Quest Minerals & Mining Corp
EXHIBIT 10.1
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>ex10_1.txt
<DESCRIPTION>EXHIBIT 10.1
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                                                                    EXHIBIT 10.1

                       SECURED CONVERTIBLE PROMISSORY NOTE

U.S. $250,000.00

         FOR VALUE RECEIVED, Quest Minerals & Mining Corp., a Utah corporation
(the "Maker"), hereby promises to pay to Professional Traders Funds, LLC, a New
York limited liability company, or its successors and assigns (the "Payee"), at
its address at 1400 Old Country Road, Suite 206, Westbury, NY 11590, or to such
other address as Payee shall provide in writing to the Maker for such purpose, a
principal sum of Two Hundred Fifty Thousand Dollars (U.S. $250,000). The
aggregate principal amount outstanding under this Note will be conclusively
evidenced by the schedule annexed as Exhibit B hereto (the "Loan Schedule"), up
to a maximum principal document of U.S $250,000. The entire principal amount
hereunder shall be due and payable in full on April 12, 2005 (the "Maturity
Date"), or on such earlier date as such principal amount may earlier become due
and payable pursuant to the terms hereof.

         1.       Interest Rate. Interest shall accrue on the unpaid principal
amount of this Secured Convertible Promissory Note (the "Note") at the rate of
eight percent (8%) per annum from the date of the first making of the loan for
such principal amount until such unpaid principal amount is paid in full or
earlier converted into shares (the "Shares") of the Maker's common stock, $0.001
par value (the "Common Stock") in accordance with the terms hereof. Interest
hereunder shall be paid quarterly or on such earlier date as the principal
amount under this Note becomes due and payable or is converted in accordance
with the terms hereof and shall be computed on the basis of a 360-day year for
the actual number of days elapsed.

         2.       Conversion of Principal and Interest. Subject to the terms and
conditions hereof, the Payee, at its sole option, may deliver to the Maker a
notice in the form attached hereto as Exhibit A (a "Conversion Notice") and an
updated Loan Schedule, at any time and from time to time after the date hereof
and prior to the payment of the principal amount and all accrued interest
thereon (the date of the delivery of a Conversion Notice shall be referred to
herein as a "Conversion Date"), to convert all or any portion of the outstanding
principal amount of this Note plus accrued and unpaid interest thereon, for a
number of Shares equal to the quotient obtained by dividing the dollar amount of
such outstanding principal amount of this Note plus the accrued and unpaid
interest thereon being converted by the Conversion Price (as defined in Section
17). Conversions hereunder shall have the effect of lowering the outstanding
principal amount of this Note plus all accrued and unpaid interest thereunder in
an amount equal to the applicable conversion, which shall be evidenced by
entries set forth in the Conversion Notice and the Loan Schedule.

         3.       Certain Conversion Limitations.

                  (a)      The Payee may not convert an outstanding principal
amount of this Note or accrued and unpaid interest thereon to the extent such
conversion would result in the Payee, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act (as defined in Section 17) and the rules promulgated thereunder) in
excess of 4.999% of the then issued and outstanding shares of Common Stock.
Since the Payee will not be obligated to report to the Maker the number of
shares of Common Stock it may hold at the time of a conversion hereunder, unless
the conversion at issue would result in the issuance of Shares in excess of
4.999% of the then outstanding shares of Common Stock without regard to any

<PAGE>

other shares which may be beneficially owned by the Payee or an affiliate
thereof, the Payee shall have the authority and obligation to determine whether
and the extent to which the restriction contained in this Section will limit any
particular conversion hereunder. The Payee may waive the provisions of this
Section upon not less than 61 days' prior notice to the Maker.

                  (b)      The Payee may not convert an outstanding principal
amount of this Note or accrued and unpaid interest thereon to the extent such
conversion would result in the Payee, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules promulgated thereunder) in excess of 9.999% of the
then issued and outstanding shares of Common Stock. Since the Payee will not be
obligated to report to the Maker the number of shares of Common Stock it may
hold at the time of a conversion hereunder, unless the conversion at issue would
result in the issuance of Shares in excess of 9.999% of the then outstanding
shares of Common Stock without regard to any other shares which may be
beneficially owned by the Payee or an affiliate thereof, the Payee shall have
the authority and obligation to determine whether and the extent to which the
restriction contained in this Section will limit any particular conversion
hereunder. The Payee may waive the provisions of this Section upon not less than
61 days' prior notice to the Maker.

