kl06044_ex10-1.htm


    
      

    

     

                                                                                     Exhibit
10.1

     

     

    
      CONFIDENTIAL
        TREATMENT REQUESTED

       

      INFORMATION
        FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND IS IDENTIFIED
        BY THREE ASTERISKS, AS FOLLOWS “* * *”.  AN UNREDACTED VERSION OF THIS
        DOCUMENT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION.

    

    
 

    Services
      Agreement

    


    This
      Services Agreement (this “Agreement”) is made and entered into as of September
      6, 2006, by and between KnowFat Franchise Company, Inc., a Delaware corporation
      (“KnowFat”), and George Foreman Ventures, LLC, a Delaware limited liability
      company (“GFVentures”, together with KnowFat, the “Parties”).

     

    WHEREAS,
      concurrently herewith, the Parties have entered into a certain Promotion License
      Agreement (the “License Agreement”) pursuant to which GFVentures (i) granted
      KnowFat a limited license to use the name and likeness of George Foreman
      (“Celebrity”) in connection with the promotion of restaurants operated by
      KnowFat and its franchisees and (ii) agreed to perform or cause Celebrity to
      perform certain services for KnowFat; and

     

    WHEREAS,
      in consideration of the license and services provided for in the License
      Agreement, and as further provided herein, KnowFat shall (i) issue shares (the
      “Shares”) of its common stock, par value $0.001 per share (“Common Stock”), to
      GFVentures and (ii) make certain cash payments to GFVentures.

     

    NOW,
      THEREFORE, in consideration of the License Agreement and the foregoing premises
      and for other good and valuable consideration, the receipt and sufficiency
      of
      which is hereby acknowledged, the Parties hereby agree as follows:

     

    Section
      1.                         Consideration.

     

    1.1.                      Stock
      Issuance Upon Closing.  At the Closing (as defined below), KnowFat
      shall issue nine hundred thousand (900,000) shares of Common Stock to
      GFVentures.  The Shares granted pursuant to this Section 1.1 shall
      vest as follows: four hundred fifty thousand (450,000) Shares shall vest on
      the
      Closing Date, two hundred thousand (200,000) Shares shall vest on the day
      following the first anniversary of the Closing Date, one hundred thousand
      (100,000) Shares shall vest on the day following the second anniversary of
      the
      Closing Date, one hundred thousand (100,000) Shares shall vest on the day
      following the third anniversary of the Closing Date and fifty thousand (50,000)
      Shares shall vest on the day prior to the fourth anniversary of the Closing
      Date; provided, however, all then unvested Shares shall vest upon the
      earlier to occur of (x) the Sale (as hereinafter defined) of the ***th Franchise,
      and (y)
      the initial public offering of Common Stock (the “KnowFat IPO”).  The
      unvested portion of the Shares shall be referred to herein as the “Unvested
      Shares”.

     

    1.2.                      Subsequent
      Stock Issuance.  After the Closing, KnowFat shall issue one
      hundred thousand (100,000) shares of Common Stock to GFVentures promptly
      following the Sale of the ***th franchise
      of an
      outlet offering the products of KnowFat or any of its affiliates (each, a
“Franchise”); provided that such Sale occurs by December 31, 2009.  If
      the ***th
      Franchise is not Sold by December 31, 2009, or if this Agreement has been
      terminated by any Party prior to the Sale of the ***th Franchise,
      GFVentures shall not be entitled to receive any Shares pursuant to this Section
      1.2.  The Shares granted pursuant to this Section 1.2 shall vest
      immediately upon issuance.  For the purposes hereof, each of “Sale”
and “Sold” means (x) the granting of rights to

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    (or
      the
      entering into an agreement with) an individual or entity to operate a Franchise
      or (y) the securing of space (by contract of sale, lease, sublease or otherwise)
      for the opening of an outlet offering the products of KnowFat or any of its
      affiliates that is not a Franchise but is operated by KnowFat or an affiliate
      thereof (each, a “Company Store”).

     

    1.3.          Cash
      Payments.

     

