Exhibit 10.4


 


WAIVER
AND AMENDMENT NO. 3 TO CREDIT AGREEMENT


 


This WAIVER
AND AMENDMENT NO. 3 TO CREDIT AGREEMENT, dated as of October 23,
2007 (this “Amendment”), to that
certain Credit Agreement, dated as of December 20, 2006 (as amended,
restated, supplemented or otherwise modified from time to time prior to the
date hereof, the “Credit Agreement”), by and among BOWIE RESOURCES, LLC, a Delaware limited liability company
(the “Borrower”), COLORADO
HOLDING COMPANY, INC., a Delaware corporation (“CHC”),
BOWIE RESOURCES MANAGEMENT PARTNER, LLC,
a Nevada limited liability company (“BRMP” and
together with CHC sometimes collectively referred to as the “Guarantors”, and the Guarantors, together with the Borrower,
collectively, the “Member Parties”), and GENERAL ELECTRIC CAPITAL
CORPORATION, as agent for the lender (“Lender”)
party to the Credit Agreement (in such capacity, the “Agent”)
and as a Lender under the Credit Agreement. Capitalized terms used herein not otherwise defined herein or
otherwise amended hereby shall have the respective meanings ascribed thereto in
the Credit Agreement.


 


RECITALS:


 


WHEREAS,
Section 1.1(a)(ii) of the Credit Agreement requires that the Borrower
shall repay the aggregate Term Loan on the last day of each Fiscal Month
commencing July 31, 2007 in the following monthly installments: (i) from
July 31, 2007 through and including December 31, 2007, $2,000,000 and
(ii) from January 31, 2008 through and including the Commitment
Termination Date, $1,000,000;


 


WHEREAS, the
Borrower has failed to make the principal portion of the Term Loan installment
due July 31, 2007;


 


WHEREAS, the
Borrower has failed to make the principal portion of the Term Loan installment
due September 30, 2007;


 


WHEREAS, Section 6.10
of the Credit Agreement requires the Borrower to meet certain Financial
Covenants, as set forth in Annex E to the Credit Agreement;


 


WHEREAS, the
Borrower has breached Section 6.10 of the Credit Agreement, in respect of
the Minimum Fixed Charge Coverage Ratio set forth in Annex E to the Credit
Agreement, for the six month period ended June 30, 2007;


 


WHEREAS, the
Borrower has breached Section 6.10 of the Credit Agreement, in respect of
the Maximum Leverage Ratio set forth in Annex E to the Credit Agreement, for
the Fiscal Quarter ended June 30, 2007;


 


WHEREAS,
the Member Parties have requested that the Lender and Agent agree to waive the
Term Loan Defaults, the FCCR Default and the Leverage Ratio Default (each as defined
below) and agree to certain amendments to the Credit Agreement, as more particularly



 

















 


set forth herein; and


 


WHEREAS,
the Lender and the Agent are willing to waive the Term Loan Defaults, the FCCR
Default and the Leverage Ratio Default (each as defined below), and to agree to
certain amendments to the Credit Agreement, as more fully set forth
hereinafter;


 


NOW, THEREFORE,
in consideration of the premises and the agreements, provisions and covenants
herein contained, the parties hereto agree as follows:


 


SECTION I.                   AMENDMENTS AND WAIVERS


 


Subject to the terms and conditions set forth
herein, and in reliance on the representations and warranties of the Member
Parties set forth herein,


 


A.                                    Section 1.1(a)(ii) of the Credit Agreement
is hereby amended by deleting such section in its entirety and inserting the
following text in lieu thereof:


 


“(ii)                            Subject to Section 1.1(a)(iii) below, the
Borrower shall repay the aggregate Term Loan in monthly installments on the
last day of each Fiscal Month commencing August 31, 2007, as follows:


 


	
  Fiscal Month Ending:

  	
   

  	
  Installment Amounts:

  	
   

  
	
  August 31, 2007

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  
	
  October 31, 2007

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  
	
  November 30, 2007

  	
   

  	
  $

  	
  3,000,000.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  3,000,000.00

  	
   

  
	
  January 31, 2008

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  
	
  February 29, 2008, and each Fiscal
  Month ending thereafter through and including the Commitment Termination
  Date”

  	
   

  	
  $

  	
  1,000,000.00

  	
  ”

  



 


B.                                    Clause (b) of Annex E to the
Credit Agreement is hereby amended by deleting such clause in its entirety and
inserting the following in lieu thereof:


 


“Minimum Fixed Charge Coverage Ratio. Borrower and its Subsidiaries shall
have on a consolidated basis at the end of each Fiscal Quarter set forth below,
a Fixed Charge Coverage Ratio for the period ending on the last day of such
Fiscal Quarter of not less than the following:


 


	
  Period

  	
   

  	
  Ratio

  
	
  three-month
  period ending March 31, 2007

  	
   

  	
  1.2:1.0

  
	
  six-month
  period ending June 30, 2007

  	
   

  	
  1.2:1.0

  



 


