Document:

Exhibit 4.9

                               DEBENTURE AGREEMENT

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                                       $156,000
PRICE                                              $130,000
DEBENTURE  NUMBER                                  June  -  2006-104
ISSUANCE  DATE                                     June  23,  2006
MATURITY  DATE                                     June  23,  2011

     FOR  VALUE  RECEIVED,  Xtreme  Companies,  Inc.,  a Nevada corporation (the
"Company"),  hereby  promises to pay DUTCHESS PRIVATE EQUITIES FUND, II, LP (the
"Holder")  by  June  23, 2011 (the "Maturity Date"), the principal amount of ONE
HUNDRED  AND FIFTY-SIX THOUSAND Dollars ($156,000) U.S., and to pay interest and
redemption  on  the  principal amount hereof, and any accrued penalties, in such
amounts, at such times and on such terms and conditions as are specified herein.

     The  Debenture  set  forth  in  this  Agreement  is  subject  to  automatic
conversion  at the end of five (5) years from the date of issuance at which time
the Debenture outstanding will be automatically converted based upon the formula
set  forth  in  Section  3.2  (c).

Article  1     Interest

     The  Company  shall  pay ten percent (10%) annual coupon on the unpaid Face
Amount of this Debenture (this "Debenture") at such times and in such amounts as
determined  by  the Holder.  The Holder shall have the right to request interest
payments  on  the  Face  Amount anytime after closing and each month thereafter.
The  Holder  shall  submit  to  the Company a notice requesting a payment in the
amount  equal  to  the  interest  accruing  for that month on the balance of the
Debenture.  The  Interest  shall  be  compounded  daily.

     Any monies paid to the Holder in excess of the interest due when paid shall
be  credited  toward  the  Redemption  of  the  Face  Amount  of  the Debenture.

Article  2     Method  of  Payment

Section  2.1     Cash  Payments

     If  requested  by  the Holder, the Company will make amortizing payments to
the  Holder (a "Payment," or collectively, the "Payments") on a monthly basis on
the  first  day of each business day of each month while there is an outstanding
balance  on  the  Debenture, in an amount to be determined by the Holder and the
Company  based  on  the  Company's  then  current financial position.  ("Payment
Amount" or collectively, the "Payment Amounts").  In no event, shall the Payment
be  less than the Interest accruing on the outstanding balance of the Debenture.

Notwithstanding any provision to the contrary in this Debenture, the Company may
pay  in full to the Holder the Face Amount, or any balance remaining thereon, in
readily  available  funds,  at  any  time and from time to time without penalty.

     Section  2.2     Conversion  Payments

     The  Holder,  at  its sole option, shall be entitled to either i) request a
Payment from the Company in the amounts set forth in Section 2.1, above; or, ii)
the  Holder  may elect to convert a portion of the Debenture pursuant to Article
3,  below,  in  an  amount equal to or greater than the Payment Amount.   In the
event the Holder is unable to convert that portion of the debenture equal to the
Payment Amount during a calendar month, the Company shall make a Payment in cash
in  an amount equal to the difference between the amount converted by the Holder
and  the  Payment  Amount  due  for  that  month.

     Nothing  contained  in this Article 2 shall limit the amount the Holder can
elect  to  convert during a calendar month except as defined in Section 3.2 (i),
below.

     All  Payments  made  in  under  Article  2,  shall  be  applied  toward the
Redemption  Amount  as  outlined  in  Article  14,  herein.

     Section  2.3  No  Penalty  for  Prepayment.

The  Company  may  make  additional  payments  toward  Redemption ("Prepayment")
without  any  penalties.

Section  2.4  Accelerated  Repayment in the Event of a Subsequent Financing by a
Third  Party.

If, at any time after Closing, the Company receives financing from a third party
(excluding the Holder), the Company is required to pay to the Holder 100% of the
proceeds  raised  from  the  third  party  in  excess  of an aggregate amount of
$500,000  (the  "Threshold Amount").  The Threshold Amount shall also pertain to
any  assets sold, transferred or disposed of by the Company.  The Company agrees
to pay one hundred percent (100%) of any proceeds raised by the Company over the
Threshold Amount toward the accelerated repayment of the Debenture with Interest
until  such time as the Face Amount of the Debenture has been paid in full.  The
accelerated  Repayment shall be made to the Holder upon the Company's receipt of
the  financing. Failure to do so will result in an Event of Default as set forth
herein.

Article  3     Conversion

     Section  3.1     Conversion  Privilege

     (a)     The  Holder  of  this Debenture shall have the right to convert any
and  all  amounts  owing under this Debenture 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 3.2(c) below.  The number of
shares  of  Common  Stock  issuable  upon  the  conversion  of this Debenture is
determined  pursuant to Section 3.2 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  this  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  unpaid  Face  Amount  of  and accrued
interest  on  this  Debenture may be converted, in whole or in part, at any time
following  the Closing Date.  Such conversion shall be effectuated by the Holder
sending  to  the  Company  a  facsimile or electronic mail version of the signed
Notice  of  Conversion  which  evidences  the  Holder's intention to convert the
Debenture  indicated.  The  date  on which the Notice of Conversion is delivered
("Conversion  Date")  shall  be  deemed  to  be the date on which the Holder has
delivered  to the Company a facsimile or electronic mail of the signed Notice of
Conversion.  Notwithstanding  the  above,  any  Notice of Conversion received by
5:00  P.M. EST, shall be deemed to have been received the previous business day,
with  receipt  being  via  a  confirmation  of  time of facsimile of the Holder.

     (b)     Common  Stock to be Issued.     Upon the Holder's conversion of any
Debenture, the Company shall issue the number of shares of Common Stock equal to
the  Conversion.  If,  at the time of conversion, the Registration Statement has
ben  declared  effective, the Company shall instruct its transfer agent to issue
stock  certificates without restrictive legend (other than a legend referring to
the  registration  statement  and prospectus delivery requires) or stop transfer
instructions.  If at the time of Holder's conversion, the Registration Statement
has  not  been declared effective, the Company shall instruct the transfer agent
to  issue the certificates with an appropriate legend.  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  otherwise  set  forth  herein.

     (c)     Conversion  Price.  Holder  is  entitled to convert the unpaid Face
Amount  of  this  Debenture, plus accrued interest, any time following a Closing
Date,  at  the  lesser  of (i) 75% of the lowest closing bid price of the Common
Stock for the fifteen trading day period prior to a Conversion; or, (ii) at five
cents  ($.05).  The  lower  of  (i)  or  (ii) being referred to as a "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, as
the case may be, to the nearest whole share.  The Holder shall retain all rights
of  conversions  during  any  partial  trading  days.

     (d)     Maximum  Interest.  Nothing  contained  in  this Debenture shall be
deemed  to  establish  or require the Company to pay 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,  if so ordered, shall be credited on any remaining balances due to
the  Holder  with  reasonable  promptness  by the Holder to the Company.  In the
event  this  Section  3.2  (d) applies, the Parties agree that the terms of this
Debenture  remain  in  full  force and effect except as is necessary to make the
interest  rate  comply  with  applicable  law.

