Document:

GRANT ENTERPRISES, INC.

OPTION AGREEMENT

 

THIS AGREEMENT (this “Agreement”) is entered into as of September 1, 2005 (the “Date of Grant”), by and between GRANT ENTERPRISES, INC., a Delaware corporation (the “Company” or “Optionor”), and SHAHIN SHADMER. (the “Optionee”).

 

	
             
 	
            RECITALS
 

 

A.        The Optionor and Optionee have agreed that the Optionee will have the right to purchase a total of 200,000 shares of the Company’s common stock of the Company as set forth below. 

 

B.          The grant of the Option evidenced by this Agreement has been bargained for by Optionee and the Optionor. 

 

	
             
 	
            AGREEMENT
 

 

NOW, THEREFORE, the parties hereto, for good and sufficient consideration the receipt of which is hereby acknowledged, and intending to be legally bound, do hereby agree as follows:

 

1.    Grant of Option. Optionor hereby grants Optionee an option (the “Option”) to purchase a total of 200,000 shares of the Company’s common stock (“Option Shares”) for a purchase price of $1.00 per share subject to the terms and conditions set forth herein. 

 

1.1        Method of Exercise. The Option shall be exercisable by Optionee by giving written notice to the Company of the election to purchase the Option Shares, such notice to be accompanied by such other executed instruments or documents as may be required by the Company pursuant to this Agreement. 

 

1.2        Payment of Purchase Price. Such shares are cashless exercisable and the payment does not have to be made until the shares underlying the options are sold by the Optionee. At such time, Optionee shall tender in cash or by certified or bank cashier’s check payable to the Company, the purchase price for the Option Shares. 

 

2.           Vesting of Option. Optionee shall have the Option to purchase all of the Option Shares immediately upon execution of this agreement. The Option must be exercised by March 7, 2006. 

 

3.            Non-Transferability of Option; Death. The Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. In the event of death of Optionee during the term of this Option, the Option may be exercised at any time prior to the date of expiration of the term of this Option, by Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that had accrued at the date of death. The terms of this Option shall be binding upon the executors, administrators, heirs and 

 

 

successors of the Optionee and upon any successor by operation of law to Optionors.

 

	
            4.
 	
            General Provisions.
 

 

4.1          Amendments; Waivers. This Agreement may be amended only by agreement in writing of all parties. No waiver of any provision nor consent to any exception to the terms of this Agreement shall be effective unless in writing and signed by the party to be bound and then only to the specific purpose, extent and instance so provided.

 

4.2          Entire Agreement. This Agreement, together with its exhibits, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the parties in connection therewith.

 

4.3          Governing Law. This Agreement and the legal relations between the parties shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed in such State. 

 

4.4          Attorneys’ Fees. Should any action or proceeding be brought to construe or enforce the terms and conditions of this Agreement or the rights of the parties hereunder, the losing party shall pay to the prevailing party all court costs and reasonable attorneys’ fees and costs (at the prevailing party’s attorneys then current rates) incurred in such action or proceeding. A party that voluntarily dismisses an action or proceeding shall be considered a losing party for purposes of this provision. Attorneys’ fees incurred in enforcing any judgment in respect of this Agreement are recoverable as a separate item. The preceding sentence is intended to be severable from the other provisions of this Agreement and to survive any judgment and, to
the maximum extent permitted by law, shall not be deemed merged into any such judgment. 

 

4.5           Receipt of Agreement. Each of the parties hereto acknowledges that he has read this Agreement in its entirety and does hereby acknowledge receipt of a fully executed copy thereof. A fully executed copy shall be an original for all purposes, and is a duplicate original.

 

4.6    Notices. Any written notice required or permitted to be given shall be deemed delivered either when personally delivered or when mailed, registered or certified, postage prepaid with return receipt requested, if to Optionee, addressed to Optionee at the last residence address of Optionee as provided by him to the Optionee from time to time, and if to the Optionor, addressed to Optionee at the last residence address of Optionee as provided by him to the Optionor from time to time.

 

4.7          Severability. If any provision of this Agreement is determined to be invalid, illegal or unenforceable by any governmental entity, the remaining provisions of this Agreement to the extent permitted by law shall remain in full force and effect

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

 

	
            ATTEST:
 	
            GRANT ENTERPRISES, INC.
 

