Document:

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Exhibit 10.1
CONSOLIDATED ENERGY, INC.
SENIOR SECURED BRIDGE PROMISSORY NOTE

$2,500,000     January 11, 2005

FOR VALUE RECEIVED, Consolidated Energy, Inc., a Wyoming corporation
("Maker"), hereby promises to pay to the order of Gryphon Master Fund, L.P., a
Bermuda limited partnership, and GSSF Master Fund, LP, a Bermuda limited
partnership (collectively, "Payee"), the principal sum of Two Million Five
Hundred Thousand Dollars ($2,500,000), together with interest thereon at the
rate of nine percent (9%) per annum from the date hereof, all in accordance
with the provisions of this senior secured bridge promissory note (this
"Note"). This Note is fully and unconditionally guaranteed by Eastern
Consolidated Energy, Inc., a Kentucky corporation and wholly-owned subsidiary
of Maker ("Guarantor").

1. Principal and Interest Payments. The entire outstanding principal amount of
this Note, together with all accrued but unpaid interest thereon, shall be due
and payable in full on March 31, 2005 (the "Payment Date"). If Maker fails to
pay the entire outstanding principal amount of this Note, together with all
accrued but unpaid interest thereon, on or before the Payment Date, the
interest rate on the outstanding balance of this Note shall thereafter
increase to eighteen percent (18%) per annum (or the maximum rate allowed by
law, whichever is less) until paid in full.

2. Mandatory Prepayments. Subject to the last sentence of this Section 2,
Maker shall prepay the entire outstanding principal amount of this Note and
all accrued and unpaid interest thereon upon (a) the consummation of a public
or private offering covering the offering and sale of equity or debt
securities (including equity or debt linked securities and bridge loan
instruments) of Maker or Guarantor (a "Financing"), (b) receipt by Maker or
Guarantor of proceeds from a bank or other institutional lending debt
financing, (c) receipt by Maker or Guarantor of casualty or condemnation
proceeds, and/or (d) the consummation of a merger, consolidation, acquisition
or other corporate transaction involving all or substantially all of the
equity interests in or assets of Maker or Guarantor. If the proceeds from any
transaction contemplated by subsection (a), (b) or (c) above are insufficient
to prepay the entire outstanding principal amount of this Note and all accrued
and unpaid interest thereon, then Maker shall only be required to make a
prepayment under this Section 2 in the amount of such proceeds actually
received. Any partial prepayment under this Section 2 shall be applied first
to accrued and unpaid interest and then to principal.

3. Voluntary Prepayments. Maker may prepay all or any portion of this Note, at
any time, by paying an amount equal to the outstanding principal amount of
this Note, or the portion of this Note called for prepayment, together with
interest accrued and unpaid thereon to the date of prepayment and any other
amounts due under this Note, without penalty or premium. All partial
prepayments under this Section 3 shall be applied first to accrued and unpaid
interest and then to principal.

4. Manner of Payment.  Payments of principal and interest on this Note shall
be made in lawful money of the United States of America by corporate check or
by wire transfer of immediately available funds to Payee to any account that
Payee may designate from time to time in writing.

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5. Senior Status; Security. The indebtedness evidenced by this Note is senior
in right of payment to all other indebtedness of Maker and Guarantor, and
Maker and Guarantor each agrees not to incur any indebtedness, which by its
terms is senior or pari passu in right of payment to this Note. In addition,
payment of the indebtedness evidenced by this Note is secured by a security
interest in all of the assets of Maker and Guarantor pursuant to that certain
Security Agreement, of even date herewith, by and among Maker, Guarantor and
Payee.

6. Events of Default.  For purposes of this Note, an "Event of Default" shall
only be deemed to have occurred if:

(a) Maker or Guarantor fails to pay when due and payable (whether at maturity
or otherwise) any principal or interest on this Note, and such failure, with
respect to the payment of interest only, shall continue unremedied for 2 days;
or

(b) (i) Maker or Guarantor shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
(ii) an order, judgment or decree is entered adjudicating Maker or Guarantor
bankrupt or insolvent; or (iii) any order for relief with respect to Maker or
Guarantor is entered under Chapter 11 of Title 11 of the United States Code
(11 U.S.C. Section 101 et seq.); or (iv) Maker or Guarantor petitions or
applies to any tribunal for the appointment of a custodian, trustee, receiver
or liquidator for all or substantially all of the assets of Maker or
Guarantor, or (v) Maker or Guarantor commences any proceeding relating to
Maker or Guarantor under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction; or (vi) any such petition or application is filed, or any such
proceeding is commenced, against Maker or Guarantor,  and, with respect only
to this clause (vi), (x) Maker  or Guarantor indicates in writing its approval
thereof, consent thereto or acquiescence therein, or (y) such petition,
application or proceeding is not dismissed within 60 days; or

(c) Maker or Guarantor fails to comply with any of its obligations or
covenants in this Note (other than payment obligations) and such failure is
not cured within 30 days after receiving written notice from Payee specifying
the particulars of such failure.