    (a)           KnowFat
      shall pay to GFVentures an amount equal to ***% (“Royalty Rate”) of the
      aggregate Net Sales (as defined below) with respect to each calendar quarter
      occurring in whole or in part following the Closing Date (each, a “Royalty
      Payment”), which Royalty Payment shall be made within thirty (30) days following
      the end of such calendar quarter.  KnowFat shall provide GFVentures
      with a written royalty statement in a form acceptable to GFVentures with each
      Royalty Payment and which shall include, but may not be limited to, a listing
      by
      Franchise and Company Store of Net Sales for the period relating to such Royalty
      Payment and the number of Franchises and Company Stores that have been Sold,
      terminated or closed, as the case may be, during such period.  For
      purposes of this Agreement, “Net Sales” shall mean all gross sales of all food,
      beverage, other menu items, merchandise, and goods and other services sold
      or
      performed by or for KnowFat or a franchisee at each of the Company Stores and
      Franchises, as applicable, whether for cash or credit, as determined in
      accordance with the remaining provisions of this Section 1.3(a) and United
      States generally accepted accounting principles and practices as in effect
      from
      time to time and consistently applied throughout the periods involved
      (“GAAP”).  Sales and service taxes collected from customers and paid
      to the appropriate taxing authority, and all management or employee meals for
      which KnowFat or a franchisee does not receive payment, shall not be included
      in
      Net Sales.  The discounted portion off menu prices whether by way of
      coupons, promotions or otherwise shall not be included in Net
      Sales.  All payments due hereunder shall be made in United States
      currency drawn on a United States bank, unless otherwise specified by the
      Parties.  All accounting terms not specifically defined herein shall
      be construed in accordance with GAAP.  Notwithstanding any other
      provision hereof, in the event of the Change of Control (as hereinafter defined)
      of KnowFat as the result of any transaction other than the KnowFat IPO,
      GFVentures may thereafter provide written notice to KnowFat whereby it shall
      be
      deemed to return ***% of its Shares received hereunder in consideration for
      the
      increase of the Royalty Rate to ***% from ***%, which increase shall be
      effective for all purposes hereunder from and upon the delivery of such
      notice.  For purposes hereof, a “Change of Control” shall be deemed to
      occur if, at any time following the date hereof, (i) any individual or entity
      (or one or more individuals or entities acting in concert as a group) directly
      or indirectly acquires (by merger or otherwise) such percentage of capital
      stock
      of KnowFat or such other rights as would entitle such individual or entity
      (or
      such group) to (x) exercise control over the day-to-day management of KnowFat
      or
      (y) appoint or determine the vote for a majority of the board of directors
      of
      KnowFat, (ii) a merger, exchange, consolidation, recapitalization or other
      business combination (a “Business Combination”) occurs in which the beneficial
      holders of capital stock of KnowFat immediately prior to the Business
      Combination beneficially own immediately following such Business Combination
      less than 51% of the aggregate equity interests of the surviving entity or
      less
      than 51% of the capital stock of KnowFat having the power to elect a majority
      of
      the board of directors of KnowFat or (iii) all or substantially all of the
      assets of KnowFat are sold or otherwise disposed of, directly, indirectly,
      voluntarily, involuntarily, by operation of law or otherwise to any individual
      or entity (or one or more individuals or entities acting in concert as a
      group).

     

     

    
      
        
        

      

      
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    (b)           KnowFat
      shall keep complete, clear and accurate records of all information related
      to
      the Net Sales, the operations of the Company Stores and Franchises and the
      Sale
      of Franchises and the opening of Company Stores.  GFVentures shall
      have the right from time to time, but not more than once a year and upon at
      least five (5) days’ written notice, at its own expense, to cause an independent
      certified public accounting firm reasonably acceptable to KnowFat to examine
      KnowFat’s books and records during business hours, in order to verify the
      accuracy of KnowFat’s calculation of Royalty Payments.  The chosen
      accounting firm shall not disclose to GFVentures any information other than
      the
      written verification of, or discrepancies in, the accuracy of the payments
      of
      the compensation hereunder, which written audit results shall be provided to
      each Party.  In the event that an audit reflects that an additional
      amount should have been paid pursuant to Section 1.3(a), KnowFat promptly upon
      its receipt of the written results of such audit shall make payment to
      GFVentures of such additional amount, together with (i) interest on such
      additional amount at the Interest Rate (as hereinafter defined) for the period
      commencing on the date such underpayment occurred and ending on the date such
      payment is made under this Section 1.3(b) and (ii) in the event such additional
      amount exceeds the greater of (x) five percent of the Royalty Payments subject
      to such audit, or (y) $10,000, the out-of-pocket costs and expenses incurred
      by
      GFVentures in connection with such audit.  In the event that an audit
      reflects that KnowFat overpaid amounts due under Section 1.3(a), GFVentures
      shall promptly reimburse KnowFat for such amounts overpaid upon its receipt
      of
      such results.  For purposes hereof, “Interest Rate” means the
      reference commercial lending rate set forth in TheWall Street
      Journal as the prime rate for money center banks in New York, New York for
      the applicable period.

     

    1.4.                      Closing.  Unless
      otherwise mutually agreed upon in writing by the Parties, subject to the earlier
      termination of this Agreement in accordance with Section 5.2, the closing of
      the
      transactions contemplated by this Agreement (the “Closing”) shall be held at
      10:00 a.m., local time, at the offices of KnowFat, on the fifth business days
      following the date that all of the conditions precedent specified in Section
      4
      shall have been and continue to be (or can at the Closing be) satisfied or
      have
      been waived by all the Parties permitted to waive such conditions (such date
      of
      the Closing hereinafter being referred to as the “Closing Date”).

     

    Section
      2.                           Representations
      and Warranties of KnowFat.

     

    KnowFat
      hereby represents and warrants to GFVentures on the date hereof
      that:

     

    2.1.                      Organization.  KnowFat
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of Delaware and has all requisite corporate power and authority to carry
      on
      its business as now conducted and as proposed to be
      conducted.  KnowFat is duly qualified to transact business and is in
      good standing in each jurisdiction in which the failure to so qualify would
      have
      a material adverse effect on its business or properties.

     

    2.2                      Authorization.  The
      execution, delivery and performance by KnowFat of this Agreement, and all
      agreements and documents contemplated hereby, have been duly authorized by
      all
      necessary corporate action of KnowFat.  The issuance and delivery of
      the Shares by

     

     

     

    
      
        
        

      

      
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    KnowFat
      has been duly authorized by all necessary corporate action of KnowFat and,
      when
      so issued and delivered, the Shares will be validly issued and outstanding,
      fully paid and non-assessable and not subject to any encumbrance or any
      preemptive or any other similar rights of the stockholders of KnowFat or others,
      other than such rights as have been waived, and will be free of restrictions
      on
      transfer other than as provided under applicable state and federal securities
      laws.  This Agreement, and all agreements and documents contemplated
      hereby to which KnowFat is a party, constitute valid and legally binding
      obligations of KnowFat, enforceable in accordance with their respective terms,
      except (i) as limited by applicable bankruptcy, insolvency, reorganization,
      moratorium, and other laws of general application affecting enforcement of
      creditors’ rights generally, and (ii) as limited by laws relating to the
      availability of specific performance, injunctive relief, or other equitable
      remedies.

