f8k080808ex10iii_ea2celsius.htm


     

    Exhibit
10.3

     

    CELSIUS
HOLDINGS, INC.

     

    CERTIFICATE
OF DESIGNATION

    OF

    SERIES
A CONVERTIBLE PREFERRED STOCK

     

    Celsius
Holdings, Inc., a Nevada corporation (the “Company”),
acting pursuant to Chapter 78 of the Nevada Revised Statutes, the General
Corporation Law of Nevada, does hereby submit the following Certificate of
Designation of Series A Convertible Preferred Stock (this “Certificate”).

     

    FIRST:  The
name of the Company is Celsius Holdings, Inc.

     

    SECOND:  By
unanimous consent of the Board of Directors of the Company (the “Board
of Directors”), the following resolutions were duly adopted:

     

    WHEREAS
the Articles of Incorporation of the Company (as amended and restated, the
“Articles
of Incorporation”) authorizes Preferred Stock consisting of 50,000
shares, par value $0.001 per share, issuable from time to time in one or more
series;

     

    WHEREAS
the Board of Directors is authorized, subject to limitations prescribed by law
and by the provisions of Article 4.01 of the Company’s Articles of
Incorporation, as amended, to establish and fix the number of shares to be
included in any series of Preferred Stock and the designation, rights,
preferences, powers, restrictions and limitations of the shares of such series;
and

     

    WHEREAS
it is the desire of the Board of Directors to establish and fix the number of
shares to be included in a new series of Preferred Stock and the designation,
rights, preferences and limitations of the shares of such new
series.

     

    NOW,
THEREFORE, BE IT RESOLVED that pursuant to Article 4.01 of the Articles of
Incorporation there is hereby established a new series of 3,000 shares of Series
A Convertible Preferred Stock of the Company (the “Series
A Preferred Stock”) to have the designation, rights, preferences, powers,
restrictions and limitations set forth in a supplement of Article 4.01 as
follows:

     

    Section
1.  Designation
and Number of Shares; Defined Terms.

     

    (a)           Designation.  The
series will be known as the “Series A Convertible Preferred Stock” and will be a
Series A consisting of 3,000 shares of the authorized but unissued preferred
stock of the Company.  The face amount of each share of Series A
Preferred Stock shall be One Thousand Dollars ($1,000) (the “Stated
Value”)

     

    (b)           Defined
Terms.  When used herein, the terms below shall have the
respective meanings indicated:

     

     

    
      
         

      

      
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    “Capital
Stock” means the capital stock of the Company, including, without
limitation, the Series A Preferred Stock.

     

    “CDS”
means CDS Ventures of South Florida, LLC, a Florida limited liability company,
and its successors and permitted assigns.

     

    “Change
of Control” means the existence, occurrence, public announcement or
entering into an agreement contemplating of any of the following: (a) the sale,
conveyance or disposition of all or substantially all of the assets of the
Company to any Person, (b) the sale, conveyance or disposition of all or
substantially all of the assets of any Company Subsidiary to a Person other than
the Company or another Company Subsidiary; (c) the effectuation of a transaction
or series of transactions in which more than fifty percent (50%) of the equity
or voting power of the Company is disposed of; (d) the effectuation of a
transaction or series of transactions in which any of the equity or voting power
of any Company Subsidiary is disposed to a Person other than the Company or
another Company Subsidiary; (e) the consolidation, merger or other business
combination of the Company with or into any other entity, immediately following
which the prior stockholders of the Company fail to own, directly or indirectly,
at least fifty percent (50%) of the surviving entity; (f) the consolidation,
merger or other business combination of any Company Subsidiary with or into any
other entity other than the Company or another Company Subsidiary; (g) a
transaction or series of transactions in which any Person or group (other than
pursuant to an agreement between current affiliates of the Company) acquires
more than fifty percent (50%) of the equity or voting power of the Company; (h)
a transaction or series of transactions in which any Person or group (other than
the Company or a Company Subsidiary) acquires any of the voting equity of a
Company Subsidiary; and (i) the Continuing Directors do not at any time
constitute at least a majority of the Board of
Directors.    .

     

    “Continuing
Director” means, at any date, a member of the Board of Directors (i) who
was a member of such board on the effective date of this Certificate or (ii) who
was nominated or elected by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election or whose
election to the Board of Directors was recommended or endorsed by at least a
majority of the directors who were Continuing Directors at the time of such
nomination or election or such lesser number comprising a majority of a
nominating committee if authority for such nominations or elections has been
delegated to a nominating committee whose authority and composition have been
approved by at least a majority of the directors who were Continuing Directors
at the time such committee was formed.

