Document:

Fiscal 2007 Employee Incentive Bonus

    RED
      MILE ENTERTAINMENT, INC.

    Fiscal
      2007 Employee Incentive Bonus Plan

    Overview

    

    Red
      Mile
      Entertainment Inc.’s (“Red Mile”) Incentive Bonus plan (the “Bonus Plan”) covers
      employees of Red Mile and its subsidiaries, except for Red Mile sales employees
      who are covered under a separate Red Mile Commission Plan (“the Commission
      Plan”) The Bonus Plan’s objective is to provide incentives to all employees.
      Eligibility for participation in the plan includes employees who do not normally
      receive overtime compensation and who have been approved for participation
      by
      the President of the Company and the Chairman of the Board of Directors of
      the
      Company. Specific criteria for earning the bonus varies based on the employee’s
      classification. 

    

    Therefore,
      for purposes of the Bonus Plan, we have created three classes of employees:
      

    

    
      	·  	
              Executive
                Officers

            

    

    
      	·  	
              Senior
                Managers

            

    

    
      	·  	
              Other
                Employees and Consultants

            

    

    

    The
      bonuses for each class will be determined based on 3 criteria; 2 criteria will
      be based on company performance measures and one criteria will be based on
      individual specific criteria. 

    

    General
      provisions:

    

    Employees
      who have commenced employment during the fiscal year shall have their bonus
      payment prorated for the portion of the fiscal year employed.

    

    
      	·  	
              Bonuses
                shall be paid approximately 3 months after the close of Red Mile’s fiscal
                year on June 30, 2007; the Board of Directors will have discretion
                to
                delay payment past June 30, 2007. 

            

    

    
      	·  	
              All
                bonuses covered under this plan are payable subject to the employee
                remaining employed at Red Mile at June 30, 2007.
                

            

    

    
      	·  	
              Bonuses
                will be calculated based on an employee’s base salary at the beginning of
                Red Mile’s fiscal year (April 1, 2006).

            

    

    
      	·  	
              At
                the discretion of the Board Of Directors, additional bonuses may
                be
                granted for exceptional performance by an individual or the company.
                Such
                bonuses shall be paid within 30 days of Board Of Director Approval.
                

            

    

    
      	·  	
              Employees
                will have the option to receive bonuses in cash or in stock; if an
                employee elects to receive the bonus in stock, the employee will
                receive
                an additional 20% in stock above the amount calculated as the cash
                bonus.
                Employees will be eligible to elect to receive a portion of the bonus
                in
                cash and a portion of the bonus in stock pro-rata; for the portion
                of the
                bonus elected to be received in stock, that portion only will be
                eligible
                for the additional 20% in stock. 

            

    

    
      	·  	
              At
                the discretion of the Board of Directors, Red Mile can elect to pay
                all
                bonuses in stock. To the extent that the payment in stock triggers
                any tax
                obligations to the employee, Red Mile will pay that portion of the
                bonus
                in cash. 

            

    

    

    
      
         

        1

      

      
        
        

        
          

        

      

      
        
        

      

    

    Other
      Employees and Consultants

    

    
      	·  	
              The
                employees of Red Mile to be included in this category and their
                eligible bonus percentages are to be determined by the President
                and Chief
                Financial Officer of Red Mile. 

            

    

     

    Senior
      Managers

    

    
      	·  	
              The
                employees of Red Mile to be included in this category and their
                eligible bonus percentages are to be determined by the President
                and Chief
                Financial Officer of Red Mile. 

            

    

    

    Executive
      Officers

     

    Currently
      included in this group are:

     

    
      	·  	
              Chester
                Aldridge, CEO

            

    

    
      	·  	
              Ben
                Zadik, CFO

            

    

    
      	·  	
              Robert
                Westmoreland, VP Publishing

            

    

    

    The
      eligible bonus percentages will be determined and approved by the Board Of
      Directors. 

    

    
2Debenture Agreement

    NEITHER
      THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE
      HAVE
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY
      STATE SECURITIES LAWS AND NEITHER THIS DEBENTURE NOR ANY INTEREST THEREIN NOR
      THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE MAY BE OFFERED, SOLD,
      TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM
      REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL
      SATISFACTORY TO THE COMPANY, IS AVAILABLE.

    

    CALIFORNIA
      NEWS TECH

    

    18.0%
      Unsecured Convertible Debenture

    

    $100,000         
      ___________, 2006

    

    This
      Unsecured Convertible Debenture (the “Debenture”) is issued by California News
      Tech, a Nevada Corporation (the “Company”) this ___ day of __________, 2006 (the
“Issuance Date”) to DNB Capital Management, Inc. (the “Holder”) pursuant to
      exemptions from registration under the Securities Act of 1933, as
      amended.

    

    ARTICLE
      I.