         4.       Deliveries.

                  (a)      Not later than five (5) Trading Days (as defined in
Section 17) after any Conversion Date, the Maker will deliver to the Payee (i) a
certificate or certificates representing the number of Shares being acquired
upon the conversion of the principal amount of this Note and any interest
accrued thereunder being converted pursuant to the Conversion Notice (subject to
the limitations set forth in Section 3 hereof), and (ii) an endorsement by the
Maker of the Loan Schedule acknowledging the remaining outstanding principal
amount of this Note plus all accrued and unpaid interest thereon not converted
(an "Endorsement"). The Maker's delivery to the Payee of stocks certificates in
accordance clause (i) above shall be Maker's conclusive endorsement of the
remaining outstanding principal amount of this Note plus all accrued and unpaid
interest thereon not converted as set forth in the Loan Schedule. If in the case
of any Conversion Notice such certificate or certificates are not delivered to
or as directed by the Payee by the twentieth (20th) Trading Day after a
Conversion Date, the Payee shall be entitled by written notice to the Maker at
any time on or before its receipt of such certificate or certificates
thereafter, to rescind such conversion, in which event the Maker shall
immediately return the certificates representing the principal amount of this
Note and any interest accrued thereunder tendered for conversion, and receive as
liquidated damages, and not as a penalty, an amount equal to $1,500 times the
number of Trading Days elapsed after the Delivery Date, which shall be added to
the remaining principal hereof.

         5.       Certain Adjustments.

                  (a)      If the Maker, at any time while any portion of the
principal amount due under this Note is outstanding, (a) shall pay a stock
dividend or otherwise make a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a
larger number of shares, (c) combine (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (d) issue
by reclassification of shares of the Common Stock any shares of capital stock of

<PAGE>

the Maker, then the Conversion Price (as defined in Section 17) shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding 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.

                  (b)      If the Maker, at any time while any portion of the
principal amount due under this Note is outstanding, shall issue rights, options
or warrants to all holders of Common Stock (and not to the Payee) entitling them
to subscribe for or purchase shares of Common Stock at a price per share less
than the Conversion Price, then the Conversion Price shall be multiplied by a
fraction, of which the denominator shall be the number of shares of the Common
Stock (excluding treasury shares, if any) outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Common Stock
offered for subscription or purchase, and of which the numerator shall be the
number of shares of the Common Stock (excluding treasury shares, if any)
outstanding on the date of issuance of such rights or warrants plus the number
of shares which the aggregate offering price of the total number of shares so
offered would purchase at the Conversion Price. Such adjustment shall be made
whenever such rights or warrants are issued, and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such rights, options or warrants. However, upon the expiration of any
such right, option or warrant to purchase shares of the Common Stock the
issuance of which resulted in an adjustment in the Conversion Price pursuant to
this Section, if any such right, option or warrant shall expire and shall not
have been exercised, the Conversion Price shall immediately upon such expiration
be recomputed and effective immediately upon such expiration be increased to the
price which it would have been (but reflecting any other adjustments in the
Conversion Price made pursuant to the provisions of this Section after the
issuance of such rights or warrants) had the adjustment of the Conversion Price
made upon the issuance of such rights, options or warrants been made on the
basis of offering for subscription or purchase only that number of shares of the
Common Stock actually purchased upon the exercise of such rights, options or
warrants actually exercised.

                  (c)      If the Maker, at any time while any portion of the
principal amount due under this Note is outstanding, shall distribute to all
holders of Common Stock (and not to the Payee) evidences of its indebtedness or
assets or rights or warrants to subscribe for or purchase any security, then in
each such case the Conversion Price shall be determined by multiplying the
Conversion Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the Per Share Market Value determined
as of the record date mentioned above, and of which the numerator shall be such
Per Share Market Value on such record date less the then fair market value at
such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Payee of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

<PAGE>

                  (d)      In case of any reclassification of the Common Stock
or any compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property, the Payee shall have the right
thereafter to, at its option, (A) convert the then outstanding principal amount,
together with all accrued but unpaid interest and any other amounts then owing
under this Note only into the shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of the Common Stock
following such reclassification or share exchange, and the Payee shall be
entitled upon such event to receive such amount of securities, cash or property
as the shares of the Common Stock of the Maker into which the then outstanding
principal amount, together with all accrued but unpaid interest and any other
amounts then owing hereunder in respect of this Note could have been converted
immediately prior to such reclassification or share exchange would have been
entitled or (B) require the Maker to prepay the aggregate of its outstanding
principal amount under this Note, plus all interest accrued and other amounts
due and payable thereon, at a price determined in accordance with Section 6. The
entire prepayment price shall be paid in cash. This provision shall similarly
apply to successive reclassifications or share exchanges.

                  (e)      No adjustments in the Conversion Price shall be
required if such adjustment is less than $0.01, provided that any adjustments
which by reason of this Section are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 5 shall be made to the nearest cent or to the nearest 1/100th
of a share, as the case may be.

                  (f)      Whenever the Conversion Price is adjusted pursuant to
any of Section 5(b) - (d), the Maker shall promptly mail to the Payee a notice
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiting such adjustment.

