Celsius Holdings, Inc 8-K, filed Aug 29, 2025
Celsius Holdings, Inc. (CELH)
About this 8-K
Celsius Holdings, Inc filed this 8-K on August 29, 2025, reporting on events of August 28, 2025.
Items reported
- Item 1.01: Entered into a material agreement
- Item 1.02: Ended a material agreement
- Item 2.01: Completed an acquisition or sale of assets
- Item 3.02: Unregistered sale of equity
- Item 3.03: Change to shareholders' rights
- Item 5.02: Director or officer change, or executive pay
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 5.07: Shareholder vote results
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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EXPLANATORY NOTE
As previously reported, on August 1, 2022, Celsius Holdings, Inc., a Nevada corporation (the “Company”), entered into a series of agreements with PepsiCo, Inc., a North Carolina corporation (“PepsiCo”), including (i) a securities purchase agreement (the “Original Purchase Agreement”), pursuant to which the Company issued and sold to PepsiCo 1,466,666 shares of the Company’s Series A Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”), (ii) a registration rights agreement (the “Original Registration Rights Agreement”) with respect to the Company’s registration for resale of the shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) into which the Series A Preferred may, subject to certain conditions, be converted, and (iii) a distribution agreement (as amended, the “Original Distribution Agreement”), pursuant to which PepsiCo became the Company’s exclusive distributor with respect to the sale and distribution of certain of the Company’s beverage products in the United States, excluding Puerto Rico and the U.S. Virgin Islands (the “Territory”).
Also as previously reported, on April 1, 2025, the Company consummated its acquisition of all of the issued and outstanding membership interests in Alani Nutrition LLC, a Kentucky limited liability company (“Alani Nu”).
As further described in this Current Report on Form 8-K, on August 28, 2025, the Company entered into a series of new and amended agreements with PepsiCo that expand and modify the Company’s relationship with PepsiCo to, among other things, provide for the acquisition by the Company of PepsiCo’s Rockstar Energy brand in the U.S. and Canada, the distribution by PepsiCo in both the Territory and in Canada of Alani Nu’s products and Rockstar Energy brand products (in addition to the Company’s existing products), and an enhanced, long-term commercial arrangement between the Company and PepsiCo, pursuant to which, among other things, PepsiCo will use its commercially reasonable efforts to sell and distribute the Company’s products (the “Captaincy”).
| Item 1.01. | Entry into a Material Definitive Agreement. |
Securities Purchase Agreement
On August 28, 2025 (the “Closing Date”), the Company entered into a securities purchase agreement with PepsiCo (the “Series B Purchase Agreement”), pursuant to which, on such date, the Company issued and sold to PepsiCo, and PepsiCo purchased from the Company, in a private placement exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), 390,000 shares of a newly created series of the Company’s preferred stock, par value $0.001 per share, designated as “Series B Convertible Preferred Stock” (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, the “Preferred Stock”), for an aggregate purchase price of $585.0 million in cash. Subject to the satisfaction of certain conditions, as set forth in the Certificate of Designation of Series B Convertible Preferred Stock, setting forth the rights, preferences, privileges and restrictions applicable to the Series B Preferred Stock (the “Series B Certificate”), each share of Series B Preferred Stock is initially convertible into 11,304,348 shares of Common Stock.
Pursuant to the Series B Purchase Agreement, the Company has granted PepsiCo the right to currently designate two persons (each, a “PepsiCo Designee”) to be nominated by PepsiCo for election to the Company’s Board of Directors (the “Board”), which number of directors may, in certain circumstances, be ratably increased upon a subsequent expansion of the number of persons serving on the Board. Upon the earlier of (i) PepsiCo, together with its affiliates, ceasing to beneficially own at least 31,639,121 shares of Common Stock (determined on an as-converted basis) and (ii) the termination of the Captaincy, PepsiCo will have the right to designate only one PepsiCo Designee; and, if PepsiCo, together with its affiliates, ceases to own at least 10,999,995 shares of Common Stock (determined on an as-converted basis), then PepsiCo’s Board designation rights will terminate in their entirety. As previously reported, the Original Purchase Agreement provided PepsiCo the right to designate a single PepsiCo Designee, and such person currently serves on the Board and constitutes one of the two PepsiCo Designees under the Series B Purchase Agreement. On the Closing Date, the Company increased the size of the Board from nine to 10 members, with Michael Del Pozzo appointed to the Board as the second PepsiCo Designee to serve for a term expiring at the Company’s 2026 annual meeting of stockholders.
Additionally, pursuant to the Series B Purchase Agreement: (i) the Company granted to PepsiCo certain customary information rights and preemptive rights; and (ii) PepsiCo has agreed to certain limitations with respect to its aggregate beneficial ownership of Common Stock and, for a period of seven years, to certain standstill restrictions with respect to its and its affiliates’ acquisition of any voting securities of the Company, subject to certain exceptions. The Series B Purchase Agreement also contains customary representations, warranties and covenants of the parties.
In accordance with the Series B Purchase Agreement, on the Closing Date, the Company: (i) filed with the Secretary of State of the State of Nevada the Series B Certificate; (ii) filed with the Secretary of State of the State of Nevada a Certificate of Amendment (the “Certificate of Amendment”) to the Designation of the Series A Convertible Preferred Stock of Celsius Holdings, Inc. (the “Series A Certificate”) (as described in Item 5.03 of this Current Report on Form 8-K); and (iii) entered into an amended and restated registration rights agreement with PepsiCo (the “A&R Registration Rights Agreement”).
Amended and Restated Registration Rights Agreement
On the Closing Date, the Company entered into the A&R Registration Rights Agreement with PepsiCo relating to the registered resale under the Securities Act of the Common Stock issuable upon conversion of the Preferred Stock (the “Registrable Securities”). The A&R Registration Rights Agreement amends and restates in its entirety the Original Registration Rights Agreement predominantly to include within the definition of “Registrable Securities” the Common Stock issuable upon conversion of the Series B Preferred Stock. The other material terms and covenants contained in the Original Registration Rights Agreement, including the customary demand, resale, and piggyback registration rights granted to PepsiCo thereunder, remain in full force and effect in the A&R Registration Rights Agreement.
Transaction Agreement – Rockstar Energy Acquisition and Captaincy
On Closing Date, the Company entered into a transaction agreement (the “Transaction Agreement”) with PepsiCo, pursuant to which (i) the Company acquired certain assets, and assumed certain liabilities, comprising the Rockstar Energy brand in the U.S. and Canada (the “Rockstar Acquisition” and, together with the Captaincy, the “Transactions”) and (ii) the Company and PepsiCo commenced the Captaincy. On the Closing Date, the Company paid PepsiCo an aggregate purchase price of $585.0 million in cash in respect of the Transactions, the A&R U.S. Distribution Agreement and the A&R Canada Distribution Agreement (as defined in Item 8.01 to this Current Report on Form 8-K), subject to a customary working capital adjustment in respect of the Rockstar Acquisition. The Captaincy commenced on the Closing Date and will continue during the term of the A&R U.S. Distribution Agreement, subject to earlier termination (i) by the parties by mutual consent, (ii) by the Company in the event of certain breaches of the Transaction Agreement by PepsiCo, or (iii) by PepsiCo in the event that the Company’s products distributed by PepsiCo fail to maintain certain market share metrics, in each case as set forth in the Transaction Agreement. The Transaction Agreement also contains customary representations, warranties, and agreements of the Company and other obligations of the Company and PepsiCo.
Amended and Restated U.S. Distribution Agreement
On the Closing Date, the Company entered into an Amended and Restated Distribution Agreement (the “A&R U.S. Distribution Agreement”) with Celsius, Inc., Alani Nu, Celsius Brands LLC, a Nevada limited liability company and wholly owned subsidiary of the Company, and PepsiCo, which amends and restates in its entirety the Original Distribution Agreement, predominantly to provide for PepsiCo’s distribution of Alani Nu and Rockstar Energy products (in addition to existing Celsius products) within the Territory. The other material terms and covenants, including termination provisions, contained in the Original Distribution Agreement remain in full force and effect in the A&R U.S. Distribution Agreement.
The foregoing descriptions of the Series B Purchase Agreement, the A&R Registration Rights Agreement, the Transaction Agreement, and the A&R U.S. Distribution Agreement are only summaries and are qualified in their entirety by reference to the full text of the Series B Purchase Agreement, the A&R Registration Rights Agreement, the Transaction Agreement and the A&R U.S. Distribution Agreement, which are filed as Exhibit 10.1, Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
| Item 1.02. | Termination of a Material Definitive Agreement. |
On the Closing Date, pursuant to the terms of the Series B Purchase Agreement, the parties thereto terminated the Original Purchase Agreement. A description of the material terms of the Original Purchase Agreement is contained in Item 1.01 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 3, 2022, which description is incorporated by reference in this Item 1.02. A brief description of the Company’s material relationships with PepsiCo is set forth in the “Explanatory Note” and Item 1.01 to this Current Report on Form 8-K, and such description is incorporated by reference in this Item 1.02.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
On the Closing Date, the Company consummated the Transactions pursuant to the Transaction Agreement. The information with respect to the Transactions contained in Item 1.01 to this Current Report on Form 8-K is incorporated by reference in this item 2.01. A brief description of the Company’s material relationship with PepsiCo is set forth in the “Explanatory Note” and Item 1.01 to this Current Report on Form 8-K, and such description is incorporated by reference in this Item 2.01.
| Item 3.02. | Unregistered Sales of Equity Securities. |
The information contained in Item 1.01 of this Current Report on Form 8-K under the heading “Securities Purchase Agreement” is hereby incorporated by reference in this Item 3.02. The Company offered and sold the shares of Series B Preferred Stock to PepsiCo in reliance on the exemption from registration under the Securities Act provided by Section 4(a)(2) thereof. Under the Series B Purchase Agreement, PepsiCo represented that it is an “accredited investor” as defined in Rule 501(a) under the Securities Act and that it was acquiring the shares of Series B Preferred Stock for investment purposes and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act.
| Item 3.03. | Material Modification to Rights of Security Holders. |
The information contained in Item 1.01 and Item 5.03 of this Report is hereby incorporated by reference in this Item 3.03.
Following the issuance by the Company of the shares of Series B Preferred Stock in accordance with the Series B Purchase Agreement on the Closing Date, the ability of the Company to declare or pay dividends on shares of its Common Stock, or any shares of other stock of the Company that rank junior to or on parity with the Series B Preferred Stock, either as to the payment of dividends or as to the distribution of assets upon the liquidation, dissolution or winding up of the Company, is subject to certain restrictions in the event that the Company does not declare and pay (or set aside) dividends on the Series B Preferred Stock.
The terms of the Series B Preferred Stock, including such restrictions, are more fully described in Item 5.03 of this Current Report on Form 8-K.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On the Closing Date, the Board appointed Michael Del Pozzo, age 49, as a director to fill the vacancy on the Board created by the increase of the size of the board from nine to 10 directors in accordance with the Series B Purchase Agreement. Mr. Del Pozzo’s term on the Board commenced on the Closing Date and expires at the Company’s 2026 annual meeting of stockholders.
Mr. Del Pozzo has served as PepsiCo’s President of North America - Commercial and Customer since January 2025. Prior to returning to PepsiCo, Mr. Del Pozzo served as President of The Hershey Company’s U.S. Confection business from August 2024 to December 2024. Before briefly departing PepsiCo, Mr. Del Pozzo served in various capacities with PepsiCo since 2001, most recently as President and General Manager of PepsiCo’s Gatorade business unit. In that role, Mr. Del Pozzo oversaw PepsiCo’s $12 billion hydration portfolio of brands that service athletes, including Gatorade, Aquafina, Propel, Muscle Milk, and Life Water. Mr. Del Pozzo’s responsibilities included manufacturing, go to market, selling, customer management, brand building, and strategy across the Gatorade and the PepsiCo hydration portfolio. A nearly 25-year PepsiCo veteran, Mr. Del Pozzo has held leadership positions across several PepsiCo operating units during his tenure, including Pepsi Beverages North America, Frito-Lay and Quaker North America, and PepsiCo Corporate. Mr. Del Pozzo is a graduate of Bowling Green State University.
Mr. Del Pozzo was selected to serve on the Board as the second PepsiCo Designee pursuant to the Series B Purchase Agreement, the description of which is set forth in Item 1.01 to this Current Report on Form 8-K and incorporated by reference in this Item 5.02. Mr. Del Pozzo will not receive compensation from the Company for his service on the Board. In connection with his appointment to the Board, Mr. Del Pozzo will enter into the Company’s current form of director and officer indemnification agreement.
Other than PepsiCo’s director designation rights under the Series B Purchase Agreement, there are no arrangements or understandings between either Mr. Del Pozzo, on the one hand, and any other person, on the other hand, pursuant to which he was appointed to the Board. Since the beginning of the Company’s last fiscal year, the Company has not engaged in any transactions, and there are no proposed transactions, or series of similar transactions, in which Mr. Del Pozzo was or is to be a participant and in which any related person had a direct or indirect material interest in which the amount involved exceeds or exceeded $120,000.
| Item 5.03. | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
Series B Preferred Stock
In connection with the issuance and sale of the Series B Preferred Stock pursuant to the Series B Purchase Agreement, the Board approved the Series B Certificate, which the Company filed with the Secretary of State of the State of Nevada on the Closing Date.
The Series B Certificate designates and authorizes the issuance of up to 390,000 shares of Series B Preferred Stock, all of which were issued and sold to PepsiCo under the Series B Purchase Agreement and are initially convertible at the rate of 28.99 shares of the Company’s Common Stock for each share of Series B Preferred Stock. The Series B Preferred Stock ranks, with respect to distribution rights and rights on liquidation, winding-up and dissolution, (i) senior and in priority of payment to the Common Stock, (ii) senior to any class or series of capital stock of the Company expressly designated as ranking by its terms junior to the Series B Preferred Stock, (iii) on parity with the Series A Preferred Stock and any class or series of capital stock of the Company expressly designated as ranking on parity with the Series B Preferred Stock, and (iv) junior to any class or series of capital stock of the Company expressly designated as ranking senior to the Series B Preferred Stock.
Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (but excluding any change of control), each holder of Series B Preferred Stock will be entitled to receive an amount per share of Series B Preferred Stock equal to the Liquidation Preference, as defined in the Series B Certificate. Holders of shares of Series B Preferred Stock will be entitled to cumulative dividends, which will be payable quarterly in arrears either in cash, in-kind, or a combination thereof at the Company’s election.
Dividends will accrue on each share of Series B Preferred Stock at the rate of 5.00% per annum, subject to adjustment as set forth in the Series B Certificate. In addition to such quarterly regular dividends, such shares of Series B Preferred Stock are entitled to participate in dividends paid to holders of Common Stock.
The shares of Series B Preferred Stock are convertible into shares of Common Stock at the then-applicable conversion ratio automatically or at the option of the Company at certain times and subject to the terms and conditions set forth in the Series B Certificate. In addition, the shares of Series B Preferred Stock are redeemable at the option of the Company or the holders of a majority of the outstanding shares of Series B Preferred Stock at certain times and subject to the terms and conditions set forth in the Series B Certificate.
The Series B Preferred Stock confers no voting rights on holders, except as otherwise required by applicable law, and with respect to matters that adversely change the powers, preferences, privileges, rights or restrictions given to the Series B Preferred Stock or provided for its benefit, or would result in securities that would be senior to or pari passu with the Series B Preferred Stock.
Certificate of Amendment to Series A Preferred Stock Certificate of Designation
In connection with issuance and sale of the Series B Preferred Stock, the Board adopted resolutions approving a Certificate of Amendment to the Series A Certificate, which Certificate of Amendment was approved by PepsiCo, as the sole holder of shares of Series A Preferred Stock, and filed by the Company with the Secretary of State of the State of Nevada on the Closing Date. The Certificate of Amendment amends the Series A Certificate solely to align certain terms contained therein to those contained in the Series B Certificate, including updating the definition of “Distribution Agreement” to refer to the A&R U.S. Distribution Agreement, and amending certain dates related to redemption and conversion to match those included in the Series B Certificate.
The foregoing descriptions of the Series B Certificate and the Certificate of Amendment are only summaries and are qualified in their entirety by reference to the full text of the Series B Certificate and the Certificate of Amendment, which are filed as Exhibit 3.1 and Exhibit 3.2, respectively, to this Current Report on Form 8-K and incorporated by reference in this Item 5.03.
| Item 5.07. | Submission of Matters to a Vote of Security Holders. |
On the Closing Date, PepsiCo, as the sole holder of all of the issued and outstanding shares of the Series A Preferred Stock, acted by way of a unanimous written consent (in lieu of a special meeting of the stockholders) and consented to the issuance of the Series B Preferred Stock and the modification of the terms of the Series A Preferred Stock as set forth in the Certificate of Amendment, as described in Item 1.01 and Item 5.03 of this Current Report on Form 8-K.
| Item 8.01. | Other Events. |
On the Closing Date, the Company and certain of its subsidiaries entered into an amended and restated distribution agreement with an affiliate of PepsiCo, pursuant to which such affiliate of PepsiCo continues to be the Company’s exclusive distributor of Celsius products in Canada and has become the Company’s exclusive Canadian distributor of Alani Nu’s products and Rockstar Energy products (the “A&R Canada Distribution Agreement”). Additionally, on the Closing Date, a subsidiary of the Company entered into a channel transition agreement with PepsiCo, which provides for the Company’s transition of certain existing distribution rights with respect to Alani Nu’s products in the Territory to PepsiCo and certain financial commitments made by PepsiCo to the Company in respect of certain contractual or other payments due to such existing distributors in connection with such transition.
| Item 9.01 | Financial Statements and Exhibits. |
| (a) | Financial Statements of Business Acquired. |
The financial statements required by Item 9.01(a) will be filed by amendment to this Current Report on Form 8-K no later than 71 calendar days after the date on which this Current Report on Form 8-K is required to be filed.
| (b) | Pro Forma Financial Information. |
The pro forma financial statements required by Item 9.01(b) will be filed by amendment to this Current Report on Form 8-K no later than 71 calendar days after the date on which this Current Report on Form 8-K is required to be filed.
| (d) | Exhibits. |
| * | Certain exhibits and schedules to this Exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission or its staff upon request. |
| + | Certain provisions and terms of this Exhibit have been redacted in accordance with Item 601(b)(10)(iv) of Regulation S-K because the Company customarily and actually treats that information as private or confidential and the omitted information is not material. The Company will supplementally provide a copy of an unredacted copy of this exhibit to the Securities and Exchange Commission or its staff upon request. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CELSIUS HOLDINGS, INC. | ||||||
| Date: August 29, 2025 | By: | /s/ Jarrod Langhans | ||||
| Jarrod Langhans, Chief Financial Officer | ||||||
Exhibit 3.1
Execution Version
CELSIUS HOLDINGS, INC.
CERTIFICATE OF DESIGNATION
OF
SERIES B CONVERTIBLE PREFERRED STOCK
WHEREAS, in accordance with the applicable provisions of the Nevada Revised Statutes (“NRS”) and pursuant to the authority under the Articles of Incorporation of the Corporation (as amended from time to time, the “Articles of Incorporation”), the Board of Directors (the “Board”) of Celsius Holdings, Inc., a corporation duly organized and existing under the laws of the State of Nevada (the “Corporation”) is authorized to issue from time to time shares of the Corporation’s Preferred Stock, par value $0.001 per share (the “Preferred Stock”), in one or more series; and
WHEREAS, the Board has adopted a resolution establishing a series of Preferred Stock designated as the “Series B Convertible Preferred Stock” and approving the terms thereof as set forth in this Certificate of Designation for such Preferred Stock (this “Certificate”).
NOW THEREFORE, BE IT RESOLVED, that pursuant to the authority expressly vested in the Board and in accordance with the provisions of the Articles of Incorporation and the NRS, the designation and amount of the Series B Convertible Preferred Stock, and the voting powers, designations, preferences, limitations, restrictions, and relative rights of the shares of Series B Convertible Preferred Stock, as well as the qualifications, limitations or restrictions thereof (in addition to any provisions set forth in the Articles of Incorporation that are applicable to the Preferred Stock of all classes and series) are as set forth in this Certificate.
SERIES B CONVERTIBLE PREFERRED STOCK
Section 1. Definitions. For the purposes hereof, the following terms shall have the following meanings:
“10-Day VWAP” per share of Common Stock, measured as of any date of determination, shall mean the arithmetic average of the VWAP per share of Common Stock for each of the ten consecutive Trading Days ending on, and including, the Trading Day immediately preceding such date of determination.
“Accrued Dividend Amount” shall have the meaning set forth in Section 3(c).
“Affiliate” shall mean, as to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 144 under the Securities Act; provided, however, the Corporation and its Subsidiaries shall not be deemed to be Affiliates of any Holder or any of its Affiliates.
“Articles of Incorporation” shall have the meaning set forth in the first WHEREAS clause.
“Automatic Conversion” shall have the meaning set forth in Section 6(b)(i).
“Automatic Conversion Date” shall mean the date an Automatic Conversion Event occurs.
“Automatic Conversion Event” shall have the meaning set forth in Section 6(b)(ii).
“Automatic Conversion Notice” shall have the meaning set forth in Section 6(b)(ii).
“Board” shall have the meaning set forth in the first WHEREAS clause.
“Business Day” shall mean any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Cash and PIK Dividend” shall have the meaning set forth in Section 3(d).
“Cash and PIK Dividend Aggregate Cash Amount” shall mean, with respect to any Cash and PIK Dividend authorized and declared by the Board (or any duly authorized committee thereof), the aggregate amount of cash authorized and declared to be paid to the Holders in respect of all issued and outstanding shares of Series B Preferred Stock as of the Record Date for such Cash and PIK Dividend.
“Cash and PIK Dividend Cash Settlement Amount” shall mean, with respect to each share of Series B Preferred Stock, an amount equal to the quotient of (A) the Cash and PIK Dividend Aggregate Cash Amount, divided by (B) the aggregate number of shares of Series B Preferred Stock issued and outstanding as of the Record Date for the applicable Cash and PIK Dividend.
“Certificate” shall have the meaning set forth in the second WHEREAS clause.
“Change of Control” shall mean: (i) a sale or transfer, directly or indirectly, of all or substantially all of the assets of the Corporation in any transaction or series of related transactions (other than sales in the ordinary course of business); (ii) any merger, consolidation or reorganization of the Corporation with or into any other entity or entities as a result of which the holders of the Corporation’s outstanding capital stock (on a fully-diluted basis) immediately prior to the merger, consolidation or reorganization no longer represent at least a majority of the voting power of the surviving or resulting corporation or other entity; or (iii) any sale or series of sales, directly or indirectly, beneficially or of record, of shares of the Corporation’s capital stock by the holders thereof which results in any Person or group of Affiliated Persons owning capital stock holding more than 50% of the voting power of the Corporation.
“Change of Control Notice” shall have the meaning set forth in Section 8(d)(ii).
“Change of Control Redemption” shall have the meaning set forth in Section 8(d)(i).
“Change of Control Redemption Date” shall have the meaning set forth in Section 8(d)(ii).
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“Change of Control Redemption Price” shall have the meaning set forth in Section 8(d)(i).
“Close of Business” shall mean 5:00 p.m., New York City time, on any Business Day.
“Common Stock” shall mean the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed into.
“Conversion Date” shall mean any Automatic Conversion Date or Mandatory Conversion Date, as applicable.
“Conversion Notice” shall mean any Automatic Conversion Notice or Mandatory Conversion Notice, as applicable.
“Conversion Ratio” for each share of Series B Preferred Stock with respect to any conversion pursuant to Section 6, shall mean the quotient of (a) the sum of (x) the Stated Value of such share of Series B Preferred Stock as of the applicable Conversion Date, plus (y) without duplication of all accrued and unpaid Dividends previously added to the Stated Value of such share of Series B Preferred Stock, all accrued and unpaid Dividends per share of Series B Preferred Stock through the applicable Conversion Date; divided by (b) the Conversion Price as of the Conversion Date.
“Conversion Price” shall mean $51.75, as adjusted in accordance with the terms and conditions of Section 7.
“Convertible Securities” shall mean any evidences of indebtedness, shares or other securities, in each case directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.
“Corporation” shall mean Celsius Holdings, Inc., a corporation organized and existing under the laws of the State of Nevada.
“Corporation Optional Redemption” shall have the meaning set forth in Section 8(a).
“Corporation Optional Redemption Notice” shall have the meaning set forth in Section 8(a).
“Corporation Optional Redemption Right” shall have the meaning set forth in Section 8(a).
“Corporation Termination Event” shall mean the date upon which the Distribution Agreement is terminated as a result of a valid termination by the Corporation in accordance with the terms of the Distribution Agreement.
“Distribution Agreement” shall mean that certain amended and restated Distribution Agreement, effective as of August 28, 2025, by and between the Corporation and the Investor, as the same may be amended, supplemented or otherwise modified from time to time.
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“Dividend” shall have the meaning set forth in Section 3(a).
“Dividend Payment Date” shall have the meaning set forth in Section 3(b).
“Dividend Rate” means, for a Regular Dividend Period for a share of Series B Preferred Stock, 5.00% per annum of the Stated Value of such share as of the Record Date for such dividend, as may be adjusted pursuant to Section 8(c)(iv).
“Exchange Property” shall have the meaning set forth in Section 7(b).
“Holder” shall mean any holder of Series B Preferred Stock.
“Holder Optional Redemption” shall have the meaning set forth in Section 8(b).
“Holder Optional Redemption Notice” shall have the meaning set forth in Section 8(b).
“Holder Optional Redemption Right” shall have the meaning set forth in Section 8(b).
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
“Investor” shall mean the initial purchaser of the Series B Preferred Stock.
“Investor Termination Event” shall mean the date upon which the Distribution Agreement is terminated as a result of a valid termination by Investor in accordance with the terms of the Distribution Agreement.
“Issuance Date” shall mean August 28, 2025.
“Junior Stock” shall have the meaning set forth in Section 5(a).
“Liquidation Event” shall have the meaning set forth in Section 5(b).
“Liquidation Preference” shall have the meaning set forth in Section 5(b).
“Majority Holders” shall have the meaning set forth in Section 4(b).
“Mandatory Conversion” shall have the meaning set forth in Section 6(a)(i).
“Mandatory Conversion Date” shall have the meaning set forth in Section 6(a)(ii).
“Mandatory Conversion Notice” shall have the meaning set forth in Section 6(a)(ii).
“NRS” has the meaning set forth in the first WHEREAS clause hereof.
“Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.
“Parity Stock” shall have the meaning set forth in Section 5(a).
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“Participating Dividend” shall have the meaning set forth in Section 3(a).
“Participating Dividend Payment Date” shall have the meaning set forth in Section 3(b).
“Person” shall mean any individual, partnership, corporation, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof.
“PIK Dividend” shall have the meaning set forth in Section 3(c).
“Preferred Stock” shall have the meaning set forth in the first WHEREAS clause.
“Record Date” shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of shares of Common Stock or shares of Series B Preferred Stock, as applicable, have the right to receive any cash, securities or other property or in which the shares of Common Stock or shares of Series B Preferred Stock (or other applicable security), as applicable, is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of shareholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board or a committee thereof, or by statute, contract, this Certificate of Designation or otherwise).
“Redemption Date” shall have the meaning set forth in Section 8(c)(i).
“Redemption Notice” shall have the meaning set forth in Section 8(c)(ii).
“Redemption Price” shall mean a price per share of Series B Preferred Stock equal to the sum of (i) the Stated Value of such share of Series B Preferred Stock as of the applicable Redemption Date, plus (ii) without duplication of all accrued and unpaid Dividends previously added to the Stated Value of such share of Series B Preferred Stock, all accrued and unpaid Dividends per share of Series B Preferred Stock through such Redemption Date.
“Regular Dividend” shall have the meaning set forth in Section 3(a).
“Regular Dividend Payment Date” shall have the meaning set forth in Section 3(b).
“Regular Dividend Period” shall have the meaning set forth in Section 3(b).
“Required Approval” shall have the meaning set forth in Section 6(c)(iv).
“Redemption Notice” shall have the meaning set forth in Section 8(c)(ii).
“Related Person” shall have the meaning given to such term in Item 404(a) of Regulation S-K as promulgated under the Securities Act (“Item 404”).
“Related Person Transaction” means any transaction for which disclosure is required under the terms of Item 404 involving the Corporation and any Related Person.
“Reorganization Event” shall have the meaning set forth in Section 7(b)(iii).
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“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Securities Purchase Agreement” shall mean that certain Securities Purchase Agreement, effective as of August 28, 2025, by and between the Corporation and Investor.
“Senior Stock” shall have the meaning set forth in Section 5(a).
“Series A Preferred Stock” means the shares of Series A Convertible Preferred Stock, par value $0.001 per share, of the Corporation, having the rights, preferences, privileges, and restrictions set forth in the Certificate of Designation of Series A Convertible Preferred Stock (as may be amended from time to time).
“Series B Preferred Stock” shall have the meaning set forth in Section 2(a).
“Series B Preferred Stock Register” shall have the meaning set forth in Section 2(b).
“Seventh Anniversary Date” shall mean August 28, 2032.
“Share Delivery Date” shall have the meaning set forth in Section 6(c)(i).
“Sixth Anniversary Date” shall mean August 28, 2031.
“Stated Value” shall mean $1,500.00 per share of Series B Preferred Stock, as shall be increased from time to time for any PIK Dividends.
“Subject Action” shall have the meaning set forth in Section 9(a).
“Subsidiary” shall mean, with respect to any Person, (a) any corporation, association or other business entity (other than a partnership or limited liability company) of which more than 50% of the total voting power of the equity entitled (without regard to the occurrence of any contingency, but after giving effect to any voting agreement or shareholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees, as applicable, of such corporation, association or other business entity is owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person; and (b) any partnership or limited liability company where (i) more than 50% of the capital accounts, distribution rights, equity and voting interests, or of the general and limited partnership interests, as applicable, of such partnership or limited liability company are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person, whether in the form of membership, general, special or limited partnership or limited liability company interests or otherwise; and (ii) such Person or any one or more of the other Subsidiaries of such Person is a controlling general partner of, or otherwise controls, such partnership or limited liability company.
“Tenth Anniversary Date” shall mean August 28, 2035.
“Thirteenth Anniversary Date” shall mean August 28, 2038.
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“Trading Day” shall mean a day on which the Common Stock is traded for any period on the principal securities exchange or if the Common Stock is not traded on a principal securities exchange, on a day that the Common Stock is traded on another securities market on which the Common Stock is then being traded.
“Triggering Condition” shall have the meaning set forth in the Distribution Agreement.
“VWAP” per share of Common Stock on any Trading Day means the per share volume-weighted average price as displayed under the heading VWAP with Bloomberg Definition calculation method (or, if Bloomberg ceases to publish such price, any successor service reasonably chosen by the Corporation) in respect of the period from the open of trading on the relevant Trading Day until the close of trading on such Trading Day (or if such volume-weighted average price is unavailable, the market price of one share of Common Stock on such Trading Day determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm selected by the Corporation in good faith).
Section 2. Designation, Amount and Par Value; Assignment
(a) The series of the Corporation’s preferred stock designated by this Certificate of Designation shall be designated as Series B Convertible Preferred Stock (the “Series B Preferred Stock”) and the number of shares so designated shall be Three Hundred Ninety Thousand (390,000). Each share of Series B Preferred Stock shall have a par value of $0.001 per share. The Series B Preferred Stock may be issued in certificated form or in uncertificated book-entry form at the election of the Holder. To the extent that any shares of Series B Preferred Stock are issued in uncertificated book-entry form, references herein to “certificates” shall instead refer to the book-entry notation relating to such shares.
(b) The Corporation shall register shares of the Series B Preferred Stock, upon records to be maintained by the Corporation for that purpose (the “Series B Preferred Stock Register”), in the name of the Holders thereof from time to time. The Corporation may deem and treat the registered Holder of shares of Series B Preferred Stock as the absolute owner thereof for the purpose of any conversion thereof and for all other purposes. The Corporation shall register the transfer of any shares of Series B Preferred Stock in the Series B Preferred Stock Register, upon surrender of the certificates, if any, evidencing such shares to be transferred, duly endorsed by the Holder thereof, to the Corporation at its address specified herein. Upon any such registration or transfer of certificated shares of Series B Preferred Stock, a new certificate evidencing the shares of Series B Preferred Stock so transferred shall be issued to the transferee and a new certificate evidencing the remaining portion of the shares not so transferred, if any, shall be issued to the transferring Holder, in each case, within three Business Days. The provisions of this Certificate of Designation are intended to be for the benefit of all Holders from time to time and shall be enforceable by any such Holder.
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Section 3. Dividends
(a) Each share of Series B Preferred Stock shall be entitled to receive, in the manner set forth in this Section 3, (i) cumulative dividends in an amount equal to the Dividend Rate (each such dividend on the Series B Preferred Stock, a “Regular Dividend” and, collectively, the “Regular Dividends”), and (ii) on an as-converted basis, current payments of any dividend or other distribution (other than a distribution upon a Liquidation Event), whether paid in cash, in-kind or in other property (including, for the avoidance of doubt, any securities other than any dividends on shares of Common Stock payable in shares of Common Stock), authorized and declared by the Board on the issued and outstanding shares of Common Stock in an amount determined by assuming that a number of shares of Common Stock equal to the Conversion Ratio in effect on the applicable Record Date for such dividend or distribution (other than a distribution upon a Liquidation Event) were issued to, and held by, the Holder of such share of Series B Preferred Stock on such Record Date (each such dividend on the Series B Preferred Stock pursuant to this clause (a), a “Participating Dividend” and, collectively, the “Participating Dividends” and, together with the Regular Dividends, the “Dividends”).
(b) Regular Dividends shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year (unless any such day is not a Business Day, in which event such Regular Dividends shall be payable on the next succeeding Business Day, without accrual of interest thereon to the actual payment date), commencing on September 30, 2025 (each such payment date, a “Regular Dividend Payment Date,” and the period from, and including, the Issuance Date to, and including, the first Regular Dividend Payment Date and each such quarterly period thereafter from, but excluding, the immediately preceding Regular Dividend Payment Date to, and including, the next occurring Regular Dividend Payment Date, a “Regular Dividend Period”). The amount of Regular Dividends payable in respect of each share of Series B Preferred Stock for any period shall be computed on the basis of a 365-day year and actual days elapsed (i.e., the daily accrual rate shall be determined by dividing the Dividend Rate by 365). Regular Dividends shall be cumulative and shall begin to accrue on a daily basis from the Issuance Date whether or not declared and whether or not the Corporation has assets legally available to make payment thereof, at a rate equal to the applicable Dividend Rate, regardless of whether or not in any Regular Dividend Period there are funds of the Corporation legally available for the payment of such Regular Dividend. The Corporation may, in its sole discretion and notwithstanding anything to the contrary in this Certificate of Designation, settle such Regular Dividend in cash out of funds legally available therefor, in-kind pursuant to the terms and conditions of Section 3(c), or a combination of cash and in-kind settlement pursuant to the terms and conditions of Section 3(d), and the Corporation shall set aside sufficient funds for the portion of any Regular Dividend to be paid in whole or in part in cash before the Board or any other authorized Person may declare, set apart funds for or pay any dividend on the Junior Stock. Participating Dividends shall be payable as and when paid to the holders of shares of Common Stock (each such date, a “Participating Dividend Payment Date” and, together with a Regular Dividend Payment Date, a “Dividend Payment Date”).
(c) With respect to each share of Series B Preferred Stock, any Regular Dividend or portion thereof in respect of such share of Series B Preferred Stock that has accrued during any applicable Regular Dividend Period but is not paid (in whole or in part) in cash on the applicable Regular Dividend Payment Date (the amount of any accrued and unpaid Regular Dividend with respect to any share of Series B Preferred Stock for any Regular Dividend Period, regardless of whether such Regular Dividend is paid in cash or kind, the “Accrued Dividend Amount” with respect to such share of Series B Preferred Stock for such Regular Dividend Period) shall, regardless of whether or not such Regular Dividend is authorized and declared by the Board, or
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whether the Corporation has assets legally available to make payment thereof, be added to the Stated Value of such share of Series B Preferred Stock immediately following the Close of Business on such Regular Dividend Payment Date. Any such addition of the Accrued Dividend Amount in respect of a share of Series B Preferred Stock to the Stated Value of such share of Series B Preferred Stock pursuant to this Section 3(c) is referred to herein as a “PIK Dividend.” The Accrued Dividend Amount in respect of any Regular Dividend Period that is not paid (in whole or in part) in cash shall, without duplication of any prior PIK Dividends (if any) only be added to the Stated Value of such share of Series B Preferred Stock once. Regular Dividends with respect to each share of Series B Preferred Stock shall continue, from and after the date of each PIK Dividend, if any, to accrue in an amount per annum equal to the Dividend Rate (as such amount per annum may be adjusted pursuant to the terms and conditions hereof) of the Stated Value of such share of Series B Preferred Stock as of the relevant Record Date.
(d) In the event that the Board has elected to effect the settlement of a Regular Dividend payment in part by payment of cash to each Holder of shares of Series B Preferred Stock and in part pursuant to a PIK Dividend (any such Regular Dividend, a “Cash and PIK Dividend”), the Corporation shall, on the applicable Regular Dividend Payment Date and in respect of each share of Series B Preferred Stock, (i) pay to the Holder thereof an amount of cash equal to the Cash and PIK Dividend Cash Settlement Amount in respect of such share of Series B Preferred Stock, and (ii) add to the Stated Value of such share of Series B Preferred Stock an amount equal to (A) the Accrued Dividend Amount with respect to such share of Series B Preferred Stock for the Regular Dividend Period ending on, and including, such Regular Dividend Payment Date, minus (B) the Cash and PIK Dividend Cash Settlement Amount in respect of such share of Series B Preferred Stock. If the Board declares a Cash and PIK Dividend, and any portion of the cash payment of such Cash and PIK Dividend per share of Series B Preferred Stock is not paid pursuant to the terms of this Section 3, then such portion shall be added to the Stated Value of such share of Series B Preferred Stock in accordance with the terms of this Section 3(d).
(e) In the event that the Board has authorized and declared the payment of a Participating Dividend, such Participating Dividend shall be paid in a manner consistent with the payments of dividends on the shares of Common Stock. The Corporation will not declare any dividend or distribution (other than a distribution upon a Liquidation Event) on the Common Stock unless, concurrently therewith, the Corporation declares a corresponding Participating Dividend in accordance with Section 3(a).
(f) Except as otherwise provided herein, if at any time the Corporation pays, in cash, less than the total amount of Dividends then accrued, but unpaid, with respect to the shares of Series B Preferred Stock, such cash payment shall be distributed pro rata among the Holders thereof based upon the Stated Value of all shares of Series B Preferred Stock held by each such Holder as of the Record Date for such payment. When Dividends are not paid in full upon the Series B Preferred Stock, all dividends on Series B Preferred Stock and any other class or series of Parity Stock shall be paid pro rata so that the amount of dividends on the shares of Series B Preferred Stock and each such other class or series of Parity Stock shall in all cases bear to each other the same ratio as accrued, but unpaid, Dividends (for the full amount of dividends that would be payable for the most recently completed Regular Dividend Period if dividends were declared in full on non-cumulative Parity Stock) on the Series B Preferred Stock and such other class or series of Parity Stock bear to each other.
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(g) Within one Business Day of the Record Date for any Regular Dividend, the Corporation will send written notice to each Holder of shares of Series B Preferred Stock stating (i) whether such Regular Dividend will be paid in cash or in kind pursuant to Section 3(c), or pursuant to a Cash and PIK Dividend pursuant to Section 3(d), and (ii) if such Regular Dividend will be paid, at least in part, in kind pursuant to Section 3(c) or pursuant to a Cash and PIK Dividend pursuant to Section 3(d), the Stated Value of each share of Series B Preferred Stock immediately before and immediately after the applicable increase.
Section 4. Voting Rights
(a) Except as otherwise provided herein or as otherwise required by the NRS, the Series B Preferred Stock shall have no voting rights.
(b) As long as any shares of Series B Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Series B Preferred Stock (“Majority Holders”):
(i) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock or alter or amend this Certificate of Designation, amend or repeal any provision of, or add any provision to, the Articles of Incorporation or the bylaws of the Corporation, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series B Preferred Stock, regardless of whether any of the foregoing actions shall be by means of amendment to or other alteration of the Articles of Incorporation (including, without limitation, by way of filing a certificate of amendment or certificate of correction or by way of filing a certificate of designation with respect to any class or series of the Corporation’s capital stock, or any amendment or correction to such certificate of designation) or by merger, consolidation or otherwise;
(ii) increase or decrease (other than by conversion) the number of authorized shares of Series B Preferred Stock;
(iii) authorize, create, issue or reclassify securities (or securities that are convertible into or exercisable for such securities) that would be Parity Stock or Senior Stock; or
(iv) enter into any agreement with respect to any of the foregoing.
(c) As long as any share of Series B Preferred Stock remains issued and outstanding, any action required or permitted to be taken by the Holders of shares of Series B Preferred Stock may be effected without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the Majority Holders and shall be delivered to the Corporation by delivery to its registered office in the State of Nevada, its principal place of business, or an officer or agent of the Corporation having custody of the books in which proceedings of meetings of holders of any other class or series of capital stock of the Corporation are recorded.
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(d) During such time or times as any Holder of Series B Preferred Stock is entitled to nominate for election a director (or directors) and at least one such seat is filled (each, a “Preferred Director”), the Corporation shall not, without approval of the Board (which such approval must include the affirmative approval of each such Preferred Director), enter into any Related Person Transaction other than on an arms’ length basis (as determined in the reasonable discretion of the Board).
Section 5. Rank; Liquidation
(a) The Series B Preferred Stock shall, with respect to dividend rights and rights upon a Liquidation Event, rank: (i) senior to all of the Common Stock; (ii) senior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms junior to any Series B Preferred Stock (any such junior class, together with the Common Stock, “Junior Stock”); (iii) on parity with the Series A Preferred Stock and any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms on parity with the Series B Preferred Stock (collectively, the “Parity Stock”); and (iv) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms senior to any Series B Preferred Stock (“Senior Stock”).
(b) Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation (but excluding any Change of Control) (each, a “Liquidation Event”), after satisfaction of all liabilities and obligations to creditors of the Corporation, subject to the rights of any class or series of Senior Stock and before any distribution or payment shall be made to any holder of any Junior Stock, and subject to Section 5(d), each Holder shall be entitled to receive, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) legally available therefor, an amount per share of Series B Preferred Stock equal to the greater of (i) the sum of (1) the Stated Value of such share of Series B Preferred Stock as of the applicable as of the date of the liquidating payment, plus (2) without duplication of all accrued and unpaid Dividends previously added to the Stated Value of such share of Series B Preferred Stock, all accrued and unpaid Dividends per share of Series B Preferred Stock through the date of the liquidating payment; and (ii) the amount that such Holder would have received had each share of Series B Preferred Stock held by such Holder, as of the commencement of such Liquidation Event, converted into a number of shares of Common Stock equal to the then-applicable Conversion Ratio (such greater amount, the “Liquidation Preference”).
(c) No Holder shall (i) be entitled to any payment in respect of its shares of Series B Preferred Stock in the event of any Liquidation Event other than payment of the Liquidation Preference expressly provided for in Section 5(b), or (ii) have any further right or claim to any of the Corporation’s remaining assets, including any right or claim to participate in the receipt of any payment on Junior Stock in connection therewith (except as provided in Section 5(b)(ii)).
(d) If, in connection with any liquidating distribution pursuant to Section 5(b), the assets of the Corporation or proceeds thereof are not sufficient to pay in full the applicable Liquidation Preference payable on the shares of Series B Preferred Stock and the corresponding liquidating distributions payable on the shares of Parity Stock, if any, then such assets, or the proceeds thereof, shall be paid pro rata in accordance with the full respective aggregate liquidating distributions that would be payable on all such shares if all amounts payable thereon were paid in full.
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Section 6. Conversion
(a) Conversion at the Option of the Corporation.
(i) At any time from and after the Seventh Anniversary Date, provided the 10-Day VWAP immediately prior to the date the Corporation delivers a Mandatory Conversion Notice to the Holders exceeds the Conversion Price, the Corporation may elect to convert (a “Mandatory Conversion”) all, but not less than all, of the outstanding shares of Series B Preferred Stock into shares of Common Stock. In the case of a Mandatory Conversion, each share of Series B Preferred Stock then outstanding shall be converted into the number of shares of Common Stock equal to the Conversion Ratio of such share in effect as of the Mandatory Conversion Date.
(ii) If the Corporation elects to effect a Mandatory Conversion, the Corporation shall provide notice thereof to each Holder (such notice, a “Mandatory Conversion Notice”) and the Holder Optional Redemption Right with respect to such shares shall terminate. The Mandatory Conversion Notice shall state: (A) the date selected by the Corporation for the Mandatory Conversion to become effective, which shall be at least 5 Business Days and not more than 15 Business Days after the date on which the Corporation provides the Mandatory Conversion Notice to each such Holder (the “Mandatory Conversion Date”); (B) the applicable Conversion Price and Conversion Ratio as in effect on the date of the Mandatory Conversion Notice; and (C) the number of shares of Common Stock to be issued (and the amount of cash to be paid in lieu of any fractional share) to such Holder upon conversion of the shares of Series B Preferred Stock held by such Holder, calculated in accordance with the Conversion Price and Conversion Ratio referred to in the immediately preceding clause (B).
(b) Automatic Conversion.
(i) Each share of Series B Preferred Stock shall automatically convert (an “Automatic Conversion”) into shares of Common Stock upon the occurrence of an Automatic Conversion Event and the Holder Optional Redemption Right shall terminate. In the case of an Automatic Conversion, each share of Series B Preferred Stock then outstanding shall be converted into the number of shares of Common Stock equal to the Conversion Ratio of such share in effect as of the Automatic Conversion Date.
(ii) If an Automatic Conversion Event occurs, the Corporation shall promptly, and in any event within 10 Business Days of such Automatic Conversion Event, provide notice of such Automatic Conversion to each Holder (such notice, a “Automatic Conversion Notice”). The Automatic Conversion Notice shall state: (A) the Automatic Conversion Date; (B) a description in reasonable detail of the Automatic Conversion Event, with such supporting information as the Holder may reasonably request; (C) the applicable Conversion Price and Conversion Ratio as in effect on the Automatic Conversion Date; and (D) the number of shares of Common Stock to be issued (and the amount of cash to be paid in lieu of any fractional share) to such Holder upon conversion of the shares of Series B Preferred Stock held by such Holder, calculated in accordance with the Conversion Price and Conversion Ratio referred to in the immediately preceding clause (C).
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(iii) Each of the following shall be an “Automatic Conversion Event” with respect to any share of Series B Preferred Stock:
A. Any date from and after the Sixth Anniversary Date on which (x) the Triggering Condition is satisfied in accordance with the Distribution Agreement and (y) the 10-Day VWAP immediately prior to such date exceeds the Conversion Price of such share as of such date; and
B. Any date from and after the occurrence of a Corporation Termination Event, if the 10-Day VWAP immediately preceding such date exceeds the Conversion Price of such share as of such date.
C. Any date from and after the occurrence of an Investor Termination Event, if the 10-Day VWAP immediately preceding such date exceeds the Conversion Price of such share as of such date.
(c) Mechanics of Conversion.
(i) Record Holder; Delivery. The Holder entitled to receive shares of Common Stock issuable upon conversion of Series B Preferred Stock shall be treated for all purposes as the record holder(s) of such Common Stock as of the Close of Business on the Conversion Date for such conversion. As promptly as practicable on or after the Conversion Date (and in no event later than three Trading Days thereafter) (the “Share Delivery Date”), the Corporation shall issue the number of whole shares of Common Stock issuable upon conversion (and deliver payment of cash in lieu of fractional shares in accordance with Section 6(c)(iii)). Such shares of Common Stock shall be issued, at the option of the applicable Holder, in certificated or uncertificated form. Any such certificate or certificates, if applicable, shall be delivered by the Corporation to the appropriate Holder(s) by mailing certificates evidencing the shares to such Holder(s) at their respective addresses as set forth in the applicable conversion notice. Any such uncertificated shares of Common Stock, if applicable, shall be registered in the name and delivered to the Depository Trust Company or other applicable account directed by the applicable Holder. If fewer than all of the certificated shares of Series B Preferred Stock held by any Holder are converted pursuant to this Section 6, then a new certificate representing the unconverted certificated shares of Series B Preferred Stock shall be issued to such Holder representing such unconverted certificated shares. In all cases, the Holder shall retain all of its rights and remedies for the Corporation’s failure to convert Series B Preferred Stock.
(ii) Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series B Preferred Stock, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holders of the Series B Preferred Stock, not less
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than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments of Section 7) upon the conversion of all outstanding shares of Series B Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.
(iii) Fractional Shares. Notwithstanding anything herein to the contrary, the Corporation shall not issue any fractional share of Common Stock upon conversion, as applicable, of any share of Series B Preferred Stock. In lieu of fractional shares otherwise issuable, Holders of shares of Series B Preferred Stock will be entitled to receive an amount in cash equal to the product of (i) such fraction of a share of Common Stock, multiplied by (ii) the 10-Day VWAP, measured as of the applicable Conversion Date. The Corporation shall pay such cash to the applicable Holder on the applicable Share Delivery Date.
(iv) Regulatory Approvals. Notwithstanding anything herein to the contrary, if any Mandatory Conversion or Automatic Conversion would require any consent, waiver, authorization or order of, or any notice provided to or filing or registration made with, any Governmental Entity (as defined in the Purchase Agreement) or the shareholders of the Corporation (a “Required Approval”), including pursuant to the HSR Act, the Corporation and the Majority Holders shall use reasonable best efforts to obtain such Required Approval as promptly as practical, and such Automatic Conversion or Mandatory Conversion shall not be effected until such Required Approval is obtained. If the Corporation and the Majority Holders determine in good faith that such Required Approval is not reasonably likely to be obtained, the Corporation shall take all action necessary to effect such conversion into Common Stock that is non-voting (but otherwise having identical rights as the existing Common Stock). For avoidance of doubt, the Holders shall retain all rights in respect of their Series B Preferred Stock (including with respect to Dividends) until such Required Approval is obtained.
(d) Transfer Restriction. With respect to any Mandatory Conversion or Automatic Conversion of Series B Preferred Stock held by Investor, in addition to any transfer restrictions which may otherwise apply to such shares of Common Stock, Investor shall not transfer or otherwise dispose of the shares of Common Stock received by Investor in such Mandatory Conversion or Automatic Conversion for a period of 35 calendar days after the receipt of the Common Stock in the Mandatory Conversion or Automatic Conversion.
Section 7. Certain Adjustments
(a) Stock Dividends and Stock Splits.
(i) If the Corporation at any time after the Issuance Date: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of this Series B Preferred Stock) with respect to the then-outstanding shares of Common Stock; (ii) subdivides outstanding shares of Common Stock into a larger number of shares; or (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, then the
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Conversion Ratio shall be divided by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event (excluding any treasury shares of the Corporation). Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the Record Date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination. All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
(ii) Whenever the Conversion Ratio is adjusted pursuant to any provision of this Section 7, the Corporation shall promptly deliver to each Holder a notice setting forth the Conversion Ratio after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(b) Reorganization Events. In the event of:
(i) any reclassification, statutory exchange, merger, consolidation or other similar business combination of the Corporation with or into another Person, in each case, pursuant to which at least a majority of the Common Stock is changed or converted into, or exchanged for, cash, securities or other property of the Corporation or another Person;
(ii) any sale, transfer, lease or conveyance to another Person of all or a majority of the property and assets of the Corporation, in each case pursuant to which the Common Stock is converted into cash, securities or other property; or
(iii) any statutory exchange of securities of the Corporation with another Person (other than in connection with a merger or acquisition) or reclassification, recapitalization or reorganization of the Common Stock into other securities; (each of which is referred to as a “Reorganization Event”);
then each share of Series B Preferred Stock outstanding immediately prior to such Reorganization Event will, subject to Section 8(d), remain outstanding but shall become convertible into, out of funds legally available therefor, the number, kind and amount of securities, cash and other property (the “Exchange Property”) that the Holder of such share of Series B Preferred Stock would have received in such Reorganization Event had each of the shares of Series B Preferred Stock held by such Holder been converted into a number of shares of Common Stock equal to the Conversion Ratio in effect immediately prior the Reorganization Event. If the kind or amount of securities, cash and other property receivable upon such Reorganization Event is not the same for each share of Common Stock held immediately prior to such Reorganization Event by a Person, then for the purpose of this Section 7(b), the kind and amount of securities, cash and other property receivable upon conversion following such Reorganization Event will be deemed to be the weighted average of the types and amounts of consideration received by the holders of Common Stock. Notwithstanding anything herein to the contrary, in the event of a Reorganization Event that constitutes a Change of Control, the provisions of Section 8(d) shall control.
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Section 8. Redemption
(a) Corporation Optional Redemption. At any time from and after the earlier of (i) the Seventh Anniversary Date, if the 10-Day VWAP does not exceed the Conversion Price on the date immediately prior to the date the Corporation delivers a Corporation Optional Redemption Notice to the Holders, and (ii) the occurrence of a Corporation Termination Event, if the 10-Day VWAP does not exceed the Conversion Price on the date immediately prior to the date the Corporation delivers a Corporation Optional Redemption Notice to the Holders, the Corporation shall have the right (the “Corporation Optional Redemption Right” and, such redemption, a “Corporation Optional Redemption”) upon written notice to the Holders (such written notice, the “Corporation Optional Redemption Notice”) to redeem all (and not less than all) of the then-outstanding shares of Series B Preferred Stock, at the Redemption Price in the manner set forth in Section 8(c).
(b) Holder Optional Redemption. On each of the Seventh Anniversary Date, the Tenth Anniversary Date and the Thirteenth Anniversary Date, the Majority Holders shall have the right (the “Holder Optional Redemption Right” and, such redemption, a “Holder Optional Redemption”), upon no less than six months prior written notice to the Corporation (such written notice, the “Holder Optional Redemption Notice”), to require the Corporation to redeem all (and not less than all) of the then-outstanding shares of Series B Preferred Stock, at the Redemption Price in the manner set forth in Section 8(c).
(c) Mechanics of Optional Redemption.
(i) In the event of a Corporation Optional Redemption, the Corporation shall effect such redemption by paying the entire Redemption Price on or before the date that is 30 days after the delivery of the Corporation Optional Redemption Notice and by redeeming all of the shares of Series B Preferred Stock on such date. In the event of a Holder Optional Redemption, the Redemption Price shall be payable, and the shares of Series B Preferred Stock redeemed by the Corporation, in three equal installments, commencing on the Seventh Anniversary Date, the Tenth Anniversary Date or the Thirteenth Anniversary Date, as applicable, and in each case on the 15th and 30th month anniversary thereafter. The date any portion of the Redemption Price is paid pursuant hereto shall be referred to as a “Redemption Date”. On each Redemption Date for a Holder Optional Redemption, the Corporation shall redeem, on a pro rata basis in accordance with the number of shares of Series B Preferred Stock owned by each Holder, that number of outstanding shares of Series B Preferred Stock determined by dividing (i) the total number of shares of Series B Preferred Stock outstanding immediately prior to such Redemption Date by (ii) the number of remaining Redemption Dates (including the Redemption Date to which such calculation applies). If, on any Redemption Date, Nevada law governing distributions to stockholders or the terms of any indebtedness of the Corporation to banks and other financial institutions engaged in the business of lending money prevent the Corporation from redeeming all share of Series B Preferred Stock to be redeemed, the Corporation shall ratably redeem the maximum number of shares that it may redeem consistent with such law, and shall redeem the remaining shares as soon as it may lawfully do so under such law.
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(ii) Upon receipt of a Holder Optional Redemption Notice or delivery of the Corporation Optional Redemption Notice, the Corporation shall send written notice (the “Redemption Notice”) to each holder of record of Series B Preferred Stock not less than 15 days prior to each Redemption Date. Each Redemption Notice shall state:
A. The number of shares of Series B Preferred Stock held by the Holder that the Corporation shall redeem on the Redemption Date specified in the Redemption Notice;
B. the Redemption Date and the Redemption Price;
C. for shares in certificated form, that the Holder is to surrender to the Corporation, in the manner and at the place designated, such certificate or certificates representing the shares of Series B Preferred Stock to be redeemed; and
D. the procedures that Holders must follow in order for their shares of Series B Preferred Stock to be redeemed.
On or before the applicable Redemption Date, the Corporation shall deliver to each Holder, by wire transfer of immediately available funds to an account or accounts specified in writing by such Holder, the Redemption Price for the shares being redeemed on such Redemption Date, subject to such Holder having complied with the procedures for surrender specified in the Redemption Notice. In the event that less than all of the shares of Series B Preferred Stock represented by a certificate are redeemed, a new certificate or book entry representing the unredeemed shares of Series B Preferred Stock shall be promptly issued to such Holder.
(iii) If the Redemption Notice shall have been duly given, and if on the applicable Redemption Date the Redemption Price payable upon redemption of the shares of Series B Preferred Stock to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that any certificates evidencing any of the shares of Series B Preferred Stock so called for redemption shall not have been surrendered, dividends with respect to such shares of Series B Preferred Stock shall cease to accrue after such Redemption Date and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the Redemption Price without interest upon surrender of any such certificate or certificates therefor.
(iv) If any shares of Series B Preferred Stock scheduled for redemption on a Redemption Date are not redeemed for any reason on such Redemption Date, (x) from such Redemption Date until the 15-month anniversary of such Redemption Date, the Dividend Rate with respect to such unredeemed share of Series B Preferred Stock shall automatically increase to 8%, (y) from such 15-month anniversary of such Redemption Date until the 30th-month anniversary of such Redemption Date, the Dividend Rate with respect to such unredeemed share of Series B Preferred Stock shall automatically increase to 10% and (z) from and after such 30th-month anniversary of such Redemption Date, the Dividend Rate with respect to any such unredeemed share of Series B Preferred Stock shall automatically increase to 12%, in each case until such share is duly redeemed.
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(d) Change of Control Redemption.
(i) In the event of a transaction resulting in a Change of Control, the Corporation (or its successor) shall redeem (a “Change of Control Redemption”) all (and not less than all) of the then-issued and outstanding shares of Series B Preferred Stock. Upon such redemption, the Corporation will pay or deliver, as applicable, to each Holder in respect of each share of Series B Preferred Stock held by such Holder, an amount equal to the greater of (A) cash in an amount equal to the Redemption Price and (B) the amount of cash and/or other assets (including securities) such Holder would have received had each share of Series B Preferred Stock held by such Holder as of the Close of Business on the Business Day immediately prior to the effective date of such transaction resulting in a Change of Control, converted into a number of shares of Common Stock equal to the then-applicable Conversion Ratio and participated in such transaction resulting in such Change of Control as a holder of shares of Common Stock (such greater amount, the “Change of Control Redemption Price”). No later than the consummation of any transaction resulting in a Change of Control, the Corporation (or its successor) shall deliver or cause to be delivered to each Holder the Change of Control Redemption Price with respect to such Holder’s shares of Series B Preferred Stock.
(ii) On or prior to the 10th Business Day prior to the date on which the Corporation anticipates consummating a transaction which would result in a Change of Control (or, if later, promptly after the Corporation shall have discovered that a transaction resulting in a Change of Control has occurred), the Corporation shall send written notice (a “Change of Control Notice”) to the Holders of record of shares of Series B Preferred Stock, which such Change of Control Notice shall include (A) the date on which the transaction that would result in a Change of Control is anticipated to be effected (or, to the extent applicable, the date on which a Schedule TO or other similar schedule, form or report disclosing the occurrence of a Change of Control was filed), (B) a description of the material terms and conditions of such transaction, (C) a statement that all shares of Series B Preferred Stock shall be redeemed by the Corporation (or its successor) on a date specified in such Change of Control Notice (the “Change of Control Redemption Date”), which such date must be a Business Day of the Corporation’s choosing that is no later than the date of the consummation of the transaction resulting in such Change of Control, (D) the Change of Control Redemption Price with respect to each share of Series B Preferred Stock, and (E) the procedures that Holders of shares of Series B Preferred Stock must follow in order for their shares of Series B Preferred Stock to be redeemed. The Holder of shares of Series B Preferred Stock subject to any Change of Control Redemption entitled to receive any securities or other assets payable upon such redemption shall be treated for all purposes as the record holder of such securities or assets as of the Close of Business on the Change of Control Redemption Date; provided, however, that such Holder may identify one or more other Persons to receive such securities or assets in connection with any such redemption in a written notice sent to the Corporation no later than three Business Days prior to the Change of Control Redemption Date.
