Exhibit 10.32

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT (this “Agreement”), dated as of March 20, 2009, among
the Grantors listed on the signature pages hereof and those additional entities
that hereafter become parties hereto by executing the form of Supplement
attached hereto as Annex 1 (collectively, jointly and severally, the “Grantors”
and each, individually, a “Grantor”), and CENTURION CREDIT FUNDING LLC (together
with its successors and assigns, the “Secured Party”).

 

W I T N E S S E T H:

 

WHEREAS, the Secured Party, Evergreen Energy Inc., Evergreen Operations, LLC,
and Buckeye Industrial Mining Co. (collectively, the “Companies” and each
individually referred to as a “Company”)  are parties to that certain Note
Purchase Agreement bearing even date herewith (as may be amended, restated,
supplemented, replaced or otherwise modified from time to time, the “Purchase
Agreement”), and

 

WHEREAS, pursuant to the terms and conditions of the Purchase Agreement, the
Secured Party has agreed to extend loans to the Companies, repayment of which is
evidenced by the Notes, and

 

WHEREAS, in order to induce Secured Party to enter into the Purchase Agreement
and the other Transaction Documents and to extend the loans pursuant to the
Purchase Agreement, the Grantors have agreed to execute and deliver to the
Secured Party this Agreement and other collateral documents and to grant the
Secured Party a continuing security interest in and to the Collateral in order
to secure the prompt and complete payment, observance and performance of, among
other things, the Secured Obligations, and

 

NOW, THEREFORE, for and in consideration of the recitals made above and other
good and valuable consideration, the receipt, sufficiency and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:

 

1.                                       Defined Terms. All capitalized terms
used herein (including in the preamble and recitals hereof) without definition
shall have the meanings ascribed thereto in the Notes, or if not expressly
defined in the Notes, then in the Purchase Agreement.  Any terms used in this
Agreement that are defined in the Code (whether or not capitalized) shall be
construed and defined as set forth in the Code unless otherwise defined herein
or in the Notes or the Purchase Agreement; provided, however, that if the Code
is used to define any term used herein and if such term is defined differently
in different Articles of the Code, the definition of such term contained in
Article 9 of the Code shall govern. In addition to those terms defined elsewhere
in this Agreement, as used in this Agreement, the following terms shall have the
following meanings:

 

(a)                                  “Account” means an account (as that term is
defined in the Code).

 

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(b)                                 “Account Debtor” means an account debtor (as
that term is defined in the Code).

 

(c)                                  “Bankruptcy Code” means Title 11 of the
United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any
successor statute.

 

(d)                                 “Books” means books and records (including
each Grantor’s Records indicating, summarizing, or evidencing such Grantor’s
assets (including the Collateral) or liabilities, each Grantor’s Records
relating to such Grantor’s business operations or financial condition, and each
Grantor’s goods or General Intangibles related to such information).

 

(e)                                  “Chattel Paper” means chattel paper (as
that term is defined in the Code) and includes tangible chattel paper and
electronic chattel paper.

 

(f)                                    “Closing Date” has the meaning specified
therefor in the Purchase Agreement.

 

(g)                                 “Code” means the New York Uniform Commercial
Code, as in effect from time to time; provided, however, that in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection, priority, or remedies with respect to Secured Party’s Liens on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of New York, the term “Code” shall mean
the Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority, or remedies.

 

(h)                                 “Collateral” has the meaning specified
therefor in Section 2; provided, however, that “Collateral” shall not include
any Excluded Property; and provided, further, that if and when any property
shall cease to be Excluded Property, such property shall be deemed at all times
from and after the date hereof to constitute Collateral.

 

(i)                                     “Commercial Tort Claims” means
commercial tort claims (as that term is defined in the Code), and includes those
commercial tort claims listed on Schedule 9 attached hereto.

 

(j)                                     “Company” and “Companies” have the
meaning specified therefor in the recitals to this Agreement.

 

(k)                                  “Controlled Foreign Corporation” shall mean
“controlled foreign corporation” as defined in the IRC.

 

(l)                                     “Copyrights” means copyrights and
copyright registrations, and also includes (i) the copyright registrations and
applications listed on Schedule 2 attached hereto and made a part hereof (as the
same may be amended or modified from time to time), (ii) all extensions or
renewals thereof, (iii) all income, royalties, damage awards and payments now
and hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past or future infringements

 

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thereof, (iv) the right to sue for past, present and future infringements
thereof, and (v) all of each Grantor’s rights corresponding thereto throughout
the world.

 

(m)                               “Copyright Security Agreement” means each
Copyright Security Agreement among Grantors, or any of them, and Secured Party
in substantially the form of Exhibit A attached hereto.

 

(n)                                 “Deposit Account” means a deposit account
(as that term is defined in the Code).

 

(o)                                 “Equipment” means equipment (as that term is
defined in the Code).

 

(p)                                 “Excluded Property” means, collectively,
(i) the voting Stock of any Controlled Foreign Corporation excluded from the
definition of Pledged Interests, (ii) any permit, lease, license, contract,
instrument or other agreement held by any Grantor that prohibits or requires the
consent of any Person other than the Companies or their respective Subsidiaries
which consent has not been obtained as a condition to the creation by such
Grantor of a Lien thereon, or any permit, lease, license, contract or other
agreement held by any Grantor to the extent that any applicable law, treaty,
rule, or regulation or any change in the interpretation or application thereof
by any Governmental Authority applicable thereto prohibits the creation of a
Lien thereon, but only, in each case, to the extent, and for so long as, such
prohibition is not terminated or rendered unenforceable or otherwise deemed
ineffective by the Code, (iii) any “intent to use” Trademark applications for
which a statement of use has not been filed (but only until such statement is
filed), and (iv) Equipment owned by any Grantor that is subject to a purchase
money Lien or capital lease (in each case, to the extent permitted under the
Purchase Agreement) if the contract or other agreement in which such Lien is
granted (or in the documentation providing for such capital lease) prohibits or
requires the consent of any Person which consent has not been obtained other
than the Companies or their respective Subsidiaries as a condition to the
creation of any other Lien on such Equipment; provided, however, Excluded
Property shall not include any Collateral described in subsection (ii) and
(iv) of this subsection (p) to the extent that any such consent or lapse, as
applicable, (x) has not been waived or (y) would be rendered ineffective
pursuant to Sections 9-406, 9-408, 9-409 of the Code or other applicable
provisions of the Code of any relevant jurisdiction or any other applicable law
(including the Bankruptcy Code, when applicable) or principles of equity;
provided, that immediately upon the ineffectiveness, lapse, termination or
waiver of any such provision, the Collateral shall include, and each such
Grantor shall be deemed to have granted a security interest in, all such right,
title and interest as if such provision had never been in effect.  “Excluded
Property” shall not include any Proceeds, substitutions or replacements of
Excluded Property (unless such Proceeds, substitutions or replacements would
constitute Excluded Property).

 

(q)                                 “Event of Default” has the meaning specified
therefor in the Notes.

 

(r)                                    “General Intangibles” means general
intangibles (as that term is defined in the Code), and, in any event, includes
payment intangibles, contract rights, rights to payment, rights arising under
common law, statutes, or regulations, choses or things in action, goodwill

 

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(including the goodwill associated with any Trademark), Patents, Trademarks,
Copyrights, URLs and domain names, industrial designs and other Intellectual
Property or rights therein or applications therefor, whether under license or
otherwise, programs, programming materials, blueprints, drawings, purchase
orders, customer lists, monies due or recoverable from pension funds, route
lists, rights to payment and other rights under any royalty or licensing
agreements, including Intellectual Property Licenses, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, pension plan refunds, pension plan refund claims,
insurance premium rebates, tax refunds, and tax refund claims, interests in a
partnership or limited liability company which do not constitute a security
under Article 8 of the Code, and any other personal property other than
Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts, goods,
Investment Related Property, Negotiable Collateral, and oil, gas, or other
minerals before extraction.

 

(s)                                  “Governmental Authority” means any federal,
state, local, or other governmental or administrative body, instrumentality,
board, department, or agency or any court, tribunal, administrative hearing
body, arbitration panel, commission, or other similar dispute-resolving panel or
body.

 

(t)                                    “Grantor” and “Grantors” have the
meanings specified therefor in the recitals to this Agreement.

 

(u)                                 “Insolvency Proceeding” means any proceeding
commenced by or against any Person under any provision of the Bankruptcy Code or
under any other state or federal bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, extensions
generally with creditors, or proceedings seeking reorganization, arrangement of
other similar relief.

 

(v)                                 “Intellectual Property” means Patents,
Copyrights, Trademarks, the goodwill associated with such Trademarks, trade
secrets and confidential and proprietary customer lists, and Intellectual
Property Licenses.

 

(w)                               “Intellectual Property Licenses” means rights
under or interests in any Patent, Trademark, Copyright or other Intellectual
Property, including software license agreements with any other party (other than
commercial off the shelf software), whether the applicable Grantor is a licensee
or licensor under any such license agreement, including the license agreements
listed on Schedule 3 attached hereto and made a part hereof.