If an Event of Default has occurred and is continuing, then the unpaid
principal amount and all accrued and unpaid interest thereon shall
automatically become due and payable, without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other notice or
other requirements of any kind, all of which are hereby expressly waived by
Maker and Guarantor. In addition, Payee or any other Payee of this Note may
institute legal action against Maker and/or Guarantor for the collection
thereof. Maker and Guarantor shall pay to Payee all reasonable costs and
expenses incurred by it in connection with the collection or enforcement of
this Note following the occurrence of an Event of Default, including, but not
limited to, the reasonable fees and expenses of Payee's attorneys for all
services rendered in connection therewith. The remedies specifically described
in this paragraph shall not be the only remedies available to Payee, and Payee
shall have the right to enforce any other right or remedy available to it at
law or in equity upon the occurrence of an Event of Default.

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7. Assignments. Payee may assign or transfer all or any portion of this Note,
subject to compliance with applicable securities laws, without the consent of
Maker or Guarantor. Payee shall notify Maker of any such assignment or
transfer promptly. Neither Maker nor Guarantor may assign its rights or
obligations under this Note. This Note shall be binding upon Maker, Guarantor
and their respective successors and shall inure to the benefit of Payee and
its successors and permitted assigns.

8. Commitment Fee; Fees and Expenses. Maker agrees to pay to Payee, from the
proceeds of the funding of this Note, a cash commitment fee equal to $50,000,
and Maker agrees that Payee may deduct such cash commitment fee from the
proceeds of the funding of this Note. Maker acknowledges that the commitment
fee payable hereunder is a bona fide commitment fee and is intended as
reasonable compensation to Payee for committing to make funds available to
Maker as described herein and for no other purposes. In addition, Maker agrees
to issue to Payee a Warrant to purchase shares of Maker's common stock, par
value $0.001 per share, in the form attached to this Note as Exhibit A. Maker
shall also pay a flat $10,000 to Payee to reimburse Payee for the fees and
expenses (including attorneys' fees and expenses) incurred by it in connection
with the preparation, negotiation, execution, delivery and performance of this
Note and the other documents contemplated hereby and the transactions
contemplated thereunder. Such amount shall be paid by deducting such amount
from the proceeds of the funding of this Note.

9. Use of Proceeds. The net proceeds of the funding of this Note shall be used
by Maker solely to purchase equipment and fund expenditures necessary for the
consummation of mining activities at Maker's Warfield Mine, and shall not be
used for any other purposes. Without limiting the generality of the foregoing,
Maker shall not use the net proceeds of the funding of this Note (i) to repay
any outstanding indebtedness or any loans to any officer, director, affiliate
or insider of Maker, or (ii) for research and development (including, without
limitation, the development of Maker's clean coal technology that was acquired
from Saudi American Minerals, Inc. or the development of any natural gas
properties).

10. Exclusive Negotiations; Right of First Refusal. During the period
beginning on the date of this Note and ending on the date that the entire
outstanding principal amount of this Note, together with all accrued but
unpaid interest thereon, is paid in full, neither Maker nor Guarantor shall
solicit, engage in or initiate discussions or negotiations with any person or
entity other than Payee that would involve a Financing, and shall negotiate
solely with Payee and its designees with respect to the consummation of a
Financing, provided that Payee is proceeding diligently and in good faith
towards the consummation of a Financing substantially in accordance with the
terms set forth in that certain Summary of Offer dated December 27, 2004,
executed by Gryphon Master Fund, L.P. and Maker. In addition, until such time
as the entire outstanding principal amount of this Note, together with all
accrued but unpaid interest thereon, is paid in full, Payee shall have a right
of first refusal with respect to each and every Financing that Maker may, from
time to time, propose to effect. Maker shall not take or fail to take any
action that would result in, or have the effect of, the circumvention of the
foregoing right of first refusal.

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11. Guarantee.

(a) Guarantor hereby guarantees, as primary obligor and not as a surety, the
prompt payment in full when due (whether at stated maturity, by required
prepayment, declaration, demand, by acceleration or otherwise) of the
principal of and interest (including any interest, fees, costs or charges that
would accrue but for the provisions of the Title 11 of the United States Code
after any bankruptcy or insolvency petition under Title 11 of the United
States Code) on this Note.  Guarantor hereby agrees that if Maker shall fail
to pay in full when due (whether at stated maturity, by acceleration or
otherwise) any amount owing under this Note, Guarantor will promptly pay the
same in cash, without any demand or notice whatsoever.

