NOTE PURCHASE AGREEMENT

NOW, THEREFORE, in consideration of the foregoing, and the representations, warranties, covenants and conditions set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:

1.         Issuance and Receipt of the Note and Warrant. The Company agrees to issue and deliver the Note and Warrant to the Purchaser upon receipt of funds from the Purchaser.  The issue date of the Note and Warrant shall be such date the Company first receives such funds.

2.         Representations and Warranties of the Company.   The Company represents, and warrants to, the Purchaser as follows:

(a)   Organization and Good Standing: Certificate of Incorporation and Bylaws. The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of its organization and has all requisite corporate power and authority to carry on its business as now conducted and proposed to be conducted.  The Company is duly qualified to conduct business as a foreign corporation and is in good standing as a foreign corporation in all jurisdictions where the properties owned, leased or operated by it are located or where its business is conducted, except where the failure to so qualify or be in good standing is not reasonably likely to have a material adverse effect on the Company’s business, financial condition, results of operations, assets, liabilities or prospects (a “Material Adverse Effect” ).

(b)   Corporate Power.   The Company has all requisite legal and corporate power to enter into, execute, deliver and perform its obligations under this Agreement, the Note and Warrant.  This Agreement is and, upon each of their issuance, the Note and Warrant will be, valid and binding obligations of the Company, enforceable in accordance with their terms.

(c)  Authorization.

(i)          Corporate Action.  All corporate and legal action on the part of the Company, its officers, directors and stockholders necessary for the execution and delivery of this Agreement and the Note, and the performance of the Company’s obligations hereunder and thereunder, has been taken.

(ii)          No Preemptive Rights.  No person has any right of first refusal or any preemptive or similar rights in connection with the issuance of the Note, or the issuance of common stock of the Company upon conversion of the Note (the “ Conversion Stock ”).

(d)   Noncontravention.   The execution, delivery and performance of and compliance with this Agreement, the Note, the issuance of the Conversion Stock will not result in nor constitute any breach, default or violation of (i) any agreement, contract, lease, license, instrument or commitment (oral or written) to which the Company is a party or is bound or (ii) any law, rule, regulation, statute or order applicable to the Company or its properties, nor result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company, any of which breach, default or violation under clause (i) or (ii), preceding, would have a Material Adverse Effect.

(e)   Consents. No consent, approval, order or authorization of, or designation, registration, declaration or filing with, any federal, state, local or provincial or other governmental authority or other person on the part of the Company is required in connection with the valid execution and delivery of this Agreement and the Note, or the offer, or issuance of the Note or the Conversion Stock other than, if required, filings or qualifications under applicable state securities laws, which filings or qualifications, if required, will be timely filed or obtained by the Company.

(f)   Offering.   In reliance, in part, on the representations and warranties of the Purchaser in Section 3 hereof, the offer and issuance of the Note in conformity with the terms of this Agreement and the issuance of the Conversion Stock will not result in a violation of the requirements of Section 5 of the Securities Act of 1933, as amended, (the “Securities Act” ) or the qualification or registration requirements of any applicable state securities laws.

(g)   Compliance with Laws.   The Company is not (i) subject to the terms or provisions of any material judgment, decree, order, writ or injunction or (ii) in violation of any terms or provisions of any laws, rules, or regulations, except where such violations do not and are not likely to have a Material Adverse Effect.

(h)   Compliance with Corporate Instruments and Laws.   The Company is not in violation of any provisions of its Articles of Incorporation or Bylaws as currently in effect.  The Company is in compliance in all material respects with all applicable laws, statutes, rules, and regulations of all governmental and regulatory authorities which are applicable and the compliance with which is material to the Company or its assets or business.  All licenses, franchises, permits and other governmental authorizations held by the Company and which are material to its business are valid and sufficient in all respects for the business presently carried on by the Company.