    PRINCIPAL
      AND INTEREST

    

    Section
      1.1.
      For
      value received, the Company promises to pay to Holder, or its registered
      assigns, the principal sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00), on
      or
      before two (2) years from the Issuance Date (the “Maturity Date”), and to pay
      interest to the Holder on the principal amount of this Debenture (the “Principal
      Amount”) outstanding from time to time quarterly in arrears at the rate of 18.0%
      per annum accruing from the Issuance Date. Accrual of interest shall commence
      on
      the first business day to occur after the Issuance Date and continue until
      payment in full of the principal sum has been made or duly provided for.
      Quarterly interest payments shall be due and payable on March 31, June 30,
      September 30 and December 31 of each year, commencing with March 31, 2007.
      If
      any interest payment date or the Maturity Date is not a business day in the
      State of Nevada, then such payment shall be made on the next succeeding business
      day. The interest on this Debenture is payable at the option of the Holder,
      upon
      notice to the Company not later than the tenth business day prior to each
      interest payment date, in cash or in shares of Common Stock of the Company,
      $.003 par value per share (“Common Stock”) valued at the Conversion Price (as
      defined herein) on the interest payment date, and in the absence of notice
      is
      payable in cash. All payments of principal and interest shall be made to the
      Holder at the address set forth above or such other address as the Holder shall
      notify the Company in writing ten (10) days prior to the due date of any payment
      or upon any prepayment of this Debenture as provided herein. 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      1.2.
      All
      payments of principal and interest shall be made to the Holder at the address
      set forth above or such other address as the Holder shall notify the Company
      in
      writing ten (10) days prior to the due date of any payment or upon any
      prepayment of this Debenture as provided herein.

    

    Section
      1.3.
      Unsecured Nature of Debenture. This Debenture is unsecured.

    

    ARTICLE
      II.

    CONVERSION
      RIGHTS; CONVERSION PRICE

    

    Section
      2.1.
      Voluntary Conversion by Holder. The Holder shall have the right,
      commencing March 31, 2007, prior to the date on which this Debenture is
      paid in full, to convert at any time, or from time to time, any part of the
      outstanding interest or Principal Amount of this Debenture into fully paid
      and
      non-assessable shares of Common Stock at the Conversion Price determined as
      provided herein. Promptly after the surrender of this Debenture, accompanied
      by
      a Notice of Conversion of Convertible Debenture in the form attached hereto
      as
      Exhibit 1, properly completed and duly executed by the Holder (a “Conversion
      Notice”), the Company shall issue and deliver to or upon the order of the Holder
      that number of shares of Common Stock for the that portion of this Debenture
      to
      be converted as shall be determined in accordance herewith. 

     

    (a) No
      fraction of a share or scrip representing a fraction of a share will be issued
      on conversion, but the number of shares issuable shall be rounded to the nearest
      whole share. The date on which Notice of Conversion is given (the “Conversion
      Date”) shall be deemed to be the date on which the Holder faxes the Notice of
      Conversion duly executed to the Company. Facsimile delivery of the Notice of
      Conversion shall be accepted by the Company at facsimile number (415) 358-9853
      Attn.: Marian Munz. Certificates representing Common Stock upon conversion
      will
      be delivered to the Holder within five (5) Trading Days from the date the Notice
      of Conversion is delivered to the Company. Delivery of shares upon conversion
      shall be made to the address specified by the Holder in the Notice of
      Conversion.

     

     

    (b) The
      Company understands that a delay in the issuance of shares of Common Stock
      upon
      a conversion beyond the five (5) Trading Day period described in Section 2.1(a)
      could result in economic loss to the Holder. As compensation to the Holder
      for
      such loss, the Company agrees to pay late payments to the Holder for late
      issuance of shares of Common Stock upon conversion in accordance with the
      following schedule (where “No. Trading Days Late” is defined as the number of
      Trading Days beyond five (5) Trading Days from the date the Notice of Conversion
      is delivered to the Company).

     

     

    

     

    
      	
               

              No.
                Trading Days Late

               

            	
              Late
                Payment for Each

              $5,000
                of Principal Amount

              Being
                Converted

            
	
               

              1

               

            	
               

              $100

               

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

              2

               

            	
               

              $200

               

            
	
               

              3

               

            	
               

              $300

               

            
	
               

              4

               

            	
               

              $400

               

            
	
               

              5

               

            	
               

              $500

               

            
	
               

              6

               

            	
               

              $600

               

            
	
               

              7

               

            	
               

              $700

               

            
	
               

              8

               

            	
               

              $800

               

            
	
               

              9

               

            	
               

              $900

               

            
	
               

              10

               

            	
               

              $1,000

               

            
	
               

              More
                than 10

               

            	
              $1,000
                +$200 for each Trading Day 

              Late
                beyond 10 Trading Days

            

    

     

    The
      Company shall pay any payments incurred under this Section 2.1(b) in immediately
      available funds upon demand. Nothing herein shall limit Holder’s right to pursue
      injunctive relief and/or actual damages for the Company’s failure to issue and
      deliver Common Stock to the holder, including, without limitation, the Holder’s
      actual losses occasioned by any “buy-in” of Common Stock necessitated by such
      late delivery. Furthermore, in addition to any other remedies which may be
      available to the Holder, in the event that the Company fails for any reason
      to
      effect delivery of such shares of Common Stock within five (5) Trading Days
      from
      the date the Notice of Conversion is delivered to the Company, the Holder will
      be entitled to revoke the relevant Notice of Conversion by delivering a notice
      to such effect to the Company, whereupon the Company and the Holder shall each
      be restored to their respective positions immediately prior to delivery of
      such
      Notice of Conversion, and in such event no late payments shall be due in
      connection with such withdrawn conversion.

