Document:

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.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    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. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      Subscriber has executed this Subscription Agreement on the date indicated on
      the
      signature page hereof.

     

    

      [SIGNATURES
        ON NEXT
        PAGE]

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    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

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    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.

            

    

     

    
      
        
        

      

      
        6REGISTRATION
      RIGHTS AGREEMENT

     

    REGISTRATION
      RIGHTS AGREEMENT
      (this
“Agreement”),
      dated
      as of December 29, 2006, by and between TEKOIL
      & GAS CORPORATION,
      a
      Delaware corporation, with principal offices located at 5036 Dr. Phillips Blvd.,
      Suite 232, Orlando, Florida 32819 (the “Company”),
      and
MASTERS
      RESOURCES LLC and MASTERS OIL & GAS LLC, both
      Texas limited liability companies (referred to together as “Buyer”)
      with
      respective principal places of business at 9801 Westheirner, Suite 1070,
      Houston, Texas 77042, and each of Rich
      Holdings, LLC,
      a Texas
      limited liability company, and John
      W. Barton,
      individually (collectively, “Buyer’s
      Designees”).

    

    PRELIMINARY
      STATEMENTS

    

    A. In
      connection with the Subscription Agreement by and between the parties of even
      date herewith (the “Securities
      Purchase Agreement”),
      the
      Company has agreed, upon the terms and subject to the conditions of the
      Securities Purchase Agreement, to issue to the Buyer shares of the Company’s
      common stock, par value $0.01 per share (the “Common
      Stock”);
      and

    

    B.
      The
      Company has agreed to provide certain registration rights under the Securities
      Act of 1933, as amended, and the rules and regulations thereunder, or any
      similar successor statute (collectively, the “1933
      Act”),
      and
      applicable state securities laws; and 

    

    C.
      Buyer
      has
      designated each of Buyer’s Designees as the recipients of the Common Stock which
      is the subject of this Agreement; and 

    

    D.
      Buyer
      and
      Buyer’s Designees agree to be bound by the terms and provisions of this
      Agreement.

    

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company, the Buyer and Buyer’s Designees hereby agree
      as follows:

     

    1. DEFINITIONS.

     

    a.
      As
      used
      in this Agreement, the following terms shall have the following
      meanings:

    

    (i) “Investor”
means
      Buyer’s Designees and any transferee or assignee thereof who agrees to become
      bound by the provisions of this Agreement in accordance with Section 9
      hereof.

    

    (ii) “register,”
      “registered,”
and
      “registration”
refer
      to a registration effected by preparing and filing a Registration Statement
      or
      Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
      1933 Act or any successor rule providing for offering securities on a continuous
      basis (“Rule
      415”),
      and
      the declaration or ordering of effectiveness of such Registration Statement
      by
      the United States Securities and Exchange Commission (the “SEC”).

    

    (iii) “Registrable
      Securities”
means
      the shares of Common Stock issued to Buyer’s Designees under the Securities
      Purchase Agreement.

    
      
         

      

      
         

        
          

        

      

       

    

    

    (iv) “Registration
      Period”
means
      the period commencing on the date on which the Registration Statement filed
      pursuant to this Agreement is declared effective by the SEC and expiring on
      the
      date that (A) the Investor may sell all of the Registrable Securities without
      restriction pursuant to Rule 144 promulgated under the 1933 Act, or (B) the
      Investor has sold all of the Registrable Securities.

    

    (v) “Registration
      Statement”
means
      a
      registration statement of the Company under the 1933 Act.

    

    b. Capitalized
      terms used herein and not otherwise defined herein shall have the respective
      meanings set forth in the Securities Purchase Agreement.