 

(x)                                   “Inventory” means inventory (as that term
is defined in the Code).

 

(y)                                 “Investment Related Property” means
(i) investment property (as that term is defined in the Code), and (ii) all of
the following (regardless of whether classified as investment property under the
Code):  all Pledged Interests, Pledged Operating Agreements, and Pledged
Partnership Agreements.

 

(z)                                   “Mortgage” has the meaning specified
therefor in the Purchase Agreement.

 

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(aa)                            “Negotiable Collateral” means letters of credit,
letter-of-credit rights, instruments, promissory notes, drafts, and documents.

 

(bb)                          “Notes” has the meaning specified therefor in the
Purchase Agreement.

 

(cc)                            “Obligations” means all of the liabilities and
obligations (primary, secondary, direct, contingent, sole, joint or several) due
or to become due, or that are now or may be hereafter contracted or acquired, or
owing, of any Grantor to the Secured Party under this Agreement, the Notes, the
Purchase Agreement, the Mortgage, the Pledge Agreement, the other Transaction
Documents, and any other instruments, agreements or other documents executed
and/or delivered in connection herewith or therewith, in each case, whether now
or hereafter existing, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from the Secured Party as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.  Without
limiting the generality of the foregoing, the term “Obligations” shall include,
without limitation: (i) principal of, and interest on, the Notes and the loans
extended pursuant thereto (including any interest that accrues after the
commencement of an Insolvency Proceeding regardless of whether allowed or
allowable in whole or in part as a claim in such Insolvency Proceeding);
(ii) any and all other fees, legal fees and other expenses, indemnities, costs,
obligations and liabilities of the Grantors from time to time under or in
connection with this Agreement, the Notes, the Purchase Agreement, the Pledge
Agreement, the Mortgage, the other Transaction Documents, and any other
instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith; (iii) payment of the Major Transaction
Prepayment Price (as defined in the Notes), and (iv) all amounts in respect of
the foregoing that would be payable but for the fact that the obligations to pay
such amounts are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving any Grantor.  Any
reference in this Agreement or in the Transaction Documents to the Obligations
shall include all or any portion thereof and any extensions, modifications,
renewals or alterations thereof, both prior and subsequent to any Insolvency
Proceeding.

 

(dd)                          “Organizational Documents” means, with respect to
each Grantor, the documents by which such Grantor was organized (such as a
certificate of incorporation, certificate of limited partnership or articles of
organization, and including, without limitation, any certificates of designation
for preferred stock or other forms of preferred equity) and which relate to the
internal governance of such Grantor (such as bylaws, a partnership agreement or
an operating, limited liability or members agreement).

 

(ee)                            “Patents” means patents and patent applications,
and also includes (i) the patents and patent applications listed on Schedule 4
attached hereto and made a part hereof (as the same may be amended or modified
from time to time), (ii) all divisions, continuations, continuations-in-part,
reissues and extensions thereof, (iii) all income, royalties, damage awards and
payments now and hereafter due or payable under and with respect thereto,
including

 

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payments under all licenses entered into in connection therewith and damages and
payments for past or future infringements thereof, (iv) the right to sue for
past, present and future infringements thereof, and (v) all of each Grantor’s
rights corresponding thereto throughout the world.

 

(ff)                                “Patent Security Agreement” means each
Patent Security Agreement among Grantors, or any of them, and Secured Party in
substantially the form of Exhibit B attached hereto.

 

(gg)                          “Permitted Encumbrances” has the meaning specified
therefor in the Purchase Agreement.

 

(hh)                          “Person” has the meaning specified therefor in the
Purchase Agreement.

 

(ii)                                  “Pledged Companies” means, each Person
listed on Schedule 5 hereto as a “Pledged Company”, together with each other
Person, all or a portion of whose Stock, is acquired or otherwise owned by a
Grantor after the Closing Date.

 

(jj)                                  “Pledged Interests” means all of each
Grantor’s right, title and interest in and to all of the Stock now or hereafter
owned by such Grantor, regardless of class or designation, including all
substitutions therefor and replacements thereof, all proceeds thereof and all
rights relating thereto, also including any certificates representing the Stock,
the right to receive any certificates representing any of the Stock, all
warrants, options, share appreciation rights and other rights, contractual or
otherwise, in respect thereof, and the right to receive dividends, distributions
of income, profits, surplus, or other compensation by way of income or
liquidating distributions, in cash or in kind, and cash, instruments, and other
property from time to time received, receivable, or otherwise distributed in
respect of or in addition to, in substitution of, on account of, or in exchange
for any or all of the foregoing.  Notwithstanding anything to the contrary
contained herein, in no event shall the Pledged Interests include more than 65%
of the voting Stock of any Controlled Foreign Corporation if and only for so
long as a pledge of more than 65% of the voting Stock of such Controlled Foreign
Corporation would have adverse United States federal income tax consequences to
any Grantor.

 

(kk)                            “Pledged Interests Addendum” means a Pledged
Interests Addendum substantially in the form of Exhibit C to this Agreement.

 

(ll)                                  “Pledged Operating Agreements” means all
of each Grantor’s rights, powers, and remedies under the limited liability
company operating agreements of each of the Pledged Companies that are limited
liability companies.

 

(mm)                      “Pledged Partnership Agreements” means all of each
Grantor’s rights, powers, and remedies under the partnership agreements of each
of the Pledged Companies that are partnerships.

 

(nn)                          “Proceeds” has the meaning specified therefor in
Section 2.

 

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(oo)                          “Purchase Agreement” has the meaning specified
therefor in the recitals to this Agreement.

 

(pp)                          “Real Property” means any estates or interests in
real property now owned or hereafter acquired by any Grantor and the
improvements thereto.

 

(qq)                          “Records” means information that is inscribed on a
tangible medium or which is stored in an electronic or other medium and is
retrievable in perceivable form.

 

(rr)                                “Security Interest” has the meaning
specified therefor in Section 2.

 

(ss)                            “Secured Obligations” means each and all of the
following: (a) all of the present and future obligations of Grantors arising
from this Agreement, the Notes, the Purchase Agreement, or the other Transaction
Documents, and (b) all Obligations of the Company, including, in the case of
each of clauses (a) and (b), reasonable attorneys fees and expenses and any
interest, fees, or expenses that accrue after the filing of an Insolvency
Proceeding, regardless of whether allowed or allowable in whole or in part as a
claim in any Insolvency Proceeding in each case, subject to any applicable
limitations expressly provided in the Transaction Documents.

 

(tt)                                “Secured Party’s Liens” means the Liens
granted by the Grantors to Secured Party under the Transaction Documents.

 

(uu)                          “Securities Account” means a securities account
(as that term is defined in the Code).

 

(vv)                          “Stock” means all shares, options, warrants,
interests, participations, or other equivalents (regardless of how designated)
of or in a Person, whether voting or nonvoting, including common stock,
preferred stock, or any other “equity security” (as such term is defined in
Rule 3a11-1 of the General Rules and Regulations promulgated by the Commission
under the Exchange Act).

 

(ww)                      “Supporting Obligations” means supporting obligations
(as such term is defined in the Code).

 

(xx)                              “Trademarks” means trademarks, trade names,
trademark applications, service marks, service mark applications, and also
includes (i) the registered or applied for trade names, trademarks, trademark
applications, service marks, and service mark applications listed on Schedule 6
attached hereto and made a part hereof (as the same may be amended or modified
from time to time), and (ii) all renewals thereof, (iii) all income, royalties,
damage awards and payments now and hereafter due or payable under and with
respect thereto, including payments under all licenses entered into in
connection therewith and damages and payments for past or future
(A) infringements and dilutions thereof and (B) injury to the goodwill
associated therewith, (iv) the right to sue for past, present and future
(A) infringements and dilutions thereof and (B) injury to the goodwill
associated therewith, (v) the goodwill of each Grantor’s business

 

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symbolized by the foregoing or connected therewith, and (v) all of each
Grantor’s rights corresponding thereto throughout the world.

 

(yy)                          “Trademark Security Agreement” means each
Trademark Security Agreement among Grantors, or any of them, and Secured Party
in substantially the form of Exhibit D attached hereto.

 

(zz)                              “Transaction Documents” has the meaning
specified therefor in the Purchase Agreement.

 

(aaa)                      “URL” means “uniform resource locator,” an internet
web address.

