Document:

exv10w28

 

Exhibit 10.28

NUCRYST PHARMACEUTICALS CORP.

DESCRIPTION OF EXECUTIVE OFFICER CASH COMPENSATION

FOR 2007

Set forth below are the 2007 annual salary of the Chief Executive Officer, the Chief Financial
Officer and each of the three other most highly compensated Executive Officers.

Scott H. Gillis

President and Chief Executive Officer

	 	 	 
	Salary	 	 
	$275,000 US
	 	 

Eliot M. Lurier

Vice President, Finance and Administration and Chief Financial Officer

	 	 	 
	Salary	 	 
	$171,000 US
	 	 

Paul Schechter, Ph.D., M.D.

Vice President, Drug Development & Regulatory Affairs and Chief Medical Officer

	 	 	 
	Salary	 	 
	$240,000 US
	 	 

David McDowell

Vice President, Manufacturing Operations

	 	 	 
	Salary	 	 
	$188,809 US1
	 	 

Katherine J. Turner

Vice President, Research

	 	 	 
	Salary	 	 
	$195,000 US
	 	 

 

			
	1.	 	Mr. McDowell’s 2007 salary has been translated into U.S. dollars for purposes of this table
at the December 31, 2006 exchange rate of U.S.$1.00 = CDN $1.1652.

     In addition to salary, the named executive officers will be eligible to receive
non-equity incentive compensation for 2007 corporate performance pursuant to NUCRYST’s employee
variable pay program.

103Exhibit 10.12
                                                                   -------------

                                                            Royal Bank of Canada
                                                      Information Technology-GTA
                                          260 East Beaver Creek Road - 2nd Floor
                                                      Richmond Hill, ON, L4B 3M3
                                                              Tel.: 416-955-2139
                                                               Fax: 416-955-2562

RBC

                               [GRAPHIC OMITED]

November 27, 2006

Private and Confidential

SENTRY  TECHNOLOGY  CANADA  INC.
37  Voyager  Court  North
Toronto,  ON
M9W  4Y2

We  refer  to  the agreement dated May 15, 2006 between SENTRY TECHNOLOGY CANADA
INC.,  as the Borrower, and Royal Bank of Canada, as the Bank, (the "Agreement")
and in particular to the Credit Facility and Financial Covenants sections of the
Agreement.

All  capitalized  terms  not  otherwise  defined  herein  shall have the meaning
ascribed  to  them  in  the  Agreement.

The  Agreement  is  amended  as  follows:

1.   Under the  Credit  Facilities  section,  Facility  #  1,  the first line is
     amended  by  deleting  the  "term facility" and by substituting the "demand
     facility".

2.   Under the  Credit  Facilities  section,  Facility  #  1(a)  is  amended and
     restated  as  follows:

     1(a) Interest  rate  (per  annum):     RBP  +  2.75%

3.     Delete  in  its  entirety  the  section  entitled  Financial  Covenants.

CONDITIONS  PRECEDENT
The  effectiveness  of  this  amendment  is  conditional  upon receipt of a duly
executed  copy  of  this  amending  agreement.

COUNTERPART  EXECUTION

This  amending  agreement  may  be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed shall
be  deemed  to be an original and all of which taken together constitute one and
the  same  instrument.

All other terms and conditions outlined in the Agreement remain unchanged and in
full  force  and  effect.

This  amending  agreement  is  open for acceptance until December 4, 2006, after
which  date  it  will  be null and void, unless extended in writing by the Bank.

<PAGE>

ROYAL  BANK  OF  CANADA

Per:  /S/  Colin  Cochrane
      --------------------
Name:  Colin  Cochrane
Title:  Manager,  Special  Asset  Management
/js

Agreed  to  and  accepted  this  28  day  of  November,  2006.
                                ----         ---------

SENTRY  TECHNOLOGY  CANADA  INC.

Per:  /S/  Peter  L.  Murdoch
    -------------------------
Name:  Peter  L.  Murdoch
Title:  President

Per:  /S/  Peter  J.  Mundy
      ---------------------
Name:  Peter  J.  Mundy
Title:  VP  -  CFO

I/We  have  the  authority  to  bind  the  BorrowerExhibit 10.1

    
      
        

      

    

    PROMISSORY
      NOTE

     

    
      	
              FACE
                AMOUNT

            	 	
              $2,553,125

            
	
              PRICE

            	 	
              $2,375,000

            
	
              INTEREST
                RATE

            	 	
              7%
                per annum

            
	
              NOTE
                NUMBER

            	 	
              March-2007-101

            
	
              ISSUANCE
                DATE

            	 	
              March
                26, 2007

            
	
              MATURITY
                DATE

            	 	
              December
                26, 2007

            
	 	 	
               

            

    

    FOR
      VALUE
      RECEIVED, Sunrise Energy Resources, Inc., a Delaware corporation, and all of
      its
      subsidiaries (the "Company")
      (OTC
      BB: SEYR) hereby promises to pay to the order of
      DUTCHESS PRIVATE EQUITIES FUND, LTD.,
      a Cayman Island exempted company (the
      "Holder"),
      by
      the Maturity Date, or earlier, the Face Amount of Two Million Five Hundred
      and
      Fifty-three Thousand One Hundred Twenty-five Dollars ($2,553,125) plus accrued
      interest U.S., (this "Note")
      in
      such amounts, at such times and on such terms and conditions as are specified
      herein. The Company and the Holder are sometimes hereinafter collectively
      referred to as the "Parties"
      and
      each a "Party"
      to this
      Agreement.

     

    
      	
              Article
                1

            	
              Method
                of Payment/Interest

            

    

     

    Section
      1.1 Payments
      made to the Holder by the Company in satisfaction of this Note (referred to
      as a
      "Payment,"
      or
      "Payments",
      or the
      amounts outlined as the "Payment
      Amount")
      based
      upon the following schedule:

     

    Payment
      due on April 26, 2007 will be in the amount of twenty thousand dollars
      ($20,000);

     

    Payment
      due on May 26, 2007 will be in the amount of twenty thousand dollars
      ($20,000);

     

    Payment
      due on June 26, 2007 will be in the amount of twenty thousand dollars
      ($20,000);

     

    Payment
      due on July 26, 2007 will be in the amount of twenty thousand dollars
      ($20,000);

    

    Payment
      due on August 26, 2007 and the 26th
      business
      day of each month thereafter until this Note is paid in full will be in the
      amount of five hundred fifteen thousand one hundred and seventy dollars and
      fifty-seven cents ($515,170.57).

