EX-10.1






October 4, 2008



Microcapital Fund Ltd.


Microcapital Fund, LP


Shea Diversified Investments, Inc.


Tahoe Partnership I, Savant Resources, LLC


E&M RP Trust


HSP Multiple Strategy Fund LLC


Mike McCoy


Dolphin Offshore Partners, LP


Siam Partners II, LP


Savant Resources LLC


Commonwealth Associates, LP.



Ladies and Gentlemen:



We have been discussing the prospects of exchanging 990,000 shares of common stock, par value
$0.001 (“Common Stock”), of Teton Energy Corporation (“Teton” or the “Company”) for 3,960,000
warrants to purchase Teton Common Stock (“Warrant” or “Warrants”), which Warrants were originally
issued on May 16, 2007, pursuant to that certain Subscription Agreement dated as of May 15, 2007,
between the Company and each of Microcapital Fund Ltd., Microcapital Fund, LP, Shea Diversified
Investments, Inc., Tahoe Partnership I, Savant Resources, LLC, E&M RP Trust, HSP Multiple Strategy
Fund LLC, Mike McCoy, Dolphin Offshore Partners, LP, Siam Partners II, LP, Savant Resources LLC,
and Commonwealth Associates, LP., and that certain Senior Subordinated Convertible Note of even
date.



This letter will memorialize our agreement exchange with each holder (a “Holder”) of such
Warrants, one (1) share of Common Stock for every four (4) Warrants held by each Holder.



To that end, kindly execute this letter agreement where provided below and deliver the
executed consent to the Company in the manner described below. Failure of the Holders of One
Hundred Percent (100%) of the Warrants to provide us with their consents by no later than October
10, 2008, will render this consent invalid. This consent shall not be valid for any other purpose.



The shares will remain registered under that certain Registration Statement on Form S-3, which
was declared effective on October 9, 2007 (File No. 333-145164) (the “Registration Statement”) and
the prospectus thereunder. As soon as the Company has received all consents from each Holder
thereunder, it will proceed to notify each Holder that the exchange has been properly ratified.
Holders should then tender their original Warrants to the Company to be held in escrow pending the
issuance of the corresponding number of shares of Common Stock to each Holder. The Company will
not issue the replacement shares of Common Stock to a Holder that has not tendered its original
Warrant. During this time the Company will undertake to file a post-effective amendment to the
Registration Statement to reduce the number of shares covered by the Registration Statement and to
describe the circumstances surrounding the exchange. While the Company believes that the shares
will continue to remain properly registered during the pendency of any review of the post-effective
amendment, Holders are cautioned to consult with their own counsel in this regard.



This consent may be executed in two or more counterparts, all of which when taken together
shall be considered one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature
page were an original thereof.



Very truly yours,



Teton Energy Corporation



	 	 	 
	By:

	 	/s/ Lonnie R. Brock      
	
 
	 	 
	Its:

	 	_EVP & CFO     
	
 
	 	 






[Acknowledgement Signatures Follow On Next Page]



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Acknowledged & Approved:



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Shares to be
	Holder
	 	Warrants Held	 	Issued
	 
	 	 	 	 	 	 	 	 
	Microcapital Fund Ltd.
By: /s/ John Ivanac________
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its: Director __________ __
	 	 	240,000	 	 	 	60,000	 
	 
	 	 	 	 	 	 	 	 
	Microcapital Fund, LP
By: /s/ John Ivanac________
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its: Vice President_________
	 	 	560,000	 	 	 	140,000	 
	 
	 	 	 	 	 	 	 	 
	Shea Diversified Investments, Inc.
By: /s/ Edmund Shea______
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its: Secretary_____________
	 	 	400,000	 	 	 	100,000	 
	 
	 	 	 	 	 	 	 	 
	Tahoe Partnership I, Savant Resources, LLC
By: /a/ Peter Shea_________
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its: Attorney in Fact_______
	 	 	80,000	 	 	 	20,000	 
	 
	 	 	 	 	 	 	 	 
	E&M RP Trust
By: /s/ Edmund Shea______
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its: Trustee ____________
	 	 	80,000	 	 	 	20,000	 
	 
	 	 	 	 	 	 	 	 
	HSP Multiple Strategy Fund LLC
By: /s/ Brian Potiker________
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its: CIO, HSP Group, LLC (Its Manager)
_______________
	 	 	400,000	 	 	 	100,000	 
	 
	 	 	 	 	 	 	 	 
	Mike McCoy
By: /s/ Mike McCoy_______
	 	 	160,000	 	 	 	40,000	 
	 
	 	 	 	 	 	 	 	 
	Dolphin Offshore Partners, LP
By: /s/ Peter Salas _________
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its: _General Partner________
	 	 	1,200,000	 	 	 	300,000	 
	 
	 	 	 	 	 	 	 	 
	Siam Partners II, LP
By: /s/ Edmund Shea______
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its: Director _____________
	 	 	80,000	 	 	 	20,000	 
	 
	 	 	 	 	 	 	 	 
	Savant Resources LLC
By: /s/ Gregg Vigil ________
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its: _EVP________________
	 	 	400,000	 	 	 	100,000	 
	 
	 	 	 	 	 	 	 	 
	Commonwealth Associates, LP.
By: /s/ Robert O’Sullivan ___
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its: _CEO & President______
	 	 	187,290	 	 	 	46,822	 
	 
	 	 	 	 	 	 	 	 
	Robert O’Sullivan
By: /s/ Robert O’Sullivan ___
	 	 	129,276	 	 	 	32,319	 
	 
	 	 	 	 	 	 	 	 
	Joseph Pallotta
By: /s/ Joseph J. Pallotta ___
	 	 	26,163	 	 	 	6,541	 
	 
	 	 	 	 	 	 	 	 
	Michael S. Falk
By: /s/ Michael S. Falk ___
	 	 	15,561	 	 	 	3,890	 
	 
	 	 	 	 	 	 	 	 
	Bonnie Giusto
By: /s/ Bonnie Giusto ___
	 	 	1,710	 	 	 	428	 
	 
	 	 	 	 	 	 	 	 
	Total:
	 	 	3,960,000	 	 	 	990,000	 
	 
	 	 	 	 	 	 	 	 






[End of Signatures]




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