Document:

EX-10.1

SECOND AMENDMENT TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

This Second Amendment to Second Amended and Restated Credit Agreement (this “Second
Amendment”) is effective as of May 21, 2009 (the “Amendment Effective Date”), by and
among Teton Energy Corporation, a Delaware corporation (the “Borrower”), JPMorgan Chase
Bank, N.A., a national banking association as Administrative Agent (the “Administrative
Agent”), and each of the financial institutions a party hereto as Lenders (hereinafter
collectively referred to as the “Lenders”, and individually, a “Lender”).

W I T N E S S E T H:

WHEREAS, the Borrower, the Administrative Agent and the Lenders are parties to that certain
Second Amended and Restated Credit Agreement dated as of April 2, 2008 (as amended, the “Credit
Agreement”) (unless otherwise defined herein, all terms used herein with their initial letter
capitalized shall have the meaning given such terms in the Credit Agreement); and

WHEREAS, pursuant to the Credit Agreement, the Lenders have made revolving credit loans to the
Borrower; and

WHEREAS, the parties hereto desire to (a) amend certain terms of the Credit Agreement in
certain respects, and (b) reaffirm the Borrowing Base and Conforming Borrowing Base in an amount
equal to $20,000,000, continuing until the next redetermination or adjustment of the Borrowing Base
and Conforming Borrowing Base thereafter; and

WHEREAS, the Borrower has previously notified the Administrative Agent of the potential sale
of a working interest in the Piceance Basin and has entered a Purchase and Sale Agreement dated
April 22, 2009 among the Borrower, Teton Piceance LLC and Puckett Land Company (the “Purchase
and Sale Agreement”), a true and correct copy of which is attached as Schedule I hereto,
pursuant to which the Borrower and Teton Piceance LLC will sell to Puckett Land Company (the
“Buyer”) its 12.5% non-operated working interest in certain assets identified in the
Purchase and Sale Agreement (the “Subject Property”). The transactions described in this
paragraph together with the transactions contemplated by Section 5 and the last sentence of
Section 3 of this Second Amendment, in each case which expressly relate to the transactions
contemplated by the Purchase and Sale Agreement (including, without limitation, any amendments to,
and consents under, the Loan Documents which may be effected by this Second Amendment and actions
that the Borrower and the Guarantors are required to take in connection therewith on or before the
Subject Transactions Closing Date (as defined below)) are collectively referred to herein as the
“Subject Transactions”; and

WHEREAS, the Borrower has requested that the Lenders consent to the consummation of the
Subject Transactions, and, in reliance on the representations and warranties of the Borrower
contained herein, and subject to the terms, and satisfaction or waiver of the conditions precedent,
set forth herein, the Lenders consent to the consummation of the Subject Transactions as provided
in Section 3 hereof.

NOW THEREFORE, for and in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confessed, the Borrower, the Administrative Agent and the Lenders party
hereto hereby agree as follows:

Section 1. Amendments. In reliance on the representations, warranties, covenants and
agreements contained in this Second Amendment, and subject to the satisfaction of the conditions
precedent set forth in Section 6 hereof, the Credit Agreement is hereby amended effective
as of the Amendment Effective Date in the manner provided in this Section 1.

1.1 Amendments to Definitions. The definitions of “Alternate Base Rate”,
“Applicable Margin”, “Loan Documents” and “Permitted Convertible Debt”
contained in Section 1.02 of the Credit Agreement shall be amended to read in full as follows:

“Alternate Base Rate” means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1% and (c) the Adjusted LIBO Rate for
a one month Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1%, provided that, for the avoidance of
doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing on
the Reuters BBA Libor Rates Page 3750 (or on any successor or substitute page of
such page) at approximately 11:00 a.m. London time on such day. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective
Rate or the Adjusted LIBO Rate shall be effective from and including the effective
date of such change in the Prime Rate, the Federal Funds Effective Rate or the
Adjusted LIBO Rate, respectively.

“Applicable Margin” “Applicable Margin” means, for any day, with
respect to any ABR Loan or Eurodollar Loan, or with respect to the Commitment Fee
Rate, as the case may be, the rate per annum set forth in the Conforming Borrowing
Base Utilization Grid below based upon the Conforming Borrowing Base Utilization
Percentage then in effect:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Conforming Borrowing Base Utilization Grid

	 

	Conforming
	 	 	<50	%	 	 	=50% <75	%	 	 	=75% <90	%	 	 	=90% <100	%	 	 	>100% <112.5	%	 	 	>112.5	%
	Borrowing Base
Utilization
Percentage
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ABR Loans
	 	 	1.500	%	 	 	1.750	%	 	 	2.000	%	 	 	2.250	%	 	 	2.750	%	 	 	3.250	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Eurodollar Loans
	 	 	2.500	%	 	 	2.750	%	 	 	3.000	%	 	 	3.250	%	 	 	3.750	%	 	 	4.250	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Commitment Fee Rate
	 	 	0.500	%	 	 	0.500	%	 	 	0.500	%	 	 	0.500	%	 	 	0.500	%	 	 	0.500	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Each change in the Applicable Margin shall apply during the period commencing
on the effective date of such change and ending on the date immediately preceding
the effective date of the next such change, provided, however, that if at any time
the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a), then the
“Applicable Margin” means the rate per annum set forth on the grid when the
Conforming Borrowing Base Utilization Percentage is at its highest level.

“Loan Documents” means this Agreement, the First Amendment, the Second
Amendment, the Notes, the Letter of Credit Agreements, the Letters of Credit, the
Intercreditor Agreement and the Security Instruments.

“Permitted Convertible Debt” means Debt of the Borrower resulting from
the single issue of the Borrower’s senior subordinated convertible notes in an
aggregate outstanding principal amount not to exceed $25,500,000, and which Debt (a)
has a coupon or interest rate not to exceed eleven and one-half percent (11.5%) per
annum, (b) shall not mature sooner than the earlier of (i) the Maturity Date, and
(ii) the date on which there are no Loans, LC Exposure or other obligations
hereunder outstanding, and all of the Commitments are terminated, (c) does not
provide for or otherwise require any amortization prior to scheduled maturity, (d)
is evidenced and governed by an indenture and related documentation containing
customary terms and conditions, including, without limitation, covenants and events
of default, for senior subordinated convertible notes of like tenor and amount, each
of which shall be satisfactory to the Administrative Agent and the Lenders in their
sole discretion, and (e) is subject to the Intercreditor Agreement.

1.2 Additional Definitions. Section 1.02 of the Credit Agreement shall be amended to
add the following definitions to such Section:

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greater of (i) (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate, and (ii) two percent
(2.00%).

“Defaulting Lender” means any Lender, as determined by the
Administrative Agent, that has (a) failed to fund any portion of its Loans or
participations in Letters of Credit within three Business Days of the date required
to be funded by it hereunder, (b) notified the Borrower, the Administrative Agent,
the Issuing Bank or any Lender in writing that it does not intend to comply with any
of its funding obligations under this Agreement or has made a public statement to
the effect that it does not intend to comply with its funding obligations under this
Agreement or under other agreements in which it commits to extend credit,
(c) failed, within three Business Days after request by the Administrative Agent, to
confirm that it will comply with the terms of this Agreement relating to its
obligations to fund prospective Loans and participations in then outstanding Letters
of Credit, (d) otherwise failed to pay over to the Administrative Agent or any other
Lender any other amount required to be paid by it hereunder within three Business
Days of the date when due, unless the subject of a good faith dispute, or
(e) (i) become or is insolvent or has a parent company that has become or is
insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or
has had a receiver, conservator, trustee or custodian appointed for it, or has taken
any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that has
become the subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any
such proceeding or appointment.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.

“Intercreditor Agreement” means that certain Amended and Restated
Intercreditor and Subordination Agreement dated as of September 19, 2008, among the
Administrative Agent, the Borrower, and The Bank of New York Mellon Trust Company,
N.A., as representative for the holders of the Permitted Convertible Debt.

“Second Amendment” means that certain Second Amendment to Second
Amended and Restated Credit Agreement dated effective as of May      , 2009, among the
Borrower, the Administrative Agent and the Lenders party thereto.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number one
minus the aggregate of the maximum reserve percentages (including any marginal,
special, emergency or supplemental reserves) expressed as a decimal established by
the Board to which the Administrative Agent is subject with respect to the Adjusted
LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board). Such reserve percentages shall include
those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.

“Type”, when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Alternate Base Rate or the Adjusted
LIBO Rate.

1.3 LIBO Rate Amendment. Section 3.02(b), Section 3.02(e), Section 3.03(a), Section
3.03(b), Section 5.01(a)(i) and Section 5.02 are hereby amended to replace all references to “LIBO
Rate” with references to “Adjusted LIBO Rate.”

1.4 Amendment to Section 3.02(c). Section 3.02(c) of the Credit Agreement shall be
amended to read in full as follows:

“(c) Post-Default Rate. Notwithstanding the foregoing, if an Event of
Default has occurred and is continuing, or if any principal of or interest on any
Loan or any fee or other amount payable by the Borrower or any Guarantor hereunder
or under any other Loan Document is not paid when due, whether at stated maturity,
upon acceleration or otherwise, and including any payments in respect of a Borrowing
Base Deficiency under Section 3.04(c), then all Loans outstanding, in the case of an
Event of Default, and such overdue amount, in the case of a failure to pay amounts
when due, shall bear interest, after as well as before judgment, at a rate per annum
equal to two percent (2%) plus the rate applicable to ABR Loans as provided in
Section 3.02(a), but in no event to exceed the Highest Lawful Rate.”

