TEKOIL
      & GAS CORPORATION

     

    SUBSCRIPTION
      AGREEMENT 

     

    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 the shares of Common Stock described
      on
      the signature page attached hereto (the “Common
      Stock”)
      of
      Tekoil & Gas Corporation, a Delaware corporation (the “Company”).

     

    2.  Consideration.
      The
      Common Stock described herein constitutes a portion of the consideration payable
      by the Company to Subscriber under a certain Purchase and Sale Agreement dated
      November 13, 2006, and as amended December 29, 2006, in connection with the
      acquisition and sale of certain assets described therein as amended by a certain
      First Amendment thereto dated of even date herewith (referred to together as
      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.

     

    (b)  Subscriber
      has not been offered the Common Stock 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 Common Stock 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 Common Stock and,
      accordingly, Subscriber will need to bear the economic risk of the investment
      in
      the Common Stock 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,
      the
      Common Stock 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 Common Stock.

     

    (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 Common Stock and has
      the
      capacity to protect Subscriber’s own interests in connection with Subscriber’s
      proposed investment in the Common Stock.

     

    (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 Common Stock
      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.

     

    (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, Subscriber is acquiring the Common Stock 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.

     

    
      
        
        

      

      
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    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 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 Common Stock 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 agrees that he will not at any time make any disposition of any
      of
      the Common Stock except in accordance with applicable federal and state
      securities laws and the legend set forth below. The certificates for the Common
      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.

     

    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. 

     

    
      
        
        

      

      
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    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:
      December 29,
      2006

     

    Subscriber
      has agreed to accept 500,000 shares of Common Stock as partial consideration
      of
      the purchase price payable by the Company under the PSA, as more fully described
      in the PSA.

     

    Which
      will be held by Subscriber(s) in the following manner, if
      applicable:

     

    
      
        	 	
                o

              	
                Community
                  Property

              	
                o

              	
                Joint
                  Tenants with Right of Survivorship

              
	 	
                o

              	
                Tenants
                  in Common

              	
                o

              	
                Separate
                  Property

              
	 	
                x

              	
                Other:
                  (e.g.
                  individual, corporation, partnership, limited liability company,
                  trust,
                  investment company). Please indicate: limited
                  liability company.

              


      

       

    

    Subscriber
      Signature(s)

     

    
      	MASTERS
              RESOURCES, LLC	 	 	MASTERS
              OIL & GAS, LLC
	 	 	 	 
	
              

            	 	 	
              

            
	
              Managing
                Member 

            	 	 	 
	
              

              Name
                and Title of Signatory if Subscriber is an entity

            	 	 	 
	 	 	 	 
	 	 	 	 
	/s/
              John W. Barton	 	 	
              /s/
                John W. Barton

            
	
              
Signature	 	 	
              
                

              

              Signature
                of Joint Subscriber

            
	
            	 	 	
            
	
              

              Social
                Security or Tax ID Number 

            	 	 	
              
Social
              Security or Tax ID Number of Joint Subscriber
	 	 	 	 
	
              
                

              

              
                Address

              

            	 	 	
              
Address
              of Joint Subscriber
	 	 	 	 
	
              
 	 	 	
              
 


    

     

    
      	Reviewed and Advised By (if
              any):	 	 	Accepted By:
	 	 	 	 
	
              

              Subscriber’s
                Professional Advisor

            	 	 	
              TEKOIL
                & GAS CORPORATION,
a Delaware
                corporation

            
	 	 	 	 
	 	 	 	 
	
            	 	 	/s/
              Mark S. Western 
	
              
Name	 	 	
              
Signature
	 	 	 	 
	
            	 	 	
              Chairman
                and CEO 

            
	
              
Address	 	 	
              

              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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