     

    “Conversion
Price” means (A) from the date on which this Certificate is effective in
the State of Nevada until and including 200 days thereafter $0.08 (eight cents)
(B) after 200 days after the date on which this Certificate is effective in the
State of Nevada, the greater of (i) 90% of the Market Price on the conversion
date and (ii) $0.08 (eight cents) as appropriately adjusted for stock splits,
stock dividends and similar events.

     

     

    
      
         

      

      
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    “Common
Stock” means the Company’s common stock, par value $0.001 per
share.

     

      “Company”
means Celsius Holdings, Inc., a Nevada corporation, and its successors and
permitted assigns.

     

    “Default
Interest Rate” means the lower of eighteen (18%) and the maximum rate
permitted by applicable law or by the applicable rules or regulations of any
governmental agency or of any stock exchange or other self-regulatory
organization having jurisdiction over the Company or the trading of its
securities.

     

    “Delivery
Default Amount” means, with respect to a Delivery Default of (i) Dividend
Shares, the aggregate Liquidation Preference of the Dividend Shares subject to
such Delivery Default as of the date on which such Dividend Shares were required
to be delivered; and (ii) Maturity Shares or Conversion Shares, the product of
(x) the number of the Maturity Shares or Conversion Shares, as the case may be,
subject to such Delivery Default multiplied
by (y) the VWAP as of the date on which such Maturity Shares or
Conversion Shares were required to be delivered.

     

    “Excluded
Stock” shall mean:  (i) the Series A Preferred Stock; (ii) all
Deliverable Shares; (iii) securities issued pursuant to the acquisition of
another business entity or business segment of any such entity by the Company by
merger, purchase of substantially all of the assets or other reorganization
whereby the Company will own more than fifty percent (50%) of the voting power
of such business entity or business segment of any such entity; (iv) securities
issued to employees, consultants, officers, directors or other advisors of the
Company pursuant to any stock option, stock purchase or stock bonus plan,
agreement or arrangement approved by the Board of Directors; and (v) securities
issued to leasing companies, landlords and other providers of goods and services
to the Company and approved by the Board of Directors.

     

    “Holder”
means any Person that holds any Shares.

     

    “Liquidation
Event” means where (i) the Company or any Company Subsidiary shall make a
general assignment for the benefit of creditors or consent to the appointment of
a receiver, liquidator, custodian, or similar official of all or substantially
all of its properties, or any such official is placed in control of such
properties, or the Company or any Company Subsidiary shall commence any action
or proceeding or take advantage of or file under any federal or state insolvency
statute, including, without limitation, the United States Bankruptcy Code,
seeking to have an order for relief entered with respect to it or seeking
adjudication as a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution, administration, a voluntary arrangement,
or other relief with respect to it or its debts; or (ii) there shall be
commenced against the Company or any Company Subsidiary any action or proceeding
of the nature referred to in clause
(i) above or seeking issuance of a warrant of attachment, execution,
distraint, or similar process against all or any substantial part of its
property, which results in the entry of an order for relief which remains
undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii)
there is initiated the dissolution or other winding up of the Company or any
material Company Subsidiary, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy proceedings; or (iv) there is initiated any
assignment for the benefit of creditors or any marshalling of the material
assets or material liabilities of the Company or any Company
Subsidiary.

     

     

    
      
         

      

      
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    “Market
Price” means the average of the ten daily VWAPs for the 10 Trading Days
immediately preceding the applicable date of determination.

     

    “Securities
Purchase Agreement” means the Securities Purchase Agreement, dated as of
August 8, 2008, by and between the Company and CDS Ventures of South Florida,
LLC, as may be amended from time to time.

     

    “Series
A Preferred Stock” has the meaning specified in the recitals of this
Certificate.

     

    “Shares”
means shares of Series A Preferred Stock.

     

    “Stated
Value” has the meaning specified in Section
1(a).

     

    “VWAP”
on a Trading Day means the volume weighted average price of the Common Stock for
such Trading Day on the Principal Market as reported by Bloomberg Financial
Markets or, if Bloomberg Financial Markets is not then reporting such prices, by
a comparable reporting service of national reputation selected by the Holders
and reasonably satisfactory to the Company.  If the VWAP cannot be
calculated for the Common Stock on such Trading Day on any of the foregoing
bases, then the Company shall submit such calculation to an independent
investment banking firm of national reputation (reasonably acceptable to the
Holders of not less than two-thirds of the Shares then outstanding), and shall
cause such investment banking firm to perform such determination and notify the
Company and the Holders of the results of determination no later than two (2)
Business Days from the time such calculation was submitted to it by the
Company.  All such determinations shall be appropriately adjusted for
any stock dividend, stock split, reverse stock split or other similar
transaction during such period.

