1
                            FORM OF DEBENTURE


THE  SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN  RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.  THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE  TRANSFERRED  OR  RESOLD  EXCEPT  AS  PERMITTED  UNDER  SUCH LAWS PURSUANT TO
REGISTRATION  OR  AN EXEMPTION THEREFROM.  THE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS  OF  THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY  REPRESENTATION  TO  THE  CONTRARY  IS  UNLAWFUL.

FACE  AMOUNT                                     $240,000
PRICE                                               $200,000
INTEREST  RATE                                     8%  per  year
DEBENTURE  NUMBER                                December-2004-101
ISSUANCE  DATE                                     December  23,  2004
MATURITY  DATE                                     December  23,  2009

     FOR  VALUE  RECEIVED,  Xtreme  Companies,  Inc.  a  Nevada corporation (the
"Company"),  hereby  promises  to  pay  DUTCHESS PRIVATE EQUITIES FUND, II, L.P.
(the "Holder") on December 23, 2009, (the "Maturity Date"), the principal amount
of  Two  Hundred and Forty Thousand Dollars ($240,000) U.S., and to pay interest
on the principal amount hereof, in such amounts, at such times and on such terms
and  conditions  as  are  specified  herein.

Article  1          Interest

     The  Company  shall  pay  interest  on  the unpaid principal amount of this
Debenture (the "Debenture") each month until the principal amount hereof is paid
in  full  or has been converted. The Debentures shall pay eight percent (8%) per
annum  and  is due every thirty (30) days from the date specified in Article 1a,
in cash, to the Holder. The closing shall be deemed to have occurred on the date
the funds (less escrow fees, attorney fees and those amounts payable pursuant to
the  terms  sheet)  are  received  by  the  Company  (the  "Closing  Date"). The
Debentures are subject to automatic conversion at the end of five (5) years from
the  date  of  issuance  at  which  time  all  Debentures  outstanding  will  be
automatically  converted  based  upon  the  formula  set  forth  in Section 3.2.

Article  1a     Interest  Payment  Schedule

     The  Company shall make interest payments beginning on January 15, 2005, in
an  amount  equal to $1,600.00, in cash, to the Holder.  Each subsequent payment
thereafter  shall  be tendered every thirty (30) days from said date in the same
amount,  in  cash,  to the Holder. The Company may make prepayments at any time.


Article  2          Method  of  Payment

     This  Debenture  must be surrendered to the Company in order for the Holder
to  receive  payment  of the principal amount hereof.  The Holder shall have the
option  of  payment  for the interest on this Debenture in United States dollars
pursuant  to  Article 1 hereof.  The Company may draw a check for the payment of
interest  to  the  order  of  the  Holder  of  this Debenture and mail it to the
Holder's  address  as  follows:

Dutchess  Private  Equities  Fund,  II,  L.P.
312  Stuart  Street,  Third  Floor
Boston,  Massachusetts  02116

Interest and principal payments shall be subject to withholding under applicable
United  States  Federal  Internal  Revenue  Service  Regulations.

Article  3          Conversion

Section  3.1     Conversion  Privilege

(a)     The  Holder  of  this  Debenture shall have the right to convert it into
shares  of  Common  Stock  at  any time following the Closing Date and  which is
before  the  close  of  business  on  the  Maturity Date, except as set forth in
Section  3.1(c)  below.  The  number of shares of Common Stock issuable upon the
conversion  of this Debenture is determined pursuant to Section 4.2 and rounding
the  result  to  the  nearest  whole  share.

(b)     This Debenture may not be converted, whether in whole or in part, except
     in  accordance  with  Article  3.

(c)     In the event all or any portion of this Debenture remains outstanding on
     the  Maturity  Date,  the  unconverted  portion  of  such  Debenture  will
automatically  be  converted  into  shares  of  Common Stock on such date in the
manner  set  forth  in  Section  3.2.

Section  3.2     Conversion  Procedure.

(a)     Conversion  Procedures.  The  Face  Amount  of  this  Debenture  may  be
converted,  in  whole  or  in  part,  any time following the Closing Date.  Such
conversion shall be effectuated by surrendering to the Company, or its attorney,
     this Debenture to be converted together with a facsimile or original of the
signed  Notice  of  Conversion which evidences Holder's intention to convert the
Debenture  indicated.  The  date  on which the Notice of Conversion is effective
("Conversion  Date")  shall  be  deemed  to  be the date on which the Holder has
delivered  to  the  Company  a  facsimile  or  original  of the signed Notice of
Conversion.  Notwithstanding  the  above,  any  Notice of Conversion received by
4:00  P.M. EST, shall be deemed to have been received the previous business day.
Receipt  being  via  a  confirmation  of  time  of  facsimile  of  the  Holder.

