Unassociated Document


    

      Exhibit
        10.59

    

    

      THIS
        LOAN AGREEMENT
        is dated
        24 October 2007

       

      BY
        AND
        BETWEEN:

       

      
        	
                (1)

              	
                Tri
                  Star Capital Ventures Limited,
                  a
                  limited liability company organised and registered under the laws
                  of the
                  British Virgin Islands with its registered office at 3rd Floor,
                  Omar Hodge
                  Building, Wickhams Cay 1, P.O. Box 362, Road Town, Tortola, British
                  Virgin
                  Islands (the “Lender”);
                  and

              


      

       

      
        	
                (2)

              	
                Tekoil
                  & Gas Corporation,
                  a
                  company organised and incorporated under the laws of the State
                  of
                  Delaware, with its registered office at 25025 Interstate 45 North,
                  Suite
                  525, The Woodlands, TX 77380, United States (the “Borrower”).

              


      

       

      IT
        IS AGREED
        as
        follows:

       

      
        	
                1.

              	
                DEFINITIONS
                  AND CONSTRUCTION

              


      

       

      
        	(a)	
                In
                  this Agreement, the following terms have the following
                  meanings:

              


      

       

      Business
        Day
        means
        any day other than a Saturday, a Sunday, or a day on which banking institutions
        are generally closed for business in the British Virgin Islands, Austria,
        or the
        United States of America.

       

      Deed
        of Guarantee
        shall
        mean those certain deeds of guarantee to be executed
        and delivered by each of the Guarantors to the Lender pursuant to Clause
        4
        hereof.

       

      Disbursement
        Date
        means
        the date on which the Lender advances any principal amount of the Loan to
        the
        Borrower in accordance with Clause 5 (Disbursement).

       

      Event
        of Default
        means
        any of the events specified in Clause 12 (Events of Default).

       

      Existing
        Liens
        means
        the Liens currently existing in favour of J. Aron & Company and its
        affiliates (and their successors and assigns) on the Borrower’s interests in,
        and rights with respect to, Tekoil and Gas Gulf Coast, LLC (including all
        proceeds, products, accessions and profits of or in respect
        thereof).

       

      Guarantors
        means
        each of (1) Mark Western, director, born 13 October 1962 in Great Yarmouth,
        England, UK and residing at 5539 Emerson Pointe Way, Orlando, FL 32819, USA
        (2)
        Gerald Goodman, director, born 29 March 1948 in New York, USA and residing
        at 7
        Briarwood Road, Rumson, NJ 07760, USA, (3) Frank Clear, director, born 15
        November 1954 in Port Elizabeth, South Africa and residing at 1901 Post Oak
        Blvd, Condo 703, Houston, TX 77056 United States and (4) Richard Creitzman,
        director, born London and residing at Flat 7, 22 Elm Park Gardens, London,
        SW10
        9NY.

       

      Indebtedness
        means
        any indebtedness for or in respect of moneys borrowed; any amount raised
        by
        acceptance under any acceptance credit facility; any amount raised pursuant
        to
        any note purchase facility or the issue of bonds, notes, debentures, loan
        stock
        or any similar instrument; any amount raised pursuant to any issue of shares
        which are expressed to be redeemable (other than solely at option of Borrower);
        any amount raised under any other transaction (including any forward sale
        or
        purchase agreement) having the commercial effect of a borrowing; and the
        amount
        of any liability in respect of any guarantee or indemnity for any of the
        items
        referred to above.

       

      Instalment
        shall
        have the meaning ascribed thereto in Clause 5 (Disbursement).

       

      Interest
        Payment Date
        shall
        have the meaning ascribed thereto in Clause 8 (Interest).

       

      Lien
        means
        any mortgage, pledge, lien, charge, encumbrance, assignment, hypothecation
        or
        security interest or any other agreement or arrangement having a similar
        effect.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Loan
        shall
        have the meaning ascribed thereto in Clause 2 (Loan).

       

      Final
        Repayment Date
        means 15
        April 2009 or such other date as may be expressly agreed by the Lender and
        the
        Borrower in writing.

       

      Repayment
        Date
        means,
        with respect to any principal amount of the Loan, the date on which such
        principal amount is repaid to the Lender in accordance with this
        Agreement.

       

      Tax
        means
        any tax, levy, impost, duty or other charge or withholding of a similar nature
        from a payment under this Agreement.

       

      United
        States dollars
        or
US$
        means
        the lawful currency for the time being of the United States of
        America.

       

      
        	(b)	
                In
                  this Agreement, unless the contrary intention appears, a reference
                  to:

              


      

       

      
        	
              	(i)	
                a
                  person
                  includes any individual, company, unincorporated association or
                  body of
                  persons (including a partnership, joint venture or consortium),
                  government, state, agency, international organisation or other
                  entity;

              


      

       

      
        	
              	(ii)	
                a
                  provision of law is a reference to that provision as amended or
                  re-enacted;

              


      

       

      
        	
              	(iii)	
                a
                  Clause or a Schedule is a reference to a clause of or a schedule
                  to this
                  Agreement; and

              


      

       

      
        	
              	(iv)	
                a
                  person includes its successors and
                  assigns.

              


      

       

      
        	(c)	
                The
                  index to and the headings in this Agreement are for convenience
                  only and
                  are to be ignored in construing this
                  Agreement.

              


      

       

      
        	
                2.

              	
                LOAN 

              


      

       

      The
        Lender shall make available to the Borrower, and the Borrower shall borrow
        from
        the Lender, a Loan in an aggregate principal amount equal to US$8,500,000.00
        (Eight Million Five Hundred Thousand United States dollars) (the “Loan”)
        on the
        terms and subject to the conditions of this Agreement.

       

      
        	
                3.

              	
                PURPOSE
                  OF LOAN

              


      

       

      The
        Loan
        shall be used solely to make an equity contribution of at least $7,500,000
        to
        Tekoil and Gas Gulf Coast, LLC, a subsidiary of the Borrower, and to pay
        certain
        costs and expenses of Tekoil and Gas Gulf Coast, LLC, a Delaware limited
        liability company which is majority owned by Borrower.

       

      
        	
                4.