 

2.                                       Grant of Security.  Each Grantor hereby
unconditionally grants, assigns, and pledges to Secured Party a continuing
security interest (herein referred to as the “Security Interest”) in all such
Grantor’s right, title and interest in and to its personal property, tangible or
intangible, of such Grantor whether now owned or hereafter acquired or arising
and wherever located, including such Grantor’s right, title, and interest in and
to the following, whether now owned or hereafter acquired or arising and
wherever located (the “Collateral”):

 

(a)                                  all of such Grantor’s Accounts;

 

(b)                                 all of such Grantor’s Books;

 

(c)                                  all of such Grantor’s Chattel Paper;

 

(d)                                 all of such Grantor’s Deposit Accounts;

 

(e)                                  all of such Grantor’s Equipment and
fixtures;

 

(f)                                    all of such Grantor’s General
Intangibles;

 

(g)                                 all of such Grantor’s Inventory;

 

(h)                                 all of such Grantor’s Investment Related
Property;

 

(i)                                     all of such Grantor’s Negotiable
Collateral;

 

(j)                                     all of such Grantor’s rights in respect
of Supporting Obligations;

 

(k)                                  all of such Grantor’s Commercial Tort
Claims;

 

(l)                                     all of such Grantor’s money, cash
equivalents, or other assets of each such Grantor that now or hereafter come
into the possession, custody, or control of Secured Party;

 

(m)                               all of the proceeds and products, whether
tangible or intangible, of any of the foregoing, including proceeds of insurance
or Commercial Tort Claims covering or relating to any or all of the foregoing,
and any and all Accounts, Books, Chattel Paper, Deposit Accounts,

 

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Equipment, General Intangibles, Inventory, Investment Related Property,
Negotiable Collateral, Supporting Obligations, money, or other tangible or
intangible property resulting from the sale, lease, license, exchange,
collection, or other disposition of any of the foregoing, the proceeds of any
award in condemnation with respect to any of the foregoing, any rebates or
refunds, whether for taxes or otherwise, and all proceeds of any such proceeds,
or any portion thereof or interest therein, and the proceeds thereof, and all
proceeds of any loss of, damage to, or destruction of the above, whether insured
or not insured, and, to the extent not otherwise included, any indemnity,
warranty, or guaranty payable by reason of loss or damage to, or otherwise with
respect to any of the foregoing (the “Proceeds”).  Without limiting the
generality of the foregoing, the term “Proceeds” includes whatever is receivable
or received when Investment Related Property or proceeds are sold, exchanged,
collected, or otherwise disposed of, whether such disposition is voluntary or
involuntary, and includes proceeds of any indemnity or guaranty payable to any
Grantor or Secured Party from time to time with respect to any of the Investment
Related Property.

 

3.                                       Security for Obligations.  This
Agreement and the Security Interest created hereby secures the payment and
performance of the Secured Obligations, whether now existing or arising
hereafter.  Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts which constitute part of the Secured
Obligations and would be owed by Grantors, or any of them, to Secured Party but
for the fact that they are unenforceable or not allowable due to the existence
of an Insolvency Proceeding involving any Grantor.

 

4.                                       Grantors Remain Liable.  Anything
herein to the contrary notwithstanding, (a) each of the Grantors shall remain
liable under the contracts and agreements included in the Collateral, including
any Pledged Operating Agreements and any Pledged Partnership Agreements, to
perform all of the duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Secured Party of any
of the rights hereunder shall not release any Grantor from any of its duties or
obligations under such contracts and agreements included in the Collateral, and
(c) Secured Party shall not have any obligation or liability under such
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall Secured Party be obligated to perform any of the obligations or duties
of any Grantors thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.  Until an Event of Default shall occur and be
continuing, except as otherwise provided in this Agreement, the Notes, the
Purchase Agreement, or other Transaction Documents, Grantors shall have the
right to possession and enjoyment of the Collateral for the purpose of
conducting the ordinary course of their respective businesses, subject to and
upon the terms hereof and of the Notes, the Purchase Agreement and the other
Transaction Documents.  Without limiting the generality of the foregoing, it is
the intention of the parties hereto that record and beneficial ownership of the
Pledged Interests, including all voting, consensual, and dividend rights, shall
remain in the applicable Grantor until the occurrence and continuance of an
Event of Default, and until Secured Party shall notify the applicable Grantor of
Secured Party’s exercise of its voting, consensual, or dividend rights with
respect to the Pledged Interests pursuant to Section 15 hereof.

 

5.                                       Representations and Warranties.  As of
each Closing, each Grantor hereby represents and warrants as follows:

 

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(a)                                  The exact legal name, jurisdiction of
incorporation, organization or formation, organizational identification number,
if any, and chief executive office of each of the Grantors is set forth on
Schedule 1  attached hereto.  No Grantor has trade names except as set forth on
Schedule 1 attached hereto.  No Grantor has used any name other than that as set
forth on Schedule 1 for the preceding five years.  No entity has merged into any
Grantor or been acquired by any Grantor within the past five years except as set
forth on Schedule 1.

 

(b)                                 Schedule 7 attached hereto sets forth all
Real Property owned or leased by Grantors as of the Closing Date.

 

(c)                                  As of the Closing Date, no Grantor has any
interest in, or title to, any  registered Copyrights, material Intellectual
Property Licenses, registered Patents or Trademarks except as set forth on
Schedules 2, 3, 4 and 6, respectively, attached hereto.  This Agreement is
effective to create a valid and continuing Lien on such Copyrights, Intellectual
Property Licenses, Patents and Trademarks and, upon filing of the Copyright
Security Agreement with the United States Copyright Office and filing of the
Patent Security Agreement and the Trademark Security Agreement with the United
States Patent and Trademark Office, and the filing of appropriate financing
statements in the jurisdictions listed on Schedule 8 hereto, all action
necessary or desirable to protect and perfect the Security Interest in the
United States in and to each Grantor’s Patents, Trademarks, Copyrights or
Intellectual Property Licenses constituting Collateral has been taken and such
perfected Security Interest is enforceable as such as against any and all
creditors of and purchasers from any Grantor, except as enforcement may be
limited by equitable principles or by bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or similar laws relating to or limiting
creditors’ rights generally.  No Grantor has any interest in any Copyright that
is necessary in connection with the operation of such Grantor’s business, except
for those Copyrights identified on Schedule 2 attached hereto which have been
registered with the United States Copyright Office.

 

(d)                                 Each Grantor has the requisite corporate,
partnership, limited liability company or other power and authority to enter
into this Agreement and the other Transaction Documents to which it is a party
and otherwise to carry out its obligations hereunder. The execution, delivery
and performance by each Grantor of this Agreement and the filings contemplated
herein and the other Transaction Documents to which it is a party have been duly
authorized by all necessary action on the part of such Grantor and no further
action is required by such Grantor.  This Agreement and the other Transaction
Documents to which it is a party has been duly executed by each Grantor.  This
Agreement and the other Transaction Documents to which it is a party constitutes
the legal, valid and binding obligation of each Grantor, enforceable against
such Grantor in accordance with its terms except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization and similar laws of
general application relating to or affecting the rights and remedies of
creditors and by general principles of equity.

 

(e)                                  No written claim has been received by any
Grantor that any Collateral or any Grantor’s use of any Collateral violates the
rights of any third party. There has been no adverse decision to any Grantor’s
claim of ownership rights in or exclusive rights to use the Collateral in any
jurisdiction or to such Grantor’s right to keep and maintain such Collateral in
full force and effect, and there is no proceeding involving said rights pending
or, to the best

 

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knowledge of such Grantor, threatened before any court, judicial body,
administrative or regulatory agency, arbitrator or other governmental authority.

 

(f)                                    Each Grantor shall at all times maintain
its books of account and records relating to the Collateral at its principal
place of business (except when temporarily kept at the offices of its attorneys
or accountants) or Evergreen Energy Inc.’s principal place of business and its
Collateral in the jurisdictions set forth on Schedule 7 attached hereto and may
not relocate such books of account and records or tangible Collateral unless it
delivers to Secured Party at least thirty (30) days prior to such relocation
(i) written notice of such relocation and the new location thereof (which must
be within the United States) and (ii) evidence that appropriate financing
statements under the Code and other necessary documents have been filed and
recorded and other steps have been taken to perfect the Security Interests to
create in favor of Secured Party, subject to Permitted Encumbrances, a valid,
perfected and continuing perfected first priority lien in the Collateral.

 

(g)                                 The execution, delivery and performance of
this Agreement and the other Transaction Documents to which it is a party by
each Grantor do not (i) violate any of the provisions of the Organizational
Documents of any Grantor or any judgment, decree, order or award of any court,
governmental body or arbitrator or any applicable law, rule or regulation
applicable to any Grantor or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing such Grantor’s debt or
otherwise) or other understanding to which any Grantor is a party or by which
any property or asset of any Grantor is bound or affected, except in all cases,
for such conflicts, defaults, terminations, amendments, acceleration,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect.  If any, all required consents (including,
without limitation, from stockholders or creditors of the Grantor) necessary for
the Grantor to enter into and perform its obligations hereunder have been
obtained.

