FORM OF SECURED BRIDGE NOTE
 
THIS BRIDGE NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT
BE SOLD, PLEDGED, OFFERED FOR SALE, ASSIGNED OR TRANSFERRED UNLESS (A) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT, AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (B)
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND THE
REGISTRATION OR QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS
ARE AVAILABLE.
 

NATIVE AMERICAN ENERGY GROUP, INC.
SECURED BRIDGE NOTE
_________, 2011
New York, NY

FOR VALUE RECEIVED, NATIVE AMERICAN ENERGY GROUP, INC., a Delaware corporation,
(“NAGP”) promises to pay to the order of
_________________________________________ (“Investor”) the principal amount of
___________________________ Dollars ($______________), together with interest on
the unpaid principal amount based on a 365-day year, all upon the terms set
forth below. This secured Bridge Note (the “Bridge Note”) is issued pursuant to
that certain Financing Agreement, dated as of July 25, 2011, executed by NAGP,
High Capital Funding, LLC, as Lead Investor, and David A. Rapaport as Escrow
Agent (the “Financing Agreement”), with Investor’s signature either affixed
thereon or incorporated by reference as evidenced by Investor’s signature on the
accompanying  Subscription Agreement. This Bridge Note is subject to the terms
and conditions of the Financing Agreement. To the extent that any of the terms
specifically set forth in the Financing Agreement is inconsistent with the
provisions of this Bridge Note specifically relating to such matters, the
Financing Agreement shall govern with respect to such inconsistencies. To the
extent relevant to this Bridge Note, the terms of the Financing Agreement are
incorporated herein by reference as though fully set forth herein. This Bridge
Note is one of a series of Bridge Notes (the Bridge Notes”), aggregating up to
Six Hundred Thousand dollars in principal amount of Bridge Notes being offered
and sold pursuant to the Financing Agreement; provided, however, that Bridge
Notes aggregating up to an additional One Hundred and Fifty Thousand dollars in
principal amount may be offered and sold at the request of the Company with the
approval of the Lead Investor. Italicized terms used herein and not otherwise
defined have the meanings ascribed to them in the Financing Agreement.

 
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1.
Interest.

a.            6.25% per annum during the initial term of this Bridge Note
payable at the Maturity Date (as defined in “2. Maturity.” below);
 
b.           8.25% per annum during any Extension Period (as defined in “2.
Maturity.” below), payable at the end of each Extension Period; and
 
c.           12.25% per annum default interest rate after the final Extension
Period, payable monthly.

2.
Maturity.

 
a. The entire principal amount of this Bridge Note and all accrued and unpaid
interest thereon is due and payable upon the earlier of (i) September 30, 2011,
or within two business days following the closing of any and all other equity
and/or debt financing totaling $3,000,000 or more (“Permanent Financing”)(the
“Maturity Date”); provided that NAGP shall make mandatory prepayments on the
Bridge Notes equal to 25% of the gross proceeds received from each closing of
the first $3,000,000 of Permanent Financing, which shall be applied to the
outstanding principal. Such mandatory prepayments shall be paid to the Escrow
Agent for the benefit of the Holders of Bridge Notes on a pro rata basis.
 
b. This Bridge Note may be prepaid at any time without premium or penalty.
 
c.  In the event NAGP shall not have closed on a cumulative total of $3,000,000
or more of Permanent Financing on or before September 30, 2011, NAGP shall have
the right to extend the Maturity Date for up to two additional one month periods
(each an “Extension Period”), until November 30, 2011  (each an “Extended
Maturity Date”), by providing written notice of such extension to the Placement
Agents, the Lead Investor, and the Escrow Agent within three business days prior
to any Maturity Date or Extended Maturity Date.
 
3.
Method of Payment.  Any payment of principal or interest hereunder shall be made
by check unless Holder has provided NAGP with appropriate wire instructions, in
which event, the payment shall be made by wire transfer of “same day” funds. For
the purpose of any interest calculation, payment shall be deemed made when the
check is sent by overnight delivery or when the wire is sent. Any partial
payment shall be applied first to a reduction of principal and thereafter to
accrued and unpaid interest. If this Bridge Note, or any payment hereunder,
falls due on a Saturday, Sunday or a day that is a public holiday in the State
of New York, any payment due hereunder shall be made on the next succeeding
business day and such additional time shall be included in the computation of
any interest payable hereunder.