              	
                PRECONDITIONS
                  TO DISBURSING THE LOAN

              


      

       

      The
        obligations of the Lender to disburse the Loan are conditional upon each
        of the
        following having been delivered to and received by the Lender in form and
        substance satisfactory to the Lender acting at its sole discretion:

       

      
        	(a)	
                duly
                  certified copies of the constitutive documents of the Borrower,
                  including
                  without limitation a certificate of incorporation, a certificate
                  of good
                  standing and an incumbency
                  certificate;

              


      

      


      
        	(b)	
                a
                  duly certified copy of a resolution of the authorised governing
                  body of
                  the Borrower:

              


      

      


      
        	
              	(1)	
                approving
                  the terms of, and the transactions contemplated by, this
                  Agreement;

              


      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
              	(2)	
                authorising
                  specified persons to execute this Agreement on its behalf;
                  and

              


      

      


      
        	
              	(3)	
                authorising
                  specified persons to sign and/or despatch all documents and notices
                  to be
                  signed and/or despatched by it under or in connection with this
                  Agreement;

              


      

       

      
        	(c)	
                evidence
                  that the process agent, which the Borrower and each of the Guarantors
                  must
                  appoint for the purposes of this Agreement or the respective Deed
                  of
                  Guarantee, has accepted its
                  appointment;

              


      

       

      
        	(d)	
                a
                  legal opinion from counsel to the Borrower and each of the Guarantors
                  in a
                  form reasonably acceptable to the Lender covering such matters
                  as are
                  customary in financing transactions;


              


      

       

      
        	(e)	
                each
                  of the Guarantors having executed and delivered to the Lender a
                  deed of
                  guarantee substantially in the form set forth in Schedule 1 hereto
                  pursuant whereto each of the Guarantors guarantees any and all
                  of the
                  obligations of the Borrower under this Agreement;
                  

              


      

       

      
        	(f)	
                the
                  audited consolidated financial statements of the Borrower for the
                  year
                  ended 31st December 2006 prepared in accordance with International
                  Accounting Standards or U.S. Generally Accepted Accounting Principles;
                  and

              


      

       

      
        	(g)	
                the
                  unaudited consolidated financial statements of the Borrower for
                  the
                  6-month period ended 30 June 2007 prepared in accordance with
                  International Accounting Standards or U.S. Generally Accepted Accounting
                  Principles.

              


      

       

      
        	
                5.

              	
                DISBURSEMENT
                  

              


      

       

      
        	(a)	
                The
                  Lender will disburse the Loan within 2 (two) Business Days following
                  the
                  receipt of a drawdown notice in the form set forth in Schedule
                  2, provided
                  that (1) the condition set forth in Clause 4 shall have been satisfied
                  and
                  (2) there are no Events of Default then
                  outstanding.

              


      

       

      
        	(b)	
                The
                  Lender will make the Loan available by credit of the Borrower’s account
                  set forth in Clause 16 of this Agreement.


              


      

       

      
        	
                6.

              	
                REPAYMENT

              


      

       

      The
        Borrower shall repay the outstanding principal amount of the Loan in equal
        monthly instalments of US$708,333 (Seven Hundred and Eight Thousand Three
        Hundred and Thirty Three United States dollars) commencing on 1st
        May 2008
        and shall repay the outstanding balance of the Loan not theretofore repaid,
        together with all accrued interest thereon calculated in accordance with
        Clause
        8 and all other amounts owed by the Borrower to the Lender in accordance
        with
        this Agreement, in full on the Final Repayment Date. 

       

      
        	
                7.

              	
                PREPAYMENT

              


      

       

      
        	(a)	
                The
                  Borrower may, by giving not less than thirty (30) calendar days'
                  prior
                  written irrevocable notice to the Lender, prepay the Loan in whole
                  or in
                  part.

              


      

       

      
        	(b)	
                Any
                  prepayment of part of the Loan must be in a minimum principal amount
                  and
                  an integral multiple in principal amount of US$100,000 (One Hundred
                  Thousand United States dollars), and such prepayment must be accompanied
                  by all accrued but unpaid interest.


              


      

       

      
        	
                8.

              	
                INTEREST

              


      

       

      
        	(a)	
                The
                  outstanding principal amount of the Loan will accrue interest at
                  the rate
                  of 13% (thirteen percent) per annum (net of any withholding) for
                  the
                  period commencing on the respective Disbursement Date and ending
                  on the
                  respective Repayment Date.

              


      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	(b)	
                All
                  interest will accrue on a daily basis and will be calculated for
                  the exact
                  number of days elapsed (including the respective Disbursement Date
                  and the
                  respective Repayment Date) on the basis of a year of 360
                  days.

              


      

       

      
        	(c)	
                The
                  Borrower shall pay interest on the outstanding principal amount
                  of the
                  Loan on the first (1st) day of each calendar month (each, an “Interest
                  Payment Date”),
                  provided that (1) if an Interest Payment Date falls on a day that
                  is not a
                  Business Day, interest shall be due on the next succeeding Business
                  Day
                  and (2) in the event any outstanding principal amount of the Loan
                  is being
                  repaid (whether at stated maturity, early repayment or upon prepayment)
                  interest accrued from the last Interest Payment Date prior to the
                  respective Repayment Date of such outstanding principal amount
                  of the Loan
                  until such respective Repayment Date shall be paid together with
                  the
                  repayment of such principal amount of the Loan on such respective
                  Repayment Date.

              


      

       

      
        	(d)	
                Any
                  amount of Interest not paid on an Interest Payment Date shall be
                  compounded and added to the outstanding principal amount of the
                  Loan.

              


      

       

      
        	
                9.

              	
                PAYMENTS
                  AND TAXES

              


      

       

      
        	(a)	
                All
                  payments by the Borrower are to be made in United States dollars
                  in
                  immediately available funds to the Lender at its account set forth
                  in
                  Clause 15 (or such other account as the Lender may notify the Borrower
                  from time to time) free and clear of and without deduction, set-off
                  or
                  withholding for or on behalf of Taxes or any other amounts or claims,
                  including counterclaims. If the Borrower is compelled to make any
                  deduction, set-off or withholding for any reason, the Borrower
                  will pay
                  such additional amounts as shall ensure receipt by the Lender of
                  the full
                  amount that the Lender would have received but for the deduction,
                  set-off
                  or withholding. 

              


      

       

      
        	(b)	
                If
                  the Borrower, in its sole discretion, determines it is required
                  by law to
                  deduct any U.S. federal withholding taxes from or in respect of
                  any sum
                  payable hereunder to any Lender: (i) the Borrower will make such
                  deductions, (ii) the Borrower will pay the full amount deducted
                  to the
                  relevant taxation authority or other authority in accordance with
                  applicable law on the Lender’s behalf, and (iii) the Borrower shall
                  deliver to such Lender evidence of such payment.
                  

              


      

       

      
        	(c)	
                In
                  the event withholding taxes (e.g., pursuant to section 871(a) or
                  section
                  881(a) of the U.S. Internal Revenue Code of 1986, as amended (the
“Code”))
                  are directly remitted on behalf of the Lender solely because (i)
                  the
                  Lender fails to provide the appropriate documentation (described
                  in Clause
                  13.(b) below) in order to take advantage of an otherwise available
                  withholding tax exemption, or (ii) the Lender breaches any of the
                  Lender
                  Representations (described in Clause 13.(a) below), the Borrower
                  shall
                  nevertheless have an obligation to increase the amount of any payment
                  made
                  to the Lender to account for the payment of such tax, or to otherwise
                  indemnify any Lender, in respect of any United States federal withholding
                  taxes remitted on the Lender’s behalf. In such case, however, Lender will
                  reasonably cooperate with Borrower in effecting a release and return
                  of
                  any such withheld amount from applicable authorities and remittance
                  of
                  same to Borrower.

              


      

       

      
        	(d)	
                If
                  the Repayment Date is not a Business Day, the Repayment Date will
                  be
                  extended to the next succeeding Business Day. During any extension
                  of the
                  Repayment Date interest shall continue to accrue on the Loan for
                  the
                  period of such extension.

