Document:

Exhibit 10.40 Option Agreement Jesse De La Rama (Aug 1, 2005)

    
      Exhibit
        10.40

       

      I.C.
        ISAACS & COMPANY,
        INC. AMENDED AND RESTATED <?xml:namespace prefix = o ns =
        "urn:schemas-microsoft-com:office:office" />

      OMNIBUS
        STOCK
        PLAN

      NONSTATUTORY
        STOCK OPTION
        GRANT AGREEMENT

      This Grant
        Agreement (the “Agreement”) is entered into on August 1, 2005, by and between
        I.C. ISAACS & COMPANY, INC., a Delaware corporation (the “Corporation”), and
        Jesse de la Rama (“Optionee”).

      WHEREAS, the
        Corporation’s wholly owned subsidiary, I.C. Isaacs & Company LP (the
“Company”), has entered into an amendment 
(the “Amendment”) dated August 1, 2005 
(the
“Grant
        Date”) to the employment
        agreement dated as of the 1st day of March 2004 with the Optionee (the
“Employment Agreement”); and

      WHEREAS, pursuant
        to the I.C. Isaacs & Company, Inc. Amended and Restated Omnibus Stock Plan
        (the “Plan”), the Compensation Committee of the Board of Directors of the
        Corporation determined, at a meeting held on the February 10, 2005 (the “Grant
        Date”), to grant an option to the Optionee, subject to the provisions of the
        Plan and this Agreement, to purchase 75,000 shares of the Common Stock, par
        value of $.0001 per share, of the Corporation (the “Common Stock”) at the
        exercise price in effect under the Plan for the Grant Date,

      NOW, THEREFORE,
        in
        consideration of the premises, mutual covenants and agreements herein, the
        Corporation and Optionee agree as follows:

      ARTICLE
        1

      GRANT
        OF
        OPTION

      Section
        1.1  Grant of Option. 
        The Corporation hereby grants to Optionee, pursuant to the provisions
        of the Plan, a non-qualified stock option to purchase from the Corporation,
        at a
        price of $6.00 per share (the “Exercise Price”), up to 75,000 shares of Common
        Stock, subject to the provisions of this Agreement (the “Option”).  The Option shall expire at 5:00 p.m.
        Eastern Time on the tenth anniversary of the Grant Date (the “Expiration Date”),
        unless fully exercised or terminated earlier pursuant to this Agreement.  Unless stated otherwise herein,
        capitalized terms in this Agreement shall have the meaning set forth in the
        Plan.

      ARTICLE
        2

      VESTING

      Section
        2.1  Vesting Schedule. 
Unless
        the Option has earlier terminated
        pursuant to the provisions of this Agreement, the Optionee’s right to purchase
        Common Stock pursuant to this Option shall vest ratably on the first, second
        and
        third anniversaries of the Grant Date, provided that he shall be an active
        employee of the Company on each of such dates. 

      Section
        2.2  Acceleration of Vesting. 
Unless
        the Option has earlier terminated
        pursuant to the provisions of this Agreement, vesting of the Option granted
        to
        Optionee hereunder shall be accelerated so that the unvested portion of the
        Option shall become 100% vested in Optionee upon the earliest to occur of:
        (i) Optionee’s termination of employment or consulting relationship due to
        Disability, as defined in Article 4 hereunder; (ii) termination of
        Optionee’s employment or consulting relationship with the Corporation as a
        result of Optionee’s death; or (iii) a Change of Control that occurs while
        Optionee is employed by or in a consulting relationship with the Corporation
        or
        an Affiliate.  For purposes of this
        Agreement, the term “Change of Control” shall have the meaning ascribed to such
        term in the Amendment.

      ARTICLE
        3

      EXERCISE
        OF
        OPTION

      Section
        3.1  Exercisability of Option. 
Pursuant
        to the terms of this Agreement,
        the Option shall be exercisable, notwithstanding any contrary provision or
        requirement contained in the Plan, for a period of ten years commencing on
        the
        Grant Date (the “Option Term”), provided that, the Optionee’s employment shall
        not be terminated for “Cause” (as such term is defined in the Employment
        Agreement); and further provided, that in the event that vesting of this
        Option
        shall be accelerated pursuant to Section 2.2 hereof, Optionee (or the legal
        representative of his estate) shall be entitled to exercise this Option,
        to the
        extent that it shall not have been exercised prior thereto, during the one
        year
        period ending on the date immediately preceding the first anniversary of
        the
        Termination Date or such shorter period as shall remain until the Expiration
        Dates

      Section
        3.2 Manner of
        Exercise.  The Option may be
        exercised, in whole or in part, by delivering written notice to the
        Corporation’s Secretary in such form as the Administrator may require from time
        to time; provided, however, that the Option may not be exercised at any one
        time
        as to fewer than ten shares (or such lesser number of shares as to which
        the
        Option is then exercisable).  Such
        notice shall specify the number of shares of Stock subject to the Option
        as to
        which the Option is being exercised, and shall be accompanied by full payment
        of
        the Exercise Price for such shares in accordance with this Section 3.2. The
        exercise shall be effective upon receipt by the Corporation’s Secretary of such
        written notice accompanied by the required payment.