                  (g)      If (A) the Maker shall declare a dividend (or any
other distribution) on the Common Stock; (B) the Maker shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Maker
shall authorize the granting to all holders of the Common Stock rights or
warrants to subscribe for or purchase any shares of capital stock of any class
or of any rights; (D) the approval of any stockholders of the Maker shall be
required in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Maker is a party, any sale or transfer of
all or substantially all of the assets of the Maker, of any compulsory share
exchange whereby the Common Stock is convened into other securities, cash or
property; (E) the Maker shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Maker; then, in
each case, the Maker shall cause to be filed at each office or agency maintained
for the purpose of conversion of the any portion of the principal amount and
interest outstanding under this Note, and shall cause to be mailed to the Payee
at its last address as it shall appear upon the stock books of the Maker, at
least 5 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
<PAGE>

share exchange; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.

                  (h)      In case of any (1) merger or consolidation of the
Maker with or into another Person that would constitute a Change of Control
Transaction (as defined in Section 17), or (2) sale, directly or indirectly, by
the Maker of more than one-half of the assets of the Maker (on an as valued
basis) in one or a series of related transactions, or (3) tender or other offer
or exchange (whether by the Maker or another Person) pursuant to which holders
of Common Stock are permitted to tender or exchange their shares for other
securities, stock, cash or property of the Maker or another Person, then the
Payee shall have the right to (A) convert the then aggregate amount of principal
and interest outstanding under this Note into the shares of stock and other
securities, cash, and property receivable upon or deemed to be held by holders
of Common Stock following such merger, consolidation or sale, and the Payee
shall be entitled upon such event or series of related events to receive such
amount of securities, cash and property as the shares of Common Stock into which
such aggregate amount of principal and interest outstanding under this Note
could have been convened immediately prior to such merger, consolidation or sale
would have been entitled, (B) in the case of a merger or consolidation, (x)
require the surviving entity to issue shares of convertible convertible debt
with aggregate principal amount equal to the then aggregate amount of principal
outstanding under this Note, plus all accrued and unpaid interest and other
amounts owing thereon, which convertible debt shall have terms identical
(including with respect to conversion) to the terms of this Note and shall be
entitled to all of the rights and privileges of the Payee as set forth herein
and the agreements pursuant to which this Note was issued (including, without
limitation, as such rights relate to the acquisition, transferability,
registration and listing of such shares of stock other securities issuable upon
conversion thereof), and (y) simultaneously with the issuance of such
convertible debt, shall have the right to convert such debt only into shares of
stock and other securities, cash and property receivable upon or deemed to be
held by holders of Common Stock following such merger or consolidation, or (C)
in the event of an exchange or tender offer or other transaction contemplated by
clause (3) of this Section, tender or exchange the then outstanding aggregate
amount of principal and interest under this Note for such securities, stock,
cash and other property receivable upon or deemed to be held by holders of
Common Stock that have tendered or exchanged their shares of Common Stock
following such tender or exchange, and the Payee shall be entitled upon such
exchange or tender to receive such amount of securities, cash and property as
the shares of Common Stock into which the then outstanding aggregate amount of
principal and interest under this Note could have been converted (taking into
account all then accrued and unpaid dividends) immediately prior to such tender
or exchange would have been entitled as would have been issued. In the case of
clause (C), the conversion price applicable for the newly issued shares of
convertible preferred stock or convertible debentures shall be based upon the
amount of securities, cash and property that each share of Common Stock would
receive in such transaction and the Conversion Price in effect immediately prior
to the effectiveness or closing date for such transaction. The terms of any such
merger, sale, consolidation, tender or exchange shall include such terms so as
to continue to give the Payee the right to receive the securities, cash and
property set forth in this Section upon any conversion or redemption following
such event. This provision shall similarly apply to successive such events.

<PAGE>

                  (i)      The Maker covenants that it will at all times reserve
and keep available out of its authorized and unissued shares of Common Stock
solely for the purpose of issuance upon conversion of the outstanding aggregate
amount of principal and interest under this Note as herein provided, free from
preemptive rights or any other actual or contingent purchase rights of persons
other than the Payee, not less than such number of shares of the Common Stock as
shall be issuable (taking into account the adjustments and restrictions of
Section 5) upon the conversion of the outstanding amount of principal and
interest under this Note. The Maker covenants that all shares of Common Stock
that shall be so issuable shall, upon issuance, be duly authorized, validly
issued and fully paid, nonassessable and, if the Registration Statement (as
defined in Section 8) pursuant to which the Payee may resell all of the Shares
issuable pursuant to the terms hereof has been declared effective under the
Securities Act, registered for public sale in accordance with such Registration
Statement.

                  (j)      Upon a conversion hereunder the Maker shall not be
required to issue stock certificates representing fractions of shares of the
Common Stock, but may if otherwise permitted, make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such time.
If the Maker elects not, or is unable, to make such a cash payment, the Payee
shall be entitled to receive, in lieu of the final fraction of a share, one
whole share of Common Stock.

                  (k)      The issuance of certificates for shares of the Common
Stock on conversion of the principal amount and interest outstanding under this
Note shall be made without charge to the Payee for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such
certificate.

