American Petro-Hunter, Inc.: Exhibit 10.27 - Filed by newsfilecorp.com





NEITHER, THE ISSUANCE AND SALE OF THE SECURITIES,
REPRESENTED BY THIS CERTIFICATE, NOR, THE SECURITIES INTO WHICH THESE SECURITIES
ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (i) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM GENERALLY ACCEPTABLE TO THE
COMPANY’S LEGAL COUNSEL, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(ii) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.


	 	 	 	 
	 		  	 
	 	Principal Amount: 	$71,000.00 	 
	 		  	 
	 	Original Issue Date: 	March 4, 2013 	 
	 		  	 
	 	Exchange Date: 	April 25, 2013 	 
	 		  	 
	 	Maturity Date: 	September 4, 2013 	 


CONVERTIBLE PROMISSORY NOTE 

            FOR
VALUE RECEIVED, AMERICAN PETRO-HUNTER, INC., a Nevada corporation (hereinafter
called “Borrower” or the “Company”), hereby promises
to pay to MAGNA GROUP, LLC, (the “Holder”) or order, without
demand, the aggregate principal amount of SEVENTY-ONE THOUSAND DOLLARS  ($71,000.00) (the “Principal Amount”), together with
interest thereon from March 4, 2013 (the “Original Issue
Date”), payable on September 4, 2013 (the “Maturity
Date”). Interest shall accrue at a rate of twelve percent (12%) per
annum, compounded annually. 

            This
Convertible Promissory Note (including all convertible promissory notes issued
in exchange, transfer or replacement hereof, this “Note”) is
issued in exchange for an outstanding Convertible Promissory Note, dated as of
the Original Issue Date (as set forth above), with an original principal amount
of U.S. $140,000.00 and an outstanding principal plus accrued but unpaid
interest amount as of the calendar day immediately preceding the Exchange Date
(as set forth above) of U.S. $71,000.00, (the “Existing
Note”), issued pursuant to the Assignment Agreement, dated as of March
4, 2013, by and between the Holder and the Borrower (the “Assignment
Agreement”), but shall not, except as set forth herein or in the
Exchange Agreement (as defined below), constitute a release of any claim under
any document or transaction contemplated by the Assignment Agreement. This Note
is issued in exchange for the Existing Note pursuant to that certain Exchange
Agreement, dated as of the Exchange Date (as set forth above), by and between
the Holder and the Borrower (the “Exchange Agreement”). Unless
otherwise separately defined herein, all capitalized terms used in this Note
shall have the same meaning as is set forth in the Purchase Agreement. The
following terms shall apply to this Note: 




ARTICLE I 
GENERAL PROVISIONS 

            1.1       
Conversion Privileges. The conversion privileges set forth in Article II
shall remain in full force and effect immediately from the date hereof and until
Note is paid in full regardless of the occurrence of an Event of Default but
subject to Article II. The Principal Amount of Note together with all unpaid
interest accrued thereon and any other amounts payable hereunder, or such
portion thereof, that has not previously been converted into common stock,
$0.001 par value, of the Company (the “Common Stock”) in
accordance with Article II hereof, if any, shall be payable in full on the
Maturity Date. 

           
1.2        Payment of Interest. There
shall be no periodic payments of interest on this Note. 

ARTICLE II 
CONVERSION RIGHTS 

            The
Holder shall have the right to convert the Principal Amount together with all
unpaid interest accrued thereon of this Note into shares of the Borrower’s
Common Stock as set forth below. 

           
2.1        Conversion into the Borrower’s
Common S tock . 

                          (a)       
Conversion Price. The conversion price (the “Conversion
Price”) in effect on any date of conversion shall be equal to $0.008
(subject to equitable adjustments for stock splits, stock dividends or rights offerings by the
Borrower relating to the Borrower’s securities or the securities of any
subsidiary of the Borrower, combinations, recapitalization, reclassifications,
extraordinary distributions and similar events). 

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                          (b)       
Conversion. The Holder shall have the option, but shall not be required,
to convert all or a portion of the Note into a number of fully paid and
non-assessable shares of Common Stock (the “Conversion Shares”).
The number of Conversion Shares issuable upon a conversion hereunder shall be
determined by the quotient obtained by dividing (x) the outstanding Principal
Amount together with all unpaid interest accrued thereon of this Note to be
converted by (y) the Conversion Price. 