     

     

    (c) If
      at any
      time (a) the Company challenges, disputes or denies the right of the Holder
      to
      effect the conversion of this Debenture into Common Stock or otherwise dishonors
      or rejects any Notice of Conversion delivered in accordance with this Section
      2.1 any Company stockholder who is not and has never been an Affiliate (as
      defined in Rule 405 under the Securities Act of 1933, as amended) of the Holder
      obtains a judgment or any injunctive relief from any court or public or
      governmental authority which denies, enjoins, limits, modifies, delays or
      disputes the right of the holder hereof to effect the conversion of this
      Debenture into Common Stock, then the Holder shall have the right, by written
      notice, to require the Company to promptly redeem this Debenture for cash at
      a
      redemption price equal to one hundred fifty 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        
percent
        (150%) of the outstanding principal amount hereof and all accrued and unpaid
        interest hereon. Under any of the circumstances set forth above, the Company
        shall be responsible for the payment of all costs and expenses of the Holder,
        including reasonable legal fees and expenses, as and when incurred in disputing
        any such action or pursuing its rights hereunder (in addition to any other
        rights of the Holder), subject in the case of clause (b) to the Company’s right
        to control and assume the defense of any such action. In the absence of an
        injunction precluding the same, the Company shall issue shares upon a properly
        noticed conversion.

    

     

     

    (d) The
      Holder shall be entitled to exercise its conversion privilege notwithstanding
      the commencement of any case under 11 U.S.C. § 101 et seq.
      (the
“Bankruptcy Code”) to the fullest extent permitted by the Bankruptcy Code. In
      the event the Company is a debtor under the Bankruptcy Code, the Company hereby
      waives to the fullest extent permitted any rights to relief it may have under
      11
      U.S.C.§ 362 in respect of the Holder’s conversion privilege. 

     

    

    Section
      2.2.
      The
      number of shares of Common Stock to be issued upon each conversion of this
      Debenture shall be determined by dividing (i) the amount of Principal and
      interest to be converted by (ii) the Conversion Price. 

    

    Section
      2.3.
      Conversion
      Price.
      Upon
      any conversion of this Debenture, the conversion price shall be the lesser
      of
      (i) sixty percent (60%) of the average closing price for the Company’s common
      stock on the NASD OTCBB for the five (5) consecutive Trading Days preceding
      the
      date of delivery to the Company of the Conversion Notice, and (ii) $0.01 per
      share, subject to adjustment from time to time upon the happening of certain
      events (the “Conversion Price”) as set forth below.

     

    (a) Stock
      Splits, etc.
      In case
      the Company shall: (i) pay a dividend in shares of Common Stock or make a
      distribution in shares of Common Stock to holders of its outstanding Common
      Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
      number of shares of Common Stock, (iii) combine its outstanding shares of Common
      Stock into a smaller number of shares of Common Stock, excluding any reverse
      split prior to March 31, 2007, or (iv) issue any shares of its capital stock
      in
      a reclassification of the Common Stock, then the number of shares of Common
      Stock issuable upon conversion of this Debenture immediately prior thereto
      shall
      be adjusted so that the holder of this Debenture shall be entitled to receive
      the kind and number of shares of Common Stock which he would have owned or
      have
      been entitled to receive had such Debenture been converted in advance thereof.
      An adjustment made pursuant to this paragraph shall become effective immediately
      after the effective date of such event retroactive to the record date, if any,
      for such event.

    

    (b) Reorganization,
      Reclassification, Merger, Consolidation or Disposition of Assets.
      In case
      the Company shall reorganize its capital, reclassify its capital stock,
      consolidate or merge with or into another corporation (where the Company is
      not
      the surviving corporation or where there is a change in or distribution with
      respect to the Common Stock of the Company), or sell, transfer or otherwise
      dispose of all or substantially all its property, assets or business to another
      corporation and, pursuant to the terms of such reorganization, reclassification,
      merger, consolidation or disposition of assets, shares of common stock of the
      successor or acquiring corporation, or any cash, shares of stock or other
      securities or property of any nature whatsoever