      Payment of
        the
        Exercise Price shall be made (a) in cash (or via certified or cashier’s
        check, or money order); (b) by a broker-assisted cashless exercise in
        accordance with Regulation T of the Board of Governors of the Federal Reserve
        System and the provisions of the next paragraph; or (c) by any combination
        of the foregoing.  In the
        Administrator’s sole and absolute discretion, the Administrator may authorize
        payment of the Exercise Price to be made, in whole or in part, by such other
        means as the Administrator may prescribe. 
The Option may be exercised only
        in multiples of whole shares and no
        fractional shares shall be issued. 

      If the Stock
        is
        publicly traded on a national exchange, payment of the exercise price may
        be
        made, in whole or in part, subject to such limitations as the Administrator
        may
        determine, by delivery of a properly executed exercise notice, together with
        irrevocable instructions:  (i) to a
        brokerage firm approved by the Corporation to deliver promptly to the
        Corporation the aggregate amount of sale or loan proceeds to pay the exercise
        price and any withholding tax obligations that may arise in connection with
        the
        exercise, and (ii) to the Corporation to deliver the certificates for such
        purchased shares directly to such brokerage firm.

      Section
        3.3  Issuance of Shares and Payment of
        Cash
        upon Exercise.  Upon
        exercise of the Option, in whole or in part, in accordance with the terms
        of
        this Agreement and upon payment of the Exercise Price for the shares of Stock
        as
        to which the Option is exercised, the Corporation shall issue to Optionee,
        the
        brokerage firm specified in the Optionee’s delivery instructions pursuant to a
        broker-assisted cashless exercise, or such other person exercising the Option,
        as the case may be, the number of shares of Stock so paid for, in the form
        of
        fully paid and nonassessable Stock and shall deliver certificates therefor
        as
        soon as practicable thereafter.  The
        stock certificates for any shares of Stock issued hereunder shall, unless
        such
        shares are registered or an exemption from registration is available under
        applicable federal and state law, bear a legend restricting transferability
        of
        such shares.

      ARTICLE
        4

      TERMINATION
        OF
        OPTION

      Section
        4.1  Termination, In General. 
The
        Option granted hereby shall
        terminate and be of no force or effect after the Expiration Date set forth
        in
        Section 1.1, unless terminated prior to such time as provided below.  For purposes of this Agreement,
“Termination Date” shall mean, (a) the effective date
        of termination of
        Optionee’s employment with the Company, any successor entity thereto or any of
        the Corporation’s other subsidiaries, if such employment is terminated for
“cause” pursuant to Section 9 of the Employment Agreement, without cause
        pursuant to Section 10 of the Employment Agreement, by Optionee pursuant
        to
        Section 11(a)(iii) of the Employment Agreement, as amended by the Amendment
        or
        by Optionee pursuant to Paragraph 7 of the Amendment; or (b) if Optionee’s
        employment with the Company, any successor entity thereto or any of the
        Corporation’s other subsidiaries is terminated due to his death or “Disability”
(as such term is hereinafter defined), the earlier to occur of (i) the
        Expiration Date, or (ii) the first anniversary of (x) the date of the Optionee’s
        death or (y) the date upon which the Optionee shall receive written notice
        of
        the Administrator’s determination that Optionee is disabled (as the case may
        be).

      Section
        4.2  Termination of Employment for
        Cause.  In the event that
        the Optionee’s employment with the Company, any successor entity thereto or any
        of the Corporation’s other subsidiaries is terminated for “cause,” this Option
        shall terminate on the Termination Date with respect to all shares of Common
        Stock not purchased hereunder prior to such Termination Date.  For purposes of this Agreement, “cause”
shall have the meaning attributed
        thereto by Section 9 of the Employment
        Agreement.

      Section
        4.3  Upon Optionee’s Death. 
Unless
        the Option has earlier terminated
        for cause or due to the Optionee’s Disability, upon Optionee’s death, Optionee's
        executor, personal representative, or the person(s) to whom the Option shall
        have been transferred by will or the laws of descent and distribution, as
        the
        case may be, may exercise all or any part of the outstanding Option, provided
        such exercise occurs within one year after the date of Optionee’s death, but not
        later than the Expiration Date of the Option.  Unless sooner terminated, the Option
        shall terminate upon the expiration of such one yearperiod.

      Section
        4.4  Termination of Employment by Reason
        of
        Disability.  Unless the
        Option has earlier terminated for cause or due to the Optionee’s death, in the
        event that Optionee ceases, by reason of Disability, to be an employee of
        the
        Company, any successor entity thereto or any of the Corporation’s other
        subsidiaries, the outstanding Option may be exercised in whole or in part
        at any
        time within one year after the date of Optionee's termination of employment
        due
        to Disability, but not later than the Expiration Date of the Option.  Unless sooner terminated, the Option
        shall terminate upon the expiration of such one yearperiod.

