purchase
Price therefore shall be appropriately adjusted.
(d)
Liquidation; Dissolution. If the
Company
shall
dissolve, liquidate or wind up its affairs, the Holder shall have the right,
but
not the obligation, to exercise this Warrant effective as of the date of such
dissolution, liquidation or winding up. If any such dissolution, liquidation
or
winding up results in any cash
distribution to the Holder in excess of the aggregate Purchase Price for the
shares of Common Stock for which this Warrant is exercisable, then the Holder
may, at its option, exercise this Warrant without making payment of such
aggregate Purchase Price and, in such case, the Company shall, upon distribution
to the Holder, consider such aggregate Purchase Price to have been paid in
full,
and in making such settlement to the Holder, shall deduct an amount equal to
such aggregate Purchase Price from the amount payable to the
Holder.
(e)
Adjustment Certificates. Upon any adjustment of the Purchase Price or the number
of shares of Common Stock issuable upon exercise or conversion of this Warrant,
a certificate, signed by (i) the Company's Chief Financial Officer or (ii)
any
independent firm of certified public accountants of recognized national standing
the
Company
selects
at its own expense, setting forth in reasonable detail the events requiring
the
adjustment and the method by which such adjustment was calculated, shall be
mailed to the Holder at the address set forth in Section 6 hereof and shall
specify the adjusted Purchase Price and the number of shares of Common Stock
issuable upon exercise or conversion of the Warrant after giving effect to
the
adjustment.
(f)
No
Impairment. The
Company
shall
not, by amendment of its Certificate of Incorporation or through any
reorganization, recapitalization, transfer of assets, consolidation,
merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but shall at all times in good faith
assist in the carrying out of all provisions of this Section 2 and in the taking
of all such action as may be necessary or appropriate in order to protect the
rights of the Holder against impairment. The
Company
shall
not be deemed to have avoided or to be seeking to avoid the observance or
performance of any of the terms to be observed or performed hereunder by issuing
securities after the Closing Date for a consideration per share less than the
Purchase Price then in effect.
(g)
Application. Except as otherwise provided herein, all subsections of this
Section 2 are intended to operate independently of one another. If an event
occurs that requires the application of more
than
one
subsection, all applicable subsections shall be given independent
effect.
3.
Registration Rights.
(a)
Piggyback Registration Rights. At any time after the grant date of this Warrant,
if the Company proposes to register any Common Stock for sale solely for cash,
either for its own account or for the account of a stockholder or stockholders
("Company Registration"), then the Company shall give the Holder written notice
of its intention to do so and of the intended method of sale ("Registration
Notice") not fewer than 30 days prior to the anticipated filing date of the
registration statement effecting such Company Registration. The Holder may
request inclusion of any exercisable shares under this Warrant (“Registrable
Shares”) in such Company Registration by delivering to the Company, within 10
days after receipt of the Registration Notice, a written notice ("Piggyback
Notice") stating the number of Registrable Shares proposed to be included and
that such shares are to be included in the Company Registration only on the
same
terms and conditions as the shares of Common Stock otherwise being sold under
such Registration. The Company shall use its reasonable efforts to cause all
Registrable Shares specified in the Piggyback Notice to be included in the
Company Registration and any related offering, all to the extent requisite
to
permit the sale by the Holder of such Registrable Shares in accordance with
the
method of sale applicable to the other shares of Common Stock included in the
Company Registration.
(b)
Limitations on Piggyback Registrations. The Company's obligation to include
Registrable Shares in the Company Registration pursuant to Section 2(a) shall
be
subject to the following limitations: The Company shall not be obligated to
include any Registrable Shares in a registration statement (i) filed on Form
S-4
or Form S-8 or such other similar successor forms then in effect under the
Securities Act, (ii) pursuant to which the Company is offering to exchange
its
own securities, or (iii) relating to dividend reinvestment plans. There is
no
limit on the number of Piggyback Registrations which may be requested
hereunder.
4.
Notices of Record Date. In case (a) the
Company
takes a
record of the holders of the Common Stock for the purpose of entitling them
to
receive any dividend or other distribution, or any right to subscribe for or
purchase any shares of stock of any class or any other securities; (b) of any
capital reorganization of the
Company,
any
reclassification of the capital stock of the Company, any consolidation
or
merger of the
Company
with or
into another corporation, or any conveyance of all or substantially all of
the
assets of the Company to another corporation; or (c) of any voluntary
dissolution, liquidation or winding-up of the
Company;
then,
in each such case, the
Company
will
mail or cause to be mailed to each Holder of a Warrant at the time outstanding
a
notice specifying, as the case may be, (i) the date on which a record is to
be
taken for the purpose of such dividend, distribution or right, and stating
the
amount and character of such dividend, distribution or right, or (ii) the date
on which such reorganization, reclassification, consolidation,
merger,
conveyance, dissolution, liquidation or winding-up is to take place, and time,
if any is to be fixed, as of which the holders of record of Common Stock (or
such other stock or securities at the time receivable upon the exercise or
conversion of the Warrant) will be entitled to exchange their shares of Common
Stock (or such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger,
conveyance, dissolution, liquidation or winding-up, and, in the case of a
reorganization, consolidation,
merger
or conveyance, the fair market value of such securities or other property as
determined by the Board. Such notice shall be mailed at least ten days prior
to
the date specified therein.