 

(h)                                 This Agreement creates a valid security
interest in the Collateral of each of Grantors, to the extent a security
interest therein can be created under the Code, securing the payment of the
Secured Obligations.  Except to the extent a security interest in the Collateral
cannot be perfected by the filing of a financing statement under the Code,  all
filings and other actions necessary or desirable to perfect and protect such
security interest have been duly taken or will have been taken upon the filing
of financing statements listing each applicable Grantor, as a debtor, and
Secured Party, as secured party, in the jurisdictions listed next to such
Grantor’s name on Schedule 7 attached hereto.  Upon the making of such filings,
Secured Party shall have, subject to Permitted Encumbrances, a first priority
perfected security interest in the Collateral of each Grantor to the extent such
security interest can be perfected by the filing of a financing statement.  All
action by any Grantor necessary to protect and perfect such security interest on
each item of Collateral has been duly taken (to the extent such action is
required under this Agreement).

 

(i)                                     (i) Except for the Security Interest
created hereby, each Grantor is and will at all times be the sole holder of
record and the legal and beneficial owner, free and clear of all

 

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Liens other than Permitted Encumbrances, of the Pledged Interests indicated on
Schedule 5 as being owned by such Grantor and, when acquired by such Grantor,
any Pledged Interests acquired after the Closing Date; (ii) all of the Pledged
Interests are duly authorized, validly issued, fully paid and nonassessable and
the Pledged Interests constitute or will constitute the percentage of the issued
and outstanding Stock of the Pledged Companies of such Grantor identified on
Schedule 5 hereto as supplemented or modified by any Pledged Interests Addendum
or any Supplement to this Agreement; (iii) such Grantor has the right and
requisite authority to pledge the Investment Related Property pledged by such
Grantor to Secured Party as provided herein; (iv) all actions necessary or
desirable to perfect, establish, subject to Permitted Encumbrances, the first
priority of, or otherwise protect, Secured Party’s Liens in the Investment
Related Property, and the proceeds thereof, have been duly taken, (A) upon the
execution and delivery of this Agreement, (B) upon the taking of possession by
Secured Party or its representative of any certificates constituting the Pledged
Interests, to the extent such Pledged Interests are represented by certificates,
and constitute investment property, together with undated powers endorsed in
blank by the applicable Grantor; (C) upon the filing of financing statements in
the applicable jurisdiction set forth on Schedule 8 attached hereto for such
Grantor with respect to the Pledged Interests of such Grantor that are not
represented by certificates, and (D) with respect to any Securities Accounts or
Deposit Accounts, upon the delivery of Control Agreements with respect thereto
(to the extent such delivery is required by the Secured Party); and (v) each
Grantor has delivered to and deposited with Secured Party (or, with respect to
any Pledged Interests created or obtained after the Closing Date, will deliver
and deposit in accordance with Sections 6(a) and 8 hereof) all certificates
representing the Pledged Interests owned by such Grantor to the extent such
Pledged Interests are represented by certificates, and undated powers endorsed
in blank with respect to such certificates. None of the Pledged Interests owned
or held by such Grantor has been issued or transferred in violation of any
securities registration, securities disclosure, or similar laws of any
jurisdiction to which such issuance or transfer may be subject.

 

(j)                                     No consent, approval, authorization, or
other order or other action by, and no notice to or filing with, any
Governmental Authority or any other Person is required (i) for the grant of a
Security Interest by such Grantor in and to the Collateral pursuant to this
Agreement or for the execution, delivery, or performance of this Agreement and
the other Transaction Documents to which it is a party by such Grantor, except
those consents, approvals, authorizations or other actions, the failure of which
to obtain could not reasonably be expected to cause a Material Adverse Effect,
or (ii) for the exercise by Secured Party of the voting or other rights provided
for in this Agreement or any other Transaction Document with respect to the
Investment Related Property or the remedies in respect of the Collateral
pursuant to this Agreement or any other Transaction Document, except as may be
required in connection with such disposition of Investment Related Property by
laws affecting the offering and sale of securities generally.

 

(k)                                  Schedule 9 attached hereto sets forth all
motor vehicles owned by Grantors as of the Closing Date with an individual value
in excess of Forty Thousand Dollars ($40,000), by model, model year and vehicle
identification number (“VIN”).

 

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6.                                       Covenants.  Each Grantor, jointly and
severally, covenants and agrees with Secured Party that from and after the date
of this Agreement and until the date of termination of this Agreement in
accordance with Section 22 hereof:

 

(a)                                  Possession of Collateral.  In the event
that any Collateral, including Proceeds, is evidenced by or consists of
Negotiable Collateral, Investment Related Property, or Chattel Paper, with a
value, individually or in the aggregate, in excess of One Hundred Thousand
Dollars ($100,000), and if and to the extent that perfection or priority of
Secured Party’s Security Interest is dependent on or enhanced by possession, the
applicable Grantor, promptly (and in any event within one (1) Business Day) upon
the request of Secured Party, shall execute such other documents and instruments
as shall be reasonably requested by Secured Party or, if applicable, endorse and
deliver physical possession of such Collateral to Secured Party or its
representative, together with, if applicable, such undated powers endorsed in
blank as shall be reasonably requested by Secured Party;

 

(b)                                 Chattel Paper.

 

(i)                                     In the event that the Grantors acquire
electronic Chattel Paper with a value, individually or in the aggregate, in
excess of Twenty-Five Thousand Dollars ($25,000), the applicable Grantor shall
promptly (and in any event within two (2) Business Days) notify the Secured
Party thereof, and upon the request of the Secured Party, take all steps
reasonably necessary to grant Secured Party control of all such electronic
Chattel Paper in accordance with the Code and all “transferable records” as that
term is defined in Section 16 of the Uniform Electronic Transaction Act and
Section 201 of the federal Electronic Signatures in Global and National Commerce
Act as in effect in any relevant jurisdiction;

 

(ii)                                  If any Grantor retains possession of any
Chattel Paper or instruments (which retention of possession shall be subject to
the extent permitted hereby and by the Purchase Agreement), promptly upon the
request of Secured Party, such Chattel Paper and instruments shall be marked
with the following legend: “This writing and the obligations evidenced or
secured hereby are subject to the Security Interest of Centurion Credit Funding
LLC”;

 

(c)                                  Letter-of-Credit Rights.  Each Grantor that
is or becomes the beneficiary of a letter of credit with a face value in excess
of Twenty-Five Thousand Dollars ($25,000) shall promptly (and in any event
within two (2) Business Days after becoming a beneficiary), notify Secured Party
thereof and, thereafter, upon the request by Secured Party, except with respect
to documentary letters of credit received by a Grantor from customers in the
ordinary course of business if no Event of Default has occurred and is
continuing, take such actions the Agent may reasonably request to grant the
Agent control thereof, which may include entering into a tri-party agreement
with Secured Party and the issuer or confirmation bank with respect to
letter-of-credit rights assigning such letter-of-credit rights to Secured Party
and directing all payments thereunder to a deposit account designated by Secured
Party, all in form and substance reasonably satisfactory to Secured Party;

 

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(d)                                 Commercial Tort Claims.  Each Grantor shall
promptly (and in any event within two (2) Business Days of receipt thereof),
notify Secured Party in writing upon becoming a plaintiff in respect of, or
otherwise obtaining a Commercial Tort Claim after the date hereof and, upon
request of Secured Party, promptly amend Schedule 10 to this Agreement to
describe such after-acquired Commercial Tort Claim in a manner that reasonably
identifies such Commercial Tort Claim, and hereby authorizes the filing of
additional financing statements or amendments to existing financing statements
describing such Commercial Tort Claims, and agrees to do such other acts or
things deemed necessary or desirable by Secured Party to give Secured Party,
subject to Permitted Encumbrances, a first priority perfected security interest
in any such Commercial Tort Claim;

 

(e)                                  Government Contracts.  If any Account or
Chattel Paper, individually or in the aggregate with a value in excess of
Twenty-Five Thousand Dollars ($25,000), arises out of a contract or contracts
with the United States of America or any department, agency, or instrumentality
thereof, Grantors shall promptly (and in any event within two (2) Business Days
of the creation thereof) notify Secured Party thereof in writing and execute any
instruments or take any steps reasonably required by Secured Party, to the
extent permitted under, and in accordance with, applicable law, in order that
all moneys due or to become due under such contract or contracts shall be
assigned to Secured Party, and shall provide written notice thereof under the
Assignment of Claims Act or other applicable law;

 

(f)                                    Intellectual Property.

