exh10-1_agreement.htm


     

    
      

      

    

     

     

     

     

     

     

     

    EXHIBIT 10.1

     

    LOAN AGREEMENT WITH FALCON OIL & GAS
LTD.

    DATED OCTOBER 1, 2008

    
 

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    LOAN
AGREEMENT

    


    THIS LOAN AGREEMENT is made this 1st
day of October, 2008, by and between PETROHUNTER ENERGY
CORPORATION, a Maryland corporation (“Borrower”), and FALCON OIL & GAS LTD., a
British Columbia corporation (“Lender”).

     

    WHEREAS, Borrower and Lender have
entered into (i) a Purchase and Sale Agreement among Borrower, Sweetpea
Petroleum Pty Ltd., Lender and Falcon Oil & Gas Australia Pty Ltd dated
August 22, 2008 (the “Beetaloo
PSA”) providing for the sale of a 50% working interest in the Beetaloo
Basin properties, and (ii) a Purchase and Sale Agreement among Borrower,
PetroHunter Operating Company, Lender and Falcon Oil & Gas USA, Inc. dated
August 22, 2008 ((the “Buckskin
Mesa PSA”) providing for the sale of a 25% working interest in 5 wells
and applicable spacing units (the “Buckskin Mesa Wells”);
and

     

    WHEREAS, Borrower is desirous of
borrowing US$5,000,000 to pay certain indebtedness, liabilities and obligations,
all as more particularly outlined in Schedule “A” attached
hereto; and

     

    WHEREAS, Lender is willing to provide
the above-described loan to Borrower on the terms and conditions hereinafter set
forth.

     

    NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants herein contained, the parties agree as
follows:

     

    1.           Terms of Loan. Subject to the
terms and conditions of this Agreement, Lender hereby agrees to loan to Borrower
the amount of US$5,000,000 (the “Loan”).

     

    a.           The
Loan shall be repaid on the earlier of: (i) that date that is 45 days after the
receipt for the (final) prospectus qualifying the distribution of the common
shares in the capital of Lender underlying the convertible securities issued to
Borrower as partial consideration under the Beetaloo PSA; (ii) the occurrence of
an Event of Default (as hereinafter defined); and (iii) 120 days from the date
of this Agreement.

     

    b.           Concurrently
herewith, Borrower shall execute a Promissory Note in favor of Lender in the
face amount of US$5,000,000 (the “Note”), in the form attached
hereto as Exhibit
“B” and incorporated by reference herein.

     

    c.           The
Loan proceeds shall be advanced directly to the creditors listed on Schedule
“A”.

     

    d.           The
unpaid principal amount of the Loan shall bear interest at the rate of 10% per
annum, with interest on overdue interest at the same rate as on principal,
computed on the daily balance outstanding, both before and after the occurrence
of an Event of Default and/or judgment (the “Interest”).  Interest
shall be payable monthly on the last business day (being any day other than a
Saturday, Sunday or statutory holiday in Denver, Colorado), with the first
payment of interest due on the last business day of the month in which this
Agreement is signed.

     

     

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    e.           Borrower
may prepay under the Note at any time in any amount without premium or
penalty.

     

    2.           Security.  As
further and continuing collateral security for all of Borrower’s indebtedness,
liabilities and obligations owed to Lender under this Loan, including any
Interest owing (collectively, the “Indebtedness”), Borrower shall
executed and deliver to Lender, in form and content satisfactory to Lender, the
following (collectively, the “Security”):

     

    a. The Loan
shall be secured by a first charge/mortgage in favor of Lender on the Buckskin
Mesa Wells, as evidenced by a Mortgage, Assignment, Security Agreement, Fixture
Filing and Financing Statement (the “Mortgage”) in the form
attached hereto as Exhibit “C” and
incorporated by reference herein.

     

    b. Borrower
shall pledge shares of Lender’s capital stock or securities convertible into
shares of Lender’s capital stock (collectively, the “Pledge Shares”), which it has
acquired in connection with the closing of the Beetaloo PSA in accordance with
the following and in the following priority:

     

    i)
  
Pledge
Shares with a value equivalent to US$7,500,000 (calculated based on the closing
trading price of the Lender’s common shares on the TSX Venture Exchange on the
trading day immediately prior to the closing of the Loan) shall be deposited in
a brokerage account designated by Lender, with the proceeds of sale irrevocably
directed to Lender to be applied on account of the Indebtedness, with the pledge
evidenced by a Pledge and Security Agreement in the form attached hereto as
Exhibit “D” and
incorporated by this reference;

     

    ii)   Up to
US$6,000,000 worth of Pledge Shares (calculated based on the closing trading
price of the Lender’s common shares on the TSX Venture Exchange on the trading
day immediately prior to the closing of the Loan) shall be available to Borrower
as collateral for loans from third parties, and if Borrower obtains any such
third party loans, the proceeds thereof shall be applied as
follows:  the first US$3,000,000 shall be for Borrower’s use as
working capital in the normal course of business, the next US$3,000,000 shall be
paid to Lender to reduce the outstanding balance on the Loan, the next
US$1,000,000 shall be available to Borrower, and thereafter proceeds of
US$1,000,000 or lesser amounts shall be distributed successively 50% to each
party until the earlier of being fully applied or until all accrued and unpaid
interest and principal under the Loan is fully paid; and

     

    iii)   All
remaining Pledge Shares shall be unpledged and may be sold by Borrower, in which
case the proceeds of any such sale shall be divided equally (50/50) between
Borrower and Lender until the earlier of being fully applied or until all
accrued and unpaid interest and principal under the Loan is fully
paid.