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(iii) If, in connection with a transaction resulting in a Change of Control, the Corporation or its successor shall not have sufficient funds legally available under the Nevada law governing distributions to stockholders to redeem all outstanding shares of Series B Preferred Stock, then the Corporation shall (A) redeem, pro rata among the Holders, a number of shares of Series B Preferred Stock equal to the number of shares of Series B Preferred Stock that can be redeemed with the maximum amount legally available for the redemption of such shares of Series B Preferred Stock under the Nevada law governing distributions to stockholders, and (B) redeem all remaining shares of Series B Preferred Stock not redeemed because of the foregoing limitations at the applicable Change of Control Redemption Price as soon as practicable after the Corporation (or its successor) is able to make such redemption out of assets legally available for the purchase of such share of Series B Preferred Stock. The inability of the Corporation (or its successor) to make a redemption payment for any reason shall not relieve the Corporation (or its successor) from its obligation to effect any required redemption when, as and if permitted by applicable law.
Section 9. Miscellaneous
(a) Notwithstanding anything herein to the contrary, if at any time the payment of any PIK Dividend or a conversion of Series B Preferred Stock (a “Subject Action”) would be prohibited until the Corporation has obtained the approval of the shareholders of the Corporation under the NRS, continued listing rules of Nasdaq or otherwise, the Corporation and the Holder shall not effect such Subject Action until such vote has been duly obtained; provided, however, that nothing herein will affect the compounding of any Dividend that the Corporation does not pay in cash (which compounding will apply even if the Corporation is otherwise prohibited from electing to make any PIK Dividend pursuant to this sentence). In such case, until such time as the requisite shareholder approval has been obtained for the Subject Action, the Corporation covenants that it shall use its reasonable best efforts to obtain such approval at any annual or special meeting of the shareholders entitled to vote on such for the purpose of voting on such Subject Action to be called as soon as reasonably practicable.
(b) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Conversion Notice or Redemption Notice, shall be in writing and delivered personally, by email, or sent by a nationally recognized overnight courier service, addressed to the Corporation, 2381 NW Executive Center Drive, Boca Raton, Florida 33431, Attn: Chief Financial Officer and Legal Department, email address: [***], or such other address or email address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by email, or sent by a nationally recognized overnight courier service addressed to each Holder at the address or email address of such Holder appearing on the books of the Corporation, or if no such address or email address appears on the books of the Corporation, at the principal place of business of such Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via email, (ii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iii) upon actual receipt by the party to whom such notice is required to be given.
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(c) Lost or Mutilated Series B Preferred Stock Certificate. If a Holder’s Series B Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Series B Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership thereof, reasonably satisfactory to the Corporation and, in each case, customary and reasonable indemnity, if requested. Applicants for a new certificate under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Corporation may prescribe.
(d) Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation. Any waiver by the Corporation or a Holder must be in writing. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the Holders of Series B Preferred Stock granted hereunder may be waived as to all shares of Series B Preferred Stock (and the Holders thereof) upon the written consent of the Majority Holders, unless a higher percentage is required by the NRS, in which case the written consent of the Holders of not less than such higher percentage shall be required.
(e) Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.
(f) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
(g) Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not be deemed to limit or affect any of the provisions hereof.
(h) Status of Converted Series B Preferred Stock. If any shares of Series B Preferred Stock shall be converted or reacquired by the Corporation, such shares shall be automatically, and without need for further action by the Board, restored to the status of authorized and unissued shares of Preferred Stock, without designation or classification as to series, until such shares are once more designated or classified as part of a particular series by the Board pursuant to the provisions of the Articles of Incorporation.
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IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation this 28th day of August, 2025.
| CELSIUS HOLDINGS, INC. | ||
| By: | /s/ Richard Mattessich | |
| Name: | Richard Mattessich | |
| Title: | Chief Legal Officer | |
SIGNATURE PAGE TO CERTIFICATE OF DESIGNATION OF SERIES B PREFERRED STOCK
Exhibit 3.2
Execution Version
CERTIFICATE OF AMENDMENT TO DESIGNATION
OF THE
SERIES A CONVERTIBLE PREFERRED STOCK OF
CELSIUS HOLDINGS, INC.
WHEREAS, on August 1, 2022, Celsius Holdings, Inc., a corporation duly organized and existing under the laws of the state of Nevada (the “Corporation”), filed a Certificate of Designation of Series A Convertible Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Nevada, establishing, in accordance with the applicable provisions of the Nevada Revised Statutes (“NRS”), and pursuant to the authority under the Articles of Incorporation of the Corporation, as amended (the “Articles of Incorporation”), a series of the Corporation’s preferred stock, par value $0.001 per share, designated as the “Series A Convertible Preferred Stock”, and having the voting powers, designations, preferences, limitations, restrictions and relative rights set forth in the Certificate of Designation (the “Series A Convertible Preferred Stock”);
WHEREAS, on August 1, 2022, the Corporation issued 1,466,666 shares of the Series A Convertible Preferred Stock to PepsiCo, Inc., a North Carolina corporation (the “Investor”);
WHEREAS, the Corporation’s Board of Directors (the “Board”) has adopted a resolution providing for an amendment to the Certificate of Designation as set forth in this Certificate of Amendment to Designation (this “Certificate of Amendment”);
WHEREAS, the Investor, as the sole holder of all of the issued and outstanding shares of the Series A Convertible Preferred Stock, has delivered a written consent (i) approving the amendments set forth in this Certificate of Amendment and (ii) consenting to the Board’s authorization, creation and issuance of 390,000 shares of preferred stock, par value $0.001 per share, designated as “Series B Convertible Preferred Stock”, of the Corporation (the “Series B Convertible Preferred Stock”);
WHEREAS, the Series B Convertible Preferred Stock by its terms ranks on parity with the Series A Convertible Preferred Stock; and
WHEREAS, the Corporation has no class or series of stock which is senior to the Series A Convertible Preferred Stock as to the payment of distributions upon dissolution of the Corporation.
NOW THEREFORE, BE IT RESOLVED, that in accordance with the provisions of the Articles of Incorporation and the NRS, the Certificate of Designation is hereby amended as set forth in this Certificate of Amendment.
AMENDMENTS
1. The following definitions shall hereby replace in their entirety the respective definitions set forth in the Certificate of Designation:
“Distribution Agreement” shall mean that certain amended and restated Distribution Agreement, effective as of August 28, 2025, by and between the Corporation and the Investor, as the same may be amended, supplemented or otherwise modified from time to time.
“Seventh Anniversary Date” shall mean August 28, 2032.
“Sixth Anniversary Date” shall mean August 28, 2031.
“Tenth Anniversary Date” shall mean August 28, 2035.
“Thirteenth Anniversary Date” shall mean August 28, 2038.
2. Section 4(d) is hereby amended and restated in its entirety to read as follows:
“(d) During such time or times as any Holder of Series A Preferred Stock is entitled to nominate for election a director (or directors) and at least one such seat is filled (each, a “Preferred Director”), the Corporation shall not, without approval of the Board (which such approval must include the affirmative approval of each such Preferred Director), enter into any Related Person Transaction other than on an arms’ length basis (as determined in the reasonable discretion of the Board).”
3. Section 9(b) is hereby amended and restated in its entirety to read as follows:
“(b) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Conversion Notice or Redemption Notice, shall be in writing and delivered personally, by email, or sent by a nationally recognized overnight courier service, addressed to the Corporation, 2381 NW Executive Center Drive, Boca Raton, Florida 33431, Attn: Chief Financial Officer and Legal Department, email address: [***], or such other address or email address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by email, or sent by a nationally recognized overnight courier service addressed to each Holder at the address or email address of such Holder appearing on the books of the Corporation, or if no such address or email address appears on the books of the Corporation, at the principal place of business of such Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via email, (ii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iii) upon actual receipt by the party to whom such notice is required to be given.”
TAX TREATMENT
1. The amendment pursuant to this Certificate of Amendment is intended to be treated as a tax-free recapitalization in accordance with section 368(a)(1)(E) of the Internal Revenue Code of 1986, amended (the “Intended Tax Treatment”). The Corporation and the Investor shall not take any position inconsistent with the Intended Tax Treatment unless required by applicable law.
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IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment this 28th day of August, 2025.
| CELSIUS HOLDINGS, INC. | ||
| By: | /s/ Richard Mattessich | |
| Name: | Richard Mattessich | |
| Title: | Chief Legal Officer | |
Exhibit 10.1
Execution Version
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into effective as of August 28, 2025, by and between Celsius Holdings, Inc., a Nevada corporation (the “Company”), and PepsiCo, Inc., a North Carolina corporation (the “Purchaser”). Certain terms used and not otherwise defined in the text of this Agreement are defined in Section 8 hereof.
RECITALS
WHEREAS, pursuant to the Securities Purchase Agreement, dated as of August 1, 2022 (the “Series A SPA”), by and between the Company and the Purchaser, the Purchaser purchased from the Company 1,466,666 shares of preferred stock, $0.001 par value per share designated as “Series A Convertible Preferred Stock” (the “Series A Preferred Stock”), having the rights, preferences and privileges set forth in the Certificate of Designation (the “Initial Series A Certificate”) filed with the Secretary of State of the State of Nevada on August 1, 2022, subject to the terms and conditions set forth in the Series A SPA;
WHEREAS, the Company and the Purchaser desire to amend the Initial Series A Certificate by filing with the Secretary of State of the State of Nevada a Certificate of Amendment to Designation in the form attached hereto as Exhibit A (the “Series A Certificate of Amendment”) and to terminate the Series A SPA;
WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser desires to purchase from the Company, 390,000 shares of preferred stock, $0.001 par value per share designated as “Series B Convertible Preferred Stock” (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, the “Preferred Stock”), having the rights, preferences and privileges set forth in the Certificate of Designation attached hereto as Exhibit B (the “Series B Certificate”), subject to the terms and conditions set forth in this Agreement;
WHEREAS, in connection herewith, the Company and the Purchaser are concurrently entering into a Transaction Agreement (the “Transaction Agreement”), which provides for, among other things, (i) the entry by the Company and the Purchaser into the Captaincy (as defined in the Transaction Agreement), (ii) the amendment and restatement of each of the U.S. Distribution Agreement and the Canada Distribution Agreement (each as defined in the Transaction Agreement) and (iii) the acquisition by the Company of the Rockstar brand in the U.S. and Canada from the Purchaser (and certain other assets related thereto); and
WHEREAS, in connection with the Transactions and the transactions contemplated by the Transaction Agreement, the Parties have agreed that their respective obligations to pay the applicable purchase price at the applicable closing under this Agreement and under the Transaction Agreement shall be set-off against one another, with any resulting balance to be settled in cash by the Party owing the excess amount.
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants herein contained, the parties hereto hereby agree as follows:
Section 1. Sale and Purchase of the Shares. Upon the terms and subject to the conditions herein contained, the Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Company, at the Closing, a total of 390,000 shares of Series B Preferred Stock, at a price per share of $1,500, for an aggregate purchase price of $585,000,000 (the “Purchase Price”). The shares of Series B Preferred Stock sold hereunder at the Closing shall be referred to as the “Shares.”
Section 2. Closing.
2.1 The closing of the purchase and sale of the Shares (the “Closing”) shall take place on August 28, 2025 via electronic exchange of required documents at the time of receipt of certified evidence from the Secretary of State of the State of Nevada of the filing of each of the Series A Certificate of Amendment and the Series B Certificate (the “Effective Date”). The date the Closing actually occurs shall be referred to herein as the “Closing Date”.
2.2 At or prior to the Closing, the Company shall deliver or, as applicable, cause to be delivered, to the Purchaser:
(a) the Shares, free and clear of all Liens (except restrictions imposed by any applicable federal and state securities Laws and the transfer restrictions set forth herein or in any Transaction Document);
(b) evidence that each of the Series A Certificate of Amendment and the Series B Certificate have been filed with the Secretary of State of the State of Nevada and is in full force and effect as of the Closing;
(c) a registration rights agreement, in the form attached hereto as Exhibit C (the “Registration Rights Agreement”), duly executed by the Company;
(d) a properly executed IRS Form W-9;
(e) the Transaction Agreement, duly executed by the Company; and
(f) the amended and restated U.S. Distribution Agreement and Canada Distribution Agreement, duly executed by the Company.
2.3 At or prior to the Closing, the Purchaser shall deliver to the Company (a) the Purchase Price, by wire transfer in immediately available U.S. federal funds, to the account designated by the Company in writing, (b) the Registration Rights Agreement, duly executed by the Purchaser, (c) a properly executed IRS Form W-9, (d) the Transaction Agreement, duly executed by the Purchaser, and (e) the amended and restated U.S. Distribution Agreement and Canada Distribution Agreement, duly executed by the Purchaser.
2.4 The Purchaser and the Company agree that, effective as of the Closing, the Series A SPA shall automatically terminate and shall be of no further force or effect other than with respect to Section 5.12 thereof, the rights and obligations provided in which shall survive.
Section 3. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company as of the Effective Date that:
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3.1 Organization and Good Standing; Corporate Power and Authority; Validity. The Purchaser is a duly organized and validly existing North Carolina corporation, has all requisite corporate power and authority to own its properties and conduct its business as presently conducted, and is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except where failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the legality, validity or enforceability of any Transaction Document. The Purchaser has all requisite corporate power and authority and has taken all necessary corporate action required for the due authorization, execution, delivery and performance by the Purchaser of this Agreement and the other Transaction Documents to which it is a party and the consummation of the Transactions. This Agreement has been duly executed and delivered by the Purchaser, and the other Transaction Documents to which it is a party will be duly executed and delivered by the Purchaser, and each such agreement constitutes or will constitute a legal, valid and binding obligation of the Purchaser enforceable against it in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other Laws of general application affecting enforcement of creditors’ rights generally, and as limited by Laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
3.2 No Conflicts. The execution, delivery and performance by the Purchaser or its relevant Affiliate of the Transaction Documents and the consummation by each such party of the Transactions to which it is a party do not and will not (a) conflict with or violate any provision of the Purchaser’s Organizational Documents, (b) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Purchaser pursuant to, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement, indenture or other instrument to which the Purchaser or its relevant Affiliate or any of their respective Subsidiaries is a party or by which any property or asset of such party is bound or affected, or (c) conflict with or result in a violation of any Law or other restriction of any Governmental Entity to which the Purchaser or its relevant Affiliate or any of their respective Subsidiaries is subject (including federal and state securities Laws and regulations), or by which any property or asset of the Purchaser or its relevant Affiliate or any of their respective Subsidiaries is bound or affected, except in the case of each of clauses (a), (b) and (c), such as could not have or reasonably be expected to result in a material adverse effect on the legality, validity or enforceability of any Transaction Document.
3.3 Filings, Consents and Approvals. Assuming the accuracy of the representations set forth in Section 4.3, the Purchaser is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any Governmental Entity in connection with the execution, delivery and performance by the Purchaser of the Transaction Documents to which it is a party and the consummation of the Transactions, other than such filings and registrations as are required to be made under applicable federal and state securities Laws.
3.4 Brokers. Except for Centerview Partners LLC, the fees and expenses of which shall be the obligation of the Purchaser, there is no broker, investment banker, financial advisor, finder or other Person which has been retained by or is authorized to act on behalf of the Purchaser who might be entitled to any fee or commission for which the Company will be liable in connection with the execution of the Transaction Documents or the consummation of the Transactions.
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3.5 Investment Representations and Warranties. The Purchaser understands and agrees that the offering and sale of the Shares has not been registered under the Securities Act or any applicable state securities Laws and is being made in reliance upon federal and state exemptions for transactions not involving a public offering which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations, warranties, agreements, acknowledgements and understandings as expressed herein.
3.6 Acquisition for Own Account; No Control Intent. The Purchaser is acquiring the Shares for its own account for investment and not with a view toward distribution in a manner which would violate the Securities Act or any applicable state securities Laws. The Purchaser is not party to any agreement providing for or contemplating the distribution of any of the Shares.
3.7 Ability to Protect Its Own Interests and Bear Economic Risks. The Purchaser, by reason of the business and financial experience of its management, has the capacity to protect its own interests in connection with the Transactions and is capable of evaluating the merits and risks of the investment in the Shares. The Purchaser is able to bear the economic risk of an investment in the Shares and is able to sustain a loss of all of its investment in the Shares without economic hardship, if such a loss should occur.
3.8 Accredited Investor; No Bad Actor. The Purchaser is an “accredited investor” as that term is defined in Rule 501(a) under the Securities Act. The Purchaser has not taken any of the actions set forth in, and is not subject to, the disqualification provisions of Rule 506(d)(1) of the Securities Act.
3.9 No Governmental Review. The Purchaser understands that no United States federal or state agency or any Governmental Entity has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.
3.10 Access to Information. The Purchaser has been provided with certain Company documents, records and other information, and has been given an opportunity to ask questions of, and receive answers from, the Company’s officers, employees, agents, accountants and representatives concerning the Company’s business, operations, financial condition, assets, liabilities and other matters relevant to its investment in the Shares. The Purchaser understands that an investment in the Shares bears significant risk and represents that it has reviewed the SEC Reports, which serve to qualify certain of the Company’s representations set forth below.
3.11 Restricted Shares.
(a) The Purchaser understands that the Shares, as well as the common stock, par value $0.001 (“Common Stock”), issuable upon conversion of the Shares, will be characterized as “restricted securities” under the federal securities Laws inasmuch as they are being acquired from the Company pursuant to the exemption from registration provided by Regulation D of the Securities Act and that under such Laws and applicable regulations such Shares may be resold without registration under the Securities Act only in certain limited circumstances.
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(b) The Purchaser acknowledges that the Shares must be held indefinitely unless subsequently registered under the Securities Act and under applicable state securities Laws or an exemption from such registration is available. The Purchaser understands that the Company is under no obligation to register the Shares, except as provided in this Agreement or the Registration Rights Agreement.
(c) The Purchaser is aware of the provisions of Rule 144 under the Securities Act, which permit limited resale of securities purchased in a private placement.
3.12 Sufficient Funds. The Purchaser has sufficient funds presently available to deliver the Purchase Price in full and to consummate the Transactions in accordance with the terms hereof and of the other Transaction Documents.
3.13 No Public Market. The Purchaser understands that no public market now exists for the Shares, and that the Company has made no assurances that a public market will ever exist for the Shares.
3.14 Tax Advisors. The Purchaser has had the opportunity to review with the Purchaser’s own tax advisors the federal, state and local tax consequences of this investment, where applicable, and the Transactions. The Purchaser is relying solely on the Purchaser’s own determination as to tax consequences or the advice of such tax advisors and not on any statements or representations of the Company or any of its agents and understands that the Purchaser (and not the Company) shall be responsible for the Purchaser’s own tax liability that may arise as a result of this investment or the Transactions.
3.15 Limitation. Except as expressly set forth in Section 4 or in any other Transaction Document or Other Document, the Purchaser acknowledges and agrees that none of the Company, its Subsidiaries or any other Person has made any representation or warranty, express or implied, at Law or in equity, by statute or otherwise, and any other representations or warranties are hereby expressly disclaimed by the Company, including, without limitation, any implied representation or warranty as to condition, merchantability, suitability or fitness for a particular purpose. Without limiting the generality of the foregoing, the Purchaser hereby expressly disclaims reliance on any representation, warranty or other statement, whether written or oral, made by, on behalf of or relating to the Company, its Affiliates or any Transaction Document, other than the representations and warranties expressly set forth in Section 4 or in any other Transaction Document or Other Document. Notwithstanding anything to the contrary, nothing in this Agreement shall limit the right of the Purchaser and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement or in any other Transaction Document or Other Document, nor will anything in this Agreement operate to limit any claim by the Purchaser or any of its Affiliates for actual and intentional fraud in the making of the representations and warranties expressly set forth in Section 4 or in any other Transaction Document or Other Document.
3.16 No Other Representations and Warranties. The representations and warranties set forth in this Section 3 and in any other Transaction Document are the only representations and warranties made by the Purchaser or any of its Affiliates with respect to the acquisition of the Shares or any other matter relating to the Transactions. Except as specifically set forth in this Agreement or in any other Transaction Document, (a) the Purchaser makes no
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warranty, express or implied, as to any matter relating to the acquisition of the Shares or any other matter relating to the Transactions, and (b) none of the Purchaser, any of its Affiliates or any of their respective stockholders, directors, officers, employees, agents or representatives will have or be subject to any liability or indemnification obligation to the Company or any other Person resulting from the distribution or delivery to the Company or its Affiliates or representatives of, or the Company’s use of, any information relating to the Purchaser or any of its Affiliates, including any summary business descriptions, financial forecasts, projections or models, or any information, documents or material made available to the Company or its Affiliates or representatives, whether orally or in writing, in management presentations, functional “break-out” discussions, responses to questions submitted on behalf of the Company or in any other form in expectation of the Transactions. Notwithstanding anything to the contrary, nothing in this Agreement shall limit the right of the Company and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement, nor will anything in this Agreement operate to limit any claim by the Company or any of its Affiliates for actual and intentional fraud in the making of the representations, warranties, covenants and agreements expressly set forth in this Agreement.
Section 4. Representations and Warranties by the Company. Except as set forth (x) in the SEC Reports filed with or furnished to the Commission after January 1, 2023 and at least one Business Day prior to the date of this Agreement, excluding any disclosure set forth in any risk factor section, any disclosure in any section relating to forward-looking statements and any other disclosure included in any such form, report, schedule, statement or other document to the extent such disclosure is predictive or forward-looking in nature or constitutes a “forward-looking statement” within the meaning of the Securities Act or the Exchange Act, or (y) in a correspondingly identified schedule separately provided by the Company to the Purchaser on the Effective Date (the “Disclosure Schedules”), it being understood that the disclosure of any fact or item in any section of the Disclosure Schedules will, should the existence of such fact or item be relevant to any other section, be deemed to be disclosed with respect to that other section to the extent that its relevance is reasonably apparent on its face, the Company represents and warrants to the Purchaser as of the Effective Date that:
4.1 Organization and Good Standing.
(a) The Company is a duly organized and validly existing Nevada corporation, has all requisite corporate power and authority to own its properties and conduct its business as presently conducted, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except where failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have Material Adverse Effect. Except as disclosed on Section 4.1(a) of the Disclosure Schedules, true and accurate copies of the Company’s Organizational Documents are publicly available in the SEC Reports.
(b) Each of the Company’s Subsidiaries is duly organized and validly existing under the Laws of its jurisdiction of organization, has all requisite corporate or other applicable entity power and authority to own its properties and conduct its business as presently conducted, is duly qualified to do business and is in good standing (where such concept is recognized under applicable Law) in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except where failure to be so qualified or in good standing (where such concept is recognized under applicable Law) would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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4.2 Corporate Power and Authority; Valid Issuance of Shares.
(a) The Company has all requisite corporate power and has taken all necessary corporate action required for the due authorization, execution, delivery and performance by the Company of this Agreement and the other Transaction Documents and the consummation of the Transactions. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Transactions have been duly authorized by the Company’s board of directors (the “Board”) or a duly authorized committee thereof and no further consent or authorization of the Company, its Board or its stockholders is required. This Agreement has been duly executed and delivered by the Company, and the other Transaction Documents to which it is a party will be duly executed and delivered by the Company, and each such agreement constitutes or will constitute a legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other Laws of general application affecting enforcement of creditors’ rights generally, and as limited by Laws relating to the availability of specific performance, injunctive relief, or other equitable remedies. Nevada Revised Statutes (“NRS”) 78.378 to 78.3793, inclusive, and NRS 78.411 to 78.444, inclusive, are inapplicable to the Purchaser and its Affiliates, this Agreement and the Transactions.
(b) The Shares and the Common Stock issuable upon conversion of the Shares (the “Conversion Shares”) have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, the Shares and Conversion Shares (collectively, the “Securities”) will be validly issued, fully paid and non-assessable, and shall be free and clear of all Liens (other than restrictions on transfer under the Transaction Documents or arising under applicable federal and state securities Laws), and will not be subject to preemptive rights or other similar rights of stockholders of the Company, and will effectively vest in the Purchaser good title to all such Securities, free and clear of all Liens (other than restrictions on transfer under the Transaction Documents or arising under applicable federal and state securities Laws). The respective rights, preferences, privileges and restrictions of the Preferred Stock and the Common Stock are as stated in the Company’s articles of incorporation or, in respect of the Preferred Stock, in the Certificates. As of the Closing, the shares of Common Stock to be issued upon any conversion or redemption of the Shares shall have been duly reserved for such issuance.
(c) Assuming the accuracy of the Purchaser’s representations in Section 3, the offer and sale of the Shares is exempt from the registration and prospectus delivery requirements of the Securities Act and the rules and regulations thereunder. Without limiting the foregoing, neither the Company nor, to the knowledge of the Company, any other person authorized by the Company to act on its behalf, has engaged
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in a general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) of investors with respect to offers or sales of the Shares and neither the Company nor, to the knowledge of the Company, any person acting on its behalf, has made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the offering or issuance of the Shares under this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act that would result in Regulation D under the Securities Act or any other applicable exemption from registration under the Securities Act not being available, nor will the Company take any action or steps that would cause the offering or issuance of the Shares under this Agreement to be integrated with other offerings.
4.3 Consents. Assuming the accuracy of the representations set forth in Section 3.3, neither the execution, delivery or performance of this Agreement by the Company, nor the consummation by it of the obligations and Transactions (including, without limitation, the issuance, the reservation for issuance and the delivery of the Shares and the provision to the Purchaser of the rights contemplated by the Transaction Documents) requires any consent of, authorization by, exemption from, filing with or notice to any Governmental Entity or any other Person, other than filings required under applicable federal and state securities Laws.
4.4 No Conflicts. The execution, delivery and performance of this Agreement and the consummation of the Transactions (including, without limitation, the issuance, the reservation for issuance and the delivery of the Shares and the provision to the Purchaser of the rights contemplated by the Transaction Documents) will not (a) result in a violation of the Company’s Organizational Documents or require the approval of the Company’s stockholders, (b) violate, conflict with or result in the breach of the terms, conditions or provisions of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right of termination, acceleration or cancellation under, any Material Contract to which the Company is a party, (c) result in any material respect in a violation of any Law, rule, regulation, order, judgment or decree (including, without limitation, federal and state securities Laws and regulations and regulations of any self- regulatory organizations to which the Company or its securities are subject) applicable to the Company or by which any material property or asset of the Company is bound or affected, (d) result in a violation of or require stockholder approval under any rule or regulation of Nasdaq, or (e) result in the creation of any encumbrance upon any of the Company’s assets, except in the case of clauses (b) or (e), for matters that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
4.5 Capitalization.
(a) The authorized capital stock of the Company consists of 400,000,000 shares of Common Stock and 2,500,000 shares of Preferred Stock. There are (i) 257,969,755 shares of Common Stock issued and outstanding; (ii) 1,466,666 shares of Preferred Stock issued and outstanding, all of which are designated as Series A Preferred Stock; (iii) 21,999,990 shares of Common Stock reserved for issuance upon the conversion of the Series A Preferred Stock; (iv) 2,327,759 shares of Common Stock reserved for issuance upon the exercise of stock options outstanding (“Options”); (v) 1,506,437 shares of Common Stock issuable (and such number are reserved for issuance) upon service-based vesting of restricted stock units for the issuance of Common Stock (the “RSUs”)
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outstanding; (vi) 296,299 shares of Common Stock issuable (and such number are reserved for issuance) upon performance-based vesting of restricted stock units (the “PSUs”) outstanding, assuming maximum performance levels are achieved, and (vii) 186,397 shares of Common Stock held by the Company in its treasury. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.
(b) No bonds, debentures, notes or other indebtedness having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which the stockholders of the Company may vote (“Voting Debt”) are issued and outstanding. Except (i) pursuant to any cashless exercise provisions of any Options or pursuant to the surrender of shares to the Company or the withholding of shares by the Company to cover tax withholding obligations under Options, RSUs or PSUs, and (ii) as set forth in Section 4.5(a) of the Disclosure Schedules, there are no outstanding equity securities of the Company, the Company does not have and is not bound by any outstanding options, preemptive rights, rights of first offer, warrants, phantom rights, calls, or other similar rights or written commitments or agreements calling for the purchase, redemption or issuance of, or securities or rights convertible into, or exchangeable for, any shares of Common Stock or any other equity securities of the Company or Voting Debt or any securities representing the right to purchase or otherwise receive any equity securities of the Company (including any stockholder rights plan or agreement) (collectively, “Company Securities”), or any obligations of the Company or any of its Subsidiaries to make any payments based on the price or value of any Company Securities. Neither the Company nor any of its Subsidiaries is party to any stockholders’ agreement, voting trust agreement or other similar agreement or understanding relating to any Company Securities or any other agreement relating to the disposition, voting or dividends with respect to any Company Securities. Except as contemplated by the Registration Rights Agreement, the Company has not granted or agreed to grant, and is not under any obligation to provide, any right to register under the Securities Act any of the Company Securities. The Company is not party to a stockholder rights agreement, “poison pill” or similar anti-takeover agreement or plan.
4.6 Material Contracts. Each Material Contract is the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other Laws of general application affecting enforcement of creditors’ rights generally, and as limited by Laws relating to the availability of specific performance, injunctive relief or other equitable remedies. The Company is in compliance with all material terms of the Material Contracts to which it is party, and there has not occurred any breach, violation or default or any event that, with the lapse of time, the giving of notice or the election of any Person, or any combination thereof, would constitute a breach, violation or default by the Company under any such Material Contract or, to the knowledge of the Company, by any other Person to any such contract except where such breach, violation or default would not have a Material Adverse Effect. The Company has not been notified in writing that any counterparty to any Material Contract intends, outside of the ordinary course, to cancel, terminate, not renew or exercise an option under any Material Contract, whether in connection with the Transactions or otherwise.
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4.7 Exchange Act; Nasdaq.
(a) The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action intended to, or which, to the knowledge of the Company, is reasonably likely to, have the effect of terminating the registration of the Common Stock under the Exchange Act, nor has the Company received as of the date of this Agreement any written notification that the Commission is contemplating terminating such registration.
(b) The Common Stock is listed on Nasdaq. To the Company’s knowledge, there are no proceedings to revoke or suspend such listing or the listing of the Shares. The Company is in compliance in all material respects with the requirements of Nasdaq for continued listing of the Common Stock thereon and any other Nasdaq listing and maintenance requirements, and the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the Transactions (including the issuance of the Shares) will not result in any noncompliance by the Company with any such requirements.
4.8 SEC Reports; Financial Statements.
(a) The Company has, since January 1, 2023, filed with or furnished to the Commission, on a timely basis (giving effect to extensions under Rule 12b-25), all required reports, proxy statements, schedules, forms and other documents required to be filed or furnished by the Company with the Commission pursuant to the Securities Act or the Exchange Act since January 1, 2023 (the foregoing, together with all exhibits thereto, collectively, the “SEC Reports”). Each of the SEC Reports, as of its respective filing date, complied in all material respects with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations of the Commission thereunder applicable to such SEC Reports, and, except to the extent that information contained in any SEC Reports has been revised, amended or superseded by a later filed SEC Report filed and publicly available prior to any date as to which this representation speaks, none of the SEC Reports as of such respective dates of filing or furnishing (or, if revised, amended or superseded by a later filed SEC Report, as of the date of the filing or furnishing of such revision or amendment) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(b) The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are reasonably designed to ensure that material information relating to the Company and its Subsidiaries is made known to the individuals responsible for the preparation of the Company’s filings with the Commission, and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors and the audit committee of the Board (A) any significant deficiency or material weakness in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that is reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information, and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.
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(c) There is no transaction, arrangement or other relationship between the Company or any of its Subsidiaries and an unconsolidated or other off-balance sheet entity that is required to be disclosed by the Company in its SEC Reports and is not so disclosed.
(d) The financial statements of the Company and its Subsidiaries included in the SEC Reports (i) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission with respect thereto, in each case as of the date such SEC Report was filed (or, if any such SEC Report was revised, amended or superseded by a later filed SEC Report, as of the date of the filing or furnishing of such revision or amendment), and (ii) have been prepared in all material respects in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) applied on a consistent basis during the periods involved (except as may be indicated in such financial statements or the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows of the Company and its Subsidiaries for the periods then ended (subject, in the case of unaudited quarterly statements, to the absence of footnote disclosures and normal year-end audit adjustments).
(e) Except for (i) those liabilities that are reflected or reserved for in the consolidated financial statements of the Company included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, (ii) liabilities incurred since December 31, 2024 in the ordinary course of business consistent with past practice, and (iii) liabilities that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Company and its Subsidiaries do not have any liability or obligation of any nature whatsoever (whether accrued, absolute, contingent or otherwise).
4.9 Absence of Litigation. There is no claim, action, suit, arbitration, investigation or other proceeding pending against, or to the knowledge of the Company, threatened, in writing, against or affecting, the Company or any of its Subsidiaries or any of their respective properties or, to the knowledge of the Company, any of their respective officers or directors before any Governmental Entity, in each case other than legal proceedings that are not reasonably expected to result in a Material Adverse Effect. Neither the Company, any of its Subsidiaries, or any director or officer thereof, is or has been the subject of any action involving a claim of a material violation of or liability under applicable federal or state securities Laws or a claim of breach of fiduciary duty relating to the Company or any of its Subsidiaries. Except as set forth on Section 4.9 of the Disclosure Schedules, there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission of the Company, any of its Subsidiaries or any current or former director or officer of the Company or any of its Subsidiaries. The Company has not received any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act and, to the Company’s knowledge, the Commission has not issued any such order.
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4.10 Compliance with Law. The Company and each of its Subsidiaries is and, since January 1, 2023 has been, in compliance with all Laws, in each case, that are applicable to the Company or any of its Subsidiaries, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and each of its Subsidiaries hold all licenses, franchises, permits, certificates, approvals and authorizations from Governmental Entities necessary for the lawful conduct of their respective businesses, except where the failure to hold the same would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
4.11 Absence of Changes. Since January 1, 2025, (a) except for the execution and performance of this Agreement, the other Transaction Documents and the Other Documents and the discussions, negotiations and transactions related thereto and any transaction of the type contemplated by this Agreement, the Transaction Documents, the Other Documents or other extraordinary transaction, the business of the Company and its Subsidiaries has been carried on and conducted in all material respects in the ordinary course of business, consistent with past practice, and (b) there has not been any Material Adverse Effect or any event or occurrence that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
4.12 Title. Each of the Company and its Subsidiaries has (i) good and marketable title to its property that is owned real property, (ii) to the knowledge of the Company, valid leases to its property that is leased real property, and (iii) good and valid title to all of its other property, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
4.13 Taxes.
(a) Each of the Company and its Subsidiaries has filed all material Tax Returns required to have been filed, such Tax Returns were accurate in all material respects, and all Taxes due and payable (taking into account any extensions properly obtained) by the Company and its Subsidiaries (whether or not shown on any Tax Return) have been timely paid, except for those which are being contested in good faith and by appropriate proceedings and in respect of which adequate reserves with respect thereto are maintained in accordance with U.S. GAAP.
(b) Each of the Company and its Subsidiaries has duly and timely withheld all Taxes required to be withheld, and such withheld Taxes have been either duly and timely paid to the proper taxing authority or properly set aside in accounts for such purpose.
(c) No examination, audit, claim, suit, action, proceeding or investigation of any Tax Return relating to any Taxes of the Company or any of its Subsidiaries or with respect to any Taxes due from or with respect to the Company or any of its Subsidiaries is currently in progress, pending or threatened in writing.
(d) During the two-year period ending on the date of this Agreement, the Company was not a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the United States Internal Revenue Code of 1986 (the “Code”)) in a transaction intended to qualify for tax-free treatment under Section 355 of the Code.
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(e) Neither the Company nor any of its Subsidiaries has engaged in, or has any liability or obligation with respect to, any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4.
(f) Neither the Company nor any of its Subsidiaries (i) has been a member of an affiliated, consolidated, combined or unitary group, other than one comprised only of the Company and/or one or more of its Subsidiaries, (ii) is party to any agreement relating to the apportionment, sharing, assignment or allocation of Taxes (other than (x) an agreement solely between or among the Company and/or one or more of its Subsidiaries or (y) Tax indemnification provisions in ordinary course commercial agreements that are not primarily related to Taxes), (iii) has entered into a closing agreement pursuant to Section 7121 of the Code, or any similar provision of state, local or non-U.S. Law, which would be binding on the Company or its applicable Subsidiary after the Closing Date, or (iv) has any liability for the Taxes of any Person (other than the Company or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or non-U.S. Law) or as a transferee or successor.
(g) The Company is not and has not been during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, a “United States real property holding Corporation” within the meaning of Section 897(c)(2) of the Code.
4.14 Employee Matters.
(a) Except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) each Plan complies with, and has been operated and administered in compliance with, its terms and all applicable Laws (including ERISA and the Code), (ii) the Company and each of its Subsidiaries has each filed all reports, returns, notices and other documentation required by ERISA, the Code or other applicable Laws to be filed by such Person with any Governmental Entity with respect to each Plan, (iii) with respect to any Plan, no action, Lien, lawsuit, claim or complaint (other than routine claims for benefits, appeals of such claims and domestic relations order proceedings) is pending or, to the knowledge of the Company, threatened, and (iv) to the knowledge of the Company, no event has occurred with respect to a Plan which would reasonably be expected to result in a liability of the Company or any of its Subsidiaries to any Governmental Entity or adversely affect the qualified status for any such Plan. None of the Company, any of its Subsidiaries or any other entity which, together with the Company or any of its Subsidiaries, would be treated as a single employer under Section 4001 of ERISA or Section 414 of the Code has, at any time during the last six years, maintained, sponsored or contributed to any employee benefit plan that is subject to Title IV of ERISA, including any “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA).
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(b) Except as would not, individually or in the aggregate, have a Material Adverse Effect: (i) neither the Company nor any of its Subsidiaries is party to any collective bargaining agreement or other contract or agreement with any labor organization or other representative of any of the employees of the Company or any of its Subsidiaries, nor is any such contract or agreement presently being negotiated; (ii) to the knowledge of the Company, no campaign is being conducted to solicit cards from any of the employees of the Company or any of its Subsidiaries to authorize representation by any labor organization, and no such campaign has been conducted since January 1, 2023; (iii) no labor strike, slowdown, work stoppage, dispute, lockout or other labor controversy is in effect or, to the knowledge of the Company, threatened in writing, and neither the Company nor any of its Subsidiaries has experienced any such labor controversy since January 1, 2023; (iv) no unfair labor practice charge or complaint is pending or, to the knowledge of the Company, threatened in writing with respect to any employment practice of the Company or any of its Subsidiaries; (v) no action, complaint, charge, inquiry, proceeding or investigation by or on behalf of any current or former employee, labor organization or other representative of the employees of the Company or any of its Subsidiaries (including persons employed jointly by such entities with any other staffing or other similar entity) is pending or, to the knowledge of the Company, threatened in writing; (vi) the Company and each of its Subsidiaries is in compliance with all applicable Laws, agreements, contracts, policies, plans and programs relating to employment, employment practices, compensation, benefits, hours, terms and conditions of employment, health and safety, employment discrimination, disability rights or benefits, affirmative action, workers’ compensation, unemployment insurance, employment and reemployment rights of members of the uniformed services, secondment, employee leave issues, payment of social security and other similar Taxes, termination of employment (including any obligation pursuant to the Worker Adjustment and Retraining Notification Act of 1988, as amended), the classification of employees as exempt or non-exempt from overtime pay requirements, the provision of meal and rest breaks and pay for all working time, and the proper classification of individuals as non-employee contractors or consultants; and (vii) the Company and each of its Subsidiaries is in compliance with all applicable Laws relating to child labor, forced labor and involuntary servitude.
4.15 Product Matters; Compliance with Laws.
(a) Except as would not, individually or in the aggregate, have a Material Adverse Effect: (i) the Company and each of its Subsidiaries is, and since January 1, 2023 has been, in compliance in all material respects with all applicable Laws (including the FDC Act, the Public Health Security and Bioterrorism Preparedness and Response Act, and similar Laws, relating to the manufacture, storage, transportation, import, export, sale, handling, distribution, packaging, packing, labeling and advertising of the Company’s or any of its Subsidiaries’ products (the “Products”)), and the Company and each of its Subsidiaries has paid, filed or otherwise complied with all applicable fees, renewals, registrations, licenses, reports and other similar obligations; (ii) all of the Products meet, and since January 1, 2023 have met, all standards for quality and workmanship prescribed by industry standards, contractual agreements or product labels and labeling; (iii) neither the Company nor any of its Subsidiaries has received in writing any deficiency notice, allegation of non-compliance, seizures, injunctions, warning letters, notices of violation or import alerts indicating or alleging that the Company’s or its Subsidiaries’ processes or Products do not comply with any applicable Laws, including those relating to the registration or certification of the Products or Product labeling; and (iv) the Products have received all applicable governmental approvals required for their sale and use.
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(b) Without in any way limiting the generality of the foregoing, except as would not, individually or in the aggregate, have a Material Adverse Effect, since January 1, 2023:
(i) neither the Company nor any of its Subsidiaries has sold or distributed any Products which are or were “adulterated,” “misbranded” or otherwise violative within the meaning of the FDC Act or any comparable state Law, or are articles that may not be introduced into interstate commerce under the provisions of Sections 404 or 505 of the FDC Act;
(ii) all of the operations of the Company and its Subsidiaries are and have been in compliance, in all material respects, with all applicable Laws, guidelines and policies issued or implemented by the U.S. Food and Drug Administration (the “U.S. FDA”), the U.S. Department of Agriculture (the “USDA”) and/or any other applicable Governmental Entity, including those related to facility registration, recordkeeping, prior notice of imported food, the reportable food registry, current good manufacturing practices, allergens and food safety;
(iii) the Company and each of its Subsidiaries has not (x) received any written notice from the U.S. FDA or any comparable state Governmental Entity of any material violation of the FDC Act or of comparable state Laws regarding any Products sold by the Company or any of its Subsidiaries; (y) been subject to any, nor is there any pending, material adverse inspection, finding of deficiency, finding of non-compliance, regulatory or warning letter, investigation, suspension of or refusal to renew a food facility registration, or other compliance or enforcement action, from or by the U.S. FDA, USDA and/or any other Governmental Entity with respect to the Products, or any facility used in the manufacture, handling, storage or distribution of the Products; or (z) undertaken any recall of Products that may have been adulterated, misbranded or otherwise made in violation of the FDC Act or the rules and regulations thereunder or comparable state Laws, except for recalls that have been reported to the U.S. FDA and have been completed in accordance with U.S. FDA’s requirements;
(iv) there has not been, nor is there any currently pending or, to the knowledge of the Company, threatened, recall or post-sale warning in respect of any Product, except for recalls that have been reported to the U.S. FDA and have been completed in accordance with the U.S. FDA’s requirements, and neither the Company nor any of its Subsidiaries has received written notice of any material action or proceeding involving any Product designed, manufactured, distributed or sold by or on behalf of the Company or any of its Subsidiaries resulting from an alleged defect in design or manufacture, any alleged hazard or impurity, or any alleged failure to warn, or from any alleged breach of implied warranties or representations, or any alleged noncompliance with any Laws, other than immaterial notices or claims that have been settled or resolved prior to the date of this Agreement;
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(v) all labels for all Products manufactured, sold or distributed by the Company or any of its Subsidiaries are, and have been, correct in all material respects, and comply in all material respects, with all requirements of all applicable Laws including those governing “organic,” “nutrient content,” “structure-function” and “health” claims;
(vi) all promotional and advertising materials used or produced by the Company or any of its Subsidiaries are, and have been, in material compliance with all applicable Laws (including those of the U.S. FDA, United States Federal Trade Commission and/or any other applicable Governmental Entity); and
(vii) none of the Company, any of its Subsidiaries or any Person acting on their behalf has made an untrue statement of a material fact or fraudulent statement to any Governmental Entity, failed to disclose a material fact required by applicable Law to any Governmental Entity or committed an act, made a statement, or failed to make a statement that, at the time such disclosure was made, would reasonably be expected to constitute a material violation of any applicable Laws.
4.16 FCPA; Illegal Payments.
(a) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, since January 1, 2023, none of the Company, any of its Subsidiaries or any officer or director or, to the knowledge of the Company, employee, agent, representative or consultant, acting on behalf of the Company or any of its Subsidiaries (and only in their capacities as such), has, in connection with the business of the Company: (i) unlawfully offered, paid, promised to pay or authorized the payment of, directly or indirectly, anything of value, including money, loans, gifts, travel or entertainment, to any Government Official with the purpose of (A) influencing any act or decision of such Government Official in his official capacity; (B) inducing such Government Official to perform or omit to perform any activity in violation of his legal duties; (C) securing any improper advantage; or (D) inducing such Government Official to influence or affect any act or decision of such Governmental Authority, except, with respect to the foregoing clauses (A)—(D), as permitted under the U.S. Foreign Corrupt Practices Act or other applicable Law; (ii) made any illegal contribution to any political party or candidate; (iii) made, offered or promised to pay any unlawful bribe, payoff, influence payment, kickback, unlawful rebate or other similar unlawful payment of any nature, directly or indirectly, in connection with the business of the Company, to any Person, including any supplier or customer; (iv) knowingly established or maintained any unrecorded fund or asset or made any false entry on any book or record of the Company or any of its Subsidiaries for any purpose; or (v) otherwise violated the U.S. Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010, as amended, or any other applicable anti-corruption or anti-bribery Law.
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(b) For purposes of this Section: “Government Official” means any officer or employee of a Governmental Authority or any department, agency or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such Governmental Authority or department, agency or instrumentality, or for or on behalf of any such public international organization, or any political party, party official or candidate thereof, excluding officials of the governments of the United States, the several states thereof, any local subdivision of any of them or any agency, department or unit of any of the foregoing; and “Governmental Authority” means any foreign government, any political subdivision thereof or any corporation or other entity owned or controlled by any government or any sovereign wealth fund, excluding the governments of the United States, the several states thereof, any local subdivision of any of them or any agency, department or unit of any of the foregoing.
4.17 Brokers. Except for UBS Securities LLC and Goldman Sachs & Co. LLC, the fees and expenses of which shall be the obligation of the Company, there is no investment banker, broker, finder, financial advisor, placement agent or other Person that has been retained by or is authorized to act on behalf of the Company who might be entitled to any fee or commission in connection with the execution of the Transaction Documents or the consummation of the Transactions.
4.18 Environmental Matters. Except as would not, individually or in the aggregate, have a Material Adverse Effect, the Company and each of its Subsidiaries: (i) is in compliance with any and all applicable foreign, federal, state and local Laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) has received and is in compliance with all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its business and (iii) has not received written notice of any actual or potential liability under any Environmental Law. Neither the Company nor any of its Subsidiaries has been named as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.
4.19 Intellectual Property Matters. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) the Company or one of its Subsidiaries (A) owns all Intellectual Property registrations and applications, and all other Intellectual Property, owned or purported to be owned by the Company or one of its Subsidiaries and all such registrations and applications are filed in their respective names, the registrations of which are subsisting, and to the knowledge of the Company, valid and enforceable, and (B) has the right to use all other Intellectual Property used in the conduct of the businesses of the Company or any of its Subsidiaries; (ii) to the knowledge of the Company, the conduct of the businesses of the Company and its Subsidiaries does not infringe the Intellectual Property of any third party, and no person is infringing any Intellectual Property owned by the Company or its Subsidiaries; (iii) the Company and its Subsidiaries take reasonable actions to protect the trade secrets and confidential information owned by the Company or its Subsidiaries and the security and operation of their software, websites and systems (and the data therein), and, to the knowledge of the Company, there has been no instance of unauthorized use or disclosure, security breach, malfunction or outage of the same; and (iv) since January 1, 2023, there has been no judicial or administrative order, decree or judgment to which the Company or any of its Subsidiaries is a party or by which they are bound that restricts any right to any proprietary Intellectual Property owned by the Company or used in the conduct of the businesses of the Company or its Subsidiaries.
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4.20 Data Privacy; Cybersecurity. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) the Company and its Subsidiaries’ information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications and databases (collectively, “IT Systems”) are adequate for, and operate and perform as required in connection with the operation of the businesses of the Company or any of its Subsidiaries, and, to the Knowledge of the Company, are free and clear of all bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants; (ii) the Company and its Subsidiaries have implemented and maintained commercially reasonable controls, policies, procedures, and safeguards designed to maintain and protect their confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and data (including all personal, personally identifiable, sensitive, confidential or regulated data (“Personal Data”)) used in connection with their businesses; (iii) there have been no breaches, violations, outages or unauthorized uses of or accesses to such IT Systems and data, except for those that have been remedied without material cost or liability or the duty to notify any other person, nor any incidents under internal review or investigations relating to the same; and (iv) the Company and its Subsidiaries are presently in compliance with applicable Laws and all judgments, orders, rules and regulations of any court or arbitrator or Governmental Entity, legally binding policies and contractual obligations relating to the privacy and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access, misappropriation or modification.
4.21 Suppliers and Customers. Since January 1, 2023, to the knowledge of the Company, none of any of the top 10 suppliers, top 10 distributors, top 10 customers or top 10 vendors has terminated or canceled, or threatened, in writing, to terminate or cancel, the business relationship between the Company and such top 10 supplier, top 10 distributor, top 10 customer or top 10 vendor.
4.22 Limitation. Except as expressly set forth in Section 3 or in any other Transaction Document or Other Document, the Company acknowledges and agrees that neither the Purchaser nor any other Person has made any representation or warranty, express or implied, at Law or in equity, by statute or otherwise, and any other representations or warranties are hereby expressly disclaimed by the Purchaser. Without limiting the generality of the foregoing, the Company hereby expressly disclaims reliance on any representation, warranty or other statement, whether written or oral, made by, on behalf of or relating to the Purchaser, its Affiliates or any Transaction Document, other than the representations and warranties expressly set forth in Section 3 or in any other Transaction Document or Other Document. Notwithstanding anything to the contrary, nothing in this Agreement shall limit the right of the Company and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement or in any other Transaction Document or Other Document, nor will anything in this Agreement operate to limit any claim by the Company or any of its Affiliates for actual and intentional fraud in the making of the representations and warranties expressly set forth in Section 3 or in any other Transaction Document or Other Document.
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4.23 No Other Representations and Warranties. The representations and warranties set forth in this Section 4 and in any other Transaction Document are the only representations and warranties made by the Company or any of its Affiliates with respect to the Shares or any other matter relating to the Transactions. Except as specifically set forth in this Agreement or in any other Transaction Document, (a) the Company makes no warranty, express or implied, as to any matter relating to the Shares or any other matter relating to the Transactions, including as to (i) the operation of the business of the Company and its Subsidiaries after the Closing in any manner or (ii) the probable success or profitability of the business of the Company and its Subsidiaries after the Closing, and (b) none of the Company, any of its Affiliates or any of their respective stockholders, directors, officers, employees, agents or representatives will have or be subject to any liability or indemnification obligation to the Purchaser or any other Person resulting from the distribution or delivery to the Purchaser or its Affiliates or representatives of, or the Purchaser’s use of, any information relating to the Company or any of its Affiliates, including any summary business descriptions, financial forecasts, projections or models, or any information, documents or material made available to the Purchaser or its Affiliates or representatives, whether orally or in writing, in management presentations, functional “break-out” discussions, responses to questions submitted on behalf of the Purchaser or in any other form in expectation of the Transactions. Notwithstanding anything to the contrary, nothing in this Agreement shall limit the right of the Purchaser and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement, nor will anything in this Agreement operate to limit any claim by the Purchaser or any of its Affiliates for actual and intentional fraud in the making of the representations, warranties, covenants and agreements expressly set forth in this Agreement.
Section 5. Covenants.
5.1 Authorized Common Stock. At any time that any Shares are issued and outstanding, the Company shall from time to time take all lawful action within its control to cause the authorized capital stock of the Company to include a sufficient number of authorized but unissued shares of Common Stock to satisfy the conversion requirements of all shares of Preferred Stock then issued and outstanding. All shares of Common Stock delivered upon conversion of the Preferred Stock shall be newly issued shares or shares held in treasury by the Company, shall have been duly authorized and validly issued and shall be fully paid and nonassessable, and free and clear of any Liens (other than Liens incurred by the Purchaser, restrictions arising under applicable securities Laws and the transfer restrictions expressly set forth in this Agreement or any other Transaction Document).
5.2 Expenses. Each of the Company and the Purchaser shall be liable for, and will pay, its own expenses incurred in connection with the negotiation, preparation, execution and delivery of this Agreement, including, without limitation, attorneys’ and consultants’ fees and expenses.
5.3 Election of Directors.
(a) Effective as of the Closing, the Purchaser shall have the right to designate two designees (the “Purchaser Designees”) to be nominated by the Company for election to the Board, and the Board shall include such Purchaser Designees in the slate of nominees to be elected or appointed to the Board at the next (and each applicable subsequent) annual or special meeting of stockholders, subject to each Purchaser Designee’s satisfaction of all applicable requirements regarding service as a director of the Company under applicable Law and Nasdaq rules (or the rules of the principal market on
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which the Common Stock is then listed) regarding service as a director and such other criteria and qualifications for service as a director applicable to all directors of the Company as in effect on the date thereof. The Purchaser and the Company agree that each such Purchaser Designee must be (i) qualified to serve as a member of the Board under all applicable and bona fide corporate governance policies and guidelines of the Company and the Board, and all applicable legal, regulatory and stock exchange requirements, and (ii) to the extent feasible, but subject to any commercial or competitive considerations and applicable Law, an individual determined by the Purchaser (in its sole and reasonable discretion) to be in a leadership position of the Purchaser or one of its Affiliates; provided, however, that, if the Purchaser designates an individual to serve as a director that is not an employee of the Purchaser or its Affiliates, such person shall be reasonably acceptable to the Company. In no event shall any such Purchaser Designee’s relationship with the Purchaser or its Affiliates (or any other actual or potential lack of independence resulting therefrom) be considered to disqualify such Purchaser Designee from being a member of the Board pursuant to this Section 5.3(a). In the event of the death, disability, resignation or removal of any Purchaser Designee as a member of the Board, the Purchaser shall be entitled to designate a Purchaser Designee to replace such Purchaser Designee and, subject to this Section 5.3(a), the Company’s Organizational Documents and any applicable provisions of the NRS, the Company shall cause such Purchaser Designee to fill such resulting vacancy.
(b) Notwithstanding the foregoing, upon the earlier of (i) the Purchaser (together with its Affiliates) ceasing to beneficially own at least 31,639,121 shares of the Company’s outstanding Common Stock (determined on an as-converted basis, and as appropriately adjusted for any applicable stock split or other recapitalization or reclassification) and (ii) the Captaincy Termination Event (the occurrence of either event, the “Second Seat Fallaway Event”), the Purchaser’s right to designate two designees for nomination pursuant to Section 5.3(a) shall be reduced to one designee. At such time, at the written request of the Board, one Purchaser Designee (which may be selected by the Purchaser or, if the Purchaser does not make such selection within three Business Days of receipt of such written request, by the Company) shall immediately resign, and the Purchaser shall cause such Purchaser Designee to immediately resign, from the Board effective as of the date of the Second Seat Fallaway Event.
(c) Notwithstanding the foregoing, upon the Purchaser (together with its Affiliates) ceasing to beneficially own at least 10,999,995 shares of the Company’s outstanding Common Stock (determined on an as-converted basis, and as appropriately adjusted for any applicable stock split or other recapitalization or reclassification) (the beneficial ownership of such minimum number of shares, the “Beneficial Ownership Requirement”), the Purchaser’s right to designate any designees for nomination pursuant to Section 5.3(a) shall terminate in full. At such time, at the written request of the Board, all Purchaser Designees shall immediately resign, and the Purchaser shall cause all Purchaser Designees to immediately resign, from the Board effective as of the first date on which the Beneficial Ownership Requirement ceases to be satisfied.
(d) In the event that any Purchaser Designee fails to immediately resign and the Purchaser fails to cause such Purchaser Designee to immediately resign, at such time as required pursuant to Sections 5.3(b) or 5.3(c), then within 10 days of such requirement not being satisfied, the Board may remove such Purchaser Designee.
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(e) Effective as of the Closing, the size of the Board has been increased to 10 members, and Israel Kontorovsky and Michael Del Pozzo have been elected to the Board as the initial Purchaser Designees to serve for terms expiring at the 2026 annual meeting of the Company’s stockholders.
(f) For so long as the Beneficial Ownership Requirement is satisfied, the Company shall not decrease the size of the Board if such decrease would require the resignation of any Purchaser Designee without the consent of the Purchaser (which may be withheld in its sole discretion).
(g) If (A) Purchaser is entitled to more than one Purchaser Designee, (B) the Purchaser Designees constitute less than 20% of the total number of the directors on the Board, and (C) Purchaser reasonably determines, in its sole discretion, that the Purchaser Designees would need to constitute no less than 20% of the total number of the directors on the Board for Purchaser to account for its investment in the Company under the equity method of accounting in accordance with U.S. GAAP ASC 323 “Equity Method Investments”, then from and after the conversion of some or all of the Preferred Stock into Common Stock (the “Conversion”), Purchaser shall be entitled to designate the minimum number of additional Purchaser Designees as would be necessary to ensure that the Purchaser Designees constitute no less than 20% of the total number of the directors on the Board. For the avoidance of doubt, the Purchaser’s right to designate any such additional Purchaser Designees shall automatically terminate upon the earlier of (i) the Second Seat Fallaway Event and (ii) the Purchaser ceasing to account for its investment in the Company under the Equity Method. In either such case, any such additional Purchaser Designees shall immediately resign, and the Purchaser shall cause any such additional Purchaser Designees to immediately resign, from the Board effective as of the date of such event.
(h) The Company shall indemnify the Purchaser Designees and provide the Purchaser Designees with director and officer insurance to the same extent as it indemnifies and provides such insurance to other members of the Board, pursuant to the Company’s Organizational Documents, the NRS or otherwise.
5.4 Information Rights. Following the Closing, for so long as the Beneficial Ownership Requirement is satisfied, the Company agrees to provide the Purchaser with the following:
(a) within 60 days after the end of each fiscal year of the Company, (A) an audited, consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year, (B) an audited, consolidated income statement of the Company and its Subsidiaries for such fiscal year and (C) an audited, consolidated statement of cash flows of the Company and its Subsidiaries for such fiscal year; provided that this requirement shall be deemed to have been satisfied if the Company files its annual report on Form 10-K for the applicable fiscal year with the Commission on or prior to the date such report is due under the Exchange Act and applicable Commission regulations (including any extensions granted pursuant to Rule 12b-25);
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(b) within 45 days after the end of each of the first three quarters of each fiscal year of the Company, (A) an unaudited, consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal quarter, (B) an unaudited, consolidated income statement of the Company and its Subsidiaries for such fiscal quarter and (C) an unaudited, consolidated statement of cash flows of the Company and its Subsidiaries for such fiscal quarter; provided that this requirement shall be deemed to have been satisfied if the Company files its quarterly report on Form 10-Q for the applicable fiscal quarter with the Commission on or prior to the date such report is due under the Exchange Act and applicable Commission regulations (including any extensions granted pursuant to Rule 12b-25); and
(c) reasonable access, to the extent reasonably requested by the Purchaser to certain of the Company’s and its Subsidiaries’ books and records, and to discuss its and their affairs, finances and accounts with its and their officers, all upon reasonable notice and at a reasonable time; provided that any investigation pursuant to this Section 5.4 shall be conducted in a manner as not to interfere unreasonably with the conduct of the business of the Company and its Subsidiaries and without requiring the Company to incur any cost not reimbursed by the Purchaser;
provided that the Company shall not be obligated to provide such access or materials if the Company determines, in its reasonable judgment, that doing so would reasonably be expected to (i) result in the disclosure of trade secrets or competitively sensitive information, (ii) violate applicable Law, an applicable order or a contract or obligation of confidentiality owing to a third party, or (iii) jeopardize the protection of an attorney-client privilege, attorney work product protection or other legal privilege.
5.5 Cooperation. In the event the issuance of the Shares hereunder or the Transactions are subject to regulatory review by a Governmental Entity, the Company and the Purchaser shall reasonably cooperate as necessary with respect to such review.
5.6 Confidentiality. Each party hereto agrees that any information relating to this Agreement or any other Transaction Document or any of the Transactions, including their existence, shall be kept confidential in accordance with Section 6.02(a) of the Transaction Agreement, which shall be deemed to apply, mutatis mutandis, to the parties to this Agreement as if fully set forth herein.
