Unassociated Document


     

    As of
October 16, 2009

    


    Teton
Energy Corporation

    600
17th
Street, Suite 1600 North

    Denver,
Colorado  80202

    
      Attention:
Jonathan Bloomfield

    

     

    
      	
              Re:

            	
              Third
      Amendment to Second Amended and Restated Credit Agreement and Forbearance
      Agreement (as amended, the “Third
      Amendment”) dated effective as of August 26, 2009, among Teton
      Energy Corporation, a Delaware corporation (“Borrower”),
      the financial institutions party thereto as lenders (“Lenders”),
      and JPMorgan Chase Bank, N.A., as Administrative Agent (“Administrative
      Agent”).  Unless otherwise defined herein, all terms used
      herein which are defined in the Third Agreement shall have the meaning
      assigned to such terms in the Third
Amendment.

            


    

     

    
      Ladies
and Gentlemen:

    

     

    Borrower
has advised Administrative Agent and Lenders that it desires to amend certain
terms of the Third Amendment.  In consideration of the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
confessed, the parties hereto hereby agree as follows:

     

    
      	
              1. 

            	
              Amendments.  In
      reliance on the representations, warranties, covenants and agreements
      contained in this letter agreement, and subject to the satisfaction of the
      conditions precedent set forth in Section 3
      hereof:

            


    

     

    (a)           
Section 2.1 of the Third Amendment is hereby amended effective as of the date
hereof by replacing each reference to “October 16, 2009” with “November 6,
2009”; and

     

    (b)           The
Lenders hereby agree that the Borrower’s financial statements for the quarter
ended September 30, 2009 shall be due to the Administrative Agent and each
Lender not later than November 30, 2009, notwithstanding the terms of Section
8.01(b) of the Credit Agreement.

     

    
      	
              2.

            	
              Representations and
      Warranties.  To induce Lenders and Administrative Agent
      to enter into this letter agreement, Borrower hereby represents and
      warrants to Lenders and Administrative Agent as
  follows:

            


    

     

    (a)           Reaffirm Existing
Representations and Warranties.  Except for the representation
and warranties made in Sections 7.04(b) and 7.22, each representation and
warranty of Borrower and its Subsidiaries contained in the Credit Agreement is
true and correct on the date hereof  and will be true and correct
after giving effect to this letter agreement (other than breaches which result
from the Specified Defaults).

     

    (b)           Due Authorization; No
Conflict.  The execution, delivery and performance by Borrower
of this letter agreement are within Borrower’s corporate powers, have been duly
authorized by all necessary action, require no action by or in respect of, or
filing with, any governmental body, agency or official and do not violate or
constitute a default under any provision of applicable law or any material
agreement binding upon Borrower or any of its Subsidiaries or result in the
creation or imposition of any Lien upon any of the assets of Borrower or any of
its Subsidiaries.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      Teton
Energy Corporation

      As of
October 16, 2009

      Page 2

    

     

     

    (c)           Validity and
Enforceability.  This letter agreement constitutes the valid
and binding obligation of Borrower enforceable in accordance with its terms,
except as (a) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditor’s rights generally, and (b) the
availability of equitable remedies may be limited by equitable principles of
general application.

     

    (d)           No Default or Event of
Default.  No Default or Event of Default has occurred which is
continuing, other than the Specified Defaults.

     

    (e)           No
Defense.  Borrower acknowledges that Borrower has no defense to
(i) Borrower’s obligation to pay any amount payable under any Loan Document when
due, or (ii) the validity, enforceability or binding effect against Borrower of
the Credit Agreement or any of the other Loan Documents or any Liens intended to
be created thereby.

     

    2.           3.           Conditions
Precedent.  The amendments contained in Section 1 hereof
shall be effective as of the date when the following conditions precedent have
been satisfied:

     

    3.                                (a)           No
Default.  No Default or Event of Default shall have occurred
which is continuing, other than the Specified Defaults.

     

    4.                                (b)           Documents.  Administrative
Agent shall have been provided with executed counterparts of this letter
agreement and such other documents, instruments and agreements, and Borrower and
each of its Subsidiaries shall have taken such actions, as the Administrative
Agent may reasonably require in connection with this letter agreement and the
transactions contemplated hereby.

     

    5.           4.           Miscellaneous.  (a)
Borrower hereby agrees to pay on demand all reasonable fees and expenses
incurred by the Administrative Agent (including, without limitation, reasonable
fees and expenses of counsel to the Administrative Agent) in connection with the
preparation, negotiation and execution of this letter agreement and all related
documents, (b) this letter agreement may be executed in counterparts, and all
parties need not execute the same counterpart; however, no party shall be bound
by this letter agreement until a counterpart hereof has been executed by
Borrower and Lenders; facsimiles or other electronic transmission (e.g., pdf) shall be effective
as originals, (c) THIS LETTER AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE
PARTIES REGARDING THE MATTERS SET FORTH HEREIN AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES,
(d) this letter agreement constitutes a “Loan Document” under and as defined in
Section 1.02 of the Credit Agreement, and (e) this letter agreement shall be
governed by, and construed in accordance with, the laws of the State of
Texas.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      
        Teton
Energy Corporation

        As of
October 16, 2009

        Page 3

      

       

    

     

    Please
evidence your agreement to each of the provisions of this letter agreement by
executing a counterpart hereof where indicated and returning an executed
counterpart to Valinda B. Wolfert, counsel for Administrative Agent, via
facsimile number (214) 999-7843 or via e-mail to vwolfert@velaw.com.