(b)     Common Stock to be Issued.     Upon the conversion of any Debentures and
     upon  receipt  by  the  Company  or its attorney of a facsimile of Holder's
signed  Notice  of  Conversion  the Company shall instruct its transfer agent to
issue  stock  certificates  without  restrictive  legend  or  stop  transfer
instructions,  if  at  that  time  the  Registration Statement has been declared
effective or if the sale is under Rule 144 (or with proper restrictive legend if
the  Registration  Statement  has  not  as yet been declared effective), in such
denominations to be specified at conversion representing the number of shares of
Common  Stock  issuable upon such conversion, as applicable.   The Company shall
act  as  Registrar  and  shall  maintain  an  appropriate  ledger containing the
necessary  information with respect to each Debenture. The Company warrants that
no instructions, other than these instructions, have been given or will be given
to  the  transfer  agent  and  that  the  Common Stock shall otherwise be freely
resold,  except  as  may  be  set  forth  herein.

(c)     Conversion  Rate.  Holder is entitled to convert the face amount of this
Debenture,  plus  accrued  interest,  anytime following the Closing Date, at the
lesser  of  (i)  75%  of  the  lowest  closing bid price during the fifteen (15)
trading  days  prior to the Conversion Date or (ii) 75% of the lowest  bid price
for  the twenty (20) trading days immediately preceding the Closing Date ("Fixed
Conversion  Price"),  each  being  referred  to  as  the "Conversion Price".  No
fractional  shares  or  scrip representing fractions of shares will be issued on
conversion,  but  the  number of shares issuable shall be rounded up or down, as
the  case  may  be,  to  the  nearest  whole  share.

(d)     Nothing  contained  in  this  Debenture  shall be deemed to establish or
require the payment of interest to the Holder at a rate in excess of the maximum
     rate  permitted  by  governing law.  In the event that the rate of interest
required  to  be  paid  exceeds the maximum rate permitted by governing law, the
rate  of  interest required to be paid thereunder shall be automatically reduced
to  the  maximum rate permitted under the governing law and such excess shall be
returned  with  reasonable  promptness  by  the  Holder  to  the  Company.

(e)     It  shall  be the Company's responsibility to take all necessary actions
and  to  bear  all  such  costs  to  issue  the Common Stock as provided herein,
including  the  responsibility and cost for delivery of an opinion letter to the
transfer  agent,  if  so  required.  The person in whose name the certificate of
Common  Stock is to be registered shall be treated as a shareholder of record on
and  after  the conversion date. Upon surrender of any Debentures that are to be
converted  in  part, the Company shall issue to the Holder a new Debenture equal
to  the  unconverted  amount,  if  so  requested  in  writing  by  Holder.

(f)     Within  three  (3)  business  days  after  receipt  of the documentation
referred to above in Section 3.2(a), the Company shall deliver a certificate, in
     accordance  with  Section  3.2(c)  for the number of shares of Common Stock
issuable  upon  the conversion.  In the event the Company does not make delivery
of  the  Common  Stock,  as instructed by Holder, within three (3) business days
after  the  Conversion  Date, then in such event the Company shall pay to Holder
one percent (1%) in cash, of the dollar value of the Debentures being converted,
compounded  daily, per each day after the third (3rd) business day following the
Conversion  Date  that  the  Common  Stock  is  not  delivered to the Purchaser.

                The  Company acknowledges that its failure to deliver the Common
Stock  within  three  (3) business days after the Conversion Date will cause the
Holder  to  suffer  damages  in  an  amount that will be difficult to ascertain.
Accordingly,  the  parties  agree  that  it  is  appropriate  to include in this
Debenture a provision for liquidated damages.  The parties acknowledge and agree
that  the  liquidated damages provision set forth in this section represents the
parties' good faith effort to quantify such damages and, as such, agree that the
form  and  amount  of  such  liquidated  damages  are  reasonable  and  will not
constitute  a  penalty.  The payment of liquidated damages shall not relieve the
Company  from  its obligations to deliver the Common Stock pursuant to the terms
of  this  Debenture.