5.7 Standstill Restrictions.
(a) From the Closing until the seventh anniversary of the Effective Date, the Purchaser covenants and agrees that, without the prior written consent of the Company or its Board, the Purchaser will not, and will not cause or permit any of its Subsidiaries or controlled Affiliates to, directly or indirectly:
(i) except as permitted by Section 5.9, acquire, offer to acquire or agree to acquire, directly or indirectly, by purchase or otherwise, any voting securities (it being understood that, for purposes of this Agreement, “voting securities” shall include any derivative instrument related to or referencing shares of Common Stock, whether settled through cash or physical delivery (“Derivative Securities”)) or direct or indirect rights to acquire any voting securities of the Company or any of its Subsidiaries, or of any successor to or person in control of the Company, or any assets of the Company or any of its Subsidiaries or division thereof or of any such successor or controlling person;
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(ii) except as set forth in Section 5.3, make, or in any way participate in, directly or indirectly, any (x) “solicitation” of “proxies” (as each of those terms is defined in Commission Rule 14a-1) to vote, or seek to advise or influence any person or entity with respect to the voting of (including, without limitation, through written consent), any voting securities of the Company or (y) tender offer or solicitation of tender of the Company’s voting securities;
(iii) make any public announcement or proposal with respect to any extraordinary transaction involving the Company or its securities (including, without limitation, voting securities) or assets;
(iv) form, join or in any way participate in a “group” (as defined for purposes of Section 13(d)(3) of the Exchange Act) in connection with any of the foregoing;
(v) except as set forth in Section 5.3, take any public action to remove any director from the Board or change the size or composition of the Board, or amend the Company’s Organizational Documents;
(vi) except as set forth in Section 5.3, otherwise take public action, alone or in concert with any other Person, to seek or propose to control the management, the Board or any policies or affairs of the Company or any of its Subsidiaries; or
(vii) knowingly advise, assist, encourage or direct any other Person to do any of the foregoing.
(b) Notwithstanding Section 5.7(a), if (i) the Company enters into a binding definitive agreement with any third party providing for a Change of Control, (ii) any Person or group (other than the Purchaser or any of its Affiliates) acquires beneficial ownership of more than 35% of the outstanding Common Stock or assets of the Company, (iii) any Bona Fide Acquiror makes a public offer or proposal to the Company which would result in such Bona Fide Acquiror acquiring beneficial ownership of more than 35% of the outstanding Common Stock or assets of the Company, or publicly announces a proposal to effect or an intention to engage in a transaction involving a Change of Control of the Company (any such public offer, proposal or announced intention, a “Third Party Proposal”), or (iv) any Bona Fide Acquiror publicly announces a tender or exchange offer for more than 35% of the outstanding Common Stock of the Company and files a tender offer statement under Section 14(d)(1) or 13(e)(1) of the Exchange Act, then the provisions of Section 5.7(a) will terminate; provided, however, that if the Person, group or Bona Fide Acquiror is solely the Person set forth on Section 5.7 of the Disclosure Schedules, the foregoing references to 35% shall be deemed to be 50%. If the Company engages an investment bank to explore or engage in a process that could lead to a Change of Control
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of the Company, the Company will, within 30 days of such engagement, provide the Purchaser with notice of such action; provided that, if the Company does not involve the Purchaser as a participant in such process (including providing Purchaser with all non-public information provided to other participants in such process), the Purchaser will not be subject to the restrictions set forth in Section 5.7(a) for so long as the Company is engaged in such particular process. Except as set forth in this Section 5.7(b) or as otherwise provided in applicable Law, none of the Company, any of its Affiliates or any of their respective directors, officers, employees, agents or representatives will have any legal, fiduciary or other duty to the Purchaser with respect to the manner in which the sale process is conducted. Furthermore, nothing in this Agreement shall be construed to prohibit the Purchaser or its Affiliates (whether during the process described in the foregoing sentence or otherwise) from submitting to the Board or the Chief Executive Officer of the Company one or more confidential proposals or offers for a potential transaction (including a Change of Control transaction) with or relating to the Company. Notwithstanding anything to the contrary, nothing in this Section 5.7 will limit the ability of (i) the Purchaser to (x) exercise its rights pursuant to Sections 5.3 or 5.9, (y) have its Shares converted or redeemed in accordance with the Certificates, or (z) vote any Common Stock beneficially owned by the Purchaser or (ii) any Purchaser Designee to vote or otherwise exercise his or her legal duties or otherwise act in his or her capacity as a member of the Board.
5.8 Preemptive Rights.
(a) From the Closing and for so long as the Beneficial Ownership Requirement is satisfied and subject to Section 5.9, if the Company proposes to issue any Common Stock or Equity-Based Securities of any kind (“New Securities”), other than in an Excluded Issuance, then the Company shall:
(i) give written notice to the Purchaser (no less than 20 Business Days prior to the closing of such issuance) of the Company’s bona fide intention to offer such New Securities, setting forth in reasonable detail (A) the designation and all of the terms and provisions of the New Securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof; (B) the price and other terms of the proposed sale of such securities; and (C) the amount of such securities proposed to be issued; provided that following the delivery of such notice, the Company shall deliver to the Purchaser any such information the Purchaser may reasonably request in order to evaluate the proposed issuance; and
(ii) offer to issue and sell to the Purchaser, on such terms as the Proposed Securities are issued and upon full payment by the Purchaser, a portion of the Proposed Securities equal to a percentage determined by dividing (A) the number of shares of Common Stock the Purchaser beneficially owns (on an as-converted basis, assuming full conversion and/or exercise of all Equity-Based Securities then outstanding, whether vested, unvested or then convertible or exercisable) by (B) the total number of shares of Common Stock then outstanding (on an as-converted basis, assuming full conversion and/or exercise of all Equity-Based Securities then outstanding, whether vested, unvested or then convertible or exercisable) (such percentage, the Purchaser’s “Participation Portion”).
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(b) The Purchaser will have the option, exercisable by written notice to the Company, to accept the Company’s offer and commit to purchase any or all of Participation Portion of the Proposed Securities offered to be sold by the Company to the Purchaser, which notice must be given within 10 Business Days after receipt of such notice from the Company. The closing of the exercise of such preemptive right shall take place simultaneously with the closing of the sale of the Proposed Securities giving rise to such preemptive right. Upon the expiration of the offering period described above, the Company will be free to sell such Proposed Securities that the Purchaser has not elected to purchase during the 90 days following such expiration on terms and conditions no more favorable to the purchasers thereof than those offered to the Purchaser in the notice delivered in accordance with Section 5.8(a). Any Proposed Securities offered or sold by the Company after such 90-day period must be reoffered to issue or sell to the Purchaser pursuant to this Section 5.8.
(c) The election by the Purchaser not to exercise its preemptive rights under this Section 5.8 in any one instance shall not affect its rights as to any subsequent proposed issuance.
(d) In the case of an issuance subject to this Section 5.8 for consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the Fair Market Value thereof.
(e) Notwithstanding any provision hereof to the contrary, in lieu of complying with the provisions of this Section 5.8, the Company may elect to give notice to the Purchaser within 30 days after the issuance of New Securities. The Purchaser shall have 20 days from the date notice is given to elect to purchase up to the number of New Securities that would, if purchased by the Purchaser, maintain the Purchaser’s percentage-ownership position, calculated as set forth in Section 5.8(a)(ii) before giving effect to the issuance of such New Securities. For the avoidance of doubt, the purchase price per security for such New Securities shall be equal to the price per security offered to the other participants in such issuance, on the same terms and conditions.
5.9 Future Acquisitions. From the Closing for so long as the Purchaser owns any Shares, the Purchaser agrees that, without the prior approval of the Board, the Purchaser will not acquire or agree to acquire beneficial ownership of Common Stock and the Equity-Based Securities (including on an as-converted basis), if such acquisition would result in the Purchaser beneficially owning more than 17.5% of the outstanding Common Stock and the Equity-Based Securities (on an as-converted basis, assuming full conversion and/or exercise of all Equity-Based Securities then outstanding, whether vested, unvested or then convertible or exercisable). For the avoidance of doubt, it shall not be deemed a breach of this Section 5.9 if the Purchaser acquires beneficial ownership of more than 17.5% of the Common Stock (on an as-converted basis, assuming full conversion and/or exercise of all Equity-Based Securities then outstanding, whether vested, unvested or then convertible or exercisable) as a result of any PIK Dividend (as defined in the applicable Certificate) or as a result of any Company stock buyback program or other reduction
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in the Company’s outstanding capital stock (e.g., stock split or reorganization), and nothing in this Section 5.9 will limit the Purchaser’s ability (i) to vote (subject to the Certificates), Transfer (subject to Section 6 below), convert (subject to the Certificates) or otherwise exercise rights of its Common Stock or Preferred Stock, (ii) to exercise its rights pursuant to Section 5.3 or pursuant to any other Transaction Document or (iii) to acquire beneficial ownership of Common Stock or Equity-Based Securities so long as such acquisition would not result in the Purchaser beneficially owning more than 17.5% of the Common Stock (on an as-converted basis, assuming full conversion and/or exercise of all Equity-Based Securities then outstanding, whether vested, unvested or then convertible or exercisable). The Company and the Purchaser acknowledge and agree that, until the Company obtains the required stockholder approval under NASDAQ Marketplace Rule 5635 (the “Approval”), (a) the total number of shares of Common Stock resulting from the conversion of the Preferred Stock cannot exceed 19.99% of the total number of shares of Common Stock outstanding immediately prior to the issuance of the Preferred Stock pursuant to this Agreement (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction), and (b) the holder of the Preferred Stock cannot be entitled to more than 19.99% of the total voting power of the Company’s equity securities outstanding immediately prior to the issuance of the Preferred Stock pursuant to this Agreement (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction). In the event that, as a result of any PIK Dividend, stock buyback program, or other reduction in the Company’s outstanding capital stock (including, without limitation, any stock split or corporate reorganization), the Purchaser acquires beneficial ownership of more than 19.99% of the outstanding Common Stock, the Company shall use commercially reasonable efforts to obtain the Approval as soon as reasonably practicable. Upon the receipt of such Approval, the ownership limitations set forth in this Section 5.9 shall immediately cease to apply. For avoidance of doubt, the foregoing shall not affect the accrual of any PIK Dividend in accordance with the Certificates. The Purchaser acknowledges that in connection with the Approval, none of the shares of Series A Preferred Stock or Series B Preferred Stock may vote on such matter.
5.10 Intended Tax Treatment. Each of the Purchaser and the Company agrees, for U.S. federal and other applicable income tax purposes, to treat (i) the Shares as constituting common stock within the meaning of Section 305 of the Code and the Treasury regulations thereunder, (ii) the aggregate issue price of the Shares as being an amount equal to the Purchase Price , and (iii) each Dividend (as defined in the Certificates) that is paid in kind as a tax-free distribution of stock of the Company with respect to its stock within the meaning of Section 305(a) of the Code (clauses (i), (ii) and (iii), collectively, the “Intended Tax Treatment”). The Purchaser and the Company agree to file all Tax Returns and take other actions in a manner consistent with, and not to take any action in a manner that is inconsistent with, the Intended Tax Treatment unless otherwise required by a “determination” within the meaning of Section 1313 of the Code.
5.11 Termination. Except as specifically otherwise provided herein, the provisions of this Agreement (other than Sections 5.6 (Confidentiality), 9.8 (Governing Law; Jurisdiction) and 9.9 (Waiver of Jury Trial)) shall terminate upon the earliest to occur of the following: (a) a Change of Control; or (b) all of the Shares (including any shares of Common Stock on an as-converted basis) having been sold, redeemed in full or otherwise disposed of, by the Purchaser and its Affiliates in accordance with the provisions of this Agreement and the Certificates. The covenants set forth in Sections 5.3 (Election of Directors), 5.4 (Information Rights) and 5.8 (Preemptive Rights) shall terminate and be of no further force and effect upon a Corporation Termination Event (as defined in the Certificates) if such termination is a termination for Cause (as defined in the U.S. Distribution Agreement).
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Section 6. Transfer Restrictions; Restrictive Legend.
6.1 Transfer Restrictions. The Purchaser understands that it may not, directly or indirectly, sell, assign, pledge, hypothecate or otherwise transfer (or enter into an obligation regarding the future sale, assignment, pledge or transfer of) (a “Transfer”) any of the Shares (other than to an Affiliate of the Purchaser) prior to (a) any such Shares being converted into Common Stock or (b) six months following the delivery of a Redemption Notice (as defined in the Certificates). Notwithstanding the foregoing, (x) any transaction involving the Purchaser or its Affiliates (including any Transfer of the Purchaser’s or its Affiliates’ equity, including any change of control of the Purchaser) that is not a direct transfer of Shares shall under no circumstances constitute a Transfer and (y) the foregoing shall not restrict the Purchaser from Transferring any Shares six months following delivery of a Redemption Notice or any shares of Common Stock at any time. The Purchaser covenants and agrees not to enter into any transaction involving the Purchaser or its Affiliates to avoid or circumvent the Transfer restrictions in this Agreement. Any Transfer or purported Transfer that is made or effected with the intent to circumvent the restrictions on Transfer set forth in this Section 6.1 shall be void. The Purchaser and its Affiliates shall use commercially reasonable efforts to effectuate any Transfer or series of related Transfers in a manner that would not result in a material adverse effect on the publicly traded price of the Common Stock, including not effecting any block trades at a price that is a greater than 20% discount to the market price of the Common Stock on the date prior to the closing of such block trade. In addition, the Purchaser understands the Company may, as a condition to the Transfer of any of the Securities, require that the request for Transfer be accompanied by an opinion of counsel reasonably satisfactory to the Purchaser, to the effect that the proposed Transfer does not result in a violation of the Securities Act, unless such Transfer is covered by an effective registration statement or by Rule 144 or Rule 144A under the Securities Act. It is understood that the certificates evidencing the Shares may bear substantially the following legend:
“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO THE TERMS AND CONDITIONS OF, AND RESTRICTIONS ON TRANSFER SET FORTH IN, A SECURITIES PURCHASE AGREEMENT, DATED AS OF AUGUST 28, 2025, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY, AND SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT.”
6.2 Unlegended Certificates. Upon request of the Purchaser (or any transferee of the Purchaser), upon receipt by the Company of an opinion of counsel reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act and applicable state securities Laws, the Company shall promptly cause the legend to be removed from, or no longer applied to, any certificate for, or record representing, any Share to be transferred in accordance with Section 6.1.
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Section 7. Registration, Transfer and Substitution of Certificates for Shares.
7.1 Stock Register; Ownership of Shares. The Company will keep at its principal office, or will cause its transfer agent to keep, a register in which the Company will provide for the registration of transfers of the Shares. The Company may treat the Person in whose name any of the Shares are registered on such register as the owner thereof and the Company shall not be affected by any notice to the contrary. All references in this Agreement to a “holder” of any Shares shall mean the Person in whose name such Shares are at the time registered on such register.
7.2 Replacement of Certificates. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate representing any of the Shares, and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement and surety bond reasonably satisfactory to the Company or, in the case of any such mutilation, upon surrender of such certificate for cancellation at the office of the Company maintained pursuant to Section 7.1 hereof, the Company at its expense will execute and deliver, in lieu thereof, a new certificate representing such Shares, of like tenor.
Section 8. Definitions. Unless the context otherwise requires, the terms defined in this Section 8 shall have the meanings specified for all purposes of this Agreement. All accounting terms used in this Agreement, whether or not defined in this Section 8, shall be construed in accordance with U.S. GAAP.
“Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
Any Person shall be deemed to “beneficially own,” to have “beneficial ownership” of, or to be “beneficially owning” any securities that such Person is deemed to “beneficially own” within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act; provided that any Person shall be deemed to beneficially own any securities that such Person has the right to acquire, whether or not such right is exercisable immediately (including assuming conversion of all Preferred Stock, if any, owned by such Person to Common Stock).
“Bona Fide Acquiror” means a Person or group making a Third Party Proposal that is reasonably capable of consummating such Third Party Proposal, taking into account all legal, financial, regulatory and other aspects of such Third Party Proposal, including the identity of the Person or group making such Third Party Proposal.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by Law to remain closed.
“Captaincy Termination Event” means the termination of the Captaincy (as defined in the Transaction Agreement) without the timely delivery of a Termination Dispute Notice (as defined in the Transaction Agreement) or, if a Termination Dispute Notice is so timely delivered, the final resolution between the Company and the Purchaser or a final determination in accordance with the terms of the Transaction Agreement that such termination was valid.
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“Certificates” means the Initial Series A Certificate, as amended by the Series A Certificate of Amendment, and the Series B Certificate.
“Change of Control” means: (i) a sale or transfer, directly or indirectly, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole in any transaction or series of related transactions (other than sales in the ordinary course of business); (ii) any merger, consolidation or reorganization of the Company with or into any other entity or entities as a result of which the holders of the Company’s outstanding capital stock (on a fully-diluted basis) immediately prior to the merger, consolidation or reorganization no longer represent at least a majority of the voting power of the surviving or resulting corporation or other entity; or (iii) any sale or series of sales, directly or indirectly, beneficially or of record, of shares of the Company’s capital stock by the holders thereof which results in any Person or group of Affiliated Persons owning capital stock holding more than 50% of the voting power of the Company.
“Commission” means the United States Securities and Exchange Commission.
“Equity-Based Security” means any class or series of shares (including a new class of common shares of the Company other than Common Stock), any Preferred Stock or other preference shares, or any other equity-like or hybrid securities (including debt securities with equity components), including options, warrants, convertibles, exchangeable or exercisable securities.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Issuance” shall mean the issuance of any New Securities (i) pursuant to an employment contract, equity compensation plan, employee stock option plan, management incentive plan, restricted stock plan, stock purchase plan or stock ownership plan or similar benefit plan, program or agreement as approved by the Board, (ii) in connection with any “business combination” (as defined in the rules and regulations promulgated by the Commission) or otherwise in connection with bona fide acquisitions of securities or substantially all of the assets of another Person, business unit, division or business, (iii) pursuant to the conversion, exercise or exchange of Preferred Stock issued to the Purchaser, (iv) the issuance of New Securities in a share split, stock dividend, recapitalization or similar transactions (except to the extent that new capital is raised in connection therewith), (v) upon the exercise or conversion of any Equity-Based Security, (vi) New Securities issued as “kickers” to banks or other financial institutions pursuant to transactions the primary purpose of which is a debt financing transaction approved by the Board, (vii) New Securities issued to suppliers or third party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board, and (viii) New Securities issued in connection with a joint venture, collaboration, license, marketing or other strategic partnership approved by the Board.
“Fair Market Value” means, with respect to any security or other property, the fair market value of such security or other property as reasonably determined in good faith by a majority of the Board, or an authorized committee thereof, after consultation with an Independent Financial Advisor.
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“FDC Act” means the United States Federal Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.), as amended to date together with any rules or regulations promulgated thereunder.
“Governmental Entity” means any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority, self-regulatory organization or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.
“Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant of nationally recognized standing; provided, however, that such firm or consultant is (i) not an Affiliate of the Company and (ii) so long as the Purchaser meets the Beneficial Ownership Requirement, reasonably acceptable to the Purchaser.
“Intellectual Property” means all worldwide intellectual property rights, whether or not registered, including patents, utility models, trademarks, service marks, trade names, corporate names, and trade dress (and all goodwill relating thereto), domain names, copyrights and copyrighted works, inventions, know-how, trade secrets, methods, processes, formulae, technical or proprietary information and technology and all registrations, applications, renewals, re-examinations, re-issues, divisions, continuations, continuations-in part and foreign counterparts thereof.
“knowledge” means, with respect to the Company, the actual knowledge of the executive officers of the Company listed on Section 8 of the Disclosure Schedules after reasonable inquiry.
“Laws” means all statutes, rules, codes, regulations, ordinances, orders, decrees, judgments, injunctions, writs, awards and decrees of, or issued by, any Governmental Entity.
“Liens” means any mortgage, pledge, security interest, encumbrance, lien, charge or other restriction of any kind, whether based on common law, statute or contract.
“Material Adverse Effect” means any material adverse effect on the condition (financial or otherwise), prospects, properties, assets, liabilities, business or operations of the Company and its Subsidiaries, taken as a whole.
“Material Contract” means (i) any contract of the Company or any of its Subsidiaries the termination of which would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, each as set forth on Section 8 of the Disclosure Schedules, or (ii) any contract that has been filed or was required to have been filed as an exhibit to the SEC Reports pursuant to Items 601(b)(1), 601(b)(2), 601(b)(4), 601(b)(9) or 601(b)(10) of Regulation S-K promulgated by the Commission.
“Nasdaq” means The Nasdaq Capital Market.
“Other Documents” means, the Transaction Agreement, the U.S. Distribution Agreement, the Canada Distribution Agreement, the Alani Nu Channel Transition Agreement, the U.S. Co-Manufacturing Agreement, the Canada Co-Manufacturing Agreement and all exhibits and schedules thereto, and any other documents or agreements executed in connection with the transactions contemplated thereunder.
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“Organizational Documents” means the certificate of incorporation, bylaws, certificate of formation, operating agreement, partnership agreement, and all other similar documents, instruments or certificates executed, adopted or filed in connection with the creation, formation, governance or organization of a Person, including any amendment thereto, as applicable.
“Person” means any individual, partnership, corporation, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof.
“Plan” means (i) any employee pension benefit plan (as defined in Section 3(2)(A) of ERISA) maintained for employees of the Company or of any member of a “controlled group,” as such term is defined in Section 414 of the Code, of which the Company or any of its Subsidiaries is a part, or any such employee pension benefit plan to which the Company or any of its Subsidiaries is required to contribute on behalf of its employees, and any other employee benefit plan (as defined in Section 3(3) of ERISA), whether or not subject to ERISA; or (ii) any compensation or other benefit plan, policy, program, agreement or arrangement, including any employment, change in control, bonus, equity-based compensation, retention or other similar agreement, that the Company or any of its Subsidiaries, maintains, sponsors, is a party to, or as to which the Company or any of its Subsidiaries otherwise has any material obligation or material liability in respect of its employees; in each case, excluding any compensation or benefit arrangement maintained by a Governmental Entity.
“Securities Act” means the Securities Act of 1933, as amended.
“Subsidiary” means, when used with respect to any Person, any corporation, limited liability company, partnership, association, trust or other entity of which (i) securities or other ownership interests representing 50% or greater of the ordinary voting power (or, in the case of a partnership, 50% or greater of the general partnership interests) or (ii) sufficient voting rights to elect at least a majority of the board of directors or other governing body are, as of such date, owned by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“Tax Return” shall mean any return, declaration, report, statement or other document filed or required to be filed in respect of Taxes (including any attachments thereto), including any information return, claim for refund, amended return and declaration of estimated Tax.
“Taxes” shall mean all United States federal, state, local or foreign taxes, charges, fees, levies or other assessments, including, without limitation, income, gross receipts, excise, real and personal property, profits, estimated, severance, occupation, production, capital gains, capital stock, goods and services, environmental, employment, withholding, stamp, value added, alternative or add-on minimum, sales, transfer, use, license, payroll and franchise taxes or any other tax of any kind whatsoever, and such term shall include any interest, penalties, fines, or additions to tax attributable to such taxes, charges, fees, levies or other assessments.
“Transactions” means the transactions contemplated by this Agreement or any other Transaction Document (which do not include the transactions contemplated by the Other Documents).
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“Transaction Documents” means this Agreement and all exhibits and schedules hereto and thereto, and any other documents or agreements executed in connection with the transactions contemplated hereunder (excluding, for the avoidance of doubt, the Other Documents).
Section 9. Miscellaneous.
9.1 Survival. None of the representations or warranties contained in this Agreement shall survive the Closing, and all rights, claims and causes of action (whether in contract or in tort or otherwise, or whether at Law or in equity) with respect thereto shall terminate at the Closing, and thereafter there will be no liability in respect thereof, other than claims for actual and intentional fraud in the making of the representations and warranties expressly set forth in this Agreement, which claims shall survive indefinitely.
9.2 Waivers and Amendments. This Agreement may be amended, modified and supplemented only by a written instrument authorized and executed by the Company and the Purchaser; provided that any of the terms or provisions of this Agreement may be waived in writing at any time by the party that is entitled to the benefits of such waived terms or provisions.
9.3 Construction. Any reference in this Agreement to a “Section,” “Exhibit” or “Schedule” refers to the corresponding Section, Exhibit or Schedule of or to this Agreement, unless the context indicates otherwise. The headings of Sections are provided for convenience only and are not intended to affect the construction or interpretation of this Agreement. The words “including,” “includes” or “include” are to be read as listing non-exclusive examples of the matters referred to, whether or not words such as “without limitation” or “but not limited to” are used in each instance. Where this Agreement states that a party “shall,” “will” or “must” perform in some manner or otherwise act or omit to act, it means that the party is legally obligated to do so in accordance with this Agreement. Any reference to a statute is deemed also to refer to any amendments or successor legislation as in effect at the relevant time. Any reference to a contract or other document as of a given date means the contract or other document as amended, supplemented and modified from time to time through such date. Any words (including capitalized terms defined herein) in the singular will be held to include the plural and vice versa and words (including capitalized terms defined herein) of one gender will be held to include the other gender as the context requires. The terms “hereof,” “herein” and “herewith” and words of similar import will, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “or” shall not be exclusive. All references to any period of days will be deemed to be to the relevant number of calendar days unless otherwise specified. All references herein to “$” or dollars will refer to United States dollars, unless otherwise specified. All accounting terms not otherwise defined herein have the meanings given to them in accordance with U.S. GAAP. Reference herein to any document or other information being “delivered,” “made available,” “distributed” or “provided” to the Purchaser shall mean that such document or information was included in the virtual data room of the Company hosted by Datasite.com, or otherwise delivered to the Purchaser or its representatives (including via e-mail), prior to execution of this Agreement.
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9.4 Notices. All notices, requests, consents and other communications under this Agreement shall be in writing and shall be deemed delivered: (a) when delivered, if delivered personally, (b) four Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) one Business Day after being sent via a reputable nationwide overnight courier service guaranteeing next Business Day delivery, or (d) when received, in the case of email, in each case to the intended recipient as set forth below; provided that, in the case of both (b) and (c), a copy shall also be sent by e-mail.
If to the Company:
Celsius Holdings, Inc.
2381 NW Executive Center Drive
Boca Raton, Florida 33431
Attention: [***]
Email: [***]
with copies to (which shall not constitute notice):
Freshfields US LLP
3 World Trade Center
175 Greenwich Street
New York, New York 10007
Attention: Ethan Klingsberg; Sanjay Murti
Email: ethan.klingsberg@freshfields.com; sanjay.murti@freshfields.com
If to the Purchaser:
PepsiCo, Inc.
700 Anderson Hill Road
Purchase, New York 10577
Attention: [***]
Email: [***]
with copies to (which shall not constitute notice):
Cravath, Swaine & Moore LLP
Two Manhattan West
375 Ninth Avenue
New York, NY 10001
Attention: Claudia J. Ricciardi
Email: cricciardi@cravath.com
or at such other address as the Company or the Purchaser may specify by written notice to the other parties hereto in accordance with this Section 9.4.
9.5 Cumulative Remedies. None of the rights, powers or remedies conferred upon the Purchaser on the one hand or the Company on the other hand shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to every other right, power or remedy, whether conferred by this Agreement or now or hereafter available at Law, in equity, by statute or otherwise.
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9.6 Successors and Assigns. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective parties hereto, the successors and permitted assigns of the Purchaser and the successors of the Company, whether so expressed or not. None of the parties hereto may assign its rights or obligations hereof without the prior written consent of the other party, except that the Purchaser may assign its rights to purchase the Shares hereunder to any of its Affiliates; provided, however, that (a) the Company is promptly furnished with written notice of the name and address of each such transferee (provided that failure to provide such notice shall not impact the validity of such assignment); and (b) each such Affiliate agrees to be bound by and subject to the terms and conditions of this Agreement and makes the same representations and warranties set forth in Section 3 hereof. This Agreement shall not inure to the benefit of or be enforceable by any other Person.
9.7 Headings. The headings of the Sections and paragraphs of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement.
9.8 Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware without regard to its conflict of law principles. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Transactions may be brought in any federal or state court located in the County of New Castle in the State of Delaware, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.
9.9 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, EACH PARTY KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY.
9.10 Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts (including counterparts delivered by facsimile, DocuSign.com or other electronic format) shall be deemed an original, shall be construed together and shall constitute one and the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.
9.11 Entire Agreement. This Agreement (together with the Other Documents and the other Transaction Documents) contains the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes and replaces all other prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof.
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9.12 Severability. If any provision of this Agreement shall be found by any court of competent jurisdiction to be invalid or unenforceable, the parties hereby waive such provision to the extent that it is found to be invalid or unenforceable. Such provision shall, to the maximum extent allowable by Law, be modified by such court so that it becomes enforceable, and, as modified, shall be enforced as any other provision hereof, all the other provisions hereof continuing in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the Effective Date.
| THE COMPANY: | ||
| CELSIUS HOLDINGS, INC. | ||
| By: | /s/ Richard Mattessich | |
| Name: Richard Mattessich | ||
| Title: Chief Legal Officer | ||
| THE PURCHASER: | ||
| PEPSICO, INC. | ||
| By: | /s/ Dan Fink | |
| Name: Dan Fink | ||
| Title: Senior Vice President | ||
[Signature Page to Securities Purchase Agreement]
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO DESIGNATION
OF
SERIES A PREFERRED STOCK
(Attached.)
A-1
EXHIBIT B
CERTIFICATE OF DESIGNATION
OF
SERIES B PREFERRED STOCK
(Attached.)
B-1
EXHIBIT C
FORM OF AMENDED AND RESTATED REGISTRATION
RIGHTS AGREEMENT
(Attached.)
C-1
Exhibit 10.2
Execution Version
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of August 28, 2025, by and between Celsius Holdings, Inc., a Nevada corporation (the “Company”), and PepsiCo, Inc., a North Carolina corporation (the “Original Holder”).
RECITALS
WHEREAS, on August 1, 2022, the Company and the Original Holder entered into a Registration Rights Agreement (the “Original Agreement”) in connection with a Securities Purchase Agreement, dated as of August 1, 2022 (the “Original Purchase Agreement”), pursuant to which the Company sold to the Original Holder an aggregate of 1,466,666 shares of the Series A Preferred Stock of the Company (the “Series A Preferred Stock”), which is convertible into shares of Common Stock (as defined below);
WHEREAS, the Company and the Original Holder are parties to a new Securities Purchase Agreement, dated as of August 28, 2025 (as amended from time to time, the “Purchase Agreement”), pursuant to which (i) the Original Purchase Agreement is being terminated and the Series A Preferred Stock is being amended and (ii) the Company is selling to the Original Holder, and the Original Holder is purchasing from the Company, an aggregate of 390,000 shares of the Series B Preferred Stock of the Company (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, as amended, the “Preferred Shares”), which is convertible into shares of Common Stock; and
WHEREAS, as a condition to the obligations of the Company and the Original Holder under the Purchase Agreement, the Company and the Original Holder are entering into this Agreement for the purpose of amending and restating the Original Agreement to grant certain registration and other rights to the Holders in respect of the Common Stock issuable upon the conversion of the Preferred Shares.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Definitions. As used in this Agreement, capitalized terms not otherwise defined herein shall have the meanings ascribed to them below:
“Affiliate” means, with respect to any specified Person, any other Person who or which, directly or indirectly, controls, is controlled by or is under common control with, such specified Person.
“Business Day” means any day that is not a Saturday, Sunday or other day on which banks are required or authorized by law to be closed in The City of New York.
“Common Stock” means the common stock, par value $0.001 per share, of the Company, and any equity securities issued or issuable in exchange for or with respect to the Common Stock by way of a stock dividend, stock split or combination of shares or in connection with a reclassification, recapitalization, merger, consolidation or other reorganization or otherwise.
“Common Stock Equivalent” means all options, warrants and other securities convertible into, or exchangeable or exercisable for (at any time or upon the occurrence of any event or contingency and without regard to any vesting or other conditions to which such securities may be subject), Common Stock.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“Holder” or “Holders” means (i) the Original Holder, (ii) any Affiliate of the Original Holder who shall acquire and hold Registrable Securities (as defined below) in accordance with the terms of this Agreement and (iii) solely with respect to a Demand Registration (as defined below), any transferee of such Registrable Securities that is granted the right to a Demand Registration hereunder; provided, that such transferee is an Affiliate of the Original Holder.
“Issuer Free Writing Prospectus” means an issuer free writing prospectus, as defined in Rule 433 under the Securities Act (as defined below), relating to an offer of Registrable Securities.
“Majority Participating Holders” means Participating Holders holding more than 50% of the Registrable Securities proposed to be included in any offering of Registrable Securities by such Participating Holders pursuant to Section 2.1 or Section 2.2.
“Participating Holder” means a Holder who shall have properly submitted a written request for inclusion of such Holder’s Registrable Securities in a registration pursuant to Section 2.1 or Section 2.2 hereof.
“Person” means any individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization or other entity or any governmental or regulatory body or other agency or authority or political subdivision thereof, including any successor, by merger or otherwise, of any of the foregoing.
“Registrable Securities” means shares of Common Stock issuable upon conversion of the Preferred Shares; provided, however, that such shares will cease to be Registrable Securities (a) when a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been sold or transferred in accordance with such registration statement, (b) when such shares shall have been sold to the public by the Original Holder (or an Affiliate of the Original Holder) pursuant to Securities Act Rule 144 (or any successor provision) or (c) such securities have ceased to be outstanding.
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“Registration Expenses” means all fees and expenses incurred in connection with the Company’s performance of or compliance with the provisions of Article II, including, without limitation: (i) all registration, listing, qualification and filing fees (including FINRA filing fees); (ii) fees and expenses of compliance with state securities or “blue sky” laws (including counsel fees in connection with the preparation of a “blue sky” and legal investment survey and FINRA filings); (iii) printing and copying expenses; (iv) messenger and delivery expenses; (v) expenses incurred in connection with any road show; (vi) fees and disbursements of counsel for the Company; (vii) with respect to each registration, the reasonable fees and disbursements of one counsel for the Participating Holder(s) selected by the Majority Participating Holders, in the case of a registration pursuant to Section 2.2, not to exceed $25,000; (viii) fees and disbursements of independent public accountants, including the expenses of any audit or “comfort” letter, and fees and expenses of other persons, including special experts, retained by the Company; (ix) underwriter fees, excluding discounts and commissions, and any other expenses which are customarily borne by the issuer or seller of securities in a public equity offering; and (x) all internal expenses of the Company (including all salaries and expenses of officers and employees performing legal or accounting duties).
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Demand Registrations; Resale Registration.
(a) (i) Subject to Section 2.1(c), at any time or from time to time, one or more Holders shall have the right to require the Company to file a registration statement under the Securities Act covering Registrable Securities with an aggregate value of $100,000,000 or greater (based on the market price of the Common Stock as of the date of the Demand Registration Request (as defined below)), by delivering a written request therefor to the Company specifying the number of Registrable Securities to be included in such registration by such Holders and the intended method of distribution thereof. All such requests by any Holder pursuant to this Section 2.1(a)(i) are referred to as “Demand Registration Requests,” the registrations so requested are referred to as “Demand Registrations” and the Holders making such demand for registration are referred to as the “Initiating Holders.” A Demand Registration requested pursuant to this Section 2.1(a)(i) may include an underwritten offering effected pursuant to an already effective registration statement. As promptly as practicable, but no later than 5 days after receipt of a Demand Registration Request, the Company shall give written notice (a “Demand Exercise Notice”) of such Demand Registration Request to all Holders of record of Registrable Securities.
(ii) The Company, subject to Section 2.3 and Section 2.7, shall include in a Demand Registration (A) the Registrable Securities of the Initiating Holders and (B) the Registrable Securities of any other Holder that shall have made a written request to the Company within the time limits specified below for inclusion in such registration. Any such request from the other Holders must be delivered to the Company within 5 days after the receipt of the Demand Exercise Notice and must specify the maximum number of Registrable Securities intended to be disposed of by such other Holder.
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(iii) The Company, as expeditiously as possible but subject to Section 2.1(c), shall use its commercially reasonable efforts to effect such Demand Registration.
(b) Registrations under this Section 2.1 shall be on such appropriate registration form of the SEC for the disposition of such Registrable Securities in accordance with the intended method of disposition thereof, which form shall be selected by the Company and shall be reasonably acceptable to the Majority Participating Holders.
(c) The Demand Registration rights granted in Section 2.1(a) to the Holders are subject to the following limitations:
(i) the Company shall not be required to cause a registration pursuant to Section 2.1(a) to be filed within 90 days or to be declared effective within a period of 180 days after the effective date of any other registration statement of the Company filed pursuant to the Securities Act; provided, that this Section 2.1(c)(i) shall not otherwise affect the Company’s obligation to effect an underwritten shelf take-down of any of Registrable Securities registered pursuant to a Demand Registration Request;
(ii) if in any registration of Registrable Securities would require disclosure of information not otherwise then required by law to be publicly disclosed and, in the good faith judgment of the board of directors of the Company, such disclosure is reasonably likely to adversely affect any material financing, acquisition, corporate reorganization or merger or other material transaction or event involving the Company or otherwise have a material adverse effect on the Company (a “Valid Business Reason”), the Company may postpone or withdraw a filing of a registration statement (or prospectus supplement) relating to a Demand Registration Request until such Valid Business Reason no longer exists, but in no event shall the Company avail itself of such right for more than 180 days, in the aggregate, in any period of 365 consecutive days; and the Company shall give notice to the Participating Holder(s) of its determination to postpone or withdraw a registration statement and of the fact that the Valid Business Reason for such postponement or withdrawal no longer exists, in each case, promptly after the occurrence thereof;
(iii) the Company shall not be obligated to effect more than 5 Demand Registrations under Section 2.1(a) pursuant to this Agreement; and
(iv) the Company will not be obligated to file a registration statement pursuant to a Demand Registration at any time when a registration statement with respect to a shelf registration covering all Registrable Securities held by the Holder remains effective; provided, that this Section 2.1(c)(iv) shall not otherwise affect the Company’s obligation to effect an underwritten shelf take-down of any of Registrable Securities registered on such shelf pursuant to a Demand Registration Request.
If the Company shall give any notice of postponement or withdrawal of any registration statement pursuant to clause (ii) above, the Company shall not register the resale of any equity security of the Company during the period of postponement or withdrawal. Each Holder agrees that, upon receipt of any notice from the Company that the Company has determined to withdraw any registration statement pursuant to clause (ii) above, such Holder will discontinue its disposition of Registrable Securities pursuant to such registration statement. If the Company shall have withdrawn or prematurely terminated a registration statement filed under Section 2.1(a)(i), the
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Company shall not be considered to have effected an effective registration for the purposes of this Agreement until the Company shall have filed a new registration statement (or prospectus supplement) covering the Registrable Securities covered by the withdrawn registration statement and such registration statement shall have been declared effective and shall not have been withdrawn or a new prospectus supplement covering the Registrable Securities shall have been filed and shall be available for the disposition of the relevant Registered Securities in accordance with the plan of distribution set forth therein. If the Company shall give any notice of withdrawal or postponement of a registration statement (or prospectus supplement) pursuant to clause (ii) above, at such time as the Valid Business Reason that caused such withdrawal or postponement no longer exists (but in no event more than 180 days after the date of the postponement or withdrawal), the Company shall use its reasonable best efforts to effect the registration under the Securities Act of the Registrable Securities covered by the withdrawn or postponed registration statement in accordance with this Section 2.1.
(d) The Company, subject to Section 2.3 and Section 2.7, may elect to include in any registration statement (or any prospectus supplement) and offering made pursuant to Section 2.1(a)(i), (i) authorized but unissued shares of Common Stock or shares of Common Stock held by the Company as treasury shares and/or (ii) any other shares of Common Stock that are requested to be included in such registration pursuant to the exercise of piggyback rights granted by the Company that are not inconsistent with the rights granted in, or otherwise conflict with the terms of, this Agreement (“Additional Piggyback Rights”); provided, however, that such inclusion shall be permitted only to the extent that it is pursuant to and subject to the terms of the underwriting agreement or arrangements, if any, entered into by the Participating Holders.
(e) A Holder may withdraw its Registrable Securities from a Demand Registration at any time. If all such Holders do so, the Company shall cease all efforts to secure registration and such registration nonetheless shall be deemed a Demand Registration for purposes of this Section 2.1 unless (i) the withdrawal is made following withdrawal or postponement of such registration by the Company pursuant to a Valid Business Reason as contemplated by Section 2.1(c)(ii), (ii) the withdrawal is based on the reasonable determination of the Initiating Holders that there has been, since the date of the Demand Registration Request, a material adverse change in the business or prospects of the Company or (iii) the Initiating Holders have paid or reimbursed the Company for all of the reasonable out-of-pocket fees and expenses incurred by the Company in connection with the withdrawn registration.
(f) A Demand Registration shall not be deemed to have been effected and shall not count as such (i) unless a registration statement with respect thereto has become effective and has remained effective for a period of at least 180 days or such shorter period during which all Registrable Securities covered by such registration statement have been sold or withdrawn, or, if such registration statement relates to an underwritten offering, such longer period as, in the opinion of counsel for the underwriter(s), is required by law for delivery of a prospectus in connection with the sale of Registrable Securities by an underwriter or dealer, (ii) if, after the registration statement with respect thereto has become effective, it becomes subject to any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason, (iii) if it is withdrawn by the Company pursuant to a Valid Business Reason as contemplated by Section 2.1(c) or (iv) if the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such Demand Registration are not satisfied, other than solely by reason of some act or omission of the Participating Holders or other third party to such agreement that is out of the Company’s control.
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(g) In connection with any Demand Registration, the Company may designate a lead managing underwriter in connection with such registration and each other managing underwriter for such registration, provided, that, in each case, each such underwriter is reasonably satisfactory to the Majority Participating Holders.
(h) The Company shall use its commercially reasonable efforts to file a registration statement on Form S-3 or such other form under the Securities Act then available to the Company with respect to the resale of the Registrable Securities upon the date on which the Preferred Shares have been converted to Common Stock (but after the Original Holder has had an opportunity to review and comment on such registration statement) (the “Filing Deadline”). The Company shall use commercially reasonable efforts to cause such Form S-3 (or equivalent) to be declared effective under the Securities Act as soon as practicable thereafter, and shall use its commercially reasonable efforts to maintain the effectiveness of the registration statement for the resale of the Registrable Securities for so long as the Holders hold any of the Registrable Securities; provided, however, that if such Filing Deadline falls on a Saturday, Sunday, or other day that the SEC is closed for business, the Filing Deadline will be automatically extended to the next business day on which the SEC is open for business. Notwithstanding the foregoing, if the Company is a WKSI (as defined below), the Company shall not be required to file a new registration statement if it already has an effective automatic shelf registration statement on file with the SEC and the Company files a prospectus supplement to such automatic shelf registration statement registering all of the Registrable Securities, within the time required by this Section 2.1(h).
Section 2.2 Piggyback Registrations.
(a) If, at any time, the Company proposes or is required to register any of its equity securities under the Securities Act pursuant to a firm-commitment underwritten public offering (other than pursuant to (i) a registration on Form S-4 or Form S-8 or any successor or similar form which is then in effect, (ii) an offering of debt that is convertible into equity securities of the Company, or (iii) a Demand Registration under Section 2.1) on a registration statement on Form S-1 or Form S-3 or an equivalent general registration form then in effect, whether or not for its own account, the Company shall give prompt written notice of its intention to do so to each Holder of record of Registrable Securities. Upon the written request of any such Holder, made within 15 days following the receipt of any such written notice (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Holder and the intended method of distribution thereof), the Company, subject to Section 2.2(b), Section 2.3 and Section 2.7, shall use commercially reasonable efforts to cause all such Registrable Securities to be included in the registration statement with the securities that the Company at the time proposes to register to permit the sale or other disposition by such Holders in accordance with the intended method of distribution thereof of the Registrable Securities to be so registered. No registration of Registrable Securities effected under this Section 2.2(a) shall relieve the Company of its obligations to effect Demand Registrations under Section 2.1.
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(b) If, at any time after giving written notice of its intention to register any equity securities and prior to the effective date of the registration statement filed in connection with such registration or the pricing of such firm-commitment underwritten public offering, the Company shall determine for any reason not to register or to delay registration of such equity securities, the Company will give written notice of such determination to each Holder of record of Registrable Securities and (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such abandoned registration, without prejudice, or (ii) in the case of a determination to delay such registration of its equity securities pursuant to Section 2.1(c)(ii), shall be permitted to delay the registration of such Registrable Securities for the same period as the delay in registering such other equity securities.
(c) Any Holder shall have the right to withdraw its request for inclusion of its Registrable Securities in any registration statement (or prospectus supplement) pursuant to this Section 2.2 by giving written notice to the Company of its request to withdraw. Such request must be made in writing prior to the earlier of the execution of the underwriting agreement or the execution of the custody agreement with respect to such registration. Such withdrawal shall be irrevocable and, after making such withdrawal, a Holder shall no longer have any right to include Registrable Securities in the registration as to which such withdrawal was made.
(d) Notwithstanding anything in this Section 2.2 to the contrary, no Holder shall have any right to include any Registrable Securities in any offering by the Company of Common Stock executed pursuant to any “at the market” program that the Company may have in effect from time to time on or after the date of this Agreement.
Section 2.3 Priority in Registrations.
(a) If any requested registration made pursuant to Section 2.1 involves an underwritten offering and the lead managing underwriter or underwriters of such offering (collectively, the “Manager”) shall advise the Company that, in its view, the number of securities requested to be included in such registration by the Participating Holders or any other persons, including those shares of Common Stock requested by the Company to be included in such registration, exceeds the largest number (the “Section 2.3(a) Sale Number”) that can be sold in an orderly manner in such offering within a price range acceptable to the Majority Participating Holders, the Company shall use commercially reasonable efforts to include in such registration:
(i) first, all Registrable Securities requested to be included in such registration by the Holders thereof; provided, however, that, if the number of such Registrable Securities exceeds the Section 2.3(a) Sale Number, the number of such Registrable Securities (not to exceed the Section 2.3(a) Sale Number) to be included in such registration shall be allocated on a pro rata basis among all Holders requesting that Registrable Securities be included in such registration, based on the number of Registrable Securities then owned by each such Holder requesting inclusion in relation to the number of Registrable Securities owned by all Holders requesting inclusion;
(ii) second, to the extent that the number of securities to be included pursuant to clause (i) of this Section 2.3(a) is less than the Section 2.3(a) Sale Number, the remaining shares to be included in such registration shall be allocated on a pro rata basis among all holders requesting that securities be included in such registration pursuant to the exercise of Additional Piggyback Rights (“Piggyback Shares”), based on the aggregate number of Piggyback Shares then owned by each holder requesting inclusion in relation to the aggregate number of Piggyback Shares owned by all holders requesting inclusion, up to the Section 2.3(a) Sale Number; and
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(iii) third, to the extent that the number of securities to be included pursuant to clauses (i) and (ii) of this Section 2.3(a) is less than the Section 2.3(a) Sale Number, any securities that the Company proposes to register, up to the Section 2.3(a) Sale Number.
If, as a result of the proration provisions of this Section 2.3(a), any Holder shall not be entitled to include all Registrable Securities in a registration that such Holder has requested be included, such Holder may elect to withdraw its request to include Registrable Securities in such registration or may reduce the number of Registrable Securities requested to be included; provided, however, that (A) such request must be made in writing prior to the earlier of the execution of the underwriting agreement or the execution of the custody agreement with respect to such registration and (B) such withdrawal shall be irrevocable and, after making such withdrawal, such Holder shall no longer have any right to include Registrable Securities in the registration as to which such withdrawal was made.
(b) If any registration pursuant to Section 2.2 involves an underwritten offering that was proposed by the Company and the Manager shall advise the Company that, in its view, the number of securities requested to be included in such registration exceeds the number (the “Section 2.3(b) Sale Number”) that can be sold in an orderly manner in such registration within a price range acceptable to the Company, the Company shall include in such registration:
(i) first, all Common Stock that the Company proposes to register for its own account; and
(ii) second, to the extent that the number of securities to be included pursuant to clause (i) of this Section 2.3(b) is less than the Section 2.3(b) Sale Number, the remaining shares to be included in such registration shall be allocated on a pro rata basis among all holders requesting that Registrable Securities or Piggyback Shares be included in such registration pursuant to the exercise of piggyback rights pursuant to Section 2.2 or Additional Piggyback Rights, based on the aggregate number of Registrable Securities and Piggyback Shares then owned by each holder requesting inclusion in relation to the aggregate number of Registrable Securities and Piggyback Shares owned by all holders requesting inclusion, up to the Section 2.3(b) Sale Number.
(c) If any registration pursuant to Section 2.2 involves an underwritten offering that was proposed by holders of securities of the Company that have the right to require such registration pursuant to an agreement entered into by the Company in accordance with Section 3.3 (“Additional Demand Rights”) and the Manager shall advise the Company that, in its view, the number of securities requested to be included in such registration exceeds the number (the “Section 2.3(c) Sale Number”) that can be sold in an orderly manner in such registration within a price range acceptable to the Company, the Company shall include in such registration:
(i) first, all securities requested to be included in such registration by the holders of Additional Demand Rights (“Additional Registrable Securities”); provided, however, that, if the number of such Additional Registrable Securities exceeds the Section 2.3(c) Sale Number, the number of such Additional Registrable Securities (not to exceed the Section 2.3(c) Sale Number) to be included in such registration shall be allocated on a pro rata basis among all holders of Additional Registrable Securities requesting that Additional Registrable Securities be included in such registration, based on the number of Additional Registrable Securities then owned by each such holder requesting inclusion in relation to the number of Additional Registrable Securities owned by all of such holders requesting inclusion;
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(ii) second, to the extent that the number of securities to be included pursuant to clause (i) of this Section 2.3(c) is less than the Section 2.3(c) Sale Number, any Common Stock that the Company proposes to register for its own account, up to the Section 2.3(c) Sale Number; and
(iii) third, to the extent that the number of securities to be included pursuant to clauses (i) and (ii) of this Section 2.3(c) is less than the Section 2.3(c) Sale Number, the remaining shares to be included in such registration shall be allocated on a pro rata basis among all holders requesting that Registrable Securities or Piggyback Shares be included in such registration pursuant to the exercise of piggyback rights pursuant to Section 2.2 or Additional Piggyback Rights, based on the aggregate number of Registrable Securities and Piggyback Shares then owned by each holder requesting inclusion in relation to the aggregate number of Registrable Securities and Piggyback Shares owned by all holders requesting inclusion, up to the Section 2.3(c) Sale Number.
Section 2.4 Registration Procedures. Whenever the Company is required by the provisions of this Agreement to use its commercially reasonable efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Agreement, the Company, as expeditiously as possible:
(a) shall prepare and file with the SEC the requisite registration statement (or a prospectus supplement covering the Registrable Securities), which shall comply as to form in all material respects with the requirements of the applicable form and shall include all financial statements required by the SEC to be filed therewith, and use commercially reasonable efforts to cause such registration statement to become and remain effective as follows: (i) in the case of a registration on Form S-1 or any successor form thereto, for a period of at least 90 calendar days (or, in the case of an underwritten offering, such period as the underwriters will reasonably require) following the date on which such registration statement is declared effective (or such shorter period which will terminate when all of the Registrable Securities covered by such registration statement have been sold pursuant thereto) or (ii) in the case of a registration on Form S-3 or any successor form thereto, until the earlier to occur of (A) the third anniversary of the effectiveness of such registration statement and (B) such time as all Registrable Securities covered by such registration statement have been sold pursuant thereto (provided, however, that before filing a registration statement (or any prospectus supplement covering the Registrable Securities where the Company is a WKSI and has filed an automatic shelf registration statement) or amendment thereto, any prospectus or supplement thereto, or comparable statements under securities or “blue sky” laws of any jurisdiction, or any Issuer Free Writing Prospectus related thereto, the Company will furnish to one counsel for the Participating Holders (selected by the Majority Participating Holders) and to the lead managing underwriters, if any, copies of all such documents proposed to be filed (including all exhibits thereto), which documents will be subject to the reasonable review and reasonable comment of such counsel, and the Company shall not file any registration statement (or any prospectus supplement covering the Registrable Securities where the Company is a WKSI and has filed an automatic shelf registration statement) or amendment thereto, any prospectus or supplement thereto or any Issuer Free Writing Prospectus related thereto to which the Majority Participating Holders or the underwriters, if any, shall reasonably object; provided, further,
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however, that the Company shall not have any obligation to modify any information if the Company expects that so doing would cause the registration statement or amendment thereto, any prospectus or supplement thereto or any Issuer Free Writing Prospectus related thereto to contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading);
(b) shall prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for such period as set forth in Section 2.4(a), and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all Registrable Securities covered by such registration statement (or any related prospectus supplement) in accordance with the intended methods of disposition by the Participating Holder(s) thereof set forth in such registration statement (or any related prospectus supplement);
(c) shall furnish, without charge, to each Participating Holder and each underwriter, if any, of the securities covered by such registration statement such number of copies of such registration statement, each amendment thereto, the prospectus included in such registration statement, each preliminary prospectus, each prospectus supplement and each Issuer Free Writing Prospectus utilized in connection therewith, all in conformity with the requirements of the Securities Act, and such other documents as such Participating Holder and underwriter reasonably may request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such Participating Holder, and shall consent to the use in accordance with all applicable law of each such registration statement, each amendment thereto, each such prospectus, preliminary prospectus, prospectus supplement or Issuer Free Writing Prospectus by each such Participating Holder and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such registration statement or prospectus;
(d) shall use commercially reasonable efforts to register or qualify the Registrable Securities covered by such registration statement (or any related prospectus supplement) under such other securities or “blue sky” laws of such jurisdictions as any Participating Holder or any managing underwriter, if any, reasonably shall request, and do any and all other acts and things that may be reasonably necessary or advisable to enable such Participating Holder or underwriter, if any, to consummate the disposition of the Registrable Securities in such jurisdictions, except that in no event shall the Company be required (i) to qualify to do business as a foreign corporation in any jurisdiction where, but for the requirements of this Section 2.4(d), it would not be required to be so qualified, (ii) to subject itself to taxation in any such jurisdiction, if it is not otherwise so subject or (iii) to consent to general service of process in any such jurisdiction;
(e) shall promptly notify each Participating Holder and each managing underwriter, if any:
(i) when the registration statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto, any post-effective amendment to the registration statement or any Issuer Free Writing Prospectus has been filed and, with respect to the registration statement or any post-effective amendment, when the same has become effective;
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(ii) of any request by the SEC or state securities authority for amendments or supplements to the registration statement or the prospectus related thereto or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction or the initiation of any proceeding for such purpose;
(v) of the existence of any fact of which the Company becomes aware which results in the registration statement, the prospectus related thereto, any document incorporated therein by reference, any Issuer Free Writing Prospectus or the information conveyed to any purchaser at the time of sale to such purchaser containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statement therein not misleading; and
(vi) if at any time the representations and warranties contemplated by any underwriting agreement, securities sale agreement or other similar agreement relating to the offering shall cease to be true and correct in all material respects; and, if the notification relates to an event described in clause (v), the Company, subject to the provisions of Section 2.1(c), promptly shall prepare and file with the SEC, and furnish to each seller and each underwriter, if any, a reasonable number of copies of, a prospectus supplemented or amended so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(f) shall comply with all applicable rules and regulations of the SEC, and make generally available to its security holders, as soon as reasonably practicable after the effective date of the registration statement (or the date of any prospectus supplement covering the Registrable Securities in connection with an offering pursuant to a “shelf” registration statement) (and in any event within 90 days after the end of the 12-month period described hereafter), an earnings statement, which need not be audited, covering a period of at least 12 consecutive months beginning with the first day of the Company’s first calendar quarter after the effective date of the registration statement (or the date of any prospectus supplement covering the Registrable Securities in connection with an offering pursuant to a “shelf” registration statement), which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(g) shall use reasonable efforts to cause all Registrable Securities covered by such registration statement to be authorized to be listed on a national securities exchange if shares of the particular class of Registrable Securities are at that time, or will be immediately following the offering, listed on such exchange;
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(h) shall provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities covered by such registration statement not later than the effective date of such registration statement (or the date of any prospectus supplement covering the Registrable Securities in connection with an offering pursuant to a “shelf” registration statement);
(i) shall enter into such customary agreements (including, if applicable, an underwriting agreement) and take such other actions as the Majority Participating Holders shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (it being understood that the Holders of the Registrable Securities that are to be distributed by any underwriters shall be parties to any such underwriting agreement and may, at their option, require that the Company make to, and for the benefit of, such Holders the representations, warranties and covenants of the Company which are being made to and for the benefit of such underwriters);
(j) to the extent required by an underwriting agreement, if any, shall use commercially reasonable efforts to obtain an opinion from the Company’s counsel and a “comfort” letter from the Company’s independent public accountants in customary form and covering such matters as are customarily covered by such opinions and “comfort” letters delivered to underwriters in underwritten public offerings, which opinion and letter shall be reasonably satisfactory to the underwriters, if any;
(k) shall use commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of the registration statement;
(l) shall provide a CUSIP number for all Registrable Securities, not later than the effective date of the registration statement (or the date of any prospectus supplement covering the Registrable Securities in connection with an offering pursuant to a “shelf” registration statement);
(m) shall make reasonably available its employees and personnel for participation in “road shows” and other marketing efforts and otherwise provide reasonable assistance to the underwriters, taking into account the needs of the Company’s businesses and the requirements of the marketing process, in the marketing of Registrable Securities in any underwritten offering;
(n) shall promptly prior to the filing of any document that is to be incorporated by reference into the registration statement, the prospectus or any prospectus supplement and prior to the filing of any Issuer Free Writing Prospectus, provide copies of such document to each managing underwriter, if any, and make the Company’s representatives reasonably available for discussion of such document and make such changes in such document concerning the Participating Holders prior to the filing thereof as underwriters may reasonably request; provided, however, that the Company shall not have any obligation to modify any information if the Company expects that so doing would cause the registration statement or amendment thereto, any prospectus or supplement thereto or any Issuer Free Writing Prospectus related thereto, to contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;
(o) shall cooperate with the Participating Holders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities to be issued in such denominations and registered in such names in accordance with the underwriting agreement prior to any sale of Registrable Securities to the underwriters or, if not an underwritten offering, in accordance with the instructions of the Participating Holders at least three Business Days prior to any sale of Registrable Securities and instruct any transfer agent and registrar of Registrable Securities to release any stop transfer orders in respect thereof; provided, however, that the Company may satisfy its obligations hereunder without issuing physical stock certificates through the use of The Depository Trust Company’s Direct Registration System or Deposit/Withdrawal at Custodian service;
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(p) shall take all such other reasonable actions as are necessary or advisable in order to expedite or facilitate the disposition of such Registrable Securities;
(q) shall not take any direct or indirect action prohibited by Regulation M under the Exchange Act; provided, however, that to the extent that any prohibition thereunder is applicable to the Company, the Company will take such reasonable action as is necessary to make any such prohibition inapplicable;
(r) shall cooperate with each Participating Holder and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA; and
(s) shall take all reasonable action to ensure that any Issuer Free Writing Prospectus utilized in connection with any registration covered by Section 2.1 or Section 2.2 complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
The Company may require as a condition precedent to the Company’s obligations under this Section 2.4, that each Participating Holder as to which any registration is being effected furnish the Company such information in writing regarding such Participating Holder and the distribution of its Registrable Securities as the Company from time to time reasonably may request; provided, that such information is necessary for the Company to consummate such registration and shall be used only in connection with such registration. Each Participating Holder agrees that upon receipt of any notice from the Company under Section 2.4(e)(v) such Participating Holder will discontinue its disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Participating Holder’s receipt of the copies of the supplemented or amended prospectus. In the event the Company shall give any such notice, the applicable period set forth in Section 2.4(b) shall be extended by the number of days during such period from and including the date of the giving of such notice to and including the date when each Participating Holder shall have received the copies of the supplemented or amended prospectus. If any such registration statement or comparable statement under “blue sky” laws refers to any Holder by name or otherwise as the Holder of any securities of the Company, such Holder shall have the right to require (i) the insertion therein of language, in form and substance reasonably satisfactory to such Holder and the Company, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company or (ii) in the event that such reference to such Holder by name or otherwise is not in the judgment of the Company, as advised by counsel, required by the Securities Act or any similar federal statute or any state “blue sky” or securities law then in force, the deletion of the reference to such Holder.
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Section 2.5 Automatic Shelf Registration Statements. To the extent the Company is a well-known seasoned issuer as defined in Rule 405 under the Securities Act (a “WKSI”) at the time (i) the Company files a registration statement pursuant to Section 2.1(h) or (ii) any Demand Registration Request is submitted to the Company, and, in the case of Demand Registration Request, such Demand Registration Request requests that the Company file an automatic shelf registration statement as defined in Rule 405 under the Securities Act (an “automatic shelf registration statement”) on Form S-3, the Company shall file (i) an automatic shelf registration statement that covers those Registrable Securities that are requested to be registered or (ii) a prospectus supplement covering the Registrable Securities where the Company has filed an automatic shelf registration statement prior to the date on which the Preferred Shares have been converted to Common Stock as set forth in Section 2.1(h) or the Demand Registration Request, as applicable. The Company shall use commercially reasonable efforts to remain a WKSI and not become an ineligible issuer (as defined in Rule 405 under the Securities Act) during the period during which such automatic shelf registration statement is required to remain effective. If the Company does not pay the filing fee covering the Registrable Securities at the time the automatic shelf registration statement is filed, the Company shall pay such fee at such time or times as the Registrable Securities are to be sold. If the automatic shelf registration statement has been outstanding for at least three years, at the end of the third year the Company shall refile a new automatic shelf registration statement covering the Registrable Securities. If at any time when the Company is required to re-evaluate its WKSI status, the Company determines that it is not a WKSI, the Company shall use reasonable best efforts to refile the shelf registration statement on Form S-3 and, if such form is not available, Form S-1, and keep such registration statement effective during the period during which such registration statement is required to be kept effective. Notwithstanding anything contained herein to the contrary, the Company shall be entitled to exclude from the automatic shelf registration statement such Registrable Securities as the Company and its securities counsel reasonably determine (in consultation with the Majority Participating Holders and their securities counsel) is reasonably necessary for the offering to qualify as a secondary (rather than a primary) offering pursuant to Rule 415 under the Securities Act in response to comments from the staff of the SEC. To the extent any Registrable Securities are so excluded, the Company agrees to register such excluded shares in accordance with Section 2.1 promptly when eligible to do so under applicable federal securities laws, rules, regulations and policies, as the Company and its securities counsel reasonably determine (in consultation with the Majority Participating Holders and their securities counsel). If the Company files any shelf registration statement for the benefit of the holders of any of its securities other than the Holders, the Company shall include in such registration statement such disclosures as may be required by Rule 430B under the Securities Act, referring to the unnamed selling security holders in a generic manner, in order to ensure that the Holders may be added to such shelf registration statement at a later time through the filing of a prospectus supplement rather than a post-effective amendment.