      For purposes
        of
        this Agreement, Disability shall mean the inability to engage in any substantial
        gainful activity by reason of any medically determinable physical or mental
        impairment which can be expected to result in death or which has lasted or
        can
        be expected to last for a continuous period of not less than 12 months.  The Administrator may require such
        proof
        of Disability as the Administrator in its sole discretion deems appropriate
        and
        the Administrator’s determination as to whether Optionee is Disabled shall be
        final and binding on all parties concerned.

      Section
        4.5  Leave of Absence. 
For
        purposes of this Agreement, the
        Optionee's employment with the Company, any successor entity thereto or any
        of
        the Corporation’s other subsidiaries shall not be deemed to terminate if the
        Optionee takes any military leave, sick leave, or other bona fide leave of
        absence approved by the Administrator of 90 days or less.  In the event of a leave in excess
        of 90
        days, the Optionee's employment shall be deemed to terminate on the 91st
        day of
        the leave unless the Optionee's right to re-employment with the Corporation
        or
        Affiliate remains guaranteed by statute or contract.

      ARTICLE
        5

      ADJUSTMENTS;
        BUSINESS
        COMBINATIONS

      Section
        5.1  Adjustments for Events Affecting
        Common
        Stock.  In the event of
        changes in the Common Stock of the Corporation by reason of any stock dividend,
        split-up, recapitalization, merger, consolidation, business combination or
        exchange of shares and the like, the Administrator shall, in its discretion,
        make appropriate adjustments to the number, kind and price of shares covered
        by
        this Option, and shall, in its discretion and without the consent of the
        Optionee, make any other adjustments in this Option, including but not limited
        to reducing the number of shares subject to the Option or providing or mandating
        alternative settlement methods such as settlement of the Option in cash or
        in
        shares of Common Stock or other securities of the Corporation or of any other
        entity, or in any other matters which relate to the Option as the Administrator
        shall, in its sole discretion, determine to be necessary or appropriate.

      Section
        5.2  Pooling of Interests
        Transaction. 
Notwithstanding anything
        in the Plan or this Agreement to the contrary
        and without the consent of the Optionee, the Administrator, in its sole
        discretion, may make any modifications to the Option, including but not limited
        to cancellation, forfeiture, surrender or other termination of the Option
        in
        whole or in part regardless of the vested status of the Option, in order
        to
        facilitate any business combination that is authorized by the Board to comply
        with requirements for treatment as a pooling of interests transaction for
        accounting purposes under generally accepted accounting principles.

      Section
        5.3  Adjustments for Unusual
        Events.  The Administrator
        is authorized to make, in its discretion and without the consent of the
        Optionee, adjustments in the terms and conditions of, and the criteria included
        in, the Option in recognition of unusual or nonrecurring events affecting
        the
        Corporation, or the financial statements of the Corporation or any Subsidiary,
        or of changes in applicable laws, regulations, or accounting principles,
        whenever the Administrator determines that such adjustments are appropriate
        in
        order to prevent dilution or enlargement of the benefits or potential benefits
        intended to be made available under the Option or the Plan.

      Section
        5.4  Binding Nature of
        Adjustments.  Adjustments
        under this Article 5 will be made by the Administrator, whose determination
        as
        to what adjustments, if any, will be made and the extent thereof will be
        final,
        binding and conclusive.  No
        fractional shares will be issued pursuant to this Option on account of any
        such
        adjustments.

      ARTICLE
        6

      MISCELLANEOUS

      Section
        6.1  Non-Guarantee of
        Employment.  Nothing in the
        Plan or this Agreement shall alter the employment status of Optionee, nor
        be
        construed as a contract of employment between the Corporation, the Company,
        any
        successor entity thereto or any of the Corporation’s other subsidiaries, and
        Optionee, or as a contractual right of Optionee to continue in the employ
        of the
        Company, or as a limitation of the right of the Company, any successor entity
        thereto or any of the Corporation’s other subsidiaries to discharge Optionee at
        any time with or without cause or notice.

      Section
        6.2  No Rights of Stockholder. 
Optionee
        shall not have any of the
        rights of a stockholder with respect to the shares of Stock that may be issued
        upon the exercise of the Option until such shares of Stock have been issued
        to
        him upon the due exercise of the Option. 
No adjustment shall be made for dividends
        or distributions or other
        rights for which the record date is prior to the date such certificate or
        certificates are issued.

      Section
        6.3  Non-Qualified Nature of
        Option.  This Agreement is
        intended to be an agreement concerning a stock option arrangement which does
        not qualify under section 422 of the Internal Revenue Code, and this
        Agreement shall be so construed. 
Optionee acknowledges that, upon
        exercise of this Option, Optionee will
        recognize taxable income in an amount equal to the excess of the then Fair
        Market Value of the shares over the Exercise Price and must comply with the
        provisions of Section 6.6 of this Agreement with respect to any tax withholding
        obligations that arise as a result of such exercise.