              


      

       

      
        	(e)	
                In
                  the event the Borrower fails to pay in full the amount due on a
                  particular
                  date (including principal, interest and any other amount), then
                  the amount
                  received by the Lender shall be allocated as
                  follows:

              


      

       

      
        	
              	(i)	
                first,
                  to payment of any amount other than principal and interest, which
                  are owed
                  to the Lender by the Borrower;

              


      

       

      
        	
              	(ii)	
                second,
                  to payment of any amount of
                  interest;

              


      

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (iii)

              	
                third,
                  to payment of any principal amount due;
                  and

              


      

       

      
        	
              	(iv)	
                fourth,
                  to payment of any other principal
                  amount.

              


      

       

      
        	(f)	
                Any
                  amounts owed by the Borrower under this Agreement shall be considered
                  paid
                  on the value date on which the respective amount is credited to
                  the
                  account of the Lender as confirmed by an extract from the Lender’s
                  account.

              


      

       

      
        	
                10.

              	
                BORROWER'S
                  REPRESENTATIONS
                  AND WARRANTIES

              


      

       

      The
        Borrower represents and warrants on the date of this Agreement and on each
        Disbursement Date that:

       

      
        	 	
                (a)

              	
                it
                  is a legal entity duly and validly incorporated and existing in
                  good
                  standing under the laws of the State of
                  Delaware;

              


      

       

      
        	 	
                (b)

              	
                it
                  has the legal capacity and power to enter into, execute, deliver
                  this
                  Agreement and to perform its obligations
                  hereunder;

              


      

       

      
        	 	
                (c)

              	
                this
                  Agreement has been duly and validly executed by
                  it;

              


      

       

      
        	 	
                (d)

              	
                the
                  execution, delivery and performance by it of this Agreement do
                  not violate
                  or conflict with any law applicable to it, any order or judgment
                  of any
                  court or other agency of government applicable to it or any of
                  its assets
                  or any contractual restriction binding on or affecting it or any
                  of its
                  assets; 

              


      

       

      
        	 	
                (e)

              	
                its
                  obligations under this Agreement constitute its legal, valid and
                  binding
                  obligations, enforceable in accordance with its terms (subject
                  to
                  applicable bankruptcy, insolvency, moratorium or similar laws affecting
                  creditors' rights generally and subject, as to enforceability,
                  to
                  equitable principles of general
                  application);

              


      

       

      
        	 	
                (f)

              	
                it
                  has obtained all authorisations, consents, licenses and permits
                  required
                  in connection with the entry into, performance, validity and
                  enforceability of, and the transactions contemplated by this Agreement
                  and
                  all such authorisations, consents, licenses and permits are in
                  full force
                  and effect;

              


      

       

      
        	 	
                (g)

              	
                no
                  Event of Default is outstanding;

              


      

       

      
        	 	
                (h)

              	
                no
                  litigation, arbitration or administrative proceedings are current,
                  pending
                  or threatened against the Borrower or its assets except as disclosed
                  in
                  the filings Borrower has made with the U.S. Securities and Exchange
                  Commission (the “Filings”);

              


      

       

      
        	 	
                (i)

              	
                all
                  information (the Information)
                  supplied by or on behalf of the Borrower to the Lender prior to
                  the
                  execution of this Agreement was true, complete and accurate in
                  all
                  respects at its date and did not omit any information which, if
                  disclosed,
                  might adversely affect the Lender's decision to enter into this
                  Agreement.
                  Nothing has occurred since the date of the Information which renders
                  it
                  untrue or misleading in any
                  respect;

              


      

       

      
        	 	
                (j)

              	
                its
                  payment obligations under this Agreement rank at least pari
                  passu
                  with all its other present and future unsecured payment obligations,
                  except for obligations mandatorily preferred by law applying to
                  companies
                  generally;

              


      

       

      
        	 	
                (k)

              	
                all
                  amounts payable by it under this Agreement may be made without
                  any
                  deduction or withholding for or on account of Tax from a payment
                  under
                  this Agreement;

              


      

       

      
        	 	
                (l)

              	
                the
                  execution by it of this Agreement constitutes, and the exercise
                  by it of
                  its rights and performance of its obligations under this Agreement
                  will
                  constitute, private and commercial acts performed for private and
                  commercial purposes and it will not be entitled to claim immunity
                  from
                  suit, execution, attachment or other legal process in any proceedings
                  taken in its jurisdiction of incorporation in relation to this
                  Agreement;

              


      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (m)

              	
                it
                  is not necessary under the laws of its jurisdiction of incorporation
                  in
                  order to enable the Lender to enforce its rights under this Agreement
                  or
                  by reason of the execution of this Agreement or the performance
                  by it of
                  its obligations under this Agreement that the Lender should be
                  licensed,
                  qualified or otherwise entitled to carry on business in the Borrower's
                  jurisdiction of incorporation and the Lender is not and will not
                  be deemed
                  to be resident, domiciled or carrying on business in the Borrower's
                  jurisdiction of incorporation by reason only of the execution,
                  performance
                  and/or enforcement of this Agreement;
                  and

              


      

       

      
        	 	
                (n)

              	
                its
                  irrevocable submission under this Agreement to arbitration and/or
                  the
                  jurisdiction of the courts of England, agreement that this Agreement
                  is
                  governed by English law and its agreement not to claim any immunity
                  to
                  which it or its assets may be entitled are legal, valid and binding
                  under
                  the laws of its jurisdiction of incorporation and any judgment
                  obtained in
                  England will be recognised and be enforceable by the courts of
                  its
                  jurisdiction of incorporation.

              


      

       

      
        	
                11.

              	
                BORROWER’S
                  COVENANTS

              


      

       

      The
        Borrower undertakes, so long as any amount remains owing to the Lender under
        this Agreement, as follows:

       

      
        	 	
                (a)

              	
                to
                  provide to the Lender promptly when they become available with
                  a copy of
                  the annual audited consolidated financial statements of the Borrower
                  and
                  the quarterly and semi-annual unaudited consolidated financial
                  statements
                  of the Borrower, in each case prepared in accordance with International
                  Accounting Standards or U.S. Generally Accepted Accounting
                  Principles;

              


      

       

      
        	 	
                (b)

              	
                to
                  provide to the Lender promptly such additional financial and other
                  information, which is in the possession of the Borrower, as the
                  Lender may
                  request at its discretion from time to
                  time;

              


      

       

      
        	 	
                (c)

              	
                to
                  notify the Lender promptly of any adverse change in its financial
                  situation;

              


      

       

      
        	 	
                (d)

              	
                to
                  provide to the Lender promptly upon becoming aware of them, details
                  of any
                  litigation, arbitration or administrative proceedings that are
                  current,
                  threatened or pending against or involving the Borrower;
                  

              


      

       

      
        	 	
                (e)

              	
                to
                  promptly obtain, maintain and comply with the terms of any authorisation,
                  consent, license or permit required under any law, rule or regulation
                  to
                  enable it to enter into and perform its obligations under this
                  Agreement
                  or for the legality, validity, enforceability or admissibility
                  in evidence
                  in any relevant jurisdiction of this
                  Agreement;

              


      

       

      
        	 	
                (f)

