MASTER SEPARATION AND DISTRIBUTION AGREEMENT

 

MASTER SEPARATION AND DISTRIBUTION AGREEMENT

 

THIS AGREEMENT (hereafter the "AGREEMENT") is effective as of October 1, 2005, by and between;

 

RG Global Lifestyles, Inc., a Delaware Corporation, having corporate offices at 30021 Tomas, Suite 200, Rancho Santa Margarita, CA 92688, hereafter “RGGL”,

 

AND:

 

Omeco Investment Group Ltd.,

Handajati Widjaja,

Serialam Pasaribu,

Lindiani Poerwaningsih,

Tan Wie Ling,

Fitri Dafiyanti Kasidik,

Nasimun,

Linda Margarita Halim,

Mastertime Worldwide Ltd.,

Winterpark Offshore Ltd.,

Good Vale Equities Ltd.,

 

 

individuals and stockholders of RGGL, collectively hereafter “DISTRIBUTEES”,

 

WHEREAS, RGGL is the owner and in control of Amerikal Nutraceutical Corp., presently a wholly owned subsidiary of the RGGL, formed under the laws of California with offices at 17751 Mitchell Ave., Irvine CA 92614, hereafter “AMERIKAL”, the object of this AGREEMENT.

 

All outstanding and issued shares of common stock of AMERIKAL are owned and controlled by RG Global Lifestyles, Inc.

 

WHEREAS, DISTRIBUTEES are stockholders of RGGL.

 

WHEREAS, The Board of Directors of RGGL and AMERIKAL believe it to be to their advantage, and to the advantage of all of the stockholders of RGGL, to distribute all of the stock, property, assets and liabilities of AMERIKAL to DISTRIBUTEES (“DISTRIBUTION”).

 

WHEREAS, RGGL will receive an aggregate of 7,500,000 shares of common stock of RGGL (RGBL.OB), par value $.001, in exchange for the DISTRIBUTION;

 

WHEREAS, DISTRIBUTEES will place 315,561 shares of common stock of RGGL in escrow as a reserve for indemnification to RGGL and or Amerikal, or settlement of any claims for liabilities attributable to the Agreement or discontinued operations, according to the terms and conditions as states in the Escrow Agreement between the parties.

 

WHEREAS, RGGL and DISTRIBUTEES intend that the DISTRIBUTION will qualify as a tax-free exchange under Section 355 of the Internal Revenue Code of 1986, as amended (the "CODE").

 

THEREFORE, DISTRIBUTEES AND RGGL ACKNOWLEDGE THAT THIS AGREEMENT SHALL BE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH BELOW;

 

Section 1. Terms

 

1.1   Distribution Terms.

 

A.   Subject to the conditions and terms set forth herein, the DISTRIBUTEES do assume, guarantee and accept, without reservation of any type, all claims, debts and or encumbrances now of record and arising prior to this AGREEMENT, and any and all claims, debts, and or encumbrances that may arise in conjunction with the execution of the DISTRIBUTEES’ responsibilities under this AGREEMENT.

 

B.   DISTRIBUTEES specifically relieve, and agrees to hold harmless, RGGL from any and all liability, debt, responsibility, claims, costs, fees, and accountability, of any and all types, arising after the date of execution of this AGREEMENT.

 

C.   RGGL agrees to transfer, assign, and sell all its rights, claims, and ownership of AMERIKAL, free and clear of all claims whatsoever except those agreed to herein.

 

1.2   Stock Distribution and Escrow.

 

A.   DISTRIBUTEES will transfer to RGGL an aggregate of 7,500,000 shares of publicly traded common stock of RGGL (RGBL.OB), par value $.001, as set forth in Exhibit D .

 

B.   DISTRIBUTEES will place 315,561 shares of common stock of RGGL in an escrow account of RGGL’s choosing as a reserve for settlement of any claims presented to RGGL for liabilities attributable to the discontinued operations, according to the terms and conditions as states in the Escrow Agreement between the parties, Exhibit E

 

C.   RGGL will transfer all outstanding common stock of AMERIKAL to DISTRIBUTEES.

 

D.   CLOSING SHALL BE ON the date execution of this AGREEMENT unless extended by mutual agreement in writing. This AGREEMENT shall remain and will be considered executory until A and B have been satisfied, irrespective of any other clause herein.

 

1.3   Conditions

 

The following are conditions to the consummation of the DISTRIBUTION. The conditions are for the sole benefit of RGGL and shall not give rise to or create any duty on the part of RGGL or the RGGL Board of Directors to waive or not waive any such condition.