(i)    Use of Proceeds .  The Company expects to use the net proceeds received under this Agreement for general working capital purposes and possibly the acquisition of assets and companies. The Company has not reserved or allocated specific amounts for these purposes. Accordingly, the Company’s management will have broad discretion as to the application of such funds.

(j)   Public Filings .

(i)          The Company has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, during the past twelve months (the “ Company SEC Reports ”). The Company SEC Reports, each as amended prior to the date hereof, (i) have been prepared in all material respects in accordance with the requirements of the Securities Act or the under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), as the case may be, and the rules and regulations promulgated thereunder, and (ii) did not, when filed as amended prior to the date hereof, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

(ii)          Each of the consolidated financial statements (including, in each case, any notes thereto) contained in or incorporated by reference into the Company SEC Reports was prepared in accordance with U.S. Generally Accepted Accounting Principles applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto), complied in all material respects with applicable accounting requirements and the rules and regulations of the Securities and Exchange Commission (the “ SEC ”) and each fairly presented, in all material respects, the consolidated financial position, results of operations and cash flows of the Company of the dates thereof and for the respective periods indicated therein except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring year end adjustments).

3.         Representations and Warranties by the Purchaser. The Purchaser represents, and warrants to, and covenants with, the Company as follows:

(a)   Investment. The Purchaser is acquiring the Note, Warrant and Conversion Stock for the Purchaser’s own account, and not directly or indirectly for the account of any other person.  The Purchaser is acquiring the Note and Conversion Stock for investment and not with a view to distribution or resale thereof except in compliance with Securities Act of 1933, as amended (the “ Securities Act ”) and any applicable state law regulating securities.

(b)   Registration of Note and Conversion Stock.   The Purchaser must bear the economic risk of investment for an indefinite period of time because the Note, Warrant and Conversion Stock have not been registered under the Securities Act and therefore cannot and will not be sold unless they are subsequently registered under the Securities Act or an exemption from such registration is available.  The Company has made no representations, warranties or covenants whatsoever as to whether any exemption from the Securities Act, including, without limitation, any exemption for limited sales in routine brokers’ transactions pursuant to Rule 144 under the Securities Act will become available. Transfer of the Note, Warrant and Conversion Stock have not been registered or qualified under any applicable state law regulating securities and therefore the Note, Warrant and Conversion Stock cannot and will not be sold unless they are subsequently registered or qualified under any such act or an exemption therefrom is available.  The Company has made no representations, warranties or covenants whatsoever as to whether any exemption from any such act will become available.

(c)   Accredited Investor. The Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act and the Purchaser is also knowledgeable, sophisticated and experienced in making, and is qualified to make decisions with respect to investments in securities presenting an investment decision like that involved in the purchase of the Note, including investments in securities issued by the Company and investments in comparable companies, and has requested, received, reviewed and considered all information it deemed relevant in making an informed decision to purchase the Note; and (ii) the Purchaser has had the opportunity to review the risks identified on Annex I , attached hereto.

(d)   Access to Information .  The Purchaser acknowledges that he has had access to the Company SEC Reports.  The Purchaser further acknowledges that the Company has made available to him the opportunity to ask questions of and receive answers from the Company's officers and directors concerning the terms and conditions of this Agreement and the business and financial condition of the Company, and the Purchaser has received such information about the business and financial condition of the Company and the terms and conditions of the Agreement as he has requested.  The Purchaser understands that the Note, Warrant and Conversion Stock are speculative investments, which involve a high degree of risk of loss of the Purchaser’s entire investment.  Among others, the undersigned has had the opportunity to review of the risks identified under the caption “Risk Factors” in the Company SEC Reports and Annex I .

(e)   Foreign Matters .  The Purchaser acknowledges that no action has been or will be taken in any jurisdiction outside the United States by the Company that would permit an offering of the Note, or possession or distribution of offering materials in connection with the issuance of the Note, in any jurisdiction outside the United States where legal action by the Company for that purpose is required.  Each Purchaser outside the United States will comply with all applicable laws and regulations in each foreign jurisdiction in purchasing this Note, Warrant and the Conversion Stock.

