Document:

Unassociated Document

    
      
        Exhibit
          10.45

         

        SCHEDULE

      

      to
        the

      ISDA
        MASTER AGREEMENT

      dated
        as of

      May
        11, 2007

       

      between

       

      J.
        ARON & COMPANY,

      a
        general partnership organized under the laws of the State of New
        York

      (“Aron”),

       

      and

       

      TEKOIL
        AND GAS GULF COAST, LLC

      a
        limited liability company organized under the laws of
        Delaware

      (“Counterparty”).

       

      Part
        1. Termination Provisions

       

      
        	
                (a)

              	
                “Specified
                  Entity” 

              

      

       

      
        	 	
                (i)

              	
                means,
                  in relation to Aron, Goldman, Sachs & Co., Goldman Sachs Capital
                  Markets, L.P., Goldman Sachs International, Goldman Sachs (Japan)
                  Ltd.,
                  Goldman Sachs International Bank, Goldman Sachs (Asia) Finance,
                  Goldman
                  Sachs Financial Markets, L.P., Goldman Sachs Paris Inc. et Cie,
                  Goldman
                  Sachs Mitsui Marine Derivative Products, L.P., Goldman, Sachs & Co.
                  oHG, J. Aron & Company (Singapore) Pte., and J. Aron & Company
                  (U.K.) for the purpose of Section 5(a)(v), and shall not apply
                  for
                  purposes of Sections 5(a)(vi), 5(a)(vii) and 5(b)(iv);
                  and

              

      

       

      
        	 	
                (ii)

              	
                means,
                  in relation to Counterparty, all Affiliates of Counterparty for
                  the
                  purpose of Sections 5(a)(v), 5(a)(vi), 5(a)(vii) and
                  5(b)(iv).

              

      

       

      
        	
                (b)

              	
                “Specified
                  Transaction”.
                  The term “Specified Transaction” in Section 14 of the Agreement is amended
                  in its entirety as follows:

              

      

       

      “Specified
        Transaction”
means,
        subject to the Schedule, (a) any transaction (including an agreement with
        respect thereto) now existing or hereafter entered into between one party
        to
        this Agreement (or any Credit Support Provider of such party or any applicable
        Specified Entity of such party) and the other party to this Agreement (or
        any
        Credit Support Provider of such other party or any applicable Specified Entity
        of such other party) (i) which is a rate swap transaction, swap option, basis
        swap, forward rate transaction, commodity swap, commodity option, commodity
        spot
        transaction, equity or equity index swap, equity or equity index option,
        bond
        option, interest rate option, foreign exchange transaction, cap transaction,
        floor transaction, collar transaction, currency swap transaction, cross-currency
        rate swap transaction, currency option, weather swap, weather derivative,
        weather option, credit protection transaction, credit swap, credit default
        swap,
        credit default option, total return swap, credit spread transaction, repurchase
        transaction, reverse repurchase transaction, buy/sell-back transaction,
        securities lending transaction, or forward purchase or sale of a security,
        commodity or other financial instrument or interest (including any option
        with
        respect to any of these transactions) or (ii) which is a type of transaction
        that is similar to any transaction referred to in clause (i) that is currently,
        or in the future becomes, recurrently entered into the financial markets
        (including terms and conditions incorporated by reference in such agreement)
        and
        that is a forward, swap, future, option or other derivative on one or more
        rates, currencies, commodities, equity securities or other equity instruments,
        debt securities or other debt instruments, or economic indices or measures
        of
        economic risk or value, (b) any combination of these transactions and (c)
        any
        other transaction identified as a Specified Transaction in this agreement
        or the
        relevant confirmation.”

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                (c)

              	
                The
                  “Cross
                  Default”
                  provisions of Section 5(a)(vi) will apply to Aron and will apply
                  to
                  Counterparty, provided that (i) the phrase “or becoming capable at such
                  time of being declared” shall be deleted from clause (1) of such Section
                  5(a)(vi); and (ii) the following language shall be added to the
                  end
                  thereof: “Notwithstanding the foregoing, a default under subsection (2)
                  hereof shall not constitute an Event of Default if (i) the default
                  was
                  caused solely by error or omission of an administrative or operational
                  nature; (ii) funds were available to enable the party to make the
                  payment
                  when due; and (iii) the payment is made within two Local Business
                  Days of
                  such party’s receipt of written notice of its failure to
                  pay.”

              

      

       

      “Specified
        Indebtedness” will
        have
        the meaning specified in Section 14 of the Agreement.

       

      “Threshold
        Amount”
        means in
        relation to Aron, US$50,000,000 (or its equivalent in another currency) and
        in
        relation to Counterparty, US$1,000,000 (or its equivalent in another
        currency).

       

      
        	
                (d)

              	
                The
                  “Credit
                  Event Upon Merger”
                  provisions of Section 5(b)(iv) will apply to Aron and will apply
                  to
                  Counterparty.

              

      

       

      
        	
                (e)

              	
                The “Automatic
                  Early Termination”
                  provision of Section 6(a) will not apply to Aron and will not apply
                  to
                  Counterparty.

              

      

       

      
        	
                (f)

              	
                Payments
                  on Early Termination.
                  For the purpose of Section 6(e):

              

      

       

      
        	 	
                (i)

              	
                Loss
                  will apply. 

