kl03016_ex10-3.htm


    
      

    


    Exhibit
10.3

    


    THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THESE
SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO
THE COMPANY, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (C) IN COMPLIANCE WITH RULE 144 OR 144A
THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS, (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR (E) IN A
TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE,
FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION,
IN EITHER CASE REASONABLY SATISFACTORY TO THE COMPANY.  HEDGING
TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE U.S. SECURITIES ACT.


     

    


     

     

    8%
CONVERTIBLE PROMISSORY NOTE

     

     

    GEORGE
FOREMAN ENTERPRISES, INC.

    


     

     

    DUE
__________, 2010

     

    


    
      	
              Original
      Issue Date:  __________, 2008

            	
              US$__________

            


    

    


    This
Convertible Promissory Note is due __________, 2010 and is one of a series of
duly authorized and issued convertible promissory notes of George Foreman
Enterprises, Inc., a Delaware corporation (the “Company”), designated
its 8% Convertible Promissory Notes (the “Note” or the
“Notes”).  This Note is issued to
________________________________________ (together with its permitted successors
and assigns, the “Holder”) in
accordance with exemptions from registration under the Securities Act of 1933,
as amended (the “Securities Act”),
pursuant to a Securities Purchase Agreement, dated __________, 2008 (the “Securities Purchase
Agreement”) between the Company and the Holder.  Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Securities Purchase Agreement.

     

    Article
I

     

    Section
1.01                                 Principal and
Interest.  For value received, the Company hereby promises to
pay to the order of the Holder, in lawful money of the United States of America
and in immediately available funds the principal sum of ____________________
Dollars ($__________) on the earlier of (i) __________, 2010 (the “Maturity Date”) or
(ii) an Event of Default (as defined in Section 3.01).

     

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    
 

    (a) Interest
shall be payable monthly commencing 30 days following the Original Issue Date
and shall accrue on the unpaid principal balance of the Note at the rate of
eight percent (8%) per year (compounded monthly) commencing from the Original
Issue Date until the Maturity Date.  Interest shall be calculated on
the basis of a 360-day year and actual calendar days elapsed.

     

    (b) On the
Maturity Date, the entire unpaid principal amount and all accrued and unpaid
interest shall be paid to the Holder, unless this Note is converted in
accordance with Section 1.02 herein.

     

    (c) The
Company may prepay the principal amount of this Note without the prior written
consent of the Holder.  In the event the Company prepays the principal
amount of this Note, the Company shall pay the total principal amount
outstanding plus a premium of (i) ten percent of the outstanding principal
amount if the prepayment occurs during the twelve month period following the
Original Issue Date (the “Initial Twelve Month Period”); or (ii) twenty percent
of the outstanding principal amount if the prepayment occurs doing the period
following the Initial Twelve Month Period and prior to the Maturity
Date.  The Company shall give the Holder at least ten (10) days
advance written notice prior to such prepayment.

     

    Section 1.02    Conversion.

     

    (a) Optional
Conversion.  From and after the Original Issue Date, the Holder
shall be entitled, at its option, to convert, at any time and from time to time,
until payment in full of this Note, all or any part of the principal amount of
the Note, plus accrued and unpaid interest thereon, into units (“Units”) of the
Company’s securities, at a price (the “Conversion Price”) of
$2.50 per Unit, subject to adjustment.  Each Unit shall consist of one
share (each, a “Conversion Share”) of
the Company’s common stock, par value $0.01 per share (the “Common Stock”), and
one common stock purchase warrant (the “Warrants”).  Each
Warrant shall entitle the holder to purchase one share of Common Stock (the
“Warrant
Shares”) at an exercise price (the “Exercise Price”) of
$3.00 per share, subject to adjustment, and shall be exercisable for a period of
five years commencing on the original Issue Date of this Note.  No
fraction of Units or scrip representing fractions of Units will be issued on
conversion, but the number of Units issuable shall be rounded to the nearest
whole Unit.  The number of Units issuable upon a conversion hereunder
shall be determined by the quotient obtained by dividing (x) the outstanding
principal amount of this Note, plus accrued and unpaid interest thereon, to be
converted as set forth in the applicable Conversion Notice by (y) the Conversion
Price.  To convert this Note, the Holder hereof shall deliver written
notice thereof, substantially in the form of Exhibit A to this Note, with
appropriate insertions (the “Conversion Notice”),
to the Company at its address as set forth herein.  The date upon
which the conversion shall be effective (the “Conversion Date”)
shall be deemed to be the date set forth in the Conversion
Notice.  Except as otherwise provided herein, the Company shall not
have the right to object to the conversion or the calculation of the applicable
conversion price, absent manifest error.  Any conversion of any
portion of the Note to Units shall be deemed to be a pre-payment of principal
plus accrued and unpaid interest, without any penalty, and shall be credited
against any future payments of principal and interest in the order that such
payments become due and payable.