    

    Any
      outstanding balance on the Note upon Maturity shall be due and payable
      immediately to the Holder at such time.

    

      

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
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            1

            
              

            

          

          
            
            

          

        

      

    

     

    Payments
      made during a month that exceed the Payment Amount due shall NOT be applied
      to
      any future Payments due to the Holder by the Company; provided, however, that
      such Payments will reduce the unpaid Face Amount of the Note
      accordingly.

     

    Section
      1.2    If
      before
      Maturity the Company raises any funds in excess of $1 million (one million
      US
      dollars) from a third-party, whether involving the issuance of debt or equity,
      including any equity line agreements with the Holder or a third party (a
      "Financing"),
      then
      the Company shall pay to the Holder one hundred percent (100%) of the net
      proceeds therefrom in excess of the first $1 million as prepayment of the Face
      Amount of this Note, Interest and penalties, if any, then due. A Financing
      will
      also include the sale by the Company of any of its assets which are deemed
      to be
      material to the Company (excluding assets sold in the normal course of
      business). All prepayments described in this Section
      1.2
      shall be
      made to the Holder within three (3) business days of the Company's receipt
      of
      proceeds from the Financing. Failure to comply with this Section
      1.2
      shall
      constitute an Event of Default (as described in Article
      4
      hereof).
      The Holder may, but is not required to, waive all or part of this Section
      1.2
      upon
      request from the Company, and any such waiver shall not be unreasonably
      withheld.

     

    Section
      1.3    The
      Company shall pay seven percent (7%) annual coupon on the unpaid Face Amount
      of
      this Note, commencing on the Issuance Date (the "Interest").
      The
      Interest shall compound daily, pro rata for partial periods.

     

    Section
      1.4    Notwithstanding
      any provision to the contrary in this Note, within the first six (6) months,
      the
      Company may pay in full to the Holder ninety-seven and one-half percent (97.5%)
      of the balance due on the Face Amount, in readily available funds at any time
      and from time to time without penalty. In the event of repayment of the
      ninety-seven and one-half percent (97.5%) of the balance due on the Face Amount
      within six (6) months the Company shall be deemed to have fully repaid the
      Note
      and shall become free and clear of any and all obligations to the
      Holder.

     

    
      	
              Article
                2

            	
              Collateral

            

    

     

    Section
      2.1    The
      Company does hereby agree to issue to the Holder for use as Collateral forty
      (40) signed Put Notices consistent with the conditions set forth in Article
      12.
      In the event, the Holder uses the Collateral in full, the Company shall
      immediately deliver to the Holder additional Put Notices to the extent of the
      outstanding Face Amount as requested by the Holder.

    

    Section
      2.2    Upon
      the
      completion of the Company's obligation to the Holder of the Face Amount of
      this
      Note, the Company will not be under any further obligation to complete
      additional Puts. All remaining Put sheets shall be marked "VOID" by the Holder
      and returned to the Company at the Company's request.

    

    Section
      2.3    The
      above
      collateral Put Notices come into effect only in the Event of Default (as
      hereinafter defined). The Company shall not be obligated to deliver any shares
      of its common stock related to the collateral Put Notices unless an Event of
      Default has occurred. The Company may, at its discretion, place all such
      collateral Put Notice in escrow to be released in the Event of Default pursuant
      to instruction by the Company.

     

    
      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
                DM

              	 	
                KT

              	 	
                RL

              	 	 

      

       

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              Article
                3

            	
              Unpaid
                Amounts

            

    

     

    Section
      3.1    In
      the
      event that the Company has not repaid the Face Amount by the Maturity Date
      (the
      "Residual
      Amount"),
      then
      as liquidated damages (the "Liquidated
      Damages"),
      the
      Face Amount shall be increased by ten percent (10.0%) as an initial penalty
      and
      an
      additional two and one-half percent (2.5%) per month (pro rata for partial
      periods), compounded daily, for each month until the Face Amount is paid in
      full. Further, if a Residual Amount remains at Maturity, it shall constitute
      an
      Event of Default hereunder. The Parties acknowledge that the Liquidated Damages
      are not interest under this Note and shall not constitute a
      penalty.

     

    
      	
              Article
                4

            	
              Defaults
                and Remedies

            

    

     

    Section
      4.1    Events
      of Default. An
      "Event
      of Default"
      occurs
      if any one of the following occur:

     

    (a)    The
      Company does not make a Payment within three (3) business days of a Payment
      Date, or a Residual Amount on the Note exists on the Maturity Date;

     

    (b)    The
      Company, pursuant to or within the meaning of any Bankruptcy Law (as defined
      below): (i) commences a voluntary case; (ii) consents to the entry of an order
      for relief against it in an involuntary case; (iii) consents to the appointment
      of a Custodian (as defined below) of the Company or for its property; (iv)
      makes
      an assignment for the benefit of its creditors; or (v) a court of competent
      jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is
      for
      relief against the Company in an involuntary case; (B) appoints a Custodian
      of
      the Company or for its property; or (C) orders the liquidation of the Company,
      and the order or decree remains unstayed and in effect for sixty (60) calendar
      days;

     

    (c)    The
      Company's $0.001 par value common stock (the "Common Stock") is suspended or
      is
      no longer listed on any recognized exchange, including an electronic
      over-the-counter bulletin board, in excess of two (2) consecutive trading days
      (excluding suspensions of not more than one (1) trading day resulting from
      business announcements by the Company);

     

    (d)    The
      registration statement for the shares underlying the current Equity Line of
      Credit is not effective for any reason; 

     

    (e)    
The
      Company breaches a material term of this Agreement or any of the Company's
      representation or warranties hereunder were false when made;

     

    (f)     
      The
      Company fails to carry out Puts, including any paperwork needed, in a timely
      manner;

     

    (g)    
An
      event
      of default occurs under any agreement given as security for the obligations
      and
      liabilities under this Note, including, without limitation the Security
      Agreement of even date herewith among the Company, TOV Energy-Servicing
      Company Esko
      Pivnich ("Esko"); and Pari, Ltd. ("Pari"),
      and
      the Holder (the "Security
      Agreement").