     

    2.3                      Exemptions
      from Securities Laws.  Subject to the accuracy of the
      representations and warranties of GFVentures in Section 3, the provisions of
      Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), are
      inapplicable to the offering, issuance, and delivery of the Shares, and no
      approval, registration or filing under any securities laws of any state is
      required in connection therewith, except such exemptive filings, if any, as
      are
      required to be made and will be made on a timely basis.

     

    2.4                      Capitalization.  As
      of the date of this Agreement, the number of shares of each class of capital
      stock of KnowFat (Series A Preferred Stock, Series B Convertible Preferred
      Stock
      and Common Stock, which are collectively referred to as “Capital Stock”) issued
      and outstanding, and the number of options, warrants and securities convertible
      into any Capital Stock (collectively, “Options”), are as set forth on Exhibit
      A hereto.  The Capital Stock and Options set forth on Exhibit
      A are all duly and validly authorized.  Except for the outstanding
      Capital Stock and Options set forth on Exhibit A, there are no
      outstanding securities of KnowFat or Options, warrants, rights (including,
      but
      not limited to, conversion, exchange or preemptive rights), commitments,
      agreements, understandings or arrangements of any kind for or relating to the
      purchase, issuance or acquisition from KnowFat of any Capital Stock or other
      securities thereof (including, but not limited to, any convertible or
      exchangeable securities) or any such Options, warrants or rights, to which,
      in
      any of the foregoing cases, KnowFat is subject or by which it is
      bound.

     

    2.5                      Litigation.  There
      is no action, claim, proceeding or investigation, in any court or before any
      governmental body or other tribunal, now pending or, to KnowFat’s knowledge,
      threatened against or affecting KnowFat, nor, to KnowFat’s knowledge, does there
      exist any reasonable basis therefore.

     

    2.6                      Compliance
      with Agreements.  KnowFat is not in material breach of, or
      in material default under, any material contract or other instrument to which
      it
      is a party or by which it or any of its property is bound or affected, nor
      is
      KnowFat in material violation or material default of any provision of its
      Certificate of Incorporation or bylaws (each as amended to date), or of any
      instrument, judgment, order, writ, or decree to which it is a party or by which
      it or its assets are bound, or in material violation of any provision of any
      federal or state statute, rule or regulation applicable to
      KnowFat.  The execution, delivery and performance of this Agreement by
      KnowFat do not and shall not, with or without the passage of time or the giving
      of notice, (a) result in the breach of, or (b) constitute a default, cause
      the
      acceleration of

     

     

     

    
      
        
        

      

      
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    performance
      or require any consent under, or (c) result in the creation of any lien, charge
      or encumbrance upon any properties or assets of KnowFat pursuant to, any
      material instrument or agreement to which KnowFat is a party or by which KnowFat
      or its assets or properties may be bound or affected, and, do not or shall
      not
      violate or conflict with any provision of the Certificate of Incorporation
      or
      bylaws of KnowFat.

     

    Section
      3.                          Representations
      and Warranties of GFVentures.

     

    GFVentures
      hereby represents and warrants to KnowFat on the date hereof that:

     

    3.1.                      Organization.  GFVentures
      is a limited liability company duly organized, validly existing and in good
      standing under the laws of Delaware and has all requisite corporate power and
      authority to carry on its business as now conducted and as proposed to be
      conducted.  GFVentures is duly qualified to transact business and is
      in good standing in each jurisdiction in which the failure to so qualify would
      have material adverse effect on its business or properties.

     

    3.2.                      Authorization.

     

    The
      execution, delivery and performance by GFVentures of this Agreement, and all
      agreements and documents contemplated hereby, have been duly authorized by
      all
      necessary corporate action of GFVentures.  This Agreement, and all
      agreements and documents contemplated hereby to which GFVentures is a party,
      constitute valid and legally binding obligations of GFVentures, enforceable
      in
      accordance with their respective terms, except (i) as limited by applicable
      bankruptcy, insolvency, reorganization, moratorium, and other laws of general
      application affecting enforcement of creditors’ rights generally, and (ii) as
      limited by laws relating to the availability of specific performance, injunctive
      relief, or other equitable remedies.

     

    3.3.                      No
      Violations.  The execution, delivery and performance of this
      Agreement by GFVentures do not and will not, with or without the passage of
      time
      or the giving of notice, (a) result in the breach of, or (b) constitute a
      default, cause the acceleration of performance or require any consent under,
      or
      (c) result in the creation of any lien, charge or encumbrance upon any property
      or assets of GFVentures pursuant to, any material instrument or agreement to
      which GFVentures is a party or by which GFVentures or its properties may be
      bound or affected, and, do not or will not violate or conflict with any
      provision of the Certificate of Organization or operating agreement of
      GFVentures.

     

    3.4.                      Purchase
      Entirely for Own Account. This Agreement is made with
      GFVentures in reliance upon GFVentures’ representation to KnowFat (which
      GFVentures hereby confirms) that the securities to be received by GFVentures
      hereunder will be acquired for investment for GFVentures’ own account and not
      with a view to the distribution of any part thereof, and GFVentures has no
      present intention of selling, granting any participation in, or otherwise
      distributing the same in a manner contrary to the Securities Act or applicable
      state securities laws.