1.5 Defaulting Lenders Provision. A new Section 5.06 shall be added to the Credit
Agreement as follows:

“Section 5.06 Defaulting Lenders. Notwithstanding any provision of
this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a) if any LC Exposure exists at the time a Lender becomes a Defaulting Lender,
the Borrower shall within one Business Day following notice by the Administrative
Agent cash collateralize such Defaulting Lender’s LC Exposure in accordance with the
procedures set forth in Section 2.08(j) for so long as such LC Exposure is
outstanding; and

(b) the Issuing Bank shall not be required to issue, amend or increase any
Letter of Credit unless it is satisfied that cash collateral will be provided by the
Borrower in accordance with Section 5.06(a).”

1.6 Amendment to Financial Statements; Other Information Covenant. Section 8.01 of
the Credit Agreement shall be amended to add the following clause (q) to the end thereof:

“(q) as soon as available but in any event within five (5) Business Days after the end
of each calendar month and at such other times as may be requested by the Administrative
Agent, as of the month (or such other time period as may be requested by the Administrative
Agent) then ended, a schedule and aging of the Borrower’s and its Subsidiaries’ accounts
payable, delivered in a format acceptable to the Administrative Agent.”

1.7 Amendment to Additional Collateral Covenant. Clause (a) Section 8.14 of the
Credit Agreement shall be amended to read in full as follows:

“(a) In connection with each redetermination of the Borrowing Base and, as applicable,
Conforming Borrowing Base, the Borrower shall review the Reserve Report and the list of
current Mortgaged Properties (as described in Section 8.12(c)(vi)) to ascertain whether the
Mortgaged Properties represent at least 95% of the total value of the Oil and Gas Properties
evaluated in the most recently completed Reserve Report after giving effect to exploration
and production activities, acquisitions, dispositions and production. In the event that the
Mortgaged Properties do not represent at least 95% of such total value, then the Borrower
shall, and shall cause its Subsidiaries to, grant, within thirty (30) days of delivery of
the certificate required under Section 8.12(c), to the Administrative Agent as security for
the Indebtedness a first-priority Lien interest (provided that Excepted Liens of the type
described in clauses (a) to (d) and (f) of the definition thereof may exist, but subject to
the provisos at the end of such definition) on additional Oil and Gas Properties not already
subject to a Lien of the Security Instruments such that after giving effect thereto, the
Mortgaged Properties will represent at least 95% of such total value. All such Liens will
be created and perfected by and in accordance with the provisions of deeds of trust,
security agreements and financing statements or other Security Instruments, all in form and
substance reasonably satisfactory to the Administrative Agent and in sufficient executed
(and acknowledged where necessary or appropriate) counterparts for recording purposes. In
order to comply with the foregoing, if any Subsidiary places a Lien on its Oil and Gas
Properties and such Subsidiary is not a Guarantor, then it shall become a Guarantor and
comply with Section 8.14(b).”

1.8 Amendment to Debt Covenant. Clauses (g), (i) and (j) of Section 9.02 of the
Credit Agreement shall be amended to read in full as follows:

“(g) Intentionally deleted.”

“(i) Permitted Convertible Debt, the principal amount of which does not exceed
$25,500,000.”

“(j) Intentionally deleted.”

1.9 Amendment to Lien Covenant. Clause (d) of Section 9.03 of the Credit Agreement
shall be amended to read in full as follows:

“(d) Liens securing Permitted Convertible Debt which are subordinated to the
Liens securing the Indebtedness pursuant to the Intercreditor Agreement.”

1.10 Amendment to Swap Agreements Covenant. Section 9.17 of the Credit Agreement
shall be amended by inserting the following sentence after the last sentence thereof:

“Further, the Borrower will not, and will not permit any Subsidiary to, terminate any
Swap Agreement, now existing or hereafter arising, which has been or will be incorporated
into the determination of the Borrowing Base and, as applicable, the Conforming Borrowing
Base, without the prior written consent of the Majority Lenders.”

1.11 Amendment to Notices Provision. Clauses (i) and (ii) of Section 12.01(a) of the
Credit Agreement shall be amended to read in full as follows:

“(i) if to the Borrower, to it at 600 17th Street, Suite 1600 North,
Denver, CO 80202, Attention of Lonnie Brock (Telecopy No. 303.565.4606); with a
copy to Gersten Savage LLP, 600 Lexington Avenue, New York, NY 10022, Attention of
David Danovitch (Telecopy No. 212.980.5192);”

“(ii) if to the Administrative Agent, to it at 712 Main Street, Floor 12,
Houston, Texas 77002, Attention of Ryan Fuessel (Telecopy No. 832.487.1765) with a
copy to 10 South Dearborn, Floor 36, Chicago, Illinois 60603, Attention of John
Runger (Telecopy No. 312.732.1775); and”

Section 2. Borrowing Base Reaffirmation.

2.1 The Borrowing Base and the Conforming Borrowing Base shall each, pursuant to Section 2.07
of the Credit Agreement, be reaffirmed at $20,000,000, and continuing until the next Scheduled
Redetermination, Interim Redetermination or other redetermination of the Borrowing Base and the
Conforming Borrowing Base thereafter. The parties agree that the reaffirmation of Borrowing Base
and the Conforming Borrowing Base provided herein shall not constitute an Interim Redetermination.

2.2 The parties hereto agree that the Borrowing Base and, as applicable, the Conforming
Borrowing Base shall be redetermined on or about August 1, 2009 (or such date promptly thereafter
as reasonably possible (i) based on the Reserve Report and such other reports, data and
supplemental information delivered to the Administrative Agent by the Borrower and (ii) in
accordance with, and consistent with, the provisions of Section 2.07 of the Credit Agreement), and
subject to Section 2.07(e) of the Credit Agreement, such redetermined Borrowing Base and, as
applicable, Conforming Borrowing Base, shall become effective and applicable to the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders on August 1, 2009. The Borrower shall
furnish to the Administrative Agent a Reserve Report evaluating the Oil & Gas Properties of the
Borrower and its Subsidiaries as of June 30, 2009 on or prior to July 15, 2009, to facilitate such
redetermination which shall otherwise be conducted in accordance with Section 2.07 of the Credit
Agreement. For the avoidance of doubt, this redetermination shall be in addition to any other
redetermination required or permitted under the Credit Agreement.

Section 3. Consent to Subject Transactions. The consummation of the Subject
Transactions (or certain transactions comprising the Subject Transactions) are, without giving
effect to this Second Amendment, prohibited by certain provisions of the Credit Agreement and the
other Loan Documents, including, without limitation, Section 9.11 of the Credit Agreement, and the
Borrower hereby requests that the Lenders consent to the consummation of the Subject Transactions.
In reliance on the representations and warranties of the Borrower contained herein, and subject to
the terms, and satisfaction of the conditions precedent, set forth in Section 5 hereof, the
Lenders hereby consent to the consummation of the Subject Transactions as of the Subject
Transactions Closing Date (hereinafter defined). Effective as of the Subject Transactions Closing
Date, the Administrative Agent is hereby authorized and directed to execute and deliver such
documents and instruments, including without limitation lien releases, as may be required to
release the Liens of the Administrative Agent upon the Subject Property.

Section 4. Borrowing Base Redetermination Upon the Subject Transactions Closing Date.
The Borrowing Base and the Conforming Borrowing Base shall each, pursuant to Section 2.07 of the
Credit Agreement, be automatically established at $15,000,000 effective as of the Subject
Transactions Closing Date without any further action by the Lenders, and continuing until the next
Scheduled Redetermination, Interim Redetermination or other redetermination of the Borrowing Base
and the Conforming Borrowing Base thereafter. The parties agree that the redetermination of
Borrowing Base and the Conforming Borrowing Base provided for in this Section 4 shall not
constitute an Interim Redetermination.

Section 5. Effectiveness of Subject Transactions. The consent contained in
Section 3 hereof shall be effective as of the date when the following conditions precedent
have been satisfied (the “Subject Transactions Closing Date”):

5.1 No Default. No Default or Event of Default shall have occurred which is
continuing.

5.2 Payment of Net Cash Proceeds. All of the consideration (net of customary third
party out-of-pocket fees and expenses of closing) to be paid to the Borrower and Teton Piceance LLC
in connection with the Subject Transactions shall have been directly paid by the Buyer to the
Administrative Agent to repay the Borrowings, and such consideration shall be in an amount not less
than $7,500,000 in immediately available funds.

5.3 Other Documents. The Subject Transactions shall be consummated on or prior to May
29, 2009 and on the same terms and conditions described in the Purchase and Sale Agreement and the
other Purchase Documents (as defined below) (including, without limitation, the Subject
Transactions shall be consummated for the consideration set forth therein), and the Administrative
Agent shall have received (a) copies of all material agreements evidencing the Subject
Transactions, including any and all supplements, amendments or modifications thereto, which
documents, and supplements, amendments or modifications (whether characterized as an amendment,
modification, waiver, consent or similar document) (collectively, the “Purchase Documents”)
shall be certified by the Borrower as true, correct and complete, and all of which agreements shall
be reasonably satisfactory to the Administrative Agent in its sole discretion, (b) evidence that
(i) the Subject Transactions shall close simultaneously with the occurrence of the Subject
Transactions Closing Date, (ii) all conditions precedent to the effectiveness of the Subject
Transactions shall have been satisfied or waived to the extent not materially adverse to the
interests of the Lenders, (iii) no party to any of the Purchase Documents is in default of its
obligations or in breach of any representations or warranties made thereunder and (iv) each
representation and warranty made by each party in the Purchase Documents is true and correct on the
Subject Transactions Closing Date, and (c) any other documents and information regarding the
Subject Transactions reasonably requested by the Administrative Agent.

