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EXHIBIT 10.1
 
SUBORDINATED UNSECURED PROMISSORY NOTE
DATED JULY 31, 2007
 
 
 
 

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This Security has not been registered under the Securities Act of 1933
(hereinafter the “1933 Act”) or under applicable state securities law
(hereinafter the “State Acts”) and may not be sold, assigned, pledged,
transferred or hypothecated, whether or not for consideration, by the holder
except upon issuance to the Company of a favorable written opinion of Counsel
for the Company or upon submission to the Company of such other evidence as may
be satisfactory to counsel to the Company to the effect that any such sale,
assignment, pledge, transfer or hypothecation will not be in violation of the
1933 Act or the State Acts.

PETROHUNTER ENERGY CORPORATION

Subordinated Unsecured Promissory Note

July 31, 2007
 

 US$250,000.00
Denver, Colorado 

 
FOR VALUE RECEIVED, PetroHunter Energy Corporation, a Maryland corporation
(hereinafter the “Company”) promises to pay to the order of Bruner Family Trust
UTD March 28, 2005 (hereinafter the “Holder”), the principal sum of Two Hundred
Fifty Thousand Dollars ($250,000.00), together with interest at the rate of
eight percent (8%) per annum (hereinafter “Interest”), such principal and
Interest to be payable ON THE LATER OF, (i) the date upon which all of the
Senior Indebtedness (as defined herein) has been indefeasibly paid in full, and
(ii) ninety (90) days from the date hereof, in each case, in lawful money of the
United States of America, subject, however, to the restrictions contained in
Section 1 hereof.  Holder shall advance the principal amount of this Note to the
Company in one or more advances and interest shall accrue from the date of each
such advance.

1. SUBORDINATION

1.1.                      The Company covenants and agrees, and Holder of this
Note, by acceptance hereof, covenants and agrees, that the payment of the
principal of and interest on this Note is expressly subordinated, only to the
extent and in the manner hereinafter set forth, in right of payment of the
principal of and interest on all Senior Indebtedness (as hereinafter defined) of
the Company.  “Senior Indebtedness,” for the purposes hereof, shall mean all
present and future debts and obligations of the Company of any kind, secured or
unsecured, due or to become due, direct or indirect, jointly or independently
owed by the Company to Global Project Finance AG pursuant to Credit and Security
Agreements dated January 9, 2007 and May 21, 2007.

1.2.                      So long as any Senior Indebtedness is outstanding, no
payment of the principal of or interest on this Note shall be made and no
property or assets of the Company shall be applied to the purchase or other
acquisition by the Company of this Note if, at the time thereof or immediately
after giving effect thereto, there shall exist under the Senior Indebtedness or
under any agreement pursuant to which Senior Indebtedness shall have been
incurred any event of default which shall not have been waived or cured as
provided under the terms of any such agreement.

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1.3.                      In the event of any dissolution, winding up (other
than a merger or share exchange), liquidation or reorganization of the Company
(in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of the Company or otherwise) or in the event of any default in the payment of
any Senior Indebtedness as to which default the Holder thereof shall have given
the Company notice (hereinafter a “proceeding”), then all principal of, premium
and interest on, the Senior Indebtedness shall first be paid in full before the
Holder of this Note shall be entitled to receive any payment or distribution in
respect of the principal of or interest on this Note (other than a distribution
of securities the right to payment of which is, at least to the same extent as
the right to payment of this Note, subordinated to the prior payment or
provision for payment in full of all Senior Indebtedness then outstanding). In
any such proceeding, any payment or distribution of any kind or character,
whether in cash, securities or other property, to which the Holder of this Note
would be entitled if this Note were not so subordinated to the Senior
Indebtedness shall be paid by the liquidating trustee, agent or other person
making such payment to the holder(s) of the Senior Indebtedness for application
to the payment of the Senior Indebtedness remaining unpaid until such Senior
Indebtedness shall have been paid in full, after giving effect to any concurrent
payment or distribution to the holder(s) of the Senior Indebtedness. To the
extent that the holder(s) of Senior Indebtedness have received payments which,
but for the provisions of this Section 1, would have been paid to the Holder of
this Note, then, upon payment in full of the Senior Indebtedness, the Holder of
this Note shall be subrogated to the rights of the holder(s) of the Senior
Indebtedness to receive payments of distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of and interest on this Note shall be paid in full. For purposes of
such subrogation, no such payments or distributions to the holder(s) of the
Senior Indebtedness, which, but for the provisions hereof, would have been
payable or distributable to the Holder of this Note, shall, as between the
Company, its creditors (other than the holder(s) of the Senior Indebtedness) and
the Holder of this Note, be deemed to be a payment by the Company to or on
account of this Note.

1.4.                      Holder of this Note, by acceptance hereof, covenants
and agrees that such Holder will not accept or receive, nor authorize any other
person to accept or receive, for the benefit of such Holder, any payment of
principal of or interest on this Note which such Holder is not entitled to
receive or retain under any of the provisions of this Note.  In the event that
the Holder of this Note shall receive any such payment or distribution which
such Holder is not entitled to retain under any of the foregoing subordination
provisions, such Holder will hold any amount so received in trust for the
holder(s) of the Senior Indebtedness and will forthwith turn over such payment
or distribution (without liability for interest thereon) to the holder(s) of
Senior Indebtedness in the form received to be applied to the Senior
Indebtedness.