      Section
        6.4  Confidential Information. 
In
        consideration of the Option granted
        to the Optionee pursuant to this Agreement, Optionee agrees and covenants
        that,
        except as specifically authorized by the Corporation, the Optionee will keep
        confidential any trade secrets or confidential or proprietary information
        of the
        Corporation or any Affiliate which are now or which hereafter may become
        known
        to Optionee as a result of Optionee's employment by the Corporation, the
        Company, any successor entity thereto or any of the Corporation’s other
        subsidiaries, and shall not at any time, directly or indirectly, disclose
        any
        such information to any person, firm, corporation or other entity, or use
        the
        same in any way other than in connection with the business of the Corporation
        or
        any Affiliate, at all times during and after Optionee's employment.

      Section
        6.5  The Corporation's Rights. 
        The existence of this Option shall not affect in any way the right
        or
        power of the Corporation or its stockholders to make or authorize any or
        all
        adjustments, recapitalizations, reorganizations or other changes in the
        Corporation's capital structure or its business, or any merger or consolidation
        of the Corporation, or any issue of bonds, debentures, preferred or other
        stocks
        with preference ahead of or convertible into, or otherwise affecting the
        Stock
        or the rights thereof, or the dissolution or liquidation of the Corporation,
        or
        any sale or transfer of all or any part of the Corporation's assets or business,
        or any other corporate act or proceeding, whether of a similar character
        or
        otherwise.

      Section
        6.6  Withholding of Taxes. 
The
        Corporation, the Company, any
        successor entity thereto or any of the Corporation’s other subsidiaries shall
        have the right to deduct from any compensation or any other payment of any
        kind
        (including withholding the issuance of shares of Stock) due Optionee the
        amount
        of any foreign, federal, state or local taxes required by law to be withheld
        as
        the result of the exercise of the Option or the lapsing of any restriction
        with
        respect to any shares of Stock acquired on exercise of the Option; provided,
        however, that the value of the shares of Stock withheld may not exceed the
        statutory minimum withholding amount required by law.  In lieu of such deduction, the
        Administrator may require Optionee to make a cash payment to the Corporation
        or
        an Affiliate equal to the amount required to be withheld.  If Optionee does not make such payment
        when requested, the Corporation may refuse to issue any Stock certificate
        under
        the Plan until arrangements satisfactory to the Administrator for such payment
        have been made.

      Section
        6.7  Optionee. 
Whenever
        the word “Optionee” is used in
        any provision of this Agreement under circumstances where the provision should
        logically be construed to apply to the estate, personal representative or
        beneficiary to whom this Option may be transferred by will or by the laws
        of
        descent and distribution, the word “Optionee” shall be deemed to include such
        person.

      Section
        6.8  Nontransferability of
        Option.   The Option
        shall be nontransferable otherwise than by will or the laws of descent and
        distribution and during the lifetime of Optionee, the Option may be exercised
        only by Optionee or, during the period Optionee is under a legal disability,
        by
        Optionee’s guardian or legal representative.  Except as provided above, the Option
        may
        not be assigned, transferred, pledged, hypothecated or disposed of in any
        way
        (whether by operation of law or otherwise) and shall not be subject to
        execution, attachment or similar process.

      Section
        6.9  Notices. 
All
        notices and other communications
        made or given pursuant to this Agreement shall be in writing and shall be
        sufficiently made or given if hand delivered or mailed by certified mail,
        addressed to Optionee at the address contained in the records of the
        Corporation, or addressed to the Administrator, care of the Corporation for
        the
        attention of its Corporate Secretary at its principal office or, if the
        receiving party consents in advance, transmitted and received via telecopy
        or
        via such other electronic transmission mechanism as may be available to the
        parties.

      Section
        6.10  Entire Agreement. 
This
        Agreement contains the entire
        agreement between the parties with respect to the subject matter contained
        herein.  Any oral or written
        agreements, representations, warranties, written inducements, or other
        communications made prior to the execution of this Agreement shall be void
        and
        ineffective for all purposes.

      Section
        6.11  Amendments. 
This
        Agreement may not be modified,
        except as provided in the Plan or in a written document signed by each of
        the
        parties hereto.  

      Section
        6.12  Conformity with Plan. 
Except
        for the provisions of this
        Agreement that are contrary to the provsions of the Plan, (a) this Agreement
        is
        intended to conform in all respects with, and is subject to all applicable
        provisions of, the Plan, which is incorporated herein by reference; and (b)
        any
        inconsistencies between this Agreement and the Plan shall be resolved in
        accordance with the terms of this Agreement.  In the event of any ambiguity in
        this
        Agreement or any matters as to which this Agreement is silent, the Plan shall
        govern.  A copy of the Plan is
        available upon request to the Administrator.

      Section
        6.13  Governing Law. 
This
        Agreement shall be governed by and
        construed in accordance with the laws of the State of Delaware, other than
        the
        conflict of laws principles thereof.

      Section
        6.14  Headings. 
The
        headings in this Agreement are for
        reference purposes only and shall not affect the meaning or interpretation
        of
        this Agreement.

      IN WITNESS
        WHEREOF,
        the Corporation has caused this Agreement to be executed by its duly authorized
        officer as of the date first above written.

                                                                             
        I.C. ISAACS & COMPANY, INC.

                                                                             
        By:      /s/
        Peter J
        Rizzo                                                                        

                                                                                     
        Peter J. Rizzo, Chief Executive Officer

      The undersigned
        hereby acknowledges that he/she has carefully read this Agreement and the
        Plan
        and agrees to be bound by all of the provisions set forth in such documents.