Section 2.6 Registration Expenses.
(a) The Company shall pay all Registration Expenses (i) with respect to any Demand Registration whether or not the relevant registration statement becomes effective or remains effective for the period contemplated by Section 2.4(a) and (ii) with respect to any registration effected under Section 2.2.
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(b) Notwithstanding the foregoing, (i) the provisions of this Section 2.6 shall be deemed amended to the extent necessary to cause these expense provisions to comply with “blue sky” laws of each state in which the offering is made, (ii) in connection with any registration hereunder, each Participating Holder shall pay all underwriting discounts and commissions pro rata in accordance with the number of Registrable Securities sold in the offering by such Participating Holder and transfer taxes, if any, attributable to the sale of such Participating Holder’s Registrable Securities, (iii) in connection with each registration pursuant to Section 2.2, the Participating Holder(s) shall pay all fees and disbursements of counsel for any holder of Registrable Securities other than with respect to the reasonable fees and disbursements of one counsel for the Participating Holder(s) selected by the Majority Participating Holders that are required to be paid by the Company, and (iv) the Company shall, in the case of all registrations under this Article II, be responsible for all its internal expenses.
Section 2.7 Underwritten Offerings.
(a) If requested by the underwriters for any underwritten offering by the Holders pursuant to a Demand Registration, the Company shall enter into a customary underwriting agreement with the underwriters. Such underwriting agreement shall be satisfactory in form and substance to the Majority Participating Holders and the Company and shall contain such representations and warranties by, and such other agreements on the part of, the Company and such other terms as are generally prevailing in agreements of that type; provided, however, that the Company shall not be required to make any representations or warranties with respect to written information specifically provided by a Participating Holder for inclusion in the registration statement.
(b) In the case of a registration pursuant to Section 2.2, if the Company shall have determined to enter into an underwriting agreement in connection therewith, any Registrable Securities to be included in such registration shall be subject to such underwriting agreement.
(c) In the case of any Demand Registration pursuant to an underwritten offering, or, in the case of a registration under Section 2.2, if the Company has determined to enter into an underwriting agreement in connection therewith, all securities to be included in such registration shall be subject to an underwriting agreement and no Person may participate in such registration unless such Person agrees to sell such Person’s securities on the basis provided therein and, subject to the provisions of this Section 2.7, completes and executes all reasonable questionnaires, and other documents, including custody agreements and powers of attorney, that must be executed in connection therewith, and provides such other information to the Company or the underwriter as may be necessary to register such Person’s securities.
Section 2.8 Holdback Agreements.
(a) Each Participating Holder agrees, to the extent requested in writing by the managing underwriters, if any, of any Demand Registration, not to sell, transfer, pledge, contract to sell, grant any option to purchase, or otherwise dispose of, indirectly or directly, including any sale pursuant to Rule 144 under the Securities Act, any Common Stock, or any other equity security of the Company or any security convertible into or exchangeable or exercisable for any equity security of the Company other than as part of such underwritten public offering during the time period reasonably requested by the managing underwriters, not to exceed 90 days or such shorter period as is applicable to any officer or director of the Company or any other selling securityholder. Each such holdback arrangement shall be subject to the same exceptions as are applicable to any officer or director of the Company or any other selling securityholder and shall include a pro rata release in the event the managing underwriters waive the terms of any holdback arrangement applicable to any officer or director of the Company or any other selling securityholder.
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(b) The Company agrees, to the extent requested in writing by the managing underwriters, if any, that, if it shall previously have received a request for registration pursuant to Section 2.1 or Section 2.2, and if such previous registration shall not have been withdrawn or abandoned, it shall not sell, transfer, pledge, contract to sell, grant any option to purchase, or otherwise dispose of any Common Stock, or any other equity security of the Company or any security convertible into or exchangeable or exercisable for any equity security of the Company (other than as part of such underwritten public offering, a registration on Form S-4 or Form S-8 or any successor or similar form which is then in effect or upon the conversion, exchange or exercise of any then outstanding Common Stock Equivalent), until a period of 90 days shall have elapsed from the effective date of such previous registration; and the Company shall so provide in any registration rights agreements hereafter entered into with respect to any of its securities.
Section 2.9 No Required Sale. Nothing in this Agreement shall be deemed to create an independent obligation on the part of any Holder to sell any Registrable Securities pursuant to any effective registration statement.
Section 2.10 Indemnification.
(a) In the event of any registration of any securities of the Company under the Securities Act pursuant to this Article II, the Company will, and hereby agrees to, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers, fiduciaries, employees, agents, Affiliates, consultants, representatives, general and limited partners, stockholders, successors, assigns (and the directors, officers, employees and stockholders thereof), and each other Person, if any, who controls such Holder within the meaning of the Securities Act, from and against any and all losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened) and expenses (including reasonable fees of counsel and any amounts paid in any settlement effected with the Company’s consent, which consent shall not be unreasonably withheld or delayed) to which each such indemnified party may become subject under the Securities Act or otherwise in respect thereof (collectively, “Losses”), insofar as such Losses arise out of or are based upon any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact necessary to be stated or necessary in order to make the statements, in light of the circumstances under which they were made, not misleading, in any registration statement under which such securities were registered under the Securities Act, or amendment thereof or supplement thereto, or in any preliminary, final or summary prospectus or any amendment or supplement thereto, together with the documents incorporated by reference therein, or any Issuer Free Writing Prospectus utilized in connection therewith, and the Company will reimburse any such indemnified party for any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Loss as such expenses are incurred; provided, however, that the Company shall not be liable to any such indemnified party in any such case to the extent such Loss arises out of or is based upon any untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact made in such registration statement or amendment thereof or supplement thereto or in any such prospectus or any preliminary, final or summary prospectus or Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Company by or on behalf of any indemnified party specifically for use therein. Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the transfer of such securities by such Holder.
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(b) Each Holder whose Registrable Securities are included in the securities as to which any registration under Section 2.1 or Section 2.2 is being effected shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in paragraph (a) of this Section 2.10), to the fullest extent permitted by law, the Company, its officers and directors, each Person controlling the Company within the meaning of the Securities Act and all other prospective sellers and their respective directors, officers, fiduciaries, employees, agents, Affiliates, consultants, representatives, general and limited partners, stockholders, successors, assigns and respective controlling Persons from and against any Loss with respect to any untrue statement or alleged untrue statement of any material fact in, or omission or alleged omission of any material fact from, such registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus utilized in connection therewith, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or its representatives by or on behalf of such Holder specifically for use therein and reimburse such indemnified party for any legal or other expenses reasonably incurred in connection with investigating or defending any such Loss as such expenses are incurred; provided, however, that the aggregate amount that any such Holder shall be required to pay pursuant to this Section 2.10 shall in no case be greater than the amount of the net proceeds received by such Holder upon the sale of the Registrable Securities pursuant to the registration statement giving rise to such claim. Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the transfer of such securities by such Holder.
(c) Any Person entitled to indemnification under this Agreement promptly shall notify the indemnifying party in writing of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 2.10, but the failure of any such Person to provide such notice shall not relieve the indemnifying party of its obligations under the preceding paragraphs of this Section 2.10, except to the extent the indemnifying party is materially prejudiced thereby, and shall not relieve the indemnifying party from any liability that it may have to any such Person otherwise than under this Article II. In case any action or proceeding is brought against an indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, unless in the reasonable opinion of outside counsel to the indemnified party a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, to assume the defense thereof jointly with any other indemnifying party similarly notified, to the extent that it chooses, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party that it so chooses, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that (i) if the indemnifying party fails to take reasonable steps necessary to defend diligently the action or proceeding within 20 days after receiving notice from such indemnified party, (ii) if such indemnified party who is a defendant in any action or proceeding that is also brought against the indemnifying party reasonably shall have concluded
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that there may be one or more legal defenses available to such indemnified party that are not available to the indemnifying party or (iii) if representation of both parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct, then, in any such case, the indemnified party shall have the right to assume or continue its own defense as set forth above (but with no more than one firm of counsel for all indemnified parties in each jurisdiction, except to the extent any indemnified party or parties reasonably shall have concluded that there may be legal defenses available to such party or parties that are not available to the other indemnified parties or to the extent representation of all indemnified parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct) and the indemnifying party shall be liable for any expenses therefor. Without the written consent of the indemnified party, which consent shall not be unreasonably withheld, no indemnifying party shall effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder, whether or not the indemnified party is an actual or potential party to such action or claim, unless such settlement, compromise or judgment (A) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (B) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.
(d) If for any reason the foregoing indemnity is unavailable or is insufficient to hold harmless an indemnified party under Section 2.10(a), Section 2.10(b) or Section 2.10(c), then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, with respect to such offering of securities. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. If, however, the allocation provided in the second preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying party and the indemnified party as well as any other relevant equitable considerations. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 2.10(d) were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentences of this Section 2.10(d). The amount paid or payable in respect of any Loss shall be deemed to include any legal or other third-party expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Loss. No Person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Notwithstanding anything in this Section 2.10(d) to the contrary, no indemnifying party other than the Company shall be required pursuant to this Section 2.10(d) to contribute any amount in excess of the net proceeds received by such indemnifying party from the sale of Registrable Securities in the offering to which the Losses of the indemnified parties relate, less the amount of any indemnification payment made by such indemnifying party pursuant to Section 2.10(b) and Section 2.10(c).
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(e) The indemnity and contribution agreements contained herein shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless of any investigation made or omitted by or on behalf of any indemnified party and shall survive the transfer of the Registrable Securities by any such party.
(f) The indemnification and contribution required by this Section 2.10 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred.
ARTICLE III
GENERAL
Section 3.1 Rule 144. The Company covenants that (a) so long as it remains subject to the reporting provisions of the Exchange Act, it will timely file the reports required to be filed by it under the Securities Act or the Exchange Act or, if it is not required to file such reports, upon the request of any Holder it shall make publicly available other information so long as necessary to permit sales of such Registrable Securities in compliance with Rule 144 under the Securities Act and (b) it will take such further action as any Holder reasonably may request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. Upon the reasonable request of any Holder in connection with the sale by such Holder of Registrable Securities without registration, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements.
Section 3.2 Nominees for Beneficial Owners. If Registrable Securities are held by a nominee for the beneficial owner thereof, the beneficial owner thereof may, at its option, be treated as the Holder of such Registrable Securities for purposes of any request or other action by any Holder or Holders pursuant to this Agreement or any determination of any number or percentage of shares constituting Registrable Securities held by any Holder or Holders contemplated by this Agreement; provided, that the Company shall have received assurances reasonably satisfactory to it of such beneficial ownership.
Section 3.3 No Inconsistent Agreements. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with any other agreements to which the Company is a party or by which it is bound. Without the prior written consent of Holders of a majority of the then outstanding Registrable Securities, which consent shall not be unreasonably withheld, the Company will not enter into any agreement with respect to its securities that is inconsistent with the rights granted in this Agreement or otherwise conflicts with the provisions hereof or provides terms and conditions that are more favorable to, or less restrictive on, the other party thereto than the terms and conditions contained in this Agreement are to the Holders, other than any lock-up agreement with the underwriters in connection with any registered offering effected hereunder, pursuant to which the Company shall agree not to register for sale, and the Company shall agree not to sell or otherwise dispose of, Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, for a specified period following the registered offering. If the Company enters into any other registration rights agreement with respect to any of its securities that contains terms that are more favorable to, or
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less restrictive on, the other party thereto than the terms and conditions contained in this Agreement are to the Holders, the terms and conditions of this Agreement shall immediately be deemed to have been amended without further action by the Company or any of the Holders so that the Holders shall each be entitled to the benefit of any such more favorable or less restrictive terms or conditions.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Amendment and Waiver.
(a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by the Company and a majority in interest of the Holders or, in the case of a waiver, by the party or parties against whom the waiver is to be effective, in an instrument specifically designated as an amendment or waiver hereto; provided, however, that waiver by the Holders shall require the consent of a majority in interest of the Holders.
(b) No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder. The failure of the Company to cause the Registration Statement to become effective and to remain effective as provided herein shall not convey to the Holder(s) any rights to the recovery of monetary and or liquidated damages.
Section 4.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or if by email, upon written confirmation of receipt by e-mail or otherwise, (b) on the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
(i) if to any Holder other than the Original Holder, to its last known address appearing on the books of the Company maintained for such purpose, and if to the Original Holder, to:
PepsiCo, Inc.
700 Anderson Hill Road
Purchase, NY 10577
Attention: [****]
E-mail: [****]
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With a copy to:
Cravath, Swaine & Moore LLP
Two Manhattan West, 375 Ninth Avenue
New York, NY 10001
Attention: Claudia J. Ricciardi
Email: cricciardi@cravath.com
(ii) if to the Company, to:
Celsius Holdings, Inc.
2381 NW Executive Center Drive
Boca Raton, FL 33431
Attention: [****]
Email: [****]
With a copy to:
Freshfields US LLP
3 World Trade Center
175 Greenwich Street, 51st Floor
New York, NY 10007
Attention: Ethan Klingsberg; Sanjay Murti
Email: ethan.klingsberg@freshfields.com; sanjay.murti@freshfields.com
or such other address as the Company or the Original Holder shall have specified to the other party in writing in accordance with this Section 4.2.
Section 4.3 Interpretation. When a reference is made in this Agreement to a Section or Article, such reference shall be to a Section or Article of this Agreement unless otherwise indicated. The headings contained in this Agreement are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise specified. Each of the parties hereto acknowledges that it has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application and is expressly waived.
Section 4.4 Entire Agreement. This Agreement constitutes the entire agreement, and supersedes all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings between the parties, with respect to the subject matter hereof and thereof.
Section 4.5 No Third-Party Beneficiaries. Except as provided in Section 2.10, nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the parties and their respective successors and permitted assigns any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement.
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Section 4.6 Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware.
Section 4.7 Submission to Jurisdiction. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any other party or its successors or assigns shall be brought and determined in any Delaware State or federal court, and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in Delaware, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Delaware as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 4.8 Assignment; Successors. The rights under this Agreement may be assigned in whole or in part (but only with all related obligations) by a Holder to a transferee of Registrable Securities that is an Affiliate of Holder; provided, however, that (x) the Company is promptly furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement. This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. If any Person shall acquire Registrable Securities from any Holder in accordance with the terms and conditions hereunder, whether by operation of law or otherwise, such Person shall promptly notify the Company and such Registrable Securities acquired from such Holder shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be entitled to receive the benefits of and be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement. Any such successor or assign shall agree in writing to acquire and hold the Registrable Securities acquired from such Holder subject to all of the terms hereof. Any attempted assignment or transfer in violation of this Agreement shall be null and void ab initio.
Section 4.9 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each of the parties shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to prevent
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breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any Delaware State or federal court, this being in addition to any other remedy to which such party is entitled at law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any law to post security as a prerequisite to obtaining equitable relief.
Section 4.10 Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.
Section 4.11 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 4.12 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.
Section 4.13 Signature. This Agreement may be executed by facsimile, electronic mail (including pdf) or any electronic signature complying with the U.S. Federal ESIGN Act of 2000 or the New York Electronic Signature and Records Act or other transmission method, and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes to the fullest extent permitted by applicable law.
Section 4.14 Time of Essence. Time is of the essence with regard to all dates and time periods set forth or referred to in this Agreement.
Section 4.15 Term. Except as specifically otherwise provided herein, the provisions of this Agreement shall terminate upon the earliest to occur of the following: (i) no Registrable Securities remain outstanding; (ii) all of the Registrable Securities have been transferred, sold or otherwise disposed of in accordance with the provisions of Rule 144 promulgated under the Securities Act (or any successor provision); or (iii) the date on which the Original Holder and its Affiliates collectively no longer hold any Registrable Securities.
Section 4.16 Amendment and Restatement. This Agreement amends and restates the Original Agreement in its entirety. Upon the execution of this Agreement, the terms and provisions of the Original Agreement shall be superseded hereby in their entirety.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| CELSIUS HOLDINGS, INC. | ||
| By: | /s/ Richard Mattessich | |
| Name: Richard Mattessich | ||
| Title: Chief Legal Officer | ||
| PEPSICO, INC. | ||
| By: | /s/ Dan Fink | |
| Name: Dan Fink | ||
| Title: Senior Vice President | ||
[Signature Page to Registration Rights Agreement]
Exhibit 10.3
CERTAIN IDENTIFIED INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT BECAUSE THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THE OMITTED INFORMATION AS PRIVATE OR CONFIDENTIAL, AND SUCH INFORMATION IS NOT MATERIAL. OMISSIONS ARE IDENTIFIED AS [***].
TRANSACTION AGREEMENT
dated as of August 28, 2025
by and
between
PEPSICO, INC.
and
CELSIUS HOLDINGS, INC.
TABLE OF CONTENTS
| ARTICLE I DEFINITIONS |
2 | |||||
| SECTION 1.01 |
Certain Defined Terms | 2 | ||||
| SECTION 1.02 |
Terms Generally | 17 | ||||
| ARTICLE II PURCHASE AND SALE OF TRANSFERRED ASSETS; ASSUMPTION OF ASSUMED LIABILITIES |
18 | |||||
| SECTION 2.01 |
Purchase and Sale of Transferred Assets; Exclusion of Excluded Assets | 18 | ||||
| SECTION 2.02 |
Assumption of Assumed Liabilities; Retention of Excluded Liabilities | 19 | ||||
| SECTION 2.03 |
Purchase Price; Allocation of Purchase Price | 19 | ||||
| SECTION 2.04 |
Purchase Price Adjustment | 20 | ||||
| SECTION 2.05 |
The Closing | 22 | ||||
| SECTION 2.06 |
Deliveries for the Closing | 22 | ||||
| SECTION 2.07 |
Withholding | 22 | ||||
| ARTICLE III CAPTAINCY |
23 | |||||
| SECTION 3.01 |
Captaincy; Term | 23 | ||||
| SECTION 3.02 |
PepsiCo Commitments | 23 | ||||
| SECTION 3.03 |
PepsiCo Efforts | 24 | ||||
| SECTION 3.04 |
Additional U.S. Margin | 25 | ||||
| SECTION 3.05 |
Management Fee | 25 | ||||
| SECTION 3.06 |
Energy Product Fee | 26 | ||||
| SECTION 3.07 |
[***] Right of First Refusal | 26 | ||||
| SECTION 3.08 |
[***] |
27 | ||||
| SECTION 3.09 |
Increase to U.S. Distribution Agreement Buy-Out | 27 | ||||
| SECTION 3.10 |
Termination | 27 | ||||
| SECTION 3.11 |
Breach; Exclusive Remedy | 28 | ||||
| ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PEPSICO |
28 | |||||
| SECTION 4.01 |
Organization and Qualification | 28 | ||||
| SECTION 4.02 |
Authority; Execution and Delivery; Enforceability | 29 | ||||
| SECTION 4.03 |
No Conflicts; Consents and Approvals | 29 | ||||
| SECTION 4.04 |
Financial Information | 30 | ||||
| SECTION 4.05 |
No Undisclosed Liabilities; Absence of Certain Changes or Events | 31 | ||||
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| SECTION 4.06 |
Absence of Litigation | 31 | ||||
| SECTION 4.07 |
Compliance with Laws | 31 | ||||
| SECTION 4.08 |
Governmental Licenses and Permits | 33 | ||||
| SECTION 4.09 |
Title | 33 | ||||
| SECTION 4.10 |
Employee Benefit Plans | 33 | ||||
| SECTION 4.11 |
Employee Matters | 34 | ||||
| SECTION 4.12 |
Environmental Matters | 35 | ||||
| SECTION 4.13 |
Contracts | 35 | ||||
| SECTION 4.14 |
Key Customers and Suppliers | 37 | ||||
| SECTION 4.15 |
Intellectual Property | 37 | ||||
| SECTION 4.16 |
Data Privacy and Security | 39 | ||||
| SECTION 4.17 |
FDA and Product Matters | 40 | ||||
| SECTION 4.18 |
Taxes | 42 | ||||
| SECTION 4.19 |
Brokers or Finders | 42 | ||||
| SECTION 4.20 |
Limitation | 43 | ||||
| SECTION 4.21 |
No Other Representations and Warranties | 43 | ||||
| ARTICLE V REPRESENTATIONS AND WARRANTIES OF CELSIUS |
43 | |||||
| SECTION 5.01 |
Organization and Qualification | 43 | ||||
| SECTION 5.02 |
Authority; Execution and Delivery; Enforceability | 44 | ||||
| SECTION 5.03 |
No Conflicts; Consents and Approvals | 44 | ||||
| SECTION 5.04 |
Absence of Litigation | 45 | ||||
| SECTION 5.05 |
Brokers or Finders | 45 | ||||
| SECTION 5.06 |
Financial Capability | 45 | ||||
| SECTION 5.07 |
Limitation | 45 | ||||
| SECTION 5.08 |
No Other Representations and Warranties | 45 | ||||
| ARTICLE VI COVENANTS |
46 | |||||
| SECTION 6.01 |
Employee Matters | 46 | ||||
| SECTION 6.02 |
Confidentiality; Publicity | 49 | ||||
| SECTION 6.03 |
Bulk Sales | 49 | ||||
| SECTION 6.04 |
Intercompany Matters; Further Assurances | 49 | ||||
| SECTION 6.05 |
Maintenance of Books and Records | 50 | ||||
| SECTION 6.06 |
Intellectual Property | 51 | ||||
| SECTION 6.07 |
Shared Contracts | 52 | ||||
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| SECTION 6.08 |
Wrong Pockets | 53 | ||||
| SECTION 6.09 |
Separation Plan | 53 | ||||
| SECTION 6.10 |
Delivery of Financial Information | 54 | ||||
| SECTION 6.11 |
Data Privacy and Security | 55 | ||||
| SECTION 6.12 |
Certain Marketing Agreements | 55 | ||||
| SECTION 6.13 |
VDR Access and Information | 55 | ||||
| ARTICLE VII TAX MATTERS |
56 | |||||
| SECTION 7.01 |
Transfer Taxes | 56 | ||||
| SECTION 7.02 |
Tax Characterization of Adjustments | 56 | ||||
| SECTION 7.03 |
Straddle Period Allocation | 56 | ||||
| SECTION 7.04 |
Tax Proceedings | 56 | ||||
| SECTION 7.05 |
Tax Cooperation | 57 | ||||
| SECTION 7.06 |
GST/HST | 57 | ||||
| ARTICLE VIII SURVIVAL; INDEMNIFICATION |
57 | |||||
| SECTION 8.01 |
Survival | 57 | ||||
| SECTION 8.02 |
Indemnification | 58 | ||||
| SECTION 8.03 |
Notice of Claim; Defense | 58 | ||||
| SECTION 8.04 |
Limitation of Liability; No Duplication; Mitigation; Exclusive Remedy | 59 | ||||
| ARTICLE IX GENERAL PROVISIONS |
60 | |||||
| SECTION 9.01 |
Waiver | 60 | ||||
| SECTION 9.02 |
No Conflict | 60 | ||||
| SECTION 9.03 |
Expenses | 60 | ||||
| SECTION 9.04 |
Notices | 61 | ||||
| SECTION 9.05 |
Headings | 62 | ||||
| SECTION 9.06 |
Severability | 62 | ||||
| SECTION 9.07 |
Entire Agreement | 62 | ||||
| SECTION 9.08 |
Successors and Assigns | 62 | ||||
| SECTION 9.09 |
No Third-Party Beneficiaries | 62 | ||||
| SECTION 9.10 |
Amendment | 62 | ||||
| SECTION 9.11 |
Governing Law; Venue; Arbitration | 62 | ||||
| SECTION 9.12 |
Counterparts | 64 | ||||
| SECTION 9.13 |
Waiver of Jury Trial | 64 | ||||
| SECTION 9.14 |
Enforcement | 64 | ||||
| SECTION 9.15 |
Mutual Drafting | 64 | ||||
| SECTION 9.16 |
Disclosure Letter | 64 | ||||
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| EXHIBITS | ||
| Exhibit A | Accounting Principles | |
| Exhibit B | Form of Bill of Sale and Assumption Agreement | |
| Exhibit C | Form of Brand Agreement | |
| Exhibit D | Form of Canada IP Assignment Agreement | |
| Exhibit E | Form of Co-Packing Services Agreement | |
| Exhibit F | Form of U.S. IP Assignment Agreement | |
| Exhibit G | Form of Transition Services Agreement | |
| Exhibit H | Transferred Data Schedule | |
| ANNEXES | ||
| Annex A | National Annual Planograms [***] | |
| Annex B | Licensed Products Relevant Share & LRB Energy Category Relevant Share | |
| Annex C | Examples of Divisional Annual Planograms | |
| Annex D | Divisional Annual Planograms | |
| Annex E | Market Planograms Guidance | |
TRANSACTION AGREEMENT
This TRANSACTION AGREEMENT (this “Agreement”) is dated as of August 28, 2025, by and between PepsiCo, Inc., a North Carolina corporation (“PepsiCo”), and Celsius Holdings, Inc., a Nevada corporation (“Celsius”). PepsiCo and Celsius are sometimes referred to herein collectively as the “Parties” and each, individually, as a “Party.”
W I T N E S S E T H:
WHEREAS, PepsiCo is, directly or indirectly through certain Subsidiaries, engaged in the worldwide business of manufacturing, marketing, selling and distributing products under, and the licensing of, the Rockstar Energy Drink Brand (such business, collectively, as conducted by PepsiCo and its Subsidiaries, the “Business”);
WHEREAS, PepsiCo and its Subsidiary Transferors desire to sell and transfer to Celsius or its designees, and Celsius or its designees desire to purchase, accept and assume from PepsiCo and its Subsidiary Transferors, certain assets and liabilities related to the business of marketing and selling products under, and the licensing of, the Rockstar Energy Drink Brand in the Acquired Territory (such business, as conducted by PepsiCo and its Subsidiaries, the “Acquired Business”);
WHEREAS, PepsiCo and Celsius desire to enter into certain long-term commercial arrangements, including (i) the Captaincy, (ii) an amendment and restatement of the Existing U.S. Distribution Agreement (the “U.S. Distribution Agreement”) and (iii) an amendment and restatement of the Existing Canada Distribution Agreement (the “Canada Distribution Agreement”);
WHEREAS, in connection herewith, the Parties are concurrently entering into a Securities Purchase Agreement (the “Securities Purchase Agreement”), which provides for, among other things, the acquisition by PepsiCo of 390,000 shares of Series B Preferred Stock (as defined in the Securities Purchase Agreement) of Celsius; and
WHEREAS, in connection with the Transactions contemplated under this Agreement and the transactions contemplated by the Securities Purchase Agreement, the Parties have agreed that their respective obligations to pay the applicable purchase price at the applicable closing under this Agreement and under the Securities Purchase Agreement shall be set-off against one another, with any resulting balance to be settled in cash by the Party owing the excess amount.
NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the following terms have the following meanings:
“AAA” has the meaning specified in Section 9.11.
“Accounting Firm” has the meaning specified in Section 2.04(c).
“Accounting Principles” means, the accounting principles, procedures, practices, methodologies and policies set forth on Exhibit A.
“Acquired Business” has the meaning specified in the Recitals.
“Acquired Territory” means (a) the U.S. and its territories and possessions, excluding Puerto Rico and the U.S. Virgin Islands, and (b) Canada and its territories and possessions.
“Action” means any claim, demand, litigation, dispute, review, charge, indictment, action, cause of action, suit, audit, examination, investigation, inquiry, hearing or other judicial or administrative proceeding, at Law or in equity, by or before any Governmental Authority or arbitration or other similar dispute resolution proceeding.
“Additional Agreements” means the Transaction Documents (other than this Agreement), the Canada Distribution Agreement, the Securities Purchase Agreement and the U.S. Distribution Agreement.
“AOP” has the meaning specified in Section 3.02(b).
“AOP Written Communications” has the meaning specified in Section 3.02(c).
“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with such specified Person. For the avoidance of doubt, PepsiCo and its Subsidiaries do not constitute Affiliates of Celsius or any of its Subsidiaries, and Celsius and its Subsidiaries do not constitute Affiliates of PepsiCo or any of its Subsidiaries.
“Agreement” has the meaning specified in the Preamble.
“[***] Product” has the meaning specified in the U.S. Distribution Agreement.
“Anti-Bribery Law” has the meaning specified in Section 4.07(c).
“Applicable Distribution Agreement” means the Canada Distribution Agreement or the U.S. Distribution Agreement, as applicable.
“Assigned Contracts” means the Contracts set forth in Section 1.01(a) of the Disclosure Letter.
“Assumed HR Liabilities” has the meaning specified in Section 6.01(i).
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“Assumed Liabilities” means the following Liabilities:
(a) all Liabilities of PepsiCo and its Subsidiaries arising under the Assigned Contracts that are actually assigned to Celsius pursuant to Section 2.02 to the extent arising from or after the Closing, but only to the extent such Liabilities do not arise from or relate to any breach (or any event, circumstance or condition occurring or existing on or prior to the Closing Date that, with or without notice or lapse of time or both, would constitute or result in a breach) by PepsiCo or its Subsidiaries of any such Assigned Contract;
(b) all Liabilities of Celsius and its Affiliates for their respective violation or breach of this Agreement or the Additional Agreements;
(c) all Liabilities for Taxes to the extent arising out of or relating to the ownership, operation or conduct of the Acquired Business, the Transferred Assets or Assumed Liabilities for Post-Closing Tax Periods (or portions thereof, as determined in accordance with Section 7.03); provided, that Assumed Liabilities shall not include any Liabilities for Taxes attributable to, arising out of or relating to the ownership, operation or conduct of the Acquired Business or the Transferred Assets in any Pre-Closing Tax Period (other than any non-income Taxes taken into account as liabilities in the calculation of Closing Net Working Capital), which shall constitute Retained Taxes;
(d) the Assumed HR Liabilities;
(e) all Liabilities relating to the Acquired Business or the Transferred Assets with respect to escheat, abandoned or unclaimed property, bottle or can deposit liabilities, in each case to the extent arising from or after the Closing; and
(f) all other Liabilities to the extent arising out of or resulting from the ownership or operation by Celsius or its Affiliates of the Acquired Business or Transferred Assets from or after the Closing.
“Base Purchase Price” has the meaning specified in Section 2.03(a).
“Benefit Plan” means each “employee benefit plan” as defined in Section 3(3) of ERISA, whether or not subject to ERISA, including each bonus, commission, profit sharing, deferred compensation, pension, savings, fringe benefit, welfare, post-retirement health or welfare benefit, health, life, tuition refund, service award, company car or automobile expense reimbursement, scholarship, relocation, disability, accident, sick pay, sick leave, accrued leave, vacation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock or other equity or equity-based or other benefit plan, program, policy, practice, arrangement, agreement, fund or commitment, and each employment, retention, consulting, change in control, salary continuation, termination or severance or other compensation plan, program, policy, practice, arrangement or agreement.
“Bill of Sale and Assumption Agreement” means the Bill of Sale and Assumption Agreement, the form of which is attached hereto as Exhibit B, to be entered into by PepsiCo or the Subsidiary Transferors, on the one hand, and Celsius or the Celsius Designees, on the other, on the Closing Date.
“Brand Agreement” means the Brand Agreement, the form of which is attached hereto as Exhibit C, to be entered into by PepsiCo and Celsius Brands LLC on the Closing Date.
“Business” has the meaning specified in the Recitals.
“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by applicable Law to be closed in New York, New York.
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“Business Employee” means any employee of PepsiCo or any of its Subsidiaries that provides services primarily to the Acquired Business and is identified on Section 1.01(b) of the Disclosure Letter.
“Captaincy CRE Obligation” has the meaning specified in Section 3.02.
“Canada Distribution Agreement” has the meaning specified in the Recitals.
“Canada IP Assignment Agreement” means the Confirmatory Assignment of Intellectual Property, the form of which is attached hereto as Exhibit D, to be entered into by PepsiCo or the Subsidiary Transferors, on the one hand, and Celsius or the Celsius Designees, on the other, on the Closing Date.
“[***]” has the meaning specified in the U.S. Distribution Agreement.
“Celsius” has the meaning specified in the Preamble.
“Celsius 401(k) Plan” has the meaning specified in Section 6.01(g).
“Celsius Deficit” has the meaning specified in Section 2.04(a).
“Celsius Designee” has the meaning specified in Section 2.01(a).
“Celsius Facings” has the meaning specified in Section 3.02(a)(i).
“Celsius Indemnified Persons” has the meaning specified in Section 8.02(a).
“CFIA” has the meaning specified in Section 4.17(b).
“Circana Data” means the information periodically published by Circana, Inc., or other such successor syndicated data reporting service.
“Claim Notice” has the meaning specified in Section 8.03(a).
“Closing” has the meaning specified in Section 2.05.
“Closing Date” has the meaning specified in Section 2.05.
“Closing Net Working Capital” means (a) the current assets of the Acquired Business to the extent included in the Transferred Assets minus (b) the current liabilities of the Acquired Business to the extent included in the Assumed Liabilities, in each case, calculated as of 12:01 a.m., New York time, on the Closing Date, in accordance with the Accounting Principles and excluding, for the avoidance of doubt, any income Tax assets or liabilities and any deferred Tax assets or liabilities.
“Co-Packing Services Agreement” means the Co-Packing Services Agreement, the form of which is attached hereto as Exhibit E, to be entered into by PepsiCo or its Affiliate, on the one hand, and Celsius or its Affiliate, on the other, on the Closing Date.
“Code” means the Internal Revenue Code of 1986.
“Confidentiality Agreement” has the meaning specified in Section 6.02(a).
“Consent” has the meaning specified in Section 4.03(b).
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“Contract” means any contract, agreement, indenture, note, bond, loan, lease, sublease, pledge, conditional sales contract, mortgage, license, sublicense, permit, obligation, undertaking, commitment or similar binding arrangement (in each case, whether written or oral).
“Control” means, as to any Person, the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by Contract or otherwise. The term “Controlled” shall have a correlative meaning.
“Controlled Group Liability” means any Liability incurred under Title IV of ERISA (including any withdrawal liability as defined in Section 4201 of ERISA) or under Sections 412 or 4971 of the Code with respect to any PepsiCo Benefit Plan subject to Title IV of ERISA, including any “multiemployer plan” (within the meaning of Sections 3(37) and 4001(a)(3) of ERISA), by reason of PepsiCo’s or any of its Affiliates’ affiliation with any of their respective ERISA Affiliates, or Celsius being deemed a successor to any ERISA Affiliate of PepsiCo or any of its Affiliates.
“Copyrights” has the meaning specified in the definition of Intellectual Property.
“Data” means any and all databases, data sets, data collections and compilations, whether structured or unstructured, and electronic files and documents containing any of the foregoing.
“Data Privacy Laws” means all applicable Laws with respect to the privacy, security, protection and processing of Personal Information, or Personal Information breach notifications or reporting, including any regulations promulgated by Governmental Authorities thereunder.
“Disagreement Notice” has the meaning specified in Section 2.04(b).
“Disclosure Letter” means the disclosure letter delivered by PepsiCo to Celsius concurrently with or prior to the execution and delivery of this Agreement.
“Divisional Annual Planograms” means each of PepsiCo’s U.S. divisions’ annual divisional commercial guidance planograms (also referred to as divisional merchandising standards), for AFH/Foodservice (i.e., workspace, colleges & universities and local restaurants), Own the Streets /Independent Business Segment (which includes small format convenience and gas stores) (“OTS/IBS”) including the Large Format Progressions. [***]. Examples of Divisional Annual Planograms [***] are set forth in Annex C.
“DSD Channels” has the meaning specified in Section 3.07(b).
“Employee Manually Transferred Data” has the meaning specified in the Transferred Data Schedule.
“Employment Offer” has the meaning specified in Section 6.01(a).
“[***]” means [***].
5
“Energy Fee Products” means [***].
“Enforceability Exceptions” has the meaning specified in Section 4.02.
“Environmental Laws” means all federal, provincial, state, local and foreign Laws concerning: (i) pollution or protection or restoration of the environment (including air, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource or environmental media), (ii) human health and safety (to the extent relating to the handling of, or exposure to, hazardous or toxic materials) or (iii) the management of (including the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, registration, production, treatment or disposal of) any hazardous or toxic materials.
“Equipment” means furniture, tools, materials, supplies, fixtures, machinery, vehicles and telecommunications, manufacturing and other equipment and other interests in tangible personal property, excluding in all cases any Information Systems and any Intellectual Property covering, embodied in or connected to any of the foregoing.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means any corporation or trade or business that, together with PepsiCo, is or was, at a relevant time, treated as a single employer under Section 414 of the Code.
“Escalation Procedure” has the meaning specified in Section 3.02(a)(iv).
“Estimated Closing Date Payment” has the meaning specified in Section 2.03(b).
“Estimated Closing Statement” has the meaning specified in Section 2.03(b).
“Estimated Net Working Capital” has the meaning specified in Section 2.03(b).
“ETA” means Part IX of the Excise Tax Act (Canada) RSC 1985, c. E-15.
“Excepted Accounts” has the meaning specified in the U.S. Distribution Agreement.
“Exchange Act” means the Securities Exchange Act of 1934, together with the rules and regulations promulgated thereunder.
“Excluded Assets” means the following assets, properties and rights of PepsiCo and its Affiliates:
(a) all cash and cash equivalents;
6
(b) all Intellectual Property other than the Transferred Intellectual Property;
(c) all Information Systems;
(d) all Internet Properties other than the Internet Properties set forth on Section 1.01(e) of the Disclosure Letter;
(e) all Data other than the Transferred Data;
(f) all Contracts other than the Assigned Contracts;
(g) all rights to Tax refunds (whether in the form of cash or a direct credit against Taxes payable in respect of a Post-Closing Tax Period) and any Tax assets, in each case relating to the Business or Transferred Assets prior to Closing to the extent attributable to Taxes paid by PepsiCo or any of its Affiliates;
(h) all of PepsiCo’s and its Affiliates rights under this Agreement and the Additional Agreements;
(i) all accounts receivable arising from sales recorded prior to the Closing;
(j) claims, causes of action, choses in action, rights of recovery and rights of set-off of any kind to the extent related to the Excluded Assets or the Excluded Liabilities;
(k) all Equipment other than the Transferred Equipment;
(l) all Inventory held by PepsiCo and its Affiliates, other than the Transferred Inventory;
(m) all stock or other equity interests in any Person;
(n) all insurance policies owned by PepsiCo or its Subsidiaries and all rights to insurance recoveries thereunder, other than to the extent arising out of or relating to any Assumed Liabilities;
(o) all of the assets, trust agreements or any other funding and administrative Contracts relating to the Business Employee Benefit Plans and any other employee benefit plan, program or arrangement sponsored, maintained or contributed to by PepsiCo or any of its Affiliates;
(p) (i) all documents (including e-mails) subject to any attorney-client privilege or work-product protection as a result of legal counsel representing PepsiCo or its Affiliates in connection with the transactions contemplated hereby and in the Additional Agreements; and (ii) all documents prepared by or on behalf of PepsiCo or any of its Affiliates in connection with the transactions contemplated hereby, other than any such documents which were provided to Celsius or its Affiliates in connection with such transaction; and
(q) all other property and assets that are not Transferred Assets.
“Excluded Businesses” means all businesses conducted and operated by PepsiCo and its Affiliates, other than the Acquired Business.
“Excluded Business Data” means all Data owned or controlled by PepsiCo or any of its Affiliates to the extent exclusively relating to the Excluded Business.
7
“Excluded Liabilities” means the following Liabilities:
(a) the Retained HR Liabilities;
(b) all Liabilities for Retained Taxes;
(c) all Liabilities of PepsiCo and its Affiliates for Indebtedness;
(d) all Liabilities for Transaction Expenses of PepsiCo or its Affiliates;
(e) all Liabilities to the extent relating to or arising out of the Excluded Businesses and/or the Excluded Assets;
(f) all Liabilities of PepsiCo and its Affiliates for their respective violation or breach of this Agreement or the Additional Agreements;
(g) all Liabilities of PepsiCo and its Affiliates to any of their respective Affiliates or equityholders;
(h) all Liabilities with respect to any violation of or non-compliance with (or alleged violation of or non-compliance with) any Laws prior to the Closing and with respect to any failure of PepsiCo or any of its Affiliates to comply with any applicable Laws with respect to the sale and transfer of the Transferred Assets;
(i) all accounts payable arising from purchases or expenses incurred prior to the Closing;
(j) all Liabilities of PepsiCo and its Affiliates with respect to escheat, abandoned or unclaimed property, bottle or can deposit liabilities, in each case to the extent arising prior to the Closing; and
(k) all other Liabilities to the extent arising out of or resulting from the ownership, operation or conduct of the Business or the Transferred Assets prior to the Closing.
“Existing Canada Distribution Agreement” means the Distribution Agreement, dated as of August 9, 2023, by The Pepsi Bottling Group (Canada), ULC and Celsius.
“Existing U.S. Distribution Agreement” means the Distribution Agreement, dated as of August 1, 2022, by PepsiCo and Celsius and as amended by Amendment #1 on March 22, 2024.
“Exploit” means, with respect to any Intellectual Property, the right to use, make, have made, sell, offer for sale, import, commercialize, copy, distribute, modify, create derivative works of, or display such Intellectual Property.
“FDA” has the meaning specified in Section 4.17(a).
“FDC Act” means the U.S. Federal Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.).
“Financial Information” has the meaning specified in Section 4.04.
“Foodservice” has the meaning specified in the U.S. Distribution Agreement.
8
“Fraud” means, with respect to any Party, actual and intentional fraud by such Party with respect to the making of its representations or warranties expressly set forth in this Agreement or in any Additional Agreement.
“Governmental Authority” means any nation or any federal, state, local or foreign government or other political subdivision thereof, or any entity (including any self-regulatory authority (including any securities exchange) or quasi-governmental authority) exercising executive, legislative, judicial, regulatory, taxing or administration functions of or pertaining to government, or any federal, state, provincial, local or foreign government authority, commission or instrumentality, or any arbitrator, court or tribunal of any jurisdiction.
“Governmental Order” means any decision, ruling, order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.
“GST/HST” means any Tax charged in accordance with the ETA, including the harmonized sales tax (HST), and any other provincial value added or goods and services in Canada.
“Hazardous Materials” means (a) petroleum, petroleum products, asbestos or asbestos-containing materials, polychlorinated biphenyls and (b) any chemical, material or other substance for which Liability or standards of conduct may be imposed, or to the extent regulated as hazardous, toxic, radioactive, a pollutant, a contaminant or waste, or words of similar meaning and regulatory effect, under Environmental Law.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
“Indebtedness” means, with respect to any Person, without duplication: (a) any obligations of such Person for borrowed money, (b) any obligations of such Person evidenced by bonds, notes, debentures, letters of credit or similar instruments, (c) any obligations of such Person under conditional sale, title retention or similar agreements, (d) any obligations of such Person with respect to the deferred purchase price of property, securities or other assets (including any earn-out payments whether or not achieved and at the maximum amount payable in respect thereof), (e) any obligations for any capital or finance lease, (f) any obligations of such Person in respect of interest rate, currency or commodity swaps, collars, caps, hedges, futures Contract, forward Contract, option or other derivative Contracts, (g) any accrued or unpaid interest, premiums, penalties, breakages, “make whole amounts” and other obligations of such Person relating to the foregoing that would be payable in connection with the repayment of the foregoing, (h) any obligations of such Person secured by a Lien, (i) any dividends, distributions or other amounts owed to an Affiliate of such Person, (j) any performance bonds, surety bonds, bankers’ acceptances or similar facilities, (k) all Indebtedness of the type referred to in clauses (a) through (j) above guaranteed by such Person, and (l) all obligations in respect of accrued interest, prepayment premiums or the like or penalties related to any of the foregoing.
“Indemnified Party” has the meaning specified in Section 8.03(a).
“Indemnifying Party” has the meaning specified in Section 8.03(a).
“Interim Financial Information” has the meaning specified in Section 4.04.
“Information Privacy and Security Requirements” means all of the following, to the extent relating to the privacy, protection, collection, use, storage, transfer, processing or security of Personal Information: (i) all Data Privacy Laws; (ii) the internal and external-facing written policies of PepsiCo and its Subsidiaries; (iii) applicable provisions of any Contracts to which PepsiCo or any of its Subsidiaries is a party; and (iv) the Payment Card Industry Data Security Standard, if applicable.
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“Information Systems” means any information technology and computer systems (including computers, servers, workstations, routers, hubs, switches, networks, data communications lines, firmware, hardware, and peripherals) and telecommunications systems, networks, hardware and other similar infrastructure or systems owned, controlled or used by the Business, whether or not outsourced.
“Intellectual Property” means any and all intellectual property or proprietary rights, whether registered or unregistered, in any jurisdiction in the world, including: (a) trademarks, domain names, social media accounts, service marks, brand names, certification marks, trade dress, logos, trade names, taglines, brand identifiers corporate names and other indications of origin, together with the goodwill associated therewith (“Trademarks”), (b) copyrights, copyright registrations, moral rights, rights in works of authorship and rights equivalent thereto, including the rights of attribution, assignation and integrity (“Copyrights”), (c) patents and patent applications, including renewals, extensions, reissues, divisionals, continuations and continuations-in-part; (d) trade secrets, know-how, marketing data and analytics and other confidential or proprietary information (“Trade Secrets”), (e) rights in software, data and databases and (f) all applications to register, registrations and renewals or extensions of each of the foregoing.
“Internet Properties” means any and all uniform resource locators and registered internet domain names and social media handles and accounts.
“Inventory” means finished goods inventory, work-in-process inventory, raw materials, supplies, packaging and other inventory.
“IRS” means the U.S. Internal Revenue Service.
“Key Customers” has the meaning specified in Section 4.14.
“Key Distributors” has the meaning specified in Section 4.13(a)(vi).
“Key Suppliers” has the meaning specified in Section 4.14.
“Knowledge of Celsius” or “Celsius’ Knowledge” means the actual knowledge of any of the individuals listed in Section 1.01(d) of the Disclosure Letter, after reasonable inquiry of such Person’s direct reports.
“Knowledge of PepsiCo” or “PepsiCo’s Knowledge” means the actual knowledge of any of the individuals listed in Section 1.01(d) of the Disclosure Letter, after reasonable inquiry of such Person’s direct reports.
“Large Format Progressions” means the grocery and all other (“A/O”) large format merchandizing progressions (i.e., energy shelf sets – 4ft, 8ft, 10ft, 20ft, etc.) created by Celsius and provided to PepsiCo.
“Law” means any law, ordinance, regulation, code, statute, decree, act, constitution, common law, treaty, convention, annex, protocol, official policy or other rule enacted, enforced, administered or promulgated by or on behalf of any Governmental Authority, including any Governmental Order.
“Liabilities” means any and all debts, liabilities, obligations or commitments of any kind or nature, whether accrued or fixed, known or unknown, absolute or contingent, matured or unmatured or disputed or undisputed.
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“Licensed Products” has the meaning specified in the U.S. Distribution Agreement; provided, that for purposes of Article III, “Licensed Products” shall not include any product that is neither in the LRB Energy Category nor marketed or merchandised as an “energy drink.”
“Licensed Products Relevant Share” means, as of any date, the dollar share collectively held by the Licensed Products as a percentage of the LRB Energy Category for the most recently ended consecutive [***]-week period as of such date and based on the most recently available Circana Data as of such date. For reference purposes only, the calculation of the Licensed Products Relevant Share as of the date hereof is set forth in Annex B hereto.
“Lien” means any lien, mortgage, security interest, charge, pledge or other similar encumbrance.
“Losses” means any and all losses, Liabilities, damages, awards, penalties, fines, settlements, judgments, royalties, costs or expenses, including reasonable attorneys’ and other professionals’ fees and expenses.
“LRB Energy Category” means the total liquid refreshment beverage energy category [***] in the U.S. as defined and reported in the Circana Data.
“LRB Energy Category Relevant Share” means, as of any date, the dollar share of the LRB Energy Category as a percentage of the Total LRB Category for the most recently ended consecutive [***]-week period as of such date and based on the most recently available Circana Data as of such date. For reference purposes only, the calculation of the LRB Energy Category Relevant Share as of the date hereof is set forth in Annex B hereto.
“Market Level Annual Planograms” means annual commercial guidance planograms for markets within a division (also referred to as market merchandising standards) for AFH/Foodservice (i.e., workplace, colleges & universities and local restaurants), and OTS/IBS. [***]
“Management Fee” has the meaning specified in Section 3.05.
“Management Fee Products” has the meaning specified in Section 3.05.
“Material Adverse Effect” means any event, change or circumstance that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the assets, liabilities, operations, results of operations or financial condition of the Acquired Business or on the Transferred Assets, taken as whole; provided, however, that in no event will any of the following events, changes or circumstances constitute or be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur: (a) changes in general economic, legal, Tax, regulatory, political or business conditions in the U.S. or elsewhere in the world; (b) changes in the credit, debt, financial or capital markets or changes in interest or exchange rates, in each case, in the U.S. or elsewhere in the world; (c) changes in conditions generally affecting any of the industries in which the Acquired Business operates; (d) any outbreak or escalation of any military conflict, declared or undeclared war, armed hostilities, cyberattacks, acts of foreign or domestic terrorism, or civil unrest; (e) any hurricane, flood, tornado, earthquake, or other natural disaster, weather-related events or other comparable events; (f) changes or proposed changes in Law applicable to the Acquired Business or U.S. GAAP or in the interpretation or enforcement thereof; (g) any epidemics, pandemics or disease; (h) the compliance with the terms of, or the taking of any action required, by this Agreement; (i) any event, change or circumstance to
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the extent related exclusively to the Excluded Businesses, Excluded Assets or Retained Liabilities; (j) any failure by the Acquired Business or the Transferred Assets to meet any internal or external estimates, expectations, budgets, projections or forecasts (but not the underlying cause of such failure); and (k) the public announcement of this Agreement and of the Additional Agreements, including any resulting loss of customers, suppliers, distributors or other persons having material business dealings with PepsiCo or its Affiliates in respect of the Acquired Business or the Transferred Assets (provided that this clause (k) shall not apply to the representations and warranties set forth in Section 4.03); provided, further, that any such event, change or circumstance referred to in clause (a), (b), (c), (d), (e), (f) or (g) of the foregoing proviso may be taken into account in determining whether a Material Adverse Effect has occurred or is reasonably likely to occur to the extent that such event, change or circumstance has had a materially disproportionate impact on the Acquired Business compared to other businesses that operate in the industry or geographies in which the Acquired Business operates (and only to the extent of any such disproportionate impact).
“Material Contract” has the meaning specified in Section 4.13(a).
“Minimum Licensed Products Facings” means, (i) with respect to the National Annual Planograms, the total number of facings allocated to “Celsius” or “Rockstar” brands in the National Annual Planograms [***], which National Annual Planograms [***] are included in Annex A hereto, and (ii) with respect to the Divisional Annual Planograms, the total number of facings allocated to “Celsius” or “Rockstar” brands in the divisional annual planograms/merchandizing standards (which have been agreed between the Parties based on the underlying geographies and market shares as of the date hereof) are included in Annex D hereto.
“National Annual Planograms” means PepsiCo’s annual U.S. national commercial guidance planograms (also referred to as national merchandising standards) for AFH/Foodservice (i.e., workplace, colleges & universities and local restaurants), including the Large Format Progressions. [***].
“Not Lawfully Transferable” means, when used with respect to specified Data, that the transfer by PepsiCo of such specified Data to Celsius is not permitted under Information Privacy and Security Requirements or for which all required consents have not been obtained for such transfer.
“Not Readily Transferable” means, when used with respect to specified Data, that such specified Data is not readily accessible to PepsiCo or cannot be accessed and fully segregated for transfer from Data related to the Excluded Businesses, in each case, without unreasonable effort or expense (as determined in PepsiCo’s reasonable discretion), or manual review, or that cannot be extracted using existing tools, processes, and automated functionality.
“Non-DSD Account” has the meaning specified in the U.S. Distribution Agreement.
“Non-Transferable Asset” has the meaning specified in Section 2.01(c).
“Party” or “Parties” has the meaning specified in the Preamble.
“PepsiCo” has the meaning specified in the Preamble.
“PepsiCo 401(k) Plan” has the meaning specified in Section 6.01(g).
“PepsiCo Deficit” has the meaning specified in Section 2.04(a).
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“PepsiCo Indemnified Persons” has the meaning specified in Section 8.02(b).
“PepsiCo Trademarks” means the marks as set forth in Section 1.01(e) of the Disclosure Letter as well as any other Trademark owned by PepsiCo and its Affiliates (other than the Transferred Intellectual Property).
“Permits” means any approval, authorization, certificate, qualification, waiver, variance, consent, license, registration or permit obtained from or issued by any Governmental Authority.
“Permitted Liens” means the following Liens:
(a) Liens for Taxes not yet due and payable or the validity of which is being timely contested in good faith by appropriate proceedings and for which adequate accruals or reserves have been established in accordance with U.S. GAAP;
(b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by Law, in each case, arising or incurred in the ordinary course of business for amounts (i) which are not delinquent or (ii) the validity of which is being timely contested in good faith by appropriate proceedings and for which adequate accruals or reserves have been established in accordance with U.S. GAAP;
(c) zoning, entitlement, building and land use regulations, customary covenants and conditions, defects of title, easements, encroachments, rights-of-way, restrictions and other similar charges or encumbrances (whether or not recorded) that, individually or in the aggregate, are not material to the Transferred Assets, taken as a whole, and do not materially interfere with the present use or operation of such Transferred Assets and do not secure Indebtedness; and
(d) non-exclusive licenses of or non-exclusive grants of rights to Intellectual Property.
“Person” means an individual, partnership, corporation, limited liability company, unlimited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other organization, whether or not a legal entity, or a Governmental Authority.
“Personal Information” means any information, alone or in combination with other available information, identifying or relating to an identified or identifiable person, device or household, in addition to any definition for “personal data,” “personal information,” “protected health information,” “nonpublic personal information” or other similar terms as defined by Data Privacy Laws.
“Post-Closing Tax Period” means any taxable period beginning after the Closing Date and the portion of any Straddle Period attributable to the portion of the period beginning after the Closing Date.
“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and the portion of any Straddle Period attributable to the portion of the period ending on and including the Closing Date.
“Product Approvals” means, with respect to any Product, any and all written approvals, clearances, exemptions, notifications, licenses, consents, Permits, registrations, variances, waivers or authorizations of any Governmental Authority necessary to research, develop, manufacture, commercially distribute, sell or market such Product.
“Product Requirements” has the meaning specified in Section 4.17(a).
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“Products” has the meaning specified in Section 4.17(a).
“Proposed Final Closing Statement” has the meaning specified in Section 2.04(b).
“Public Official” means: (i) any officer, employee or representative of any Governmental Authority, (ii) any officer, employee or representative of any commercial enterprise that is owned or controlled by a Governmental Authority, (iii) any officer, employee or representative of any public international organization, such as the International Monetary Fund, the United Nations or the World Bank, (iv) any Person acting in an official capacity for any Governmental Authority, enterprise or organization identified above and (v) any political party, party official or candidate for political office.
“Purchase Price” has the meaning specified in Section 2.03(a).
“Registered Intellectual Property” has the meaning specified in Section 4.15(a).
“Relevant Band” means [***].
“Retained HR Liabilities” has the meaning specified in Section 6.01(i).
“Retained Taxes” means (i) all Liabilities for Taxes to the extent arising out of or relating to the ownership, operation or conduct of the Acquired Business, the Transferred Assets or Assumed Liabilities for Pre-Closing Tax Periods, (ii) all Liabilities for Taxes relating to the ownership or operation of any Excluded Business or Excluded Asset without regard to whether such Taxes relate to Pre-Closing Tax Periods, (iii) all Liabilities for Taxes of PepsiCo or any of its Affiliates (or for which PepsiCo or any of its Affiliates may otherwise be liable) without regard to whether such Taxes relate to Pre-Closing Tax Periods (other than Liabilities arising out of or relating to the ownership, operation or conduct of the Acquired Business, the Transferred Assets or Assumed Liabilities, in each case, for Post-Closing Tax Periods).
“Rockstar Energy Drink Brand” means the brand names “ROCKSTAR”, “ROCKSTAR ENERGY”, “ROCKST★R”, “ЯR” and the related brands and sub-brands listed in Section 1.01(f) of the Disclosure Letter, including any and all stylizations, translations, variations, adaptations, abbreviations and phonetic equivalents thereof.
“ROFR Product” has the meaning specified in Section 3.07.
“Sanctions Laws” has the meaning specified in Section 4.07(e).
“SEC” has the meaning specified in Section 6.10(a).
“Securities Purchase Agreement” has the meaning specified in the Recitals.
“Separation Plan” has the meaning specified in Section 6.09.
“Shared Contract” has the meaning specified in Section 6.07.
“Specified Agreement” has the meaning specified in Section 6.06(c)(iii) of the Disclosure Letter.
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“Straddle Period” means any taxable period that includes (but does not end on) the Closing Date.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, unlimited liability company, joint venture, partnership or other entity of which such Person (or any one or more of its Subsidiaries) (a) beneficially owns, either directly or indirectly, more than 50% of (i) the total combined voting power of all classes of voting securities of such entity, (ii) the total combined equity interests, or (iii) the capital or profit interests, in the case of a partnership; or (b) otherwise has the power to vote or to direct the voting of sufficient securities to elect a majority of the board of directors or similar governing body.
“Subsidiary Transferors” means any Subsidiary of PepsiCo that owns or holds the rights to any Transferred Asset.
“Target Net Working Capital” means $40,000,000.
“Tax” or “Taxes” means any and all taxes, charges (including customs duties or fines), fees, levies, imposts, duties, assessments or other governmental charges of any kind whatsoever in the nature of a tax, imposed by or payable to any Governmental Authority, including any gross income, net income, alternative or add-on minimum, franchise, profits or excess profits, gross receipts, estimated, capital, goods, services, documentary, use, transfer, ad valorem, business rates, value added, sales, goods and services (GST), harmonized sales (HST), customs, real or personal property, capital stock, license, payroll, withholding or back-up withholding, beverage or soda, employment, social security, workers’ compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, occupancy, transfer, gains taxes, in each case, whether disputed or not, together with any interest, penalties, additions to tax or additional amounts imposed with respect thereto.
“Tax Act” means the Income Tax Act (Canada), RSC 1985 c. 1, 5th Supp.
“Tax Authority” means any Governmental Authority responsible for the imposition, collection or administration of any Tax.
“Tax Proceeding” has the meaning specified in Section 7.04.
“Tax Returns” means all returns, reports, statements, declarations, forms, and other information required to be supplied to a Tax Authority relating to Taxes, including elections, declarations, disclosures, schedules, attachments, supplements, estimates and information returns and all amendments thereto.
“Termination Dispute Notice” has the meaning specified in Section 3.10(d).
“Third-Party Claim” has the meaning specified in Section 8.03(a).
“Total LRB Category” means the total liquid refreshment beverage category [***] in the U.S. as defined and reported in the Circana Data.
“Trade Secrets” has the meaning specified in the definition of Intellectual Property.
“Trademarks” has the meaning specified in the definition of Intellectual Property.
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“Transaction Expenses” means all fees, costs and expenses (including data room and travel expenses) incurred by PepsiCo or its Affiliates in connection with this Agreement, the Additional Agreements and the Transactions (including any fees and expenses of legal counsel, financial advisors, investment bankers, brokers and accountants or other service providers of PepsiCo or any of its Affiliates).
“Transactions” means the transactions contemplated by the Transaction Documents.
“Transaction Documents” means this Agreement, the Bill of Sale and Assumption Agreement, the Brand Agreement, the Canada IP Assignment Agreement, the Transition Services Agreement and the U.S. IP Assignment Agreement.
“Transfer Taxes” means all transfer, sales, use, real or personal property, transfer, documentary, stamp and all other similar Taxes or other like charges together with interest, penalties or additional amounts imposed with respect thereto, but excluding GST/HST.