     

    (c)           Cross
References.  The terms below are defined in the sections of
this Certificate indicated below:

     

    
      	
              “Board
      of Directors”

            	
              Preamble

            
	
              “Certificate”

            	
              Preamble

            
	
              “Articles
      of Incorporation”

            	
              Recitals

            
	
              “Conversion”

            	
              Section
      8(a)

            
	
              “Conversion
      Date”

            	
              Section
      8(b)

            
	
              “Conversion
      Delivery Date”

            	
              Section
      8(c)

            
	
              “Conversion
      Notice”

            	
              Section
      8(b)

            


    

     

     

    
      
         

      

      
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              “Conversion
      Shares”

            	
              Section
      8(a)

            
	
              “Deliverable
      Shares”

            	
              Section
      10

            
	
              “Delivery
      Default”

            	
              Section
      10(b)

            
	
              “Delivery
      Default Date”

            	
              Section
      10(b)

            
	
              “Delivery
      Default Payments”

            	
              Section
      10(b)

            
	
              “Dividend
      Payment Date”

            	
              Section
      2(b)

            
	
              “Dividend
      Share Delivery Date”

            	
              Section
      2(c)

            
	
              “Dividend
      Shares”

            	
              Section
      2(c)

            
	
              “Dividends”

            	
              Section
      2(a)

            
	
              “DTC”

            	
              Section
      10(a)

            
	
              “DWAC”

            	
              Section
      10(a)

            
	
              “Early
      Redemption”

            	
              Section
      7(a)

            
	
              “Early
      Redemption Date”

            	
              Section
      7(a)

            
	
              “Early
      Redemption Notice”

            	
              Section
      7(a)

            
	
              “Early
      Redemption Price”

            	
              Section
      7(b)

            
	
              “Issue
      Date”

            	
              Section
      2(a)

            
	
              “Junior
      Stock”

            	
              Section
      2(b)

            
	
              “Liquidation
      Preference”

            	
              Section
      4(a)

            
	
              “Mandatory
      Redemption”

            	
              Section
      6(a)

            
	
              “Mandatory
      Redemption Date”

            	
              Section
      6(c)

            
	
              “Mandatory
      Redemption Event”

            	
              Section
      6(a)

            
	
              “Mandatory
      Redemption Notice”

            	
              Section
      6(c)

            
	
              “Mandatory
      Redemption Price”

            	
              Section
      6(b)

            
	
              “Maturity
      Date”

            	
              Section
      3(a)

            
	
              “Maturity
      Shares”

            	
              Section
      3(b)

            
	
              “Maturity
      Share Delivery Date”

            	
              Section
      3(b)

            
	
              “Transfer
      Agent”

            	
              Section
      10(a)

            


    

     

    (d)           Terms
Defined in Securities Purchase Agreement.  Any capitalized term
used but not defined herein has the meaning specified in the Securities Purchase
Agreement.

     

    (e)           Usage.  All
definitions contained in this Certificate are equally applicable to the singular
and plural forms of the terms defined.  The words “hereof”, “herein”
and “hereunder” and words of similar import contained in this Certificate refer
to this Certificate as a whole and not to any particular provision of this
Certificate.

     

    Section
2.  Dividends.

     

    (a)           Dividend
Rate.  Dividends (the “Dividends”)
shall accrue on the Stated Value of each Share at an annual rate equal to ten
percent (10%), computed on the basis of a 360-day year (consisting of 12 months
of 30 days each) and calculated using the actual number of days elapsed since
and including the date on which such Share was issued (the “Issue
Date”) or the date on which Dividends were most recently paid, as the
case may be.

     

     

    
      
         

      

      
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    (b)           Dividend
Payment Date.  Each Holder shall be entitled to receive, in
preference to the payment of dividends to any holders of the Company’s common
stock or any other class or series of preferred stock (collectively, the “Junior
Stock”), the accrued and unpaid Dividends for each Share held by such
Holder on the last Business Day of each fiscal year of the Company (each, a
“Dividend
Payment Date”).

     

    (c)           Payment
of Dividend in Shares.  The Company shall pay all Dividends in
kind with additional Shares.  The number of Shares to be issuable to a
Holder on a Dividend Payment Date shall be equal to the quotient of (x) the
Dividends payable to such Holder on such Dividend Payment Date divided
by (y) $1,000 (the “Dividend
Shares”).  On or before the fifth (5th) Business Day following
a Dividend Payment Date (the “Dividend
Share Delivery Date”), the Company must deliver to each Holder the
Dividend Shares issuable to such Holder in accordance with the provisions of
Section
10.

     

    Section
3.  Maturity
Date.

     

    (a)           Payment
at Maturity.  All Shares shall mature on February 1, 2013 (the
“Maturity
Date”).  On the Maturity Date, the Company shall pay to each
Holder the aggregate Liquidation Preference for such Holder’s Shares in
accordance with this Section
3.