              To  the extent that the failure of the Company to issue the Common
Stock pursuant to this Section 3.2(f) is due to the unavailability of authorized
but unissued shares of Common Stock, the provisions of this Section 3.2(f) shall
not  apply  but  instead  the  provisions  of  Section  3.2(g)  shall  apply.

              The  Company  shall  make any payments incurred under this Section
3.2(f)  in  immediately  available funds within three (3) business days from the
date the Common Stock is fully delivered.  Nothing herein shall limit a Holder's
right  to  pursue  actual  damages  or  cancel  the conversion for the Company's
failure  to  issue  and  deliver  Common  Stock  to  the Holder within three (3)
business  days  after  the  Conversion  Date.

(g)     The  Company  shall  at  all  times reserve (or make alternative written
arrangements  for  reservation or contribution of shares) and have available all
Common  Stock  necessary  to meet conversion of the Debentures by all Holders of
the entire amount of Debentures then outstanding. If, at any time Holder submits
     a  Notice of Conversion and the Company does not have sufficient authorized
but  unissued  shares  of Common Stock (or alternative shares of Common Stock as
may  be  contributed by Stockholders) available to effect, in full, a conversion
of  the  Debentures  (a  "Conversion  Default",  the  date of such default being
referred to herein as the "Conversion Default Date"), the Company shall issue to
the Holder all of the shares of Common Stock which are available, and the Notice
of  Conversion  as to any Debentures requested to be converted but not converted
(the  "Unconverted Debentures"), may be deemed null and void upon written notice
sent  by  the  Holder  to the Company.  The Company shall provide notice of such
Conversion  Default  ("Notice of Conversion Default") to all existing Holders of
outstanding  Debentures,  by  facsimile,  within  three (3) business day of such
default  (with  the original delivered by overnight or two day courier), and the
Holder  shall  give notice to the Company by facsimile within five business days
of  receipt  of  the  original  Notice  of Conversion Default (with the original
delivered  by overnight or two day courier) of its election to either nullify or
confirm  the  Notice  of  Conversion.

     The Company agrees to pay to all Holders of outstanding Debentures payments
for  a  Conversion  Default  ("Conversion  Default  Payments")  in the amount of
(N/365)  x (.24) x the initial issuance price of the outstanding and/or tendered
but  not  converted  Debentures held by each Holder where N = the number of days
from the Conversion Default Date to the date (the "Authorization Date") that the
Company  authorizes  a  sufficient  number  of  shares of Common Stock to effect
conversion  of  all  remaining  Debentures.  The  Company  shall  send  notice
("Authorization  Notice")  to  each  Holder  of  outstanding  Debentures  that
additional  shares  of Common Stock have been authorized, the Authorization Date
and  the  amount  of Holder's accrued  Conversion Default Payments.  The accrued
Conversion  Default  shall  be  paid in cash or shall be convertible into Common
Stock  at  the  Conversion  Rate,  upon written notice sent by the Holder to the
Company, which Conversion Default shall be payable as follows:  (i) in the event
Holder  elects to take such payment in cash, cash payments shall be made to such
Holder  of  outstanding  Debentures  by  the fifth day of the following calendar
month,  or  (ii)  in  the event Holder elects to take such payment in stock, the
Holder  may  convert  such  payment amount into Common Stock  at  the conversion
rate  set  forth in Section 3.2(c) at any time after the 5th day of the calendar
month  following the month in which the Authorization Notice was received, until
the  expiration  of  the  mandatory  four  (4)  year  conversion  period.
     The  Company  acknowledges that its failure to maintain a sufficient number
of authorized but unissued shares of Common Stock to effect in full a conversion
of the Debentures will cause the Holder to suffer damages in an amount that will
be  difficult  to  ascertain.  Accordingly,  the  parties  agree  that  it  is
appropriate  to  include  in  this Agreement a provision for liquidated damages.
The  parties  acknowledge  and  agree  that the liquidated damages provision set
forth in this section represents the parties' good faith effort to quantify such
damages  and, as such, agree that the form and amount of such liquidated damages
are  reasonable  and  will  not constitute a penalty.  The payment of liquidated
damages shall not relieve the Company from its obligations to deliver the Common
Stock  pursuant  to the terms of this Debenture.  Nothing herein shall limit the
Holder's  right to pursue actual damages for the Company's failure to maintain a
sufficient  number  of  authorized  shares  of  Common  Stock.

