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Re:

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

 

Ladies and Gentlemen:

1.

Amendments.  In reliance on the representations, warranties, covenants and agreements contained in this letter agreement, and subject to the satisfaction of the conditions precedent set forth in Section 3 hereof, the Third Amendment is hereby amended effective as of the date hereof as follows:

2.

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

3.

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

4.

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