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      DEBTOR
IN POSSESSION FINANCING AMENDMENT AND FOURTH AMENDMENT TO SECOND

      AMENDED
AND RESTATED CREDIT AGREEMENT

       

      THIS
DEBTOR IN POSSESSION FINANCING AMENDMENT AND FOURTH AMENDMENT TO SECOND AMENDED
AND RESTATED CREDIT AGREEMENT (this “Fourth
Amendment”) is dated as of December 14, 2009, and entered into among
Teton Energy Corporation, a Delaware corporation (the “Borrower”),  the
financial institutions listed on the signature pages hereof each of whom are
Lenders under and as defined in the hereinafter described Credit Agreement (the
“Lenders”),
and JPMorgan Chase Bank, N.A., a national banking association, as administrative
agent (in such capacity, the “Administrative
Agent”) for the Lenders.

       

      WITNESSETH:

       

      WHEREAS,
the Borrower, the Lenders and the Administrative Agent are parties to that
certain Second Amended and Restated Credit Agreement dated as of April 2,
2008 (as modified to date, the “Credit
Agreement”);

       

      WHEREAS,
pursuant to the terms of the Credit Agreement, the Lenders made loans to the
Borrower, which loans are secured by a lien upon substantially all of the
personal and real property of the Borrower and its Subsidiaries;

       

      WHEREAS,
the Borrower and each of its Subsidiaries filed a voluntary petition for relief
under Chapter 11, Title 11, United States Code, on November 8, 2009, in the
United States Bankruptcy Court for the District of Delaware (the “Case”);

       

      WHEREAS,
the Borrower and its Subsidiaries have insufficient unencumbered cash or liquid
assets with which to operate their business;

       

      WHEREAS,
the Borrower is unable to obtain credit on an unsecured basis or as an
administrative expense pursuant to 11 U.S.C §§ 364(a) and (b), and
503(b)(1);

       

      WHEREAS,
an immediate need exists for the Borrower to obtain funds to continue operation
of its business;

       

      WHEREAS,
the Lenders have agreed to extend additional credit to the Borrower up to an
amount not to exceed $750,000 (the “DIP
Facility”) for Budgeted Expenses (as defined below) from the Fourth
Amendment Effective Date (as defined below) until the earlier of (a) the
occurrence of a Postpetition Default (as defined below) or (b) January 31,
2010;

       

      WHEREAS,
the Lenders have agreed to grant the request of the Borrower to extend such
additional credit, but only upon the terms and conditions set forth in this
Fourth Amendment and the Financing Order (as defined below); and

       

      WHEREAS,
the Borrower has agreed to secure its obligations to the Administrative Agent
and the Lenders in connection with such additional credit with, among other
things, a first priority perfected security interest in all of its and its
Subsidiaries’ existing and future personal and real property, as set forth in
the Financing Order.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

       

      NOW,
THEREFORE, for valuable consideration hereby acknowledged, the parties hereto
agree as follows:

       

      Section 1Definitions.  Unless
specifically defined or redefined below, capitalized terms used herein shall
have the meanings ascribed thereto in the Credit Agreement.

       

      Section 2Amendments
to Credit Agreement.  Subject to the terms and conditions
hereof, the provisions of the Credit Agreement enumerated below are amended as
follows:

       

      (a)           Effective
as of the date hereof, the following definitions set forth in Section 1.02 of
the Credit Agreement are hereby amended to read in full as follows:

       

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

       

      “Material
Adverse Effect” means any event, development or circumstance arising
after the date hereof that has had or could reasonably be expected to have a
material adverse effect on (a) the business, operations, Property, prospects or
condition (financial or otherwise) of the Borrower or any of its Subsidiaries,
(b) the ability of the Borrower, any Subsidiary or any Guarantor to perform any
of its obligations under any Loan Document, (c) the validity or enforceability
of any Loan Document, (d) the DIP Collateral, or the Administrative Agent’s
liens (on behalf of itself and the Lenders) on the DIP Collateral or the
priority of such liens, or (e) the rights and remedies of or benefits available
to the Administrative Agent, the Issuing Bank or any Lender under any Loan
Document

       

      (b)           Effective
as of the date hereof, the following definitions are hereby added to Section
1.02 of the Credit Agreement:

       

      “Bankruptcy
Code” means 11 U.S.C. § 101 et seq.

       

      “Bankruptcy
Court” means the United States Bankruptcy Court for the District of
Delaware or any other court with competent jurisdiction over the
Case.

       

      “Budget”
means the 13-week cash budget detailing the Borrower’s anticipated cash receipts
and expenditures from the week ending November 6, 2009, until
January 29, 2010, as amended or supplemented from time to time, which
budget (and any amendments thereto) shall be in form and substance acceptable to
the Lenders and shall be incorporated into the Financing Order and attached
hereto as Exhibit
D.  Changes to the Budget are subject to the prior written
approval of the Administrative Agent in its sole and absolute
discretion.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

       

      “Budgeted
Expenses” means expenses permitted to be paid by the Debtors for the
purposes set forth in the Budget.

       

      “Case”
means the Chapter 11 bankruptcy case of the Debtors pending before the
Bankruptcy Court entitled “In re Teton Energy
Corporation”, Case No. 09-13946, including adversary proceedings or other
ancillary proceedings.

       

      “Cash
Collateral” means cash collateral, as such term is defined in Section
363(a) of the Bankruptcy Code and as defined in the Financing Order, arising
from or relating to Collateral granted to the Administrative Agent for the
benefit of the Lenders.

       

      “Cash
Collateral Order” has the meaning specified in Section 3(i) of the Fourth
Amendment.

       

      “Debtors”
means the Borrower and each of its Subsidiaries.

       

      “DIP
Collateral”
means any and all of the properties and assets of the Debtors and the
Debtors’ bankruptcy estate, both
real and personal, including, without limitation, all cash, accounts, inventory,
equipment, general intangibles, intellectual property of all kinds including
patents, trademarks, trade names, service marks and copyrights, securities,
instruments, investment property, deposit accounts, chattel paper, warehouse
receipts, bills of lading, tax refunds of any nature, insurance proceeds,
insurance premium refunds, deposits of any kind, security deposits, utility
deposits, bonds and proceeds of same, causes of action (whether by contract or
tort, common law or statutory, equitable or otherwise), oil and gas interests,
leasehold interests in real estate or personal property and customer lists,
whether acquired before or after the Petition Date, whether now owned and
existing or hereafter acquired, created, or arising, and all products, proceeds,
rents, revenues, and profits thereof (including, without limitation, claims of
the Debtors against third parties for loss or damage to such property), and all
accessions thereto, substitutions and replacements therefor, and wherever
located, in which the Administrative Agent, for the benefit of the Lenders, is
granted a first priority lien or security interest to secure the Postpetition
Obligations as set forth in the Financing Order.

       

      “Final
Order” has the meaning specified in Section 3(h) of the Fourth
Amendment.

       

      “Financing
Order” means the one or more orders of the Bankruptcy Court authorizing
and approving, on either an interim or final basis, the financing contemplated
by the Fourth Amendment and use of Cash Collateral, each in form and substance
satisfactory to the Lenders.

       

      “Fourth
Amendment” means that Fourth Amendment to Second Amended and Restated
Credit Agreement dated as of December 14, 2009 among the Borrower, the
Administrative Agent and the Lenders.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

       

      “Fourth
Amendment Effective Date” means December 14, 2009.

       

      “Lender
Plan Support Agreement” means the Plan Support Agreement in form and
substance satisfactory to the Administrative Agent and the Lenders pursuant to
which the Lenders agree to support the Plan of Reorganization.

       

      “Petition
Date” means November 8, 2009.

       

      “Plan of
Reorganization” means the Plan of Reorganization in form and substance
satisfactory to the Administrative Agent and the Lenders pursuant to which the
Debtors shall emerge from bankruptcy and shall sell substantially all of their
assets to Reorganized Teton as defined therein.