              

      

       

      
        	 	
                (ii)

              	
                The
                  Second Method will apply.

              

      

       

      
        	
                (g)

              	
                “Termination
                  Currency”
                  means United States Dollars.

              

      

       

      
        	
                (h)

              	
                The
                  parties agree to amend the following subsections of Section 5(a)
                  as
                  follows:

              

      

       

      
        	 	
                (i)

              	
                clause
                  (i): in the third line of this clause, delete the word “third” and insert
                  the word “first;”

              

      

       

      
        	 	
                (ii)

              	
                clause
                  (ii): in the fifth line of this clause, delete the word “thirtieth” and
                  insert the word “fifth;” and

              

      

       

      
        	 	
                (iii)

              	
                clause
                  (vii)(4): delete, following the word “liquidation” in line 9, the clause
                  beginning with “and, in the case of” and ending with the word “thereof” in
                  line 13; and in Clause (vii)(7): delete, following the word “assets” in
                  line 19, the clause beginning with “and such secured party” and ending
                  with the word “thereafter” in line 21, to eliminate the 30-day grace
                  period.

              

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (iv)

              	
                The
                  parties also agree to add a new clause (ix) as
                  follows:

              

      

       

      
        	 	
                (ix)

              	
                Adequate
                  Assurance.
                  A
                  party (“X”) fails to provide adequate assurance of its ability to perform
                  all of its outstanding obligations hereunder to the other party
                  (“Y”) on
                  or before 48 hours after a request for such assurance is made by
                  Y when Y
                  has reasonable grounds for
                  insecurity.

              

      

       

      
        	
                (i)

              	
                Additional
                  Events of Default with respect to Counterparty.
                  Section 5(a) is hereby further amended to include the following
                  as clause
                  (x), from and including the date that the Credit Agreement becomes
                  effective in accordance with its
                  terms:

              

      

       

      “(x) Each
        of
        the Events of Default (as such term is defined in the Credit Agreement)
        (together with the relevant provisions of any other Section or Sections to
        which
        such Events of Default refer, including definitions) of the Credit Agreement
        is
        hereby incorporated herein by this reference and made a part of this Agreement
        to the same extent as if the Credit Agreement were set forth in full herein,
        provided that any reference in such Events of Default to the "Lenders" or
        any
        other like term shall be deemed to be a reference to Aron. The occurrence
        at any
        time of any such Event of Default under the Credit Agreement will constitute
        an
        Event of Default with respect to Counterparty for the purposes of Section
        5(a)
        of the Agreement. If such Credit Agreement should for any reason terminate
        or if
        Aron shall object to any amendment to the Credit Agreement, such Events of
        Default will be incorporated herein as they existed immediately prior to
        such
        event. 

       

      
        	
                (j)

              	
                Additional
                  Termination Event will
                  apply.
                  It
                  will
                  constitute an Additional Termination Event hereunder upon the occurrence
                  of any of the following events:

              

      

      

      
        	
              	(i)	
                Any
                  of the following occurs with respect to Counterparty's obligations
                  to Aron
                  under this Agreement: 

              

      

      

      
        	 	
                (A)

              	
                such
                  obligations cease to be secured by an uncapped First Priority Lien
                  pursuant to the Security Documents;

              

      

       

      
        	 	
                (B)

              	
                such
                  obligations cease to be equally and ratably secured with Counterparty’s
                  Obligations to the creditors holding a First Priority Lien under
                  the
                  Credit Agreement pursuant to the Security
                  Documents;

              

      

      

      
        	 	
                (C)

              	
                such
                  obligations cease to rank at least pari passu with Counterparty's
                  Obligations to the Senior Creditors holding a First Priority Lien
                  under
                  the Credit Agreement pursuant to the Security Documents;
                  or

              

      

      

      
        	 	
                (D)

              	
                such
                  obligations cease to be guaranteed by the Guarantors pursuant to
                  the
                  Guarantees at any time for any
                  reason.

              

      

      

      
        	 	
                (ii)

              	
                The
                  Credit Agreement is replaced by another credit facility, or
                  amended and/or amended and restated to increase the
                  funded indebtedness (from such amount as of the date of this Agreement)
                  or
                  commitments or to add borrowing tranches; provided,
                  however, that any such event shall not constitute an Additional
                  Termination Event if such terms are acceptable to Aron in its sole
                  discretion. 

              

      

      

      
        	
              	(iii)	
                Any
                  Collateral under the Security Documents is released at any time,
                  unless
                  Aron shall have consented in writing prior to such release;
                  or

              

      

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      For
        the
        foregoing Additional Termination Event, Counterparty shall be the sole Affected
        Party and all Transactions shall be Affected Transactions. 

       

      For
        purposes of this Agreement, the following terms shall have the following
        meanings:

       

      “Collateral”
shall
        have the meaning set forth in the Credit Agreement.

       

      “Credit
        Agreement”
means
        that certain Credit and Guaranty Agreement, dated as of May __, 2007, among
        Counterparty, as Borrower, Tekoil & Gas Corporation, as Borrower and the
        other Guarantors party thereto from time to time, Aron as Lead Arranger,
        Administrative Agent and Syndication Agent and the other Lenders from time
        to
        time party thereto, without giving effect to any amendments, modifications
        or
        supplements thereto, or waiver or termination thereof, after the date the
        Credit
        Agreement becomes effective; provided that if Aron (in its sole discretion)
        consents to such amendment, modification, supplement or waiver of the Credit
        Agreement on or after the date the Credit Agreement becomes effective, then
        the
        term “Credit Agreement” shall refer to the Credit Agreement as so amended,
        modified, supplemented or waived.