              	
                to
                  comply in all respect with all laws, rules and regulations to which
                  it is
                  subject;

              


      

       

      
        	 	
                (g)

              	
                to
                  ensure that their payment obligations under this Agreement rank
                  at least
                  pari
                  passu with
                  all their other present and future unsecured payment obligations,
                  except
                  for obligations mandatorily preferred by law applying to companies
                  generally;

              


      

       

      
        	 	
                (h)

              	
                not
                  to, directly or indirectly, create, incur or suffer to exist any
                  Liens
                  (other than (i) a Lien in favour of the Lender, (ii) the Existing
                  Liens,
                  or (iii) a Lien over the assets covered by the Existing Liens to
                  secure
                  Indebtedness raised to replace the Indebtedness secured by the
                  Existing
                  Liens) on the assets of the Borrower to secure any Indebtedness
                  of the
                  Borrower or any of its
                  subsidiaries;

              


      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (i)

              	
                not
                  to enter into any accession, amalgamation, demerger, division,
                  merger,
                  reconstruction or separation without the prior written consent
                  of the
                  Lender;

              


      

       

      
        	 	
                (j)

              	
                to
                  pay or discharge in a timely manner, and in any event before the
                  same
                  shall become overdue, all of its liabilities with respect to
                  Taxes;

              


      

       

      
        	 	
                (k)

              	
                not
                  to pay, make or declare any dividend or other distribution without
                  the
                  prior written consent of the Lender; and


              


      

       

      
        	 	
                (l)

              	
                not
                  to, directly or indirectly, transact any business or enter into
                  any
                  transaction with any related parties, including inter-company loans,
                  other
                  than on arm’s length terms.

              


      

       

      
        	
                12.

              	
                EVENTS
                  OF DEFAULT

              


      

       

      
        	(a)	
                If:

              


      

       

      
        	
              	(i)	
                the
                  Borrower fails to pay any amount within three (3) Business Days
                  after the
                  amount becomes due in the currency and in the manner specified
                  under this
                  Agreement;

              


      

       

      
        	
              	(ii)	
                the
                  Borrower fails to perform or comply in any material respect with
                  any of
                  its other obligations or with any other provision of this Agreement
                  within
                  thirty (30) Business Days;

              


      

       

      
        	
              	(iii)	
                any
                  representation or warranty of the Borrower in or in connection
                  with this
                  Agreement proves to have been inaccurate, incomplete or misleading
                  in any
                  material respect at the time it was made or repeated or deemed
                  to have
                  been made or repeated; or

              


      

       

      
        	
              	(iv)	
                any
                  other Indebtedness or any other financial obligation of the Borrower
                  becomes prematurely payable or is placed on demand or the creditor
                  in
                  respect thereof becomes entitled to declare any such obligation
                  prematurely payable or any such obligation is not paid when due
                  or any
                  security therefor becomes enforceable;
                  or

              


      

       

      
        	
              	(v)	
                the
                  Borrower goes into liquidation or is dissolved, or a meeting of
                  the
                  members or creditors of the Borrower is convened for the purpose
                  of
                  considering a resolution for (or to petition for) its winding up
                  or for
                  its administration or any such resolution is passed;
                  or

              


      

       

      
        	
              	(vi)	
                any
                  liquidator, trustee in bankruptcy, judicial custodian, compulsory
                  manager,
                  receiver, administrative receiver, administrator or other creditors'
                  representative is appointed (or is requested to be appointed) in
                  respect
                  of the Borrower or any of its assets;
                  or

              


      

       

      
        	
              	(vii)	
                the
                  Borrower is, or is deemed for the purposes of any law to be, unable
                  to pay
                  its debts as they fall due or to be insolvent or ceases or threatens
                  to
                  cease to carry on all or a substantial part of its business;
                  or

              


      

       

      
        	
              	(viii)	
                any
                  attachment, sequestration, distress or execution affects any asset
                  of the
                  Borrower and is not discharged within forty-five (45) Business
                  Days;
                  or

              


      

       

      
        	
              	(ix)	
                any
                  step (including, without limitation, petition, proposal, convening
                  a
                  meeting, negotiations or suspension of payments on any debt) is
                  taken with
                  a view to a composition, assignment or arrangement with any creditors
                  of
                  the Borrower or with a view to the rehabilitation, administration,
                  custodianship, liquidation, winding-up or dissolution of the Borrower
                  or
                  any other insolvency proceedings involving the Borrower or an order
                  for
                  the winding-up or administration of the Borrower is made;
                  or

              


      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        	
              	(x)	
                any
                  event analogous (in the opinion of the Lender) to those described
                  in
                  sub-clauses (v) to (ix) (inclusive) above occurs in any jurisdiction;
                  or

              


      

       

      
        	
              	(xi)	
                it
                  is or becomes illegal for the Lender or the Borrower to make or
                  maintain
                  any of its obligations under this Agreement;
                  or

              


      

       

      
        	
              	(xii)	
                any
                  of the Guarantors breaches any of its obligations under its respective
                  Deed of Guarantee; or

              


      

       

      
        	
              	(xiii)	
                this
                  Agreement or any Deed of Guarantee is declared invalid or unenforceable
                  by
                  any court of law;

              


      

       

      then
        and
        at any time thereafter, the Lender may by written notice to the Borrower
        terminate its obligations under this Agreement and/or demand immediate repayment
        of the Loan, together with all other amounts payable under this Agreement,
        whereupon they shall immediately become due and payable.

       

      
        	(b)	
                The
                  Borrower shall notify the Lender in writing of any Event of Default
                  promptly upon its occurrence.

              


      

       

      
        	
                13.

              	
                LENDER
                  REPRESENTATIONS

              


      

       

      
        	(a)	
                The
                  Lender represents that: (a) the Lender is taxable as a corporation
                  for
                  U.S. federal income tax purposes; (b) the interest income payable
                  under
                  the Loan is not effectively connected with a United States trade
                  or
                  business conducted by the Lender; (c) the Lender does not directly
                  or
                  indirectly own 10% or more of the combined voting power of the
                  Borrower’s
                  stock; (d) the Lender is not a controlled foreign corporation within
                  the
                  meaning of section 957(a) of the Code; (e) the Lender is not a
                  bank whose
                  execution of this Loan constitutes an extension of credit made
                  pursuant to
                  a loan agreement entered into in the ordinary course of its trade
                  or
                  business as described in section 881(c)(3)(A) of the
                  Code.

              


      

       

      
        	(b)	
                The
                  Lender shall use reasonable efforts to provide, on or prior to
                  May 1,
                  2008, a properly completed Internal Revenue Service Form W-8BEN
                  (or other
                  permissible W-8 Series Form) to the Borrower. The Lender shall
                  use
                  reasonable efforts to deliver to the Borrower an additional copy
                  of such
                  Form (or successor Form) on or before the date that such Form expires
                  or
                  becomes obsolete or after the occurrence of any event requiring
                  a change
                  in the most recent Form so delivered by it, in each case certifying
                  that
                  the Lender is entitled to an exemption from or a reduction of withholding
                  or deduction for or on account of United States federal income
                  taxes in
                  connection with the interest payments made under this Loan. The
                  Lender
                  will promptly notify the Borrower within 30 days of any changes
                  in
                  circumstances that would modify or render invalid any claimed exemption
                  or
                  reduction.