(h)     If,  by  the  third  (3rd) business day after the Conversion Date of any
portion  of  the  Debentures to be converted (the "Delivery Date"), the transfer
agent  fails  for  any reason to deliver the Common Stock upon conversion by the
Holder  and  after  such  Delivery Date, the Holder purchases, in an open market
transaction  or otherwise, shares of Common Stock (the "Covering Shares") solely
in  order  to  make  delivery  in  satisfaction of a sale of Common Stock by the
Holder (the "Sold Shares"), which delivery such Holder anticipated to make using
     the  Common  Stock issuable upon conversion (a "Buy-In"), the Company shall
pay  to  the  Holder, in addition to any other amounts due to Holder pursuant to
this  Debenture,  and  not  in  lieu  thereof,  the Buy-In Adjustment Amount (as
defined  below).  The  "Buy  In  Adjustment  Amount"  is the amount equal to the
excess,  if  any,  of (x) the Holder's total purchase price (including brokerage
commissions,  if  any)  for the Covering Shares over (y) the net proceeds (after
brokerage  commissions, if any) received by the Holder from the sale of the Sold
Shares.  The  Company  shall  pay  the Buy-In Adjustment Amount to the Holder in
immediately  available  funds within five (5) business days of written demand by
the  Holder.  By  way of illustration and not in limitation of the foregoing, if
the  Holder  purchases  shares  of  Common  Stock  having a total purchase price
(including  brokerage  commissions) of $11,000 to cover a Buy-In with respect to
shares  of  Common  Stock  it  sold  for  net  proceeds  of  $10,000, the Buy-In
Adjustment  Amount  which the Company will be required to pay to the Holder will
be  $1,000.

(i)     Prospectus and Other Documents. The Company shall furnish to Holder such
     number  of  prospectuses and other documents incidental to the registration
of the shares of Common Stock underlying the Debentures, including any amendment
of  or  supplements  thereto.

(j)     Limitation  on Issuance of Shares. If the Company's Common Stock becomes
listed  on  the Nasdaq SmallCap Market after the issuance of the Debentures, the
Company  may  be limited in the number of shares of Common Stock it may issue by
virtue  of  (X)  the number of authorized shares or (Y) the applicable rules and
regulations  of  the  principal  securities  market on which the Common Stock is
listed  or  traded,  including,  but  not  necessarily  limited  to, NASDAQ Rule
4310(c)(25)(H)(i)  or  Rule  4460(i)(1), as may be applicable (collectively, the
"Cap  Regulations").  Without  limiting  the  other  provisions thereof, (i) the
Company  will  take  all steps reasonably necessary to be in a position to issue
shares of Common Stock on conversion of the Debentures without violating the Cap
     Regulations  and  (ii)  if,  despite  taking  such steps, the Company still
cannot  issue such shares of Common Stock without violating the Cap Regulations,
the  holder  of  a  Debenture  which  cannot  be  converted as result of the Cap
Regulations  (each  such  Debenture,  an "Unconverted Debenture") shall have the
right  to  elect  either  of  the  following  remedies:

     (x)  if  permitted  by  the  Cap  Regulations, require the Company to issue
shares  of Common Stock in accordance with such holder's Notice of Conversion at
a  conversion  purchase  price equal to the average of the closing bid price per
share  of  Common  Stock  for  any five (5) consecutive trading days (subject to
certain  equitable  adjustments for certain events occurring during such period)
during the sixty (60) trading days immediately preceding the Conversion Date; or

     (y)  require the Company to redeem each Unconverted Debenture for an amount
(the  "Redemption Amount"), payable in cash, equal to the sum of (i) one hundred
thirty-three  percent  (133%) of the principal of an Unconverted Debenture, plus
(ii) any accrued but unpaid interest thereon through and including the date (the
"Redemption  Date")  on  which  the  Redemption  Amount  is  paid to the holder.

     A  holder  of  an Unconverted Debenture may elect one of the above remedies
with  respect  to  a  portion of such Unconverted Debenture and the other remedy
with  respect  to  other  portions of the Unconverted Debenture.  The Debentures
shall  contain  provisions  substantially  consistent with the above terms, with
such additional provisions as may be consented to by the Holder.  The provisions
of  this section are not intended to limit the scope of the provisions otherwise
included  in  the  Debentures.