                          (c)       
Mechanics of Conversion. As a condition to effecting the conversion set
forth in Section 2.1(b) above, the Holder shall properly complete and deliver to
the Company a Notice of Conversion, a form of which is annexed hereto as
Exhibit A (the “Notice of Conversion”), which notice must
be received by the Company at least one (1) Trading Day prior to the Maturity
Date. The Notice of Conversion shall set forth the Principal Amount together
with all unpaid interest accrued thereon of this Note to be converted and the
date on which such conversion shall be effected (such date, the
“Conversion Date”). If no Conversion Date is specified in a Notice
of Conversion, the Conversion Date shall be the date that such Notice of
Conversion is deemed delivered hereunder. Upon timely delivery to the Borrower
of the Notice of Conversion, certificates evidencing that number of shares of
Common Stock for the portion of the Note converted in accordance herewith shall
be transmitted by the Company’s transfer agent to the Holder by crediting the
account of the Holder’s prime broker with The Depository Trust Company through
its Deposit / Withdrawal at Custodian system if the Company is then a
participant in such system and either (A) there is an effective registration
statement permitting the issuance of the Conversion Shares to, or resale of the
Conversion Shares by, the Holder or (B) the shares are eligible for resale by
the Holder without volume or manner-of-sale limitations pursuant to Rule 144,
and otherwise by physical delivery to the address specified by the Holder in the
Notice of Conversion by the date that is three (3) Trading Days after the
Conversion Date (such third day being the “Share Delivery Date”).


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(d)        Obligation to Deliver
Conversion Shares Absolute; Certain Remedies. 

                                        (i)       
Obligation Absolute. The Company’s obligations to issue and deliver the
Conversion Shares upon conversion of this Note in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction by
the Holder to enforce the same, any waiver or consent with respect to any
provision hereof, the recovery of any judgment against any Person or any action
to enforce the same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any other Person
of any obligation to the Company or any violation or alleged violation of law by
the Holder or any other Person, and irrespective of any other circumstance which
might otherwise limit such obligation of the Company to the Holder in connection
with the issuance of such Conversion Shares; provided, however, that such
delivery shall not operate as a waiver by the Company of any such action the
Company may have against the Holder. In the absence of such injunction, the
Company shall issue Conversion Shares or, if applicable, cash, upon a properly
noticed conversion. 

                                        (ii)       
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. In addition to any other rights available to the Holder, if the
Company fails for any reason to deliver to the Holder such certificate or
certificates by the Share Delivery Date pursuant to Section 2.1(c), and if after
such Share Delivery Date the Holder is required by its brokerage firm to
purchase (in an open market transaction or otherwise), or the Holder’s brokerage
firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Conversion Shares which the Holder was entitled to
receive upon the conversion relating to such Share Delivery Date (a
“Buy-In”), then the Company shall (A) pay in cash to the Holder
(in addition to any other remedies available to or elected by the Holder) the
amount, if any, by which (x) the Holder’s total purchase price (including any
brokerage commissions) for the Common Stock so purchased exceeds (y) the product
of (1) the aggregate number of shares of Common Stock that the Holder was
entitled to receive from the conversion at issue multiplied by (2) the actual
sale price at which the sell order giving rise to such purchase obligation was
executed (including any brokerage commissions) and (B) at the option of the
Holder, either reissue (if surrendered) this Note in a Principal Amount equal to
the Principal Amount of the attempted conversion (in which case such conversion
shall be deemed rescinded) or deliver to the Holder the number of shares of
Common Stock that would have been issued if the Company had timely complied with its delivery requirements
under Section 2.1(c) (the “Buy- In Liquidated Damages”). For
example, if the Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of this Note
with respect to which the actual sale price of the Conversion Shares (including
any brokerage commissions) giving rise to such purchase obligation was a total
of $10,000 under clause (A) of the immediately preceding sentence, the Company
shall be required to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of such loss. 

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                                        (iii)       
Rescission. If, in the case of any Notice of Conversion, such certificate
or certificates are not delivered to or as directed by the applicable Holder by
the Share Delivery Date, the Holder shall be entitled to elect by written notice
to the Company at any time on or before its receipt of such certificate or
certificates, to rescind such Conversion, in which event the Company shall
promptly return to the Holder any original Note delivered to the Company and the
Holder shall promptly return to the Company the Common Stock certificates issued
to such Holder pursuant to the rescinded Conversion Notice. 

