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**SUNRISE        ENERGY RESOURCES, INC.**

**CD-1011**

** 6%        SUBORDINATED NOTE DUE JULY 25, 2009**

**Promise to        Pay**
**US$1,000,        000 (One million US dollars) **
**US$1,000,000 (One million US        dollars)**
**6% (six percent)**

**Interest        Payments**

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**Lender’s        Right of Acceleration**

|   | (a) | If                  the Borrower fails to make any payment or principal or interest                  within                  fifteen days after its due date. |
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|   | (b) | If                  the Borrower fails to keep any other covenant made in this Note                  within                  thirty days after written notice from the                  Lender. |
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|   | (c) | If                  one or more judgments is entered against the Borrower which exceed,                  in the                  aggregate, $100,000 if the Borrower does not pay such judgments                  or arrange                  for their enforcement to be postponed no later than within thirty                  days                  after the judgments have been                  entered. |
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|   | (d) | If                  bankruptcy, receivership, or insolvency proceedings are started                  by or                  against the Borrower, or if the Borrower dissolves, liquidates                  or                  otherwise winds up its business. |
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**Agreement        of Subordination**

|   | (a) | The                  Lender shall not be entitled to receive any principal, interest                  or fee                  payments, and the Borrower shall not make such payments, unless,                  at the                  time of such payment (i) the Borrower shall have paid all amounts                  due at                  such time under any Senior Indebtedness, and (ii) the Borrower                  shall not                  be in default under the terms of any Senior Indebtedness and payment                  of                  the amount due under this Note would not result in a default under                  any                  Senior Indebtedness.  The word “default” includes defaults                  declared by holders of any Senior Indebtedness and any conditions,                  event                  or act which, with notice or the passage of time, would result                  in a                  default under any Senior                  Indebtedness. |
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|   | (b) | If                  bankruptcy, receivership, or insolvency proceedings by or against                  the                  Borrower or its property occurs, or if the Borrower dissolves,                  liquidates                  its assets or otherwise winds up its business, the Borrower shall                  pay all                  outstanding Senior Indebtedness before making any payment of principal,                  interest or fees due under this Note.  Any payments or                  distributions (including distributions of the Borrower’s non-cash assets                  or securities that would otherwise be made to the Lender will first                  be                  paid on account of all outstanding Senior                  Indebtedness. |
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|   | (c) | If                  the Lender demands early payment of this Note for any reason, the                  Borrower                  shall first pay all outstanding Senior Indebtedness before making                  any                  payments under this note. |
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|   | (d) | If                  the Lender receives any payment which is not entitled under this                  Note, the                  Lender shall hold such payment for the benefit of the holder of                  Senior                  Indebtedness and deliver such payment or distribution to the holders                  of                  Senior Indebtedness or their representatives for payment on account                  of all                  outstanding Senior Indebtedness. |
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|   | (e) | After                  the Senior Indebtedness has been paid in full, the Lender shall                  be                  entitled to the rights of Senior Indebtedness to receive payments                  until                  all amounts due under this Note are paid in                  full |
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**Notices**