    

    2. REGISTRATION
      RIGHTS. 

    

    a.
      Mandatory
      Registration.
      The
      Company shall prepare and file with the SEC a Registration Statement on Form
      S-3
      (or, if such form is unavailable for such a registration, on such other form
      as
      is available for such a registration) covering the resale of the Registrable
      Securities within 45 days of the date of Closing. The Registration Statement
      (and each amendment or supplement thereto, and each request for acceleration
      of
      effectiveness thereof) shall be provided to and approved by Buyer’s Designees
      and their counsel prior to its filing or other submission, such approval not
      to
      be unreasonably withheld. The Company will use its reasonable efforts to cause
      such Registration Statement to become effective within 120 days of filing.
      In
      the event such Registration Statement does not become effective within 180
      days
      from the date of such filing, Investor shall have the right to put (by written
      demand and tender) the Registrable Securities or any portion thereof to the
      Company and the Company shall be obligated to repurchase the same (free and
      clear of all liens, claims and encumbrances) at a purchase price equal to the
      average per share trading price of the common stock of the Company (on the
      principal exchange or quotation media on which such common stock is traded
      or
      quoted) during the ten (10) day trading period ending immediately prior to
      the
      date of such demand and tender multiplied by the number of shares of common
      stock of the Company comprising Registrable Securities and included in such
      demand and tender, with payment and delivery to occur within ten (10) business
      days following such demand.

    

    b.
      Piggy-Back
      Registrations.
      If at
      any time prior to filing a Registration Statement under this Agreement, the
      Company shall file with the SEC a Registration Statement relating to an offering
      for its own account or the account of others under the 1933 Act of any of its
      equity securities (other than on Form S-4 or Form S-8 or their then equivalents
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with stock option or other employee benefit plans), the Company
      shall
      send to the Investor who is entitled to registration rights under this Section
      2
      written notice of the intended filing of such Registration Statement and, if
      within twenty (20) days after receipt of such notice, the Investor shall so
      request in writing, the Company shall include in such Registration Statement
      all
      or any part of the Registrable Securities the Investor requests to be
      registered, except that if, in connection with any underwritten public offering
      for the account of the Company the managing underwriter(s) thereof shall impose
      a limitation on the number of shares of Common Stock which may be included
      in
      the Registration Statement because, in such underwriter(s)’ judgment, marketing
      or other factors dictate such limitation is necessary to facilitate public
      distribution, then the Company shall be obligated to include in such
      Registration Statement only a limited portion of the Registrable Securities
      with
      respect to which the Investor has requested inclusion hereunder, such portion
      to
      be determined as hereinafter provided; provided that no portion of the equity
      securities which the Company is offering for its own account shall be excluded;
      provided,
      further
      that the
      Company shall be entitled to exclude Registrable Securities to the extent
      necessary to avoid breaching obligations existing prior to the date hereof
      to
      other stockholders of the Company. Subject to the foregoing, the Company shall
      not exclude any Registrable Securities unless the Company has first excluded
      all
      outstanding securities, the holders of which are not entitled to inclusion
      of
      such securities in such Registration Statement or are not entitled to pro rata
      inclusion with the Registrable Securities, and, after giving effect to the
      immediately preceding clause, any exclusion of Registrable Securities shall
      be
      made pro rata with holders of other securities having the right to include
      such
      securities in the Registration Statement other than holders of securities
      entitled to inclusion of their securities in such Registration Statement by
      reason of demand registration rights. The obligations of the Company under
      this
      Section 2 may be waived by the Investor. If an offering in connection with
      which
      the Investor is entitled to registration under this Section 2. is an
      underwritten offering, then if the Investor’s Registrable Securities are
      included in such Registration Statement the Investor shall, unless otherwise
      agreed by the Company, offer and sell such Registrable Securities in an
      underwritten offering using the same underwriter or underwriters and, subject
      to
      the provisions of this Agreement, on the same terms and conditions as other
      shares of Common Stock included in such underwritten offering. 

    
      
         

      

      
        2

        
          

        

      

       

    

    

    3. OBLIGATIONS
      OF THE COMPANY. 

    

    In
      connection with the registration of the Registrable Securities, the Company
      shall have the following obligations:

    

    a.
      A
      Registration Statement filed pursuant to this Agreement (including any
      amendments or supplements thereto and prospectuses contained therein) shall
      not
      contain any untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein, or necessary to make the statements therein,
      in
      light of the circumstances in which they were made, not misleading.