1.5.                      The holder(s) of any Senior Indebtedness may, at any
time and from time to time, without the consent of or notice to the Holder of
this Note, without incurring responsibility to the Holder of this Note and
without impairing or releasing the obligations of the Holder of this Note to the
holder(s) of the Senior Indebtedness, change or extend the time of payment of,
or renew or alter, any Senior Indebtedness, or otherwise amend in any manner any
agreement pursuant to which Senior Indebtedness shall have been issued and
exercise or refrain from exercising any rights against the Company and any other
person.

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1.6.                      No holder of Senior Indebtedness shall be prejudiced
in its right to enforce subordination of this Note by any act or failure to act
by the Company or any other person in the custody of the assets or property of
the Company.

1.7.                      The provisions of this Section 1 regarding
subordination are solely for the purpose of defining the relative rights of the
holder(s) of Senior Indebtedness on the one hand and the rights of the Holder of
this Note on the other hand, and none of such provisions shall impair, as
between the Company and the Holder of this Note, the obligation of the Company,
which is unconditional and absolute, to pay to the Holder of this Note the
principal of and interest on this Note in accordance with its terms, and no such
provisions shall prevent the Holder of this Note from exercising all remedies
otherwise permitted by applicable law.

2.  EVENTS OF DEFAULT.

If one or more of the following events (hereinafter “events of default”) shall
occur:

(a) default in the payment of any principal of or interest on this Note and the
continuation of such default for a period of 10 days;

(b) breach of any covenant contained in this Note and the continuation of such
breach for a period of 30 days or more after written notice thereof;

(c) the Company or any of its subsidiaries files or is served with any petition
for relief under the Bankruptcy Code or any similar federal or state statute
(the “Code”) or the entry by a court of competent jurisdiction of a decree or
order adjudging the company or the subsidiary, as the case may be, a bankrupt or
insolvent or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company or the
subsidiary under the Code or appointing a receiver, trustee or other similar
official of the Company or the subsidiary or all or substantially all of its
assets or the subsidiary’s assets, or ordering the winding up or liquidation of
its affairs or the subsidiary’s affairs, and the continuation of such decree or
order unstayed and in effect for a period of 60 consecutive days;

(d) the institution by the Company or any of its subsidiaries or the consent to
the institution by the Company or its subsidiary of proceedings to adjudicate
the Company or its subsidiary a bankrupt or insolvent or the filing or consent
by the Company or its subsidiary to the filing of a petition or answer seeking
reorganization or relief under the Code, the consent by the Company or its
subsidiary to the appointment of a receiver, trustee or other similar official
of the Company or its subsidiary or of any substantial part of its property of
its subsidiary’s property, an assignment by the Company or its subsidiary for
the benefit of creditors or the admission by the Company or its subsidiary in
writing of its inability to pay its debts generally as they become due; or

(e) a default by the Company in any of its obligations under any other
promissory note or any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be
issued, or by which there may be

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secured or evidenced any indebtedness for borrowed money or money due under any
long term leasing or factoring arrangement of the Company in an amount exceeding
$100,000, whether such indebtedness now exists or shall hereafter be created and
such default shall result in such indebtedness becoming or being declared due
and payable prior to the date on which it would otherwise become due and
payable;

then, subject to the terms, provisions and restrictions contained in Section 1
hereof, the Holder of this Note may, by written notice to the Company, declare
the entire unpaid principal of and accrued and unpaid Interest on this Note to
be due and payable and, upon such declaration, the same shall become due and
payable forthwith without further demand or notice, the payment on such
declaration, however, being subject to the subordination provisions of this
Note.

3.  MISCELLANEOUS.

3.1.                      All powers and remedies given by this Note to the
Holder hereof shall, to the extent permitted by law, be deemed cumulative and
not exclusive of any other power or remedy or of any other powers and remedies
available to the Holder hereof, by judicial proceedings or otherwise, to enforce
the performance or observance of the covenants and agreements contained in this
Note.  No delay or omission of the Holder hereof to exercise any right or power
accruing upon any default occurring and continuing as aforesaid shall impair any
such right or power or shall be construed to be a waiver of any such default or
any acquiescence therein.  Every power and remedy given by this Note or by law
to the Holder hereof may be exercised from time to time, and as often as shall
be deemed expedient, by the Holder hereof, all subject, as hereinabove provided,
to the payment of the principal of and the interest on this Note being expressly
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness.

3.2.                      In addition to the payments provided for above,
subject to the terms, provisions and restrictions contained in Section 1 hereof,
the Company agrees to pay all expenses incurred, including reasonable attorneys’
fees, if this Note is placed in the hands of an attorney for collection or if it
is collected through bankruptcy or other judicial proceedings.

3.3.                      The Company, to the extent permitted by law, waives
notice, demand, presentment for payment, protest, the filing of suit or the
taking of any other action by any Holder hereof for the purpose of fixing its
liability hereon.

3.4.                      This Note has been executed and delivered in and shall
be governed by and construed in accordance with the laws of the State of
Colorado.

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IN WITNESS WHEREOF, the Company has executed this Note under seal on the day and
year first above written.
 

  PETROHUNTER ENERGY CORPORATION      
 
By:
/s/ David Brody   Name:  David Brody    Title:  Vice President & General Counsel
     

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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