Item 1.01 Entry into a Material Definitive Agreement.
Effective as of August 26, 2009 (the "Effective Date"), Teton Energy Corporation ("Teton" or the "Company") entered into a Third Amendment to the Second Amended and Restated Credit Agreement and Forbearance Agreement (the "Third Amendment") with JPMorgan Chase Bank, N.A. ("JPMorgan Chase"), as administrative agent, and each of the financial institutions identified in the Third Amendment (hereinafter collectively referred to as the "Lenders"). All capitalized terms not defined herein shall have the meaning set forth in the Third Amendment incorporated by reference therein.
Under the terms of the Third Amendment:
(a) The Company's pre-existing borrowing base capacity was decreased from $20,000,000 to $14,000,000 continuing until the next scheduled redetermination, interim redetermination or other redetermination of the borrowing base and the conforming borrowing base thereafter.
(b) The Company, the Administrative Agent, and each of the Lenders agreed to forbear from exercising their rights and remedies as a result of the Specified Default (the Company's failure to repay the Borrowing Base Deficiency of $8,484,296 on August 25, 2009) under the Loan Documents to (i) accelerate the outstanding principal balance of the Loans; and (ii) to commence foreclosure proceedings under the Security Instruments, during the period from the Effective Date until the earlier of (A) the occurrence of any Default or Event of Default other than the Specified Defaults, or (B) 5:00 p.m., September 15, 2009.
(c) The definition of interest payment date has been revised to mean, with respect to any ABR Loan, the last day of each month and with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest period that occurs at intervals of one month's duration after the first day of such Interest Period.
(d) From and after August 25, 2009, any payments due under the Loan Documents are subject to a Post Default Interest Rate calculated at a rate per annum equal to two percent (2%) plus the rate applicable to ABR Loans or Eurodollar Loans.
(e) The Company agreed to obtain fully executed account control agreements in a form and substance satisfactory to the Administrative Agent and the Majority Lenders covering all of the Company's and its subsidiaries' deposit accounts including without limitation accounts held at Wells Fargo Bank, N.A.
(f) the definition of loan documents ("Loan Documents") has been revised to mean the Third Amendment, the First Amendment, the Second Amendment, the Notes, the Letter of Credit Agreements, the Letters of Credit, the Intercreditor Agreement and the Security Instruments.
(g) The Company, consistent with its fiduciary obligations, shall continue to pursue diligently various strategic alternatives such as raising additional capital, merger reorganization, restructuring, or sale of all or substantially all of the assets of the Company and its subsidiaries. There are no other material relationships between the Company or its affiliates and JPMorgan Chaser or the Lenders, other than in respect to the Third Amendment. The foregoing summary of the Third Amendment is qualified in its entirety by reference to the definitive transaction documents, a copy of which is attached as Exhibit 10.1 to this Current Report.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off Balance Sheet Arrangement of a Registrant The information included in Item 1.01 of this Current Report is hereby incorporated by reference into this Item 2.03. Item 9.01 Financial Statements and Exhibits
(a) Financial statements of businesses acquired N/A

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(b) Pro forma financial information N/A
(c) Shell company transactions N/A

(d) Exhibits Exhibit No. Description 10.1 Form of Third Amendment to Second Amended and Restated Credit Agreement and Forbearance Agreement.

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