 

(i)                                     Upon request of Secured Party, in order
to facilitate filings with the United States Patent and Trademark Office and the
United States Copyright Office, each Grantor shall execute and deliver to
Secured Party one or more Copyright Security Agreements, Trademark Security
Agreements, or Patent Security Agreements to further evidence Secured Party’s
Liens on such Grantor’s Patents, Trademarks, or Copyrights, and the General
Intangibles of such Grantor relating thereto or represented thereby;

 

(ii)                                  Each Grantor shall have the duty, to the
extent necessary or economically desirable in the operation of its business,
(A) to promptly sue for infringement, misappropriation, or dilution and to
recover any and all awarded damages for such infringement, misappropriation, or
dilution, (B) to prosecute diligently any trademark application or service mark
application that is part of such Grantor’s Trademarks pending as of the date
hereof or hereafter until the termination of this Agreement, (C) to prosecute
diligently any patent application that is part of such Grantor’s Patents pending
as of the date hereof or hereafter until the termination of this Agreement, and
(D) to take all reasonable and necessary action to preserve and maintain all of
such Grantor’s Trademarks, Patents, Copyrights, Intellectual Property Licenses,
and its rights therein, including the filing of applications for renewal,
affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings.  Each Grantor shall promptly file an
application with the United States Copyright Office for any Copyright that has
not been registered with the United States Copyright Office if such Copyright is
necessary or economically desirable in the operation of such Grantor’s business.
Any expenses incurred in connection with the foregoing shall be borne by the
appropriate Grantor.  Each Grantor further agrees not to abandon any Trademark,
Patent,

 

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Copyright, or Intellectual Property License that is necessary or economically
desirable in the operation of such Grantor’s business;

 

(iii)                               Grantors acknowledge and agree that Secured
Party shall have no duties with respect to the Trademarks, Patents, Copyrights,
or Intellectual Property Licenses.  Without limiting the generality of this
Section 6(g), Grantors acknowledge and agree that Secured Party shall not be
under any obligation to take any steps necessary to preserve rights in the
Trademarks, Patents, Copyrights, or Intellectual Property Licenses against any
other Person, but Secured Party may do so at its option from and after the
occurrence and during the continuance of an Event of Default, and all expenses
incurred in connection therewith (including reasonable fees and expenses of
attorneys and other professionals) shall be for the sole account of the Company
and shall be chargeable to the Company;

 

(iv)                              In no event shall any Grantor, either itself
or through any agent, employee, licensee, or designee, file an application for
the registration of any Patent, Trademark, or Copyright with the United States
Patent and Trademark Office, the United States Copyright Office or any similar
office or agency without giving Secured Party prompt (and in any event within
ten (10) Business Days) written notice thereof.  Promptly upon any such filing,
each Grantor shall comply with Section 6(g)(i) hereof;

 

(g)                                 Investment Related Property.

 

(i)                                     If any Grantor shall receive or become
entitled to receive any Pledged Interests after the Closing Date, it shall
promptly (and in any event within five (5) Business Days of receipt thereof)
deliver to Secured Party a duly executed Pledged Interests Addendum identifying
such Pledged Interests;

 

(ii)                                  Upon the occurrence and during the
continuance of an Event of Default, all sums of money and property paid or
distributed in respect of the Investment Related Property which are received by
any Grantor shall be held by the Grantors in trust for the benefit of Secured
Party segregated from such Grantor’s other property, and such Grantor shall
deliver it forthwith to Secured Party in the exact form received;

 

(iii)                               Each Grantor shall promptly deliver to
Secured Party a copy of each notice or other communication received by it in
respect of any Pledged Interests;

 

(iv)                              No Grantor shall make or consent to any
amendment or other modification or waiver with respect to any Pledged Interests,
Pledged Operating Agreement, or Pledged Partnership Agreement, that could
reasonably be expected to result in a Material Adverse Effect or enter into any
agreement or permit to exist any restriction with respect to the pledge of any
Pledged Interests other than pursuant to the Transaction Documents;

 

(v)                                 Each Grantor agrees that it will cooperate
with Secured Party in obtaining all necessary approvals and making all necessary
filings under federal, state, local, or foreign law in connection with the
Security Interest on the Investment Related Property or any sale or transfer
thereof;

 

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(vi)                              As to all limited liability company or
partnership interests, issued under any Pledged Operating Agreement or Pledged
Partnership Agreement, each Grantor hereby represents, warrants and covenants
that the Pledged Interests issued pursuant to such agreement (A) are not and
shall not be dealt in or traded on securities exchanges or in securities
markets, (B) do not and will not constitute investment company securities, and
(C) are not and will not be held by such Grantor in a securities account.  In
addition, none of the Pledged Operating Agreements, the Pledged Partnership
Agreements, or any other agreements governing any of the Pledged Interests
issued under any Pledged Operating Agreement or Pledged Partnership Agreement,
provide or shall provide that such Pledged Interests are securities governed by
Article 8 of the Uniform Commercial Code as in effect in any relevant
jurisdiction;

 

(h)                                 Real Property; Fixtures.  Each Grantor
covenants and agrees that upon the acquisition of any fee interest in Real
Property it will promptly (and in any event within two (2) Business Days of
acquisition) notify Secured Party of the acquisition of such Real Property and
will grant to Secured Party a first priority Mortgage on each fee interest in
Real Property now or hereafter owned by such Grantor and shall deliver such
other documentation and opinions, in form and substance satisfactory to Secured
Party, in connection with the grant of such Mortgage as Secured Party shall
request in its reasonable credit judgment, including title insurance policies,
financing statements, fixture filings and environmental audits and such Grantor
shall pay all recording costs, intangible taxes and other fees and costs
(including reasonable attorneys’ fees and expenses) incurred in connection
therewith.  Each Grantor acknowledges and agrees that, to the extent permitted
by applicable law, all of the Collateral shall remain personal property
regardless of the manner of its attachment or affixation to real property.

 

(i)                                     Transfers and Other Liens.  Except as
otherwise expressly permitted hereby or by the Purchase Agreement, Grantors
shall not (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral, or
(ii) create or permit to exist any Lien upon or with respect to any of the
Collateral of any of Grantors, except for Permitted Encumbrances.  The inclusion
of Proceeds in the Collateral shall not be deemed to constitute Secured Party’s
consent to any sale or other disposition of any of the Collateral except as
expressly permitted in this Agreement, the Purchase Agreement or the other
Transaction Documents;

 

(j)                                     Motor Vehicles.  With respect to all
motor vehicles owned by any Grantor, upon request of Secured Party, Grantor
shall deliver to Secured Party, a certificate of title for all such motor
vehicles and shall cause those title certificates to be filed (with the Secured
Party’s Liens noted thereon) in the appropriate state motor vehicle filing
office; and

 

(k)                                  Insurance.  The Grantors shall maintain
with financially sound and reputable insurers, insurance with respect to the
Collateral, including Collateral hereafter acquired, against loss or damage of
the kinds and in the amounts customarily insured against by entities of
established reputation having similar properties similarly situated and in such
amounts as are customarily carried under similar circumstances by other such
entities and otherwise as is prudent for entities engaged in similar businesses
but in any event sufficient to cover the full replacement cost thereof (it being
agreed that the insurance policies and amounts maintained by Grantors as of the
Closing Date are satisfactory).  The Grantors shall cause each insurance policy

 

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issued in connection herewith to provide, and the insurer issuing such policy to
certify to Secured Party that (a) Secured Party will be named as lender loss
payee (mortgagee, as applicable) and additional insured under each such
insurance policy; (b) if such insurance be proposed to be cancelled or
materially changed for any reason whatsoever, such insurer will promptly notify
Secured Party and such cancellation or change shall not be effective as to
Secured Party for at least thirty (30) days after receipt by Secured Party of
such notice, unless the effect of such change is to extend or increase coverage
under the policy; and (c) Secured Party will have the right (but no obligation)
at its election to remedy any default in the payment of premiums within thirty
(30) days of notice from the insurer of such default.  If no Event of Default
exists and if the proceeds arising out of any claim or series of related claims
do not exceed $100,000, loss payments in each instance will be available to the
Grantors and applied by the Grantors to the repair and/or replacement of
property with respect to which the loss was incurred.  If no Event of Default
exists and such proceeds exceed $100,000, and in any event after an Event of
Default occurs, all proceeds then or thereafter in existence shall be paid to
Secured Party (for application to the Obligations) and, if received by any
Grantor, shall be held in trust for Secured Party and promptly paid over to
Secured Party (for application to the Obligations) unless otherwise directed in
writing by Secured Party.

 

(l)                                     Copies.  The Grantors shall deliver
copies of such policies or the related certificates evidencing that Secured
Party is listed as lender loss payee on property insurance and as additional
insured on liability insurance at least annually and at the time any new policy
of insurance is issued.

 

7.                                       Relation to Other Security Documents. 
The provisions of this Agreement shall be read and construed with the other
Transaction Documents referred to below in the manner so indicated.

 

(a)                                  Purchase Agreement. In the event of any
conflict between any provision in this Agreement and a provision in the Purchase
Agreement, such provision of the Purchase Agreement shall control.

 

(b)                                 Note. In the event of any conflict between
any provision in this Agreement and a provision in the Notes, such provision of
the Notes shall control.

 

(c)                                  Patent, Trademark, Copyright Security
Agreements.  The provisions of any executed Copyright Security Agreements,
Trademark Security Agreements, and Patent Security Agreements are supplemental
to the provisions of this Agreement, and nothing contained in the Copyright
Security Agreements, Trademark Security Agreements, or the Patent Security
Agreements shall limit any of the rights or remedies of Secured Party hereunder.

 

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8.                                       Further Assurances.

 

(a)                                  Each Grantor agrees that from time to time,
at its own expense, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
that Secured Party may reasonably request, in order to perfect and protect the
Security Interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any of the Collateral.