    
       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
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        3

        
          

        

      

      
        
        

      

    

     

    (h)    The
      occurrence of any event which is described elsewhere in this Note as
      constituting an Event of Default hereunder.

     

    As
      used
      in this Section
      4.1,
      the term
      "Bankruptcy
      Law"
      means
      Title 11 of the United States Code or any similar federal or state law for
      the
      relief of debtors, and the term "Custodian"
      means
      any receiver, trustee, assignee, liquidator or similar official under any
      Bankruptcy Law.

     

     Section
      4.2    Remedies.
      Upon the
      occurrence of each and every Event of Default, the Holder may seek any or all
      of
      the following remedies to the extent of the Residual Amount:

     

    (a)    The
      Holder may elect to execute the Puts in an amount that will repay the Holder
      and
      fully enforce the Holder's rights under the Security Agreement as well as the
      Secured Continuing Unconditional Guaranty of even date herewith among Pari,
      Esko
      and the Holder (the "Guaranty")

     

    (b)    The
      Holder
      may increase the Face
      Amount of the Note by ten percent (10.0%) as an initial penalty and an
      additional two
      and
      one-half percent (2.5%) per month (pro rata for partial periods), compounded
      daily, until such Event of Default is cured (if capable of being cured) or
      this
      Note, together with all interest thereon, is repaid in full (i.e., exercise
      the
      Liquidated Damages option). The Parties acknowledge that the Liquidated Damages
      are not interest under this Note and shall not constitute a
      penalty.

     

    (c)    The
      Holder may elect to stop any further funding to the Company excluding the Equity
      Line of Credit.

     

    (d)    As
      more
      fully described herein, the Holder may also
      do
either
      (i) or
      (ii) below, but not both; provided, however, that the Holder may only utilize
      (i) below in the event of default pursuant to Section 4.1 and such default
      is
      not cured by the Company within thirty five (35) days:

     

    (i)    Switch
      the Residual Amount to a three-year ("Convertible
      Maturity Date"),
      eighteen percent (18%) interest bearing convertible debenture at a floating
      rate
      discount of twenty-five percent (25%) to the prevailing market price during
      conversion, and with such other terms described hereinafter (the "Convertible
      Debenture").
      The
      Convertible Debenture shall be considered closed ("Convertible
      Closing Date")
      as of
      the date of the Event of Default. 

     

    (ii)   The
      Holder may increase the Payment Amount described under Article
      1
      hereof
      to fulfill the repayment of the Residual Amount, by using the Collateral Put
      Notices. The Company shall provide full cooperation to the Holder in directing
      funds owed to the Holder on any Put made by the Company to the Investor. The
      Company agrees to diligently carry out the terms outlined in the Equity Line
      for
      delivery of any such shares. In the event the Company is not diligently
      fulfilling its obligation to direct funds owed to the Holder from Puts to the
      Holder, as reasonably determined by the Holder, the Holder may, after giving
      the
      Company five (5) business days advance notice to cure same, elect to increase
      the Face Amount of the Note by two and one-half percent (2.5%) per day,
      compounded daily, in addition to and on top of any additional remedies available
      to the Holder under this Note.

    
       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
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        4

        
          

        

      

      
        
        

      

    

     

    Section
      4.3    Conversion
      Privilege

     

    (a)    In
      the
      event that a Convertible Debenture is issued by the Company pursuant to Section
      4.2(d)(i), the Holder shall have the right to convert the Convertible Debenture
      into shares of Common Stock at any time following the Convertible Closing Date
      and before the close of business on the Convertible Maturity Date. The number
      of
      shares of Common Stock issuable upon the conversion of the Convertible Debenture
      shall be determined pursuant to Section
      4.4
      hereof,
but
      the
      number of shares issuable shall be rounded up to the nearest whole
      share.

     

    (b)    In
      the
      event all or any portion of the Convertible Debenture remains outstanding on
      the
      Convertible Maturity Date (the "Debenture
      Residual Amount"),
      the
      unconverted portion of such Convertible Debenture will automatically be
      converted into shares of Common Stock on such date in the manner set forth
      in
Section
      4.4
      hereof.

     

    Section
      4.4    Conversion
      Procedure

     

    (a)    The
      Holder may elect to convert the Residual Amount in whole or in part any time
      and
      from time to time following the Convertible Closing Date. Such conversion shall
      be effectuated by providing the Company, or its attorney, with that portion
      of
      the Convertible Debenture to be converted together with a facsimile or
      electronic mail of the signed notice of conversion (the "Notice
      of Conversion").
      The
      date on which the Notice of Conversion is effective ("Conversion
      Date")
      shall
      be deemed to be the date on which the Holder has delivered to the Company a
      facsimile or electronically mailed the Notice of Conversion (receipt being
      via a
      confirmation of the time such facsimile or electronic mail to the Company as
      provided by the Holder). The Holder can elect to either reissue the Convertible
      Debenture, or continually convert the remaining Residual Amount under the
      Debenture.

     

    (b)    Common
      Stock to be Issued. Upon
      the
      conversion of the Convertible Debenture by the Holder, the Company shall
      instruct its transfer agent to issue stock certificates without restrictive
      legends or stop transfer instructions, if, at that time, a registration
      statement covering the underlying shares of Common Stock has been declared
      effective (or with proper restrictive legends if the registration statement
      has
      not as yet been declared effective), in specified denominations representing
      the
      number of shares of Common Stock issuable upon such conversion. In the event
      that the Convertible Debenture is deemed saleable under Rule 144 of the
      Securities Act, the Company shall, upon a Notice of Conversion, instruct the
      transfer agent to issue free trading certificates without restrictive legends,
      subject to other applicable securities laws. The Company is responsible to
      for
      all costs associated with the issuance of the shares, including but not limited
      to the opinion letter, overnight delivery of the certificates and any other
      costs that arise. The Company shall act as registrar of the Shares of Common
      Stock to be issued and shall maintain an appropriate ledger containing the
      necessary information with respect to each Convertible Debenture. The Company
      warrants that no instructions have been given or will be given to the transfer
      agent which limit, or otherwise prevent resale and that the Common Stock shall
      otherwise be freely resold, except as may be set forth herein or subject to
      applicable law.