     

     [Signature
Pages Follow]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        	 	 	 
	 	TETON
      ENERGY CORPORATION,
as Borrower
	 	 	 
	 	 	 	 
	
                 

              	
                By:
      

              	  
      	 
	 	 	Dominic
      J. Bazile II,	 
	 	 	President
      and Chief Operating Officer	 
	 	 	 	 


      

    

    


    Each of
the undersigned (i) consent and agree to this letter agreement and each of the
terms and provisions contained herein, and (ii) agree that the Loan Documents to
which it is a party shall remain in full force and effect and shall continue to
be the legal, valid and binding obligation of such Person, enforceable against
it in accordance with its terms.

     

    
      
        	 	ACKNOWLEDGED
      AND AGREED TO BY:
	 	 	 
	 	      
                TETON NORTH AMERICA
      LLC,
as Guarantor

              
	 	 	 
	 	 	 	 
	
                 

              	
                By:
      

              	 
      	 
	 	 	Dominic
      J. Bazile II,	 
	 	 	      
                President
      and Chief Operating Officer

              	 
	 	 	 	 


      

    

    
       

      
        
          	 	 	 
	 	TETON
      PICEANCE LLC,
as Guarantor
	 	 	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 
      	 
	 	 	Dominic
      J. Bazile II,	 
	 	 	President
      and Chief Operating Officer	 
	 	 	 	 


        

      

       

        
          
            	 	 	 
	 	TETON
      DJ LLC,
as Guarantor
	 	 	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	 
      	 
	 	 	Dominic
      J. Bazile II,	 
	 	 	President
      and Chief Operating Officer	 
	 	 	 	 


          

        

         

         

        
          
             

          

          
            
              [Signature
Page to Letter Agreement – Teton Energy Corporation]

            

            
              

            

          

          
             

          

        

      

    

     

    
      
        
          	 	 	 
	 	TETON
      WILLISTON LLC,
as Guarantor
	 	 	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 
      	 
	 	 	Dominic
      J. Bazile II,	 
	 	 	President
      and Chief Operating Officer	 
	 	 	 	 


        

      

      
         

        
          
            	 	 	 
	 	TETON
      BIG HORN LLC,
as Guarantor
	 	 	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	 
      	 
	 	 	Dominic
      J. Bazile II,	 
	 	 	President
      and Chief Operating Officer	 
	 	 	 	 


          

        

        
          
             

            
              
                	 	 	 
	 	TETON
      DJCO LLC,
as Guarantor
	 	 	 
	 	 	 	 
	
                         

                      	
                        By:
      

                      	 
      	 
	 	 	Dominic
      J. Bazile II,	 
	 	 	President
      and Chief Operating Officer	 
	 	 	 	 


              

            

             

            
               

              
                
                   

                

                
                  
                    [Signature
Page to Letter Agreement – Teton Energy Corporation]

                  

                  
                    

                  

                

                
                   

                

              

            

             

          

        

      

    

    
      
        
          	 	 	 
	 	JPMORGAN
      CHASE BANK, N.A.,
as Administrative Agent and a
    Lender
	 	 	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 
      	 
	 	 	John
      Runger,	 
	 	 	      
                  Managing
      Director

                	 
	 	 	 	 


        

      

       

      
         

        
          
             

          

          
            
              [Signature
Page to Letter Agreement – Teton Energy Corporation]

            

            
              

            

          

          
             

          

           

        

      

      
        
          
            
              	 	 	 
	 	ROYAL
      BANK OF CANADA,
as Syndication Agent and a Lender
	 	 	 
	 	 	 	 
	
                       

                    	
                      By:
      

                    	 
      	 
	 	Name: 	 
      	 
	 	Title: 	      
                       
      

                    	 
	 	 	 	 


            

          

           

          
             

            
              
                 

              

              
                
                  [Signature
Page to Letter Agreement – Teton Energy Corporation]

                

                
                  

                

              

              
                 

              

            

          

          
            
               

              
                
                  	 	 	 
	 	GUARANTY
      BANK AND TRUST COMPANY,
as a Lender
	 	 	 
	 	 	 	 
	
                           

                        	
                          By:
      

                        	 
      	 
	 	Name: 	 
      	 
	 	Title: 	      
                           
      

                        	 
	 	 	 	 


                

              

               

              
                 

                
                  
                     

                  

                  
                    
                      [Signature
Page to Letter Agreement – Teton Energy Corporation]

                    

                    
                      

                    

                  

                  
                     

                  

                

              

               

              
                
                  
                    
                      	 	 	 
	 	U.S.
      BANK NATIONAL ASSOCIATION,
as a Lender
	 	 	 
	 	 	 	 
	
                               

                            	
                              By:
      

                            	 
      	 
	 	Name: 	 
      	 
	 	Title: 	      
                               
      

                            	 
	 	 	 	 


                    

                  

                  
                     

                     

                    
                      
                         

                      

                      
                        
                          [Signature
Page to Letter Agreement – Teton Energy Corporation]