(b) Guarantor hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that Payee
exhaust any right, power or remedy or proceed against Maker under this Note.
Guarantor waives any and all notice of the creation, renewal, extension,
waiver, termination or accrual of any of the obligations of Maker under this
Note and notice of or proof of reliance by Payee upon the guarantee of
Guarantor.

(c) In any action or proceeding involving any state corporate, limited
partnership or limited liability company law, or any applicable state, federal
or foreign bankruptcy, insolvency, reorganization or other law affecting the
rights of creditors generally, if the obligations of Guarantor hereunder would
otherwise be held or determined to be void, voidable, invalid or
unenforceable, or subordinated to the claims of any other creditors on account
of the amount of its liability hereunder, then, notwithstanding any other
provision hereof to the contrary, the amount of such liability shall, without
any further action by Guarantor or any other person, be automatically limited
and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.

12. Miscellaneous.

(a) If the date of any payment required under this Note shall be a Saturday,
Sunday or a bank holiday, such payment shall be made on the first business day
following such date.

(b) Maker hereby waives presentment for payment, demand, notice of nonpayment,
notice of default, notice of acceleration, notice of intent to accelerate,
notice of protest and protest of this Note.

(c) This Note shall be governed by and construed in accordance with the
substantive laws of the State of Texas without giving effect to the choice of
law provisions of such State. Maker (i) hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court sitting in the
Northern District of Texas and the courts of the State of Texas located in
Dallas, Texas, for the purposes of any suit, action or proceeding arising out
of or relating to this Note or the transactions contemplated hereby, and (ii)
hereby waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper. Maker
hereby agrees that the prevailing party in any suit, action or proceeding
arising out of or relating to this Note shall be entitled to reimbursement for
reasonable legal fees from the non-prevailing party.

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(d) Neither this Note nor any term hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by Maker and Payee.

(e) No failure on the part of Payee to exercise, and no delay in exercising
any right, remedy or power hereunder, shall operate as a waiver thereof, nor
shall any single or partial exercise by Payee of any right, remedy or power
hereunder preclude any other or future exercise of any other right, remedy or
power. Each and every right, remedy or power hereby granted to Payee or
allowed it by law or other agreement shall be cumulative and not exclusive of
any other, and may be exercised by Payee from time to time.

(f) In case any provision of this Note is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it
is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Note will not in any way be
affected or impaired thereby. In no event shall the amount of interest paid
hereunder exceed the maximum rate of interest on the unpaid principal balance
hereof allowable by applicable law. If any sum is collected in excess of the
applicable maximum rate, the excess collected shall be applied to reduce the
principal debt. If the interest actually collected hereunder is still in
excess of the applicable maximum rate, the interest rate shall be reduced so
as not to exceed the maximum allowable under law.

IN WITNESS WHEREOF, Maker has caused this Note to be executed and delivered as
of the date first above written.

CONSOLIDATED ENERGY, INC.

By: /s/ David Guthrie
David Guthrie, President

EASTERN CONSOLIDATED ENERGY, INC.

By: /s/ David Guthrie
David Guthrie, President<PAGE>
Exhibit 10.2

THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON
EXERCISE OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED EXCEPT UPON DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL
SATISFACTORY IN FORM AND SUBSTANCE TO IT THAT SUCH TRANSFER WILL NOT VIOLATE
THE SECURITIES ACT OF 1933, AS AMENDED

THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.

Consolidated Energy, Inc.

Warrant for the Purchase of Shares of Common Stock,
par value $0.001 per Share

No. W-B1   514,706 Shares

THIS CERTIFIES that, for value received, Gryphon Master Fund, L.P. and GSSF
Master Fund, LP, whose address is 100 Crescent Court, Suite 490, Dallas, Texas
75201 (together with any person or entity to which this Warrant (or any
portion hereof) may be transferred, the "Holder"), is entitled to subscribe
for and purchase from Consolidated Energy, Inc., a Wyoming corporation (the
"Company"), upon the terms and conditions set forth herein, 514,706 shares of
the Company's Common Stock, par value $0.001 per share ("Common Stock"), at a
price of $1.70 per share (the "Exercise Price"). As used herein the term "this
Warrant" shall mean and include this Warrant and any Common Stock or Warrants
hereafter issued as a consequence of the exercise or transfer of this Warrant
in whole or in part.