     

     

     

    
      
         

      

      
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    (b) Mandatory
Conversion.  Simultaneously with the closing of a company
financing in the form of a private placement of units (the “PPO”) in the amount
of at least $3,000,000 (the “Minimum PPO Amount”), including the proceeds
derived by the Company from the issuance of the Notes, this Note will
automatically convert as to all unpaid principal, plus accrued interest, if any,
into Units at the Conversion Price.  The PPO will involve an offering
of Company units which may be offered pursuant to Regulation D and/or Regulation
S of the Securities Act and any and all applicable state securities
laws.  Each PPO unit will consist of one share of Common Stock and one
common stock purchase warrant to purchase one-half of a share of Common Stock
(the “Investor Warrant”).  Each two Investor Warrants will entitle the
holder to purchase one share of Common Stock at a price per share to be
determined and will be exercisable for a period of five years from the PPO
closing date.  In addition, each Investor Warrant will contain
standard anti-dilution protection from stock splits, stock dividends and stock
contributions, will provide for weighted average price protection and will
provide for “cashless exercise” to the extent that a registration statement
covering the resale of the shares underlying the Investor Warrant is not then in
effect.  As more fully described in the Securities Purchase Agreement,
piggyback registration rights will apply to resales of the shares of Common
Stock comprising part of the units issued in connection with the PPO, for shares
underlying the Investor Warrants, the Common Stock forming part of the Units
issuable upon conversion of the Notes, and the Common Stock issuable upon
exercise of the Warrants forming part of the Units issuable upon conversion of
the Notes.

     

    Section
1.03         Reservation of Common
Stock.  As set forth in Section 4(e) of the Securities Purchase
Agreement, the Company shall reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of this Note and the exercise of the Warrants, that number of shares
of Common Stock equal to the sum of (i) the number of shares of Common Stock
into which the Note is convertible from time to time based upon the Conversion
Price, plus (ii) the number of shares of Common Stock for which the Warrants are
exercisable from time to time based upon the Exercise Price.

     

    Section
1.04          Absolute
Obligation/Ranking.  Except as expressly provided herein, no
provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, interest and
liquidated damages (if any) on, this Note at the time, place, and rate, and in
the coin or currency, herein prescribed.  This Note is a direct debt
obligation of the Company.  This Note ranks pari passu with all other
Notes now or hereinafter issued pursuant to the Securities Purchase
Agreement.

     

    Section
1.05           Paying Agent and
Registrar.  Initially, the Company will act as paying agent and
registrar.  The Company may change any paying agent, registrar, or
Company-registrar by giving the Holder not less than ten (10) business
days’ written notice of its election to do so, specifying the name, address,
telephone number and facsimile number of the paying agent or
registrar.  The Company may act in any such capacity.

     

    Section
1.06           Different
Denominations.  This Note is exchangeable for an equal
aggregate principal amount of Notes of different authorized denominations, as
requested by the Holder surrendering the same.  No service charge will
be made for such registration of transfer or exchange.

     

     

     

    
      
         

      

      
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    Section
1.07            Investment
Representations. This Note has been issued subject to certain investment
representations of the original Holder set forth in the Securities Purchase
Agreement and may be transferred or exchanged only in compliance with the
Securities Purchase Agreement and applicable federal and state securities laws
and regulations.