                                                                             
        OPTIONEE

                                                                             
             Jesse De
        La Rama                                                                              

       

                                                                             
        Date:    August 1,
        2005                                   

       

    

    CORPORATE
      SECRETARY

    I.C.
      ISAACS & COMPANY,
      INC.

    3840
      BANK
      STREET

    BALTIMORE,
      MARYLAND  21224

     

    Gentlemen:

    I hereby elect
      to
      exercise the Option dated August 1, 2005 concerning the grant made to me on
      February 10, 2005 by I.C. ISAACS & COMPANY, INC. (the “Company”), subject to
      all the terms and provisions of the Nonstatutory Stock Option Grant Agreement
      previously executed by me, and the I.C. ISAACS & COMPANY, INC. AMENDED AND
      RESTATED OMNIBUS STOCK PLAN. 
Pursuant to this election, I wish to
      purchase ____________ shares of
      Common Stock of the Company at a price of $___________ per share.

    Enclosed
      is payment for such
      shares in the amount of $_____________ in the form of:

    £ 
Cash             
      £ 
Certified
      or Cashier’s Check         
£ 
Money
      Order

    £ 
Irrevocable
      Broker-Assisted Cashless
      Exercise Instructions

    I understand
      that
      my election will be effective the date this election notice, together with
      the
      cash, check or other payment of the purchase price, is received by the Company
      as indicated below.

    My
      address of record
      is:

               
                                                                 

               
                                                                 

               
                                                                 

    And
      my Social Security
      Number is:                              

     

    Date:________________________               
      ______________________________________

                                                                           
      (Optionee)

                                                                           
      Received
      by
      I.C. ISAACS & COMPANY, INC. on

                                                                           
      ___________________________, ______

                                                                           
      By:                                                                  
      

     

                                                                           
      Title:Unassociated Document

    
      
        

      

    

     

    SUNRISE
      ENERGY RESOURCES, INC.

    

    CD-1001

    

     10%
      SUBORDINATED NOTE DUE MARCH 30, 2009

    

    This
      10%
      Note (hereinafter referred to as “the Note” or “the Notes”) is dated
MARCH 30, 2006.

    

    Borrower:    Sunrise
      Energy Resources,
      Inc.

    

    Address:    
551
      Fifth
      Avenue, Suite 601

                                
      New
      York, NY  10017

    

    The
      word
“Borrower” means the original Borrower and anyone else who merges with the
      Borrower or assumes the Borrower’s obligations under this
      Note.  However, the assumption of the Borrower’s obligations under
      this Note shall not release the Borrower from such obligations.

    

    Lender:       
      Millington Solutions Limited

    

    Address:    
Suite
      401,
      302 Regent Street, London W1R 6HH

    

    

    The
      Lender may transfer all or any part of this Note with written notice to the
      Borrower of the transfer, including the name, address of the transferee and
      the
      amount of the Note transferred.  The Borrower may treat the Lender as
      the owner of this Note until the Borrower receives a written notice of a
      transfer of all or part of this Note to another Lender.  The word
“Lender” shall mean the original Lender and anyone else to whom this Note is
      transferred.

    

    1.   
              Promise to
      Pay.  In return for a loan in  the amount of
US$1,000, 000 (One million US dollars) that is received from
      the original Lender, the Borrower promises to pay to the Lender
US$1,000,000 (One million US dollars) (hereinafter referred to
      as “the Principal”), plus accrued interest at a rate of 10% (ten
      percent) per annum.  The proceeds of the Note may be received
      from the Lender in tranches. The Borrower will repay the entire principal 3
      (three) years from the date of each tranche, unless the Lender demands earlier
      payment under “Lender’s Right of Acceleration” below or the parties agree to
      extend the due date.  The Borrower may make earlier principal
      payments.

    

    2.    
             Interest
      Payments.  The Borrower will make annual interest payments to
      the Lender in calculated at the rate of 10% annualized and accrued from the
      date
      of the receipt of each tranche hereunder. The interest shall be payable on
      March
      31, June 30, September 30 and December 31 beginning on March 31,
      2007.  However, if an interest payment is due on a Saturday, Sunday or
      legal holiday, then the Borrower shall make the interest payment the next day.
      The Borrower may at its sole discretion defer the payments of interest until
      the
      earlier of maturity or conversion of each tranche. Any deferred accrued interest
      shall be added to the outstanding Principal balance on the interest payment
      date.

     

    
      
        CD-1001

      

      
        1

        
          

        

      

      
        
        

      

    

    

    3.  
               Lender’s Right of
      Acceleration.  The Lender has the right, referred to as “the
      Lender’s Right of Acceleration”, to declare the entire unpaid principal and
      interest under this Note due immediately for any of the following
      reasons:

    

    
      	
            	
              (a)

            	
              If
                the Borrower fails to make any payment or principal or interest within
                fifteen days after its due date.

            

    

    
      	
               

            	
              (b)

            	
              If
                the Borrower fails to keep any other covenant made in this Note within
                thirty days after written notice from the
                Lender.