    
       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
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        5

        
          

        

      

      
        
        

      

    

     

    (c)    Conversion
      Rate.
      The
      Holder is entitled to convert the
      Convertible Debenture Residual Amount, plus accrued interest and penalties,
      anytime following the Convertible Closing Date, at the lesser of either (i)
      seventy-five percent (75%) of the lowest closing bid price during the fifteen
      (15) trading days immediately preceding the Notice of Conversion or (ii) 100%
      of
      the lowest bid price for the twenty (20) trading days immediately preceding
      the
      Convertible Closing Date ("Fixed
      Conversion Price").
      No
      fractional shares or scrip representing fractions of shares will be issued
      on
      conversion, but the number of shares issuable shall be rounded up to the nearest
      whole share.

     

    (d)    Nothing
      contained in the Convertible Debenture shall be deemed to establish or require
      the Company to pay interest to the Holder at a rate in excess of the maximum
      rate permitted by applicable law. In the event that the rate of interest
      required to be paid exceeds the maximum rate permitted by governing law, the
      rate of interest required to be paid thereunder shall be automatically reduced
      to the maximum rate permitted under the governing law and such excess shall
      be
      returned with reasonable promptness by the Holder to the Company. In the event
      this Section
      4.4(d)
      applies,
      the Parties agree that the terms of this Note shall remain in full force and
      effect except as is necessary to make the interest rate comply with applicable
      law.

     

    (e)    The
      Holder shall be treated as a shareholder of record on the date the Company
      is
      required to issue the Common Stock to the Holder. If prior to the issuance
      of
      stock certificates, the Holder designates another person as the entity in the
      name of which the stock certificates requesting the Convertible Debenture are
      to
      be issued, the Holder shall provide to the Company evidence that either no
      tax
      shall be due and payable as a result of such transfer or that the applicable
      tax
      has been paid by the Holder or such person. If the Holder converts any part
      of
      the Convertible Debentures, or will be, the Company shall issue to the Holder
      a
      new Convertible Debenture equal to the unconverted amount, immediately upon
      request by the Holder.

     

    (f)    
Within
      four (4) business days after receipt of the documentation referred to in this
      Section, the Company shall deliver a certificate for the number of shares of
      Common Stock issuable upon the conversion. In the event the Company does not
      make delivery of the Common Stock as instructed by Holder within four (4)
      business days after the Conversion Date, the Company shall pay to the Holder
      an
      additional one percent (1.0%) per day in cash of the full dollar value of the
      Debenture Residual Amount then remaining after conversion, compounded daily;
      provided, however, that the Company shall not be liable for any amounts under
      this Section 4.4(f) in the event that the delay in the issuance of the Common
      Stock is as a result of actions by the Holder or outside of the control of
      the
      Company. The Company shall use reasonably commercial efforts to ensure that
      its
      transfer agent, Computer Share, timely complies with any instructions to issue
      shares as may be required.

    
      
         

        
          	
                   

                	 	
                   

                	 	
                   

                	 	
                  SEYR
                    Note March.2007.$2,553,125.FINAL

                
	
                  DM

                	 	
                  KT

                	 	
                  RL

                	 	 

        

         

      

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (g)    The
      Company shall at all times reserve (or make alternative written arrangements
      for
      reservation or contribution of shares) and have available all Common Stock
      necessary to meet conversion of the Convertible Debentures by the Holder of
      the
      entire amount of Convertible Debentures then outstanding. If, at any time,
      the
      Holder submits a Notice of Conversion and the Company does not have sufficient
      authorized but unissued shares of Common Stock (or alternative shares of Common
      Stock as may be contributed by stockholders of the Company) available to effect,
      in full, a conversion of the Convertible Debentures (a "Conversion
      Default,"
      the
      date of such default being referred to herein as the "Conversion
      Default Date"),
      the
      Company shall issue to the Holder all of the shares of Common Stock which are
      available. Any Convertible Debentures, or any portion thereof, which cannot
      be
      converted due to the Company's lack of sufficient authorized common stock (the
      "Unconverted
      Debentures"),
      may
      be deemed null and void upon written notice sent by the Holder to the Company.
      The Company shall provide notice of such Conversion Default ("Notice
      of Conversion Default")
      to the
      Holder, by facsimile, within one (1) business days of such default.

     

    (h)    The
      Company agrees to pay the Holder payments for a Conversion Default
      ("Conversion
      Default Payments")
      in the
      amount of (N/365) multiplied by 0.24, the product of which is then multiplied
      by
      the initial issuance price of the outstanding or tendered but not converted
      Convertible Debentures held by the Holder, where N equals the number of days
      from the Conversion Default Date to the date (the "Authorization
      Date")
      that
      the Company authorizes a sufficient number of shares of Common Stock to effect
      conversion of all remaining Convertible Debentures. The Company shall send
      notice ("Authorization
      Notice")
      to the
      Holder that additional shares of Common Stock have been authorized, the
      Authorization Date, and the amount of Holder's accrued Conversion Default
      Payments. The accrued Conversion Default shall be paid in cash or shall be
      convertible into Common Stock at the conversion rate set forth in Section
      4.4(c)
      hereof,
      upon written notice sent by the Holder to the Company, which Conversion Default
      shall be payable as follows: (i) in the event the Holder elects to take such
      payment in cash, cash payment shall be made to the Holder within five (5)
      business days, or (ii) in the event Holder elects to take such payment in stock,
      the Holder may convert at the conversion rate set forth in Section
      4.4(c)
      hereof
      until the expiration of the conversion period.