                          (e)       
Adjustment. The number and kind of shares or other securities to be
issued upon conversion determined pursuant to Section 2.1(b), shall be subject
to adjustment, from time to time, upon the happening of certain events while
this conversion right remains outstanding, as follows: 

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                                        (i)        Fundamental Transaction. If, at any time while this Note is outstanding,
(i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person,
(ii) the Company, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct
or indirect, purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more
of the outstanding Common Stock, (iv) the Company, directly or indirectly, in
one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property, or (v) the Company, directly
or indirectly, in one or more related transactions consummates a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent conversion of this Note, the
Holder shall have the right to receive, for each Conversion Share that would
have been issuable upon such conversion immediately prior to the occurrence of
such Fundamental Transaction (without regard to any limitation in Section 2.3 on
the conversion of this Note), the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate
Consideration”) receivable as a result of such Fundamental Transaction
by a holder of the number of shares of Common Stock for which this Note is
convertible immediately prior to such Fundamental Transaction (without regard to
any limitation in Section 2.3 on the conversion of this Note). For purposes of
any such conversion, the determination of the Conversion Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one (1) share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Conversion Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any conversion of this Note following such Fundamental
Transaction. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company
under this Note and the other Transaction Documents in accordance with the
provisions of this Section 2(e)(i) pursuant to written agreements in form and
substance reasonably satisfactory to the Holder and approved by the Holder
(without unreasonable delay) prior to such Fundamental Transaction and shall, at
the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the
Successor Entity evidenced by a written instrument substantially similar in form
and substance to this Note which is convertible for a corresponding number of
shares of capital stock of such Successor Entity (or its parent entity)
equivalent to the shares of Common Stock acquirable and receivable upon
conversion of this Note (without regard to any limitations on the conversion of
this Note) prior to such Fundamental Transaction, and with a conversion price
which applies the conversion price hereunder to such shares of capital stock
(but taking into account the relative value of the shares of Common Stock
pursuant to such Fundamental Transaction and the value of such shares of capital
stock, such number of shares of capital stock and such conversion price being
for the purpose of protecting the economic value of this Note immediately prior
to the consummation of such Fundamental Transaction), and which is reasonably
satisfactory in form and substance to the Holder. Upon the occurrence of any
such Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Note and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may
exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Note and the other Transaction Documents
with the same effect as if such Successor Entity had been named as the Company
herein. 

6




                                        (ii)       
Stock Dividends and Stock Splits. If the Company, at any time while this
Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution
or distributions payable in shares of Common Stock on shares of Common Stock or
any Common Stock Equivalents (which, for avoidance of doubt, shall not include
any shares of Common Stock issued by the Company upon conversion of, or payment
of interest on, the Note), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of a reverse
stock split) outstanding shares of Common Stock into a smaller number of shares
or (iv) issues, in the event of a reclassification of shares of the Common
Stock, any shares of capital stock of the Company, then the Conversion Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock (excluding any treasury shares of the Company)
outstanding immediately before such event, and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re classification.

7




                          (f)       
Notice of Adjustment. Upon the occurrence of an event specified in
Section 2.1(e), the Borrower shall promptly mail to the Holder a notice setting
forth the adjustment and setting forth a statement of the facts requiring such
adjustment, provided that any additional notice requirements set forth in
Section 2.1(e)(i) shall also be applicable. 

                         
(g)        Reservation of Shares. At
such time when necessary, Borrower: 

                                        (i)       
will reserve from its authorized and unissued Common Stock a sufficient amount
of Common Stock to permit the full conversion of Note; 

                                        (ii)       
represents that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable; and 

                                        (iii)       
agrees that its issuance of Note shall constitute full authority to its
officers, agents, and transfer agents who are charged with the duty of executing
and issuing stock certificates to execute and issue the necessary certificates
for shares of Common Stock upon the conversion of Note. 

            2.2       
Method of Conversion. Note may be converted by the Holder, in whole or in
part, as described in Section 2.1(a) hereof and the Purchase Agreement. Upon
partial conversion of Note, a new Note containing the same date and provisions
of Note shall, at the request of the Holder, be issued by the Borrower to the
Holder for the principal balance of Note and interest which shall not have been
converted or paid. 