The number of shares of Common Stock issuable upon exercise of the Warrants
(the "Warrant Shares") and the Exercise Price may be adjusted from time to
time as hereinafter set forth.

1. Exercise Price and Exercise Period.  This Warrant may be exercised at any
time or from time to time during the period commencing at 10:00 A.M. Eastern
time on January 11, 2005 and ending at 5:00 P.M. Eastern Time on January 11,
2010 (the "Exercise Period").

2. Procedure for Exercise; Effect of Exercise.

(a) Cash Exercise. This Warrant may be exercised, in whole or in part, by the
Holder during normal business hours on any business day during the Exercise
Period by (i) the presentation and surrender of this Warrant to the Company at
its principal office along with a duly executed Notice of Exercise (in the
form attached to this Agreement) specifying the number of Warrant Shares to be
purchased, and (ii) delivery of payment to the Company of the Exercise Price
for the number of Warrant Shares specified in the Notice of Exercise by cash,
wire transfer of immediately available funds to a bank account specified by
the Company, or by certified or bank cashier's check.

(b) Cashless Exercise.  This Warrant may also be exercised by the Holder
through a cashless exercise, as described in this Section 2(b). In such case,
this Warrant may be exercised, in whole or in part, by the Holder during
normal business hours on any business day during the Exercise Period by the
presentation and surrender of this Warrant to the Company at its principal
office along with a duly executed Notice of Exercise specifying the number of

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Warrant Shares to be applied to such exercise. The number of shares of Common
Stock to be issued upon exercise of this Warrant pursuant to this Section 2(b)
shall equal the value of this Warrant (or the portion thereof being canceled)
computed as of the date of delivery of this Warrant to the Company using the
following formula:

X = Y(A-B)/A

Where:

X  =  the number of shares of Common Stock to be issued to Holder under this
Section 2(b);

Y  =  the number of Warrant Shares identified in the Notice of Exercise as
being applied to the subject exercise;

A  =  the Current Market Price on such date; and

B  =  the Exercise Price on such date

For purposes of this Section 2(b), Current Market Price shall have the
definition provided in Section 6(g).

The Company acknowledges and agrees that this Warrant was issued on the date
set forth at the end of this Warrant. Consequently, the Company acknowledges
and agrees that, if the Holder conducts a cashless exercise pursuant to this
Section 2(b), the period during which the Holder held this Warrant may, for
purposes of Rule 144 promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), be "tacked" to the period during which the Holder
holds the Warrant Shares received upon such cashless exercise.

Notwithstanding the foregoing, the Holder may conduct a cashless exercise
pursuant to this Section 2(b) only after the first anniversary of the initial
issuance date of this Warrant, and then only in the event that a registration
statement covering the resale of the Warrant Shares is not then effective at
the time that the Holder wishes to conduct such cashless exercise.

(c) Effect of Exercise.  Upon receipt by the Company of this Warrant and a
Notice of Exercise, together with proper payment of the Exercise Price, as
provided in this Section 2, the Company agrees that such Warrant Shares shall
be deemed to be issued to the Holder as the record holder of such Warrant
Shares as of the close of business on the date on which this Warrant has been
surrendered and payment has been made for such Warrant Shares in accordance
with this Agreement and the Holder shall be deemed to be the holder of record
of the Warrant Shares, notwithstanding that the stock transfer books of the
Company shall then be closed or that certificates representing such Warrant
Shares shall not then be actually delivered to the Holder. A stock certificate
or certificates for the Warrant Shares specified in the Notice of Exercise
shall be delivered to the Holder as promptly as practicable, and in any event
within seven (7) business days, thereafter. The stock certificate(s) so
delivered shall be in any such denominations as may be reasonably specified by
the Holder in the Notice of Exercise.  If this Warrant should be exercised in
part only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the Holder to
purchase the balance of the Warrant Shares subject to purchase hereunder.

3. Registration of Warrants; Transfer of Warrants.  Any Warrants issued upon
the transfer or exercise in part of this Warrant shall be numbered and shall

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be registered in a Warrant Register as they are issued. The Company shall be
entitled to treat the registered holder of any Warrant on the Warrant Register
as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in such Warrant on the
part of any other person, and shall not be liable for any registration or
transfer of Warrants which are registered or to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration or transfer, or with the knowledge of such facts that its
participation therein amounts to bad faith. This Warrant shall be transferable
only on the books of the Company upon delivery thereof duly endorsed by the
Holder or by its duly authorized attorney or representative, or accompanied by
proper evidence of succession, assignment, or authority to transfer.  In all
cases of transfer by an attorney, executor, administrator, guardian, or other
legal representative, duly authenticated evidence of his or its authority
shall be produced.  Upon any registration of transfer, the Company shall
deliver a new Warrant or Warrants to the person entitled thereto. This Warrant
may be exchanged, at the option of the Holder thereof, for another Warrant, or
other Warrants of different denominations, of like tenor and representing in
the aggregate the right to purchase a like number of Warrant Shares, upon
surrender to the Company or its duly authorized agent.