(f)   Compliance with Laws .  Purchaser will not use any of the Conversion Stock to cover any short position in the Common Stock of the Company if doing so would be in violation of applicable securities laws.

(g)   Legal and Tax Advice .  The Purchaser understands that nothing in the Company SEC Reports, this Agreement or any other materials presented to the Purchaser in connection with the purchase of the Note, Warrant and Conversion Stock constitutes legal, tax or investment advice.  The Purchaser has consulted such legal, tax and investment advisors, as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Note, Warrant and Conversion Stock.

4.         Redemption Right. Upon the Repayment Date (as defined in the Note), the Company shall have the right to automatically convert any remaining outstanding principal balance and accrued interest under the Note into Conversion Stock at the rate of the Conversion Price (as defined in the Note).

5.       Security Interest and Collateral Assignment.

(a)   Security Interest .  As security interest for the full, prompt, complete, and final payment when due (whether at stated maturity, by acceleration, or otherwise) of the amounts owed under the Note, the Company shall grant to the Purchaser a security interest in all of the Company’s right, title, and interest in, to, and under all of the Company’s assets on the terms and conditions set forth in the form of Security Agreement attached hereto as Exhibit B .

(b)   Collateral Assignment .  The Company agrees to pay and assign up to $7,500 of any royalty fees payable to the Company from the Company’s investment in the Poston Prospect #1 Lutters oil well located in Trego County, Kansas on the terms and conditions set forth in the form of Collateral Assignment of Royalties attached hereto as Exhibit C . Each payment shall be credited first to accrued but unpaid interest and the balance to principal.

6.       Indemnification.

(a)   Company’s Indemnification of Purchaser .  To the extent permitted by law, the Company shall defend, indemnify and hold harmless the Purchaser from and against any and all losses, claims, judgments, liabilities, demands, charges, suits, penalties, costs or expenses, including court costs and attorneys’ fees resulting from any claim, demand, suit, action or proceeding brought by any third party (“ Claims and Liabilities ”) with respect to or arising from (i) the breach of any warranty or any inaccuracy of any representation made by the Company in this Agreement, or (ii) the breach of any covenant or agreement made by the Company in this Agreement.

(b)   Purchaser’s Indemnification of Company .  To the extent permitted by law, the Purchaser shall defend, indemnify and hold harmless the Company from and against any and all Claims and Liabilities with respect to or arising from (i) the breach of any warranty or any inaccuracy of any representation made by the Purchaser in this Agreement, or (ii) the breach of any covenant or agreement made by the Purchaser in this Agreement.

