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.

    


    
      
         

      

      
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              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").

    


    
      
         

      

      
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    (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.

    


    
      
         

      

      
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    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.

    


    
      
         

      

      
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    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.

    


    
      
         

      

      
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    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.

    


    
      
         

      

      
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    (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.

    


    
      
         

      

      
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    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.

    


    
      
         

      

      
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    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

    


     

    
      
         

      

      
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    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.

    


    
      
        2

      

      
         

        
          

        

      

      
         

      

    

    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.

    


    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    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.

    


    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    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. 

    


    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    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.

    


    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (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.

    


    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      date
      first above written.

    


    


    


    ________________________________

    BY:
      

    ITS:
      

    


    


    


    ________________________________

    ,
      Optionee

    
      
         

      

      
        8

        
          

        

      

      
         

      

    


    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.

    


    _________________________

    (Signature)

    


    _________________________

    (Name
      of
      Optionee)

    


    
      
         

      

      
        9