       

      “First
        Priority”
shall
        have the meaning set forth in the Credit Agreement.

       

      “Guarantor”
shall
        have the meaning set forth in the Credit Agreement.

       

      “Guaranty
        Agreement”
shall
        have the meaning set forth in the Credit Agreement.

       

      “Lien”
shall
        have the meaning set forth in the Credit Agreement.

       

      “Obligations”
shall
        have the meaning set forth in the Credit Agreement.

       

      “Security
        Documents”
shall
        have the meaning set forth in the Credit Agreement.

       

      
        	
                (j)

              	
                Early
                  Termination.
                  Notwithstanding anything to the contrary in Section 6(a) or Section
                  6(b),
                  the parties agree that, except with respect to Transactions (if
                  any) that
                  are subject to Automatic Early Termination under Section 6(a),
                  the
                  Non-defaulting Party or the party that is not the Affected Party
                  (in a
                  case where a Termination Event under Section 5(b)(iv)) is not required
                  to
                  terminate the Transactions on a single day, but rather may terminate
                  the
                  Transactions over a commercially reasonable period of time (not
                  to exceed
                  ten days) (the “Early Termination Period”). The last day of the Early
                  Termination Period shall be the Early Termination Date for purposes
                  of
                  Section 6; provided, however, that interest shall accrue on the
                  Transactions terminated during the Early Termination Period prior
                  to the
                  Early Termination Date at the Non-default
                  Rate.

              

      

       

      Part
        2. Tax Representations

       

      
        	
                (a)

              	
                Payer
                  Tax Representations. For
                  the purposes of Section 3(e), Aron and Counterparty make the following
                  representation:

              

      

       

      It
        is not
        required by any applicable law, as modified by the practice of any relevant
        governmental revenue authority, of any Relevant Jurisdiction to make any
        deduction or withholding for or on account of any Tax from any payment (other
        than interest under Section 2(e), 6(d)(ii), or 6(e) of this Agreement) to
        be
        made by it to the other party under this Agreement. In making this
        representation, it may rely on (i) the accuracy of any representations made
        by
        the other party pursuant to Section 3(f) of this Agreement, (ii) the
        satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of
        this
        Agreement, and the accuracy and effectiveness of any document provided by
        the
        other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement, and
        (iii) the satisfaction of the agreement of the other party contained in Section
        4(d) of this Agreement, provided that it shall not be a breach of this
        representation where reliance is placed on clause (ii) and the other party
        does
        not deliver a form or document under Section 4(a)(iii) by reason of material
        prejudice to its legal or commercial position. 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
        	
                (b)

              	
                Payee
                  Tax Representations.
                  For the purposes of Section 3(f), Counterparty makes the following
                  representations:

              

      

       

      
        	 	
                (i)

              	
                It
                  is not acting as an agent or intermediary for any foreign person
                  with
                  respect to the payments received or to be received by it in connection
                  with this Agreement.

              

      

       

      
        	 	
                (ii)

              	
                It
                  is a United States person within the meaning of Section 7701(a)(30)
                  of the
                  Internal Revenue Code of 1986, as
                  amended.

              

      

       

      Part
        3. Agreement to Deliver Documents

       

      
        	
                (a)

              	
                For
                  the purpose of Section 4(a), Tax forms, documents, or certificates
                  to be
                  delivered are:

              

      

       

      Tax
        forms, documents, or certificates to be delivered are:

       

      
        	
                Party
                  required to deliver document

                 

              	
                Forms/Documents/Certificates

                 

              	
                Date
                  by which to
                  be delivered

                 

              
	
                Counterparty

              	
                United
                  States Internal Revenue Service Form W-9, or any successor
                  form.

              	
                (i)
                  On a date which is before the first Scheduled Payment Date under
                  this
                  Agreement, (ii) promptly upon reasonable demand by GSCM, and (iii)
                  promptly upon learning that any such form previously provided by
                  Counterparty has become obsolete, incorrect, or
                  ineffective.

              

      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                (b)

              	
                Other
                  documents to be delivered are:

                 

              

      

      
        	
                Party
                  required to deliver

                 

              	
                Form/Document/Certificate

                 

              	
                Date
                  by which to be delivered

                 

              	
                Covered
                  by Section 3(d) Representation

                 

              
	
                Aron
                  and Counterparty

              	
                Evidence
                  of authority of signatories

              	
                Upon
                  or promptly following execution of this Agreement

              	
                Yes

              
	
                Aron
                  

              	
                Any
                  Credit Support Document specified in Part 4(f)(i) herein

              	
                Within
                  three (3) days of execution of this Agreement 

              	
                No

              
	
                Aron
                  and Counterparty

              	
                Most
                  recent annual audited and quarterly financial statements of the
                  party or,
                  with respect to Aron, its Credit Support Provider

              	
                Promptly
                  following reasonable demand by the other party

              	
                Yes

              
	
                Counterparty

              	
                Certified
                  resolutions of its board of directors or other governing
                  body