“Transferred Assets” means all of PepsiCo’s and its Affiliates’ right, title and interest in and to the following:
(a) the Transferred Intellectual Property;
(b) the Transferred Data;
(c) the Assigned Contracts;
(d) all Inventory used, or held for use, exclusively by PepsiCo’s external co-packers for use in the Acquired Business (collectively, the “Transferred Inventory”);
(e) all Equipment of the type set forth in, Section 1.01(g) of the Disclosure Letter that (i) is exclusively used in the Acquired Business, (ii) is located in the Acquired Territory and bears, incorporates or displays the Rockstar Energy Drink Brand and does not bear, incorporate or display any PepsiCo Trademark as its primary branding element (excluding any such use of a PepsiCo Trademark in an incidental manner to indicate or attribute affiliation) or (iii) is specifically identified on Section 1.01(g) of the Disclosure Letter (collectively, “Transferred Equipment”);
(f) claims, causes of action, choses in action, rights of recovery and rights of set-off of any kind to the extent related to the Transferred Assets or the Assumed Liabilities;
(g) all Permits (including any product registrations and marketing authorizations) necessary for the operation of the Acquired Business to the extent such Permits are exclusively related to the Acquired Business and transferable under applicable Law; and
(h) copies of any and all documents, instruments, papers, books, records, books of account, catalogs, brochures, sales literature, promotional materials, certificates and other documents (or portions thereof), existing in PepsiCo’s possession or control in tangible form, in each case to the extent primarily related to the Acquired Business; provided, however, that (i) none of the foregoing shall include any data or information related to the Excluded Businesses, and (ii) prior to delivery of any such materials, PepsiCo shall have the right to review the same and to remove or redact any competitively sensitive or other confidential information of PepsiCo or its Affiliates that does not primarily relate to the Acquired Business.
“Transferred Business Employee” has the meaning specified in Section 6.01(a).
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“Transferred Data” means any and all Data of the type set forth in the “Transferred Data Schedule” attached hereto as Exhibit H (as such exhibit may be amended from time to time by the Parties’ mutual written agreement), in each case, that is controlled by PepsiCo or its Affiliates and primarily used or primarily held for use in connection with the Acquired Business, except for any Data that is: (a) Not Readily Transferable; (b) Not Lawfully Transferrable; (c) consists of Excluded Business Data; or (d) other than in the case of Employee Manually Transferred Data, Unstructured Data; provided that “Transferred Data” shall not include any Intellectual Property.
“Transferred Intellectual Property” means (a) any and all (1) Trademark rights in and to the Rockstar Energy Drink Brand and (2) Copyrights owned by PepsiCo and its Affiliates that are used or held for use as of the Closing in connection with advertising, marketing and promotion of the Rockstar Energy Drink Brand or the products of the Acquired Business, and the packaging of the products of the Acquired Business, in the case of each of (1) and (2) in the Acquired Territory and owned by PepsiCo or its Affiliates, (b) the Internet Properties set forth on Section 1.01(c) of the Disclosure Letter and (c) any and all other Intellectual Property (other than Registered Intellectual Property, Personal Information and Data) owned by PepsiCo or its Affiliates and primarily used or held for use by, or primarily developed for, the Acquired Business, in each case together with (i) any and all claims and causes of action with respect to such Intellectual Property, accruing on or after Closing, and the right to seek damages for the past, present or future infringement thereof and (ii) all rights to proceeds, income, revenues and royalties with respect thereto whether accruing before, on or after Closing.
“Transition Services Agreement” means the Transition Services Agreement, the form of which is attached hereto as Exhibit G, to be entered into by PepsiCo and Celsius on the Closing Date.
“Unstructured” means, when used with respect to specified Data, that such specified Data does not have a pre-defined data model or is not organized in a pre-defined structured manner.
“U.S.” means the United States of America.
“U.S. Distribution Agreement” has the meaning specified in the Recitals.
“U.S. IP Assignment Agreement” means the Intellectual Property Assignment Agreement, the form of which is attached hereto as Exhibit F, to be entered into by PepsiCo or the Subsidiary Transferors, on the one hand, and Celsius or the Celsius Designees, on the other, on the Closing Date.
“U.S. GAAP” means generally accepted accounting principles in the U.S.
“USDA” has the meaning specified in Section 4.17(b).
“VDR” means the Intralinks electronic data room for Project Burn maintained by PepsiCo.
“WARN Act” has the meaning specified in Section 4.11(d).
SECTION 1.02 Terms Generally. Unless the context otherwise requires:
(a) words in the singular shall include the plural and vice versa, and words of one gender shall include the other genders, in each case, as the context requires;
(b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement and not to any particular provision of this Agreement, and Article, Section, paragraph, clause, subclause, Exhibit and Schedule references are to the Articles, Sections, paragraphs, clauses or subclauses of, or Exhibits or Schedules to, this Agreement, as applicable, unless otherwise specified;
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(c) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified;
(d) the phrase “ordinary course of business” shall mean the ordinary course of business consistent with past practice;
(e) the phrase “to the extent” shall mean the degree to which a subject or other item extends and shall not simply mean “if”;
(f) references herein to any Person shall include such Person’s successors and permitted assigns;
(g) with respect to the determination of any period of time, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”;
(h) the term “Dollars” and “$” mean U.S. Dollars, the lawful currency of the U.S.;
(i) the word “or” shall be disjunctive but not exclusive;
(j) references herein to any Law shall be deemed to refer to such Law as amended, modified, codified, reenacted, supplemented or superseded in whole or in part and in effect from time to time, and also to all rules and regulations promulgated thereunder;
(k) references herein to any Contract (other than any reference to a Contract in the Disclosure Letter) mean such Contract as amended, supplemented or modified (including any waiver thereto) in accordance with the terms thereof;
(l) references to “made available” mean that such documents or information referenced shall have been contained in the VDR prior to the execution of this Agreement;
(m) if the last day for the giving of any notice or the performance of any act required or permitted under this Agreement is a day that is not a Business Day, then the time for the giving of such notice or the performance of such action shall be extended to the next succeeding Business Day; and
(n) references herein to “as of the date hereof,” “as of the date of this Agreement” or words of similar import shall be deemed to mean “as of the date of the execution and delivery of this Agreement.”
ARTICLE II
PURCHASE AND SALE OF TRANSFERRED ASSETS; ASSUMPTION OF ASSUMED LIABILITIES
SECTION 2.01 Purchase and Sale of Transferred Assets; Exclusion of Excluded Assets.
(a) On the terms and subject to the conditions set forth in this Agreement, at the Closing, PepsiCo shall (or, as applicable, shall cause the Subsidiary Transferors to) sell, transfer, convey, assign and deliver to Celsius (or, as applicable, one or more Affiliates of Celsius designated by Celsius in writing prior to the date hereof (each, a “Celsius Designee”)), and Celsius shall (or, as applicable, shall cause the Celsius Designees to) purchase and accept from PepsiCo (or, as applicable, the Subsidiary Transferors) the Transferred Assets, free and clear of all Liens other than Permitted Liens (the “Sale”).
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(b) PepsiCo shall not sell, transfer, convey, assign or deliver to Celsius, and Celsius shall not purchase, acquire, receive or accept, any of PepsiCo’s or its Affiliates’ right, title or interest in, to or under the Excluded Assets, all of which shall be retained by PepsiCo and its Affiliates.
(c) Notwithstanding any other provision in this Agreement to the contrary, no Transferred Asset shall be sold, transferred, conveyed, assigned or delivered if the sale, transfer, conveyance, assignment or delivery (or the attempt thereof) without the Consent of a third party or Governmental Authority would constitute a breach, violation or other contravention of the rights of such third party or a violation of applicable Law (any such Transferred Asset, a “Non-Transferable Asset”) until such Consent is obtained, at which time such Non-Transferable Asset shall be automatically sold, transferred, conveyed, assigned and delivered to Celsius (or a Celsius Designee) for no additional consideration. For a period of 12 months following the Closing, the Parties shall use their respective commercially reasonable efforts to cooperate with each other to obtain promptly any such Consent required for the sale, transfer, conveyance, assignment or delivery of any such Non-Transferable Asset to Celsius (or a Celsius Designee); provided, further, that neither Party nor any of their respective Affiliates shall be required to contribute capital, pay or grant any consideration or concession in any form (including providing any letter of credit, guaranty or other financial accommodation) to any Person in order to obtain or make any such Consent (other than reasonable and documented out-of-pocket expenses, attorneys’ fees and recording or similar fees). Pending the earlier of obtaining such Consent and the expiration of such 12-month period, the Parties shall use commercially reasonable efforts to cooperate with each other in any reasonable and lawful arrangements designed to provide Celsius (or a Celsius Designee) all economic benefits and burdens of any such Non-Transferable Asset. During such time period, PepsiCo and its applicable Subsidiary Transferors shall comply with all applicable covenants and obligations with respect to such Non-Transferable Asset to the extent arising after the Closing Date and relating to such period during which such Non-Transferable Asset is held for the benefit of Celsius (or a Celsius Designee).
SECTION 2.02 Assumption of Assumed Liabilities; Retention of Excluded Liabilities.
(a) On the terms and subject to the conditions set forth in this Agreement, at the Closing, Celsius shall (or shall cause one or more of the Celsius Designees to) assume, and become obligated to pay, perform and discharge when due, all Assumed Liabilities.
(b) Celsius shall not assume or cause to be assumed, or be deemed to have assumed or caused to be assumed, or be liable or responsible for, any Excluded Liabilities, all of which shall be retained by and be the sole and exclusive responsibility of PepsiCo and its Affiliates.
SECTION 2.03 Purchase Price; Allocation of Purchase Price.
(a) Subject to the terms and conditions of this Agreement, in consideration of the sale, assignment, delivery, conveyance and transfer of the Transferred Assets and the other rights received in connection with the entry into the long-term commercial arrangements contemplated by the Transaction Documents and the Additional Agreements, Celsius on its own behalf and, as applicable, as agent for the Celsius Designees (if any), shall (i) assume and become obligated to pay, perform and discharge, when due, the Assumed Liabilities, and (ii) pay to PepsiCo (for itself and on behalf of the Subsidiary Transferors) an amount of cash equal to $585,000,000 (the “Base Purchase Price”), plus (A) the amount, if any, by which Closing Net Working Capital exceeds Target Net Working Capital, minus (B) the amount, if any, by which Target Net Working Capital exceeds Closing Net Working Capital (the Base Purchase Price as so adjusted, the “Purchase Price”).
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(b) As used in this Agreement, the “Estimated Closing Date Payment” means an amount equal to the Base Purchase Price, plus (A) the amount, if any, by which Estimated Net Working Capital exceeds Target Net Working Capital, minus (B) the amount, if any, by which Target Net Working Capital exceeds Estimated Net Working Capital. For purposes of determining the amount of cash to be paid as the Estimated Closing Date Payment by Celsius (or a Celsius Designee(s)) at the Closing pursuant to Section 2.06(b), PepsiCo shall prepare and deliver to Celsius on the Closing Date a written statement certified by an officer of PepsiCo setting forth PepsiCo’s good faith estimates (the “Estimated Closing Statement”) of: (i) the Closing Net Working Capital (such amount, the “Estimated Net Working Capital”) and (ii) the Estimated Closing Date Payment. The Estimated Closing Statement shall have been prepared in accordance with the applicable definitions and other provisions set forth herein and the Accounting Principles. PepsiCo shall have delivered, together with the Estimated Closing Statement, any supporting documentation and information with respect to the amounts set forth therein.
(c) Notwithstanding the foregoing, consistent with their mutual understanding that the value of the Transferred Assets (other than any Transferred Intellectual Property owned by PepsiCo) in respect of Canada is de minimis, the Parties agree that the allocation of the Base Purchase Price to Transferred Assets (other than the Transferred Intellectual Property owned by PepsiCo) that are located in Canada or that may be used in Canada shall not exceed $393,547 unless otherwise agreed by the Parties. The Parties shall cooperate in allocating the amount allocable to Equipment located in Canada to its provinces on the basis of net book value and shall report for any GST/HST or other Tax purposes consistent with such allocation.
SECTION 2.04 Purchase Price Adjustment.
(a) (x) If the Purchase Price, as finally determined in accordance with this Section 2.04, is less than the Estimated Closing Date Payment (the difference between the Estimated Closing Date Payment and such Purchase Price, a “PepsiCo Deficit”), PepsiCo shall pay to Celsius the amount of such PepsiCo Deficit, if any, and (y) if the Estimated Closing Date Payment is less than the Purchase Price, as finally determined in accordance with this Section 2.04 (the difference between such Purchase Price and the Estimated Closing Date Payment, a “Celsius Deficit”), Celsius shall pay to PepsiCo the amount of such Celsius Deficit, if any, and in each case, such payment shall be made by wire transfer of immediately available U.S. dollar funds to an account designated by the Party receiving payment, within five Business Days after the final determination of the Purchase Price in accordance with this Section 2.04.
(b) As promptly as practicable (and, in any event, within 90 days after the Closing), Celsius shall prepare and deliver to PepsiCo a statement setting forth Celsius’ good faith calculation of (i) the Closing Net Working Capital and (ii) the Purchase Price (the “Proposed Final Closing Statement”). The Proposed Final Closing Statement shall be prepared in accordance with the applicable definitions and other provisions set forth herein and the Accounting Principles. The Parties agree to provide each other and their respective representatives reasonable access to their respective books and records (including any supporting work papers, subject to the execution of customary work paper access letters) and personnel for the sole purpose of preparing and evaluating the Proposed Final Closing Statement and resolving any disputes in connection therewith; provided, that no Party shall be required to disclose any information if such disclosure would jeopardize any attorney-client or other legal privilege or contravene any applicable Law or Contract; provided, however, that if any such disclosure is not made in reliance on this sentence, the Party electing not to disclose shall provide the other Party with notice thereof and shall use commercially reasonable efforts to provide such disclosure in a manner which would not violate any such Law or Contract or result in the waiver of any such privilege or protection. If PepsiCo disagrees with the determination of the Proposed Final Closing Statement, PepsiCo shall notify Celsius in writing of such disagreement within 45 days after delivery of the Proposed Final Closing Statement, which written notice shall set forth any such disagreement in reasonable detail (a “Disagreement Notice”). If PepsiCo fails to deliver a Disagreement Notice by the end of such 45-day period, PepsiCo shall be deemed to have accepted the Proposed Final Closing Statement delivered by Celsius, and Celsius and PepsiCo agree that the items and amounts set forth
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in the Proposed Final Closing Statement shall be final and binding on the Parties. Matters included in the calculations in the Proposed Final Closing Statement to which PepsiCo does not object in the Disagreement Notice shall be deemed accepted by PepsiCo and shall not be subject to further dispute or review. Celsius and PepsiCo shall negotiate in good faith to resolve any such disagreement set forth in a Disagreement Notice, and any resolution agreed to in writing by Celsius and PepsiCo shall be final and binding upon the Parties.
(c) If Celsius and PepsiCo are unable to resolve any disagreement as contemplated by Section 2.04(b) within 30 days after delivery by PepsiCo of a Disagreement Notice, Celsius and PepsiCo shall jointly select and appoint a nationally recognized third-party accounting or consulting firm with significant experience in resolving purchase price disputes, the retention of which will not give rise to present or potential future auditor independence problems for Celsius, PepsiCo or any of their respective Affiliates or Subsidiaries, as determined in the reasonable discretion of Celsius and PepsiCo, to resolve such disagreement (the firm so selected and appointed shall be referred to herein as the “Accounting Firm”). The Parties shall instruct the Accounting Firm to (i) consider only those items and amounts set forth in the Proposed Final Closing Statement as to which PepsiCo has disagreed pursuant to a Disagreement Notice and Celsius and PepsiCo have not resolved their disagreement and (ii) render its determination in respect of such items within 30 days after its retention. The scope of the disputes to be resolved by the Accounting Firm shall be limited to whether such calculation was done in accordance with the terms hereof (including the definitions herein) and the Accounting Principles, and whether there were mathematical or other manifest errors in the calculation of the Proposed Final Closing Statement, and the Accounting Firm shall not make any other determination. The Accounting Firm, acting as an expert and not as an arbitrator, shall make its determination based solely on written submissions and supporting material provided by Celsius and PepsiCo and not pursuant to any independent review. None of Celsius, PepsiCo or their respective representatives shall have any ex parte communications or meetings with the Accounting Firm concerning the subject matter hereof without the prior written consent of the other Party. In resolving any such disagreement, the Accounting Firm may not assign a value to such item greater than the greatest value for such item claimed by a Party in the Proposed Final Closing Statement or in the Disagreement Notice or less than the lowest value for such item claimed by a Party in the Proposed Final Closing Statement or in the Disagreement Notice. Celsius and PepsiCo shall cooperate with the Accounting Firm and use commercially reasonable efforts to cause the Accounting Firm to deliver to the Parties, as promptly as practicable, a written report setting forth the resolution of any such disagreement determined in accordance with the terms of this Agreement. The determination by the Accounting Firm in such report shall be final and binding on the Parties. The fees, costs and expenses of the Accounting Firm arising in connection with this Section 2.04 shall be borne by the Parties in such proportion to reflect the relative amount of each Party’s determination that has been modified pursuant to the Accounting Firm’s report. For example, if PepsiCo claims in the Disagreement Notice that the Purchase Price is $100,000 more than that determined by Celsius and set forth in the Proposed Final Closing Statement, but the Accounting Firm determines that PepsiCo has a valid claim for only $30,000, then Celsius shall bear 30% of the fees, costs and expenses of the Accounting Firm and PepsiCo shall bear the other 70% of such fees, costs and expenses.
(d) With respect to amounts included in Closing Net Working Capital that are denominated in currencies other than U.S. dollars, the current foreign exchange rate for each such currency as of immediately before the effective time of the Closing (or, if such rate is not published on such date, the most recent rate published prior to such date) as published by Reuters shall be used to convert such amounts into U.S. dollars for purposes of determining Closing Net Working Capital in connection with the adjustments pursuant to this Section 2.04. In the event that any such foreign exchange rate is not available from Reuters, the Parties shall agree on a commercially reasonable alternative rate.
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(e) Notwithstanding anything to the contrary in this Agreement, this Section 2.04 shall be the sole and exclusive remedy with respect to the calculation of the Closing Net Working Capital and the Purchase Price and any disputes in respect thereof.
SECTION 2.05 The Closing. Subject to the terms and conditions of this Agreement, the sale and purchase of the Transferred Assets, the assumption of the Assumed Liabilities and the commencement of the Captaincy (all as contemplated herein, the “Closing”) shall take place by electronic exchanges of signatures concurrently with the execution of this Agreement, or at such other time as Celsius and PepsiCo may mutually agree in writing. The date on which the Closing takes place is referred to herein as the “Closing Date”. For the sake of clarity, the transfer of the Transferred Assets and Assumed Liabilities will be deemed to take place and be effective on the Closing Date at 12:01 a.m., New York time.
SECTION 2.06 Deliveries for the Closing.
(a) At the Closing, PepsiCo shall deliver or cause to be delivered to Celsius:
(i) a counterpart to each of the Additional Agreements, duly executed by each of PepsiCo and any of its Subsidiaries that is a party thereto;
(ii) a properly executed IRS Form W-9; and
(iii) such other instruments of transfer and conveyance, duly executed by PepsiCo or a Subsidiary Transferor (as applicable) in such customary form as is reasonably acceptable to both PepsiCo and Celsius, as necessary to vest in Celsius (or a Celsius Designee) all of PepsiCo’s (or such Subsidiary Transferor’s) right, title and interest in and to the Transferred Assets, in each case free and clear of all Liens other than Permitted Liens, and Transferred Liabilities.
(b) At the Closing, Celsius shall deliver or cause to be delivered to PepsiCo:
(i) a counterpart to each of the Additional Agreements, duly executed by each of Celsius and any of the Celsius Designees that is a party thereto;
(ii) a properly executed IRS Form W-9;
(iii) such other instruments of transfer and conveyance, duly executed by Celsius or a Celsius Designee (as applicable) in such customary form as is reasonably acceptable to both PepsiCo and Celsius, as necessary to vest in Celsius or such Celsius Designee (as applicable) all of PepsiCo’s and the Subsidiary Transferors’ right, title and interest in and to the Transferred Assets, in each case free and clear of all Liens other than Permitted Liens, and Transferred Liabilities; and
(iv) the Estimated Closing Date Payment by wire transfer of immediately available funds, to an account or accounts designated at least one Business Day prior to the Closing Date by PepsiCo in a written notice to Celsius.
SECTION 2.07 Withholding. Each Party and any of their Affiliates or designees shall be entitled to deduct and withhold any Taxes from the amounts otherwise payable pursuant to this Agreement to any Person such amounts as it is required to deduct and withhold with respect to the making of such payment under applicable Law; provided that, such Party shall use commercially reasonable efforts to notify the other Party in writing prior to deducting or withholding any amounts and cooperate in good faith with the other Party to reduce or mitigate the amount of any deduction or withholding to the extent such reduction or mitigation is permitted under applicable Law. Such withheld amounts shall be treated for all purposes of this Agreement as having been paid to such Person in respect to which such deduction and withholding was made.
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ARTICLE III
CAPTAINCY
SECTION 3.01 Captaincy; Term. PepsiCo and Celsius agree to an enhanced, long-term commercial arrangement on the terms and conditions set forth in this Article III (the “Captaincy”). The Captaincy will take effect as from the Closing and will continue during the term of the U.S. Distribution Agreement, unless earlier terminated pursuant to Section 3.10 (the term of the Captaincy, the “Captaincy Period”).
SECTION 3.02 PepsiCo Commitments. From and after the Closing, PepsiCo shall use commercially reasonable efforts to sell and distribute the Licensed Products in the U.S. (the obligation in this sentence, the “Captaincy CRE Obligation”). In furtherance of the foregoing, during the Captaincy Period, PepsiCo shall adhere to the following commitments:
(a) Annual Planograms.
(i) During the Captaincy Period, (A) PepsiCo shall ensure that each National Annual Planogram and each Divisional Annual Planogram allocates to the Licensed Products at least the applicable Minimum Licensed Products Facings (the facings so allocated to the Licensed Products, the “Celsius Facings”), even if the aggregate number of facings for all products in such Annual Planogram decreases in the future (except as contemplated in Section 3.02(a)(ii) below), (B) Celsius shall be entitled to allocate the Celsius Facings among Licensed Products in its sole discretion and (C) no Celsius Facings shall be allocated to PepsiCo’s other products. For the avoidance of doubt, if PepsiCo uses its commercially reasonable efforts to cause any customer to offer Licensed Products in accordance with National Annual Planograms and Divisional Annual Planograms designed in accordance with this Section 3.02(a), but such customer nonetheless elects to offer a lower number of Licensed Products, then PepsiCo shall not be deemed to be in breach of this Section 3.02(a).
(ii) Notwithstanding anything to the contrary herein, if during the Captaincy Period either (x) the Licensed Products Relevant Share or (y) the LRB Energy Category Relevant Share falls from one Relevant Band to a lower Relevant Band in any given calendar year (as measured as of the last Business Day in June of such year), then PepsiCo and Celsius shall cooperate in good faith to agree on a proportionately lower number of Minimum Licensed Products Facings for future National Annual Planograms and Divisional Annual Planograms (which reduction may, at PepsiCo’s election, take effect in the subsequent calendar year or any year thereafter in which the applicable dollar share remains in or below such lower Relevant Band); provided, that PepsiCo and Celsius shall also cooperate in good faith on proportionately reversing any such reduction for future National Annual Planograms and Divisional Annual Planograms in the event of subsequent growth that results in either the Licensed Products Relevant Share or the LRB Energy Category Relevant Share increasing to a higher Relevant Band.
(iii) If, following the date hereof, PepsiCo’s U.S. geographical divisions are further divided, consolidated or otherwise restructured or materially modified, the Parties shall negotiate in good faith to agree upon revised Minimum Licensed Products Facings for the Divisional Annual Planograms, which revised Minimum Licensed Product Facings shall reflect the geography and market shares (as of the date hereof) underlying such divided, consolidated, restructured or modified divisions.
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(iv) If, in any year, the Parties are unable to agree on a reduction or increase in the number of Minimum Licensed Products Facings for future National Annual Planograms or Divisional Annual Planograms as set forth in Section 3.02(a)(ii) or on revised Minimum Licensed Products Facings for the Divisional Annual Planograms in accordance with Section 3.02(a)(iii), then, at the request of either Party, such dispute may be elevated for good faith discussion and resolution in accordance with this Section 3.02(a)(iv) (the “Escalation Procedure”). The Parties will, within [***] following such request, establish a committee (the “Contract Committee”), to be comprised of not less than two management-level representatives from each of Celsius and PepsiCo. The Contract Committee shall use reasonable efforts to resolve any such dispute in good faith, during a period of [***] following the establishment of the Contract Committee. If the Contract Committee is unable to reach a resolution during such period of [***], a Celsius executive officer and a PepsiCo management member with the title of senior vice president or above shall promptly discuss such dispute and shall use reasonable efforts to resolve such dispute within [***] following the expiration of such [***] period.
(b) Period Priorities. PepsiCo shall designate the Licensed Products as a “focus priority” for at least [***] of PepsiCo’s internal annual operations planning (“AOP”) calendar periods each year during the Captaincy Period, [***]. For each such calendar period, Celsius shall be entitled to select which brands of Licensed Products are so designated.
(c) Strategic Meetings. During the Captaincy Period, at each of PepsiCo’s annual U.S. Beverages national AOP meetings (and any substitute or successor annual meeting where category and brand plans are presented to PepsiCo’s beverage sales organization/distribution network), PepsiCo shall provide Celsius with presence on the [***] together with (i) time to present its LRB Energy Category and Licensed Products brand plans at the meeting and (ii) inclusion in [***] that incorporate PepsiCo portfolio of brands and categories (“AOP Written Communications”), in each case that are commensurate with the scale of PepsiCo’s distribution of products in the LRB Energy Category relative to PepsiCo’s distribution of other products presented at such annual U.S. national AOP meetings. [***].
SECTION 3.03 PepsiCo Efforts.
(a) During the Captaincy Period, PepsiCo shall use good faith efforts to work with Celsius to increase (in a commercially reasonable manner) the number of Celsius Facings in the National Annual Planograms to more than the Minimum Licensed Products Facings (it being agreed that no such increase shall modify or impact PepsiCo’s commitments under Section 3.02(a) or, subject to PepsiCo’s compliance with Section 3.02(a) otherwise limit PepsiCo’s ability to determine the number of facings for the Licensed Products in the National Annual Planograms).
(b) As part of the Annual Review (as defined in the Distribution Agreement), PepsiCo will review Market Level Annual Planograms in each division and inform Celsius whether: [***] (the foregoing, collectively, the “Market Planogram Guidance”). In the event that, at such Annual Review, PepsiCo informs Celsius that the Market Planogram Guidance have not been
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confirmed for the applicable division, the foregoing will be discussed during such Annual Meeting and the Parties will discuss and agree on a plan to use commercially reasonable efforts to reach the Market Planogram Guidance. [***].
SECTION 3.04 Additional U.S. Margin.
(a) During the Captaincy Period, PepsiCo’s targeted margin under the U.S. Distribution Agreement of [***] (as set forth in section (b) of Schedule 6 of the U.S. Distribution Agreement) shall be deemed to be increased to [***]. Further, during the Captaincy Period, (i) if the Licensed Products collectively achieve at least a [***] dollar share of the U.S. LRB Energy Category for the [***]-week period ending on the last day of any calendar quarter (based on the most recently available Circana Data as of the end of that quarter), such targeted margin shall be deemed to be increased to [***] for each subsequent calendar quarter for which such dollar share remains at [***] or above and (ii) if the Licensed Products collectively achieve at least a [***] dollar share of the U.S. LRB Energy Category for the [***]-week period ending on the last day of any calendar quarter (based on the most recently available Circana Data as of the end of that quarter), such targeted margin shall be deemed to be increased to [***] for each subsequent calendar quarter for which such dollar share remains at [***] or above. For the avoidance of doubt, in determining whether the dollar share for any “subsequent calendar quarter” remains at or above an applicable threshold, the Parties agree to recalculate such dollar share for the [***]-week period ending on the last day of the immediately preceding calendar quarter (based on the most recently available Circana Data as of the end of that quarter).
(b) If the Circana Data is permanently discontinued or the methodology or scope thereof changes materially, the Parties shall cooperate and negotiate in good faith to establish a replacement benchmark that reflects a corresponding metric. If the Parties are unable to agree on a replacement benchmark within 30 days, the Parties will seek to resolve such dispute in accordance with the Escalation Procedure.
(c) For the avoidance of doubt, notwithstanding anything to the contrary herein or in the U.S. Distribution Agreement, there shall be no targeted margin with respect to any Non-DSD Account, nor shall PepsiCo’s actual margin on any such Non-DSD Account be taken into account when calculating whether or not the targeted margin set forth above has been achieved, or, correspondingly, whether any true-up payment to PepsiCo or a subdistributor is owed, it being expressly acknowledged and agreed that sales to Non-DSD Accounts shall be disregarded in all respects with respect to the targeted margin described above.
(d) Following the Closing, the Parties shall use commercially reasonable efforts to discuss and promptly agree upon the payment mechanics for the payments of additional margin due under Section 3.04(a), which shall be substantially similar to those set forth in the amendment to the U.S. Distribution Agreement, dated March 21, 2024, between PepsiCo and Celsius.
SECTION 3.05 Management Fee. From time to time, PepsiCo may request that Celsius sell certain bottled or canned PepsiCo products in the LRB Energy Category or that are marketed or merchandised as “energy drinks” through key accounts sales calls in the U.S. and Canada. If Celsius accepts such request (it being understood that Celsius will be deemed to have accepted any such request in respect of existing products packaged under the “[***]” or “[***]” brand), the Parties shall cooperate in good faith to enter into a separate written agreement in respect of such selling service, which would set forth the specific products that would be sold by Celsius (the “Management Fee Products”) and would provide that PepsiCo would pay Celsius a management fee of [***] of any Management Fee Product sold in the U.S. or Canada by Celsius through key accounts sales calls during the Captaincy Period (a “Management Fee”). In furtherance of the foregoing, with respect to any Management Fee Product packaged under the “[***]” brand, Celsius shall agree to use commercially reasonable efforts to promote and sell such products in the U.S. or Canada, as applicable.
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SECTION 3.06 Energy Product Fee.
(a) PepsiCo shall pay Celsius an energy product fee of [***] of any Energy Fee Product sold in the U.S. or Canada during the Captaincy Period (an “Energy Product Fee”). For the avoidance of doubt, any Energy Product Fee payable shall be incremental to any other amounts required to be paid to Celsius (including any Management Fee), and the payment of any Management Fee in respect of [***] shall not relieve PepsiCo of any obligation to pay an Energy Product Fee in respect of the [***].
(b) PepsiCo shall deliver payment statements for any Energy Product Fee on a quarterly basis and remit each payment within [***] of a calendar quarter end. PepsiCo shall include reporting on the Energy Fee Products in any depletion report delivered pursuant to any Applicable Distribution Agreement. Notwithstanding anything to the contrary therein, Celsius’ audit rights under Section 9.18 of each Applicable Distribution Agreement shall extend to PepsiCo’s books and records as they relate to the calculation and payment of the Energy Product Fee.
SECTION 3.07 [***] Right of First Refusal.
(a) If, during the Captaincy Period, Celsius acquires from a third party (whether by merger, stock or asset purchase or otherwise, in one transaction or in a series of related transactions) the rights (or control over such rights) to sell or distribute [***] (any such product, a “ROFR Product”), Celsius shall provide written notice to PepsiCo of such acquisition not less than [***] prior to the consummation thereof; provided, that Celsius shall use commercially reasonable efforts to provide such notice not more than [***] prior to such consummation. Such written notice shall contain (a) a description of all distribution agreements or arrangements related thereto (including breakage fees and penalties), to the extent known by Celsius, (b) the identity of the seller and (c) the intended date of consummation. Upon delivery of such notice, PepsiCo shall have [***] to elect to become the exclusive distributor of such ROFR Product in the U.S. and Canada on terms consistent with the Applicable Distribution Agreements (other than as set forth below) by delivery of a written notice of such election to Celsius. During such [***] period, upon the reasonable request of PepsiCo, Celsius shall provide PepsiCo with reasonable access to brand and commercial materials obtained in connection with due diligence (including consumer data, category data, velocity, brand services, demographics and brand strategy); provided, that Celsius shall not be obligated to provide any access that would reasonably be expected to violate any applicable Law or to jeopardize the potential acquisition. If PepsiCo delivers such written notice of election to Celsius within such [***] period, then Celsius and PepsiCo shall cooperate in good faith to enter into an amendment to each Applicable Distribution Agreement to include the ROFR Product as a “Licensed Product” thereunder; provided, that any such amendment shall [***]. [***].
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(b) Notwithstanding the foregoing, Celsius shall have no obligation to deliver a notice in respect of (and PepsiCo shall have no right to elect to distribute) any ROFR Products that are acquired as part of an acquisition in which ROFR Products collectively make up less than [***] of the total products acquired, [***]. Further, if Celsius acquires a ROFR Product, but in good faith does not intend to continue to distribute such ROFR Product through direct store delivery channels (“DSD Channels”), Celsius may affirmatively elect to cease such distribution by including such election in the written notice required by Section 3.07(a). If Celsius makes such election, (i) Celsius shall be required to cease such distribution within 12 months following the closing of the acquisition of the rights to such ROFR Product and (ii) PepsiCo shall have no right to elect to distribute such ROFR Product; provided, that, if Celsius fails to cease such distribution by the end of such 12-month period, PepsiCo’s right to elect to distribute such ROFR Product in accordance with Section 3.07(a) shall be reinstated for a period of [***] beginning upon the end of such 12-month period. Without limiting the foregoing Section 3.07(a), nothing in this Section 3.07 shall be construed to restrict Celsius from selling any ROFR Product through non-DSD Channels (including the Ecommerce Channel, the Club Channel and internationally).
SECTION 3.08 [***]. [***].
SECTION 3.09 Increase to U.S. Distribution Agreement Buy-Out. During the Captaincy Period, in the event that a Buy-Out (as defined in the U.S. Distribution Agreement) becomes due pursuant to Section 3.3(a)(i)(B) or Section 3.3(a)(ii) of the U.S. Distribution Agreement, the amount of such Buy-Out shall be deemed to be increased by [***]. In addition, during the first two years of the Captaincy Period, each of the references to “[***], an Affiliate of [***], an exclusive [***] bottler or an Affiliate of an exclusive [***] bottler” in Section 3.3(a)(ii) of the U.S. Distribution Agreement shall be deemed to include “[***] or an Affiliate thereof”.
SECTION 3.10 Termination.
(a) The Captaincy shall automatically terminate upon the termination of the U.S. Distribution Agreement.
(b) The Captaincy may be terminated at any time:
(i) by the mutual written consent of PepsiCo and Celsius;
(ii) by PepsiCo, upon written notice to Celsius, if the Licensed Products shall have failed to collectively maintain at least a [***] dollar share of the LRB Energy Category for the [***]-week period immediately preceding the delivery of such notice; provided, that any termination pursuant to this Section 3.10(b)(ii) shall only take effect upon the first day of the calendar year that is at least six months after the delivery of such notice; or
(iii) by Celsius, upon written notice to PepsiCo, if PepsiCo shall have breached or failed to satisfy any of its obligations under Section 3.02, Section 3.06 or Section 3.08, which breach or failure (A) has more than a de minimis impact and (B) shall not have been cured by (x) in the case of a breach or failure of the Captaincy CRE Obligation, the [***], or (y) in all other cases, the [***] following receipt of written notice from Celsius of such breach or failure (which notice shall specify in reasonable detail the nature of such breach or failure).
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(c) In the event of the termination of the Captaincy in accordance with this Section 3.10, the Captaincy Period shall end and the provisions of this Article III shall cease to apply, except that (i) the provisions of this Section 3.10 and Section 3.11 shall survive any such termination, (ii) PepsiCo shall remain obligated to pay any Management Fee or Energy Product Fee earned prior to such termination and (iii) Celsius shall remain obligated to pay any additional margin accrued under Section 3.04 prior to such termination.
(d) Any termination pursuant to Section 3.10(a) or Section 3.10(b)(i) shall become effective immediately. Any termination pursuant to Section 3.10(b)(ii) or Section 3.10(b)(iii) shall become effective upon the [***] following delivery of written notice of such termination (subject, in the case of a termination pursuant to Section 3.10(b)(ii), to the proviso set forth therein), unless the non-terminating Party delivers written notice disputing such termination during such [***] period (such notice, a “Termination Dispute Notice”). If the non-terminating Party does not deliver a Termination Dispute Notice within such [***] period, such termination shall become effective and shall be final, binding and non-appealable.
(e) In the event either Party timely delivers a Termination Dispute Notice in respect of any termination, the Parties will seek to resolve such dispute in accordance with the Escalation Procedure and such termination shall not take effect during the pendency of such Escalation Procedure. Upon the conclusion of the Escalation Procedure, unless the terminating Party agrees to withdraw its termination notice, such termination shall become effective immediately (subject, in the case of a termination pursuant to Section 3.10(b)(ii), to the proviso set forth therein). Notwithstanding the effectiveness of such termination, the non-terminating Party may seek further resolution of such dispute in accordance with Section 9.11(b). In the event that any such termination takes effect and it is subsequently finally determined that such termination was invalid, the Captaincy shall be retroactively reinstated as if such termination had never occurred, with each Party that continues to comply with its obligations under this Article III being entitled to collect (i) all amounts that would have been payable to it in the absence of such termination plus (ii) simple interest on such amounts through the date of actual payment at an interest rate per annum of 5.00%. Upon any such retroactive reinstatement, if Celsius shall have acquired a ROFR Product while such termination was in effect, the terms of Section 3.07 shall apply as if Celsius had provided the requisite notice on the date of such retroactive reinstatement.
SECTION 3.11 Breach; Exclusive Remedy. Notwithstanding anything to the contrary in this Agreement or any Additional Agreement, (i) Celsius’ sole and exclusive remedy for any breach or alleged breach by PepsiCo of Section 3.02, Section 3.06 or Section 3.08 shall be to terminate the Captaincy in accordance with Section 3.10(b)(iii) and (ii) any breach by either Party of the provisions of the Captaincy set forth in this Article III shall not constitute a breach under any other Article of this Agreement or any other agreement between the Parties, nor shall either Party refer to any such breach (or alleged breach) of the Captaincy in support of any such non-Captaincy breach (or alleged breach).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PEPSICO
Except as set forth in the Disclosure Letter, PepsiCo hereby represents and warrants to Celsius as follows:
SECTION 4.01 Organization and Qualification. Each of PepsiCo and the Subsidiary Transferors is duly organized, validly existing and, except in any jurisdiction that does not recognize such a concept, in good standing under its jurisdiction of incorporation or organization, as applicable, and has all requisite legal entity power and authority to own, lease or otherwise hold its assets and properties and to conduct the Acquired Business as currently conducted, except as would not reasonably be expected, individually or in
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the aggregate, to have a material adverse effect on the ability of PepsiCo or the Subsidiary Transferors to perform their respective obligations under this Agreement or any Additional Agreement or to consummate the Transactions (a “Seller Material Adverse Effect”). Each of PepsiCo and the Subsidiary Transferors is duly licensed or qualified to do business in each jurisdiction in which the properties owned or leased by it or the operation of the Acquired Business requires such license or qualification, except as would not reasonably be expected, individually or in the aggregate, to have a Seller Material Adverse Effect.
SECTION 4.02 Authority; Execution and Delivery; Enforceability. Each of PepsiCo and the Subsidiary Transferors, as applicable, has all requisite power and authority to execute and deliver this Agreement and the Additional Agreements to which it is or will be a party, to fully perform its obligations hereunder and thereunder, as applicable, and to consummate the Transactions. The execution, delivery and performance by each of PepsiCo and the Subsidiary Transferors, as applicable, of this Agreement and the Additional Agreements to which it is or will be a party, and the consummation by PepsiCo and the Subsidiary Transferors of the Transactions, have been duly authorized by all necessary action on the part of PepsiCo and the Subsidiary Transferors, as applicable, and no other action on the part of PepsiCo or the Subsidiary Transferors is necessary to authorize the execution, delivery or performance of this Agreement or the Additional Agreements, or the consummation of the Transactions. Each of PepsiCo and the Subsidiary Transferors has duly executed and delivered this Agreement and each Additional Agreement to which it is or will be a party, and, assuming the due execution and delivery by Celsius, this Agreement constitutes PepsiCo’s, and each Additional Agreement to which PepsiCo or any Subsidiary Transferor is or will be a party, as applicable, constitutes PepsiCo’s or such Subsidiary Transferor’s legal, valid and binding obligation, enforceable against PepsiCo or such Subsidiary Transferor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting creditors’ rights generally and by general principles of equity, regardless of whether enforcement is sought in a proceeding at Law or in equity (the “Enforceability Exceptions”).
SECTION 4.03 No Conflicts; Consents and Approvals. Subject to receipt of the consents, approvals and waivers, and the making of the filings and notifications, in each case listed in Section 4.03 of the Disclosure Letter, the requirements of the HSR Act and the filing by PepsiCo of reports under the Exchange Act and as contemplated by the rules of The Nasdaq Stock Market LLC, none of (i) the execution, delivery and performance by PepsiCo or any of the Subsidiary Transferors, as applicable, of this Agreement and each Additional Agreement to which it is or will be a party, (ii) the consummation by PepsiCo and such Subsidiary Transferors of the Transactions or (iii) the compliance by PepsiCo and such Subsidiary Transferors with any of the provisions hereof or thereof, as the case may be, will:
(a) conflict with, violate or result in the breach of any provision of the certificate of incorporation or by-laws or other organizational documents of PepsiCo or any Subsidiary Transferor;
(b) require PepsiCo or any Subsidiary Transferor to make any filing with, provide notice to or obtain any Permit, authorization, clearance, consent or approval (each, a “Consent”) from any Governmental Authority;
(c) conflict with, violate or result in the breach by PepsiCo or any Subsidiary Transferor of any Law applicable to PepsiCo, the Subsidiary Transferors or the ownership or use of the Transferred Assets or the performance of the Assumed Liabilities;
(d) conflict with, violate, result in the breach or termination of, or constitute (with or without notice or lapse of time or both) a default under, require PepsiCo or any Subsidiary Transferor to make any filing with, provide notice to or obtain any Consent from any Person under, give rise to any right of termination or acceleration or right to increase the obligations or otherwise adversely modify the terms under, any Contract or other instrument or obligation included in the Assigned Contracts or the Shared Contracts or binding upon the Transferred Assets; or
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(e) result in the creation or imposition of any Lien (other than any Permitted Lien) upon any of the Transferred Assets;
except, in the case of each of (b), (c), (d) and (e), as would not reasonably be expected to, individually or in the aggregate, be material to the Acquired Business or the Transferred Assets, taken as a whole, or prevent or materially impair or delay PepsiCo or such Subsidiary Transferor from performing its obligations under this Agreement or any Additional Agreement or from consummating the Transactions.
SECTION 4.04 Financial Information.
(a) Section 4.04 of the Disclosure Letter sets forth (a) certain balance sheet and results of operations information as of and for the fiscal years ended December 30, 2023 and December 28, 2024 and (b) certain balance sheet and results of operations information as of and for the interim period ended July 12, 2025 (the information identified in clause (b), the “Interim Financial Information” and, together with the information identified in clause (a), the “Financial Information”), which were prepared based on the use of reasonable allocations, estimates and assumptions made in good faith for purposes of presenting the financial position and results of operations of the Acquired Business. The Financial Information: (x) was extracted from the books and records of PepsiCo and its Affiliates, which were prepared in accordance with U.S. GAAP in all material respects, taken as a whole, and (y) fairly presents, in all material respects, the financial condition and results of operations of the Acquired Business as of the dates and for the periods indicated therein, subject, in each case, to the absence of notes and other presentation items required under GAAP (which, in each case, if presented, would not materially alter the financial condition or financial results of the Acquired Business) and, as it relates to the Interim Financial Information, subject to normal, recurring year-end adjustments (which are not material, individually or in the aggregate, to the Acquired Business); provided however, that (i) throughout the respective periods covered thereby, the Acquired Business has not operated as separate stand-alone entities of PepsiCo and its Affiliates, and instead the Acquired Business has been reported within the consolidated financial statements of PepsiCo and its Affiliates, (ii) stand-alone financial statements have not historically been prepared for the Acquired Business, and (iii) the Financial Statement are not necessarily indicative of the financial position and results of operations of the Acquired Business had it been reported on a stand-alone basis.
(b) With due regard for the purpose for which the Financial Information was prepared and subject to the use of reasonable allocations, estimates and assumptions made in good faith for purposes of presenting the Financial Information, revenue reflected in the Financial Information (i) represent, in all material respects, all revenue for the Acquired Business which are operating in nature during the periods presented; (ii) is consistent with and have been prepared from the books and records of PepsiCo; (iii) does not include any revenue which are non-recurring in nature or which have not been generated in the ordinary course of business; (iv) represents bona fide, arm’s-length sales transactions; and (v) in all material respects, has been billed consistently across the periods presented with no material changes in the discounts, rebates or other benefits offered to customers outside the ordinary course of business.
(c) With due regard for the purpose for which the Financial Information was prepared and subject to the use of reasonable allocations, estimates and assumptions made in good faith for purposes of presenting the Financial Information, direct operating expenses reflected in the Financial Information (i) represent, in all material respects, all direct operating expenses for the Acquired Business made during the periods presented, (ii) in all material respects, have been paid consistently throughout the periods presented with no material delays or changes in timing of payments, (iii) represent bona fide costs for the operation of the Acquired Business, (iv) capture, in all material respects, all direct operating costs required to operate the Acquired Business in ordinary course of business, and (v) are paid consistent with commercial terms, in all material respects.
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SECTION 4.05 No Undisclosed Liabilities; Absence of Certain Changes or Events.
(a) There are no Liabilities in respect of the Acquired Business, except for Liabilities (i) incurred in the ordinary course of business since July 12, 2025 (which, for the avoidance of doubt, shall not include any Liability for breach of contract, breach of warranty, tort, infringement, violation of Law, or relating to any cause of action, claim or lawsuit) or (ii) that would not reasonably be expected, individually or in the aggregate, to be material to the Acquired Business or the Transferred Assets.
(b) Since July 12, 2025 through the date hereof, there has not been any event, change or circumstance that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect.
(c) Since July 12, 2025 through the date hereof, the Business has been operated in the ordinary course of business, and neither PepsiCo nor any of its Subsidiaries have (solely with respect to the Acquired Business or the Transferred Assets):
(i) made any change in any method of financial accounting or financial accounting practice or policy other than those required by U.S. GAAP or required by applicable Law, or otherwise conducted its cash management practices other than in the ordinary course of business (including with respect to the collection of accounts receivable, payments of accounts payable and accrued expenses and credit practices and operation of cash management practices generally);
(ii) acquired, disposed of or leased or licensed any material properties or assets, other than the acquisition or disposition of Inventory in the ordinary course of business;
(iii) canceled, waived or released any material right or claim; or
(iv) agreed to, authorized or committed to agree to or authorize any of the actions set forth in clauses (i) through (iii) above.
SECTION 4.06 Absence of Litigation. There are no, and during the last three years there have been no, Actions pending or, to the Knowledge of PepsiCo, threatened, by or against PepsiCo or any of its Affiliates or any of the officers, directors or employees of PepsiCo or any of its Affiliates which (a) seek to prevent, hinder, modify or delay the Transactions, or (b) individually or in the aggregate, are, were or would reasonably be expected to be, material to the Acquired Business or the Transferred Assets, taken as a whole. There are no outstanding Governmental Orders which (a) would purport to prevent, hinder, modify or delay the Transactions or (b) individually or in the aggregate, would reasonably be expected to be material to the Acquired Business or the Transferred Assets, taken as a whole.
SECTION 4.07 Compliance with Laws.
(a) PepsiCo and its Affiliates are, and for the last three years have been, in compliance with all Laws and Governmental Orders, in each case except as would not reasonably be expected to, individually or in the aggregate, be material to the Acquired Business or the Transferred Assets, taken as a whole. During the last three years, neither PepsiCo nor any of its Affiliates has received any notice or other communication from a Governmental Authority that alleges that PepsiCo or any of its Affiliates is not in compliance with any Law, except as would not reasonably be expected to, individually or in the aggregate, be material to the Acquired Business or the Transferred Assets, taken as a whole.
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(b) During the last five years, PepsiCo, its Affiliates and its and their respective officers, directors, employees and, to the Knowledge of PepsiCo, any agents, representatives or other Persons acting on behalf of the Acquired Business have been in compliance with, and have not been the target of any Action related to, applicable Laws related to deceptive or unfair marketing practices of the Acquired Business, including Section 5 of the Federal Trade Commission Act, any relevant regulations promulgated by the FTC and state and foreign consumer protection acts.
(c) With respect to the Acquired Business, during the last five years, PepsiCo, its Affiliates and its and their respective officers, directors, employees and, to the Knowledge of PepsiCo, any agents, representatives or other Persons acting on behalf of the Acquired Business have been in compliance with, and have not been the target of any Action related to, applicable Laws related to bribery, corruption, kickbacks, racketeering, fraud or other improper payments including the Corruption of Foreign Public Officials Act (Canada), the U.S. Foreign Corrupt Practices Act of 1977 and the UK Bribery Act of 2010 (“Anti-Bribery Laws”). With respect to the Acquired Business, during the last five years, PepsiCo, its Affiliates and its and their respective officers, directors, employees and, to the Knowledge of PepsiCo, any agents, representatives or other Persons acting on behalf of the Acquired Business have not paid, offered or promised to pay, or authorized or ratified the payment or transfer, directly or indirectly, of any monies or anything of value to any Public Official for the purpose of corruptly influencing any act or decision of such Public Official or of a Governmental Authority to obtain or retain business, or direct business to any Person or to secure any other improper benefit or advantage, in each case, in violation of any Anti-Bribery Laws. With respect to the Acquired Business, during the last five years, neither PepsiCo nor any of its Affiliates has conducted or initiated any internal investigation, made a voluntary or other disclosure to a Governmental Authority or received any notice, citation, report or allegation, including, to the Knowledge of PepsiCo, any oral complaint, allegation, assertion or claim on a hotline or whistleblower or similar telephone line or service, related to alleged violations of any Anti-Bribery Laws.
(d) With respect to the Acquired Business, during the last five years, PepsiCo, its Affiliates and its and their respective officers, directors, employees and, to the Knowledge of PepsiCo, any agents, representatives or other Persons acting on behalf of the Acquired Business have been in compliance with, and have not been the target of any Action related to, applicable Laws related to money laundering, anti-terrorism, proceeds of crime or financial record keeping, including the Criminal Code of Canada Section 462.3 and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and the U.S. Bank Secrecy Act.
(e) With respect to the Acquired Business, during the last five years, PepsiCo, its Affiliates and its and their respective officers, directors, employees and, to the Knowledge of PepsiCo, any agents, representatives or other Persons acting on behalf of the Acquired Business have been in compliance with, and have not been the target of any Action related to, applicable Laws related to economic or financial sanctions, trade or export controls imposed, administered or enforced by the U.S., Canada, United Kingdom, European Union or its member states, or any other applicable sanctions authority with jurisdiction over PepsiCo or its Subsidiaries (“Sanctions Laws”).
(f) With respect to the Acquired Business, during the last five years, none of PepsiCo, its Affiliates or its or their respective officers, directors, employees or, to the Knowledge of PepsiCo, any agents, representatives or any other Persons acting on behalf of the Acquired Business, has been a Person: (i) listed on any sanctions-related lists (excluding any counter-sanctions regimes imposed by the Russian Federation or the People’s Republic of China) or owned or controlled by, or acting on behalf of, any such Person; (ii) operating, organized or resident in a country or other territory subject to comprehensive sanctions, which as of the date of this Agreement are Cuba, Iran, North Korea and the Crimea and separatist-controlled portions of the Donetsk and Luhansk regions of Ukraine or (iii) otherwise targeted under any Sanctions Laws.
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SECTION 4.08 Governmental Licenses and Permits. Section 4.08 of the Disclosure Letter contains a list, as of the date hereof, of all material Permits used in and held for use in, or otherwise necessary for, the Acquired Business or necessary or required for the ownership of the Transferred Assets. PepsiCo and the Subsidiary Transferors hold all such Permits. All such Permits are valid and in full force and effect and no violation of, or default under, any such Permits has occurred which would give any Governmental Authority any right of revocation, non-renewal, adverse modification or cancellation of, with or without notice or lapse of time or both, except as would not reasonably be expected, individually or in the aggregate, to be material to the Acquired Business.
SECTION 4.09 Title. PepsiCo or a Subsidiary Transferor holds good and valid title to, or has valid leases, licenses or rights to use, all of the Transferred Assets (other than the Transferred Intellectual Property, which is the exclusive subject of Section 4.15), in each case, free and clear of all Liens other than Permitted Liens. All Transferred Equipment is (i) usable in the ordinary course of business and, in all material respects, adequate and suitable for the uses to which it is currently being put and (ii) in all material respects, in good operating condition and repair, subject to ordinary wear and tear.
SECTION 4.10 Employee Benefit Plans.
(a) Section 4.10(a) of the Disclosure Letter sets forth a true, correct and complete list of each material Business Employee Benefit Plan. “Business Employee Benefit Plan” means any Benefit Plan that PepsiCo or any of its Subsidiaries or ERISA Affiliates sponsors, maintains, contributes to or is required to contribute to, for the benefit of any Business Employee or his or her dependent(s). PepsiCo has made available to Celsius, with respect to each material Business Employee Benefit Plan, true, correct and complete copies of, to the extent applicable, all plan documents and all amendments thereto. No Business Employee Benefit Plans (or any assets or Liabilities thereof) will be transferred to, or otherwise will be assumed by, Celsius or any of its Affiliates.
(b) Each Business Employee Benefit Plan (i) has been established, maintained, funded, operated and administered in compliance in all material respects with all applicable Laws and with its terms, and (ii) all material premiums and other payments that are due pursuant to such plans as applicable to Business Employees have been timely paid. Each Business Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination, opinion or advisory letter (as applicable) from the IRS as to its qualified status, and nothing has occurred that could reasonably be expected to adversely affect such qualified status.
(c) Except as could not result in any Liability to Celsius, there is no Action, audit, examination or investigation pending with respect to any Business Employee Benefit Plan before any Governmental Authority and, to PepsiCo’s Knowledge, no such Action, audit, examination or investigation has been threatened.
(d) Except as could not result in any Liability to Celsius, neither PepsiCo nor any of its Subsidiaries has received notice of any pending or threatened claim or litigation with respect to any Business Employee Benefit Plan.
(e) No Business Employee Benefit Plan is: (i) a “defined benefit plan” (as defined in Section 3(35) of ERISA) or any other plan that is or was subject to Title IV of ERISA or Sections 412 or 430 of the Code, (ii) a “multiemployer plan” (as defined in Sections 3(37) or 4001(3) of ERISA), (iii) a “multiple employer plan” (within the meaning of Section 210 of ERISA or Section 413(c) of the Code), or (iv) a “multiple employer welfare arrangement” (as such term is defined in Section 3(40) of ERISA). No Controlled Group Liabilities have been incurred that have not yet been satisfied in full, and none of the Transferred Assets is subject to a Lien under ERISA. The Business does not have any Liability by reason of at any time being treated as a single employer with any other Person under Section 414 of the Code.
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(f) No Business Employee Benefit Plan provides for post-termination, post-ownership or retiree insurance or other health or welfare benefits to any Business Employee beyond those required by COBRA for which the covered Person pays the full premium cost of coverage, and the Business has not incurred (whether or not assessed) any Tax or penalty under Sections 4980B, 4980H, 4980D, 6721 or 6722 of the Code. No Business Employee Benefit Plan constitutes a “non-qualified deferred compensation plan” under Section 409A of the Code.
(g) Neither the execution and delivery of this Agreement nor the consummation of the Transactions contemplated hereby could (either alone or in conjunction with any other event), directly or indirectly, (i) result in any payment (in cash, property or the vesting of property and including, without limitation, severance, change in control or otherwise) becoming due to any Business Employee under any Business Employee Benefit Plan, (ii) increase any compensation or benefits otherwise payable or provided under any Business Employee Benefit Plan to any Business Employee, (iii) result in the acceleration of time of payment, funding or vesting of any such compensation or benefits under any Business Employee Benefit Plan for the benefit of any Business Employee, or (iv) result in an obligation to fund or otherwise set aside assets to secure to any extent any of the obligations under any Business Employee Benefit Plan in respect of any Business Employee.
(h) Neither the execution of this Agreement nor the consummation of the Transactions (either alone or when combined with the occurrence of any other event) will result in any Business Employee who is a “disqualified individual” (as defined under Section 280G of the Code) becoming entitled to any payment or benefit that would reasonably be expected to be characterized as a “parachute payment” (within the meaning of Section 280G of the Code). No Business Employee has any “gross up” agreements with PepsiCo or any of its Affiliates or other assurance of reimbursement for any Taxes imposed under Section 409A or 4999 of the Code.
SECTION 4.11 Employee Matters.
(a) Section 4.11(a)(i) of the Disclosure Letter sets forth a true, correct and complete list of each employee of PepsiCo or its Affiliates that is a Business Employee as of the date hereof, setting forth the following information for each: (A) name or employee identification number; (B) job title; (C) date of hire; (D) full-time or part-time status; (E) exempt or non-exempt classification under wage and hour Laws (as applicable); (F) base annual salary or hourly wage rate (as applicable); (G) work location; (H) estimated and target annual short-term cash and long-term incentive compensation, including bonus or commission opportunity; (I) leave status (including type of leave, start date and anticipated return date (if known)); and (J) whether such individual is on a work visa and the type and expiration date of such visa. Section 4.11(a)(ii) of the Disclosure Letter sets forth a true, correct and complete list of each natural person consultant or independent contractor (including any brand-ambassador, social media influencer or similar contractor) that provides services to the Acquired Business as of the date hereof, setting forth the following information for each: (A) name, (B) category of services, (C) date of engagement and (D) fees paid to such individual. In the preceding 12 months, neither PepsiCo nor any of its Affiliates has (i) transferred any individuals who performed services primarily for the Acquired Business to a department, position or role outside of the Acquired Business or otherwise substantially reduced any such individual’s working time dedicated to the Acquired Business or (ii) transferred any individuals who performed services primarily for a department, position or role outside of the Acquired Business to a role within the Acquired Business or otherwise substantially increased such individual’s working time dedicated to the Acquired Business.
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(b) Neither PepsiCo nor any of its Affiliates is party to any collective bargaining agreement or other Contract with a labor union or labor organization representing any current or former Business Employee, and there is no labor union or labor organization representing, or to the Knowledge of PepsiCo, purporting to represent or seeking to represent any Business Employee. There are no strikes, slowdowns, work stoppages, unfair labor practice charges or any other material labor disputes involving any Business Employee pending or, to the Knowledge of PepsiCo, threatened, nor have there been any such strikes, slowdowns or work stoppages since January 1, 2022.
(c) With respect to current Business Employees, each of PepsiCo and its Affiliates is, and since January 1, 2022 has been, in compliance in all material respects with, and is not in violation in any respect of any, Law respecting labor and employment.
(d) With respect to the Acquired Business, since January 1, 2022, neither PepsiCo nor any of its Affiliates has, (i) implemented any “plant closing” or employee “mass layoff” (in each case as defined in the Worker Adjustment Retraining and Notification Act of 1988, as amended, or any similar state or local statute, rule or regulation) affecting any site of employment or one or more facilities or operating units within any site of employment, or (ii) implemented any other employee layoff, facility closure or shutdown, furlough or temporary layoff, reduction in salary or wages, or other material workforce changes, and no such action is currently contemplated, planned or announced. No Business Employee has been notified of an upcoming employment loss, as defined the Worker Adjustment and Retraining Notification Act (the “WARN Act”), within the 90-day period ending on the date hereof.
(e) Since January 1, 2022 through the date hereof, to the Knowledge of PepsiCo, there have been no allegations of sexual harassment or harassment based on any other protected category against any Business Employee.
SECTION 4.12 Environmental Matters. Except as would not reasonably be expected, individually or in the aggregate, to be material to the Acquired Business or the Transferred Assets, (a) PepsiCo and its Affiliates are, and for the past three years have been, in compliance with all applicable Environmental Laws, (b) there is no Action pending or, to PepsiCo’s Knowledge, threatened against PepsiCo or any of its Affiliates relating to any Environmental Laws, (c) during the past three years, neither PepsiCo nor any of its Affiliates has received any written (or, to PepsiCo’s Knowledge, oral) notice, report or other information regarding any actual or alleged violation of Environmental Laws, or any Liabilities for personal injury, property damage or investigatory or cleanup obligations arising under Environmental Laws, (d) no Hazardous Materials are present in, on or under any real property currently or, during the period of ownership or operation in connection with the Acquired Business, formerly owned, operated, occupied or leased at any time by PepsiCo or any of its Affiliates in the operation of the Acquired Business and (e) neither PepsiCo nor any of its Affiliates has transported or arranged for the transportation of, stored or arranged for the storage of, used, manufactured, disposed of or arranged for the disposal of, or released any Hazardous Materials in violation of applicable Environmental Laws or in a manner that would reasonably be expected to result in Liability to the Acquired Business.