 

(b)                                 Subject to Section 8(c), each Grantor
authorizes the filing by Secured Party of financing or continuation statements,
or amendments thereto, and such Grantor will execute and deliver to Secured
Party such other instruments or notices, as may be necessary or as Secured Party
may reasonably request, in order to perfect and preserve the Security Interest
granted or purported to be granted hereby.

 

(c)                                  Each Grantor authorizes Secured Party at
any time and from time to time to file, transmit, or communicate, as applicable,
financing statements and amendments (i) describing the Collateral as “all
personal property of debtor” or “all assets of debtor” or words of similar
effect, (ii) describing the Collateral as being of equal or lesser scope or with
greater detail, or (iii) that contain any information required by part 5 of
Article 9 of the Code for the sufficiency or filing office acceptance.  Each
Grantor also hereby ratifies any and all financing statements or amendments
previously filed by Secured Party in any jurisdiction.

 

(d)                                 Each Grantor acknowledges that it is not
authorized to file any financing statement or amendment or termination statement
with respect to any financing statement filed in connection with this Agreement
without the prior written consent of Secured Party, subject to such Grantor’s
rights under Section 9-509(d)(2) of the Code.

 

9.                                       Secured Party’s Right to Perform
Contracts, Exercise Rights, etc.  Upon the occurrence and during the continuance
of an Event of Default, Secured Party (or its designee) (a) may proceed to
perform any and all of the obligations of any Grantor contained in any contract,
lease, or other agreement and exercise any and all rights of any Grantor therein
contained as fully as such Grantor itself could, (b) shall have the right to use
any Grantor’s rights under Intellectual Property Licenses in connection with the
enforcement of the Secured Party’s rights hereunder, including the right to
prepare for sale and sell any and all Inventory and Equipment now or hereafter
owned by any Grantor and now or hereafter covered by such licenses, but only to
the extent permitted by such licenses or the licensors thereunder or applicable
law, and (c) shall have the right to request that any Stock that is pledged
hereunder be registered in the name of Secured Party or any of its nominees.

 

10.                                 Secured Party Appointed Attorney-in-Fact. 
Each Grantor hereby irrevocably appoints Secured Party its attorney-in-fact,
with full authority in the place and stead of such Grantor and in the name of
such Grantor or otherwise, at such time as an Event of Default has occurred and
is continuing under the Notes, to take any action and to execute any instrument
which Secured Party may reasonably deem necessary or advisable to accomplish the
purposes of this Agreement, including:

 

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(a)                                  to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for moneys due and to
become due under or in connection with the Accounts or any Supporting
Obligations in connection therewith or any other Collateral of such Grantor;

 

(b)                                 to receive and open all mail addressed to
such Grantor and to notify postal authorities to change the address for the
delivery of mail to such Grantor to that of Secured Party;

 

(c)                                  to receive, indorse, and collect any drafts
or other instruments, documents, Negotiable Collateral or Chattel Paper;

 

(d)                                 to file any claims or take any action or
institute any proceedings which Secured Party may deem necessary or desirable
for the collection of any of the Collateral of such Grantor or otherwise to
enforce the rights of Secured Party with respect to any of the Collateral;

 

(e)                                  to repair, alter, or supply goods, if any,
necessary to fulfill in whole or in part the purchase order of any Person
obligated to such Grantor in respect of any Account of such Grantor;

 

(f)                                    to use any labels, Patents, Trademarks,
trade names, URLs, domain names, industrial designs, Copyrights, advertising
matter or other industrial or intellectual property rights, in advertising for
sale and selling Inventory and other Collateral and to collect any amounts due
under Accounts, contracts or Negotiable Collateral of such Grantor; and

 

(g)                                 Secured Party shall have the right, but
shall not be obligated, to bring suit in its own name to enforce the Trademarks,
Patents, Copyrights and Intellectual Property Licenses and, if Secured Party
shall commence any such suit, the appropriate Grantor shall, at the request of
Secured Party, do any and all lawful acts and execute any and all proper
documents reasonably required by Secured Party in aid of such enforcement.

 

To the extent permitted by law, each Grantor hereby ratifies all that such
attorney-in-fact shall lawfully do or cause to be done by virtue hereof.  This
power of attorney is coupled with an interest and shall be irrevocable until
this Agreement is terminated.

 

11.                                 Secured Party May Perform.  If any of
Grantors fails to perform any agreement contained herein, Secured Party may
itself perform, or cause performance of, such agreement, and the reasonable
out-of-pocket expenses of Secured Party incurred in connection therewith shall
be payable, jointly and severally, by Grantors.

 

12.                                 Secured Party’s Duties.  The powers
conferred on Secured Party hereunder are solely to protect Secured Party’s
interest in the Collateral, and shall not impose any duty upon Secured Party to
exercise any such powers.  Except for the safe custody of any Collateral in its
actual possession and the accounting for moneys actually received by it
hereunder, Secured Party shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral.  Secured Party shall be

 

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deemed to have exercised reasonable care in the custody and preservation of any
Collateral in its actual possession if such Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property.

 

13.                                 Collection of Accounts, General Intangibles
and Negotiable Collateral.  At any time upon the occurrence and during the
continuance of an Event of Default, Secured Party or Secured Party’s designee
may (a) notify Account Debtors of any Grantor that the Accounts, General
Intangibles, Chattel Paper or Negotiable Collateral have been assigned to
Secured Party or that Secured Party has a security interest therein, and
(b) collect the Accounts, General Intangibles and Negotiable Collateral
directly, and any collection costs and expenses shall constitute part of such
Grantor’s Secured Obligations under the Transaction Documents.

 

14.                                 Disposition of Pledged Interests by Secured
Party.  None of the Pledged Interests existing as of the date of this Agreement
are, and none of the Pledged Interests hereafter acquired on the date of
acquisition thereof will be, registered or qualified under the various federal
or state securities laws of the United States and disposition thereof after an
Event of Default may be restricted to one or more private (instead of public)
sales in view of the lack of such registration.  Each Grantor understands that
in connection with such disposition, Secured Party may approach only a
restricted number of potential purchasers and further understands that a sale
under such circumstances may yield a lower price for the Pledged Interests than
if the Pledged Interests were registered and qualified pursuant to federal and
state securities laws and sold on the open market.  Each Grantor, therefore,
agrees that:  (a) if Secured Party shall, pursuant to the terms of this
Agreement, sell or cause the Pledged Interests or any portion thereof to be sold
at a private sale, Secured Party shall have the right to rely upon the advice
and opinion of any nationally recognized brokerage or investment firm (but shall
not be obligated to seek such advice and the failure to do so shall not be
considered in determining the commercial reasonableness of such action) as to
the best manner in which to offer the Pledged Interest or any portion thereof
for sale and as to the best price reasonably obtainable at the private sale
thereof; and (b) such reliance shall be conclusive evidence that Secured Party
has handled the disposition in a commercially reasonable manner.

 

15.                                 Voting Rights.

 

(a)                                  Upon the occurrence and during the
continuation of an Event of Default, (i) Secured Party may, at its option, and
with no prior notice to any Grantor, and in addition to all rights and remedies
available to Secured Party under any other agreement, at law, in equity, or
otherwise, exercise all voting rights, and all other ownership or consensual
rights in respect of the Pledged Interests owned by such Grantor, but under no
circumstances is Secured Party obligated by the terms of this Agreement to
exercise such rights, and (ii) if Secured Party duly exercises its right to vote
any of such Pledged Interests, each Grantor hereby appoints Secured Party, such
Grantor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such
Pledged Interests in any manner Secured Party deems advisable for or against all
matters submitted or which may be submitted to a vote of shareholders, partners
or members, as the case may be.  The power-of-attorney granted hereby is coupled
with an interest and shall be irrevocable.

 

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(b)                                 For so long as any Grantor shall have the
right to vote the Pledged Interests owned by it, such Grantor covenants and
agrees that it will not, without the prior written consent of Secured Party,
vote or take any consensual action with respect to such Pledged Interests which
would materially adversely affect the rights of Secured Party or the value of
the Pledged Interests.

 

(c)                                  If any of the Collateral subject to this
Agreement consists of nonvoting equity or ownership interests (regardless of
class, designation, preference or rights) that may be converted into voting
equity or ownership interests upon the occurrence of certain events (including,
without limitation, upon the transfer of all or any of the other stock or assets
of the issuer), it is agreed that the pledge of such equity or ownership
interests pursuant to this Agreement or the enforcement of any of Secured
Party’s rights hereunder shall not be deemed to be the type of event which would
trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which the Grantor is subject or to
which the Grantor is party.

