Unassociated Document


    EXHIBIT
      10.78

    

      J.
        ARON & COMPANY

      


      


      May
        29,
        2008

      


      


      
        	
                TekOil
                  and Gas Gulf Coast, LLC.

              	
                Via
                  Telecopy and Certified Mail No. 7160 3901 9842 7747
                  6564

              
	
                25050
                  I-45 North, Suite 525

              	
                Return
                  Receipt Requested

              
	
                The
                  Woodlands, Texas 77380

              	 
	
                Attn:
                  Mr. Mark Western

              	 
	 	 
	
                TekOil
                  & Gas Corporation

              	
                Via
                  Telecopy and Certified Mail No. 7160 3901 9842 8489
                  8816

              
	
                25050
                  I-45 North, Suite 525

              	
                Return
                  Receipt Requested

              
	
                The
                  Woodlands, Texas 77380

              	 
	
                Attn:
                  Mr. Mark Western

              	 
	 	 
	
                Mr.
                  Mark Western

              	
                Via
                  Telecopy and Certified Mail No. 7160 3901 9842 8489
                  8823

              
	
                5036
                  Dr. Phillips Blvd, #232

              	
                Return
                  Receipt Requested

              
	
                Orlando,
                  Florida 32819

              	 


      

      


      
        	
                Re:

              	
                Notice
                  of Acceleration and Demand

              
	 	
                Credit
                  and Guaranty Agreement dated as of May 11,
                  2007

              


      

      


      Gentlemen:

      


      This
        notice is being provided to you under that certain Credit and Guaranty Agreement
        dated as of May 11, 2007 (as amended, the “Credit
        Agreement”),
        executed by TekOil and Gas Gulf Coast, LLC, a Delaware limited company
        (“Borrower”),
        TekOil & Gas Corporation, a Delaware corporation (“Parent”),
        the
        lenders party to the Credit Agreement (“Lenders”),
        J.
        Aron & Company, as Lead Arranger and as Syndication Agent (in such
        capacities, “Syndication
        Agent”),
        and
        J. Aron & Company, as Administrative Agent for such Lenders (“Administrative
        Agent”)
        and
        Limited Guaranty dated October 24, 2007, (the “Limited
        Guaranty”)
        executed by Mark S. Western (“Western”)
        in
        favor of Administrative Agent for the benefit of the Lenders. Capitalized
        terms
        used herein and not otherwise defined shall have the meanings set forth in
        the
        Credit Agreement.

      


      Borrower’s,
        Parent’s and Western’s Obligations to Beneficiaries are evidenced by the Credit
        Agreement, the Limited Guaranty, the Note, the ORRI Conveyance, the Hedging
        Contracts, and the other Transaction Documents (the “Obligations”).
        


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      


      


      Written
        notice dated May 1, 2008 (the “May
        1, 2008 Default Notice”),
        was
        served on Borrower notifying Borrower that certain Events of Default exist
        under
        the Credit Agreement. In addition to the Events of Default enumerated in
        the May
        1, 2008 Default Notice (and prior notices referenced therein), additional
        Events
        of Default have occurred and are continuing under the Credit Agreement as
        a
        result of (a) Borrower diverting from the Collateral Account to undisclosed
        accounts established by Borrower gross cash revenues and receipts payable
        to
        Borrower from any source or activity in contravention of Section
        2.19 of
        the
        Credit Agreement, and (b) Borrower’s conversion of Royalty Owner’s ORRI payment
        due under the ORRI Conveyance. As of the date hereof, Borrower has failed
        to
        cure or remedy such Events of Default. The Events of Default enumerated herein
        and under the May 1, 2008 Default Notice (and prior notices referenced therein)
        are not intended to be exhaustive of all Defaults and/or Events of Default
        which
        may exist under the Credit Agreement and Administrative Agent is not precluded
        from providing supplemental notices of default from time to time hereafter.
        Based upon the foregoing, you are hereby informed that (A) the Commitments
        are
        terminated, (B) all Obligations, including the unpaid principal amount of
        and
        accrued interest on the Loans and any premium provided for herein, shall
        accrue
        interest until paid in full at the Post Default Rate, (C) all Obligations
        (other
        than obligations arising under the Hedging Contracts), including without
        limitation, the unpaid principal amount of and accrued interest on the Loans,
        the ORRI payments, and all other fees and expenses due under the Transaction
        Documents are immediately due and payable, (D) Administrative Agent has been
        instructed by Lenders to enforce any and all Liens and security interests
        created pursuant to the Security Documents, and (E) Administrative Agent
        shall
        enforce its other rights and remedies under the Transaction Documents and
        applicable Law. 