(k)     Limitation  on  Amount  of  Conversion  and  Ownership.  Notwithstanding
anything  to  the  contrary  in  this Debenture, in no event shall the Holder be
entitled  to convert that amount of Debenture, and in no event shall the Company
permit  that  amount of conversion, into that number of shares, which when added
to  the sum of the number of shares of Common Stock beneficially owned, (as such
term  is  defined  under Section 13(d) and Rule 13d-3 of the Securities Exchange
Act  of  1934, as may be amended, (the "1934 Act")), by the Holder, would exceed
4.99%  of  the  number  of  shares of Common Stock outstanding on the Conversion
Date,  as  determined  in  accordance with Rule 13d-1(j) of the 1934 Act. In the
event  that  the  number  of shares of Common Stock outstanding as determined in
accordance  with  Section  13(d)  of the 1934 Act is different on any Conversion
Date  than it was on the Closing Date, then the number of shares of Common Stock
outstanding  on  such  Conversion  Date shall govern for purposes of determining
whether the Holder would be acquiring beneficial ownership of more than 4.99% of
     the  number  of shares of Common Stock outstanding on such Conversion Date.

(l)     Legend.  The  Holder acknowledges that each certificate representing the
Debentures,  and the Common Stock unless registered pursuant to the Registration
Rights  Agreement  or  under  Rule  144  sales,  shall  be  stamped or otherwise
imprinted  with  a  legend  substantially  in  the  following  form:

THE  SECURITIES  EVIDENCED  BY  THIS  CERTIFICATE  MAY  NOT  BE OFFERED OR SOLD,
TRANSFERRED,  PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT
TO  AN  EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED,  (ii)  TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR
RULE  UNDER  SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) IF AN
EXEMPTION  FROM  REGISTRATION  UNDER  SUCH  ACT  IS  AVAILABLE.

     (m)  Prior  to  conversion  of  all  the  Debentures,  if  at  any time the
conversion  of  all  the Debentures and exercise of all the Warrants outstanding
would  result  in  an  insufficient  number of authorized shares of Common Stock
being  available  to  cover all the conversions, then in such event, the Company
will  move  to  call and hold a shareholder's meeting or have shareholder action
with  written  consent  of  the proper number of shareholders within thirty (30)
days  of  such  event, or such greater period of time if statutorily required or
reasonably necessary as regards standard brokerage house and/or SEC requirements
and/or  procedures,  for  the purpose of authorizing additional shares of Common
Stock  to  facilitate  the  conversions.   In  such  an  event management of the
Company  shall  recommend  to  all shareholders to vote their shares in favor of
increasing  the  authorized  number of shares of Common Stock. Management of the
Company  shall vote all of its shares of Common Stock in favor of increasing the
number  of  shares  of authorized Common Stock.  Company represents and warrants
that  under  no  circumstances will it deny or prevent Holder's right to convert
the  Debentures  as  permitted under the terms of this Subscription Agreement or
the  Registration  Rights  Agreement.  Nothing  in  this Section shall limit the
obligation of the Company to make the payments set forth in Section 3.2(g).  The
Holder,  at  their  option,  may  request  the  company  to  authorize and issue
additional  shares  if  the  Holder feels it is necessary for conversions in the
future  In  the event the Company's shareholder's meeting does not result in the
necessary authorization, the Company shall redeem the outstanding Debentures for
an  amount  equal  to (x) the sum of the principal of the outstanding Debentures
plus  accrued  interest  thereon  multiplied  by  (y)  133%.

Section  3.3     Fractional  Shares.  The  Company  shall  not  issue fractional
shares of Common Stock, or scrip representing fractions of such shares, upon the
     conversion of this Debenture.  Instead, the Company shall round up or down,
as  the  case  may  be,  to  the  nearest  whole  share.

Section  3.4     Taxes  on  Conversion.  The  Company shall pay any documentary,
stamp  or  similar  issue  or  transfer tax due on the issue of shares of Common
Stock  upon the conversion of this Debenture.  However, the Holder shall pay any
such  tax  which  is  due because the shares are issued in a name other than its
name.

Section  3.5     Company to Reserve Stock.  The Company shall reserve the number
of  shares  of Common Stock required pursuant to and upon the terms set forth in
the  Subscription  Agreement  to  permit  the conversion of this Debenture.  All
shares of Common Stock which may be issued upon the conversion hereof shall upon
     issuance be validly issued,  fully paid and nonassessable and free from all
taxes,  liens  and  charges  with  respect  to  the  issuance  thereof.

Section  3.6     Restrictions  on  Sale.  This Debenture has not been registered
under  the  Securities  Act of 1933, as amended, (the "Act") and is being issued
under Section 4(2) of the Act and Rule 506 of Regulation D promulgated under the
     Act.  This  Debenture  and  the  Common  Stock issuable upon the conversion
thereof may only be sold pursuant to registration under or an exemption from the
Act.