SECTION 4.13 Contracts.
(a) Section 4.13(a) of the Disclosure Letter lists (x) each Assigned Contract and (y) every other Contract of the following types (A) to which PepsiCo or any of its Subsidiaries is a party and that relates to the Acquired Business or (B) pursuant to which the Acquired Business has any rights or obligations as of the date hereof (each Contract listed or required to be listed, a “Material Contract”):
(i) any Contract providing for payments by or to the Acquired Business in excess of $250,000 in any 12-month period;
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(ii) any Contract providing for a joint venture, partnership or other similar arrangement between PepsiCo or any Subsidiary and any other Person in respect of the Acquired Business;
(iii) any Contract with a Key Customer or Key Supplier;
(iv) any collective bargaining agreement or other Contract with a labor organization involving any Business Employees;
(v) all agreements pursuant to which (A) PepsiCo or its Affiliates have granted licenses, covenants not to assert, standstills, immunities or similar rights to, under or in relation to any material Transferred Intellectual Property to any third party; or (B) PepsiCo or its Affiliates have received licenses, covenants not to assert, standstills or immunities under third-party Intellectual Property that is used or held for use in the operation of the Acquired Business and is material to the Acquired Business, in each case, other than (1) licenses in respect of Information Systems or any component thereof or commercially available software; and (2) non-exclusive licenses granted or received in the ordinary course of business to or by distributors, manufacturers, retailers, vendors, sponsors, co-marketers and other service providers or recipients in the ordinary course of business for the purposes of providing services to, or receiving services from, the Acquired Business;
(vi) the 10 largest distributors (the “Key Distributors”) of the Acquired Business based on the volume sold to customer for the fiscal year ended December 28, 2024;
(vii) any Contract for the provision of raw materials, packing, co-packing, freight or warehousing that is (x) primarily related to the Acquired Business or the Transferred Assets and (y) material to the Acquired Business or the Transferred Assets, taken as a whole;
(viii) any Contract that obligates PepsiCo or any Subsidiary to make any capital expenditure or capital improvements in respect of the Acquired Business in an amount in excess of, individually or in the aggregate, $50,000;
(ix) any Contract related to the Acquired Business that obligates PepsiCo or any Subsidiary to make any capital contribution, investment or loan in excess of $50,000;
(x) any Contract related to the Acquired Business (A) that restricts PepsiCo or any Subsidiary in any respect from competing in any line of business or with any Person, in each case in the Acquired Territory, (B) that requires the purchase of all or substantially all of PepsiCo’s or any Subsidiary’s requirements of a particular product or service from a supplier, (C) pursuant to which PepsiCo or any Subsidiary has granted exclusive rights to a customer or a supplier (including to purchase or distribute products or services) or containing any other exclusivity obligations, (D) containing rights of first refusal, rights of first offer or other similar rights or (E) containing “most favored nation” pricing provisions, in each case where such rights, limitations or provisions would purport to apply to Celsius or its Affiliates after the Closing;
(xi) any Contract related to the Acquired Business in respect of the acquisition or disposition of any interest in any Person or any business, line of business or division thereof, or a material portion of the assets of any Person (other than Inventory in the ordinary course of business), that has not yet been consummated or pursuant to which PepsiCo or such Subsidiary has continuing material Liabilities, including with respect to an earn-out, milestone, royalty, revenue-share or similar payment obligation;
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(xii) any Contract related to the Acquired Business with a Governmental Authority, excluding such Contracts entered into in the ordinary course of business with a Governmental Authority as a customer;
(xiii) any Contract related to the Acquired Business entered into for the resolution or settlement of any Action pursuant to which PepsiCo or such Subsidiary has continuing material non-monetary obligations;
(xiv) any Shared Contract material to the Acquired Business; and
(xv) any Contract containing any commitment to do, or to enter into, any of the foregoing.
(b) Each Material Contract is a legal, valid and binding obligation of PepsiCo or one of its Subsidiaries, enforceable against such Person in accordance with its terms and, to PepsiCo’s Knowledge, each other party thereto, and is in full force and effect, subject in all cases to the Enforceability Exceptions. PepsiCo and its Subsidiaries are in compliance (and no event has occurred that, with or without notice or lapse of time or both, would result in a failure to be so in compliance), in all material respects, with each, and, have not received any written (or, to PepsiCo’s Knowledge, oral) notice of any breach or default under any, Material Contract. To the Knowledge of PepsiCo, each other party to each Material Contract is in compliance (and no event has occurred that, with or without notice or lapse of time or both, would result in a failure to be so in compliance), in all material respects, with each, and has not received any notice of any breach or default under any, Material Contract. Neither PepsiCo nor any of its Subsidiaries has received any written notice (or, to PepsiCo’s Knowledge, oral) indicating that any party to a Material Contract intends to terminate, cancel or modify in a materially adverse manner its business relationship with respect to the Acquired Business. PepsiCo has made available to Celsius a true and correct copy of those portions of each Material Contract relating to the Acquired Business or Transferred Assets, together with all amendments, extensions, guarantees and other binding supplements thereto as of the date of this Agreement.
SECTION 4.14 Key Customers and Suppliers. Section 4.14 of the Disclosure Letter sets forth the 10 largest suppliers (the “Key Suppliers”) and 10 largest customers (the “Key Customers”) of the Acquired Business based on the dollar amount of purchases and sales, respectively, for the fiscal year ended December 28, 2024. No Key Supplier or Key Customer has, since December 28, 2024, (a) cancelled or otherwise terminated, or threatened in writing (or, to PepsiCo’s Knowledge, orally), to cancel or otherwise terminate, its relationship with PepsiCo or any of its Subsidiaries with respect to the Acquired Business in any material respect, (b) decreased or limited materially, or threatened in writing (or, to PepsiCo’s Knowledge, orally), to decrease or limit materially, its services, supplies or materials for use in the Acquired Business or its usage or purchase of the services or products of the Acquired Business, except for normal cyclical changes related to customers’ businesses, or (c) changed in any materially adverse manner the material terms on which such supplier or customer conducts business with PepsiCo or any of its Subsidiaries with respect to the Acquired Business.
SECTION 4.15 Intellectual Property.
(a) Section 4.15(a)(i) of the Disclosure Letter sets forth a true, correct and complete list of all registered, issued or applied-for Transferred Intellectual Property (“Registered Intellectual Property”), as well as all material unregistered Trademarks, including, as applicable, (i) the registration or application number, (ii) the registration or application date, (iii) the jurisdiction in where such item is registered or applied for, (iv) the current owner of record, registrant or account administrator and (v) if not otherwise available, the date of first use. All such Transferred Intellectual Property is subsisting and, to the Knowledge of PepsiCo, valid and enforceable. No Registered Intellectual Property is subject to any challenge, interference, opposition or other proceeding challenging the validity, enforceability, registrability, ownership or use thereof.
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(b) PepsiCo and each of its Affiliates has taken reasonable steps to preserve, maintain and protect the Transferred Intellectual Property, including timely payment of applicable maintenance fees and filing of applicable statements of use. In the past five years, no Governmental Authority has refused or rejected any Trademark application included in the Transferred Intellectual Property and filed by or on behalf of PepsiCo or any of its Affiliates and no Trademark registration or application included in the Transferred Intellectual Property and filed by or on behalf of PepsiCo or any of its Affiliates has been denied, objected to or opposed. Since January 1, 2022, PepsiCo has not received any written notice of any other Person’s prior rights in or to any Trademark (whether registered or unregistered) included in the Registered Intellectual Property.
(c) PepsiCo or the Subsidiary Transferors exclusively own and possess all right, title and interest in and to the Transferred Intellectual Property, free and clear of all Liens other than Permitted Liens. Immediately following the Closing, after giving effect to the transactions contemplated by this Agreement, all Transferred Intellectual Property will be fully owned, available for use, transferrable, alienable and licensable by Celsius and its Subsidiaries, without any restrictions, accounting or permission and without any payment of additional amounts to any other Person. The consummation of the transactions contemplated by this Agreement will not result in (i) the grant or expansion of any rights, licenses or encumbrances on, or loss or modification of any right to, any Transferred Intellectual Property or (ii) any payment to any Person with respect to any Transferred Intellectual Property in excess of what would have otherwise been payable.
(d) The Transferred Intellectual Property, together with the rights granted to Celsius and its Subsidiaries under this Agreement, the Assigned Contracts and the Additional Agreements, constitute all of the Intellectual Property used in connection with or necessary for the conduct of the Acquired Business as currently conducted by PepsiCo and its Affiliates and, immediately following the Closing, will constitute all of the Intellectual Property used in connection with or necessary for the conduct of the Acquired Business in substantially the same manner as currently conducted by PepsiCo and its Affiliates. The Transferred Data and any Data that is Not Lawfully Transferrable but otherwise satisfies the definition of Transferred Data, together with the rights granted to Celsius and its Subsidiaries under this Agreement, the Assigned Contracts and the Additional Agreements, and the Data provided or made available for transfer to Celsius (or with respect to which, Celsius has the contractual right to request) under the Transition Services Agreement, constitute in all material respects all of the Data used in connection with or necessary for the conduct of the Acquired Business as currently conducted by PepsiCo and its Affiliates.
(e) Except as would not reasonably be expected, individually or in the aggregate, to be material to the Acquired Business (i) neither the operation of the Acquired Business nor the use of any of the Transferred Intellectual Property by PepsiCo and its Affiliates infringes, misappropriates or otherwise violates the Intellectual Property of any Person and (ii) there are no claims pending or threatened in writing or, to the Knowledge of PepsiCo, otherwise, against PepsiCo or any of its Affiliates that (A) the operation of the Acquired Business or the use of any Transferred Intellectual Property infringes, misappropriates or otherwise violates any Intellectual Property of any Person or (B) challenge the validity, enforceability or ownership of any Transferred Intellectual Property.
(f) Except as would not reasonably be expected, individually or in the aggregate, to be material to the Acquired Business, PepsiCo has not filed or threatened any Action or sent any written charge or notice alleging any infringement, misappropriation or other violation of any Transferred Intellectual Property and, to the Knowledge of PepsiCo, no Person is infringing, misappropriating or otherwise violating any Transferred Intellectual Property.
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(g) (i) PepsiCo and its Affiliates have taken commercially reasonable steps to (A) protect the Transferred Intellectual Property, including against infringement, misappropriation or other violation by any Person; (B) preserve all Trade Secrets included in the Transferred Intellectual Property as trade secrets under applicable Law and (C) maintain the confidentiality of all other material confidential information included in the Transferred Intellectual Property, (ii) except as would not reasonably be expected, individually or in the aggregate, to be material to the Acquired Business, no Trade Secret included in the Transferred Intellectual Property has been disclosed to any Person except pursuant to non-disclosure obligations and, to the Knowledge of PepsiCo, all such Persons are in full compliance with such obligations and (iii) to the Knowledge of PepsiCo, there has been no unauthorized use or disclosure of any Trade Secrets included in the Transferred Intellectual Property.
(h) All Persons that have participated in the development of any Transferred Intellectual Property for the Acquired Business have executed written agreements that (i) assign to PepsiCo or its Affiliates all right, title and interest in and to any and all Intellectual Property developed by such Persons within the scope of their employment or engagement, and (ii) obligate the applicable Person to maintain the confidentiality of any Trade Secrets of the Acquired Business. To the Knowledge of PepsiCo, no Person is in breach of any such agreement or obligation referenced in this Section 4.15(h).
SECTION 4.16 Data Privacy and Security.
(a) The operation of the Acquired Business complies, and since January 1, 2022, has complied, in all material respects, with applicable Information Privacy and Security Requirements. Except as would not reasonably be expected, individually or in the aggregate, to be material to the Acquired Business, neither PepsiCo nor any of its Affiliates has, since January 1, 2022, (A) experienced any breach of security, phishing incident, ransomware or malware attack or other incident in which any Personal Information or other Data or information included in the Transferred Data was lost, stolen, accessed, used, disclosed, modified or exfiltrated in an unauthorized or unlawful manner, or has received any written notices or complaints from any Person or been the subject of any claim, proceeding or investigation with respect thereto or (B) been required under any Information Privacy and Security Requirements to notify any Person of the loss or theft of or unauthorized or unlawful access to any Personal Information or other Data or information included in the Transferred Data, that would prevent the transfer of the Transferred Data to Celsius in accordance with the Transaction Documents or that would be reasonably expected to cause any exposure or leakage of or unauthorized access to the material Trade Secrets included in the Transferred Data. PepsiCo and its Affiliates have, in each case to the extent required by Information Privacy and Security Requirements, provided notices, obtained consents, and satisfied all other requirements necessary for their processing of Personal Information included in the Transferred Data in connection with the Acquired Business and for the consummation of the Transactions that can be satisfied by PepsiCo and its Affiliates, including providing notices and obtaining consents necessary for the lawful and effective transfer of the Transferred Data to Celsius. Except as would not reasonably be expected, individually or in the aggregate, to be material to the Acquired Business, PepsiCo and its Affiliates have contractually obligated any third parties that process, access or store Personal Information or other Data or information included in the Transferred Data to abide by terms that are compliant in all material respects with applicable Information Privacy and Security Requirements. Neither the execution, delivery or performance of this Agreement or the Additional Agreements nor the consummation of the Transactions will result in a breach or violation of, or constitute a default under, any Information Privacy and Security Requirements. Neither PepsiCo nor any of its Affiliates is subject to any Information Privacy and Security Requirements that, following the Closing, would prevent Celsius from receiving or using any Personal Information or other Data or information included in the Transferred Data in all material respects in the manner in which PepsiCo and its Affiliates receive and use any Personal Information or other Data or information included in the Transferred Data in the operation of the Acquired Business prior to the Closing.
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(b) PepsiCo and its Affiliates have at all times taken commercially reasonable actions and measures, including adopting and following policies and procedures and putting in place technological, physical, administrative, operational and other safeguards, to protect the confidentiality, integrity, availability, privacy and security of the Transferred Data. PepsiCo and its Affiliates have timely remediated and addressed any material and adverse audit findings relating to the implementation of technical, physical, administrative and operational security measures pertinent to safeguarding material Trade Secrets included in the Transferred Data. There have been no material failures, breakdowns or performance reductions of any Information Systems reasonably expected to cause any exposure or leakage of or unauthorized access to the material Trade Secrets included in the Transferred Data.
(c) The Information Systems and related services provided under the Transition Services Agreement will be sufficient for the operation of the Acquired Business immediately after the Closing in all material respects in the same manner as currently conducted by PepsiCo and its Affiliates.
SECTION 4.17 FDA and Product Matters.
(a) Since January 1, 2022 through the date hereof, the manufacturing practices, ingredients, composition and labeling for each of the products manufactured or sold by the Acquired Business (the “Products”) have been in compliance with all applicable Laws (including (i) the FDC Act and any regulations promulgated by the U.S. Food and Drug Administration (the “FDA”), and (ii) the Food and Drugs Act (Canada) and the Safe Food for Canadians Act) relating to the use, manufacture, packaging, licensing, labeling, distribution, storage, transportation, handling or sale of such Products (collectively, the “Product Requirements”), in each case, except as would not reasonably be expected, individually or in the aggregate, to be material to the Acquired Business. No Action has been filed against, or, to PepsiCo’s Knowledge, threatened to be filed against, PepsiCo or any of its Affiliates by any Person relating to any alleged violation of any Product Requirement or any express or implied warranties of the Products, except as would not reasonably be expected, individually or in the aggregate, to be material to the Acquired Business. All labeling used on the Inventory and Products of the Acquired Business that is required to be filed or registered with or approved by each Governmental Authority has been so filed, registered or approved, and is otherwise in material compliance with all Product Requirements. PepsiCo has made available to Celsius every material written complaint and written notice of alleged defect or adverse reaction that PepsiCo, its Affiliates or the Business have received with respect to the Products since January 1, 2022.
(b) PepsiCo and its Affiliates have established compliance programs and procedures reasonably designed to assure compliance, in all material respects, with all applicable Laws related to the production and manufacture of the Products, including those implemented by the FDA and the U.S. Department of Agriculture (the “USDA”), the Canadian Food Inspection Agency (the “CFIA”) and Health Canada.
(c) Since January 1, 2022 through the date hereof, neither PepsiCo nor any of its Affiliates has sold or distributed any Products which are or were “adulterated,” “misbranded” or otherwise violative within the meaning of the FDC Act, the Food and Drugs Act (Canada) and the Safe Food for Canadians Act, or are articles that may not be introduced into interstate commerce under the provisions of Sections 404 or 505 of the FDC Act or equivalent provisions of applicable Law in the Acquired Territory.
(d) Since January 1, 2022 through the date hereof, none of PepsiCo, any of its Affiliates or, to the Knowledge of PepsiCo, any third party engaged by PepsiCo or its Affiliates in connection with the manufacturing of a Product has (i) received any written notice from the FDA of any material violation of the FDC Act, or from any other Governmental Authority, including the CFIA or Health Canada, of any material violation the Food and Drugs Acts (Canada) or the Safe Foods for Canadians Act, regarding any Products sold by PepsiCo or its Affiliates, or (ii) been subject to any, nor is there any pending, material
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adverse inspection, finding of deficiency, finding of non-compliance, regulatory or warning letter, investigation, suspension of or refusal to renew a food facility registration, or other compliance or enforcement Action, from or by the FDA, USDA, CFIA, Health Canada or any other Governmental Authority in the Acquired Territory with respect to the Products, or any facility used in the manufacture, handling, storage or distribution of the Products, except as would not reasonably be expected, individually or in the aggregate, be material to the Acquired Business.
(e) Since January 1, 2022 through the date hereof, there have been no (i) recalls, product warnings or withdrawals of Products that may have been adulterated, misbranded or otherwise made in violation of the FDC Act or the rules and regulations thereunder, comparable state Laws or any other comparable Laws, including the Food and Drugs Act (Canada) and the Safe Food for Canadians Act, except for recalls that have been reported to the FDA, Health Canada or CFIA and have been completed in accordance with the requirements of the FDA, Health Canada and CFIA or (ii) other similar federal, state, provincial or private actions with respect to such Products.
(f) PepsiCo, its Affiliates and, to the Knowledge of PepsiCo, all third parties engaged by PepsiCo or its Affiliates in connection with the manufacturing of a Product, possess all Product Approvals necessary and sufficient to conduct the Acquired Business. The Product Approvals are in full force and effect. None of PepsiCo, any of its Affiliates or, to the Knowledge of PepsiCo, any third party engaged by PepsiCo or its Affiliates in connection with the manufacturing of a Product is in material violation of the terms of any Product Approvals. The execution, delivery and performance by PepsiCo and the Subsidiary Transferors, as applicable, of this Agreement and the Additional Agreements to which it is or will be a party, and the consummation of the Transactions, will not terminate, or render terminable, any Product Approvals, except as would not reasonably be expected, individually or in the aggregate, to be material to the Acquired Business.
(g) PepsiCo and the Subsidiary Transferors own all Inventory used or held for use in the Acquired Business, wherever held and whether or not reflected in the Financial Information, free and clear of all Liens other than Permitted Liens. Such Inventory is (i) in all material respects of a quality and condition merchantable in the ordinary course of business and subject to normal and customary reserves and (ii) in all material respects subject to reasonably designed procedures for storage and handling in conformity with industry standards and good business practice.
(h) Since January 1, 2022 through the date hereof, all labels for all Products manufactured, sold or distributed by PepsiCo or any of its Affiliates have been correct in all material respects, and have complied in all material respects, with all requirements of all applicable Laws including those governing “organic,” “nutrient content,” “structure-function” and “health” claims.
(i) Since January 1, 2022 through the date hereof, all promotional and advertising materials prepared by or on behalf of PepsiCo and its Affiliates for the Acquired Business have materially complied with all applicable Laws (including those of the FDA, U.S. Federal Trade Commission and/or any other applicable Governmental Authority).
(j) To PepsiCo’s Knowledge, none of PepsiCo, any of its Affiliates or any Person acting on their behalf has made, in respect of the Acquired Business, an untrue statement of a material fact or fraudulent statement to any Governmental Authority, failed to disclose a material fact required by applicable Law to any Governmental Authority or committed an act, made a statement or failed to make a statement that, at the time such disclosure was made, would reasonably be expected to constitute a material violation of any applicable Laws.
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SECTION 4.18 Taxes.
(a) All material Tax Returns required to be filed with respect to the Transferred Assets and the Acquired Business have been timely filed (taking into account all extensions of due dates), such Tax Returns were accurate in all material respects, and all Taxes due and payable (taking into account any extensions properly obtained) in respect thereof (whether or not shown on any Tax Return) have been timely paid, except for those which are being contested in good faith and by appropriate proceedings and in respect of which adequate reserves with respect thereto are maintained in accordance with U.S. GAAP.
(b) There are no Liens in respect of Tax matters upon or pending against the Acquired Business or any of the Transferred Assets (other than Permitted Liens).
(c) There is no Tax deficiency outstanding, assessed or proposed against PepsiCo or any of its Affiliates which outstanding, assessed or proposed Tax deficiency is exclusively with respect to the Transferred Assets or the Acquired Business.
(d) No agreement has been entered into with any Governmental Authority with respect to the Taxes relating exclusively to the Transferred Assets or the Acquired Business that would reasonably be expected to increase the amount of Taxes payable by Celsius in a Post-Closing Tax Period.
(e) PepsiCo and its Affiliates have properly collected and remitted all material sales, use, value added, goods and services, harmonized sales and similar Taxes with respect to sales made or services provided to its customers with respect to the Transferred Assets and the Acquired Business prior to the Closing Date for which Celsius would reasonably be expected to be liable as a transferee or successor or under other provision of Law.
(f) PepsiCo and its Affiliates have duly and timely remitted to the applicable Governmental Authority material required bottle or similar deposit amounts required to be remitted with respect to the Acquired Business.
(g) All Taxes required to be withheld with respect to the Transferred Assets or the Acquired Business have duly and timely been withheld, and such withheld Taxes have been either duly and timely paid to the proper Tax Authority or properly set aside in accounts for such purpose.
(h) No examination, audit, claim, suit, action, proceeding or investigation of any Tax Return relating to any Taxes in respect of the Transferred Assets or the Acquired Business or with respect to any Taxes due from or with respect to the Transferred Assets or the Acquired Business is currently in progress, pending or threatened in writing.
(i) None of the Transferred Assets is “taxable Canadian property” of PepsiCo or any other Subsidiary Transferor that is a non-resident of Canada for purposes of the Tax Act.
(j) PepsiCo is a non-resident of Canada for purposes of the ETA, does not carry on business in Canada for purposes of the ETA, and is not registered for GST/HST under Subdivision d of Division V of the ETA.
SECTION 4.19 Brokers or Finders. Except for fees or commissions that will be paid by PepsiCo or its Affiliates, no agent, broker, investment banker or other Person is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee from or based on arrangements made by PepsiCo or its Affiliates in connection with this Agreement or the Additional Agreements or the Transactions.
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SECTION 4.20 Limitation. Except as expressly set forth in Article V or in any other Transaction Document or Additional Agreement, PepsiCo acknowledges and agrees that none of Celsius, its Subsidiaries or any other Person has made any representation or warranty, express or implied, at Law or in equity, by statute or otherwise, and any other representations or warranties are hereby expressly disclaimed by PepsiCo, including, without limitation, any implied representation or warranty as to condition, merchantability, suitability or fitness for a particular purpose. Without limiting the generality of the foregoing, PepsiCo hereby expressly disclaims reliance on any representation, warranty or other statement, whether written or oral, made by, on behalf of or relating to Celsius, its Affiliates or any Transaction Document, other than the representations and warranties expressly set forth in Article V or in any other Transaction Document or Additional Agreement. Notwithstanding anything to the contrary, nothing in this Agreement shall limit the right of PepsiCo and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement or in any other Transaction Document or Additional Agreement, nor will anything in this Agreement operate to limit any claim by PepsiCo or any of its Affiliates for Fraud.
SECTION 4.21 No Other Representations and Warranties. The representations and warranties set forth in this Article IV and in any other Transaction Document or Additional Agreement are the only representations and warranties made by PepsiCo or any of its Affiliates with respect to the Acquired Business or the Transferred Assets or any other matter relating to the Transactions. Except as specifically set forth in this Agreement and in any other Transaction Document or Additional Agreement, (a) PepsiCo makes no warranty, express or implied, as to any matter relating to the Acquired Business or the Transferred Assets or any other matter relating to the Transactions, including as to (i) the operation of the Acquired Business or the Transferred Assets after the Closing in any manner or (ii) the probable success or profitability of the Acquired Business after the Closing, and (b) none of PepsiCo, any of its Affiliates or any of their respective stockholders, directors, officers, employees, agents or representatives will have or be subject to any liability or indemnification obligation to Celsius or any other Person resulting from the distribution or delivery to Celsius or its Affiliates or representatives of, or Celsius’ use of, any information relating to the Acquired Business or the Transferred Assets, including any summary business descriptions, financial forecasts, projections or models, or any information, documents or material made available to Celsius or its Affiliates or representatives, whether orally or in writing, in management presentations, functional “break-out” discussions, responses to questions submitted on behalf of Celsius or in any other form in expectation of the Transactions. Notwithstanding anything to the contrary, nothing in this Agreement shall limit the right of Celsius and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement, nor will anything in this Agreement operate to limit any claim by Celsius or any of its Affiliates for Fraud.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CELSIUS
Celsius hereby represents and warrants to PepsiCo:
SECTION 5.01 Organization and Qualification. Each of Celsius and the Celsius Designees is duly organized, validly existing and, except in any jurisdiction that does not recognize such a concept, in good standing under its jurisdiction of incorporation or organization, as applicable, and has all requisite legal entity power and authority to own, lease or otherwise hold its assets and properties and to carry on its business as currently conducted, except as would not reasonably be expected, individually or in the aggregate, to have a material adverse effect on the ability of Celsius or the Celsius Designees to perform their respective obligations under this Agreement or any Additional Agreement or to consummate the Transactions. Each of Celsius and the Celsius Designees is duly licensed or qualified to do business in each jurisdiction in which the properties owned or leased by it or the operation of its business requires such license or qualification, except as would not reasonably be expected, individually or in the aggregate, to have a material adverse effect on the ability of Celsius or the Celsius Designees to perform their respective obligations under this Agreement or any Additional Agreement or to consummate the Transactions.
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SECTION 5.02 Authority; Execution and Delivery; Enforceability. Each of Celsius and the Celsius Designees, as applicable, has all requisite power and authority to execute and deliver this Agreement and the Additional Agreements to which it is or will be a party, to fully perform its obligations hereunder and thereunder, as applicable, and to consummate the Transactions. The execution, delivery and performance by each of Celsius and the Celsius Designees, as applicable, of this Agreement and the Additional Agreements to which it is or will be a party, and the consummation by Celsius and the Celsius Designees of the Transactions, have been duly authorized by all necessary action on the part of Celsius and such Celsius Designee, and no other action on the part of Celsius or such Celsius Designee is necessary to authorize the execution, delivery or performance of this Agreement or the Additional Agreements, or the consummation of the Transactions. Each of Celsius and the Celsius Designees has duly executed and delivered this Agreement and each Additional Agreement to which it is or will be a party, and, assuming the due execution and delivery by PepsiCo, this Agreement constitutes Celsius’, and each Additional Agreement to which Celsius or any Celsius Designee is or will be a party, as applicable, constitutes Celsius’ or such Celsius Designee’s legal, valid and binding obligation, enforceable against Celsius or such Celsius Designee in accordance with its terms, except as such enforceability may be limited by the Enforceability Exceptions.
SECTION 5.03 No Conflicts; Consents and Approvals. Subject to the requirements of the HSR Act and the filing by Celsius of reports under the Exchange Act and as contemplated by the rules of The Nasdaq Stock Market LLC, none of (i) the execution, delivery and performance by Celsius or any of the Celsius Designees, as applicable, of this Agreement and each Additional Agreement to which it is or will be a party, (ii) the consummation by Celsius and such Celsius Designees of the Transactions or (iii) the compliance by Celsius and such Celsius Designees with any of the provisions hereof or thereof, as the case may be, will:
(a) conflict with, violate or result in any breach of any provision of the certificate of incorporation or by-laws or other organizational documents of Celsius or any Celsius Designee;
(b) require Celsius or any Celsius Designee to make any filing with, provide notice to or obtain any Consent from any Governmental Authority;
(c) conflict with, violate or result in the breach by Celsius or any Celsius Designee of any Law applicable to Celsius or such Celsius Designee;
(d) conflict with, violate, result in the breach or termination of, or constitute (with or without notice or lapse of time or both) a default under, require Celsius or any Celsius Designee to make any filing with, provide notice to or obtain any Consent from any Person under, give rise to any right of termination or acceleration or right to increase the obligations or otherwise adversely modify the terms under, any Contract or other instrument or obligation to which Celsius or any Celsius Designee is a party or by which any of the assets or properties of Celsius or any Celsius Designee is bound; or
(e) result in the creation or imposition of any Lien (other than any Permitted Lien) upon any assets of Celsius or any Celsius Designee;
except, in the case of each of (b), (c), (d) and (e), as would not reasonably be expected, individually or in the aggregate, to prevent or materially impair or delay Celsius or such Celsius Designee from performing its obligations under this Agreement and the other Additional Agreements to which it is a party or from consummating the Transactions.
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SECTION 5.04 Absence of Litigation. As of the date hereof, there are no Actions pending or, to the Knowledge of Celsius, threatened, against Celsius or any of its Affiliates (i) seeking to prevent, hinder, modify or delay the Transaction or (ii) that would prohibit or materially impair or delay Celsius or any of its Affiliates, as applicable, from performing its obligations under this Agreement or any Additional Agreements or from consummating the Transactions.
SECTION 5.05 Brokers or Finders. Except for fees or commissions that will be paid by Celsius or its Subsidiaries, no agent, broker, finder, investment banker or other Person is or will be entitled any broker’s or finder’s fee or any other commission or similar fee from or based on arrangements made by Celsius or its Subsidiaries in connection with this Agreement or the Additional Agreements or the Transactions.
SECTION 5.06 Financial Capability. Upon the consummation of the transactions contemplated by the Securities Purchase Agreement, Celsius and its Affiliates shall have sufficient cash to satisfy all of Celsius’ obligations under this Agreement, including the payment of the Purchase Price and any fees and expenses of, or payable by, Celsius or its Affiliates in connection with the transactions contemplated by this Agreement.
SECTION 5.07 Limitation. Except as expressly set forth in Article IV or in any other Transaction Document or Additional Agreement, Celsius acknowledges and agrees that none of PepsiCo, its Subsidiaries or any other Person has made any representation or warranty, express or implied, at Law or in equity, by statute or otherwise, and any other representations or warranties are hereby expressly disclaimed by Celsius, including, without limitation, any implied representation or warranty as to condition, merchantability, suitability or fitness for a particular purpose. Without limiting the generality of the foregoing, Celsius hereby expressly disclaims reliance on any representation, warranty or other statement, whether written or oral, made by, on behalf of or relating to PepsiCo, its Affiliates or any Transaction Document, other than the representations and warranties expressly set forth in Article IV or in any other Transaction Document or Additional Agreement. Notwithstanding anything to the contrary, nothing in this Agreement shall limit the right of Celsius and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement or in any other Transaction Document or Additional Agreement, nor will anything in this Agreement operate to limit any claim by Celsius or any of its Affiliates for Fraud.
SECTION 5.08 No Other Representations and Warranties. The representations and warranties set forth in this Article V and in any other Transaction Document or Additional Agreement are the only representations and warranties made by Celsius or any of its Affiliates with respect to the acquisition of the Acquired Business or Transferred Assets or any other matter relating to the Transactions. Except as specifically set forth in this Agreement and in any other Transaction Document or Additional Agreement, (a) Celsius makes no warranty, express or implied, as to any matter relating to the acquisition of the Acquired Business or the Transferred Assets or any other matter relating to the Transactions, and (b) none of Celsius, any of its Affiliates or any of their respective stockholders, directors, officers, employees, agents or representatives will have or be subject to any liability or indemnification obligation to PepsiCo or any other Person resulting from the distribution or delivery to PepsiCo or its Affiliates or representatives of, or the PepsiCo’s use of, any information relating to Celsius or any of its Affiliates, including any summary business descriptions, financial forecasts, projections or models, or any information, documents or material made available to PepsiCo or its Affiliates or representatives, whether orally or in writing, in management presentations, functional “break-out” discussions, responses to questions submitted on behalf of PepsiCo or in any other form in expectation of the Transactions. Celsius acknowledges that PepsiCo and its Affiliates provides various services, rights and support to both the Acquired Business and the Excluded Businesses, in each case that will not continue after the Closing except to the extent provided in the Transition Services Agreement or this Agreement or any other Additional Agreement. Notwithstanding anything to the contrary, nothing in this Agreement shall limit the right of PepsiCo and its Affiliates to rely on the representations, warranties, covenants and agreements expressly set forth in this Agreement, nor will anything in this Agreement operate to limit any claim by PepsiCo or any of its Affiliates for Fraud.
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ARTICLE VI
COVENANTS
SECTION 6.01 Employee Matters.
(a) No later than 10 Business Days following the date of this Agreement, Celsius or its Affiliates shall offer employment to each Business Employee on terms and conditions consistent with this Section 6.01, which offer shall remain open for acceptance until 11:59 p.m., New York time, on the date that is 30 days following the date of this Agreement (such offers, the “Employment Offers”, and such period, the “Offer Period”). Each Employment Offer shall (i) provide for a position that is (at least for a year) located at such Business Employee’s place of work immediately prior to the Closing Date or allows for remote work and (ii) if accepted by the applicable Business Employee, become immediately effective as of the expiration of the Offer Period. PepsiCo and Celsius shall cooperate in good faith in connection with the Employment Offers and exchange any information necessary (to the extent permitted by applicable Law) for Celsius to implement the Employment Offers and Benefit Plans required to be provided to the Transferred Business Employees under this Section 6.01. Each Business Employee who accepts an Employment Offer pursuant to this Section 6.01(a) and becomes employed by Celsius pursuant to this Section 6.01 shall be referred to herein as a “Transferred Business Employee”. PepsiCo and its Affiliates shall terminate the employment of each Transferred Business Employee with PepsiCo or its Affiliates effective as of expiration of the Offer Period (the “Transfer Date”), and each Transferred Business Employee shall cease to participate in any Business Employee Benefit Plan as an active employee and shall begin to participate in the Benefit Plans of Celsius or its Affiliates as soon as administratively practicable following the Transfer Date in accordance with the terms of the Benefit Plans of Celsius or its Affiliates. Notwithstanding the generality of the foregoing, Celsius shall offer employment to each Business Employee who is on a leave of absence on the Closing Date as of the date on which such employee is able to commence active employment and presents himself or herself to Celsius for active employment on terms consistent with those applicable to Business Employees under this Section 6.01; provided that such employee so presents himself or herself within six months following the Closing. Each such employee who accepts such offer and returns to work not later than six months following the Closing shall become a Transferred Business Employee effective as of the date of such return and all references to the “Transfer Date” (other than in this Section 6.01(a) and Section 6.01(c)) shall be deemed to refer to the date on which such employee commences employment with Celsius or its Affiliates as the context so requires.
(b) PepsiCo and Celsius intend that the Transactions shall not constitute a termination of employment of any Business Employee prior to or upon the applicable Transfer Date for purposes of any Business Employee Benefit Plan that provides for severance or termination benefits and that the Transferred Business Employees shall have continuous and uninterrupted employment immediately before and immediately after the applicable Transfer Date. Notwithstanding anything herein to the contrary, Celsius shall not have any responsibility for, and PepsiCo shall retain all Liability arising as a result of, the actual or constructive termination of a Business Employee’s employment with PepsiCo as a result of the Transactions.
(c) For a period of one year following the Closing Date, Celsius or its Affiliates shall provide each Transferred Business Employee during his or her employment with Celsius with (i) a base salary or base wage rate (as applicable) and target annual short-term cash incentive compensation opportunities with a value that is (excluding change of control, retention or other one-time awards) no less favorable in the aggregate than those provided to such Transferred Business Employee immediately prior to the Closing Date, (ii) target long-term incentive compensation opportunities that are no less favorable than those
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provided to similarly situated employees of Celsius and (iii) other employee benefits (including group health and other welfare, retirement and similar benefits but excluding defined benefit pension and post-employment welfare benefits and change of control, retention or other one-time awards) that are no less favorable than those provided to similarly situated employees of Celsius. In addition, if the employment of any Transferred Business Employee is terminated by Celsius without cause (as determined by Celsius in good faith and consistent with past practice) after the Closing Date but prior to the first anniversary of the Closing Date, Celsius shall provide severance benefits no less favorable than those provided to similarly situated employees of Celsius.
(d) Celsius shall provide that each Transferred Business Employee shall participate in an annual or short-term cash incentive program for the remaining portion of the fiscal year in which the Transfer Time occurs, subject to terms and conditions substantially similar to those applicable to similarly situated Celsius employees. Celsius shall provide that each Transferred Business Employee shall, for the fiscal year in which the Transfer Time occurs, be paid an amount no less than the amount accrued in Closing Net Working Capital with respect to his or her (i) annual bonus for the applicable fiscal year, and (ii) long-term cash incentive for completed performance periods, as applicable. Such amounts shall be paid no later than the date on which Celsius pays annual bonuses to other similarly situated employees of Celsius subject to continued employment through such date. Following the expiration of the Offer Period, Celsius shall reimburse PepsiCo for any such bonus amounts accrued in Closing Net Working Capital that relate to Business Employees who do not become Transferred Business Employees.
(e) From and after the applicable Transfer Date, Celsius shall provide credit to each Transferred Business Employee under any applicable Benefit Plan, program or policy of Celsius or its Affiliates maintained for the benefit of any Transferred Business Employee for his or her service recognized by PepsiCo and its Affiliates and respective predecessors before the applicable Transfer Date for all purposes, including for purposes of eligibility, vesting (other than vesting of future equity awards, if any), continuous service, determination of service awards, future vacation accruals, paid time off and severance entitlements, to the same extent and for the same purposes as such service was recognized by PepsiCo and its Affiliates immediately prior to the applicable Transfer Date, as applicable; provided that such service shall not be recognized to the extent that such recognition would result in a duplication of benefits for the same period of service.
(f) Celsius shall use commercially reasonable efforts to (i) waive any pre-existing condition, exclusion, limitation, actively-at-work requirement or waiting period under all employee health and other welfare benefit plans established or maintained by Celsius or any of its Affiliates for the benefit of the Transferred Business Employees (including their respective dependents and beneficiaries, if any), except to the extent such pre-existing condition, exclusion, limitation, requirement or waiting period would have been applicable to any Transferred Business Employees (including their respective dependents and beneficiaries, if any) under a similar Business Employee Benefit Plan or any plan, program, agreement, arrangement or understanding that is required by applicable Laws immediately prior to the applicable Transfer Date and (ii) provide full credit for any co-payments, deductibles or similar out-of-pocket payments made or incurred by any Transferred Business Employees (including their respective dependents and beneficiaries, if any) prior to the applicable Transfer Date for the plan year in which the applicable Transfer Date occurs.
(g) No later than the Closing Date, Celsius shall, or shall cause its Affiliates to, have in effect a defined contribution plan that includes a qualified cash or deferred arrangement within the meaning of Section 401(k) of the Code (the “Celsius 401(k) Plan”) that will provide benefits to Transferred Business Employees participating in defined contribution plans that include a qualified cash or deferred arrangement within the meaning of Section 401(k) of the Code sponsored by PepsiCo or one of its Affiliates (each, a “PepsiCo 401(k) Plan”) as of the Closing Date. Each Transferred Business Employee who participates in a
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PepsiCo 401(k) Plan as of the Closing Date shall become a participant in the Celsius 401(k) Plan as soon as administratively practicable after the applicable Transfer Date in accordance with the terms of the Celsius 401(k) Plan. If a Transferred Business Employee elects a “direct rollover” to the Celsius 401(k) Plan of the account balances of such Transferred Business Employee (including a direct in-kind rollover of promissory notes evidencing any outstanding loans) under PepsiCo’s 401(k) Plan in accordance with applicable Law and the Celsius 401(k) Plan, Celsius agrees to allow each such Transferred Business Employee to make such direct rollover to the extent permitted by applicable Law and the terms of the Celsius 401(k) Plan. Following the applicable Transfer Date, Celsius shall provide to each Transferred Business Employee an amount equal to the PepsiCo 401(k) Plan unvested account balance reflected in Closing Net Working Capital with respect to such Transferred Business Employee, either in the form of an employer-match contribution under the Celsius 401(k) Plan or a cash bonus, as determined in the sole discretion of Celsius. Following the expiration of the Offer Period, Celsius shall reimburse PepsiCo for any such unvested account balances reflected in Closing Net Working Capital that relate to Business Employees who do not become Transferred Business Employees.
(h) PepsiCo shall pay to each Transferred Business Employee all amounts in respect of vacation days and other paid time off accrued but not taken by such Transferred Business Employee on or prior to the Closing Date. Celsius shall have no obligation to honor such accrued vacation days or paid time off after the Closing.
(i) From and after the Closing Date, except as expressly provided herein, Celsius shall, and shall cause its Affiliates to, assume (i) all employment, labor, compensation, pension, employee welfare and employee benefits related liabilities, obligations, commitments, claims and losses relating to each Transferred Business Employee (or their respective dependents and beneficiaries, if any) arising after the Closing in connection with such Transferred Business Employee’s employment or service with Celsius (ii) all severance obligations relating to each Business Employee who does not receive an Employment Offer on the terms consistent with this Section 6.01 and is terminated by PepsiCo or its Affiliates and (iii) all liabilities relating to the payment of accrued annual bonuses and long-term cash incentives pursuant to Section 6.01(d) and unvested account balances pursuant to Section 6.01(g) for the Transferred Business Employees, in each case under this clause (iii) to the extent reflected in the Estimated Closing Statement (collectively, the “Assumed HR Liabilities”). From and after the Closing Date, except as expressly provided herein, PepsiCo and its Affiliates shall retain (i) all employment, labor, compensation, pension, employee welfare and employee benefits related liabilities, obligations, commitments, claims and losses relating to each Transferred Business Employee (or their respective dependents and beneficiaries, if any) arising on or prior to the Closing, (ii) all employment, labor, compensation, pension, employee welfare and employee benefits related liabilities, obligations, commitments, claims and losses arising at any time relating to any Business Employee who receives an Employment Offer from Celsius or its Affiliates on the terms consistent with this Section 6.01 but declines such Employment Offer (including any severance obligations in connection therewith) and each other employee, officer, director or manager of or consultant to PepsiCo or any of its Affiliates (or their respective dependents and beneficiaries, if any) and (iii) all Liabilities arising at any time under or with respect to any of the Benefit Plans sponsored or maintained by PepsiCo or its Subsidiaries ((i), (ii) and (iii) collectively, the “Retained HR Liabilities”).
(j) PepsiCo and its Affiliates shall be responsible for all claims for workers’ compensation benefits which are incurred prior to the applicable Transfer Date by Transferred Business Employees. Celsius shall be responsible for all claims for workers’ compensation claims that are incurred on or after the applicable Transfer Date by Transferred Business Employees. For purposes of this Section 6.01(j), a claim for workers’ compensation benefits shall be deemed to be incurred when the event giving rise to the claim occurs, provided that a workers’ compensation claim that arises from a repetitive activity that occurs over a period both preceding and following the applicable Transfer Date shall be deemed to be a joint responsibility of PepsiCo and Celsius and shall be equitably apportioned between PepsiCo and Celsius based upon the relative periods of time that the workers’ compensation claim transpired preceding and following the applicable Transfer Date.
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(k) PepsiCo and its Affiliates shall provide any required notice under, and shall retain all Liabilities relating to, the WARN Act and similar state, local and foreign Laws or any other similar applicable Law, with respect to any event affecting the Business Employees on or prior to the Closing Date. PepsiCo shall notify Celsius prior to Closing of any layoffs of any Business Employees in the 90-day period on or prior to Closing.
(l) This Section 6.01 is included for the sole benefit of the Parties and their respective transferees and permitted assigns and does not and shall not create any right in any other Person, including any Business Employee. Nothing contained in this Agreement (express or implied) (i) is intended to create or amend, or to require Celsius or its Affiliates to establish or maintain, any particular employee benefit plan or arrangement or (ii) is intended to confer upon any individual any right to employment for any period of time, or any right to a particular term or condition of employment. No Business Employee, including any beneficiary or dependent thereof, or any other Person not a party to this Agreement, shall be entitled to assert any claim against Celsius, PepsiCo or any of their respective Affiliates under this Section 6.01.
SECTION 6.02 Confidentiality; Publicity.
(a) The terms of the Mutual Confidentiality and Non-Use Agreement, dated as of April 19, 2025, between Celsius and PepsiCo (the “Confidentiality Agreement”) shall terminate as of the Closing. Following the Closing, any non-public, confidential or proprietary information in any Party’s possession relating to the other Party’s business or operations shall be subject to the confidentiality provisions set forth in Section 9.1 of the U.S. Distribution Agreement; provided, that, for the avoidance of doubt, any such information to the extent related to the Acquired Business shall be deemed to be information in respect of Celsius’ business or operations.
(b) The timing and content of the initial public announcement regarding this Agreement, the Additional Agreements and the Transactions shall be mutually agreed upon in advance by PepsiCo and Celsius. Following such initial public announcement, PepsiCo and Celsius shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any public announcement or disclosure with respect to this Agreement, the Additional Agreements or the Transactions and shall not issue any such public announcement or disclosure prior to such consultation, except as such Party may reasonably conclude may be required by applicable Law, court process or by obligations pursuant to any listing agreement with or the listing rules of any national securities exchange or national securities quotation system (and then only after as much advance notice and consultation as is reasonably feasible); provided, however, that the foregoing shall not preclude any public announcement or disclosure that in the good faith judgment of the applicable Party is consistent with prior public announcements or disclosures made in compliance with this Section 6.02(b) and, in any event, do not contain any information relating to this Agreement, the Additional Agreements or the Transactions that has not been previously announced or made public in compliance with this Section 6.02(b).
SECTION 6.03 Bulk Sales. Each Party hereby waives compliance with any applicable bulk sale or bulk transfer or similar Laws of any jurisdiction to the extent applicable to the Transactions.
SECTION 6.04 Intercompany Matters; Further Assurances.
(a) Except as set forth in Section 6.04(a) of the Disclosure Letter, PepsiCo shall, and shall cause its Affiliates to, agree that, from and after the Closing, all rights and obligations of any party under all agreements and arrangements (including all intercompany receivables and payables between entities) between PepsiCo and its Affiliates, on the one hand, and the Acquired Business, on the other hand, shall terminate and be cancelled without any further Liability, including any Liability relating to any period prior to the Closing.
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(b) Each of the Parties shall execute and deliver such documents and other papers and use commercially reasonable efforts to take such further actions as may reasonably be required to carry out the provisions of this Agreement and the Additional Agreements and give effect to the transactions contemplated hereby and thereby, including (to the extent required by Section 2.01(c)) obtaining third-party consents and the execution and delivery of such assignments, deeds and other documents as may be necessary to transfer any Transferred Assets or Assumed Liabilities as provided in this Agreement. In furtherance of the foregoing, from and after the Closing until the date that is 12 months after the Closing (except with respect to the Shared Contracts, which are governed solely by Section 6.07) (i) PepsiCo shall (and shall cause its Affiliates to) do all things necessary, proper or advisable under applicable Law (A) to put Celsius (or a Celsius Designee) in actual possession, ownership and control of the Transferred Assets and Celsius shall cooperate with PepsiCo for such purposes and (B) to assure that PepsiCo and its Affiliates, rather than Celsius or any of its Affiliates, are the obligors in respect of all Excluded Liabilities and (ii) Celsius shall do all things necessary, proper and advisable under applicable Law as reasonably requested by PepsiCo (A) to transfer to PepsiCo (or such other Person as PepsiCo shall indicate) any Excluded Assets that Celsius or any of its Affiliates may possess, and (B) to ensure that Celsius, rather than PepsiCo or any of its Affiliates, is the obligor in respect of all Assumed Liabilities, and PepsiCo shall cooperate with Celsius for such purposes.
SECTION 6.05 Maintenance of Books and Records.
(a) After the Closing, until the sixth anniversary of the Closing Date, (i) each of the Parties hereto shall preserve all pre-Closing tangible records possessed or controlled, or to be possessed or controlled, by such Party or any of its Affiliates relating to the Acquired Business, and (ii) upon any reasonable written request from the other Party hereto or its employees, agents or representatives (specifying the purpose of such request) (“Records Request”), the Party holding such records shall, within ten (10) Business Days, (1) provide to the requesting Party or its employees, agents or representatives reasonable access to such records during normal business hours, and such employees, agents or representatives shall not unreasonably interfere with the other Party’s ordinary course of business, and (2) permit the requesting Party or its employees, agents or representatives to make copies of such records, in each case at no cost to the requesting Party or its employees, agents or representatives (other than for reasonable documented out-of-pocket expenses that are approved in writing prior to being incurred).
(b) Nothing herein shall (i) govern either Party’s access to, use of, or provision of any Data, which shall be governed exclusively by, and subject in all respects to, the terms and conditions of Exhibit F to the Transition Services Agreement, (ii) apply to any tangible records that contain data or information related to the Excluded Businesses or are not readily accessible, retrievable, deliverable or separable from records (or any data or information therein) related to the Excluded Businesses, without unreasonable effort or expense (as determined in PepsiCo’s reasonable discretion), or (iii require either Party to disclose any information to the other if such disclosure would jeopardize any attorney-client or other legal privilege or contravene any applicable Law or Information Privacy and Security Requirements, duty or agreement (it being understood that each Party shall cooperate in any reasonable efforts and requests for waivers and consents that would enable otherwise required disclosure to the other Party to occur without so jeopardizing privilege or contravening such applicable Law, requirement, duty or agreement). Such records may be sought under this Section 6.05 for any reasonable purpose, including to the extent reasonably required in connection with the audit, accounting, financial reporting, Tax, litigation, federal securities disclosure or other similar needs of the Party seeking such records.
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(c) Notwithstanding the foregoing, any and all such records may be destroyed by a Party in accordance with its ordinary-course record destruction, retention and archival policies, as may be in effect from time to time or otherwise if such destroying Party sends to the other Party hereto written notice of its intent to destroy such records, specifying in reasonable detail the contents of the records to be destroyed; such records may then be destroyed after the 60th day following such notice unless the other Party hereto notifies the destroying Party that such other Party desires to obtain possession of such records, in which event the destroying Party shall transfer the records to such requesting Party and such requesting Party shall pay all reasonable expenses of the destroying Party in connection therewith.
SECTION 6.06 Intellectual Property.
(a) As soon as reasonably practicable after the Closing, no later than the first anniversary of the Closing, and except as otherwise permitted under any Additional Agreement or other Contract between the Parties, Celsius shall, and shall cause each of its Affiliates to, remove, cover or otherwise obscure the PepsiCo Trademarks from all promotional and marketing materials, employee uniforms and identification badges, email signatures and facilities; provided that, notwithstanding the foregoing, Celsius and its Affiliates shall be permitted to deplete existing inventory and packaging materials bearing the PepsiCo Trademarks as of the Closing in the ordinary course of business.
(b) Notwithstanding the foregoing, Celsius and its Affiliates have the right to use the PepsiCo Trademarks at all times after the Closing: (i) as required by applicable Law; (ii) on internal business and legal documents and items existing as of the Closing; and (iii) in a neutral, non-trademark manner to describe the history of the Acquired Business and otherwise as permitted by “fair use” principles.
(c) Effective upon the Closing, (i) PepsiCo, on behalf of itself and its Affiliates, hereby grants to Celsius and its Affiliates a non-exclusive, royalty-free, fully-paid, perpetual, irrevocable, non-terminable license in the Acquired Territory to Exploit the Intellectual Property (other than Trademarks, provided, that nothing in this Section 6.01(c)(i) shall obligate the transfer and delivery of Data and Personal Information) in the manner Exploited prior to the Closing (including natural evolutions thereof) that is owned or controlled by PepsiCo or any of its Affiliates and used by them prior to the Closing in connection with the Acquired Business, (ii) Celsius, on behalf of itself and its Affiliates, hereby grants to PepsiCo and its Affiliates a non-exclusive, royalty-free, fully-paid, perpetual, irrevocable, non-terminable, worldwide license to Exploit in the manner Exploited prior to the Closing (including natural evolutions thereof) those items of unregistered Transferred Intellectual Property (other than (A) Trademarks and (B) Transferred Data exclusively related to the Acquired Business) used by PepsiCo and its Affiliates prior to the Closing in connection with the Excluded Businesses, [***] and (iii) Celsius, on behalf of itself and its affiliates, hereby grants to PepsiCo the license set forth and as further described in Section 6.06(c)(iii) of the Disclosure Letter, and Celsius and PepsiCo, on behalf of themselves and their respective Affiliates, agree to comply with the provisions set forth in Section 6.06(c)(iii) of the Disclosure Letter.
(d) The licenses granted under Sections 6.06(c)(i) and 6.06(c)(ii) may not be assigned, sublicensed or transferred by, respectively, PepsiCo and its Affiliates, on the one hand, or Celsius and its Affiliates, on the other hand, without the prior written consent of, respectively, Celsius or PepsiCo; provided, however, that each Party may, without the other Party’s consent, (i) grant sublicenses to service providers, consultants, or independent contractors in connection with the performance of services for such Party and its Affiliates and (ii) transfer such license to an acquiror or any of its Affiliates in connection with a merger, acquisition, divestiture, reorganization, or change of control of such Party or any of its Affiliates or sale of any portion of the Acquired Business or the Excluded Businesses, as applicable; provided that (x) any assignment, sublicense or transfer of the licenses granted under Sections 6.06(c)(i) and 6.06(c)(ii)
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shall be subject to the rights and obligations set forth in this Section 6.06 and (y) the Intellectual Property that is the subject of any such assignment, sublicense or transfer shall, notwithstanding such sale, assignment or transfer, remain fully subject to the licenses granted under Sections 6.06(c)(i) and 6.06(c)(ii), and each transferee shall, as a condition precedent to such sale, assignment or transfer, agree in writing to be bound by the foregoing.
(e) (i) All rights and licenses granted under this Section 6.06 are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses to rights to “intellectual property” as defined under the Bankruptcy Code, (ii) all Intellectual Property licensed under this Section 6.06 and all embodiments thereof are, and shall otherwise be deemed to be, for purposes of same “embodiment(s)” of “intellectual property”, and (iii) the rights, elections and obligations of the applicable licensee provided under Section 365(n) (or any other provision) of the Bankruptcy Code apply to all licenses granted under this Section 6.06. Each Party acknowledges that if it, as a debtor in possession or a trustee in bankruptcy in a case under the Bankruptcy Code, rejects this Agreement, then the other Party may elect to retain its rights under this Section 6.06 as provided in Section 365(n) of the Bankruptcy Code. The Parties further agree that, in the event of the commencement of any bankruptcy proceeding by or against a Party under the Bankruptcy Code, the other Party shall be entitled to retain all such rights under this Section 6.06. Each Party agrees and acknowledges that enforcement by the other Party of any rights under Section 365(n) of the Bankruptcy Code in connection with this Section 6.06 shall not violate the automatic stay of Section 362 of the Bankruptcy Code and waives any right to object on such basis. Upon rejection of this Agreement by a rejecting Party or its bankruptcy trustee in a bankruptcy case under the Bankruptcy Code, and written request of the other Party to such rejecting Party or its bankruptcy trustee pursuant to Section 365(n) of the Bankruptcy Code the rejecting Party or such bankruptcy trustee shall (x) provide the other Party a complete duplicate of or complete access to (as the other Party deems appropriate) the Intellectual Property, embodiments thereof and materials that are the subject of the rights and licenses granted pursuant to this Section 6.06, or any agreement supplementary to this Section 6.06, held by the rejecting Party or such bankruptcy trustee, and (y) not interfere with the rights of the other Party provided in this Section 6.06 and any other agreement supplementary to this Section 6.06 to the Intellectual Property and materials that are the subject of the rights and licenses provided under such agreements, including any right to obtain the Intellectual Property and materials that are the subject of such rights and licenses from any relevant Party.
SECTION 6.07 Shared Contracts. The Parties acknowledge that PepsiCo and its Affiliates are party to certain Contracts that are material to the operation of the Acquired Business, but that also relate to the Excluded Businesses and, as such, will remain with PepsiCo and its Affiliates after the Closing (excluding any Contract in respect of services that are the subject of the Transition Services Agreement, the “Shared Contracts”); provided, however, that in no event shall the Shared Contracts include any Contract that is a Contract solely among PepsiCo and any of its Affiliates. With respect to any such Shared Contract set forth on Section 6.07 of the Disclosure Letter, for the term of such Shared Contract, PepsiCo shall, and shall cause its Subsidiaries to, and Celsius shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to implement an arrangement in respect of such Shared Contract reasonably satisfactory to the Parties, under which Celsius would, in compliance with applicable Law, be the beneficiary of the rights and be responsible for the obligations of the portion of such Shared Contract related to the Acquired Business. For 12 months following the Closing, if Celsius identifies any Shared Contract that was required to be scheduled on Section 4.13(a)(xiv) of the Disclosure Letter but was omitted, the Parties will discuss in good faith whether such Shared Contract shall be subject to the immediately preceding sentence, taking into account the materiality of such Shared Contract to the Acquired Business.
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SECTION 6.08 Wrong Pockets.
(a) To the extent that, within 12 months after the Closing, Celsius, PepsiCo or any of their respective Affiliates determine that Celsius or any of its Affiliates has received any Excluded Asset or is found to be subject to any Excluded Liability, in each case, that should have been retained by PepsiCo or its Affiliates hereunder, (x) Celsius shall (or shall cause such Affiliate to) use commercially reasonable efforts to promptly transfer such Excluded Asset to PepsiCo or its designee, or (y) PepsiCo shall promptly assume (or cause its Affiliates to promptly assume) such Excluded Liabilities, in each case, for no consideration; provided, however, that Celsius shall have a right to contest any such determination in good faith.
(b) To the extent that, within 12 months after the Closing, Celsius, PepsiCo or any of their respective Affiliates determine that PepsiCo or any of its Affiliates held or has continued to hold any Transferred Asset or is found to be subject to any Assumed Liability, in each case, that should have been transferred to Celsius or any of its designated Affiliates hereunder, (x) PepsiCo shall (or shall cause such Affiliate to) use commercially reasonable efforts to promptly transfer such Transferred Asset to Celsius or its designee, or (y) Celsius shall promptly assume (or cause its Affiliates to promptly assume) such Assumed Liabilities, in each case, for no consideration; provided, however, that PepsiCo shall have a right to contest any such determination in good faith.
(c) To the extent that, after the Closing, (i) Celsius or any of its Affiliates receives any amount that is properly for the account of PepsiCo or any of its Affiliates according to the terms of this Agreement (including any amount in respect of or under any Excluded Asset or otherwise due to PepsiCo or any of its Affiliates) or PepsiCo or any of its Affiliates makes a payment on behalf of Celsius or any of its designated Affiliate(s) (upon Celsius’ prior written consent) (including any payment in respect of or under any Assumed Liability), Celsius shall promptly after becoming aware of the misdirected nature of such payment (and in any event no later than 10 Business Days after the earlier of (x) Celsius or its Affiliates becoming so aware and (y) delivery of written notice by PepsiCo to Celsius with evidence of the amount of the payment so made by PepsiCo on behalf of Celsius, as applicable) deliver such amount to PepsiCo and (ii) PepsiCo or any of its Affiliates receives any amount that is properly for the account of Celsius or any of its Affiliates according to the terms of this Agreement (including any amount in respect of or under any Transferred Asset) or Celsius or any of its Affiliates makes a payment on behalf of PepsiCo or any of its Affiliates (upon PepsiCo’s prior written consent) (including any payment in respect of or under any Excluded Liability or otherwise payable by PepsiCo or any of its Affiliates), PepsiCo shall promptly after becoming aware of the misdirected nature of such payment (and in any event no later than 10 Business Days after the earlier of (x) PepsiCo or its Affiliates becoming so aware and (y) delivery of written notice by Celsius to PepsiCo with evidence of the amount of the payment so made by Celsius on behalf of PepsiCo, as applicable) deliver such amount to Celsius. All amounts due and payable under this Section 6.08 shall be due and payable by the applicable Party in immediately available funds, without set-off, by wire transfer to the account designated by the other Party.