Section 6. Conditions Precedent to Amendment. The effectiveness of the amendments to
the Credit Agreement contained in Section 1 hereof is subject to the satisfaction of each
of the following conditions precedent:

6.1 No Default. No Default or Event of Default shall have occurred which is
continuing.

6.2 Security Instruments.

(a) The Administrative Agent shall be reasonably satisfied that the Security
Instruments create first priority, perfected Liens (subject only to Excepted Liens
identified in clauses (a) to (d) and (f) of the definition thereof, but subject to the
provisos at the end of such definition) on at least 95% of the total value of the Oil and
Gas Properties evaluated in the most recently completed Reserve Report after giving effect
to exploration and production activities, acquisitions, dispositions and production.

(b) The Administrative Agent shall have received counterparts of a security agreement,
duly executed and delivered by the Borrower and the Guarantors, in form and substance
satisfactory to the Administrative Agent, pursuant to which the Borrower and the Guarantors
will pledge certain personal property assets, all related financing statements, and a
customary legal opinion to the extent reasonably requested by the Administrative Agent or
its counsel.

6.3 Other Documents. The Administrative Agent shall have been provided with such
other documents, instruments and agreements, and the Borrower shall have taken such actions, as the
Administrative Agent may reasonably require in connection with this Second Amendment and the
transactions contemplated hereby.

6.4 Fees and Expenses. The Borrower shall have paid all reasonable out-of-pocket fees
and expenses of counsel for the Administrative Agent incurred, to the extent the same have been
invoiced and sent to the Borrower on or prior to the Amendment Effective Date, including all such
out-of-pocket fees and expenses incurred in connection with the preparation, negotiation and
execution of this Second Amendment and any other Loan Documents to be executed and delivered in
connection therewith and any and all fees payable to Administrative Agent or the Lenders pursuant
to or in connection with this Second Amendment in consideration for the agreements set forth
herein.

Section 7. Representations and Warranties of the Borrower. To induce the Lenders and
the Administrative Agent to enter into this Second Amendment, the Borrower hereby represents and
warrants to the Lenders and the Administrative Agent as follows:

7.1 Purchase Documents. Attached hereto as Schedule I hereto are full, true
and correct copies of the Purchase and Sale Agreement and all other Purchase Documents in existence
on the Amendment Effective Date. No material rights or obligations of any party to any of the
Purchase Documents have been waived and no party to any of the Purchase Documents is in default of
its obligations or in breach of any representations or warranties made thereunder. Each of the
Purchase Documents is a valid, binding and enforceable obligation of each party thereto in
accordance with its terms and is in full force and effect. Each representation and warranty made
by each party in the Purchase Documents is true and correct on the date hereof.

7.2 Reaffirm Existing Representations and Warranties. Except for the representations
and warranties made in Sections 7.04(b) and 7.22, each representation and warranty of the Borrower
and its Subsidiaries contained in the Credit Agreement and the other Loan Documents is true and
correct on the date hereof and will be true and correct after giving effect to the amendments set
forth in Section 1 hereof.

7.3 Due Authorization; No Conflict. The execution, delivery and performance by the
Borrower of this Second Amendment are within the 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 the Borrower or any of its
Subsidiaries or result in the creation or imposition of any Lien upon any of the assets of the
Borrower or any of its Subsidiaries.

7.4 Validity and Enforceability. This Second Amendment constitutes the valid and
binding obligation of the 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.

7.5 No Default or Event of Default. No Default or Event of Default has occurred which
is continuing.

7.6 NO CLAIMS. THE BORROWER AND EACH GUARANTOR REPRESENT AND WARRANT THAT IT HAS NO
CLAIMS (AS THE TERM IS DEFINED IN THIS PARAGRAPH), DEFENSES, OFFSETS, OR COUNTERCLAIMS OF ANY
NATURE WHATSOEVER AGAINST THE ADMINISTRATIVE AGENT, THE SYNDICATION AGENT, THE LENDERS AND THEIR
RESPECTIVE PREDECESSORS, AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS,
REPRESENTATIVES, SUCCESSORS, AND ASSIGNS (COLLECTIVELY, THE “LENDER-RELATED PARTIES”). IT
IS THE INTENTION OF THE PARTIES THAT THE LENDER-RELATED PARTIES HAVE NO LIABILITY TO THE BORROWER
OR ANY GUARANTOR BY REASON OF ANYTHING OCCURRING PRIOR TO THE DATE OF THIS SECOND AMENDMENT
RELATING TO CLAIMS COVERED BY THIS SECOND AMENDMENT. ACCORDINGLY, THIS SECOND AMENDMENT IS MADE TO
COMPROMISE, RESOLVE, SETTLE, DISCHARGE, AND TERMINATE ALL ACTUAL AND POTENTIAL CLAIMS OF THE
BORROWER AND THE GUARANTORS BY REASON OF ANYTHING OCCURRING PRIOR TO THE DATE OF THIS SECOND
AMENDMENT RELATING TO CLAIMS COVERED BY THIS SECOND AMENDMENT. THE TERM “CLAIMS” AS USED
IN THIS SECOND AMENDMENT MEANS ALL ACCOUNTS, AGREEMENTS, AVOIDANCE ACTIONS, BILLS, BONDS, CAUSES,
CAUSES OF ACTION, CHARGES, CLAIMS, COMPLAINTS, CONTRACTS, CONTROVERSIES, COSTS, COUNTERCLAIMS,
DAMAGES, DEBTS, DEMANDS, EQUITABLE PROCEEDINGS, EXECUTIONS, EXPENSES, LEGAL PROCEEDINGS,
LIABILITIES, LOSSES, MATTERS, OBJECTIONS, OBLIGATIONS, ORDERS, PROCEEDINGS, RECKONINGS, REMEDIES,
RIGHTS, SETOFF, SUITS, SUMS OF MONEY, OF EVERY SORT AND DESCRIPTION, INCLUDING BUT NOT LIMITED TO
BREACH OF CONTRACT, BREACH OF ANY SPECIAL RELATIONSHIP, BREACH OR ABUSE OF ANY FIDUCIARY DUTY,
CONCEALMENT, CONFLICTS OF INTEREST, CONSPIRACY, COURSE OF CONDUCT OR DEALING, DEBT
RECHARACTERIZATION, DECEIT, DECEPTIVE TRADE PRACTICES, DEEPENING INSOLVENCY, DEFAMATION, CONTROL,
DISCLOSURE, DURESS, ECONOMIC DURESS, EQUITABLE SUBORDINATION, FRAUD, FRAUDULENT CONVEYANCE,
FRAUDULENT TRANSFER, GROSS NEGLIGENCE, INSOLVENCY LAW VIOLATIONS, INTERFERENCE WITH CONTRACTUAL AND
BUSINESS RELATIONSHIPS, MISREPRESENTATION, MISUSE OF INSIDER INFORMATION, NEGLIGENCE, OBLIGATION OF
FAIR DEALING, OBLIGATION OF GOOD FAITH AND FAIR DEALING, OBLIGATION OF GOOD FAITH, PREFERENCE,
SECRECY, SECURITIES AND ANTITRUST LAWS VIOLATIONS, SUBSTANTIVE CONSOLIDATION, TYING ARRANGEMENTS,
UNCONSCIONABILITY, USURY, VIOLATIONS OF STATUTES AND REGULATIONS OF GOVERNMENTAL ENTITIES,
INSTRUMENTALITIES AND AGENCIES, WRONGFUL SETOFF, WHETHER DIRECT AND INDIRECT, FIXED OR CONTINGENT,
KNOWN OR UNKNOWN, WHETHER SOUNDING IN TORT, OR BROUGHT UNDER CONTRACT OR STATUTE, AT LAW OR IN
EQUITY, WHETHER OR NOT LIQUIDATED, WHICH MAY HAVE ARISEN AT ANY TIME ON OR PRIOR TO THE DATE OF
THIS SECOND AMENDMENT AND WHICH WERE IN ANY MANNER RELATED TO ANY OF THE LOAN DOCUMENTS OR THE
ENFORCEMENT OR ATTEMPTED ENFORCEMENT BY THE ADMINISTRATIVE AGENT OR THE LENDERS OF RIGHTS, REMEDIES
OR RECOURSES RELATED THERETO. TO THE EXTENT THAT ANY CLAIMS, DEFENSES, OR OFFSETS EXIST AS OF THE
DATE HEREOF, THEY ARE HEREBY WAIVED AND RELEASED BY THE BORROWER AND EACH GUARANTOR IN
CONSIDERATION OF THE LENDERS’ EXECUTION OF THIS SECOND AMENDMENT. THE BORROWER AND EACH GUARANTOR
REPRESENT AND WARRANT THAT IT HAS NOT ASSIGNED ANY CLAIMS, OFFSETS OR DEFENSES TO ANY PERSON,
INDIVIDUAL AND/OR ENTITY.

Section 8. Miscellaneous.