       

      “Plan
Sponsorship Agreement”
means the Plan Sponsorship Agreement in form and substance satisfactory
to the Administrative Agent and the Lenders pursuant to which Rise Energy
Partners II, LLC sponsors the Plan of Reorganization.

       

      “Plan
Support Agreement”
means the Plan Support Agreement in form and substance satisfactory to
the Administrative Agent and the Lenders pursuant to which the holders of the
Permitted Debt agree to support the Plan of Reorganization.

       

      “Postpetition
Aggregate Commitments” means $750,000, being the aggregate amount of the
Postpetition Commitments of all Lenders, as the same may be reduced from time to
time.

       

      “Postpetition
Commitment”
means the commitment of any Lender to make Postpetition Loans as set
forth in Section 2.09(a) hereof up to the amount for such Lender set forth on
Exhibit B to
the Fourth Amendment.

       

      “Postpetition
Default” means the occurrence and continuance of any of the following
events:

       

      
        	
                 
      

              	
                (a)

              	
                The
      Borrower shall fail to pay any principal of the Postpetition Loans when
      the same becomes due and payable;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                The
      Borrower shall fail to pay any interest on the Postpetition Loans or any
      fee or other amount due with respect to the Postpetition Obligations after
      such interest, fee, or other amount becomes due and
    payable;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Any
      representation or warranty made by the Borrower in the Fourth Amendment or
      in any statement or certificate given after the Fourth Amendment Effective
      Date by the Borrower in writing pursuant to any Loan Document or in
      connection with any Loan Document shall be false in any material respect
      on the date as of which made;

              

      

       

      
        
          
          

        

        
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                (d)

              	
                The
      Borrower shall breach or violate any term, covenant or agreement contained
      in the Fourth Amendment, Articles 7, 8, or 9 of this Agreement (other than
      as set forth on Exhibit C
      attached hereto), or any of the other Loan
  Documents;

              

      

       

      
        	
                 
      

              	
                (e)

              	
                An
      Event of Default shall occur under and as defined in the Financing
      Order;

              

      

       

      
        	
                 
      

              	
                (f)

              	
                The
      Case shall be dismissed or converted to a case under Chapter 7 of the
      Bankruptcy Code; or a Chapter 11 trustee or an examiner with expanded
      power shall be appointed in the Case without the express written consent
      of the Administrative Agent;

              

      

       

      
        	
                 
      

              	
                (g)

              	
                Any
      security interest, lien, claim or encumbrance, excluding the Liens
      permitted pursuant to Section 9.03 hereof, shall be granted in any of the
      DIP Collateral which is pari passu with or senior to the claims of the
      Lenders therein, including any surcharge of the DIP Collateral pursuant to
      Bankruptcy Code § 506(c) or otherwise without the express written consent
      of the Administrative Agent;

              

      

       

      
        	
                 
      

              	
                (h)

              	
                Any
      Debtor shall make any payment (whether by way of adequate protection or
      otherwise) of principal or interest or otherwise on account of any
      prepetition Indebtedness, except to the Lenders, unless approved by the
      Administrative Agent in writing or as authorized by the Bankruptcy Court
      after notice and hearing;

              

      

       

      
        	
                 
      

              	
                (i)

              	
                The
      Bankruptcy Court shall enter an order granting relief from the automatic
      stay to the holder or holders of any other security interest or lien
      (other than the Lenders) in any DIP Collateral to permit the pursuit of
      any judicial or non-judicial transfer or other remedy against any assets
      of the Borrower without the express written consent of the Administrative
      Agent;

              

      

       

      
        	
                 
      

              	
                (j)

              	
                Any
      provision of the documents relating to the Postpetition Loans shall cease
      to be valid and binding on the Debtors, or the Debtors shall so assert in
      any pleading filed in any court;

              

      

       

      
        	
                 
      

              	
                (k)

              	
                The
      Debtors shall for any reason fail to remit to the Administrative Agent all
      net proceeds from the sale, disposition, collection, or other realization
      upon the Collateral or the DIP Collateral for application in accordance
      with Section 2.09(h);

              

      

       

      
        	
                 
      

              	
                (l)

              	
                The
      Debtors shall attempt to vacate or modify either the Financing Order or
      the Cash Collateral Order over the objection of the Administrative
      Agent;

              

      

       

      
        
          
          

        

        
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                (m)

              	
                The
      entry of an order pursuant to Bankruptcy Code § 363 approving the sale of
      a material portion of the Debtors’ assets without the prior written
      consent of the Administrative Agent and the Lenders to such
      sale;

              

      

       

      
        	
                 
      

              	
                (n)

              	
                Actual
      performance shall at any time adversely deviate from the Budget by 15% or
      more calculated on a line item by line item basis and measured weekly on a
      rolling 4 week basis from the Petition Date; provided that a weekly
      variance which does not exceed $25,000 in the aggregate shall not create a
      Forbearance Default as long as the variance for any 4 consecutive weeks
      does not exceed $100,000 in the
aggregate;

              

      

       

      
        	
                 
      

              	
                (o)

              	
                The
      failure to confirm a Plan of Reorganization in the Case acceptable to the
      Administrative Agent on or prior to January 31,
  2010;

              

      

       

      
        	
                 
      

              	
                (p)

              	
                The
      Plan of Reorganization shall be amended or modified without the prior
      written consent of the Administrative Agent;
or

              

      

       

      
        	
                 
      

              	
                (q)

              	
                A
      breach of the Plan Sponsorship Agreement or the Plan Support Agreement
      shall occur, or either such agreement shall terminate, or any party
      thereto shall assert that it is no longer subject to and bound by the
      terms thereof, or the consummation of the transactions contemplated by the
      Plan Sponsorship Agreement shall be rendered impracticable to occur
      timely, or the transactions contemplated thereby shall fail to close and
      fund on or prior to January 31,
2010.

              

      

       

      “Postpetition
Loans” means advances by the Lenders to the Borrower pursuant to the
Postpetition Commitments in an aggregate amount not to exceed at any time the
Postpetition Aggregate Commitments then in effect.

       

      “Postpetition
Obligations” means all present and future obligations, indebtedness and
other liabilities of the Debtors or any of them arising with respect to the
Financing Order or the Postpetition Loans, including without limitation the
principal amount thereof, and any interest, fees, and charges related thereto or
in connection therewith, and any and all renewals, extensions, rearrangements,
and refundings of the foregoing.

       

      “Postpetition
Termination Date” means the earliest of (a) January 31, 2010 at 5:00
p.m. Central Time, (b) the date the Borrower terminates the commitment of the
Lenders to make the Postpetition Loans, (c) the date the Administrative Agent
terminates the commitment of the Lenders to make the Postpetition Loans upon the
occurrence of a Postpetition Default, (d) the effective date of a confirmed plan
of reorganization for the Debtors, (e) the date on which any agreement for the
sale of substantially all of the Debtors’ assets closes, or (f) the date on
which the Bankruptcy Court approves the extension of any other credit facilities
to the Debtors.

       

      
        
          
          

        

        
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      “Prepetition
Obligations” means all Indebtedness other than the Postpetition
Obligations.

       

      “Rise
Transaction” has the meaning specified in Section 3(j) of the Fourth
Amendment.

       

      “Superpriority
Claim” means a claim against the Debtors in the Case which is an
administrative expense claim having priority over any and all administrative
expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy
Code.

       

      “Third
Amendment” means that certain Third Amendment to Second Amended and
Restated Credit Agreement and Forbearance Agreement dated as of August 26, 2009,
among the Borrower, the Lenders, and the Administrative Agent, as
amended.

       

      (c)           Effective
as of the date hereof, Article 2 of the Credit Agreement is amended to add
thereto the following Section 2.09:

       

      SECTION
2.09.                                           Postpetition
Loans.