         6.       Mandatory Prepayment Upon Triggering Events. Upon the
occurrence of a Triggering Event (as defined below), the Payee shall have the
right (in addition to all other rights it may have hereunder under any
Transaction Document or under applicable law), exercisable at the sole option of
the Payee, to require the Maker to prepay all or a portion of the outstanding
principal amount of this Note plus all accrued and unpaid interest thereon. Such
prepayment shall be due and payable within thirty (30) Trading Days of the date
on which the notice for the payment therefor is provided by the Payee.

            A "Triggering Event" means any one or more of the following events
(whatever the reason and whether it shall be voluntary or involuntary. or
effected by operation of law or pursuant to any judgment, decree or order of any
court. or any order, rule or regulation of any administrative or governmental
body):
                           (i)      any default in the payment of the principal
of interest on or other payments owing in respect of this Note, free of any
claim of subordination, as and when the same shall become due and payable
(whether on a Conversion Date, the Maturity Date, by acceleration or otherwise);

                           (ii)     the Maker shall fail for any reason to
deliver certificates or an Endorsement to the Payee prior to the sixtieth (60th)
day after a Conversion Date pursuant to and in accordance with Section 4(a);

<PAGE>

                           (iii)    the failure of the Common Stock to be
eligible for trading on the OTC Bulletin Board or listed for trading on a
Subsequent Market or the suspension of the Common Stock from trading on the OTC
Bulletin Board or a Subsequent Market, in either case, for more than thirty (30)
consecutive calendar days;

                           (iv)     the Maker shall be a party to any Change of
Control Transaction or shall agree to sell or dispose of all or in excess of 33%
of its assets in one or more transactions (whether or not such sale would
constitute a Change of Control Transaction), or shall redeem or repurchase more
than a de minimis number of shares of Common Stock or other equity securities of
the Maker (other than redemptions of Shares);

                           (v)      the Maker or any of its subsidiaries shall
commence or there shall be commenced against the Maker or any such subsidiary a
case under any applicable bankruptcy or insolvency laws as now or hereafter in
effect or any successor thereto, or the Maker commences any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Maker or any subsidiary
thereof or there is commenced against the Maker or any subsidiary thereof any
such bankruptcy, insolvency or other proceeding which remains undismissed for a
period of 60 days; or the Maker or any subsidiary thereof is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or the Maker or any subsidiary thereof suffers
any appointment of any custodian or the like for it or any substantial part of
its property which continues undischarged or unstayed for a period of 60 days;
or the Maker or any subsidiary thereof shall by any act or failure to act
indicate its consent to, approval of or acquiescence in any of the foregoing; or
any corporate or other action is taken by the Maker or any subsidiary thereof
for the purpose of effecting any of the foregoing;

                           (vi)     the Maker shall fail to observe or perform
any other covenant, agreement or warranty contained in, or otherwise commit any
breach of, any Transaction Document, and such failure or breach shall not, if
subject to the possibility of a cure by the Maker, have been remedied within
sixty (60) days after the date on which notice of such failure or breach shall
have been given;

                           (vii)    the Payee shall determine that the
obligations under this Note are no longer adequately secured by the Security
Agreement and additional or other security therefor shall not be satisfactorily
provided to or for the benefit of the Payee.

         7.       Secured Obligation. The obligations under this Note are
secured pursuant to the Security Agreement (as defined in Section 17).

         8.       Registration.

                  (a)      Definitions. As used in this Section 8, the following
terms shall have the following meanings:

                           (i)      Exchange Act: The Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC promulgated
thereunder.

<PAGE>

                           (ii)     Losses: See Section 8(f) hereof.

                           (iii)    Prospectus: The prospectus included in any
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Securities Act Rule 430A), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements to the
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.

                           (iv)     Registration Expenses: All reasonable
expenses incurred by the Maker in complying with Sections 8(c) and 8(d) hereof,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Maker, accountants' expenses
(including, without limitation, any special audits or "comfort" letters
incidental to or required by any such registration), any fees or disbursements
of underwriters customarily paid by issuers or sellers of securities (but
excluding underwriting discounts and commissions) and blue sky fees and expenses
in all states reasonably designated by the holders of Registrable Securities.

                           (v)      Registrable Securities: The Shares and any
Common Stock issued or issuable in respect of the Shares pursuant to any stock
split, stock dividend, recapitalization, or similar event.

                           (vi)     Registration Statement: Any registration
statement of the Maker which covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

                           (vii)    Rule 144: Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC (excluding Rule 144A).

                           (viii)   SEC: The Securities and Exchange Commission.

                           (ix)     Securities Act: The Securities Act of 1933,
as amended, and the rules and regulations promulgated by the SEC thereunder.

                           (x)      Underwritten registration or underwritten
offering: A registration in which securities of the Maker are sold to an
underwriter for reoffering to the public.

                  (b)      Securities Subject to the Registration Rights. The
securities entitled to the benefits of the Registration Rights set forth in this
Section 8 are the Registrable Securities.