     (e)     Opinion  Letter.  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 or entity 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)     Delivery  of  Shares.  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, the Company shall pay to
Holder  in cash, as liquidated damages, an additional three percent (3%) per day
of  the  dollar  value  of  the  Debentures  being  converted.

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

              The  Company  shall  make any payments required 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 the
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.

     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 Holder of the
entire  amount  of  Debentures  then  outstanding.  If,  at any time, the 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.  Any
Convertible  Debentures or any portion thereof, which cannot be converted due to
the  Company's  lack  of  sufficient  authorized  common stock (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 the Holder, by facsimile, within one (1)
business  days  of  such  default.

     In  the event of Conversion Default, the Company will pay to the Holder 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 that the Company authorizes
a  sufficient  number  of  shares  of  Common  Stock to effect conversion of all
remaining  Debentures (the "Authorization Date").  The Company shall send notice
to  Holder  of outstanding Debenture that additional shares of Common Stock have
been  authorized;  stating  the  Authorization  Date  and the amount of Holder's
accrued  Conversion  Default  Payments  ("Authorization  Notice").  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,  as  follows:   (i) in the event the Holder elects to take such payment
in  cash,  cash  payment  shall  be made to the Holder  within five (5) business
days,  or  (ii)  in  the  event Holder elects to take such payment in stock, the
Holder  may  convert  at  the conversion rate set forth in the first sentence of
this  paragraph  within  five  (5)  business  days  until  the expiration of the
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  Debenture  will  cause  the Holder to suffer irreparable harm, and that
damages  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.

     If,  by the third (3rd) business day after the Conversion Date, any portion
of  the  shares  of  the  Convertible  Debentures have not been delivered to the
Holder  and  the  Holder  purchases, in an open market transaction or otherwise,
shares  of  Common  Stock  (the "Covering Shares") necessary to make delivery of
shares  which  would  have been delivered if the full amount of the shares to be
converted and delivered to the Holder, then the Company shall pay to the Holder,
in  addition  to  any  other  amounts due to Holder pursuant to this Convertible
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.

     (g)     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.  Any  filings  submitted via EDGAR will constitute
fulfillment  of  the  Company's  obligation  under  this  Section.

     (h)     Limitation  on  Issuance  of  Shares. If the Company's Common Stock
becomes  listed  on  the  Nasdaq  SmallCap  Market  after  the  issuance  of the
Debenture, the Company may be limited in the number of shares of Common Stock it
may issue by virtue of (A) the number of authorized shares or (B) 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  cannot convert 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 the 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 on
which  the  Redemption  Amount  is  paid  to the holder (the "Redemption Date").

     The  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 Debenture
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  Debenture.

     (i)     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.

     (j)     Legend.  The Holder acknowledges that each certificate representing
the  Debentures,  and  the  Common  Stock  unless  registered  pursuant  to  the
Registration  Rights  Agreement,  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, PURSUANT TO RULE 144 UNDER THE ACT (OR
ANY  SIMILAR  RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(iii)  PURSUANT  TO  AN  AVAILABLE  EXEMPTION  FROM REGISTRATION UNDER SUCH ACT.

     (k)  Prior to conversion of the Debenture, 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  to an amount equal to three hundred percent (300%) of the balance
on  the DebentureThe Company represents and warrants that under no circumstances
will  it  deny  or  prevent  the  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 this Section 3.  The Holder, at his
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 the
sum of the principal of the outstanding Debentures plus accrued interest thereon
multiplied  by  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 by the Company 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     Stock Splits, Combinations and Dividends.  If the shares of
Common  Stock  are  subdivided  or  combined into a greater or smaller number of
shares  of  Common Stock, or if a dividend is paid on the Common Stock in shares
of  Common  Stock, the Conversion Price shall be proportionately reduced in case
of  subdivision  of shares or stock dividend or proportionately increased in the
case  of  combination  of  shares,  in each such case, by the ratio of the total
number  of shares of Common Stock outstanding immediately after such event bears
to  the  total number of shares of Common Stock outstanding immediately prior to
such  event.

Article  4     Mergers

     The  Company shall not consolidate or merge into, or transfer any or 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  only upon such written assumption of the Company's obligation.
The  Company  shall  make  notice  to  the  Holder  simultaneously  with  the
dissemination  of  a  Merger  to  the  public  markets.

Article  5  Security

     This  Debenture  is  secured  by  both  Security  Agreements (the "Security
Agreements")  between  the Company and the Holder and its affiliates, both dated
February  22,  2006.

Article  6     Defaults  and  Remedies

     Section 6.1     Events of Default.  An "Event of Default" occurs if any one
of  the  following  occur:

     (a)  the  Company  does  not make the Payment of the principal, interest or
other sum due under this Debenture by the Holder's conversion into Common Stock,
within  five (5) business days of the Maturity Date, upon redemption, Conversion
Date  or  otherwise  described  herein;  or,

     (b)  the  Company does not make a Payment in cash for a period of three (3)
business  days  when  due  as  described  in  this  Agreement;  or,

     (c)  any  of  the  Company's representations or warranties contained in the
Transaction  Documents  or  this  Debenture  were false when made or the Company
fails  to comply with any of its other agreements and such failure continues for
a  period  of  five  (5)  business  days;  or,

     (d)  the  Company  pursuant to or within the meaning of any Bankruptcy Law:
(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; or,

     (e)  the  Company's  Common  Stock  is suspended or no longer listed on any
recognized  exchange  including  electronic  over-the-counter  bulletin  board
("Principal  Market")  for  in  excess  of  three  (3) consecutive Trading Days.
Failure  to  comply  with  the requirements for continued listing on a Principal
Market  for  a period of five (5) trading days; or notification from a Principal
Market  that  the  Company  is  not  in  compliance with the conditions for such
continued  listing  on  such  Principal  Market;  or,

     (f)  the  Company  breaches  any  covenant  or condition of the Transaction
Documents,  and  such breach, if subject to cure, continues for a period of five
(5)  business  days;  or,

     Section 6.2     Remedies.  In the Event of Default, the Holder may elect to
secure  a  portion  of the Company's assets in Pledged Collateral (as defined in
the  Security Agreement).  The Holder may also elect to garnish Revenue from the
Company  in  an  amount  that will repay the Holder on the schedules outlined in
this  Agreement.

     In  the  Event  of  Default,  as outlined in this Agreement, the Holder can
exercise  its  right to increase the Face Amount of the Debenture by ten percent
(10%) as an initial penalty, and for each subsequent Event of Default under this
Agreement.  In addition, the Holder may elect to increase the Face Amount by two
and  one-half  percent (2.5%) per month (pro-rata for partial periods) paid as a
penalty  for liquated damages ("Liquidated Damages").  The Liquated Damages will
be  compounded  daily.  It  is the intention and acknowledgement of both parties
that  the  Liquidated  Damages not be deemed as interest under the terms of this
Agreement.

