TEKOIL & GAS CORPORATION SUBSCRIPTION AGREEMENT
TEKOIL
& GAS CORPORATION
THE
COMMON STOCK HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE
SECURITIES LAWS. THE COMMON STOCK MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
1. Subscription.
Subscriber (as identified on the signature page attached hereto) hereby
subscribes for and agrees to be issued the shares of Common Stock described
on
the signature page attached hereto (the “Common
Stock”)
of
Tekoil & Gas Corporation, a Delaware corporation (the “Company”).
2. Consideration.
The
Common Stock described herein constitutes a portion of the consideration payable
by the Company to Subscriber under a certain Purchase and Sale Agreement dated
November 13, 2006, and as amended December 29, 2006, in connection with the
acquisition and sale of certain assets described therein as amended by a certain
First Amendment thereto dated of even date herewith (referred to together as
the
“PSA”).
3. Subscriber's
Representations and Warranties.
Subscriber represents, warrants, acknowledges and agrees that:
(a) Subscriber
is a resident of the state indicated on the signature page hereof, is legally
competent to execute this Subscription Agreement, and:
(i) if
Subscriber is an individual, has his or her principal residence in such
state;
(ii) if
Subscriber is a corporation, partnership, trust, limited liability company
or
other form of business organization, has its principal office in such state;
or
(iii) if
Subscriber is a corporation, partnership, trust, limited liability company
or
other form of business organization, Subscriber has not been organized for
the
specific purpose of acquiring the Common Stock.
(b) Subscriber
has not been offered the Common Stock by any form of general solicitation or
general advertising, including but not limited to any advertisement, article,
notice or other communication published in any newspaper, magazine, or similar
media or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
(c) Subscriber
has had access during the course of this transaction and prior to the issuance
of the Common Stock to all information necessary to enable Subscriber to
evaluate the merits and risks of a prospective investment in the Company
(including, without limitation, the periodic and other reports filed by the
Company with the U.S. Securities and Exchange Commission (the “SEC”) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and
Subscriber has had the opportunity to ask questions of and receive answers
from
the officers and directors of the Company, or a person or persons acting on
its
behalf, concerning the terms and conditions of the offering and all questions
raised by Subscriber have been answered to the full satisfaction of Subscriber.
(d) There
are
substantial restrictions on the transferability of the Common Stock and,
accordingly, Subscriber will need to bear the economic risk of the investment
in
the Common Stock for an indefinite period of time and will not be readily able
to liquidate the investment in case of an emergency.
(e) Subscriber
understands that the Company has a limited financial or operating history,
the
Common Stock is a speculative investment which involves a high degree of
financial risk, and there is no assurance of any economic, income or tax benefit
from such investment.
(f) In
making
this investment, Subscriber is relying solely upon the advice of Subscriber's
personal tax advisors, and not the Company nor its advisers and counsel, with
respect to the tax aspects of an investment in the Common Stock.
(g) If
Subscriber is a corporation, partnership, trust, limited liability company,
employee benefit plan or other entity, Subscriber is authorized and qualified
to
become a stockholder of the Company and the person signing this Subscription
Agreement on behalf of such entity has been duly authorized by such entity
to do
so.
(h) No
representations or warranties have been made to Subscriber by the Company or
any
officer, employee, agent or affiliate of the Company (other than those set
forth
in the PSA), and Subscriber's investment decision has been based solely upon
Subscriber's independent evaluation and due diligence, if any, of the
Company.
(i) Subscriber
is experienced in evaluating and investing in early stage companies such as
the
Company. Subscriber is experienced in business matters and regards himself,
herself or itself as a sophisticated investor able to evaluate investment and
financial information and to choose independent professional advisors to assist
in such evaluation and, either alone or with such advisers, has such knowledge
and experience in financial and business matters that Subscriber is capable
of
evaluating the merits and risks of an investment in the Common Stock and has
the
capacity to protect Subscriber’s own interests in connection with Subscriber’s
proposed investment in the Common Stock.
(j) Subscriber’s
aggregate commitments to investments that are not readily marketable are not
disproportionate to Subscriber’s net worth and an investment in the Common Stock
will not cause such aggregate commitment to become excessive. Subscriber has
adequate means of providing for Subscriber’s current needs and possible personal
and family contingencies. Subscriber will not be readily able to liquidate
the
investment in the case of an emergency, and Subscriber has no need for liquidity
in this investment in the Company.
(k) Subscriber
has a preexisting business or personal relationship with the Company or with
one
or more of its officers or directors. Except for Subscriber’s intention to
distribute the shares (or cause them to be issued directly) to its members,
pro-rata, Subscriber is acquiring the Common Stock solely for Subscriber’s own
account for investment (and not for the account of any other person), and not
with a view to, or for, any resale, distribution, fractionalization or other
transfer thereof, and Subscriber has no present plans to enter into any
contract, undertaking, agreement or arrangement for any such resale,
distribution, fractionalization or transfer.