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      (including
        warrants or other subscription or purchase rights) in addition to or in lieu
        of
        common stock of the successor or acquiring corporation (“Other Property”), are
        to be received by or distributed to the holders of Common Stock of the Company,
        then Holder shall have the right thereafter to receive, upon conversion of
        this
        Debenture, the number of shares of common stock of the successor or acquiring
        corporation or of the Company, if it is the surviving corporation, and Other
        Property receivable upon or as a result of such reorganization,
        reclassification, merger, consolidation or disposition of assets by a holder
        of
        the number of shares of Common Stock into which this Debenture is convertible
        immediately prior to such event. In case of any such reorganization,
        reclassification, merger, consolidation or disposition of assets, the successor
        or acquiring corporation (if other than the Company) shall expressly assume
        the
        due and punctual observance and performance of each and every covenant and
        condition of this Debenture to be performed and observed by the Company and
        all
        the obligations and liabilities hereunder, subject to such modifications
        as may
        be deemed appropriate (as determined in good faith by resolution of the Board
        of
        Directors of the Company) in order to provide for adjustments of the number
        of
        shares of common stock into which this Debenture is convertible which shall
        be
        as nearly equivalent as practicable to the adjustments provided for in this
        Section 2.3(b). For purposes of this Section 2.3(b), “common stock of the
        successor or acquiring corporation” shall include stock of such corporation of
        any class which is not preferred as to dividends or assets over any other
        class
        of stock of such corporation and which is not subject to redemption and shall
        also include any evidences of indebtedness, shares of stock or other securities
        which are convertible into or exchangeable for any such stock, either
        immediately or upon the arrival of a specified date or the happening of a
        specified event and any warrants or other rights to subscribe for or purchase
        any such stock. The foregoing provisions of this Section 2.3(b) shall similarly
        apply to successive reorganizations, reclassifications, mergers, consolidations
        or disposition of assets.

    

     

    (c)
       Notice
      of Adjustment.
      Whenever the number of shares of Common Stock or number or kind of securities
      or
      other property issuable upon the conversion of this Debenture or the Conversion
      Price is adjusted, as herein provided, the Company shall promptly mail by
      registered or certified mail, return receipt requested, to the Holder of this
      Debenture notice of such adjustment or adjustments setting forth the number
      of
      shares of Common Stock (and other securities or property) issuable upon the
      conversion of this Debenture and the Conversion Price of such shares of Common
      Stock (and other securities or property) after such adjustment, setting forth
      a
      brief statement of the facts requiring such adjustment and setting forth the
      computation by which such adjustment was made. Such notice, in the absence
      of
      manifest error, shall be conclusive evidence of the correctness of such
      adjustment.

     

     

    Section
      2.4.
      Notice
      of Corporate Action.
      If at
      any time:

    

    (a) the
      Company shall take a record of the holders of its Common Stock for the purpose
      of entitling them to receive a dividend or other distribution, or any right
      to
      subscribe for or purchase any evidences of its indebtedness, any shares of
      stock
      of any class or any other securities or property, or to receive any other right,
      or

    

    (b) there
      shall be any capital reorganization of the Company, any reclassification or
      recapitalization of the capital stock of the Company or any consolidation or
      merger of the Company with, or any sale, transfer or other disposition of all
      or
      substantially all the property, assets or business of the Company to, another
      corporation or,

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) there
      shall be a voluntary or involuntary dissolution, liquidation or winding up
      of
      the Company;

    

    then,
      in
      any one or more of such cases, the Company shall give to Holder (i) at least
      30
      days’ prior written notice of the date on which a record date shall be selected
      for such dividend, distribution or right or for determining rights to vote
      in
      respect of any such reorganization, reclassification, merger, consolidation,
      sale, transfer, disposition, liquidation or winding up, and (ii) in the case
      of
      any such reorganization, reclassification, merger, consolidation, sale,
      transfer, disposition, dissolution, liquidation or winding up, at least 30
      days’
prior written notice of the date when the same shall take place. Such notice
      in
      accordance with the foregoing clause also shall specify (x) the date on which
      any such record is to be taken for the purpose of such dividend, distribution
      or
      right, the date on which the holders of Common Stock shall be entitled to any
      such dividend, distribution or right, and the amount and character thereof,
      and
      (y) the date on which any such reorganization, reclassification, merger,
      consolidation, sale, transfer, disposition, dissolution, liquidation or winding
      up is to take place and the time, if any such time is to be fixed, as of which
      the holders of Common Stock shall be entitled to exchange their shares of Common
      Stock for securities or other property deliverable upon such disposition,
      dissolution, liquidation or winding up. Each such written notice shall be
      sufficiently given if addressed to Holder at the last address of Holder
      appearing on the books of the Company and delivered in accordance with Section
      5.1.

     

    Section
      2.5.
      Method
      of Conversion.
      Except
      as otherwise provided in this Debenture or agreed to by the Holder, this
      Debenture may be converted by the Holder pursuant to its conversion rights
      set
      forth in Section 2.1 in whole at any time or in part (provided each such partial
      conversion is at least $10,000) by submitting to the Company a Conversion Notice
      and surrendering this Debenture with the mailed confirmation of the Conversion
      Notice at the office of the Company as provided in Section 5.1. Upon a partial
      conversion of this Debenture, a new debenture containing the same date and
      provisions as this Debenture shall be issued by the Company to the Holder for
      the balance due hereunder which shall not have been converted.