     The  Company  agrees that the date of consideration for the Debenture shall
remain  the  Issuance  Date stated herein.  The Company shall provide an opinion
letter  from  counsel  within  two  (2)  business days of written request by the
Holder  stating that the date of consideration for the Debenture is the Issuance
Date  and submission of proper Rule 144, promulgated under the Securities Act of
1933,  support  documentation  consisting of Form 144, a broker's representation
letter  and a seller's representation letter.  In the event the Company does not
deliver  the  opinion  letter  within  two business days, the Default Conversion
Price  shall  immediately  decrease by two percent (2%) for each business day an
opinion  letter fails to be delivered.  In the event that counsel to the Company
fails  or  refuses  to  render  an  opinion  as  required to issue the Shares in
accordance  with  this paragraph (either with or without restrictive legends, as
applicable),  then  the  Company irrevocably and expressly authorizes counsel to
the  Holder  to  render  such  opinion and shall authorize the Transfer Agent to
accept  and  to  rely  on  such  opinion  for the purposes of issuing the Shares
(which  is  attached  as  Exhibit  E  to  the Subscription Agreement between the
Company  and  the  Holder  of this date).  Any costs incurred by Holder for such
opinion  letter  shall  be  added  to  the  Face  Amount  of  the  Debenture.

     Section  6.3     Acceleration.  If  an  Event of Default occurs, 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.

     Section 6.4     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.  And, the Company warrants that it has
taken  all necessary steps to subordinate its other obligations to the rights of
the  Holder  hereunder.

     Section  6.5     Cost  of  Collections.  If an Event of Default occurs, the
Company  shall  pay  the Holder hereof reasonable costs of collection, including
reasonable  attorney's  fees.

Article  7     Registered  Debentures

     Section  7.1     Record  Ownership.  The  Company,  or  its attorney, shall
maintain  a  register  of  the Holder 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.

     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
Debenture  if  the  Holder  so  requests  by  written  notice  to  the  Company.

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:

Laurie  Phillips
Xtreme  Companies,  Inc.
300  Westlink  Dr
Washington,  MO  36090
Telephone:  (636)  390-9000
Facsimile:  (636)  390-2556

If  to  the  Investor:

Douglas  Leighton
Dutchess  Capital  Management
50  Commonwealth  Ave,  Suite  2
Boston,  MA  02116
Telephone:  617-301-4702
Facsimile:  617-249-0947

     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  Note  authorizes  or  requires  the  payment  of  money or the
performance of a condition or obligation on a Saturday or Sunday or a holiday on
which  the  United  States  Stock Markets ("US Markets") are closed ("Holiday"),
such  payment  shall  be  made  or condition or obligation performed on the last
business day preceding such Saturday, Sunday or Holiday.  A "business day" shall
mean  a  day  on  which  the  US  Markets are open for a full day or half day of
trading.

Article  10     No  Assignment

     This  Debenture and the obligation hereunder shall not be assignable by the
Company  or  the  Holder.

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     Disputes  Under  Agreement

     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.   Nothing  in this section shall limit the Holder's
right  to  obtain  an  injunction for a breach of this Agreement from a court of
law.

Article  14  Redemption

     The  Holder  shall  have  the  right  to be redeemed from the Debenture, in
whole  or  in part, at a price equal to one hundred and twenty percent (120%) of
the  outstanding  principal  amount of the Debenture, including accrued interest
(and  penalties  if  applicable).  Any  Payments, as defined in Article 2 above,
shall  apply  to  the  Redemption  Amount.

Article  15     Use  of  Proceeds

     For  general  corporate  purposes  and  working  capital.

Article  16     Structuring  and  Administration  Expense

     The Company agrees to pay for related expenses associated with the proposed
transaction  of  $10,000.  This  amount  shall cover, but is not limited to, the
following:  due  diligence  expenses, document creation expenses, closing costs,
and  transaction  administration  expenses.  This  shall  be  deducted  from the
Closing.

Article  17     Waiver

The  Holder's  delay or failure at any time or times hereafter to require strict
performance  by  the  Company of any undertakings, agreements or covenants shall
not  waive,  affect, or diminish any right of the Holder under this Agreement to
demand  strict  compliance and performance herewith. Any waiver by the Holder of
any  Event  of  Default  shall  not  waive or affect any other Event of Default,
whether  such Event of Default is prior or subsequent thereto and whether of the
same  or a different type. None of the undertakings, agreements and covenants of
the  Company  contained  in  this  Agreement,  and no Event of Default, shall be
deemed  to  have  been  waived by the Holder, nor may this Agreement be amended,
changed  or  modified,  unless such waiver, amendment, change or modification is
evidenced  by an instrument in writing specifying such waiver, amendment, change
or  modification  and  signed  by  the  Holder.

Article  18     Integration

This  Debenture  is  the FINAL AGREEMENT between the Company and the Holder with
respect  to  the  terms  and conditions set forth herein, and, the terms of this
Debenture  may  not  be  contradicted  by evidence of prior, contemporaneous, or
subsequent  oral  agreements of the Parties.  The execution and delivery of this
Debenture  shall  not alter the prior written agreements between the Company and
the  Holder.

Article  19     Failure  to  Meet  Obligations

           The  Company  acknowledges that its failure to timely meet any of its
obligations  hereunder,  including,  but without limitations, its obligations to
make  Payments,  deliver  shares  and,  as  necessary,  to register and maintain
sufficient  number  of  Shares, will cause the Holder to suffer irreparable harm
and,  that  the  actual  damage  to  the  Holder 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 do 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.

Article  20     Registration

     The  Company  shall  file  a registration statement with the SEC, within 45
days  following  a  written  request by the Holder ("Filing Date"), covering the
Debenture.  The  number of shares of Stock registered shall be equivalent to the
sum  of:  1) the Face Amount divided by the Conversion Price. The Company agrees
that  if  such  registration  statement has not been submitted to the SEC by the
Filing  Date,  the Conversion Price will initially drop ten percent (10%) and an
additional  ten  percent  (10%) for every fifteen (15) day period thereafter the
Company  fails to file the Registration Statement.  The Company also agrees that
if  the  Filing  Date  exceeds 45 days or the date the registration statement is
declared  effective  (the "Effective Date") exceeds 90 days from the Filing Date
("Penalty Date" collectively the "Penalty Dates"), a penalty of two percent (2%)
per  month, of the Face Amount of the Debenture, shall accrue for each month the
Filing  Date  and/or  the Effective Date exceeds the Penalty Date, pro-rated for
partial  periods.  The  Company  agrees not to include any other registration to
this  statement  without  the  Investor's  consent.

                                      *.*.*

<PAGE>

     IN  WITNESS WHEREOF, the Company has duly executed this Debenture as of the
date  first  written  above  and  duly  authorized  to  sign  on  behalf  of:

                         XTREME  COMPANIES,  INC.