     

    Section
1.08            Reliance on Note
Register.  Prior to due presentment to the Company for transfer
or conversion of this Note, the Company and any agent of the Company may treat
the person in whose name this Note is duly registered on the Note Register as
the owner hereof for the purpose of receiving payment as herein provided and for
all other purposes, whether or not this Note is overdue, and neither the Company
nor any such agent shall be affected by notice to the contrary.

     

    Section
1.09             In
addition to the rights and remedies given it by this Note, the Holder shall have
all those rights and remedies allowed by applicable laws.  The rights
and remedies of the Holder are cumulative and recourse to one or more right or
remedy shall not constitute a waiver of the others.

     

    Article
II

     

    Section
2.01             Amendments and Waiver of
Default.  The Note may not be amended without the consent of
the Holder.  Notwithstanding the above, without the consent of the
Holder, the Note may be amended to cure any ambiguity, defect or inconsistency
or to make any change that does not adversely affect the rights of the
Holder.

     

     

    Article
III

     

    Section
3.01             Events of
Default.  Each of the following events shall constitute a
default under this Note (each an “Event of
Default”):

     

    (a) failure
by the Company to pay principal amount or interest due hereunder within five (5)
days of the date such payment is due;

     

    (b) failure
by the Company’s transfer agent to issue Common Stock to the Holder within four
(4) business days of the Company’s receipt of the attached Conversion Notice
from Holder in accordance with the Securities Purchase Agreement;

     

    (c) failure
by the Company for ten (10) days after notice to it to comply with any of its
other agreements in the Note;

     

    (d) the
Company shall:  (1) make a general assignment for the benefit of
its creditors; (2) apply for or consent to the appointment of a receiver,
trustee, assignee, custodian, sequestrator, liquidator or similar official for
itself or any of its assets and properties; (3) commence a voluntary case
for relief as a debtor under the United States Bankruptcy Code; (4) file
with or otherwise submit to any governmental authority any petition, answer or
other document seeking:  (A) reorganization, (B) an
arrangement with creditors or (C) to take advantage of any other present or
future applicable law respecting bankruptcy, reorganization, insolvency,
readjustment of debts, relief of debtors, dissolution or liquidation;
(5) file or otherwise submit any answer or other document admitting or
failing to contest the material allegations of a petition or other document
filed or otherwise submitted against it in any

     

     

    
      
         

      

      
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    proceeding
under any such applicable law, or (6) be adjudicated a bankrupt or
insolvent by a court of competent jurisdiction;

     

    (e) any case,
proceeding or other action shall be commenced against the Company for the
purpose of effecting, or an order, judgment or decree shall be entered by any
court of competent jurisdiction approving (in whole or in part) anything
specified in Section 3.01(d) hereof, or any receiver, trustee, assignee,
custodian, sequestrator, liquidator or other official shall be appointed with
respect to the Company, or shall be appointed to take or shall otherwise acquire
possession or control of all or a substantial part of the assets and properties
of the Company, and any of the foregoing shall continue unstayed and in effect
for any period of sixty (60) days;

     

    (f) any
material obligation of the Company for the payment of borrowed money is not paid
when due or within any applicable grace period, or such obligation becomes or is
declared to be due and payable before the expressed maturity of the obligation,
or there shall have occurred an event that, with the giving of notice or lapse
of time, or both, would cause any such obligation to become, or allow any such
obligation to be declared to be, due and payable before the expressed maturity
date of the obligation;

     

    (g) a breach
by the Company of any material contract that would have a Material Adverse
Effect (as defined in the Securities Purchase Agreement);

     

    (h) any event
of default of the Company under any agreement, note, mortgage, security
agreement or other instrument evidencing or securing indebtedness that ranks
senior in priority to, or pari passu with, the obligations under this Note and
the Securities Purchase Agreement;

     

    (i) any
material breach by the Company of any of its representations or warranties under
the Securities Purchase Agreement; or

     

    (j) any
default, whether in whole or in part, shall occur in the due observance or
performance of any obligations or other covenants, terms or provisions to be
performed under this Note or the Securities Purchase Agreement which is not
cured by the Company within five (5) days after receipt of written notice
thereof.