 

A.   NO LEGAL RESTRAINTS. No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the DISTRIBUTION shall be in effect and no other event outside the control of RGGL shall have occurred or failed to occur that prevents the consummation of the DISTRIBUTION.

 

Section 2. Representations

 

As a material inducement to the DISTRIBUTEES to enter into the AGREEMENT and purchase AMERIKAL, RGGL and AMERIKAL, jointly and severally, represent and warrant that:

 

 

AMERIKAL is a corporation duly incorporated and validly exists under the laws of the State of California as evidenced by Exhibit A . The copies of the Corporation's Articles of Incorporation, bylaws, and books and records or copies thereof have been or will be furnished to the DISTRIBUTEES on or before the closing and such copies thereof reflect all amendments made thereto at any time prior to the date of this AGREEMENT and such copies are correct and complete.

 

 

The DISTRIBUTEES acknowledge and RGGL represents that the shares of stock of AMERIKAL have "NOT" been registered under Securities Act of 1933 ("1933 Act") or under any state security laws prior to this AGREEMENT.

 

 

RGGL warrants to the DISTRIBUTEES that there are no undisclosed liabilities of AMERIKAL to the best of RGGL'S knowledge.

 

 

The DISTRIBUTEES have all requisite corporate powers and authority and all material licenses, permits and authorizations necessary to own and operate its properties, carry on its business as now conducted, and enter into and execute this AGREEMENT.

 

Section 3. Subsidiaries

 

AMERIKAL has no, nor has had any, subsidiaries or affiliated companies during the period prior to this AGREEMENT while a subsidiary of RGGL, and does not otherwise own or control, directly or indirectly, any equity interest in any corporation or entity that has not been disclosed in this agreement.

 

Section 4. Conduct of Business; Liabilities

 

AMERIKAL is not in default under, and no condition exist that with notice or lapse of time would constitute a default of AMERIKAL under;

 

 

 

 

 

Section 5. Financial Statements

 

RGGL has made available to DISTRIBUTEES on or before the closing, their audited consolidated financial statements for the fiscal year ending March 31, 2005, and unaudited consolidated financial statements for the periods ending June 30 and September 30, 2005, which includes AMERIKAL.

Section 6. Title and Related Matters

 

Except as set forth in Exhibit G , AMERIKAL has good and marketable title to all of its property, real or personal, and other assets included in the Financial Statements, free and clear of all security interest, mortgages, liens, pledges, charges, claims or encumbrances of any kind or character.

 

Section 7. Litigation

 

Except as set forth in Exhibit D , to the best of RGGL'S knowledge there are no material actions, suits, proceedings, orders, investigations or claims pending or overtly threatened against AMERIKAL or its property of either, at law or in equity, or before or by any governmental department, commission, board, bureau, agency or instrumentality. AMERIKAL is not subject to any arbitration proceedings under collective bargaining agreements or otherwise or, to the best of RGGL'S knowledge subject to any government investigations or inquires: and to the best of RGGL'S directors, and responsible officers' of AMERIKAL, there is no basis for any of the foregoing.

 

Section 8. Tax Matters

 

a.   RGGL has prepared in a substantially correct manner and have filed all tax returns and reports heretofore required to be filed by them and paid all taxes shown as due thereon.

 

b.   No taxing authority has asserted any deficiency in the payment of any tax or informed RGGL that it intends to assert any such deficiency or to make any audit or other investigation of AMERIKAL for the purpose of determining whether such a deficiency should be asserted against AMERIKAL.

 

Section 9. Compliance with Laws

 

To the best of RGGL'S knowledge, AMERIKAL is, in the conduct of business, in substantial compliance with all laws, statutes, ordinances, regulations, orders, judgments or decrees applicable to them, the enforcement of which, if AMERIKAL was not in compliance therewith, would have a materially adverse effect on the business of AMERIKAL, taken as a whole. Neither RGGL nor AMERIKAL have received any notice of any asserted present or past failure by AMERIKAL to comply with such laws, statutes, ordinances, regulations, orders, judgments or decrees.

 

Section 10. Employment and Labor Related Matters

 

To RGGL'S knowledge, no employee of AMERIKAL is in violation of any material term of any employment contract, or any other contract or agreement relating to the relationship of such employee with AMERIKAL or any other party because of the nature of the business conducted or to be conducted by AMERIKAL. Each employee of AMERIKAL with access to confidential or proprietary information has executed, or in the ordinary course of business will execute, a proprietary information agreement obligating such employee to hold confidential AMERIKAL proprietary information. AMERIKAL has in all material respects complied with all applicable US and California Laws relating to employment.