              	
                Upon
                  execution of this Agreement

              	
                Yes

              
	
                Counterparty

              	
                Any
                  Credit Support Document specified in Part 4(f)(ii) and Part 4(f)(iii)
                  herein

              	
                On
                  the date of execution of this Agreement

              	
                No

              
	
                Counterparty

              	
                Such
                  documents, reports and certificates as the Counterparty shall be
                  required
                  to provide to the Administrative Agent under the Credit
                  Agreement

              	
                At
                  such times such documents, reports or certificates, as the case
                  may be,
                  are required to be delivered by the Counterparty under the Credit
                  Agreement

              	
                Yes

              
	
                Counterparty

              	
                Legal
                  opinion with respect to Counterparty

              	
                Upon
                  execution of this Agreement

              	
                Yes

              

      

       

      Part
        4. Miscellaneous

       

      
        	
                (a)

              	
                Addresses
                  for Notices.
                  For the purpose of Section 12(a):

              

      

       

      
        	 	
                (i)

              	
                Address
                  for notices or communications to
                  Aron:

              

      

       

      
        
          
            	
                  	
                    Address:

                  	
                    J.
                      Aron & Company

                  

          

          
            	 	 	
                    85
                      Broad Street

                    New
                      York, New York 10004

                  

          

          
            	 	 	 

          

          
            	 	Attention:	Energy
                    Operations

          

          
            	 	Telephone:	(212)
                    902-8986

          

          
            	 	Facsimile:	(212)
                    493-9849

          

        

      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	 	 

        	 	
                (ii)

              	
                Address
                  for notices or communications to
                  Counterparty:

              

      

       

      
        
          	 	Address:	Tekoil and Gas Gulf Coast,
                  LLC

          	 	 	
                  25050 I-45 North, Suite 525

                  The Woodlands, Texas
                    77380

                

          	 	 	 

          	 	Attention:	Mark Western

          	 	Telephone:	 

          	 	Facsimile: 	281-364-8008

        

         

      

      
        	
                (b)

              	
                Process
                  Agent.
                  For the purpose of Section 13(c):

              

      

       

      Aron
        appoints as its Process Agent, not applicable.

       

      Counterparty
        appoints as its Process Agent: in the Borough of Manhattan, City, County
        and
        State of New York:

      
        	 
	
                C. T.
                  Corporation System

                111
                  Eighth Avenue

                13th
                  Floor

                New
                  York, New York 10011

              

      

       

      
        	
                (c)

              	
                Offices.
                  The provisions of Section 10(a) will apply to this
                  Agreement.

              

      

       

      
        	
                (d)

              	
                Multibranch
                  Party.
                  For the purpose of Section 10(c):

              

      

       

      Aron
        is
        not a Multibranch Party.

       

      Counterparty
        is not a Multibranch Party.

       

      
        	
                (e)

              	
                Calculation
                  Agent.
                  The Calculation Agent is Aron.

              

      

       

      
        	
                (f)

              	
                Credit
                  Support Document.
                  Any guaranty or other form of credit support provided on behalf
                  of
                  Counterparty at any time shall constitute a Credit Support Document
                  with
                  respect to the obligations of Counterparty. Details of any other
                  Credit
                  Support Document, each of which is incorporated by reference in,
                  and made
                  part of, this Agreement and each Confirmation (unless provided
                  otherwise
                  in a Confirmation) as if set forth in full in this Agreement or
                  such
                  Confirmation:

              

      

       

      
        	 	
                (i)

              	
                Guaranty
                  by The Goldman Sachs Group, Inc. (“Goldman Group”) in favor of
                  Counterparty as beneficiary thereof shall constitute a Credit Support
                  Document with respect to the obligations of
                  Aron.

              

      

       

      
        	 	
                (ii)

              	
                The
                  Security Documents shall constitute Credit Support Documents with
                  respect
                  to the obligations of Counterparty.

              

      

       

      
        	 	
                (iii)

              	
                Each
                  of the Guarantees shall constitute Credit Support Documents with
                  respect
                  to the obligations of Counterparty to Aron under this
                  Agreement.

              

      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      

       

      
        	
                (g)

              	
                Credit
                  Support Provider. 

              

      

       

      Credit
        Support Provider means in relation to Aron, Goldman Group. 

       

      Credit
        Support Provider means in relation to Counterparty, the Guarantors (as defined
        in the Credit Agreement)
        and any
        party that at any time provides a guaranty or other form of credit support
        on
        behalf of Counterparty.

       

      
        	
                (h)

              	
                Governing
                  Law. Section
                  13(a) is hereby replaced with the
                  following:

              

      

       

      
        	 	
                (a)

              	
                Governing
                  Law.
                  This Agreement and each Transaction entered into hereunder will
                  be
                  governed by, and construed and enforced in accordance with, the
                  law of the
                  State of New York without reference to its choice of law
                  doctrine.

              

      

       

      
        	
                (i)

              	
                Jurisdiction.
                  Section 13(b) is hereby amended by:

              

      

       

      
        	 	
                (i)

              	
                deleting
                  in the second line of subparagraph (i) thereof the word “non-”;
                  and

              

      

       

      
        	 	
                (ii)

              	
                deleting
                  the final paragraph thereof.