   By:  /s/Laurie  A.  Phillips
        -----------------------
 Name:  Laurie  Phillips
Title:  Chief  Executive  Officer

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

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

<PAGE>

                                    Exhibit A

                              NOTICE OF CONVERSION
                              --------------------

     (To be Executed by the Registered Owner in order to Convert Debenture)
TO  Xtreme  Companies,  Inc.,  Inc.

     The  undersigned  hereby  irrevocably  elects,  as  of ________________, to
convert  $________________  of  its convertible debenture (the "Debenture") into
Common  Stock  of  Xtreme  Companies,  Inc.,(the  "Company")  according  to  the
                   -------------------------
conditions  set  forth  in  the  Debenture  issued  by  the  Company.

Date  of  Conversion________________________________________________

Applicable  Conversion  Price________________________________________

Number  of  Debentures  Issuable  upon  this  Conversion_______________________

Name(Print)___________Dutchess  Private  EquitiesFund,  II, LP _________________
                      ----------------------------------------

Address______________50  Commonwealth  Ave,  Boston,  MA  02116_____________
                     ------------------------------------------

Phone_____617-301-4700_____________  Fax________617-249-0947___________
          -------------------------             ------------

                    By:_______________________________________
                                   Douglas  LeightonExhibit 10.1

                         Receivable Factoring Agreement

FACE  AMOUNT                                        $695,000
INTEREST  RATE                                      3.5%  per  month
ISSUANCE  DATE                                      May  17,  2006
MATURITY  DATE                                      July  17,  2006

     FOR  VALUE  RECEIVED,  Xtreme  Companies,  Inc.,  a Nevada corporation (the
"Company"),  (OTC  BB:  NWKI)  hereby  promises to pay DUTCHESS PRIVATE EQUITIES
FUND,  II,  L.P.  (the  "Holder")  by  July  17,  2006 (the "Maturity Date"), or
earlier,  the Face Amount of Six Hundred Ninety-Five Thousand dollars ($695,000)
U.S.,  plus  accrued  interest, in such amounts, at such times and on such terms
and  conditions  as  are  specified  herein.

Article  1     Method  of  Payment/Interest

          The  Company  shall  pay  three  and  one-half  percent (3.5%) monthly
coupon,  compounded  daily,  on  the  unpaid  Face  Amount, pro rata for partial
periods.  The  Company  shall pay a minimum of one month's interest on the funds
("Minimum  Interest")  to  the  Holder.

Section  1.2  Prepayment

The  Company  shall  make  mandatory  payments to the Holder as the funds become
available  from  the  boats listed below in Exhibit A ("Collateral Receivables")
(attached  hereto  and  incorporated  by  reference).  The  Company  shall  make
immediate  payment  to  the Holder within one (1) day, via wire transfer, to the
Holder's  account  for  the  Face Amount plus accrued interest and penalties, if
any.

The  Company  may  make additional payments ("Prepayment") without any penalties
provided  the  Minimum  Interest  is  paid.

Article  2        Collateral

     The  Company  will  deliver  the  assigned  receivables, attached hereto as
Exhibit A and incorporated by reference, due to the Company and its wholly owned
subsidiary  Marine  Holdings  d/b/a  Challenger  Offshore.  The  Company  shall
immediately  make  payment  to the Holder on ANY funds received from the vendors
listed  on  Exhibit  A.

Article  3        Unpaid  Amounts

     In  the event that on the Maturity Date, there is an outstanding balance on
the  Face  Amount, the Holder can exercise its right to increase the Face Amount
by ten percent (10%) per month for each month that the Agreement remains unpaid,
compounded  daily, pro rata for partial periods. The Company shall also continue
to  pay  the  interest  rate  outlined in this Agreement.  If the aforementioned
occurs,  the  Company  will be in Default and remedies as described in Article 4
may  be  taken  at  the  Holder's  discretion.

Article  4     Defaults  and  Remedies

     Section  4.1     Events  of Default. An "Event of Default" occurs if any of
the  following  occur:

     (a)     the  Company  does  not make the Payment on the Face Amount of this
Agreement within two (2) business days of the Maturity Date, as applicable, upon
receipt  of  Collateral  or  otherwise;  or
(b)     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;  (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;  or
(c)     the  Company's  $0.001  par  value  common stock (the "Common Stock") is
suspended  or  is  no  longer  listed  on  any recognized exchange, including an
electronic over-the-counter bulletin board, for in excess of two (2) consecutive
trading  days;  or
(d)     any  of  the  Company's  representations or warranties contained in this
Agreement  were  false when made and such failure continues for a period of five
(5)  business  days;  or,
(e)     the  Company  breaches  any covenant or condition of this Agreement, and
such  breach,  if  subject  to cure, continues for a period of five (5) business
days.

     As  used  in  this Section 4.1, 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.

     Section 4.2     Remedies.  In the Event of Default, the Holder may elect to
secure  a  portion of the Company's assets not to exceed 200% of the Face Amount
of  the  Agreement,  including,  but  not limited to: accounts receivable, cash,
marketable  securities,  equipment, building, land or inventory.  The Holder may
also  elect  to  garnishee Revenue from the Company in an amount that will repay
the  Holder  on  the  schedules  outlined  in  this  Agreement.

     For  EACH  Event  of Default, as outlined in this Agreement, the Holder can
          ----
exercise  its  right to increase the Face Amount ten percent (10%) as an initial
penalty.  In addition, the Holder may elect to increase the Face Amount by three
percent  (3%)  per month paid as a penalty for Liquidated Damages.  The Liquated
Damages  will  be  compounded daily.  It is the intention and acknowledgement of
both  parties  that  the  Liquidated  Damages  not  be  deemed  as  interest.

     In  the  event of a Default hereunder, the Holder shall have the right, but
not  the  obligation,  to  1)  switch  the  Residual  Amount  to  a  three-year
("Convertible  Maturity  Date"),  fifteen  percent  (15%)  interest  bearing
convertible  debenture  at  the terms described in Section 4.2 (the "Convertible
Debenture").  At  such  time  of  Default,  the  Convertible  Debenture shall be
considered  closed  ("Convertible  Closing  Date").  If  the  Holder  chooses to
convert  the  Residual Amount to a Convertible Debenture, the Company shall have
twenty  (20)  business days after notice of the same (the "Notice of Convertible
Debenture")  to file a registration statement covering an amount of shares equal
to  three  hundred  percent  (300%)  of  the  Residual Amount. Such registration
statement  shall  be  declared  effective  under  the Securities Act of 1933, as
amended  (the  "Securities Act"), by the Securities and Exchange Commission (the
"Commission") within forty (40) business days of the date the Company files such
Registration  Statement.   In  the  event  the  Company  does  not  file  such
registration  statement  within  twenty  (20)  business  days  of  the  Holder's
request,  or such registration statement is not declared by the Commission to be
effective  under the Securities Act within the time period described above , the
Residual  Amount  shall  increase by five thousand dollars ($5,000) per day.  In
the  event  the Company is given the option for accelerated effectiveness of the
registration  statement,  it  agrees  that  it  shall  cause  such  registration
statement  to  be  declared effective as soon as reasonably practicable.  In the
event  that the Company is given the option for accelerated effectiveness of the
registration  statement, but chooses not to cause such registration statement to
be  declared  effective  on  such  accelerated  basis, the Residual Amount shall
increase  by  five  thousand dollars ($5,000) per day commencing on the earliest
date  as  of  which  such  registration statement would have been declared to be
effective  if  subject  to  accelerated  effectiveness.