    

    Section
      2.6.
      Restrictions
      on Securities.
      This
      Debenture has been issued by the Company pursuant to the exemption from
      registration under the Securities Act of 1933, as amended (the “Act”). None of
      this Debenture or the shares of Common Stock issuable upon conversion of this
      Debenture may be offered, sold or otherwise transferred unless (i) they first
      shall have been registered under the Act and applicable state securities laws
      or
      (ii) the Company shall have been furnished with an opinion of legal counsel
      (in
      form, substance and scope reasonably acceptable to Company) to the effect that
      such sale or transfer is exempt from the registration requirements of the Act.
      Each certificate for shares of Common Stock issuable upon conversion of this
      Debenture that have not been so registered and that have not been sold pursuant
      to an exemption that permits removal of the applicable legend, shall bear a
      legend substantially in the following form, as appropriate:

    

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933 (THE “ACT”). THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD
      OR OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     THE
      ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS
      ARE MADE PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
      OF THOSE LAWS.

    

    Upon
      the
      request of a holder of a certificate representing any shares of Common Stock
      issuable upon conversion of this Debenture, the Company shall remove the
      foregoing legend from the certificate or issue to such Holder a new certificate
      free of any transfer legend, if (a) with such request, the Company shall have
      received an opinion of counsel, reasonably satisfactory to the Company in form,
      substance and scope, to the effect that any such legend may be removed from
      such
      certificate or (b) a registration statement under the Act covering such
      securities is in effect.

    

    Section
      2.7.
      Registration
      Rights.
      If at
      any time the Company proposes to register any of its common stock under the
      Act,
      whether as a result of an offering for its own account or the account of others,
      excluding any registrations to be effected on Forms S-4 or S-8 or other
      applicable successor Forms, the Company shall, at such time, promptly give
      Holder written notice of such proposed registration and offer Holder the
      opportunity to include the shares of common stock issued as interest and the
      shares of Common Stock issuable upon conversion of this Debenture in such
      registration statement (each, a “Piggy Back Registration”). The Company shall
      include in any such registration statement all or part of the underlying common
      stock that Holder requests to be registered. In a Piggyback Registration, the
      Company will pay the registration expenses and the reasonable fees and
      disbursements of one counsel for the selling Holders selected by them shall
      be
      borne by the Company.

    

    Section
      2.8.
      Reservation
      of Common Stock.
      

     

    (a) The
      Company covenants that during the period the Debenture is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of Common Stock of the Company upon the
      Conversion of the Debenture. The Company further covenants that its issuance
      of
      this Debenture shall constitute full authority to its officers who are charged
      with the duty of executing stock certificates to execute and issue the necessary
      certificates for shares of Common Stock of the Company issuable upon the
      conversion of this Debenture. The Company will take all such reasonable action
      as may be necessary to assure that such shares of Common Stock may be issued
      as
      provided herein without violation of any applicable law or regulation, or of
      any
      requirements of the NASD OTCBB (or such other principal market upon which the
      Common Stock of the Company may be listed).

     

    (b) The
      Company shall not by any action, including, without limitation, amending its
      certificate of incorporation or through any reorganization, transfer of assets,
      consolidation, merger, dissolution, issue or sale of securities or any other
      voluntary action, avoid or seek to avoid the observance or performance of any
      of
      the terms of this Debenture, but will at all times in good faith assist in
      the
      carrying out of all such terms and in the taking of all such actions as may
      be
      necessary or appropriate to protect the rights of Holder against impairment.
      Without limiting the generality of the foregoing, the Company will (a) not
      increase the par value of any shares of Common Stock issuable upon the
      conversion of this Debenture above the amount payable therefor upon such
      conversion immediately prior to such increase in par value, (b) take

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      all
        such
        action as may be necessary or appropriate in order that the Company may validly
        and legally issue fully paid and nonassessable shares of Common Stock upon
        the
        conversion of this Debenture, and (c) use its best efforts to obtain all
        such
        authorizations, exemptions or consents from any public regulatory body having
        jurisdiction thereof as may be necessary to enable the Company to perform
        its
        obligations under this Debenture.

    

     

    (c) Upon
      the
      request of Holder, the Company will at any time during the period this Debenture
      is outstanding acknowledge in writing, in form reasonably satisfactory to
      Holder, the continuing validity of this Debenture and the obligations of the
      Company hereunder.

     

    (d) Before
      taking any action which would cause an adjustment reducing the current
      Conversion Price below the then par value, if any, of the shares of Common
      Stock
      issuable upon conversion of the Debentures, the Company shall take any corporate
      action which may be necessary in order that the Company may validly and legally
      issue fully paid and non-assessable shares of such Common Stock at such adjusted
      Conversion Price.

     

    (e) Before
      taking any action which would result in an adjustment in the number of shares
      of
      Common Stock into which this Debenture is convertible or in the Conversion
      Price, the Company shall obtain all such authorizations or exemptions thereof,
      or consents thereto, as may be necessary from any public regulatory body or
      bodies having jurisdiction thereof.

     

    (f) If
      at any
      time the Company does not have a sufficient number of authorized and available
      shares of Common Stock for issuance upon conversion of the Debenture, then
      the
      Company shall call and hold a special meeting of its stockholders within
      forty-five (45) days of that time for the sole purpose of increasing the number
      of authorized shares of Common Stock.

    

    Section
      2.9.
      Prepayment.
      