              


      

       

      
        	
                14.

              	
                TRANSFERS

              


      

       

      
        	(a)	
                The
                  Lender may assign and/or transfer all or any of its rights under
                  this
                  Agreement under the procedures described in Clause 14.(b), but
                  without any
                  increase of the amount or the scope of its obligations under this
                  Loan
                  Agreement. The Borrower may not assign or transfer any of its rights
                  or
                  obligations under this Agreement.

              


      

       

      
        	(b)	
                Transfer
                  of the Loan by the Lender or any subsequent Lender may only be
                  effectuated
                  by the surrender of this Loan Agreement to the Borrower and reissuance
                  of
                  a Loan Agreement of like terms. The Borrower shall comply within
                  30 days
                  to any request by the Lender pursuant to this Clause 14.(b). Subject
                  to
                  the foregoing, this Loan shall be binding upon and inure to the
                  benefit of
                  the Lender and the Borrower and their respective transferees, successors
                  and assigns.

              


      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        	
                15.

              	
                WAIVERS

              


      

       

      No
        failure or delay by the Lender in exercising any right, power or privilege
        under
        this Agreement shall operate as a waiver thereof or prejudice any other or
        further exercise by the Lender of any of its rights or remedies under this
        Agreement. The rights and remedies of the Lender under this Agreement are
        cumulative and not exclusive of any rights or remedies provided by
        law.

       

      
        	
                16.

              	
                NOTICES
                  AND ACCOUNTS

              


      

       

      
        	(a)	
                All
                  notices or other communications under or in connection with this
                  Agreement
                  shall be given in writing or by facsimile. A notice will be deemed
                  to be
                  given:

              


      

       

      
        	
              	(i)	
                if
                  in writing, when delivered; and

              


      

       

      
        
          	
                	(ii)	
                  if
                    by facsimile, when received (confirmed by a letter, delivered
                    personally
                    or despatched by registered prepaid mail (airmail if overseas),
                    within
                    twenty-four hours of the despatch of the facsimile, but failure
                    to
                    despatch or receive that confirmation shall not prejudice the
                    effectiveness of the notice sent by
                    facsimile).

                


        

      

       

      However,
        a notice given in accordance with the above, but received on a day other
        than a
        Business Day or after 4.00 p.m. in the place of receipt, will only be deemed
        to
        be given on the next Business Day in that place.

       

      
        	(b)	
                Until
                  further notice given in accordance with the provisions of sub-clause
                  (a)
                  above, the following shall be the address for notices under this
                  Agreement:

              


      

       

      
        	
              	(i)	
                if
                  to the Lender, to:

                 

                3rd
                  Floor, Omar Hodge Building, 

                Wickhams
                  Cay 1, 

                P.O.
                  Box 362, Road Town, Tortola, 

                British
                  Virgin Islands

              


      

       

      
        	
              	(ii)	
                if
                  to the Borrower, to:

              


      

       

      25025
        Interstate 45 North, 

      Suite
        525, The Woodlands, 

      TX
        77380,


      United
        States

       

      
        
          
            	(c)	
                    The
                      following bank accounts shall be used for disbursement of any
                      amount of
                      the Loan and (re)payment of any amount of the Loan or any other
                      amounts
                      owed hereunder, until further notice by either party to the
                      other:

                  


          

        

      

      


      
        	
              	Borrower:	
                Beneficiary:
                  Tekoil & Gas Corporation  

              


      

      Bank:
        Regions Bank, Orlando Florida, USA  

       

      SWIFT:
        UPNBUS44 

      Account
        No. 0033317186 

      ABA
        No.
        062005690   

      With  

      SWIFT  

       

      
        	
              	Lender:	
                Beneficiary:
                  Tri-Star Capital Ventures Ltd.

                Bank: Raiffeisen
                  Zentralbank, Vienna, Austria

                 

                Account
                  No. 70-50.682.137

                IBAN: AT633100007050682137 

              


      

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      
        	
                17.

              	
                GOVERNING
                  LAW

              


      

       

      This
        Agreement is governed by, and shall be construed and interpreted in accordance
        with, the laws of England and Wales, without regard to its conflict of law
        principles. 

       

      
        	
                18.

              	
                ENFORCEMENT

              


      

       

      
        	(a)	
                The
                  English courts have exclusive jurisdiction to settle any dispute
                  in
                  connection with this Agreement. 

              


      

       

      
        	(b)	
                The
                  English courts are the most appropriate and convenient courts to
                  settle
                  any such dispute.

              


      

       

      
        	(c)	
                (i)          
                   Notwithstanding
                  the foregoing provisions of this Clause, the parties agree that
                  if the
                  Lender so requires, any dispute arising out of this Agreement (including
                  any question regarding its existence, validity or termination)
                  shall be
                  referred to and finally resolved by arbitration under the Rules
                  of
                  Arbitration of the London Court of International Arbitration (the
                  Rules)
                  by one arbitrator appointed in accordance with the said Rules,
                  which Rules
                  are deemed to be incorporated by reference into this Clause
                  18.

              


      

       

      
        
          	
                	(ii)	
                  The
                    seat of arbitration shall be London. The applicable law shall
                    be English
                    law.

                


        

      

       

      
        	
              	(iii)	
                The
                  parties agree that the language of the arbitration, including oral
                  hearings, written evidence and correspondence, shall be
                  English.

              


      

       

      
        	
              	(iv)	
                A
                  duly rendered arbitration award shall be final and binding on the
                  parties
                  to the dispute.

              


      

       

      
        	
              	(v)	
                This
                  arbitration clause shall be separately
                  enforceable.

              


      

       

      
        	
                19.

              	
                SERVICE
                  OF PROCESS

              


      

       

      
        	(a)	
                The
                  Borrower hereby irrevocably appoints Trident Corporate Services
                  (UK)
                  Limited, 7 Welbeck Street, London W1G9YE, England, as its agent
                  under this
                  Agreement for service of process in any proceedings before the
                  English
                  courts.

              


      

       

      
        	(b)	
                If
                  any person appointed as process agent is unable for any reason
                  to act as
                  agent for service of process, the Borrower must immediately appoint
                  another agent on terms acceptable to the Lender. Failing this,
                  the Lender
                  may appoint another agent for this
                  purpose.

              


      

       

      
        	(c)	
                The
                  Borrower agrees that failure by a process agent to notify it of
                  any
                  process will not invalidate the relevant
                  proceedings.

              


      

       

      
        	(d)	
                This
                  Clause does not affect any other method of service allowed by
                  law.

              


      

       

      
        	20.	
                WAIVER
                  OF IMMUNITY

              


      

       

      Each
        party irrevocably and unconditionally:

       

      
        	 	
                (a)

              	
                agrees
                  not to claim any immunity from proceedings brought by the other
                  party
                  against it in relation to this Agreement and to ensure that no
                  such claim
                  is made on its behalf;

              


      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (b)

              	
                consents
                  generally to the giving of any relief or the issue of any process
                  in
                  connection with those proceedings;
                  and

              


      

       

      
        	 	
                (c)

              	
                waives
                  all rights of immunity in respect of it or its
                  assets.