     

    As the Pledge Shares are being held in
escrow pursuant to the terms of the Beetaloo PSA, Borrower and Lender shall
advise the Escrow Agent (as defined in the Beetaloo PSA) of this Loan Agreement
and the security interest created in the Pledge Shares by sending a notice in
the form attached hereto as Exhibit
“E”.

     

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    3.           Covenants.  During
such time as the Indebtedness is outstanding, Borrower shall:

    


    a.  Pay when
due all amounts owing to all of its creditors and the creditors of its
subsidiaries, Sweetpea Petroleum Pty Ltd. and PetroHunter Operating
Company;

     

    
      	
              b.      

            	
              Pay
      to Lender all amounts owing hereunder when
due;

            


    

    


    c.  Pay all
amounts owing to all governmental authorities when due, including without
limitation, all amounts owing in respect of the realty taxes, levies or similar
charges related to the Beetaloo Basin and Buckskin Mesa properties (the “Properties”);

    


    d.  File and
pay all tax returns and any other claims or obligations including those which
may rank in priority to the Security;

    


    e.  Upon
request, provide to Lender such reports and information concerning the
Properties, and Borrower and its business and affairs as Lender may reasonably
request;

    


    f.  Promptly
report any material adverse change in Borrower’s business or affairs immediately
following any occurrence thereof; and

    


    g.  Keep and
maintain the Properties in good and proper repair.

     

    4.           Conditions of
Lending.  Lender’s obligation to advance the Loan shall be
subject to and conditional upon the satisfaction of the following conditions,
each of which may be waived by Lender in its sole and unfettered
discretion:

     

    a.  Borrower
shall have executed and delivered this Loan Agreement, the Note, the Mortgage,
the Pledge and Security Agreement and such other and further documents as
contemplated hereby as may be reasonably required by Lender.

    


    b.  Borrower
shall have provided materials, satisfactory to Lender, supporting the disclosure
of the obligations and information provided in Schedule “A”.

    


    c.  The
Beetaloo PSA shall have been amended by deleting the last sentence in Section
2.4(b) thereof and replacing said sentence with a new sentence which shall
provide as follows:  “The Adjustment Amount shall not exceed
US$3,500,000.”

    


    d.  Schedule
“A” to the Initial Buckskin Mesa Escrow Agreement (as that term is defined in
the Beetaloo PSA) shall have been amended to provide that the Initial Completion
Program and AFE for each of the five wells shall be designed to allow meaningful
completion work to be performed on all five of the wells, with the specific work
to be performed on each well mutually agreed to by Rod Wallis (of Lender) and
Lyle Nelson (of Borrower) and that if either or both of said individuals is no
longer employed by his respective employer, such party shall promptly designate
a new representative.

     

     

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    e.  Borrower
and Lender shall have received all required regulatory and corporate approvals,
including that of the TSX Venture Exchange.

    


    f.  Borrower
shall have executed, or shall have caused to be executed, such other further
documentation, guarantees and loan agreements as Lender shall require in its
sole discretion, which shall be reasonably consistent with the other terms
herein.

     

    5.           Events of
Default.  At the sole option of Lender, upon the occurrence of
any of the following events (each an “Event of Default” and
collectively, “Events of
Default”), all of the Indebtedness shall become due and payable and the
Security shall become enforceable:

    


    a.           Borrower
fails to pay the Indebtedness to Lender when due;

     

    b.           Borrower
or any guarantor of the Indebtedness fails to observe, perform or is otherwise
in breach of any of its obligations to Lender hereunder or under the
Security;

     

    c.           Borrower
becomes bankrupt or the filing of a petition for a receiving order is filed
against Borrower;

     

    d.           A
party commences an action against Borrower or any guarantor of the Indebtedness
or its property, assets or undertaking, which may adversely impact or otherwise
impair Borrower’s ability to pay the Indebtedness, as reasonably determined by
Lender; and/or

     

    e.           A
receiver, manager, agent, liquidator or other similar administrator is appointed
in respect of Borrower’s assets, or any material part thereof, or a secured
party, lien claimant, other holder of an encumbrance, judgment creditor or a
person asserting similar rights takes possession of Borrower’s assets or any
party thereof.