8.1 Reaffirmation of Loan Documents; Extension of Liens. Any and all of the terms and
provisions of the Credit Agreement and the Loan Documents shall, except as amended and modified
hereby, remain in full force and effect. The amendments contemplated hereby shall not limit or
impair any Liens securing the Indebtedness, each of which are hereby ratified, affirmed and
extended to secure the Indebtedness after giving effect to this Second Amendment.

8.2 RELEASE OF CLAIMS; COVENANT NOT TO SUE. THE BORROWER AND EACH GUARANTOR HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVE, REMISE, ACQUIT, AND FULLY AND FOREVER RELEASE AND DISCHARGE
THE LENDER-RELATED PARTIES FROM ANY AND ALL CLAIMS WHICH THE BORROWER OR ANY GUARANTOR EVER HAD OR
NOW HAVE AGAINST THE LENDER-RELATED PARTIES. THE BORROWER AND EACH GUARANTOR COVENANT AND AGREE
NEVER TO COMMENCE, VOLUNTARILY AID IN ANY WAY, FOMENT, PROSECUTE OR CAUSE TO BE COMMENCED OR
PROSECUTED AGAINST ANY OF THE LENDER-RELATED PARTIES ANY ACTION OR OTHER PROCEEDING BASED UPON ANY
OF THE CLAIMS WHICH MAY HAVE ARISEN AT ANY TIME ON OR PRIOR TO THE DATE OF THIS SECOND AMENDMENT
AND WERE IN ANY MANNER RELATED TO ANY OF THE LOAN DOCUMENTS. WITHOUT IN ANY WAY MODIFYING OR
LIMITING THE FOREGOING, AND IN ADDITION TO THE FOREGOING, THE BORROWER AND EACH GUARANTOR HEREBY
INCORPORATE INTO THIS SECOND AMENDMENT, RESTATE, ACKNOWLEDGE, AFFIRM AND AGREE TO EVERY WAIVER AND
RELEASE OF ANY CLAIMS AS SET FORTH IN THE LOAN DOCUMENTS AS IF THE SAME WERE SET FORTH HEREIN.

8.3 Parties in Interest. All of the terms and provisions of this Second Amendment
shall bind and inure to the benefit of the parties hereto and their respective successors and
assigns.

8.4 Legal Expenses. The Borrower hereby agrees to pay on demand all reasonable fees
and expenses of counsel to the Administrative Agent incurred by the Administrative Agent in
connection with the preparation, negotiation and execution of this Second Amendment and all related
documents.

8.5 Counterparts. This Second Amendment may be executed in counterparts, and all
parties need not execute the same counterpart; however, no party shall be bound by this Second
Amendment until the Borrower, the Administrative Agent and all Lenders have executed a counterpart.
Facsimiles or other electronic transmission shall be effective as originals.

8.6 Complete Agreement. THIS SECOND AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN OR AMONG THE PARTIES.

8.7 Headings. The headings, captions and arrangements used in this Second Amendment
are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or
modify the terms of this Second Amendment, nor affect the meaning thereof.

8.8 Effectiveness. This Second Amendment shall be effective automatically and without
necessity of any further action by the Borrower, the Administrative Agent or the Lenders when
counterparts hereof have been executed by the Borrower, the Administrative Agent and all Lenders,
and all conditions to the effectiveness hereof set forth herein have been satisfied.

8.9 Governing Law. This Second Amendment shall be governed by and construed in
accordance with the laws of the state of Texas.

8.10 Successors and Assigns. This Second Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of the Administrative Agent, the Issuing Bank and each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be null and void).
Nothing in this Second Amendment, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, and their respective successors and assigns permitted
hereby) any legal or equitable right, remedy or claim under or by reason of this Second Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed
by their respective Responsible Officers on the date and year first above written.

[Signature pages to follow]

	 	 	 
	BORROWER: TETON ENERGY CORPORATION
	 	 	By:

	 	 	 

Lonnie R. Brock, Executive Vice President and
Chief Financial Officer

Each of the undersigned (i) consent and agree to this Second Amendment 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:

	GUARANTORS:
	 	TETON NORTH AMERICA LLC

	 
	 	

	 	 	By:

	 	 	 

Lonnie R. Brock, Executive Vice President and
Chief Financial Officer

TETON PICEANCE LLC

	 	 	 	By:

Lonnie R. Brock, Executive Vice President and
Chief Financial Officer

TETON DJ LLC

	 	 	 	By:

Lonnie R. Brock, Executive Vice President and
Chief Financial Officer

TETON WILLISTON LLC

	 	 	 	By:

Lonnie R. Brock, Executive Vice President and
Chief Financial Officer

TETON BIG HORN LLC

	 	 	 	By:

Lonnie R. Brock, Executive Vice President and
Chief Financial Officer

TETON DJCO LLC

	 	 	 	By:

Lonnie R. Brock, Executive Vice President and
Chief Financial Officer

1

	 	 	 
	ADMINISTRATIVE AGENT/LENDER:
	 	JPMORGAN CHASE BANK, N.A.,

	 
	 	

	as Administrative Agent and a Lender
	 	

By:

	 	 	 

	 	 	Ryan Fuessel,

Senior Vice President

2

	 	 	 
	SYNDICATION AGENT/LENDER:
	 	ROYAL BANK OF CANADA,

	 
	 	

	as Syndication Agent and a Lender
	 	

By:

	 	 	 

	 	 	Name:

	 	 	 

	 	 	Title:

	 	 	 

3

	 	 	 
	LENDER:
	 	GUARANTY BANK AND TRUST COMPANY,

	 
	 	

	as a Lender
	 	

By:

	 	 	 

	 	 	Name:

	 	 	 

	 	 	Title:

	 	 	 

4

	 	 	 
	LENDER:
	 	U.S. BANK NATIONAL ASSOCIATION,

	 
	 	

	as a Lender
	 	

By:

	 	 	 

	 	 	Name:

	 	 	 

	 	 	Title:

	 	 	 

SCHEDULE I

Purchase and Sale Agreement

[See Attached]

5EX-10.2

PLEDGE AND SECURITY AGREEMENT

THIS PLEDGE AND SECURITY AGREEMENT is entered into as of May 21, 2009 by and between
Teton Energy Corporation, a Delaware corporation (the “Borrower”), and JPMorgan Chase Bank,
N.A., a national banking association, in its capacity as agent (the “Administrative Agent”)
for the lenders party to the Credit Agreement referred to below.

PRELIMINARY STATEMENT

The Borrower, the Administrative Agent and the Lenders entered into that Credit Agreement
dated as of April 2, 2008 (as heretofore amended and as it may hereafter be amended or modified
from time to time, the “Credit Agreement”). The Borrower is entering into this Pledge and
Security Agreement (as it may be amended or modified from time to time, the “Security
Agreement”) in order to induce the Lenders to continue to extend credit to the Borrower under
the Credit Agreement.

ACCORDINGLY, the Borrower and the Administrative Agent, on behalf of the Lenders, hereby agree
as follows:

ARTICLE I

DEFINITIONS

1.1 Terms Defined in Credit Agreement. All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.

1.2 Terms Defined in Uniform Commercial Code. Terms defined in the UCC which are not
otherwise defined in this Security Agreement are used herein as defined in the UCC.

1.3 Definitions of Certain Terms Used Herein. As used in this Security Agreement, in
addition to the terms defined in the Preliminary Statement, the following terms shall have the
following meanings:

“Accounts” shall have the meaning set forth in Article 9 of the UCC.

“Article” means a numbered article of this Security Agreement, unless another document
is specifically referenced.

“Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.

“Collateral” means all Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Instruments, Inventory, Investment Property, Pledged Deposits, and Other Collateral,
wherever located, in which the Borrower now has or hereafter acquires any right or interest, and
the proceeds (including Stock Rights), insurance proceeds and products thereof, together with all
books and records, customer lists, credit files, computer files, programs, printouts and other
computer materials and records related thereto.

“Control” shall have the meaning set forth in Article 8 or, if applicable, in Section
9.104, 9.105, 9.106 or 9.107 of Article 9 of the UCC.

“Default” means an event described in Section 5.1.

“Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC.

“Documents” shall have the meaning set forth in Article 9 of the UCC.

“Equipment” shall have the meaning set forth in Article 9 of the UCC.

“Exhibit” refers to a specific exhibit to this Security Agreement, unless another
document is specifically referenced.

“General Intangibles” shall have the meaning set forth in Article 9 of the UCC.

“Instruments” shall have the meaning set forth in Article 9 of the UCC.

“Inventory” shall have the meaning set forth in Article 9 of the UCC.

“Investment Property” shall have the meaning set forth in Article 9 of the UCC.

“Lenders” means the lenders party to the Credit Agreement and their successors and
assigns.

“Obligations” means any and all existing and future indebtedness, obligation and
liability of every kind, nature and character, direct or indirect, absolute or contingent
(including all renewals, extensions and modifications thereof and all fees, costs and expenses
incurred by the Administrative Agent or the Lenders in connection with the preparation,
administration, collection or enforcement thereof), of the Borrower to the Administrative Agent or
any Lender or any branch, subsidiary or affiliate thereof, arising under or pursuant to this
Security Agreement, the Credit Agreement and any promissory note or notes now or hereafter issued
under the Credit Agreement.

“Other Collateral” means any property of the Borrower, other than real estate, not
included within the defined terms Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Instruments, Inventory, Investment Property and Pledged Deposits, including, without
limitation, all cash on hand, letter-of-credit rights, letters of credit, Stock Rights and Deposit
Accounts or other deposits (general or special, time or demand, provisional or final) with any bank
or other financial institution, it being intended that the Collateral include all property of the
Borrower other than real estate.

