THE SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT
BE SOLD, TRANSFERRED, OR ASSIGNED, UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE
IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION
UNDER THE SECURITIES ACT.

 

Date: ____________ (the “Date”)

 

Tranche #: ______

 

Tranche Amount: $______________ (the “Tranche Amount”)

 

WARRANT

TO PURCHASE COMMON STOCK

OF

AMERICAN PETRO-HUNTER, INC.

(Void after July __, 2017)

 

1.       Issuance of Warrant. FOR VALUE RECEIVED, on and after the date of
issuance of this Warrant, and subject to the terms and conditions herein set
forth, the Holder (as defined below) is entitled to purchase from American
Petro-Hunter, Inc., a Nevada corporation (the “Company”), at any time during the
Exercise Period (as defined below), at a price per share equal to the Warrant
Price (as defined below and subject to adjustment as described below), the
Warrant Stock (as defined below and subject to adjustment as described below)
upon exercise of this warrant (this “Warrant”) pursuant to Section 5 hereof.
This Warrant is being issued pursuant to the terms of the Purchase Agreement,
dated as of even date herewith by and between the Company and ASYM Energy
Opportunities LLC (the “Agreement”). Capitalized terms not otherwise defined
herein shall have the meanings given to them in the Agreement.

 

2.       Definitions. As used in this Warrant, the following terms have the
definitions ascribed to them below:

 

(a)   “Commencement Date” means the date of each issuance of borrowings received
by the Company under the Purchase Agreement (each, a “Tranche”). For
clarification purposes, each Tranche will have a separate Commencement Date and
be the Date written above.

 

(b)    “Common Stock” means the Common Stock, $0.001 par value, of the Company.

 

(c)    “Exercise Period” means the period commencing on the Commencement Date
and ending at 5:00 p.m. Pacific Standard Time on the Termination Date (as
defined below); provided, however, the Exercise Period shall end and this
Warrant shall no longer be exercisable and shall become null and void (except
the right to receive the securities and property to which the Holder is entitled
by virtue of exercising or converting this Warrant in connection with any
Termination Event) upon consummation of any of the following (each, a
“Termination Event”): (i) the lease of all or substantially all of the assets of
the Company or the exclusive license of all or substantially all of the
Company’s intellectual property to a third party, (ii) the acquisition of the
Company by another entity by means of any transaction or series of related
transactions (including without limitation, any reorganization, merger or
consolidation, but excluding any merger or conversion effected exclusively for
the purpose of changing the domicile of the Company), or (iii) the sale,
conveyance or disposal of all or substantially all of the assets of the Company,
unless the Company’s shareholders of record as constituted immediately prior to
such acquisition or sale will, immediately after such acquisition or sale (by
virtue of securities issued as consideration for the Company’s acquisition or
sale or otherwise) hold at least fifty percent (50%) of the voting power of the
surviving or acquiring entity. Notwithstanding anything to the contrary herein,
this Warrant shall continue in full force and effect until the Termination Date
unless (y) no less than thirty (30) days prior to any Termination Event, the
Company shall have given the Holder notice of such Termination Event, which
notice shall include a reasonably detailed description of the terms of such
Termination Event, and (z) the Company shall have given the Holder a reasonable
opportunity to exercise or convert this Warrant.

 

 

 

 

(d)    “Holder” means ASYM Energy Opportunities LLC or its assigns.

 

(e)    “Termination Date” means five (5) years from the Commencement Date.

 

(f)     “Warrant Price” means a price per warrant share equal to the lesser of:
(i) $0.20, (ii) 85% of the volume weighted average price per share (“VWAP”) of
the Company’s common stock for the fifteen days preceding the issuance of any
Tranche as defined in the Purchase Agreement, or (iii) the trailing ninety (90)
net average daily oil production multiplied by $40,000, the product of which is
reduced by the Company’s total debt and any obligations or liabilities
(collectively, “Net Asset Value”), thereafter divided by the Company’s fully
diluted number of common shares outstanding. In no case, however, shall the Net
Asset Value be less than $500,000.