     

    3.5.                      Disclosure
      of Information; Due Diligence.  GFVentures has had an opportunity
      to ask questions of and receive answers from KnowFat regarding KnowFat and
      the
      terms and

     

     

     

     

    
      
        
        

      

      
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    conditions
      of the issuance of securities issued hereunder and to obtain additional
      information necessary to verify the accuracy of the information supplied or
      to
      which it had access.

     

    3.6.                      Investment
      Experience; Accredited Investor Status.  GFVentures is an investor
      in securities of companies in the development stage and acknowledges that the
      securities to be issued hereunder are speculative and involve a high degree
      of
      risk.  GFVentures can bear the economic risk of its investment
      (including possible complete loss of such investment) for an indefinite period
      of time and has such knowledge and experience in financial or business matters
      that it is capable of evaluating the merits and risks of the investment in
      the
      securities purchased hereunder.  GFVentures represents that it has not
      been organized for the purpose of acquiring the securities to be purchased
      hereunder.  GFVentures understands that, unless otherwise provided
      herein, the securities to be issued hereunder have not been registered under
      the
      Securities Act, or under the securities laws of any jurisdiction, by reason
      of
      reliance upon certain exemptions, and that the reliance on such exemptions
      is
      predicated upon the accuracy of GFVentures' representations and warranties
      in
      this Section 3.  GFVentures is familiar with Regulation D
      promulgated under the Securities Act and is an "accredited investor" as defined
      in Rule 501(a) of such Regulation D.

     

    3.7.                      Restricted
      Securities.  GFVentures understands that, unless otherwise
      provided herein, the securities to be issued hereunder are characterized as
      "restricted securities" under the federal securities laws inasmuch as they
      are
      being acquired from KnowFat in a transaction not involving a public offering
      and
      that under such laws and applicable regulations such securities may be resold
      without registration under the Securities Act only in certain limited
      circumstances and in accordance with the terms and conditions set forth in
      the
      legend described below.  In this connection, GFVentures represents
      that it is familiar with Securities and Exchange Commission, Rule 144, as
      presently in effect, and understands the resale limitations imposed thereby
      and
      by the Securities Act.

     

    3.8.                      Legends.  It
      is understood that the certificates evidencing the securities to be received
      hereunder may bear substantially the following legends:

     

    THE
      SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE
      SECURITIES LAW, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED,
      OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
      COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (ii) THE COMPANY
      RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THESE SECURITIES
      SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSACTION IS EXEMPT FROM
      REGISTRATION, OR (iii) THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH
      TRANSACTION IS EXEMPT FROM REGISTRATION.

     

    THE
      SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER
      SET FORTH IN A CERTAIN SERVICES

     

     

     

     

    
      
        
        

      

      
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    AGREEMENT
      BETWEEN THE COMPANY AND THE REGISTERED OWNER OF THE SHARES (OR HIS, HER OR
      ITS
      PREDECESSOR IN INTEREST).  THE COMPANY WILL FURNISH A COPY OF SUCH
      AGREEMENT UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.

     

    Section
      4.            
             Conditions
      to Closing.

     

    4.1.                      Condition
      to Obligations of all Parties.  The obligation of each Party to
      consummate the transactions contemplated by Section 1 hereof on and following
      (as applicable) the Closing Date is subject to the fulfillment to the reasonable
      satisfaction (except with respect to Section 4.1(b)(ii)) of each Party (or
      to
      waiver thereby) at or prior to the Closing of each of the following additional
      conditions:

     

    (a)            each
      Party having duly executed and delivered to the other Party the License
      Agreement and the License Agreement being in full force and effect on the
      Closing Date.

     

    (b)            KnowFat’s
      completion in accordance with applicable law of the earlier to occur of (i)
      the
      offering and issuance of shares of Series C Convertible Preferred Stock (with
      the powers, designations, preferences, rights, qualifications, limitations
      and
      restrictions consistent with, and substantially similar to, those powers,
      designations, preferences, rights qualifications, limitations and restrictions
      of KnowFat’s Series A Preferred Stock and Series B Convertible Preferred Stock)
      at a price no less than $6.50 per share, resulting in net proceeds to KnowFat
      of
      not less than $5,000,000, or (ii) to the sole satisfaction of GFVentures, the
      completion of an issuance of such Series C Convertible Preferred Stock at a
      lower price and/or resulting in a lower amount of net proceeds.  In
      the event the Closing occurs following the completion of an issuance under
      clause (ii) of this Section 4.1(b), GFVentures shall, subject to applicable
      securities laws, provide commercially reasonable cooperation to KnowFat to the
      extent reasonably requested thereby in connection with the completion of an
      offering consistent with clause (i) of this Section 4.1(b).

     

    4.2.         Conditions
      to Obligations of KnowFat.  In addition to the fulfillment (or
      waiver) of the condition set forth in Section 4.1 hereof, the obligation of
      KnowFat to consummate the transactions contemplated by Section 1 hereof on
      and
      following (as applicable) the Closing Date is subject to the fulfillment to
      the
      reasonable satisfaction of KnowFat (or to waiver thereby) at or prior to the
      Closing of each of the following additional conditions:

     

    (a)           The
      representations and warranties of GFVentures contained in this Agreement shall
      be true in all material respects on the Closing Date as though such
      representations and warranties were made on as of the Closing Date.

     

    (b)           No
      suit, action or other proceeding shall be pending before any court or
      governmental agency to restrain or prohibit the consummation of the transactions
      provided for in this Agreement or the License Agreement or to obtain damages
      or
      other relief in connection herewith or therewith or the consummation of such
      transactions.