    


    6.           Fees and
Expenses.  Borrower shall be responsible for all of Lender’s
fees and expenses incurred in connection with this Loan (the “Expenses”), up to a maximum of
US$15,000, including without limitation costs and legal expenses incurred in the
preparation of this Agreement, the Note, the Mortgage and other documents in
connection herewith, and in respect of inspections, appraisals, documentation
and enforcement of the Security, all of which Expenses shall be secured by the
Security and shall be paid forthwith upon presentation by Lender to
Borrower.  The Expenses shall be deemed to form part of the
Indebtedness, be subject to the Security and bear interest at the same rate as
the Indebtedness.

    


    7.           Notices. All notices,
consents, approvals, requests, demands and other communications which are
required or may be given hereunder shall be in writing and shall be duly given
if personally delivered, sent by facsimile, telegram or overnight courier or
posted by U.S. registered or certified mail, return receipt requested, postage
prepaid and addressed to the other parties at the addresses set forth
below.

     

     

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    Lender:                Falcon
Oil & Gas Ltd.

    1875
Lawrence Street, Suite 1400

    Denver,
Colorado  80202

    Attention:
Chief Executive Officer

    Facsimile
number: (303) 572-8927

    


    with a
copy to (which copy shall not constitute notice hereunder):

    


    Aird
& Berlis LLP

    Brookfield
Place, 181 Bay Street

    Suite
1800, Box 754

    Toronto,
Ontario

    M5J
2T9

    Attention:
Daniel N. Bloch

    Facsimile
number: (416) 863-1515

    
 

    Borrower:            PetroHunter
Energy Corporation

    1600
Stout Street, Suite 2000

    Denver,
Colorado 80202

    Attention:
Chief Executive Officer

    Facsimile
number:  (720) 889-8371

    


    with a
copy to (which copy shall not constitute notice hereunder):

    


    Dill Dill
Carr Stonbraker & Hutchings, P.C.

    455
Sherman Street, Suite 300

    Denver,
Colorado 80203

    Attention:
Fay M. Matsukage, Esq.

    Facsimile
number: (303) 777-3823

    


    Any party
may from time to time change the address to which notices to it are to be sent
by giving notice of such change to the other parties in the manner set forth
herein.  Notices shall be deemed given on the next business day
following the day such notice is posted or sent by courier in the manner
described above, and if sent by facsimile or telegram, on the date such notice
is sent, and if delivered in person, on the date so delivered.  Any
notice period shall commence on the day such notice is deemed
given.  For the purposes of this Agreement, the term “business day” shall include
all days other than Saturdays, Sundays and federal banking
holidays.

    


    8.           Miscellaneous.

     

    a.           No Waiver.  No
failure or delay of any party hereto to exercise any right given to it
hereunder, or to insist on strict compliance with any provision hereunder, shall
constitute a waiver of such provision or of any other provision hereof, or a
waiver of any breach, and no waiver of any provision or breach of any provision
shall constitute a waiver of any other provision or breach or of any subsequent
breach of the same provision.  No waiver shall be effective unless in
writing and signed by the party having the right to waive such
provision.

     

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    b.           Survival.  All
covenants, agreements, representations and warranties made herein and in any
other instruments or documents delivered pursuant hereto shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect so long as any of the amounts due hereunder are outstanding and
unpaid.

     

    c.           Entire Agreement;
Modification.  This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof,
superseding all prior negotiations, correspondence, understandings and
agreements, if any, between the parties; no amendment or modification of this
Agreement shall be binding on the parties unless made in writing and duly
executed by all parties.  There are no oral or implied agreements and
no oral or implied warranties between the parties hereto other than those
expressed herein.

     

    d.           Binding Effect;
Assignability.  This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.  This Agreement shall not be assignable by the Borrower
without the prior written consent of Lender.

     

    e.           Headings.  The
section and other headings in this Agreement are for reference only and shall
not limit or otherwise affect any of the terms hereof.

     

    f.           Further Assurances and Corrective
Instruments. The parties hereto agree to execute, acknowledge, seal and
deliver, after the date hereof, without additional consideration, such further
assurances, instruments and docu­ments, and to take such further actions, as
the parties hereto shall request in order to fulfill the intent of this
Agreement and the transactions contemplated hereby.

     

    g.           Severability.  Any
provision in this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provisions
in any other jurisdiction.

     

    h.           Governing
Law.  This Agreement is made in and shall be governed by and
construed and interpreted in accordance with the laws of the State of
Colorado.

    


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    IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
under seal, with the intention of making it a sealed instrument, as of the day
and year first above written.

    


    ATTEST:                                                                           BORROWER:

    


    PETROHUNTER ENERGY
CORPORATION

    


    


    /s/ Kyle White
Johnson                                                  By:   /s/ Charles A.
Josenhans                           
 

    Kyle
WhiteJohnson                                                                     Charles
A. Josenhans

    Assistant
Secretary                                                                      Interim
Chief Financial Officer

    


    LENDER:

    


    FALCON OIL & GAS LTD.

    


    


    /s/ Evan L.
Wasoff                                                          By:    /s/ Roderick J.
Wallis                                  


    Evan L.
Wasoff                                                                              Roderick
J. Wallis

    Chief
Financial
Officer                                                                Chief
Operating Officer

     

     

     

     

     

     

     

     

     

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