     

    (b)           Payment
in Shares of Common Stock.  The Company shall pay the amount
due on the Maturity Date in kind with shares of Common Stock.  The
number of shares of Common Stock to be issuable to a Holder on the Maturity Date
(the “Maturity
Shares”) shall be equal to the quotient of (x) the aggregate Liquidation
Preference for such Holder’s Shares on the Maturity Date divided
by (y) the Conversion Price in effect as of the Maturity
Date.  On or before the third (3rd) Business Day following the
Maturity Date (the “Maturity
Share Delivery Date”), the Company must deliver to each Holder the
Maturity Shares issuable to such Holder under this Section
3 in accordance with the provisions of Section
10.

     

    Section
4.  Liquidation
Preference.

     

    (a)           Preference.  In
the event of any liquidation, dissolution or winding up of the Company, either
voluntarily or involuntarily, each Holder shall be entitled to receive prior and
in preference to any distribution of any of the assets or surplus funds of the
Company to the holders of any Junior Stock, an amount (the “Liquidation
Preference”) equal to (A) $1,000 per Share held by such Holder, plus
(B) a further amount equal to any Dividends accrued but unpaid on such
Shares.  If, upon such liquidation, dissolution or winding up of the
Company, the assets of the Company available for distribution to the
stockholders of the Company are insufficient to provide for the payment of the
full aforesaid preferential amount, such assets as are so available shall be
distributed among the Holders in proportion to the relative aggregate
Liquidation Preferences of the Shares held by such Holders.  The
Liquidation Preference set forth in this Section
4(a) shall be appropriately adjusted for any stock splits, stock
combinations, stock dividends or similar recapitalizations.

     

     

    
      
         

      

      
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    (b)           Noncash
Distributions.  If any of the assets of the Company are to be
distributed other than in cash under this Section
4, then the Board of Directors shall promptly engage independent
competent appraisers to determine the value of the assets to be distributed to
the holders of Capital Stock.  The Company shall, upon receipt of such
appraiser’s valuation, give prompt written notice to each holder of Capital
Stock of the appraiser’s valuation.

     

    Section
5.  Covenants
and Agreements.

     

    (a)           Certain
Affirmative Covenants of the Company.  The Company shall, and
shall cause each Company Subsidiary to:

     

    (i)           maintain
its corporate existence in good standing;

     

    (ii)           comply
with all Governmental Requirements applicable to the operation of its business,
except for instances of noncompliance that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect;

     

    (iii)           comply
with all agreements, documents and instruments binding on it or affecting its
Properties or business, including, without limitation, all Material Contracts,
except for instances of noncompliance that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect;

     

    (iv)           provide
each Holder with copies of all materials sent to its shareholders at the same
time as such materials are delivered to such shareholders;

     

    (v)           timely
file with the Commission all reports required to be filed pursuant to the
Exchange Act and refrain from terminating its status as an issuer required by
the Exchange Act to file reports thereunder even if the Exchange Act or the
rules or regulations thereunder would permit such termination (and otherwise
make and keep public information available, as those terms are understood and
defined in Rule 144);

     

    (vi)           ensure
that the Common Stock is at all times listed or quoted on the Nasdaq Bulletin
Board, Nasdaq Global Market, the New York Stock Exchange, the American Stock
Exchange, or such other exchange or quotation service (reasonably satisfactory
to the Holders of not less than two-thirds of the Shares then
outstanding;

     

    (vii)           maintain
commercially reasonable insurance coverage (including D&O insurance) for
each of the Company and Company Subsidiaries; and

     

    (viii)                      obtain
Stockholder Cap Approval in accordance with the terms of the Securities Purchase
Agreement, if such is needed.

     

    (b)           Certain
Negative Covenants of the Company.  The Company shall not, and
shall cause each Company Subsidiary not to:

     

     

    
      
         

      

      
        -7-

        
          
 

      

      
         

      

    

     

    (i)           enter
into any transaction or arrangement with any Affiliate, employee, officer,
director or shareholder of the Company or Company Subsidiary, unless such
transaction is effectuated on an arms’ length basis and approved by the
independent directors of the Company or such Company Subsidiary, as the case may
be;

     

    (ii)           incur
(or permit to exist) any Debt (other than Permitted Debt);

     

    (iii)           grant,
establish or maintain any Lien on any of its Property other than Permitted
Liens;

     

    (iv)           make
any Restricted Payments other than Restricted Payments made by a Company
Subsidiary to the Company;

     

    (v)           make
any offers or sales of any security or solicit any offers to buy any security,
which will be integrated with the sale of the Securities in a manner which would
require the registration of any of the Securities under the Securities Act or
require stockholder approval under the rules and regulations of the Principal
Market;

     

    (vi)           dispose
of all or any part of its Property unless (i) such disposition is in the
ordinary course of business and for fair market value, and (ii) such Property is
not material to the Company’s or any Company Subsidiary’s business, operations
or financial condition or performance; or

     

    (vii)           consent
to or implement any termination, amendment, modification, supplement or waiver
of the certificate or articles of incorporation, articles of organization,
bylaws, regulations or other constituent documents of the Company or any Company
Subsidiary which could reasonably be expected to adversely affect the rights of
any Holder under the Transaction Documents.