 

Each party agrees not to directly solicit or recruit the other party's employees for a period of two years following the effective date of the DISTRIBUTION.

 

Section 11. Agreements and Commitments

 

RGGL has provided AMERIKAL a complete and accurate list of each material agreement, contract, instrument and commitment to which AMERIKAL is a party.

 

Section 12. Personnel

 

RGGL has provided AMERIKAL a true and complete list of names, title, and current salaries of all officers of AMERIKAL; the names of all directors of AMERIKAL the wage rates, (or range ), for each class of exempt and nonexempt, salaried and hourly employees of AMERIKAL all scheduled or contemplated increases in compensation or bonuses; and all scheduled or contemplated promotions.

 

Section 13. Intellectual Property

 

AMERIKAL owns or has the right to use free and clear of all liens, charges, claims and restrictions, those patents, trademarks, service marks, trade names, copyrights, licenses and other intellectual property rights necessary to comply with this AGREEMENT. To the knowledge of RGGL or AMERIKAL, AMERIKAL has not infringed upon, nor is it infringing upon, any patent, trademark, service mark, and trade name, copyright or other intellectual property of any third party nor is RGGL and AMERIKAL aware of any violation by third party of such.

 

Section 14. Benefit Plans

 

AMERIKAL does not maintain any retirement or deferred compensation plan, saving, incentive, stock option or stock purchase plan, unemployment compensation plan, vacation pay, severance pay, bonus or benefit arrangement, insurance or hospitalization program or any other fringe benefit arrangement for any employee, consultant, or agent of AMERIKAL or RGGL whether pursuant to a contract, agreement, custom, law, or informal understanding for which RGGL and AMERIKAL may have an ongoing material liability after the execution of this AGREEMENT.

 

Section 15. Assignment

 

The Parties agree that no party may assign his interest under this AGREEMENT without the prior written consent of the other party, which consent will not be unreasonably withheld. However, each party may, by notice to the other party, assign its interest under this AGREEMENT to an affiliated company. In the case of such assignment, the Parties shall remain liable for all their obligations under this AGREEMENT.

 

Section 16. Compliance with the laws, rules and regulations

 

The Parties agree to comply with all applicable laws, rules and regulations of the United States, and California, DISTRIBUTEES agree to file applications and be responsible for all costs for any and all certificates, permits, licenses, governing authority approvals, and any other documentation otherwise necessary to meet the Parties' obligations under this AGREEMENT. DISTRIBUTEES and RGGL agree to execute and complete any and all Exhibits and supply all information necessary to complete this AGREEMENT on or before closing.

 

Section 17. Governing law

 

This AGREEMENT shall be interpreted and governed by and enforced in accordance with the laws of the State of California.

 

Section 18. Dispute resolutions

 

1.   All disputes arising in connection with this AGREEMENT, or any agreement made in furtherance thereof, except as to matters of urgent interest, shall be finally settled by arbitration in accordance with the arbitration rules of the American Arbitration Association.

 

2.   The arbitral tribunal shall be composed of three (3) arbitrators.

 

3.   RGGL shall choose one arbitrator, DISTRIBUTEES shall choose one arbitrator, and the two so chosen shall appoint the third arbitrator. The place of arbitration shall be convenient to both parties in the State of California. The arbitral procedure shall be conducted in the English language.

 

4.   Each party to the arbitration shall bear the cost of their individual representation regardless of the arbitration decision and award and such cost shall not be a part of said decision and or award.

 

5.   Each party to the arbitration shall share equally in any cost and fees of the American Arbitration Association that are assessed per the fee schedule as published.

 

6.   Any award or decision will be enforceable through any court of proper jurisdiction in the United States of America.

 

Section 19. Severability, Corrections, Counterparts .

 

Any provision of the AGREEMENT prohibited by applicable law shall be invalid to the extent of such prohibition unless it is determined by the Parties hereto that such prohibition invalidates the purpose or intent of this AGREEMENT. The parties to this AGREEMENT agree to modify and execute any changes necessary to correct any errors clerical and verbiage which may cloud and or misdirect the intent and purpose of this AGREEMENT. This AGREEMENT may be executed in one or more counterparts, each of which when executed shall be deemed an original, but all of which taken together shall constitute one and the same document.

 

Section 20. Force Majeure

 

Neither party hereto shall be responsible for damages caused by the delay or failure to perform in whole or in