     

    Section
3.02        If any
Event of Default occurs, the full principal amount of this Note, together with
interest and other amounts owing in respect thereof, to the date of acceleration
shall become, at the Holder’s election, immediately due and payable in
cash.  Commencing upon the occurrence of any Event of Default that
result in the eventual acceleration of this Note, the interest rate on this Note
shall accrue at the rate of 15% per annum, or such lower maximum amount of
interest permitted to be charged under applicable law.  All Notes for
which the full amount hereunder shall have been paid in accordance herewith
shall promptly be surrendered to or as directed by the Company.  The
Holder need not provide and the Company hereby waives any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable
law.  Such declaration may be rescinded and annulled by the Holder at
any time prior to payment hereunder and the Holder

     

     

     

    
      
         

      

      
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    shall
have all rights as a Note holder until such time, if any, as the full payment
under this Section shall have been received by it.  No such rescission
or annulment shall affect any subsequent Event of Default or impair any right
consequent thereon.

     

    Article
IV

     

    Section
4.01         Negative
Covenants.  So long as this Note shall remain in effect and
until any outstanding principal and all accrued interest thereon and all fees
and all other expenses or amounts payable under this Note and the Securities
Purchase Agreement have been paid in full, unless the Holders, subject to
Section 8(p) of the Securities Purchase Agreement, shall otherwise consent in
writing, the Company shall not:

     

    (a) Organizational
Change    Directly or indirectly consummate any
merger, reorganization, restructuring, reverse stock split consolidation, sale
of all or substantially all of the Company’s assets or any similar transaction
or related transactions (each such transaction, an “Organizational Change”),
other than the PPO, unless prior to the consummation of an Organizational
Change, other than the PPO, the Company obtains the written consent, subject to
Section 8(p) of the Securities Purchase Agreement, of the Buyers that have
outstanding Notes.

     

    (b) Dividends and
Distributions.  In the case of the Company, declare or pay,
directly or indirectly, any dividend or make any other distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, with respect to any shares of its capital stock or directly
or indirectly redeem, purchase, retire or otherwise acquire for value any shares
of any class of its capital stock or set aside any amount for any such purpose;
provided, however, that the Company may

     

    (i) declare
and pay dividends consisting entirely of its common stock,

     

    (ii) repurchase
shares of its capital stock from its employees in connection with the
termination of such employees and

     

    (iii) make
distributions consisting entirely of its common stock in connection with stock
splits of its capital stock.

     

    (c) Limitation on Certain
Payments and Prepayments.

     

    Optionally
prepay, repurchase or redeem or otherwise defease or segregate funds with
respect to any indebtedness of the Company, other than for obligations incurred
in the ordinary course of business (including for working capital and similar
facilities), senior indebtedness existing on the date hereof and set forth in
Schedule A attached hereto, indebtedness under this Note or the Securities
Purchase Agreement.

     

    Article
V

     

    Section
5.01       Re-issuance of
Note.  When the Holder elects to convert a part of the Note,
then the Company shall reissue a new Note in the same form as this Note to
reflect the new principal amount and the Holder shall return the Note to the
Company for cancellation.

     

     

    
      
         

      

      
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    Article
VI

     

    Section
6.01       Anti-dilution.  Adjustment of Conversion
Price.  The Conversion Price shall be adjusted from time to
time as follows:

     

    (a) Adjustment of Conversion
Price and Number of Shares upon Issuance of Common Stock.

