Document:

EXHIBIT
      10.65

     

     

     

    EXECUTION
      VERSION

    

    THE
      SECURITIES OFFERED HEREIN HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
      ACT
      OF 1933, AS AMENDED (THE “1933 ACT”) AND MAY NOT BE OFFERED OR SOLD IN THE
      UNITED STATES OR TO U.S. PERSONS (AS THAT TERMS IS DEFINED IN THE 1933 ACT)
      UNLESS THE SECURITIES ARE REGISTERED UNDER THE 1933 ACT, OR AN EXEMPTION FROM
      THE REGISTRATION REQUIREMENTS OF THE 1933 ACT IS AVAILABLE. THIS PURCHASE
      AGREEMENT IS EXECUTED IN RELIANCE UPON THE EXEMPTIONS PROVIDED BY RULE 903
      OF
      REGULATION S UNDER THE 1933 ACT.

    

    TEKOIL
      & GAS CORPORATION

     

      
        

      

    

     

    PURCHASE
      AGREEMENT

     

    
      
 

    THIS
      PURCHASE AGREEMENT (this
      “Purchase
      Agreement”)
      has
      been executed by the undersigned in connection with an offering (the
“Offering”)
      by
      Tekoil & Gas Corporation, a Delaware corporation (the “Issuer”),
      of
      3,571,429 units of the Issuer (the “Units”)
      at
      $0.28 per Unit, with each Unit consisting of one share of common stock, par
      value $0.000001 per share (the “Common
      Stock”),
      of
      the Issuer and a warrant (the “Warrant”,
      and
      together with the Common Stock, the “Securities”)
      to
      purchase one share of Common Stock of the Issuer on appropriate exercise
      thereunder and subject to the terms thereof. The Securities being subscribed
      for
      pursuant to this Purchase Agreement have not been registered under the
      Securities Act of 1933, as amended (the “1933
      Act”).
      The
      offer and sale of the Securities is being made in reliance upon Rule 903 of
      Regulation S promulgated under the 1933 Act. (All dollar amounts in this
      Purchase Agreement are expressed in U.S. Dollars).

    

    Each
      of
      the Issuer and RAB Special Situations (Master) Fund Limited, c/o RAB Capital,
      1
      Adam Street, London WC2N 6LE, United Kingdom, a corporation organized under
      the
      laws of the Cayman Islands (hereinafter referred to as the “Investor”),
      hereby agrees as follows:

    

    ARTICLE
      1

    PURCHASE
      

        

    1.1. Purchase

    

    The
      Investor hereby agrees to purchase the Units for an aggregate purchase price
      of
      One Million Dollars (US$1,000,000.00)(the “Purchase
      Price”).

    

    
      
        1.2.
          Closing

      

    

    

    The
      closing of the purchase and sale of the Units (the “Closing”)
      will
      take place on December 10, 2007 or at such other time as the Issuer and the
      Investor mutually agree upon (the “Closing
      Date”).

    

    
      
        1.3.
          Method
          of Payment

      

    

    

    The
      Investor shall pay the Purchase Price by delivering good funds in United States
      Dollars by way of wire transfer of funds into escrow for the benefit of the
      Issuer on the Closing Date. Unless other arrangements acceptable to the Issuer
      have been made, the aggregate purchase
      proceeds representing the Purchase Price payable for the Units subscribed for
      hereunder shall be paid by wire transfer (in accordance with Exhibit
      A
      attached
      hereto) and the Issuer is irrevocably directed to release certificates
      representing the Common Stock and the Warrant purchased hereunder and such
      other
      documentation as the Investor may reasonably request.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    If,
      prior
      to the Closing Date, the terms and conditions contained in this Purchase
      Agreement have not been complied with to the satisfaction of the Issuer, or
      waived by it, the Issuer and Investor will have no further obligations under
      this Purchase Agreement.

    

    1.4. Conditions
      of Closing

     

    The
      Investor acknowledges and agrees that the obligations of the Issuer hereunder
      are conditional on the accuracy of the representations and warranties of the
      Investor contained in this Purchase Agreement as of the date of this Purchase
      Agreement, and as of the Closing Date as if made at and as of the Closing Date,
      and the fulfillment of the following additional conditions as soon as possible
      and in any event not later than the Closing Date unless other arrangements
      acceptable to the Issuer have been made:

     

    
      	 	
              (a)

            	
              the
                Issuer shall have received all necessary approvals and consents,
                including
                all necessary regulatory approvals and consents required for the
                completion of the transaction contemplated by this Purchase Agreement
                and
                the Registration Rights Agreement described
                below;

            

    

     

    
      	 	
              (b)

            	
              the
                representations and warranties of the Issuer contained herein being
                true
                and correct as of the Closing Date with the same force and effect
                as if
                made at and as of the Closing Date after giving effect to the transactions
                contemplated hereby;

            

    

     

    
      	 	
              (c)

            	
              the
                Issuer having complied with all covenants, and satisfied all terms
                and
                conditions contained herein to be complied with and satisfied by
                the
                Issuer at or prior to the Closing;

            

    

     

    
      	 	
              (d)

            	
              the
                Investor not having previously terminated the obligations thereof
                pursuant
                to this Purchase Agreement; and

            

    

     

    
      	 	
              (e)

            	
              the
                Investor having completed this Purchase Agreement in full and having
                paid
                the Purchase Price for the Units subscribed for hereunder to the
                Issuer in
                the manner contemplated in this Purchase
                Agreement.

            

    

     

    The
      Issuer acknowledges and agrees that the obligations of the Investor hereunder
      are conditional on the accuracy of the representations and warranties of the
      Issuer contained in this Purchase Agreement as of the date of this Purchase
      Agreement, and as of the Closing Date as if made at and as of the Closing Date
      and the fulfillment of the following additional conditions as soon as possible
      and in any event not later than the Closing Date:

     

    
      	 	
              (a)

            	
              all
                covenants, agreements and conditions contained in this Purchase Agreement
                and Registration Rights Agreement to be performed by the Issuer on
                or
                prior to the Closing Date shall have been performed or complied with
                in
                all material respects; and

            

    

     

    
      	 	
              (b)

            	
              the
                Issuer shall have delivered, or cause to be delivered, to the Investor’s
                counsel the following items:

            

    

     

    
      	 	
              (i)

            	
              a
                copy
                of
                the certificates representing the Securities purchased by the Investor,
                registered in the name of the Investor or its nominee as set forth
                on
                Exhibit
                B
                attached hereto (the “Certificates”);

            

    

     

    
      	 	
              (ii)
                

            	
              a
                copy
                of
                this Purchase Agreement duly executed by the
                Issuer;

            

    

     

    
      	 	
              (iii)

            	
              a
                copy
                of
                the Registration Rights Agreement attached hereto as Exhibit
                C
                (the “Registration
                Rights Agreement”,
                and together with this Purchase Agreement, the “Transaction
                Documents”)
                duly executed by the Issuer;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iv)

            	
              a
                copy
                of
                a certificate executed by the chief executive officer or the chief
                financial officer of the Issuer, dated the Closing Date, in form
                and
                substance reasonably satisfactory to the Investor, confirming such
                matters
                as may be reasonably requested by the Investor or its counsel;
                

            

    

     

    
      	 	
              (v)

            	
              a
                copy
                of
                an opinion letter of Issuer’s counsel in form and substance satisfactory
                to the Investor; 

            

    

     

    
      	 	
              (vi)
                

            	
              a
                copy of a certificate from the principal executive officer of the
                Issuer
                certifying as of the Closing Date that the Issuer and Tekoil and
                Gas Gulf
                Coast, LLC (“Tekoil
                LLC”)
                are not in default of any of their covenants and obligations under
                the
                Credit and Guaranty Agreement, dated as of May 11, 2007, as amended
                August
                15, 2007 and October 24, 2007 (the “Credit
                Agreement”),
                among the Issuer, Tekoil LLC, the lenders party to the Credit Agreement
                and J. Aron & Company; and 

            

    

     

    
      	 	
              (vii)

            	
              such
                other documents relating to the transactions contemplated by this
                Purchase
                Agreement as the Investor or its counsel may reasonably
                request.

            

    

     

    ARTICLE
      2

    REPRESENTATIONS
      AND WARRANTIES OF THE INVESTOR

     

    2.1
      Representations
      and Warranties

    

    The
      Investor represents and warrants in all material respects to the Issuer, with
      the intent that the Issuer will rely thereon in accepting this subscription,
      that:

    

    
      	 	
              (a)

            	
              Accredited
                Investor Status; Experience.
                The Investor an “accredited investor” as such term is defined in Rule
                501(a) of Regulation D promulgated under the 1933 Act and, in addition,
                is
                sufficiently experienced in financial and business matters to be
                capable
                of evaluating the merits and risks of its investments, and to make
                an
                informed decision relating thereto, and to protect its own interests
                in
                connection with the purchase of the
                Securities.

            

    

    

    
      	 	
              (b)

            	
              No
                Distribution.
                The Investor is or will be purchasing the Securities for investment
                purposes only and not with an intent or view towards further sale
                thereof,
                and has not pre-arranged any sale with any other
                investor.

            

    

    

    
      	 	
              (c)

            	
              Not
                Underwriter.
                The Investor is not an underwriter, or dealer in, the Securities,
                and the
                Investor is not participating, pursuant to a contractual agreement,
                in a
                distribution of the Securities.

            

    

    

    
      	 	
              (d)

            	
              Importance
                of Representations.
                The Investor understands that the Securities are being offered and
                sold to
                it in reliance on an exemption from the registration requirements
                of the
                1933 Act, and that the Issuer is relying upon the truth and accuracy
                of
                the representations, warranties, agreements, acknowledgments and
                understandings of the Investor set forth herein in order to determine
                the
                applicability of such exemptions and the suitability of the Investor
                to
                acquire the Securities.

            

    

    

    
      	 	
              (e)

            	
              No
                Registration.
                The Securities have not been registered under the 1933 Act and may
                not be
                transferred, sold, assigned, hypothecated or otherwise disposed of
                unless
                such transaction is the subject of a registration statement filed
                with and
                declared effective by the Securities and Exchange Commission (the
                “SEC”)
                or unless an exemption from the registration requirements under the
                1933
                Act, such as Rule 144, is
                available.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

        

    
      	 	
              (f)

            	
              Compliance
                with Securities Laws.
                The offer and sale of the Securities under this Purchase Agreement
                does
                not contravene any of the applicable securities legislation in the
                jurisdiction in which the Investor (or any beneficial person for
                whom it
                is acting) resides and does not give rise to any obligation of the
                Issuer
                to prepare and file a prospectus or similar document or to register
                the
                Securities or to be registered with or to file any report or notice
                with
                any governmental or regulatory authority.