     

    Section
6.  Mandatory
Redemption.

     

    (a)           Mandatory
Redemption Event.  Each Holder shall have the right to require
the Company to redeem all or any portion of the Shares held by such Holder (a
“Mandatory
Redemption”)
in cash upon the occurrence of any of the following events (each, a “Mandatory
Redemption Event”):

     

    (i)           any
representation or warranty of the Company set forth in the Securities Purchase
Agreement was not true and correct in all material respects as of the date when
made;

     

    (ii)           the
Company fails at any time to comply with or perform in all material respects all
of the agreements, obligations, covenants and conditions set forth in Section
5 or any other provision of this Certificate that are required to be
complied with or performed by it, and such failure is not cured within five (5)
Business Days from the date on which a Holder delivers written notice thereof to
the Company; or

     

     

    
      
         

      

      
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    (iii)           a
Change of Control.

     

    (b)           Mandatory
Redemption Price.  The amount payable upon a Mandatory
Redemption (the “Mandatory
Redemption Price”) shall be equal to the greater of (i) the aggregate
Liquidation Preference for the Shares being redeemed as of the Mandatory
Redemption Date and (ii) the aggregate Liquidation Preference for such Shares
divided
by the Conversion Price multiplied
by the Market Price in effect on the Mandatory Redemption
Date.

     

    (c)           Payment
of Mandatory Redemption Price.  The Company shall pay in cash
the Mandatory Redemption Price to the Holder exercising its right to redemption
on or prior to the fifth (5th)
Business Day following the date on which such Holder delivers written notice
(the “Mandatory
Redemption Notice”) to
the Company demanding the redemption of such Holder’s Shares pursuant to this
Section
6 and specifying the number of Shares to be redeemed (such fifth (5th)
Business Day being referred to herein as the “Mandatory
Redemption Date”).  If the Company fails to pay the Mandatory
Redemption Price to a Holder on or before the Mandatory Redemption Date, such
Holder shall be entitled to interest thereon, from and after the Mandatory
Redemption Payment Date until the Mandatory Redemption Price has been paid in
full, at an annual rate equal to the Default Interest Rate.

     

    Section
7.  Early
Redemption.

     

    (a)           General.  The
Company shall have the right at any time on or after July 1, 2010 to redeem all
but not less than all of the outstanding Shares in cash (an “Early
Redemption”).  For the avoidance of doubt, the Company shall
not have the right to redeem any Shares prior to July 1, 2010.  In
order to effectuate an Early Redemption, the Company must deliver written notice
thereof to each Holder (an “Early
Redemption Notice”), and such notice shall specify the date on which such
early redemption shall be effectuated (the “Early
Redemption Date”), provided
that the Early Redemption Date must be at least sixty (60) days following
the date on which the Early Redemption Notice has been delivered to all of the
Holders.  Notwithstanding the foregoing, if a Holder delivers a
Mandatory Redemption Notice or Conversion Notice at any time prior to the Early
Redemption Date, then the provisions of this Certificate applicable to such
Mandatory Redemption or Conversion, as applicable, including the Company’s
obligation to pay the amounts or deliver shares of Common Stock in connection
with such Mandatory Redemption or Conversion, as applicable, shall apply and
control.

     

    (b)           Early
Redemption Price.  The amount payable upon an Early Redemption
(the “Early
Redemption Price”) shall be equal to 104% of the aggregate Liquidation
Preference for the Shares being redeemed.

     

    (c)           Payment
of Early Redemption Price.  The Company shall pay in cash the
Early Redemption Price to each Holder on the Early Redemption
Date.  If the Company fails to pay the Early Redemption Price to a
Holder on or before the Early Redemption Date, such Holder shall be entitled to
interest thereon, from and after the Early Redemption Date until the Early
Redemption Price has been paid in full, at an annual rate equal to the Default
Interest Rate.

     

     

    
      
         

      

      
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    Section
8.  Conversion.  The
Series A Preferred Stock shall be convertible into Common Stock as
follows:

     

    (a)           Right
to Convert; Number of Conversion Shares.  Each Holder shall
have the right to convert, at any time and from time to time, all or any part of
the Shares held by such Holder into such number of fully paid and non-assessable
shares (the “Conversion
Shares”) of Common Stock as is determined in accordance with the terms
hereof (a “Conversion”).  The
number of Conversion Shares to be delivered by the Company pursuant to a
Conversion shall be determined by dividing (i) the aggregate Liquidation
Preference of the Shares to be converted by (ii) the Conversion Price in effect
on the applicable Conversion Date.