“Pledged Deposits” means all time deposits of money (other than Deposit Accounts and
Instruments), whether or not evidenced by certificates, which the Borrower may from time to time
designate as pledged to the Administrative Agent or to any Lender as security for any Obligation,
and all rights to receive interest on said deposits.

“Rate Management Transaction” means any transaction (including an agreement with
respect thereto) now existing or hereafter entered into between the Borrower and any Lender or
Affiliate thereof which is a rate swap, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index option, bond option, interest
rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction,
forward transaction, currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to any of these
transactions) or any combination thereof, whether linked to one or more interest rates, foreign
currencies, commodity prices, equity prices or other financial measures.

“Rate Management Obligations” means any and all obligations of the Borrower, whether
absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions therefor), under
(i) any and all Rate Management Transactions, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.

“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments or Pledged Deposits, and any other rights or claims to receive money which are General
Intangibles or which are otherwise included as Collateral.

“Required Secured Parties” means (a) prior to an acceleration of the obligations under
the Credit Agreement, the Majority Lenders, (b) after an acceleration of the obligations under the
Credit Agreement but prior to the date upon which the Credit Agreement has terminated by its terms
and all of the obligations thereunder have been paid in full, Lenders and their Affiliates holding
in the aggregate at least 66?% of the total of (i) the unpaid principal amount of outstanding Loans
and (ii) the aggregate net early termination payments and all other amounts then due and unpaid
from the Borrower to the Lenders or their Affiliates under Rate Management Transactions, as
determined by the Administrative Agent in its reasonable discretion, and (c) after the Credit
Agreement has terminated by its terms and all of the obligations thereunder have been paid in full
(whether or not the obligations under the Credit Agreement were ever accelerated), Lenders and
their Affiliates holding in the aggregate at least 66?% of the aggregate net early termination
payments and all other amounts then due and unpaid from the Borrower to the Lenders or their
Affiliates under Rate Management Transactions, as determined by the Administrative Agent in its
reasonable discretion.

“Section” means a numbered section of this Security Agreement, unless another document
is specifically referenced.

“Secured Obligations” means the Obligations and Rate Management Obligations entered
into with one or more of the Lenders or their Affiliates.

“Security” has the meaning set forth in Article 8 of the Texas UCC.

“Stock Rights” means any securities, dividends or other distributions and any other
right or property which the Borrower shall receive or shall become entitled to receive for any
reason whatsoever with respect to, in substitution for or in exchange for any securities or other
ownership interests in a corporation, partnership, joint venture or limited liability company
constituting Collateral and any securities, any right to receive securities and any right to
receive earnings, in which the Borrower now has or hereafter acquires any right, issued by an
issuer of such securities.

“UCC” means the Uniform Commercial Code as in effect from time to time of the
governing jurisdiction set forth in Section 8.14 hereof.

“Unmatured Default” means an event which but for the lapse of time or the giving of
notice, or both, would constitute a Default.

The foregoing definitions shall be equally applicable to both the singular and plural forms of
the defined terms.

ARTICLE II

GRANT OF SECURITY INTEREST

The Borrower hereby pledges, assigns and grants to the Administrative Agent, on behalf of and
for the ratable benefit of the Lenders and (to the extent specifically provided herein) their
Affiliates, a security interest in all of the Borrower’s right, title and interest in and to the
Collateral to secure the prompt and complete payment and performance of the Secured Obligations.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Administrative Agent and the Lenders that:

3.1 Title, Authorization, Validity and Enforceability. The Borrower has good and
valid rights in or the power to transfer the Collateral and title to the Collateral with respect to
which it has purported to grant a security interest hereunder, free and clear of all Liens except
for Liens permitted under Section 4.1(f), and has full power and authority to grant to the
Administrative Agent the security interest in such Collateral pursuant hereto. The execution and
delivery by the Borrower of this Security Agreement has been duly authorized by proper corporate
proceedings, and this Security Agreement constitutes a legal, valid and binding obligation of the
Borrower and creates a security interest which is enforceable against the Borrower in all now owned
and hereafter acquired Collateral.

3.2 Conflicting Laws and Contracts. Neither the execution and delivery by the
Borrower of this Security Agreement, the creation and perfection of the security interest in the
Collateral granted hereunder, nor compliance with the terms and provisions hereof will violate any
law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Borrower
or the Borrower’s articles or certificate of incorporation or by-laws, the provisions of any
indenture, instrument or agreement to which the Borrower is a party or is subject, or by which it,
or its property, is bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien pursuant to the terms of any such indenture, instrument or
agreement (other than any Lien of the Administrative Agent on behalf of the Lenders).

3.3 Type and Jurisdiction of Organization. The Borrower is a corporation organized
under the laws of the State of Delaware.

3.4 Principal Location. The Borrower’s mailing address and the location of its place
of business (if it has only one) or its chief executive office (if it has more than one place of
business), is disclosed in Exhibit A; the Borrower has no other places of business except
those set forth in Exhibit A.

3.5 Property Locations. The Inventory and Equipment are located solely at the
locations described in Exhibit A. All of said locations are owned by the Borrower except
for locations (a) which are leased by the Borrower as lessee and designated in Part B of
Exhibit A and (b) at which Inventory is held in a public warehouse or is otherwise held by
a bailee or on consignment as designated in Part C of Exhibit A, with respect to which
Inventory the Borrower has delivered bailment agreements, warehouse receipts, financing statements
or other documents satisfactory to the Lenders to protect the Administrative Agent’s and the
Lenders’ security interest in such Inventory.

3.6 No Other Names. The Borrower has not conducted business under any name except the
name in which it has executed this Security Agreement, which is the exact name as it appears in the
Borrower’s organizational documents, as amended, as filed with the Borrower’s jurisdiction of
organization.

3.7 No Default. No Default or Unmatured Default exists.

3.8 Accounts and Chattel Paper. The names of the obligors, amounts owing, due dates
and other information with respect to the Accounts and Chattel Paper are and will be correctly
stated in all records of the Borrower relating thereto and in all invoices and reports with respect
thereto furnished to the Administrative Agent by the Borrower from time to time. As of the time
when each Account or each item of Chattel Paper arises, the Borrower shall be deemed to have
represented and warranted that such Account or Chattel Paper, as the case may be, and all records
relating thereto, are genuine and in all respects what they purport to be.

3.9 Intentionally deleted.

3.10 No Financing Statements. No financing statement describing all or any portion of
the Collateral which has not lapsed or been terminated naming the Borrower as debtor has been filed
in any jurisdiction except (a) financing statements naming the Administrative Agent on behalf of
the Lenders as the secured party and (b) as described in Exhibit B and (c) as permitted by
Section 4.1(f).

3.11 Federal Employer Identification Number. The Borrower’s Federal employer
identification number is 84-1482290.

3.12 State Organization Number. If the Borrower is a registered organization, the
Borrower’s State organization number is 2896826.

ARTICLE IV

COVENANTS

From the date of this Security Agreement, and thereafter until this Security Agreement is
terminated:

4.1 General.

(a) Inspection. The Borrower will permit the Administrative Agent or any Lender, by
its representatives and Administrative Agents (i) to inspect the Collateral, (ii) to examine and
make copies of the records of the Borrower relating to the Collateral and (iii) to discuss the
Collateral and the related records of the Borrower with, and to be advised as to the same by, the
Borrower’s officers and employees (and, in the case of any Receivable, with any person or entity
which is or may be obligated thereon), all at such reasonable times and intervals as the
Administrative Agent or such Lender may determine, and all at the Borrower’s expense.

(b) Taxes. The Borrower will pay when due all taxes, assessments and governmental
charges and levies upon the Collateral, except those which are being contested in good faith by
appropriate proceedings and with respect to which no Lien exists.

(c) Records and Reports; Notification of Default. The Borrower will maintain complete
and accurate books and records with respect to the Collateral, and furnish to the Administrative
Agent, with sufficient copies for each of the Lenders, such reports relating to the Collateral as
the Administrative Agent shall from time to time request. The Borrower will give prompt notice in
writing to the Administrative Agent and the Lenders of the occurrence of any Default or Unmatured
Default and of any other development, financial or otherwise, which might materially and adversely
affect the Collateral.

(d) Financing Statements and Other Actions; Defense of Title. The Borrower hereby
authorizes the Administrative Agent to file, and if requested will execute and deliver to the
Administrative Agent, all financing statements and other documents and take such other actions as
may from time to time be requested by the Administrative Agent in order to maintain a first
perfected security interest in and, if applicable, Control of, the Collateral. The Borrower will
take any and all actions necessary to defend title to the Collateral against all persons and to
defend the security interest of the Administrative Agent in the Collateral and the priority thereof
against any Lien not expressly permitted hereunder.

(e) Disposition of Collateral. The Borrower will not sell, lease or otherwise dispose
of the Collateral except (i) prior to the occurrence of a Default or Unmatured Default,
dispositions specifically permitted pursuant to Section 9.11 of the Credit Agreement, (ii) until
such time following the occurrence of a Default as the Borrower receives a notice from the
Administrative Agent instructing the Borrower to cease such transactions, sales or leases of
Inventory in the ordinary course of business, and (iii) until such time as the Borrower receives a
notice from the Administrative Agent pursuant to Article VII, proceeds of Inventory and Accounts
collected in the ordinary course of business.