4. Restrictions on Transfer.  (a) The Holder, as of the date of issuance
hereof, represents to the Company that such Holder is acquiring the Warrants
for its own account for investment purposes and not with a view to the
distribution thereof or of the Warrant Shares.  Notwithstanding any provisions
contained in this Warrant to the contrary, this Warrant and the related
Warrant Shares shall not be transferable except pursuant to the proviso
contained in the following sentence or upon the conditions specified in this
Section 4, which conditions are intended, among other things, to insure
compliance with the provisions of the Securities Act and applicable state law
in respect of the transfer of this Warrant or such Warrant Shares. The Holder
by acceptance of this Warrant agrees that the Holder will not transfer this
Warrant or the related Warrant Shares prior to delivery to the Company of an
opinion of the Holder's counsel (as such opinion and such counsel are
described in Section 4(b) hereof) or until registration of such Warrant Shares
under the Securities Act has become effective or after a sale of such Warrant
or Warrant Shares has been consummated pursuant to Rule 144 or Rule 144A under
the Securities Act; provided, however, that the Holder may freely transfer
this Warrant or such Warrant Shares (without delivery to the Company of an
opinion of counsel) (i) to one of its nominees, affiliates or a nominee
thereof, (ii) to a pension or profit-sharing fund established and maintained
for its employees or for the employees of any affiliate,  (iii) from a nominee
to any of the aforementioned persons as beneficial owner of this Warrant or
such Warrant Shares, (iv) to a qualified institutional buyer, so long as such
transfer is effected in compliance with Rule 144A under the Securities Act, or
(v) to an accredited investor (as such term is defined in Regulation D under
the Securities Act).

(b) The Holder, by its acceptance hereof, agrees that prior to any transfer of
this Warrant or of the related Warrant Shares (other than as permitted by
Section 4(a) hereof or pursuant to a registration under the Securities Act),
the Holder will give written notice to the Company of its intention to effect
such transfer, together with an opinion of such counsel for the Holder as
shall be reasonably acceptable to the Company, to the effect that the proposed
transfer of this Warrant and/or such Warrant Shares may be effected without
registration under the Securities Act.  Upon delivery of such notice and
opinion to the Company, the Holder shall be entitled to transfer this Warrant

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and/or such Warrant Shares in accordance with the intended method of
disposition specified in the notice to the Company.

(c) Each stock certificate representing Warrant Shares issued upon exercise or
exchange of this Warrant shall bear the following legend unless the opinion of
counsel referred to in Section 4(b) states such legend is not required:

"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED EXCEPT UPON
DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY IN FORM AND
SUBSTANCE TO IT THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT OF
1933, AS AMENDED."

The Holder understands that the Company may place, and may instruct any
transfer agent or depository for the Warrant Shares to place, a stop transfer
notation in the securities records in respect of the Warrant Shares.

5. Reservation of Shares. The Company shall at all times during the Exercise
Period reserve and keep available out of its authorized and unissued Common
Stock, solely for the purpose of providing for the exercise of the rights to
purchase all Warrant Shares granted pursuant to the Warrants, such number of
shares of Common Stock as shall, from time to time, be sufficient therefor.
The Company covenants that all shares of Common Stock issuable upon exercise
of this Warrant, upon receipt by the Company of the full Exercise Price
therefor, and all shares of Common Stock issuable upon conversion of this
Warrant, shall be validly issued, fully paid, non-assessable, and free of
preemptive rights, and free from all taxes, claims, liens, charges and other
encumbrances.