     

    (b)           Conversion
Notice.  In order to convert Shares, a Holder shall send to the
Company by facsimile transmission, at any time prior to 5:00 p.m., New York City
time, on the date on which such Holder wishes to effect such Conversion (the
“Conversion
Date”), a notice of conversion (a “Conversion
Notice”) stating the number of Shares to be converted, the amount of
Dividends accrued (but remaining unpaid) thereon, and a calculation of the
number of shares of Common Stock issuable upon such Conversion.  Such
Holder shall thereafter send the certificate or certificates representing the
Shares being converted to the Company.  The Company shall issue a new
certificate for Shares to such Holder in the event that less than all of the
Shares represented by a certificate are converted; provided,
however, that the failure of the Company to deliver such new certificate
shall not affect the right of such Holder to submit a further Conversion Notice
with respect to such Shares and, in any such case, such Holder shall be deemed
to have submitted the original of such new certificate at the time that it
submits such further Conversion Notice.  Except as otherwise provided
herein, upon delivery of a Conversion Notice by a Holder in accordance with the
terms hereof, such Holder shall, as of the applicable Conversion Date, be deemed
for all purposes to be the record owner of the Common Stock to which such
Conversion Notice relates.  In the case of a dispute between the
Company and a Holder as to the calculation of the Conversion Price or the number
of Conversion Shares issuable upon a Conversion (including without limitation
the calculation of any adjustment to the Conversion Price pursuant to Section
9), the Company shall issue to such Holder the number of Conversion
Shares that are not disputed within the time periods specified in Section
10 and shall submit the disputed calculations to its independent
accountant within two (2) Business Days of receipt of such Holder’s Conversion
Notice.  The Company shall cause such accountant to calculate the
Conversion Price as provided herein and to notify the Company and such Holder of
the results in writing no later than five (5) Business Days following the
Company’s receipt of such Holder’s Conversion Notice.  Such
accountant’s calculation shall be deemed conclusive absent manifest
error.  The fees of any such accountant shall be borne by the party
whose calculations were most at variance with those of such
accountant.

     

     

    
      
         

      

      
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    (c)           Delivery
of Conversion Shares.  Upon receipt of a fax copy of a
Conversion Notice from a Holder, the Company shall, no later than the close of
business on the fifth (5th) Business Day following the Conversion Date set forth
in such Conversion Notice (the “Conversion
Delivery Date”), issue and deliver or caused to be delivered to such
Holder the number of Conversion Shares determined pursuant to Section
8(a); provided,
however, that any Conversion Shares that are the subject of the dispute
procedure described in Section
8(b) shall be delivered no later than the close of business on the fifth
(5th) Business Day following the determination made pursuant
thereto.  The Company must deliver to each Holder the Conversion
Shares issuable to such Holder under this Section
8 in accordance with the provisions of Section
10.

     

    Section
9.  Adjustment
of Conversion Price.  The Conversion Price of the Series A
Preferred Stock shall be subject to adjustment from time to time as
follows:

     

    (a)           Stock
Splits and Stock Dividends.  If the number of shares of Common
Stock outstanding at any time after the date hereof is increased by (i) a stock
dividend payable in (x) shares of Common Stock (other than dividends payable
pursuant to the Series A Preferred Stock), or (y) options to purchase or rights
to subscribe for Common Stock or other securities of the Company convertible
into or exchangeable for Common Stock, or (ii) a subdivision or split-up of
shares of Common Stock, then, on the date such payment is made or such change is
effective, the Conversion Price shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of the Series A
Preferred Stock shall be increased in proportion to such increase of outstanding
shares.

     

    (b)           Reverse
Stock Splits and Stock Combinations.  If the number of shares
of Common Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, then, on the effective
date of such combination, the Conversion Price shall be appropriately increased
so that the number of shares of Common Stock issuable on conversion of the
Series A Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares.

     

    (c)           Distributions.  In
case the Company shall declare a cash dividend upon its Common Stock or shall
distribute to holders of its Common Stock shares of its capital stock (other
than Common Stock), stock or other securities of other Persons, evidences of
indebtedness issued by the Company or other Persons, assets (excluding cash
dividends) or options or rights (excluding options to purchase and rights to
subscribe for Common Stock or other securities of the Company convertible into
or exchangeable for Common Stock), then, in such case, each Holder shall,
concurrently with the distribution to holders of Common Stock, receive a like
distribution based upon the number of shares of Common Stock into which such
Holder’s Shares are then convertible at the Conversion Price in effect on the
record date for such distribution.