    

    b.
      The
      Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to the Registration Statement and
      the
      prospectus used in connection with the Registration Statement as may be
      necessary to keep the Registration Statement effective at all times during
      the
      Registration Period, and, during the Registration Period, comply with the
      provisions of the 1933 Act with respect to the disposition of all Registrable
      Securities of the Company covered by the Registration Statement until such
      time
      as all of such Registrable Securities have been disposed of in accordance with
      the intended methods of disposition by the seller or sellers thereof as set
      forth in the Registration Statement.

    

    c. The
      Company shall furnish to the Investor if its Registrable Securities are included
      in the Registration Statement and its legal counsel (i) promptly after the
      same
      is prepared and publicly distributed, filed with the SEC, or received by the
      Company, one copy of the Registration Statement and any amendment thereto,
      each
      preliminary prospectus and prospectus and each amendment or supplement thereto,
      and (ii) such number of copies of a prospectus, including a preliminary
      prospectus, and all amendments and supplements thereto and such other documents
      as the Investor may reasonably request in order to facilitate the disposition
      of
      the Registrable Securities owned by the Investor.

    

    d.
      As
      promptly as practicable after becoming aware of such event, the Company shall
      notify the Investor of the happening of any event, of which the Company has
      knowledge, as a result of which the prospectus included in the Registration
      Statement, as then in effect, includes an untrue statement of a material fact
      or
      omission to state a material fact required to be stated therein or necessary
      to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading, and use its best efforts promptly to prepare a supplement
      or amendment to the Registration Statement to correct such untrue statement or
      omission, and deliver such number of copies of such supplement or amendment
      to
      the Investor as the Investor may reasonably request.

    
      
         

      

      
        3

        
          

        

      

       

    

    

    e. 
      The
      Company shall use its best efforts to prevent the issuance of any stop order
      or
      other suspension of effectiveness of a Registration Statement, and, if such
      an
      order is issued, to obtain the withdrawal of such order at the earliest possible
      moment and to notify the Investor if the Investor holds Registrable Securities
      being sold (or, in the event of an underwritten offering, the managing
      underwriters) of the issuance of such order and the resolution thereof.

    

    f.
      The
      Company shall hold in confidence and not make any disclosure of information
      concerning the Investor provided to the Company unless (i) the Company
      determines disclosure of such information is necessary to comply with federal
      or
      state securities laws, (ii) the disclosure of such information is necessary
      to
      avoid or correct a misstatement or omission in any Registration Statement,
      (iii)
      the release of such information is ordered pursuant to a subpoena or other
      final, non-appealable order from a court or governmental body of competent
      jurisdiction, or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this or any other agreement.
      The
      Company agrees that it shall, upon learning that disclosure of such information
      concerning the Investor is sought in or by a court or governmental body of
      competent jurisdiction or through other means, give prompt notice to the
      Investor and allow the Investor, at the Investor’s expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, such information.

    

    g.
      The
      Company shall use its best efforts to cause all the Registrable Securities
      covered by the Registration Statement to be listed on the American Stock
      Exchange and on each additional national securities exchange on which securities
      of the same class or series issued by the Company are then listed, if any,
      if
      the listing of such Registrable Securities is then permitted under the rules
      of
      such exchange.

    

    h.
      The
      Company shall cooperate with the Investor if it holds Registrable Securities
      and
      the managing underwriter or underwriters, if any, to facilitate the timely
      preparation and delivery of certificates representing the Registrable Securities
      to be offered pursuant to the Registration Statement and enable such
      certificates to be in such denominations or amounts, as the case may be, as
      the
      managing underwriter or underwriters, if any, or the Investor may reasonably
      request and registered in such names as the managing underwriter or
      underwriters, if any, or the Investor may request.

