EXHIBIT 10.27

FIFTH AMENDMENT TO PURCHASE AND SALE AGREEMENT

TRINITY BAY, REDFISH REEF, FISHERS REEF, NORTH POINT BOLIVAR FIELDS
IN GALVESTON AND CHAMBERS COUNTIES, TEXAS
 
THIS FIFTH AMENDMENT TO PURCHASE AND SALE AGREEMENT (the “Fifth Amendment”) is
dated effective as of April 12, 2007, and is made by and between Masters
Resources, LLC, and Masters Oil & Gas, LLC, both Texas limited liability
companies having their respective principal places of business at 9801
Westheimer, Suite 1070, Houston, Texas 77042 (collectively, “Masters”), and
Tekoil and Gas Gulf Coast, LLC, a Delaware limited liability company, having its
principal place of business at 5036 Dr. Phillips Blvd., Suite 232, Orlando,
Florida 32819 (“Buyer”) (Masters and Buyer are sometimes called collectively the
“parties” and individually “party”).

RECITALS

On November 13, 2006, Masters and Tekoil and Gas Corporation, a Delaware
corporation (“Original Buyer”), executed and delivered a Purchase and Sale
Agreement, dated effective as of October 1, 2006, covering the “Assets”
described therein. On December 29, 2006, Masters and Original Buyer executed and
delivered that certain First Amendment to Purchase and Sale Agreement also
covering the Assets. On February 8, 2007, the parties contemporaneously executed
and delivered that certain Second Amendment and that certain Assignment and
Assumption Agreement (the “Assignment”) by and between Buyer and Original Buyer.
On March 1, 2007, Masters and Buyer executed and delivered that certain Third
Amendment to Purchase and Sale Agreement also covering the Assets. On March 22,
2007 Masters and Buyer executed and delivered that certain Fourth Amendment to
Purchase and Sale Agreement also covering the Assets (the Purchase and Sale
Agreement, the First Amendment to Purchase and Sale Agreement, the Second
Amendment to the Purchase and Sale Agreement, the Third Amendment to the
Purchase and Sale Agreement and the Fourth Amendment to the Purchase and Sale
Agreement are herein collectively referred to as the “Original Agreement”). The
parties now desire to amend the Original Agreement in certain respects.
Accordingly, the parties agree as set out in this Fifth Amendment. (Unless
otherwise noted, defined terms used in this Fifth Amendment shall have the
meanings ascribed to them in the Original Agreement).

I. AMENDMENTS

A. The opening paragraph of Section 2.1 of the Original Agreement is deleted and
the  following is inserted in lieu thereof:

“2.1 Purchase Price
 
The Purchase Price for the Assets will be Forty Million and No/100 Dollars
($40,000,000.00), plus 4,000,000 shares of common stock of Original Buyer1 (the
“Common Stock”), plus the reservation at Closing by Masters of the overriding
royalty interests described in this Section 2.1 hereinbelow. Masters will accept
at Closing a promissory note by Original Buyer, in the form attached hereto as
Exhibit A, in the original principal amount of Ten Million and No/100 Dollars
($10,000,000.00) (the “Note”), representing ($10,000,000.00) of the
($40,000,000.00) monetary portion of the Purchase Price described above. The
Note shall be secured by a Pledge and Security Agreement covering the membership
interest of Old Buyer in Buyer, in the form attached hereto as Exhibit B.

The Note shall be convertible at the election of Masters into up to three
million shares of common stock of Original Buyer (the “Conversion Stock”) at a
conversion price of $3.33 per share, subject to the provisions of Section 2.1(B)
hereof.
 

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Both parties acknowledge that all references to “Buyer” in Section 2.1 (B) of
the Original Agreement shall be amended to “Original Buyer.”

 
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The One Million and No/100 Dollar ($1,000,000.00) set aside provided for in the
separately executed Erskine Indemnity Agreement between Masters and Buyer shall
at any time due thereunder be, at Buyer’s sole discretion, immediately applied
against amounts due under the Note at the time of Buyer’s request, and any other
amounts due Buyer under such Indemnity Agreement may, at Buyer's sole
discretion, be set off against amounts due under the Note. If the Erskine
dispute is not settled to the reasonable satisfaction of Buyer by the time the
Note is to be satisfied, Two Million Dollars ($2,000,000) of the obligations due
under the Note shall be suspended (and no default or interest accrual shal occur
onder the Note as a result thereof) pending resolution of such dispute to the
reasonable satisfaction of Buyer or application of the One Million dollar
($1,000,000) set aside and the additional One Million dollar ($1,000,000) offset
amount against such Two Million Dollar ($2,000,000) Note balance as further
provided in the Indemnity Agreement."

B.  The reference in the first line of Section 2.1(B) to 500,000 shares is
deleted and replaced with “4,000,000 shares and the Note (which may be converted
into the Conversion Stock as aforesaid)” and the second line of Section 2.1(B)
is amended by inserting between the words “”shares” and “shall” the following
phrase:

“(together with the Note and any shares of Conversion Stock into which any
portion of the Note is converted as described above)”

C.  The following is inserted as subsection (D) in Section 2.1 of the Original
Agreement:

“(D) At Closing Masters shall reserve an additional overriding royalty interest
(the “Additional ORRI”) for a three (3) year period from the date of Closing,
after which the Additional ORRI will expire. The Additional ORRI shall be equal
to 2% of 100% of the production from:

(1) those of the Wells shown as “proved undeveloped reserves” and “proved
non-producing reserves” and “proved developed producing” in the Reserve Report;
and

(2) any present or future well completed in and producing from any zone or
formation not presently producing or capable of producing and not documented in
the Reserve Reports.”