5.
Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to
the
Company
of the
loss, theft, destruction or mutilation of this Warrant and (in the case of
loss,
theft or destruction) upon delivery of an indemnity agreement in such reasonable
amount as the Company may determine, or (in the case of mutilation) upon
surrender and cancellation thereof, the
Company
at its
expense, will issue a replacement.
6.
Transferability of Warrant; No Redemption. This Warrant and all rights hereunder
are freely transferable by the Holder, subject to compliance with applicable
state and federal securities laws. This Warrant shall not be
redeemable
by the
Company,
in
whole or in part, at any time.
7.
Notices. All notices, instructions and other communications given
hereunder
or in connection herewith shall be sent to:
If
to the
Borrower to: RG Global Lifestyles, Inc.
30021
Xxxxx, Xxxxx 000
Xxxxxx
Xxxxx Xxxxxxxxx, XX 00000
Attention:
Chief Operating Officer
Facsimile:
(000) 000-0000
If
to the
Lender
to:
Facsimile:
8.
Change; Waiver. This Warrant except by agreement may not be changed, amended
or
modified in writing signed by the
Company
and the
Holder.
9.
No
Rights as Stockholder. This Warrant does not entitle the Holder to any voting
rights or other rights as a stockholder of the
Company
prior to
the exercise of this Warrant.
10.
Headings. The headings in this Warrant are for purposes of reference only and
shall not be deemed to constitute a part hereof.
11.
Governing Law. This Warrant is delivered in the State of California and shall
be
construed in accordance with and governed by the laws of such state without
regard to its conflicts of laws rules.
Dated:
November ____, 2005
RG
Global
Lifestyles, Inc.
Xxx
Xxxxxxxxxxxxx
Chief
Executive Officer
EXHIBIT
1
NOTICE
OF EXERCISE OR CONVERSION
TO:
RG
Global Lifestyles, Inc.
1.
The
undersigned hereby elects to receive __________ shares of Common Stock of RG
Global Lifestyles, Inc., pursuant to the terms of the attached
Warrant.
2.
Method
of Exercise (Please initial the applicable blank):
___
The
undersigned elects to exercise the attached Warrant by means
of
a
cash
payment,
and tenders herewith payment in full for the
purchase
price of the shares being purchased, together with all
applicable
transfer taxes, if any.
___
The
undersigned elects to convert the attached Warrant by means
of
the
conversion provisions of Section 2(b) of the Warrant.
3.
Please
issue a certificate or certificates representing said shares of Common Stock
in
the name of the undersigned or in such other name as is specified
below:
_________________________________
(Name)
_________________________________
_________________________________
(Address)
4.
The
undersigned represents that the aforesaid shares of Common Stock are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such
shares.
All
capitalized terms used but not otherwise defined herein shall have the meaning
ascribed to such terms in the Warrant.
_________________________________
Name
of
Holder
_________________________________
Signature
of Authorized Signatory
_________________________________
Print
Name and Title
_________________________________
Date
EXHIBIT
2
ASSIGNMENT
FORM
(To
be
executed only upon the assignment of the within Warrant)
FOR
VALUE
RECEIVED, the undersigned registered Holder of the within Warrant hereby sells,
assigns and transfers unto _____________________, whose address is
___________________ all of the rights of the undersigned under the within
Warrant, with respect to shares of Common Stock (as defined within the Warrant)
of RG Global Lifestyles, Inc., and, if such shares of Common Stock shall not
include all the shares of Common Stock issuable as provided in the within
Warrant, that a new Warrant of like tenor for the number of shares of Common
Stock not being transferred hereunder be issued in the name of and delivered
to
the undersigned, and does hereby irrevocably constitute and appoint
_________________ attorney to register such transfer on the books
of RG
Global Lifestyles, Inc. maintained for that purpose, with full power of
substitution in the premises.
Dated:_____________
Signature
Guaranteed ___________________________________
____________________________________________________
By:________________________________
(Signature
of Registered Holder)
Title:_____________________________
NOTICE:
The signature to this Notice of Assignment must correspond
with
the
name upon the face of the within Warrant in every
particular,
without alteration or enlargement or any
change
whatever.
The
signature to this Notice of Assignment must be
guaranteed
by a commercial bank or trust company in the
United
States
or a
member firm of the New
York
Stock
Exchange.