              

      

       

      
        	
                (j)

              	
                Netting
                  of Payments.
                  Subparagraph (ii) of Section 2(c) will not apply to Transactions.
                  Notwithstanding anything to the contrary in Section 2(c), unless
                  otherwise
                  expressly agreed by the parties, the netting provided for in Section
                  2(c)
                  will not apply separately to any pairings of branches or Offices
                  through
                  which the parties make and receive payments or
                  deliveries.

              

      

       

      Part
        5. Other Provisions

       

      
        	
                (a)

              	
                Accuracy
                  of Specified Information.
                  Section 3(d) is hereby amended by adding in the third line thereof
                  after
                  the word “respect” and before the period, the phrase “or, in the case of
                  audited or unaudited financial statements, a fair presentation
                  of the
                  financial condition of the relevant
                  person.”

              

      

       

      
        	
                (b)

              	
                Scope
                  of Agreement.
                  Any transaction outstanding between the parties at the date this
                  Agreement
                  comes into force or entered into by the parties at or after the
                  date this
                  Agreement comes into force that is: (1) an FX Transaction or a
                  Currency
                  Option Transaction as defined in the 1998 FX and Currency Option
                  Definitions (the “FX Definitions”), as published by the International
                  Swaps and Derivatives Association, Inc. (“ISDA”), the Emerging Markets
                  Traders Association, and the Foreign Exchange Committee, unless
                  otherwise
                  specified in the relevant confirmation, and (2) a transaction between
                  the
                  parties of the type set forth in the definition of “Specified Transaction”
                  herein unless otherwise specified in the relevant confirmation
                  relating to
                  such Specified Transaction or unless otherwise agreed by the parties,
                  will
                  constitute a “Transaction” for the purposes of this Agreement.
                  Transactions of the type set forth in (1) above will
                  be deemed to incorporate the FX Definitions.

              

      

       

      
        	
                (c)

              	
                Additional
                  Representations.
                  The parties agree to amend Section 3 by adding new Sections 3(g),
                  (h),
                  (i), and (j) as follows:

              

      

       

      
        	 	
                (g)

              	
                Eligible
                  Contract Participant.
                  It
                  is an “eligible contract participant” as defined in the U.S. Commodity
                  Exchange Act.

              

      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (h)

              	
                Non-Reliance.
                  It
                  is acting for its own account, and it has made its own independent
                  decisions to enter into that Transaction and as to whether that
                  Transaction is appropriate or proper for it based upon its own
                  judgment
                  and upon advice from such advisers as it has deemed necessary.
                  It is not
                  relying on any communication (written or oral) of the other party
                  as
                  investment advice or as a recommendation to enter into that Transaction;
                  it being understood that information and explanations related to
                  the terms
                  and conditions of a Transaction shall not be considered investment
                  advice
                  or a recommendation to enter into that Transaction. No communication
                  (written or oral) received from the other party shall be deemed
                  to be an
                  assurance or guarantee as to the expected results of that
                  Transaction.

              

      

       

      
        	 	
                (i)

              	
                Assessment
                  and Understanding.
                  It
                  is capable of assessing the merits of and understanding (on its
                  own behalf
                  or through independent professional advice), and understands and
                  accepts,
                  the terms, conditions and risks of that Transaction. It is also
                  capable of
                  assuming, and assumes, the risks of that
                  Transaction.

              

      

       

      
        	 	
                (j)

              	
                Status
                  of Parties.
                  The other party is not acting as a fiduciary for or an adviser
                  to it in
                  respect of that Transaction.

              

      

       

      
        	
                (e)

              	
                Transfer.
                  The following amendments are hereby made to Section
                  7:

              

      

       

      
        	 	
                (i)

              	
                In
                  the third line, insert the words “which consent will not be arbitrarily
                  withheld or delayed,” immediately before the word “except”;
                  and

              

      

       

      
        	 	
                (ii)

              	
                in
                  clause (a), insert the words “or reorganization, incorporation,
                  reincorporation, or reconstitution into or as,” immediately before the
                  word “another.”

              

      

       

      
        	
                (e)

              	
                Consent
                  to Recording.
                  Each party consents to the recording of telephone conversations
                  between
                  the trading, marketing and other relevant personnel of the parties,
                  with
                  or without the use of a warning tone, and their Affiliates in connection
                  with this Agreement or any potential
                  Transaction.

              

      

       

      
        	
                (f)

              	
                Definitions.
                  The following amendments are hereby made to Section
                  14:

              

      

       

      
        	 	
                (i)

              	
                The
                  definition of “Termination
                  Currency Equivalent”
                  in
                  Section 14 is hereby amended by deleting in its entirety the text
                  after
                  the first three lines thereof and replacing it with the
                  following:

              

      

       

      “by
        the
        party making the relevant determination in any commercially reasonable manner
        as
        being required to purchase such amount of such Other Currency as at the relevant
        Early Termination Date, or, if the relevant amount determined in accordance
        with
        Section 6(e) is determined as of a later date, that later date, for value
        on the
        date the payment or settlement payment is due.”