(c)   Claims Procedure .  Promptly after the receipt by any indemnified party (the “ Indemnitee ”) of notice of the commencement of any action or proceeding against such Indemnitee, such Indemnitee shall, if a claim with respect thereto is or may be made against any indemnifying party (the “ Indemnifying Party ”) pursuant to this Section 6, give such Indemnifying Party written notice of the commencement of such action or proceeding and give such Indemnifying Party a copy of such claim and/or process and all legal pleadings in connection therewith.  The failure to give such notice shall not relieve any Indemnifying Party of any of its indemnification obligations contained in this Section 6, except where, and solely to the extent that, such failure actually and materially prejudices the rights of such Indemnifying Party.  Such Indemnifying Party shall have, upon request within thirty (30) days after receipt of such notice, but not in any event after the settlement or compromise of such claim, the right to defend, at its own expense and by its own counsel reasonably acceptable to the Indemnitee, any such matter involving the asserted liability of the Indemnitee; provided, however, that if the Indemnitee determines that there is a reasonable probability that a claim may materially and adversely affect it, other than solely as a result of money payments required to be reimbursed in full by such Indemnifying Party under this Section 6 or if a conflict of interest exists between Indemnitee and the Indemnifying Party, the Indemnitee shall have the right to defend, compromise or settle such claim or suit; and, provided, further, that such settlement or compromise shall not, unless consented to in writing by such Indemnifying Party, which shall not be unreasonably withheld, be conclusive as to the liability of such Indemnifying Party to the Indemnitee.  In any event, the Indemnitee, such Indemnifying Party and its counsel shall cooperate in the defense against, or compromise of, any such asserted liability, and in cases where the Indemnifying Party shall have assumed the defense, the Indemnitee shall have the right to participate in the defense of such asserted liability at the Indemnitee’s own expense.  In the event that such Indemnifying Party shall decline to participate in or assume the defense of such action, prior to paying or settling any claim against which such Indemnifying Party is, or may be, obligated under this Section 6 to indemnify an Indemnitee, the Indemnitee shall first supply such Indemnifying Party with a copy of a final court judgment or decree holding the Indemnitee liable on such claim or, failing such judgment or decree, the terms and conditions of the settlement or compromise of such claim.  An Indemnitee’s failure to supply such final court judgment or decree or the terms and conditions of a settlement or compromise to such Indemnifying Party shall not relieve such Indemnifying Party of any of its indemnification obligations contained in this Section 6, except where, and solely to the extent that, such failure actually and materially prejudices the rights of such Indemnifying Party.  If the Indemnifying Party is defending the claim as set forth above, the Indemnifying Party shall have the right to settle the claim only with the consent of the Indemnitee.

(d)   Exclusive Remedy .  Each of the parties hereto acknowledges and agrees that, from and after the Effective Date, its sole and exclusive monetary remedy with respect to any and all claims relating to the subject matter of this Agreement shall be pursuant to the indemnification provisions set forth in this Section 6, except that nothing in this Agreement shall be deemed to constitute a waiver of any injunctive or other equitable remedies or any tort claims of, or causes of action arising from, intentionally fraudulent misrepresentation, willful breach or deceit.

7.         Confidentiality.   The Purchaser represents to the Company that, at all times during the Company’s offering of the Note, the Purchaser has maintained in confidence all non-public information regarding the Company received by the Purchaser from the Company or its agents, and covenants that it will continue to maintain in confidence such information and shall not use such information for any purpose other than to evaluate the purchase of the Note until such information (a) becomes generally publicly available other than through a violation of this provision by the Purchaser or his agents or (b) is required to be disclosed in legal proceedings (such as by deposition, interrogatory, request for documents, subpoena, civil investigation demand, filing with any governmental authority or similar process), provided, however, that before making any use or disclosure in reliance on this subparagraph (b) the Purchaser shall give the Company at least fifteen (15) days prior written notice (or such shorter period as required by law) specifying the circumstances giving rise thereto and will furnish only that portion of the non-public information which is legally required and will exercise his best efforts to obtain reliable assurance that confidential treatment will be accorded any non-public information so furnished.

8.       Miscellaneous.

(a)   Waivers and Amendments.   Any provision of this Agreement may be amended, waived or modified upon the written consent of the Company and the Purchaser.

(b)   Governing Law.   This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to the conflict of laws provisions of the State of Nevada or of any other state.

(c)    Entire Agreement.   This Agreement, together with the Exhibits hereto, constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof.

(d)   Notices.   All notices, requests and other communications hereunder shall be in writing and shall be deemed to have been duly given at the time of receipt if delivered by hand or by facsimile transmission or three (3) days after being mailed, registered or certified mail, return receipt requested, with postage prepaid to the applicable parties hereto at the address stated on the signature page hereto or if any party shall have designated a different address or facsimile number by notice to the other party given as provided above, then to the last address or facsimile number so designated.

(e)   Validity.   If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions thereof shall not in any way be affected or impaired thereby.

(f)   Counterparts.   This Agreement may be executed in any number of counterparts, and a party’s delivery of a signed counterpart by facsimile transmission shall constitute that party’s due execution of this Agreement.