            2.3       
Limitations on Conversion. Notwithstanding anything to the contrary
contained in this Note, this Note shall not be convertible by the Holder hereof,
and the Company shall not effect any conversion of this Note or otherwise issue
any shares of Common Stock pursuant hereto, to the extent (but only to the
extent) that the Holder or any of its affiliates would beneficially own in
excess of 4.99% (the “Maximum Percentage”) of the Common Stock. To
the extent the above limitation applies, the determination of whether this Note
shall be convertible (vis-à-vis other convertible, exercisable or exchangeable
securities owned by the Holder) shall, subject to such Maximum Percentage
limitation, be determined on the basis of the first submission to the Company for conversion, exercise or
exchange (as the case may be). No prior inability to convert this Note, or to
issue shares of Common Stock, pursuant to this paragraph shall have any effect
on the applicability of the provisions of this paragraph with respect to any
subsequent determination of convertibility. For purposes of this paragraph,
beneficial ownership and all determinations and calculations (including, without
limitation, with respect to calculations of percentage ownership) shall be
determined in accordance with Section 13(d) of the Securities Act of 1934, as
amended, and the rules and regulations promulgated thereunder. The provisions of
this paragraph shall be implemented in a manner otherwise than in strict
conformity with the terms of this paragraph to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended Maximum
Percentage beneficial ownership limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such Maximum
Percentage limitation. The limitations contained in this paragraph shall apply
to a successor Holder of this Note. The holders of Common Stock shall be third
party beneficiaries of this paragraph and the Company may not waive this
paragraph without the consent of holders of a majority of its Common Stock. For
any reason at any time, upon the written or oral request of the Holder, the
Company shall within two (2) Trading Days confirm orally to the Holder and, if
requested, in writing to the Holder the number of shares of Common Stock then
outstanding, including by virtue of any prior conversion or exercise of
convertible or exercisable securities into Common Stock, including, without
limitation, pursuant to this Note or securities issued pursuant to the Purchase
Agreement. 

8




ARTICLE III 
EVENT OF DEFAULT 

            The
occurrence of any of the following events of default (“Event of
Default”) shall, at the option of the Holder hereof, make the
outstanding Principal Amount plus all other amounts payable under this Note
immediately due and payable in cash at the Mandatory Default Amount (as defined
below), upon demand: 

            3.1       
Failure to Pay. The Borrower fails to pay the Principal Amount or other
sum due under Note when due. 

            3.2       
Breach of Covenant. The Borrower breaches any material covenant of the
Purchase Agreement or Note in any material respect and such breach, if subject
to cure, continues for a period of FIFTEEN (15) Trading Days after
written notice to the Borrower from the Holder. 

9 




            3.3       
  Breach of Representations and Warranties. Any material representation or
warranty of the Borrower made, in the Purchase Agreement or in any certificate
delivered pursuant to the Purchase Agreement, said statement or certificate
given in writing pursuant hereto or in connection therewith shall be false or
misleading in any material respect as of the date made and the Closing Date.

            3.4       
Receiver or Trustee. The Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or such
a receiver or trustee shall otherwise be appointed. 

            3.5       
Judgments. Any money judgment, writ or similar final process shall be
entered or filed against Borrower or any of its property or other assets for
more than ONE MILLION DOLLARS ($1,000,000.00) and shall remain unvacated,
unbonded or unstayed for a period of FORTY-FIVE (45) days. 

            3.6       
Bankruptcy. Bankruptcy, reorganization, insolvency proceeding,
liquidation proceedings or other proceedings or relief under any bankruptcy law
or any law, or the issuance of any notice in relation to such event, for the
relief of debtors shall be instituted by or against the Borrower and if
instituted against them are not dismissed within FORTY-FIVE (45) Trading Days of
initiation. 

            3.7       
Non-Payment. A default by the Borrower under any one or more obligations
in an aggregate monetary amount in excess of ONE MILLION DOLLARS ($1,000,000.00)
for more than TWENTY (20) Trading Days after notice to the Borrower from the
Holder, unless the Borrower is contesting the validity of such obligation in
good faith and has segregated cash funds equal to not less than one-half of the
contested amount. 

            3.8       
Failure to Deliver Common Stock or Replacement Note. Borrower’s failure
to deliver Common Stock to the Holder pursuant to and in the form required by
Note within TEN (10) Trading Days after the applicable Conversion Date. 