      


      Demand
        is
        hereby made upon Borrower, Parent and Western for payment in full of the
        entire
        amount of the Obligations in immediately available funds. Please contact
        the
        undersigned for the exact amount due and owing. 

      


      This
        is
        not a notice of an early termination under the Hedging Contracts. J. Aron
&
Company, in its capacity as counterparty under the Hedging Contracts will
        send
        you a separate communication related to its rights under the Hedging Contracts.
        Nothing in this notice shall be deemed to constitute a waiver of any rights
        J.
        Aron & Company, in its capacity as counterparty under the Hedging Contracts,
        may have with respect to Borrower under or in connection with the Hedging
        Contracts. J. Aron & Company, in its capacity as counterparty under the
        Hedging Contracts
        hereby
        reserves the right to exercise from time to time any rights, powers or
        privileges and/or remedies to which it is entitled under the Hedging Contracts
        or under any other agreement between J. Aron & Company and/or its affiliates
        and the Borrower and/or its affiliates or otherwise.

      


      If
        any
        party who receives this letter is a debtor in a bankruptcy proceeding subject
        to
        the provisions of the United States Bankruptcy Code (Title
        11
        of the
United
        States Code,
        the
“Code”),
        then
        this letter is merely intended to be written notice that formal demand has
        been
        made in compliance with the Transaction Documents and applicable law. In
        such
        event, this letter is neither an act to collect, assess, or recover a claim
        against such party, nor is this letter intended to violate any provisions
        of the
        Code. All claims that Administrative Agent and each Lender assert against
        such
        party will be properly asserted in compliance with the Code and such party’s
        respective bankruptcy proceedings.

      


      Under
        no
        circumstances or contingencies shall the interest accrued, charged, or collected
        under, or in connection with, the Credit Agreement and the other Transaction
        Documents exceed the maximum amount of interest permitted by applicable law.
        In
        addition, all of Administrative Agent’s and each Lenders’ claims, demands, and
        accruals regarding the Obligations, whenever made, whether for principal,
        interest, or otherwise, are intended to comply in all respects, both
        independently and collectively, with all applicable usury laws and are
        accordingly limited so that applicable usury laws are not
        violated.


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      


      


      Nothing
        contained in this letter is intended to waive any Default or Event of Default,
        or waive any rights, remedies, or recourses available to Administrative Agent
        or
        any Lender, nor be an election of remedies resulting from any default with
        respect to the Credit Agreement and the other Transaction Documents. This
        Notice
        is delivered to Borrower, Parent and Western on behalf of the Administrative
        Agent and the Lenders and is not intended and shall not be construed to be
        delivered for the benefit of any third party. 

      


      


      This
        matter requires your immediate attention. If you have any questions regarding
        the foregoing, then please contact the undersigned. 

      


      Sincerely,

      


      J.
        ARON & COMPANY,

      as
        Lead
        Arranger, Syndication Agent, 

      Administrative
        Agent, Lender Counterparty and a Lender

      


      


      
        	
                By:

              	
                /s/
                  Susan Rudov

              
	 	
                Authorized
                  Signatory

              


      

      


      
        	
                cc:

              	
                Baker
                  & Hostettler LLP

              
	 	
                SunTrust
                  Center

              
	 	
                200
                  S. Orange Ave, Suite 2300

              
	 	
                Orlando,
                  FL 32802

              
	 	
                Attention:
                  Ken Wright

              
	 	
                Telecopier:
                  407 841-0168

              
	 	 
	 	
                Neligan
                  Foley LLP

              
	 	
                325
                  North St. Paul, Suite 3600

              
	 	
                Dallas,
                  Texas 75201

              
	 	
                Attention:
                  Nick Foley

              
	 	
                Telecopier:
                  214 840 5301