       

      
        	
                 
      

              	
                (a)

              	
                Commitment for
      Postpetition Loans.  From and after the Petition Date,
      the Lenders shall have no obligation to make any new Loans or issue any
      Letters of Credit to the Borrower.  Notwithstanding the
      foregoing, subject to the terms and conditions contained in this Section
      2.09, the Lenders agree to make Postpetition Loans to the Borrower from
      time to time, but not more frequently than once per day, from the Fourth
      Amendment Effective Date until the Postpetition Termination Date, in
      accordance with their Postpetition Commitments and in an aggregate amount
      not to exceed at any time outstanding the Postpetition Aggregate
      Commitments. Each Postpetition Loan may be prepaid at any time without
      premium or penalty and may be borrowed, repaid, and reborrowed subject to
      the terms and conditions of this
Agreement.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Borrowing
      Mechanics.  Each Postpetition Loan shall be made on
      notice given by the Borrower to the Administrative Agent not later than
      11:00 a.m. Central Time on the Business Day prior to the date of the
      proposed Postpetition Loan.  Each such notice (a “Postpetition
      Notice of Borrowing”) shall be in substantially the form of Exhibit A to
      the Fourth Amendment specifying therein (i) the proposed funding date,
      (ii) the aggregate amount of such proposed Postpetition Loan, and (iii)
      that the proposed use of the proceeds thereof is for Budgeted Expenses in
      compliance with the Budget and no other cash is available to the Borrower
      to pay such Budgeted Expenses.  Administrative Agent may
      condition the disbursement of Postpetition Loans on receipt of such
      documentation as it shall require to evidence that the proceeds of such
      Postpetition Loans shall be used in accordance with the Budget both as to
      amount of such Postpetition Loans and as to the timing of such
      Postpetition Loans.

              

      

       

       

      
        
          
          

        

        
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                (c)

              	
                Conditions Precedent
      to Each Postpetition Loan.  The obligation of the Lenders
      to make any Postpetition Loan (including the initial Postpetition Loan)
      shall be subject to the following conditions precedent: (i) the Borrower
      shall deliver to the Administrative Agent an executed Postpetition Notice
      of Borrowing pursuant to Section 2.09(b) hereto, (ii) no event has
      occurred and is continuing which constitutes a Postpetition Default or
      which would constitute a Postpetition Default but for the requirement that
      notice be given or time elapsed or both; (iii) the Borrower shall deliver
      to the Administrative Agent a certificate of the chief financial officer
      of the Borrower certifying that (A) all representations and warranties
      made by the Borrower in the Fourth Amendment or in any statement or
      certificate after the Fourth Amendment Effective Date by the Borrower in
      writing pursuant to any Loan Document or in connection with any Loan
      Document shall be true and correct (including, without limitation, the
      representations and warranties made in Sections 7.04 and 7.05) and (B) the
      Borrower shall apply the proceeds of the Postpetition Loan only to
      Budgeted Expenses; (iv) with respect to the initial Postpetition Loan, the
      Administrative Agent shall have received such other approvals or documents
      as the Lenders may reasonably request; (v) no Bankruptcy Court order has
      been entered authorizing the Debtors to obtain financing or credit
      pursuant to Section 364 of the Bankruptcy Code from any Person other than
      the Lenders secured by a security interest or having the priority of an
      administrative claim unless otherwise consented to by the Administrative
      Agent in writing; (vi) the Financing Order shall not have been vacated,
      reversed, modified, or amended and, in the event that such order is the
      subject of any pending appeal, no performance of any obligation of any
      party hereto shall have been stayed pending appeal; (vii) the
      Administrative Agent shall have received payment for all reasonable
      professional fees incurred by the Administrative Agent and the Lenders
      with respect to the Postpetition Loans; and (viii) after giving effect to
      the Postpetition Loan requested, the total Postpetition Loans shall not
      exceed the Postpetition Aggregate Commitment.  In no event shall
      the Lenders be requested to advance any funds or extend any credit other
      than for Budgeted Expenses actually incurred and payable either at the
      time of such advance or within one week
  thereafter.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Repayment.  The
      Borrower shall repay the entire unpaid principal amount of the
      Postpetition Loans, together with all accrued and unpaid interest thereon,
      on the earlier of the Postpetition Termination Date or the date on which
      the Bankruptcy Court approves the extension of any other credit facilities
      to the Debtors.

              

      

       

       

      
        
          
          

        

        
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                (e)

              	
                Interest.  The
      Borrower shall pay interest on the unpaid principal amount of each
      Postpetition Loan from the date made until the principal amount thereof
      shall have been paid in full at a rate per annum equal at all times to the
      Alternate Base Rate in effect from time to time plus 5.25%, payable,
      monthly in arrears on the first Business Day of each month, and on the
      Postpetition Termination Date; provided however that all principal
      outstanding after the occurrence of a Postpetition Default shall bear
      interest, from the date of such Postpetition Default until the date on
      which such amount is due until such amount is paid in full or such
      Postpetition Default is waived or cured, payable on demand, at the
      Alternate Base Rate in effect from time to time plus 7.25% per
      annum.

              

      

       

      
        	
                 
      

              	
                (f)

              	
                Fees.  The
      Borrower agrees to pay to the Administrative Agent for the account of each
      Lender a commitment fee of 1.00% on the average daily amount of the unused
      amount of the Postpetition Commitment of such Lender during the period
      from and including the date of the Petition Date to but excluding the
      Postpetition Termination Date.  Accrued commitment fees shall be
      payable in arrears on the last day of each month and on the Postpetition
      Termination Date, commencing on the first such date to occur after the
      Petition Date.  All commitment fees shall be computed on the
      basis of a year of 360 days, unless such computation would exceed the
      Highest Lawful Rate, in which case interest shall be computed on the basis
      of a year of 365 days (or 366 days in a leap year), and shall be payable
      for the actual number of days elapsed (including the first day but
      excluding the last day).

              

      

       

      
        	
                 
      

              	
                (g)

              	
                Grant of Security
      Interest.  As security for the prompt payment and
      performance when due (whether at stated maturity, by acceleration or
      otherwise) of all the Postpetition Obligations and to induce the Lenders
      to make the Postpetition Loans in accordance with the terms hereof, each
      Debtor shall, pursuant to the Financing Order, and does hereby, assign,
      convey, mortgage, pledge, hypothecate and grant to the Administrative
      Agent, for the benefit of the Lenders, a first priority perfected security
      interest in the DIP Collateral, in each case subject to Prior Liens (as
      defined in the Financing Order) and to agreed upon carve-outs for the
      Debtors’ professionals and the creditor committee’s professionals and
      certain fees and expenses payable to the United States Trustee and the
      Clerk of the Bankruptcy Court as more fully set forth in the Financing
      Order.  Furthermore, in the event any unapplied remaining
      retainer funds paid to any of the Debtors’ Bankruptcy Court approved
      professionals are returned to the Borrower, such returned unapplied
      remaining retainer funds shall be considered Cash
      Collateral.  No cost or surcharge shall be imposed against the
      DIP Collateral or the Collateral under Section 506(c) of the
      Code.

              

      

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

       

      
        	
                 
      

              	
                (h)

              	
                Application of Sale
      Proceeds and Collections.  Notwithstanding anything to
      the contrary contained in this Agreement, from and after the Fourth
      Amendment Effective Date and so long as no Postpetition Default has
      occurred and is continuing, all net proceeds received from the sale,
      disposition, collection or other realization upon the Collateral or the
      DIP Collateral shall be applied (a) first, to payment of all fees,
      including attorneys fees, and expenses incurred by the Administrative
      Agent and the Lenders under the Credit Agreement or the Fourth Amendment,
      (b) second, to payment of the Postpetition Obligations plus any fees and
      accrued interest thereon, and (c) third, to payment of the Prepetition
      Obligations plus any accrued interest thereon, each as determined by the
      Administrative Agent in its sole and absolute discretion, until such time
      as all Indebtedness of the Borrower to the Administrative Agent and the
      Lenders is satisfied in full, and then to the
      Borrower.  Notwithstanding the foregoing, the Administrative
      Agent and the Lenders agree that, so long as the Lender Plan Support
      Agreement remains effective and has not been terminated, proceeds from the
      sale of the Collateral to Rise Energy Partners II, LP shall be applied as
      set forth in the Plan Sponsorship
Agreement.