 

16.                                 Remedies.  Upon the occurrence and during
the continuance of an Event of Default:

 

(a)                                  Secured Party may exercise in respect of
the Collateral, in addition to other rights and remedies provided for herein, in
the other Transaction Documents, or otherwise available to it, all the rights
and remedies of a secured party on default under the Code or any other
applicable law.  Without limiting the generality of the foregoing, each Grantor
expressly agrees that, in any such event, Secured Party without demand of
performance or other demand, advertisement or notice of any kind (except a
notice specified below of time and place of public or private sale) to or upon
any of Grantors or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code or any other applicable law), may take immediate
possession of all or any portion of the Collateral and (i) require Grantors to,
and each Grantor hereby agrees that it will at its own expense and upon request
of Secured Party forthwith, assemble all or part of the Collateral as directed
by Secured Party and make it available to Secured Party at one or more locations
where such Grantor regularly maintains Inventory, and (ii) without notice except
as specified below, sell or otherwise dispose of the Collateral or any part
thereof in one or more parcels at public or private sale or other disposition,
at any of Secured Party’s offices or elsewhere, for cash, on credit, and upon
such other terms as Secured Party may deem commercially reasonable. Without
limiting the generality of the foregoing, Secured Party may disclaim any and all
representations and warranties in connection with any such sale or other
disposition.  Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days notice to any of Grantors of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification and specifically such notice shall
constitute a reasonable “authenticated notification of disposition” within the
meaning of Section 9-611 of the Code.  Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. 
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.

 

21

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(b)                                 Secured Party is hereby granted a license or
other right to use, without liability for royalties or any other charge, each
Grantor’s labels, Patents, Copyrights, rights of use of any name, trade secrets,
trade names, Trademarks, service marks and advertising matter, URLs, domain
names, industrial designs, other industrial or intellectual property or any
property of a similar nature, whether owned by any of Grantors or with respect
to which any of Grantors have rights under license, sublicense, or other
agreements, (but only to the extent (i) such license, sublicense or agreement
does not prohibit such use by Secured Party and (ii) such Grantor will not be in
default under such license, sublicense or other agreement as a result of such
use by Secured Party) as it pertains to the Collateral, in preparing for sale,
advertising for sale and selling any Collateral, and each Grantor’s rights under
all licenses and all franchise agreements shall inure to the benefit of Secured
Party.

 

(c)                                  Any cash held by Secured Party as
Collateral and all cash proceeds received by Secured Party in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral shall be applied against the Secured Obligations in the order set
forth in the Purchase Agreement.   In the event the proceeds of Collateral are
insufficient to satisfy all of the Secured Obligations in full, each Grantor
shall remain jointly and severally liable for any such deficiency.

 

(d)                                 Each Grantor hereby acknowledges that the
Secured Obligations arose out of a commercial transaction.

 

17.                                 Remedies Cumulative.  Each right, power, and
remedy of Secured Party as provided for in this Agreement or in the other
Transaction Documents or now or hereafter existing at law or in equity or by
statute or otherwise shall be cumulative and concurrent and shall be in addition
to every other right, power, or remedy provided for in this Agreement or in the
other Transaction Documents or now or hereafter existing at law or in equity or
by statute or otherwise, and the exercise or beginning of the exercise by
Secured Party, of any one or more of such rights, powers, or remedies shall not
preclude the simultaneous or later exercise by Secured Party of any or all such
other rights, powers, or remedies.

 

18.                                 Marshaling. Secured Party  shall not be
required to marshal any present or future collateral security (including but not
limited to the Collateral) for, or other assurances of payment of, the Secured
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of its rights and
remedies hereunder and in respect of such collateral security and other
assurances of payment shall be cumulative and in addition to all other rights
and remedies, however existing or arising.  To the extent that it lawfully may,
each Grantor hereby agrees that it will not invoke any law relating to the
marshaling of collateral which might cause delay in or impede the enforcement of
Secured Party’s rights and remedies under this Agreement or under any other
instrument creating or evidencing any of the Secured Obligations or under which
any of the Secured Obligations is outstanding or by which any of the Secured
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, each Grantor hereby irrevocably waives the benefits
of all such laws.

 

22

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19.                                 Indemnity and Expenses.

 

(a)                                  Each Grantor agrees to indemnify Secured
Party from and against all claims, lawsuits and liabilities (including
reasonable attorneys’ fees) growing out of or resulting from this Agreement
(including enforcement of this Agreement) or any other Transaction Document to
which such Grantor is a party, except claims, losses or liabilities resulting
from the gross negligence or willful misconduct of the party seeking
indemnification as determined by a final non-appealable order of a court of
competent jurisdiction, and subject to any other express limitations set forth
in the Transaction Documents.  This provision shall survive the termination of
this Agreement and the repayment of the Secured Obligations.

 

(b)                                 Grantors, jointly and severally, shall, upon
demand, pay to Secured Party all the fees, costs, charges and expenses which
Secured Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or, upon an
Event of Default, the sale of, collection from, or other realization upon, any
of the Collateral in accordance with this Agreement and the other Transaction
Documents, (iii) the exercise or enforcement of any of the rights of Secured
Party hereunder or (iv) the failure by any of Grantors to perform or observe any
of the provisions hereof.

 

20.                                 Merger, Amendments; Etc.  THIS AGREEMENT,
TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS, REPRESENTS 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 AGREEMENTS BETWEEN THE PARTIES.  No waiver of any provision of this
Agreement, and no consent to any departure by any of Grantors herefrom, shall in
any event be effective unless the same shall be in writing and signed by Secured
Party, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.  No amendment of any
provision of this Agreement shall be effective unless the same shall be in
writing and signed by Secured Party and each of Grantors to which such amendment
applies.

 

21.                                 Addresses for Notices.  All notices and
other communications provided for hereunder shall be given in the form and
manner and delivered to Secured Party at its address specified in the Purchase
Agreement, and to any of the Grantors at their respective addresses specified in
the Purchase Agreement, as applicable, or, as to any party, at such other
address as shall be designated by such party in a written notice to the other
party.

 

22.                                 Continuing Security Interest: Assignments
under Credit Agreement.  This Agreement shall create a continuing security
interest in the Collateral and shall (a) remain in full force and effect until
the Obligations have been indefeasibly paid in full or otherwise terminated in
accordance with the provisions of the Notes and the Purchase Agreement, (b) be
binding upon each of Grantors, and their respective successors and assigns, and
(c) inure to the benefit of, and be enforceable by, Secured Party, and its
successors, transferees and assigns.  Without limiting the generality of the
foregoing clause (c), Secured Party may, in accordance with the provisions of
the Notes and the Purchase Agreement, assign or otherwise transfer all or any
portion of its rights and obligations under the Notes and the Purchase Agreement
to any other Person, and such other Person shall thereupon become vested with
all the benefits in respect thereof granted to Secured Party herein or
otherwise.  Upon indefeasible payment in full or other termination of the

 

23

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Obligations in accordance with the provisions of the Notes and the Purchase
Agreement, the Security Interest granted hereby shall terminate and all rights
to the Collateral shall revert to Grantors or any other Person entitled
thereto.  At such time, Secured Party shall authorize the filing of appropriate
termination statements to terminate such Security Interests.  No transfer or
renewal, extension, assignment, or termination of this Agreement or of the
Notes, the Purchase Agreement, any other Transaction Document, or any other
instrument or document executed and delivered by any Grantor to Secured Party
nor any additional loans made by Secured Party to the Companies, or any of them,
nor the taking of further security, nor the retaking or re-delivery of the
Collateral to Grantors, or any of them, by Secured Party, shall release any of
Grantors from any obligation, except a release or discharge executed in writing
by Secured Party in accordance with the provisions of the Notes and the Purchase
Agreement.  Secured Party shall not by any act, delay, omission or otherwise, be
deemed to have waived any of its rights or remedies hereunder, unless such
waiver is in writing and signed by Secured Party and then only to the extent
therein set forth.  A waiver by Secured Party of any right or remedy on any
occasion shall not be construed as a bar to the exercise of any such right or
remedy which Secured Party would otherwise have had on any other occasion.

 

23.                                 Governing Law.

 

(a)                                  THE VALIDITY OF THIS AGREEMENT AND THE
OTHER TRANSACTION DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN
ANOTHER TRANSACTION DOCUMENT IN RESPECT OF SUCH OTHER TRANSACTION DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(b)                                 THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK,
STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST
ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT SECURED PARTY’S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE SECURED PARTY ELECTS TO BRING SUCH ACTION
OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  SECURED PARTY AND EACH
GRANTOR WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 23(b).

 

(c)                                  TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, SECURED PARTY AND EACH GRANTOR HEREBY WAIVE THEIR

 

24

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RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS.  SECURED PARTY AND EACH GRANTOR REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

 

24.                                 New Subsidiaries.  Without impairing the
limitations and restrictions of Section 3.20 of the Purchase Agreement, any new
direct or indirect Subsidiary (whether by acquisition or creation) of Grantor is
required, following request from Secured Party, to enter into this Agreement by
executing and delivering in favor of Secured Party a supplement to this
Agreement in the form of Annex 1 attached hereto.  Upon the execution and
delivery of Annex 1 by such new Subsidiary, such Subsidiary shall become a
Grantor hereunder with the same force and effect as if originally named as a
Grantor herein.  The execution and delivery of any instrument adding an
additional Grantor as a party to this Agreement shall not require the consent of
any Grantor hereunder.  The rights and obligations of each Grantor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Grantor hereunder.