10




            3.9       
Reservation Default. Failure by the Borrower to have reserved for
issuance upon conversion of this Note the amount of Common stock as set forth in
this Note for more than NINETY (90) days after notice to the Borrower from the
Holder. 

            Upon
the payment in full of the Mandatory Default Amount, the Holder shall promptly
surrender this Note to or as directed by the Company. In connection with such
acceleration described herein, the Holder need not provide, and the Company
hereby waives, any presentment, demand, protest or other notice of any kind, and
the Holder may immediately and without expiration of any grace period enforce
any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. For purposes of this Article III,
“Mandatory Default Amount” means the sum of (a) the greater of (i)
the outstanding Principal Amount of this Note, divided by the Conversion Price
on the date the Mandatory Default Amount is either (A) demanded (if demand or
notice is required to create an Event of Default) or otherwise due or (B) paid
in full, whichever has a lower Conversion Price, multiplied by the VWAP on the
date the Mandatory Default Amount is either (x) demanded or otherwise due or (y)
paid in full, whichever has a higher VWAP, or (ii) 100% of the outstanding
principal amount of this Note, and (b) all other amounts, costs, expenses and
liquidated damages due in respect of this Note. 

ARTICLE IV 
NEGATIVE COVENANTS 

            4.1       
Negative Covenants. As long as any portion of this Note remains
outstanding, unless the Holder shall have otherwise given prior written consent,
the Company shall not, and shall not permit any of the Subsidiaries to, directly
or indirectly: 

                          (a)       
other than Permitted Indebtedness (as defined below), enter into, create, incur,
assume, guarantee or suffer to exist any secured indebtedness for borrowed money
of any kind, including, but not limited to, a guarantee, on or with respect to
any of its property or assets now owned or hereafter acquired or any interest
therein or any income or profits therefrom; 

                          (b)       
other than Permitted Liens (as defined below), enter into, create, incur, assume
or suffer to exist any Liens of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein or
any income or profits therefrom; 

11




                          (c)       
repay, repurchase or offer to repay, repurchase or otherwise acquire for cash
more than a de minimis number of shares of its Common Stock other than
repurchases of Common Stock of departing officers and directors of the Company,
provided that such repurchases shall not exceed an aggregate of $150,000 during
the term of this Note; or 

                         
(d)        pay cash dividends or
distributions on any equity securities of the Company. 

           
4.2        Definitions. For the
purpose of this Note, the following definitions shall apply: 

                          (a)       
“Permitted Indebtedness” means (i) the Indebtedness evidenced by
the Note, (ii) the Indebtedness existing on the Original Issue Date and set
forth on Schedule 5.19 attached to the Purchase Agreement, (iii)
unsecured Indebtedness incurred by the Company, which Indebtedness is not senior
in rank to the Note and does not mature prior to six months from the issue date
of such Indebtedness, (iv) Indebtedness secured by Permitted Liens, and (v)
extensions, refinancings and renewals of any items in clauses (i) through (iv)
above, provided that the principal amount is not increased (other than with
respect to the addition of existing or future interest due and payable
thereunder to the principal thereunder) or the terms modified to impose
materially more burdensome terms upon the Company or its Subsidiaries, as the
case may be. 

                          (b)       
“Permitted Lien” means the individual and collective reference to
the following: (i) any Lien for taxes not yet due or delinquent or being
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with GAAP, (ii) any statutory Lien arising
in the ordinary course of business by operation of law with respect to a
liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen's liens, mechanics' liens and other similar liens,
arising in the ordinary course of business with respect to a liability that is
not yet due or delinquent or that are being contested in good faith by
appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or
held by the Company or any of its Subsidiaries to secure the purchase price of
such equipment or indebtedness incurred solely for the purpose of financing the
acquisition or lease of such equipment, or (B) existing on such equipment at the
time of its acquisition, provided that the Lien is confined solely to the
property so acquired and improvements thereon, and the proceeds of such
equipment, (v) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type
described in clause (iv) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the Indebtedness being extended, renewed or
refinanced does not increase, (vi) leases or subleases and licenses and
sublicenses granted to others in the ordinary course of the Company's business,
not interfering in any material respect with the business of the Company and its
Subsidiaries taken as a whole, (vii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payments of custom duties in
connection with the importation of goods, (viii) Liens arising from judgments,
decrees or attachments in circumstances not constituting an Event of Default,
(ix) Liens incurred in connection with Permitted Indebtedness under clause (i)
and, solely to the extent existing as of the Original Issue Date, clause (ii) of
the definition thereof (including any extensions, refinancings and renewals of
such Indebtedness that constitute Permitted Indebtedness). 