              

      

       

      
        	
                 
      

              	
                (i)

              	
                Postpetition
      Default.  Upon the occurrence and during the continuance
      of any Postpetition Default, the Administrative Agent (at the request of
      the Lenders) may, by written notice to the Borrower, declare all or any
      portion of the Postpetition Obligations to be, and the same shall
      forthwith become, due and payable, together with accrued interest thereon,
      and the obligation of the Lenders to make any further Postpetition Loans
      shall thereupon terminate.  After the occurrence and during the
      continuance of any Postpetition Default, all net proceeds received from
      the sale, disposition, collection or other realization upon the Collateral
      or the DIP Collateral shall be applied to such Prepetition Obligations and
      Postpetition Obligations as may be determined by the Administrative Agent
      in its sole and absolute
discretion.

              

      

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

       

      (d)           Effective
as of the date hereof, clause (d) of Section 3.02 is hereby amended to read in
full as follows:

       

      (d)           Interest Payment
Dates.  Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and on the Termination Date;
provided that (1) interest accrued pursuant to Section 3.02(c) shall be payable
on demand, (2) in the event of any repayment or prepayment of any Loan (other
than an optional prepayment of an ABR Loan prior to the Termination Date),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment, (3) in the event of any conversion of
any Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion, and (D) from and after the Petition Date, accrued interest on each
Loan (other than a Postpetition Loan) shall be payable on each Interest Payment
Date for such Loan commencing on the earliest of (1) a termination of the Rise
Transaction or the Plan Sponsorship Agreement, (2) the closing of the sale of
all or a material part of the assets of the Debtors, or (3) January 31,
2010.

       

      (e)           Effective
as of the date hereof, Article 8 of the Credit Agreement is hereby amended to
add thereto the following sections:

       

      SECTION
8.18.                                           Budget.  The
Debtors shall operate strictly in accordance with the Budget attached hereto as
Exhibit D,
shall have cash receipts equaling at least 85% of the cash receipts reflected on
the Budget from time to time as measured weekly on a rolling 4-week basis, and
shall pay only those actual, ordinary and necessary operating expenses of the
Debtors’ business in compliance with and not to exceed by more than 15% those
expenses on a line item basis listed on the Budget as measured weekly on a
rolling 4-week basis, as the Budget may be modified in writing with the prior
written consent of the Administrative Agent; provided that a weekly variance
which does not exceed $25,000 in the aggregate shall not constitute a breach of
this Section 8.18 as long as the variance for any 4 consecutive weeks does not
exceed $100,000 in the aggregate.

       

      SECTION
8.19.                                           Reports.  The
Borrower shall furnish the following:

       

      (a)           Not
later than the close of business on Wednesday of each week, the Borrower will
provide the Administrative Agent with a variance report showing (A) actual
receipts and expenses for the preceding week as compared to those contemplated
by the Budget, and (B) aggregate actual receipts and expenses for period from
the Petition Date through the end of the preceding week as compared to the
Budget for the same period.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

       

      (b)           Such
other reports that the Administrative Agent or any Lender may request from time
to time.

       

      (c)           The
Borrower will provide or cause to be provided to the Administrative Agent and
the Lenders telephonic and/or written weekly reports by the Borrower as may be
requested by the Administrative Agent.

       

      (f)           Effective
as of the date hereof, Article 9 of the Credit Agreement is hereby amended to
add thereto the following section:

       

      SECTION
9.19.                                           Chapter 11
Claims.  The Debtors shall not incur, create, assume, suffer to
exist, or permit any claim in the Case (including without limitation any claim
under Section 506(c) of the Bankruptcy Code and any deficiency claim remaining
after the satisfaction of a Lien that secures a claim) to be on a parity with or
senior to the claims of the Administrative Agent for the benefit of the Lenders
against the Debtors hereunder, or apply to the Bankruptcy Court for authority to
do so.  The Debtors shall not pay fees and expenses to any Bankruptcy
Court-approved professional until such Bankruptcy Court-approved professional is
authorized to be paid pursuant to any fee procedure approved by the Bankruptcy
Court.

       

      Section 3Conditions
Precedent.  This Fourth Amendment shall not be effective until
all corporate actions of the Borrower taken in connection herewith and the
transactions contemplated hereby shall be satisfactory in form and substance to
Administrative Agent and the Lenders, and each of the following conditions
precedent shall have been satisfied:

       

      (a)           The
Administrative Agent and each Lender shall have received each of the following,
in form and substance satisfactory to the Administrative Agent, the Lenders and
the Administrative Agent’s counsel, in their sole and absolute
discretion:

       

      
        	
                 
      

              	
                (i)

              	
                a
      certificate of a chief executive officer of Borrower certifying that ii)
      all representations and warranties in this Fourth Amendment are true and
      correct in all material respects and iii) there exists no Postpetition
      Default after giving effect to this Fourth Amendment and the borrowings
      contemplated hereby; and

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                such
      other documents, instruments, and certificates as the Lenders shall deem
      necessary or appropriate in connection with this Fourth Amendment and the
      transactions contemplated hereby.

              

      

       

      (b)           The
Administrative Agent shall have received a counterpart of this Fourth Amendment
duly executed and delivered by a duly authorized officer of each Debtor and each
Lender.

       

      (c)           All
governmental and third party approvals necessary in connection with the
financing contemplated hereby and the continuing operations of the Borrower
(including shareholder approvals, if any) shall have been obtained on
satisfactory terms and shall be in full force and effect.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

       

      (d)           All
legal (including tax implications) and regulatory matters incident to the
transactions contemplated by this Fourth Amendment and the Rise Transaction
shall be satisfactory to the Administrative Agent and Lenders.

       

      (e)           The
Borrower and all of its Subsidiaries shall have filed the Case.

       

      (f)           The
Bankruptcy Court’s entry of an order approving the DIP Facility and other
arrangements described herein, in form and substance acceptable to the
Administrative Agent and the Lenders, which order shall approve the DIP Facility
on a final basis, in form and substance acceptable to the Administrative Agent
and the Lenders (such final order being referred to herein as the “Final
Order”).

       

      (g)           The
Bankruptcy Court’s entry of a cash collateral order (the “Cash
Collateral Order”) in form and substance satisfactory to the
Administrative Agent and the Lenders, which order may be included and part of
the Final Order.

       

      (h)           The
Lenders shall have received the Budget which shall be in a form and substance
acceptable to the Administrative Agent.

       

      (i)           The
Administrative Agent and the Lenders shall have been reimbursed for all
reasonable fees and expenses incurred by the Administrative Agent and the
Lenders, and each Lender shall have received an upfront fee of 2.00% of the
amount of its Postpetition Commitment.

       

      (j)           The
Plan of Reorganization shall be in form and substance satisfactory to the
Administrative Agent and the Lenders shall have been agreed to by the Debtors,
Rise Energy Partners II, LLC, and the holders of the Borrower’s Permitted Debt
providing for a sale of substantially all of the assets of Borrower and its
subsidiaries to Reorganized Teton (as defined in the Plan of Reorganization) and
funded by Rise Energy Partners II, LLC, any deposit required thereby shall have
been paid, and the Borrower shall have proposed and filed with the Bankruptcy
Court a sale and bidding procedure acceptable to the Administrative Agent and
the Lenders, the Plan of Reorganization, and as such other documents as may be
necessary to consummate the sale transaction with Rise Energy Partners II, LLC
(collectively, the “Rise
Transaction”), and the Plan Sponsorship Agreement and Plan Support
Agreement shall have been executed by the Borrower and its Subsidiaries, Rise
Energy Partners II, LLC, and the holders of the Borrower’s Permitted
Debt.