     

    (i) If at any
time after the Original Issue Date through the earlier of (A) the first
anniversary of the Original Issue Date; (B) payment in full on this Note; or (C)
the date of full conversion of this Note, the Company issues or sells, or is
deemed to have issued or sold, any shares of Common Stock (other than the
conversion/exchange of rights by George Forman and/or George Foreman
Productions, Inc. under the Investor Rights Agreement and/or Registration Rights
Agreement filed by the Company with the SEC on Form 8-K on August 18, 2005,
shares of Common Stock which are issued or deemed to have been issued by the
Company in connection with an Approved Stock Plan (as defined herein) or upon
issuance, exercise or conversion of the Other Securities (as defined herein))
for a consideration per share less than a price (the “Applicable Price”)
equal to the Conversion Price in effect immediately prior to such issuance or
sale, then immediately after such issue or sale the Conversion Price then in
effect shall be reduced to an amount equal to such consideration per share,
provided that in no event shall the Conversion Price be reduced below $0.01, and
the number of shares of Common Stock issuable upon conversion shall be subject
to a corresponding adjustment.

     

    (ii) If any
time after the first anniversary of the Original Issue Date and prior to payment
in full on this Note or full conversion of this Note, the Company issues or
sells, or is deemed to have issued or sold, any shares of Common Stock (other
than the conversion/exchange of rights by George Forman and/or George Foreman
Productions, Inc. under the Investor Rights Agreement and/or Registration Rights
Agreement filed by the Company with the SEC on Form 8-K on August 18, 2005,
shares of Common Stock which are issued or deemed to have been issued by the
Company in connection with an Approved Stock Plan (as defined herein) or upon
issuance, exercise or conversion of the Other Securities (as defined herein))
for a consideration per share less than a price (the “Applicable Price”) equal
to the Conversion Price in effect immediately prior to such issuance or sale,
then immediately after such issue or sale the Conversion Price then in effect
shall be reduced to an amount based upon the weighted average formula (the
“Weighted Average Formula”) set forth below in Section 6.01(g) and the number of
shares issuable upon conversion shall be subject to a corresponding
adjustment.

     

    (b) Effect on Conversion Price
of Certain Events.  For purposes of determining the adjusted
Conversion Price under Section 6.01(a)(i) and (ii) above, the following shall be
applicable:

     

    (i) Issuance of
Options.  If after the date hereof, the Company in any manner
grants any rights, warrants or options to subscribe for or purchase Common Stock
or convertible securities (“Options”), other than
Other Securities issued or deemed to have been issued in connection with any
Approved Stock Plan, and the lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Option or upon conversion
or exchange of any convertible securities issuable upon exercise of any such
Option is less than the Conversion

     

     

    
      
         

      

      
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    Price
then in effect, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share.  For
purposes of this Section 6.01(b)(i), the lowest price per share for which one
share of Common Stock is issuable upon exercise of such Options or upon
conversion or exchange of such convertible securities shall be equal to the sum
of the lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one share of Common Stock upon the granting or sale
of the Option, upon exercise of the Option or upon conversion or exchange of any
other convertible security other than this Note issuable upon exercise of such
Option.  No further adjustment of the Conversion Price shall be made
upon the actual issuance of such Common Stock or of such convertible securities
upon the exercise of such Options or upon the actual issuance of such Common
Stock upon conversion or exchange of such convertible securities.

     

    (ii) Issuance of Convertible
Securities.  If the Company in any manner issues or sells any
convertible securities after the Original Issue Date, other than Other
Securities issued or deemed to have been issued in connection with an Approved
Stock Plan, and the lowest price per share for which one share of Common Stock
is issuable upon the conversion or exchange thereof is less than the Conversion
Price then in effect, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
issuance or sale of such convertible securities for such price per
share.  For the purposes of this Section 6.01(b)(ii), the lowest
price per share for which one share of Common Stock is issuable upon such
conversion or exchange shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to one
share of Common Stock upon the issuance or sale of the convertible security and
upon conversion or exchange of such convertible security.  No further
adjustment of the Conversion Price shall be made upon the actual issuance of
such Common Stock upon conversion or exchange of such convertible securities,
and if any such issue or sale of such convertible securities is made upon
exercise of any Options for which adjustment of the Conversion Price had been or
are to be made pursuant to other provisions of this Section 6.01(b), no further
adjustment of the Conversion Price shall be made by reason of such issue or
sale.