            

    

    
      	
               

            	
              (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.

            

    

    
      	
               

            	
              (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.

            

    

    

    4.  
               Agreement of
      Subordination.  The Lender’s rights to receive payments of
      principal, interest and fees under this Note is subordinated to the prior
      payment of all loans or other extensions of credit made to the Borrower by
      any
      bank, savings and loan association, finance company, insurance company or any
      similar financial institution (such loans and extensions of credit, together
      with any interest or fees payable on or in connection with such loans and
      extensions of credit, are from now on called “Senior Indebtedness”) on the
      following types:

    

    
      	
               

            	
              (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.

            

    

    
      	
               

            	
              (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.

            

    

    
      	
               

            	
              (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.

            

    

    
      	
               

            	
              (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

            

    

    

    5. 
                Notices.  All
      notices under this Note must be in writing.  They may be given by (a)
      personal delivery, or (b) certified mail, return receipt
      requested.  Each Party mush accept and claim the notices given by the
      other.  Notices shall be addressed to the other party at the address
      written at the beginning of this Note, or, if the notice is to a Lender to
      whom
      this Note was transferred, the address stated in the notice to the Borrower
      of
      such transfer.  Either party may notify the other of a change of
      address.

    

    6. 
                 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.

            

    

    

    
      	
              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.

            

    

    

    
      
        CD-1001

      

      
        3

        
          

        

      

      
        
        

      

    

     

    In
      case
      any Note is surrendered for conversion for only a portion of the principal
      amount thereof, the Company shall execute and deliver to the holder of such
      Note, at the expense of the Company, a new Note in the denomination or
      denominations ($1,000 and integral multiples thereof, plus one Note in a lesser
      denomination, if required) as such holder may request in an aggregate principal
      amount equal to the unconverted portion of the Note so surrendered.

    

    
      	
              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.

            

    

    

    
      	
              6.4.

            	
              Conversion
                Price.

            

    

    

    
      	
               

            	
              (i)

            	
              The
                price at which shares of Common Stock shall be delivered upon conversion
                (herein called the Conversion Price) shall initially be US$2.20 (Two
                US
                dollars and two cents) per share of Common
                Stock.

            

    

    
      	
               

            	
              (ii)

            	
              Each
                US$1000 Note Unit shall be convertible into 454 shares of the Borrower’s
                common stock.

            

    

    
      	
               

            	
              (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.

            

    

    

    
      	
              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.

            

    

    

    The
      Conversion Price shall be subject to adjustment from time to time as
      follows:

    

    A.  In
      case the Company at any time or from time to time after the date hereof (I)
      issues or sells any additional shares of Common Stock for a consideration per
      share less than the Conversion Price in effect immediately prior to the issue
      or
      sale of such additional shares, or without consideration, or (II) pay or make
      a
      dividend (other than in cash payable from retained earnings or earned surplus)
      or other distribution on Common Stock, then and thereafter successively upon
      each such issue, sale, dividend or other distribution, the Conversion Price
      for
      each share of Common Stock in effect immediately prior to such issue, sale,
      dividend or other distribution shall forthwith be reduced to a price (calculated
      to the nearest full cent) equal to the quotient obtained by dividing (i) an
      amount equal to the sum of (a) the total number of shares of Common Stock
      outstanding immediately prior to such issue sale, dividend or other distribution
      multiplied by such Conversion Price in effect immediately prior to such issue,
      sale, dividend or other distribution, plus (b) in the case of such an issue
      or
      sale, the consideration, if any, received by the Company upon such issue or
      sale, or minus (c) in the case of such a dividend or other distribution, the
      amount of such dividend or other distribution, by (ii) the total number of
      shares of Common Stock outstanding immediately after such issue, sale, dividend
      or other distribution.

    

    
      
        CD-1001

      

      
        4

        
          

        

      

      
        
        

      

    

     

    The
      Company shall not be required to make any adjustment of the Conversion Price
      if
      the amount of such adjustment shall be less than $0.001 per share, but in such
      case any adjustment that would otherwise be required then to be made shall
      be
      carried forward and shall be made at the time and together with any adjustment
      so carried forward, shall amount to not less than $0.001 per share.

    

    For
      the
      purpose of any adjustment as provided in this subsection A, the following
      provisions shall also be applicable:

    

    (i)           In
      case of the issue of additional shares of Common Stock for cash, the
      consideration received by the Company therefore shall be deemed to be the cash
      proceeds received by the Company for such shares, without deduction therefrom
      of
      any expenses incurred or any underwriting commissions or concessions paid or
      allowed by the Company in connection therewith.

    

    (ii)           In
      case at any time the Company shall grant any rights to subscribe for or to
      purchase, or any options for the purchase of, Common Stock or any stock or
      other
      securities convertible into or exchangeable for Common Stock (such convertible
      or exchangeable stock or securities being herein called “Convertible
      Securities”), whether or not such rights or options or the rights to convert or
      exchange any such Convertible Securities are immediately exercisable, and the
      price per share for which Common Stock is issuable upon the exercise of such
      rights or options or upon conversion or exchange of such Convertible
      Securities,

    

    (iii)           In
      case at any time the Company shall declare a dividend or make any other
      distribution upon any stock of the Company payable in Common Stock or
      Convertible Securities, any Common Stock or Convertible Securities, as the
      case
      may be, issuable in payment of such dividend or distribution shall be deemed
      to
      have been issued or sold without consideration.