       

      Section 4Representations and
Warranties; Ratifications.  The Borrower represents and
warrants to the Administrative Agent and the Lenders that 2) this Fourth
Amendment constitutes its legal, valid, and binding obligations, enforceable in
accordance with the terms hereof (subject as to enforcement of remedies to any
applicable bankruptcy, reorganization, moratorium, or other laws or principles
of equity affecting the enforcement of creditors’ rights generally), 3) the
Credit Agreement, as amended hereby, and the other Loan Documents remain in full
force and effect, 4) other than as disclosed on Exhibit C, there
exists no Event of Default under the Credit Agreement after giving effect to
this Fourth Amendment, and (d) Teton ORRI LLC has immaterial assets, whose value
is in the aggregate less than $100,000.  Except as expressly modified
by this Fourth Amendment, the terms and provisions of the Credit Agreement and
the other Loan Documents are ratified and confirmed and shall continue in full
force and effect.  Except as provided herein, this Fourth Amendment
shall not constitute an amendment or waiver of any terms and provisions of the
Credit Agreement and other Loan Documents nor a waiver of the rights of the
Administrative Agent and the Lenders to insist upon compliance with each term,
covenant, condition, or provision of the Credit Agreement and other Loan
Documents.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

       

      Section 5Further
Assurances.  The Borrower and the Guarantors shall execute and
deliver such further agreements, documents, instruments, and certificates in
form and substance satisfactory to the Administrative Agent, as the
Administrative Agent or any Lender may deem necessary or appropriate in
connection with this Fourth Amendment.

       

      Section 6Counterparts.  This
Fourth Amendment and the other Loan Documents may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument; in making proof of any such agreement, it shall not be necessary to
produce or account for any counterpart other than one signed by the party
against which enforcement is sought.  Signatures delivered by fax and
pdf (email) shall be binding and effective as originals.

       

      Section 7Expenses.  The
Borrower agrees to pay all costs and expenses of the Administrative Agent
including, without limitation, those contemplated under Section 12.03 of the
Credit Agreement and any other Loan Document, and expressly including fees,
charges and expenses of Vinson & Elkins L.L.P. or any other consultant for
or advisor to the Administrative Agent in connection with the preparation,
negotiation, execution, delivery and administration of this Fourth Amendment and
all other instruments or documents provided for herein or delivered or to be
delivered hereunder or in connection herewith (all such costs and expenses, the
“Agent’s
Expenses”).  In addition, the Borrower agrees to save and hold
harmless the Administrative Agent and the Lenders from all liability for the
Agent’s Expenses.  All of the Agent’s Expenses constitute Postpetition
Obligations under the Loan Documents.  Borrower acknowledges that it
will receive a summary invoice reflecting only the total amount due and that
such summary invoice will not contain any narrative description of the services
provided by Vinson & Elkins L.L.P. or any other consultant or
advisor.  Borrower agrees that delivery of such summary invoices shall
not, in any way constitute a waiver of any right or privilege of the
Administrative Agent and Lenders associated with such invoices.  The
Administrative Agent is authorized by the Borrower to charge the Borrower's
deposit accounts with JPMorgan for any and all of the Agent’s Expenses from time
to time as determined by the Administrative Agent.  All obligations
provided in this shall survive any termination of this Fourth Amendment and the
other Loan Documents.  Borrower agrees and intends that each transfer
to or for the benefit of the Administrative Agent and the Lenders made or to be
made under this 5) are made according to ordinary business terms between
Borrower, the Administrative Agent and the Lenders taking into account the
Borrower’s business and financial affairs and 6) are intended by the
Borrower, the Administrative Agent and Lenders to be a contemporaneous exchange
for new value given to the Borrower by the Administrative Agent and the Lenders
as set forth herein.

       

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      Section 8Indemnification.  The
Borrower and each Subsidiary hereby agrees to indemnify the Administrative Agent
and the Lenders from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against the Administrative Agent or any Lender in any way relating to
or arising out of or any action taken or omitted by the Administrative Agent or
any Lender under this Fourth Amendment or in any way relating to the
Postpetition Loans; provided that neither the Borrower nor any Subsidiary shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from the Administrative Agent’s or any Lender’s gross negligence or
willful misconduct.

       

      Section 9WAIVER OF
JURY TRIAL.  TO THE MAXIMUM EXTENT
PERMITTED BY LAW, THE BORROWER AND EACH SUBSIDIARY HEREBY WAIVES ANY RIGHT THAT
IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN TORT,
CONTRACT, EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO THIS FOURTH
AMENDMENT, THE OTHER LOAN DOCUMENTS, OR ANY RELATED MATTERS, AND AGREES THAT ANY
SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A
JURY.

       

      Section 10GOVERNING
LAW.  THIS
FOURTH AMENDMENT AND ALL LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS MADE UNDER THE
LAWS OF THE STATE OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT (1)
FEDERAL LAWS GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION
OF ALL OR ANY PART OF THIS AGREEMENT AND ALL DOMESTIC LOAN DOCUMENTS OR (2)
STATE LAW GOVERNS UCC COLLATERAL INTERESTS FOR PROPERTIES OUTSIDE THE STATE OF
TEXAS.  WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE BORROWER AGREES
THAT BOTH THE BANKRUPTCY COURT AND THE COURTS OF TEXAS WILL HAVE JURISDICTION
OVER PROCEEDINGS IN CONNECTION HEREWITH.

       

      Section 11RATIFICATION.  THE BORROWER AND EACH
SUBSIDIARY HEREBY RATIFIES AND CONFIRMS EACH OF THE RELEASES AND COVENANTS NOT
TO SUE CONTAINED IN SECTION 6.6 AND SECTION 8.2 OF THE THIRD
AMENDMENT.

       

      Section 12ENTIRE
AGREEMENT.  THIS FOURTH AMENDMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.  THIS FOURTH AMENDMENT SHALL
CONSTITUTE A LOAN DOCUMENT.

       

      [Remainder
of page left intentionally blank.  Signature pages
follow.]

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

       

      
        	
                BORROWER:

              	
                TETON
      ENERGY CORPORATION

              
	 
      	 
      	
                    
      

                 

                 

              
	 
      	
                By:

              	
                /s/ Jonathan
      Bloomfield

              
	 
      	 
      	
                Name:
      Jonathan Bloomfield

              
	 
      	 
      	
                Title:
      Executive Vice President and Chief Financial
  Officer

              

      

      

       

      Each of
the undersigned (i) consent and agree to this Fourth Amendment and each of the
terms and provisions contained herein, and (ii) ratify and confirm the Guaranty
Agreement and 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.

       

      

      
        	
                SUBSIDIARIES/GUARANTORS:

              	
                
                  TETON
      NORTH AMERICA LLC

                

              
	 
      	 
      	
                    
      

                 

                 

              
	 
      	
                By:

              	
                /s/ Jonathan
      Bloomfield

              
	 
      	 
      	
                Name:
      Jonathan Bloomfield

              
	 
      	 
      	
                Title:
      Executive Vice President and Chief Financial Officer

              
	 
      	 
      	
                    
      

                 

                 

                 

              
	 
      	
                TETON
      PICEANCE LLC

              
	 
      	 
      	 
      
	 
      	 
      	
                    
      

                 

              
	 
      	
                By:

              	
                /s/ Jonathan
      Bloomfield

              
	 
      	 
      	
                Name:
      Jonathan Bloomfield

              
	 
      	 
      	
                Title:
      Executive Vice President and Chief Financial
  Officer

              

      

       

       

       

       

      
        Signature
Page

        Fourth
Amendment to Second Amended and Restated Credit Agreement

        Teton
Energy Corporation

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

      
        	 
      	 
      	 
      
	 
      	
                TETON
      DJ LLC

              
	 
      	 
      	
                    
      

                 

                 

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Jonathan
      Bloomfield

              
	 
      	 
      	
                Name:
      Jonathan Bloomfield

              
	 
      	 
      	
                Title:
      Executive Vice President and Chief Financial Officer

              
	 
      	 
      	
                    
      

                 

              
	 
      	
                TETON
      WILLISTON LLC

              
	 