     

    (i)    
The
      Company acknowledges that its failure to maintain a sufficient number of
      authorized but unissued shares of Common Stock to effect in full a conversion
      of
      the Convertible Debentures in full will cause the Holder to suffer irreparable
      harm, and that the actual damages to the Holder will be difficult to ascertain.
      Accordingly, the parties agree that it is appropriate to include in this
      Agreement a provision for liquidated damages. The Parties acknowledge and agree
      that the liquidated damages provision set forth in this section represents
      the
      parties' good faith effort to quantify such damages and, as such, agree that
      the
      form and amount of such liquidated damages are reasonable, and under the
      circumstances, do not constitute a penalty. The payment of liquidated damages
      shall not relieve the Company from its obligations to deliver the Common Stock
      pursuant to the terms of this Convertible Debenture.

     

    (j)    
If,
      by
      the fourth (4th) business day after the Conversion Date, any portion of the
      shares of the Convertible Debentures have not been delivered to the Holder
      and
      the Holder purchases, in an open market transaction or otherwise, shares of
      Common Stock (the "Covering
      Shares")
      necessary to make delivery of shares which would had been delivered if the
      full
      amount of the shares to be converted had been delivered to the Holder, then
      the
      Company shall pay to the Holder, in addition to any other amounts due to Holder
      pursuant to this Convertible Debenture, and not in lieu thereof, the Buy-In
      Adjustment Amount (as defined below). The "Buy
      In
      Adjustment Amount"
      is the
      amount equal to the excess, if any, of (x) the Holder's total purchase price
      (including brokerage commissions, if any) for the Covering Shares, minus (y)
      the
      net proceeds (after brokerage commissions, if any) received by the Holder from
      the sale of the Sold Shares. The Company shall pay the Buy-In Adjustment Amount
      to the Holder in immediately available funds within five (5) business days
      of
      written demand by the Holder. By way of illustration only and not in limitation
      of the foregoing, if the Holder purchases shares of Common Stock having a total
      purchase price (including brokerage commissions) of $11,000 to cover a Buy-In
      with respect to shares of Common Stock it sold for net proceeds of $10,000,
      the
      Buy-In Adjustment Amount which the Company will be required to pay to the Holder
      will be $1,000.

    
       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
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        7

        
          

        

      

      
        
        

      

    

     

    
      	
              Article
                5

            	
              Additional
                Financing and Registration
                Statements

            

    

     

    Section
      5.1    The
      Company will not enter into any additional financing agreements whether for
      debt
      or equity, without prior expressed written consent from the Holder, which may
      be
      given or withheld in Holder's sole and absolute discretion.

     

    Section
      5.2    The
      Company agrees that it shall not file any registration statement which includes
      any of its Common Stock (other than registration statements associated with
      registering shares on Form S-4, Form S-8 (covering shares of the Company's
      Common Stock issued pursuant to a bona fide employee stock option plan or other
      Company common stock benefit plan approved by the Board of Directors) or other
      limited purpose form) until such time as the Note is paid in full (the
      "Lock-Up
      Period")
      or
      unless and until Holder gives its prior written consent (which may be given
      or
      withheld in Holder's sole and absolute discretion), except for any registration
      statements the Company is contractually obligated to file pursuant to a
      Financing that may be conducted by the Company before Maturity, provided a
      copy
      of the agreement for such financing is provided by the Company to the
      Holder.

     

    Section
      5.3    If
      at any
      time while this Note is outstanding, the Company issues or agrees to issue
      to
      any entity or person ("Third-Party")
      for
      any reason whatsoever, any common stock or securities convertible into or
      exercisable for shares of common stock (or modify any such terms in effect
      prior
      to the execution of this Note) (a "Third
      Party Financing"),
      at
      terms deemed by the Holder to be more favorable to the Third-Party, then the
      Company grants to the Holder the right, at the Holder's election, to modify
      the
      terms of this Note to match or conform to the more favorable term or terms
      of
      the Third-Party Financing. The rights of the Holder in this Section
      5.3
      are in
      addition to all other rights the Holder has pursuant to this Note and the
      related Security Agreement between the Holder and the Company.

     

    Violation
      of any Section under this Article
      5
      shall
      constitute an Event of Default and the Holder may elect to take the action
      or
      actions outlined in Article
      4 hereof.

    
       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
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                RL

              	 	 

      

       

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    
      	
              Article
                6

            	
              Notice

            

    

     

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

     

    If
      to the
      Company:

     

    Attn:
      Roman Livson 

    Sunrise
      Energy Resources, Inc

    551
      FIFTH
      AVENUE

    SUITE
      2020

    NEW
      YORK
      NY 10017 

    Telephone:
      212-973-0063

    Fax:
      212-214-0310 

    

    If
      to the
      Holder:

    

    Dutchess
      Capital Management, LLC

    Douglas
      Leighton

    50
      Commonwealth Ave, Suite 2

    Boston,
      MA 02116

    Telephone:
      (617) 301-4700

    Facsimile:
      (617) 249-0947

    

    Section
      6.2    The
      Parties are required to provide each other with five (5) business days prior
      notice to the other party of any change in address, phone number or facsimile
      number.

     

    
      	
              Article
                7

            	
              Time

            

    

     

    Where
      this Note authorizes or requires the payment of money or the performance of
      a
      condition or obligation on a Saturday or Sunday or a holiday on which the United
      States Stock Markets ("US
      Markets")
      are
      closed ("Holiday"),
      such
      payment shall be made or condition or obligation performed on the last business
      day preceding such Saturday, Sunday or Holiday. A "business
      day"
      shall
      mean a day on which the
      US
      Markets are open for a full day or half day of trading.

     

    
      	
              Article
                8

            	
              No
                Assignment.

            

    

     

    This
      Note
      and the obligations hereunder shall not be assigned.

    
       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
                DM

              	 	
                KT

              	 	
                RL

              	 	 

      

       

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	
              Article
                9

            	
              Rules
                of Construction.