    

    4. OBLIGATIONS
      OF THE INVESTOR.

    

    In
      connection with the registration of the Registrable Securities, the Investor
      shall have the following obligations:

    

    a.
      It
      shall
      be a condition precedent to the obligations of the Company to complete the
      registration of Registrable Securities pursuant to this Agreement that the
      Investor shall furnish to the Company such information regarding itself, the
      Registrable Securities held by it and the intended method of disposition of
      the
      Registrable Securities held by it as shall be reasonably required to effect
      the
      registration of such Registrable Securities and shall execute such documents
      in
      connection with such registration as the Company may reasonably request. At
      least five (5) days prior to the first anticipated filing date of the
      Registration Statement, the Company shall notify the Investor of the information
      the Company requires from the Investor if the Investor elects to have any of
      the
      Investor’s Registrable Securities included in the Registration Statement.

     

    b.
      The
      Investor by the Investor’s acceptance of the Registrable Securities agrees to
      cooperate with the Company as reasonably requested by the Company in connection
      with the preparation and filing of the Registration Statement hereunder, unless
      the Investor has notified the Company in writing of the Investor’s election to
      exclude all of the Investor’s Registrable Securities from the Registration
      Statement.

    
      
         

      

      
        4

        
          

        

      

       

    

    

    c.
      The
      Investor agrees that, upon receipt of any notice from the Company of the
      happening of any event of the kind described in Section 3(d) or 3(e), the
      Investor will immediately discontinue disposition of Registrable Securities
      pursuant to the Registration Statement covering such Registrable Securities
      until the Investor’s receipt of the copies of the supplemented or amended
      prospectus contemplated by Section 3(d) or 3(e) and, if so directed by the
      Company, the Investor shall deliver to the Company (at the expense of the
      Company) or destroy (and deliver to the Company a certificate of destruction)
      all copies in the Investor’s possession, of the prospectus covering such
      Registrable Securities current at the time of receipt of such
      notice.

    

    d. Investor
      may not participate in any underwritten registration hereunder unless the
      Investor (i) agrees to sell the Investor’s Registrable Securities on the basis
      provided in any underwriting arrangements, (ii) completes and executes all
      questionnaires, powers of attorney, indemnities, underwriting agreements and
      other documents reasonably required under the terms of such underwriting
      arrangements, and (iii) agrees to pay its pro rata share of all underwriting
      discounts and commissions.

    

    e. The
      Investor shall give notice to the Company when it has sold all of the
      Registrable Securities.

    

    5. EXPENSES
      OF REGISTRATION.

    

    All
      reasonable expenses, other than underwriting discounts and commissions, incurred
      in connection with registrations, filings or qualifications pursuant to Sections
      2 and 3, including, without limitation, all registration, listing and
      qualifications fees, printers and accounting fees, the fees and disbursements
      of
      counsel for the Company, shall be borne by the Company. Notwithstanding the
      foregoing, the Investor shall be responsible for all expenses, fees and
      disbursements incurred by such Investor or on such Investor’s behalf, including
      all fees and disbursements of counsel to the Investor.

    

    6. INDEMNIFICATION.
      

    

    In
      the
      event any Registrable Securities are included in a Registration Statement under
      this Agreement:

    