     Section  4.3     Conversion  Privilege

     (a)     The  Holder  shall  have  the  right  to  convert  the  Convertible
Debenture  into  shares  of  Common  Stock at any time following the Convertible
Closing  Date  and  which  is  before  the  close of business on the Convertible
Maturity  Date.  The  number  of  shares  of  Common  Stock  issuable  upon  the
conversion  of the Convertible Debenture shall be determined pursuant to Section
4.3,  but the number of shares issuable shall be rounded up or down, as the case
may  be,  to  the  nearest  whole  share.

     (b)     The  Convertible Debenture may be converted, whether in whole or in
part,  at  any  time  and  from  time  to  time.

     (c)     In  the  event  all  or  any  portion  of the Convertible Debenture
remains  outstanding  on  the Convertible Maturity Date (the "Debenture Residual
Amount"),  the  unconverted  portion  of  such  Convertible  Debenture  will
automatically  be  converted  into  shares  of  Common Stock on such date in the
manner  set  forth  in  Section  4.3.

     Section  4.4     Conversion  Procedure

     (a)     The  Residual Amount may be converted, in whole or in part any time
and  from time to time, following the Convertible Closing Date.  Such conversion
shall  be  effectuated  by  surrendering  to  the  Company, or its attorney, the
Convertible  Debenture  to be converted together with a facsimile or original of
the  signed  notice  of  conversion  (the "Notice of Conversion").   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, as long as the original Convertible
Debenture(s)  to  be  converted  are  received  by  the  Company within five (5)
business  days thereafter.  At such time that the original Convertible Debenture
has  been  received by the Company, the Holder can elect to whether a reissuance
of the Convertible Debenture is warranted, or whether the Company can retain the
Convertible  Debenture  as  to  a  continual  conversion  by  the  Holder.
Notwithstanding  the  above,  any Notice of Conversion received by 4:00 P.M. EST
shall  be deemed to have been received the following business day (receipt being
via  a  confirmation  of  the  time  such facsimile to the Company is received).

     (b)     Common  Stock  to  be  Issued.     Upon  the  conversion  of  any
Convertible  Debentures  and  upon  receipt  by the Company or its attorney of a
facsimile  or  original of the Holder's signed Notice of Conversion, the Company
shall  instruct  its  transfer  agent  to  issue  stock  certificates  without
restrictive  legends  or  stop  transfer  instructions,  if  at  that  time  the
aforementioned registration statement described in Section 4.1 has been declared
effective  (or with proper restrictive legends 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.   In  the event that the Debenture is aged one year
and  deemed  sellable  under  Rule  144,  the  Company  shall,  upon a Notice of
Conversion,  instruct  the  transfer  agent  to  issue free trading certificates
without  restrictive  legends, subject to other applicable securities laws.  The
Company  is responsible to provide all costs associated with the issuance of the
shares,  including  but  not  limited  to  the  opinion  letter,  FedEx  of  the
certificates  and any other costs that arise. The Company shall act as registrar
and  shall  maintain  an appropriate ledger containing the necessary information
with  respect  to  each  Convertible  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  or  subject  to  applicable  law.

     (c)     Conversion  Rate.  Holder  is  entitled  to  convert  the Debenture
Residual  Amount  ,  plus  accrued  interest,  anytime following the Convertible
Maturity  Date,  at  the lesser of (i) fifty percent (50%) of the lowest closing
bid price during the fifteen (15) trading  immediately preceding the Convertible
Maturity  Date  or (ii) 100% of the lowest bid price for the twenty (20) trading
days  immediately  preceding  the  Convertible  Maturity Date ("Fixed 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 the Convertible 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.  Holder shall be treated as a shareholder of
record  on  the  date  Common Stock is issued to the Holder. If the Holder shall
designate  another  person  as  the  entity  in  the  name  of  which  the stock
certificates  issuable  upon  conversion  of the Convertible Debenture are to be
issued  prior  to the issuance of such certificates, the Holder shall provide to
the  Company evidence that either no tax shall be due and payable as a result of
such  transfer  or  that  the applicable tax has been paid by the Holder or such
person. Upon surrender of any Convertible Debentures that are to be converted in
part, the Company shall issue to the Holder a new Convertible Debenture equal to
the  unconverted  amount,  if  so  requested  in  writing  by  the  Holder.

     (f)     Within  five  (5)  business days after receipt of the documentation
referred  to  above in Section 4.2, the Company shall deliver a certificate, 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  five (5) business days after the Conversion Date, then in such event the
Company  shall pay to the Holder one percent (1%) in cash of the dollar value of
the Debenture Residual Amount remaining after said conversion, compounded daily,
per  each  day  after the fifth (5th) business day following the Conversion Date
that  the  Common  Stock  is  not  delivered  to  the  Purchaser.

     (g)     The  Company  acknowledges  that  its failure to deliver the Common
Stock  within  five  (5)  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
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  Convertible  Debenture.

     (h)     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 Convertible Debentures  by the
Holder  of  the entire amount of Convertible Debentures then outstanding. If, at
any time the 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 of the Company) available
to  effect,  in  full, a conversion of the Convertible 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
Convertible  Debentures  requested  to  be  converted  but  not  converted  (the
"Unconverted  Convertible 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 the Holder, by
facsimile  within  three  (3)  business  days of such default (with the original
delivered  by  overnight  mail  or  two  day courier), and the Holder shall give
notice  to  the Company by facsimile within five (5) business days of receipt of
the  original  Notice  of  Conversion  Default  (with  the original delivered by
overnight  mail or two day courier) of its election to either nullify or confirm
the  Notice  of  Conversion.

     (i)     The  Company  agrees  to  pay  the Holder payments for a Conversion
Default  ("Conversion  Default Payments") in the amount of (N/365) multiplied by
..24  multiplied by the initial issuance price of the outstanding or tendered but
not  converted Convertible Debentures held by the 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 Convertible Debentures.  The Company shall
send  notice  ("Authorization  Notice")  to the Holder 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 set forth in the first sentence of this paragraph, upon written
notice  sent  by  the  Holder  to the Company, which Conversion Default shall be
payable  as follows:  (i) in the event the Holder elects to take such payment in
cash,  cash  payments shall be made to the Holder  by the fifth (5th) 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 the first sentence of this paragraph at any
time  after  the  fifth  (5th)  day of the calendar month following the month in
which  the  Authorization  Notice  was  received,  until  the  expiration of the
mandatory  three  (3)  year  conversion  period.