      	 
      	 
      
	 
      	 
      	
                     
      

                 

                 

              
	 
      	
                By:

              	
                /s/ Jonathan
      Bloomfield

              
	 
      	 
      	
                Name:
      Jonathan Bloomfield

              
	 
      	 
      	
                Title:
      Executive Vice President and Chief Financial Officer

              
	 
      	 
      	
                    
      

                 

              
	 
      	
                TETON
      BIG HORN LLC

              
	 
      	 
      	 
      
	 
      	 
      	
                    
      

                 

                 

              
	 
      	
                By:

              	
                /s/ Jonathan
      Bloomfield

              
	 
      	 
      	
                Name:
      Jonathan Bloomfield

              
	 
      	 
      	
                Title:
      Executive Vice President and Chief Financial Officer

              
	 
      	 
      	
                    
      

                 

              
	 
      	
                TETON
      DJCO LLC

              
	 
      	 
      	
                    
      

                 

                 

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Jonathan
      Bloomfield

              
	 
      	 
      	
                Name:
      Jonathan Bloomfield

              
	 
      	 
      	
                Title:
      Executive Vice President and Chief Financial
  Officer

              

      

       

       

      
        Signature
Page

        Fourth
Amendment to Second Amended and Restated Credit Agreement

        Teton
Energy Corporation

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

      
        	 
      	
                TETON
      ORRI LLC

              
	 
      	 
      	 
      
	 
      	 
      	
                    
      

                 

              
	 
      	
                By:

              	
                /s/ Jonathan
      Bloomfield

              
	 
      	 
      	
                Name:
      Jonathan Bloomfield

              
	 
      	 
      	
                Title:
      Executive Vice President and Chief

                Financial
      Officer

              

      

       

      

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        Signature
Page

        Fourth
Amendment to Second Amended and Restated Credit Agreement

        Teton
Energy Corporation

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      

      
        	
                ADMINISTRATIVE
      AGENT/LENDER:

              	
                
                  JPMORGAN CHASE BANK,
      N.A.,

                

              
	 
      	
                as
      Administrative Agent and a Lender

              
	 
      	 
      	
                    
      

                 

                 

              
	 
      	
                By:

              	
                /s/ John
      Runger

              
	 
      	
                Name:

              	
                John
      Runger

              
	 
      	
                Title:

              	
                Managing
      Director

              
	 
      	 
      	 
      

      

       

       

       

       

       

       

       

      
        Signature
Page

        Fourth
Amendment to Second Amended and Restated Credit Agreement

        Teton
Energy Corporation

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 
      	 
      	 
      
	
                LENDER:

              	
                
                  ROYAL BANK OF
      CANADA,

                

              
	 
      	
                as
      a Lender

                 

                 

                 

              
	 
      	
                By:

              	
                /s/ Leslie P.
      Vowell

              
	 
      	
                Name:

              	
                Leslie
      P. Vowell

              
	 
      	
                Title:

              	
                Attorney
      in Fact

              

      

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        Signature
Page

        Fourth
Amendment to Second Amended and Restated Credit Agreement

        Teton
Energy Corporation

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 
      	 
      	 
      
	 
      	 
      	 
      
	
                LENDER:

              	
                
                  GUARANTY BANK AND TRUST
      COMPANY,

                

              
	 
      	
                as
      a Lender

                 

                 

                 

              
	 
      	
                By:

              	
                /s/ Gail J.
      Nofsinger

              
	 
      	
                Name:

              	
                Gail
      J. Nofsinger

              
	 
      	
                Title:

              	
                Senior
      Vice President

              

      

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        Signature
Page

        Fourth
Amendment to Second Amended and Restated Credit Agreement

        Teton
Energy Corporation

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 
      	 
      	 
      
	
                LENDER:

              	
                
                  U.S. BANK NATIONAL
      ASSOCIATION,

                

              
	 
      	
                as
      a Lender

                 

                 

              
	 
      	
                By:

              	
                /s/ William J.
      Umscheid

              
	 
      	
                Name:

              	
                William
      J. Umscheid

              
	 
      	
                Title:

              	
                Vice
      President

              

      

      

       

      

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        Signature
Page

        Fourth
Amendment to Second Amended and Restated Credit Agreement

        Teton
Energy CorporationUnassociated Document

     

    EXHIBIT
4.2

     

    
      DEFENSE
SOLUTIONS HOLDING, INC.

      

      WARRANT TO PURCHASE COMMON
STOCK

       

      VOID
AFTER 5:00 P.M., EASTERN TIME,

      ON THE
EXPIRATION DATE

      

      THIS
WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT
BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT
COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR WITHOUT DELIVERING AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

       

      FOR VALUE
RECEIVED, DEFENSE SOLUTIONS HOLDING, INC., a Nevada corporation (the “Company”),
hereby agrees to sell upon the terms and on the conditions hereinafter set
forth, at any time commencing on the date hereof but no later than 5:00 p.m.,
Eastern Time, on December 16, 2012 (the “Expiration Date”) to Carol Gray,
or registered assigns (the “Holder”), under the terms as hereinafter set forth,
ONE MILLION (1,000,000) fully paid and non-assessable shares of the Company’s
Common Stock (the “Warrant Stock”), at a purchase price per share of $0.05 (the
“Warrant Price”), pursuant to this warrant (this “Warrant”).  The
number of shares of Warrant Stock to be so issued and the Warrant Price are
subject to adjustment in certain events as hereinafter set forth.  The
term “Common Stock” shall mean, when used herein, unless the context otherwise
requires, the stock and other securities and property at the time receivable
upon the exercise of this Warrant.

       

      
        	
                1.  

              	
                Exercise of
      Warrant.

              

      

       

      
        	
                     
      (a)  

              	
                The
      Holder may exercise this Warrant according to its terms by surrendering to
      the Company at the address set forth in Section 9, this Warrant and the
      election to purchase form attached hereto having then been duly executed
      by the Holder, accompanied by cash, certified check or bank draft in
      payment of the purchase price, in lawful money of the United States of
      America, for the number of shares of the Warrant Stock specified in the
      subscription form, or as otherwise provided in this Warrant prior to 5:00
      p.m., Eastern Time, on the Expiration
Date.

              

      

       

      
        	
                     
      (b)  

              	
                This
      Warrant may be exercised in whole or in part so long as any exercise in
      part hereof would not involve the issuance of fractional shares of Warrant
      Stock.  If exercised in part, the Company shall deliver to the
      Holder a new Warrant, identical in form, in the name of the Holder,
      evidencing the right to purchase the number of shares of Warrant Stock as
      to which this Warrant has not been exercised, which new Warrant shall be
      signed by the Chairman, Chief Executive Officer or President of the
      Company.  The term Warrant as used herein shall include any
      subsequent Warrant issued as provided
herein.

              

      

       

      
        Confidential
and Proprietary

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                     
      (c)  

              	
                No
      fractional shares or scrip representing fractional shares shall be issued
      upon the exercise of this Warrant.  The Company shall pay cash
      in lieu of fractions with respect to the Warrants based upon the fair
      market value of such fractional shares of Common Stock (which shall be the
      closing price of such shares on the exchange or market on which the Common
      Stock is then traded) at the time of exercise of this
    Warrant.

              

      

       

      
        	
                     
      (d)  

              	
                In
      the event of any exercise of the rights represented by this Warrant, a
      certificate or certificates for the Warrant Stock so purchased, registered
      in the name of the Holder, shall be delivered to the Holder within a
      reasonable time after such rights shall have been so
      exercised.  The person or entity in whose name any certificate
      for the Warrant Stock is issued upon exercise of the rights represented by
      this Warrant shall for all purposes be deemed to have become the holder of
      record of such shares immediately prior to the close of business on the
      date on which the Warrant was surrendered and payment of the Warrant Price
      and any applicable taxes was made, irrespective of the date of delivery of
      such certificate, except that, if the date of such surrender and payment
      is a date when the stock transfer books of the Company are closed, such
      person shall be deemed to have become the holder of such shares at the
      opening of business on the next succeeding date on which the stock
      transfer books are open.  Except as provided in Section 4
      hereof, the Company shall pay any and all documentary stamp or similar
      issue or transfer taxes payable in respect of the issue or delivery of
      shares of Common Stock on exercise of this
  Warrant.