IN WITNESS WHEREOF , the parties have executed and delivered this Agreement as of the date and year first written above.

AMERICAN PETRO-HUNTER, INC.

Name: Robert McIntosh

Title: Chief Executive Officer

JOHN E. FRIESEN

Exhibit A

American Petro-Hunter, Inc.

SECURED CONVERTIBLE PROMISSORY NOTE

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 August 13, 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 the Company’s twenty five (25%) ownership of working interest in the Poston Prospect #1 Lutters oil well located in Trego County, Kansas will be payable by mail to the registered address of the Holder in an amount equal to the lesser of (i) such royalty fee payable to the Company, or (ii) $7,500. Such payment shall continue until and including the Repayment Date. Any remaining accrued interest shall be payable in arrears on the 1st day after the end of each month, commencing August 1, 2009, and continuing thereafter until and including the Repayment Date, when all accrued but unpaid interest and the unpaid principal balance shall be paid in full. Each 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 the number of shares of securities to which the Holder will be entitled on such conversion (bearing such legends as may be required by applicable state and federal securities laws in the opinion of legal counsel for the Company), together with any other securities and property, if any, to which the Holder is entitled on such conversion under the terms of this Note.

4.   Adjustment Provisions .  The number and character of shares of common stock issuable upon conversion of this Note and the Conversion Price therefor, are subject to adjustment upon occurrence of the following events:

4.1   Adjustment for Stock Splits, Stock Dividends, Recapitalizations, etc .  The Conversion Price of this Note and the number of shares of common stock issuable upon conversion of this Note shall each be proportionally adjusted to reflect any stock dividend, stock split, reverse stock split, reclassification, recapitalization or other similar event affecting the number of outstanding shares of common stock.

4.2   Adjustment for Reorganization, Consolidation, Merger .  In the event (a) of any reorganization of the Company, (b) the Company consolidates with or merges into another entity, (c) the Company sells all or substantially all of its assets to another entity and then distributes the proceeds to its shareholders, or (d) the Company issues or otherwise sells securities representing more than 50% of the voting power of the Company in a single or series of related transactions immediately after giving effect to such transaction or series of related transaction (each of such events shall be referred to herein as a “Liquidation Event” ), then, and in each such case, the Holder, upon the conversion of this Note at any time after the consummation of any Liquidation Event shall be entitled to receive, in lieu of the stock or other securities and property receivable upon the conversion of this Note prior to such consummation, the stock or other securities or property to which the Holder would have been entitled upon the consummation of such Liquidation Event if the Holder had converted this Note immediately prior thereto, all subject to further adjustment as provided in this Note, and the successor or purchasing entity in a Liquidation Event (if other than the Company) shall duly execute and deliver to the Holder a supplement hereto acknowledging such entity’s obligations under this Note.

4.3            No Change Necessary .  The form of this Note need not be changed because of any adjustment in the Conversion Price or in the number of shares of common stock issuable upon its conversion.

5.   Defaults .  Holder may declare the entire unpaid principal and accrued interest on this Note due and payable within five (5) business days, by a notice in writing sent by certified mail to the Company if the Company defaults in the payment of principal of the Note or accrued interest thereon when due and not cured by the Company within thirty (30) days.

6.   Prepayment .  At any time prior to the Repayment Date and upon seven (7) days prior written notice, the Company may prepay, in whole or in part, the Debt in full satisfaction and accord of the Company’s obligations under this Note.

7.   Secured Note .  The full amount of this Note is secured by the Collateral identified and described as security therefor in the Security Agreement attached as Exhibit B to the Agreement.