     

     

    
      
         

      

      
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    (d)           Capital
Reorganization.  In case, at any time after the date hereof, of
any capital reorganization, or any reclassification of the stock of the Company
(other than a change in par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), or the consolidation or merger
of the Company with or into another Person (other than a consolidation or merger
in which the Company is the continuing entity and which does not result in any
change in the Common Stock), or of the sale or other disposition of all or
substantially all of the properties and assets of the Company as an entirety to
any other Person, the Shares shall, if such event is not deemed a liquidation
for purposes of Section
4, after such reorganization, reclassification, consolidation, merger,
sale or other disposition, be convertible into the kind and number of shares of
stock or other securities or property of the Company or of the entity resulting
from such consolidation or surviving such merger or to which such properties and
assets shall have been sold or otherwise disposed to which such Holder would
have been entitled if immediately prior to such reorganization,
reclassification, consolidation, merger, sale or other disposition such Holder
had converted its Shares into Common Stock.  The provisions of this
Section
9(e) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales or other
dispositions.  The provisions of this Section
9(e) shall not affect the Holders right to effect a Mandatory Redemption
if any of the transactions described in this Section
9(e) also constitute a Mandatory Redemption Event.

     

    (e)           Minimal
Adjustments.  No adjustment in a Conversion Price need be made
if such adjustment would result in a change in a Conversion Price of less than
$0.01. Any adjustment of less than $0.01 which is not made shall be carried
forward and shall be made at the time of and together with any subsequent
adjustment which, on a cumulative basis, amounts to an adjustment of $0.01 or
more in a Conversion Price.  All calculations under this Section
9 shall be made to the nearest cent or to the nearest one hundredth
(1/100) of a share, as the case may be.

     

    (f)           Certificate
as to Adjustments.  Upon the occurrence of each adjustment or
readjustment of a Conversion Price pursuant to this Section
9, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
Holder a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is
based.  The Company shall, upon written request at any time of any
Holder, furnish or cause to be furnished to such Holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Conversion Price
at the time in effect for the Series A Preferred Stock held, and (iii) the
number of shares of Common Stock and the amount if any, of other property which
at the time would be received upon the conversion of the Series A Preferred
Stock.

     

    (g)           Notices
of Record Date.  In the event of any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, the Company shall mail to each Holder at least
ten (10) Business Days prior to the date specified therein, a notice specifying
the date on which any such record is to be taken for the purpose of such
dividend or distribution.

     

     

    
      
         

      

      
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    Section
10.  Delivery
of Shares.  The provisions of this Section
10 shall apply to all deliveries of Dividend Shares, Maturity Shares and
Conversion Shares (collectively, the “Deliverable
Shares”):

     

    (a)           Method
of Delivery.  The Company or its designated transfer agent (the
“Transfer
Agent”) shall effect all deliveries of Deliverable Shares required to be
delivered to a Holder by issuing and delivering such Deliverable Shares to the
Depository Trust Company (“DTC”)
account on such Holder’s behalf via the Deposit Withdrawal Agent Commission
System (“DWAC”).  Notwithstanding
the foregoing, the delivery of (i) all Dividend Shares, (ii) any other
Deliverable Shares to the extent such Deliverable Shares are restricted and may
not be delivered in accordance with the preceding sentence, and (iii) any other
Deliverable Shares to the extent such Holder requests in writing, shall be
effected by delivering to such Holder or its nominee physical certificates
representing such Deliverable Shares no later than the close of business on the
date on which such Deliverable Shares are due.  Deliverable Shares
delivered to a Holder shall not contain any restrictive legend as long as the
resale of such Deliverable Shares (x) has been or will be made (as certified in
writing by such Holder to the Company) pursuant to an effective registration
statement, (y) has been made pursuant to Rule 144 under the Securities Act, or
(z) may be made pursuant to Rule 144(k) under the Securities Act or any
successor rule or provision.

     

    (b)           Failure
to Deliver.

     

    (i)           In
the event that, for any reason, a Holder has not timely received the number of
Deliverable Shares required to be delivered to such Holder, or the Deliverable
Shares so delivered contain a restrictive legend in spite of such Holder
complying with the requirements described in clause
(x), (y)
or (z)
of Section
10(a), on or before the delivery date for such Deliverable Shares (a
“Delivery
Default”, and the date on which such delivery was required to be made,
the “Delivery
Default Date”), the Company shall pay to such Holder payments (“Delivery
Default Payments”) in the amount of (A) (N/360) multiplied
by (B) the applicable Delivery Default Amount multiplied
by (C) the Default Interest Rate, where “N” equals the number of days
elapsed between the date on which such Deliverable Shares were to be delivered
(or date on which the restrictive legend was to be removed from such Deliverable
Shares) and the date on which such Delivery Default has been
cured.  Amounts payable pursuant to the preceding sentence shall be
paid to the Holder in immediately available funds on or before the second (2nd)
Business Day following written notice from such Holder to the Company specifying
the amount owed to it by the Company.