(f) Liens. The Borrower will not create, incur, or suffer to exist any Lien on the
Collateral except (i) the security interest created by this Security Agreement, and (ii) other
Liens permitted pursuant to Section 9.03 of the Credit Agreement (including those Liens securing
Permitted Convertible Debt which are subordinated to the Liens securing the Indebtedness pursuant
to the Intercreditor Agreement).

(g) Change in Corporate Existence, Type or Jurisdiction of Organization, Location,
Name. The Borrower will:

(i) preserve its existence as a corporation and not, in one transaction or a series of
related transactions, merge into or consolidate with any other entity, or sell all or
substantially all of its assets;

(ii) not change its state of organization;

(iii) not maintain its place of business (if it has only one) or its chief executive
office (if it has more than one place of business) at a location other than a location
specified on Exhibit A; and

(iv) not (A) have any Inventory or Equipment or proceeds or products thereof (other
than Inventory and proceeds thereof disposed of as permitted by Section 4.1(e)) at a
location other than a location specified in Exhibit A, (B) change its name or
taxpayer identification number or (C) change its mailing address,

unless the Borrower shall have given the Administrative Agent not less than 30 days’ prior written
notice of such event or occurrence and the Administrative Agent shall have either (x) determined
that such event or occurrence will not adversely affect the validity, perfection or priority of the
Administrative Agent’s security interest in the Collateral, or (y) taken such steps (with the
cooperation of the Borrower to the extent necessary or advisable) as are necessary or advisable to
properly maintain the validity, perfection and priority of the Administrative Agent’s security
interest in the Collateral.

(h) Other Financing Statements. The Borrower will not sign or authorize the signing
on its behalf or the filing of any financing statement naming it as debtor covering all or any
portion of the Collateral, except as permitted by Section 4.1(f).

4.2 Receivables.

(a) Certain Agreements on Receivables. The Borrower will not make or agree to make
any discount, credit, rebate or other reduction in the original amount owing on a Receivable or
accept in satisfaction of a Receivable less than the original amount thereof, except that, prior to
the occurrence of a Default, the Borrower may reduce the amount of Accounts arising from the sale
of Inventory in accordance with its present policies and in the ordinary course of business.

(b) Collection of Receivables. Except as otherwise provided in this Security
Agreement, the Borrower will collect and enforce, at the Borrower’s sole expense, all amounts due
or hereafter due to the Borrower under the Receivables.

(c) Delivery of Invoices. The Borrower will deliver to the Administrative Agent
immediately upon its request after the occurrence of a Default duplicate invoices with respect to
each Account bearing such language of assignment as the Administrative Agent shall specify.

(d) Disclosure of Counterclaims on Receivables. If (i) any discount, credit or
agreement to make a rebate or to otherwise reduce the amount owing on a Receivable exists or (ii)
if, to the knowledge of the Borrower, any dispute, setoff, claim, counterclaim or defense exists or
has been asserted or threatened with respect to a Receivable, the Borrower will disclose such fact
to the Administrative Agent in writing in connection with the inspection by the Administrative
Agent of any record of the Borrower relating to such Receivable and in connection with any invoice
or report furnished by the Borrower to the Administrative Agent relating to such Receivable.

4.3 Inventory and Equipment.

(a) Maintenance of Goods. The Borrower will do all things necessary to maintain,
preserve, protect and keep the Inventory and the Equipment in good repair and working and saleable
condition.

(b) Insurance. The Borrower will (i) maintain fire and extended coverage insurance on
the Inventory and Equipment containing a lender’s loss payable clause in favor of the
Administrative Agent, on behalf of the Lenders, and providing that said insurance will not be
terminated except after at least 30 days’ written notice from the insurance company to the
Administrative Agent, (ii) maintain such other insurance on the Collateral for the benefit of the
Administrative Agent as the Administrative Agent shall from time to time request, (iii) furnish to
the Administrative Agent upon the request of the Administrative Agent from time to time the
originals of all policies of insurance on the Collateral and certificates with respect to such
insurance and (iv) maintain general liability insurance naming the Administrative Agent, on behalf
of the Lenders, as an additional insured.

4.4 Instruments, Securities, Chattel Paper, Documents and Pledged Deposits. The
Borrower will (a) deliver to the Administrative Agent immediately upon execution of this Security
Agreement the originals of all Chattel Paper, Securities and Instruments constituting Collateral
(if any then exist), (b) hold in trust for the Administrative Agent upon receipt and immediately
thereafter deliver to the Administrative Agent any Chattel Paper, Securities and Instruments
constituting Collateral, (c) upon the designation of any Pledged Deposits (as set forth in the
definition thereof), deliver to the Administrative Agent such Pledged Deposits which are evidenced
by certificates included in the Collateral endorsed in blank, marked with such legends and assigned
as the Administrative Agent shall specify, and (d) upon the Administrative Agent’s request, after
the occurrence and during the continuance of a Default, deliver to the Administrative Agent (and
thereafter hold in trust for the Administrative Agent upon receipt and immediately deliver to the
Administrative Agent) any Document evidencing or constituting Collateral.

4.5 Uncertificated Securities and Certain Other Investment Property. The Borrower
will permit the Administrative Agent from time to time to cause the appropriate issuers (and, if
held with a securities intermediary, such securities intermediary) of uncertificated securities or
other types of Investment Property not represented by certificates which are Collateral to mark
their books and records with the numbers and face amounts of all such uncertificated securities or
other types of Investment Property not represented by certificates and all rollovers and
replacements therefor to reflect the Lien of the Administrative Agent granted pursuant to this
Security Agreement. The Borrower will take any actions necessary to cause (a) the issuers of
uncertificated securities which are Collateral and which are Securities and (b) any financial
intermediary which is the holder of any Investment Property, to cause the Administrative Agent to
have and retain Control over such Securities or other Investment Property. Without limiting the
foregoing, the Borrower will, with respect to Investment Property held with a financial
intermediary, cause such financial intermediary to enter into a control agreement with the
Administrative Agent in form and substance satisfactory to the Administrative Agent.

4.6 Stock and Other Ownership Interests.

(a) Changes in Capital Structure of Issuers. The Borrower will not (i) permit or
suffer any issuer of privately held corporate securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company constituting Collateral to
dissolve, liquidate, retire any of its capital stock or other Instruments or Securities evidencing
ownership, reduce its capital or merge or consolidate with any other entity, or (ii) vote any of
the Instruments, Securities or other Investment Property in favor of any of the foregoing.

(b) Issuance of Additional Securities. The Borrower will not permit or suffer the
issuer of privately held corporate securities or other ownership interests in a corporation,
partnership, joint venture or limited liability company constituting Collateral to issue any such
securities or other ownership interests, any right to receive the same or any right to receive
earnings, except to the Borrower.

(c) Registration of Pledged Securities and other Investment Property. The Borrower
will permit any registerable Collateral to be registered in the name of the Administrative Agent or
its nominee at any time at the option of the Required Secured Parties.

(d) Exercise of Rights in Pledged Securities and other Investment Property. The
Borrower will permit the Administrative Agent or its nominee at any time after the occurrence of a
Default, without notice, to exercise all voting and corporate rights relating to the Collateral,
including, without limitation, exchange, subscription or any other rights, privileges, or options
pertaining to any corporate securities or other ownership interests or Investment Property in or of
a corporation, partnership, joint venture or limited liability company constituting Collateral and
the Stock Rights as if it were the absolute owner thereof.

4.7 Pledged Deposits. The Borrower will not withdraw all or any portion of any
Pledged Deposit or fail to rollover said Pledged Deposit without the prior written consent of the
Administrative Agent.

4.8 Letter-of-Credit Rights. The Borrower will upon the Administrative Agent’s
request, cause each issuer of a letter of credit, to consent to the assignment of proceeds of the
letter of credit in order to give the Administrative Agent Control of the letter-of-credit rights
to such letter of credit.

4.9 Federal, State or Municipal Claims. The Borrower will notify the Administrative
Agent of any Collateral which constitutes a claim against the United States government or any state
or local government or any instrumentality or agency thereof, the assignment of which claim is
restricted by federal, state or municipal law.

ARTICLE V

DEFAULT

5.1 The occurrence of any one or more of the following events shall constitute a Default:

(a) Any representation or warranty made by or on behalf of the Borrower under or in connection
with this Security Agreement shall be materially false as of the date on which made.

(b) The breach by the Borrower of any of the terms or provisions of Article IV or Article VII.

(c) The breach by the Borrower (other than a breach which constitutes a Default under Section
5.1(a) or 5.1(b)) of any of the terms or provisions of this Security Agreement which is not
remedied within 10 days after the giving of written notice to the Borrower by the Administrative
Agent.

(d) Any material portion of the Collateral shall be transferred or otherwise disposed of,
either voluntarily or involuntarily, in any manner not permitted by Section 4.1(e) or 8.7 or shall
be lost, stolen, damaged or destroyed.

(e) Any Secured Obligation shall not be paid when due, whether at stated maturity, upon
acceleration, or otherwise.

(f) The occurrence of any “Default” under, and as defined in, the Credit Agreement.

(g) Any limited partnership interests or ownership interests in a limited liability company
which are included within the Collateral shall at any time constitute a Security or the issuer of
any such interests shall take any action to have such interests treated as a Security unless (i)
all certificates or other documents constituting such Security have been delivered to the
Administrative Agent and such Security is properly defined as such under Article 8 of the Uniform
Commercial Code of the applicable jurisdiction, whether as a result of actions by the issuer
thereof or otherwise, or (ii) the Administrative Agent has entered into a control agreement with
the issuer of such Security [or with a securities intermediary relating to such Security] and such
Security is defined as such under Article 8 of the Uniform Commercial Code of the applicable
jurisdiction, whether as a result of actions by the issuer thereof or otherwise.