8.   Representations and Acknowledgments of the Holder .  The Holder hereby represents, warrants, acknowledges and agrees that:

8.1   Investment .  The Holder is acquiring this Note and the securities issuable upon conversion of this Note (together, the “ Securities ”) for the Holder’s own account, and not directly or indirectly for the account of any other person.  The Holder is acquiring the Securities for investment and not with a view to distribution or resale thereof except in compliance with Securities Act of 1933 (the “ Act ”) and any applicable state law regulating securities.

8.2   Access to Information .  The Holder has had the opportunity to ask questions of, and to receive answers from, appropriate executive officers of the Company with respect to the terms and conditions of the transactions contemplated hereby and with respect to the business, affairs, financial condition and results of operations of the Company.  The Holder has had access to such financial and other information as is necessary in order for the Holder to make a fully informed decision as to investment in the Company, and has had the opportunity to obtain any additional information necessary to verify any of such information to which the Holder has had access.

8.3   Pre-Existing Relationship .  The Holder further represents and warrants that the Holder has such business or financial expertise as to be able to protect the Holder’s own interests in connection with the purchase of the Securities.

8.4   Speculative Investment .  The Holder’s investment in the Company represented by the Securities is highly speculative in nature and is subject to a high degree of risk of loss in whole or in part; the amount of such investment is within the Holder’s risk capital means and is not so great in relation to the Holder’s total financial resources as would jeopardize the personal financial needs of the Holder and the Holder’s family in the event such investment were lost in whole or in part.

8.5   Unregistered Securities .

(a)   The Holder must bear the economic risk of investment for an indefinite period of time because the Securities have not been registered under the Act and therefore cannot and will not be sold unless they are subsequently registered under the Act or an exemption from such registration is available.  The Company has made no representations, warranties or covenants whatsoever as to whether any exemption from the Act, including, without limitation, any exemption for limited sales in routine brokers’ transactions pursuant to Rule 144 under the Act will become available.

(b)   Transfer of the Securities has not been registered or qualified under any applicable state law regulating securities and therefore the Securities cannot and will not be sold unless they are subsequently registered or qualified under any such act or an exemption therefrom is available.  The Company has made no representations, warranties or covenants whatsoever as to whether any exemption from any such act will become available.

8.6   Accredited Investor .  The Holder presently qualifies as an “accredited investor” within the meaning of Regulation D of the rules and regulations promulgated under the Act.

9.   Miscellaneous .

9.1   Waiver and Amendment .  Any provision of this Note may be amended, waived or modified only upon the written consent of the Company and the Holder.

9.2   Restrictions on Transfer .  This Note may only be transferred in compliance with applicable state and federal laws.  All rights and obligations of the Company and the Holder will be binding upon and benefit the successors, assigns, heirs, and administrators of the parties.

9.3   Company Representation .  The Company represents to the Holder that the Company is a corporation duly organized, validly existing, authorized to exercise all its corporate powers, rights and privileges, and in good standing in the State of Nevada and has the corporate power and corporate authority to own and operate its properties and to carry on its business as now conducted; all corporate action on the part of the Company, its officers, directors, and shareholders necessary for the authorization, execution, delivery, and performance of all obligations under this Note have been taken; this Note constitutes a legally binding and valid obligation of the Company enforceable in accordance with its terms, except to the extent that such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance or other laws or court decisions relating to or affecting the rights of creditors generally, and such enforcement may be limited by equitable principles of general applicability.

9.4   No Assignment .  Holder may not transfer or assign all or any part of this Note except upon prior written notice to the Company and with the Company’s prior written consent, which consent shall not be unreasonably withheld; except that Holder may transfer this Note or part thereof either during his lifetime or on death by will or intestacy to his immediate family or to a trust, the beneficiaries of which are exclusively Holder and/or a member or members of his immediate family, or to a family-owned corporation.

9.5   Governing Law .  This Note will be governed by the laws of the State of Nevada applicable to contracts between Nevada residents wholly to be performed in Nevada.

Agreed and Accepted by the Holder:

/s/ John E. Friesen

John E. Friesen

SECURITY AGREEMENT

RECITAL