Document:

Exhibit
10.4

 

EMPLOYMENT
AGREEMENT

 

This Employment Agreement is
Agreement is entered into on June 27, 2003, between SUB-URBAN INDUSTRIES, INC.
(the “Company”), a California corporation, having its principal place of
business located at 500 Molino #215, Los Angeles, CA 90013, and Joseph E.
Shortal, an individual (the “Employee”).

 

WITNESSETH:

 

WHEREAS, the Employee has
expertise in the areas of sales, marketing, administration and management;

 

WHEREAS, the parties acknowledge that the Employee’s abilities and
services are unique and essential to the prospects of the Company; and

 

WHEREAS, in light of the foregoing, the Company desires to employ the
Employee as its Chief Executive Officer and (interim) Chief Financial Officer,
and the Employee desires to accept such employment.

 

NOW, THEREFORE, the parties hereto agree as follows:

1.             Employment.
The Company hereby employs the Employee, and the Employee hereby accepts
employment, upon the terms and conditions hereinafter set forth.

 

2.             Term. This
Agreement shall commence on the date hereof and shall terminate as of the
earlier of:

(a) three (3) years from the date hereof, plus - absent any prior
termination of this Agreement pursuant to this Section 2 - automatic renewals
for one-year effective upon each annual anniversary of the date of this
Agreement;

(b) the death or “Permanent Disability” (as hereafter defined) of the
Employee;

(c) thirty (30) days
after a material breach hereof by the Employee and notice thereof by the
Company to the Employee, if such breach remains uncured; or

 

(d) thirty (30)
days after a material breach hereof by the Company and notice thereof by the
Employee to the Company, if such remains uncured

 

The exercise of the Company’s or the Employee’s right to terminate this
Agreement pursuant to clause (c) or (d) hereof, as the case may be, shall not
abrogate the rights and remedies of the terminating party in respect of the
breach giving rise to such termination.

 

 

3.             Compensation.
For all services rendered under this Agreement:

                (a)           (i)            The
Company shall pay the Employee a base salary of $3,000 per month ($36,000 per
annum) in equal monthly or semi-monthly installments commencing on the later of
July 1, 2003, or upon the receipt of at least $300,000 of equity (or debt
convertible into equity) financing from third parties (“External Funding”). The
base salary shall be increased to $10,000 per month ($120,000 per annum)
beginning when the Company has received an aggregate of at least $2,000,000 of
External Funding. Notwithstanding anything herein to the contrary, (i) the
amount of base compensation payable to the Employee shall not be less than the
base compensation payable to any other senior executive of the Company, and
(ii) if cash flow constraints preclude full payment of base salaries to all
senior management employees of the Company, the Employee agrees to deferral and
accrual of all or part of his base salary pari passu with deferments by other
senior management employees; provided, however that the aggregate accrual may
not exceed an amount equal to 25% of one year’s annual base salary without the
Employee’s consent.

 

(ii) If the Employee is unable to perform effectively his duties
hereunder (herein “Disability”) for a period of at one hundred eighty
(180) days or more in any consecutive one year period (herein “Permanent
Disability”), the Company may elect, upon notice to the Employee, to pay
the Employee one-third of the compensation the Employee would otherwise be
entitled to pursuant to clause (i) above for the balance of the term specified
in Section 2(a) hereof and shall thereupon have no further obligation under
Section 3(b) or (e) hereof.

                (b) The Employee
shall be entitled to incentive compensation as determined by the Board of
Directors, which amount shall not be less than the amount of incentive
compensation payable to any other senior executive of the Company.

 

                (c) During the
term of his employment, the Employee shall be entitled to participate in
employee benefit plans or programs of the Company, if any, to the extent that
his position, tenure, salary, age, health and other qualifications make him
eligible to participate, subject to the rules and regulations applicable
thereto. Such additional benefits shall include, subject to the approval of the
Board of Directors, medical, dental, life insurance and income insurance, paid
vacation and equity stock incentive plans; provided, however, that in no event
shall Employee’s benefits hereunder be less favorable than those afforded any
other senior executive of the Company.