                  (c)      Registration Rights. The Maker shall (i) file a
Registration Statement under the Securities Act covering the Registrable
Securities within thirty (30) days following the date hereof, (ii) undertake
commercially reasonable efforts to cause the Registration Statement to be
declared effective one hundred twenty (120) days following the Closing Date, and
(iii) if the Maker is eligible to incorporate periodic reports by reference into

<PAGE>

such Registration Statement, and such Registration Statement is declared
effective, undertake commercially reasonable best efforts to keep the
Registration Statement continuously effective, supplemented and amended for a
period of one year.

                  (d)      Holdback and Lock-Up Agreements.

                           (i)      Restrictions on Public Sale by Holders of
Registrable Securities. Each holder of Registrable Securities whose Registrable
Securities are covered by a Registration Statement filed pursuant to Section
8(c) hereof agrees, if requested by the managing underwriters in an underwritten
offering (to the extent timely notified in writing by the Maker or the managing
underwriters), not to effect any public sale or distribution of securities of
the Maker of any class included in such Registration Statement, including a sale
pursuant to Rule 144 (except as part of such underwritten offering), during the
10-day period prior to, and the 180-day period beginning on, the effective date
of any underwritten offering made pursuant to such Registration Statement;
provided, however, the foregoing prohibition shall only apply if all Registrable
Securities requested by such holder to be covered by such Registration Statement
are included in such Registration Statement.

                           (ii)     The foregoing provisions shall not apply to
any holder of Registrable Securities if such holder is prevented by applicable
statute or regulation from entering into any such agreement; provided, however,
that any such holder shall undertake in its request to participate in any such
underwritten offering not to effect any public sale or distribution of the class
of Registrable Securities covered by such Registration Statement (except as part
of such underwritten offering) during such period unless it has provided five
(5) business days prior written notice of such sale or distribution to the
managing underwriters.

                  (e)      Expenses and Procedures.

                           (i)      Expenses of Registration. All Registration
Expenses (exclusive of underwriting discounts and commissions) shall be borne by
the Maker. Each holder of Registrable Securities shall bear all underwriting
discounts, selling commissions, sales concessions and similar expenses
applicable to the sale of the Registrable Securities sold by such holder.

                           (ii)     Registration Procedures. The Maker will keep
the holders of Registrable Securities advised as to the initiation of
registration, qualification and compliance and as to the completion thereof. At
its expense, the Maker will furnish such number of Prospectuses and other
documents incident thereto as the holders or underwriters from time to time may
reasonably request.

                           (iii)    Information. The Maker may require each
seller of Registrable Securities as to which any registration is being effected
to furnish such information regarding the distribution of such Registrable
Securities as the Maker may from time to time reasonably request and the Maker
may exclude from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information after receiving such request.

                           (iv)     Delay or Suspension. Notwithstanding
anything herein to the contrary, the Maker may, at any time, suspend the
effectiveness of any Registration Statement for a period of up to 60 consecutive

<PAGE>

days or 90 days in the aggregate in any calendar year, as appropriate (a
"Suspension Period"), by giving notice to each holder of Registrable Securities
to be included in the Registration Statement, if the Maker shall have
determined, after consultation with its counsel, that the Maker is required to
disclose any material corporate development which the Maker determines could
reasonably be expected to have a material effect on the Maker. Each holder of
Registrable Securities agrees by acquisition of such Registrable Securities
that, upon receipt of any notice from the Maker of a Suspension Period, such
holder shall forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or Prospectus until such holder (i) is
advised in writing by the Maker that the use of the applicable Prospectus may be
resumed, (ii) has received copies of a supplemental or amended prospectus, if
applicable, and (iii) has received copies of any additional or supplemental
filings which are incorporated or deemed to be incorporated by reference in such
Prospectus. The Maker shall prepare, file and furnish to each holder of
Registrable Securities immediately upon the expiration of any Suspension Period,
appropriate supplements or amendments, if applicable, to the Prospectus and
appropriate documents, if applicable, incorporated by reference in the
Registration Statement. The Maker agrees to use its best efforts to cause any
Suspension Period to be terminated as promptly as possible.

                           (v)      Blue Sky. The Maker will, as expeditiously
as possible, use its best efforts to register or qualify the Registrable
Securities covered by a Registration Statement under the securities or blue sky
laws of such jurisdictions as the Maker deems appropriate or, in the case of an
underwritten public offering, the managing underwriter shall reasonably request,
provided that the Maker shall not be required in connection therewith or as a
condition thereto to qualify to do business in any jurisdiction where it is not
so qualified or to take any action which would subject it to taxation or service
of process in any jurisdiction where it is not otherwise subject to such
taxation or service of process.

                           (vi)     Notification of Material Events. The Maker
will, as expeditiously as possible, immediately notify each holder of
Registrable Securities under a Registration Statement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the Prospectus contained
in such Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing and, as expeditiously as possible, amend or
supplement such Prospectus to eliminate the untrue statement or the omission.

                  (f)      Indemnification.

