SUBORDINATED CONVERTIBLE PROMISSORY NOTE

                                 TERMS  AND  CONDITIONS

     Xtreme  Companies,  Inc.  (the  "Company")  shall  borrow  from  "Lender"
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$_______________  (USD)  (the  "Promissory  Note").
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LOAN  AMOUNT:     $________________  (USD)

PROMISSORY  NOTE:

INTEREST  AND  PAYMENT:     Twelve  (12)  month  term promissory note shall bear
simple interest at the rate of five percent (5%) per annum, payable at maturity.

 AT  MATURITY:

     The  Lender,  at  their sole discretion, and upon 30 days written notice to
the Company prior to maturity, shall have the right to receive the return of the
principal  Loan  amount  plus  5%  simple  annual  interest.

     OR CONVERT THE LENDER'S PRINCIPAL INTO THE COMMON STOCK OF THE COMPANY IN A
MANNER  THAT  WOULD  REFLECT THE HIGHEST VALUE FOR CONVERSION AVAILABLE BASED ON
THE  TERMS  OF  CONVERSION  IN  THIS  DOCUMENT ON THE DAY THAT THE NOTE MATURES.



TERMS  OF  CONVERSION:

The  Lender  will  receive  a  minimum of 2000 Shares of Xtreme Common stock for
every  $1000.00  (USD)  loaned  to  the Company or an amount of stock equal to a
thirty  percent  (30%)  discount  to the market value of the stock on the day of
conversion  whichever results in the greatest value for the lender, to be issued
within  20  days  of maturity of this note, if the Lender decides to forfeit the
principal  &  5%  Interest  through  the  process  of conversion. The Lender may
convert  principal  and Interest into common shares of Xtreme Companies, Inc. or
any successor company at the time of maturity simply by notifying the company in
writing  anytime prior to the maturity date of this note. If the company has not
received  notice  by  the  maturity  date  of this note, the authority to choose
between  payment  of  Interest  and  principal  or conversion will revert to the
Company.


ADDITIONAL  BENEFIT:

     As  an additional benefit, the lender will also be issued by the Company, a
right,  represented  by  a  warrant.  The  warrant will be issued with the above
described  common  shares, to increase the Lenders holdings of Xtreme Companies,
Inc.  common stock by 1000 shares per $1000 loaned to borrower at a price not to
exceed  $0.75.  The  right  to  exercise  the  Warrant  will start at the day of
conversion  and  last  for up to one-year beyond that date.  The company may, in
its  sole discretion, offer a lower exercise price but not a price higher than $
0.75.

SUBORDINATION:


     The  promissory notes will be subordinated in payment and preference to the
Company's  existing  or  future  commercial  lenders.

     If the company has not been notified of Lenders intention by maturity date,
the  option of repayment and interest or conversion will transfer to the company
and  will  follow  the same terms available to the Lender prior to that maturity
date.

EARLY  REPAYMENT  OPTION:

If  the  early  repayment  option  is taken by Lender, the Company will agree to
retire  the  debt  early at 125% of the principal loan amount. The time of early
retirement will be determined by mutual agreement of the lender and the Company.
The  early  repayment  must  be  agreed  upon and executed by both parties. Once
repayment is done under this option, all repayment obligations of this note will
be considered satisfied and all other options, rights, and warrants of this note
will  be  considered  canceled.


The  covenants  contained  within  this  note  shall  be, but not limited to the
following:

COVENANTS  &  COLLATERAL:  1.)  The Company will be required to raise additional
capital  through  the  sale of Common Stock. The Company may be required to seek
financing  through  the sale of preferred stock, convertible debentures or other
forms  of debt and/or equity financing. The availability of additional financing
may  be dependent on the relative success and progress of the Company and may be
offered  on  more  favorable  terms than offered herein. 2.) The Company will be
required  to  liquidate assets available to the company, in the case of default,
to  fully  repay  the  loan, by presenting a demand letter for repayment and the
company  will  be bound to do so immediately and be so bound by any and all laws
applicable as a Nevada Corporation and enforceable against the Company's assets,
irrespective  of  the physical location of those assets, and irrespective of the
physical  description of those assets, so long as those assets have a sell value
alone  or  combined  to  satisfy  the  debt.


ADJUSTMENTS IN CONVERSION PRICE AND SHARES AND WARRANT EXERCISE PRICE AND COMMON
SHARES:

     The  Conversion  Price  and  Common  Shares  and Warrant exercise price and
common  shares  shall  be subject to adjustment from time to time as provided in
this  Section.  [a]  If  the  Issuer is recapitalized through the subdivision or
combination  of  its outstanding shares of Common Stock into a larger or smaller
number  of  shares, the number of shares of Common Stock for which this Note may
be  exercised  shall  be  increased  or  reduced, as of the record date for such
capitalization,  in  the  same  proportion  as  the  increase or decrease in the
outstanding  shares  of Common Stock, and the Conversion Price shall be adjusted
so  that  the aggregate amount payable for the purchase of all Conversion Shares
and  Warrant  Shares  which may be issued hereunder immediately after the record
date  for  such  capitalization  shall  equal  the  aggregate  amount so payable
immediately before such record date. [b] In the case of any consolidation of the
Issuer  with,  or merger of the Issuer into, any other corporation (other than a
consolidation or merger in which the Issuer is the continuing corporation and in
which  no  change occurs in its outstanding Common Stock), or in the case of any
sale  or transfer of all or substantially all of the assets of the Issuer, or in
the  case  of  any  statutory  exchange  of  securities with another corporation
(including  any  exchange  effected  in  connection  with  a  merger  of a third
corporation into the Issuer, except where the Issuer is the surviving entity and
no  change  occurs  in  its outstanding Common Stock), the corporation formed by
such  consolidation  or  the  corporation  resulting  from  such  merger  or the
corporation  which  shall have acquired such assets or securities of the Issuer,
as  the  case  may  be,  shall  execute and deliver to the Holder simultaneously
therewith  a  new  Conversion and or Warrant execution document, satisfactory in
form  and  substance  to  the  Holder, together with such other documents as the
Holder  may  reasonably  request,  entitling  the Holder thereof to receive upon
exercise of such Conversion or Warrant Exercise the kind and amount of shares of
stock  and  other  securities  and  property receivable upon such consolidation,
merger,  sale,  transfer,  by  a  Holder of the number of shares of Common Stock
purchasable  upon  exercise  of  this  Conversion  and or Warrant Exercise shall
provide  for  adjustments  which, for events subsequent to the effective date of
such  written instrument, shall be as nearly equivalent as may be practicable to
the  adjustments  provided for in this Section. The provisions of this paragraph
shall similarly apply to successive securities and property receivable upon such
consolidation,  consolidations,  merger,  exchanges,  sales  or  other transfers
covered hereby. [c] If the Issuer shall, at a time before the expiration of this
Warrant, sell all or substantially all of its assets and distribute the proceeds
thereof  to  the  Issuer's shareholders, the Holder shall, upon exercise of this
Conversion  and  Warrant  Exercise,  have  the  right to receive, in lieu of the
shares  of  Common Stock of the Issuer that the Holder otherwise would have been
entitled  to  receive,  the  same  kind  and amount of assets as would have been
issued,  distributed,  or  paid  to  the  Holder upon any such distribution with
respect  to  such  shares  of Common Stock of the Issuer has the Holder been the
holder  of  records  of  such shares of Common Stock receivable upon exercise of
this  Conversion  and  or  Warrant on the date for determining those entitled to
receive  any such distribution.[d] The term "Common Stock" shall mean the Common
Stock  of the Issuer as the same exists at the Closing Date or as such stock may
be  constituted  from time to time, except that for the purpose of this Section,
the term "Common Stock: shall include any stock of any class of the Issuer which
has  no  preference in respect of interest or of amounts payable in the event of
any  voluntary  or  involuntary  liquidation,  dissolution, or winding up of the
Issuer  and  which  is  not  subject to redemption by the Issuer. [e] The Issuer
shall  retain  a  firm  of independent public accountants of recognized standing
(who  may  be  any  such  firm  regularly  employed  by  the Issuer) to make any
computation  required  under this Section, and a certificate signed by such firm
shall  be  conclusive  evidence of the correctness of any computation made under
this  Section.  [f]  Notwithstanding  any other provision, this Warrant shall be
binding  upon  and  inure  to  the  benefit of any successors and assigns of the
Issuer.




NOTICE  OF  ADJUSTMENT:

So  long  as the Warrant shall be outstanding and the Conversion is outstanding,
[a] if the Issuer shall propose to pay any interest or make any interest or make
any  distribution  upon  the  Common  Stock,  or  [b]  if the Issuer shall offer
generally  to  the holders of Common Stock the right to subscribe to or purchase
any  shares  of  any class of Common Stock or securities convertible into Common
Stock or any other similar rights, or [c] if there shall be any proposed capital
reorganization  of  the  Issuer in which the Issuer is not the surviving entity,
recapitalization  of the capital stock of the Issuer, consolidation or merger of
the  Issuer  with or into another corporation, sale, lease, or other transfer of
all  or  substantially all of the property and assets of the Issue, or voluntary
or involuntary dissolution, liquidation or winding up of this Issuer, or [d] any
significant  or  special  action  or event, then in such event, the Issuer shall
give  to  the  Holder,  reasonable  notice  prior  to the relevant data a notice
containing a description of the proposed action or event and stating the date or
expected  date on which a record of the Issuer's stockholders is to be taken for
any  of  the foregoing purposes, and the date or expected date on which any such
dividend,  distribution,  subscription,  reclassification,  reorganization,
consolidation,  combination,  merger,  conveyance,  sale,  lease  or  transfer,
dissolution, liquidation or winding up is to take place and the date or expected
date,  if any is to be fixed, as of which the holders of Common Stock of records
shall  be  entitled  to  exchange their shares of Common Stock for securities or
other  property  deliverable  upon  such  event.


NOTICE:

     Any  notice  to  be given or to be served upon any party in connection with
the Warrant and or Conversion Note must be in writing and will be deemed to have
been given and received upon confirmed receipt, if sent by facsimile, or two (2)
days  after  it  has  been  submitted  for  delivery  by  Federal Express or any
equivalent  carrier,  charges  prepaid, and addressed to the following addresses
with  a  confirmation  of  delivery.


                                   SIGNATURES
                  XTREME COMPANIES SUBORDINATED PROMISSORY NOTE