 

(g)    “Warrant Stock” means the shares of Common Stock purchasable upon
exercise of this Warrant. The total number of shares of Warrant Stock to be
issued upon the exercise of this Warrant shall be equal to eighty-three percent
(83%) of the amount of any Tranche, in this case, the Tranche Amount written
above, divided by the Warrant Price; provided, however, such number shall be
subject to adjustment as described in Section 3 hereof.

 

3.     Adjustments and Notices. The Warrant Price and the number of shares of
Warrant Stock shall be subject to adjustment from time to time in accordance
with this Section 3.

 

(a)    Adjustments to Warrant Stock. When any adjustment is required to be made
to the Warrant Price as described in Section 2(f) above, the number of shares of
Warrant Stock purchasable upon the exercise of this Warrant shall be changed to
the number determined by dividing (i) an amount equal to the number of shares
issuable upon the exercise of this Warrant immediately prior to such adjustment,
multiplied by the Warrant Price in effect immediately prior to such adjustment,
by (ii) the Warrant Price in effect immediately after such adjustment.

 

(b)    Reclassification, Exchange, Substitution, In-Kind Distribution. Upon any
reclassifications, exchange, substitution or other event that results in a
change of the number and/or class of the securities issuable upon exercise of
this Warrant or upon the payment of a dividend in securities or property other
than shares of Common Stock, the Holder shall be entitled to receive, upon
exercise of this Warrant, the number and kind of securities and property that
Holder would have received if this Warrant had been exercised or converted
immediately before the record date for such reclassification, exchange,
substitution, or other event or immediately prior to the record date for such
dividend. The Company or its successor shall promptly issue to Holder a new
warrant for such new securities or other property. The new warrant shall provide
for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The provisions of this Section 3(b)
shall similarly apply to successive reclassifications, exchanges, substitutions,
or other events and successive dividends.

 

 

 

 

(c)   Certificate of Adjustment. In each case of an adjustment or readjustment
of the Warrant Price, the Company, at its own expense, shall compute such
adjustment or readjustment in accordance with the provisions hereof and prepare
a certificate executed by the Company’s Chief Financial Officer showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to the Holder.

 

(d)   No Impairment. The Company shall not, by amendment of its Articles of
Incorporation or through a reorganization, transfer of assets, consolidation,
dissolution, issue, or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed under this Warrant by the Company, but shall at all times
in good faith assist in carrying out all of the provisions of this Section 3 and
in taking all such action as may be necessary or appropriate to protect the
Holder’s rights under this Section 3 against impairment.

 

(e)   Fractional Shares. No fractional shares shall be issuable upon exercise or
conversion of the Warrant and the number of shares to be issued shall be rounded
to the nearest whole share. If a fractional share interest arises upon any
exercise or conversion of the Warrant, the Company shall eliminate such
fractional share interest by paying the Holder an amount computed by multiplying
the fractional interest by the fair market value of a full share.

 

4.      Reservation of Stock. On and after the Commencement Date, the Company
shall reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of Warrant Stock upon the exercise or
conversion of this Warrant. Issuance of this Warrant shall constitute full
authority to the Company’s officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares of
Warrant Stock issuable upon the exercise or conversion of this Warrant.

 

5.       Exercise of Warrant.

 

(a)    This Warrant may be exercised as a whole or part by the Holder, at any
time after the date hereof prior to the termination of this Warrant, by the
surrender of this Warrant, together with the Notice of Exercise and Investment
Representation Statement in the forms attached hereto as Attachments 1 and 2,
respectively, duly completed and delivered to the principal office of the
Company, specifying the portion of the Warrant to be exercised, and accompanied
by payment in full of the Warrant Price in cash or by check with respect to the
shares of Warrant Stock being purchased, except in the case of a Net Exercise
pursuant to Section 5(b). This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the shares of
Warrant Stock issuable upon such exercise shall be treated for all purposes as
the holder of such shares of record as of the close of business on such date. As
promptly as practicable after such date, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of full shares of Warrant Stock issuable upon such exercise. If
this Warrant shall be exercised for less than the total number of shares of
Warrant Stock then issuable upon exercise, promptly after surrender of this
Warrant upon such exercise, the Company will execute and deliver a new warrant,
dated the date hereof, evidencing the right of the Holder to the balance of this
Warrant Stock purchasable hereunder upon the same terms and conditions set forth
herein.