D. Section 8.1 of the Original Agreement is deleted and the following is
inserted in lieu  thereof:

“8.1 Date, Time and Place of Closing

Unless the parties agree otherwise in writing and subject to the provisions in
this Agreement, the completion of the transaction contemplated by this Agreement
(the “Closing”) will be held on or before April 25, 2007, at 10:00 a.m. Central
Standard Time (or such earlier date or time as the parties may agree). The
Closing will be held at the offices of Masters as set forth in the opening
paragraph of this Agreement (or such other place as the parties may agree). In
the event that the Closing does not occur before the close of business at 5:00
p.m. on April 25, 2007, Masters shall have the right to terminate this Agreement
and to retain the Deposit.”

E. That certain Subscription Agreement dated December 29, 2006 and executed by
and between Masters and Original Buyer is superseded entirely by a certain
Amended and Restated Subscription Agreement between Masters and Original Buyer
of even date herewith substantially in the form attached hereto as Exhibit C.

F. The Registration Rights Agreement executed December 29, 2006 by and between
Masters and Original Buyer in connection with the Subscription Agreement, is
subject to the amendments made herein and the Common Stock and the Conversion
Stock described herein shall constitute the “Registrable Securities” thereunder.

G. The following is inserted in Exhibit “A” of the Original Agreement:

“Lease No. TX-0894-0001
  Lessor: State of Texas M-105666
  Lease Date: 10/4/2005
 
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Recording Information: Recorded in the Official Public Records of Chambers and
Galveston Counties, Texas, in Chambers County under File No. 05 826 621 and in
Galveston County under File No. 2006001465, covering approximately 320 acres
being the NE/2 of State Tract 199, East Bay.

Lease No. TX-0894-0002
Lessor: State of Texas M-105667
Lease Date: 10/4/2005
 
Recording Information: Recorded in the Official Public Records of Chambers and
Galveston Counties, Texas, in Chambers County under File No. 05 826 615 and in
Galveston County under File No. 2006001464, covering approximately 320 acres
being the SW/2 of State Tract 199, East Bay.

Lease No. TX-0894-0003
Lessor: State of Texas M-106331
Lease Date: 4/4/2006
 
Recording Information: Recorded in the Official Public Records of Chambers
County, Texas under File No. _____________, covering approximately 160 acres
being the È/2 of the NE/2 of State Tract 226, Galveston Bay.”

H. The following is inserted in Exhibit “B” of the Original Agreement:

“State Tract No. 199 No. 1 Well located in Chambers/Galveston Counties, Texas.
Masters Resources, LLC Working Interest:
WI before Contract Depth of Initial Well: 6.667%
WI after contract depth of Initial Well: 5.00%.”

I. The following is inserted in Exhibit “C” of the Original Agreement:

“Joint Operating Agreement dated May 1, 2006 by and between Davis Petroleum
Corp. (“Operator”) and Masters Resources, LLC, et. al. covering the Dolphin
Prospect, being 800 acres in State Tracts 199 and 226 and the associated Area of
Mutual Interest.”

J. The following is inserted in Schedule 3.1 (H) of the Original Agreement.

“Joint Operating Agreement dated May 1, 2006 by and between Davis Petroleum
Corp. (“Operator”) and Masters Resources, LLC, et. al. covering the Dolphin
Prospect, being 800 acres in State Tracts 199 and 226 and the associated Area of
Mutual Interest.”

K. The reference to the Dolphin Prospect in Schedule 1.2 (A) of the Original
Agreement is deleted in its entirety from Schedule 1.2 (A).

II. MISCELLANEOUS

A. To the extent any provision of the Original Agreement, conflicts with any
provision of this Fifth Amendment, the provisions of this Fifth Amendment shall
control and be used to determine the obligations of the Parties.

B. The parties ratify confirm and adopt the Original Agreement as amended and
supplemented by this Fifth Amendment.

C. Facsimile delivery of this Fifth Amendment signed by each party to the other
shall be binding and effective the same as if an original signed copy has been
delivered by each party to the other. This Fifth Amendment may be executed in
multiple counterparts, each of which shall be considered an original and all of
which together shall constitute one and the same document.

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[SIGNATURE PAGE FOLLOWS]
 
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IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of
April 12, 2007.

TEKOIL AND GAS GULF COAST, LLC

By: Tekoil & Gas Corporation,
        Its Sole Member
 
By: /s/ Mark S. Western

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Name: Mark Western
Title: President
 

 MASTERS RESOURCES, LLC:    MASTERS OIL & GAS, LLC:            
 By: /s/ Richard M. Lee

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Name: Richard H. Lee
Title: Manager
 
 By: /s/ Richard M. Lee

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Name: Richard H. Lee
Title: Manager

 
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EXHIBIT A
 

PROMISSORY NOTE

PAYABLE TO MASTERS

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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR ANY APPLICABLE STATE LAW, AND MAY NOT BE SOLD,
DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A)
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS COVERING ANY SUCH TRANSACTION OR (B) SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION AND, IF REQUESTED BY THE MAKER, THE MAKER HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE MAKER THAT THE TRANSFER IS EXEMPT FROM
THE REGISTRATION PROVISIONS UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.