       

      
        	
                (g)

              	
                Set-off.
                  The parties agree to amend Section 6 by adding a new Section 6(f)
                  as
                  follows:

              

      

       

      “(f) Upon
        the
        occurrence of an Event of Default or Termination Event under Section 5(b)(iv)
        with respect to a party ("X"), the other party ("Y") will have the right
        (but
        not be obliged) without prior notice to X or any other person to set-off
        or
        apply any obligation of X owed to Y (or any Affiliate of Y) (whether or not
        matured or contingent and whether or not arising under this Agreement, and
        regardless of the currency, place of payment or booking office of the
        obligation) against any obligation of Y (or any Affiliate of Y) owed to X
        (whether or not matured or contingent and whether or not arising under this
        Agreement, and regardless of the currency, place of payment or booking office
        of
        the obligation). Y will give notice to the other party of any set-off effected
        under this Section 6(f).

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      Amounts
        (or the relevant portion of such amounts) subject to set-off may be converted
        by
        Y into the Termination Currency at the rate of exchange at which such party
        would be able, acting in a reasonable manner and in good faith, to purchase
        the
        relevant amount of such currency.

       

      If
        any
        obligation is unascertained, Y may in good faith estimate that obligation
        and
        set-off in respect of the estimate, subject to the relevant party accounting
        to
        the other when the obligation is ascertained.

       

      Nothing
        in this Section 6(f) shall be effective to create a charge or other security
        interest. This Section 6(f) shall be without prejudice and in addition to
        any
        right of set-off, combination of accounts, lien or other right to which any
        party is at any time otherwise entitled (whether by operation of law, contract
        or otherwise).”

       

      
        	
                (h)

              	
                Definitions.
                  This Agreement, each Confirmation and each Transaction is subject
                  to the
                  1993 ISDA Commodity Derivatives Definitions as supplemented by
                  the 2000
                  Supplement to the 1993 ISDA Commodity Derivatives Definitions,
                  as
                  published by ISDA (together, the “Definitions”), and will be governed in
                  all respects by the Definitions (except that references to “Swap
                  Transactions” in the Definitions will be deemed to be references to
                  “Transactions”). The Definitions are incorporated by reference in, and
                  made part of, this Agreement and each Confirmation as if set forth
                  in full
                  in this Agreement and such Confirmations. In the event of any
                  inconsistency between the provisions of this Agreement and the
                  Definitions, this Agreement will prevail. Subject to Section 1(b),
                  in the
                  event of any inconsistency between the provisions of any Confirmation,
                  this Agreement, and the Definitions, such Confirmation will prevail
                  for
                  the purpose of the relevant
                  Transaction.

              

      

       

      
        
          
            	(j)	
                    Incorporation
                      of Covenants by Reference. Each
                      of the affirmative and negative covenants contained in the
                      Credit
                      Agreement (together with the relevant provisions of any other
                      Section or
                      Sections to which they refer, including definitions) is hereby
                      incorporated herein by this reference and made a part of this
                      Agreement to
                      the same extent as if the Credit Agreement were set forth in
                      full herein,
                      provided that any reference in such provisions to, “Bank”, “Deposit Bank”,
                      the “Administrative Agent,” the “Agent”, the “Required Lenders” and the
                      "Lenders" or any other like term shall be deemed to be a reference
                      to
                      Aron. If for any reason such Credit Agreement should for any
                      reason
                      terminate, such covenants will be incorporated herein as they
                      existed
                      immediately prior to such event. Each such incorporated covenant
                      will be
                      deemed an agreement or obligation for the purposes of Section
                      5(a)(ii) of
                      the Agreement.

                  

          

        

      

       

      
        	
                (k)

              	
                Waiver
                  of Trial by Jury.
                  Each party hereby irrevocably waives any and all right to trial
                  by jury in
                  any Proceeding.

              

      

       

      
        	
                (l)

              	
                Confirmations.
                  Counterparty shall be deemed to have agreed to the terms contained
                  in any
                  Confirmation (as amended and revised) sent by Aron to Counterparty
                  unless
                  Counterparty objects to such terms within three (3) Business Days
                  of
                  receipt.

              

      

       

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      Part
        6.  Disruption
        Fallbacks

      

      The
        following “Disruption
        Fallbacks”
        specified in Section 7.5(c) of the Definitions shall apply, in the following
        order, except as otherwise specified in the relevant Confirmation:

      

      
        	
              	(i)	
                “Fallback
                  Reference Price”; 

              

        	 	 	 

        	 	(ii)	“Postponement”, with two (2) Commodity
                Business Days as the Maximum  Days
                of Disruption;

        	 	 	 

        	 	(iii)	Negotiated
                Fallback;

        	 	 	 

        	 	(iv)	
                “Fallback
                  Reference Dealers”; and

              

        	 	 	 

        	 	(v)	
                “Calculation
                  Agent Determination”. 

              

      

       

       

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      

      

      IN
        WITNESS WHEREOF,
        the
        parties have executed this document on the respective dates specified below
        with
        effect from the date specified on the first page of this document.