 

 

	
            _________________
 	
            By:
 	
            /s/  SHAHIN SHADMER
 

 

	
            ATTEST:
 	
            SHAHIN SHADMER
 

 

	
            _________________
 	
            /s/  SHAHIN SHADMEREXHIBIT 4.1

                         DEBENTURE AGREEMENT

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

FACE  AMOUNT                                              $192,000
PRICE                                                     $160,000
INTEREST  RATE                                      10%  per  year
DEBENTURE  NUMBER                               November  2005-101
ISSUANCE  DATE                                  November  1,  2005
MATURITY  DATE                                  November  1,  2010

FOR  VALUE  RECEIVED,  Jane  Butel  Corp  d/b/a  Bootie  Beer  Corp,  a  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 November,1 2010, (the "Maturity Date") the
principal amount of One Hundred Ninety-Two Thousand Dollars ($192,000) 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 convened. The Debentures shall pay ten percent (10%) per annum and
is  payable,  at  the Holder's option, in cash or in stock upon each conversion.
The  closing  shall  be  deemed  to  have  occurred  on  November 1st, 2005. 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.
50  Commonwealth  Ave,  Suite  2
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  not  to  exceed the face amount, interest and accrued
penalties as stated above and pursuant to Section 3.2 and rounding the result to
the  nearest  whole  share,

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

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

Section  3.2        Conversion  Procedure,

(a)  Conversion  Procedures. The 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 arc 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 referenced
to  above  in  Section  3.2(a),  the  Company  shall  deliver  a certificate, in
accordance  with  Section  3,  2(c)  for  the  number  of shares of Common Stock
issuable upon the conversion. In the event the Company does not make delivery of
the  Common Stock, as instructed by Holder, within three (3) business days after
the  Conversion  Date,  then  in  such event the Company shall pay to Holder one
percent  (1%)  in  cash,  of the dollar value of the Debentures being converted,
compounded  daily, per each day after the third (3rd) business day following the
Conversion  Date  that  the  Common  Stock  is  not  delivered to the Purchaser.

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

To the extent that the failure of the Company to issue the Common Stock pursuant
to  this  Section 3.2(f) is due to the unavailability of authorized but unissued
shares  of  Common  Stock, the provisions of this Section 3.2(1) 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 arc 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 lake 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 five
(5)  year  conversion  period.

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

(h) If, by the third (3rd) business day after the Conversion Date of any portion
of  the  Debentures  to  be  converted (the "Delivery Date"), the transfer agent
fails  for  any reason to deliver the Common Stock upon conversion by the Holder
and after such Delivery Date the Holder purchases, in an open market transaction
or  otherwise, shares of Common Stock (the "Covering Shares") solely in order to
make delivery in satisfaction of a sale of Common Stock by the Holder (the "Sold
Shares"),  which delivery such Holder anticipated to make using the Common Stock
issuable  upon  conversion (a "Buy-In"), the Company shall pay to the Holder, in
addition  to any other amounts due to Holder pursuant to this Debenture, and not
in  lieu  thereof,  the Buy-In Adjustment Amount (as defined below). The "Buy In
Adjustment  Amount"  is  the  amount  equal  to  the  excess, if any, of (x) the
Holder's  total purchase price (including brokerage commissions, if any) for the
Covering  Shares over (y) the net proceeds (after brokerage commissions, if any)
received  by  the Holder from the sale of the Sold Shares. The Company shall pay
the Buy-In Adjustment Amount to the Holder in immediately available funds within
five  (5)  business days of written demand by the Holder, By way of illustration
and not in limitation of the foregoing, if the Holder purchases shares of Common
Stock  having  a  total  purchase  price  (including brokerage commissions) of $
11,000  to cover a Buy-In with respect to shares of Common Stock it sold for net
proceeds  of  $10,000,  the  Buy-In  Adjustment Amount which the Company will he
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 Small Cap 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 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 repot 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
tine  Company  or for all or substantially all of its property or (C) orders the
liquidation  of  the  Company,  and  the order or decree remains unstayed and in
effect for sixty (60) calendar days, (e) the Company's Common Stock is suspended
or  no  longer  listed  on  any  recognized  exchange  including  electronic
over-the-counter  bulletin  board  for in excess of five (5) consecutive trading
days.