     

    (ii)           In
addition to any other remedies provided herein, each Holder shall have the right
to pursue actual damages for the Company’s failure to issue and deliver
Deliverable Shares on the applicable delivery date, including, without
limitation, damages relating to any purchase of shares of Common Stock by or on
behalf of such Holder in order to make delivery on a sale lawfully effected in
anticipation of receiving Deliverable Shares, such damages to be in an amount
equal to (A) the aggregate amount paid by such Holder for the shares of Common
Stock so purchased minus
(B) the aggregate amount received by such Holder upon the sale of such
Deliverable Shares (or in the case of Dividend Shares, the aggregate amount
received by such Holder upon the conversion of such Dividend Shares and
subsequent sale of the Conversion Shares), and such Holder shall have the right
to pursue all other remedies available to it at law or in equity (including,
without limitation, a decree of specific performance and/or injunctive
relief).

     

     

    
      
         

      

      
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    (c)           Fractional
Shares.  No fractional Deliverable Shares shall be issued upon
conversion of the Series A Preferred Stock.  In lieu of any fractional
share to which a Holder would otherwise be entitled, the Company shall pay cash
equal to such fraction multiplied by (i) $1,000 in the case of a fractional
Dividend Share, and (ii) the Market Price determined as of the required delivery
date in the case of a fractional share of Common Stock.

     

    Section
11.  Reservation
of Deliverable Shares.  The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Series A
Preferred Stock and shares of Common Stock solely for the purpose of effecting
the delivery of the Deliverable Shares as shall from time to time be sufficient
to effect all of the delivery requirements under this Certificate, and if at any
time the number of authorized but unissued shares of Series A Preferred Stock or
shares of Common Stock shall not be sufficient to effect any of the delivery
requirements under this Certificate, the Company will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Series A Preferred Stock or shares of Common Stock, as
the case may be, to such number of shares as shall be sufficient for such
purpose.

     

    Section
12.  Voting
Rights; Protective Provisions; Waivers.

     

    (a)           Voting
Rights.  Each Share shall have the same voting rights as the
shares of Common Stock into which it may be converted determined in accordance
with  the Conversion Price then in effect. The Company shall provide
each Holder with prior notification of each meeting of stockholders (and copies
of proxy statements and other information sent to such stockholders) in the same
manner as notification sent to holders of Common Stock.

     

    (b)           Protective
Provisions. So long any Shares are outstanding, the Company shall not,
without first obtaining  the approval of the Holders of not less than
two-thirds of the Shares then outstanding:

     

    (i)           alter,
change, modify or amend (x) the terms of the Series A Preferred Stock in any way
or (y) the terms of any other capital stock of the Company so as to affect
adversely the Series A Preferred Stock;

     

    (ii)           create
or issue any new class or series of capital stock, or increase the authorized
number of any existing class or series of capital stock, in either such case
having a preference over or ranking pari
passu with the Series A Preferred Stock as to redemption or distribution
of assets upon a Liquidation Event or any other liquidation, dissolution or
winding up of the Company;

     

     

    
      
         

      

      
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    (iii)           increase
the authorized number of shares of Series A Preferred Stock;

     

    (iv)           re-issue
any Shares which have been converted or redeemed in accordance with the terms
hereof; or

     

    (v)           issue
any Shares except pursuant to the terms of this Certificate.

     

    In the
event that (x) the Holders of not less than two-thirds of the Shares then
outstanding agree to allow the Company to alter or change the rights,
preferences or privileges of the Series A Preferred Stock pursuant to the terms
hereof, no such change shall be effective to the extent that, by its terms, it
applies to less than all of the Shares then outstanding.

     

    (c)           Waivers.  Any
waiver or consent under this Certificate shall be in writing and be binding only
upon the specific Person giving such waiver or consent and limited to the
specific instance and purpose for which such waiver or consent was
given.

     

    Section
13.  Notices.  Any
notice required by the provisions of this Certificate to be given to a Holder
shall be deemed given if deposited in the United States mail, postage prepaid,
and addressed to such Holder of record at such Holder’s latest address appearing
on the books of the Company or at such other address provided by such Holder to
the Company in writing.

     

    [Remainder
of Page Intentionally Left Blank]

     

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, the Company has caused this Certificate to be executed by its
President and attested to by its Secretary this 8th day of August,
2008.

     

    CELSIUS
HOLDINGS, INC.

     

     

    By:      /s/
Stephen C. Haley

               
Name:
Stephen C. Haley

               
Title:  Chief
Executive Officer

     

     

    ATTEST:

     

     

    By:       /s/
Jan A.
Norelid

               
Name:  Jan A Norelid

                Title:  Secretary