       

       

      
        	
                J.
                  ARON & COMPANY

              	 	 	
                TEKOIL
                  AND GAS GULF COAST, LLC

              
	 	 	 	 
	 	 	 	 
	
                /s/ Colleen
                  Foster

              	 	 	
                /s/
                  Mark S.
                  Western

              
	
                

                Name: Colleen
                  Foster

              	 	 	
                
                  

                  Name: Mark
                    S. Western

                

              

      

      
        	
                Title: Managing
                  Director

              	 	 	
                Title: President

              
	
                Date:

              	 	 	
                Date: May
                  11, 2007

              

      

      

      

      
        
          
          

        

        
          12Unassociated Document

    Exhibit
      10.46

     

    TEKOIL
      & GAS CORPORATION

     

    TRANSFER
      ACKNOWLEDGEMENT

    AND
      AGREEMENT

     

    

    1.     Prior
      Subscription.
      Each
      Subscriber (as identified on the signature page attached hereto) has subscribed,
      pursuant to a certain Amended and Restated Subscription Agreement executed
      by
      the parties hereto as of April 12, 2007 (the “Subscription Agreement”), for and
      agreed to be issued Nine Million (9,000,000) shares of Common Stock (the
“Common
      Stock”)
      of
      Tekoil & Gas Corporation, a Delaware corporation (the “Company”),
      all
      as consideration under a certain Purchase and Sale Agreement dated November
      13,
      2006, and as amended through the date hereof (referred to together as the
“PSA”).
      Capitalized terms used herein and not otherwise defined have the meanings
      ascribed to them in the PSA. The Common Stock is also referred to herein as
      the
“Securities”.
      Each
      Subscriber and the Company is also party to a certain Registration Rights
      Agreement dated December 29, 2006 and as amended through the date hereof by
      the
      amendments to the PSA (the “Registration Rights Agreement”). 

     

    2.     Distribution.
      As
      contemplated in the Subscription Agreement and the Registration Rights
      Agreement, Subscribers desire to distribute and transfer the certain of the
      shares of Common Stock to the “Transferees” indicated below to or for the
      benefit of the members of the Subscribers and request that the Company do so,
      and such Transferees desire to receive certificates representing the shares
      of
      Common Stock to be transferred to them as indicated below, but subject in all
      respects to the terms hereof and the other agreements described
      herein:

     

    
      	
              Transferee

            	
              Shares
                of Common Stock

            
	 	 
	
              Rich
                Holdings LLC, 

            	
              4,000,000

            
	
              A
                Texas limited liability company,

            	 
	
              wholly
                owned by Richard H. Lee

               

            	 
	
              John
                W. Barton

            	
              4,000,000

            

    

    

    and
      the
      balance of 1,000,000 shares of Common Stock shall be issued in the name of
      Masters Resources, LLC (one of the original Subscribers).

    

    3.     Transferee's
      Representations and Warranties.
      Each
      Transferee, severally and not jointly, represents, warrants, acknowledges and
      agrees that:

     

    (a)     Transferee
      is a resident of the state indicated on the signature page hereof, is legally
      competent to execute this agreement, and:

     

    (i)     if
      Transferee is an individual, has his or her principal residence in such
      state;

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (ii)     if
      Transferee is a corporation, partnership, trust, limited liability company
      or
      other form of business organization, has its principal office in such state;
      or

     

    (iii)     if
      Transferee is a corporation, partnership, trust, limited liability company
      or
      other form of business organization, Transferee has not been organized for
      the
      specific purpose of acquiring the Common Stock.

     

    (b)     Transferee
      has not been offered the Securities by any form of general solicitation or
      general advertising, including but not limited to any advertisement, article,
      notice or other communication published in any newspaper, magazine, or similar
      media or broadcast over television or radio, or any seminar or meeting whose
      attendees have been invited by any general solicitation or general
      advertising.

     

    (c)     Transferee
      has had access during the course of this transaction and prior to the issuance
      of the Securities to all information necessary to enable Transferee 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 Transferee 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
      Transferee have been answered to the full satisfaction of
      Transferee.

     

    (d)     There
      are
      substantial restrictions on the transferability of the Securities and,
      accordingly, Transferee will need to bear the economic risk of the investment
      in
      the Securities for an indefinite period of time and will not be readily able
      to
      liquidate the investment in case of an emergency.

     

    (e)     Transferee
      understands that the Company has a limited financial or operating history,
      each
      of the Securities is a speculative investment which involves a high degree
      of
      financial risk, and there is no assurance of any economic, income or tax benefit
      from such investment.

     

    (f)     In
      making
      this investment, Transferee is relying solely upon the advice of Transferee's
      personal tax advisors, and not the Company nor its advisers and counsel, with
      respect to the tax aspects of an investment in the Securities.

     

    (g)     If
      Transferee is a corporation, partnership, trust, limited liability company,
      employee benefit plan or other entity, Transferee is authorized and qualified
      to
      become a stockholder of the Company and the person signing this 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 Transferee by the Company or
      any
      officer, employee, agent or affiliate of the Company (other than those set
      forth
      in the PSA), and Transferee's investment decision has been based solely upon
      Transferee's independent evaluation and due diligence, if any, of the
      Company.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (i)     Transferee
      is experienced in evaluating and investing in early stage companies such as
      the
      Company. Transferee 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 Transferee is capable
      of
      evaluating the merits and risks of an investment in the Securities and has
      the
      capacity to protect Transferee’s own interests in connection with Transferee’s
      proposed investment in the Securities.

     

    (j)     Transferee’s
      aggregate commitments to investments that are not readily marketable are not
      disproportionate to Transferee’s net worth and an investment in the Securities
      will not cause such aggregate commitment to become excessive. Transferee has
      adequate means of providing for Transferee’s current needs and possible personal
      and family contingencies. Transferee will not be readily able to liquidate
      the
      investment in the case of an emergency, and Transferee has no need for liquidity
      in this investment in the Company.