            

    

    

    
      	 	
              (g)

            	
              Current
                Information.
                The Investor has been furnished with or has acquired copies of all
                requested information concerning the Issuer (the “Disclosure”),
                including, without limitation,, the filings submitted by the Issuer
                to the
                SEC (the “SEC
                Filings”)
                under the Securities Exchange Act of 1934, as amended (the “1934
                Act”)
                and under the 1933 Act.

            

    

    

    
      	 	
              (h)

            	
              Independent
                Investigation.
                The Investor, in making the decision to subscribe for the Securities,
                has
                relied upon independent investigations made by it and its representatives
                or advisors, if any, has, together with its representatives or advisors,
                if any, reviewed the Disclosure and the Investor and such representatives
                or advisors, if any, have, prior to entering into this Purchase Agreement,
                been given access and the opportunity to examine all material contracts
                and documents relating to the Offering and an opportunity to ask
                questions
                of, and to receive answers from, the Issuer or any person acting
                on its
                behalf concerning the terms and conditions of the Offering. The Investor
                and its representatives or advisors, if any, have been furnished
                with
                access to all materials relating to the business, finances and operation
                of the Issuer and materials relating to the offer and sale of the
                Securities which have been requested. The Investor, its representatives
                and advisors, if any, have received complete and satisfactory answers
                to
                any such inquiries.

            

    

    

    
      	 	
              (i)

            	
              No
                Written or Oral Representations.
                No person has made to the Investor any written or oral
                representations

            

    

    

    
      	
            	(i)	
              that
                any person will resell or repurchase the
                Securities,

            

    

    

    
      	
            	(ii)	
              that
                any person will refund the purchase price of the Securities,
                or

            

    

    

    
      	
            	(iii)	
              as
                to the future price or value of the
                Securities.

            

    

     

    
      	 	
              (j)

            	
              No
                Recommendation or Endorsement.
                The Investor understands that neither the SEC nor any federal or
                state
                agency has passed on or made any recommendation or endorsement of
                the
                Securities. 

            

    

    

    
      	 	
              (k)

            	
              Partnership,
                Corporation or Trust.
                If
                the Investor is a partnership, corporation or trust, the person executing
                this Purchase Agreement on its behalf represents and warrants
                that:

            

    

    

    
      	 	
              (i)

            	
              he
                or she has made due inquiry to determine the truthfulness of the
                representations and warranties made pursuant to this Purchase Agreement,
                and

            

    

    

    
      	 	
              (ii)

            	
              he
                or she is duly authorized (and if the undersigned is a trust, by
                the trust
                agreement) to make this investment and to enter into and execute
                this
                Purchase Agreement on behalf of such
                entity.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (l)

            	
              Non-Affiliate
                Status.
                The Investor is not an affiliate of the Issuer nor is any affiliate
                of the
                Investor an affiliate of the Issuer. In the event that the Investor
                is or
                becomes an affiliate of the Issuer the Investor acknowledges that
                the
                Securities held by it will be subject to additional resale restrictions
                under the 1933 Act.

            

    

    

    
      	 	
              (m)

            	
              No
                Advertisement or General Solicitation.
                The sale of the Securities has not been advertised through any article,
                notice or other communication published in any newspaper, magazine,
                or
                similar media or broadcast over television or radio; or through any
                seminar or meeting whose attendees have been invited by any general
                solicitation or general advertising.

            

    

    

    
      	 	
              (n)

            	
              Offshore
                Transaction.
                The Investor represents that it is not a U.S. Person as defined in
                Rule
                902(k) of Regulation S (a “U.S.
                Person”),
                that at the time of the acquisition of the Securities it will not
                be a
                U.S. Person, that the Investor is not, and at the time of the acquisition
                of the Securities will not be, acquiring the Securities for the account
                or
                benefit of a U.S. Person, and that the Investor is normally resident
                at
                the address provided by the Investor on the first page
                hereof.

            

    

    

    
      	 	
              (o)

            	
              Hedging
                Transactions.
                The Investor acknowledges and agrees that all offers and sales of
                the
                Securities, as applicable, by the Investor shall be made only in
                accordance with the provisions of Regulation S, pursuant to registration
                of the Securities under the 1933 Act, or pursuant to an available
                exemption from the registration requirements of the 1933 Act. The
                Investor
                acknowledges and agrees that it cannot engage in hedging transactions
                with
                regard to the Securities prior to the expiration of the one-year
                distribution compliance period specified in paragraph (b)(3) in Rule
                903
                promulgated under the 1933 Act unless in compliance with the 1933
                Act.

            

    

    

    
      	 	
              (p)

            	
              Sole
                Beneficial Owner.
                Upon consummation of the transactions contemplated by this Purchase
                Agreement, the Investor will be the sole beneficial owner of the
                Securities issued to it pursuant to this Purchase Agreement and the
                Investor has not pre-arranged any sale with any person or persons
                in the
                United States.

            

    

    

    
      	 	
              (q)

            	
              Outside
                United States.
                The Investor is outside the United States; provided, that delivery
                of the
                Securities may be effected in the United States through the Investor’s
                agent as long as the Investor is outside the United States at the
                time of
                such delivery.

            

    

    

    
      	 	
              (r)

            	
              No
                Present Intention to Sell.
                The Investor has no present intention to sell or otherwise transfer
                the
                Securities except in accordance with Regulation S, pursuant to
                registration under the 1933 Act, or pursuant to an available exemption
                from registration under the 1933 Act, in each case in accordance
                with all
                applicable securities laws.

            

    

    

    
      	 	
              (s)

            	
              Refusal
                to Register.
                The Investor understands that the Issuer is required, under Rule
                903 of
                Regulation S, to refuse to register the transfer of any of the Securities
                to be received by the Investor pursuant to this Purchase Agreement
                that
                are not transferred pursuant to a registration statement under the
                1933
                Act, in compliance with Regulation S, or otherwise pursuant to an
                available exemption from
                registration.

            

    

    

    
      	 	
              (t)

            	
              No
                Short Position.
                The Investor will not, directly or indirectly, or through one or
                more
                intermediaries, maintain any short position in the Securities during
                the
                applicable distribution compliance
                period.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (u)

            	
              Legend.
                The Investor understands and acknowledges that the Investor may not
                transfer or otherwise dispose of the Securities unless the proposed
                transfer may be effected without any violation of the 1933 Act or
                any
                applicable state securities law. The Certificate(s) representing
                the
                Securities shall bear the following legend in addition to any other
                legend
                required under this Purchase
                Agreement:

            

    

    

    In
      the
      case of the Common Stock:

    

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR OTHER
      APPLICABLE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
      AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE AND MAY NOT BE OFFERED, SOLD,
      PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS
      OF
      REGULATIONS S, RULE 901 THROUGH RULE 905, AND PRELIMINARY NOTES UNDER THE U.S.
      SECURITIES ACT OR (2) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
      REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT (AND, IN THE CASE OF (1)
      OR
      (2), IF REQUESTED BY THE COMPANY, THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
      REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT THE TRANSFER IS EXEMPT
      FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT AND APPLICABLE STATE
      SECURITIES LAWS) OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT. HEDGING
      TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
      COMPLIANCE WITH THE U.S. SECURITIES ACT.

    

    The
      Issuer, at its sole expense, shall cause its legal counsel to delivery any
      opinion letter as may be required pursuant to (1) or (2) above. 

    

    In
      the
      case of the Warrant:

    

    THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
      OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE,
      MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
      (A)
      AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE
      STATE SECURITIES LAWS, OR (B) AN EXEMPTION THEREFROM AND,
      IF
      REQUESTED BY THE COMPANY, THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
      REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT THE TRANSFER IS EXEMPT
      FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT AND APPLICABLE STATE
      SECURITIES LAWS.

    

    
      	 	
              (v)

            	
              Legal
                and Tax Advice.
                The Investor is responsible for obtaining such legal and tax advice
                as it
                considers appropriate in connection with the execution, delivery
                and
                performance of this Purchase Agreement and the transactions contemplated
                hereunder.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.2 Non-Merger
      and Survival

    

    The
      representations and warranties of the Investor contained herein will be true
      at
      the date of execution of this Purchase Agreement by the Investor and as of
      the
      Closing of the Offering in all material respects as though such representations
      and warranties were made as of such times and shall survive the Closing of
      the
      Offering and the delivery of the Certificates. 

    

    2.3 Indemnity

    

    The
      Investor agrees to indemnify and hold harmless the Issuer from and against
      any
      and all claims, demands, actions, suits, proceedings, assessments, judgments,
      damages, costs, losses and expenses, including attorney’s fees incurred in
      contesting any such claim and any payment made in good faith in settlement
      of
      any claim (subject to the right of the Investor to defend any such claim),
      resulting from the breach of any representation or warranty of such party under
      this Purchase Agreement.

     

    ARTICLE
      3

    REPRESENTATIONS
      AND WARRANTIES OF THE ISSUER

     

    3.1 Issuer
      Representations and Warranties

    

    The
      Issuer, upon taking up and accepting this subscription, represents and warrants
      in all material respects to the Investor, with the intent that the Investor
      will
      rely thereon in entering into this Purchase Agreement, that:

    

    
      	 	
              (a)
                

            	
              Authority;
                Enforceability.
                The Issuer has the requisite corporate power and authority to enter
                into
                and to consummate the transactions contemplated by the Transaction
                Documents. The execution and delivery by the Issuer of the Transaction
                Documents have been duly authorized by all necessary action on the
                part of
                the Issuer, and no further consent or action is required by the Issuer,
                its Board of Directors or its stockholders. Each of the Transaction
                Documents constitutes, or will when duly authorized, executed and
                delivered by all parties thereto other than the Issuer constitute,
                a valid
                and binding obligation of the Issuer, enforceable against the Issuer
                in
                accordance with the terms thereof, except that (i) the enforcement
                thereof
                may be limited by applicable bankruptcy, insolvency, reorganization,
                moratorium or similar laws affecting the rights of creditors generally,
                (ii) equitable remedies, including, without limitation, specific
                performance and injunction, may be granted only in the discretion
                of a
                court of competent jurisdiction, (iii) rights of indemnity, contribution
                and the waiver of contribution provided for herein, and any provisions
                exculpating a party from a liability or duty otherwise owed by it,
                may be
                limited under applicable law, and (iv) the enforceability of provisions
                in
                any Transaction Document which purport to sever any provision which
                is
                prohibited or unenforceable under applicable law without affecting
                the
                enforceability or validity of the remainder of such Transaction Document
                would be determined only in the discretion of the
                court.

            

    

     

    
      	 	
              (b)
                

            	
              Proper
                Organization.
                The Issuer is a corporation duly organized, validly existing and
                in good
                standing under the laws of its jurisdiction of incorporation and
                is duly
                qualified as a foreign corporation in all jurisdictions where the
                failure
                to be so qualified would have a materially adverse effect on its
                business,
                taken as whole.

