NOTE PURCHASE AGREEMENT

NOTE PURCHASE AGREEMENT

THIS NOTE PURCHASE AGREEMENT ("Agreement") is made as of ______________, 2006, by and among Mountains West Exploration, Inc., a New Mexico corporation ("Borrower") and the lenders (each individually a "Lender," and collectively the "Lenders") named on the Schedule of Lenders attached hereto (the "Schedule of Lenders"). Capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed to them in Section 1 below.

WHEREAS, each of the Lenders intends to provide certain Consideration to the Borrower as described for each Lender on the Schedule of Lenders; and

WHEREAS, the parties wish to provide for the sale and issuance of the Notes in return for the provision by the Lenders of the Consideration to the Company on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

• • (a)          "Aggregate Loan Amount" shall have the same meaning as set forth in Section 2.1 below.

    (b)          "Consideration" shall mean the amount of money paid by each Lender pursuant to this Agreement as shown on the Schedule of Lenders.

    (c)          "Conversion Shares" shall, for purposes of determining the type of Equity Securities issuable upon conversion of the Notes, mean if the Notes are converted to equity pursuant to Section 2.2 below, the Equity Securities issued in the Next Equity Financing.

    (d)          "Conversion Price" shall mean with respect to a conversion pursuant to Section 2.2 below, a price per share equal to seventy five percent (75%) of the price paid per share for Equity Securities by the investors in the Next Equity Financing.

    (e)          "Equity Securities" shall mean the Company’s Common Stock or Preferred Stock or any securities conferring the right to purchase the Company’s Preferred Stock or securities convertible into, or exchangeable for (with or without additional consideration), the Company’s Common Stock or Preferred Stock, except any security granted, issued and/or sold by the Company to any director, officer, employee or consultant of the Company in such capacity for the primary purpose of soliciting or retaining their services.

    (f)           "Knowledge" shall mean the actual knowledge of any officer of the Company.

• • (g)          "Majority Note Holders" shall mean the holders of a majority in interest of the aggregate principal amount of Notes.

    (h)          "Maturity Date" shall mean, as to each Lender, 180 days following the date of issuance of the Note, provided however, at Borrower’s election, which election shall be deemed automatically given absent delivery of written notice to Lender to the contrary, the Maturity Date shall automatically extend for each Note until the first anniversary date, with such first 180 days being the "Initial Period" and the balance of such year being the "Second Period."

    (i)           "Next Equity Financing" shall mean the next sale (or series of related sales) by the Company of its Equity Securities following the date of this Agreement from which the Company receives gross proceeds of not less than $2,000,000 including the aggregate amount of debt securities converted into Equity Securities upon conversion of the Notes pursuant to Section 2.2 below;

    (j)           "Notes" shall mean the one or more unsecured convertible promissory notes issued to each Lender pursuant to Section 2.1 below, the form of which is attached hereto as Exhibit B.

2.1           Issuance of Notes . In return for the Consideration paid by each Lender, the Borrower shall sell and issue to such Lender one or more unsecured Notes in the aggregate principal amount of up to $500,000 (the aggregate principal amount so sold being the "Aggregate Note Amount"). Each Note shall have a principal balance equal to that portion of the Consideration paid by such Lender for the Note, as set forth in the Schedule of Lenders. Each Note shall be convertible into Conversion Shares pursuant to Section 2.2 below. Borrower in its sole discretion may increase the Aggregate Note Amount by delivery of notice to the existing Lenders of such increased amount, not to exceed an additional $500,000.

2.2           Right to Convert Notes/Next Equity Financing . The principal and unpaid accrued interest of each Note shall automatically be converted into the right to receive from Borrower Conversion Shares upon the closing of the Next Equity Financing. The number of Conversion Shares to be issued upon such conversion shall be equal to the quotient obtained by dividing the outstanding principal and unpaid accrued interest on a Note to be converted, on the date of conversion, by the Conversion Price (the "Conversion Amount"); provided however, the Borrower in its sole discretion may elect to pay the accrued interest with respect to the Note in cash, in which event the Conversion Amount computation shall be based solely upon the unpaid principal amount of the Note, exclusive of accrued, unpaid interest. At least five (5) days prior to the closing of the Next Equity Financing, the Borrower shall notify the holder of each Note in writing of the terms under which the Equity Securities of the Borrower will be sold in such financing. The issuance of Conversion Shares pursuant to the conversion of each Note shall be upon and subject to the same terms and conditions applicable to the Equity Securities sold in the Next Equity Financing including any registration rights granted thereunder. Upon the

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conversion of a Note into Conversion Shares, in lieu of any fractional shares to which the holder of the Note would otherwise be entitled, the Borrower shall pay the Note holder cash equal to such fraction multiplied by the Conversion Price. The Borrower shall not be required to issue or deliver the Conversion Shares until the Note holder has surrendered the Note to the Borrower.