              


      

       

      
        	21.	
                LANGUAGE

              


      

       

      
        	
                (a)

              	
                Any
                  notice given in connection with this Agreement must be in
                  English.

              


      

       

      
        	(b)	
                Any
                  other document provided in connection with this Agreement must
                  be:

              


      

       

      
        	
              	(i)	
                in
                  English; or

              


      

       

      
        	
              	(ii)	
                accompanied
                  by a certified English translation. In this case, the English translation
                  prevails unless the document is a statutory or other official document.
                  

              


      

       

      
        	22.	
                SEVERABILITY

              


      

       

      If
        a term
        of this Agreement is or becomes invalid or unenforceable in any jurisdiction,
        that shall not affect:

       

      
        	 	
                (a)

              	
                the
                  legality, validity or enforceability in that jurisdiction of any
                  other
                  term of this Agreement;

              


      

       

      
        	 	
                (b)

              	
                the
                  legality, validity or enforceability in other jurisdictions of
                  that or any
                  other term of this Agreement. 

              


      

       

      
        
          	23.	
                  COUNTERPARTS

                


        

      

       

      This
        Agreement may be executed in any number of counterparts. This has the same
        effect as if the signatures on the counterparts were on a single copy of
        this
        Agreement.

       

      
        	24.	
                CONFIDENTIALITY

              


      

       

      Each
        party agrees and covenants to keep the existence, contents and substance
        of this
        Agreement and the transactions contemplated hereby (“Confidential
        Information”)
        confidential, and not (otherwise than with the consent of the other party
        hereto
        or as may be required to effect dispute resolution pursuant to Clause 18
        hereof)
        to disclose, or to allow disclosure by its respective affiliates, directors,
        officers, employees, agents or representatives of Confidential Information
        to
        any third party other than such party’s accountants, auditors, legal and
        financial advisors (who shall undertake a like duty of confidentiality, for
        the
        fulfilment of which duty the respective party engaging such advisors shall
        be
        responsible) or as required by law or by decision of any court (and, if so
        required, only following consultation with the other party hereto). The terms
        and requirements of this Clause shall be effective during the entire term
        of
        this Agreement and shall continue to be effective after the termination of
        this
        Agreement for an additional period of one (1) calendar year. The Lender hereby
        consents to the disclosure of Confidential Information to J. Aron & Company
        and its affiliates (and their successors and assigns).

       

      [remainder
        intentionally left blank]

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, the parties have caused their duly authorized representatives
        to execute this Agreement on the date stated at the beginning of this
        Agreement.

       

      
        	
                Lender

                 

                TRI
                  STAR CAPITAL VENTURES LIMITED 

                 

                By  
                  /s/ Vilija Nikulina 

                
                  

                

                Vilija
                  Nikulina 

                Director
                  

              	
                Borrower
                  

                 

                TEKOIL
                  & GAS CORPORATION 

                 

                By  
                  /s/ Mark S. Western 

                
                  

                

                Mark
                  S. Western

                Chief
                  Executive Officer

              


      

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      


      SCHEDULE
        1

      


      Form
        of Deed of Guarantee 


      

        DEED
          OF GUARANTEE

        


        THIS
          DEED
          OF GUARANTEE is made on __ October 2007

        


        BY
          AND
          BETWEEN:

        


        
          	(1)	
                  [Name],
                    born ______ in _____, _____ passport number ______ issued
                    on _______ (the “Guarantor”),
                    and

                


        

        


        
          	(2)	
                  Tri
                    Star Capital Ventures Limited,
                    a
                    company organised and existing under the laws of the British
                    Virgin
                    Islands with its registered address at 3rd
                    Floor, Omar Hodge Building, Wickhams Cay 1, P.O. Box 362, Road
                    Town,
                    Tortola, British Virgin Islands (the “Beneficiary”).

                


        

        


        WHEREAS:

        


        
          	
                  A.

                	
                  Tekoil
                    & Gas Corporation (the “Obligor”)
                    wishes to borrow certain monies from the Beneficiary under a
                    Loan
                    Agreement between the Obligor and the Beneficiary dated on or
                    about the
                    date hereof (“Guaranteed
                    Agreement”);

                


        

        


        
          	
                  B.

                	
                  As
                    a condition to the Beneficiary agreeing to enter into the Guaranteed
                    Agreement and lend such monies, the Beneficiary requires this
                    Guarantee;
                    and

                


        

        


        
          	
                  C.

                	
                  The
                    Guarantor expects to derive substantial benefit from the Beneficiary
                    agreeing to lend such monies to the
                    Obligor.

                


        

        


        IT
          IS AGREED:

        


        
          	
                  1

                	
                  GUARANTEE

                


        

         

        
          	1.1	
                  The
                    Guarantor as primary obligor hereby unconditionally and irrevocably
                    guarantees to the Beneficiary the due and punctual payment by
                    the Obligor
                    of all monies that are or may become due from the Obligor under
                    or in
                    respect of the Guaranteed Agreement including without limitation
                    the
                    principal of and interest on the loan made under the Guaranteed
                    Agreement
                    and any damages or other liability in respect of any breach of
                    the
                    Guaranteed Agreement (the “Guaranteed
                    Amounts”).

                


        

        


        
          	1.2	
                  If
                    and whenever the Obligor defaults for any reason whatsoever in
                    the payment
                    of any Guaranteed Amount, the Guarantor shall forthwith upon
                    demand pay
                    (or procure the payment of) the Guaranteed Amount in regard to
                    which such
                    default has been made in the manner prescribed by the Guaranteed
                    Agreement
                    and so that the same benefits shall be conferred on the Beneficiary
                    as it
                    would have received if the Guaranteed Amounts had been duly paid
                    by the
                    Obligor. 

                


        

        


        
          	1.3	
                  This
                    deed is in addition to and not in substitution for any other
                    security
                    which the Beneficiary may at any time hold for payment of the
                    Guaranteed
                    Amounts and may be enforced without first having recourse to
                    any such
                    security and without taking any steps or proceedings against
                    the
                    Obligor.

                


        

        


        
          	1.4	
                  As
                    a separate and independent stipulation the Guarantor agrees that
                    any of
                    the Guaranteed Amounts which may not be recoverable from or enforceable
                    against the Obligor by reason of any legal limitation, disability
                    or
                    incapacity on or of the Obligor, the invalidity of the Guaranteed
                    Agreement, the Obligor not being legally bound by the Guaranteed
                    Agreement
                    for failure of it being properly executed and delivered, or any
                    other fact
                    or circumstance (other than proper payment or performance, binding
                    written
                    waiver by the Beneficiary, or any limitation imposed by the Guaranteed
                    Agreement) shall nevertheless be recoverable from the Guarantor
                    as though
                    the same had been owed by the Guarantor and the Guarantor were
                    the sole or
                    principal obligor in respect thereof and shall be paid by the
                    Guarantor
                    forthwith upon demand. 