THIS NOTE IS SUBJECT TO THE PROVISIONS OF A SUBSCRIPTION AGREEMENT, INCLUDING
THEREIN CERTAIN RESTRICTIONS ON TRANSFER. A COMPLETE AND CORRECT COPY OF SUCH
AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY AND
WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE

CONVERTIBLE
PROMISSORY NOTE

$10,000,000.00   
______________ __, 2007

FOR VALUE RECEIVED, the undersigned, TEKOIL & GAS CORPORATION, a Delaware
corporation (“Maker”), promises to pay to the order of MASTERS RESOURCES, LLC
and MASTERS OIL & GAS, LLC, both Texas limited liability companies, an
individual referred to collectively as “Payee” or “Holder”), at the office of
Payee at 9801 Westheimer, Suite 1070, Houston, Texas 77042, or at such other
place as Holder may designate to Maker in writing from time to time, the
principal sum of TEN MILLION AND NO/100THS DOLLARS ($10,000,000.00), in lawful
money of the United States. Amounts payable hereunder shall be paid, at Payee’s
option as specified by Payee in writing from time to time, either by (i) check
delivered to the office of Payee or (ii) wire transfer of immediately available
funds to an account specified by Payee in writing from time to time. This Note
is referred to in and issued pursuant to that certain Subscription Agreement,
dated as of April ___, 2007, by and between Payee and Maker (as amended from
time to time, the “Agreement”).

This Note shall be convertible into shares of common stock of Maker (“Common
Stock”) at the option of Holder at the “Conversion Rate” described below of
obligation owed hereunder for each share of Common Stock, as further provided
below. The Conversion Rate shall be one (1) share of Common Shares per $3.33 in
amount due under the Note.

To convert all of any portion of this Note, the Holder must (a) complete and
manually sign the irrevocable conversion notice attached hereto (or complete and
manually sign a facsimile of such notice) and deliver such notice to the
Company, (b) if this Note is in certificated form, surrender such Note to the
Company, (c) furnish appropriate endorsements and transfer documents if required
by the Company and (d) pay any transfer or similar tax, if required. The date on
which the Holder satisfies all such requirements shall be deemed to be the date
on which this Note shall have been surrendered for conversion.

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Commencing with the thirty first (31st) day following the date hereof, the
unpaid principal balance of this Note shall accrue interest at the rate of six
percent (6%) simple interest, per annum. On the sixtieth (60th) day following
the date hereof (the “Maturity Date”), the entire unpaid principal balance,
together with accrued but unpaid interest, if any, shall be immediately due and
payable in full. If such day is not a business day, such payment shall be made
on the next succeeding day which is a business day and interest shall continue
to accrue thereon until paid. As used herein, “business day” means a day, other
than a Saturday, Sunday or legal holiday, on which commercial banks in Houston,
Texas are open for the general transaction of business.

The indebtedness evidenced hereby may be prepaid in whole or in part, at any
time and from time to time, without premium or penalty. Any such prepayments
shall be credited first to any accrued and unpaid interest and then to the
outstanding principal balance hereof.

The failure of Maker to pay any principal, interest or any other sums required
hereunder when due under this Note shall constitute a default. If a default
shall occur hereunder and such default shall continue for fifteen (15) business
days after notice thereof is delivered by Holder to Maker, then, and in such
event, the entire outstanding principal balance of the indebtedness evidenced
hereby, together with any other sums advanced hereunder and/or under any other
instrument or document now or hereafter evidencing, securing or in any way
relating to the indebtedness evidenced hereby, shall, at the option of Holder
become due and payable regardless of the stipulated date of maturity. Upon the
occurrence of a default as set forth herein, which default is not cured
following the giving of any applicable notice and within any applicable cure
period set forth herein, at the option of Holder the outstanding principal
balance hereof shall bear interest thereafter until paid at an annual rate (the
“Default Rate”) equal to the lesser of (i) ten percent (10%) per annum, or (ii)
the maximum rate of interest allowed to be charged under applicable law (the
“Maximum Rate”), regardless of whether or not there has been an acceleration of
the payment of principal as set forth herein.

This Note is secured by a certain Pledge and Security Agreement dated as of the
date hereof relating to membership interests in Tekoil and Gas Gulf Coast, LLC,
a Delaware limited liability company, owned by Maker.

In the event this Note is placed in the hands of an attorney for collection, or
if Holder incurs any costs incident to the collection of the indebtedness
evidenced hereby, Maker and any endorsers hereof agree to pay to Holder an
amount equal to all such costs, including, without limitation, all reasonable
attorneys’ fees and all court costs.

Presentment for payment, demand, protest and notice of demand, protest and
nonpayment are hereby waived by Maker and all other parties hereto. No failure
to accelerate the indebtedness evidenced hereby by reason of a default
hereunder, acceptance of a past-due installment or other indulgences granted
from time to time, shall be construed as a novation of this Note or as a waiver
of such right of acceleration or of the right of Holder thereafter to insist
upon strict compliance with the terms of this Note or to prevent the exercise of
such right of acceleration or any other right granted hereunder or by applicable
law. No extension of the time for payment of the indebtedness evidenced hereby
or any installment due hereunder, made by agreement with any person now or
hereafter liable for payment of the indebtedness evidenced hereby, shall operate
to release, discharge, modify, change or affect the original liability of Maker
hereunder or that of any other person now or hereafter liable for payment of the
indebtedness evidenced hereby, either in whole or in part, unless Holder agrees
otherwise in writing. This Note may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.