    

    (a)
      The
      Company shall have the option to prepay some or all of the outstanding Principal
      Amount of this Debenture, pursuant to the provisions of this Section 2.9. The
      prepayment price shall be equal to the outstanding Principal Amount (or portion
      thereof) to be prepaid as of the date of prepayment (the “Prepayment Date”)
      together with any accrued and unpaid interest. If this Debenture is called
      for
      prepayment pursuant this Section 2.9, the Company shall give written notice
      to
      the Holder not less than thirty (30) days nor more than sixty (60) days prior
      to
      the Prepayment Date, setting forth the prepayment price to be paid, instructions
      for presentation of the Debentures for prepayment and the Prepayment Date.
      Upon
      notice of any prepayment, the Company covenants and agrees that upon
      presentation of the Debentures, it will pay on the Prepayment Date the Principal
      to be prepaid as specified in such notice (the “Prepayment Amount”). Holders may
      convert their Debentures pursuant to Article II of this Debenture during the
      period from the date of notice of prepayment until 5:00 p.m. Pacific Time on
      the
      business day immediately prior to the Prepayment Date.

     

    (b) If
      all of
      the outstanding Principal Amount of this Debenture is being prepaid, and if
      the
      Holder does not wish to convert the Debenture, the Holder shall cause such
      Debenture to be timely delivered to the Company at its principal offices after
      receiving the notice of prepayment required by this Section 2.9. 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) If
      (i)
      upon notice of any prepayment a Holder determines not to convert his debenture
      with in the period provided in Section 2.9(a); and (ii) on or before the
      Prepayment Date the Company makes payment to Holder of 100% of the outstanding
      Principal Amount of the Debenture, then, on and after said Prepayment Date,
      notwithstanding that this Debenture shall not have been surrendered for
      prepayment, the obligation evidenced by the Debenture shall be deemed no longer
      outstanding, and all rights with respect thereto shall forthwith cease and
      terminate.

    

    Section
      2.10.
      Paying
      Agent and Registrar.
      Initially, the Company will act as paying agent and registrar. The Company
      may
      change any paying agent, registrar, or Company-registrar by giving the Holder
      not less than ten (10) business days’ written notice of its election to do so,
      specifying the name, address, telephone number and facsimile number of the
      paying agent or registrar. 

    

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES OF HOLDER

    

    Section
      3.1.
      The
      Holder represents and warrants to the Company:

    

    (a)  The
      Holder of this Debenture, by acceptance hereof, agrees that this Debenture
      is
      being acquired for investment and that such Holder will not offer, sell or
      otherwise dispose of this Debenture or the Common Stock issuable upon conversion
      hereof except under circumstances that will not result in a violation of the
      Act
      or any application state securities laws or similar laws relating to the sale
      of
      securities;

    

    (b)  That
      Holder understands that none of this Debenture or the Common Stock issuable
      upon
      conversion hereof have been registered under the Securities Act of 1933, as
      amended (the “Act”), in reliance upon the exemptions from the registration
      provisions of the Act and any continued reliance on such exemption is predicated
      on the representations of the Holder set forth herein;

    

    (c)  Holder
      (i) has adequate means of providing for his current needs and possible
      contingencies, (ii) has no need for liquidity in this investment, (iii) is
      able
      to bear the substantial economic risks of an investment in this Debenture for
      an
      indefinite period, (iv) at the present time, can afford a complete loss of
      such
      investment, and (v) does not have an overall commitment to investments which
      are
      not readily marketable that is disproportionate to Holder’s net worth, and
      Holder’s investment in this Debenture will not cause such overall commitment to
      become excessive;

    

    (d)  Holder
      is
      an “accredited investor” (as defined in Regulation D promulgated under the Act)
and
      the
      Holder’s total investment in this Debenture does not exceed 10% of the Holder’s
      net worth; and

    

    (e)  Holder
      recognizes that an investment in the Company involves significant risks and
      only
      investors who can afford the loss of their entire investment should consider
      investing in the Company and this Debenture. 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      IV.

    EVENTS
      OF DEFAULT

     

    Section
      4.1. Default.
      In case
      one or more of the following events (“Events of Default”) (whatever the reason
      for such Event of Default and whether it shall be voluntary or involuntary
      or be
      effected by operation of law or pursuant to any judgment, decree or order of
      any
      court or any order, rule or regulation of any administrative or governmental
      body) shall have occurred:

     

    (a) default
      in the due and punctual payment of all or any part of any payment of interest
      or
      the Principal Amount as and when such amount or such part thereof shall become
      due and payable hereunder; or

     

    (b) failure
      on the part of the Company duly to observe or perform in all material respects
      any of the covenants or agreements on the part of the Company contained herein
      (other than those covered by clause (a) above) for a period of 10 business
      days
      after the date on which written notice specifying such failure, stating that
      such notice is a “Notice of Default” hereunder and demanding that the Company
      remedy the same, shall have been given by the Holder by registered or certified
      mail, return receipt requested, to the Company; or

     

    (c) the
      occurrence of any event or condition which results in the acceleration of the
      maturity of any material indebtedness of the Company (any indebtedness in excess
      of $10,000 shall be deemed material) or enables or, with the giving of notice
      or
      lapse of time or both, would enable the holder of any such monetary obligation
      or any person acting on such holder’s behalf to accelerate the maturity thereof;
      or