 

(b)    The Holder may, in its sole discretion, exercise this Warrant in whole or
in part and, in lieu of making the cash payment otherwise contemplated to be
made to the Company upon such exercise in payment of the Warrant Price as set
forth in Section 5(a) above, elect instead to receive upon such exercise the
“Net Number” of shares of the Company’s Common Stock determined according to the
following formula (a “Net Exercise”):

 

 

 

 

Net Number = (A x B) - (A x C)

 

B

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is then being
exercised.

 

B= the closing sale price of the Common Stock of the Company on the last trading
day immediately preceding the date of the Notice of Exercise on which at least
10,000 shares of the Company’s Common Stock were traded, as reported on
Nasdaq.com (as adjusted for stock splits, stock dividends and the like).

 

C= the Warrant Price then in effect for the applicable Warrant Stock at the time
of such exercise.

 

(c)   Notwithstanding anything to the contrary contained in this Warrant, this
Warrant shall not be exercisable by the Holder hereof to the extent (but only to
the extent) necessary to ensure that, following such exercise, the total number
of shares of Common Stock then beneficially owned by Holder and its affiliates
and any other persons whose beneficial ownership of 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. 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 exercise contained in this Section 5(b) or increase or decrease
such limitation percentage to any other percentage as specified in a written
notice to the Company.

 

6.      Transfer of Warrant. Notwithstanding anything to the contrary herein,
subject to applicable securities laws, this Warrant may be transferred or
assigned in whole or in part by the Holder, and the Company shall permit such
transfer or assignment to an affiliate of the Holder.

 

7.      Demand Registration Rights.

 

(a)    Registration Process.

 

i.             Upon the written request of Holder, the Company shall prepare and
file a Registration Statement covering the resale of the Warrant Stock, and use
commercially reasonable best efforts to cause the Registration Statement
declared effective; provided, however, that the amount of Warrant Stock to be
included in the Registration Statement shall be limited to not less than 100% of
the maximum amount of Warrant Stock which may be included in a single
registration statement without exceeding registration limitations imposed by the
SEC pursuant to Rule 415, and provided, further, that the Company shall not be
obligated to the Holder for any penalties or damages, liquidated or otherwise,
so long as the Company uses its commercially reasonable best efforts with
respect to its obligations under this Section 7.

 

ii.            The Company will pay all expenses associated with the
registration, including, without limitation, filing and printing fees, and the
Company’s counsel and accounting fees and expenses, costs, if any, associated
with registering or qualifying the Warrant Stock for sale under applicable state
securities laws.

 

 

 

 

iii.            The Company shall have the right to delay the filing or
effectiveness of the Registration Statement, or, as applicable, suspend sales of
Warrant Stock under an effective Registration Statement or suspend trading of
its securities on any exchange, (i) in the event such filing or effectiveness of
the Registration Statement, or the non-suspension of trading, would in the
Company’s reasonable judgment require the disclosure of material, non-public
information concerning the Company that is not, in the reasonable opinion of the
Company, in the best interest of the Company, or (ii) during the occurrence of
any event specified in Section 7(b)(iii) below.

 

iv.             Subject to the provisions of Section 7(a)(iii) and 7(b)(iii),
the Company will use commercially reasonable best efforts to cause the
Registration Statement to remain continuously effective for a period that will
terminate upon the earlier of (x) the date on which all the Warrant Stock
covered by the Registration Statement have been sold or (y) the date on which
all the Warrant Stock covered by the Registration Statement may be sold
immediately without registration pursuant to Rule 144 of the Securities Act
(“Rule 144”).

 

v.             The Company’s obligation to register the Warrant Stock shall
terminate upon the earlier of (A) the sale of such Warrant Stock pursuant to a
Registration Statement or Rule 144, or (B) such Warrant Stock has become
eligible for sale by the Holder pursuant to Rule 144.