     (j)     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 Convertible 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 Convertible Debenture.

     (k)     If,  by  the  third (3rd) business day after the Conversion Date of
any portion of the Convertible 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  Convertible  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.

     (l)     The  Company shall defend, protect, indemnify and hold harmless the
Holder  and  all  of  its shareholders, officers, directors, employees, counsel,
and  direct  or  indirect  investors and any of the foregoing person's agents or
other  representatives  (including,  without  limitation,  those  retained  in
connection  with the transactions contemplated by this Agreement) (collectively,
the  "Section  4.3(h) Indemnitees") from and against any and all actions, causes
of  action,  suits,  claims,  losses,  costs,  penalties,  fees, liabilities and
damages,  and expenses in connection therewith (irrespective of whether any such
Section  4.3(h)  Indemnitee  is  a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the  "Section  4.3(h) Indemnified Liabilities"), incurred by any Section 4.3(h)
Indemnitee  as  a  result  of,  or  arising  out  of,  or  relating  to  (i) any
misrepresentation  or  breach  of  any  representation  or  warranty made by the
Company  in  the  Transaction  Documents or any other certificate, instrument or
document  contemplated  hereby  or  thereby,  (ii)  any  breach of any covenant,
agreement,  or  obligation of the Company contained in the Transaction Documents
or  any  other  certificate,  instrument,  or  document  contemplated  hereby or
thereby,  (iii) any cause of action, suit, or claim brought or made against such
Section  4.3(h) Indemnitee by a third party and arising out of or resulting from
the  execution,  delivery,  performance,  or  enforcement  of  the  Transaction
Documents  or any other certificate, instrument, or document contemplated hereby
or thereby, (iv) any transaction financed or to be financed in whole or in part,
directly  or  indirectly,  with the proceeds of the issuance of the Common Stock
underlying  the  Convertible  Debenture ("Securities"), or (v) the status of the
Holder or holder of the Securities as an investor in the Company, except insofar
as  any  such  misrepresentation, breach or any untrue statement, alleged untrue
statement,  omission,  or  alleged  omission  is  made  in  reliance upon and in
conformity  with  written  information furnished to the Company by the Holder or
the  Investor which is specifically intended by the Holder or the Investor to be
relied  upon  by  the  Company, including for use in the preparation of any such
registration  statement,  preliminary  prospectus, or prospectus, or is based on
illegal trading of the Common Stock by the Holder or the Investor. To the extent
that  the  foregoing  undertaking  by  the  Company may be unenforceable for any
reason,  the  Company  shall  make  the  maximum contribution to the payment and
satisfaction  of  each  of the Indemnified Liabilities that is permissible under
applicable  law.  The indemnity provisions contained herein shall be in addition
to  any  cause  of  action  or  similar  rights  the  Holder  may  have, and any
liabilities  the  Holder  may  be  subject  to.

Article  5     Additional  Financing  and  Registration  Statements

     Section  5.1     The  Company  will not enter into any additional financing
agreements,  debt  or  equity,  without prior expressed written consent from the
Holder,  which shall not be unreasonably withheld.  Failure to do so will result
in  an  Event of Default and the Holder may elect to take the action outlined in
Article  4.

     Section  5.2     The Company agrees that it shall not file any registration
statement  which  includes any of its Common Stock, including those on Form S-8,
until  such  time  as  the Face Amount is paid off in full ("Lock-Up Period") or
without  the  prior  written  consent  of  the  Holder.

     Section  5.3     The  Holder  shall also reserve the right to switch to the
terms of the new financing  If at any time while the Face Amount is outstanding,
if  the  Company  issues  or  agree  to  issue  any  common  stock or securities
convertible  into  or  exercisable for shares of commons stock (or modify any of
the  foregoing which may be outstanding) to any person or entity.  Additionally,
if the Company shall, issue or agree to issue any of the aforementioned services
to  any  person,  firm  or  corporation at terms deemed by the Holder to be more
favorable  to the other investor than the terms or conditions of this Agreement,
then the Holder is granted the right to modify any such term or condition of the
Agreement  to  be  the  same  as  any  such  term or condition of any subsequent
offering.  The  rights  of  the  Holder in this Section 5 are in addition to any
other right the Holder has pursuant to this Agreement and the Security Agreement
of  even  date  between  the  Holder  and  the  Company.

     Section 5.4     The Company agrees that any and all its officers, insiders,
affiliates or other related parties shall refrain from selling any Stock, during
the  Lock-Up  Period.

Article  6     Notice.

     Any  notices,  consents,  waivers  or  other  communications  required  or
permitted  to  be given under the terms of this Agreement 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:

     Laurie  Phillips
     Xtreme  Companies,  Inc.
     300  Westlink  Dr
     Washington,  MO  36090
     Telephone:  (636)  390-9000
     Facsimile:  (636)  390-2556

If  to  the  Holder:

     Dutchess  Capital  Management
     Douglas  Leighton
     50  Commonwealth  Ave  Suite  2
     Boston,  MA  02116
     Phone:  617-301-4700
     Facsimile:  617-249-0947

     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  7     Time

     Where  this  Agreement  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 Agreement.  A "business day"
shall  mean  a day on which the banks in New York are not required or allowed to
be  closed.

Article  8     No  Assignment

     This  Agreement  and  the  terms  and  conditions  herein,  shall  not  be
assignable.

Article  9     Rules  of  Construction.

     In  this  Agreement,  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 Agreement are inserted for
convenience  of  reference  only, and they neither form a part of this Agreement
nor are they to be used in the construction or interpretation hereof.  Wherever,
in  this  Agreement, 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  Agreement.

Article  10     Governing  Law

     The validity, terms, performance and enforcement of this Agreement 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  State  of
Massachusetts.

Article  11     Litigation

     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.   Nothing in this
section  shall  limit the Holder's right to obtain an injunction for a breach of
this  Agreement  from  a  court  of  law.

Article  12      Conditions  to  Closing

     The Company shall have delivered the proper Collateral to the Holder before
Closing.

Article  13     Structuring  and  Administration  Expense

     The Company agrees to pay for related expenses associated with the proposed
transaction  of  $20,000.  This  amount  shall cover, but is not limited to, the
following:  due  diligence  expenses, document creation expenses, closing costs,
and  transaction  administration expenses. This shall be deducted from the first
closing.