     

     

    
      
        
        

      

      
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    4.3.         Conditions
      to Obligations of GFVentures.  In addition to the fulfillment (or
      waiver) of the condition set forth in Section 4.1 hereof, the obligation of
      GFVentures to consummate the transactions contemplated by Section 1 hereof
      on
      and following (as applicable) the Closing Date is subject to the fulfillment
      to
      the reasonable satisfaction thereof (or to waiver thereby) at or prior to the
      Closing of each of the following additional conditions:

     

    (a)           The
      representations and warranties of KnowFat contained in this Agreement and the
      License Agreement shall be true in all material respects on the Closing Date
      as
      though such representations and warranties were made on as of the Closing
      Date.

     

    (b)           No
      suit, action or other proceeding shall be pending before any court or
      governmental agency to restrain or prohibit the consummation of the transactions
      provided for in this Agreement or the License Agreement or to obtain damages
      or
      other relief in connection herewith or therewith or the consummation of such
      transactions.

     

    Section
      5                      Term;
      Termination.

     

    5.1.                  Term.  The
      “Term” of this Agreement shall commence on the Closing Date and continue through
      the fourth anniversary of the Closing Date, unless sooner terminated pursuant
      to
      this Section 5.

     

    5.2.                   Termination
      Before Closing.  This Agreement shall terminate and the
      transactions contemplated by this Agreement shall be abandoned upon occurrence
      of any of the following events at any time prior to the Closing:

     

       (a)           by
      KnowFat, upon its written notice to GFVentures in the event that GFVentures
      is
      in breach of any representation, warranty or covenant contained in this
      Agreement, and such breach, individually or in combination with any other such
      breach, (i) would cause the conditions set forth in Section 4.2 not to be
      satisfied and (ii) is not cured within 15 days following delivery by KnowFat
      to
      GFVentures of written notice of such breach;

        

        (b)           by
      GFVentures, upon its written notice to KnowFat in the event that KnowFat is
      in
      breach of any representation, warranty or covenant contained in this Agreement,
      and such breach, individually or in combination with any other such breach,
      (i)
      would cause the conditions set forth in Section 4.1 or 4.3 not to be satisfied
      and (ii) is not cured within 15 days following delivery by GFVentures to KnowFat
      of written notice of such breach;

     

        (c)           by
      mutual written consent of the Parties;

     

        (d)           by
      GFVentures, upon its written notice to KnowFat, if the Closing shall not have
      occurred by October 1, 2006 (the “Expiration Date”), and the reason for the
      Closing not occurring by such date is not the breach or default of GFVentures
      of
      any of its obligations under this Agreement; or

     

        (e)           by
      either GFVentures or KnowFat, upon its written notice to such other Party,
      if
      (i) any court of competent jurisdiction shall have issued an order, decree
      or ruling or taken any other action (A) restraining or enjoining the
      transactions contemplated under this Agreement until a date later than the
      Expiration Date or (B) otherwise prohibiting the

     

     

     

    
      
        
        

      

      
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    transactions
      contemplated under this Agreement, and (ii) such order, decree, ruling or
      other action shall have become final and non-appealable.

     

    If
      any
      Party terminates this Agreement pursuant to this Section 5.2, all obligations
      of
      each Party hereunder shall terminate (except those set forth in Section 7
      hereof, which shall continue in effect) without any liability of any Party
      to
      any other Party (except for any liability of any Party for breaches of this
      Agreement).

     

    5.3.                      Termination
      After Closing.

     

    (a)           KnowFat
      may terminate this Agreement after the Closing by giving written notice to
      GFVentures in the event that GFVentures is in breach of any of its material
      obligations under this Agreement and such breach is not cured within 30 days
      following delivery by KnowFat to GFVentures of written notice of such
      breach.

     

    (b)           GFVentures
      may terminate this Agreement after the Closing by giving written notice to
      KnowFat in the event that KnowFat is in breach of any of its material
      obligations under this Agreement or the License Agreement and such breach is
      not
      cured (i) within five (5) business days following delivery by GFVentures to
      KnowFat of written notice of such a breach pertaining to KnowFat’s payment or
      Share issuance obligations hereunder or (ii) within 30 days following delivery
      by GFVentures to KnowFat of written notice of such a breach pertaining to any
      of
      KnowFat’s other obligations hereunder or thereunder.

     

    (c)           Notwithstanding
      any other provision of this Agreement or the License Agreement, in the event
      that (x) GFVentures breaches its material obligations under Section 2 of the
      License Agreement due to any reason other than the death or Disability (as
      hereinafter defined) of Celebrity and such breach remains uncured upon the
      expiration of the applicable cure period set forth therein, and (y) KnowFat
      is
      not in breach or default of any of its obligations under this Agreement or
      the
      License Agreement, KnowFat may terminate both this Agreement and the License
      Agreement in accordance with and subject to Section 5.3(a) hereof and require
      GFVentures to immediately forfeit to KnowFat the number of Unvested Shares
      indicated below; provided however, that upon the earlier to occur of (1) the
      Sale of the ***th Franchise,
      and (2)
      the KnowFat IPO, KnowFat will have no further right to require the forfeiture
      of
      (and GFVentures shall have no obligation to forfeit) Shares under this Section
      5.3(c):

     

    (i)           if
      this Agreement is terminated by KnowFat pursuant to this Section 5.3(c) between
      the Closing Date and the first anniversary of the Closing Date, GFVentures
      shall
      forfeit 450,000 Unvested Shares;

     

    (ii)           if
      this Agreement is terminated by KnowFat pursuant to this Section 5.3(c) between
      the day after the first anniversary of the Closing Date and the second
      anniversary of the Closing Date, GFVentures shall forfeit 250,000 Unvested
      Shares;

     

    (iii)           if
      this Agreement is terminated by KnowFat pursuant to this Section 5.3(c) between
      the day after the second anniversary of the Closing Date and the third
      anniversary of the Closing Date, GFVentures shall forfeit 100,000 Unvested
      Shares; and

     

     

    
      
        
        

      

      
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    (iv)           if
      this Agreement is terminated by KnowFat pursuant to this Section 5.3(c) between
      the day after the third anniversary of the Closing Date and the day prior to
      the
      fourth anniversary of the Closing Date, GFVentures shall forfeit 50,000 Unvested
      Shares.