                


        

         

        
          
            
            

          

          
            13

            
              

            

          

          
            
            

          

        

         

        
          	
                  2

                	
                  NON-WAIVER

                


        

         

        Neither
          the Guarantor’s liability under this deed nor the rights, powers and remedies
          conferred upon the Beneficiary by this Deed or by law shall be released,
          impaired or discharged by any matter or thing which might operate to affect
          or
          prejudice such rights, powers and remedies including without
          limitation:-

        


        
          	2.1	
                  time
                    or any other concession, forbearance, forgiveness, indulgence
                    or
                    arrangement being given to the Obligor by the Beneficiary or
                    by anything
                    that the Beneficiary or the Obligor may do or omit or neglect
                    to do which,
                    but for this provision, might release or discharge the Guarantor’s
                    obligations hereunder;

                


        

        


        
          	2.2	
                  any
                    invalidity, unenforceability, illegality or voidability of any
                    obligation
                    expressed to be assumed or owed by the Obligor under the Guaranteed
                    Agreement;

                


        

        


        
          	2.3	
                  the
                    existence of any claim, set-off or other rights which the Guarantor
                    may
                    have at any time against the Obligor, the Beneficiary, or any
                    other person
                    or which the Obligor may have against the Guarantor, whether
                    in connection
                    with the Guaranteed Agreement or otherwise;


                


        

        


        
          	2.4	
                  any
                    payment or discharge under the Guaranteed Agreement which is
                    avoided or
                    repaid as a consequence of the amalgamation, reorganisation,
                    liquidation,
                    dissolution, insolvency, receivership, administration or other
                    similar
                    process against the Obligor; or

                


        

        


        
          	2.5	
                  any
                    compromise of any dispute with the Obligor, any failure of supervision
                    to
                    detect or prevent any fault by the Beneficiary or any assignment
                    of the
                    benefit of the Guaranteed
                    Agreement.

                


        

        


        
          	
                  3

                	
                  VARIATIONS.
                    NO INCREASE WITHOUT GUARANTOR’S
                    CONSENT.

                


        

         

        The
          Guarantor hereby authorises the Obligor and the Beneficiary to make any
          addendum
          or variation to the Guaranteed Agreement, and the Guarantor hereby guarantees
          the due and punctual payment by the Obligor of all monies that are or may
          become
          due from the Obligor under or in respect of the amended Guaranteed Agreement
          under the terms of this deed; provided
          that
          if any
          such addendum or variation increases the principal amount of the loan under
          the
          Guaranteed Agreement (otherwise than as a result of compounding interest
          as
          provided therein), then unless it is made with the Guarantor’s express written
          consent, such addendum or variation shall not increase the extent of the
          Guarantor’s obligations and liabilities hereunder and this Deed and the
          guarantees and undertakings in this Deed shall apply and extend only to
          such
          monies as were due under the Guaranteed Agreement prior to such addendum
          or
          variation and shall not apply to any monies due in respect of any drawdowns
          made
          pursuant to, or after, such addendum or variation.

        


        
          	
                  4

                	
                  DURATION

                


        

         

        This
          deed
          shall be effective at the date of its execution and shall remain in force
          for
          the duration of the Guaranteed Agreement. 

        


        
          	
                  5

                	
                  DISPUTED
                    CLAIMS

                


        

         

        If
          the
          Obligor defaults in the payment of any Guaranteed Amount, the Beneficiary
          shall
          have the right to proceed against the Guarantor under this deed without
          proceeding against or exercising or exhausting any other remedy against
          the
          Obligor. The Guarantor may exercise all defences, set-offs, counterclaims
          and
          other rights to which the Obligor is or may in respect of mature obligations
          be
          entitled under the Guaranteed Agreement and in any action brought by the
          Beneficiary against the Guarantor under this deed the Guarantor may assert
          any
          such defence, set-off, counterclaim or other right as if the action had
          been
          brought by the Beneficiary against the Obligor under the Guaranteed
          Agreement.

         

        
          
            
            

          

          
            14

            
              

            

          

          
            
            

          

        

        


        
          	
                  6

                	
                  REPRESENTATIONS
                    AND WARRANTIES

                


        

         

        The
          Guarantor represents and warrants to the Beneficiary that:- 

        


        
          	6.1	
                  it
                    has the legal capacity and power to enter into, execute, deliver
                    and
                    perform this Deed;

                


        

        


        
          	6.2	
                  the
                    execution, delivery and performance by it of this Deed do not
                    violate or
                    conflict in any material way with any law applicable to it, any
                    order or
                    judgment of any court or other agency of government applicable
                    to it or
                    any of its assets or any contractual restriction binding on or
                    affecting
                    it or any of its assets; and

                


        

        


        
          	6.3	
                  its
                    obligations under this Deed constitute its legal, valid and binding
                    obligations, enforceable in accordance with their respective
                    terms
                    (subject to applicable bankruptcy, insolvency, moratorium or
                    similar laws
                    affecting creditors' rights generally and subject, as to enforceability,
                    to equitable principles of general
                    application).

                


        

        


        
          	
                  7

                	
                  SECURITY

                


        

         

        
          	7.1	
                  The
                    Guarantor represents and warrants that it has not taken or received
                    and
                    will not take or receive any security from the Obligor for or
                    in respect
                    of the Guarantor’s obligations under this
                    Deed.

                


        

        


        
          	7.2	
                  If
                    at any time the Guarantor has the benefit of any security in
                    breach of
                    this Clause 7, it shall hold such security on trust for the Beneficiary
                    and shall upon request by the Beneficiary, transfer or assign
                    such
                    security to the Beneficiary as security for the Guarantor’s obligations
                    under this deed.

                


        

        


        
          	
                  8

                	
                  NON-DUPLICATION

                


        

         

        The
          Beneficiary shall not be entitled to recover its loss more than once from
          the
          Guarantor or the Obligor or any other guarantor. Nothing in this Deed shall
          affect the obligation of the Beneficiary to mitigate its loss.

        


        
          	
                  9

                	
                  ASSIGNMENT

                


        

         

        
          	9.1	
                  The
                    Beneficiary may not assign or transfer any of its rights or obligations
                    under this Deed without the Guarantor’s
                    consent.

                


        

        


        
          	9.2	
                  The
                    Guarantor may not assign or transfer any of its rights or obligations
                    under this Deed without the Beneficiary’s
                    consent.

                


        

        


        
          	
                  10

                	
                  REMEDIES
                    AND WAIVERS

                


        

         

        
          	10.1	
                  No
                    delay or omission on the part of the Beneficiary in exercising
                    any right,
                    power or remedy provided by law or under this Deed shall impair
                    such
                    right, power or remedy or operate as a waiver thereof or of any
                    other
                    right, power or remedy.

                


        

        


        
          	10.2	
                  The
                    single or partial exercise by the Beneficiary of any right, power
                    or
                    remedy provided by law or under this deed shall not preclude
                    any other or
                    further exercise thereof or the exercise of any other right,
                    power or
                    remedy.

                


        

        


        
          	10.3	
                  The
                    rights, powers and remedies provided by this Deed are cumulative
                    with, and
                    not exclusive of, any rights, powers and remedies provided by
                    law.