3.             Closing . The initial closing (the "First Closing") of the purchase of the Notes in the amounts set forth opposite each Lender’s name on the Schedule of Lenders shall take place at the offices of the Borrower at 12:00 p.m., on the date of counterpart execution of this Agreement by the Initial Lender, or at such other time and place as the Borrower and Lenders purchasing the aggregate principal amount of the Notes to be sold at the First Closing agree upon orally or in writing. Any subsequent closing of the purchase of the Notes (a "Subsequent Closing") in the amounts set forth opposite each Lender’s name on the Schedule of Lenders shall take place at such locations and at such times as shall be mutually agreed upon orally or in writing by the Borrower and Lenders purchasing the aggregate principal amount of the Notes to be sold at such Subsequent Closing. At each Closing, each Lender shall deliver the Consideration to the Borrower and the Borrower shall deliver to each Lender one or more executed Notes in return for the respective Consideration provided to the Borrower.

Borrower has advised each Lender that in order to expedite issuance of the Notes, Borrower’s funds from the Notes initially will be deposited in a bank account of its Affiliate, Momentum Capital, which will hold said funds in trust for Borrower and apply them solely per Borrower’s direction until a separate account is established for Borrower. All Lender’s consent to this arrangement.

4.             Use of Consideration . Notwithstanding anything to the contrary herein, there shall be no minimum aggregate principal amount of the Notes which must be sold by the Borrower to any one or more Lenders before the Borrower can use the proceeds of respective Consideration provided to the Borrower at the First Closing or any Subsequent Closing of the purchase of any Notes.

5.             Representations and Warranties of the Borrower . In connection with the transactions provided for herein, the Borrower hereby represents and warrants to the Lenders that:

5.1           Organization, Good Standing and Qualification . The Borrower is a corporation, validly existing, and in good standing under the laws of the State of New Mexico and has all requisite corporate power and authority to carry on its business as now conducted. The Borrower is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties.

5.2           Authorization . All corporate action has been taken on the part of the Borrower, its shareholders, officers, and directors necessary for the authorization, execution, delivery and (except for the authorization and issuance of any Conversion Shares issuable in connection with Section 2.2 hereof) performance, of this Agreement and the Notes. Except as may be limited by applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights, the Borrower has taken all corporate action

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required to make all of the obligations of the Borrower reflected in the provisions of this Agreement and the Notes the valid and enforceable obligations they purport to be.

5.3           Compliance with Other Instruments . Neither the authorization, execution and delivery of this Agreement or the Notes, nor the issuance and delivery of the Notes, will constitute or result in a default or violation of any law or regulation applicable to the Borrower or any term or provision of the Borrower’s current Articles, Bylaws or any material agreement or instrument by which it is bound or to which its properties or assets are subject.

5.4           Valid Issuance . The Conversion Shares to be issued, sold and delivered upon conversion of the Notes will be, when issued in accordance with the terms of this Agreement and the Notes, duly and validly issued, fully paid and nonassessable and, based in part upon the representations and warranties of the Lenders in this Agreement, will be issued in compliance with all applicable federal and state securities laws.

5.5           No Violation . The Borrower is not in violation of any order of any court, arbitrator or governmental body, material laws, ordinances or governmental rules or regulations (domestic or foreign) to which it is subject, or with respect to any material loan agreement, debt instrument or contract with a supplier or customer of the Borrower or other agreement to which it is a party and has not failed to obtain or apply for any licenses, permits, franchises or other governmental authorizations necessary to the ownership of its property or to the conduct of its business.

5.6           No Litigation . There are no suits or proceedings pending or, to the Knowledge of the Borrower, threatened in any court or before any regulatory commission, board or other governmental administrative agency against or affecting the Borrower which if determined adversely to the Borrower could result in a material adverse effect on the Borrower’s business as presently conducted or its ability to perform its obligations hereunder or under the Notes.

5.7           Arms’ Length Transactions . The transactions evidenced by this Agreement and the Notes and the other documents and instruments delivered in connection herewith or therewith (a) are the result of arms’ length negotiations among the parties hereto, (b) are made on commercially reasonable terms and (c) are undertaken by the Borrower without any intent to hinder, delay or defraud any entity to which the Borrower is or may become indebted.

6.             Representations and Warranties of the Lenders . In connection with the transactions provided for herein, each Lender hereby represents and warrants to the Borrower that:

6.1           Authorization . This Agreement constitutes such Lender’s valid and legally binding obligation, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights and (ii) laws relating to the availability of specific performance, injunctive relief or other equitable remedies. Each Lender represents that the execution, delivery and performance of this Agreement has been duly authorized and approved by such Lender.

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6.2           Purchase Entirely for Own Account . Each Lender acknowledges that this Agreement is made with Lender in reliance upon such Lender’s representation to the Borrower that the Notes, the Conversion Shares, and any Common Stock issuable upon conversion of the Conversion Shares (collectively, the "Securities") will be acquired for investment for Lender’s own account, as principal and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that such Lender has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, each Lender further represents that such Lender does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Securities.

6.3           Disclosure of Information . Each Lender acknowledges that he or it has received all the information, documents and materials he or it considers necessary or appropriate for deciding whether to acquire the Notes. Each Lender confirms that he or it has made such further investigation of the Borrower as was deemed appropriate to evaluate the merits and risks of this investment. Each Lender further represents that he or it has had an opportunity to ask questions and receive answers from the Borrower regarding the terms and conditions of the offering of the Notes.

6.4           Investment Experience . Each Lender is an investor in securities of companies in the development stage and acknowledges that he or it is able to fend for itself, can bear the economic risk of its investment and