<![CDATA[Section 1 - Registrant's Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
On June 5, 2006 and June 29, 2006, respectively, we entered into
settlement agreements with 2 separate investors relating to claims arising under
and in connection with those certain unit purchase agreements dated as of
February 22, 2005, March 4, 2005, April 15, 2005, and April 18, 2005, pursuant
to which we issued an aggregate of $1,425,000 in convertible promissory notes
and related warrants to various investors. In February 2006, we settled our
disputes with one of the larger investors, Professional Traders Fund, that had
arisen under the unit purchase agreements. Accordingly, we have now settled and
restructured an aggregate of $1,050,000 (or approximately 74%) of the
convertible notes issued pursuant to the unit purchase agreements. We are
continuing our discussions with the remaining unitholders from the unit purchase
agreements.
A summary of our June 2006 settlements and restructurings with each of
the investors is set forth below.
First Mirage Restructuring
On June 6, 2006, we entered into a settlement agreement with First
Mirage, Inc., pursuant to which we settled and resolved all outstanding disputes
under the unit purchase agreements with First Mirage and any and all documents
related thereto. The parties agreed to a complete restructuring of the
obligations to First Mirage under these agreements, effectuated through the
issuance of amended and restated instruments and common stock, as follows:
1. Amended and Restated Unit Notes. We issued to First Mirage
amended and restated convertible notes in the aggregate principal amounts of
$200,000.00 and $50,000, respectively, which notes are now due on or before
February 22, 2007 and April 18, 2007, respectively. The original convertible
notes had maturity dates of March 31, 2006 and April 18, 2006, respectively.
These amended and restated notes will initially be convertible into our common
stock at a rate of $.075 per share, subject to adjustment as provided in the
amended and restated notes.
2. Issuance of Quest Common Stock. We issued to First Mirage
share certificates representing 400,000 shares of our common stock in
consideration of First Mirage's exercise in full (on a cashless basis) of all
Series A warrants held by them.
3. Waiver of Rights under April 2005 Unit Warrant. First Mirage
waived any rights arising out of or relating to a Series A Warrant purportedly
issued in April 2005, any shares of common stock issuable upon exercise of such
Series A Warrant, any Series B Warrant issuable upon exercise of such Series A
Warrant, or any shares of common stock issuable upon exercise of such a Series B
Warrant.
4. Termination of Unit Purchase Agreements. All of the provisions
contained in the unit purchase agreements, solely as to First Mirage, were
terminated and of no further force and effect. In addition, First Mirage waived
any and all right to any claims or damages previously incurred under the unit
purchase agreements due to our default thereunder, including any defaults under
the registration rights agreement entered into in connection with the unit
purchase agreements.
5. Termination of Registration Rights Agreement. All of the
provisions contained in the registration rights agreement entered into in
connection with the unit purchase agreement, solely as to First Mirage, were
terminated and of no further force and effect. In addition, First Mirage waived
any and all right to any liquidated damages previously incurred under the
registration rights agreement due to our default thereunder.
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The description of the agreement with First Mirage and all related
documents and instruments referred to above does not comport to be complete and
is qualified entirely by reference to such agreement and all related documents
and instruments, all of which are incorporated herein by reference.
Greenwood Partners Restructuring
On June 29, 2006, we entered into a settlement agreement with Greenwood
Partners, LP , pursuant to which we settled and resolved all outstanding
disputes under the unit purchase agreements, that certain financial advisory
agreement dated as of April 15, 2005 between us and Greenwood Partners, and any
and all documents related thereto. The parties agreed to a complete
restructuring of the obligations under these agreements, effectuated through the
issuance of amended and restated instruments, and common stock, as follows:
1. Cancellation of Five Advisory Units. Five (5) units issued to
Greenwood as compensation under the financial advisory agreement, or advisory
units, (which included (i) convertible notes in the aggregate principal amount
of $125,000, and (ii) Series A Warrants to purchase (a) up to 750,000 shares of
common stock and (b) Series B Warrants to purchase up to an additional 750,000
shares of common stock) will be cancelled and of no further force and effect.
Subsequent to the cancellation, Greenwood will continue to own five (5) advisory
units.