5.2 Acceleration and Remedies. Upon the acceleration of the obligations under the
Credit Agreement pursuant to Section 10.02 thereof, the Obligations and, to the extent provided for
under the Rate Management Transactions evidencing the same, the Rate Management Obligations, shall
immediately become due and payable without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived, and the Administrative Agent may, with the concurrence or at
the direction of the Required Secured Parties, exercise any or all of the following rights and
remedies:

(a) Those rights and remedies provided in this Security Agreement, the Credit Agreement, or
any other Loan Document, provided that this Section 5.2(a) shall not be understood to limit
any rights or remedies available to the Administrative Agent and the Lenders prior to a Default.

(b) Those rights and remedies available to a secured party under the UCC (whether or not the
UCC applies to the affected Collateral) or under any other applicable law (including, without
limitation, any law governing the exercise of a bank’s right of setoff or bankers’ lien) when a
debtor is in default under a security agreement.

(c) Without notice except as specifically provided in Section 8.1 or elsewhere herein, sell,
lease, assign, grant an option or options to purchase or otherwise dispose of the Collateral or any
part thereof in one or more parcels at public or private sale, for cash, on credit or for future
delivery, and upon such other terms as the Administrative Agent may deem commercially reasonable.

The Administrative Agent, on behalf of the secured parties, may comply with any applicable state or
federal law requirements in connection with a disposition of the Collateral and compliance will not
be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

If, after the Credit Agreement has terminated by its terms and all of the Obligations have been
paid in full, there remain Rate Management Obligations outstanding, the Required Secured Parties
may exercise the remedies provided in this Section 5.2 upon the occurrence of any event which would
allow or require the termination or acceleration of any Rate Management Obligations pursuant to the
terms of the agreement governing any Rate Management Transaction.

5.3 Debtor’s Obligations Upon Default. Upon the request of the Administrative Agent
after the occurrence of a Default, the Borrower will:

(a) Assembly of Collateral. Assemble and make available to the Administrative Agent
the Collateral and all records relating thereto at any place or places specified by the
Administrative Agent.

(b) Secured Party Access. Permit the Administrative Agent, by the Administrative
Agent’s representatives and agents, to enter any premises where all or any part of the Collateral,
or the books and records relating thereto, or both, are located, to take possession of all or any
part of the Collateral and to remove all or any part of the Collateral.

5.4 License. The Administrative Agent is hereby granted a license or other right to
use, following the occurrence and during the continuance of a Default, without charge, the
Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks, customer lists and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in completing production of, advertising for sale, and
selling any Collateral, and, following the occurrence and during the continuance of a Default, the
Borrower’s rights under all licenses and all franchise agreements shall inure to the Administrative
Agent’s benefit. In addition, the Borrower hereby irrevocably agrees that the Administrative Agent
may, following the occurrence and during the continuance of a Default, sell any of the Borrower’s
Inventory directly to any person, including without limitation persons who have previously
purchased the Borrower’s Inventory from the Borrower and in connection with any such sale or other
enforcement of the Administrative Agent’s rights under this Agreement, may sell Inventory which
bears any trademark owned by or licensed to the Borrower and any Inventory that is covered by any
copyright owned by or licensed to the Borrower and the Administrative Agent may finish any work in
process and affix any trademark owned by or licensed to the Borrower and sell such Inventory as
provided herein.

ARTICLE VI

WAIVERS, AMENDMENTS AND REMEDIES

No delay or omission of the Administrative Agent or any Lender to exercise any right or remedy
granted under this Security Agreement shall impair such right or remedy or be construed to be a
waiver of any Default or an acquiescence therein, and any single or partial exercise of any such
right or remedy shall not preclude any other or further exercise thereof or the exercise of any
other right or remedy. No waiver, amendment or other variation of the terms, conditions or
provisions of this Security Agreement whatsoever shall be valid unless in writing signed by the
Administrative Agent with the concurrence or at the direction of the Lenders required under Section
12.02 of the Credit Agreement and then only to the extent in such writing specifically set forth.
All rights and remedies contained in this Security Agreement or by law afforded shall be cumulative
and all shall be available to the Administrative Agent and the Lenders until the Secured
Obligations have been paid in full.

ARTICLE VII

PROCEEDS; COLLECTION OF RECEIVABLES

7.1 Lockboxes. Upon request of the Administrative Agent after the occurrence of a
Default or Unmatured Default, the Borrower shall execute and deliver to the Administrative Agent
irrevocable lockbox agreements in the form provided by or otherwise acceptable to the
Administrative Agent, which agreements shall be accompanied by an acknowledgment by the bank where
the lockbox is located of the Lien of the Administrative Agent granted hereunder and of irrevocable
instructions to wire all amounts collected therein to a special collateral account at the
Administrative Agent.

7.2 Collection of Receivables. The Administrative Agent may at any time after the
occurrence of a Default, by giving the Borrower written notice, elect to require that the
Receivables be paid directly to the Administrative Agent for the benefit of the Lenders. In such
event, the Borrower shall, and shall permit the Administrative Agent to, promptly notify the
account debtors or obligors under the Receivables of the Lenders’ interest therein and direct such
account debtors or obligors to make payment of all amounts then or thereafter due under the
Receivables directly to the Administrative Agent. Upon receipt of any such notice from the
Administrative Agent, the Borrower shall thereafter hold in trust for the Administrative Agent, on
behalf of the Lenders, all amounts and proceeds received by it with respect to the Receivables and
Other Collateral and immediately and at all times thereafter deliver to the Administrative Agent
all such amounts and proceeds in the same form as so received, whether by cash, check, draft or
otherwise, with any necessary endorsements. The Administrative Agent shall hold and apply funds so
received as provided by the terms of Sections 7.3 and 7.4.

7.3 Special Collateral Account. The Administrative Agent may require all cash
proceeds of the Collateral to be deposited in a special non-interest bearing cash collateral
account with the Administrative Agent and held there as security for the Secured Obligations. The
Borrower shall have no control whatsoever over said cash collateral account. If no Default or
Unmatured Default has occurred or is continuing, the Administrative Agent shall from time to time
deposit the collected balances in said cash collateral account into the Borrower’s general
operating account with the Administrative Agent. If any Default or Unmatured Default has occurred
and is continuing, the Administrative Agent may (and shall, at the direction of the Majority
Lenders), from time to time, apply the collected balances in said cash collateral account to the
payment of the Secured Obligations whether or not the Secured Obligations shall then be due.

7.4 Application of Proceeds. The proceeds of the Collateral shall be applied by the
Administrative Agent to payment of the Secured Obligations in the following order unless a court of
competent jurisdiction shall otherwise direct:

(a) FIRST, to payment of all costs and expenses of the Administrative Agent incurred in
connection with the collection and enforcement of the Secured Obligations or of the security
interest granted to the Administrative Agent pursuant to this Security Agreement;

(b) SECOND, to payment of that portion of the Secured Obligations constituting accrued and
unpaid interest and fees, pro rata among the Lenders and their Affiliates in accordance with the
amount of such accrued and unpaid interest and fees owing to each of them;

(c) THIRD, to payment of the principal of the Secured Obligations and the net early
termination payments and any other Rate Management Obligations then due and unpaid from the
Borrower to any of the Lenders or their Affiliates, pro rata among the Lenders and their Affiliates
in accordance with the amount of such principal and such net early termination payments and other
Rate Management Obligations then due and unpaid owing to each of them;

(d) FOURTH, to payment of any Secured Obligations (other than those listed above) pro rata
among those parties to whom such Secured Obligations are due in accordance with the amounts owing
to each of them; and

(e) FIFTH, the balance, if any, after all of the Secured Obligations have been satisfied,
shall be deposited by the Administrative Agent into the Borrower’s general operating account with
the Administrative Agent.

ARTICLE VIII

GENERAL PROVISIONS

8.1 Notice of Disposition of Collateral; Condition of Collateral. The Borrower hereby
waives notice of the time and place of any public sale or the time after which any private sale or
other disposition of all or any part of the Collateral may be made. To the extent such notice may
not be waived under applicable law, any notice made shall be deemed reasonable if sent to the
Borrower, addressed as set forth in Article IX, at least ten days prior to (a) the date of any such
public sale or (b) the time after which any such private sale or other disposition may be made.
Administrative Agent shall have no obligation to clean-up or otherwise prepare the Collateral for
sale.

8.2 Compromises and Collection of Collateral. The Borrower and the Administrative
Agent recognize that setoffs, counterclaims, defenses and other claims may be asserted by obligors
with respect to certain of the Receivables, that certain of the Receivables may be or become
uncollectible in whole or in part and that the expense and probability of success in litigating a
disputed Receivable may exceed the amount that reasonably may be expected to be recovered with
respect to a Receivable. In view of the foregoing, the Borrower agrees that the Administrative
Agent may at any time and from time to time, if a Default has occurred and is continuing,
compromise with the obligor on any Receivable, accept in full payment of any Receivable such amount
as the Administrative Agent in its sole discretion shall determine or abandon any Receivable, and
any such action by the Administrative Agent shall be commercially reasonable so long as the
Administrative Agent acts in good faith based on information known to it at the time it takes any
such action.