              

      

       

      
        	
                2.  

              	
                Disposition of Warrant
      Stock and Warrant.

              

      

       

      
        	
                     
      (a)  

              	
                The
      Holder hereby acknowledges that this Warrant and any Warrant Stock
      purchased pursuant hereto are not being registered (i) under the Act on
      the ground that the issuance of this Warrant is exempt from registration
      under Section 4(2) of the Act as not involving any public offering or (ii)
      under any applicable state securities law because the issuance of this
      Warrant does not involve any public offering; and that the Company’s
      reliance on the Section 4(2) exemption of the Act and under applicable
      state securities laws is predicated in part on the representations hereby
      made to the Company by the Holder that it is acquiring this Warrant and
      will acquire the Warrant Stock for investment for its own account, with no
      present intention of dividing its participation with others or reselling
      or otherwise distributing the same, subject, nevertheless, to any
      requirement of law that the disposition of its property shall at all times
      be within its control.

              

      

       

      The
Holder hereby agrees that it will not sell or transfer all or any part of this
Warrant and/or Warrant Stock unless and until it shall first have given notice
to the Company describing such sale or transfer and furnished to the Company
either (i) an opinion, reasonably satisfactory to counsel for the Company, of
counsel (skilled in securities matters, selected by the Holder and reasonably
satisfactory to the Company) to the effect that the proposed sale or transfer
may be made without registration under the Act and without registration or
qualification under any state law, or (ii) an interpretative letter from the
Securities and Exchange Commission to the effect that no enforcement action will
be recommended if the proposed sale or transfer is made without registration
under the Act.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                     
      (b)  

              	
                If,
      at the time of issuance of the shares issuable upon exercise of this
      Warrant, no registration statement is in effect with respect to such
      shares under applicable provisions of the Act, the Company may at its
      election require that the Holder provide the Company with written
      reconfirmation of the Holder’s investment intent and that any stock
      certificate delivered to the Holder of a surrendered Warrant shall bear
      legends reading substantially as
follows:

              

      

       

      “TRANSFER
OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS
SET FORTH IN THE WARRANT PURSUANT TO WHICH THESE SHARES WERE PURCHASED FROM THE
COMPANY.  COPIES OF THOSE RESTRICTIONS ARE ON FILE AT THE PRINCIPAL
OFFICES OF THE COMPANY, AND NO TRANSFER OF SUCH SHARES OR OF THIS CERTIFICATE,
OR OF ANY SHARES OR OTHER SECURITIES (OR CERTIFICATES THEREFOR) ISSUED IN
EXCHANGE FOR OR IN RESPECT OF SUCH SHARES, SHALL BE EFFECTIVE UNLESS AND UNTIL
THE TERMS AND CONDITIONS THEREIN SET FORTH SHALL HAVE BEEN COMPLIED
WITH.”

       

      “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF
THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

       

      In
addition, so long as the foregoing legend may remain on any stock certificate
delivered to the Holder, the Company may maintain appropriate “stop transfer”
orders with respect to such certificates and the shares represented thereby on
its books and records and with those to whom it may delegate registrar and
transfer functions.

       

      
        	
                3.  

              	
                Reservation
      of Shares.  The Company
      hereby agrees that at all times there shall be reserved for issuance upon
      the exercise of this Warrant such number of shares of its Common Stock as
      shall be required for issuance upon exercise of this
      Warrant.  The Company further agrees that all shares which may
      be issued upon the exercise of the rights represented by this Warrant will
      be duly authorized and will, upon issuance and against payment of the
      exercise price, be validly issued, fully paid and non-assessable, free
      from all taxes, liens, charges and preemptive rights with respect to the
      issuance thereof, other than taxes, if any, in respect of any transfer
      occurring contemporaneously with such issuance and other than transfer
      restrictions imposed by federal and state securities
  laws.

              

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	
                4.  

              	
                Exchange,
      Transfer or Assignment of Warrant.  This
      Warrant is exchangeable, without expense, at the option of the Holder,
      upon presentation and surrender hereof to the Company or at the office of
      its stock transfer agent, if any, for other Warrants of different
      denominations, entitling the Holder or Holders thereof to purchase in the
      aggregate the same number of shares of Common Stock purchasable
      hereunder.  Upon surrender of this Warrant to the Company or at
      the office of its stock transfer agent, if any, with the Assignment Form
      annexed hereto duly executed and funds sufficient to pay any transfer tax,
      the Company shall, without charge, execute and deliver a new Warrant in
      the name of the assignee named in such instrument of assignment and this
      Warrant shall promptly be canceled.  This Warrant may be divided
      or combined with other Warrants that carry the same rights upon
      presentation hereof at the office of the Company or at the office of its
      stock transfer agent, if any, together with a written notice specifying
      the names and denominations in which new Warrants are to be issued and
      signed by the Holder hereof.

              

      

       

      
        	
                5.  

              	
                Capital
      Adjustments.  This
      Warrant is subject to the following further
  provisions:

              

      

       

      
        	
                     
      (a)  

              	
                Recapitalization,
      Reclassification and Succession.  If any recapitalization
      of the Company or reclassification of its Common Stock or any merger or
      consolidation of the Company into or with a corporation or other business
      entity, or the sale or transfer of all or substantially all of the
      Company’s assets or of any successor corporation’s assets to any other
      corporation or business entity (any such corporation or other business
      entity being included within the meaning of the term “successor
      corporation”) shall be effected, at any time while this Warrant remains
      outstanding and unexpired, then, as a condition of such recapitalization,
      reclassification, merger, consolidation, sale or transfer, lawful and
      adequate provision shall be made whereby the Holder of this Warrant
      thereafter shall have the right to receive upon the exercise hereof as
      provided in Section 1 and in lieu of the shares of Common Stock
      immediately theretofore issuable upon the exercise of this Warrant, such
      shares of capital stock, securities or other property as may be issued or
      payable with respect to or in exchange for a number of outstanding shares
      of Common Stock equal to the number of shares of Common Stock immediately
      theretofore issuable upon the exercise of this Warrant had such
      recapitalization, reclassification, merger, consolidation, sale or
      transfer not taken place, and in each such case, the terms of this Warrant
      shall be applicable to the shares of stock or other securities or property
      receivable upon the exercise of this Warrant after such
      consummation.

              

      

       

      
        	
                     
      (b)  

              	
                Subdivision or
      Combination of Shares.  If the Company at any time while
      this Warrant remains outstanding and unexpired shall subdivide or combine
      its Common Stock, the number of shares of Warrant Stock purchasable upon
      exercise of this Warrant and the Warrant Price shall be proportionately
      adjusted.

              

      

       

      
        	
                     
      (c)  

              	
                Stock Dividends and
      Distributions.  If the Company at any time while this
      Warrant is outstanding and unexpired shall issue or pay the holders of its
      Common Stock, or take a record of the holders of its Common Stock for the
      purpose of entitling them to receive, a dividend payable in, or other
      distribution of, Common Stock, then the number of shares of Warrant Stock
      purchasable upon exercise of this Warrant shall be adjusted to the number
      of shares of Common Stock that Holder would have owned immediately
      following such action had this Warrant been exercised immediately prior
      thereto.

              

      

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
        	
                     
      (d)  

              	
                Warrant Price
      Adjustment.  Whenever the number of shares of Warrant
      Stock purchasable upon exercise of this Warrant is adjusted, as herein
      provided, the Warrant Price payable upon the exercise of this Warrant
      shall be adjusted to that price determined by multiplying the Warrant
      Price immediately prior to such adjustment by a fraction (i) the numerator
      of which shall be the number of shares of Warrant Stock purchasable upon
      exercise of this Warrant immediately prior to such adjustment, and (ii)
      the denominator of which shall be the number of shares of Warrant Stock
      purchasable upon exercise of this Warrant immediately
      thereafter.