            

    

     

    
      	 	
              (c)
                

            	
              Reporting
                Issuer.
                The Issuer is a reporting issuer under the 1934 Act, and at the Closing
                Date, the Issuer will have filed all documents that it is required
                to file
                under the provisions of the 1934 Act during a period of at least
                two years
                prior to the date hereof (the “SEC
                Reports”).
                

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (d)
                

            	
              SEC
                Reports.
                As of their respective filing dates, each of the Issuer’s SEC Reports (and
                if any SEC Report filed prior to the date of this Purchase Agreement
                was
                amended or superseded by a filing prior to the date of the Closing
                Date,
                then also on the date of filing of such amendment or superseding
                filing)
                filed on or after January 1, 2007, (i) where required, were prepared
                in
                all material respects in accordance with the requirements of the
                1933 Act
                or the 1934 Act, as the case may be, and the rules and regulations
                promulgated under such acts applicable to such SEC Reports, (ii)
                did not
                contain any untrue statements of a material fact and did not omit
                to state
                a material fact necessary to make the statements therein, in light
                of the
                circumstances under which they were made, not misleading and (iii)
                are all
                the forms, reports and documents required to be filed by the Issuer
                with
                the SEC since that time. 

            

    

    

    
      	 	
              (e)
                

            	
              Financial
                Statements.
                Each set of audited consolidated financial statements and unaudited
                interim financial statements of the Issuer (including any notes thereto)
                included in the SEC Filings (i) complies as to form in all material
                respects with the published rules and regulations of the SEC with
                respect
                thereto, and (ii) have been prepared in accordance with United States
                generally accepted accounting principles applied on a consistent
                basis
                (except as may be indicated therein or in the notes thereto) and
                fairly
                present, in all material respects, the financial position of the
                Issuer as
                of the dates thereof and the results of its operations and cash flows
                for
                the periods then ended subject, in the case of the unaudited interim
                financial statements, to normal year-end adjustments which were not
                or are
                not expected to be material in amount. To the Issuer’s knowledge, no
                events or other factual matters exist which would require the Issuer
                to
                file any amendments or modifications to any SEC Filings which have
                not yet
                been filed with the SEC but which are required to be filed with the
                SEC
                pursuant to the 1933 Act or the 1934 Act. As used herein, the words
                “knowledge
                of the Issuer”
                (or any substantially similar phrase) means the active knowledge
                (with
                reasonable investigation) of the executive officers of the
                Issuer.

            

    

    

    
      	 	
              (f)
                

            	
              Sarbanes-Oxley
                Act.
                Each SEC Report containing financial statements that has been filed
                with
                or submitted to the SEC since July 31, 2002, was accompanied by the
                certifications required to be filed or submitted by the Issuer’s chief
                executive officer and chief financial officer pursuant to the
                Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley
                Act");
                at the time of filing or submission of each such certification, such
                certification was true and accurate and complied with the Sarbanes-Oxley
                Act and the rules and regulations promulgated thereunder; such
                certifications contain no qualifications or exceptions to the matters
                certified therein and have not been modified or withdrawn; and neither
                the
                Issuer nor any of its officers has received notice from any governmental
                entity questioning or challenging the accuracy, completeness, form
                or
                manner of filing or submission of such
                certification.

            

    

    

    
      	 	
              (g)
                

            	
              Subsidiaries.
                The SEC Filings describes each of the Issuer’s material subsidiaries, and
                each such subsidiary is a corporation duly incorporated and in good
                standing under the laws of its incorporating jurisdiction, and has
                the
                requisite corporate power and authority to conduct its business as
                it is
                currently being conducted. Except as otherwise disclosed in the SEC
                Filings, all of the issued and outstanding shares of capital stock
                of each
                of the Issuer’s material subsidiaries are validly issued and are fully
                paid, non-assessable and free of preemptive and similar
                rights.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (h)
                

            	
              Third
                Party Rights.
                Except as described in Schedule 3.1(h), in the SEC Filings or as
                contemplated in the Offering, as of the date Closing Date, no person,
                firm
                or corporation has any agreement or option or right or privilege
                (whether
                preemptive or contractual) capable of becoming an agreement for the
                purchase, subscription or issuance of any unissued shares, securities
                or
                warrants of the Issuer. 

            

    

    

    
      	 	
              (i)
                

            	
              Title
                to Assets.
                Except as qualified in the SEC Filings, the Issuer or a subsidiary
                is the
                beneficial owner of the properties, business and assets or the interests
                in the properties, business or assets referred to as owned by it
                in the
                SEC Report, all agreements under which the Issuer or a subsidiary
                holds an
                interest in a property, business or asset are in good standing according
                to their terms except where the failure to be in such good standing
                does
                not and will not have a material adverse effect on the Issuer (on
                a
                consolidated basis) or its properties, business or
                assets.

            

    

    

    
      	 	
              (j)
                

            	
              Taxes.
                The Issuer and each of its subsidiaries has filed all federal, state,
                local and other tax returns that are required to be filed or have
                requested extensions thereof (except in any case in which the failure
                so
                to file would not have a material adverse effect on the assets and
                properties, business, results of operations or condition (financial
                or
                otherwise) of the Issuer) on a consolidated basis and has paid all
                taxes
                required to be paid by it and any other assessment, fine or penalty
                levied
                against it, to the extent that any of the foregoing is due and payable,
                except for any such assessment, fine or penalty that is currently
                being
                contested in good faith. The Issuer and each of its subsidiaries
                has
                established on its books and records reserves that are adequate for
                the
                payment of all taxes not yet due and payable and there are no liens
                for
                taxes on the assets of the Issuer or any subsidiary and there are
                no
                audits known by the Issuer's management to be pending of the tax
                returns
                of the Issuer or any subsidiary (whether federal, state, local or
                foreign)
                and there are no claims which have been or may be asserted relating
                to any
                such tax returns, which audits and claims, if determined adversely,
                would
                result in the assertion by any governmental agency of any deficiency
                that
                would have a material adverse effect on the assets or properties,
                business, results of operations or condition (financial or otherwise)
                of
                the Issuer (on a consolidated basis). No taxation authority has asserted
                or, to the best of the Issuer's knowledge, threatened to assert any
                assessment, claim or liability for taxes due or to become due in
                connection with any review or examination of the tax returns of the
                Issuer
                or each of its subsidiaries (including, without limitation, any
                predecessor companies) filed for any year which would have a material
                adverse effect on the assets or properties, business, results of
                operations or condition (financial or otherwise) of the Issuer (on
                a
                consolidated basis).

            

    

    

    
      	 	
              (k)
                

            	
              Internal
                Controls.
                The Issuer and each of its subsidiaries maintains a system of internal
                accounting controls sufficient to provide reasonable assurance that:
                (i)
                transactions are executed in accordance with management's general
                or
                specific authorizations, (ii) transactions are recorded as necessary
                to
                permit preparation of financial statements in conformity with generally
                accepted accounting principles and to maintain asset accountability,
                (iii)
                access to assets is permitted only in accordance with management's
                general
                or specific authorization and (iv) the recorded accountability for
                assets
                is compared with the existing assets at reasonable intervals and
                appropriate action is taken with respect to any
                differences.

            

    

    

    
      	 	
              (l)
                

            	
              Non-Default.
                Except as described in Schedule 3.1(l) or in the SEC Filings, the
                Issuer
                is not in default in the performance or observance of any material
                obligation, agreement, covenant or condition contained in any indenture,
                mortgage, deed of trust or other material instrument or agreement
                to which
                it is a party or by which it or its property may be
                bound.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (m)
                

            	
              Non-Contravention.
                The execution and delivery of this Purchase Agreement and the consummation
                of the issuance of the Securities and the transactions contemplated
                by
                this Purchase Agreement do not and will not conflict with or result
                in a
                breach by the Issuer of any of the terms or provisions of, or constitute
                a
                default under, the Certificate of Incorporation or Bylaws of the
                Issuer,
                or any indenture, mortgage, deed of trust, or other material agreement
                or
                instrument to which the Issuer is a party or by which it or any of
                its
                properties or assets are bound, or any existing applicable decree,
                judgment or order of any court, federal or state regulatory body,
                administrative agency or other domestic governmental body having
                jurisdiction over the Issuer or any of its properties or assets.
                

            

    

    

    
      	 	
              (n)
                

            	
              Changes,
                Dividends, Etc.
                Since the date of the Issuer’s most recent financial statements, except as
                described in Schedule 3.1(n) or in the SEC Filings, the Issuer has
                not:
                (i) incurred any debts, obligations or liabilities, absolute, accrued
                or contingent and whether due or to become due, except current liabilities
                incurred in the ordinary course of business which will not materially
                and
                adversely affect the business, properties or prospects of the Issuer;
                (ii) paid any obligation or liability other than, or discharged or
                satisfied any liens or encumbrances other than those securing, current
                liabilities, in each case in the ordinary course of business;
                (iii) declared or made any payment to or distribution to its
                shareholders as such, or purchased or redeemed any of its shares
                of
                capital stock, or obligated itself to do so; (iv) mortgaged, pledged
                or subjected to lien, charge, security interest or other encumbrance
                any
                of its assets, tangible or intangible, except in the ordinary course
                of
                business; (v) sold, transferred or leased any of its assets except in
                the ordinary course of business; (vi) suffered any physical damage,
                destruction or loss (whether or not covered by insurance) materially
                and
                adversely affecting the properties, business or prospects of the
                Issuer;
                (vii) entered into any transaction other than in the ordinary course
                of business; (viii) encountered any labor difficulties or labor union
                organizing activities; (ix) issued or sold any shares of capital
                stock or other securities or granted any options, warrants, or other
                purchase rights with respect thereto other than pursuant to this
                agreement; (x) made any acquisition or disposition of any material
                assets or become involved in any other material transaction, other
                than
                for fair value in the ordinary course of business; (xi) increased the
                compensation payable, or to become payable, to any of its directors
                or
                employees, or made any bonus payment or similar arrangement with
                any of
                its directors or employees or increased the scope or nature of any
                fringe
                benefits provided for its directors or employees; or (xii) agreed to
                do any of the foregoing other than pursuant hereto.
                

            

    

    

    
      	 	
              (o)
                

            	
              Conditions
                of Properties.
                The plant, offices and equipment of the Issuer have been kept in
                good
                condition and repair in the ordinary course of
                business.