     

    (iii) Change in Option Price or
Rate of Conversion.  If the purchase price provided for in any
Options, the additional consideration, if any, payable upon the issue,
conversion or exchange of any convertible securities, or the rate at which any
convertible securities are convertible into or exchangeable for Common Stock
changes at any time, the Conversion Price in effect at the time of such change
shall be adjusted to take into consideration the Conversion Price which would
have been in effect at such time had such Options or convertible securities
provided for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold and the number of shares of Common Stock issuable upon conversion of this
Note shall be correspondingly readjusted as shall the number shares issuable
upon conversion of the Note due to other Conversion Price changes required by
this Article 6.  For purposes of this Section 6.01(b)(iii), if the
terms of any Option or convertible security that was outstanding as of the
Original Issue Date are changed in the manner described in the immediately
preceding sentence, then such Option or convertible security and the Common
Stock deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such change. 

     

     

    
      
         

      

      
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    No
adjustment pursuant to this Section 6.01(b) shall be made if such adjustment
would result in an increase of the Conversion Price then in effect.

     

    (c) Effect on Conversion Price
of Certain Events.  For purposes of determining the adjusted
Conversion Price under Sections 6.01(a) and 6.01(b), the following shall be
applicable:

     

    (i) Calculation of Consideration
Received.  If any Common Stock, Options or convertible
securities are issued or sold or deemed to have been issued or sold for cash,
the consideration received therefore will be deemed to be the net amount
received by the Company therefore.  If any Common Stock, Options or
convertible securities are issued or sold for a consideration other than cash,
the amount of such consideration received by the Company will be the fair value
of such consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
will be the market price of such securities on the date of receipt of such
securities (measured by the closing sale price of such securities on the
Over-the-Counter Bulletin Board or its principal trading market).  The
fair value of any consideration other than cash or securities will be determined
jointly by the Company and the holders of the principal amount of the Notes then
outstanding.  If such parties are unable to reach agreement within
ten (10) days after the occurrence of an event requiring valuation (the
“Valuation
Event”), the fair value of such consideration will be determined within
five (5) Business Days after the tenth (10th) day
following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the holders of the principal amount of the Notes
then outstanding.  The determination of such appraiser shall be final
and binding upon all parties and the fees and expenses of such appraiser shall
be borne by the Company.

     

    (ii) Integrated
Transactions.  In case any Option is issued in connection with
the issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been issued
for a consideration of $0.001.

     

    (iii) Treasury
Shares.  The number of shares of Common Stock outstanding at
any given time does not include shares owned or held by or for the account of
the Company, and the disposition of any shares so owned or held will be
considered an issue or sale of Common Stock.

     

    (iv) Record
Date.  If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (1) to receive a dividend or other
distribution payable in Common Stock, Options or in convertible securities or
(2) to subscribe for or purchase Common Stock, Options or convertible
securities, then such record date will be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.

     

    (d) Adjustment of Conversion
Price upon Subdivision or Combination of Common Stock.  If the
Company at any time after the date of issuance of this Note subdivides (by any
stock split, stock dividend, recapitalization or otherwise) one or more classes
of its outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such subdivision will be
proportionately reduced.  If the Company at any

     

     

    
      
         

      

      
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    time
after the date of issuance of this Note combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to such combination will be proportionately
increased.  Any adjustment under this Section 6.01(d) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.

     

    (e) Distribution of
Assets.  If the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of
Common Stock, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement or other similar transaction) (a “Distribution”), at
any time after the issuance of this Note, then, in each such case the Conversion
Price in effect immediately prior to the close of business on the record date
fixed for the determination of holders of Common Stock entitled to receive the
Distribution shall be reduced, effective as of the close of business on such
record date, to a price determined by multiplying such Conversion Price by a
fraction of which (A) the numerator shall be the closing bid price of the Common
Stock on the trading day immediately preceding such record date minus the value
of the Distribution (as determined in good faith by the Company’s Board of
Directors) applicable to one share of Common Stock, and (B) the denominator
shall be the closing bid price of the Common Stock on the trading day
immediately preceding such record date.