Section  3.7     Mergers,  Etc.  If  the  Company  merges  or  consolidates with
another corporation or sells or transfers all or substantially all of its assets
     to  another  person  and  the  holders  of the Common Stock are entitled to
receive  stock,  securities  or property in respect of or in exchange for Common
Stock,  then  as a condition of such merger, consolidation, sale or transfer, it
may thereafter be converted on the terms and subject to the conditions set forth
above  into the kind and amount of stock, securities or property receivable upon
such merger, consolidation, sale or transfer by a holder of the number of shares
of  Common Stock into which this Debenture might have been converted immediately
before  such  merger,  consolidation,  sale  or transfer, subject to adjustments
which  shall  be  as  nearly  equivalent  as  may  be practicable to adjustments
provided  for  in  this  Article  3.

Section  3.8      Mandatory  Redemption.  The  Holder, at its sole option, shall
have  the  right  to exercise a "Mandatory Redemption" to redeem, in whole or in
part,  the  outstanding  amount  of  the  Debenture, as follows: The Holder must
notify the Company in writing, via facsimile transmission, that it is exercising
     its  right of Mandatory Redemption.  In the event the Holder exercises such
right  of Mandatory Redemption the Company shall pay the Holder in U.S. currency
130%  of  that  portion of the Debenture being redeemed, plus accrued but unpaid
interest and liquidated damages, if any.  The redemption amount shall be paid to
the  Holder  within  five  (5)  calendar  days  of the date the Company receives
written  notice  from  the  Holder of the Mandatory Redemption notice and if not
paid  in  such  time  the Company shall not be entitled to any further Mandatory
Redemption.  The  Holder  at  its  sole  option retains the right to decline any
Mandatory  Redemption  from  the  company.


Article  4          Mergers
     The  Company  shall  not  consolidate  or  merge  into,  or transfer all or
substantially  all  of  its assets to, any person, unless such person assumes in
writing  the  obligations  of  the  Company under this Debenture and immediately
after  such transaction no Event of Default exists.  Any reference herein to the
Company  shall  refer  to  such  surviving  or  transferee  corporation  and the
obligations  of  the  Company  shall  terminate  upon  such  written assumption.

Article  5        Reports
     The  Company  will mail to the Holder hereof at its address as shown on the
Register  a  copy  of any annual, quarterly or current report that it files with
the  Securities  and Exchange Commission promptly after the filing thereof and a
copy  of  any annual, quarterly or other report or proxy statement that it gives
to  its  shareholders  generally at the time such report or statement is sent to
shareholders.

Article  6          Defaults  and  Remedies

Section  6.1     Events  of  Default.  An  "Event  of Default" occurs if (a) the
Company  does  not  make  the  payment  of  the  principal  of this Debenture by
conversion into Common Stock within ten (10) business days of the Maturity Date,
     upon  redemption  or  otherwise,  (b)  the Company does not make a payment,
other  than  a  payment  of  principal,  for a period of three (3) business days
thereafter,  (c) any of the Company's representations or warranties contained in
the Subscription Agreement or this Debenture were false when made or the Company
fails  to  comply with any of its other agreements in the Subscription Agreement
or this Debenture and such failure continues for the period and after the notice
specified  below,  (d)  the  Company  pursuant  to  or within the meaning of any
Bankruptcy  Law  (as hereinafter defined):  (i) commences a voluntary case; (ii)
consents  to the entry of an order for relief against it in an involuntary case;
(iii)  consents to the appointment of a Custodian (as hereinafter defined) of it
or  for  all  or  substantially  all  of  its  property  or (iv) makes a general
assignment  for  the  benefit  of  its  creditors  or  (v)  a court of competent
jurisdiction  enters  an  order or decree under any Bankruptcy Law that:  (A) is
for  relief against the Company in an involuntary case; (B) appoints a Custodian
of the Company or for all or substantially all of its property or (C) orders the
liquidation  of  the  Company,  and  the order or decree remains unstayed and in
effect for sixty (60) calendar days, (e) the Company's Common Stock is suspended
or  no  longer  listed  on  any  recognized  exchange  including  electronic
over-the-counter  bulletin  board  for in excess of five (5) consecutive trading
days,  (f)  failure  for  the Company to deliver shares pursuant to a Conversion
Notice  sent  by  the  Holder,  (g) the Company is in Violation of the Threshold
Amount  as  outlined  in  Article  15.  As  used  in  this Section 6.1, the term
"Bankruptcy Law" means Title 11 of the United States Code or any similar federal
or  state  law  for  the  relief  of  debtors.  The  term  "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.  A  default  under  clause  (c)  above is not an Event of Default until the
holders  of  at  least  25%  of the aggregate principal amount of the Debentures
outstanding  notify the Company of such default and the Company does not cure it
within  thirty  (30)  business days after the receipt of such notice, unless the
Company  commences  to  cure such default within such period, which must specify
the  default,  demand  that  it  be  remedied  and state that it is a "Notice of
Default".  Prior to the expiration of the time for curing a default as set forth
in  the  preceding  sentence,  the  holders of a majority in aggregate principal
amount  of  the Debentures at the time outstanding (exclusive of Debentures then
owned  by  the  Company  or  any  subsidiary or affiliate) may, on behalf of the
holders  of all of the Debentures, waive any past Event of Default hereunder (or
any  past  event  which,  with  the  lapse  of  time or notice and lapse of time
designated  in  subsection  (a), would constitute an Event of Default hereunder)
and  its  consequences,  except  a default in the payment of the principal of or
interest  on any of the Debentures. In the case of any such waiver, such default
or Event of Default shall be deemed to have been cured for every purpose of this
Debenture and the Company and the holders of the Debentures shall be restored to
their  former  positions  and rights hereunder, respectively; but no such waiver
shall  extend  to any subsequent or other default or impair any right consequent
thereon.