 
4.
Security.  Repayment of this Bridge Note shall be secured by a lien on certain
tangible and intangible assets of the NAGP and its consolidated subsidiaries as
described in Schedule A to the Financing Agreement.

 
 
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5.
Default.  In the event of an occurrence of any event of default specified below,
the Lead Investor may declare a default, upon which, the principal of, and all
accrued and unpaid interest on, the Bridge Note shall become immediately due and
payable without notice, except as specified below:

 
 
a.
NAGP fails to make any payment hereunder when due, which failure has not been
cured within Five (5) business days following such due date.

 
 
b.
Any defined event of default occurs under any contract or instrument pursuant to
which NAGP has incurred any liability for borrowed money in excess of One
Hundred Thousand Dollars ($100,000.00), which event of default has not been
waived within Five (5) business days following such occurrence, and which event
of default is reasonably likely to materially affect NAGP’s business.

 
 
c.
NAGP files a petition to take advantage of any insolvency act; makes an
assignment for the benefit of its creditors; commences a proceeding for the
appointment of a receiver, trustee, liquidator or conservator of itself of a
whole or any substantial part of its property; files a petition or answer
seeking reorganization or arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state and Ninety (90) calendar days expire without dismissal
thereof).

 
 
d.
A court of competent jurisdiction enters an order, judgment or decree appointing
a custodian, receiver, trustee, liquidator or conservator of NAGP or of the
whole or any substantial part of its properties, or approves a petition filed
against NAGP seeking reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state; or if, under the provisions of any other law for
the relief or aid of debtors, a court of competent jurisdiction assumes custody
or control of NAGP or of the whole or any substantial part of its properties; or
there is commenced against NAGP any proceeding for any of the foregoing relief
and such proceeding or petition remains undismissed for a period of Ninety (90)
calendar days; or if NAGP by any act indicates its consent to or approval of any
such proceeding or petition.

 
 
e.
If (i) any judgment remaining unpaid, unstayed or undismissed for a period of
Sixty (60) calendar days is rendered against NAGP which by itself or together
with all other such judgments rendered against NAGP remaining unpaid, unstayed
or undismissed for a period of Sixty calendar (60) days, is in excess of One
Hundred Thousand Dollars ($100,000.00), or (ii) there is any attachment or
execution against NAGP’s properties remaining unstayed or undismissed for a
period of Sixty (60) calendar days which by itself or together with all other
attachments and executions against NAGP’s properties remaining unstayed or
undismissed for a period of Sixty (60) calendar days is for an amount in excess
of One Hundred Thousand Dollars ($100,000.00).

 
 
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6.
Cumulative Remedies.  The remedies of Investor as provided herein, in the
Security Documents, or any one or more of them, or in law or in equity, shall be
cumulative and concurrent, and may be pursued singularly, successively or
together at Investor's sole discretion, and may be exercised as often as
occasion therefore shall occur.

 
7.
Successors and Assigns.  The Bridge Note is transferable and assignable by
Investor or any subsequent permitted assignee subject to the requirement that
any such assignment or transfer be, in the opinion of NAGP’s counsel, in
compliance with applicable federal and state securities laws. The assignee shall
be referred to herein as a “Holder.” All covenants, agreements and undertakings
in the Bridge Note by or on behalf of any of the parties shall bind and inure to
the benefit of the respective successors and assigns of the parties whether so
expressed or not.

 
8.
Notices.  Any and all notices, requests, consents and demands required or
permitted to be given hereunder shall be in writing and shall be deemed given
and received (i) upon personal delivery, (ii) upon the first business day
following the receipt of confirmation of facsimile transmission to the telefax
number or email as indicated below, (iii) upon delivery by overnight courier,
prepaid and delivered on a business day; or (iv) upon the third business day
after deposit in the United States mail, by certified or registered mail,
postage prepaid and addressed as follows:

 
To Investor:
[to the address and facsimile provided in
 
Subscription Agreement between NAGP
 
and the Investor executed in connection with
 
the purchase and sale of this Bridge Note]
   
To NAGP:
Native American Energy Group, Inc.
 