                           (i)      Indemnification by Maker. The Maker shall,
without limitation as to time, indemnify and hold harmless, to the full extent
permitted by law, each holder of Registrable Securities, its officers,
directors, agents and employees, each person who controls such holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act), and the officers, directors, agents or employees of any such controlling
person, from and against all losses, claims, damages, liabilities, costs
(including, without limitation, all reasonable attorneys' fees) and expenses
(collectively "Losses"), as incurred, arising out of or based upon any untrue

<PAGE>

statement or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus or any amendment or
supplement thereto, or arising out of or based upon any omission or alleged
omission of 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
(in the case of any Prospectus) not misleading, except insofar as the same are
based solely upon information furnished to the Maker by such holder for use
therein; provided, however, that the Maker shall not be liable in any such case
to the extent that any such Loss arises out of or is based upon an untrue
statement or alleged untrue statement or omission made in any preliminary
prospectus or Prospectus if (i) such holder failed to send or deliver a copy of
the Prospectus or Prospectus supplement with or prior to the delivery of written
confirmation of the sale of Registrable Securities and (ii) the Prospectus or
Prospectus supplement would have corrected such untrue statement or omission. If
requested, the Maker shall also indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, their officers, directors, agents and employees and each person
who controls such persons (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities.

                           (ii)     Indemnification by Holder of Registrable
Securities. In connection with any Registration Statement in which a holder of
Registrable Securities is participating, such holder of Registrable Securities
shall furnish to the Maker in writing such information as the Maker may
reasonably request for use in connection with any Registration Statement or
Prospectus. Such holder hereby agrees to indemnify and hold harmless, to the
full extent permitted by law, the Maker, and its officers, directors, agents and
employees, each person who controls the Maker (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act), and the officers,
directors, agents or employees of any such controlling person, from and against
all losses, as incurred, arising out of or based upon any untrue statements or
alleged untrue statement of material fact contained in any Registration
Statement, Prospectus or preliminary prospectus, or arising out of or based upon
any omission of 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 (in the case of any Prospectus) not misleading, to the extent, but only to
the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such holder to the Maker for use in such
Registration Statement, Prospectus or preliminary prospectus. The Maker shall be
entitled to receive indemnities from accountants, underwriters, selling brokers,
dealer managers and similar securities industry professionals participating in
the distribution to the same extent as provided above with respect to
information so furnished by such persons specifically for inclusion in any
Registration Statement, Prospectus or preliminary prospectus, provided, that the
failure of the Maker to obtain any such indemnity shall not relieve the Maker of
any of its obligations hereunder. Notwithstanding any provision of this Section
8(f) to the contrary, the liability of a holder of Registrable Securities under
this Section 8(f) shall not exceed the purchase price received by such holder
for the Registrable Securities sold pursuant to a Registration Statement or
Prospectus.

                           (iii)    Conduct of Indemnification Proceedings. If
any action or proceeding (including any governmental investigation or inquiry)
shall be brought or any claim shall be asserted against any person entitled to
indemnity hereunder (an "indemnified party"), such indemnified party shall
promptly notify the party from which such indemnity is sought (the "indemnifying
party") in writing, and the indemnifying party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses incurred in connection with the
defense thereof. All such fees and expenses (including any fees and expenses

<PAGE>

incurred in connection with investigation or preparing to defend such action or
proceeding) shall be paid to the indemnified party, as incurred, within 20 days
of written notice thereof to the indemnifying party; provided, however, that if,
in accordance with this Section 8(f), the indemnifying party is not liable to
the indemnified party, such fees and expenses shall be returned promptly to the
indemnifying party. Any such indemnified party shall have the right to employ
separate counsel in any such action, claim or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be the
expense of such indemnified party unless (a) the indemnifying party has agreed
to pay such fees and expenses, (b) the indemnifying party shall have failed
promptly to assume the defense of such action, claim or proceeding and to employ
counsel reasonably satisfactory to the indemnified party in any such action,
claim or proceeding, or (c) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such indemnified party
and the indemnifying party, and such indemnified party shall have been advised
by counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the indemnifying party
(in which case, if such indemnified party notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action, claim or proceeding on behalf of such indemnified
party, it being understood, however, that the indemnifying party shall not, in
connection with any one such action, claim or proceeding or separate but
substantially similar or related actions, claims or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any time for all such
indemnified parties, unless in the opinion of counsel for such indemnified party
a conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such action, claim or proceeding, in
which event the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel or counsels). No indemnifying party will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the release of such indemnified party
from all liability in respect to such claim or litigation without the written
consent (which consent will not be unreasonably withheld) of the indemnified
party. No indemnified party shall consent to entry of any judgment or enter into
any settlement without the written consent (which consent will not be
unreasonably withheld) of the indemnifying party from which indemnify or
contribution is sought.

