SUNRISE ENERGY RESOURCES, INC. 10% SUBORDINATED CONVERTIBLE NOTE DUE MARCH 31ST, 2013
SUNRISE
ENERGY RESOURCES, INC.
10%
SUBORDINATED CONVERTIBLE NOTE DUE MARCH 31ST, 2013
This
convertible debenture note agreement (the “Agreement”) is entered into as of
this 23 day of May 2010, by and between Infox Ltd. (“the Lender”),
located at Xxxxxxx Xxx, 00x, Xxxx, Xxxxxxx and Sunrise Energy Resources,
Inc. (“Borrower”) located at 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, XX
00000, each, a “Party”, and collectively (the “Parties”).
WHEREAS, the Lender provided
demand loans to Sunrise Energy Resources, Inc. (“the Borrower”) in the amount of
$275,091 during 2004-2005 (“the Loan Principal”);
WHEREAS, the accrued interest
on the Loan Principal as of April 1, 2010 amounted to $22,476 (“the Loan
Interest’);
WHEREAS, on April 1, 2010 the
Lender instructed the Borrower to repay the outstanding balance of the Loan
Principal and Loan Interest at the earliest possible date;
WHEREAS, despite multiple
efforts to raise funding undertaken during April 1, 2010 to the date hereof the
Borrower has been unable to raise sufficient amounts to repay the Loan Principal
and the Loan Interest in the total amount of $297,567;
NOW, THEREFORE, the Borrower
and the Lender hereby agree to exchange the outstanding Loan Principal and Loan
Interest into a convertible debenture note (“the Note”) in accordance with the
terms and conditions hereof. April 1, 2010 shall be deemed the Effective Date of
the exchange and the Effective Date of the Note.
Definition
of certain terms
The term
“Borrower” means the original Borrower and anyone else who merges with the
Borrower or assumes the Borrower’s obligations under the
Note. However, the assumption of the Borrower’s obligations under
this Note shall not release the Borrower from such obligations.
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 the Note until it received written notice of a transfer of all or
part of the Note to another Lender. The term “Lender” shall mean the
original Lender and anyone else to whom the Note is transferred.
1. Promise to Pay. For
value received from the original Lender, the Borrower promises to pay to the
Lender $297,567 (“Note Principal”), plus interest at a rate of 10% (ten percent)
per annum (“Note Interest”). The Borrower shall repay the entire
outstanding principal and interest by March 31, 2013 (“the Note Maturity Date”),
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 shall make quarterly interest payments
to the Lender on the last day of each quarter during the maturity period of the
Note in the amount equal to 2.5% (two and a half of a percent) of the principal
outstanding as of the payment date. However, if an interest payment falls due on
a Saturday, Sunday or legal holiday, the Borrower shall make the interest
payment the following business day.
3. Interest
Capitalization. Subject to the consent of the Parties the
accrued Note Interest may be capitalized on each interest due date. Upon
capitalization, the aforesaid Note Interest shall be deemed to become part of
the Note Principal.
4. Early Repayment of Note
Principal. The Borrower shall be entitled to repay the Note
Principal in whole or in part prior to the Note Maturity Date without any
penalties. Any such payment shall include the payment of interest accrued on the
Note Principal being repaid as of the date of payment. If the payment is made
between quarter ends, the accrued interest shall be computed pro-rata to the
number of days during which the principal remained outstanding during the
quarter in accordance with the simple interest convention.
5. Lender’s Right of
Acceleration. The Lender has the right to declare the entire
unpaid Note Principal and Note Interest due immediately for any of the following
causes:
(a) If
the Borrower fails to make any payment or principal or interest under the Note
within fifteen days after its due date.
(b) If
the Borrower fails to maintain any other covenant made under the Note within
thirty days after a 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.
6. Notices. All
notices under the Note must be furnished in writing. The notices may
be given by (a) personal delivery, or (b) certified mail, return receipt
requested. Notices shall be addressed to the other party at the
address provided hereunder, 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 shall notify the other of a change of
address.
7. Conversion of the
Notes.
7.1 Right to
convert. Subject to and upon compliance with the provisions of
this Section, at the option of the holder of the Note, such Note, or any portion
of the outstanding Note Principal and Note Interest, may at any time prior to
the Note Maturity Date be converted into the Borrower's common stock at the
Conversion Price (as hereinafter defined).
7.2 Manner of Exercise of Conversion
Privilege. In order to exercise the conversion privilege, the
holder shall surrender the Note to the Borrower accompanied by written notice to
the Borrower stating that the holder elects to convert the Note or a specified
portion thereof on a certain date (“the Conversion Date”). In the event, the
Conversion Date falls between quarter ends, the accrued Note Interest shall be
computed pro-rata to the number of days during which the principal remained
outstanding during the quarter in accordance with the simple interest
convention. Such accrued Note Interest shall be automatically converted into the
Borrower’s common stock along with the Note Principal. In this case, the amount
stated in the holder’s conversion notice shall be deemed to include the Note
Principal and the Note Interest.