2
4. Representations
and Warranties Concerning Suitability and Accredited Investor
Status.
Subscriber hereby represents and warrants to the Company that Subscriber is
an
“Accredited Investor” (as defined under Regulation D as promulgated and
amended by the SEC pursuant to the Securities Act) on the basis of the
representations made by Subscriber to the Company below. Subscriber hereby
represents and warrants that:
(a) Subscriber
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Company
and
has obtained sufficient information from the Company to evaluate the merits
and
risks of an investment in the Company.
(b) Subscriber
has determined that the Common Stock are a suitable investment for Subscriber.
Subscriber is able to bear the economic risk of the investment in the Company
(including a complete loss thereof) and has adequate financial or other means
for providing for Subscriber's current needs and contingencies and has no need
for liquidity in this investment.
5. Fees
and Expenses.
Subscriber shall pay for all its own fees and expenses in connection with this
subscription, including without limitation legal fees and fees of its advisors
and counsel, if any.
6. Restrictions.
The
Subscriber agrees that he will not at any time make any disposition of any
of
the Common Stock except in accordance with applicable federal and state
securities laws and the legend set forth below. The certificates for the Common
Stock to be issued to the undersigned will bear a legend in substantially the
following form:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES
MAY
NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION
IS
NOT REQUIRED UNDER THE SECURITIES ACT OF 1933 OR SUCH LAWS.
7. Miscellaneous.
The
terms and conditions contained in this Subscription Agreement (together with
the
PSA and a certain Registration Rights Agreement executed by the Company and
Subscriber of even date herewith) constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all previous
agreements and understandings, whether oral or written, between the parties
hereto with respect to the subject matter hereof. This Subscription Agreement
shall be construed in accordance with and governed by the laws of the State
of
Delaware. This Subscription Agreement may be amended only by a writing executed
by the Company and Subscriber.
3
IN
WITNESS WHEREOF,
Subscriber has executed this Subscription Agreement on the date indicated on
the
signature page hereof.
[SIGNATURES
ON NEXT
PAGE]
4
The
undersigned Subscriber confirms and certifies that Subscriber has read this
entire Subscription Agreement and understands the provisions hereof, and that
the undersigned has executed this Subscription Agreement as of the date set
forth below.
DATED:
December 29,
2006
Subscriber
has agreed to accept 500,000 shares of Common Stock as partial consideration
of
the purchase price payable by the Company under the PSA, as more fully described
in the PSA.
Which
will be held by Subscriber(s) in the following manner, if
applicable:
|
o
|
Community
Property
|
o
|
Joint
Tenants with Right of Survivorship
|
|
|
o
|
Tenants
in Common
|
o
|
Separate
Property
|
|
|
x
|
Other:
(e.g.
individual, corporation, partnership, limited liability company,
trust,
investment company). Please indicate: limited
liability company.
|
|||
Subscriber
Signature(s)
| MASTERS RESOURCES, LLC | MASTERS OIL & GAS, LLC | ||
|
|
|
||
|
Managing
Member
|
|||
|
Name
and Title of Signatory if Subscriber is an entity
|
|||
| /s/ Xxxx X. Xxxxxx |
/s/
Xxxx X. Xxxxxx
|
||
|
Signature |
Signature
of Joint Subscriber
|
||
|
Social
Security or Tax ID Number
|
Social Security or Tax ID Number of Joint Subscriber |
||
|
Address
|
Address of Joint Subscriber |
||
|
|
|
| Reviewed and Advised By (if any): | Accepted By: | ||
|
Subscriber’s
Professional Advisor
|
TEKOIL
& GAS CORPORATION,
a Delaware corporation |
||
| /s/ Xxxx X. Western | |||
|
Name |
Signature |
||
|
Chairman
and CEO
|
|||
|
Address |
Name/Title
|
5
Note:
In
the
case of subscription by,
| · |
Joint
Tenants
with Rights of Survivorship or Tenants
in Common,
all tenants must execute this
subscription,
|
| · |
Husband
and Wife,
as community property, one signature only is
required.
|
| · |
A
Trust,
the Trustee must sign and a copy of the Trust Agreement should be
provided.
|
| · |
A
Partnership,
a
copy of the Statement of Partnership or the Partnership Agreement
should
be provided, and execution must be by the number of partners required
therein to bind the Partnership.
|
| · |
A
Corporation,
a
resolution of the Board of Directors authorizing the subscription
and
certified by the Secretary should be
included.
|
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