SUBSCRIPTION AGREEMENT
This Subscription Agreement ("Agreement"), dated as of November 3,
2004, between Mountains West Exploration, Inc. , ("MWEX") a New Mexico
Corporation, and Sky Blue Ventures, LLC (the "Buyer").
W I T N E S S E T H:
A. WHEREAS, MWEX is a corporation duly organized under the laws of the
State of New Mexico and Seller is the principal shareholder and creditor.
B. WHEREAS, Buyers wish to purchase an aggregate of 12,980,729 shares of
common stock from MWEX from MWEX (the "Shares"), and MWEX desires to sell the
Shares to Buyers pursuant to this agreement.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
The Consideration
1.1 Subject to the conditions set forth herein, MWEX shall sell to Buyers
and Buyers shall purchase post reverse split (post reverse split) common shares
from Seller. The aggregate purchase price for the shares to be paid by Buyers to
Seller is $25,000 (the "Consideration") of which $25,000 is herewith paid as
full consideration for the purchase of the shares.
ARTICLE II
Closing and Issuance of Shares
2.1 The subscription for New Shares is granted by MWEX for 12,980,729
shares to Buyers upon deposit of the consideration of $25,000 in escrow for the
subscription. The New Shares are hereby subscribed are to be issued immediately.
2.2 Closing hereunder shall be completed by release from escrow of the cash
consideration, the loan proceeds and share certificates on or before November 4,
2004 at 5:00 p.m. MDT ("Closing Date") subject to satisfaction of the terms and
conditions set forth herein. Consideration may be delivered by Federal Express
or wire transfers, and any closing documents may be delivered by facsimile,
Federal Express or other appropriate means.
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ARTICLE III
Representations, Warranties and Covenants of MWEX
MWEX and Seller hereby, represents, warrants and covenants to Buyers as
follows:
3.1 MWEX is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Mexico, and has the corporate power
and authority carry on its business. The Articles of Incorporation and
Amendments and Bylaws of MWEX, which will be delivered to Buyers at closing, are
complete and accurate, and the minute books of MWEX, copies of which have also
been delivered to Buyers, contain a record, which is complete and accurate in
all material respects, of all meetings, and all corporate actions of the
shareholders and Board of Directors of MWEX.
3.2 The authorized capital stock of MWEX consists of 50,000,000 shares of
common stock. There are 37,019,271 shares (approximately) of Common Stock of
MWEX issued and outstanding as of date hereof and will be prior to. All such
shares of capital stock of MWEX are validly issued, fully paid, non-assessable
and free of preemptive rights. MWEX has no outstanding warrants, or other rights
to purchase, or subscribe to, or other securities convertible into or
exchangeable for any shares of capital stock of MWEX, or contracts or
arrangements of any kind relating to the issuance, sale or transfer of any
capital stock or other equity securities of MWEX. This Agreement has been duly
authorized, validly executed and delivered on behalf of MWEX and is a valid and
binding agreement and obligation of MWEX enforceable against the parties in
accordance with its terms, subject to limitations on enforcement by general
principles of equity and by bankruptcy or other laws affecting the enforcement
of creditors' rights generally, and MWEX has complete and unrestricted power to
enter into and to consummate the transactions contemplated by this Agreement.
3.3 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated herein by
MWEX will conflict with or result in a breach or violation of the Articles of
Incorporation or Bylaws of MWEX, or of any material provisions of any indenture,
mortgage, deed of trust or other material agreement or instrument to which MWEX
is a party, or of any material provision of any law, statute, rule, regulation,
or any existing applicable decree, judgment or order by any court, federal or
state regulatory body, administrative agency, or other governmental body having
jurisdiction over MWEX, or any of its material properties or assets, or will
result in the creation or imposition of any material lien, charge or encumbrance
upon any material property or assets of MWEX pursuant to the terms of any
agreement or instrument to which MWEX is a party or by which MWEX may be bound
or to which any of MWEX property is subject and no event has occurred with which
lapse of time or action by a third party could result in a material breach or
violation of or default by MWEX.
3.4 There is no claim, legal action, arbitration, governmental
investigation or other legal or administrative proceeding, nor any order, decree
or judgment in progress, pending or in effect, or to the best knowledge of MWEX
threatened against or relating to MWEX or affecting any of its assets,
properties, business or capital stock (except lawsuits with forced pooling
parties). There is no continuing order, injunction or decree of any court,
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arbitrator or governmental authority to which MWEX is a party or by which MWEX
or its assets, properties, business or capital stock are bound.