            

    

    

    
      	
            	(p)	
              Litigation;
                Governmental Proceedings.
                Except as described in Schedule 3.1(p) or in the SEC Filings, (i)
                there
                are no legal actions, suits, arbitrations or other legal, administrative
                or governmental proceedings or, to the knowledge of the Issuer, threatened
                against the Issuer, or its properties or business, and the Issuer
                is not
                aware of any pending investigations or facts which are likely to
                result in
                or form the basis for any such action, suit or other proceeding;
                (ii) the
                Issuer is not in default with respect to any judgment, order or decree
                of
                any court or any governmental agency or instrumentality; (iii) the
                Issuer
                has not been threatened with any action or proceeding under any business
                or zoning ordinance, law or regulation; and (iv) the Issuer is not
                aware
                of any legislation, or proposed legislation (published by a legislative
                body), which it anticipates will materially and adversely affect
                the
                business, affairs, operations, assets or liabilities (contingent
                or
                otherwise) of the Issuer and its subsidiaries, considered as a
                whole.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (q)
                

            	
              Permits;
                Licenses.
                Except as described in Schedule 3.1(q) or in the SEC Filings, the
                Issuer
                and each of its subsidiaries has obtained all certificates,
                authorizations, permits or licenses necessary to conduct the business
                now
                owned or operated by it and the Issuer has not received any notice
                of
                proceedings relating to the revocation or modification of any material
                certificate, authority, permit or license necessary which, if the
                subject
                of an unfavorable decision, ruling or finding would materially and
                adversely affect the conduct of the business, operations, financial
                condition or income of the Issuer (on a consolidated basis).
                

            

    

    

    
      	 	
              (r)
                

            	
              Compliance
                With Applicable Laws and Other Instruments.
                The business and operations of the Issuer have been and are being
                conducted in all material respects in accordance with all applicable
                laws,
                rules and regulations of all governmental authorities. Neither the
                execution nor delivery of, nor the performance of or compliance with,
                this
                agreement nor the consummation of the transactions contemplated hereby
                will, with or without the giving of notice or passage of time, result
                in
                any breach of, or constitute a default under, or result in the imposition
                of any lien or encumbrance upon any asset or property of the Issuer
                pursuant to, any agreement or other instrument to which the Issuer
                is a
                party or by which it or any of its properties, assets or rights is
                bound
                or affected, nor will such performance, compliance or consummation
                violate
                the articles of incorporation or bylaws of the Issuer. The Issuer
                is not
                in violation of its articles of incorporation or bylaws nor in material
                violation of, or in material default under, any lien, indenture,
                mortgage,
                lease, agreement, instrument, commitment or arrangement in any material
                respect. The Issuer is not subject to any restriction which would
                prohibit
                it from entering into or performing its obligations under this
                agreement.

            

    

    

    
      	 	
              (s)
                

            	
              Environmental
                Matters.
                Except as disclosed in the SEC Filings, to the Issuer’s knowledge: (i) the
                operations carried on by the Issuer are in material compliance with
                all
                applicable federal, state and municipal environmental, health and
                safety
                statutes, regulations and permits; (ii) none of such operations is
                subject
                to any judicial or administrative proceeding alleging the violation
                of any
                federal, state or municipal environmental, health or safety statute
                or
                regulation or is subject to any investigation concerning whether
                any
                remedial action is needed to respond to a release of any Hazardous
                Material (as defined below) into the environment; (iii) except in
                material
                compliance with applicable environmental laws, none of the premises
                currently occupied by the Issuer has at any time been used by the
                Issuer
                or by any other occupier, as a waste storage or waste disposal site
                or to
                operate a waste management business; (iv) the Issuer has no material
                contingent liability in connection with any release of any Hazardous
                Material on or into the environment from any of the premises currently
                occupied by the Issuer or from the operations carried out thereon
                except
                to the extent such release is in material compliance with all applicable
                laws; (v) neither the Issuer nor any occupier of the premises currently
                occupied by the Issuer, generates, transports, treats, stores or
                disposes
                of any waste, subject waste, hazardous waste, deleterious substance,
                industrial waste (as defined in applicable federal, state or municipal
                legislation) on any of the premises currently occupied by the Issuer
                in
                material contravention of applicable federal, state or municipal
                laws or
                regulations enacted for the protection of the natural environment
                or human
                health; and (vi) no underground storage tanks or surface impoundments
                containing a petroleum product or Hazardous Material are located
                on any of
                the Issuer or its subsidiaries’ properties in material contravention of
                applicable federal, state or municipal laws or regulations enacted
                for the
                protection of the natural environment or human health. For the purposes
                of
                this subparagraph, “Hazardous
                Material”
                means any contaminant, pollutant, subject waste, hazardous waste,
                deleterious substance, industrial waste, toxic matter or any other
                substance that when released into the natural environment is likely
                to
                cause, at some immediate or future time, material harm or degradation
                to
                the natural environment or material risk to human health and, without
                restricting the generality of the foregoing, includes any contaminant,
                pollutant, subject waste, deleterious substance, industrial waste,
                toxic
                matter or hazardous waste as defined by applicable federal, provincial,
                state or municipal laws or regulations enacted for the protection
                of the
                natural environment or human health.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (t)
                

            	
              Capital
                Stock.
                The authorized capital stock of the Issuer consists of 200,000,000
                common
                shares, $0.000001 par value. Schedule
                3.1(t)
                sets forth the issued and outstanding capital of the Issuer as of
                the
                Closing Date. All of the outstanding shares of the Issuer were duly
                authorized and validly issued and are fully paid and nonassessable.
                Except
                as set forth on Schedule
                3.1(t)
                or
                in the SEC Filings, there are no outstanding subscriptions, options,
                warrants, calls, contracts, demands, commitments, convertible securities
                or other agreements or arrangements of any character or nature whatever,
                other than this Purchase Agreement, under which the Issuer is obligated
                to
                issue any securities of any kind representing an ownership interest
                in the
                Issuer. Except as described in Schedule 3.1(t) or in the SEC Filings,
                (i)
                neither the offer nor the issuance or sale of the Securities constitutes
                an event, under any anti-dilution provisions of any securities issued
                or
                issuable by the Issuer or any agreements with respect to the issuance
                of
                securities by the Issuer, which will either increase the number of
                shares
                issuable pursuant to such provisions or decrease the consideration
                per
                share to be received by the Issuer pursuant to such provisions; and
                (ii)
                no holder of any security of the Issuer is entitled to any pre-emptive
                or
                similar rights to purchase any securities of the Issuer from the
                Issuer.
                

            

    

    

    
      	 	
              (u)
                

            	
              Outstanding
                Debt.
                Except as described in Schedule 3.1(u) or in the SEC Filings, (i)
                the
                Issuer does not have any material indebtedness incurred as the result
                of a
                direct borrowing of money, including, but not limited to, indebtedness
                with respect to trade accounts; and (ii) the Issuer is not in default
                in
                the payment of the principal of or interest or premium on any such
                indebtedness, and no event has occurred or is continuing under the
                provisions of any instrument, document or agreement evidencing or
                relating
                to any such indebtedness which with the lapse of time or the giving
                of
                notice, or both, would constitute an event of default
                thereunder.

            

    

    

    
      	 	
              (v)
                

            	
              Assets
                and Contracts.
                The Issuer has in all material respects substantially performed all
                obligations required to be performed by it to date and is not in
                default
                in any material respect under any of the contracts, agreements, leases,
                documents, commitments or other arrangements to which it is a party
                or by
                which it is otherwise bound. All instruments material to the Issuer’s
                business or otherwise described in this section are in effect and
                enforceable according to their respective terms, and there is not
                under
                any of such instruments any existing material default or event of
                default
                or event which, with notice or lapse of time or both, would constitute
                an
                event of default thereunder. All parties having material contractual
                arrangements with the Issuer are in substantial compliance therewith
                and
                none are in material default in any respect
                thereunder.

            

    

    

    
      	 	
              (w)
                

            	
              Insurance
                Coverage.
                There are in full force policies of insurance issued by insurers
                of
                recognized responsibility insuring the Issuer and its properties
                and
                business against such losses and risks, and in such amounts, as in
                the
                Issuer’s best judgment, after advice from its insurance broker, are
                acceptable for the nature and extent of such business and its
                resources.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (x)
                

            	
              No
                Brokers or Finders.
                Except as set forth on Schedule
                3.1(x),
                no person, firm or corporation has or will have, as a result of any
                act or
                omission of the Issuer, any right, interest or valid claim against
                the
                Issuer or the Investor for any commission, fee or other compensation
                as a
                finder or broker in connection with the transactions contemplated
                by this
                Purchase Agreement. The Issuer will indemnify and hold the Investor
                harmless against any and all liability with respect to any such
                commission, fee or other compensation which may be payable or determined
                to be payable in connection with the transactions contemplated by
                this
                Purchase Agreement.

            

    

    

    
      	 	
              (y)
                

            	
              Disclosure.
                The Issuer has not knowingly withheld from the Investor any material
                facts
                known to the Issuer and relating to the assets, business, operations,
                financial condition or prospects of the Issuer. No representation
                or
                warranty in this Agreement or in any certificate, schedule, statement
                or
                other document furnished or to be furnished to any Investor pursuant
                hereto or in connection with the transactions contemplated hereby
                contains
                or will contain any untrue statement of a material fact or omits
                or will
                omit to state any material fact required to be stated herein or therein
                or
                necessary to make the statements herein or therein not
                misleading.

            

    

    

    
      	 	
              (z)
                

            	
              Registration
                Rights.
                Except as described in Schedule 3.1(z) or in the SEC Filings or as
                contemplated under the Registration Rights Agreement, the Issuer
                has not
                agreed to register any of its authorized or outstanding securities
                under
                the 1933 Act.

            

    

    

    
      	 	
              (aa)
                

            	
              Retirement
                Plans.
                The Issuer does not have any retirement plan in which any employees
                of the
                Issuer participates that is subject to any provisions of the Employee
                Retirement Income Security Act of 1974 and of the regulations adopted
                pursuant thereto.

            

    

    

    
      	 	
              (bb)
                

            	
              Not
                Investment Company.
                The Issuer is not an "investment company" within the meaning of the
                Investment Company Act of 1940.

            

    

    

    
      	 	
              (cc)
                

            	
              Securities.
                The Securities, when issued and paid for pursuant to the terms of
                this
                Purchase Agreement will be duly authorized, validly issued and
                outstanding, fully paid, nonassessable shares and shall be free and
                clear
                of all pledges, liens and encumbrances.

            

    

    

    
      	 	
              (dd)
                

            	
              Securities
                Laws.
                Based in part upon the representations of the Investor in this Purchase
                Agreement, no consent, authorization, approval, permit or order of
                or
                filing with any governmental or regulatory authority is required
                under
                current laws and regulations in connection with the execution and
                delivery
                of this agreement or the offer, issuance, sale or delivery of the
                Securities, other than the qualification thereof, if required, under
                applicable state securities laws, which qualification has been or
                will be
                effected as a condition of these sales, except applicable notices
                of
                exemption, such as a Form D. The Issuer has not, directly or through
                an
                agent, offered the Securities or any similar securities for sale
                to, or
                solicited any offers to acquire such securities from, persons other
                than
                the Investors and other accredited investors. Under the circumstances
                contemplated by this agreement and assuming the accuracy of the
                representations of the Investors in this Purchase Agreement, the
                offer,
                issuance, sale and delivery of the Securities will not, under current
                laws
                and regulations, require compliance with the prospectus delivery
                or
                registration requirements of the 1933
                Act.