     

    (f) Certain
Events.  If any event occurs of the type contemplated by the
provisions of this Section 6.01 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company’s Board of Directors will make an appropriate adjustment in the
Conversion Price or the number of shares issuable upon conversion so as to
protect the rights of the holders of the Note; provided, except as set forth in
Section 6.01(d), that no such adjustment pursuant to this Section 6.01(f) will
increase the Conversion Price as otherwise determined pursuant to this Section
6.01.

     

    (i) Notices.

     

    1) Immediately
upon any adjustment of the Conversion Price, the Company will give written
notice thereof to the holder of this Note, setting forth in reasonable detail,
and certifying, the calculation of such adjustment.

     

    2) The
Company will give written notice to the holder of this Note at least ten (10)
days prior to the date on which the Company closes its books or takes a record
(A) with respect to any dividend or distribution upon the Common Stock,
(B) with respect to any pro rata subscription offer to holders of Common
Stock or (C) for determining rights to vote with respect to any dissolution
or liquidation, provided that such information shall be made known to the public
prior to or in conjunction with such notice being provided to such
holder.

     

     

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (ii) Definitions.

     

    1) “Approved Stock Plan”
means any employee benefit plan, agreement or arrangement approved by the Board
of Directors of the Company, or any successor thereto, pursuant to which the
Company’s securities may be issued to any employee, officer or director of or
consultant to the Company or any subsidiary for services provided to the
Company.

     

    2) “Other Securities”
means (i) those options and warrants of the Company issued prior to, and
outstanding on, the Original Issue Date, (ii) the shares of Common Stock
issuable on exercise of such options and warrants, provided such options and
warrants are not amended after the Original Issue Date, and (iii) the
shares of Common Stock issuable upon exercise of the Warrants or conversion of
this Note.

     

    (g) Weighted Conversion
Formula.  Pursuant to the Weighted Average Formula, the
Conversion Price in effect immediately prior to a triggering issue of Common
Stock, shall be reduced, concurrently with such issue, to a price (calculated to
the nearest cent) determined by multiplying such Conversion Price by a fraction,
(A) the numerator of which shall be (1) the number of shares of Common Stock
outstanding immediately prior to such issue plus (2) the number of shares of
Common Stock which the aggregate consideration received or to be received by the
Company for the total number of additional shares of Common Stock so issued
would purchase at such Conversion Price; and (B) the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issue plus the number of such additional shares of Common Stock so issued;
provided that, (i) for the purpose of this Section 6.01(g), all shares of Common
Stock issuable upon conversion or exchange of convertible securities outstanding
immediately prior to such issue shall be deemed to be outstanding, and (ii) the
number of shares of Common Stock deemed issuable upon conversion or exchange of
such outstanding convertible securities shall be determined without giving
effect to any adjustments to the conversion or exchange price or conversion or
exchange rate of such convertible securities resulting from the issuance of
additional shares of Common Stock that is the subject of this
calculation.  The provisions of this Section 6.01(g) shall not operate
to increase the Conversion Price.

     

     

    Article
VII

     

    Section
7.01                                 Notice.  Notices
regarding this Note shall be sent to the parties at the following addresses,
unless a party notifies the other parties, in writing, of a change of
address:

     

     

     

     

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

     

    
      	
              If
      to the Company, to:

            	
              George
      Foreman Enterprises, Inc.