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All agreements herein made are expressly limited so that in no event whatsoever,
whether by reason of advancement of proceeds hereof, acceleration of maturity of
the unpaid balance hereof or otherwise, shall the amount paid or agreed to be
paid to Holder for the use of the money advanced or to be advanced hereunder
exceed the Maximum Rate. If, from any circumstances whatsoever, the fulfillment
of any provision of this Note or any other agreement or instrument now or
hereafter evidencing, securing or in any way relating to the indebtedness
evidenced hereby shall involve the payment of interest in excess of the Maximum
Rate, then, ipso facto, the obligation to pay interest hereunder shall be
reduced to the Maximum Rate; and if from any circumstance whatsoever, Holder
shall ever receive interest, the amount of which would exceed the amount
collectible at the Maximum Rate, such amount as would be excessive interest
shall be applied to the reduction of the principal balance remaining unpaid
hereunder and not to the payment of interest. This provision shall control every
other provision in any and all other agreements and instruments existing or
hereafter arising between Maker and Holder with respect to the indebtedness
evidenced hereby.

This Note is intended as a contract under and shall be construed and enforceable
in accordance with the laws of the State of Texas, and shall be enforceable in a
court of competent jurisdiction in the State of Texas, regardless of in which
state this Note is being executed.

HOLDER AND MAKER HEREBY KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COUNSEL
WAIVE TRIAL BY JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS,
WHETHER IN CONTRACT OR TORT OR OTHERWISE, AT LAW OR IN EQUITY, ARISING OUT OF OR
IN ANY WAY RELATING TO THIS NOTE.

As used herein, the terms “Maker” and “Holder” shall be deemed to include their
respective successors, legal representatives and assigns, whether by voluntary
action of the parties or by operation of law.
 

   
 MAKER:
 
TEKOIL & GAS CORPORATION
a Delaware corporation
        By:      

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Mark Western
Chief Executive Officer

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EXHIBIT A TO PROMISSORY NOTE

CONVERSION NOTICE

To:          Tekoil & Gas Corporation
                5036 Dr. Phillips Boulevard
                 Suite 232
                 Orlando, Florida 32819

The undersigned hereby elects to:

Convert $_________ in amount due for ______________ (conversion amount divided
by Conversion Rate) shares of Common Stock of Tekoil & Gas Corporation, pursuant
to the terms of the attached Promissory Note and reduction of the amount due
undersigned under Promissory Note by the number of shares of Common Stock
indicated above multiplied by the Conversion Rate.
 
The Holder reaffirms all covenants, representations and warranties made by it in
a certain Amended and Restated Subscription Agreement dated as of April _____,
2007, and agrees that all such covenants, representations and warranties shall
be deemed to be have been re-made as of the date hereof.

     
Date:_______________________  
HOLDER:  
   
   
  By:    

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Name:
Address:

 
Name in which shares should be registered:
_______________________________________

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EXHIBIT B TO FIFTH AMENDMENT

PLEDGE AND SECURITY AGREEMENT
(Pledge of Membership Interest)

This PLEDGE AND SECURITY AGREEMENT (the “Agreement”), is executed to be
effective as of April ___, 2007 (the “Effective Date”), by and between TEKOIL &
GAS CORPORATION a Delaware corporation (“Pledgor”), and MASTERS RESOURCES, LLC
and MASTERS OIL & GAS, LLC, both Texas limited liability companies
(collectively, “Secured Party”).

WHEREAS, Tekoil & Gas Gulf Coast, LLC, a Delaware limited liability company (the
“Company”), has executed a Convertible Promissory Note of even date herewith, in
the original principal amount of Ten Million and No/100 Dollars ($10,000,000.00)
payable to the order of Secured Party (the “Note”);

WHEREAS, the Board of Directors of Pledgor has determined that Pledgor’s
execution, delivery and performance of this Agreement may reasonably be expected
to benefit Pledgor, directly or indirectly, and are in the best interests of
Pledgor;

WHEREAS, to secure Company’s obligations under the Note, Pledgor has agreed to
pledge and grant to Secured Party a security interest in and to the Pledged
Membership Interest (as hereinafter defined), as provided herein;

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

1.  Grant of Security Interest. As collateral security for the full and timely
payment, performance and observance of the Obligations (as defined in Section
2(a) below), Pledgor hereby pledges and grants to Secured Party a security
interest in and to, and assigns, transfers, pledges and conveys to Secured
Party, all of Pledgor’s right, title and interest in and to the following
described collateral (collectively, the “Collateral”), now owned or hereafter
acquired, wherever located, howsoever arising or created, and whether now
existing or hereafter arising, existing or created, as security for the
Obligations:

(a) All of Pledgor’s right, title and interest now or hereafter accruing under
the First Amended and Restated Operating Agreement of Tekoil & Gas Gulf Coast,
LLC, as amended (the “Operating Agreement”), with respect to any interest now
owned or hereafter acquired or owned by Pledgor in the Company, and including,
without limitation, all distributions, proceeds, fees, preferences, payments or
other benefits, which Pledgor now is or may hereafter become entitled to receive
with respect to such interests in the Company (collectively, the “Pledged
Membership Interest”);

(b) All of Pledgor’s distribution rights, income rights, liquidation interest,
accounts, contract rights, general intangibles, notes, instruments, drafts and
documents relating to the Pledged Membership Interest; and

(c) All substitutions, replacements, products, proceeds, income and profits
arising from any of the foregoing.  
 
2. Definitions.

(a) The term “Obligations” as used herein shall mean (i) the payment of the
Note, together with interest on any and all amounts due thereunder as provided
therein, (ii) all costs of collection and enforcement in connection with the
Note including, without limitation, reasonable attorneys’ fees, and (iii) all
other amounts payable by the Company or Pledgor to Secured Party described in
this Agreement or in the instruments or understandings evidencing or securing
the Note.

(b) Subject to the further express definitions set forth herein, all terms used
herein which are defined in Article 9 of the Texas Business and Commerce Code
(the “Code”), shall have the same meaning herein as in the Code.