    a.
      To
      the
      extent permitted by law, the Company will indemnify, hold harmless and defend
      (i) the Investor who holds such Registrable Securities, and (ii) the
      directors, officers and each person who controls any Investor within the meaning
      of the 1933 Act or the Securities Exchange Act of 1934, as amended (the
“1934
      Act”),
      if
      any, (each, an “Indemnified
      Person”),
      against any losses, claims, damages, liabilities or expenses (joint or several)
      (collectively, “Claims”)
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon: (i) any untrue statement or alleged untrue statement of
      a
      material fact in a Registration Statement or the omission or alleged omission
      to
      state a material fact therein required to be stated or necessary to make the
      statements therein not misleading, (ii) any untrue statement or alleged untrue
      statement of a material fact contained in any preliminary prospectus if used
      prior to the effective date of such Registration Statement, or contained in
      the
      final prospectus (as amended or supplemented, if the Company files any amendment
      thereof or supplement thereto with the SEC) or the omission or alleged omission
      to state therein any material fact necessary to make the statements made
      therein, in light of the circumstances under which the statements therein were
      made, not misleading, or (iii) any violation or alleged violation by the Company
      of the 1933 Act, the 1934 Act, any other law, including, without limitation,
      any
      state securities law, or any rule or regulation thereunder relating to the
      offer
      or sale of the Registrable Securities pursuant to a Registration Statement
      (the
      matters in the foregoing clauses (i) through (iii) being, collectively,
“Violations”).
      Subject to the restrictions set forth in Section 6(d) with respect to the number
      of legal counsel, the Company shall reimburse the Investor or controlling
      person, promptly as such expenses are incurred and are due and payable, for
      any
      legal fees or other reasonable expenses incurred by them in connection with
      investigating or defending any such Claim. Notwithstanding anything to the
      contrary contained herein, the indemnification agreement contained in this
      Section 6(a): (i) shall not apply to a Claim arising out of or based upon a
      Violation which occurs in reliance upon and in conformity with information
      furnished in writing to the Company by any Indemnified Person expressly for
      use
      in connection with the preparation of the Registration Statement or any such
      amendment thereof or supplement thereto, if such prospectus was timely made
      available by the Company pursuant to Section 3(c) hereof; (ii) with respect
      to
      any preliminary prospectus, shall not inure to the benefit of any such person
      from whom the person asserting any such Claim purchased the Registrable
      Securities that are the subject thereof (or to the benefit of any person
      controlling such person) if the untrue statement or omission of material fact
      contained in the preliminary prospectus was corrected in the prospectus, as
      then
      amended or supplemented, if such prospectus was timely made available by the
      Company pursuant to Section 3(c) hereof; (iii) shall not be available to the
      extent such Claim is based on a failure of the Investor to deliver or to cause
      to be delivered the prospectus made available by the Company; and (iv) shall
      not
      apply to amounts paid in settlement of any Claim if such settlement is effected
      without the prior written consent of the Company, which consent shall not be
      unreasonably withheld. Such indemnity shall remain in full force and effect
      regardless of any investigation made by or on behalf of the Indemnified Person
      and shall survive the transfer of the Registrable Securities by the Investor
      pursuant to Section 9.

    
      
         

      

      
        5

        
          

        

      

       

    

    

    b.
      In
      connection with any Registration Statement in which the Investor is
      participating, the Investor agrees to indemnify, hold harmless and defend,
      to
      the same extent and in the same manner set forth in Section 6(a), the Company,
      each of its directors, each of its officers who signs the Registration
      Statement, each person, if any, who controls the Company within the meaning
      of
      the 1933 Act or the 1934 Act, any underwriter and any other stockholder selling
      securities pursuant to the Registration Statement or any of its directors or
      officers or any person who controls such stockholder or underwriter within
      the
      meaning of the 1933 Act or the 1934 Act (collectively and together with an
      indemnified Person, an “Indemnified
      Party”),
      against any Claim to which any of them may become subject, under the 1933 Act,
      the 1934 Act or otherwise, insofar as such Claim arises out of or is based
      upon
      any Violation, in each case to the extent (and only to the extent) that such
      violation occurs in reliance upon and in conformity with written information
      furnished to the Company by the Investor expressly for use in connection with
      such Registration Statement or to the extent such Claim is based upon any
      violation or alleged violation by the Investor of the 1933 Act, 1934 Act or
      any
      other law; and the Investor will reimburse any legal or other expenses
      reasonably incurred by them in connection with investigating or defending any
      such Claim; provided, however, that the indemnity agreement contained in this
      Section 6(b) shall not apply to amounts paid in settlement of any Claim if
      such
      settlement is effected without the prior written consent of the Investor, which
      consent shall not be unreasonably withheld; provided, further, however, that
      the
      Investor shall be liable under this Section 6(b) for only that amount of a
      Claim
      as does not exceed the net proceeds to the Investor as a result of the sale
      of
      Registrable Securities pursuant to such Registration Statement. Such indemnity
      shall remain in full force and effect regardless of any investigation made
      by or
      on behalf of such Indemnified Party and shall survive the transfer of the
      Registrable Securities by the Investors pursuant to Section 9. Notwithstanding
      anything to the contrary contained herein, the indemnification agreement
      contained in this Section 6(b) with respect to any preliminary prospectus shall
      not inure to the benefit of any Indemnified Party if the untrue statement or
      omission of material fact contained in the preliminary prospectus was corrected
      on a timely basis in the prospectus, as then amended or
      supplemented.