                           (iv)     Contribution. If the indemnification
provided for in this Section 8(f) is unavailable to an indemnified party under
Section 8(f)(i) or 8(f)(ii) hereof (other than by reason of exceptions provided
in those Sections) in respect of any Losses, then each applicable indemnifying
party in lieu of indemnifying such indemnified party shall contribute to the
amount paid or payable by such indemnified party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the actions,
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and the indemnified party shall be determined by reference to, among other
things, whether any action in question, including any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth

<PAGE>

in Section 8(f)(iii), any legal or other fees or expenses reasonably incurred by
such party in connection with any action, suit, claim, investigation or
proceeding.

                           The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 8(f)(iv) were determined
by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

                  (g)       Rule 144. The Maker shall file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder, and will take such further action
as any holder of Registrable Securities may reasonably request, all to the
extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemption provided by Rule 144 or Rule 144A. Upon the request of any
holder of Registrable Securities, the Maker shall deliver to such holder a
written statement as to whether the Maker has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 8(g) shall be deemed to
require the Maker to register any of its securities under any section of the
Exchange Act.

                  (h)      Underwritten Registrations. No holder of Registrable
Securities may participate in any underwritten registration hereunder unless
such person (i) agrees to sell such holder's Registrable Securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements, and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.

         9.       No Waiver of Payee's Rights, etc. All payments of principal
and interest shall be made without setoff, deduction or counterclaim. No delay
or failure on the part of the Payee in exercising any of its options, powers or
rights, nor any partial or single exercise of its options, powers or rights
shall constitute a waiver thereof or of any other option, power or right, and no
waiver on the part of the Payee of any of its options, powers or rights shall
constitute a waiver of any other option, power or right. The Maker hereby waives
presentment of payment, protest, and notices or demands in connection with the
delivery, acceptance, performance, default or endorsement of this Note.
Acceptance by the Payee of less than the full amount due and payable hereunder
shall in no way limit the right of the Payee to require full payment of all sums
due and payable hereunder in accordance with the terms hereof.

         10.      Modifications. No term or provision contained herein may be
modified, amended or waived except by written agreement or consent signed by the
party to be bound thereby.

         11.      Cumulative Rights and Remedies; Usury. The rights and remedies
of the Payee expressed herein are cumulative and not exclusive of any rights and
remedies otherwise available. If it shall be found that any interest outstanding
hereunder shall violate applicable laws governing usury, the applicable rate of
interest outstanding hereunder shall be reduced to the maximum permitted rate of
interest under such law.

<PAGE>

         12.      Collection Expenses. If this obligation is placed in the hands
of an attorney for collection after default, and provided the Payee prevails on
the merits in respect to its claim of default, the Maker shall pay (and shall
indemnify and hold harmless the Payee from and against), all reasonable
attorneys' fees and expenses incurred by the Payee in pursuing collection of
this Note.

         13.      Successors and Assigns. This Note shall be binding upon the
Maker and its successors and shall inure to the benefit of the Payee and its
successors and assigns. The term "Payee" as used herein, shall also include any
endorsee, assignee or other holder of this Note.

         14.      Lost or Stolen Promissory Note. If this Note is lost, stolen,
mutilated or otherwise destroyed, the Maker shall execute and deliver to the
Payee a new promissory note containing the same terms, and in the same form, as
this Note. In such event, the Maker may require the Payee to deliver to the
Maker an affidavit of lost instrument and customary indemnity in respect thereof
as a condition to the delivery of any such new promissory note.

         15.      Due Authorization. This Note has been duly authorized,
executed and delivered by the Maker and is the legal obligation of the Maker,
enforceable against the Maker in accordance with its terms.

         16.      Government Law. This Note shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the city of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by
law.

         17.      Definitions. For the purposes hereof, the following terms
shall have the following meanings:

         "Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York or State of Utah are authorized or required by law or other government
action to close.

         "Change of Control Transaction" means the occurrence of any of (i) an
acquisition after the date hereof by an individual or legal entity or "group"
(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of in
excess of 33% of the voting securities of the Maker, (ii) a replacement of more
than one-half of the members of the Maker's board of directors which is not
approved by those individuals who are members of the board of directors on the
date hereof in one or a series of related transactions, (iii) the merger of the
Maker with or into another entity, the direct or indirect consolidation or sale
of all or substantially all of the assets of the Maker in one or a series of
related transactions, unless following such transaction, the holders of the
Maker's securities continue to hold at least 66% of such securities following
<PAGE>

such transaction or (iv) the execution by the Maker of an agreement to which the
Maker is a party or by which it is bound, providing for any of the events set
forth above in (i), (ii) or (iii).

         "Conversion Price" shall be 50% of the average of the Per Share Market
Values during the three (3) Trading Days immediately preceding a Conversion
Date; provided, however, that the Conversion Price shall not be lower than $1.00
per Share (subject to adjustment pursuant to Section 5 hereof), unless the
Registration Statement is not declared effective one hundred twenty (120) days
following the Closing Date, in which case the Conversion Price may be lower than
$1.00 per Share (subject to adjustment pursuant to Section 5 hereof), and shall
not be higher than $2.00 per Share (subject to adjustment pursuant to Section 5
hereof).