6. Exercise Price Adjustments.  The Exercise Price shall be subject to
adjustment from time to time as follows:

(a) (i)  In the event that the Company shall (A) pay a dividend or make a
distribution to all its stockholders, in shares of Common Stock, on any class
of capital stock of the Company or any subsidiary which is not directly or
indirectly wholly owned by the Company, (B) split or subdivide its outstanding
Common Stock into a greater number of shares, or (C) combine its outstanding
Common Stock into a smaller number of shares, then in each such case the
Exercise Price in effect immediately prior thereto shall be adjusted so that
the Holder of a Warrant thereafter surrendered for Exercise shall be entitled
to receive the number of shares of Common Stock that such Holder would have
owned or have been entitled to receive after the occurrence of any of the
events described above had such Warrant been exercised immediately prior to
the occurrence of such event. An adjustment made pursuant to this Section
6(a)(i) shall become effective immediately after the close of business on the
record date in the case of a dividend or distribution (except as provided in
Section 6(e) below) and shall become effective immediately after the close of
business on the effective date in the case of such subdivision, split or
combination, as the case may be. Any shares of Common Stock issuable in
payment of a dividend shall be deemed to have been issued immediately prior to
the close of business on the record date for such dividend for purposes of
calculating the number of outstanding shares of Common Stock under clauses
(ii) and (iii) below.

(ii) In the event that the Company shall commit to issue any (1) shares of
Common Stock, (2) rights, options or warrants entitling any person to purchase
shares of Common Stock, or (3) rights, warrants or options or other securities
convertible into or exchangeable for Common Stock (any securities contemplated

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by the foregoing (1), (2) or (3) being referred to as "New Securities"), in
any such case at a price per share less than the Current Market Price per
share on the earliest of (A) the date the Company shall enter into a firm
contract for such issuance or distribution, (B) the record date for the
determination of stockholders entitled to receive any such New Securities, if
applicable, or (C) the date of actual issuance or distribution of any such New
Securities (provided that the issuance of Common Stock upon the exercise of
New Securities that are rights, warrants, options or convertible or
exchangeable securities ("New Derivative Securities") will not cause an
adjustment in the Exercise Price if no such adjustment would have been
required at the time such New Derivative Security was issued), then the
Exercise Price in effect immediately prior to such earliest date shall be
adjusted so that the Exercise Price shall equal the price determined by
multiplying the Exercise Price in effect immediately prior to such earliest
date by the fraction:

(x) whose numerator shall be (I) the number of shares of Common Stock
outstanding on such date plus (II) the number of shares of Common Stock which
the aggregate offering price of the total number of New Securities so offered
would have purchased at such Current Market Price (such amount, with respect
to any New Derivative Securities, determined by multiplying the total number
of shares of Common Stock subject thereto by the exercise price of such New
Derivative Securities, and dividing the product so obtained by such Current
Market Price), and

(y) whose denominator shall be (I) the number of shares of Common Stock
outstanding on such date plus (II) the number of additional shares of Common
Stock to be issued or distributed or receivable upon exercise of any such New
Derivative Security.

Such adjustment shall be made successively whenever any such New Securities
are issued. In determining whether any New Derivative Securities entitle the
holders to subscribe for or purchase shares of Common Stock at less than such
Current Market Price, and in determining the aggregate offering price of
shares of Common Stock so issued, there shall be taken into account any
consideration received by the Company for such Common Stock or New Derivative
Securities, the value of such consideration, if other than cash, to be
determined by the Board of Directors, whose determination shall be conclusive
and described in a certificate filed with the records of corporate proceedings
of the Company. If any New Derivative Security to purchase or acquire Common
Stock, the issuance of which resulted in an adjustment in the Exercise Price
pursuant to this subsection (ii) shall expire and shall not have been
exercised, the Exercise Price shall immediately upon such expiration be
recomputed to the Exercise Price which would have been in effect had the
adjustment of the Exercise Price made upon the issuance of such New Derivative
Security been made on the basis of offering for subscription, purchase or
issuance, as the case may be, only of that number of shares of Common Stock
actually purchased or issued upon the actual exercise of such New Derivative
Security.

(iii) In the event that the entire outstanding principal amount of that
certain Senior Secured Bridge Promissory Note, of even date herewith, in the
original principal amount of $2,500,000, executed by the Company in favor of
the Holder, together with all accrued but unpaid interest thereon, is not paid
in full on or before March 31, 2005, then the Exercise Price shall be adjusted
to equal $0.01. Upon such adjustment of the Exercise Price, this Warrant shall
thereafter evidence the right to purchase, at the adjusted Exercise Price,
2,058,824 shares of Common Stock.

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(iv) No adjustment in the Exercise Price shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Exercise Price then in effect; provided, however, that any adjustments that by
reason of this Section 6(a) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.  All calculations
under this Section 6(a) shall be made to the nearest cent or nearest 1/100th
of a share.

(v) The Company from time to time may reduce the Exercise Price by any amount
for any period of time in the discretion of the Board of Directors. A
voluntary reduction of the Exercise Price does not change or adjust the
Exercise Price otherwise in effect for purposes of this Section 6(a).

