SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this “ Agreement ”), dated as of __________, 2006, by and between Tekoil & Gas Corporation , a Delaware corporation, with its principal place of business at 5036 Dr. Phillips Blvd., Suite 232, Orlando, FL 32819 (the “ Company ”), and the legal person whose signature and principal residence or principal place of business are included on the signature page hereto (the “ Buyer” ).
A. The Company and Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Rule 506 under Regulation D (“ Regulation D ”) as promulgated by the United States Securities and Exchange Commission (the “ SEC ”) under the Securities Act of 1933, as amended (the “ 1933 Act ”);
B. Buyer wishes to purchase, in the amounts and upon the terms and conditions stated in this Agreement (i) shares of the Company’s Series A Convertible Preferred Stock, par value $.00000001 per share (the “ Preferred Stock ”);
NOW THEREFORE , the Company and Buyer hereby agrees as follows:
1. PURCHASE AND SALE OF PREFERRED STOCK
a. Purchase of Preferred Stock . The Company shall issue and sell to Buyer and Buyer shall purchase a number of shares of Preferred Stock (the “ Preferred Shares ”) at a per share purchase price (the “ Purchase Price ”), each as indicated on the signature page attached hereto, which Purchase Price shall be payable in immediately available United States Dollars to the Company on the Closing Date. The Company shall promptly deliver stock certificates, duly executed on behalf of the Company, representing the Preferred Shares (the “ Stock Certificates” ) to Buyer.
b. Closing Date . The date of the closing of the sale of the Preferred Shares (as defined below) shall be a indicated on the signature page attached hereto (the “ Closing Date ”).
2. BUYER’S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to the Company that:
a. Investment Purpose . The Preferred Shares are being acquired by Buyer in good faith solely for its own personal account, for investment purposes only, and are not being purchased for resale, resyndication, distribution, subdivision or fractionalization thereof; Buyer has no contract or arrangement with any person to sell, transfer or pledge to any person the Preferred Shares or any part thereof, any interest therein or any rights thereto; Buyer has no present plans to enter into any such contract or arrangement; and Buyer understands that as a result it must bear the economic risk of the investment for an indefinite period of time because the Preferred Shares have not been registered under the 1933 Act, and, therefore, cannot be sold unless they are subsequently registered under the 1933 Act.
b. Accredited Investor Status . Buyer is an “accredited investor” as that term is defined in Rule 501(a)(3) of Regulation D, by reason of its qualification in the category thereof listed on the signature page hereof.
c. Reliance on Exemptions . Buyer understands that the Preferred Shares are being offered and sold to it under the exemption from the registration requirements of the United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of Buyer to acquire the Preferred Shares.
d. Information . Buyer understands and acknowledges that it is purchasing the Preferred Shares without being furnished any offering literature, prospectus or other materials, that this transaction has not been scrutinized by the SEC or by any administrative agency charged with the administration of the securities laws of any state, that all documents, records and books, pertaining to the Company, its business, finances and operations, and this investment have been made available to Buyer, and his advisors and representatives, including his attorney, its accountant and/or his purchaser representative, and that the books and records of the Company will be available upon reasonable notice for inspection by Buyer during reasonable business hours at the Company’s principal place of business. Buyer and his advisors and representatives, including his attorney, his accountant and/or his purchaser representative, if any, have been afforded the opportunity to ask questions of the Company and have received complete and satisfactory answers to any such inquiries. Buyer understands that his investment in the Preferred Shares is speculative and involves a high degree of risk high degree of risk of loss and that Buyer must be prepared to lose his entire investment in the Company. Buyer has sought such accounting, legal and tax advice, as it has considered necessary to an informed investment decision with respect to his acquisition of the Preferred Shares. Buyer, or Buyer together with his purchaser representative, if any, have such knowledge and experience in financial and business matters that it and such representative are capable of evaluating the merits and risks of an investment in the Preferred Shares and of making an informed investment decision.