            

    

    

    
      	 	
              (ee)
                

            	
              Securities
                Act Exemptions.
                All securities issued by the Issuer have been issued in full compliance
                with an exemption or exemptions from the registration and prospectus
                delivery requirements of the 1933 Act and from the registration and
                qualification requirements of all applicable state securities
                laws.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ff)
                

            	
              Transfer
                Restrictions.
                Provided that a registration statement in respect of the Securities
                (as
                contemplated in the Registration Rights Agreement) is in effect as
                required under all applicable securities laws, such Securities shall
                be
                freely transferable on the books and records of the Issuer, provided
                that
                the sale is made to a bona-fide purchaser and that the prospectus
                delivery
                requirements are met.

            

    

    

    
      	 	
              (gg)
                

            	
              No
                General Solicitation or Advertising.
                Neither the Issuer nor any of its affiliates, nor any person acting
                on its
                or their behalf, has engaged in or will engage in any form of “general
                solicitation” or “general advertising” (as such terms are defined in Rule
                502 (c) under Regulation D of the 1933 Act) in the United States
                with
                respect to offers or sales of the
                Securities.

            

    

    

    
      	 	
              (hh)
                

            	
              Offers
                and Sales During Past Six Months.
                The Issuer has not, for a period of six months prior to the date
                hereof,
                sold, offered for sale or solicited, and will not for a period of
                six
                months after the Closing Date, offer, sell or solicit, any offer
                to buy
                any of its securities in a manner that would be integrated with the
                offer
                and sale of the Securities and would cause the exemption from registration
                set forth in Rule 506 of Regulation D of the 1933 Act to become
                unavailable with respect to the offer and sale of the
                Securities.

            

    

    

    
      	 	
              (ii)
                

            	
              OTCBB.
                The Common Stock is currently quoted for trading on the OTC Bulletin
                Board
                operated by the National Association of Securities Dealers. No order
                ceasing or suspending trading in securities of the Issuer nor prohibiting
                the sale of such securities has been issued to and is outstanding
                against
                the Issuer or its directors, officers or promoters or against any
                other
                companies that have common directors, officers or promoters and,
                to the
                best of the Issuer’s knowledge, no investigations or proceedings for such
                purposes are pending or threatened.

            

    

    

    3.2 Non-Merger
      and Survival

    

    The
      representations and warranties of the Issuer contained herein will be true
      at
      the date of execution of this Purchase Agreement by the Issuer and as of the
      Closing of the Offering in all material respects as though such representations
      and warranties were made as of such times and shall survive the Closing of
      the
      Offering and the delivery of the Certificates. 

    

    3.3 Indemnity

    

    The
      Issuer shall indemnify, defend and hold the Investor (which term shall, for
      the
      purposes of this Section, include the Investor or its shareholders, managers,
      partners, directors, officers, members, employees, direct or indirect investors,
      agents and affiliates and assignees and the stockholders, partners, directors,
      members, managers, officers, employees direct or indirect investors and agents
      of such affiliates and assignees) harmless against any and all liabilities,
      loss, cost or damage, together with all reasonable costs and expenses related
      thereto (including reasonable legal and accounting fees and expenses), arising
      from, relating to, or connected with an untrue, inaccurate or breached
      statement, representation, warranty or covenant of the Issuer contained in
      this
      Purchase Agreement and/or the Registration Rights Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      4

    COVENANTS
      OF THE ISSUER

    

    4.1 Covenants
      of the Issuer

    

    The
      Issuer covenants and agrees with the Investor that:

     

    
      	 	
              (a)

            	
              Reserved
                Common Stock.
                For so long as the Warrant held by the Investor shall remain outstanding,
                the Issuer covenants and agrees with the Investor that it will at
                all
                times fully reserve from its authorized but unissued Common Stock
                such
                sufficient numbers of shares of Common Stock to permit the conversion
                in
                full of the Warrant.

            

    

    

    
      	 	
              (b)

            	
              Filings.
                The Issuer will make all necessary filings in connection with the
                sale of
                the Securities as required by the laws and regulations of all appropriate
                jurisdictions within the United States of
                America.

            

    

    

    
      	 	
              (c)

            	
              Rule
                144 and 904 Opinions.
                The Issuer at its sole expense will, upon written request by the
                Investor,
                take such steps as are necessary to cause its counsel to issue an
                opinion
                to the Issuer’s transfer agent allowing the Investor to offer and sell the
                Common Stock, and any Common Stock issued upon exercise of the Warrant,
                in
                reliance on the applicable provisions of Rule 144 or Rule 904 of
                Regulation S provided that the holding period and other requirements
                of
                such Rule 144 or the the expiration of the one year “distribution
                compliance period” (as defined in Rule 902(f) of Regulation S) Regulation
                S are met.

            

    

     

    4.2 Survival
      

    

    The
      covenants set forth in this Article 4 shall survive the Closing for the benefit
      of the Investor.

     

    ARTICLE
      5

    REGISTRATION
      RIGHTS AND FIRST RIGHTS

    

    5.1 Registration
      Statement

    

    The
      Issuer shall grant the Investor the registration rights set forth in the
      Registration Rights Agreement.

    

    5.2 Removal
      of Legend

    

    After
      the
      registration statement referenced in the Registration Rights Agreement is
      declared effective by the SEC, the Investor may deliver to the Issuer the
      certificate representing the Securities issued to the Investor in connection
      with a sale described in Section 3.1(ff) hereof and the Issuer will, within
      three days after receipt by the Issuer of the foregoing, issue a new certificate
      representing and in exchange for the aforementioned certificate in the name
      of
      such bona fide purchaser, which new certificate shall be issued without any
      restrictive legend.

    

    5.3 Right
      of First Offer on Issuer Issuance

    

    
      	 	
              (a)

            	
              Right
                of First Offer.
                Subject to the exceptions set forth on Schedule 5.3(a), the Issuer
                hereby
                grants to the Investor a right of first offer (“Right
                of First Offer”)
                to purchase such Investor’s Pro Rata Share (as defined in
                Section 5.3(b) below) of any New Securities (as defined in
                Section 5.3(c) below) which the Issuer may, from time to time,
                propose to issue and sell.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (b)

            	
              Pro
                Rata Share.
                The Investor’s “Pro
                Rata Share,”
                for purposes of this Section 5.3, is equal to the fraction obtained
                by
                dividing (1) the total number of shares of Common Stock then held by
                the Investor (including any Common Stock issuable upon the exercise
                of
                warrants held by the Investor) by (2) the sum of the total number of
                shares of Common Stock outstanding or issuable on the date of the
                transaction giving rise to the Right of First Offer, computed on
                a
                “fully-diluted” basis. 

            

    

     

    
      	 	
              (c)

            	
              New
                Securities.
                Except as set forth below, “New
                Securities”
                shall mean any shares of capital stock of the Issuer, including Common
                Stock and preferred stock, whether or not now authorized, and rights,
                options or warrants to purchase said shares of Common Stock or preferred
                stock and securities of any type whatsoever that are, or may by their
                terms become, convertible into said shares of Common Stock or preferred
                stock. Notwithstanding the foregoing, “New
                Securities”
                shall not include the following:

            

    

     

    
      	 	
              (i)

            	
              Common
                Stock, or options or other rights to purchase Common Stock, issued
                or
                granted to employees, officers, directors and consultants of the
                Issuer
                pursuant to any one or more employee stock plans or agreements approved
                by
                the Issuer’s Board of Directors not to exceed 10% of the number of issued
                and outstanding shares of Common Stock on the date of this Purchase
                Agreement;

            

    

    

    
      	 	
              (ii)

            	
              shares
                of Common Stock or other securities issued as a dividend or distribution
                on, or in connection with a split of or recapitalization of, any
                of the
                capital stock of the Issuer;

            

    

    

    
      	 	
              (iii)

            	
              securities
                issued by the Issuer pursuant to a strategic partnership, joint venture
                or
                other similar arrangement unanimously approved by the Board of Directors
                where the primary purpose of the arrangement is not to raise capital;
                and

            

    

    

    
      	 	
              (iv)

            	
              securities
                issued by the Issuer pursuant to the acquisition of another corporation
                or
                other entity by the Issuer by merger, purchase of all or substantially
                all
                of the capital stock or assets, or other
                reorganization.

            

    

    

    
      	 	
              (d)

            	
              Procedure.
                In the event the Issuer proposes to undertake an issuance of New
                Securities, it shall give the Investor written notice (the “Issuer
                Notice”)
                of its intention, describing the amount and type of New Securities
                to be
                issued, and the price and terms upon which the Issuer proposes to
                issue
                the same. The Investor shall have 20 days from the deemed date of
                receipt of the Issuer Notice to exercise the Investor’s Right of First
                Offer to purchase up to the Investor’s respective Pro Rata Share of such
                New Securities for the price and upon the terms specified in the
                Issuer
                Notice by delivering written notice (the “Right
                of First Offer Election Notice”)
                to the Issuer and stating therein the quantity of New Securities
                to be
                purchased.

            

    

     

    Settlement
      for the New Securities to be purchased by the Investor pursuant to this
      Section 5.3(d) shall be made in cash within 20 days from the
      Investors’ deemed date of receipt of the Issuer Notice; provided,
      however,
      that if
      the terms of payment for the New Securities specified in the Issuer Notice
      were
      other than cash against delivery, the Investor shall pay in cash to the Issuer
      the fair market value of such consideration as mutually agreed upon by the
      Issuer the Investor or, if no such agreement is reached, as determined by the
      Issuer’s Board of Directors, which determination shall be final, within five
      days of such determination if such determination is made after 15 days
      following receipt of the Issuer Notice.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      Issuer shall have 120 days after the deemed receipt of the Issuer Notice to
      sell the New Securities not elected to be purchased by the Investor at the
      price
      and upon terms no more favorable to the purchasers of such securities than
      specified in the Issuer Notice. In the event the Issuer has not sold some or
      all
      of the New Securities within such 120-day period, the Issuer shall not
      thereafter issue or sell any unsold New Securities without first offering such
      securities to the Investor in the manner provided above.

     

    If
      the
      Investor shall have failed to deliver to the Issuer its Right of First Offer
      Election Notice within the time periods described in this Section 5.3(d),
      the Investor shall be deemed to have waived its Right of First Offer as to
      such
      financing to which such notice pertains.

     

    
      	 	
              (e)

            	
              Termination
                and Assignment.
                The Right of First Offer granted in this Section 5.3 shall expire
                upon the
                12 month anniversary of the Closing Date. The Right of First Offer
                is
                non-assignable except to any transferee to whom registration rights
                may be
                transferred pursuant to Section 9(f) of the Registration Rights
                Agreement.