(vi) In the event that, at any time as a result of an adjustment made pursuant
to Sections 6(a)(i) through 6(a)(iv) above, the Holder of any Warrant
thereafter surrendered for exercise shall become entitled to receive any
shares of the Company other than shares of the Common Stock, thereafter the
number of such other shares so receivable upon exercise of any such Warrant
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Common
Stock contained in Sections 6(a)(i) through 6(a)(v) above, and the other
provisions of this Section 6(a) with respect to the Common Stock shall apply
on like terms to any such other shares.

(b) In case of any reclassification of the Common Stock (other than in a
transaction to which Section 6(a)(i) applies), any consolidation of the
Company with, or merger of the Company into, any other entity, any merger of
another entity into the Company (other than a merger that does not result in
any reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company), any sale or transfer of all or
substantially all of the assets of the Company or any compulsory share
exchange, pursuant to which share exchange the Common Stock is converted into
other securities, cash or other property, then lawful provision shall be made
as part of the terms of such transaction whereby the Holder of a Warrant then
outstanding shall have the right thereafter, during the period such Warrant
shall be exercisable, to exercise such Warrant only for the kind and amount of
securities, cash and other property receivable upon the reclassification,
consolidation, merger, sale, transfer or share exchange by a holder of the
number of shares of Common Stock of the Company into which a Warrant might
have been able to exercise for immediately prior to the reclassification,
consolidation, merger, sale, transfer or share exchange assuming that such
holder of Common Stock failed to exercise rights of election, if any, as to
the kind or amount of securities, cash or other property receivable upon
consummation of such transaction subject to adjustment as provided in Section
6(a) above following the date of consummation of such transaction. The
provisions of this Section 6(b) shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share
exchanges.

(c) If:

(i) the Company shall take any action which would require an adjustment in the
Exercise Price pursuant to Section 6(a); or

(ii) the Company shall authorize the granting to the holders of its Common
Stock generally of rights, warrants or options to subscribe for or purchase
any shares of any class or any other rights, warrants or options; or

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(iii) there shall be any reclassification or change of the Common Stock (other
than a subdivision or combination of its outstanding Common Stock or a change
in par value) or any consolidation, merger or statutory share exchange to
which the Company is a party and for which approval of any stockholders of the
Company is required, or the sale or transfer of all or substantially all of
the assets of the Company; or

(iv) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;

then, in each such case, the Company shall cause to be filed with the transfer
agent for the Warrants and shall cause to be mailed to each Holder at such
Holder's address as shown on the books of the transfer agent for the Warrants,
as promptly as possible, but at least 30 days prior to the applicable date
hereinafter specified, a notice stating (A) the date on which a record is to
be taken for the purpose of such dividend, distribution or granting of rights,
warrants or options, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution or rights, warrants or options are to be determined, or (B) the
date on which such reclassification, change, consolidation, merger, statutory
share exchange, sale, transfer, dissolution, liquidation or winding-up is
expected to become effective or occur, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon such
reclassification, change, consolidation, merger, statutory share exchange,
sale, transfer, dissolution, liquidation or winding up.  Failure to give such
notice or any defect therein shall not affect the legality or validity of the
proceedings described in this Section 6(c).

(d) Whenever the Exercise Price is adjusted as herein provided, the Company
shall promptly file with the transfer agent for the Warrants a certificate of
an officer of the Company setting forth the Exercise Price after the
adjustment and setting forth a brief statement of the facts requiring such
adjustment and a computation thereof.  The Company shall promptly cause a
notice of the adjusted Exercise Price to be mailed to each Holder.

(e) In any case in which Section 6(a) provides that an adjustment shall become
effective immediately after a record date for an event and the date fixed for
such adjustment pursuant to Section 6(a) occurs after such record date but
before the occurrence of such event, the Company may defer until the actual
occurrence of such event (i) issuing to the Holder of any Warrants exercised
after such record date and before the occurrence of such event the additional
shares of Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Common Stock issuable
upon such exercise before giving effect to such adjustment, and (ii) paying to
such holder any amount in cash in lieu of any fraction pursuant to Section
6(i).

(f) In case the Company shall take any action affecting the Common Stock,
other than actions described in this Section 6, which in the opinion of the
Board of Directors would materially adversely affect the exercise right of the
Holders, the Exercise Price may be adjusted, to the extent permitted by law,
in such manner, if any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances.