                (d) The Company
will furnish the Employee with a Company- owned/financed or leased automobile
of the make and model then authorized by the Company’s policy (together with
full insurance coverage with policy limits not less than those required by
applicable finance or lease agreements) and a cell phone and service, all
without cost to the Employee.

 

                (e) The Employee
shall be entitled to reimbursement of all reasonable expenses incurred by him
in the performance of his duties, subject to the presenting of appropriate
vouchers in accordance with the Company’s policy.

 

                (f)
Notwithstanding anything herein to the contrary, in the event of

a termination by Company of Employee’s employment hereunder, or a
material change in the Employee’s title or the scope and/or nature of his
duties, which constitutes a material breach of this Agreement (“Severance
Event”), Employee shall receive, in lieu of any damages otherwise
applicable to the remainder of the term of this Agreement, severance
compensation comprised of (i) a lump sum payment in an amount equal to three
(3) times the Employee’s annual base compensation applicable at the time of
Severance Event plus (ii) for a period of three (3) years following the
Severance Event, a continuation of all fringe and other benefits inuring to
Employee at the time of the Severance Event.

 

4.             Duties. The
Employee shall be employed as Chief Executive Officer and (interim) Chief
Financial Officer of the Company. His duties as Chief Executive Officer shall
include overall responsibility for managing the administrative, personnel,
marketing, sales and finance, together with such additional duties as may be
assigned to him from time to time by the Board of Directors in connection with
the conduct of its business. The Employee shall perform and discharge such
duties well and faithfully. A material change in the Employee’s title or the
scope and/or nature of his duties which is not consistent with the foregoing
and with the office of Chief Executive Officer, without the express written
consent of the Employee, shall constitute a material breach of this Agreement
by the Company. If the Employee is elected to be a director of the Company or
any subsidiary thereof during the term of this Agreement, the Employee will
serve in such capacity without further compensation.

5.             Extent of
Services. Absent a Disability pursuant to Section 3(a)(ii) hereof, the
Employee shall devote sufficient professional time, attention and energies to
the business of the Company in order to perform his duties under this Agreement
for the benefit of the Company, all as determined by the Employee in the good
faith exercise of this reasonable discretion. During the term of this
Agreement, the Employee shall not be engaged in any other business or
professional activity (whether or not such activity is pursued for gain, profit
or other pecuniary advantage) if such other business or professional activity
materially interferes with the Employee’s duties hereunder or otherwise
constitutes a breach of any other provision of this Agreement.

 

 

6.             Purchase of
Stock. Concurrently herewith, and as partial

consideration for entering into this Agreement, the Employee is
purchasing shares of the Company’s Common Stock as described in that certain “Founder’s
Stock Purchase Agreement,” a copy of which is attached as Exhibit A
hereto and incorporated herein by reference.

 

7.             Proprietary
Information. Concurrently herewith, as a condition of the

Employee’s engagement under this Agreement, the Employee has executed
the “Proprietary Information and Inventions Agreement,” a copy of which
is attached hereto as Exhibit B hereto and incorporated herein by
reference.

8.             Indemnification.
To the maximum extent permitted by California law, the Company shall indemnify
and hold the Employee harmless from expenses, judgments, fines, settlements and
other amounts (including attorneys fees and related costs) actually and
reasonably incurred by the Employee in connection with the defense or
settlement of civil, criminal, administrative and/or investigative proceeding against
the Employee in the Employee’s capacity as an officer and/or director of the
Company.

9.             Insurance.
The Company may, at its election and for its benefit, insure the Employee
against accidental loss or death and the Employee shall submit to such physical
examination and supply such information as may be required in connection
therewith.

 

10.           No Relocation~ Location of
Performance 

 

                                (a)           The parties acknowledge that the
Employee is not required to change his place of residence from Los Angeles
County, CA to perform hereunder.

                                (b)           The Employee’s services will be
performed in the greater Los

Angeles area. The Employee’s performance hereunder shall be within such
area or its environs. The parties acknowledge, however, that the Employee may
be required to travel extensively in connection with the performance of his
duties hereunder.