     

    (d) any
      representation, warranty or statement of fact made by the Company herein when
      made or deemed to have been made, false or misleading in any material respect;
      provided,
      however,
      that
      such failure shall not result in an Event of Default to the extent it is
      corrected by the Company within a period of 5 business days after the date
      on
      which written notice specifying such failure, stating that such notice is a
      “Notice of Default” hereunder and demanding that the Company remedy same, shall
      have been given by the Holder by registered or certified mail, return receipt
      requested; or

     

    (e) any
      of
      the following actions by the Company pursuant to or within the meaning title
      11,
      U.S. Code or any similar federal or state law for the relief of debtors
      (collectively, the “Bankruptcy Law”): (A) commencement of a voluntary case or
      proceeding, (B) consent to the entry of an order for relief against it in an
      involuntary case or proceeding, (C) consents to the appointment of a receiver,
      trustee, assignee, liquidator or similar official under any Bankruptcy Law
      (each, a “Custodian”), of it or for all or substantially all of its property,
      (D) a general assignment for the benefit of its creditors, or (E) admission
      in
      writing its inability to pay its debts as the same become due; or

     

    (f) entry
      by
      a court of competent jurisdiction of 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 the property
      of
      the Company, or (C) orders the liquidation of the Company, and such order or
      decree remains unstayed and in effect for 60 days; or

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (g) the
      Company shall have its Common Stock suspended or delisted from trading on the
      NASD OTCBB (or such other principal market upon which the Common Stock of the
      Company may be listed) for two (2) Trading Days;

     

    then,
      in
      each case where an Event of Default specified in Sections 4.1(b), (c), (d)
      or
      (g) occurs, the Holder, by notice in writing to the Company (the “Acceleration
      Notice”), may declare the outstanding Principal Amount (in whole or in part) to
      be due and payable immediately, and upon any such declaration the same shall
      become immediately due and payable; provided,
      however,
      that if
      an Event of Default specified in Section 4.1(a), (e) or (f) occurs, the
      outstanding Principal Amount shall become and be immediately due and payable
      without any declaration or other act on the part of the Holder. Notwithstanding
      any other provision of this Note, upon the occurrence of and during the
      continuance of, any Event of Default, the interest rate hereunder shall be
      twenty-four percent (24%) per annum.

     

    Section
      4.2.
      Payment
      of Costs. The
      Company shall reimburse the Holder, on demand, for any and all reasonable costs
      and expenses, including reasonable attorneys’ fees and disbursement and court
      costs, incurred by the Holder in collecting or otherwise enforcing this Note
      or
      in attempting to collect or enforce this Note.

     

    Section
      4.3. Powers
      and Remedies Cumulative; Delay or Omission Not Waiver of Default.
      No
      right or remedy herein conferred upon or reserved to the Holder is intended
      to
      be exclusive of any other right or remedy available to Holder under applicable
      law, and every such right and remedy shall, to the extent permitted by law,
      be
      cumulative and in addition to every other right and remedy given hereunder
      or
      now or hereafter existing at law or in equity or otherwise. The assertion or
      employment of any right or remedy hereunder, or otherwise, shall not prevent
      the
      concurrent assertion or employment of any other appropriate right or remedy.
      No
      delay or omission of the Holder to exercise any right or power accruing upon
      any
      Default occurring and continuing as aforesaid shall impair any such right or
      power or shall be construed to be a waiver of any such Default or an
      acquiescence therein; and every power and remedy given by this Note or by law
      may be exercised from time to time, and as often as shall be deemed expedient,
      by the Holder.

     

    Section
      4.4.
      Waiver
      of Past Defaults.
      The
      Holder may waive any past default or Event of Default hereunder and its
      consequences but no such waiver shall extend to any subsequent or other default
      or Event of Default or impair any right consequent thereon.

    

    Section
      4.5.
      Waiver
      of Presentment etc.
      The
      Company hereby waives presentment, demand, notice, protest and all other demands
      and notices in connection with the delivery, acceptance, performance and
      enforcement of this Debenture, except as specifically provided
      herein.

    

    ARTICLE
      V.

    MISCELLANEOUS

    

    Section
      5.1.
      Notices.
      Any
      notice herein required or permitted to be given shall be in writing and may
      be
      personally served or delivered by courier or sent by United States mail and
      shall be deemed to have been given upon receipt if personally served (which
      shall include telephone line 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    facsimile
      transmission) or sent by courier or three (3) days after being deposited in
      the
      United States mail, certified, with postage pre-paid and properly addressed,
      if
      sent by mail. For the purposes hereof, the address of the Holder shall be the
      address shown on the first page of hereof; and the address of the Company shall
      be 825 Van Ness Ave., Suite 406-407, San Francisco, CA 94109. The Company shall
      accept facsimile notice at the following number (415) 358 9853 Attn.: Marian
      Munz. Both the Holder and the Company may change the address for service by
      delivery of written notice to the other as herein provided.