 

vi.            The provisions of this Section 7 will survive termination of the
Warrant for so long as the Warrant Stock remains outstanding.

 

(b)     Holder’s Obligations. In connection with the registration of the Warrant
Stock, the Holder shall have the following obligations:

 

i.               It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Warrant with respect to
the Warrant Stock that Holder shall furnish to the Company such information
regarding itself, the Warrant Stock held by it and the intended method of
disposition of the Warrant Stock held by it as shall be reasonably required to
effect the registration of such Warrant Stock and shall execute such documents
in connection with such registration as the Company may reasonably request.

 

ii.              Holder agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder.

 

iii.             Holder agrees to immediately discontinue disposition of Warrant
Stock pursuant to any Registration Statement upon notice from the Company of (A)
the issuance of any stop order or other suspension of effectiveness of the
Registration Statement by the SEC, or the suspension of the qualification of any
of the Warrant Stock for sale in any jurisdiction by the applicable regulatory
authorities, (B) the happening of any event, as promptly as practicable after
becoming aware of such event, as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, (C) the failure of the prospectus included
in the Registration Statement, as then in effect, to comply with the
requirements of the Securities Act, until the Purchaser’s receipt of a
supplemented or amended prospectus or receipt of notice that no supplement or
amendment is required, or (D) the happening of any other event that in the
Company’s reasonable judgment makes it necessary to file a supplement to the
prospectus included in the Registration Statement or to file and have declared
effective a post-effective amendment to the Registration Statement (including,
without limitation, filing a post-effective amendment or supplement to
incorporate the Company’s annual or quarterly reports and audited financial
statements on Form 10-K or Forms 10-Q).

 

 

 

 

(c)      Transfer of Registration Rights. The rights under this Warrant shall be
automatically assignable by the Holder to any transferee of all or any portion
of Warrant Stock if: (i) the Holder agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment, (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of the name and address of such transferee or assignee, and the
securities with respect to which such registration rights are being transferred
or assigned, (iii) following such transfer or assignment, the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act of 1933, as amended (the “Securities Act”) and applicable
state securities laws, (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this sentence, the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein, (v) such transfer shall have been made in accordance with the
applicable requirements of the Agreement, and (vi) such transferee shall be an
“accredited investor” as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act. As used in this Section 7, the term
“Holder” includes any transferee or assignee who agrees to become bound by the
provisions of this Warrant.

 

(d)      Definitions. As used in this Warrant, the following terms shall have
the following meanings:

 

i.            “register,” “registered,” and “registration” refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act and pursuant to Rule 415 under the Securities
Act or any successor rule providing for offering securities on a continuous
basis (“Rule 415”), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the “SEC”).

 

ii.         “Registration Statement” means a registration statement eligible to
be filed by the Company under the Securities Act.

 

8.     Termination. This Warrant shall terminate at 5:00 p.m. Pacific Standard
Time on the Termination Date, subject to earlier termination as set forth in
Section 2(c) hereof.

 

 

 

 

9.      Miscellaneous. This Warrant shall be governed by the laws of the State
of Nevada, as such laws are applied to contracts to be entered into and
performed entirely in Nevada. In the event of any dispute among the Holder and
the Company arising out of the terms of this Warrant, the parties hereby consent
to the exclusive jurisdiction of the federal and state courts located in the
State of Nevada for resolution of such dispute, and agree not to contest such
exclusive jurisdiction or seek to transfer any action relating to such dispute
to any other jurisdiction. The headings in this Warrant are for purposes of
convenience and reference only, and shall not be deemed to constitute a part
hereof. Neither this Warrant nor any term hereof may be changed or waived
orally, but only by an instrument in writing signed by the Company and the
Holder of this Warrant.

 

AMERICAN PETRO-HUNTER, INC.       Authorized Signature       Robert McIntosh  
Name       Chief Executive Officer   Title  

 

ASYM ENERGY OPPORTUNITIES LLC           Authorized Signature       Greg Imbruce
  Name       President   Title