108-18 Queens Blvd., Suite 901
 
Forest Hills, NY 11375
 
Tel: 718 408-2323
 
Fax: 718 793-4034
     
Att:  Raj Nanvaan,  CFO, COO

Either party may change by notice the address to which notices to that party are
to be addressed.
 
9.
Waivers/Forebearance/Amendment.  NAGP hereby waives presentment for payment,
demand, protest and notice of protest for nonpayment of the Bridge Note and
consents to any extension or postponement of the time of payment or any other
indulgence. Investor shall not be deemed, by any act or omission, to have waived
any of its rights or remedies hereunder unless such waiver is in writing and
signed by Investor and then only to the extent specifically set forth in such
writing. A waiver with reference to one event shall not be construed as
continuing or as a bar to or waiver of any right or remedy as to a subsequent
event. No delay or omission of Investor to exercise any right, whether before or
after a default hereunder, shall impair any such right or shall be construed to
be a waiver of any right or default, and the acceptance at any time by Investor
of any past-due amount shall not be deemed to be a waiver of the right to
require prompt payment when due of any other amounts then or thereafter due and
payable. Notwithstanding the foregoing, any provision of this Bridge Note may be
waived or amended upon the written consent of the NAGP and the consent of the
holder of this Bridge Note. The Bridge Note may only be amended or modified by
written agreement signed by NAGP and Holder.

 
 
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10.
Expenses.  In the event that Holder brings legal action against NAGP, or NAGP
brings legal action against Holder, to enforce or otherwise determine the
meaning or enforceability of the Bridge Note or any provision hereof, each party
shall bear its own expenses, including attorney fees, directly attributable to
such action. However, in any action for breach of the Bridge Note, including
nonpayment, the prevailing party in any such dispute shall be entitled to
recover all reasonable costs and attorney fees incurred in connection with such
action. In addition, Investor shall be entitled to recover from NAGP all
reasonable costs of collection, including without limitation, legal fees and
expenses incurred in any bankruptcy and/or state insolvency proceeding.

 
11.
Appointment of Lead Investor as Agent of Investor.  The Lead Investor is
appointed as the agent of the Investor with full authority to exercise any and
all rights and remedies of the Investor under this Bridge Note and to modify or
amend this Bridge Note, in any and all respects, with the consent of NAGP.
However, the Lead Investor shall not have the authority to reduce the principal
amount owing under this Bridge Note without the written consent of at least
seventy-five percent in interest of the Holders of all of the Bridge Notes of
the same series issued pursuant to the Financing Agreement, except as part of a
compromise and/or settlement of claims against NAGP arising from a default under
the such Bridge Notes.

 
12.
Choice of Law.  The Bridge Note shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of New York. The parties agree that venue for any suit, action, proceeding or
litigation arising out of or in relation to this Bridge Note will be in any
federal or state court in the City of New York having subject matter
jurisdiction, and the parties hereby submit to the jurisdiction of that court.

 
WITH RESPECT TO ANY CLAIM OR ACTION ARISING UNDER THIS BRIDGE NOTE, EACH PARTY
HEREBY (A) IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE CITY OF NEW YORK,
STATE OF NEW YORK, AND (B) IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY HAVE AT
ANY TIME TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS BRIDGE NOTE BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER IRREVOCABLY WAIVES THE RIGHT
TO OBJECT, WITH RESPECT TO SUCH CLAIM, SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING
IN THIS BRIDGE NOTE WILL BE DEEMED TO PRECLUDE THE INVESTOR FROM BRINGING AN
ACTION OR PROCEEDING IN THE STATE OF MONTANA.

 
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IN WITNESS WHEREOF, this Bridge Note has been executed and delivered on the date
specified on the first page hereof by the duly authorized representative of
Investor.

NATIVE AMERICAN ENERGY GROUP, INC.
a Delaware corporation
   
By:
                
Its:
  

 
 
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