3.5 MWEX has accurately prepared and filed all federal, state and other tax
returns required by law, domestic and foreign, to be filed by it through its
fiscal 2003 year and has paid or made provisions for the payment of all taxes
shown to be due and all additional assessments, and adequate provisions have
been and are reflected in the financial statements of MWEX for all current taxes
and other charges to which MWEX is subject and which are not currently due and
payable. None of the Federal income tax returns of MWEX have been audited by the
Internal Revenue Service or other foreign governmental tax agency. MWEX has no
knowledge of any additional assessments, adjustments or contingent tax liability
(whether federal or state) pending or threatened against MWEX for any period,
nor of any basis for any such assessment, adjustment or contingency.
3.6 MWEX has delivered to Buyers unaudited financial statements for the
period ended June 30, 2004. All such statements, herein sometimes called "MWEX
Financial Statements" are complete and correct in all material respects and,
together with the notes to these financial statements, present fairly the
financial position and results of operations of MWEX for the periods indicated
within the knowledge of MWEX and/or Seller. All financial statements of MWEX
have been prepared in accordance with generally accepted accounting principles.
3.7 As of the date hereof, MWEX, represents and warrants that all
outstanding indebtedness of MWEX is as shown on the financial statements
attached hereto (the updated statements), except debts shown in June 30, 2004
financial statements, and accruals since December 31, 2003. Any and all accruals
to officers and directors shall be waived and released by each officer or
director, in writing at closing.
3.8 Since the dates of the updated MWEX Financial Statements, there have
not been any material adverse changes in the business or condition, financial or
otherwise, of MWEX within the knowledge of MWEX and/or Seller. MWEX does not
have any liabilities, commitments or obligations, secured or unsecured except as
shown on updated financials (whether accrued, absolute, contingent or
otherwise), and except for accruals, for legal fees and costs, consulting fees
and costs of this transaction.
3.9 MWEX is not a party to any contract performable in the future.
3.10 The representations and warranties of MWEX and Seller shall be true
and correct as of the date hereof.
3.11 MWEX has delivered to Buyers, all of its corporate books and records
for review, and will turn over all original corporate records at closing
3.12 MWEX has no employee benefit plan in effect at this time.
3.13 No representation or warranty by MWEX or the Seller in this Agreement,
or any certificate delivered pursuant hereto contains any untrue statement of a
material fact or omits to state any material fact necessary to make such
representation or warranty not misleading.
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3.14 Buyer has received copies of Form 10KSB as filed with the Securities
and Exchange Commission ("SEC") which included audits for the year ended
December 31, 2003 and each of its other reports to shareholders filed with the
SEC through the period of June 30, 2004. MWEX is a registered company under the
Securities Exchange Act of 1934, as amended and is current in its filings.
3.15 MWEX has not made to Buyers any general solicitation or general
advertising regarding the shares of MWEX common stock.
3.16 MWEX has incurred no liabilities except as shown on the financial
statements or referenced in 3.7 hereof and fees in conjunction with this
transaction.
3.17 It is a requirement that the New Share Purchase proceeds shall be used
to pay on going reporting and maintenance costs.
Procedure for Closing
4.1 On August 15, the subscription shall be consummated after satisfaction
of all conditions precedent set forth in Article V and VIII, and MWEX common
stock certificates for the 12,980,729 Purchase Shares shall be delivered, upon
receipt of the Consideration for the Subscription, together with issuance or
delivery of all other items, agreements, warranties, and representations set
forth in this Agreement.
ARTICLE V
Conditions Precedent to the
Consummation of the Purchase
The following are conditions precedent to the consummation of the Agreement
on or before the Closing Date:
5.1 MWEX shall have performed and complied with all of its respective
obligations hereunder which are to be complied with or performed on or before
the Closing Date.
5.2 No action, suit or proceeding shall have been instituted or shall have
been threatened before any court or other governmental body or by any public
authority to restrain, enjoin or prohibit the transactions contemplated herein,
or which might subject any of the parties hereto or their directors or officers
to any material liability, fine, forfeiture or penalty on the grounds that the
transactions contemplated hereby, the parties hereto or their directors or
officers, have violated any applicable law or regulation or have otherwise acted
improperly in connection with the transactions contemplated hereby, and the
parties hereto have been advised by counsel that, in the opinion of such
counsel, such action, suit or proceeding raises substantial questions of law or
fact which could reasonably be decided adversely to any party hereto or its
directors or officers.