              

      

       

      
        	
                     
      (e)  

              	
                Deferral and
      Cumulation of De Minimis Adjustments.  The Company shall
      not be required to make any adjustment pursuant to this Section 5 if the
      amount of such adjustment would be less than one percent (1%) of the
      Warrant Price in effect immediately before the event that would otherwise
      have given rise to such adjustment.  In such case, however, any
      adjustment that would otherwise have been required to be made shall be
      made at the time of and together with the next subsequent adjustment
      which, together with any adjustment or adjustments so carried forward,
      shall amount to not less than one percent (1%) of the Warrant Price in
      effect immediately before the event giving rise to such next subsequent
      adjustment.  All calculations under this Section 5 shall be made
      to the nearest cent or to the nearest one-hundredth of a share, as the
      case may be, but in no event shall the Company be obligated to issue
      fractional shares of Common Stock or fractional portions of any securities
      upon the exercise of the Warrants.

              

      

       

      
        	
                     
      (f)  

              	
                Duration of
      Adjustment.  Following each computation or readjustment
      as provided in this Section 5, the new adjusted Warrant Price and number
      of shares of Warrant Stock purchasable upon exercise of this Warrant shall
      remain in effect until a further computation or readjustment thereof is
      required.

              

      

       

      
        	
                6.  

              	
                Notice to
      Holders.

              

      

       

      
        	
                     
      (a)  

              	
                Notice of Record
      Date.  In case:

              

      

       

      
        	
                                 
         (i)  

              	
                the
      Company shall take a record of the holders of its Common Stock (or other
      stock or securities at the time receivable upon the exercise of this
      Warrant) for the purpose of entitling them to receive any dividend (other
      than a cash dividend payable out of earned surplus of the Company) or
      other distribution, or any right to subscribe for or purchase any shares
      of stock of any class or any other securities, or to receive any other
      right;

              

      

       

      
        	
                                    
      (ii)  

              	
                of
      any capital reorganization of the Company, any reclassification of the
      capital stock of the Company, any consolidation with or merger of the
      Company into another corporation, or any conveyance of all or
      substantially all of the assets of the Company to another corporation;
      or

              

      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                                    
      (iii)  

              	
                of
      any voluntary dissolution, liquidation or winding-up of the
      Company;

              

      

       

      then, and
in each such case, the Company will mail or cause to be mailed to the Holder
hereof at the time outstanding a notice specifying, as the case may be, (i) the
date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any, is to be fixed, as of which
the holders of record of Common Stock (or such stock or securities at the
time receivable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution or winding-up.  Such
notice shall be mailed at least twenty (20) calendar days prior to the record
date therein specified, or if no record date shall have been specified therein,
at least twenty (20) days prior to such specified date.

       

      
        	
                     
      (b)  

              	
                Certificate of
      Adjustment. Whenever any adjustment shall be made pursuant to
      Section 5 hereof, the Company shall promptly make available and have on
      file for inspection a certificate signed by its Chairman, Chief Executive
      Officer, President or Vice President, setting forth in reasonable detail
      the event requiring the adjustment, the amount of the adjustment, the
      method by which such adjustment was calculated and the Warrant Price and
      number of shares of Warrant Stock purchasable upon exercise of this
      Warrant after giving effect to such
adjustment.

              

      

       

      
        	
                7.  

              	
                Loss,
      Theft, Destruction or Mutilation.  Upon
      receipt by the Company of evidence satisfactory to it, in the exercise of
      its reasonable discretion, of the ownership and the loss, theft,
      destruction or mutilation of this Warrant and, in the case of loss, theft
      or destruction, of indemnity reasonably satisfactory to the Company and,
      in the case of mutilation, upon surrender and cancellation thereof, the
      Company will execute and deliver in lieu thereof, without expense to the
      Holder, a new Warrant of like tenor dated the date
  hereof.

              

      

       

      
        	
                8.  

              	
                Warrant
      Holder Not a Stockholder.  The Holder
      of this Warrant, as such, shall not be entitled by reason of this Warrant
      to any rights whatsoever as a stockholder of the Company, including but
      not limited to voting rights.

              

      

       

      
        	
                9.  

              	
                Notices.  Any notice
      required or contemplated by this Warrant shall be in writing and shall be
      deemed to have been duly given if delivered to the addressee in person,
      deposited with a reputable overnight courier or transmitted by registered
      or certified mail, return receipt requested, to the Company at 707
      Eagleview Boulevard, Suite 100, Exton, Pennsylvania 19341,
      Attention:  Chief Financial Officer, or to the Holder at the
      name and address set forth in the Warrant Register maintained by the
      Company, or to such other addresses as any of them, by notice to the
      others, may designate from time to
time.

              

      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	
                10.  

              	
                Choice
      of Law.  THIS
      WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND
      CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA, WITHOUT
      GIVING EFFECT TO ITS CONFLICTS OF LAW
RULES.

              

      

       

      IN
WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its
behalf, in its corporate name and by a duly authorized officer, as of this 16th
day of December 2009.

       

      
        
          	 	
                  DEFENSE SOLUTIONS
      HOLDING, INC.

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	  	 
	 	Name: 
      	
                	 
	 	Title:	
                	 
	 	 	 	 

        

      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      

      ELECTION
TO PURCHASE

      

      (To be
executed by the registered holder if such holder desires to exercise the within
Warrants)

      

      Defense
Solutions Holding, Inc.

      707
Eagleview Boulevard, Suite 100

      Exton,
Pennsylvania  19341

      Attention:  Chief
Financial Officer

      

      The
undersigned hereby (1) irrevocably elects to exercise his or its rights to
purchase ____________ shares of Common Stock covered by the within Warrants, (2)
makes payment in full of the Purchase Price by enclosure of cash, a certified
check or bank draft, (3) requests that certificates for such shares of Common
Stock be issued in the name of:

       

      

      Please
print name, address and Social Security or Tax Identification
Number:

       

      ________________________________________________

       

      ________________________________________________

       

      ________________________________________________

       

      ________________________________________________

      

      and (4)
if said number of shares of Common Stock shall not be all the shares evidenced
by the within Warrants, requests that a new warrant certificate for the balance
of the shares covered by the within Warrants be registered in the name of, and
delivered to:

      

      Please
print name and address:

      ________________________________________________

       

      ________________________________________________

       

      ________________________________________________

      

      In lieu
of receipt of a fractional share of Common Stock, the undersigned will receive a
check representing payment therefore.

      

      

      
        
          	Dated: 
      	  	 	
                	 
	 	 	
                	WARRANT
      HOLDER	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                	 	
                  By:
      

                	/s/ 	 
	 	 	 	 	Name 	 
	 	 	 	 	Title 	 

        

      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      ASSIGNMENT
FORM

       

      FOR VALUE
RECEIVED,__________________________________________________________________hereby
sells, assigns and transfers unto

       

      Name:_________________________________________________________________________________________________________________

      (Please
typewrite or print in block letters)

       

      Social
Security or Taxpayer Identification Number
:_______________________________________________________________________________

       

      the right
to purchase Common Stock of Defense Solutions Holding, Inc., a Nevada
corporation, represented by this Warrant to the extent of shares as to which
such right is exercisable and does hereby irrevocably constitute and appoint
____________________________, Attorney, to transfer the same on the books of the
Company with full power of substitution in the premises.

       

      DATED:
__________________

      

       

      
        
          	 	 	 	 
	
                   

                	
                   

                	 	 
	 	 	Signature	 
	 	 	
                   

                	 
	 	 	 	 
	 	 	 	 
	 	 	   
       	 
	 	 	Signature,
      if jointly held	 

        

         

         

        

      

      
        
          	Witness:	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	   	 	 	
                	 

        

        
           

           

        

        
          
            
            

          

          
            9

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