            
	 
      	
              100
      N. Wilkes-Barre Blvd., 4th
      Floor

            
	 
      	
              Wilkes
      Barre, PA 18702

            
	 
      	
              Attention:  Richard
      Huffsmith, General Counsel

            
	 
      	
              Telephone:  (570)
      822-6277

            
	 
      	
              Facsimile:  (570)
      820-7014

            
	 
      	 
      
	
              With
      a copy to:

            	
              Gottbetter
      & Partners, LLP

            
	 
      	
              488
      Madison Avenue, 12th
      Floor

            
	 
      	
              New
      York, New York 10022

            
	 
      	
              Attention:  Scott
      Rapfogel

            
	 
      	
              Telephone:  212-400-6900

            
	 
      	
              Facsimile:  212-400-6901

            
	 
      	 
      
	
              If
      to the Holder:

            	
              At
      the address set forth in the Securities Purchase
  Agreement

            


    

    


    Section
7.02       Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof.  Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by any of the
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced in the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”).  Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, or such
New York Courts are improper or inconvenient venue for such
proceeding.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Note and agrees that such service shall
constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Note or the transactions contemplated hereby.  If
either party shall commence an action or proceeding to enforce any provisions of
this Note, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.

     

    Section
7.03        Severability.  The
invalidity of any of the provisions of this Note shall not invalidate or
otherwise affect any of the other provisions of this Note, which shall remain in
full force and effect.

     

     

     

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

     

    Section
7.04        Entire Agreement and
Amendments.  This Note, together with the Securities Purchase
Agreement, Warrant to Purchase Common Stock and Investor Questionnaire
represents the entire agreement between the parties hereto with respect to the
subject matter hereof and there are no representations, warranties or
commitments, except as set forth herein.  This Note may be amended
only by an instrument in writing executed by the parties hereto.

     

    


    [Remainder
of Page Intentionally Left Blank]

     

    
 

    
      
         


      

      
        13

        
          

        

      

      
         


      

    

     

    
 

    IN WITNESS WHEREOF, with the
intent to be legally bound hereby, the Company as executed this Note as of the
date first written above.

     

    
      	 
      	
              GEORGE
      FORMAN ENTERPRISES, INC.

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:                                                                

            
	 
      	
              Name:

            
	 
      	
              Title:

            


    

    


    


    



    
      
         


      

      
        14

        
          

        

      

      
         


      

    


    


     

    EXHIBIT
A

     

     

    NOTICE OF
CONVERSION

     

     

    (To
be executed by the Holder in order to convert the Note)

     

    
      	
              TO:

            	 
      


    

    


    The
undersigned hereby irrevocably elects to convert $ of the principal amount of
the above Note into Units of George Foreman Enterprises, Inc., according to the
conditions stated therein, as of the Conversion Date written below.

    


    
      	
              Conversion
      Date:

            	 _____________________________________________________________
      
	 	_____________________________________________________________ 
	
              Applicable
      Conversion Price:

            	_____________________________________________________________ 
      
	 	_____________________________________________________________  
	
              Signature:

            	_____________________________________________________________  
      
	 	_____________________________________________________________  
	
              Name:

            	_____________________________________________________________ 
      
	 	_____________________________________________________________  
	
              Address:

            	_____________________________________________________________  
      
	 	 
	
              Amount
      to be converted:

            	
              $____________________________________________________________                                                                                      

            
	 	 
	
              Amount
      of Note unconverted:

            	
              $____________________________________________________________                                                                                      

            
	 	 
	
              Conversion
      Price per Unit:

            	
              $____________________________________________________________                                                                                      

            
	 	 
	
              Interest
      on the Principal being converted shall be paid as

            	_____________________________________________________________  
      
	 	 
	
              Number
      of shares of Common Stock and Warrants to be issued including as payment
      of interest, if applicable:

            	_____________________________________________________________  
      
	 	 
	
              Please
      issue the shares of Common Stock and Warrants in the following name and to
      the following address:

            	_____________________________________________________________ 
      
	 	 
	
              Issue
      to the following account of the Holder:

            	_____________________________________________________________  
      
	 	 
	
              Authorized
      Signature:

            	_____________________________________________________________  
      
	 	 
	
              Name:

            	_____________________________________________________________  
      
	 	 
	
              Title:

            	_____________________________________________________________  
      
	 	 
	
              Phone
      Number:

            	_____________________________________________________________  
      
	 	 
	
              Broker
      DTC Participant Code:

            	_____________________________________________________________  
      
	 	 
	
              Account
      Number:

            	_____________________________________________________________