            

    

     

    
      	 	
              (f)

            	
              Issuer
                Right to Terminate Issuance of New Securities.
                Notwithstanding the foregoing, the Issuer may in its sole discretion
                terminate any proposed issuance of New Securities in respect of which
                the
                Issuer has given Issuer Notice, at any time prior to the consummation
                thereof. The foregoing provision shall apply even in the event the
                Investor shall have exercised its Rights of First Offer hereunder;
                provided,
                however,
                that no New Securities covered by the applicable Issuer Notice shall
                then
                have been issued.

            

    

     

    5.4 Dilutive
      Issuances 

    

    If
      at any
      time before the 12 month anniversary of the Closing Date, the Issuer issues
      or
      sells, or is deemed to have issued or sold, any New Securities for a
      consideration per share (the “New
      Issuance Price”)
      less
      than $0.28 (the foregoing a “Dilutive
      Issuance”),
      then
      immediately after such Dilutive Issuance, the Issuer shall promptly issue to
      the
      Investor a number of additional shares of Common Stock so that the effective
      purchase price of each share of Common Stock sold to the Investor under this
      Purchase Agreement is equal to the New Issuance Price. 

     

    ARTICLE
      6

    ISSUANCE
      OF CERTIFICATES

    

    On
      or
      immediately following the Closing of the Offering, the Issuer will prepare
      and
      issue one or more Certificates for the Common Stock and the Warrant registered
      in such name or names as specified by the Investor in Exhibit B hereto and
      cause
      the same to be delivered to the Investor pursuant to the delivery instructions
      provided therein.

     

    ARTICLE
      7

    GENERAL
      PROVISIONS

     

    7.1 Costs;
      Expenses

    

    At
      the
      Closing, the Issuer shall pay in connection with the preparation, execution
      and
      delivery of this Purchase Agreement, the issuance of the Securities, certain
      due
      diligence and related legal matters, the fees and out-of-pocket expenses of
      legal counsel to the Investor in the amount of US$5,000, which shall be deducted
      from the Purchase Price. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7.2 Governing
      Law

    

    This
      Purchase Agreement shall be governed by and construed under the law of the
      State
      of Delaware without regard to its choice of law provision.

    

    7.3 Successors
      and Assigns

    

    This
      Purchase Agreement shall inure to the benefit of and be binding on the
      respective successors and assigns of the parties hereto.

    

    7.4 Execution
      by Counterparts and Facsimile

    

    This
      Purchase Agreement may be executed in counterparts and by facsimile, each of
      which when executed by any party will be deemed to be an original and all of
      which counterparts will together constitute one and the same Purchase
      Agreement.

    

    7.5 Authorization

    

    The
      Investor hereby authorizes the Issuer to correct any minor errors in, or
      complete any minor information missing from any part of this Purchase Agreement
      and any other schedules, forms, certificates or documents executed by the
      Investor and delivered to the Issuer in connection with the
      Offering.

     

     

    [Remainder
      of page intentionally left blank]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      undersigned represents that the foregoing statements are true and that it caused
      this Purchase Agreement to be duly executed on its behalf on this 10th 
      day of
      December, 2007.

    

    

    RAB
      Special Situations (Master) Fund Limited by

    

    

    
      	
              /s/
                Simon Gwyther

            	 
	
              (Signature)

            	 
	 	 
	
              Simon
                Gwyther

            	 
	
              (Name)

            	 
	 	 
	 	 
	
              /s/
                Jake Leavesley

            	 
	
              (Signature)

            	 
	 	 
	
              Jake
                Leavesley

            	 
	
              (Name)

            	 

    

    

    Authorised
      signatories for RAB Capital plc for and on 

    behalf
      of
      RAB Special Situations (Master) Fund Limited

     

    

    Agreed
      to
      this 6th 
      day of
      December, 2007:

    

    TEKOIL
      & GAS CORPORATION

    

    

    
      	
              By:

            	
              /s/
                Mark S. Western

            
	 	
              Name:

            	
              Mark
                S. Western

            
	 	
              Title:

            	
              President and Chief Executive Officer

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    Wire
      Instructions

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

     

    Registration
      and Delivery Instructions

     

    
      	
              Subscriber
                Information

            	
              Registration
                Information

               

              Registration
                of the certificates representing the securities should be made exactly
                as
                follows:

            
	
               

              RAB
                Special Situations (Master) Fund Limited

              c/o
                RAB Capital Plc

              1
                Adam Street

              London
                WC2N 6LE

              United
                Kingdom

              Phone:
                44 20 7389 7000

              Fax:
                44 20 7389 7057

              email:
                legal@rabcap.com

            	
               

              Credit
                Suisse Client Nominees (UK) Limited

              One
                Cabot Square

              London,
                United Kingdom

              E14
                4QJ

            

    

    

    Delivery
      of Certificates

    The
      certificates representing the securities is to be delivered as
      follows:

    

    Martin
      Feast

    Prime
      Brokerage Settlements

    CSFB
      (Europe) Ltd.

    One
      Cabot
      Square

    London
      E14 4QJ

    United
      Kingdom

    Phone:
      44
      20 7888 1187

    Fax:
      44
      20 7458 8245

    

    Notation:
      RAB
      Special Situations (Master) Fund Limited

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    

    Registration
      Rights Agreement

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      3.1(h)

    TO
      PURCHASE AGREEMENT

    

    Third
      Party Rights.

     

    450,000
      Options granted to Gipsymoth Holdings Ltd.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3.1(l)

    TO
      PURCHASE AGREEMENT

    

    Non-Default.

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3.1(n)

    TO
      PURCHASE AGREEMENT

    

    Changes,
      Dividends, Etc.

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3.1(p)

    TO
      PURCHASE AGREEMENT

    

    Litigation;
      Governmental Proceedings.

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3.1(q)

    TO
      PURCHASE AGREEMENT

     

    Permits;
      Licenses.

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3.1(t)

    TO
      PURCHASE AGREEMENT

    

      
        	
                Common
                  stock –
                  outstanding

              	 	 	
                46,723,177

              	 
	 	 	 	 	 
	
                
                  Options
                    granted to directors convertible into common shares @ $1.00 per
                    share

                

              	 	 	
                7,000,000

              	 
	 	 	 	 	 
	
                
                  Options
                    granted to Gipsymoth Holdings Ltd. convertible into common shares @
                    $0.50 per share

                

              	 	 	
                450,000

              	 
	 	 	 	 	 
	
                
                  Warrants
                    to Goldman Sachs convertible into common shares @ $0.50 per
                    share

                

              	 	 	
                900,000

              	 
	 	 	 	 	 
	
                Total
                  shares fully diluted

              	 	 	
                55,073,177

              	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3.1(u)

    TO
      PURCHASE AGREEMENT

    

    Outstanding
      Debt.

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3.1(x)

    TO
      PURCHASE AGREEMENT

     

    No
      Brokers or Finders.

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3.1(z)

    TO
      PURCHASE AGREEMENT

     

    Registration
      Rights.

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      5.3(a)

    TO
      PURCHASE AGREEMENT

     

    Right
      of First Offer.

     

    Rights
      granted under Warrant issued to Goldman, Sachs & Co., dated May 11, 2007, to
      purchase 900,000 shares of Common stock of the Company.EXHIBIT
      10.66

     

     

    
      EXECUTION
        VERSION

       

    

    THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
      OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE,
      MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
      (A)
      AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE
      STATE SECURITIES LAWS, OR (B) AN EXEMPTION THEREFROM AND, IF REQUESTED BY THE
      COMPANY, THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY
      TO THE COMPANY TO THE EFFECT THAT THE TRANSFER IS EXEMPT FROM THE REGISTRATION
      PROVISIONS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
      LAWS.

     

    WARRANT
      TO PURCHASE COMMON STOCK

    OF

    TEKOIL
      & GAS CORPORATION

     

    This
      Warrant is issued to the “Holder” described on the signature page below (the
      "Holder"), by TEKOIL & GAS CORPORATION, a Delaware corporation (the
      "Company"), on December 10, 2007 (the "Warrant Issue Date"). This Warrant is
      issued pursuant to the terms of a certain Purchase Agreement dated of even
      date
      herewith (the “Purchase Agreement”) relating to the purchase of certain shares
      of Common Stock and this Warrant from Company by Holder. Capitalized terms
      used
      herein, but not otherwise defined, shall have the meaning ascribed to them
      in
      the Purchase Agreement.

     

    1. Number
      of Shares Subject to Warrant; Definition of Certain Terms.
      Subject
      to the terms and conditions hereinafter set forth, the Holder is entitled,
      upon
      surrender of this Warrant at the principal office of the Company, to purchase
      from the Company, at a price per share equal to the Exercise Price (as defined
      in Section 2 below), the Warrant Shares. 

     

    For
      purposes of this Warrant: 

     

    (A) "Common
      Stock" shall mean the Company's common stock, $0.000001 par
      value, and shall include: (i) in case of any reorganization,
      reclassification, consolidation, merger, distribution, securities exchange
      or
      sale or conveyance of assets, the securities or other property into or for
      which
      shares of such common stock are converted or exchanged, and (ii) any other
      securities or other property into or for which shares of such common stock
      may
      be converted or exchanged. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (B) "Fair
      Market Value" of securities or other property shall mean (i) in the case of
      securities that are traded on a national securities exchange, an amount per
      share equal to the average of the reported sale prices per share of such
      securities on the principal national securities exchange on which such
      securities are traded, on each trading day in the seven-day period immediately
      prior to the date as of which Fair Market Value is being determined or (ii)
      in
      the case of all securities or property not covered by clause (i) above, the
      fair
      market value of such securities or other property determined by the Board of
      Directors of the Company in good faith, unless the Holder requests that an
      independent appraisal of such securities or other property be obtained, in
      which
      case the fair market value shall be determined by a qualified, nationally
      recognized, independent appraiser (the "Appraiser”) selected by the Company and
      acceptable to the Holder (such approval by the Holder not to be unreasonably
      withheld or delayed) experienced in appraising securities or other property
      similar to that with respect to which the Fair Market Value is to be determined.
      The Company shall make available all information reasonably necessary to allow
      the Appraiser to perform the appraisal and shall instruct the Appraiser to
      use
      commercially reasonable efforts to complete the appraisal and to provide the
      Company and the Holder a written determination of the Fair Market Value within
      twenty (20) days of the date as of which Fair Market Value is to be determined
      hereunder. All fees and expenses of the Appraiser will be borne by the Company;
      provided, however, that if the fair market value of such securities of other
      property as determined by the Appraiser is not more than 10% more or less than
      the fair market value determined by the Company's Board of Directors, then
      the
      fees and expenses of the Appraiser will be borne by the Holder (or reimbursed
      to
      the Company by the Holder to the extent previously paid by the
      Company).

     

    (C) "Warrant
      Shares" shall mean 3,571,429 shares of Common Stock, subject to adjustment
      as
      described in Section 7 below.