    

    (iv)           In
      case any shares of Common Stock or Convertible Securities or any rights or
      options to purchase any such Common Stock or Convertible Securities shall be
      issued or sold, in whole or in part, for a consideration other than cash, the
      amount of the consideration other than cash received by the Company shall be
      deemed to be the fair value of such consideration as determined by the Board
      of
      Directors of the Company.

    

    
      
        CD-1001

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (v)           In
      the event of the consolidation of the Company with or the merger of the Company
      into any other corporation or of the sale of the properties and assets of the
      Company as, or substantially as, an entirety for stock or other securities
      of
      any corporation, or the merger of any other corporation into the Company as
      a
      result of which the holders of shares of Common Stock of the Company shall
      be
      deemed to have become the holders of, or shall become entitled to, stock or
      other securities of any corporation other than the Company, the Company shall
      be
      deemed to have issued a number of shares of its Common Stock for such stock
      or
      securities computed on the basis of the exchange ratio actually applied in
      the
      transaction and for a consideration equal to the fair market value on the date
      of such transaction of such stock or securities of the other
      corporation.  If such determination shall cause an adjustment in the
      Conversion Price, the determination of the number of shares of Common Stock
      issuable upon the conversion of any Convertible Note immediately prior to such
      consolidation, merger or sale for the purpose of subsection (iii) of this
      subsection 6.5 shall be made after giving effect to such adjustment of the
      Conversion Price.

    

    (vi)           In
      case of the payment or making of a dividend or other distribution on Common
      Stock in property (other than in shares of Common Stock and securities
      convertible into or exchangeable for shares for Common Stock, but including
      all
      other securities) such dividend or other distribution shall be deemed to have
      been paid or make at the close of business at the record date fixed for the
      determination of stockholders entitled to receive such dividend or other
      distribution shall be the amount of cash and, if in property other than cash,
      shall be deemed to be the value of such property as determined in good faith
      by
      the Board of Directors of the Company at the time of the declaration of such
      dividend or other distribution.

    

    (vii)           The
      number of shares of Common Stock outstanding at any given time shall not include
      shares owned or held by or for the account of the Company, and the disposition
      of any such shares shall be considered an issue of sale of Common
      Stock.

    

    B.  Anything
      to the contrary notwithstanding, the Company shall not be required to make
      any
      adjustment of the Conversion Price in any of the following events:

    

    (i)           The
      issue of the Convertible Notes of which this note is a part;

    

    (ii)           The
      issue of shares of Common Stock upon the conversion from time to time of the
      Notes;

    

    (iii)           The
      issue of not more than 1,000,000 shares of Common Stock upon the exercise of
      options granted under the Company’s Employee’s Qualified Stock Option
      Plan;

    

    
      
        CD-1001

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (iv)           The
      issue of non-qualified stock options (and the issuance of shares upon the
      exercise thereof) by the Company to its officers and employees for not exceeding
      an aggregate of 1,000,000 shares of Common Stock;

    

    (v)           Such
      additional shares as may be issuable upon the exercise of such options by reason
      of stock dividends, stock splits, and other changes in the capitalization of
      the
      Company; and

    

    C.  In
      case at any time the Company’s shares shall be combined into a small number of
      shares, the conversion price in effect immediately prior to such combination
      shall remain unchanged.

    

    D.  If
      any capital reorganization or reclassification of the capital stock of the
      Company, or consolidation or merger of the Company with another corporation,
      or
      the sale of all or substantially all of its assets to another corporation shall
      be effected in such a way that holders of Common Stock (or any other securities
      of the Company then issuable upon the conversion of this Note) shall be entitled
      to receive stock, securities or assets with respect to or in exchange for Common
      Stock (or such other securities) then, as a condition of such reorganization,
      reclassification, consolidation, merger or sale, lawful and adequate provision
      shall be made whereby the holder hereof shall thereafter have the right to
      purchase and receive upon the basis and upon the terms and conditions specified
      in this Convertible Note and in lieu of the shares of the Common Stock (or
      other
      securities) of the Company immediately theretofore purchasable and receivable
      upon the exercise of the rights represented hereby, such shares of stock,
      securities or assets as my be issued or payable with respect to or in exchange
      for a number of shares of such Common Stock (or such other securities)
      immediately theretofore purchasable and receivable upon the exercise of the
      rights represented hereby, had such reorganization, reclassification,
      consolidation , merger or sale not taken place, and in any case appropriate
      provision shall be made with respect to the rights and interest of the holder
      of
      this Convertible Note to the end that the provisions hereof (including without
      limitation provisions fro adjustments of the conversion price and of the number
      of shares purchasable upon the conversion of this Note) shall thereafter be
      applicable, as nearly as may be, in relation to any shares of stock, securities
      or assets thereafter deliverable upon the conversion hereof (including an
      immediate adjustment, by reason of such consolidation, merger or sale, of the
      conversion price, to the value for the Common Stock reflected by the terms
      of
      such consolidation, merger or sale if the value so reflected is less than the
      conversion price in effect immediately prior to such consolidation, merger
      or
      sale).  The Company shall not effect any such consolidation, merger or
      sale, unless prior to the consummation thereof the successor corporation (if
      other than the Company) resulting from such consolidation or merger or the
      corporation purchasing such assets shall assume, by written instrument executed
      and mailed to the registered holder hereof at the last address of such holder
      appearing on the books of the Company, the obligation to deliver to such holder
      such shares of stock, securities or assets, as, in accordance with the foregoing
      provisions, such holder may be entitled to purchase.  The successor
      corporation shall be deemed substituted for the Company for all purposes of
      this
      Agreement and the Convertible Notes.