SECTION 6.09 Separation Plan. The Parties shall each use their respective commercially reasonable efforts to agree and implement a plan for the separation, transfer, migration and hand-over of the Transferred Assets and Transferred Liabilities (other than with respect to Transferred Data and embodiments of Intellectual Property, the separation, transfer, migration and handover of which shall be exclusively governed by Schedule K of the Transition Services Agreement) (the “Separation Plan”), within the timeframe specified therein, and in any event, by the expiration or termination of the Transition Services Agreement.
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SECTION 6.10 Delivery of Financial Information.
(a) PepsiCo shall deliver, or cause to be delivered, as promptly as practicable upon reasonable request by Celsius, all financial statements and other financial information related to the Acquired Business needed by Celsius to satisfy Celsius’ post-Closing periodic reporting and registration statement (including any prospectus or prospectus supplement included therein) requirements with the Securities and Exchange Commission (the “SEC”). In furtherance of the foregoing, PepsiCo shall deliver, or cause to be delivered:
(i) by no later than November 4, 2025, an audited statement of assets acquired and liabilities assumed as of December 30, 2023 and an audited statement of revenues and direct expenses for the year ended December 30, 2023, in each case in respect of the Acquired Business, together with all required footnotes thereto, prepared in accordance with U.S. GAAP;
(ii) by no later than November 4, 2025, an audited statement of assets acquired and liabilities assumed as of December 28, 2024 and audited statement of revenue and direct expenses for the year ended December 28, 2024, in each case in respect of the Acquired Business, together with all required footnotes thereto, prepared in accordance with U.S. GAAP;
(iii) by no later than November 4, 2025, an unaudited statement of revenue and direct expenses for the 24 weeks ended June 15, 2024, in each case in respect of the Acquired Business, together with all required footnotes thereto, prepared in accordance with U.S. GAAP; and
(iv) by no later than November 4, 2025, an unaudited statement of assets acquired and liabilities assumed as of June 14, 2025 and unaudited statement of revenue and direct expenses for the 24 weeks ended June 14, 2025, in each case in respect of the Acquired Business, together with all required and applicable footnotes and schedules thereto, prepared in accordance with U.S. GAAP,
in each case, satisfying the requirements of Rule 3-05 of Regulation S-X. PepsiCo shall ensure that the financial statements referenced in this Section 6.10(a) fairly present in all material respects the financial condition of the Acquired Business as of their respective dates and for the respective periods covered thereby.
(b) From and after the date hereof, until the date that Celsius has filed a periodic report with the SEC that includes or incorporates financial statements where the Acquired Business has been consolidated with Celsius for one complete fiscal year, PepsiCo shall (i) reasonably cooperate with Celsius and provide Celsius with all assistance reasonably requested in connection with the preparation by Celsius of pro forma financial statements in accordance with Article 11 of Regulation S-X reflecting the Transactions, including by delivering all financial data reasonably required by Celsius to prepare such pro forma financial statements and which data shall include an unaudited statement of revenue and direct expenses in respect of the Acquired Business for the partial fiscal quarter ended on the Closing Date (prepared in accordance with U.S. GAAP); (ii) shall cause PepsiCo employees with management responsibility for the Acquired Business to participate in any customary diligence calls, meetings or drafting sessions in connection with the preparation of any registration statements, proxy statements or any offering documents as may be reasonably requested by Celsius, and (iii) use commercially reasonable efforts to cause KPMG LLP or any other mutually agreed independent audit firm who audited the statements specified in Section 6.10(a)(i) and Section 6.10(a)(ii) to provide all reasonably required assistance to Celsius in connection with the review of the financial statements and pro forma financial statements referenced in this Section 6.10, provide all consents required for the inclusion of said audit firm’s audit report in respect of the audited financial statements referred to in Section 6.10(a)(i) and Section 6.10(a)(ii) in any Celsius SEC filing required to include (or incorporate by reference) such financial statements and deliver any comfort letters and participate in any diligence calls as reasonably requested by Celsius. In addition, PepsiCo shall deliver drafts of the statements specified in Section 6.10(a)(i)(iv) by no later than October 20, 2025.
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(c) PepsiCo consents to the public disclosure by Celsius of any of the financial and other information provided pursuant to this Section 6.10 as required or deemed advisable to comply with Celsius’ obligations under the rules of the SEC.
(d) If PepsiCo breaches its obligations set forth in Section 6.10(a)(i)–(iv) and such breach results in Celsius being unable to comply with its reporting obligations under Rule 3-05 of Regulation S-X in connection with the Transactions, then, if Celsius elects in writing (which election must be made within 30 days of Celsius becoming aware of such failure to comply with such reporting obligations and will be irrevocable), PepsiCo shall promptly pay to Celsius $15,000,000. In the event that Celsius makes such an election, such payment shall be Celsius and its Affiliate’s sole and exclusive monetary remedy for such breach, and neither Celsius nor its Affiliates shall be entitled to any indemnification or any other monetary remedy in connection with such breach or failure to comply, whether under Article III or any other provision of this Agreement. The Parties acknowledge that this Section 6.10 is an integral part of the Transactions, and that, without this Section 6.10, the Parties would not enter into this Agreement. Each of the Parties acknowledges and agrees that the harm to Celsius resulting from a breach of this Section 6.10 may be difficult or impossible to determine accurately and, therefore, the amount payable pursuant to this Section 6.10(d) is not a penalty but rather constitutes liquidated damages in a reasonable amount that will compensate Celsius for the actual or anticipated harm caused by such a breach.
SECTION 6.11 Data Privacy and Security. From and after the Closing Date, (A) Celsius shall, or shall cause its Affiliates to, (i) process the Personal Information included in the Transferred Data consistent with its standard practices for processing such information in accordance with Data Privacy Laws, and any opt-outs, preferences or other elections with respect thereto made by the applicable data subjects that have been communicated by PepsiCo to Celsius, (ii) take commercially reasonable actions and measures, including adopting and following policies and procedures and putting in place technological, physical, administrative, operational and other safeguards, designed to protect the confidentiality, integrity, availability, privacy and security of the Transferred Data in accordance with Data Privacy Laws, and (B) both Parties shall provide reasonable information, assistance and cooperation that the other Party may reasonably request or may reasonably require to fulfill its obligations under Data Privacy Laws, in connection with (1) a notice or other communication by or to a Governmental Authority, (2) compliance with a Governmental Order, or (3) pursuant to Data Privacy Laws, in each case of the foregoing (1) through (3), solely with respect to any Personal Information included in the Transferred Data.
SECTION 6.12 Certain Marketing Agreements. For 12 months following the Closing, if PepsiCo identifies any marketing Contract that is exclusively related to the Acquired Business, PepsiCo shall provide Celsius with written notice thereof, together with a copy of such Contract; provided that if PepsiCo determines in good faith that providing a copy of such Contract to Celsius would involve the disclosure of competitively sensitive information, PepsiCo may provide such Contract under a customary “clean team” arrangement. Following receipt of such notice, Celsius may, with PepsiCo’s consent (which shall not be unreasonably withheld, conditioned or delayed), designate such contract as an Assigned Contract (it being understood that any such Contract, if determined to be assigned, shall be assigned in accordance with Section 2.01(c)).
SECTION 6.13 VDR Access and Information. Promptly following the Closing, PepsiCo shall deliver to Celsius three USB drives, each containing an electronic copy of the contents of the VDR.
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ARTICLE VII
TAX MATTERS
SECTION 7.01 Transfer Taxes. Transfer Taxes applicable to, imposed upon or arising out of any transaction contemplated by this Agreement shall be borne 50% by PepsiCo and 50% by Celsius. Any Tax Return required to be filed with respect to any such Transfer Taxes will be filed by the Person primarily responsible for such filing under applicable Law, with each Party paying (or procuring payment by its Affiliate of) 50% of such Transfer Taxes. The Party or Affiliate thereof preparing any Tax Returns related to Transfer Taxes will consult with the other Party in advance before filing any Tax Return. The Parties will reasonably cooperate (and procure the reasonable cooperation of their Affiliates) in obtaining any available exemptions or refunds with respect to, or otherwise minimizing, Transfer Taxes, and any refunds of any Transfer Taxes will be shared equally pro rata by PepsiCo and Celsius.
SECTION 7.02 Tax Characterization of Adjustments. PepsiCo and Celsius agree to treat all payments made either to or for the benefit of the other following the Closing (including any payments made under any indemnity provisions of this Agreement) as adjustments to the Purchase Price for all Tax purposes, and that such treatment shall govern for purposes hereof, except as otherwise required by applicable Law.
SECTION 7.03 Straddle Period Allocation. The amount of Taxes allocable to either the Pre-Closing Tax Period or Post-Closing Tax Period of any Straddle Period shall equal: (a) for any Taxes imposed on a periodic basis (such as real, personal and intangible property Taxes, and any refund of or credit for such Taxes), the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the denominator of which is the total number of days in the Straddle Period, and the numerator being either (i) the number of days during the Straddle Period that are in the Pre-Closing Tax Period (for the Pre-Closing Tax Period), or (ii) the number of days during the Straddle Period that are in the Post-Closing Tax Period (for the Post-Closing Tax Period), and (b) for all other Taxes, determined on an interim closing of the books basis, effective as of the end of the day on the Closing Date. The amount of a payment with respect to Taxes for a Straddle Period shall be apportioned to the Party that actually made such payment so the Party benefits from such payment.
SECTION 7.04 Tax Proceedings. PepsiCo shall promptly notify Celsius in writing, and Celsius shall promptly notify PepsiCo in writing, of receipt of notice of any Action relating to Taxes with respect to the Transferred Assets or the Acquired Business that could affect Taxes that are not (i) Excluded Liabilities (in the case of a notice received by PepsiCo) or (ii) Assumed Liabilities (in the case of a notice received by Celsius) (any Action relating to Taxes with respect to the Transferred Assets or the Acquired Business that could reasonably be expected to affect Retained Taxes or Assumed Liabilities, a “Tax Proceeding”). PepsiCo shall control (at PepsiCo’s sole cost and expense) any Tax Proceeding to the extent relating primarily to Taxes that are Excluded Liabilities and Celsius shall control (at Celsius’ sole cost and expense) any Tax Proceeding to the extent relating primarily to Taxes that are Assumed Liabilities. With respect to each Tax Proceeding, (i) the Party not controlling such Tax Proceeding pursuant to this Section 7.04 (the “Non-Controlling Party”) shall be entitled to participate in such Tax Proceeding with its own counsel at its own expense (to the extent relating to the Transferred Assets or the Acquired Business), (ii) the Non-Controlling Party shall be provided with copies of all material correspondence, notices and other written materials received from any Governmental Authority with respect to such Tax Proceeding (in each case, to the extent relating to the Transferred Assets or the Acquired Business), (iii) the Party controlling such Tax Proceeding pursuant to this Section 7.04 (the “Controlling Party”) shall consult in good faith with the Non-Controlling Party with respect to any material issue relating to the Tax Proceeding with respect to the Transferred Assets or the Acquired Business and (iv) the Controlling Party shall not settle such Tax Proceeding without the prior consent of the Non-Controlling Party, such consent not to be unreasonably withheld, conditioned or delayed; provided that in no event shall PepsiCo or Celsius, as applicable, be required (x) to provide or disclose to the other party or any of their respective Affiliates any Tax Return, or information contained in a Tax Return, of PepsiCo or its Affiliates or Celsius or its Affiliates, as applicable, or any information or access to the extent it would jeopardize any privilege reasonably available to PepsiCo or its Affiliates or Celsius or its Affiliates, as applicable, in respect of any of its records or contravene any applicable Law, (y) to permit Celsius to participate in any Action related to Taxes of PepsiCo or its
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Affiliates (except where Celsius is acting as the Controlling Party under this Section 7.04) or (z) to permit PepsiCo to participate in any Action related to Taxes of Celsius or its Affiliates (except where Celsius is acting as the Controlling Party under this Section 7.04). Except as otherwise addressed specifically in this Section 7.04, any expenses incurred with respect to a Tax Proceeding shall be borne by PepsiCo and Celsius in the same ratio as the applicable Taxes for such Tax Proceeding are borne.
SECTION 7.05 Tax Cooperation. After the Closing, upon reasonable notice, Celsius, on the one hand, and PepsiCo, on the other hand, agree to furnish or cause to be furnished to each other and their representatives, employees, counsel and accountants access, during normal business hours, such information and assistance relating to the Transferred Assets or the Acquired Business as are reasonably necessary for (i) Tax accounting matters relating to the Transferred Assets or the Acquired Business, (ii) the preparation and filing of any Tax Returns, reports or forms relating to the Transferred Assets or Acquired Business, or (iii) the defense or conduct of any Tax Proceeding; provided that, in no event shall PepsiCo be required to provide or disclose to Celsius or any of its Affiliates any Tax Return, or information contained in a Tax Return, of PepsiCo or its Affiliates or any information or access to the extent it would jeopardize any privilege reasonably available to PepsiCo or its Affiliates in respect of any of its records or contravene any applicable Law.
SECTION 7.06 GST/HST. The Purchase Price and all other amounts payable by Celsius or its designees to PepsiCo and its Subsidiary Transferors under this Agreement are exclusive of applicable GST/HST. Celsius or its designees shall be solely liable and responsible for the payment, in addition to the Purchase Price and any other amount payable hereunder, of applicable GST/HST to PepsiCo and its Subsidiary Transferors, and any applicable GST/HST shall be invoiced by PepsiCo or its Subsidiary Transferors to Celsius or its designees pursuant to an invoice that contains such information as may be required by applicable GST/HST legislation for Celsius or its designees to claim any related GST/HST credits, rebates or refunds, including the information prescribed in the Input Tax Credit (GST/HST) Regulations. Notwithstanding the generality of the foregoing:
(a) PepsiCo and Celsius agree that the transfer of the Transferred Intellectual Property by PepsiCo to Celsius shall not be subject to GST/HST.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
SECTION 8.01 Survival. None of the representations, warranties, covenants or agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Closing, and all rights, claims and causes of action (whether in contract or in tort or otherwise, or whether at Law or in equity) with respect thereto shall terminate at the Closing, and thereafter there will be no Liability in respect thereof, other than (a) those covenants and agreements set forth in this Agreement which by their nature or their express terms are required to be performed or complied with in whole or in part at or after the Closing, which covenants and agreements shall survive the Closing in accordance with their respective terms or until fully performed and (b) claims for Fraud, which shall survive indefinitely. The obligations of PepsiCo to indemnify the Celsius Indemnified Persons (x) pursuant to Section 8.02(a)(i) shall survive until the applicable covenant or agreement terminates pursuant to the foregoing provisions of this Section 8.01 and (y) pursuant to Section 8.02(a)(ii) shall survive indefinitely. The obligations of Celsius to indemnify the PepsiCo Indemnified Persons (x) pursuant to Section 8.02(b)(i) shall survive until the applicable covenant or agreement terminates pursuant to the foregoing provisions of this Section 8.01 and (y) pursuant to Section 8.02(b)(ii) shall survive indefinitely. Notwithstanding anything contained herein to the contrary, to the extent that a Party has delivered written notice to another Party with respect to a breach of a covenant or agreement prior to the date on which such Party’s right to bring a claim with respect to such covenant or agreement would expire in accordance with the terms of this Section 8.01, then any such claim, and the related covenant or agreement on which such claim is based, shall survive (solely for the purposes of such claim) until such claim is fully resolved or finally judicially determined in accordance with the provisions of this Agreement.
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SECTION 8.02 Indemnification.
(a) From and after the Closing, subject to Section 8.03 and the survival periods set forth in Section 8.01, PepsiCo shall indemnify, defend and hold harmless Celsius and its Affiliates (collectively, the “Celsius Indemnified Persons”) from and against any and all Losses actually suffered, incurred or sustained by any of them to the extent resulting from, relating to, or arising out of:
(i) any breach of those covenants and agreements of PepsiCo set forth in this Agreement that by their nature or their express terms are required to be performed or complied with in whole or in part at or after the Closing (subject, with respect to the covenants and agreements set forth in Section 6.10(a)(i)-(iv), to Section 6.10(d)); or
(ii) the Excluded Liabilities.
(b) From and after the Closing, subject to Section 8.03 and the survival periods set forth in Section 8.01, Celsius shall indemnify, defend and hold harmless PepsiCo and its Affiliates (collectively, the “PepsiCo Indemnified Persons”) from and against any and all Losses actually suffered, incurred or sustained by any of them to the extent resulting from, relating to, or arising out of:
(i) any breach of those covenants and agreements of Celsius set forth in this Agreement) that by their nature or their express terms are required to be performed or complied with in whole or in part at or after the Closing; or
(ii) the Assumed Liabilities.
SECTION 8.03 Notice of Claim; Defense.
(a) If (i) any third party or Governmental Authority institutes, threatens or asserts any claim, action or other proceeding that may give rise to Losses for which a Party (an “Indemnifying Party”) may be liable for indemnification under this Article VIII (a “Third-Party Claim”) or (ii) any Person entitled to indemnification under this Agreement (an “Indemnified Party”) shall have a claim to be indemnified by an Indemnifying Party that does not involve a Third-Party Claim, then, in the case of clause (i) or (ii), the Indemnified Party shall promptly send to the Indemnifying Party a written notice specifying (to the extent known) the nature of such claim and the amount (to the extent then known or able to be estimated) of all related Losses (a “Claim Notice”); provided, however, that any failure to give such Claim Notice or to provide any such facts or amounts shall not affect the rights of the Indemnified Parties except to the extent that such failure materially prejudices the rights or defenses of the Indemnifying Party.
(b) In the event of a Third-Party Claim, subject to this Section 8.03(b), the Indemnifying Party shall have 30 days from its receipt of the relevant Claim Notice to notify the Indemnified Party in writing that the Indemnifying Party elects to assume the defense of such Third-Party Claim, at its own expense and by its own counsel (reasonably acceptable to the Indemnified Parties). Should the Indemnifying Party so elect to assume the defense of a Third-Party Claim, the Indemnified Parties may participate, at their own expense and through legal counsel of their choice, in any such Action, provided that (i) the Indemnifying Party may elect to control the defense of the Indemnified Parties in connection with such Action and (ii) the Indemnified Parties and their counsel shall cooperate with the Indemnifying Party’s counsel in connection with such Action. Notwithstanding anything to the contrary in this Agreement, the Indemnifying
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Party shall not be entitled to assume or continue control of the defense of any Third-Party Claim if (A) such Third-Party Claim relates to or arises in connection with any criminal proceeding, (B) such Third-Party Claim seeks an injunction or equitable or other non-monetary relief against any Indemnified Party (other than to the extent incidental to monetary relief) or (C) involves an actual conflict of interest between the Indemnifying Party and the Indemnified Party as advised by counsel. The Indemnifying Party shall have the right to settle, compromise or discharge a Third-Party Claim either (A) with the prior written consent of the applicable Indemnified Party (which shall not be unreasonably withheld, conditioned or delayed) or (B) without any Indemnified Party’s consent if such settlement, compromise or discharge (x) provides for no relief other than the payment of monetary damages and such monetary damages are paid in full by the Indemnifying Party, (y) includes as an unconditional term thereof the giving by the Person(s) asserting such Third-Party Claim to all Indemnified Parties of an unconditional release from all Liability with respect to such Third-Party Claim and (z) does not contain an admission of Liability or wrongdoing on the part of any Indemnified Party. Notwithstanding the foregoing, if the Indemnifying Party elects not to retain counsel reasonably satisfactory to the relevant Indemnified Parties and is not permitted to or elects not to assume control of such defense within a reasonable period of time or if both the Indemnifying Party and any Indemnified Party are parties to or subjects of such Action and conflicts of interests exist between the Indemnifying Party and such Indemnified Party, then the Indemnified Parties shall retain counsel reasonably acceptable to the Indemnifying Party in connection with such Action and assume control of the defense of the Indemnified Parties in connection with such Action, and the fees, charges and disbursements of no more than one such counsel per jurisdiction selected by the Indemnified Parties shall be reimbursed by the Indemnifying Party. Whether the Indemnifying Party or the Indemnified Party controls the defense of any Third-Party Claim, the Parties hereto shall cooperate in the defense thereof in accordance with Section 8.03(c). Under no circumstances will the Indemnifying Party have any Liability in connection with any settlement of any Action that is entered into by the Indemnified Party without its prior written consent (which shall not be unreasonably withheld, conditioned or delayed).
(c) From and after the delivery of a Claim Notice, at the reasonable request of the Indemnifying Party, each Indemnified Party shall grant the Indemnifying Party and its employees, counsel, experts and representatives reasonable access, during normal business hours and upon prior written notice, to the books, records, personnel and properties of the Indemnified Party to the extent reasonably related to the Claim Notice at no cost to the Indemnifying Party (other than for reasonable out-of-pocket expenses of the Indemnified Parties); provided that the Indemnified Party shall not be required to provide such access to the extent it would jeopardize any privilege reasonably available to an Indemnified Party in respect of any of its records or contravene any applicable Law; provided, however, that if any such access is not provided in reliance on this sentence, the Indemnified Party shall provide the Indemnifying Party with notice thereof and shall use commercially reasonable efforts to provide such disclosure in a manner which would not violate any such Law or result in the waiver of any such privilege or protection.
(d) Notwithstanding the foregoing, Tax Proceedings shall be governed by Section 7.04 and not this Section 8.03.
SECTION 8.04 Limitation of Liability; No Duplication; Mitigation; Exclusive Remedy.
(a) Any Liability for indemnification hereunder shall be determined without duplication of recovery (i) by reason of the state of facts giving rise to such Liability constituting a breach of more than one covenant or agreement or (ii) to the extent such Liability was already included on a dollar-for-dollar basis in the calculation of Purchase Price as finally determined pursuant to Section 2.04. Notwithstanding anything to the contrary in this Agreement, the amount of any Losses to which an Indemnified Party will be entitled indemnification pursuant to this Article VIII shall be calculated net of the amount of any recoveries actually received by such Indemnified Party under any existing insurance policies or any other source (which recoveries shall be net of any actual, reasonable and documented out-of-pocket collection costs and any increase in premium directly attributable to such Loss) in respect of any such Losses.
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(b) Notwithstanding anything to the contrary herein, (i) the maximum aggregate liability of Celsius for any and all claims for indemnification under Section 8.02(a)(i) of this Agreement shall in no event exceed the Purchase Price and (ii) the maximum aggregate liability of PepsiCo for any and all claims for indemnification under Section 8.02(b)(i) of this Agreement shall in no event exceed the Purchase Price.
(c) Notwithstanding anything to the contrary herein or provided under applicable Law, Losses shall not include any (i) punitive or exemplary damages, (ii) special, incidental or consequential damages or (iii) treble damages, regardless of the form of action through which any of the foregoing are sought, in each case except to the extent any such Losses are awarded and paid by an Indemnified Party with respect to a Third-Party Claim.
(d) PepsiCo and Celsius, and shall cause their respective Affiliates to, cooperate with each other with respect to resolving any claim or liability with respect to which one party is obligated to indemnify the other party, including by using commercially reasonable efforts to mitigate any Loss for which indemnification is sought under this Agreement; provided, however, that the reasonable and documented out-of-pocket costs of such mitigation shall constitute Losses for purposes of this Agreement. In the event that PepsiCo or Celsius, as applicable, fails to use such commercially reasonable efforts to mitigate any such Loss, then notwithstanding anything else to the contrary contained herein, the other Party shall not be required to indemnify any Person for any Loss that would reasonably be expected to have been avoided if PepsiCo or Celsius, as applicable, had made such efforts.
(e) From and after the Closing, except in the case of Fraud, (i) as expressly provided in Section 2.04, (ii) as expressly provided in Article III, (iii) as expressly provided in Section 6.10(d) or (iv) in respect of the Additional Agreements (to the extent expressly provided by the applicable Additional Agreement), the exclusive monetary remedy of Celsius and the other Celsius Indemnified Persons in connection with this Agreement and the transactions contemplated hereby (whether under this contract or arising under common law or any other Law) shall be as provided in this Article VIII.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Waiver. Either Party may (a) extend the time for the performance of any of the obligations or other acts of the other Party, (b) waive any inaccuracies in the representations and warranties of the other Party contained herein or in any document delivered pursuant to this Agreement or (c) waive compliance with any of the agreements of the other Party contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party to be bound thereby. Except as otherwise provided in this Agreement, any failure to assert, or delay in the assertion of, rights under this Agreement shall not constitute a waiver of those rights.
SECTION 9.02 No Conflict. In the event of any conflict or inconsistency between the terms and conditions of this Agreement and the terms and conditions of any Additional Agreement, the terms and conditions of this Agreement shall prevail.
SECTION 9.03 Expenses. Except as otherwise provided in this Agreement or the Additional Agreements, the Parties shall bear their respective direct and indirect costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Agreement and the transactions contemplated hereby.
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SECTION 9.04 Notices. All notices, requests, consents and other communications under this Agreement shall be in writing and shall be deemed delivered: (a) when delivered, if delivered personally, (b) four Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (c) one Business Day after being sent via a reputable nationwide overnight courier service guaranteeing next Business Day delivery, or (d) when received, in the case of email, in each case to the intended recipient as set forth below; provided that, in the case of both (b) and (c), a copy shall also be sent by e-mail.
| (a) | if to PepsiCo: |
PepsiCo, Inc.
700 Anderson Hill Road
Purchase, New York 10577
Attention: [***]
Email: [***]
with copies to (which shall not constitute notice):
Cravath, Swaine & Moore LLP
Two Manhattan West
375 Ninth Avenue New York,
New York 10001
Attention: Claudia J. Ricciardi
Email: cricciardi@cravath.com
| (b) | if to Celsius: |
Celsius Holdings, Inc.
2381 NW Executive Center Drive
Boca Raton, Florida 33431
Attention: [***]
Email: [***]
with copies to (which shall not constitute notice):
Freshfields US LLP
3 World Trade Center
175 Greenwich Street
New York, New York 10007
Attention: Ethan Klingsberg; Sanjay Murti
Email: ethan.klingsberg@freshfields.com; sanjay.murti@freshfields.com
or at such other address as Celsius or PepsiCo may specify by written notice to the other parties hereto in accordance with this Section 9.04.
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SECTION 9.05 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
SECTION 9.06 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any applicable Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
SECTION 9.07 Entire Agreement. This Agreement (together with the Exhibits and the Additional Agreements) constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, between PepsiCo and Celsius with respect to the subject matter hereof.
SECTION 9.08 Successors and Assigns. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective parties hereto, the successors and permitted assigns of Celsius and the successors of PepsiCo, whether so expressed or not. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or transferred, in whole or in part, by operation of Law or otherwise by either Party hereto without the prior written consent of the other Party; provided, however, that without PepsiCo’s consent, Celsius may (a) upon promptly furnished written notice, assign any or all of its rights and interests hereunder to one or more of its Affiliates, to any of its lenders as collateral security or to any Person in connection with the sale of all or substantially all of Celsius’ assets (provided that such assignment by Celsius shall not relieve Celsius of its obligations or other liabilities under this Agreement) or (b) designate one or more of its Affiliates to perform its obligations hereunder, in each case, if Celsius nonetheless remains fully responsible for the performance of its obligations hereunder and, if such assignee ceases to remain an Affiliate of Celsius, Celsius shall cause such assignment to be rescinded or otherwise reversed; provided that any assignment to a Celsius Affiliate that results in or increases any withholding, Transfer Tax, VAT or similar Tax shall be permitted only with PepsiCo’s written consent. Any assignment or transfer in violation of this Section 9.08 shall be null and void.
SECTION 9.09 No Third-Party Beneficiaries. Except as set forth in Section 8.02, this Agreement is for the sole benefit of the Parties and their permitted assigns, and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 9.10 Amendment. This Agreement may not be amended or modified except by an instrument in writing signed by each of the Parties.
SECTION 9.11 Governing Law; Venue; Arbitration.
(a) This Agreement, and any dispute arising from or relating to the interpretation, construction, validity, enforcement or enforceability of this Agreement, or any of the transactions contemplated by this Agreement, including all Actions (whether in contract or in tort, at Law or in equity or granted by statute), shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to any principle of conflicts of Law that would require the application of the Laws of any other jurisdiction; provided, however, that any matters arising under Article III (including the application of any other provision hereof thereto) shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to any principle of conflicts of Law that would require the application of the Laws of any other jurisdiction.
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(b) Each Party irrevocably agrees that any legal Action arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement (whether in contract, tort or otherwise and whether at Law or in equity) brought by any Party shall be settled by arbitration before the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules in New York, New York by three arbitrators. One arbitrator will be nominated by Celsius, one will be nominated by PepsiCo, with each nomination being made no more than five days following the date of notice of the dispute. The third arbitrator will be the chairman and will be nominated by the first two. If the first two are unable to agree, the arbitral institution will appoint the third. Any arbitrator(s) selected to resolve the dispute will be bound exclusively by the Laws of the State of Delaware without regard to its principles of choice of Law. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof pursuant to Law. The arbitration panel’s fees will be borne equally by the Parties. All other costs and expenses in connection with the arbitration will be borne by the Party who incurs such expense or who requests a service (including, without limitation, a transcript of a deposition or of the arbitration proceeding). In connection with the arbitration: (a) the arbitration panel will have no authority to award punitive or exemplary damages; (b) any award will be paid promptly, without deduction or offset and judgment upon the award may be entered by any court of competent jurisdiction; (c) if the award is confirmed by a court of competent jurisdiction, a Party challenging the award or resisting enforcement of a judgment entered upon the award will pay, to the extent permitted by Law, all costs, attorneys’ fees and expenses incurred by the other Party in defending the award or seeking enforcement of the judgment; and (d) the decision of the arbitration panel will have no collateral estoppel effect with respect to a claim by or against any Person or business entity who is not a party to the arbitration. The decision of the arbitration panel will be final and binding on the Parties, and the arbitration panel’s award will be the exclusive remedy between the Parties with respect to all claims and issues arising out of the transaction(s) or occurrence(s) at issue, whether or not presented or pled to the arbitration panel. If a dispute is referred to arbitration pursuant to this Section 9.11(b), unless the arbitrators rule otherwise, the obligations of the Parties shall not be suspended, and the provisions of this Agreement shall continue to be carried out by the Parties; provided, however, that any suspension of the Parties’ obligations under Article III shall be subject to Section 3.10(d) of Article III. This Section 9.11(b) shall not limit the jurisdiction of the Accounting Firm set forth in Section 2.04, although actions may be brought to arbitration in accordance with this Section 9.11(b) for purposes of enforcing the jurisdiction and judgments of the Accounting Firm.
(c) Notwithstanding Section 9.11(b), each Party recognizes that the failure of the other Party to comply with the terms of this Agreement could cause the nonbreaching Party irreparable damage for which monetary damages would be insufficient. Therefore, it is mutually agreed that in the event of a breach or threatened conduct that may cause a Party to breach and is likely to result in any substantial and irreparable loss or damage according to the equity rules, the non-breaching Party may seek interim injunctive relief from a court, until such time as a final and binding determination is made by the arbitration panel. If interim injunctive relief is sought from a court, it shall be sought in a court of competent jurisdiction. Application to a court for interim injunctive relief shall not be deemed incompatible with the agreement to arbitrate or a waiver of the right to arbitrate. The foregoing right to seek interim injunctive relief is in addition to, and not in lieu of, all other remedies or rights that the non-breaching Party might otherwise have by virtue of any breach of this Agreement by the other Party.
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SECTION 9.12 Counterparts. This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by electronic delivery in .pdf or other generally available graphical format shall be sufficient to bind the Parties hereto to the terms and conditions of this Agreement.
SECTION 9.13 Waiver of Jury Trial. Each Party hereby waives, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any litigation, claim, suit or proceeding of any kind or description, whether in Law or in equity, whether in Contract or in tort or otherwise, directly or indirectly, arising out of or relating to this Agreement or any transaction contemplated by this Agreement. Each Party (a) certifies that no representative, agent or attorney of any other Party has represented, expressly or otherwise, that such other Party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other Party have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 9.13.
SECTION 9.14 Enforcement. The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that any breach of this Agreement could not be adequately compensated in all cases by monetary damages alone. The Parties acknowledge and agree that the Parties shall be entitled, without posting a bond or similar indemnity, to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in accordance with Section 9.11, in addition to any other remedy to which they are entitled at Law or in equity.
SECTION 9.15 Mutual Drafting. Each Party hereto has participated in the drafting of this Agreement, which each Party acknowledges is the result of extensive negotiations between the Parties hereto. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision.
SECTION 9.16 Disclosure Letter. The Disclosure Letter shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in Article IV. The information set forth in the Disclosure Letter is disclosed solely for the purposes of this Agreement, and no information set forth therein shall be deemed to be an admission by any Party to any third party of any matter whatsoever, including of any violation of Law or breach of any Contract. The Parties agree that the disclosure set forth in any particular section or subsection of the Disclosure Letter shall be deemed to be an exception to (or, as applicable, a disclosure for purposes of) (a) the representations and warranties of PepsiCo that are set forth in the corresponding section or subsection of this Agreement and (b) any other representation and warranties of PepsiCo that are set forth in this Agreement, but in the case of this clause (b) only if the relevance of that disclosure as an exception to (or a disclosure for purposes of) such other representations and warranties is reasonably apparent on the face of such disclosure.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, PepsiCo and Celsius have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| PEPSICO, INC. | ||
| By: |
/s/ Dan Fink | |
| Name: Dan Fink | ||
| Title: Senior Vice President | ||
| CELSIUS HOLDINGS, INC. | ||
| By: |
/s/ Richard Mattessich | |
| Name: Richard Mattessich | ||
| Title: Chief Legal Officer | ||
[Signature Page to Transaction Agreement]
Exhibit 10.4
CERTAIN IDENTIFIED INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT BECAUSE THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THE OMITTED INFORMATION AS PRIVATE OR CONFIDENTIAL, AND SUCH INFORMATION IS NOT MATERIAL. OMISSIONS ARE IDENTIFIED AS [***]
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
This Amended and Restated Distribution Agreement (“Agreement”) is made effective as of August 28, 2025 (the “A&R Effective Date”), by and among Celsius, Inc., a Nevada corporation (“Company”), Alani Nutrition LLC, a Kentucky limited liability company (“Alani Nu”), Celsius Brands LLC, a Nevada limited liability company (“Celsius Brands”), PepsiCo, Inc., a North Carolina corporation (“Distributor”) and, solely with respect to Section 9, Celsius Holdings, Inc., a Nevada corporation (“Holdings”). Company, Alani Nu and Celsius Brands, collectively, on the one hand, and Distributor, on the other, shall sometimes be referred to hereinafter individually as a “Party” and collectively as the “Parties.”
WHEREAS, Holdings and Distributor entered into a Distribution Agreement (the “Original Distribution Agreement”), effective as of August 1, 2022 (the “Original Effective Date”), as amended by Amendment #1 to the Distribution Agreement, dated March 21, 2024 (the “First Amendment”), pursuant to which, among other things, Holdings granted to Distributor the exclusive right to sell and distribute, directly and/or through its Subdistributor(s), Celsius Licensed Products in the Territory and in connection therewith the right to use the related Marks set forth on Schedule 1 in the Territory in accordance with the terms thereof;
WHEREAS, following Holdings’ acquisition of all of the issued and outstanding membership interests of Alani Nu on April 1, 2025, Holdings, directly and indirectly through its subsidiaries, develops, markets and sells products packaged under the “Alani Nu” brand;
WHEREAS, in connection herewith, Holdings and Distributor are concurrently entering into a Transaction Agreement (the “Transaction Agreement”), which provides for, among other things, the acquisition by Holdings (or a designated subsidiary) of the “Rockstar” brand in the U.S. and Canada from Distributor and its applicable subsidiaries (and certain other assets related thereto);
WHEREAS, the Parties desire to amend and restate the Original Distribution Agreement (as amended by the First Amendment) to additionally grant Distributor the exclusive right to sell and distribute, directly and/or through its Subdistributor(s), Alani Nu Licensed Products and the Rockstar Licensed Products in the Territory and, in connection therewith, to grant Distributor and Subdistributors the right to use the related Marks set forth on Schedule 1 in the Territory in accordance with the terms of this Agreement and the Alani Nu Channel Transition Agreement (as defined below); and
WHEREAS, in consideration of the foregoing, the Parties have accepted the terms and conditions set forth herein.
NOW THEREFORE, for the consideration hereinafter set forth, together with the premises, mutual promises, and covenants contained herein, and such other good and valuable consideration, the receipt, adequacy, and sufficiency of which are hereby acknowledged by each of the Parties to this Agreement, the Parties hereto agree as follows:
CERTAIN DEFINITIONS
“AAA” has the meaning set forth in Section 9.10(b).
“Act” has the meaning set forth in Section 2.2(b).
“Actual Annual Cases” has the meaning set forth in Section 5.3(f).
“Additional Agreements” has the meaning given to such term in the Transaction Agreement.
“Advertising and Promotional Costs” has the meaning set forth in Section 5.3(d).
“Affiliate” means, with respect to any Person (as defined below), any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by legally binding contract, indenture, note, bond, lease, license, commitment, instrument or other agreement, whether or not in writing.
“Alani Nu Channel Transition Agreement” means that certain Channel Transition Agreement executed by and between Distributor and Company on even date herewith, a copy of which is attached hereto as Exhibit A.
“Alani Nu Licensed Products” means the Licensed Product SKUs packaged under Marks related to the “Alani Nu” brand.
“Annual Review” has the meaning set forth in Section 5.3(b).
“Buy-Out” has the meaning set forth in Section 3.3(a).
“Case” means, unless otherwise mutually agreed to by the Parties in writing (including as set forth on Schedule 3), each 12-count, 12 fluid oz per container case equivalent of ready-to-drink Licensed Products (144 fluid oz per case). Other sized containers and cases will be based on the foregoing volumes. Current Case configurations are on the stock keeping unit (“SKU”) list set forth on Schedule 3.
“Celsius Licensed Products” means the Licensed Product SKUs packaged under Marks related to the “Celsius” brand.
“Certificates of Designation” means (i) that certain Certificate of Designation of Series A Convertible Preferred Stock of Company, executed and filed as of the Original Effective Date, as amended by that certain Certificate of Amendment to Designation of the Series A Convertible Preferred Stock of Company, executed and filed as of the same date hereof, and (ii) that certain Certificate of Designation of Series B Convertible Preferred Stock of Company, executed and filed as of the same date hereof.
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“Change of Control” means: (i) a sale or transfer, directly or indirectly, of all or substantially all of the assets of Holdings in any transaction or series of related transactions (other than sales in the ordinary course of business); (ii) any merger, consolidation or reorganization of Holdings with or into any other entity or entities as a result of which the holders of Holdings’ outstanding capital stock (on a fully-diluted basis) immediately prior to the merger, consolidation or reorganization no longer represent at least a majority of the voting power of the surviving or resulting corporation or other entity; or (iii) any sale or series of sales, directly or indirectly, beneficially or of record, of shares of Holdings’ capital stock by the holders thereof which results in any Person or group of Affiliated Persons owning capital stock holding more than 50% of the voting power of Holdings.
“Channel Transition Agreement” means that certain Channel Transition Agreement executed by and between Distributor and Company on August 1, 2022.
“Channels” means all channels and distribution methods existing as of the Original Effective Date within the Territory, except for the Excluded Accounts provided on Schedule 2 attached hereto (as such term is defined on Schedule 2).
“Circana Data” means the information periodically published by Circana, Inc., or other such successor syndicated data reporting service.
“Claim” has the meaning set forth in Section 6.1.
“Club Channel” means a retail store requiring paid membership and usually selling a wide variety of merchandise, in which customers may buy large, wholesale quantities of the store’s products [***].
“Co-Manufacturing Agreement” means that certain Co-Manufacturing Agreement to be entered into between the Company (or an Affiliate thereof) and the Distributor in accordance with the Transaction Agreement or any similar or substitute contractual arrangement (including transition services agreements for co-manufacturing) between the Company (or an Affiliate thereof) and the Distributor.
“Co-op Fund” has the meaning set forth in Section 5.3(f).
“Competitor” means [***].
“Competitive Change of Control” means a Change of Control wherein a Competitor is the acquiring or constituent party in such transaction.
“Confidential Information” has the meaning set forth in Section 9.1.
“Contract Committee” has the meaning set forth in Section 5.3(c).
“Cruise Lines” means companies that operate cruise ships on oceans and rivers and which market cruises to the public [***], including any channels of sales for distribution and sale to such companies and/or operators.
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“Damages” has the meaning set forth in Section 6.1.
“Distributor’s Total Adjusted Field Net Revenue” means [***].
“Dollars”, “dollars” and “$” each mean lawful money of the United States.
“Ecommerce Channel” means merchants selling through websites and/or mobile applications which offer various products for sale to consumers [***].
“Energy Drink” means [***].
“Escalation Procedure” has the meaning set forth in Section 5.3(c).
“Excluded Accounts” are defined or listed, as applicable, in Schedule 2.
“Excluded Products” means [***].
“Existing Alani Nu Distributor” has the meaning set forth in Section 1.1(b)(ii).
“Existing Product” has the meaning set forth in Schedule 4.
“Expansion Product” has the meaning set forth in Schedule 5.3(g).
“Foodservice” means, except for the Excluded Accounts set forth on Schedule 2, customers and channels serviced by Distributor’s Foodservice organization [***].
“Force Majeure Event” has the meaning set forth in Section 9.9.
“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or Orders (as defined below) of such organization or authority have the force of Law (as defined below)), or any arbitrator, court or tribunal of competent jurisdiction, including, without limitation, the United States Food and Drug Administration and the United States Federal Trade Commission.
“Gross Profits” means [***].
“Group Presidents” has the meaning set forth in Section 5.3(c).
“Indemnitee” has the meaning set forth in Section 6.3.
“Indemnitor” has the meaning set forth in Section 6.3.
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“Intellectual Property” means all present or future trademarks, trade dress, patents, copyrights, and other intellectual property rights, registered or unregistered, including, without limitation, trade secrets, designs, packaging and inventions, marketing materials and marketing content, owned by Company or its Affiliate(s), including those associated with Licensed Products (whether or not patented or patentable) and all content, graphics and other works of authorship (including the Marks) created by Company or its Affiliate(s) or on behalf of Company or its Affiliate(s) by third parties and used in connection with Licensed Products.
“Joint Business Plan” has the meaning set forth in Section 5.3(a).
“Laws” means, as applied to any Person, any and all applicable statutes, laws, ordinances, regulations, rules, codes, Orders, constitutions, treaties, common laws, judgments, decrees, and other requirements or rules of law, including, without limitation, those promulgated by any Governmental Authority.
“Licensed Products” means: (a) non-alcoholic beverages and/or dietary supplements packaged under the Marks, including (i) ready-to-drink beverages or liquids and (ii) other liquid concentrate products which are not ready-to-drink; (b) [***]packaged under the Marks and which become “Licensed Products” pursuant to the terms of Section 5.3; and (c) any other products which the Parties may, upon mutual written agreement add as Licensed Products, from time to time during the Term of this Agreement. The SKUs for the initial Licensed Products as of the A&R Effective Date are attached on Schedule 3. The Parties will mutually align on pricing for any Licensed Products not specifically priced in this Agreement.
“[***]” means [***].
“LRB Energy Category” means the total liquid refreshment beverage energy category [***]in the U.S. as defined and reported in the Circana Data.
“Marks” means the trademarks set forth on Schedule 1 and any other trademarks, logos, service marks, trade dress, slogans, designs, logos and other source indicators used by Company or its Affiliates in connection with Licensed Products, including all trade dress, logos and slogans, whether such are registered or unregistered.
“Military Channel” means the channel of sales to the U.S. Military for distribution and/or sale to Qualified Consumers (defined herein) [***].
“Mutual Performance Objectives” has the meaning set forth in Section 5.3(b).
“New [***] Product” has the meaning set forth in Section 5.3(h)2.
“New Channels” means all channels and distribution methods created after the Original Effective Date within the Territory.
“New Channel Proposal” has the meaning set forth in Section 2.6(a).
“New Channel Second Proposal” has the meaning set forth in Section 2.6(b).
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“New [***] Accrual Amount” means an amount accrued by Distributor equal to $[***] of Licensed Products sold by Distributor.
“New [***] Drink” means any new [***].
“New [***] Minimum Share Achievement” has the meaning set forth in Section 2.4(f)(i).
“New [***] Product” has the meaning set forth in Section 5.3(h)1.
“New Product” has the meaning set forth in Schedule 5.3(g).
“Order” means, as applied to any Person, any order, judgment, decree, injunction, stipulation, settlement, or consent of or with any Governmental Authority.
“Person” means any individual, partnership, corporation, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof.
“Product Issue” has the meaning set forth in Section 8.1.
“Qualified Consumers” means members of the active U.S. military, military dependents, retirees and honorably discharged veterans.
“Quarterly Review” has the meaning set forth in Section 5.3(e).
“Restricted Product” has the meaning set forth in Schedule 5.3(g).
“Restriction Termination Date” has the meaning set forth in Schedule 5.3(g).
“Retail” means, except for the Excluded Accounts set forth on Schedule 2, customers and channels serviced by Distributor’s Retail Sales and Distribution organization.
“Rockstar Agreement” has the meaning set forth in Schedule 4.
“Rockstar Licensed Products” means the Licensed Product SKUs packaged under Marks related to the “Rockstar” brand.
“Sales Fundamentals” has the meaning set forth in Section 5.3(b).
“Series B Securities Purchase Agreement” means that certain Securities Purchase Agreement dated as of the same date hereof between Company and Distributor.
“Subdistributor(s)” means any third-party entity appointed and authorized by Distributor in writing to distribute Licensed Products within the Territory, including Distributor’s subsidiaries or Distributor’s independent bottlers.
“Term” has the meaning set forth in Section 3.1.
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“Territory” means, for purposes of this Agreement, the United States and its territories and possessions, excluding (i) the Excluded Accounts and (ii) all customers, accounts and channels in Puerto Rico and US Virgin Islands.
“Triggering Condition” means any date from and after the [***] anniversary of the A&R Effective Date upon which the Licensed Products collectively achieve at least a [***] share of the LRB Energy Category for the immediately preceding [***] period.
SECTION 1 - Exclusive Appointment
1.1 Grant of Rights.
| (a) | Scope. This Agreement grants Distributor the right to exclusively distribute the Licensed Products within the Territory on the terms and subject to the conditions stated herein. |
| (b) | Exclusivity and Appointment. |
| (i) | Unless and until this Agreement is terminated hereunder, Distributor shall have the exclusive right (directly and/or indirectly through a Subdistributor(s)) to distribute and sell Celsius Licensed Products and Rockstar Licensed Products throughout the Territory in the Channels, subject to the exceptions as provided for in this Agreement (including the exceptions stated in Schedule 2). |
| (ii) | Subject to Alani Nu’s termination of the rights of each existing distributor of Alani Nu in respect of Alani Nu Licensed Products (each, an “Existing Alani Nu Distributor”) in accordance with the terms of the Alani Nu Channel Transition Agreement, Distributor shall have the exclusive right (directly and/or indirectly through a Subdistributor(s)), from and after the later of (i) the A&R Effective Date or (ii) as related only to the specific territory serviced by each Existing Alani Nu Distributor, the date such Existing Alani Nu Distributor’s rights to distribute the Alani Nu Licensed Products are terminated, in each case, to distribute and sell Alani Nu Licensed Products in the Channels in the Territory previously belonging to such Existing Alani Nu Distributor, subject to the limited exceptions as provided for in this Agreement (including the exceptions stated in Schedule 2). With respect to each portion of the Territory which is not serviced by any Existing Alani Nu Distributor as of the A&R Effective Date, Distributor shall have the exclusive right (directly and/or indirectly through a Subdistributor(s)), from and after the A&R Effective Date, to distribute and sell Alani Nu Licensed Products in the Channels throughout such portion of the Territory, subject to the exceptions as provided for in this Agreement (including the exceptions stated in Schedule 2). For the avoidance of doubt, except as otherwise provided in the Alani Nu Channel Transition Agreement, Alani Nu shall have no liability to Distributor if, and to the extent, Alani Nu is unable to terminate the rights of any Existing Alani Nu Distributor, including, without limitation, due to franchise or similar Laws. |
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| (iii) | Any changes to this Section 1.1(b) shall be done by an amendment pursuant to Section 9.6 of this Agreement. Distributor will include the terms set forth on Schedule 4 in its subdistribution agreements offered to Distributor’s independent bottler Subdistributor. |
| (c) | Existing Alani Nu Distributors. Subject to the terms and conditions of this Agreement and the Alani Nu Channel Transition Agreement, Alani Nu believes in good faith that it can lawfully conclude the rights of Existing Alani Nu Distributors to sell and distribute Alani Nu Licensed Products pursuant to and in accordance with its agreements with such Existing Alani Nu Distributors or applicable Law in order to grant Distributor the exclusive right to sell and distribute Alani Nu Licensed Products in the Territory. Alani Nu will act promptly to ensure that it complies with the terms of the Alani Nu Channel Transition Agreement. Upon each such termination of an Existing Alani Nu Distributor’s distribution rights, Distributor will have the exclusive rights to sell Alani Nu Licensed Products in the portion of the Territory previously covered by such Existing Alani Nu Distributor. As more fully set forth in the Alani Nu Channel Transition Agreement, Alani Nu will solely be responsible for paying any amounts payable to Existing Alani Nu Distributors as a result of any such termination, including applicable buyout amounts set forth in Alani Nu’s agreements with its existing distributors, subject in each case to Distributor’s obligation to pay the Transition Payments (as defined in the Alani Nu Channel Transition Agreement) to Alani Nu in accordance with the terms of the Alani Nu Channel Transition Agreement. |
SECTION 2 - Representations, Warranties and Covenants
2.1 Products. The Parties agree that, under this Agreement, Company shall manufacture and supply Licensed Products to Distributor and Distributor shall carry such Licensed Products required herein, or otherwise as mutually agreed to in writing between the Parties. Notwithstanding anything to the contrary herein, the Parties acknowledge and agree that, for so long as Distributor is manufacturing (or is required to manufacture) Rockstar Licensed Products for Company pursuant to the Co-Manufacturing Agreement, the representations and warranties of the Company set forth in Sections 2.2(b)(ii) and 2.2(b)(vi), and the covenants of the Company set forth in this Section 2.1, Sections 2.3(b)(i) and 2.3(b)(iv), in each case solely with respect to the manufacture of Rockstar Licensed Products, shall not apply.
2.2 Representations and Warranties.
| (a) | Distributor Representations and Warranties. Distributor represents and warrants that (i) it will comply with all Laws, including, without limitation, Laws relating to food, labeling, health, packaging, returnable container Laws, deposit Laws and Laws applicable to Distributor’s use of Company’s Intellectual Property, (ii) it has the financial resources, infrastructure, equipment, and capability to cover and service the Territory to meet Distributor’s obligations contained herein, (iii) it shall organize and maintain an adequate sales force to sell Licensed Products in the Territory to meet Distributor’s obligations contained herein, (iv) it is qualified and permitted to enter into this Agreement, and the Alani Nu Channel Transition Agreement and (v) this Agreement and the Alani Nu Channel Transition Agreement do not and will not, individually or as a whole, conflict with any of Distributor’s legal or contractual obligations. |
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| (b) | Company Representations and Warranties. Company represents and warrants that (i) it will comply with all Laws applicable to its performance hereunder, (ii) the Licensed Products will be merchantable, of good quality and fit for the purpose intended, and will not be impure, contaminated or adulterated, misbranded or mislabeled within the meaning of the Federal Food, Drug and Cosmetic Act (“Act”) and shall comply in all respects with the Act, as amended, and the Food Additives Amendment of 1968, provided that the foregoing warranty shall not extend to Licensed Products that are changed or improperly stored after delivery to Distributor’s delivery location or are damaged due to Distributor’s, any Subdistributor’s or any other third party’s actions or omissions, (iii) it is qualified and permitted to enter into this Agreement and the Alani Nu Channel Transition Agreement, (iv) to the extent written agreements exist, it has the right to terminate its Existing Alani Nu Distributors in accordance with the terms of its agreements with such Existing Alani Nu Distributors, and, to the extent no written agreements exist, it has the right to terminate such Existing Alani Nu Distributors in accordance with applicable Law, (v) this Agreement and the Alani Nu Channel Transition Agreement do not and will not, individually or as a whole, conflict with any of Company’s legal or contractual obligations and (vi) the Licensed Products contain [***]. |
2.3 Covenants.
| (a) | Distributor hereby covenants that during the Term it will, as it relates to Distributor’s obligations under this Agreement: |
| (i) | use commercially reasonable efforts to sell and distribute Licensed Products in all Channels in the Territory during the Term; |
| (ii) | not sell Licensed Products to or solicit any person or entity outside the Territory or any other territory not authorized by Company; |
| (iii) | forward to Company all inquiries received regarding potential sales of Licensed Products outside the Territory; |
| (iv) | not, directly or indirectly, knowingly make any misrepresentations or false, disparaging, or misleading statements pertaining to Licensed Products or Company; |
| (v) | not adulterate or misbrand the Licensed Products, or engage in any activity that could or does render the Licensed Products adulterated or misbranded; |
| (vi) | distribute, transport and store the Licensed Products in accordance with all Laws; |
| (vii) | maintain all necessary records for compliance with the terms of this Agreement and all Laws; and |
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| (viii) | work diligently to have each Subdistributor that is [***] enter into a subdistribution agreement by and between Distributor and the Subdistributor, including terms substantially similar to the terms in Schedule 4. |
| (b) | Company hereby covenants that during the Term: |
| (i) | it will use commercially reasonable efforts to market, promote and manufacture the Licensed Products during the Term; |
| (ii) | it will not, directly or indirectly, knowingly make any misrepresentations or false, disparaging, or misleading statements pertaining to Distributor or Distributor’s products; |
| (iii) | it and its Affiliates will not grant any third party the right to sell or distribute any Licensed Products in the Territory or to use and/or display the Marks and/or Company Intellectual Property in the Territory in connection with the sale or distribution of any Licensed Products, unless otherwise permitted herein or agreed in writing by the Parties; and |
| (iv) | it will comply and the Licensed Products will comply with all applicable federal, state and local Laws and industry standards that may now or hereafter be applicable to any performance hereunder by or on behalf of Company or the Licensed Products, as applicable, provided that the foregoing covenant shall not extend to Licensed Products that are changed or improperly stored after delivery to Distributor’s delivery location or are damaged due to Distributor’s, any Subdistributor’s or third party’s actions or omissions. |
2.4 Non-compete.
| (a) | During the Term, neither Distributor nor any of its Affiliates will sell or distribute within the Territory an Energy Drink that contains all three (3) of the following elements: [***]. |
| (b) | During the Term, neither Distributor nor any of its Affiliates will sell or distribute within the Territory an Energy Drink that either: (1) (i) is primarily marketed or advertised as [***] and (ii) is contained in [***]; or (2) [***]. In the event that Company modifies the appearance of [***] to no longer contain such trade dress at any time during the Term, then the foregoing restrictions shall no longer apply to Distributor or any of its Affiliates. |
| (c) | During the Term, neither Distributor nor any of its Affiliates will sell or distribute within the Territory any Energy Drinks under the following trademarks: [***]. |
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| (d) | During the Term, except as otherwise expressly provided in Section 2.4(c) and the penultimate bullet in Schedule 4, none of Distributor, any of its Affiliates [***] will distribute any Energy Drinks restricted by the provisions 2.4(a), (b) or (c) above. |
| (e) | During the Term, until [***], Distributor for itself and on behalf of its Affiliates agrees that it and they will not launch or distribute in the Territory any [***]. |
| (f) | After [***], Distributor and its Affiliates are permitted to launch any beverages without restriction [***], provided, neither Distributor nor any of its Affiliates is restricted by provisions 2.4(a), (b) or (c) above and, provided further, that the following shall apply: |
| (i) | If Distributor or any of its Affiliates launches any [***] that achieves and maintains a market share of [***] of the LRB Energy Category (“New [***] Minimum Share Achievement”) for any period of [***], then Distributor will accrue (on an annual basis) the New [***] Accrual Amount for so long as the LRB Energy Category market share of any New [***] Energy Drink(s) distributed by Distributor or any of its Affiliates in the Territory maintains the New [***] Minimum Share Achievement. |
| (g) | The New [***] Accrual Amount shall be spent by and used by Distributor to incrementally support Company and maintain focus on the Licensed Products within the Distributor’s organization, provided that the parties will meet and mutually agree on how the funds are spent which may include but not limited to incremental marketing support, promotional support, cold equipment, staff incentives, etc. |
2.5 [Reserved].
2.6 Right of First Offer – New Channel.
| (a) | If, during the Term of this Agreement, Company intends to commence distribution or sale of the Licensed Products in any New Channel(s), Company shall notify Distributor in writing of such intention and Distributor shall have the right of first offer to submit a proposal (the “New Channel Proposal”) detailing the terms and conditions upon which it would be willing to sell or distribute the Licensed Products, either directly or through a local sub-distributor for such New Channel(s). Distributor shall have [***] from the date of receipt of such notice to deliver in writing the New Channel Proposal to Company. Company shall then have a period of [***] following its receipt of Distributor’s New Channel Proposal to review and respond to Distributor’s Proposal. If Company accepts Distributor’s New Channel Proposal, the parties shall use commercially reasonable efforts to enter into a new agreement for such New Channel(s) reasonably consistent with this Agreement. |
| (b) | If, within such subsequent [***] period, Company rejects Distributor’s New Channel Proposal, then Distributor shall have an additional [***] period following written notice from Company of its rejection of the New Channel Proposal to respond to Company with a second proposal (the “New Channel Second Proposal”) detailing revised terms and conditions under which it would be willing to sell or distribute the |
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| Licensed Products, either directly or through a local sub-distributor in such New Channel(s). Company shall then have a further period [***] following its receipt of Distributor’s New Channel Second Proposal to review and respond to Distributor’s New Channel Second Proposal. If Company accepts Distributor’s New Channel Second Proposal, the parties shall use commercially reasonable efforts to enter into a new agreement for such New Channel(s) reasonably consistent with this Agreement. |
| (c) | If Company rejects Distributor’s New Channel Second Proposal, Company shall be entitled to enter into a distribution arrangement with any other third party on terms not materially more favorable to the relevant third-party distributor than the terms specified in the New Channel Second Proposal. |
SECTION 3 - Term and Termination
3.1 Term. The term of this Agreement shall commence on the Original Effective Date and will continue for an unlimited period (the “Term”).