3. Pledgor’s Representations and Warranties. Pledgor warrants and agrees with
Secured Party that:

3.01. Payment. Pledgor will not sell or otherwise dispose of any of the
Collateral without the express written permission of Secured Party. There does
not exist any certificate that represents the Pledged Membership Interests as
such interests are uncertificated.
 
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3.02. Information. The address of Pledgor is the address set forth beside
Pledgor’s signature on this Agreement. Pledgor shall notify Secured Party ten
(10) days in advance of any change in Pledgor’s address.

3.03. Other Liens. Except as evidenced hereby or executed in connection
herewith, there is no certificate of title, financing statement or other writing
showing any lien on, or security interest in, the Collateral. Pledgor is the
lawful owner and holder of the Collateral and has full power and lawful
authority to grant to Secured Party a security interest in the Collateral as
provided in this Agreement. Pledgor will defend the Collateral against the
claims and demands of all third persons.

3.04. Covenants Concerning the Collateral. Pledgor shall not sell, transfer,
mortgage or otherwise encumber any Collateral in any manner without first
obtaining the written consent of Secured Party, which consent may be withheld in
Secured Party’s sole and absolute discretion. Any written consent to any such
sale, mortgage, transfer or encumbrance shall not be construed to be a waiver of
this provision in respect of any subsequent proposed sale, mortgage, transfer or
encumbrance.

3.05. Further Assurances. Pledgor will do, make, procure, execute and deliver
all acts, things, writings and assurances as Secured Party may at any time
reasonably request to perfect, protect, assure or enforce its interest, rights
and remedies created by or arising in connection with this Agreement, including
the execution of financing statements.

3.06. Time of the Essence. Pledgor agrees that in performing any act under this
Agreement, time shall be of the essence and Secured Party’s acceptance of
partial or delinquent payments under the Notes by the Company, or failure of
Secured Party to exercise any right or remedy, shall not be a waiver of any
obligation of Pledgor or right of Secured Party or constitute a waiver of any
similar or dissimilar default subsequently occurring.

4. Event of Default. Pledgor shall be in “Default” under this Agreement if
Pledgor defaults in the performance of any obligation, covenant, representation
or warranty contained in this Agreement, a default occurs in payment of or
otherwise under and terms or provisions of the Note, or any party (other than
Secured Party) to any agreement executed in connection with or securing the
Note, including, without limitation, any guaranty, any security agreement, and
any agreement relating to the modification, renewal, extension or rearrangement
of the Note, fails to perform any obligation, covenant, representation or
warranty contained therein.

5. Rights of Secured Party.

5.01. Remedies After Default.

(a) If any Default shall have occurred and is continuing, Secured Party, at its
option, without demand, presentment, notice of acceleration, intention to
accelerate or other notice (which are fully waived) may:

(1) exercise all the rights of a secured party under the Code.

(2) sell all of the Collateral or any part thereof at public or private sale or
at any broker’s board or on any securities exchange, for cash, at such price or
prices as Secured Party may reasonably deem satisfactory. Upon Secured Party’s
demand, Pledgor will take all steps necessary to prepare the Collateral for and
otherwise assist in any proposed disposition of the Collateral. Any holder of
the indebtedness secured hereby may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations, at any private sale) and
thereafter hold the same absolutely, free from any right or claim of whatsoever
kind. Any holder of the Collateral shall have the right to offset the amount of
its bid against an equal amount of the secured indebtedness held by such holder.
 
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Pledgor agrees that, because of the Securities Act of 1933, as amended, or any
other laws or regulations, and for other reasons, there may be legal and/or
practical restrictions or limitations affecting Secured Party in any attempts to
dispose of certain portions of the Collateral and for the enforcement of its
rights. For these reasons, Secured Party is hereby authorized by Pledgor, but
not obligated, upon the occurrence and during the continuation of a Default, to
sell all or any part of the Collateral at private sale, subject to investment
letter or in any other manner which will not require the Collateral, or any part
thereof, to be registered in accordance with the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder, or any other laws,
at a reasonable price at such private sale or other distribution in the manner
mentioned above. Pledgor understands that Secured Party may in its discretion
approach a limited number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Collateral, or any part or party
thereof, than would otherwise be obtainable if such Collateral were either
afforded to a larger number or potential purchasers, or registered or sold in
the open market. Pledgor agrees that such private sale shall be deemed to have
been made in a commercially reasonable manner, and that Secured Party has no
obligation to delay the sale of any Collateral to permit the issuer thereof to
register it for public sale under any applicable federal or state securities
laws.

Secured Party is authorized, in connection with any such sale (i) to restrict
the prospective bidders on or purchasers of any of the Collateral to a limited
number of sophisticated investors who will represent and agree that they are
purchasing for their own account for investment and not with a view to the
distribution or sale of any of such Collateral and (ii) to impose such other
limitations or conditions in connection with any such sale as Secured Party
reasonably deems necessary in order to comply with applicable law. Pledgor
covenants and agrees that it will execute and deliver such documents and take
such other action as Secured Party reasonably deems necessary in order that any
such sale may be made in compliance with applicable law. Upon any such sale,
Secured Party shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any such sale shall
hold the Collateral so sold absolutely, free from any claim or right of Pledgor
of whatsoever kind, including any equity or right of redemption of Pledgor.
Pledgor, to the extent permitted by applicable law, hereby specifically waives
all rights of redemption, stay or appraisal which it has or may have under any
law now existing or hereafter enacted.