2. Amended and Restated Unit Notes. We issued to Greenwood
Partners amended and restated convertible notes in the aggregate principal
amounts of $100,000.00, $125,000 and $100,000, respectively, which notes are now
due on or before February 22, 2007, April 15, 2007 and April 18, 2007,
respectively. The original convertible notes had maturity dates of March 31,
2006, April 18, 2006 and April 18, 2006, respectively. These amended and
restated notes will initially be convertible into our common stock at a rate of
$.075 per share, subject to adjustment as provided in the amended and restated
notes.
3. Issuance of Quest Common Stock. We issued to Greenwood
Partners share certificates representing 866,667 shares of our common stock in
consideration of Greenwood Partners' exercise in full (on a cashless basis) of
all Series A and Series B Warrants held by them.
4. Termination of Financial Advisory Agreement. All of the
provisions contained in the financial advisory agreement were terminated and of
no further force and effect. In addition, the parties waived any and all right
to any claims or damages allegedly incurred by such party under the financial
advisory agreement.
5. Termination of Unit Purchase Agreements. All of the provisions
contained in the unit purchase agreements, solely as to Greenwood Partners, were
terminated and of no further force and effect. In addition, Greenwood Partners
waived any and all right to any claims or damages previously incurred under the
unit purchase agreements due to our default thereunder, including any defaults
under the registration rights agreement entered into in connection with the unit
purchase agreements.
6. Termination of Registration Rights Agreement. All of the
provisions contained in the registration rights agreement entered into in
connection with the unit purchase agreement, solely as to Greenwood Partners,
were terminated and of no further force and effect. In addition, Greenwood
Partners waived any and all right to any liquidated damages previously incurred
under the registration rights agreement due to our default thereunder.
The description of the agreement with Greenwood Partners and all
related documents and instruments referred to above does not comport to be
complete and is qualified entirely by reference to such agreement and all
related documents and instruments, all of which are incorporated herein by
reference.
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Item 1.02 Termination of a Material Definitive Agreement.
See Item 1.01 above.
Item 1.03 Bankruptcy or Receivership.
Not applicable.
Section 2 - Financial Information
Item 2.01 Completion of Acquisition or Disposition of Assets.
Not applicable.
Item 2.02 Results of Operations and Financial Condition.
Not applicable.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
Not applicable.
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation Under an Off-Balance Sheet Arrangement.
Not applicable.
Item 2.05 Costs Associated with Exit or Disposal Activities.
Not applicable.
Item 2.06 Material Impairments.
Not applicable.
Section 3 - Securities and Trading Markets
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule
or Standard: Transfer of Listing.
Not applicable.
Item 3.02 Unregistered Sales of Equity Securities.
See Item 1.01 above. The issuance of common stock and amended and
restated notes to the investors was exempt under both Sections 3(a)(9) and 4(2)
of the Securities Act of 1933, as amended.
Item 3.03 Material Modification to Rights of Security Holders.
See Item 1.01 above.
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Section 4 - Matters Related to Accountants and Financial Statements
Item 4.01 Changes in Registrant's Certifying Accountant.
Not applicable.
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
Not applicable.
Section 5 - Corporate Governance and Management
Item 5.01 Changes in Control of Registrant.
Not applicable
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
Not applicable.
Item 5.03 Amendments to Articles of Incorporation or Bylaws: Change in Fiscal
Year.
Not applicable.
Item 5.04 Temporary Suspension of Trading Under Registrant's Employee Benefit
Plans.
Not applicable.
Item 5.05 Amendments to the Registrant's Code of Ethics, or Waiver of a
Provision of the Code of Ethics.
Not applicable.
Section 6 - [Reserved]
Not applicable.
Section 7 - Regulation FD
Item 7.01 Regulation FD Disclosure.
Not applicable.
Section 8 - Other Events
Item 8.01 Other Events.
Not applicable.
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Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
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Not applicable.
(b) Pro Forma Financial Information.
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Not applicable.
(c) Exhibits.
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10.1 Settlement Agreement dated June 5, 2006
10.2 Settlement Agreement dated June 29, 2006
10.3 Form of Amended and Restated Note
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
QUEST MINERALS & MINING CORP.
(Registrant)
Date: July 17, 2006 By: /s/ EUGENE CHIARAMONTE, JR.
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Eugene Chiaramonte, Jr., Vice President
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