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5.3 The representations and warranties made by MWEX in this Agreement shall
be true as though such representations and warranties had been made or given on
and as of the Closing Date, except to the extent that such representations and
warranties may be untrue on and as of the Closing Date because of changes caused
by transactions suggested or approved in writing by the Buyers.
ARTICLE VI
Termination and Abandonment
6.1 Anything contained in this Agreement to the contrary notwithstanding,
the Agreement may be terminated and abandoned at any time prior to or on the
Closing Date:
(a) By mutual consent of parties;
(b) By either party, if any condition set forth in Article V or any other
Article relating to the other party has not been met or has not been
waived;
(c) By Buyers, if any suit, action, or other proceeding shall be pending
or threatened by the federal or a state government before any court or
governmental agency, in which it is sought to restrain, prohibit, or
otherwise affect the consummation of the transactions contemplated
hereby;
(d) By Buyers, if there is discovered any material error, misstatement or
omission in the representations and warranties of another party;
(e) By MWEX, if the Subscription payment does not occur, through no
failure to act by MWEX, on November 4, 2004, or if Buyers fails to
deliver the consideration required herein;
(f) If all of the outstanding liabilities fees and accruals cannot be
settled at closing;
6.2 Any of the terms or conditions of this Agreement may be waived at any
time by the party which is entitled to the benefit thereof, by action taken by
its Board of Directors provided; however, that such action shall be taken only
if, in the judgment of the Board of Directors taking the action, such waiver
will not have a materially adverse effect on the benefits intended under this
Agreement to the party waiving such term or condition.
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ARTICLE VII
Continuing Representations and
Warranties and Covenants
7.1 The respective representations, warranties, and covenants of the
parties hereto and agreements of the parties hereto shall survive after the
closing under this Agreement for a period of two years hereafter in accordance
with the terms thereof.
ARTICLE VIII
Miscellaneous
8.1 This Agreement embodies the entire agreement between the parties, and
there have been and are no agreements, representations or warranties among the
parties other than those set forth herein or those provided for herein, except
that a companion document, the Reorganization Agreement, has been executed
concurrently which contains numerous warranties and representations.
8.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one instrument.
8.3 All parties to this Agreement agree that if it becomes necessary or
desirable to execute further instruments or to make such other assurances as are
deemed necessary, the party requested to do so will use its best efforts to
provide such executed instruments or do all things necessary or proper to carry
out the purpose of this Agreement.
8.4 This Agreement may not be amended except by written consent of both
parties.
8.5 Any notices, requests, or other communications required or permitted
hereunder shall be delivered personally or sent by overnight courier service,
prepaid, addressed as follows:
To MWEX: Mountains West Exploration, Inc.
X.X. Xxx 000
Xxxxxxxx, XX 00000
To Seller: Mountains West Exploration, Inc.
X.X. Xxx 000
Xxxxxxxx, XX 00000
To Buyer: Xxxx Xxxx Ventures, LLC
0000 Xxxxxxxxx Xxxx., #000
Xxxxxxxx, XX 00000
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or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
8.6 No press release or public statement will be issued relating to the
transactions contemplated by this Agreement without prior approval of the Buyers
and Sellers. However, MWEX may issue at any time any press release or other
public statement it believes on the advice of its counsel it is obligated to
issue to avoid liability under the law relating to disclosures, but the party
issuing such press release or public statement shall make a reasonable effort to
give the other party prior notice of and opportunity to participate in such
release or statement.
8.7 This Agreement shall be governed by and construed in accordance with
and enforced under the laws of the state of Colorado applicable to all
agreements made hereunder. Venue and jurisdiction for any legal actions
hereunder shall be District Court in and for Jefferson County, Colorado.
8.8 In the event of a breach or default of this Agreement or any of the
continuing covenants hereunder which results in a party or any effected
shareholder who is a beneficiary of a surviving or continuing covenant,
commencing legal action, the prevailing party in such legal action shall be
entitled to an award of all legal fees and costs of the action, against the
non-prevailing party.
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IN WITNESS WHEREOF, the parties have executed this Agreement this 3rd day
of November, 2004.
MOUNTAINS WEST EXPLORATION, INC.
By: _________________________________
Name: _______________________________
Title: ________________________________
BUYERS:
Xxxx Xxxx Ventures, LLC
By:________________________________
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