Article  16      Indemnification

     In  consideration  of the Holder's execution and delivery of this Agreement
and  the  acquisition and funding by the Holder hereunder and in addition to all
of  the Company's other obligations under the documents contemplated hereby, the
Company shall defend, protect, indemnify and hold harmless the Holder and all of
their  shareholders,  officers,  directors,  employees,  counsel,  and direct or
indirect  investors  and  any  of  the  foregoing  person's  agents  or  other
representatives  (including,  without  limitation,  those retained in connection
with  the  transactions  contemplated  by  this  Agreement)  (collectively,  the
"INDEMNITEES")  from  and  against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection  therewith (irrespective of whether any such Indemnitee is a party to
the  action  for  which  indemnification  hereunder  is  sought),  and including
reasonable  attorneys'  fees  and disbursements (the "INDEMNIFIED LIABILITIES'),
incurred by any Indemnitee as a result of, or arising out of, or relating to (i)
any  misrepresentation  or  breach of any representation or warranty made by the
Company  in  the  Agreement,  or  any  other certificate, instrument or document
contemplated  hereby  or  thereby  (ii) any breach of any covenant, agreement or
obligation  of  the Company contained in the Agreement or any other certificate,
instrument  or  document  contemplated  hereby or thereby, except insofar as any
such  misrepresentation,  breach  or  any  untrue  statement,  alleged  untrue
statement,  omission  or  alleged  omission  is  made  in  reliance  upon and in
conformity  with  written  information furnished to the Company by, or on behalf
of,  the  Holder or based on illegal or alleged illegal trading of the Shares by
the  Holder.  To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the  payment  and  satisfaction  of each of the Indemnified Liabilities which is
permissible  under  applicable  law.  The  indemnity provisions contained herein
shall  be  in  addition  to any cause of action or similar rights the Holder may
have,  and  any  liabilities  the  Holder  may  be  subject  to.

Article  17     Waiver

     The  Holder's  delay  or  failure at any time or times hereafter to require
strict performance by Company of any undertakings, agreements or covenants shall
not  waiver, affect, or diminish any right of the Holder under this Agreement to
demand  strict  compliance and performance herewith. Any waiver by the Holder of
any  Event  of  Default  shall  not  waive or affect any other Event of Default,
whether  such Event of Default is prior or subsequent thereto and whether of the
same  or a different type. None of the undertakings, agreements and covenants of
the  Company  contained  in  this  Agreement,  and no Event of Default, shall be
deemed  to  have  been  waived by the Holder, nor may this Agreement be amended,
changed  or  modified,  unless such waiver, amendment, change or modification is
evidenced  by an instrument in writing specifying such waiver, amendment, change
or  modification  and  signed  by  the  Holder.

Article  18     Senior  Obligation

     The  Company  shall  cause this Agreement ("Holder's Debt") to be senior in
right  of  payment  to all other Indebtedness of the Company for the Collateral.

Article  19     Transactions  With  Affiliates

     The  Company  shall  not,  and shall cause each of its Subsidiaries not to,
enter into, amend, modify or supplement, or permit any Subsidiary to enter into,
amend,  modify  or  supplement,  any  agreement,  transaction,  commitment  or
arrangement with any of its or any Subsidiary's officers, directors, persons who
were  officers  or  directors  at  any  time  during  the  previous  two  years,
shareholders who beneficially own five percent (5%) or more of the Common Stock,
or  affiliates  or with any individual related by blood, marriage or adoption to
any  such  individual  or with any entity in which any such entity or individual
owns  a  five  percent (5%) or more beneficial interest (each a "Related Party")
during  the  Lock  Up  Period

Article  20     Security

     The Holder shall have full right to funds due to the Company from the boats
listed on Exhibit A.  In the Event of Default the Holder shall have the right to
attach  any  other  assets  as  outlined  in  Article  4.

Article  21     Miscellaneous

a.     All  pronouns  and  any variations thereof used herein shall be deemed to
refer  to  the  masculine,  feminine,  impersonal,  singular  or  plural, as the
identity  of  the  person  or  persons  may  require.

b.     Neither  this  Agreement  nor  any  provision  hereof  shall  be  waived,
modified,  changed,  discharged,  terminated,  revoked or canceled, except by an
instrument  in  writing  signed by the party effecting the same against whom any
change,  discharge  or  termination  is  sought.

c.     Notices  required  or permitted to be given hereunder shall be in writing
and  shall  be deemed to be sufficiently given when personally delivered or sent
by  facsimile  transmission:  (i) if to the Company, at its executive offices or
(ii)  if  to  the  Holder,  at  the  address for correspondence set forth in the
Article 6, or at such other address as may have been specified by written notice
given  in  accordance  with  this  paragraph.

d.     This  Agreement may be executed in two or more counterparts, all of which
taken  together shall constitute one instrument.  Execution and delivery of this
Agreement  by  exchange of facsimile copies bearing the facsimile signature of a
party  shall  constitute  a  valid  and  binding  execution and delivery of this
Agreement  by  such  party.  Such  facsimile copies shall constitute enforceable
original  documents.

e.     This Written Agreement represent the FINAL AGREEEMENT between the Company
and  the  Holders  and  may  not  be  contradicted  by  evidence  of  prior,
contemporaneous,  or  subsequent  oral  agreements  of the parties, there are no
unwritten  oral  agreements  among  the  parties.

f.     The  execution, delivery and performance of this Agreement by the Company
and  the consummation by the Company of the transactions contemplated hereby and
thereby will not (i) result in a violation of the Articles of Incorporation, any
Certificate of Designations, Preferences and Rights of any outstanding series of
preferred  stock  of  the  Company  or  the  By-laws  or  (ii) conflict with, or
constitute a material default (or an event which with notice or lapse of time or
both  would  become  a  material default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
contract, indenture mortgage, indebtedness or instrument to which the Company or
any  of  its Subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree, including United States federal and state
securities  laws  and regulations and the rules and regulations of the principal
securities  exchange  or  trading  market on which the Common Stock is traded or
listed  (the  "Principal  Market"),  applicable  to  the  Company  or any of its
Subsidiaries  or  by  which  any  property or asset of the Company or any of its
Subsidiaries  is  bound or affected. Neither the Company nor its Subsidiaries is
in violation of any term of, or in default under, the Articles of Incorporation,
any  Certificate  of  Designations,  Preferences  and  Rights of any outstanding
series  of preferred stock of the Company or the By-laws or their organizational
charter  or  by-laws,  respectively,  or  any  contract,  agreement,  mortgage,
indebtedness,  indenture,  instrument, judgment, decree or order or any statute,
rule  or  regulation  applicable  to the Company or its Subsidiaries, except for
possible  conflicts,  defaults,  terminations,  amendments,  accelerations,
cancellations  and  violations  that  would not individually or in the aggregate
have a Material Adverse Effect. The business of the Company and its Subsidiaries
is  not  being  conducted,  and shall not be conducted, in violation of any law,
statute,  ordinance,  rule, order or regulation of any governmental authority or
agency,  regulatory  or  self-regulatory  agency,  or court, except for possible
violations the sanctions for which either individually or in the aggregate would
not  have  a Material Adverse Effect.  The Company is not required to obtain any
consent,  authorization,  permit or order of, or make any filing or registration
(except  the  filing of a registration statement)  with, any court, governmental
authority  or  agency, regulatory or self-regulatory agency or other third party
in  order for it to execute, deliver or perform any of its obligations under, or
contemplated  by, this Agreement in accordance with the terms hereof or thereof.
All  consents,  authorizations, permits, orders, filings and registrations which
the  Company  is required to obtain pursuant to the preceding sentence have been
obtained  or  effected  on or prior to the date hereof and are in full force and
effect  as  of  the date hereof. The Company and its Subsidiaries are unaware of
any  facts  or  circumstances which might give rise to any of the foregoing. The
Company is not, and will not be, in violation of the listing requirements of the
Principal  Market  as  in  effect  on the date hereof and on each of the Closing
Dates  and is not aware of any facts which would reasonably lead to delisting of
the  Common  Stock  by  the  Principal  Market  in  the  foreseeable  future.