            

    

     

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

     

    
      	
              Article
                10

            	
              Governing
                Law

            

    

     

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

     

    
      	
              Article
                11

            	
              Disputes
                Subject to Arbitration

            

    

     

    The
      Parties shall submit all disputes arising under this Note to arbitration in
      Boston, Massachusetts before a single arbitrator of the American Arbitration
      Association (the "AAA").
      The
      arbitrator shall be selected by application of the rules of the AAA, or by
      mutual agreement of the Parties, except that such arbitrator shall be an
      attorney admitted to practice law in the Commonwealth of Massachusetts. No
      Party
      will challenge the jurisdiction or venue provisions provided in this
Article
      11.
      Nothing
      in this Article
      11 shall
      limit the Holder's right to obtain an injunction for a breach of this Note
      from
      any court of law. Any
      injunction obtained shall remain in full force and effect until the arbitrator,
      as set forth in this Article
      11
      fully
      adjudicates the dispute.

     

    
      	
              Article
                12

            	
              Conditions
                to Closing

            

    

     

    The
      Company shall have delivered the proper Collateral to the Holder before Closing
      of this Note.

     

    
      	
              Article
                13

            	
              Closing
                Costs

            

    

     

    The
      Company agrees to pay for related expenses associated with the proposed
      transaction of fifteen thousand dollars ($15,000). This amount shall cover,
      but
      is not limited to, the following: due diligence expenses, document creation
      expenses, closing costs, and transaction administration expenses. All such
      structuring and administration expenses shall be deducted from the first
      Closing.

     

    The
      Company shall pay sixty thousand dollars ($60,000) to the Holder upon
      Closing.

    
       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
                DM

              	 	
                KT

              	 	
                RL

              	 	 

      

       

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	
              Article
                14

            	
              Indemnification

            

    

     

    In
      consideration of the Holder's execution and delivery of this Agreement and
      the
      acquisition and funding by the Holder of this Note and in addition to all of
      the
      Company's other obligations under the documents contemplated hereby, the Company
      shall defend, protect, indemnify and hold harmless the Holder and all of its
      shareholders, officers, directors, employees, counsel, and direct or indirect
      investors and any of the foregoing person's agents or other representatives
      (including, without limitation, those retained in connection with the
      transactions contemplated by this Agreement) (collectively, the "Indemnities")
      from
      and against any and all actions, causes of action, suits, claims, losses, costs,
      penalties, fees, liabilities and damages, and expenses in connection therewith
      (irrespective of whether any such Indemnitee is a party to the action for which
      indemnification hereunder is sought), and including, without limitation,
      reasonable attorneys' fees and disbursements (the "Indemnified
      Liabilities"),
      incurred by any Indemnitee as a result of, or arising out of, or relating to
      (i)
      any misrepresentation or breach of any representation or warranty made by the
      Company in the Note, or any other certificate, instrument or document
      contemplated hereby or thereby, or (ii) any breach of any covenant, agreement
      or
      obligation of the Company contained in the Note or any other certificate,
      instrument or document contemplated hereby or thereby, except insofar as any
      such misrepresentation, breach or any untrue statement, alleged untrue
      statement, omission or alleged omission is made in reliance upon and in
      conformity with written information furnished to the Company by, or on behalf
      of, the Holder or is based on illegal trading of the Common Stock by the Holder.
      To the extent that the foregoing undertaking by the Company may be unenforceable
      for any reason, the Company shall make the maximum contribution to the payment
      and satisfaction of each of the Indemnified Liabilities that is permissible
      under applicable law. The indemnity provisions contained herein shall be in
      addition to any cause of action or similar rights the Holder may have, and
      any
      liabilities the Holder may be subject to.

     

    
      	
              Article
                15

            	
              Incentive
                Shares

            

    

    

    The
      Company shall issue fifty thousand (50,000) shares of unregistered, restricted
      Common Stock to the Holder as an incentive for the investment ("Incentive
      Shares"). The Incentive Shares shall be issued and delivered immediately to
      the
      Holder and shall carry piggyback registration rights and may be included in
      one
      or more registration statements filed by the Company covering shares to be
      registered for its own account or for the account of selling securityholders,
      or
      both (other than a registration statement associated with registering shares
      on
      Form S-4, S-8 or other limited purpose form). The Company shall notify the
      Holder of its intent to file a registration statement and the Holder shall
      promptly accept or decline from including the Incentive Shares in such
      registration statement The Company's failure to issue the Incentive Shares
      constitutes an Event of Default and the Holder may elect to enforce the remedies
      outlined in Article 4. The Company's obligation to provide the Holder with
      the
      Incentive Shares, as set forth herein, shall survive the operation of the
      Agreement and any default on this obligation shall provide the Holder with
      all
      rights, remedies and default provisions set forth in this Note, or otherwise
      available by law.

    
       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
                DM

              	 	
                KT

              	 	
                RL

              	 	 

      

       

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
              Article
                16

            	
              Use
                of Proceeds

            

    

     

    The
      Company shall use the funds for capital expenditures, working capital and
      general corporate purposes.

     

    
      	
              Article
                17

            	
              Waiver

            

    

     

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

     

    
      	
              Article
                18

            	
              Senior
                Obligation

            

    

     

    The
      Company shall cause this Note to be senior in right of payment to all other
      current or future debt of the Company. The Company warrants that it has taken
      all necessary steps to subordinate its other obligations to the rights of the
      Holder under this Note and the failure to do so shall constitute an Event of
      Default.

     

    
      	
              Article
                19

            	
              Transactions
                With Affiliates

            

    

     

    The
      Company shall not, and shall cause each of its Subsidiaries to not enter into,
      amend, modify or supplement, or permit any Subsidiary to enter into, amend,
      modify or supplement, any agreement, transaction, commitment or arrangement
      with
      any of its or any Subsidiary's officers, directors, persons who were officers
      or
      directors at any time during the previous two (2) years, shareholders who
      beneficially own five percent (5%) or more of the Common Stock, or affiliates
      or
      with any individual related by blood, marriage or adoption to any such
      individual or with any entity in which any such entity or individual owns a
      five
      percent (5%) or more beneficial interest (each a "Related
      Party")
      during
      the Lock-Up Period.