(g) For the purpose of any computation under Section 2(b) or this Section 6,
the "Current Market Price" per share of Common Stock on any day shall mean:
(i) if the principal trading market for such securities is a national or

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regional securities exchange, the closing price on such exchange on such day;
or (ii) if sales prices for shares of Common Stock are reported by the NASDAQ
National Market System (or a similar system then in use), the last reported
sales price (regular way) so reported on such day; or (iii) if neither (i) nor
(ii) above are applicable, and if bid and ask prices for shares of Common
Stock are reported in the over-the-counter market by NASDAQ (or, if not so
reported, by the National Quotation Bureau), the average of the high bid and
low ask prices so reported on such day. Notwithstanding the foregoing, if
there is no reported closing price, last reported sales price, or bid and ask
prices, as the case may be, for the day in question, then the Current Market
Price shall be determined as of the latest date prior to such day for which
such closing price, last reported sales price, or bid and ask prices, as the
case may be, are available, unless such securities have not been traded on an
exchange or in the over-the-counter market for 30 or more days immediately
prior to the day in question, in which case the Current Market Price shall be
determined in good faith by, and reflected in a formal resolution of, the
Board of Directors of the Company.

(h) Upon each adjustment of the Exercise Price (other than an adjustment under
Section 6(a)(iii)), this Warrant shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of shares (calculated to
the nearest thousandth) obtained by dividing (i) the product obtained by
multiplying the number of shares purchasable upon exercise of this Warrant
prior to adjustment of the number of shares by the Exercise Price in effect
prior to adjustment of the Exercise Price, by (ii) the Exercise Price in
effect after such adjustment of the Exercise Price.

(i) The Company shall not be required to issue fractions of shares of Common
Stock or other capital stock of the Company upon the exercise of this Warrant.
If any fraction of a share would be issuable on the exercise of this Warrant
(or specified portions thereof), the Company shall purchase such fraction for
an amount in cash equal to the same fraction of the Current Market Price of
such share of Common Stock on the date of exercise of this Warrant.

7. Transfer Taxes. The issuance of any shares or other securities upon the
exercise of this Warrant, and the delivery of certificates or other
instruments representing such shares or other securities, shall be made
without charge to the Holder for any tax or other charge in respect of such
issuance. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

8. Loss or Mutilation of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
any Warrant (and upon surrender of any Warrant if mutilated), and upon
reimbursement of the Company's reasonable incidental expenses, the Company
shall execute and deliver to the Holder thereof a new Warrant of like date,
tenor, and denomination.

9. No Rights as a Stockholder. The Holder of any Warrant shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided in this Warrant.

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10. Governing Law.  This Warrant shall be construed in accordance with the
laws of the State of Texas applicable to contracts made and performed within
such State, without regard to principles of conflicts of law.

11. Piggyback Registration.  If at any time while any Warrant or Warrant
Shares are outstanding (without any obligation to do so) the Company proposes
to file a registration statement under the Securities Act with respect to an
offering of any securities of the Company (other than a registration statement
(i) on Form S-8 or any successor form to such Form or in connection with any
employee or director welfare, benefit or compensation plan, (ii) on Form S-4
or any successor form to such Form or in connection with an exchange offer,
(iii) in connection with a rights offering exclusively to existing holders of
Common Stock, (iv) in connection with an offering solely to employees of the
Company or its subsidiaries, or (v) relating to a transaction pursuant to Rule
145 of the Securities Act or any other "business combination" transaction),
whether or not for its own account, the Company shall give prompt written
notice of such proposed filing to the Holder. The notice referred to in the
preceding sentence shall offer the Holder the opportunity to register such
amount of Registrable Securities (as defined below) as the Holder may request
(a "Piggyback Registration"). The Company shall include in such Piggyback
Registration, in the registration and qualification for sale under the "blue
sky" or securities laws of the various states and in any underwriting in
connection therewith all Registrable Securities for which the Company has
received a written request for inclusion therein within 15 calendar days after
the notice referred to above has been given by the Company to the Holder. The
Holder shall be permitted to withdraw all or part of the Registrable
Securities from a Piggyback Registration at any time prior to the effective
date of such Piggyback Registration. For purposes of this Section 11,
"Registrable Securities" means the Warrant Shares and any shares of Common
Stock issued and issuable upon any stock split, stock dividend,
recapitalization or similar event with respect to the Warrant Shares and any
other securities issued in exchange of or replacement of the Warrant Shares,
until in the case of any such security (a) a registration statement covering
such security has been declared effective by the United States Securities and
Exchange Commission and continues to be effective during the period ending on
the second anniversary of the initial issuance date of this Warrant, or (b)
such security is sold in compliance with Rule 144 under the Securities Act or
may be sold pursuant to Rule 144(k) under the Securities Act, after which time
such security shall not be a Registrable Security.

Dated: January 11, 2005

CONSOLIDATED ENERGY, INC.

 By: /s/David Guthrie
 David Guthrie, President

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