     

    Following
      the forfeiture of any Unvested Shares in accordance with the terms hereof,
      GFVentures shall return the certificates evidencing such Unvested Shares to
      KnowFat.

     

    For
      purposes hereof, “Disability” means the inability of GFVentures, by reason of
      injury or illness of Celebrity, substantially to perform its material
      obligations under Section 2 of the License Agreement for (a) a continuous period
      of six months or (b) more than two, 90-day periods in one continuous 12-month
      period.

     

    (d)           This
      Agreement shall automatically terminate upon termination of the License
      Agreement.

     

    In
      the
      event of the termination of this Agreement pursuant to this Section 5.3,
      this Agreement shall forthwith become void (except for this Section 5.3 and
      Sections 1.1, 1.2, 1.3, 6.3 and 7 hereof, which shall continue in effect),
      and
      there shall be no liability or obligation on the part of any Party with respect
      to this Agreement, other than that such termination shall not (i) relieve
      any Party of any liability resulting from any breach hereof by such Party on
      or
      prior to the date of such termination or (ii) affect any right or
      obligation arising hereunder on or prior to the date of such termination or
      as a
      result of such breach or termination.  Notwithstanding the foregoing,
      it is acknowledged that the respective rights and obligations of the Parties
      under Section 1.3 shall survive the expiration of the Term or the earlier
      termination of this Agreement and such rights and obligations shall continue
      in
      perpetuity; provided, however, the respective rights and obligations of the
      Parties under Section 1.3 hereof shall terminate upon (A) the termination of
      this Agreement by GFVentures pursuant to Section 5.3(b) hereof or (B) the
      occurrence of the fourth anniversary of the Closing Date without Celebrity
      having made himself available for at least three days of promotional activity
      pursuant to the terms of the License Agreement.  Such termination
      shall not affect any right or obligation arising under Section 1.3 hereof on
      or
      prior to the date of such termination of the rights and obligations
      thereunder.

     

    Section
      6.                                Covenants.

     

    6.1.                      Restrictions
      on Transfer of the Shares.  GFVentures shall not sell, assign,
      transfer, pledge, hypothecate or otherwise dispose of, by operation of law
      or
      otherwise, any Shares, or any interest therein, until the end of the Term;
      provided, however, notwithstanding any other provision hereof, GFVentures may
      from time to time transfer Shares to the Celebrity or its other member, provided
      that such transferee (a) of any Shares shall take title subject to the
      restrictions of this Section 6.1 and (b) of any Unvested Shares shall take
      title
      subject to the forfeiture provisions of this Agreement with respect
      thereto.  GFVentures or other permitted holder of Unvested Shares
      shall be entitled to exercise any and all rights and powers inuring to an owner
      of Common Stock, including, but not limited to, the right to vote the same
      and
      to receive dividends or other distributions made or paid with respect thereto,
      subject, however, to the forfeiture provisions, restrictions and limitations
      imposed thereon hereunder.

     

     

     

    
      
        
        

      

      
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    6.2.                      Registered
      Securities.  In the event that any of KnowFat’s Common Stock is
      registered under the Securities Act and publicly traded on a date that KnowFat
      is obligated to issue shares of Common Stock to GFVentures pursuant to the
      terms
      of this Agreement, the Common Stock issued by KnowFat on that date shall be
      registered under the Securities Act and, subject to the restrictions contained
      in this Agreement, eligible to be traded on the securities exchanges on which
      the Common Stock is listed.  KnowFat hereby grants to GFVentures, with
      respect to Shares received by GFVentures hereunder prior to the date that Common
      Stock becomes registered under the Securities Act, demand, piggyback and other
      registration rights to the same extent and on the same terms, to the extent
      applicable, that such rights are granted to holders of its Series C Convertible
      Preferred Stock with respect thereto.

     

    6.3.                      Dilution;
      Preemption Rights.

     

    (a)           For
      the purposes of this Section 6.3, “Additional Shares” shall mean any shares of
      capital stock of KnowFat whether or not now authorized, and any Convertible
      Securities (as hereinafter defined); provided, however, that the term
“Additional Shares” does not include (i) shares of capital stock or Convertible
      Securities issued for the acquisition by the Company of not less than 51% of
      the
      voting power of, or in connection with a merger with, another corporation,
      limited liability company or other entity, (ii) shares, or options to purchase
      shares, issued to employees, officers, directors or consultants of KnowFat
      pursuant to an option plan, (iii) shares created as a result of a stock split
      or
      (iv) shares issued in the KnowFat IPO.  For the purposes of this
      Section 6.3, “Convertible Securities” shall mean any evidences of indebtedness
      or other securities convertible into or exchangeable for capital stock of
      KnowFat, including rights, options, or warrants to subscribe for, purchase
      or
      otherwise acquire capital stock of KnowFat or Convertible
      Securities.