     

    
      	
              Article
                20

            	
              Equity
                Line Obligations

            

    

     

    At
      the
      request of the Holder, at any time after the Company's current effective
      registration statement for the Equity Line of Credit with Dutchess Private
      Equities Fund (File No: 333-137360),
      has
      five hundred thousand (500,000) shares or less remaining for issuance and,
      if so
      permitted under Rule 415 of the Securities Act of 1933, as amended, or the
      general guidelines (if any) promulgated by the United States Securities and
      Exchange Commission (the "SEC"
      or the
      "Commission"),
      the
      Company shall immediately prepare and file a new registration statement for
      the
      registration of additional shares as set forth in a related Investment Agreement
      on the same terms and conditions as the Investment Agreement dated September
      7,
      2006. The Holder shall also retain the right to determine the date of the filing
      of such registration statement, but in no event sooner than twenty (20) business
      days prior to a notice being given to the Company. The
      Company shall respond to any and all SEC comments or correspondence, whether
      written or oral, direct or indirect, formal or informal ("Comments"),
      within seven (7) business days of receipt by the Company of such Comments.
      To
      the extent necessary and applicable to the Holder, the Holder shall assist
      the
      Company in responding to any such Comments. The seven (7) business day period
      shall be extended as may be required by delays caused by the Holder; and,
      provided further, that
      such
      seven (7) business day period shall be extended an additional two (2) business
      days for responses to SEC Staff accounting comments. The Company shall undertake
      best efforts to cause any such registration statement relating to these
      securities to become effective no later than two (2) business days after notice
      from the SEC that the Registration Statement has been cleared of all comments.
      Failure
      to do any action outlined in this Article
      20
      shall
      constitute an Event of Default and the Holder may seek to take actions as
      outlined in Article
      4.

    
       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
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        12

        
          

        

      

      
        
        

      

    

     

    
      	
              Article
                21

            	
              Security

            

    

     

    This
      Note
      shall be secured by and the Holder shall have full right to exercise its rights
      and remedies under (i) the Security Agreement and (ii) the
      Guaranty.

     

    
      	
              Article
                22

            	
              Miscellaneous

            

    

     

    Section
      22.1    This
      Note
      may be executed in two (2) or more counterparts, all of which taken together
      shall constitute one instrument. Execution and delivery of this Note by exchange
      of facsimile copies bearing the facsimile signature of a Party shall constitute
      a valid and binding execution and delivery of this Note by such Party. Such
      facsimile copies shall constitute enforceable original documents.

     

    Section
      22.2    The
      Company warrants that the execution, delivery and performance of this Note
      by
      the Company and the consummation by the Company of the transactions contemplated
      hereby and thereby will not (i) result in a violation of the Articles of
      Incorporation, any Certificate of Designations, Preferences and Rights of any
      outstanding series of preferred stock of the Company or the Bylaws, (ii)
      conflict with, or constitute a material default (or an event which with notice
      or lapse of time or both would become a material default) under, or give to
      others any rights of termination, amendment, acceleration or cancellation of,
      any material agreement, contract, indenture mortgage, indebtedness or instrument
      to which the Company or any of its Subsidiaries is a party, or (iii) result
      in a
      violation of any law, rule, regulation, order, judgment or decree, including
      United States federal and state securities laws and regulations and the rules
      and regulations of the principal securities exchange or trading market on which
      the Common Stock is traded or listed (the "Principal
      Market"),
      applicable to the Company or any of its Subsidiaries (which for purposes of
      this
      Note means any entity in which the Company, directly or indirectly, owns capital
      stock or holds an equity or similar interest) or by which any property or asset
      of the Company or any of its Subsidiaries is bound or affected. Neither the
      Company nor its Subsidiaries is in violation of any term of, or in default
      under, the Articles of Incorporation, any Certificate of Designations,
      Preferences and Rights of any outstanding series of preferred stock of the
      Company or the Bylaws or their organizational charter or Bylaws, respectively,
      or any contract, agreement, mortgage, indebtedness, indenture, instrument,
      judgment, decree or order or any statute, rule or regulation applicable to
      the
      Company or its Subsidiaries, except for possible conflicts, defaults,
      terminations, amendments, accelerations, cancellations and violations that
      would
      not individually or in the aggregate have a Material Adverse Effect (as defined
      below). The business of the Company and its Subsidiaries is not being conducted,
      and shall not be conducted, in violation of any law, statute, ordinance, rule,
      order or regulation of any governmental authority or agency, regulatory or
      self-regulatory agency, or court, except for possible violations the sanctions
      for which either individually or in the aggregate would not have a Material
      Adverse Effect. The Company is not required to obtain any consent,
      authorization, permit or order of, or make any filing or registration (except
      the filing of a registration statement) with, any court, governmental authority
      or agency, regulatory or self-regulatory agency or other third party in order
      for it to execute, deliver or perform any of its obligations under, or
      contemplated by, this Note in accordance with the terms hereof or thereof.
      All
      consents, authorizations, permits, orders, filings and registrations which
      the
      Company is required to obtain pursuant to the preceding sentence have been
      obtained or effected on or prior to the date hereof and are in full force and
      effect as of the date hereof. The Company and its Subsidiaries are unaware
      of
      any facts or circumstances which might give rise to any of the foregoing. The
      Company is not, and will not be, in violation of the listing requirements of
      the
      Principal Market as in effect on the date hereof and is not aware of any facts
      which would lead to delisting of the Common Stock by the Principal
      Market.

    
       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
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                KT

              	 	
                RL

              	 	 

      

       

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Section
      22.3    The
      Company and its Subsidiaries are corporations duly organized and validly
      existing in good standing under the laws of the respective jurisdictions of
      their incorporation, and have the requisite corporate power and authorization
      to
      own their properties and to carry on their business as now being conducted.
      Both
      the Company and its Subsidiaries are duly qualified to do business and are
      in
      good standing in every jurisdiction in which their ownership of property or
      the
      nature of the business conducted by them makes such qualification necessary,
      except to the extent that the failure to be so qualified or be in good standing
      would not have a Material Adverse Effect. As used in this Note, "Material
      Adverse Effect"
      means
      any material adverse effect on the business, properties, assets, operations,
      results of operations, financial condition or prospects of the Company and
      its
      Subsidiaries, if any, taken as a whole, or on the transactions contemplated
      hereby or by the agreements and instruments to be entered into in connection
      herewith, or on the authority or ability of the Company to perform its
      obligations under the Note.