g.     The  Company and its "Subsidiaries" (which for purposes of this Agreement
means  any  entity  in  which  the Company, directly or indirectly, owns capital
stock  or  holds  an equity or similar interest) are corporations duly organized
and  validly  existing  in  good  standing  under  the  laws  of  the respective
jurisdictions of their incorporation, and have the requisite corporate power and
authorization  to  own  their  properties  and to carry on their business as now
being  conducted. Both the Company and its Subsidiaries are duly qualified to do
business and are in good standing in every jurisdiction in which their ownership
of  property  or  the  nature  of  the  business  conducted  by  them makes such
qualification  necessary,  except  to  the  extent  that  the  failure  to be so
qualified  or  be  in good standing would not have a Material Adverse Effect. As
used  in  this  Agreement,  "Material Adverse Effect" means any material adverse
effect  on  the business, properties, assets, operations, results of operations,
financial  condition  or  prospects of the Company and its Subsidiaries, if any,
taken  as  a  whole,  or  on  the  transactions  contemplated  hereby  or by the
agreements  and instruments to be entered into in connection herewith, or on the
authority  or  ability  of  the  Company  to  perform  its obligations under the
Agreement.

h.     Authorization;  Enforcement;  Compliance with Other Instruments.  (i) The
Company  has  the  requisite  corporate  power  and  authority to enter into and
perform  this Agreement, and to issue the Agreement in accordance with the terms
hereof  and  thereof,  (ii)  the  execution and delivery of the Agreement by the
Company  and  the consummation by it of the transactions contemplated hereby and
thereby,  have  been  duly  and  validly  authorized  by  the Company's Board of
Directors  and  no  further consent or authorization is required by the Company,
its  Board  of Directors, or its shareholders, (iii) the Agreement has been duly
and  validly  executed  and  delivered  by  the  Company, and (iv) the Agreement
constitutes the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited  by  general  principles of equity or applicable bankruptcy, insolvency,
reorganization,  moratorium,  liquidation  or  similar  laws  relating  to,  or
affecting  generally,  the  enforcement  of  creditors'  rights  and  remedies.

I.     The  execution  and  delivery of this Agreement shall not alter any prior
written  agreements  between  the  Company  and  the  Holder.

j.      There are no disagreements of any kind presently existing, or reasonably
anticipated  by  the  Company to arise, between the Company and the accountants,
auditors  and  lawyers  formerly or presently employed by the Company, including
but  not limited to disputes or conflicts over payment owed to such accountants,
auditors  or  lawyers.

k.     All  representations  made  by or relating to the Company of a historical
nature  and  all  undertaking  described  herein  shall  relate and refer to the
Company,  its  predecessors,  and  the  Subsidiaries.

l.     The only officer, director, employee and consultant stock option or stock
incentive  plan  currently  in  effect  or  contemplated by the Company has been
submitted  to  the  Holder  or is described with Reports.  No other plan will be
adopted  nor  may  any  options.

<PAGE>

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

                                XTREME COMPANIES

                              Laurie  A.  Phillips
                              --------------------

       /s/Laurie  Phillips
       -------------------
 Name: Laurie  Phillips
Title: Chief  Executive  Officer

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

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

<PAGE>
                                    EXHIBIT A

                            CHALLENGER OFFSHORE BOATS
                         ATTACHED TO FACTORING AGREEMENT

<TABLE>
<CAPTION>

<S>     <C>                 <C>                        <C>                   <C>
          APPROX INVOICE/                              $ AVAILABLE TO APPLY
BOAT #  PYMT FROM CUSTOMER   APPROX. LOAN PAYMENT DUE    TO FACTOR BALANCE                   COMMENT
109     $         138,000   $                 102,000  $            36,000   Remaining $after WIP loan is paidoff
------  ------------------  -------------------------  --------------------  ------------------------------------
110     $          82,000   $                  62,000  $            20,000   Remaining $after WIP loan is paidoff
------  ------------------  -------------------------  --------------------  ------------------------------------
115     $         120,000   $                  78,000  $            42,000   Remaining $after WIP loan is paidoff
------  ------------------  -------------------------  --------------------  ------------------------------------
119     $          45,000   N/A                        $            45,000
------  ------------------  -------------------------  --------------------  ------------------------------------
120     $          75,000   $                  30,000  $            45,000   Remaining $after Happy Apple loan is paidoff
------  ------------------  -------------------------  --------------------  ------------------------------------
125     $         130,000   N/A                        $           130,000
------  ------------------  -------------------------  --------------------  ------------------------------------
126     $         120,000   N/A                        $           120,000
------  ------------------  -------------------------  --------------------  ------------------------------------
129     $         140,000   $                  55,000  $            85,000   Remaining $after WIP loan is paidoff
------  ------------------  -------------------------  --------------------  ------------------------------------
Philly
Fire    $          60,000   $                  28,000  $            32,000   Remaining $after WIP loan is paidoff
------  ------------------  -------------------------  --------------------  ------------------------------------
CT Fire $          36,750   N/A                        $            36,750
------  ------------------  -------------------------  --------------------  ------------------------------------
Cpt
Morgan  $         100,000   N/A                        $           100,000
------  ------------------  -------------------------  --------------------  ------------------------------------
TOTAL   $         966,750   $                 293,000  $           673,750
------  ------------------  -------------------------  --------------------  ------------------------------------
</TABLE>

All  amounts  are  approximate.  Any  monies  received  from customers for above
listed  boats  must  first  be  applied to outstanding WIP loans at Sun Security
or  applied against the Happy Apple loan, where noted.  Xtreme agrees to forward
all  remaining  monies  to  Dutchess.

We,  the  Company, do hereby agree to assign the above Receivables as Collateral
as  defined  in  Section  2  of the Receivable Factoring Agreement above, and do
hereby, agree to make such payments to Holder from these Receivables as outlined
in  the  Agreement.  We, the Company, realize that failure to make payments from
the  above Receivables to the Holder as outlined in the Agreement will result in
an  Event  of  Default  as outlined in Article 4 and the Holder may take actions
against  the  Company.

 /s/Laurie  A.  Phillips
 --------------------
 Laurie  Phillips,  CEO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00108-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00108-of-00352.parquet"}]]