                


        

         

        
          
            
            

          

          
            15

            
              

            

          

          
            
            

          

        

         

        
          	
                  11

                	
                  PROPER
                    LAW AND JURISDICTION

                


        

         

        
          	11.1	
                  This
                    Deed shall be governed by, and shall be construed and interpreted
                    in
                    accordance with, the laws of England and Wales, without regard
                    to its
                    conflict of law principles. 

                


        

        


        
          	11.2	
                  The
                    English courts have exclusive jurisdiction to settle any dispute
                    in
                    connection with this Agreement. 

                


        

        


        
          	11.3	
                  The
                    English courts are the most appropriate and convenient courts
                    to settle
                    any such dispute.

                


        

         

        
          	
                	11.3.1	
                  Notwithstanding
                    the foregoing provisions of this Clause, the parties agree that
                    if the
                    Beneficiary so requires, any dispute arising out of this Agreement
                    (including any question regarding its existence, validity or
                    termination)
                    shall be referred to and finally resolved by arbitration under
                    the Rules
                    of Arbitration of the London Court of International Arbitration
                    (the
                    Rules)
                    by one arbitrator appointed in accordance with the said Rules,
                    which Rules
                    are deemed to be incorporated by reference into this Clause
                    17.

                


        

         

        
          	
                	11.3.2	
                  The
                    seat of arbitration shall be London. The applicable law shall
                    be English
                    law.

                


        

         

        
          	
                	11.3.3	
                  The
                    parties agree that the language of the arbitration, including
                    oral
                    hearings, written evidence and correspondence, shall be
                    English.

                


        

         

        
          	
                	11.3.4	
                  A
                    duly rendered arbitration award shall be final and binding on
                    the parties
                    to the dispute.

                


        

         

        
          	
                	11.3.5	
                  This
                    arbitration clause shall be separately
                    enforceable.

                


        

        


        
          	
                  12

                	
                  SERVICE
                    OF PROCESS

                


        

         

        
          	12.1	
                  The
                    Guarantor hereby irrevocably appoints Trident Corporate Services
                    (UK)
                    Limited, 7 Welbeck Street, London W1G9YE, England, as its agent
                    under this
                    Agreement for service of process in any proceedings before the
                    English
                    courts.

                


        

        


        
          	12.2	
                  If
                    any person appointed as process agent is unable for any reason
                    to act as
                    agent for service of process, the Guarantor must immediately
                    appoint
                    another agent on terms acceptable to the Beneficiary. Failing
                    this, the
                    Beneficiary may appoint another agent for this
                    purpose.

                


        

        


        
          	12.3	
                  The
                    Guarantor agrees that failure by a process agent to notify it
                    of any
                    process will not invalidate the relevant
                    proceedings.

                


        

        


        
          	12.4	
                  This
                    Clause does not affect any other method of service allowed by
                    law.

                


        

        


        
          	
                  13

                	
                  NOTICES

                


        

         

        
          	13.1	
                  Any
                    notice required to given to the Guarantor under this Deed shall
                    be in
                    writing and delivered personally or sent by commercial courier
                    to the
                    address included for Guarantor on the signature page hereof or
                    to such
                    other address as the Guarantor may from time to time specify
                    in writing to
                    the Beneficiary. Any notice shall be deemed to have been served
                    when
                    actually delivered.

                


        

         

        
          
            
            

          

          
            16

            
              

            

          

          
            
            

          

        


        In
          witness whereof, this deed has been executed and delivered as a deed on
          the date
          first mentioned above.

        


        Signed
          and delivered as a deed by

        


        [NAME
          OF GUARANTOR] 

        


        


        Signature:
          ____________________

        


        Address
          for Notice Purposes:

        _______________________________

        _______________________________

        _______________________________

        Facsimile:
          _______________________

        


        in
          the
          presence of:

         

        Witness

        

          
            	
                    Signature
                      of witness:

                  	
                    __________________

                  
	 	 
	
                    Name
                      of witness: 

                  	
                    __________________

                  
	 	 
	
                    Address
                      of witness: 

                  	
                    __________________

                  
	 	
                     

                    __________________

                  


          

        

         

        Signed
          and delivered as a deed by

         

        TRI
          STAR CAPITAL VENTURES LIMITED

        


         

        By  
          ___________________________

        Vilija
          Nikulina 

        Director
          

        


        in
          the
          presence of:

         

        Witness

        

          
            	
                    Signature
                      of witness:

                  	
                    __________________

                  
	 	 
	
                    Name
                      of witness: 

                  	
                    __________________

                  
	 	 
	
                    Address
                      of witness: 

                  	
                    __________________

                  
	
                     

                  	
                     

                    __________________

                  


          

        

        
           

          
            
            

          

          
            17

            
              

            

          

          
            
            

          

        

      


      SCHEDULE
        2

      


      Form
        of Drawdown Notice 

       

      
        ____________,
          20071 

        


        3rd
          Floor, Omar Hodge Building 

        Wickhams
          Cay I 

        P.O.
          Box
          362

        Road
          Town, Tortola 

        British
          Virgin Islands

         

        Attention:
          Directors

        


        Facsimile:
          + [     ]

         

        RE:
           Loan
          Agreement dated as of [   ] 

        


        Dear
          Madam / Sir,

        


        Reference
          is made to the Loan Agreement dated as of [  ] between Tri Star
          Capital
          Ventures Limited (as “Lender”) and Tekoil & Gas Corporation (as “Borrower”)
          (the “Loan Agreement”). Capitalized terms used and not otherwise defined herein
          shall have the meanings ascribed to them in the Loan Agreement.

        


        Pursuant
          to clause 5(a) of the Loan Agreement, I hereby request disbursement of
          an amount
          equal to US$ _______ (__________ United States Dollars) on
          ____________2
          by means
          of bank wire transfer to the following account and in accordance with the
          following instructions:

        

          
            	
                    Recipient’s
                      Account: 

                  	 	
                    _______________

                  
	
                    Recipient’s
                      Bank Name:

                  	 	
                    _______________

                  
	
                    Recipient’s
                      Bank address:

                  	 	
                    _______________

                  
	
                    Recipient’s
                      Bank SWIFT:

                  	 	
                    _______________

                  
	
                    [Recipient’s
                      Bank Sort Code:

                  	 	
                    _______________]

                  
	
                    [Correspondent
                      Account: 

                  	 	
                    _______________]

                  
	
                    [Correspondent
                      Bank Name:

                  	 	
                    _______________]

                  
	
                    [Correspondent
                      Bank SWIFT:

                  	 	
                    _______________]

                  
	
                    Message:

                  	 	
                    _______________

                  


          

           

        

        Please
          confirm disbursement in accordance with the foregoing instructions by means
          of a
          written notice with bank confirmation of the transfer as requested. Thank
          you
          very much.

        


        Sincerely
          yours,

         

        [         ]

        

          
            
              
                

              

            

            
              	
                      1

                    	
                      Date
                        of this Disbursement Request must be at least two (2) Business
                        Days prior
                        to the Disbursement Date.

                    


            

          

          
             

            
              	2	
                      Disbursement
                        Date must be at least two (2) Business Days after the date
                        of this
                        Disbursement Request.

                    


            

             

          

        

      

      
        
          
          

        

        
          18