Pledgor agrees that ten (10) days written notice from Secured Party to Pledgor
of Secured Party’s intention to make any such public or private sale or sale at
a broker’s board or on a securities exchange shall constitute “reasonable
notification” within the meaning of the Code. Such notice shall (1) in case of a
public sale, state the time and place fixed for such sale, (2) in case of sale
at a broker’s board or on a securities exchange, state the board or exchange at
which such a sale is to be made and the day on which the Collateral, or the
portion thereof so being sold, will first be offered to sale at such board or
exchange and (3) in the case of a private sale, state the day after which such
sale may be consummated. Any such public sale shall be held at such time or
times within ordinary business hours and at such place or places as Secured
Party may fix in the notice of such sale. At any such sale, the Collateral may
be sold in one lot as an entirety or in separate parcels, as Secured Party may
reasonably determine. Secured Party shall not be obligated to make any such sale
pursuant to any such notice. Secured Party may, upon written notice to Pledgor,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so adjourned.

Secured Party, instead of exercising the power of sale herein conferred upon it,
may proceed by a suit or suits at law or in equity to foreclose the security
interests and sell the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction.

(b) Without limiting the foregoing, or imposing upon Secured Party any
obligations or duties not required by applicable law, Pledgor acknowledges and
agrees that, in foreclosing upon any of the Collateral, or exercising any other
rights or remedies provided Secured Party hereunder or under applicable law,
Secured Party may, but shall not be required to: (1) qualify or restrict
prospective purchasers of the Collateral by requiring evidence of sophistication
and/or creditworthiness, and requiring the execution and delivery of
confidentiality agreements or other documents and agreements as a condition to
such prospective purchasers’ receipt of information regarding the Collateral or
participation in any public or private foreclosure sale process; (2) provide to
prospective purchasers the Operating Agreement and business and financial
information regarding the Company available in the files of Secured Party at the
time of commencing the foreclosure process, without the requirement that Secured
Party obtain, or seek to obtain, any updated business or financial information,
or verify, or certify to prospective purchasers, the accuracy of any such
business or financial information; (3) sell at foreclosure all, or a portion but
not all, of the rights, titles and interests of Pledgor in the Company; it being
further specifically acknowledged by Pledgor that limitations or potential
limitations on the transfer of certain Collateral under the Regulations or other
applicable agreements or law may limit Secured Party’s right or ability to
foreclose upon or sell certain rights, titles and interests of Pledgor in the
Company; (4) offer for sale, and sell, the Pledged Membership Interests either
with, or without, first employing an appraiser, investment banker, or broker
with respect to the evaluation of Collateral, the solicitation of purchasers for
Collateral, or the manner of sale of Collateral.
 
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(c) Secured Party shall have all rights, remedies and recourse granted in the
Note, this Agreement or existing at common law or equity (including specifically
those granted by the Code), and such rights and remedies (1) shall be cumulative
and concurrent, (2) may be pursued separately, successively or concurrently
against Pledgor and any party obligated to pay or perform the Obligations, any
of the Collateral, or any other security for any of the Obligations, at the sole
discretion of Secured Party, and (3) may be exercised as often as occasion
therefor shall arise, it being agreed by Pledgor that the exercise or failure to
exercise any such rights or remedies shall in no event be construed as a waiver
or release thereof or of any other right, remedy or recourse.

(d) Notwithstanding a foreclosure upon any of the Collateral or exercise of any
other remedy by Secured Party in connection with a Default, Pledgor shall not be
subrogated thereby to any rights of Secured Party against the Collateral or any
other security for any of the Obligations. Pledgor shall not be deemed to be the
owner of any interest in any of the Obligations until all of the Obligations
have been paid to Secured Party and are fully performed and discharged.

(e) All recitals in any instrument of assignment or any other instrument
executed by Secured Party incident to the sale, transfer, assignment or other
disposition or utilization of the Collateral or any part thereof hereunder shall
be rebuttably presumptive evidence of the matters stated therein and all
prerequisites of such sale or other action contained in such recitals shall be
presumed to have been performed or to have occurred.

(f) Notwithstanding anything to the contrary contained herein, Pledgor shall
retain all voting rights with respect to the Pledged Membership Interest,
including after a Default has occurred hereunder.

5.02. No Waiver. Pledgor may remedy any Default and the Secured Party may waive
any Default without waiving any other Default. The remedies of Secured Party are
cumulative, and the exercise or partial exercise of any one or more of the
remedies provided for herein shall not be construed as a waiver of any of the
other remedies of Secured Party. No delay of Secured Party in exercising any
power or right shall operate as a waiver thereof. Secured Party’s failure to
assert a security interest on all or any portion of the Collateral at any time,
does not waive any security interest, any right of Secured Party to assert any
security interest or any other right, power or remedy of Secured Party with
respect to the Collateral as to which Secured Party has failed to assert a
security interest or any other Collateral.

5.03. Assignment. This Agreement, the Obligations or Secured Party’s rights
hereunder may not be assigned by Secured Party without the prior written consent
of Pledgor.

6. Additional Agreements.

6.01. Miscellaneous. “Secured Party” and “Pledgor” as used in this Agreement
include the heirs, successors, legal representatives, receivers and assigns of
those parties. The divisions of this Agreement into sections and subsections and
the titles thereto have been made for convenience only and shall be given no
substantive meaning or significance whatever in construing the terms and
provisions of this Agreement.

6.02. Choice of Law. UNLESS EXPRESSLY PROVIDED ELSEWHERE IN THIS AGREEMENT, THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.

6.03. Illegality. If any provision of this Agreement is rendered or declared
invalid, illegal or ineffective by reason of any existing or subsequently
enacted legislation or by decree of a court of competent jurisdiction, such
legislation or decree shall not impair, invalidate or nullify the remainder of
this Agreement which shall remain in full force and effect.