     

    2. Exercise
      Price.
      The per
      share purchase price for the Warrant Shares shall be $0.28 (the "Exercise
      Price"). The Exercise Price shall be subject to adjustment pursuant to Section
      7
      hereof. 

     

    3. Exercise
      Period.
      Except
      as otherwise provided for herein, this Warrant shall be exercisable, in whole
      or
      in part, at any time and from time to time from and after the date hereof and
      before or on the fifth anniversary thereof (the "Expiration Date"). After the
      Expiration Date, this Warrant shall be void and of no further force and effect.
      Whether or not surrendered to the Company by the Holder, this Warrant shall
      be
      deemed canceled upon the expiration hereof.

     

    4. Method
      of Exercise.

     

    (a) While
      this Warrant remains outstanding and exercisable in accordance with Section
      3
      hereof, the purchase rights hereby represented may be exercised in whole or
      in
      part, at the election of the Holder, by the tender of the Notice of Exercise
      in
      substantially the form attached hereto as Exhibit
      A
      and the
      surrender of this Warrant at the principal office of the Company and by the
      payment to the Company in cash, by check, cancellation of indebtedness or other
      form of payment acceptable to the Company, of an amount equal to the then
      applicable Exercise Price multiplied by the number of shares of Common Stock
      then being purchased.

     

    (b) 
      If this
      Warrant is exercised only in part, the Company shall, upon surrender of this
      Warrant, execute and deliver to the Holder a new Warrant evidencing the rights
      of the Holder to purchase the balance of the Warrant Shares issuable hereunder
      and otherwise identical to this Warrant.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    5. Certificates
      for Shares.
      Upon
      the exercise of the purchase rights evidenced by this Warrant, one or more
      certificates for the number of shares of Common Stock so purchased shall be
      issued as soon as practicable thereafter (with appropriate restrictive legends,
      as applicable).

     

    6. Issuance
      of Shares.
      The
      Company hereby covenants that it will, at all times while this Warrant remains
      outstanding, have authorized and duly and validly reserved for issuance a
      sufficient number of shares of Common Stock to provide for the exercise of
      this
      Warrant in full. The Company represents, warrants and covenants that the Warrant
      Shares, when issued pursuant to the exercise of this Warrant, will be duly
      and
      validly issued, fully paid and nonassessable and free from all taxes, liens,
      and
      charges with respect to the issuance thereof. The Company shall not take any
      action that would cause the Exercise Price to be less than the par value of
      the
      Common Stock. The Warrant Shares issued hereunder shall have the same rights
      and
      obligations pertaining to the other shares of Common Stock issued previously
      or
      hereafter by the Company.

     

    7. Adjustment
      of Exercise Price and Number of Shares.
      The
      number of and kind of securities purchasable upon exercise of this Warrant
      and
      the Exercise Price shall be subject to adjustment from time to time as
      follows:

     

    (a) Subdivisions,
      Combinations and Other Issuances.
      If the
      Company shall at any time prior to the exercise in full or expiration of this
      Warrant subdivide its Common Stock, by split-up or otherwise, or combine its
      Common Stock, or issue additional Common Stock as a dividend with respect to
      any
      of its Common Stock, the number of Warrant Shares shall forthwith be
      proportionately increased in the case of a subdivision or stock dividend, or
      proportionately decreased in the case of a combination. Appropriate adjustments
      shall also be made to the Exercise Price, provided that the aggregate Exercise
      Price payable hereunder for the total number of Warrant Shares purchasable
      under
      this Warrant (as adjusted) shall remain the same. Any adjustment under this
      Section
      7(a)
      shall
      become effective at the close of business on the date the subdivision or
      combination becomes effective, or as of the record date of such dividend, or
      in
      the event that no record date is fixed, upon the making of such
      dividend.

     

    (b) Reclassification,
      Reorganization, Merger, Consolidation, Etc.
      In the
      event of any corporate reclassification, capital reorganization, merger,
      consolidation, sale or conveyance by the Company of all or substantially all
      of
      its assets or property to another person, spin-off or change in the Common
      Stock
      of the Company (other than as a result of a subdivision, combination, or
      dividend provided for in Section
      7(a)
      above),
      then, as a condition of such event, lawful provision shall be made, and duly
      executed documents evidencing the same from the Company or its successor shall
      be delivered to the Holder, so that the Holder shall have the right at any
      time
      prior to the expiration of this Warrant to purchase, at a total price equal
      to
      that payable upon the exercise of this Warrant, the kind and amount of shares
      of
      stock and/or other securities and property receivable in connection with such
      event by a holder of the same number of shares for which this Warrant could
      have
      been exercised immediately prior to such event. In any such case appropriate
      provisions shall be made with respect to the rights and interest of the Holder
      so that the provisions hereof shall thereafter be applicable with respect to
      any
      shares of stock or other securities and property deliverable upon exercise
      hereof, and appropriate adjustments shall be made to the Exercise Price,
      provided that the aggregate exercise price payable hereunder for the total
      number of shares of Common Stock purchasable under this Warrant (as adjusted)
      shall remain the same.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (c) Issuance
      of Additional Shares of Common Stock.

     

    (i) General.
      Subject
      to Section
      7(d)(iv),
      if at
      any time after the date of this Warrant, the Company shall (A) issue or sell
      any
      shares of Common Stock (other than any issuance for which an adjustment is
      made
      pursuant to subsection (a) or (b) of this Section 7)
      without
      consideration or for a consideration per share of Common Stock less than the
      Exercise Price determined immediately before the date of such issuance or sale,
      (B) issue or sell any warrants, options or other rights to acquire shares of
      its
      Common Stock for a consideration per share of Common Stock less than the
      Exercise Price determined immediately before the date of such issuance or sale
      or (C) issue or sell any other securities that are convertible into shares
      of
      its Common Stock for a consideration per share or exchange price less than
      the
      Exercise Price determined immediately before the date of such issuance or sale,
      then, effective immediately upon such issuance or sale, the Exercise Price
      shall
      be
      reduced to the price at which such shares of Common Stock are being issued
      or
      sold by the Company or the price at which such other securities are exercisable
      or convertible into shares of the Company’s Common Stock. 

     

    (d) Miscellaneous.

     

    (i) Treasury
      Stock.
      The
      number of shares of Common Stock outstanding at any given time shall not include
      shares owned or held by or for the account of the Company or any of its
      subsidiaries, and the disposition of any shares of Common Stock so owned or
      held
      shall be considered an issuance of shares of Common Stock.

     

    (ii) Record
      Date.
      If the
      Company takes a record of the holders of shares of Common Stock for the purpose
      of entitling them (A) to receive a dividend or other distribution payable
      in shares of Common Stock, Options or Convertible Securities or (B) to
      subscribe for or purchase shares of Common Stock, Options or Convertible
      Securities, then such record date shall be deemed to be the date of the issuance
      or sale of the shares of Common Stock deemed to have been issued or sold upon
      the declaration of such dividend or the making of such other distribution or
      the
      date of the granting of such right of subscription or purchase, as the case
      may
      be. If the Company shall take any such record of the holders of its shares
      of
      Common Stock and shall, thereafter and before the taking of the action for
      which
      such record was taken, legally abandons its plan to take such action, then
      thereafter no adjustment shall be required by reason of the taking of such
      record and any such adjustment previously made in respect thereof shall be
      rescinded and annulled.

     

    (iii) Notice;
      Adjustment Rules.
      Whenever the Exercise Price and the number of Warrant Shares shall be adjusted
      as provided in this Section 7, the Company shall provide to the Holder a
      statement, signed by a duly elected executive officer of the Company, describing
      in detail the facts requiring such adjustment and setting forth a calculation
      of
      the Exercise Price and the number of Warrant Shares applicable to this Warrant
      after giving effect to such adjustment. All calculations under this Section
      7
      shall be made to the nearest one hundredth of a cent ($.0001) or to the nearest
      full share of Common Stock, as the case may be. Adjustments pursuant to this
      Section 7 shall apply to successive events or transactions of the types covered
      hereby. Notwithstanding any other provision of this Section 7, no adjustment
      shall be made to the number of Warrant Shares or to the Exercise Price if such
      adjustment represents less than one percent (1%) of the number of Warrant Shares
      or less than one percent (1%) of the Exercise Price immediately prior to such
      adjustment, but any lesser adjustment shall be carried forward and shall be
      made
      at the time and together with the next subsequent adjustment which together
      with
      any adjustments so carried forward shall amount to one percent (1%) or more
      of
      the number of Warrant Shares or the Exercise Price.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    (iv) Excluded
      Issuances.
      Notwithstanding any other provision of this Section 7, no adjustment shall
      be
      made pursuant to subsection (c) of this Section 7, nor shall Section 14
      apply, in respect of (i) the issuance from time to time of shares of Common
      Stock upon the exercise of this Warrant, (ii) securities issued upon
      exercise, conversion or exchange of any options, convertible securities or
      other
      rights, warrants, commitments or claims, provided that the foregoing are issued
      and outstanding on the date hereof, (iii) any issuance of shares of restricted
      stock or options to purchase shares of Common Stock to employees, officers
      or
      directors of the Company pursuant to a stock option plan or other employee
      benefit arrangement approved by the Board of Directors of the Company, in good
      faith, or (iv) any issuance of Common Stock or Common Stock equivalent to
      licensors, customers, lessors, consultants, suppliers, lenders or vendors of
      the
      Company in connection with a bona fide transaction of the Company approved
      by
      the Board of Directors; provided, however, that the aggregate number of shares
      issued pursuant to clauses (iii) and (iv) (including, without limitation,
      shares subject to such options or Common Stock equivalents), does not exceed
      an
      aggregate of 10% of the shares of Common Stock outstanding on a fully diluted
      basis on the Warrant Issue Date (subject to adjustment in the event of stock
      splits, combinations or similar occurrences after the date hereof).

     

    8. Notice
      of Certain Actions.
      In the
      event that the Company (or its Board of Directors):

     

    (a) shall
      authorize issuance to all holders of shares of Common Stock of rights or
      warrants to subscribe for or purchase any equity interest in the Company or
      of
      any Options or Convertible Securities; or

     

    (b) shall
      authorize any distribution to holders of shares of Common Stock or any equity
      interest in the Company, whether in the form of cash, property, assets,
      evidences of indebtedness, or other consideration; or

     

    (c) becomes
      a
      party to any consolidation or merger for which approval of any equity owners
      of
      the Company will be required, or to a conveyance or transfer of the properties
      and assets of the Company substantially as an entirety, or of any capital
      reorganization or reclassification or change of the shares of Common Stock
      or
      any equity interests of the Company;

     

    (d) commences
      a voluntary or involuntary dissolution, liquidation or winding up;
      or

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    (e) takes
      any
      other action that would require an adjustment pursuant to Section
      7;

     

    then
      the
      Company shall provide a written notice to the Holder stating (i) the date
      as of which the holders of record of shares of Common Stock or other equity
      interests of the Company to be entitled to receive any such rights, equity
      or
      distribution are to be determined, (ii) if applicable, the material terms
      of any such consolidation or merger and the expected effective date thereof,
      or
      (iii) if applicable, the material terms of any such conveyance, transfer,
      dissolution, liquidation or winding up, the date it is expected to become
      effective, and the date as of which it is expected that holders of record will
      be entitled to exchange their shares of Common Stock or other equity interests
      of the Company for securities or other property, if any, deliverable upon such
      reclassification, conveyance, transfer, dissolution, liquidation, or winding
      up.
      Such notice shall be given not later than twenty business days prior to the
      effective date (or the applicable record date, if earlier) of such event. The
      failure to give the notice required by this Section 8 or any defect therein
      shall not affect the legality or validity of any distribution, right, warrant,
      consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
      up, or the vote upon any action.

