THIS NOTE AND THE SECURITIES
ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE BORROWER THAT REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH
ACT.
American Petro-Hunter,
Inc.
SECURED CONVERTIBLE PROMISSORY
NOTE
|
September 15,
2009
|
$500,000
|
American Petro-Hunter, Inc., a Nevada
corporation (the “ Company ”), for value
received, promises to pay to the order of John E. Friesen (the
“ Holder ”), the sum of $500,000, or the
aggregate unpaid principal balance of all amounts outstanding
hereunder, whichever is less (the " Principal "), plus
simple interest thereon from the date first set forth above until
paid at an annual interest rate equal to eighteen percent (18%) and
in accordance with the provisions of Section 2
below. Any remaining principal and interest hereof will
be payable at the principal office of the Company or by mail to the
registered address of the Holder on or before September 15, 2010
(the “ Repayment Date ”) except that no payment
will be required to the extent that such principal and interest are
or have been paid or converted pursuant to the terms hereof or
under the Agreement.
This Note is issued by the Company in connection
with that certain Note Purchase Agreement dated as of even date
herewith (the “ Agreement ”). This
Note incorporates by reference all the terms of the Note Purchase
Agreement. The following is a statement of the rights of
the Holder and the conditions to which this Note is subject, and to
which the Holder, by the acceptance of this Note,
agrees:
1.
Definitions . As used in this Note, the following
terms, unless the context otherwise requires, have the following
meanings:
1.1 “
Company ” will mean American Petro-Hunter, Inc. and
will include any corporation, partnership, limited liability
company or other entity that will succeed to or assume the
obligations of the Company under this Note.
1.2 “
Holder ” will mean any person who will at the time be
the registered holder of this Note.
2.
Conversion and Payment of Interest
2.1 Any
monthly royalty fee payable to the Company from any of the
Company’s current or future working interests in its wells
will be payable by mail to the registered address of the Holder in
an amount up to the amount of accrued but unpaid
interest. Such payment shall continue until and
including the Repayment Date. All accrued but unpaid interest and
the unpaid principal balance shall be paid in full on the Repayment
Date. Any payment shall be credited first to accrued but unpaid
interest and the balance to principal, and interest shall cease to
accrue on the amount of principal so paid. Interest shall be
computed on the basis of a year of 365 days for the actual number
of days elapsed.
2.2 At
any time prior to the Repayment Date, Holder at its option and upon
prior written notice to the Company, may convert in whole or in
part, the outstanding Principal and accrued but unpaid interest
thereon (the “ Debt ”) into shares of common
stock of the Company based on a per share conversion price of the
lower of (i) $0.35, or (ii) a twenty five percent (25%) discount to
the average closing trading price (as reported by Bloomberg) of a
share of Company common stock during the five (5) trading days
prior to the conversion date (the “ Conversion
Price ”); provided , however, the number of
shares of Company common stock that may be acquired by Holder upon
any conversion of the Debt shall be limited to the extent necessary
to ensure that, following such exercise, the total number of shares
of Company common stock then beneficially owned by Holder and his
affiliates and any other persons whose beneficial ownership of
Company common stock would be aggregated with the Holder’s
for purposes of Section 13(d) of the Exchange Act, does not exceed
4.999% of the total number of issued and outstanding shares of
Company common stock (including for such purpose the shares of
Company common stock issuable upon such conversion). For
such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing,
Holder may waive such limitation on conversion contained in this
Section 2.2 or increase or decrease such limitation
percentage to any other percentage as specified in a written notice
to the Company.
2.3 In
the event of conversion, the Holder will surrender the original
copy of this Note for conversion at the principal office of the
Company at the time of such closing. Holder agrees to
execute all necessary documents in connection with the conversion
of this Note, including a definitive stock purchase
agreement. If upon such conversion of this Note a
fraction of a share would result, then the Company will round up to
the nearest whole share.
2.4 All
rights with respect to such portion of this Note converted pursuant
to Section 2.2 shall terminate upon issuance of the
corresponding shares of common stock to the
Holder. Notwithstanding the foregoing, Holder agrees to
surrender this Note to the Company for cancellation as to that
portion of the Note that the Holder elects to convert under
Section 2.2 as soon as possible following the
conversion of this Note, and the Company shall execute and deliver
a new Note upon the same terms and conditions set forth herein,
dated the date hereof, evidencing the right of the Holder to the
balance of the principal that was not converted (and accrued but
unpaid interest thereon, as applicable).
3.
Issuance of Consideration on Conversion . As soon
as practicable after conversion of this Note pursuant to Section
2 and receipt of the original Note and related documents, but
in not event later than five (5) business days, the Company at its
expense will cause to be issued in the name of and delivered to the
Holder, a certificate or certificates for