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Per Share Market Value" means on any particular date (a) the closing
bid price per share of Common Stock on such date on the OTC Bulletin Board or on
such Subsequent Market on which the shares of Common Stock are then listed or
quoted, or if there is no such price on such date, then the closing bid price on
the OTC Bulletin Board or on such Subsequent Market on the date nearest
preceding such date, or (b) if the shares of Common Stock are not then listed or
quoted on the OTC Bulletin Board or a Subsequent Market, the closing bid price
for a share of Common Stock in the over-the-counter market, as reported by the
National Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (c) if the shares of Common Stock are not then reported by the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the relevant conversion period, as determined in good faith by
the Payee.

         "Person" means a corporation, an association, a partnership, limited
liability company an organization, a business, an individual, a government or
political subdivision thereof or a governmental agency.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Security Agreement" means the Security Agreement, dated as of the date
hereof, between the Maker and the Payee, as amended modified or supplemented
from time to time in accordance with its terms.

         "Subsequent Market" means the New York Stock Exchange, American Stock
Exchange, Nasdaq SmallCap Market or Nasdaq National Market.

         "Trading Day" means (a) a day on which the shares of Common Stock are
traded on such Subsequent Market on which the shares of Common Stock are then
listed or quoted, or (b) if the shares of Common Stock are not listed on a
Subsequent Market, a day on which the shares of Common Stock are traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (c) if the
shares of Common Stock are not quoted on the OTC Bulletin Board, a day on which
the shares of Common Stock are quoted in the over-the-counter market as reported
by the National Quotation Bureau Incorporated (or any similar organization or
agency succeeding its functions of reporting prices); provided, however, that in

<PAGE>

the event that the shares of Common Stock are not listed or quoted as set forth
in (a), (b) and (c) hereof, then Trading Day shall mean any day except Saturday,
Sunday and any day which shall be a legal holiday or a day on which banking
institutions in the State of New York or State of Utah are authorized or
required by law or other government action to close.

         18.      Representations and Warranties.

                  (a)      Organization and Good Standing. The Maker is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Utah and has full corporate power and authority to enter
into and perform its obligations under this Agreement, and to own its properties
and to carry on its business as presently conducted and as proposed to be
conducted.

                  (b)      Validity of Transactions. This Note, and each
document executed and delivered by the Maker in connection with the transactions
contemplated by this Note, including this Note, have been duly authorized,
executed and delivered by the Maker and is each the valid and legally binding
obligation of the Maker, enforceable in accordance with its terms, except as
limited by applicable bankruptcy, insolvency reorganization and moratorium laws
and other laws affecting enforcement of creditor's rights generally and by
general principles of equity.

                  (c)      No Violation. The execution, delivery and performance
of this Agreement has been duly authorized by the Maker's Board of Directors and
will not violate any law or any order of any court or government agency
applicable to the Maker, as the case may be, or the Articles of Incorporation or
Bylaws of the Maker, and will not result in any breach of or default under, or,
except as expressly provided herein, result in the creation of any encumbrance
upon any of the assets of the Maker pursuant to the terms of any agreement or
instrument by which the Maker or any of its assets may be bound. No approval of
or filing with any governmental authority is required for the Maker to enter
into, execute or perform this Agreement.

         IN WITNESS WHEREOF, the Maker has caused this Secured Convertible
Promissory. Note to be duly executed and delivered as of the date first set
forth above.

                                       QUEST MINERALS & MINING CORP.


                                       By: /s/ EUGENE CHIARAMONTE, JR.
                                           ------------------------------------
                                       Name:  Eugene Chiaramonte, Jr.
                                       Title: Vice President

<PAGE>

                                    EXHIBIT A

                              NOTICE OF CONVERSION

Dated:

         The undersigned hereby elects to convert the principal amount and
interest indicated below of the attached Secured Convertible Promissory Note
into shares of common stock, $0.001 par value (the "Common Stock"), of Quest
Minerals & Mining Corp., according to the conditions hereof, as of the date
written below. No fee will be charged to the holder for any conversion.

Exchange calculations:
                       -------------------------------------------------

Date to Effect Conversion:
                          ----------------------------------------------

Principal Amount and Interest of
Secured Convertible Note to be Converted:
                                         -------------------------------

Number of shares of Common Stock to be Issued:
                                              --------------------------


Applicable Conversion Price:

Signature:
          -------------------------------------------------

Name:
     ------------------------------------------------------

Address:
        ---------------------------------------------------

<PAGE>

                                    EXHIBIT B

                                  LOAN SCHEDULE

   Secured Convertible Promissory Note Issued by Quest Minerals & Mining Corp.

                             Dated: October 12, 2004

                                    SCHEDULE
                                       OF
                      CONVERSIONS AND PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>
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      Date of Conversion             Amount of Conversion        Total Amount Due Subsequent
                                                                        To Conversion
------------------------------------------------------------------------------------------------
<S>                                  <C>                         <C>

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</TABLE>

</TEXT>
</DOCUMENT>