2

















 


	
  nine-month
  period ending September 30, 2007

  	
   

  	
  1.2:1.0

  
	
  twelve-month
  period ending December 31, 2007

  	
   

  	
  1.0:1.0

  
	
  twelve-month
  period ending March 31, 2008

  	
   

  	
  1.0:1.0

  
	
  Each
  twelve-month period ending each Fiscal Quarter thereafter

  	
   

  	
   1.2:1.0”

  



 


C.                                    The
Agent and Lenders hereby waive the Events of Default described as follows
(collectively the “Waivers”):


 


1. The Event of Default occasioned by the
failure of the Borrower to make the required principal payment in respect of
the Term Loan on July 31, 2007 (the “July Term Loan
Default”);


 


2. The Event of Default occasioned by the
failure of the Borrower to make the required principal payment in respect of
the Term Loan on September 30, 2007 (the “September Term
Loan Default” and, together with the July Term Loan Default,
the “Term Loan Defaults”);


 


3. The Event of Default occasioned by the
Borrower and its Subsidiaries failing to have, as of June 30, 2007 for the
six-month period then ended, a Fixed Charge Coverage Ratio of not less than 1.2
to 1.0 (the “FCCR Default”); and


 


4. The Event of Default occasioned by the
Borrower and its Subsidiaries failing to have, as of June 30, 2007 for the
twelve month period then ended, a Maximum Leverage Ratio of not more than 10.0
to 1.0 (the “Leverage Ratio Default”).


 


SECTION II.               CONDITIONS PRECEDENT TO
EFFECTIVENESS OF AMENDMENT


 


The
effectiveness of the amendments and Waivers set forth in this Amendment is
subject to the condition that the Borrower, the other Member
Parties, the Lender and the Agent indicate their consent to such amendments and
Waivers by executing and delivering the signature pages hereof to the
Agent (the date on which the last of
such deliveries is made is referred to herein as the “Amendment Effective Date”).


 


SECTION III.           REPRESENTATIONS AND
WARRANTIES


 


A.                 Corporate Power and Authority. Each Member Party has
all requisite corporate power and authority to enter into this Amendment and to
carry out the transactions contemplated by, and perform its obligations under,
the Credit Agreement, as amended by this Amendment (the “Amended
Credit Agreement”).


 


B.                 Authorization of Amendments. The execution and
delivery of this Amendment have been duly authorized by all necessary
corporate, limited liability company or partnership (as applicable) action on
the part of each Member Party.


 


3

















 


C.                 No Conflict. The
execution and delivery by each Member Party of this Amendment and the
performance by each Member Party of the Amended Credit Agreement do not and
will not (i) violate any provision of any law or any governmental rule or
regulation applicable to any Member Party, the certificate or articles of
incorporation or bylaws (or other organizational documents) of any Member Party
or any order, judgment or decree of any court or other agency of government
binding on any Member Party; (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
material indenture, mortgage, deed to secure debt, deed of trust, lease,
agreement or other instrument to which any Member Party is a party or by which
any Member Party or any of its property is bound (any of the foregoing, a “Contractual Obligation”); (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of a Member Party other than those in
favor of the Agent, on behalf of itself and the Lender, pursuant to the Loan
Documents; or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of any Member Party
other than those that have been made or obtained.


 


D.                 Governmental Consents. No action, consent or approval of, registration or filing with or any
other action by any Governmental Authority is required in connection with the
execution and delivery by each Member Party of this Amendment or the
performance by the Member Parties of the Amended Credit Agreement.


 


E.                   Binding Obligation. This Amendment has been duly
executed and delivered by each Member Party and this Amendment and the Amended
Credit Agreement constitute the legal, valid and binding obligation of each
Member Party enforceable against each Member Party in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors’ rights
generally and except as enforceability may be limited by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).


 


F.                   Incorporation of Representations and Warranties
From Loan Documents. The representations and warranties contained in the Loan
Documents are and will be true, correct and complete in all respects on and as
of the Amendment Effective Date to the same extent as though made on and as of
that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all respects on and as of such earlier date.


 


G.                 Absence of Default. After
giving effect to the amendments and Waivers set forth in Section I
hereof, no event has occurred and is continuing or will result from the
consummation of the transactions contemplated by this Amendment that would
constitute an Event of Default or a Default, other than the Synfuel Default. “Synfuel Default” shall mean the Borrower’s breach of Section 6.23 of the Credit
Agreement resulting from the Borrower’s failure to obtain the express written
consent of the Agent prior to entering into certain contracts for the sale of
coal to Synfuels.


 


4

















 


SECTION IV.          ACKNOWLEDGEMENT AND CONSENT


 


Each Guarantor hereby consents to the terms
of this Amendment and further hereby confirms and agrees that, notwithstanding
the effectiveness of this Amendment, the obligations of such Guarantor under
each of the Loan Documents to which such Guarantor is a party shall not be
impaired and each of the Loan Documents to which such Guarantor is a party are,
and shall continue to be, in full force and effect and are hereby confirmed and
ratified in all respects.