12




ARTICLE V 
REDEMPTION RIGHTS 

            5.1       
Optional Redemption Right. Subject to the provisions of this Article V,
at any time (a) within ninety (90) days after the Effective Date, the Company
may deliver a notice to the Holder (an “Optional Redemption
Notice” and the date such notice is deemed delivered hereunder, the
“Optional Redemption Notice Date”) of its irrevocable election to
redeem all of the then outstanding principal amount together with all unpaid
interest accrued thereon of this Note for cash at a redemption price equal to
115% multiplied by all of the then outstanding principal amount together with
all unpaid interest accrued thereon of this Note, on the 20th Trading
Day following the Optional Redemption Notice Date (such date, the
“Optional Redemption Date”, such 20 Trading Day period, the
“Optional Redemption Period” and such redemption, the
“Optional Redemption”), and (b) after ninety (90) days after the
Effective Date, the Company may deliver an Optional Redemption Notice of its
irrevocable election to redeem all of the then outstanding principal amount
together with all unpaid interest accrued thereon of this Note for cash at a
redemption price equal to 150% multiplied by all of the then outstanding
principal amount together with all unpaid interest accrued thereon of this Note,
on the Optional Redemption Date. The Optional Redemption Amount is payable in
full on the Optional Redemption Date. The Company may only effect an Optional
Redemption if each of the Equity Conditions (as defined below) shall have been met (unless
waived in writing by the Holder) on each Trading Day during the period
commencing on the Optional Redemption Notice Date through to the Optional
Redemption Date and through and including the date payment of the Optional
Redemption Amount is actually made in full. If any of the Equity Conditions
shall cease to be satisfied at any time during the Optional Redemption Period,
then the Holder may elect to nullify the Optional Redemption Notice by notice to
the Company within 3 Trading Days after the first day on which any such Equity
Condition has not been met in which case the Optional Redemption Notice shall be
null and void, ab initio. The Company covenants and agrees that it
will honor all Notices of Conversion tendered from the time of delivery of the
Optional Redemption Notice through the date all amounts owing thereon are due
and paid in full. “Equity Conditions” means, during the period in
question, (a) the Company shall have duly honored all conversions and
redemptions scheduled to occur or occurring by virtue of one or more Notices of
Conversion of the Holder, if any, (b) the Company shall have paid all liquidated
damages and other amounts owing to the Holder in respect of this Note, (c)(i)
there is an effective Registration Statement pursuant to which the Holder is
permitted to utilize the prospectus thereunder to resell all of the Conversion
Shares issuable upon conversion of such portion of this Note subject to an
Optional Redemption (and the Company believes, in good faith, that such
effectiveness will continue uninterrupted for such period) or (ii) all of the
Conversion Shares issuable upon conversion of such portion of this Note subject
to an Optional Redemption may be resold pursuant to Rule 144 during such period,
(d) the Common Stock is trading on a Trading Market and all of the shares
issuable pursuant to the Transaction Documents are listed or quoted for trading
on such Trading Market (and the Company believes, in good faith, that trading of
the Common Stock on a Trading Market will continue uninterrupted for the
foreseeable future), (e) there is a sufficient number of authorized but unissued
and otherwise unreserved shares of Common Stock for the issuance of all of the
Conversion Shares issuable upon conversion of such portion of this Note being
redeemed at such time, (f) there is no existing Event of Default and, to the
actual knowledge of the Company, no existing event which, with the passage of
time or the giving of notice, would constitute an Event of Default, (g) the
issuance of the shares issuable to the Holder upon conversion of such portion of
this Note subject to an Optional Redemption would not violate the limitations
set forth in Section 2.3 under this Note, (h) there has been no public
announcement of a pending or proposed Fundamental Transaction that has not been
consummated or abandoned, and (i) the applicable Holder is not in possession of any information provided by the Company that
constitutes, or may constitute, material non-public information. 