     

    (k)     Transferee
      has a preexisting business or personal relationship with the Company or with
      one
      or more of its officers or directors. Transferee is acquiring the Securities
      solely for Transferee’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 Transferee has no present
      plans
      to enter into any contract, undertaking, agreement or arrangement for any such
      resale, distribution, fractionalization or transfer.

     

    (l)     The
      terms
      of the Registration Rights Agreement, as amended, shall apply to Transferee
      as
      if Transferee were a signatory thereto.

     

    4.     Representations
      and Warranties Concerning Suitability and Accredited Investor
      Status.
      Transferee hereby represents and warrants to the Company that Transferee 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 Transferee to the Company below. Transferee hereby
      represents and warrants and agrees that:

     

    (a)     Transferee
      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)     Transferee
      has determined that the Securities are a suitable investment for Transferee.
      Transferee 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 Transferee's current needs and contingencies and has no need
      for liquidity in this investment.

     

    5.     Fees
      and Expenses.
      Transferee 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.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    6.     Restrictions.
      The
      Transferee will not at any time make any disposition of any of the Securities
      except in accordance with applicable federal and state securities laws and
      the
      legend set forth below. The certificates for the Securities to be issued to
      the
      undersigned will bear a legend in substantially the following form:

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES
      MAY
      NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES
      LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION
      IS
      NOT REQUIRED UNDER THE SECURITIES ACT OF 1933 OR SUCH LAWS.

     

    In
      the
      event the Common Stock may be publicly resold under the Registration Rights
      Agreement or otherwise under applicable securities laws, Transferees and Masters
      Resources, LLC together agree that they will not publicly resell more than
      250,000 shares thereof per calendar week. Transferees and Masters Resources,
      LLC
      together agree that a legend reflecting the foregoing, pro-rated as to the
      allocations described above, and reasonable transfer restrictions consistent
      therewith may be placed on the Common Stock.

     

    7.     Miscellaneous.
      The
      terms and conditions contained in this agreement (together with the PSA and
      Registration Rights Agreement) constitute the entire agreement between the
      parties with respect to the subject matter hereof and supersede all previous
      agreements and under-standings, whether oral or written, between the parties
      hereto with respect to the subject matter hereof. This agreement shall be
      construed in accordance with and governed by the laws of the State of Delaware.
      This agreement may be amended only by a writing executed by the Company and
      Transferee.

     

    IN
      WITNESS WHEREOF,
      Transferee has executed this agreement on the date indicated on the signature
      page hereof.

     

    [Signatures
      on Next Page]

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    The
      undersigned each confirms and certifies that it has read this entire agreement
      and understands the provisions hereof, and that the undersigned has executed
      this agreement as of the date set forth below.

     

    DATED:
      May ____, 2007

     

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

    

    
      	
              (     )     Community
                Property

            	
              (     )     Joint
                Tenants with Right of Survivorship

            
	
              (     )     Tenants
                in Common

            	
              (     )     Separate
                Property

            
	
              ( X )     Other:
                (e.g.
                individual, corporation, partnership, limited liability company (as
                to
                both ), trust, investment company). Please indicate: ___________

               

            

    

     

    Subscriber
      Signature(s):

     

    
      	 	MASTERS RESOURCES,
              LLC	 	 	MASTERS OIL & GAS,
              LLC
	 	 	 	 	 
	 	/s/ John
              W. Barton	 	 	/s/ John
              W. Barton
	 	Name and Title of Signatory
              if
              Subscriber is an
              entity	 	 	
            
	 	 	 	 	 
	By:	
               John
                W. Barton

            	 	
               By: 
                

            	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
	 	 	 	 	 
	 	  	 	 	 
              

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
       

      
        	 	Transferee: 	 	 	Transferee:
	 	 	 	 	 
	 	RICH HOLDINGS LLC	 	 	MASTERS OIL & GAS,
                LLC
	 	 	 	 	 
	 By:	/s/ Richard
                H. Lee 	 	
                By: 
                  

              	/s/ John
                W. Barton
	 	    
                Richard H. Lee 	 	 	     John
                W. Barton
	 	 	 	 	 
	As
                its: Managing Member	 	
                  
                  

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	###-##-####	 	 	###-##-####
	 	Social Security or Tax ID Number 	 	 	Social Security or Tax ID Number of
                Joint
                 Subscriber
	 	 	 	 	 
	 	7
                Twin Circle 	 	 	18
                Woodlake Sq. #200
	 	Address 	 	 	Address of Joint Transferee
	 	 	 	 	 
	 	
                Houston,
                  TX 77042   

              	 	 	Houston,
                TX 77063
	 	 	 	 	 
	 	 	 	 	 
	 	Accepted By:	 	 	 
	 	 	 	 	 
	 	
                TEKOIL
                  & GAS CORPORATION,

                a
                  Delaware corporation

              	 	 	 
	 	 	 	 	 
	By:	/s/ Mark
                Western	 	 	 
	 	Signature	 	 	 
	 	 	 	 	 
	 	Mark
                Western, President	 	 	 
	 	Name/Title	 	 	 

      

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    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.

               

            

    

    

     

     

     

     

     

    
 

    
      
        
        

      

      
        7

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