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The
aforesaid conversion notice should state the name or names (with address) in
which the certificate or certificates for shares of common stock shall be
issued. As promptly as practicable after the receipt of such notice
and the surrender of the Note, the Borrower shall issue and deliver to the
holder, a certificate or certificates for the number of full shares of common
stock issuable on such conversion. Such conversion shall be deemed to have been
effected at the close of business on the Conversion Date, 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 resulting shares on the Conversion
Date.
In the
event a Note shall be surrendered for conversion representing a portion of the
outstanding Note Principal, the Borrower shall execute and deliver to the holder
of the Note, a replacement Note in an aggregate Note Principal equal to the
unconverted portion of the Note so surrendered.
7.3 Fractions of
Share. The Borrower shall not be required to issue fractions
of a share or scrip representing fractional shares of common stock upon
conversion of the Note. The number of the resulting converted shares
shall be rounded down to the nearest whole.
7.4 Conversion Price.
(i) The
price at which shares of common stock shall be delivered upon conversion (the
“Conversion Price”) shall equal $0.01 (One US cent) per share of Common
Stock.
(ii) The
Conversion Price shall not be subject to adjustment for stock splits and/or
reverse splits that may occur prior to such conversion.
7.5 Notice of Distributions, Rights of
Reorganization, Etc.
In the
event at any time prior to the Note Maturity Date:
(i) Borrower
offers for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or other rights;
(ii) Borrower
undergoes any capital reorganization, or reclassification of the capital stock
of the Borrower, or consolidation or merger of the Borrower, or sale of all or
substantially all of its assets to, another corporation; or
(iii) Borrower
files for a voluntary or involuntary dissolution, liquidation or winding up of
the Borrower;
Then, in
any of the aforesaid events, the Borrower shall furnish a written notice, to the
holder of this Note, of the date on which (a) the books of the Borrower 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 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 Borrower’s transfer books are closed in
respect thereto.
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7.6 Taxes on
Conversion. The issue of certificates on conversion of the
Notes shall be made without charge to the converting holder for any tax in
respect of the issue thereof. The Borrower 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 Borrower 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 Borrower the amount of
such tax or shall have established to the satisfaction of the Borrower that such
tax has been paid.
7.7 Borrower to Reserve
Stock. The Borrower 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 Borrower
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
Borrower 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 non-assessable.
The
Borrower covenants that all shares of common stock which may be issued upon
conversion of Notes will upon issue be fully paid and non-assessable and free
from all taxes, liens and charges with respect to the issue
thereof.
8. Language. The language used in
this Agreement will be deemed to be the language chosen by the Parties to
express their mutual intent, and no rules of strict construction will be applied
against any Party.
9. Severability. If any provision
of this Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
10. Counterparts. This Agreement
may be executed in counterparts, each of which shall be deemed an original and
both of which together shall constitute one document. Both Parties
agree herein that signatures submitted by facsimile or e-mail shall have the
same binding effect as if they were original signatures.
11. Entire Agreement. This
Agreement constitutes the entire agreement between the Parties with respect to
the subject matter hereof, and supersedes any prior or contemporaneous
agreements or undertakings, whether written or oral, between the Parties with
respect to the subject matter hereof. This Agreement may not be
amended or modified except by an instrument in writing signed by each of the
Parties.
12. Governing law. The validity,
interpretation, and performance of this Agreement shall be controlled by and
construed under the laws of the State of New York, United States of America,
without giving effect to the principles of conflicts of laws which would give
rise to the application of the domestic substantive law of any other
jurisdiction. Each Party hereby irrevocably and unconditionally
consents to the exclusive jurisdiction of the federal and state courts sitting
in New York, New York for any action, suit or proceeding arising out of or
related hereto. Each Party hereto further hereby irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of or relating to this Agreement in such courts, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in any inconvenient forum. Each Party hereby
knowingly, voluntarily and intentionally waives any right (to the fullest extent
permitted by applicable law) to a trial by jury of any dispute arising out of,
under or relating to, this Agreement and agrees that any such dispute shall be
tried before a judge sitting without a jury.
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IN WITNESS WHEREOF, the
Parties have executed this Agreement as of the date and year first written
above.
|
Dated:
|
May
23, 2010
|
BORROWER
|
Signature:
|
____________________________ |
|
Name:
|
Konstantin
Tsiryulnikov
|
Sunrise
Energy Resources, Inc.
|
Title:
|
Chief
Executive Officer
|
LENDER
|
Signature:
|
____________________________ |
|
Name:
|
Xxxxxx
Xxxxx
|
Infox
Ltd.
|
Title:
|
Authorised
Xxxxxx
|
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