     

    (b)           KnowFat
      shall not, without GFVentures’ prior written consent, sell any Additional Shares
      for consideration per share of less than $6.50.  The consideration per
      share received by KnowFat for the issue of (i) any Additional Share shall be
      the
      amount of cash received by KnowFat per share and (ii) Convertible Securities
      shall be the total amount, if any, received by KnowFat as consideration for
      the
      issue of such Convertible Securities, plus the minimum aggregate amount of
      additional consideration payable to KnowFat upon the conversion, exchange,
      or
      exercise of such Convertible Securities, divided by the maximum number of shares
      issuable upon conversion, exchange or exercise of such Convertible
      Securities.  It is understood that, notwithstanding any other
      provision hereof, KnowFat does not intend to issue a total number of its Series
      C Convertible Preferred Stock that shall result in aggregate net proceeds to
      KnowFat in excess of $10,000,000.  KnowFat shall obtain the prior
      written consent of GFVentures prior to issuing any shares of its Series C
      Convertible Preferred Stock that shall result in aggregate net proceeds to
      KnowFat in excess of such amount from the issuance of its Series C Convertible
      Preferred Stock.

     

    (c)           KnowFat
      hereby grants to GFVentures the right to purchase up to its Proportionate
      Percentage (as hereinafter defined) of each future issuance of capital stock
      of
      KnowFat and Convertible Securities in accordance with the terms of this Section
      6.3(c), other than (i) shares of capital stock or Convertible Securities issued
      for the acquisition by the Company of not less than 51% of the voting power
      of,
      or in connection with a merger with, another corporation, limited liability
      company or other entity, (ii) shares, or options to purchase

     

     

     

    
      
        
        

      

      
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    shares,
      issued to employees, officers, directors or consultants of KnowFat pursuant
      to
      an option plan, (iii) shares created as a result of a stock split or (iv) shares
      issued in the KnowFat IPO.  KnowFat shall, prior to making any such
      issuance, give written notice thereof to GFVentures, which notice shall specify
      the security or securities KnowFat proposes to issue and the consideration
      that
      KnowFat intends to receive therefor (“Issuance Notice”).  For a period
      of 30 days following the date of such Issuance Notice, GFVentures shall be
      entitled, by written notice to KnowFat, to elect to purchase all or any part
      of
      its Proportionate Percentage of the securities being sold in such
      issuance.  If an election pursuant to this Section 6.3(c) shall not be
      made with respect to such issuance within such 30 day period, then KnowFat
      may
      issue such securities to investors, but only for a consideration payable in
      cash
      not less than, and otherwise on terms no more favorable to the investors than,
      that set forth in the corresponding Issuance Notice and only within 90 days
      following the end of such 30 day period.  In the event that any such
      election is made by GFVentures, it shall purchase from KnowFat for the
      consideration and on the terms set forth in such Issuance Notice, the securities
      that it shall have elected to purchase.  For purposes hereof,
“Proportionate Percentage” means, as of any date, the result (expressed as a
      percentage) obtained by dividing (i) the number of shares of Common Stock held
      by GFVentures, by (ii) the number of shares of Common Stock then issued and
      outstanding.

     

    6.4             
Performance
      of
      Conditions.  Each Party shall take all reasonable steps necessary
      or appropriate, and shall use all commercially reasonable efforts, to effect
      as
      promptly as practicable the satisfaction of the conditions required to be
      satisfied in order for it to consummate the transactions contemplated by this
      Agreement, including all applicable conditions set forth in Section
      4.

     

    Section
      7.                          Miscellaneous.

     

    7.1.                      No
      Assignment.  This Agreement and the rights and duties hereunder
      shall not be assignable by any Party except upon written consent of the other
      Party.  KnowFat may not transfer all or substantially all of the
      business, assets or right to receive Net Sales of KnowFat or any of its
      affiliates without the prior written consent of GFVentures.

    


    7.2.                      Expenses.  Except
      as otherwise provided herein, each Party shall bear its own costs and expenses
      (including legal and accounting fees and expenses) incurred in connection with
      this Agreement and the transactions contemplated hereby.

    


    7.3.                      Agreement
      binding on Successors.  The provisions of this Agreement shall be
      binding upon and shall inure to the benefit of the Parties hereto, their heirs,
      administrators, successors and permitted assigns.

    


    7.4.                      Waiver,
      Modification.  The failure of any Party to exercise in any respect
      any right provided for herein shall not be deemed a waiver of any right
      hereunder.  This Agreement may not be modified or altered except by
      written instrument duly executed by all Parties.  If any term, clause
      or provision hereof is held invalid or unenforceable by a court of competent
      jurisdiction, such invalidity shall not affect the validity or operation of
      any
      other term, clause or provision and such invalid term, clause or provision
      shall
      be deemed to be severed from the Agreement.

     

     

     

    
      
        
        

      

      
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    7.5.                      No
      joint venture.  Nothing contained herein shall constitute this
      arrangement to be employment, a joint venture or a partnership.