11.           Assignment.
This Agreement may not be assigned by any party hereto; provided that the
Company may assign this Agreement: (i) to an affiliate so long as such
affiliate assumes the Company’s obligations hereunder; provided that no such
assignment shall discharge the Company of its obligations herein, or (ii) in
connection with a merger or consolidation involving the Company or a sale of
substantially all its assets to the surviving corporation or purchaser as the
case may be, so long as such assignee assumes the Company’s obligations
thereunder.

 

12.           Notices. Any
notice required or permitted to be given under this Agreement shall be
sufficient if in writing and sent by registered mail to the Employee at his
residence at 1327 Sunset Plaza Dr, Los Angeles, CA 90069 or to the Company at
its address set forth above, Attention: James Blondell, President, or to such
other address of which a party is given notice as herein provided.

 

13.           Waiver of Breach.
A waiver by the Company or the Employee of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by the other party.

14.           Additional
Documents and Acts. Each party agrees to execute such additional documents
and perform such additional acts as may be requested by the other party to
effect the reasonable intent of this Agreement.

15.           Disputes. In
the event of any litigation to enforce or interpret any provision of this
Agreement, a court of competent jurisdiction may award either party reasonable
attorneys’ fees and costs, in addition to any other appropriate relief.

16.           Entire Agreement.
This instrument contains the entire agreement of the parties. It may be changed
only by an agreement in writing signed by a party against whom enforcement of
any waiver, change, modification, extension or discharge is sought.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first hereinabove written.

 

SUB-URBAN INDUSTRIES, INC., A California Corporation

 

 

	
  By:

  	
  /s/
  James Blondell

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  James
  Blondell, Its President

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/
  Joseph E. Shortal

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Aaron Apodaga

  	
   

  	
  Joseph
  E. Shortal, An Individual

  	
   

  	
   

  	
   

  
	
   

  	
  Aaron
  Apodaga, Its Secretary

  	
   

  	
  “Employee”EXHIBIT 4.9

                                FORM OF DEBENTURE

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

FACE  AMOUNT                                               $72,000
PRICE                                                      $60,000
INTEREST  RATE                                      10%  per  year
DEBENTURE  NUMBER                                   July  2005-101
ISSUANCE  DATE                                     July  15,  2005
MATURITY  DATE                                     July  15,  2010

     FOR VALUE RECEIVED, Jane Butel Corporation Florida corporation and it's
wholly owned subsidiary Bootie Beer Company (the "Company"), hereby promises to
pay to the order of DUTCHESS PRIVATE EQUITIES FUND, II, L.P. (the "Holder") on
August 3, 2010, (the "Maturity Date"), the principal amount of Seventy-Two
Thousand Dollars ($72,000) U.S., and to pay interest on the principal amount
hereof, in such amounts, at such times and on such terms and conditions as are
specified herein.

Article  1          Interest

     The Company shall pay interest on the unpaid principal amount of this
Debenture (the "Debenture") each month until the principal amount hereof is paid
in full or has been converted. The Debentures shall pay ten percent (10%) per
annum and is due every thirty (30) days from the date specified in Article 1a,
in cash, to the Holder. The closing shall be deemed to have occurred on the date
the funds (less escrow fees, attorney fees and those amounts payable pursuant to
the terms sheet) are received by the Company (the "Closing Date"). The
Debentures are subject to automatic conversion at the end of five (5) years from
the date of issuance at which time all Debentures outstanding will be
automatically converted based upon the formula set forth in Section 3.2.

Article  2          Method  of  Payment

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

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

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

Article  3          Conversion

Section  3.1     Conversion  Privilege

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

<PAGE>

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

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

Section  3.2     Conversion  Procedure.

(a) Conversion Procedures. The face amount of this Debenture may be converted,
in whole or in part, any time following the Closing Date. Such conversion shall
be effectuated by surrendering to the Company, or its attorney, this Debenture
to be converted together with a facsimile or original of the signed Notice of
Conversion which evidences Holder's intention to convert the Debenture
indicated. The date on which the Notice of Conversion is effective ("Conversion
Date") shall be deemed to be the date on which the Holder has delivered to the
Company a facsimile or original of the signed Notice of Conversion, as long as
the original Debenture(s) to be converted are received by the Company within
five (5) business days thereafter. At such time that the original Debenture has
been submitted to the Company, the Holder can elect to whether a reissuance of
the debenture is warranted, or whether the Company can retain the Debenture as
to a continual conversion by Holder. Notwithstanding the above, any Notice of
Conversion received by 4:00 P.M. EST, shall be deemed to have been received the
previous business day. Receipt being via a confirmation of time of facsimile of
the Holder.