     

    Section
      22.4    Authorization;
      Enforcement; Compliance with Other Instruments.
      (i) The
      Company has the requisite corporate power and authority to enter into and
      perform its obligations under this Note, and to issue this Note and Incentive
      Shares in accordance with the terms hereof and thereof; (ii) the execution
      and
      delivery of this Note by the Company and the consummation by it of the
      transactions contemplated hereby and thereby, including without limitation
      the
      reservation for issuance and the issuance of the Incentive Shares pursuant
      to
      this Note, have been duly and validly authorized by the Company's Board of
      Directors and no further consent or authorization is required by the Company,
      its Board of Directors, or its shareholders; (iii) this Note has been duly
      and
      validly executed and delivered by the Company; and (iv) this Note constitutes
      the valid and binding obligations of the Company enforceable against the Company
      in accordance with their terms, except as such enforceability may be limited
      by
      general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally, the enforcement of creditors' rights and
      remedies.

    
       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
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                KT

              	 	
                RL

              	 	 

      

       

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Section
      22.5    The
      execution and delivery of this Note shall not alter the prior written agreements
      between the Company and the Holder, consisting of the Investment Agreement
      and
      Registration Rights Agreement. This Note is the final agreement between the
      Company and the Holder with respect to the terms and conditions set forth
      herein, and, the terms of this Note may not be contradicted by evidence of
      prior, contemporaneous, or subsequent oral agreements of the Parties. The
      execution and delivery of this Note is done in conjunction with the previously
      executed Security Agreement (as defined in Article
      21
      hereof).

     

    Section
      22.6    There
      are
      no disagreements of any kind presently existing, or reasonably anticipated
      by
      the Company to arise, between the Company and the accountants, auditors and
      lawyers formerly or presently used by the Company, including but not limited
      to
      disputes or conflicts over payment owed to such accountants, auditors or
      lawyers.

     

    Section
      22.7    All
      representations made by or relating to the Company of a historical nature and
      all undertakings described herein shall relate and refer to the Company, its
      predecessors, and the Subsidiaries.

     

    Section
      22.8    The
      only
      officer, director, employee and consultant stock option or stock incentive
      plan
      currently in effect or contemplated by the Company has been submitted to the
      Holder or is described or within past filings with the SEC. The Company agrees
      not to initiate or institute any new stock option or stock incentive plan
      without the prior written consent of the Holder.

     

    Section
      22.9    The
      Company acknowledges that its failure to timely meet any of its obligations
      hereunder, including, but without limitation, its obligations to make Payments,
      deliver shares and, as necessary, to register and maintain sufficient number
      of
      Shares, will cause the Holder to suffer irreparable harm and that the actual
      damage to the Holder will be difficult to ascertain. Accordingly, the parties
      agree that it is appropriate to include in this Note a provision for liquidated
      damages. The parties acknowledge and agree that the liquidated damages provision
      set forth in this section represents the parties' good faith effort to quantify
      such damages and, as such, agree that the form and amount of such liquidated
      damages are reasonable and do not constitute a penalty. The payment of
      liquidated damages shall not relieve the Company from its obligations to deliver
      the Common Stock pursuant to the terms of this Note.

     

    Section
      22.10   In
      the
      event that any rules, regulations, oral or written interpretations or comments,
      whether written or oral, formal or informal, from the SEC, NASD, NYSE, NASDAQ
      or
      other governing or regulatory body, prohibit or hinder any operation of this
      Agreement or the Equity Line, the Parties hereby agree that those specific
      terms
      and conditions shall be negotiated in good faith on similar terms within a
      commercially reasonable time period, but in no event greater than ten (10)
      business days, and shall not alter, diminish or affect any other rights, duties,
      obligations or covenants in this Note and that all terms and conditions will
      remain in full force and effect except as is necessary to make those specific
      terms and conditions comply with applicable rule, regulation, interpretation
      or
      Comment. Failure for the Company to agree to such new terms as necessary to
      achieve the intent of the original documents, shall constitute an Event of
      Default and the Holder may therefore elect to take actions as outlined in
Article
      4
      hereof;
      provided, however, that the Holder must act in a commercially reasonable manner
      for an Event of Default as provided hereunder to occur.

    
       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
                DM

              	 	
                KT

              	 	
                RL

              	 	 

      

       

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Section
      22.11    The
      Company hereby represent and warrants to the Holder that: (i) it is voluntarily
      issuing this Note of its own freewill, (ii) it is not issuing this Note under
      economic duress, (iii) the terms of this Note are reasonable and fair to the
      Company, and (iv) the Company has had independent legal counsel of its own
      choosing review this Note, advise the Company with respect to this Note, and
      represent the Company in connection with its issuance of this Note.

     

    Section
      22.12    Intentionally
      Deleted.

    

    [BALANCE
      OF PAGE LEFT BLANK INTENTIONALLY]

    
       

       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
                DM

              	 	
                KT

              	 	
                RL

              	 	 

      

      

        
          
            
            

          

          
            16

            
              

            

          

          
            
            

          

        

      

    

    

    IN
      WITNESS WHEREOF, the Company has caused this Note to be duly executed by its
      authorized officer as of the date first indicated above.

    

    
      	
              SUNRISE
                ENERGY RESOURCES, INC

            
	 	 
	
              By:
                

            	
              /s/
                Konstantin Tsiryulnikov

            
	
              Name:

            	
              Konstantin
                Tsiryulnikov

            
	
              Title:

            	
              President
                and CEO

            
	 	 
	
              By:
                

            	/s/
              Roman Livson
	
              Name:

            	
              Roman
                Livson

            
	
              Title:

            	
              Chief
                Financial Officer 

            
	 	 
	
              DUTCHESS
                PRIVATE EQUITIES FUND, LTD.

            
	 	 
	 	 
	 	 
	
              By:
                

            	
              /s/
                Douglas H. Leigton

            
	
              Name:

            	
              Douglas
                H. Leighton

            
	
              Title:

            	
              Director

            

    

     

    
       

       

      
        	
                 

              	 	
                 

              	 	
                 

              	 	
                SEYR
                  Note March.2007.$2,553,125.FINAL

              
	
                DM

              	 	
                KT

              	 	
                RL

              	 	 

      

       

       

      17

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