     

    9. Merger
      or Consolidation of the Company.
      The
      Company will not merge or consolidate with or into any other entity unless
      the
      successor entity expressly assumes, by supplemental agreement reasonably
      satisfactory in form and substance to each Holder, the due and punctual
      performance and observance of each and every covenant and condition of this
      Warrant to be performed and observed by the Company.

     

    10. No
      Shareholder Rights.
      Prior
      to exercise of this Warrant, the Holder shall not be entitled to any rights
      of a
      shareholder with respect to the shares of Common Stock issuable upon exercise
      of
      this Warrant, including (without limitation) the right to vote such shares
      of
      Common Stock, receive dividends or other distributions thereon, exercise
      preemptive rights or be notified of shareholder meetings, and such Holder shall
      not, by reason of being the Holder, be entitled to any notice or other
      communication concerning the business or affairs of the Company. However,
      nothing in this Section 10 shall limit the right of the Holder or its affiliates
      to be provided the notices required under this Warrant or the Credit
      Agreement.

     

    11. Compliance
      With Securities Act; Transferability of Warrant or Shares.

     

    (a) Compliance
      With Securities Act.
      The
      Holder, by acceptance hereof, agrees that this Warrant, and the shares of Common
      Stock issuable upon exercise of this Warrant, are being acquired for investment
      and that such Holder will not offer, sell or otherwise dispose of this Warrant,
      or any shares of Common Stock issuable upon exercise of this Warrant, except
      under circumstances which will not result in a violation of the Securities
      Act,
      or any applicable state securities laws. This Warrant and all shares of Common
      Stock issued upon exercise of this Warrant (unless registered under the
      Securities Act and any applicable state securities laws) shall be stamped or
      imprinted with a legend in substantially the following form:

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    "THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR OTHER
      APPLICABLE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
      AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE AND MAY NOT BE OFFERED, SOLD,
      PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS
      OF
      REGULATIONS S, RULE 901 THROUGH RULE 905, AND PRELIMINARY NOTES UNDER THE U.S.
      SECURITIES ACT OR (2) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
      REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT (AND, IN THE CASE OF (1)
      OR
      (2), IF REQUESTED BY THE COMPANY, THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
      REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT THE TRANSFER IS EXEMPT
      FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT AND APPLICABLE STATE
      SECURITIES LAWS) OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT. HEDGING
      TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
      COMPLIANCE WITH THE U.S. SECURITIES ACT.”

     

    (b) Transferability.
      Subject
      to compliance with applicable federal and state securities laws , this Warrant
      and all rights hereunder are transferable in whole or in part by the Holder
      to
      any person or entity upon written notice to the Company. The transfer shall
      be
      recorded on the books of the Company upon the surrender of this Warrant,
      properly endorsed for transfer by delivery of an Assignment Form in
      substantially the form attached hereto as Exhibit B,
      to the
      Company at the address set forth in Section 15 hereof, and the payment to
      the Company of all transfer taxes and other governmental charges imposed on
      such
      transfer. In the event of a partial or complete transfer, the Company shall
      issue to the Holders one or more appropriate new warrants that are identical
      to
      this Warrant except as to the number of shares of Common Stock issuable upon
      exercise thereof (if such transfer is a partial transfer).

     

    12. Restricted
      Securities.
      The
      Holder understands that this Warrant and the shares of Common Stock issuable
      upon exercise of this Warrant, will not be registered at the time of their
      issuance under the Securities Act for the reason that the sale provided for
      herein is exempt pursuant to Section 4(2) of the Securities Act based on the
      representations of the Holder set forth herein. The Holder represents that
      it
      has such knowledge and experience in financial and business matters as to be
      capable of evaluating the merits and risks of its investment and has the ability
      to suffer the total loss of the investment. The Holder further represents that
      it has had the opportunity to ask questions of and receive answers from the
      Company concerning the terms and conditions of this Warrant and the business
      of
      the Company, and to obtain additional information to such Holder's satisfaction.
      The Holder further represents that it is an "accredited investor" within the
      meaning of Regulation D under the Securities Act, as presently in effect. The
      Holder further represents that this Warrant is being acquired for the account
      of
      the Holder for investment only and not with a present view to, or with any
      present intention of, a distribution or resale thereof, in whole or in part,
      or
      the grant of any participation therein, other than pursuant to the terms of
      a
      certain Registration Rights Agreement of even date herewith between Holder
      and
      the Company (the "Registration Rights Agreement") relating to the shares of
      Common Stock issuable upon exercise of this Warrant.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    13. Successors
      and Assigns.
      The
      terms and provisions of this Warrant shall inure to the benefit of, and be
      binding upon, the Company and the Holders hereof and their respective successors
      and assigns.

     

    14. Amendments
      and Waivers.
      Any
      term of this Warrant may be amended and the observance of any term of this
      Warrant may be waived (either generally or in a particular instance and either
      retroactively or prospectively), with the written consent of the Company and
      the
      Holder.

     

    15. Notices.
      All
      notices required under this Warrant shall be deemed to have been given or made
      for all purposes (i) upon personal delivery, (ii) upon confirmation receipt
      that
      the communication was successfully sent to the applicable number if sent by
      facsimile, (iii) one day after being sent, when sent by professional overnight
      courier service, or (iv) three business days after posting when sent by
      registered or certified mail. Notices to the Company shall be sent to the
      address of the Company set forth below (or at such other place as the Company
      shall notify the Holder hereof in writing) and notices to the Holder shall
      be
      sent to the address of the Holder set forth below (or at such other place as
      the
      Holder shall notify the Company hereof in writing):

     

    

    
      	
              To
                the Company:

            	
              TEKOIL
                & GAS CORPORATION

            
	 	
              5036
                Dr. Phillips Blvd.

            
	 	
              Suite
                232

            
	 	
              Orlando,
                FL 32819

            
	 	
              Telephone:
                (407) 996-8506

            
	 	
              Telecopy:
                (407) 996-8507

            
	 	
              Attn:
                Mr. Mark Western

            

    

    

    To
      the
      Holder as provided on the signature page of this Warrant.

    

    16. Captions.
      The
      section and subsection headings of this Warrant are inserted for convenience
      only and shall not constitute a part of this Warrant in construing or
      interpreting any provision hereof.

     

    17. Governing
      Law.
      This
      Warrant shall be governed by the laws of the State of Delaware, without regard
      to the choice or conflict of laws principles thereof.

     

    [Signatures
      on Following Page]

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the undersigned have caused this Warrant to be duly executed
      as
      of the date first set forth above.

     

    
      	
              COMPANY

            
	 
	
              TEKOIL
                & GAS CORPORATION

            
	 	 
	 	 
	
              By:
                

            	
                
                /s/ Mark S. Western

            
	 	Name: Mark
              Western
	 	Title: Chairman
              and
              CEO

    

     

     

    
      	
              HOLDER

            
	 
	
              RAB
                Special Situations (Master) Fund Limited by

            
	 
	 
	
              /s/
                Simon Gwyther

            
	
              (Signature)

            
	 
	
              Simon
                Gwyther

            
	
              (Name)

            
	 
	 
	
              /s/
                Jake Leavesley

            
	
              (Signature)

            
	 
	
              Jake
                Leavesley

            
	
              (Name)

            
	 
	
              Authorized
                signatories for RAB Capital plc for and on

            
	
              behalf
                of RAB Special Situations (Master) Fund
                Limited

            

    

    

    
      	
              Address:
                

            	
              c/o
                RAB Capital plc

            
	 	
              1
                Adam Street

            
	 	
              London
                WC2N 6LE

            
	 	
              United
                Kingdom

            

    

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    

    NOTICE
      OF
      EXERCISE

     

    To:
      TEKOIL & GAS CORPORATION

    

    The
      undersigned hereby elects to purchase      shares
      of
      Common Stock (as defined in the attached Warrant) of TEKOIL & GAS
      CORPORATION, pursuant to the terms of the attached Warrant.

    

    The
      aggregate Exercise Price is enclosed.

     

    The
      Holder represents that it has such knowledge and experience in financial and
      business matters as to be capable of evaluating the merits and risks of its
      investment, and has the ability to suffer the total loss of the investment.
      The
      Holder further represents that it has had the opportunity to ask questions
      of
      and receive answers from the Company concerning the terms and conditions of
      the
      Warrant and the business of the Company, and to obtain additional information
      to
      such Holder's satisfaction. The Holder further represents that it is an
      "accredited investor" within the meaning of Regulation D under the Securities
      Act, as presently in effect. The undersigned hereby represents and warrants
      that
      the undersigned is acquiring such shares for its own account for investment
      purposes only, and not for resale or with a present view to distribution of
      such
      shares or any part thereof in violation of the Securities Act.

     

    
      	
              Date:_______________________

            	
              WARRANTHOLDER:

            
	 	 
	 	
              By:

            	 

	 	 	
              Name:

            
	 	 	
              Address:

            

    

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    

    ASSIGNMENT
      FORM

    

    TO: TEKOIL
      & GAS CORPORATION

    

    The
      undersigned hereby assigns and transfers unto _____________________________
      of
      ______________________________________________ (Please typewrite or print in
      block letters) the right to purchase ____________ shares of Common Stock (as
      defined in the Warrant) of TEKOIL & GAS CORPORATION subject to the Warrant,
      dated as of _____________________________, by and between TEKOIL & GAS
      CORPORATION and the undersigned (the "Warrant").

    

    This
      assignment complies with the provisions of Section 11 of the Warrant and is
      accompanied by funds sufficient to pay all applicable transfer
      taxes.

    

    In
      addition, the undersigned and/or its assignee will provide such evidence as
      is
      reasonably requested by TEKOIL & GAS CORPORATION, to evidence compliance
      with applicable securities laws as contemplated by Sections 11 and 12 of the
      Warrant.

     

    
      	
              Date:_______________________

            	
              By:

            	 

	 	 	 
	 	 	 
	 	 

	 	
              (Print
                Name of Signatory)

            
	 	 
	 	 

	 	
              (Title
                of Signatory)

            

    

     

    
      
        
        

      

      
        -11-

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