Section  6.2     Acceleration.  If an Event of Default occurs and is continuing,
the  Holder  hereof by notice to the Company may declare the remaining principal
amount  of this Debenture, together with all accrued interest and any liquidated
damages,  to be due and payable.  Upon such declaration, the remaining principal
amount  shall  be  due  and  payable  immediately.

Section  6.3     Seniority,  No  indebtedness  of  the Company is senior to this
Debenture in right of payment, whether with respect to interest, damages or upon
     liquidation  or  dissolution  or  otherwise.

Article  7          Registered  Debentures

Section  7.1     Record Ownership.  The Company, or its attorney, shall maintain
a register of the holders of the Debentures (the "Register") showing their names
     and  addresses  and  the serial numbers and principal amounts of Debentures
issued to them.  The Register may be maintained in electronic, magnetic or other
computerized form.  The Company may treat the person named as the Holder of this
Debenture  in  the Register as the sole owner of this Debenture.   The Holder of
this  Debenture  is  the  person  exclusively  entitled  to  receive payments of
interest  on  this  Debenture,  receive  notifications  with  respect  to  this
Debenture, convert it into Common Stock and otherwise exercise all of the rights
and  powers  as  the  absolute  owner  hereof.

Section  7.2     Worn  or  Lost  Debentures.  If  this  Debenture  becomes worn,
defaced  or  mutilated  but  is still substantially intact and recognizable, the
Company  or  its  agent  may  issue  a  new  Debenture  in  lieu hereof upon its
surrender.   Where  the  Holder  of this Debenture claims that the Debenture has
been  lost,  destroyed  or  wrongfully  taken,  the  Company  shall  issue a new
Debenture  in  place  of  the  original  Debenture  if the Holder so requests by
written  notice  to  the  Company  actually received by the Company before it is
notified  that  the Debenture has been acquired by a bona fide purchaser and the
Holder  has delivered to the Company an indemnity bond in such amount and issued
by  such  surety as the Company deems satisfactory together with an affidavit of
the Holder setting forth the facts concerning such loss, destruction or wrongful
     taking  and  such  other  information  in  such  form  with  such  proof or
verification  as  the  Company  may  request.

Article  8          Notice.

     Any  notices,  consents,  waivers  or  other  communications  required  or
permitted  to  be given under the terms of this Debenture must be in writing and
will  be  deemed  to  have  been  delivered  (i)  upon  receipt,  when delivered
personally;  (ii)  upon receipt, when sent by facsimile (provided a confirmation
of  transmission is mechanically or electronically generated and kept on file by
the  sending  party);  or  (iii)  one  (1)  day  after deposit with a nationally
recognized  overnight  delivery  service, in each case properly addressed to the
party  to  receive  the  same.  The  addresses  and  facsimile  numbers for such
communications  shall  be:

If  to  the  Company:
     Kevin  Ryan,  CEO
     Xtreme  Companies,  Inc.
     300  Westlink  Drive
     Washington,  MO  63090
     Telephone:  636-390-9000
     Facsimile:  636-394-7576

If  to  the  Holder:

     At  the  address  listed  in  the  Questionnaire.