     

    
      
        CD-1001

      

      
        7

        
          

        

      

      
        
        

      

    

    

    The
      provisions of subsection D governing the substitution of another corporation
      for
      the Company shall similarly apply to successive instances in which the
      corporation then deemed to be the Company hereunder shall either sell all or
      substantially all of its properties and assets to any other corporation or
      shall
      be the surviving corporation of the merger into it of any other corporation
      as a
      result of which the holders of any of its tock or other securities shall be
      deemed to have become the holders of, or shall become entitled to, the stock
      or
      other securities of any corporation other than the corporation at the time
      deemed to be the Company hereunder.

    

    
      	
              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.

            

    

    

    The
      Company will, within 90 days after the end of each of its fiscal years, and
      at
      such other times as the Holder may reasonably request, mail to the holder of
      each Convertible Note at the address of such holder shown on the books of the
      Company a certificate of the independent public accountants for the Company
      specifying the Conversion Price in effect as the end of such fiscal year and
      the
      number of shares of Common Stock, or the kind and amount of any securities
      or
      property other than Common Stock or both, issuable upon the conversion of the
      Convertible Notes.

    

    
      	
              6.7

            	
              Notice
                of Distributions, Rights of Reorganization, Etc.  In
                case at any time:

            

    

    

    (1)           the
      Company pays any dividend payable in stock upon its Common Stock or make any
      distribution (other than regular cash dividend) to the holders of its Common
      Stock;

    

    (2)           the
      Company shall offer for subscription pro rata to the holders of its Common
      Stock
      any additional shares of stock of any class or other rights;

    

    (3)           there
      shall be any capital reorganization, or reclassification of the capital stock
      of
      the Company, or consolidation or merger of the Company, or sale of all or
      substantially all of its assets to, another corporation; or

    

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

    

    then
      in
      any one or more of said cases, the Company shall give written notice, to the
      holder of this Convertible Note, of the date on which (a) the books of the
      Company shall close or a record shall be taken for such dividend, distribution
      or subscription rights, or (b) such reorganization, reclassification,
      consolidation, merger, sale, dissolution, liquidation or winding up shall take
      place, as the case may be.  Such notice shall also specify the dates
      as of which the holders of Common Stock of record shall participate in such
      dividend, distribution or subscription rights, or shall be entitled to exchange
      their Common Stock for securities or other property deliverable upon such
      reorganization, reclassification, consolidation, merger, sale, dissolution,
      liquidation or winding up, as the case may be.  Such written notice
      shall be given at least 20 days prior to the record date or the date on which
      the Company’s transfer books are closed in respect thereto.

     

    
      
        CD-1001

      

      
        8

        
          

        

      

      
        
        

      

    

    

    
      	
              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.

            

    

    

    
      	
              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.

            

    

    

    The
      Company will not take any action which would cause the conversion price to
      be
      below the then par value, if any, per share of the Common Stock, or in the
      case
      of no-par stock, below the amount for which such shares may be issued as fully
      paid and nonassesable.

    

    The
      Company covenants that all shares of Common Stock which may be issued upon
      conversion of Notes will upon issue be fully paid and nonassessable and free
      from all taxes, liens and charges with respect to the issue
      thereof.

    

    
      	
              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.

            

    

    

    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.

            

    

     

    
      
        CD-1001

      

      
        9

        
          

        

      

      
        
        

      

    

     

    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.

            

    

    

    
      	
              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.

            

    

    

    
      	
              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.

            

    

    

    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.

            

    

    

    
      	
               

            	
              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.

            

    

    

    10.
      Restrictive Period Conditions

    

    
      
        CD-1001

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	
              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.

            

    

    

    
      	
              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.

            

    

    

    
      	
              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.

            

    

    

    
      Agreed
        and executed on this date by the Borrower and the Lender.

    

    

    

    Borrower:    Sunrise
      Energy Resources, Inc.

    

    

    

    s/
      Konstantin Tsiryulnikov

    Konstantin
      Tsiryulnikov

    Chief
      Executive Officer

    

    

    

    Lender:        
      Millington Solutions Limited

    

    

    

    s/
      Millington Solutions Limited

    Evgeniy
      Kozlov

    Director

     

    
      CD-1001

      11

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