    
      
         

      

      
        6

        
          

        

      

       

    

    

    c.
      The
      Company shall be entitled to receive indemnities from underwriters, selling
      brokers, dealer managers and similar securities industry professionals
      participating in any distribution, to the same extent as provided above, with
      respect to information such persons so furnished in writing by such persons
      expressly for inclusion in the Registration Statement.

    

    d.
      Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action (including any governmental action),
      such Indemnified Person or Indemnified Party shall, if a Claim in respect
      thereof is to made against any indemnifying party under this Section 6, deliver
      to the indemnifying party a written notice of the commencement thereof, and
      the
      indemnifying party shall have the right to participate in, and, to the extent
      the indemnifying party so desires, jointly with any other indemnifying party
      similarly noticed, to assume control of the defense thereof with counsel
      mutually satisfactory to the indemnifying party and the Indemnified Person
      or
      the Indemnified Party, as the case may be; provided, however, that an
      Indemnified Person or Indemnified Party shall have the right to retain its
      own
      counsel with the fees and expenses to be paid by the indemnifying party, if,
      in
      the reasonable opinion of counsel retained by the indemnifying party, the
      representation by such counsel of the Indemnified Person or Indemnified Party
      and the indemnifying party would be inappropriate due to actual or potential
      differing interests between such Indemnified Person or Indemnified Party and
      any
      other party represented by such counsel in such proceeding. The failure to
      deliver written notice to the indemnifying party within a reasonable time of
      the
      commencement of any such action shall not relieve such indemnifying party of
      any
      liability to the Indemnified Person or Indemnified Party under this Section
      6,
      except to the extent that the indemnifying party is prejudiced in its ability
      to
      defend such action. The indemnification required by this Section 6 shall be
      made
      by periodic payments of the amount thereof during the course of the
      investigation or defense, as such expense, loss, damage or liability is incurred
      and is due and payable.

    

    7. CONTRIBUTION.
      

    

    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided, however, that (i) no contribution
      shall be made under circumstances where the maker would not have been liable
      for
      indemnification under the fault standards set forth in Section 6, (ii) no seller
      of Registrable Securities guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
      from
      any seller of Registrable Securities who was not guilty of such fraudulent
      misrepresentation, and (iii) contribution by any seller of Registrable
      Securities shall be limited in amount to the net amount of proceeds received
      by
      such seller from the sale of such Registrable Securities.

    

    8. AMENDMENT
      OF REGISTRATION RIGHTS. 

    

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and the Investor.
      Any amendment or waiver effected in accordance with this Section 10 shall be
      binding upon the Investor and the Company.

    

    9. MISCELLANEOUS.

    

    a.
      A
      person
      or entity is deemed to be a holder of Registrable Securities whenever such
      person or entity owns of record such Registrable Securities. If the Company
      receives conflicting instructions, notices or elections from two or more persons
      or entities with respect to the same Registrable Securities, the Company shall
      act upon the basis of instructions, notice or election received from the
      registered owner of such Registrable Securities.

    
      
         

      

      
        7

        
          

        

      

       

    

    

    b.
      Any
      notices required or permitted to be given under the terms of this Agreement
      shall be sent by registered or certified mail, return receipt requested, or
      delivered personally or by courier and shall be effective five days after being
      placed in the mail, if mailed, or upon receipt, if delivered personally or
      by
      courier, in each case addressed to a party. The addresses for such
      communications shall be:

    

    
      	
              If
                to the Company:

            	
              Tekoil
                & Gas Corporation

            
	 	
              5036
                Dr. Phillips Blvd., Suite 232

            
	 	
              Orlando,
                Florida 32819

            
	 	
              Telephone:
                (407) 996-8506

            
	 	
              Telecopy:
                (407) 996-8507

            
	 	
              Attention:
                Mr. Mark Western

            
	 	 
	
              With
                copy to:

            	
              Baker
                & Hostetler LLP

            
	 	
              200
                South Orange Avenue

            
	 	
              Orlando,
                FL 32801

            
	 	
              Telephone:
                (407) 649-4001

            
	 	
              Telecopy:
                (407) 841-0168

            
	 	
              Attention:
                Kenneth C. Wright, Esq.