6.04. Amendments. No modification, variation or amendment of or to this
Agreement shall be effective unless in writing signed by Pledgor and Secured
Party.

6.05. Notice. Any notice or demand to Pledgor or Secured Party hereunder or in
connection herewith may be given and shall conclusively be deemed and considered
to have been given and received upon the deposit thereof in the mail, in
writing, duly stamped and mailed by certified mail, return receipt requested and
addressed to the address set forth on this Agreement, or at such other address
as Pledgor or Secured Party may designate to the other in writing.
 
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6.06. Counterparts. This Assignment may be executed simultaneously or in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, Pledgor and Secured Party have executed this Agreement on
the dates set forth below their signatures, to be effective as of the Effective
Date.

                Address for Notice:     PLEDGOR:        

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TEKOIL & GAS CORPORATION,
a Delaware corporation

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By:

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Mark Western, Chief Executive Officer
            Date:      

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        Address for Notice:     SECURED PARTY:        

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MASTERS RESOURCES, LLC,
a Texas limited liability company

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By:

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Name:

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Title:

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Date: 

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MASTERS OIL & GAS, LLC,
a Texas limited liability company

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By:

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Name: 

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Title: 

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Date: 

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EXHIBIT C TO FIFTH AMENDMENT

TEKOIL & GAS CORPORATION
 
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT
 
This Agreement supersedes and replaces a certain Subscription Agreement executed
by the parties hereto as of December 29, 2006.
 
THE COMMON STOCK HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE
SECURITIES LAWS. THE COMMON STOCK MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
 
1.  Subscription. Subscriber (as identified on the signature page attached
hereto) hereby subscribes for and agrees to be issued Four Million (4,000,000)
shares of Common Stock (the “Common Stock”) of Tekoil & Gas Corporation, a
Delaware corporation (the “Company”), a Promissory Note (the “Note”) in the
amount of Ten Million Dollars ($10,000,000), which Note may be converted to up
to Three Million shares (3,000,000) shares of common stock of the Company (the
“Conversion Stock”) at a conversion price of $3.33 per share , all as
consideration under the “PSA” described below. The Common Stock, the Note and
the Conversion Stock are referred to together as the “Securities”.
 
2.  Consideration. The Securities constitute a portion of the consideration
payable by the Company to Subscriber under a certain Purchase and Sale Agreement
dated November ___, 2006, and as amended December 29, 2006, in connection with
the acquisition and sale of certain assets described therein, as amended through
the date hereof (referred to together as the “PSA”). Capitalized terms used
herein and not otherwise defined have the meanings ascribed to them in the PSA.
 
3.  Subscriber's Representations and Warranties. Subscriber represents,
warrants, acknowledges and agrees that:
 
(a)  Subscriber is a resident of the state indicated on the signature page
hereof, is legally competent to execute this Subscription Agreement, and:
 
(i)  if Subscriber is an individual, has his or her principal residence in such
state;
 
(ii)  if Subscriber is a corporation, partnership, trust, limited liability
company or other form of business organization, has its principal office in such
state; or
 
(iii)  if Subscriber is a corporation, partnership, trust, limited liability
company or other form of business organization, Subscriber has not been
organized for the specific purpose of acquiring the Common Stock.
 
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(b)  Subscriber has not been offered the Securities by any form of general
solicitation or general advertising, including but not limited to any
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
 
(c)  Subscriber has had access during the course of this transaction and prior
to the issuance of the Securities to all information necessary to enable
Subscriber to evaluate the merits and risks of a prospective investment in the
Company (including, without limitation, the periodic and other reports filed by
the Company with the U.S. Securities and Exchange Commission (the “SEC”) under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and
Subscriber has had the opportunity to ask questions of and receive answers from
the officers and directors of the Company, or a person or persons acting on its
behalf, concerning the terms and conditions of the offering and all questions
raised by Subscriber have been answered to the full satisfaction of Subscriber.
 
(d)  There are substantial restrictions on the transferability of the Securities
and, accordingly, Subscriber will need to bear the economic risk of the
investment in the Securities for an indefinite period of time and will not be
readily able to liquidate the investment in case of an emergency.
 
(e)  Subscriber understands that the Company has a limited financial or
operating history, each of the Securities is a speculative investment which
involves a high degree of financial risk, and there is no assurance of any
economic, income or tax benefit from such investment.
 
(f)  In making this investment, Subscriber is relying solely upon the advice of
Subscriber's personal tax advisors, and not the Company nor its advisers and
counsel, with respect to the tax aspects of an investment in the Securities.
 
(g)  If Subscriber is a corporation, partnership, trust, limited liability
company, employee benefit plan or other entity, Subscriber is authorized and
qualified to become a stockholder of the Company and the person signing this
Subscription Agreement on behalf of such entity has been duly authorized by such
entity to do so.
 
(h)  No representations or warranties have been made to Subscriber by the
Company or any officer, employee, agent or affiliate of the Company (other than
those set forth in the PSA), and Subscriber's investment decision has been based
solely upon Subscriber's independent evaluation and due diligence, if any, of
the Company.
 
(i)  Subscriber is experienced in evaluating and investing in early stage
companies such as the Company. Subscriber is experienced in business matters and
regards himself, herself or itself as a sophisticated investor able to evaluate
investment and financial information and to choose independent professional
advisors to assist in such evaluation and, either alone or with such advisers,
has such knowledge and experience in financial and business matters that
Subscriber is capable of evaluating the merits and risks of an investment in the
Securities and has the capacity to protect Subscriber’s own interests in
connection with Subscriber’s proposed investment in the Securities.
 