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

(c) Conversion Rate. Holder is entitled to convert the face amount of this
Debenture, plus accrued interest, anytime following the Closing Date, at $1.00
per share ("Fixed Conversion Price"), the "Conversion Price". No fractional
shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded up or down, as the case may
be, to the nearest whole share.

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

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

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

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

<PAGE>

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

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

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

     The Company agrees to pay to all Holders of outstanding Debentures payments
for a Conversion Default ("Conversion Default Payments") in the amount of
(N/365) x (.24) x the initial issuance price of the outstanding and/or tendered
but not converted Debentures held by each Holder where N = the number of days
from the Conversion Default Date to the date (the "Authorization Date") that the
Company authorizes a sufficient number of shares of Common Stock to effect
conversion of all remaining Debentures. The Company shall send notice
("Authorization Notice") to each Holder of outstanding Debentures that
additional shares of Common Stock have been authorized, the Authorization Date
and the amount of Holder's accrued Conversion Default Payments. The accrued
Conversion Default shall be paid in cash or shall be convertible into Common
Stock at the Conversion Rate, upon written notice sent by the Holder to the
Company, which Conversion Default shall be payable as follows: (i) in the event
Holder elects to take such payment in cash, cash payments shall be made to such
Holder of outstanding Debentures by the fifth day of the following calendar
month, or (ii) in the event Holder elects to take such payment in stock, the
Holder may convert such payment amount into Common Stock at the conversion rate
set forth in Section 3.2(c) at any time after the 5th day of the calendar month
following the month in which the Authorization Notice was received, until the
expiration of the mandatory four (4) year conversion period.

     The Company acknowledges that its failure to maintain a sufficient number
of authorized but unissued shares of Common Stock to effect in full a conversion
of the Debentures will cause the Holder to suffer damages in an amount that will
be difficult to ascertain. Accordingly, the parties agree that it is appropriate
to include in this Agreement a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set forth in this
section represents the parties' good faith effort to quantify such damages and,
as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Debenture. Nothing herein shall limit the Holder's
right to pursue actual damages for the Company's failure to maintain a
sufficient number of authorized shares of Common Stock.

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

<PAGE>

brokerage commissions) of $11,000 to cover a Buy-In with respect to shares of
Common Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount
which the Company will be required to pay to the Holder will be $1,000.

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

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

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

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

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

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

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

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

     (m) Prior to conversion of all the Debentures, if at any time the
conversion of all the Debentures and exercise of all the Warrants outstanding
would result in an insufficient number of authorized shares of Common Stock
being available to cover all the conversions, then in such event, the Company
will move to call and hold a shareholder's meeting or have shareholder action
with written consent of the proper number of shareholders within thirty (30)
days of such event, or such greater period of time if statutorily required or
reasonably necessary as regards standard brokerage house and/or SEC requirements
and/or procedures, for the purpose of authorizing additional shares of Common
Stock to facilitate the conversions. In such an event management of the Company
shall recommend to all shareholders to vote their shares in favor of increasing
the authorized number of shares of Common Stock. Management of the Company shall

<PAGE>

vote all of its shares of Common Stock in favor of increasing the number of
shares of authorized Common Stock. Company represents and warrants that under no
circumstances will it deny or prevent Holder's right to convert the Debentures
as permitted under the terms of this Subscription Agreement or the Registration
Rights Agreement. Nothing in this Section shall limit the obligation of the
Company to make the payments set forth in Section 3.2(g). The Holder, at their
option, may request the company to authorize and issue additional shares if the
Holder feels it is necessary for conversions in the future In the event the
Company's shareholder's meeting does not result in the necessary authorization,
the Company shall redeem the outstanding Debentures for an amount equal to (x)
the sum of the principal of the outstanding Debentures plus accrued interest
thereon multiplied by (y) 133%.

