EXHIBIT 4.4
Observation Rights And Termination Agreement
CELSIUS HOLDINGS, INC.
OBSERVATION RIGHTS AND TERMINATION
AGREEMENT
This Agreement dated as of
January ___, 2007 is entered into by and among Celsius Holdings,
Inc., a Nevada corporation (the " Company "), and John T.
Nugent and Anthony J. Baudanza (the "Observers" collectively or the
"Observer" individually).
Recitals
WHEREAS, the Company entered into
a Merger Agreement and Plan of Reorganization dated as of January
____, 2007, among the Company, Elite FX, Inc., and other parties
named therein (the "Merger Agreement") providing for the merger of
Elite FX, Inc. with and into a subsidiary of the Company (the
"Merger"); and
WHEREAS, prior to the execution
of the Merger Agreement, Elite FX, Inc. entered into the following
agreements with the Observers: Stockholders Voting Agreement,
Investor Rights Agreement, Right of First Refusal and Co-sale
Agreement (the "Elite Agreements"), pursuant to which Elite FX,
Inc. granted the Observers certain rights related to the voting for
members of Elite's board of directors, rights of first refusal to
purchase stock issued by Elite, registration of Elite stock held by
the Observers and right of first refusal to purchase stock from one
of Elite's founding shareholders; and
WHEREAS, the Company and the
Observers desire to provide for the continuation or
re-establishment of certain rights from the Elite Agreements and
for the termination of all other rights arising out of the Elite
Agreements.
NOW, THEREFORE, in consideration
of the mutual promises and covenants contained in this Agreement,
the parties hereto agree as follows:
1. Termination of Elite
Agreements . The following agreements between Elite FX, Inc.
and John T. Nugent and Anthony J. Baudanza and Stephen Haley (with
respect to certain of the agreements), each dated August 1, 2006,
shall be terminated in their entirety at the effective time of the
Merger: Stockholders Voting Agreement, Investor Rights
Agreement, Right of First Refusal and Co-sale Agreement
.
2. Observation Rights .
Pursuant to the terms of this Agreement, the Observers shall be
entitled to attend, as observers, all meetings of the Company's
Board of Directors (including telephonic meetings); provided,
however, that (a) the Company's Board of Directors may require that
the Observers, or either of them, not attend any particular Board
meeting or be excused from any portions of meetings that involve
matters or business that the Company's Board of Directors, in its
reasonable discretion, determines involve matters or business
necessary to be considered by the Board of Directors without the
Observers being in attendance; and (b) such rights shall exist for
each such individual only for so long as such individual owns at
least 1.0% of the outstanding shares of the Company's Common Stock.
Should the Company's Board of Directors determine that an
extraordinary and rare circumstance exists such that the Observers,
or either of them, should be asked not to attend all or part of a
Board meeting, the Board must provide to the Observers, at least
five (5) business days prior to such a meeting, with a written
explanation detailing the reasons for the exclusion;
provided that the Company's Board of Directors may not
exclude one or both of the Observers from meetings or portions of
meetings during which the Board will address either stockholder or
compensation matters.
1
Except with respect to matters or
business as to which the Company's Board of Directors has
determined should be considered by the Board of Directors without
the Observers being in attendance and for so long as such
individual is entitled to attend Board meetings, such individuals
shall be provided with the same meeting notices and materials as
the members of the Company's Board of Directors, including but not
limited to copies of all proposed and final resolutions, minutes
and written consents. Notwithstanding anything to the contrary
herein, the Observers may opt to terminate their Observation rights
effective upon 5 business days written notice to the Company,
following which time the Observers will no longer be provided with
meeting notices and material. Upon electing to terminate their
status as Observers, the Observers will in no way be considered by
the Corporation to be insiders or affiliates, unless required by
applicable law.
3. Registration Rights .
Following the closing of the Merger, the Observers shall have
certain registration and related rights with respect to the shares
of common stock of the Company they receive as consideration in the
Merger pursuant to the Registration Rights Agreement attached as
Exhibit H to the Merger Agreement. The Company and Elite FX, Inc.
will not waive the conditions in the Merger Agreement that the
private placement occur prior to or concurrent with the closing of
the Merger or that the registration rights agreement be effective
at the closing of the private placement and will not amend the
terms of the Registration Rights Agreement without the consent of
the Observers.
4. Repayment of Debt . At
the closing of the Merger and as a condition thereto, all
outstanding indebtedness of Elite FX, Inc. owed to the Observers in
their capacity as lenders under the Secured Credit Agreement dated
as of April 10, 2006 (the "Secured Credit Agreement") will be
repaid in full which shall result in the termination of the Secured
Credit Agreement and cancellation of any outstanding promissory
notes issued pursuant thereto.
5. Non-transferability .
This Agreement, and the rights and obligations of each Observer
hereunder, may not be transferred or assigned by such
Observer.
6. Confidential and Material
Non-Public Information . As Observers, it is anticipated that
you will receive or learn of confidential and/or other material
non-public information which shall all be deemed "Confidential
Information" as defined below. This Agreement shall establish a
fiduciary duty or other relationship of trust and confidence with
respect to your possession or knowledge of Confidential Information
and your acknowledgement of, and covenant to comply with, the
prohibitions on the use and dissemination of material, non-public
information as well as the other restrictive provisions contained
herein.
6.1 Confidential Information
Defined . "Confidential