**Conversion of Convertible        Notes**

| 6.1. | **Right                  to convert**.  Subject to and upon compliance with the                  provisions of this Section 6, at the option of the holder of any                  Notes,                  such Notes, or any portion of the principal amount thereof, may                  at any                  time at or before the close of business on the maturity date of                  such Notes                  be converted at 100% or so much of the principal amount of such                  Notes as                  are so converted into Common Stock at the Conversion Price, determined                  as                  hereinafter provided, in effect at the date of the                  conversion. |
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| 6.2. | **Manner                  of Exercise of Conversion Privilege**.  In order to                  exercise the conversion privilege, the holder shall surrender this                  Note to                  the Company at any time during usual business hours at its principal                  office in New York City, accompanied by a written notice to the                  Company at                  such office or agency that the holder elects to convert this Note                  or a                  specified portion thereof and stating the name or names (together                  with the                  address) in which the certificate or certificates for shares of                  Common                  Stock which shall be issued upon conversion.  All Notes                  surrendered for conversion shall (if so required by the Company)                  be                  accompanied by proper assignments thereof to the Company or be                  blank.  As promptly as practicable after the receipt of such                  notice and the surrender of this Note as aforesaid the Company                  shall issue                  and deliver to the holder, or on his written order, a certificate                  or                  certificates for the number of full shares of Common Stock issuable                  on                  such conversion in accordance with the provision of this Article                  and cash,                  as provided in Subsection 3, in respect of any fraction of a share                  of                  Common Stock otherwise issuable upon such conversion.  Such                  conversion shall be deemed to have been effected at the close of                  business                  on the Date of Conversion, and the person or persons in whose name                  or                  names any certificate or certificates for shares of Common Stock                  shall be                  issuable upon such conversion shall be deemed to have become the                  holder or                  holders of record of the shares represented thereby on such date;                  provided, however, that any such surrender on any date when the                  stock                  transfer books of the Company shall be closed shall constitute                  the person                  or persons in whose name or names the certificate or certificates                  for such                  shares are to be issued as the record holder or holders thereof                  for all                  purposes at the close of business on the next succeeding day on                  which such                  stock transfer books are open, and the Note surrendered shall not                  be                  deemed to have been converted until such time for all purposes,                  but such                  conversion shall be at the conversion price in effect at the close                  of                  business on the date of such surrender.  Anything contained in                  this Section 6.2 to the contrary notwithstanding, the Company shall                  not be                  obligated to effect the transfer of any Conversion Shares upon                  conversion                  of any portion of any Notes or cause any Conversion Shares upon                  conversion                  of any Notes to be registered in any name or names other than the                  name of                  the holder of the Notes, converted or to be converted (or such                  holder’s                  nominee or nominees) unless such holder delivers to the Company                  an opinion                  of counsel reasonably satisfactory to the Company to the effect                  that such                  transfer is in compliance with applicable securities                  laws. |
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| 6.3. | **Fractions                  of Share**.  The Company shall not be required to issue                  fractions of a share or scrip representing fractional shares of                  Common                  Stock upon conversion of the Note.  If any fraction of a share                  of Common Stock would, except for the provisions of this Section                  be                  issuable on the conversion of any Notes (or specified portions                  thereof),                  the Company shall pay a cash adjustment in respect of such fraction,                  equal                  to the value of such fraction based on the then Conversion                  Price. |
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| 6.4. | **Conversion                  Price**. |
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|   | (i) | The                  price at which shares of Common Stock shall be delivered upon conversion                  (herein called the Conversion Price) shall initially be US$1.40                  (One US                  dollar and forty cents) per share of Common                  Stock. |
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|   | (ii) | Each                  US$1000 Note Unit shall be convertible into 714 shares of the Borrower’s                  common stock. |
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|   | (iii) | The                  Conversion Price in effect or to be in effect at any time shall                  be subject                  to adjustment from time to time as provided in subsection                  6.5. |
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| 6.5 | **Adjustment                  of Conversion Price and Number of Shares of Common Stock Issuable                  upon                  Conversion of the Notes**.  Upon each adjustment of the                  Conversion Price, the Note Holders shall thereafter be entitled                  to                  purchase, at the conversion price resulting from such adjustment,                  the                  number of shares obtained by multiplying the Conversion Price in                  effect                  immediately prior to such adjustment by the number of shares purchasable                  pursuant hereto immediately prior to such adjustment and dividing                  the                  product thereof by the conversion price resulting from such                  adjustment. |
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| 6.6 | **Notice                  of Conversion Price**.  Upon any adjustment of the                  conversion price, than and in each such case the Company shall                  give                  written notice thereof, to the holder thereof, which notice shall                  state                  the conversion price resulting from such adjustment and the increase                  or                  decrease, if any, in the number of shares purchasable at such price                  upon                  the exercise of this Convertible Note, setting forth in reasonable                  detail                  the method of calculation and the facts upon which such calculation                  is                  based. |
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| 6.7 | **Notice                  of Distributions, Rights of Reorganization, Etc**.  In                  case at any time: |
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| 6.8 | **Taxes                  on Conversion**.  The issue of stock certificates on                  conversion of the Notes shall be made without charge to the converting                  Noteholder for any tax in respect of the issue thereof.  The                  Company shall not, however, be required to pay any tax which may                  be                  payable in respect of any transfer involved in the issue and delivery                  of                  stock in any name other than that of the holder of any Note converted,                  and                  the Company shall not be required to issue or deliver any certificate                  in                  respect to such stock unless and until the person or persons requesting                  the issuance thereof shall have paid to the Company the amount                  of such tax                  or shall have established to the satisfaction of the Company that                  such tax                  has been paid. |
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| 6.9 | **Company                  to Reserve Stock**.  The Company shall at all times                  reserve and keep available out of its authorized but unissued stock,                  for                  the purpose of effecting the conversion of the Notes, such number                  of its                  duly authorized shares of Common Stock as shall from time to time                  be                  sufficient to effect the conversion of all outstanding                  Notes.  If any shares of Common Stock, reserved or to be                  reserved, for such purposes, required registration under any Federal                  or                  state law before such shares may be validly issued to the holder,                  the                  Company covenants that it will in good faith and as expeditiously                  as                  possibly endeavor to secure such registration or approval, as the                  case may                  be. |
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| 6.10 | **No                  Rights as Stockholders**.  Prior to the conversion of any                  Note, the holder of such Note shall not be entitled to any rights                  of a                  stockholder of the Company, including without limitation the right                  to                  vote, to receive dividends or other distributions or to exercise                  any                  pre-emptive rights, and shall not be entitled to receive any notice                  of any                  proceedings of the Company, except as provided                  herein. |
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**7.        Representations and Warranties of Corporation**