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            5.2        Right to Convert. Notwithstanding the foregoing, the Holder may elect to
convert the outstanding principal amount of the Note subject to an Optional
Redemption Notice pursuant to Article II at any time prior to actual payment in
cash for any redemption under this Section 5 by the delivery of an irrevocable
Notice of Conversion to the Company. 

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ARTICLE VI 
UNSECURED NOTE 

           
6.1        Unsecured Note. Note is an
unsecured obligation of the Borrower. 

ARTICLE VII 
MISCELLANEOUS 

            7.1       
Failure or Indulgence Not Waiver. No failure or delay on the part of
Holder hereof in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise
available. 

            7.2       
Notices. All notices, requests, demands, consents, instructions or other
communications required or permitted hereunder shall be in writing and either
faxed, mailed or delivered to each party at the respective addresses of the
parties as set forth in the Purchase Agreement or at such other address or
facsimile number as a party shall furnished to the other party in writing. All
such notices and communications shall be effective (a) when sent by Federal
Express or other overnight service of recognized standing on the Trading Day
following the deposit with such service; (b) when mailed, by registered or
certified mail, first class postage prepaid and addressed as aforesaid through
the United States Postal Service, upon receipt; (c) when delivered by hand, upon
delivery; and/or (d) when faxed, upon confirmation of receipt. 

            7.3       
Amendment Provision. No provision of this Note may be modified or amended
without the prior written consent of the Holder. The term “Note” and all
reference thereto, as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so amended or
supplemented. 

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            7.4       
Assignability. Note shall be binding upon the Borrower and its successors
and assigns, and shall inure to the benefit of the Holder and its successors and
assigns. 

            7.5       
Cost of Collection. If default is made in the payment of Note, Borrower
shall pay the Holder hereof reasonable costs of collection, including reasonable
attorneys’ fees. 

            7.6       
Governing Law. Note shall be governed by and construed in accordance with
the laws of the State of New York, including, but not limited to, New York
statutes of limitations. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the civil or state courts of New York or in the federal courts located in the
State and county of New York. Both parties and the individual signing this
Agreement on behalf of the Borrower agree to submit to the jurisdiction of such
courts. The prevailing party shall be entitled to recover from the other party
its reasonable attorney’s fees and costs. In the event that any provision of
Note is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform to such statute or
rule of law. Any such provision, which may prove invalid or unenforceable under
any law, shall not affect the validity or unenforceability of any other
provision of Note. Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action against the
Borrower in any other jurisdiction to collect on the Borrower’s obligations to
Holder, or to enforce a judgment or other decision in favor of the Holder.
This Note shall be deemed an unconditional obligation of Borrower for the
payment of money and, without limitation to any other remedies of Holder, may be
enforced against Borrower by summary proceeding pursuant to New York Civil
Procedure Law and Rules Section 3213 or any similar rule or statute in the
jurisdiction where enforcement is sought. For purposes of such rule or statute,
any other document or agreement to which Holder and Borrower are parties or
which Borrower delivered to Holder, which may be convenient or necessary to
determine Holder’s rights hereunder or Borrower’s obligations to Holder are
deemed a part of Note, whether or not such other document or agreement was
delivered together herewith or was executed apart from Note. 

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            7.7       
Construction. Each party acknowledges that its legal counsel participated
in the preparation of Note and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of Note to favor any party against
the other. 

            7.8       
Shareholder Status. The Holder shall not have rights as a shareholder of
the Borrower with respect to unconverted portions of Note. However, the Holder
will have the rights of a shareholder of the Borrower with respect to the Shares
of Common Stock to be received after delivery by the Holder of a Conversion
Notice to the Borrower. 

            7.9       
Non-Business Days. Whenever any payment or any action to be made shall be
due on a Saturday, Sunday or a public holiday under the laws of the State of New
York, such payment may be due or action shall be required on the next succeeding
Trading Day and, for such payment, such next succeeding day shall be included in
the calculation of the amount of accrued interest payable on such date. 

[SIGNATURES ON THE FOLLOWING PAGE] 

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            IN
WITNESS WHEREOF, Borrower has caused Note to be signed in its name by
an authorized officer as of the 24th day of April2012. 

AMERICAN PETRO-HUNTER, INC. 

 

By: /s/ Robert B. McIntosh 

Name: Robert B. McIntosh 

Title: Chief Executive Officer