e. Governmental Review . Buyer understands that no United States federal or state agency or any other government or governmental agency has approved or disapproved or passed on or made any recommendation or endorsement of the Preferred Shares or the fairness or suitability of the investment in the Preferred Shares, nor have such authorities passed upon or endorsed the merits of the offering of the Preferred Shares or the accuracy or adequacy of any of the information provided by the Company to Buyer regarding the Company, the Preferred Shares or any other matter, and that the Company is relying on the truth and accuracy of the representations, declarations and warranties herein made by Buyer in offering the Preferred Shares for sale to it without having first registered the same under the 1933 Act.
f. Transfer or Resale . Buyer understands that (i) the Preferred Shares have not been and are not being registered under the 1933 Act or any state securities laws, and may not be transferred unless (a) subsequently registered thereunder, or (b) Buyer shall have provided the Company with a statement of the circumstances surrounding the proposed disposition and shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect (1) that the Preferred Shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration and (2) that appropriate action necessary for compliance with the 1933 Act has been taken; (ii) any sale of such Preferred Shares made in reliance on Rule 144 promulgated under the 1933 Act may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such Preferred Shares under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Preferred Shares under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.
g. Legends . Buyer understands that the Stock Certificates shall bear a restrictive legend in substantially the following form (and a stop-transfer order shall be placed against transfer of such Stock Certificates):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE REOFFERED, SOLD, TRANSFERRED, PLEDGED, OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT AND THE STATE SECURITIES ACT OR BLUE SKY ACT OF ANY STATE HAVING JURISDICTION THEREOF, OR (B) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR THE SECURITIES ACT OR BLUE SKY ACT OF ANY STATE HAVING JURISDICTION WITH RESPECT THERETO.
h. Authorization; Enforcement . This Agreement has been duly and validly authorized, executed and delivered on behalf of Buyer and are valid and binding agreements of Buyer enforceable in accordance with their terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors’ rights generally.
i. High Risk Investment . Buyer acknowledges that the Company is a development stage company with no revenues, limited resources and no audited financial statements. Buyer understands the high risk nature of its investment hereunder and is able to afford an entire loss thereof and is in no current need of liquidity with respect thereto. Buyer understands that the transfer of the Preferred Stock is restricted and that no meaningful current market exists with respect to the Preferred Stock of the Company and there can be no assurance that one will develop in the future. Buyer has been afforded the opportunity to ask questions of the officers of the Company and have access to the books and records thereof, to the extent deemed necessary by it to ensure that its investment hereunder is a fully-informed one.
j. No Conflicts . The execution, delivery and performance of this Agreement by the Buyer and the consummation by the Buyer of the transactions contemplated hereby will not (i) result in an violation of the Certificate of Incorporation , as amended, as in effect on the date hereof (“ Certificate of Incorporation ”) and the Company’s Bylaws, as in effect on the date hereof (the “ Bylaws ”) or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Buyer or by which any property or asset of Buyer is bound or affected, or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Buyer or by which any property or asset of the Buyer is bound or affected. The business of the Buyer is not being conducted, and shall not be conducted through the Closing Date, in violation of any law, ordinance, regulation of any governmental entity. Except as required under the 1933 Act and any applicable state securities laws, the Buyer is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement in accordance with the terms hereof.
k. Indemnification . Buyer acknowledges that Buyer understands the meaning and legal consequences of the representations and warranties in this Section 2, and that the Company has relied upon such representations and warranties, and Buyer hereby agrees to indemnify and hold harmless the Company and its officers, directors, shareholders, agents and representatives from and against any and all claims, demands, losses, damages, expenses or liabilities (including attorneys’ fees) due to or arising out of, directly or indirectly, a breach of any such representations or warranties. Notwithstanding the foregoing, however, no representation, warranty, acknowledgment or agreement made herein by Buyer shall in any manner be deemed to constitute a waiver of any rights granted to such Buyer under federal or state securities laws.
l. Short Position and Market Purchases . Buyer is not purchasing the Preferred Shares for the purpose of covering any short position in the Preferred Shares.
m. Aggregate Offering Amount . Buyer acknowledges that it must make a minimum purchase of $5,000 in Preferred Stock hereunder and that the Company shall not be obligated to sell a minimum or maximum amount of Preferred Stock (other than the