    

    Section
      5.2.
      Entire
      Agreement and Amendment Provision.
      This
      Debenture represents the entire agreement between the parties hereto with
      respect to the subject matter hereof and there are no representations,
      warranties or commitments, except as set forth herein. This Debenture and any
      provision hereof may be amended only by an instrument in writing signed by
      the
      Company and the Holder.

    

    Section
      5.3.
      Assignability.
      This
      Debenture shall be binding upon the Company and its successors and assigns
      and
      shall inure to be the benefit of the Holder and its successors and assigns;
      provided, however, that so long as no Event of Default has occurred, this
      Debenture shall only be transferable in whole subject to the restrictions
      contained in the restrictive legend on the first page of this Debenture. This
      Debenture shall not be binding upon Media Sentiment, Inc. and shall not create
      a
      claim against that entity, its assets or its operations.

    

    Section
      5.4.
      Governing
      Law.
      This
      Debenture shall be governed by the internal laws of the State of Nevada, without
      regard to conflicts of laws principles. The parties hereto hereby submit to
      the
      exclusive jurisdiction and venue of the state or federal courts sited in Clark
      County, Nevada with respect to any dispute arising under this
      Debenture.

     

    Section
      5.5.
      Replacement
      of Debenture.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this
      Debenture, and in case of loss, theft or destruction, of indemnity or security
      reasonably satisfactory to it (which shall not include the posting of any bond),
      and upon surrender and cancellation of such Debenture, if mutilated, the Company
      will make and deliver a new Debenture of like tenor.

    

    Section
      5.6.
      This
      Debenture shall not entitle the Holder to any of the rights of a stockholder
      of
      the Company, including without limitation, the right to vote, to receive
      dividends and other distributions, or to receive any notice of, or to attend,
      meetings of stockholder or any other proceedings of the Company, unless and
      to
      the extent converted into shares of Common Stock in accordance with the terms
      hereof.

    

    Section
      5.7.
      Severability.
      In case
      any provision of this Debenture is held by a court of competent jurisdiction
      to
      be excessive in scope or otherwise invalid or unenforceable, such provision
      shall be adjusted rather than voided, if possible, so that it is enforceable
      to
      the maximum extent possible, and the validity and enforceability of the
      remaining provisions of this Debenture will not in any way be affected or
      impaired thereby.

    

    Section
      5.8.
      Headings.
      The
      headings of the sections of this Debenture are inserted for convenience only
      and
      do not affect the meaning of such section.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      5.9.
      Counterparts.
      This
      Debenture may be executed in multiple counterparts, each of which shall be
      an
      original, but all of which shall be deemed to constitute on
      instrument.

    

    Section
      5.10.
      Specific
      Performance.
      Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to specific performance of its rights
      under this Debenture. The Company agrees that monetary damages would not be
      adequate compensation for any loss incurred by reason of a breach by it of
      the
      provisions of this Debenture and hereby agrees to waive the defense in any
      action for specific performance that a remedy at law would be
      adequate.

    

    Section
      5.11.
      Designation
      of Director.
      DNB
      Capital Management, Inc. will be allowed, but not required, to nominate one
      (1)
      additional person to the Company’s Board of Directors for so long as this
      Debenture remains outstanding. Upon an uncured Event of Default, DNB Capital
      Management, Inc., by its consent, shall have the right to nominate or replace
      directors such that control of the Board of Directors is achieved.

    

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

    

    

      

      
        	
                COMPANY

                 

                 

                 

                 

                /s/
                  Marian Munz

                By:
                  MARIAN MUNZ

                Its:
                  PRESIDENT

              	 	
                HOLDER

                 

                 

                 

                 

                /s/
                  David N. Baker

                By:
                  DAVID N. BAKER

                Its:
                  PRESIDENT

              
	
                 

                CALIFORNIA
                  NEWS TECH

              	 	
                 

                
                  DNB
                    Capital Management, Inc. 

                

              

      

       

      

       

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      1

    

    CONVERSION
      NOTICE

    ________________________________________________________________________

    

    (To
      be
      executed by the Holder in order to Convert the Debenture)

    

    TO:

    

    

    The
      undersigned hereby irrevocably elects to convert US$__________ of the Principal
      Amount of the above Debenture into Shares of Common Stock of California News
      Tech, according to the conditions stated therein, as of the Conversion Date
      written below. If shares are to be issued in the name of a person other than
      the
      undersigned, the undersigned will pay all transfer taxes payable with respect
      thereto and is delivering herewith such certificates and opinions as reasonably
      requested by the Company in accordance therewith. No fee will be charged to
      the
      Holder for any conversion, except for such transfer taxes, if any.

    

    Conversion
      Date: ___________________________________________

    

    Applicable
      Conversion Price: $____ 

    

    

    Signature:     ___________________________________________

    

    Name:       ___________________________________________

    

    Address:     ___________________________________________

     

              ___________________________________________

    

    Tax
      I.D.
      or Soc. Sec. No: ___________________________________________

    

    Principal
      Amount to be converted:    

     US$________________________________________

    

    Amount
      of
      Debenture unconverted: 

    US$________________________________________

    

    Number
      of
      shares of Common Stock to be issued: ________________________

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