As  used  in  this  Section 6.1, the term "Bankruptcy Law" means Title 11 of the
United  States  Code  or  any  similar  federal  or  state law for the relief of
debtors.  The term "Custodian" means any receiver, trustee, assignee, liquidator
or  similar  official under any Bankruptcy Law. A default under clause (c) above
is  not  an  Event of Default until the holders of at least 25% of the aggregate
principal  amount  of  the  Debentures  outstanding  notify  the Company of such
default  and the Company does not cure it within thirty (30) business days after
the  receipt  of  such notice, unless the Company commences to cure such default
within  such  period, which must specify the default, demand that it be remedied
and  state that it is a "Notice of Default". Prior to the expiration of the time
for  curing  a  default as set forth in the preceding sentence, the holders of a
majority in aggregate principal amount of the Debentures at the time outstanding
(exclusive  of  Debentures  then  owned  by  the  Company  or  any subsidiary or
affiliate)  may,  on  behalf  of the holders of all of the Debentures, waive any
past Event of Default hereunder (or any past event which, with the lapse of time
or  notice  and  lapse of time designated in subsection (a), would constitute an
Event  of  Default  hereunder)  and  its  consequences,  except a default in the
payment of the principal of or interest on any of the Debentures. In the case of
any  such  waiver, such default or Event of Default shall be deemed to have been
cured for every purpose of this Debenture and the Company and the holders of the
Debentures  shall  be  restored  to their former positions and rights hereunder,
respectively;  but,  no  such  waiver  shall  extend  to any subsequent or other
default  or  impair  any  right  consequent  thereon.

          In the Event of Default and provided the Debentures have not been paid
in full, the Holder may elect to secure a portion of the Company's assets not to
exceed  200%  of the Face Amount of the Note,  in Pledged Collateral (as defined
in the Security Agreement).  The Holder may also elect to garnishee Revenue from
the Company in an amount that will repay the Holder on the schedules outlined in
this  Agreement.

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

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,  lo  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:
Douglas  H.  Leighton
Dutchess  Private  Equities  Fund,  II,  L.P.
50  Commonwealth  Ave,  Suite  2
Boston,  Massachusetts  02116

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

Article  9     Time

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

Article  10       No  Assignment

This  Debenture  shall  not  be  assignable.

Article  11       Rules  of  Construction.

In  this Debenture, unless the context otherwise requires, words in the singular
number  include the plural, and in the plural include the singular, and words of
the masculine gender include the feminine and the neuter, and when the -sense so
indicates,  words  of the neuter gender may refer to any gender. The numbers and
titles  of  sections  contained in the Debenture are inserted for convenience of
reference  only,  and they neither form a part of this Debenture nor are they to
be  used  in  the  construction  or  interpretation  hereof.  Wherever,  in this
Debenture,  a  determination  of  the  Company  is  required  or  allowed,  such
determination  shall  he  made  by  a  majority of the Board of Directors of the
Company and if it in 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 (he provisions hereof and in accordance with the laws
of  the  Commonwealth  of  Massachusetts  applicable  to  agreements  that  arc
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 Bolder, the Company shall issue a warrant
for two hundred thousand (200,000) 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  Redemption

     The  Holder  shall  have  the  right  to be redeemed from the Debenture, in
whole  or  in part, at a price equal to one hundred and thirty percent (130%) of
the  outstanding  principal  amount of the Debenture, including accrued interest
(and  penalties  if  applicable).  Any  Payments, as defined in Article 2 above,
shall  apply to the Redemption Amount.  The Investor also holds the right to use
the  existing  equity  line  to  redeem  the  Debenture

Article  16       Document  Preparation  Fees

The  Company  shall pay to Dutchess Advisors, LLC ten thousand dollars ($10,000)
directly  from closing on November 1st, 2005, and ten thousand dollars ($10,000)
directly  from  closing  on December 1st, 2005 for the preparation of documents.

Article  17     Waiver

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

Article  18     Waiver  of  Jury  Trial

AS  A  MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE
PARTIES  HERETO  HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED  IN  ANY  WAY  TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
ASSOCIATED  WITH  THIS  TRANSACTION.

Article  19     Use  of  Funds

The  Company  shall use the funds from the Debenture specifically as outlined in
Exhibit  A,  attached  hereto  and  incorporate  by  reference.

                                      *.*.*

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

JANE  BUTEL  CORP.  D/B/A  BOOTIE  BEER  CORP.

By:  /s/  Tania  Torruella
     ---------------------
Tania  Torruella
CEO  and  Chairperson

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

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

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