8.3 Secured Party Performance of Debtor Obligations. Without having any obligation to
do so, the Administrative Agent may perform or pay any obligation which the Borrower has agreed to
perform or pay in this Security Agreement and the Borrower shall reimburse the Administrative Agent
for any amounts paid by the Administrative Agent pursuant to this Section 8.3. The Borrower’s
obligation to reimburse the Administrative Agent pursuant to the preceding sentence shall be a
Secured Obligation payable on demand.

8.4 Authorization for Secured Party to Take Certain Action. The Borrower irrevocably
authorizes the Administrative Agent at any time and from time to time in the sole discretion of the
Administrative Agent and appoints the Administrative Agent as its attorney in fact (a) to execute
on behalf of the Borrower as debtor and to file financing statements necessary or desirable in the
Administrative Agent’s sole discretion to perfect and to maintain the perfection and priority of
the Administrative Agent’s security interest in the Collateral, (b) to indorse and collect any cash
proceeds of the Collateral, (c) to file a carbon, photographic or other reproduction of this
Security Agreement or any financing statement with respect to the Collateral as a financing
statement and to file any other financing statement or amendment of a financing statement (which
does not add new collateral or add a debtor) in such offices as the Administrative Agent in its
sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority
of the Administrative Agent’s security interest in the Collateral, (d) to contact and enter into
one or more agreements with the issuers of uncertificated securities which are Collateral and which
are Securities or with financial intermediaries holding other Investment Property as may be
necessary or advisable to give the Administrative Agent Control over such Securities or other
Investment Property, (e) subject to the terms of Section 4.1(e), to enforce payment of the
Receivables in the name of the Administrative Agent or the Borrower, (f) to apply the proceeds of
any Collateral received by the Administrative Agent to the Secured Obligations as provided in
Article VII and (g) to discharge past due taxes, assessments, charges, fees or Liens on the
Collateral (except for such Liens as are specifically permitted hereunder), and the Borrower agrees
to reimburse the Administrative Agent on demand for any payment made or any expense incurred by the
Administrative Agent in connection therewith, provided that this authorization shall not
relieve the Borrower of any of its obligations under this Security Agreement or under the Credit
Agreement.

8.5 Specific Performance of Certain Covenants. The Borrower acknowledges and agrees
that a breach of any of the covenants contained in Sections 4.1(e), Section 4.1(f), 4.4, 5.3, or
8.7 or in Article VII will cause irreparable injury to the Administrative Agent and the Lenders,
that the Administrative Agent and Lenders have no adequate remedy at law in respect of such
breaches and therefore agrees, without limiting the right of the Administrative Agent or the
Lenders to seek and obtain specific performance of other obligations of the Borrower contained in
this Security Agreement, that the covenants of the Borrower contained in the Sections referred to
in this Section 8.5 shall be specifically enforceable against the Borrower.

8.6 Use and Possession of Certain Premises. Upon the occurrence of a Default, the
Administrative Agent shall be entitled to occupy and use any premises owned or leased by the
Borrower where any of the Collateral or any records relating to the Collateral are located until
the Secured Obligations are paid or the Collateral is removed therefrom, whichever first occurs,
without any obligation to pay the Borrower for such use and occupancy.

8.7 Dispositions Not Authorized. The Borrower is not authorized to sell or otherwise
dispose of the Collateral except as set forth in Section 4.1(e) and notwithstanding any course of
dealing between the Borrower and the Administrative Agent or other conduct of the Administrative
Agent, no authorization to sell or otherwise dispose of the Collateral (except as set forth in
Section 4.1(e)) shall be binding upon the Administrative Agent or the Lenders unless such
authorization is in writing signed by the Administrative Agent with the consent or at the direction
of the Required Lenders.

8.8 Benefit of Agreement. The terms and provisions of this Security Agreement shall
be binding upon and inure to the benefit of the Borrower, the Administrative Agent and the Lenders
and their respective successors and assigns (including all persons who become bound as a debtor to
this Security Agreement), except that the Borrower shall not have the right to assign its rights or
delegate its obligations under this Security Agreement or any interest herein, without the prior
written consent of the Administrative Agent.

8.9 Survival of Representations. All representations and warranties of the Borrower
contained in this Security Agreement shall survive the execution and delivery of this Security
Agreement.

8.10 Taxes and Expenses. Any taxes (including income taxes) payable or ruled payable
by Federal or State authority in respect of this Security Agreement shall be paid by the Borrower,
together with interest and penalties, if any. The Borrower shall reimburse the Administrative
Agent for any and all out-of-pocket expenses and internal charges (including reasonable attorneys’,
auditors’ and accountants’ fees and reasonable time charges of attorneys, paralegals, auditors and
accountants who may be employees of the Administrative Agent) paid or incurred by the
Administrative Agent in connection with the preparation, execution, delivery, administration,
collection and enforcement of this Security Agreement and in the audit, analysis, administration,
collection, preservation or sale of the Collateral (including the expenses and charges associated
with any periodic or special audit of the Collateral). Any and all costs and expenses incurred by
the Borrower in the performance of actions required pursuant to the terms hereof shall be borne
solely by the Borrower.

8.11 Headings. The title of and section headings in this Security Agreement are for
convenience of reference only, and shall not govern the interpretation of any of the terms and
provisions of this Security Agreement.

8.12 Termination. This Security Agreement shall continue in effect (notwithstanding
the fact that from time to time there may be no Secured Obligations outstanding) until (a) the
Credit Agreement has terminated pursuant to its express terms and (b) all of the Secured
Obligations have been indefeasibly paid and performed in full and no commitments of the
Administrative Agent or the Lenders which would give rise to any Secured Obligations are
outstanding.

8.13 Entire Agreement. This Security Agreement embodies the entire agreement and
understanding between the Borrower and the Administrative Agent relating to the Collateral and
supersedes all prior agreements and understandings between the Borrower and the Administrative
Agent relating to the Collateral.

8.14 CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF TEXAS, BUT GIVING
EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

8.15 Indemnity. The Borrower hereby agrees to indemnify the Administrative Agent and
the Lenders, and their respective successors, assigns, agents and employees (“Indemnified
Parties”), from and against any and all liabilities, damages, penalties, suits, costs, and
expenses of any kind and nature (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Administrative Agent or any Lender is a party thereto)
imposed on, incurred by or asserted against any Indemnified Party, in any way relating to or
arising out of this Security Agreement, or the manufacture, purchase, acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return or other
disposition of any Collateral (including, without limitation, (a) ANY OF THE FOREGOING ARISING FROM
THE NEGLIGENCE OF AN INDEMNIFIED PARTY and (b) latent and other defects, whether or not
discoverable by the Administrative Agent or the Lenders or the Borrower, and any claim for patent,
trademark or copyright infringement).

8.16 Conflicts. In the event of any conflict between the provisions of this Security
Agreement and the provisions of the Credit Agreement, the provisions of the Credit Agreement shall
govern.

ARTICLE IX

NOTICES

9.1 Sending Notices. Any notice required or permitted to be given under this Security
Agreement shall be sent (and deemed received) in the manner and to the addresses set forth in
Article XII of the Credit Agreement.

9.2 Change in Address for Notices. Each of the Borrower, the Administrative Agent and
the Lenders may change the address for service of notice upon it by a notice in writing to the
other parties.

ARTICLE X

THE ADMINISTRATIVE AGENT

JPMorgan Chase Bank, N.A. has been appointed Administrative Agent for the Lenders hereunder
pursuant to Article XI of the Credit Agreement. It is expressly understood and agreed by the
parties to this Security Agreement that any authority conferred upon the Administrative Agent
hereunder is subject to the terms of the delegation of authority made by the Lenders to the
Administrative Agent pursuant to the Credit Agreement, and that the Administrative Agent has agreed
to act (and any successor Administrative Agent shall act) as such hereunder only on the express
conditions contained in such Article XI. Any successor Administrative Agent appointed pursuant to
Article XI of the Credit Agreement shall be entitled to all the rights, interests and benefits of
the Administrative Agent hereunder.

IN WITNESS WHEREOF, the Borrower and the Administrative Agent have executed this
Security Agreement as of the date first above written.

TETON ENERGY CORPORATION

By:

Name:

Title:

JPMORGAN CHASE BANK, N.A., as Administrative Agent

By:

Ryan Fuessel,

Senior Vice President

EXHIBIT A

(See Sections 3.3, 3.4, 3.5, 4.1(g) and 9.1 of Security Agreement)

Place of Business (if it has only one) or Chief Executive Office (if more than one place of
business) and Mailing Address:

Teton Energy Corporation

600 17th Street, Suite 1600 North

Denver, CO 80202

Attention: Lonnie R Brock

Locations of Inventory and Equipment and Fixtures:

	A.	 	Properties Owned by the Borrower:

Properties covered by and described by the Security Instruments and Reserve Report delivered
to the Administrative Agent in connection with the Credit Agreement

	B.	 	Properties Leased by the Borrower (Include Landlord’s Name):

Offices at location noted in address above.

Owner is CCP/MS SSIII Denver Dominion Plaza Property Owners LLC

The lease term is 69 months beginning in November 2008.

	C.	 	Public Warehouses or other Locations pursuant to Bailment or Consignment Arrangements
(include name of Warehouse Operator or other Bailee or Consignee):

None

EXHIBIT B

OFFICES IN WHICH FINANCING STATEMENTS HAVE BEEN FILED

(See Section 3.1 of Security Agreement)

Delaware Secretary of State

County Clerk

Garfield County, Colorado

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