     Each  party  shall provide five (5) business days prior notice to the other
party  of  any  change  in  address,  phone  number  or  facsimile  number.

Article  9          Time
     Where  this  Debenture  authorizes  or requires the payment of money or the
performance  of  a  condition  or obligation on a Saturday or Sunday or a public
holiday,  or authorizes or requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain date, and such period of time ends on a Saturday or a Sunday or a public
holiday,  such  payment  may be made or condition or obligation performed on the
next  succeeding  business day, and if the period ends at a specified hour, such
payment  may  be made or condition performed, at or before the same hour of such
next  succeeding  business  day,  with  the  same force and effect as if made or
performed  in  accordance  with  the  terms of this Debenture.  A "business day"
shall  mean  a day on which the banks in New York are not required or allowed to
be  closed.

Article  10          No  Assignment
     This  Debenture  shall  not  be  assignable.

Article  11          Rules  of  Construction.
     In  this  Debenture,  unless  the  context otherwise requires, words in the
singular  number include the plural, and in the plural include the singular, and
words  of the masculine gender include the feminine and the neuter, and when the
sense  so  indicates,  words  of the neuter gender may refer to any gender.  The
numbers  and  titles  of  sections  contained  in the Debenture are inserted for
convenience  of  reference  only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof.  Wherever,
in  this  Debenture, a determination of the Company is required or allowed, such
determination  shall  be  made  by  a  majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the  Company  and  the  Holder  of  this  Debenture.

Article  12          Governing  Law
     The validity, terms, performance and enforcement of this Debenture shall be
governed  and construed by the provisions hereof and in accordance with the laws
of  the  Commonwealth  of  Massachusetts  applicable  to  agreements  that  are
negotiated,  executed,  delivered  and  performed  solely in the Commonwealth of
Massachusetts.

Article  13          Litigation

DISPUTES  SUBJECT  TO  ARBITRATION  GOVERNED  BY  MASSACHUSETTS  LAW
--------------------------------------------------------------------

     All  disputes  arising  under  this  agreement  shall  be  governed  by and
interpreted  in  accordance  with the laws of the Commonwealth of Massachusetts,
without regard to principles of conflict of laws.  The parties to this agreement
will  submit all disputes arising under this agreement to arbitration in Boston,
Massachusetts before a single arbitrator of the American Arbitration Association
("AAA").  The  arbitrator  shall  be selected by application of the rules of the
AAA, or by mutual agreement of the parties, except that such arbitrator shall be
an  attorney  admitted to practice law in the Commonwealth of Massachusetts.  No
party  to  this agreement will challenge the jurisdiction or venue provisions as
provided  in  this  section.

Article  14          Investor  Shares

     The  Company  shall  issue XXXXXX shares of unregistered, restricted Common
Stock  to  the Holder as an incentive for the investment ("Shares").  The Shares
shall  be issued and delivered within two (2) days to the Holder and shall carry
best  efforts  for  piggyback  registration  rights.

Article  15     Additional  Financing

     The Company will not enter into any additional financing agreements without
prior expressed written consent from the Holder, which shall not be unreasonably
withheld.  Upon  receipt by the Company of an aggregate amount of fifty thousand
dollars  ($50,000)  in  financing  ("Threshold  Amount")  from Holder or another
source,  including  exercise  of  any  existing  exercise  of  Warrants and debt
financing  from  a  lending  institution,  the Company shall pay back 50% of the
amount  above  the  Threshold  Amount  to  the Holder pursuant to the Redemption
Provisions  set  forth  in  Article  3,  Section  3.8.



     IN  WITNESS WHEREOF, the Company has duly executed this Debenture as of the
date  first  written  above.
                         XTREME  COMPANIES,  INC.

                         By:  /s/  Kevin  Ryan
                           -------------------
                         Name:       Kevin  Ryan
     Title:       CEO

                              DUTCHESS  PRIVATE  EQUITIES  FUND,  II,  L.P.
                              BY  ITS  GENERAL  PARTNER  DUTCHESS
                              CAPITAL  MANAGEMENT,  LLC

                         By:  /s/  Douglas  Leighton
                                   Name:  Douglas  H.  Leighton
                         Title:  A  Managing  Member