3.2 Termination. Section 3.1, Section 3.2 and Section 9.9 set forth the sole and exclusive mechanisms for termination of this Agreement. The Parties agree and acknowledge that the notice provisions and consideration provided in this Section 3.2 and Section 3.3 (if and to the extent payable) are reasonable and adequate to each Party in the event of termination.
| (a) | Termination With Cause. Each Party shall have the right to terminate this Agreement “With Cause” (as defined below) on the terms and in accordance with the timelines set forth below. Termination of this Agreement pursuant to this Section 3.2(a) shall not in any way terminate, limit or restrict the rights and remedies of either Party against the other Party which has violated, breached or failed to satisfy any of the representations, warranties, covenants, agreements, conditions or other provisions of this Agreement. |
| (i) | Termination by Company With Cause. Company has the right to terminate this Agreement With Cause upon written notice to Distributor on the terms herein. Upon termination of this Agreement by Company With Cause, Distributor shall, within [***] of termination, pay to Company any and all amounts owed by Distributor to Company. |
| a. | Definition of Cause. Company shall have the right to terminate this Agreement “With Cause” upon written notice to Distributor if or upon, as applicable: |
| i. | Distributor becomes insolvent, or files a voluntary petition, or acquiesces to an involuntary petition, pursuant to any bankruptcy act or Law, or an order is entered in any involuntary proceeding which remains unstayed for more than 30 days, or a petition is filed for, or Distributor consents to the appointment of, or possession is taken by a trustee, receiver or similar official for Distributor of all or a substantial part of its business, or an order is entered appointing any such official which remains unstayed for more than 30 days; or |
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| ii. | Distributor ceases all or a material part of its beverage business, or an order is entered by a court of competent jurisdiction decreeing the dissolution of Distributor or Distributor ceases to function as an ongoing concern and/or ceases to conduct its operations in the normal course of business, or the administration or the occurrence of any analogous event; or |
| iii. | Distributor or one of its Affiliates commits a material breach or fails to perform or observe in a material way any of the representations, warranties, covenants or obligations applicable to it hereunder, and fails to cure any such breach or failure to perform or observe such material representations, warranties, covenants or obligations within 30 days after receiving written notice from Company stating the nature and character of such breach or failure; provided that, if the breach cannot be corrected within 30 days, Distributor and its Affiliates will have that additional time to correct the breach as reasonably required (not to exceed 90 days), provided further that Distributor or its applicable Affiliate begins taking the actions necessary to correct the breach during the 30-day cure period and diligently and in good faith pursues those actions to completion; provided, further, that, the occurrence of ordinary course issues and challenges relating to the transition and ramp-up of distribution of the Alani Nu Licensed Products during the first twelve (12) months following the A&R Effective Date shall not, absent extenuating facts or circumstances (for example, gross negligence or willful misconduct), constitute “material breaches” or “failures to perform” for purposes of this Section 3.2(a)(i)a.iii; or |
| iv. | The distribution relationship contemplated by this Agreement is required to be terminated by any Governmental Authority, including, without limitation, the United States Federal Trade Commission. |
| (ii) | Termination by Distributor With Cause. Distributor has the right to terminate this Agreement With Cause (as defined below) upon written notice to Company on the terms herein. Upon termination of this Agreement by Distributor With Cause, Company shall, [***] pay to Distributor, any and all amounts owed by Company to Distributor, other than the Buy-Out, which shall be payable within the timeline set forth in Section 3.3. |
| a. | Definition of Cause. Distributor shall have the right to terminate this Agreement “With Cause” if: |
| i. | Company becomes insolvent, or files a voluntary petition, or acquiesces to an involuntary petition, pursuant to any bankruptcy act or Law, or an order is entered in any involuntary proceeding which remains unstayed for more than 30 days, or a petition is filed for, or Company consents to the appointment of, or possession is taken by, a trustee, receiver or similar for Company of all or a substantial part of its business, or an order is entered appointing any such official which remains unstayed for more than 30 days; |
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| ii. | Company ceases all or a material part of its business, or an order is entered by a court of competent jurisdiction decreeing the dissolution of Company or Company ceases to function as an ongoing concern and/or ceases to conduct its operations in the normal course of business, or the administration or the occurrence of any analogous event; or |
| iii. | Company or one of its Affiliates commits a material breach or fails to perform or observe in a material way any of its material representations, warranties, covenants or obligations hereunder, and fails to cure any such breach or perform or observe its representations, warranties, covenants or obligations within 30 days after receiving written notice from Distributor stating the nature and character of such breach or failure; provided that, if the breach cannot be corrected within 30 days, Company and its Affiliates will have that additional time to correct the breach as reasonably required (not to exceed 90 days), provided further that Company or its applicable Affiliate begins taking the actions necessary to correct the breach during the 30-day cure period and diligently and in good faith pursues those actions to completion; or |
| iv. | Holdings consummates a Competitive Change of Control. In the event Holdings executes a binding written agreement for a Competitive Change of Control, Company shall notify Distributor in writing within [***] of the execution of such binding written agreement for a Competitive Change of Control, and if Distributor wishes to exercise its right to terminate, it shall provide Company with written notice of such termination (the “Distributor’s Notice”) within [***] after Distributor receives such written notice from Company; provided that the effective date of any such termination shall be [***] after the effective date of such Competitive Change of Control if the acquiring or constituent party is [***], an Affiliate of [***], an exclusive [***] bottler or an Affiliate of an exclusive [***] bottler and [***] after the effective date of such Competitive Change of Control if the acquiring or constituent party is any other Competitor, provided further that during such [***] period, as applicable, after the effective date of a Competitive Change of Control, the restrictions set forth in Section 2.4 shall not apply to Distributor or its Affiliates. In the event that such Competitive Change of Control is not consummated for any reason, then Distributor’s termination notice shall be deemed withdrawn and null and void with no further action required on the part of Company or Distributor. |
| (iii) | Termination by Company for Change of Control. Company shall have the right to terminate this Agreement in connection with Holdings’ execution of a binding written agreement to consummate a Change of Control (whether to a Competitor or a non-Competitor). In such case, Company shall notify |
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| Distributor in writing within [***] of the execution of such binding written agreement for a Change of Control, provided the effective date of termination shall [***] after the effective date of such Change of Control if the acquiring or constituent party is [***], an Affiliate of [***], an exclusive [***] bottler or an Affiliate of an exclusive [***] bottler and [***] after the effective date of such Change of Control if the acquiring or constituent party is any other Competitor or non-Competitor, provided further that during such [***] period, as applicable, after the effective date of a Competitive Change of Control, the restrictions set forth in Section 2.4 shall not apply to Distributor or its Affiliates, provided further that Company shall pay the Buy-Out pursuant to Section 3.3. |
| (b) | Termination Without Cause. Provided that the Party wishing to terminate this Agreement is not then in breach of any of the terms and conditions contained in this Agreement beyond any applicable notice and cure periods, beginning in the nineteenth year of the Term (i.e., 2041), either Party shall have the right to terminate this Agreement without cause in its sole discretion by providing written notice on August 1 of such year to the other Party of its intention to terminate, which termination shall be effective in twelve (12) months (i.e., August 1, 2042). Thereafter, beginning in the twenty-ninth year of the Term (i.e., 2051) and each ten (10) year period thereafter (i.e., 2061, 2071, etc.) either Party shall have the right to terminate this Agreement without cause in its sole discretion by providing written notice on August 1 of such year to the other Party of its intention to terminate, which termination shall be effective in twelve (12) months. For clarity, if either Party terminates this Agreement in accordance with this Section 3.2(b), both Parties shall continue to perform their respective obligations under this Agreement after notice of termination until the expiration of the twelve (12) month notice period. |
| (c) | Effect of Termination. In the event of the termination of this Agreement for any reason whatsoever, the Parties shall have the following rights and obligations: |
| i. | Distributor shall have the right to sell through the Licensed Products in its possession for a reasonable period of time following the effective date of such termination, not to exceed [***]. Any remaining Distributor inventory of Licensed Products that are good and salable shall be purchased by Company from Distributor, at Distributor’s cost price plus freight; |
| ii. | Company shall have the right, at its option, to cancel any or all accepted but undelivered purchase orders for Licensed Product that provide for delivery after the effective date of termination; |
| iii. | Termination of this Agreement shall not release either Party from the obligations to make payments of any undisputed amounts then or thereafter due and payable under this Agreement or waive either Party’s rights or obligations under this Agreement; and |
| iv. | If requested by Company, as appropriate under the circumstances, Distributor will use commercially reasonable efforts to assist Company in the orderly transition of the Territory to one or more new distributors. |
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3.3 Buy-Out.
| (a) | The compensation to be paid by Company to Distributor in the context of termination shall be as follows (if applicable, the “Buy-Out”): |
| (i) | In the event of (A) Company’s termination of this Agreement pursuant to Section 3.2(b), (B) Company’s termination of this Agreement pursuant to Section 3.2(a)(iii) in connection with a Change of Control (other than in connection with a Competitive Change of Control, which shall be governed by Section 3.3(a)(ii) below), or (C) Distributor’s termination With Cause pursuant to Section 3.2(a)(ii) (other than in connection with a Competitive Change of Control, which shall be governed by Section 3.3(a)(ii) below), the Buy-Out shall be an amount equal to [***] Distributor’s Gross Profits in the [***] period immediately preceding such termination notice date; or |
| (ii) | In the event of (A) Company’s termination of this Agreement pursuant to Section 3.2(a)(iii) in connection with a Competitive Change of Control, or (B) Distributor’s termination of this Agreement pursuant to Section 3.2(a)(ii)a.iv in connection with a Competitive Change of Control, the Buy-Out shall be an amount equal to (i) for any Competitive Change of Control to [***], an Affiliate of [***], an exclusive [***] bottler or an Affiliate of an exclusive [***] bottler, an amount equal to (x) [***] Distributor’s Gross Profits in the [***] period immediately preceding such termination notice date plus (y) [***], or (ii) for any Competitive Change of Control to a Competitor other than [***], an Affiliate of [***], an exclusive [***] bottler or an Affiliate of an exclusive [***] bottler, [***] Distributor’s Gross Profits in the [***] period immediately preceding such termination notice date. |
| (b) | Notwithstanding the foregoing, in the event of any termination taking place during the [***] of the Term for which the Buy-Out is owed, the amount payable to Distributor shall be at least equal to the amount of the [***] previously paid to Company by Distributor. |
| (c) | Except as otherwise provided in this Section 3.3(c), Company shall pay any Buy-Out owed to Distributor in full no later than the effective date of termination or, if the effective date of termination is less than [***] from the date of notice of termination, no later than [***] from the date of notice of termination of this Agreement from Distributor. |
In the event of a dispute between the Parties regarding the amount of the Buy-Out owed to Distributor, Company shall be obligated to pay the Buy-Out in full to Distributor but may, at its option, hold back such disputed amount solely if such amount represents a variation of [***] (the “Disputed Buy-Out Portion”) from the undisputed amount of the Buy-Out (the “Undisputed
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Buy-Out Portion”). Company shall pay the Undisputed Buy-Out Portion to Distributor no later than the effective date of termination (or, if the effective date of termination is less than [***] from the date of notice of termination, no later than [***] from the date of notice of termination) and the Parties shall in good faith work to settle the Disputed Buy-Out Portion no later than the [***] from the date of notice, no later than [***] from the date of notice of termination from Distributor).
Notwithstanding anything contained herein to the contrary, if any portion of the Undisputed Buy-Out Portion due to Distributor remains outstanding from Company as of the effective date of termination, or as of the expiration of the foregoing [***] period, as applicable, this Agreement shall remain in full force and effect and shall only be deemed terminated upon Company’s payment to Distributor of the Undisputed Buy-Out Portion, in full. For the avoidance of doubt, no Buy-Out shall be payable to Distributor upon (i) Distributor’s termination of this Agreement without cause pursuant to Section 3.2(b) or (ii) Company’s termination of this Agreement With Cause.
| (d) | For the avoidance of doubt, there shall be no Buy-Out owed by Company in connection with (i) any Competitive Change of Control where Distributor does not exercise its right to terminate this Agreement pursuant to Section 3.2(a)(ii)(a)(iv), and provided that such new buyer agrees to assume the obligations of Company under this Agreement, or (ii) any Change of Control where Company does not exercise its right to terminate this Agreement pursuant to Section 3.2(a)(iii). |
SECTION 4 - Intellectual Property
4.1 Ownership of IP. Company or its Affiliate(s), as applicable, owns and shall retain all right, title and interest in the Marks and the Intellectual Property.
4.2 License.
| (a) | Distributor is hereby granted the exclusive (except as otherwise provided herein, and solely for the purposes set forth in this Agreement), sublicensable (solely to its Subdistributors), non-assignable, and non-transferable right to use the Intellectual Property in the Territory related to the Celsius Licensed Products and the Rockstar Licensed Products, in accordance with the terms hereof, in connection with the promotion, merchandising, marketing, distribution, and sale of Celsius Licensed Products and Rockstar Licensed Products as contemplated hereby. |
| (b) | Distributor is hereby granted the exclusive (except as otherwise provided herein, and solely for the purposes set forth in this Agreement), sublicensable (solely to its Subdistributors), non-assignable, and non-transferable right to use the Intellectual Property in the Transitioned Territory (as defined in the Alani Nu Channel Transition Agreement) related to the Alani Nu Licensed Products, in accordance with the terms hereof, in connection with the promotion, merchandising, marketing, distribution, and sale of Alani Nu Licensed Products as contemplated hereby. |
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4.3 Company Representations. Company represents and warrants that it or its Affiliate(s) owns and possesses adequate authority and rights to grant Distributor the right to use Company’s Intellectual Property in the Territory (or Transitioned Territory, as applicable) as contemplated hereby, and that the use of Company’s Intellectual Property by Distributor in the Territory (or Transitioned Territory, as applicable) in accordance with the terms of this Agreement will not, to the best of Company’s knowledge, infringe the trademark or other Intellectual Property rights of any third party.
4.4 Distributor Acknowledgments. Distributor understands and agrees that Company or its Affiliates own full right, title, interest and other valuable property rights in and to the Intellectual Property and Marks. Distributor agrees that it shall not, at any time during the Term, contest the validity of Company’s or Affiliate(s)’s ownership, as applicable, of rights or ability to control the Marks or Intellectual Property. Distributor acknowledges and agrees that its right to use the Marks and Intellectual Property derives solely from this Agreement and is limited to the sale, distribution and marketing of Licensed Products in the Territory pursuant to and in compliance with this Agreement. None of these rights are being assigned to Distributor. Distributor shall not represent that it owns any rights in Company’s Intellectual Property, and Company’s Intellectual Property shall not be used by Distributor in any manner other than as agreed to herein by Company. During the Term, Distributor acknowledges and agrees that, unless otherwise agreed by Company or provided herein:
| (a) | Distributor shall only use the Intellectual Property or Marks in connection with the sale and/or marketing of Licensed Products subject to this Agreement; |
| (b) | Distributor shall only use the Intellectual Property or Marks in a form and format pre-approved by Company; |
| (c) | Distributor shall promptly discontinue the use of all of the Intellectual Property upon the termination of this Agreement with a reasonable time period for Distributor to sell through the Licensed Products, not to exceed [***]; |
| (d) | Distributor shall promptly change the manner in which the Intellectual Property or Marks related to Licensed Products is displayed or used as requested from time to time by Company with adequate advance notice to Distributor; |
| (e) | None of the Intellectual Property or Marks shall be used as part of the corporate or business entity name under which Distributor’s performance of this Agreement is conducted; and |
| (f) | Distributor will promptly notify Company in writing of any actual or alleged infringement of the Intellectual Property or Marks about which Distributor has knowledge, stating with particularity the facts on which the infringement is based or alleged and, upon request, shall, at the expense of the Company, reasonably assist Company in any action, proceeding or enforcement efforts in respect thereof. |
For the avoidance of doubt, the Parties acknowledge that (i) Distributor has retained rights to certain intellectual property in respect of the “Rockstar” brand outside of the Territory, which such rights constitute “Excluded Assets” under the Transaction Agreement, as well as certain rights with respect thereto in the Territory pursuant to the Brand Agreement and the other Additional Agreements and (ii) nothing in this Agreement, including this Section 4.4, is intended to, or shall, apply to or limit in any way Distributor’s use of such rights.
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SECTION 5 - Terms of Purchases and Sales
5.1 Payment Terms and Right of Offset. Subject to the terms herein, Distributor shall pay Company the full invoice price for the Licensed Products within [***] of Licensed Products delivery to Distributor’s designated facilities. Distributor will have no obligation to pay Company for any Licensed Products unless: (i) Distributor has received such Licensed Products, or (ii) Distributor has received from Company an invoice for such Licensed Products in a form mutually agreed to by the Parties. Distributor has the right to withhold payments due hereunder as an offset against undisputed amounts not paid by Company related to Licensed Products ordered by Distributor, and any and all undisputed balances due and payable to Distributor pursuant to this Agreement.
5.2 Pricing. Pricing for Licensed Products payable by Distributor to Company are as set forth on Schedule 6. Pricing principles for customers are set forth on Schedule 6.
5.3 Annual Plan, Quarterly Business Review and Advertising and Promotions.
| (a) | Joint Business Plan. The Parties will establish by [***] an updated non-binding projected joint business plan (“Joint Business Plan” or “JBP”) for Licensed Products that will be attached hereto as Schedule 7. The Parties will calculate the projections in the Joint Business Plan based on information currently available to both Parties at the time the Joint Business Plan is created. The Parties shall use commercially reasonable efforts to achieve such results; however, neither Company nor Distributor guarantees that the business transactions contemplated by this Agreement will achieve the results projected in the Joint Business Plan or during any Annual Review (as defined below). The Joint Business Plan will also include the initial contact information for each Party’s designated personnel. |
| (b) | Annual Review. Company and Distributor will work together to develop a new Joint Business Plan by [***] of each calendar year (the “Annual Review”) for the ensuing year containing non-binding sales and marketing plans intended to maximize distribution and sales of Licensed Products in the Territory and describing “Sales Fundamentals,” which includes estimated net sales targets, product innovation, advertising and marketing expenditures, and the Parties’ general plans for developing and promoting Licensed Products during the following year. The Parties’ mutual performance objectives criteria is attached in Schedule 9 hereto (the “Mutual Performance Objectives”). |
| (c) | Escalation. If, in any year, the Parties are unable to agree on a new Joint Business Plan, then the most recent Joint Business Plan shall be deemed the effective Joint Business Plan for such year. If at the conclusion of such year the Parties are again unable to agree upon a Joint Business Plan, then, at the request of either Party, such dispute may be elevated for good faith discussion and resolution (the “Escalation Procedure”). The Parties will, within [***] following such request, establish a committee (the “Contract Committee”), to be comprised of not less than [***] management-level representatives from each of Distributor and Company. The Contract Committee shall use reasonable |
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| efforts to resolve any such dispute in good faith, during a period of [***] following the establishment of the Contract Committee. Company’s president and one of Distributor’s presidents of PepsiCo North American Beverages (collectively, the “Group Presidents”) shall promptly discuss such dispute and shall use reasonable efforts to resolve such dispute within [***] following the expiration of such [***] period. |
| (d) | Advertising and Promotion. The Parties acknowledge the importance of advertising, promoting and merchandising Licensed Products to increase and maintain demand in the Territory. Accordingly, unless otherwise mutually agreed to in writing by the Parties, Company will cover [***] of the costs related to advertising, merchandising and promotional plans (“Advertising and Promotional Costs”) within the Territory (including acquiring and using marketing equipment, visi-coolers, equipment placement fees, customer costs for electrical work arising out of equipment installation, point of sale, permanent or temporary merchandising materials, account specific programs, space payments, slotting, display programs, customer incentives, traditional media, social media, etc.). Company shall establish a reserve fund to pay for point-of-sale artwork to be used in the trade (“POS Fund”). Company shall share digital files with Distributor who will produce and distribute point-of-sale artwork through Distributor system at costs paid through POS Fund. Either Party may, in connection with the distribution of Licensed Products, elect to spend any of its own funds on a promotional materials, provided it has communicated to the other Party about the activity outside of the Joint Business Plan. Notwithstanding anything contained herein to the contrary, Company will not be required to reimburse the Distributor for equipment and merchandising materials physically placed in market within the Territory as of the A&R Effective Date, such as coolers, vending machines and shelving. |
| (e) | Quarterly Review. The Parties shall conduct a business review each calendar quarter (or at such other intervals to which the Parties may agree in writing) during which review Company and Distributor shall review the previous quarter’s business results, discuss the then-current Joint Business Plan, and review overall performance (“Quarterly Review”). |
| (f) | Marketing Co-op. For each year of the Term, each Party agrees to accrue on its own books an amount equal to [***] (or in such other amount agreed to by the Parties in the Joint Business Plan) for all Cases of Licensed Products actually sold during each year of the Term (“Actual Annual Cases”), which accrual will take place by each Party at least quarterly during each year of the Term to remain as current as possible to reflect Actual Annual Cases. Such accrued amount of each Party once combined together is called the “Co-Op Fund”. On an annual basis, the Parties will mutually agree upon how to deploy any of the Co-Op Fund. Neither party shall unreasonably withhold agreement on how to use the Co-Op Fund. Once the fund reaches $[***] in total, the Parties shall mutually agree as to whether incremental contributions to the fund should be made or if a portion of the available balance should be returned to the respective Parties. Notwithstanding anything to the contrary herein, neither Party shall be required to accrue amounts in respect of Cases of Rockstar Licensed Products or Alani Nu Licensed Products that were actually sold prior to the A&R Effective Date. |
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| (g) | Restricted Products. The terms and conditions related to Restricted Products are attached hereto as Schedule 5.3(g). |
| (h) | Product Innovation. |
| 1. | [***] Product Innovation. Subject to the terms and conditions set forth in Schedule 5.3(g), Distributor shall launch all commercially reasonable [***] beverage innovation developed by Company under the Marks (each, a “New [***] Product”), either as a test, regional or national distribution, as mutually determined by Company and Distributor, unless Distributor is prohibited from doing so by non-compete obligations contained in its other joint venture partnerships/agreements, provided that any New [***] Product [***] shall be deemed excluded from the [***] restriction set forth in Appendix 1 to Schedule 5.3(g) hereto. In the event Distributor is prohibited from taking on any such New [***] Product, it shall certify the same to Company in writing within [***] following Company’s notice to Distributor, in which event (i) such New [***] Product shall not be deemed a “Licensed Product” under this Agreement, (ii) Company shall be free to launch and distribute such New [***] Product with one or more other distributors of its choosing, including, without limitation, a Competitor, and (iii) Distributor shall have no future distribution or other rights with respect to such New [***] Product, even if the non-compete obligation(s) which initially restricted Distributor from launching such New [***] Product eventually no longer apply. |
| 2. | [***] Product Innovation. Subject to the terms and conditions set forth in Schedule 5.3(g), with respect to any [***] beverage innovation developed by Company under the Marks (each, if any, a “New [***] Product”), one of the following processes shall apply: |
| A. | If Company desires that Distributor’s Affiliate launch and distribute such New [***] Product, Company will notify Distributor in writing of such desire, and Distributor’s Affiliate and Company shall discuss the launch and distribution of such New [***] Product, either as a test, regional or national distribution, as mutually determined by Company and Distributor’s Affiliate, unless Distributor or Distributor’s Affiliate is prohibited from doing so by non-compete obligations contained in its other joint venture partnerships/agreements. In the event Distributor or Distributor’s Affiliate determines, in its sole discretion that it is prohibited from taking on any such New [***] Product, it shall certify the same to Company in writing within [***] following Company’s notice to Distributor, in which event (i) such New [***] Product shall not become a “Licensed Product” under this Agreement, (ii) Company shall be free to launch and distribute such New [***] Product with one or more other distributors of its choosing, including, without limitation, |
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| a Competitor, and (iii) Distributor shall have no future distribution or other rights with respect to such New [***] Product, even if the non-compete obligation(s) which initially restricted Distributor from launching such New [***] Product eventually no longer apply. |
| B. | If, on the other hand, Company is unsure whether Distributor is best suited to launch and distribute such New [***] Product, Company will instead notify Distributor in writing of its intent to launch such New [***] Product, and Distributor shall have a right of first negotiation with respect thereto. Thereafter, the parties will commence good faith negotiations with respect to such launch and distribution, which good faith negotiations shall continue for a period of [***], or such shorter period of time as may be agreed upon by the Parties. If, at the conclusion of such negotiations, Company does not believe Distributor would be capable of launching and distributing such New [***] Product to Company’s satisfaction (for example, if Distributor’s [***] distribution network is not commensurate with traditional [***] distribution networks, whether from an infrastructure standpoint, service standpoint or otherwise), (i) such New [***] Product shall not become a “Licensed Product” under this Agreement, (ii) Company shall be free to launch such New [***] Product with one or more distributors of its choosing, including, without limitation, a Competitor, and (iii) Distributor shall have no future distribution or other rights with respect to such New [***] Product. For clarification, if, at the conclusion of such negotiations, Company desires that Distributor launch and distribute such New [***] Product, Distributor shall do so pursuant to the terms of Section 5.3(h)(2)(A) above. |
| 3. | Innovation Process. With respect to any New [***] Product or New [***] Product which Distributor agrees to launch and distribute pursuant to this Section 5.3(h), the Parties shall mutually agree upon an innovation process and business plan (including ingredients, product attributes, marketing, positioning and the like). The Parties will mutually agree on the innovation process and business plan but Company shall at all times have the right (in its sole discretion) to determine what ingredients are contained within any New [***] Product or New [***] Product, subject to any restriction stated herein. |
| (i) | SKU Determination. During the annual Joint Business Plan review, the Parties shall meet to mutually determine the number of Licensed Product SKUs that Distributor will carry; provided, that Company shall have the right to require that Distributor carry up to [***] Licensed Product SKUs if Company so elects. Company shall have sole discretion to determine which Licensed Products comprise the SKUs carried pursuant to this Section 5.3(i). This determination shall be made prior to Distributor’s annual SKU rationalization process and in consideration of the lead time to remove any SKUs from customer accounts and in consideration of existing customer contracts. |
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| (j) | Equipment. |
| 1. | Company-Branded Coolers. Company shall develop a budget (in its sole discretion) and fund [***]% of all Celsius identifiable/branded coolers delivered to Distributor’s and/or Subdistributor’s distribution facilities, the type of coolers, including delivery schedule and quantity, shall be mutually determined by the Parties. Upon mutual agreement of the Parties, Distributor may purchase Celsius identifiable/branded coolers on behalf of Company and then bill such costs to Company. Distributor shall place and manage Company-owned coolers as part of its sales process. |
| 2. | Distributor-Owned Energy Portfolio Coolers. Licensed Products may also be included in Distributor-owned energy portfolio coolers based on Distributor’s discretion and its field merchandising standards and recommendations, subject to customer acceptance. Distributor will fund [***]% of Distributor-owned energy portfolio coolers. |
| 3. | Equipment Servicing. Upon mutual agreement, Distributor shall service Company equipment at standard rates through Distributor’s Service Advantage Program. |
| 4. | Additional Terms. The Parties agree to the additional terms in respect of Company branded and owned coolers as set forth in Schedule 5.3(j) attached hereto. |
| (k) | Reports. Distributor shall periodically provide Company with access to the extracted sales-related data and other data and reports related to the Licensed Products as set forth in Schedule 5.3(k) attached hereto |
| (l) | Transshipment. |
| 1. | Other than to Excluded Accounts, Company shall not directly sell or distribute any Licensed Products in the Territory and shall not directly sell or distribute any Licensed Products to any entity it knows has the intention to sell or distribute such Licensed Products in the Territory. |
| 2. | Company will inform its customers and/or Existing Alani Nu Distributors of the limits of their distribution rights, including the territories in which Distributor has the right to distribute the Licensed Products. If Distributor or Company becomes aware that Company’s customers and/or Existing Alani Nu Distributors are the source of Licensed Products sold inside the Territory, such Party shall notify the other, including identifying where such transshipment is occurring and providing reasonable details in respect thereof, and Company will use its commercially reasonable efforts to cause such customers and/or Existing Alani Nu Distributors to cease distribution of Licensed Products inside the Territory. Once notified that Company’s customers and/or Existing Alani Nu Distributors is the source of Licensed Products sold inside the Territory, Company will use commercially reasonable efforts, based upon its existing agreements with the customers and/or |
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| Existing Alani Nu Distributors to cause the customers and/or Existing Alani Nu Distributors to cease transshipping the Licensed Products, which may include remedies available to Company under its agreement with such customers and/or Existing Alani Nu Distributors (e.g., withholding funding and termination of the right to distribute the Licensed Products). If such customers and/or Existing Alani Nu Distributors continue to transship the Licensed Products in violation of the terms of their applicable agreement, Company shall use commercially reasonable efforts to terminate such agreement with the transshipping customer or Existing Alani Nu Distributor, as applicable. For the avoidance of doubt, this Section 5.3(l) shall not apply to restrict distribution by any Existing Alani Nu Distributor in the specific territory serviced by such Existing Alani Nu Distributor until and unless such Existing Alani Nu Distributor’s distribution rights are terminated in accordance with the terms of the Alani Nu Channel Transition Agreement. |
| (m) | [***]. With respect to any national [***] customer renewal or [***] new business opportunity, Distributor shall use commercially reasonable efforts to include the Licensed Products within the scope of products sold and distributed to such customer; provided, that (i) Distributor shall not be required to use such commercially reasonable efforts if such customer’s request specifically excludes the LRB Energy Category, (ii) if Distributor uses such commercially reasonable efforts, but such customer nonetheless elects not to carry one or more Licensed Products, then Distributor shall not be deemed to be in breach of this Section 5.3(m), and (iii) if any such opportunity would require Distributor to commit to any funding obligations, the inclusion of the Licensed Products in such opportunity would be conditioned on Company agreeing to bear its share of such funding obligations related to the Licensed Products (which agreement, for the avoidance of doubt, shall be required only to the extent such funding falls outside of the framework set forth in Schedule 6 hereto). The Parties shall cooperate in good faith to determine the Company’s share of such funding obligations. |
| (n) | Excluded Accounts. Notwithstanding anything to the contrary in this Agreement, the Excluded Accounts will not be included in the JBP establishment, development, reviews or discussions described in this Section 5.3 (other than with respect to any discussion or agreement to add accounts as Excluded Accounts). |
5.4 Purchase Orders, Shipment and Title.
| (a) | Distributor shall issue all purchase orders to Company in written form via electronic data interface, facsimile or email and cause all purchase orders to list (i) the Licensed Products to be purchased, including SKUs, (ii) the quantities ordered, (iii) the requested delivery date and (iv) the delivery location. Purchase orders shall be submitted at least [***] in advance of the applicable delivery date. Unless otherwise agreed to by Company in writing, Distributor’s purchase orders shall be submitted in full truckload quantities consisting of [***] pallets per truckload of (i) [***] per truckload for deliveries to Distributor’s mixing centers and (ii) no more than [***] SKUs per truckload for deliveries to Distributor’s non-mixing centers. Company may accept any purchase order by confirming the order (whether by written confirmation, invoice, or otherwise) or by delivering the Licensed Products to the delivery location, whichever occurs first. No purchase order is binding on Company unless accepted by Company as provided in this Agreement. From time to time or through the JBP process, the Parties shall, in good faith, discuss purchase order issuance by and invoicing and delivery to Distributor’s independent bottler Subdistributors, and upon mutual agreement, may adjust the mechanisms set forth in this Section 5.4 accordingly. |
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| (b) | Unless expressly agreed to by the Parties in writing, Company shall select the carriers for delivery of the Licensed Products. Company shall invoice Distributor upon shipment for the Licensed Products included in such shipment. |
| (c) | Any time quoted for delivery is an estimate only; provided, however, that Company shall use commercially reasonable efforts to deliver all Licensed Products on or before the requested delivery date. |
| (d) | Title to the Licensed Products shipped under any purchase order passes to Distributor on Company’s or its carrier’s delivery of such Licensed Products to Distributor at the delivery location. Risk of loss to Licensed Products shipped under any purchase order passes to Distributor on Company’s or its carrier’s delivery of such Licensed Products to Distributor at the delivery location. |
SECTION 6—Indemnification
6.1 Company Indemnity. Without limiting any claim for which Distributor is required to indemnify Company pursuant to Section 6.2, Company agrees to indemnify, defend, and hold Distributor, and its Affiliates and its and their respective officers, directors, employees and agents, harmless from and against any and all costs, losses and liabilities, including, without limitation, reasonable fees and disbursements of counsel, costs to investigate and defend, including any appeals, penalties, judgments, Taxes, fees or settlement amounts (“Damages”) relating to, resulting from or arising in connection with any civil, criminal, administrative or investigative actions or proceedings commenced or threatened by a third party (“Claim”) regarding:
| (a) | an act or omission on the part of Company that constitutes a material breach of this Agreement or the falsity of, or the failure of the Licensed Products to comply with, as applicable, any of the representations, warranties or covenants of this Agreement; |
| (b) | the death of or injury to any Person or damage to any property (personal, real or otherwise) of third parties which resulted or is alleged to have resulted from any acts or omissions, whether designated as negligent or otherwise, of Company; |
| (c) | the death of or injury to any Person or damage to any property (personal, real or otherwise) of third parties which resulted or is alleged to have resulted from Licensed Products, whether due to any alleged defect or any alleged failure in Licensed Products or otherwise, regardless of how the cause of action is stated (including but not limited to negligence, strict liability, or breach of warranty), but excluding any such death, injury or damage which resulted or is alleged to have resulted from any matter which Distributor is required to indemnify Company pursuant to Section 6.2, including, without limitation, Distributor’s improper storage or handling of the Licensed Products; |
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| (d) | claims of infringement of any third party’s patent, copyright, trade secret, trademark, or other Intellectual Property by Distributor’s distribution or sale of any Products or licensed use of Marks in accordance with the terms and conditions of this Agreement; |
| (e) | any claims arising out of or in connection with claims, statements and/or information, or an alleged failure to provide information, on the label, or other printed or electronic material of Licensed Products developed or approved by Company; and |
| (f) | any taxes, import duties or other impositions or penalties assessed by Governmental Authorities in the Territory (collectively, “Taxes”) that are imposed on (or assessed against) Company under Law with respect to the sale of the Licensed Products to the Distributor, but excluding, for clarity, any Taxes with respect to the distribution and sale of the Licensed Products by the Distributor or any Subdistributor in the Territory in the Channels and imposed on (or assessed against) the Distributor or any Subdistributor under Law. |
6.2 Distributor Indemnity. Without limiting any claim for which Company is required to indemnify Distributor pursuant to Section 6.1, Distributor hereby agrees to indemnify, defend, and hold Company, and its Affiliates and its and their respective officers, directors, employees and agents, harmless from and against any and all Damages relating to, resulting from or arising in connection with any Claim regarding:
| (a) | Distributor’s or any Subdistributor’s actions or omissions regarding merchandising, distribution, sale, handling or storage of the Licensed Products, in any case, to the extent any such action or omission is in violation of this Agreement, Company’s approved uses of the Intellectual Property or Law, including the sale of any damaged or unsaleable Licensed Products by Distributor or any Subdistributor, provided that either (i) Distributor knew or reasonably should have known that such Licensed Product was damaged or unsaleable at the time of sale (ii) Distributor or its Subdistributor caused such Licensed Products to be damaged or unsaleable; |
| (b) | an act or omission on the part of Distributor or any Subdistributor that constitutes a material breach of this Agreement or the falsity of, or the failure to comply with, as applicable, Distributor’s representations, warranties or covenants under this Agreement; |
| (c) | the death of or injury to any Person or damage to any property (personal, real or otherwise) of third parties which resulted or is alleged to have resulted from any acts or omissions, whether designated as negligent or otherwise, of Distributor or any Subdistributor; |
| (d) | any Taxes with respect to the distribution and sale of the Licensed Products by the Distributor or any Subdistributor in the Territory in the Channels and imposed on (or assessed against) the Distributor or any Subdistributor under Law; |
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| (e) | Company’s or any of its Affiliates’ production, commercialization, marketing or distributing, or entering into any agreement with any other Person to produce, commercialize, market or distribute, or holding any equity or debt interest in, or participating in the management of, any other Person producing, commercializing, marketing or distributing any Restricted Product in the Territory after the Restriction Termination Date while Distributor or any of its Affiliates holds any equity or debt interest in the Company, solely as a result of Distributor’s or any of its Affiliate’s equity or debt interest in the Company; and |
| (f) | Company’s or any of its Affiliates’ production, commercialization, marketing or distribution, or entering into any agreement with any other Person to produce, commercialize, market or distribute, or hold any equity or debt interest in, or participate in the management of, any other Person producing, commercializing, marketing or distributing, (i) any New Product in the Territory, or (ii) any Expansion Product outside of the Territory, in either case (i) or (ii), after the Restriction Termination Date while Distributor or any of its Affiliates holds any equity or debt interest in the Company, solely as a result of Distributor’s or any of its Affiliate’s equity or debt interest in the Company. |
6.3 Indemnification Procedures. If a Claim is commenced against a Party hereto (the “Indemnitor”), prompt notice thereof shall be given by the Party initiating the Claim (the “Indemnitee”) to the Indemnitor. The failure to deliver such notice, however, shall not release the Indemnitor from any of its obligations under this Section 6.3 except to the extent that the Indemnitor is materially prejudiced by such failure. At the Indemnitor’s cost and expense: (i) the Indemnitor shall promptly take control of the defense of such Claim and shall engage attorneys reasonably acceptable to the Indemnitee to defend such claim; and (ii) the Indemnitee shall reasonably cooperate with the Indemnitor (and its attorneys) in the defense of such Claim. The Indemnitee may, at its own cost and expense, participate (through its attorneys or otherwise) in such defense. The Indemnitor shall not enter into a settlement of such claim that does not include a full release of the Indemnitee or involves a remedy other than the payment of money, without the Indemnitee’s consent. If the Indemnitor does not assume control over the defense of a Claim as provided in this Section 6.3, the Indemnitee may defend the claim in such manner as it may deem appropriate, at the cost and expense of the Indemnitor.
SECTION 7 - Insurance
7.1 Type of Insurance. All insurance policies required to be carried by the Parties will be maintained without interruption from the date of this Agreement and written on an occurrence or claims made basis by companies duly licensed to transact the prescribed coverages in each jurisdiction in the Territory in which Distributor operates that have a rating of A-VII or greater. A broad form company’s endorsement will be maintained in such insurance policy specifically naming the other Party as an additional insured as its interests may appear on such policy, with respect to comprehensive general liability coverage and automobile liability coverage. Each Party will promptly furnish to the other certificates showing the coverages required by this Agreement. The policies and certificates of insurance will contain provisions requiring the insurer to provide at least [***] days’ prior written notice of non-renewal, cancellation or other changes in the coverage that may impair or otherwise affect the other Party’s rights hereunder. Each Party will, prior to the effective date of any such change or cancellation, replace such insurance with insurance satisfactory to the other and furnish the other with certificates evidencing such replacement insurance, within [***] days of such change or cancellation. Each Party will not, without sending written notice to the other, settle or compromise any liabilities or consent to the entry of any judgment against the other.
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7.2 Insurance. Each Party will procure and maintain in full force and effect throughout the Term of this Agreement the following insurance though carriers acceptable to the other Party:
| (a) | Long-term disability, as required by Law; |
| (b) | Unemployment, as required by Law; |
| (c) | Workers’ Compensation Insurance covering injury to or occupational disease or death of the employees of Distributor in accordance with applicable statutory requirements, including Employer’s Liability Insurance, with a limit of liability under the Employer’s Liability portion of at least $[***] per occurrence or claims made; |
| (d) | Commercial General Liability Insurance, including limited contractual liability (and including limited contractual liability with respect to the indemnity obligations set forth in Section 6 (Indemnification)), on an occurrence or claims made basis, naming the other Party as an additional insured, as its interests may appear, and having a minimum of the following: |
| • | Bodily Injury & Property Damage |
| • | Per Occurrence or Claim $ [***] |
| • | Aggregate $ [***] |
| • | Product Liability Aggregate $ [***] |
| • | Auto Liability $ [***] |
| • | Personal Injury $ [***] |
| • | Commercial Auto Liability $ [***] (each accident) |
| • | Excess/Umbrella Insurance $ [***] (This policy shall provide excess limits for the General Liability, Product Liability, and Automobile Liability policies and follow form or be at least as broad in coverage); and |
SECTION 8 - Product Recalls
8.1 Communication. Each Party will promptly advise the other Party, in writing, and each Party will communicate to the other all relevant facts known to it, if either Party:
| (a) | learns of any issues relating to a potential food safety issue caused by or associated with any Licensed Products purchased from Company hereunder, |
| (b) | learns of any food safety issue related to the quality of Licensed Products, including, but not limited to, manufacturing defects that may impact the quality of the drinks, labeling, packaging, declared net contents ingredients, or formula, or |
| (c) | is advised of such a condition by competent authorities of any Governmental Authority having jurisdiction over such Licensed Products (collectively, “Product Issue(s)”). |
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The Parties will cooperate in communication with the public and Governmental Authorities and in correcting any such condition that is found to exist. Distributor and Company will consult with one another prior to making any statements to the public or to any Governmental Authority concerning the Product Issue, except in circumstances in which doing so would prevent timely notification that may be required to be given under Law.
8.2 Responsibility and Expenses. Without limiting each Party’s indemnification obligations under Section 6, with respect to any Product Issue:
| (a) | Reasonable expenses actually incurred by Company associated with the correction of a Product Issue caused by or associated with Licensed Products purchased by Distributor that result from: (i) Distributor’s or any Subdistributor’s failure to comply with the terms of this Agreement or (ii) the negligent act or omission, willful misconduct or fault of Distributor or any Subdistributor will be solely Distributor’s responsibility. For such expenses, Distributor will hold harmless and indemnify Company from and against all such reasonable expenses related to any recall or withdrawal, including the actual cost of Licensed Products, as well as the reasonable costs of inspection, investigation, Licensed Products replacement, retrieval, segregation, storage, transportation, destruction and/or disposal, and reasonable attorneys’ fees. |
| (b) | Reasonable expenses actually incurred by Distributor or any Subdistributor associated with the correction of a Product Issue caused by or associated with Licensed Products that result from (i) Company’s failure to comply with the terms of this Agreement, or (ii) the negligent act or omission, willful misconduct or fault of Company will be solely Company’s responsibility. For such expenses, Company will hold harmless and indemnify Distributor or any Subdistributor from and against all such reasonable expenses related to any recall or withdrawal, including the actual cost of Licensed Products, as well as the reasonable costs of inspection, investigation, Licensed Products replacement, retrieval, segregation, storage, transportation, destruction and/or disposal, and reasonable attorneys’ fees. |
SECTION 9 - General Provisions
9.1 Confidentiality. During the Term of this Agreement, the Parties will disclose to one another non-public information concerning their respective businesses and operations (including, but not limited to plans and trade secrets, and the terms of this Agreement) which is confidential and proprietary (“Confidential Information”). Each of the Parties to this Agreement agrees that Confidential Information disclosed by the other will not, without the prior written approval of the other, be disclosed (other than to (i) the Existing Alani Nu Distributors in order to facilitate the transition of distribution rights to Distributor, (ii) necessary parties in connection with Distributor resolving all non-compete restrictions that could prevent it from performing under this Agreement, (iii) necessary parties in connection with obtaining the consents for the transfer or assignment of Transferred Assets as contemplated by the Transaction Agreement, (iii) regulatory authorities and (iv) the Subdistributors or to those of the Parties’ or Subdistributors’ employees, agents and representatives with a reasonable need-to-know and who agree to honor the provisions of this Section) or used by it except in connection with this Agreement. Confidential Information does
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not include information which (x) becomes generally available in the public domain other than as a result of a breach of this Section, (y) a Party is required to disclose pursuant to Law or judicial order, or (z) was already in the receiving Party’s possession at the time disclosed, as evidenced by its written records. Upon termination of this Agreement, neither Party thereafter will use or disclose any Confidential Information received from the other, and will return each copy thereof, whether in written or electronic form, or will promptly destroy the same together with all documents and materials which contain or are based upon such Confidential Information. Notwithstanding the foregoing, each Party may retain copies of Confidential Information that are stored on such Party’s IT backup and disaster recovery systems until the ordinary course deletion thereof; provided that such Party shall continue to be bound by the terms and conditions of this Section with respect to such retained Confidential Information. The obligations under this Section will survive termination of this Agreement for a period of [***] years thereafter; provided, however, that the obligations under this Section shall remain in effect with respect to any trade secrets of the disclosing Party contained within the Confidential Information for so long as such Confidential Information remains a trade secret under applicable Law. Other than as permitted by this Section 9.1, after signing and during the Term of this Agreement, neither Party shall disclose the existence of this Agreement or any prices or terms of purchase under this Agreement to any person or entity, without the prior express written consent of the other Party, which may be withheld in such Party’s sole discretion. No press releases, publicity statements or other publicly-issued information regarding this Agreement or the other Party will be released by either Party without the prior written approval of the other Party (except as specifically permitted by the Transaction Agreement). The timing and content of such releases or publicity statements will be mutually agreed to in writing between the Parties.
9.2 Notices. All notices or other communication required or permitted hereunder (other than routine communications having no legal effect) shall be in writing and sent to the addresses set forth below, and shall be deemed to have been transmitted (i) when sent via email, provided that the sending Party receives a non-automated reply email or other written notice from the recipient confirming receipt, (ii) when delivered in person or (iii) when postmarked, if mailed via a reputable courier service such as DHL, UPS, or FedEx, signature required (provided that in the case of clauses (ii) and (iii), copies of such notices shall also be sent by email):
If to Company:
Celsius Holdings, Inc.
2381 NW Executive Center Drive
Boca Raton, FL 33431
Attn: [***]
Email: [***]
with a required copy to (which shall not constitute notice):
Freshfields US LLP
3 World Trade Center
175 Greenwich Street
New York, New York 10007
Attention: Ethan Klingsberg; Sanjay Murti
Email: ethan.klingsberg@freshfields.com; sanjay.murti@freshfields.com
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If to Distributor:
PepsiCo, Inc.
700 Anderson Hill Road
Purchase, NY 10577
Attention: [***]
Email: [***]
with a required copy to (which shall not constitute notice):
Cravath, Swaine & Moore LLP
Two Manhattan West
375 Ninth Avenue
New York, NY 10001
Attention: Claudia J. Ricciardi
Email: cricciardi@cravath.com
or such other address as may be specified by a Party hereto pursuant to notice given to the other Parties in accordance with the provisions of this paragraph.
9.3 No Agency. Nothing contained in this Agreement shall be construed in any manner as creating an agency, partnership, joint venture, franchise or any type of relationship between Company and Distributor, except that of independent contractors. Distributor shall not have nor shall Distributor hold itself out as having, any authority whatsoever, whether express or implied, to assume, create or incur any obligation or liability whatsoever, contractual or otherwise, on behalf of or in the name of Company or to bind Company in any other manner whatsoever except as expressly set forth in this Agreement. Distributor acknowledges and agrees that Company and/or its Affiliates do not exercise any control with respect to Distributor’s operation of its own business or the decision-making process of that business, including, without limitation, (i) the terms of payment by customers, credit practices, warranties, Taxes, and representations in dealings between Distributor and its customers, (ii) the appearances of any of Distributor’s business premises and the use of fixtures and equipment utilized therein, and (iii) the uniforms of employees, hours of operation, housekeeping, and similar matters.
9.4 No Third Party Beneficiaries. Except as otherwise expressly provided herein, nothing in this Agreement is intended, nor shall be deemed, to confer any rights or remedies upon any person or legal entity not a party hereto.
9.5 Entire Agreement. This Agreement, the Channel Transition Agreement, the Alani Nu Channel Transition Agreement, the Certificates of Designation, the Series B Securities Purchase Agreement, the Transaction Agreement and the Additional Agreements, together with any other documents incorporated herein and therein by reference and all related exhibits and schedules, shall constitute the entire agreement between Company and Distributor with respect to the subject matter contained herein and therein. There are no understandings, agreements, representations, or warranties, expressed or implied, not specified herein or therein regarding this Agreement, the
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Channel Transition Agreement, the Alani Nu Channel Transition Agreement, the Certificates of Designation, the Series B Securities Purchase Agreement, the Transaction Agreement and the other Additional Agreements. The terms of this Agreement, the Channel Transition Agreement, the Alani Nu Channel Transition Agreement, the Certificates of Designation, the Series B Securities Purchase Agreement, the Transaction Agreement and the other Additional Agreements shall prevail over any terms or conditions contained in any other documentation related to the subject matter of this Agreement, the Channel Transition Agreement, the Alani Nu Channel Transition Agreement, the Certificates of Designation, the Series B Securities Purchase Agreement, the Transaction Agreement or the other Additional Agreements and expressly exclude any of Distributor’s general terms and conditions contained in any other document issued by Distributor.
9.6 Modification. No amendment or modification of this Agreement shall be valid or binding unless it is in writing and signed by both Parties to this Agreement. With respect to both Parties, only an officer shall have the authority to amend or modify this Agreement.
9.7 Industry Terms. Other than as defined in this Agreement, the words and phrases used herein shall have the meaning generally understood in the dietary supplement and beverage ([***]) industries. Both Parties have participated in the drafting of this Agreement and this Agreement shall be construed in accordance with its fair meaning and not for or against either Party on account of which Party drafted this Agreement.
9.8 Assignment.
| (a) | Assignment with Consent. This Agreement is being entered into by the Parties hereto on the basis of careful investigation of the other Party’s reputation and experience and the know-how of its personnel. Without the prior written approval of the other Party or unless otherwise permitted in this Agreement in Section 9.8(b) below, this Agreement and a Party’s duties, privileges, rights and obligations hereunder may not be transferred, in whole or in part, directly or indirectly. |
| (b) | Assignment without Consent. Notwithstanding the provisions of Section 9.8(a) above, but subject to each Party’s termination rights under Section 3.2, either Party may assign this Agreement in its entirety without consent of the other Party, to its subsidiaries or Affiliates, or, in the case of Company, in connection with a Change of Control. Subject to the foregoing, this Agreement will bind and inure to the benefit of the Parties, their respective successors and permitted assigns. |
9.9 Force Majeure. Neither Party will be in default or breach of this Agreement for any failure or delay in performing any obligation hereunder (other than the payment of money) if such failure results from an event or occurrence beyond its reasonable control, including, fire, lightning, storm, flood, earthquake, governmental Laws, regulations or other acts, sabotage, acts of the public enemy, war, riots or insurrection, pandemic, wide-spread public health emergency, or other acts of God (each a “Force Majeure Event”). A Party whose performance under this Agreement is prevented by a Force Majeure Event will give prompt written notice to the other Party, and will devote its commercially reasonable efforts to remedying, to the extent possible, the condition giving rise to such Force Majeure Event, and to resuming performance promptly. Company may
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make alternative arrangements for the distribution of Licensed Products in the Territory to the extent and for so long as either Party is affected by a Force Majeure Event. Notwithstanding anything contained herein to the contrary, in the event that either Party is prevented from performing any of its material obligations under this Agreement because of a Force Majeure Event, and such failure continues for more than [***], the Party which is not prevented from performance may terminate this Agreement without the payment of any Buy-Out, liquidated damages or other penalty.
9.10 Governing Law; Arbitration.
| (a) | Governing Law. New York law shall govern all issues relating to the enforcement, interpretation, validity and effect of this Agreement, without regard to choice or conflict of laws principles. |
| (b) | Arbitration. |
Any dispute between the Parties arising out of or relating to this Agreement, whether brought forth under breach of contract, tort, restraint of trade or other theory of statutory or common law, will be settled by arbitration before the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules in New York, New York by [***] arbitrators. One arbitrator will be nominated by Company, one will be nominated by Distributor, with each nomination being made no more than [***] following the date of notice of the dispute. The [***] arbitrator will be the chairman, and will be nominated by the first [***]. If the first [***] are unable to agree, the arbitral institution will appoint the [***]. Any arbitrator(s) selected to resolve the dispute will be bound exclusively by the Laws of the State of New York without regard to its principles of choice of law. Notwithstanding this paragraph, nothing herein prevents either Party from seeking interim or injunctive relief in aid of arbitration from an appropriate jurisdiction, or from Company or its Affiliates taking the actions related to the protection of the Intellectual Property contained in Section 9.10(c) below. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof pursuant to Law.
The arbitration panel’s fees will be borne equally by the Parties. All other costs and expenses in connection with the arbitration will be borne initially by the Party who incurs such expense or who requests a service (including, without limitation, a transcript of a deposition or of the arbitration proceeding). At the conclusion of the arbitration proceeding, all costs and expenses (including, without limitation, reasonable attorneys’ fees) of the prevailing party shall be reimbursed by the Party that does not prevail at the discretion of the arbitration panel. If a party prevails on some but not all issues, the arbitration panel will determine the manner in which such costs and expenses (including attorneys’ fees) will be borne.
In connection with the arbitration: (a) the arbitration panel will have no authority to award punitive or exemplary damages (other than in the case of a third party claims for which a Party is indemnified by the other Party under Section 6), or as provided herein; (b) any award will be paid promptly, without deduction or offset and judgment upon
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the award may be entered by any court of competent jurisdiction; (c) if the award is confirmed by a court of competent jurisdiction, a Party challenging the award or resisting enforcement of a judgment entered upon the award will pay, to the extent permitted by Law, all costs, attorneys’ fees and expenses incurred by the other Party in defending the award or seeking enforcement of the judgment; and (d) the decision of the arbitration panel will have no collateral estoppel effect with respect to a claim by or against any Person or business entity who is not a party to the arbitration.
The decision of the arbitration panel will be final and binding on the Parties, and the arbitration panel’s award will be the exclusive remedy between the Parties with respect to all claims and issues arising out of the transaction(s) or occurrence(s) at issue, whether or not presented or pled to the arbitration panel.
| (c) | Injunctive Relief. Notwithstanding Section 9.10(b) above, each Party recognizes that the failure of the other Party to comply with the terms of this Agreement could cause the non-breaching Party irreparable damage for which monetary damages would be insufficient. Therefore, it is mutually agreed that in the event of a breach or threatened conduct that may cause a Party to breach and is likely to result in any substantial and irreparable loss or damage according to the equity rules (including for a violation of Section 9.1(Confidentiality)), the non-breaching Party may seek interim injunctive relief from a court, until such time as a final and binding determination is made by the arbitration panel. If interim injunctive relief is sought from a court, it shall be sought in a court of competent jurisdiction. Application to a court for interim injunctive relief shall not be deemed incompatible with the agreement to arbitrate or a waiver of the right to arbitrate. The foregoing right to seek interim injunctive relief is in addition to, and not in lieu of, all other remedies or rights that the non-breaching Party might otherwise have by virtue of any breach of this Agreement by the other Party. |
Notwithstanding anything to the contrary in this Agreement, including in this Section 9.10(c) or Section 9.10(b), Company or its Affiliates have the right to commence a civil action in any court of competent jurisdiction against Distributor or take other appropriate action to compel Distributor’s compliance with standards related to Intellectual Property owned by Company or its Affiliates or requirements to protect the goodwill of the intellectual property owned by Company or its Affiliates.
| (d) | Continuing Performance. Neither Party shall suspend or delay its performance under this Agreement during or pending the resolution of any negotiation, mediation, arbitration or other dispute proceeding. A Party’s continued performance hereunder shall not be construed as a waiver or concessions of any claim, defense, issue of fact or other right or remedy provided for hereunder or otherwise available to a Party. |
| (e) | Limitation of Adjudicative Proceedings. Each of the Parties irrevocably waives trial by jury in any action, proceeding or counterclaim, whether at or in equity, relating to this Agreement, whether or not there are other parties in such action or proceeding. |
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| (f) | Mandatory Mediation. In case of any dispute arising during the Term of this Agreement which cannot be settled by reasonable discussion among the Parties, the Parties agree that, prior to commencing any arbitration proceeding as contemplated by Section 9.10(b) they will first engage the services of a professional mediator agreed upon by the Parties and attempt in good faith to resolve the dispute through confidential non-binding mediation. The mediation shall take place in New York, New York unless otherwise agreed to by the Parties. The Parties agree that any statements made by either Party in any mediation proceeding will not be admissible in any subsequent arbitration or legal proceeding. Except as otherwise agreed to in the context of the mediation, each Party shall bear one-half (1/2) of the mediator’s fees and expenses and shall pay all of its own attorneys’ fees and expenses related to the mediation. If the dispute has not been settled within [***] after submission of the dispute to the mediator, then, upon notice by either Party to the other, the dispute shall be submitted for and finally settled by arbitration. |
| (g) | Exclusion of Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY IN CONTRACT, TORT, STRICT LIABILITY OR ON ANY OTHER BASIS, FOR ANY PUNITIVE DAMAGES OF ANY NATURE, PROVIDED, HOWEVER, THAT THE FOREGOING EXCLUSION DOES NOT APPLY TO (I) ANY ACT OF DISHONESTY BY EITHER PARTY, (II) ANY VIOLATION OF COMPANY’S OR ITS AFFILIATE’S INTELLECTUAL PROPERTY RIGHTS COMMITTED BY DISTRIBUTOR, OR (III) ANY AMOUNT OWED BY A PARTY PURSUANT TO ITS INDEMNIFICATION OBLIGATIONS UNDER SECTION 6 (E.G., PUNITIVE DAMAGES AWARDED TO A THIRD PARTY AND REQUIRED TO BE PAID BY AN INDEMNITEE). |
9.11 Interpretation. The titles and headings used herein are for convenience only and are not to be considered in construing this Agreement. The provisions of this Agreement were negotiated by both of the Parties hereto and said Agreement shall be deemed to have been drafted by both Parties, each of whom had the opportunity to consult with legal counsel, and shall not be interpreted against either Party as the “drafter” thereof. In this Agreement, references to “includes,” “including,” “including but not limited to,” “including without limitation” and words or phrases of similar import shall be deemed to have the same meaning and the words “includes(s)” and “including” shall not be deemed to be terms of limitation but rather be deemed to be followed by the words “without limitation.” The phrase “to the extent” shall mean the degree to which a subject or other item extends and shall not simply mean “if”. The word “or” shall be disjunctive but not exclusive. References herein to any Law shall be deemed to refer to such Law as amended, modified, codified, reenacted, supplemented or superseded in whole or in part and in effect from time to time, and also to all rules and regulations promulgated thereunder. References herein to any Person shall include such Person’s successors and permitted assigns The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement and not to any particular provision of this Agreement, and Section, paragraph, clause, subclause, Appendix and Schedule references are to the Sections, paragraphs, clauses or subclauses of, or Appendix or Schedules to, this Agreement, as applicable, unless otherwise specified. References herein to “as of the date hereof,” “as of the date of this Agreement” or words of similar import shall be deemed to mean “as of the date of the execution and delivery of this Agreement. Reference to any period of days shall be deemed to be to the relevant number of calendar days unless otherwise specified. When calculating the period of time before which, within
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which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date for calculating such period shall be excluded. If the last day of such period is a non-business day, the period in question shall end on the next succeeding business day. As used herein, “business day” means any day except Saturday, Sunday, or a federal or New York holiday.
9.12 Waiver and Severability. No waiver of any provision of this Agreement or any rights or obligations of a Party shall be effective, except pursuant to a written instrument signed by an officer of such Party, and such waiver shall be effective only in the specific instance and for the specific purpose stated in such writing. The Parties hereto recognize that if, after the date of execution of this Agreement, any provision of this Agreement is held to be illegal, invalid, or unenforceable, such provision will be fully severable and such severance will not affect the validity of the remainder of this Agreement.
9.13 Counterparts and Signatures. This Agreement may be executed in several counterparts, each of which shall constitute an original, but all of which shall constitute one and the same instrument. This Agreement may be signed using electronic signatures, and those signatures will have full legal force and effect.
9.14 Authorization. Each Party executing this Agreement represents that he is an officer of the respective company and is empowered to execute this Agreement and bind the respective company.
9.15 Acknowledgement. Each Party acknowledges that they have read this agreement, understand the terms of this Agreement, have had the opportunity to consult and has consulted with independent legal counsel in connection with this Agreement, and has signed this Agreement voluntarily.
9.16 Survival. The provisions of this Agreement which expressly or by their nature are intended to survive the termination of this Agreement will so survive the termination of this Agreement.
9.17 Audit Rights. Each Party shall have the right not more than [***] during each calendar year of the Term, upon no less than [***] prior written notice to the other, to perform an audit of the other Party’s books and records (including financial and internal controls) solely as they relate to the supply and sale of the Licensed Products and the requirements of this Agreement. In addition, Company shall have the right not more than once during each calendar year of the Term, upon no less than [***] prior written notice to Distributor, to perform a physical inventory of Company’s property at any of Distributor’s equipment centers on the following terms and conditions: [***]. Distributor agrees to work in good faith in a commercially reasonable manner to try to accommodate an audit request that does not meet the foregoing terms and conditions.
For any audit described in this Section 9.17: (a) any such audit will take place within the other Party’s typical business hours; (b) any audit to take place will be only through a reputable independent auditor reasonably acceptable to the other Party; and (c) any independent auditor must sign a confidentiality agreement prior to reviewing any information.
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9.18 Rights and Obligations of Company. Notwithstanding anything to the contrary herein, Company and Distributor hereby acknowledge and agree that (a) Alani Nu shall be the primary obligor and beneficiary of the obligations and rights of Company hereunder (and shall be deemed to make the representations and warranties set forth in Section 2.2(b)) in respect of the Alani Nu Licensed Products and (b) Celsius Brands shall be the primary obligor and beneficiary of the obligations and rights of Company hereunder (and shall be deemed to make the representations and warranties set forth in Section 2.2(b)) in respect of the Rockstar Licensed Products. Holdings shall cause Company, Alani Nu and Celsius Brands to comply with their respective obligations hereunder, including as set forth in this Section 9.19.
9.19 Co-Manufacturing Agreement and Captaincy In the event of any conflict between the provisions of this Agreement and those of the Co-Manufacturing Agreement or Article III of the Transaction Agreement, the provisions of the Co-Manufacturing Agreement or Article III of the Transaction Agreement (as applicable) shall control.
9.20 Amendment and Restatement. This Agreement amends and restates the Original Distribution Agreement in its entirety. Upon the execution of this Agreement, the terms and provisions of the Original Distribution Agreement (including the First Amendment) shall be superseded hereby in their entirety. For the avoidance of doubt, the execution of this Agreement shall not affect the validity of the Certificates of Designation, which shall remain in effect in accordance with their terms.
[Remainder of page intentionally left blank; signature page and attachments to follow.]
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IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the date in the preamble above.
| PEPSICO, INC. (DISTRIBUTOR) | ||
| By: | /s/ Dan Fink | |
| Name: | Dan Fink | |
| Title: | Senior Vice President | |
[Signature Page to Amended and Restated Distribution Agreement]
| CELSIUS HOLDINGS, INC. (HOLDINGS), solely with respect to Section 9 | ||
| By: | /s/ Richard Mattessich | |
| Name: | Richard Mattessich | |
| Title: | Chief Legal Officer | |
| CELSIUS, INC. (COMPANY) | ||
| By: | /s/ Richard Mattessich | |
| Name: | Richard Mattessich | |
| Title: | Chief Legal Officer | |
| ALANI NUTRITION LLC (ALANI NU) | ||
| By: | /s/ Richard Mattessich | |
| Name: | Richard Mattessich | |
| Title: | Chief Legal Officer | |
| CELSIUS BRANDS LLC (CELSIUS BRANDS) | ||
| By: | /s/ Richard Mattessich | |
| Name: | Richard Mattessich | |
| Title: | Chief Legal Officer | |
[Signature Page to Amended and Restated Distribution Agreement]