(j)  Subscriber’s aggregate commitments to investments that are not readily
marketable are not disproportionate to Subscriber’s net worth and an investment
in the Securities will not cause such aggregate commitment to become excessive.
Subscriber has adequate means of providing for Subscriber’s current needs and
possible personal and family contingencies. Subscriber will not be readily able
to liquidate the investment in the case of an emergency, and Subscriber has no
need for liquidity in this investment in the Company.
 
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(k)  Subscriber has a preexisting business or personal relationship with the
Company or with one or more of its officers or directors. Except for
Subscriber’s intention to distribute the shares (or cause them to be issued
directly) to its members, pro-rata, on condition that they make the
representations, warranties and agreements herein provided in favor of Company,
Subscriber is acquiring the Securities solely for Subscriber’s own account for
investment (and not for the account of any other person), and not with a view
to, or for, any resale, distribution, fractionalization or other transfer
thereof, and Subscriber has no present plans to enter into any contract,
undertaking, agreement or arrangement for any such resale, distribution,
fractionalization or transfer.
 
4.  Representations and Warranties Concerning Suitability and Accredited
Investor Status. Subscriber hereby represents and warrants to the Company that
Subscriber is an “Accredited Investor” (as defined under Regulation D as
promulgated and amended by the SEC pursuant to the Securities Act) on the basis
of the representations made by Subscriber to the Company below. Subscriber
hereby represents and warrants and agrees that:
 
(a)  Subscriber has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an investment in
the Company and has obtained sufficient information from the Company to evaluate
the merits and risks of an investment in the Company.
 
(b)  Subscriber has determined that the Securities are a suitable investment for
Subscriber. Subscriber is able to bear the economic risk of the investment in
the Company (including a complete loss thereof) and has adequate financial or
other means for providing for Subscriber's current needs and contingencies and
has no need for liquidity in this investment.
 
5.  Fees and Expenses. Subscriber shall pay for all its own fees and expenses in
connection with this subscription, including without limitation legal fees and
fees of its advisors and counsel, if any.
 
6.  Restrictions. The Subscriber will not at any time make any disposition of
any of the Securities except in accordance with applicable federal and state
securities laws and the legend set forth below. The certificates for the
Securities, the Note and the Conversion Stock to be issued to the undersigned
will bear a legend in substantially the following form:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933 OR SUCH LAWS.
 
In the event the Common Stock or Conversion Stock may be publicly resold under
the Registration Rights Agreement or otherwise under applicable securities laws,
Subscriber agrees that it will not publicly resell more than 250,000 shares
thereof per calendar week. In addition, during the period that the Note is
outstanding, subject to the limitations of the preceding sentence, which may be
waived by the Company in its sole discretion, no public re-sales of the Common
Stock may occur unless and until all Conversion Shares have been issued in
satisfaction of the Note. Subscriber agrees that a legend reflecting the
foregoing and reasonable transfer restrictions consistent therewith may be
placed on the Common Stock and Conversion Stock.
 
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7.  Miscellaneous. The terms and conditions contained in this Subscription
Agreement (together with the PSA and a certain Registration Rights Agreement
executed by the Company and Subscriber of even date herewith) constitute the
entire agreement between the parties with respect to the subject matter hereof
and supersede all previous agreements and understandings, whether oral or
written, between the parties hereto with respect to the subject matter hereof.
This Subscription Agreement shall be construed in accordance with and governed
by the laws of the State of Delaware. This Subscription Agreement may be amended
only by a writing executed by the Company and Subscriber.
 
IN WITNESS WHEREOF, Subscriber has executed this Subscription Agreement on the
date indicated on the signature page hereof.
 
[SIGNATURES ON NEXT PAGE]

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The undersigned Subscriber confirms and certifies that Subscriber has read this
entire Subscription Agreement and understands the provisions hereof, and that
the undersigned has executed this Subscription Agreement as of the date set
forth below.
 
DATED: April ____, 2007
 
Which will be held by Subscriber(s) in the following manner, if applicable:

  (     ) Community Property (     ) Joint Tenants with Right of Survivorship  
(     ) Tenants in Common (     ) Separate Property   (     )
Other: (e.g. individual, corporation, partnership, limited liability company,
trust, investment company). Please indicate:___________________.
 

Subscriber Signature(s)

        MASTERS RESOURCES, LLC     MASTERS OIL & GAS, LLC                

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Name and Title of Signatory if Subscriber is an entity
                     

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Signature    

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Signature of Joint Subscriber                

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Social Security or Tax ID Number     

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Social Security or Tax ID Number of Joint Subscriber                

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Address    

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Address of Joint Subscriber                 Reviewed and Advised By (if any):   
  Accepted By:        

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Subscriber’s Professional Advisor    
TEKOIL & GAS CORPORATION,
a Delaware corporation
               

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Name    

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Signature                

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Address     

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Name/Title

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Note: 
 
In the case of subscription by,
 

·  
Joint Tenants with Rights of Survivorship or Tenants in Common, all tenants must
execute this subscription,

 

·  
Husband and Wife, as community property, one signature only is required.

 

·  
A Trust, the Trustee must sign and a copy of the Trust Agreement should be
provided.

 

·  
A Partnership, a copy of the Statement of Partnership or the Partnership
Agreement should be provided, and execution must be by the number of partners
required therein to bind the Partnership.

 

·  
A Corporation, a resolution of the Board of Directors authorizing the
subscription and certified by the Secretary should be included.

 
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