| 7.1 | The                  Сompany                  represents that it is a corporation duly organized, validly existing                  under                  the laws of the State of Delaware. The Company is authorized to                  issue the                  Notes subscribed to by this instrument.  Upon payment for the                  Notes, the original Lender shall be the owner of duly and validly                  issued                  Notes. Delivery of the Note Certificates to the original Lender                  shall mean                  transfer to the Original Lender the title and the right to sell                  the Notes,                  the rights to receive interest and principal payments, rights to                  convert                  the Notes into Common Stock, as well as other rights as envisaged                  by the                  Articles of the Corporation and the US                  laws. |
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**8.        Representations and Warranties of        the  Lender**

| 8.1 | **Lender’s                  Organization**. The Lender is duly organized, validly                  existing, and in good standing, operating pursuant to the laws                  of the                  United Kingdom, and has all requisite corporate power and authority                  to                  carry on its business as currently conducted.  The Lender is                  also empowered and authorized to purchase the Notes for which it                  is                  subscribing. |
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| 8.2 | **Private                  Sale**. The Lender understands that this is a private                  offering.  The Notes have not been registered under the Act and                  are being acquired by the Lender for investment.  The Lender                  understands that it may not sell the Notes without compliance with                  the                  Act, applicable portions of which are explained                  below. |
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| 8.3 | **Compliance                  with Securities Act of 1933**. The Lender understands that                  the Notes it is acquiring are sold in reliance upon an exemption                  from such                  registration requirements afforded by Regulation S, governing the                  offer                  and sale of securities that occur outside the U.S.  Regulation S                  provides that Notes, sold pursuant to the exemption provided by                  that                  Regulation, within one (1)  year after completion of Notes                  purchasing under this Contract (hereinafter referred to as the“Restricted                  Period”), must not be sold without any solicitation or other efforts to                  sell the Notes or any re-sale into the United                  States. |
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**9.  No        U.S. Distribution.**

| 9.1 | Lender                  is not a US Person.  The Lender represents that is not a U.S.                  person as defined in Regulation S, promulgated under the                  Act.  The Lender may be a “distributor” as defined in Regulation                  S. |
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|   | 9.2 | No                  Solicitations or Sales to US Person.. The Lender acknowledges that the                  Notes cannot be sold in the United States as part of a United States                  "distribution" (as such term is defined in the federal securities                  laws of                  the United States).  The Lender has not offered the Notes to any                  person in the United States or to any U.S. Person as that term                  is defined                  in Regulation S.  The Lender has no reason to believe that                  the purchase of the Notes has been pre-arranged with a Lender in                  the                  United States.  The Lender has not engaged in any "directed                  selling efforts" (as that term is defined in Regulation S) to re-sell                  the                  Notes into the United States or to US Persons; nor has the Lender                  conducted any general solicitation to sell the Shares to persons                  residing                  within the United States or to U.S. Persons.  The Lender agrees                  that to the extent that it is a distributor, all offers and sales                  of the                  securities prior to the expiration of the registration period shall                  be                  made only in accordance with the provision of Rule 903 and Rule                  904 under                  Regulation S; pursuant to registration of the shares under the                  Act, or                  pursuant to an exemption from the registration requirements of                  the                  Act. |
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**10.        Restrictive Period Conditions**

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| 10.1. | Any                  transfer of the Notes resulting in violating the terns of this                  Agreement                  shall be void. All and any Note transfers by the secretary of the                  Corporation or by its transfer agent with making notes in the Securities                  Transfer Register of the Corporation shall be carried out only                  in                  compliance with the provisions of this                  Agreement. |
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| 10.2. | During                  the Restricted Period the Corporation will: refrain from publishing                  or                  disseminating any material in connection with the offering of the                  Notes in                  the United States;  ensure that all Offering Restrictions as                  defined in Regulation S applicable to the sale of Notes pursuant                  to this                  Contract are thoroughly complied with and satisfied; and refrain                  from                  engaging, and insure that none of its branches or affiliates will                  engage,                  in any Directed Selling Efforts as defined in Regulation S with                  respect to                  the Notes. |
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| 10.3 | Lender's                  Investigation. The Lender has been given a reasonable opportunity to                  ask questions of and receive answers from the Corporation concerning                  the                  Corporation and the Notes for which it is subscribing. The Lender                  has such                  knowledge and expertise in financial and business matters that                  the Lender                  is capable of evaluating the merits and risks involved in an investment                  in                  the Notes. The Lender shall not rely on any received information                  apart                  from that, which is given in this Contract, as well as on the information,                  resulting from any independent study of the Corporation conducted                  by the                  Lender. |
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**Borrower:    Sunrise        Energy Resources, Inc.**

**Lender:                Millington Solutions Limited**

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