            

    

    

    

    
      	
              If
                to the Buyer or Buyer’s Designees:

            	
              Masters
                Resources LLC

            
	 	
              9801
                Westheirner, Suite 1070

            
	 	
              Houston,
                Texas 77042

            
	 	
              Telephone: 
                832/252-1801

            
	 	
              Telecopy: 
                  832/252-1805

            

    

    

    Each
      party shall provide notice to the other party of any change in
      address.

    

    c.
      Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

    

    d.
      This
      Agreement shall be enforced, governed by and construed in accordance with the
      laws of the State of Florida applicable to agreements made and to be performed
      entirely within such State. In the event that any provision of this Agreement
      is
      invalid or unenforceable under any applicable statute or rule of law, then
      such
      provision shall be deemed inoperative to the extent that it may conflict
      therewith and shall be deemed modified to conform with such statute or rule
      of
      law. Any provision hereof which may prove invalid or unenforceable under any
      law
      shall not affect the validity or enforceability of any other provision
      hereof.

    

    e.
      This
      Agreement and the Securities Purchase Agreement constitute the entire agreement
      among the parties hereto with respect to the subject matter hereof and thereof.
      There are no restrictions, promises, warranties or undertakings, other than
      those set forth or referred to herein and therein. This Agreement and the
      Securities Purchase Agreement supersede all prior agreements and understandings
      among the parties hereto with respect to the subject matter hereof and
      thereof.

    

    f.
      Subject
      to the requirements of Section 9 hereof, this Agreement shall inure to the
      benefit of and be binding upon the successors and assigns of each of the parties
      hereto.

    

    g.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

    
      
         

      

      
        8

        
          

        

      

       

    

    

    h. This
      Agreement may be executed in two or more identical counterparts, each of which
      shall be deemed an original but all of which shall constitute one and the same
      agreement. This Agreement, once executed by a party, may be delivered to the
      other party hereto by facsimile transmission of a copy of this Agreement bearing
      the signature of the party so delivering this Agreement.

    

    i. Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

    

    [SIGNATURES
      APPEAR ON FOLLOWING PAGE]

    
      
         

      

      
        9

        
          

        

      

       

    

    IN
      WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
      to
      be duly executed as of day and year first above written.

    
      	 	 	 
	 	
              “Company”

               

              TEKOIL
                & GAS CORPORATION

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Mark S.
              Western
	 	
              
Mark
              Western, Chairman and
              CEO

    
      	 	 	 
	 	
              
                “Buyer”

                 

                MASTERS
                  RESOURCES LLC

              

            
	 
 	 
 	 
 
	
            	By:  	/s/
              John W.
              Barton
	 	
              
                

              

              Print Name: John
                W. Barton

               

              As its:
                Managing Member

            

    

    
      	 	 	 
	 	
               

              
                MASTERS
                  OIL & GAS LLC

              

            
	 
 	 
 	 
 
	
            	By:  	 /s/
              John W.
              Barton
	 	
              
                

              

              Print
                Name:
                John W. Barton 

                

              As its:
                Managing Member

            

      	 	 	 
	 	 	 
	 	
              
                
                  “Buyer’s
                    Designees”

                   

                  RICH
                    HOLDINGS LLC

                

              

            
	 
 	 
 	 
 
	
            	By:  	 /s/
              Richard
              Lee
	 	
              
                

              

              Print Name:
                Richard Lee

               

              As its:
                Managing Member

            

    

    
      	 	 	 
	 	 	 
	
            	       	
              /s/
                John W. Barton    

            
	 	
              
                
John
                W. Barton

            

  

    
      
         

      

      
        10

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