 


Each Guarantor hereby acknowledges and agrees
that (i) notwithstanding the conditions to effectiveness set forth in this
Amendment, such Guarantor is not required by the terms of the Credit Agreement
or any other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (ii) nothing in the Credit
Agreement, this Amendment or any other Loan Document shall be deemed to require
the consent of such Guarantor to any future amendments to the Credit Agreement.


 


SECTION V.              MISCELLANEOUS


 


A.                 Binding
Effect. This Amendment shall be binding upon the parties hereto and
their respective successors and assigns and shall inure to the benefit of the
parties hereto and the successors and assigns of Lender.


 


B.                 Severability. In case any provision
in or obligation hereunder shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.


 


C.                 Effect
on Credit Agreement. Except as expressly set forth herein, the Lender and Agent agree to no
amendment and grant no waiver or consent with respect to the Credit Agreement
or any other Credit Document, and the Credit Agreement and the other Credit
Documents remain in full force and effect and are hereby ratified and confirmed.
Lender’s and Agent’s agreeing to the amendments and waivers contained herein do
not and shall not create (nor shall any Credit Party rely upon the existence of
or claim or assert that there exists) any obligation of Lender or Agent to
consider or to agree to any further amendments or waivers to any Credit
Document. In the event that Lender or Agent subsequently agree to consider any
further amendment or waiver to any Credit Document, neither the amendments and
waivers contained herein nor any other conduct of Lender or Agent shall be of
any force or effect on Lender’s or Agent’s consideration or decision with
respect to any such amendment or waiver, and Lender and Agent shall have no
further obligation whatsoever to consider or to agree to any such amendment or
waiver. Lender and Agent expressly reserve the right to require strict
compliance with the terms of the Credit Agreement and the other Credit
Documents in all respects. The amendments and waivers agreed to herein shall
not constitute a course of dealing at variance with the Credit Agreement so as
to require further notice by Lender or Agent to require strict compliance with
the terms of the Credit Agreement and the other Credit Documents in the future.
The parties hereto acknowledge and agree that this Amendment shall be deemed to
be a Credit Document. On and after the Amendment Effective Date, each reference
in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or
words of like import referring to the Credit Agreement, and each reference in
the other Credit Documents to the


 


5

















 


“Credit Agreement”, “thereunder”, “thereof”, “therein”
or words of like import referring to the Credit Agreement shall mean and be a
reference to the Amended Credit Agreement.


 


D.                 Limited Waivers. The Waivers set forth above are subject to the conditions and
limitations set forth herein and shall be applicable only for the purposes, and
the date or period, as applicable, set forth herein, and not for any other
purposes or with respect to any other date or period. The Waivers contained
herein shall not apply to any other Default or Event of Default, regardless of
whether such Default or Event of Default is prior or subsequent to any of the
Defaults or Events of Default that are the subject of the Waivers or is of the
same or a different type as any of the Defaults or Events of Default that are
the subject of the Waivers. With respect to any Default or Event of Default
(other than those that  are the subject
of the Waivers), the Agent and Lender retain and reserve all rights and
remedies of every and any kind to which either of such parties may be entitled
under the Credit Agreement, any other Loan Document or any document
contemplated by or delivered to the Agent or the Lender in connection with
the Credit Agreement, including the right to realize upon any and all
Collateral.


 


E.                   Fees and Expenses. The Member Parties acknowledge that all costs, fees and expenses as
described in Section 11.3 of the Credit Agreement incurred by the Lender
or the Agent or its counsel with respect to this Amendment and the documents
and transactions contemplated hereby shall be for the account of the Borrower.


 


F.                   Headings. Section headings
herein are included herein for convenience of reference only and shall not
constitute a part hereof for any other purpose or be given any substantive
effect.


 


G.                 APPLICABLE
LAW. THIS AMENDMENT
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401
AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).


 


H.                 Counterparts. This Amendment may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.


 


[The remainder of this page is intentionally left blank.]


 


6

















 


IN WITNESS WHEREOF,
the parties hereto have caused this Amendment to be duly executed and delivered
by their respective officers thereunto duly authorized as of the date first
written above.


 


	
  BORROWER:

  	
  BOWIE RESOURCES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott Dyer

  
	
   

  	
  Name:

  	
  Scott Dyer

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  GUARANTORS:

  	
  COLORADO HOLDING COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James J. Wolff

  
	
   

  	
  Name:

  	
  James J. Wolff

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BOWIE RESOURCES MANAGEMENT 

  PARTNER, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Keith H. Sieber

  
	
   

  	
  Name:

  	
  Keith H. Sieber

  
	
   

  	
  Title:

  	
  President

  



 


S-1

















 


	
  AGENT AND LENDER:



  	
  GENERAL ELECTRIC CAPITAL CORPORATION, 

  in its respective capacities as Agent and Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew A. Toth, III

  
	
   

  	
  Name:

  	
  Matthew A. Toth, III

  
	
   

  	
  Title:

  	
  Authorized Signatory

  



 


S-2