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

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

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

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

Section  3.7     Reserved

Section 3.8 Company Mandatory Redemption. The Holder, at its sole option, shall
have the right to exercise a "Mandatory Redemption" to redeem, in whole or in
part, the outstanding amount of the Debenture, from the proceeds of a future
financing between the Company and the Holder ("Future Funding"). The Holder must
notify the Company in writing, via facsimile transmission, that it is exercising
its right of Mandatory Redemption. The redemption amount shall be paid to the
Holder from a Closing of a Future Funding.

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

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

Article  6          Defaults  and  Remedies

Section 6.1 Events of Default. An "Event of Default" occurs if (a) the Company
does not make the payment of the principal of this Debenture by conversion into
Common Stock within ten (10) business days of the Maturity Date, upon redemption
or otherwise, (b) the Company does not make a payment, other than a payment of
principal, for a period of three (3) business days thereafter, (c) any of the
Company's representations or warranties contained in the Subscription Agreement
or this Debenture were false when made or the Company fails to comply with any
of its other agreements in the Subscription Agreement or this Debenture and such
failure continues for the period and after the notice specified below, (d) the
Company pursuant to or within the meaning of any Bankruptcy Law (as hereinafter
defined): (i) commences a voluntary case; (ii) consents to the entry of an order
for relief against it in an involuntary case; (iii) consents to the appointment
of a Custodian (as hereinafter defined) of it or for all or substantially all of
its property or (iv) makes a general assignment for the benefit of its creditors
or (v) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that: (A) is for relief against the Company in an involuntary
case; (B) appoints a Custodian of the Company or for all or substantially all of
its property or (C) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for sixty (60) calendar days, (e) the
Company's Common Stock is suspended or no longer listed on any recognized
exchange including electronic over-the-counter bulletin board for in excess of

<PAGE>

five (5) consecutive trading days. As used in this Section 7.1, the term
"Bankruptcy Law" means Title 11 of the United States Code or any similar federal
or state law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law. A
default under clause (c) above is not an Event of Default until the holders of
at least 25% of the aggregate principal amount of the Debentures outstanding
notify the Company of such default and the Company does not cure it within
thirty (30) business days after the receipt of such notice, unless the Company
commences to cure such default within such period, which must specify the
default, demand that it be remedied and state that it is a "Notice of Default".
Prior to the expiration of the time for curing a default as set forth in the
preceding sentence, the holders of a majority in aggregate principal amount of
the Debentures at the time outstanding (exclusive of Debentures then owned by
the Company or any subsidiary or affiliate) may, on behalf of the holders of all
of the Debentures, waive any past Event of Default hereunder (or any past event
which, with the lapse of time or notice and lapse of time designated in
subsection (a), would constitute an Event of Default hereunder) and its
consequences, except a default in the payment of the principal of or interest on
any of the Debentures. In the case of any such waiver, such default or Event of
Default shall be deemed to have been cured for every purpose of this Debenture
and the Company and the holders of the Debentures shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.

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

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

Article  7          Registered  Debentures

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

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

Article  8          Notice.

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

If  to  the  Company:
Tania  Torruella
Bootie  Beer  Company
620  No.  Denning  Drive,  Suite  100
Winter  Park,  FL  32789

If  to  the  Holder:

     At  the  address  listed  in  the  Questionnaire.

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

<PAGE>

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

Article  10          No  Assignment
     This  Debenture  shall  not  be  assignable.

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

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

Article  13          Litigation

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

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

Article  14     Warrants

     As an additional inducement to Holder, the Company shall issue a warrant
for seventy-two thousand (72,000) shares of its common stock to be purchased at
the Fixed Conversion Price. Any partial amount invested shall be pro-rated on
the basis of the investment by Holder. These shares shall have piggyback
registration rights.

Article  15        Document  Preparation  Fees

     The Company shall pay to Dutchess Advisors, LLC ten thousand dollars
($10,000) directly from closing, for the preparation of documents.

                                       ***

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

By  /s/  Douglas  D'Agata
Douglas  D'Agata
Interim  CEO

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

By:  /s/  Douglas  Leighton
Douglas  H.  Leighton
Managing  Member

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