    


    7.6.                      Governing
      Law; Arbitration; Equitable Remedies.  This Agreement and
      performance hereunder shall be governed by the laws of the State of New
      York.  Except as set forth below, each Party hereby agrees to meet and
      confer in good faith to resolve any dispute or claim arising out of, or relating
      to, this Agreement during the Term (“Dispute”) through informal discussions
      between the Parties.  If the Parties are unable to resolve such
      Dispute through such discussions, either Party may submit such Dispute to final
      and binding arbitration in accordance with the Commercial Arbitration Rules
      of
      the American Arbitration Association, to the extent such rules are not
      inconsistent with this Agreement.  Such arbitration shall be conducted
      in the county of the principal office of the non-submitting
      party.  Any award rendered pursuant to such arbitrators shall be in
      writing and final and binding upon the Parties, and judgment upon any such
      award
      may be entered in any court having jurisdiction thereof.  The fees and
      expenses of such arbitration shall be borne equally by the
      Parties.  Each Party shall pay its own fees and costs relating to any
      arbitration proceedings, including, but not limited to, attorneys’
fees.  Notwithstanding the foregoing, with respect to any Dispute
      requiring equitable remedies (including, but not limited to, specific
      performance and injunctive relief), the Parties shall be entitled to seek such
      equitable remedies before a court of competent jurisdiction without first
      engaging in the dispute resolution set forth above.  It is hereby
      acknowledged that a Party shall not be required to exercise its right to
      terminate this Agreement in order to bring a Dispute under this Section 7.6
      or
      to seek equitable remedies before a court of competent jurisdiction with respect
      to any act or omission by the other Party that might be give rise to such
      termination right.

    


    7.7.                      Notices.  All
      notices, requests, demands and other communications called for or contemplated
      hereunder shall be in writing and shall be deemed to have been duly given when
      delivered to the Party to whom addressed or when sent by facsimile (if promptly
      confirmed by registered or certified mail, return receipt requested, prepaid
      and
      addressed) to the Parties, their successors in interest, or their permitted
      assignees at the following addresses, or at such other addresses as the Parties
      may designate by written notice in the manner aforesaid:

     

    If
      to
      KnowFat:                                                                           If
      to GFVentures:

    


    KnowFat
      Franchise Company,
      Inc.                                        George
      Foreman Ventures, LLC

    20
      Guest
      Street, Suite
      450                                                        
100 North Wilkes-Barre Boulevard, 4th Floor

    East
      Brighton, MA
      02135                                                         Wilkes-Barre,
      PA 18702

    Attn:
      Eric
      Spitz                                                                           Attn:  Rick
      Huffsmith

    Telephone:
      (617)
      787-6000                                                        Telephone:
      570.822.6277, ext. 18

    Facsimile:
      (617)
      787-6010                                                           Facsimile:
      570.820.7014

     

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    
 

    with
      a
      copy to:

    


    Robinson
&
Cole
      llp                                                                   Riker
      Danzig Scherer Hyland & Perretti LLP

    695
      East
      Main
      Street                                                                   One
      Speedwell Avenue

    Stamford,
      CT
      06904-2305                                                            Morristown,
      New Jersey 07962-1981

    Attention:  Richard
      A. Krantz,
      Esq.                                          Attention:
      Andrew J. Stamelman, Esq.

    Telephone:  (203)
      462-7505                                                         Telephone:
      973.451.8515

    Facsimile:  (860)
      462-7599                                                            Facsimile:
      973.538.1984

     

    7.8.                      Entire
      Agreement.  Each Party acknowledges that it has read this
      Agreement and the License Agreement, understands them, and agrees to be bound
      by
      their terms and further agrees that they are the complete and exclusive
      statements of the agreement between the Parties, and supersedes and merges
      all
      prior proposals, understandings and all other agreements, oral and written,
      between the Parties relating to the subject matter of this Agreement and the
      License Agreement. The
      remedies herein provided shall be cumulative and non-exclusive and shall be
      in
      addition to any other rights and remedies the Parties may have at law or in
      equity.

    


    7.9.           Counterparts;
      Headings; Construction.  This Agreement may be executed in any
      number of counterparts, and each when so executed and delivered shall be an
      original, but all the counterparts shall together constitute one and the same
      instrument.  The Section headings are inserted for convenience only
      and are not to be construed as part of this Agreement.  This Agreement
      shall not be construed as if prepared by one of the Parties, but rather
      according to its fair meaning as a whole, as if both Parties hereto had prepared
      it.

    


    7.10.                      Payments.  All
      payments made hereunder shall be made on the date payment is due in immediately
      available (same day) funds by wire transfer or certified check in U.S. dollars
      to the account indicated in writing to the payor-party by the payee-party
      .  Whenever any payment hereunder shall be stated to be due on or by
      no later than a day that is not a business day, such payment shall be made
      on or
      by no later than the next succeeding business day.

    


    7.11.                      Section
      409A.  If any provision of this Agreement contravenes any
      regulations or United States Treasury guidance promulgated under Section 409A
      of
      the United States Internal Revenue Code of 1986, as amended (the “Code”), or if
      any tax is imposed under Section 409A of the Code on any payment to be received
      by GFVentures hereunder, this Agreement or any provision hereof may be reformed
      by GFVentures, subject to the consent of KnowFat (which consent shall not be
      unreasonably withheld or delayed), to maintain, to the maximum extent
      practicable, the original intent of the applicable provision without violating
      the provisions of Section 409A of the Code.

    


    [signature
      page to follow]

     

     

     

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Parties have duly executed this Services Agreement as
      of
      the date set forth above.

    


    


    


    KNOWFAT
      FRANCHISE COMPANY, INC.

    


    By:______________________________________                                                                  

    Name:____________________________________

    Title:_____________________________________                                                                  

    


    


    GEORGE
      FOREMAN VENTURES, LLC

    


    By:______________________________________                                                                  

    Name:____________________________________

    Title:_____________________________________                                                                  

    


     

     

     

     

    
15