 

25.                                 Secured Party.  Each reference herein to any
right granted to, benefit conferred upon or power exercisable by the “Secured
Party” shall be a reference to Secured Party, it successors and assigns..

 

26.                                 Miscellaneous.

 

(a)                                  This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement.  Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. 
Any party delivering an executed counterpart of this Agreement by telefacsimile
or other electronic method of transmission also shall deliver an original
executed counterpart of this Agreement but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Agreement.  The foregoing shall apply to each other Transaction
Document mutatis mutandis.

 

(b)                                 Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.

 

(c)                                  Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.

 

25

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(d)                                 The pronouns used herein shall include, when
appropriate, either gender and both singular and plural, and the grammatical
construction of sentences shall conform thereto.

 

(e)                                  Unless the context of this Agreement or any
other Transaction Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms
“includes” and  “including” are not limiting, and the term “or” has, except
where otherwise indicated, the inclusive meaning represented by the phrase
“and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar
terms in this Agreement or any other Transaction Document refer to this
Agreement or such other Transaction Document, as the case may be, as a whole and
not to any particular provision of this Agreement or such other Transaction
Document, as the case may be.  Section, subsection, clause, schedule, and
exhibit references herein are to this Agreement unless otherwise specified.  Any
reference in this Agreement or in any other Transaction Document to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein or in the other Transaction Documents).  Any reference herein
or in any other Transaction Document to the satisfaction or repayment in full of
the Obligations shall mean the repayment in full in cash (or cash
collateralization in accordance with the terms hereof) of all Obligations other
than unasserted contingent indemnification Obligations.  Any reference herein to
any Person shall be construed to include such Person’s successors and assigns. 
Any requirement of a writing contained herein or in any other Transaction
Document shall be satisfied by the transmission of a Record and any Record so
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.

 

[SIGNATURE PAGE FOLLOWS]

 

26

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IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement
by and through their duly authorized officers, as of the day and year first
above written.

 

 

GRANTOR:

BUCKEYE INDUSTRIAL MINING CO.   

 

 

 

 

 

By:

/s/ Diana L. Kubik

 

Name: Diana L. Kubik

 

Title: Vice President and Chief Financial Officer

 

 

 

 

SECURED PARTY:

CENTURION CREDIT FUNDING LLC

 

 

 

 

 

By:

/s/ David Levy

 

Name: David Levy

 

Title: Authorized Signatory

 

[SIGNATURE PAGE TO SECURITY AGREEMENT]

 

S-1

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SCHEDULE 1

 

ORGANIZATIONAL INFORMATION

 

Legal Name:

 

Buckeye Industrial Mining Co.

 

Jurisdiction of Incorporation

 

Ohio

 

Organizational ID Number: 1084966

 

Chief Executive Office:  4719 Industrial Road, Lisbon, OH 44432

 

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SCHEDULE 2

 

COPYRIGHT REGISTRATIONS AND APPLICATIONS

 

None.

 

--------------------------------------------------------------------------------

 

SCHEDULE 3

 

INTELLECTUAL PROPERTY LICENSES

 

Professional Support and Technology Transfer Agreement, dated January 3, 2005,
between N-Viro International Corporation and Buckeye Industrial Mining Co.

 

--------------------------------------------------------------------------------

 

SCHEDULE 4

 

PATENTS AND PATENT APPLICATIONS

 

None.

 

--------------------------------------------------------------------------------

 

SCHEDULE 5

 

PLEDGED COMPANIES

 

None.

 

--------------------------------------------------------------------------------

 

SCHEDULE 6

 

TRADE NAMES, TRADEMARKS, TRADEMARK APPLICATIONS, SERVICE MARKS, AND SERVICE MARK
APPLICATIONS

 

None.

 

--------------------------------------------------------------------------------

 

SCHEDULE 7

 

OWNED OR LEASED REAL PROPERTY

 

See attached.

 

--------------------------------------------------------------------------------

 

SCHEDULE 8

 

LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS

 

Grantor

 

Jurisdictions

 

 

 

Buckeye Industrial Mining Co.

 

Ohio

 

--------------------------------------------------------------------------------

 

SCHEDULE 9

 

MOTOR VEHICLES

 

None.

 

SECURITY AGREEMENT

 

--------------------------------------------------------------------------------

 

SCHEDULE 10

 

COMMERCIAL TORT CLAIMS

 

None.

 

--------------------------------------------------------------------------------

 

ANNEX 1 TO SECURITY AGREEMENT
FORM OF SUPPLEMENT

 

Supplement No.          (this “Supplement”) dated as of
                              , to the Security Agreement dated as of
March     , 2009 (as amended, restated, supplemented or otherwise modified from
time to time, the “Security Agreement”) by each of the parties listed on the
signature pages thereto and those additional entities that thereafter become
parties thereto (collectively, jointly and severally, “Grantors” and each
individually “Grantor”) and CENTURION CREDIT FUNDING LLC in its capacity as
Secured Party (together with the successors, “Secured Party”).

 

W I T N E S S E T H:

 

WHEREAS, the Secured Party and EVERGREEN ENERGY INC. and EVERGREEN OPERATIONS,
LLC and BUCKEYE INDUSTRIAL MINING CO. (collectively, the “Companies” and each
individually a “Company”) are parties to that certain Note Purchase Agreement
dated as of March     , 2009 (as may be amended, restated, supplemented,
replaced or otherwise modified from time to time, the “Purchase Agreement”), and

 

WHEREAS, pursuant to the terms and conditions of the Purchase Agreement, the
Secured Party has agreed to extend loans to the Companies, repayment of which is
evidenced by the Notes, and

 

WHEREAS, all capitalized terms used herein without definition shall have the
meanings ascribed thereto in the Security Agreement or the Notes, or if not
expressly defined in the Notes, then in the Purchase Agreement, and

 

WHEREAS, Grantors have entered into the Security Agreement in order to induce
the Secured Party to make certain financial accommodations to the Companies; and

 

WHEREAS, pursuant to the terms and provisions of the Transaction Documents, new
direct or indirect Subsidiaries of any Company, must execute and deliver certain
Transaction Documents, including the Security Agreement, and the execution of
the Security Agreement by the undersigned new Grantor or Grantors (collectively,
the “New Grantors”) may be accomplished by the execution of this Supplement in
favor of Secured Party;

 

NOW, THEREFORE, for and in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each New Grantor hereby agrees as follows:

 

1.             In accordance with Section 24 of the Security Agreement, each New
Grantor, by its signature below, becomes a “Grantor” under the Security
Agreement with the same force and effect as if originally named therein as a
“Grantor” and each New Grantor hereby (a) agrees to all of the terms and
provisions of the Security Agreement applicable to it as a “Grantor” thereunder
and (b) represents and warrants that the representations and warranties made by
it as a “Grantor” thereunder are true and correct on and as of the date hereof. 
In furtherance of the foregoing, each New Grantor, as security for the payment
and performance in full of the Secured Obligations, does hereby grant, assign,
and pledge to Secured Party a security interest in and

 

--------------------------------------------------------------------------------

 

security title to all assets of such New Grantor including, all property of the
type described in Section 2 of the Security Agreement to secure the full and
prompt payment of the Secured Obligations, including, any interest thereon, plus
reasonable attorneys’ fees and expenses if the Secured Obligations represented
by the Security Agreement are collected by law, through an attorney-at-law, or
under advice therefrom.  Schedule 1,  “Organizational Information”, Schedule 2,
“Copyright Registrations and Applications”, Schedule 3, “Intellectual Property
Licenses”, Schedule 4, “Patents and Patent Applications”, Schedule 5, “Pledged
Companies”,  Schedule 6, “Trade Names, Trademarks, Trademark Applications,
Service Marks and Service Mark Applications”,  Schedule 7, “Owned Real
Property,”  Schedule 8, “List of Uniform Commercial Code Filing Jurisdictions”,
Schedule 9 “Motor Vehicles”, and Schedule 10 “Commercial Tort Claims” attached
hereto supplement Schedule 1, Schedule 2, Schedule 3, Schedule 4, Schedule
5, Schedule 6, Schedule 7, Schedule 8, Schedule 9 and Schedule 10 respectively,
to the Security Agreement and shall be deemed a part thereof for all purposes of
the Security Agreement.  Each reference to a “Grantor” in the Security Agreement
shall be deemed to include each New Grantor.  The Security Agreement is
incorporated herein by reference.

 

2.             Each New Grantor represents and warrants to Secured Party that
this Supplement has been duly executed and delivered by such New Grantor and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other
similar laws affecting creditors’ rights generally and general principles of
equity (regardless of whether such enforceability is considered in a proceeding
at law or in equity).

 

3.             This Supplement may be executed in multiple counterparts, each of
which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument.  Delivery of a
counterpart hereof by facsimile transmission or by e-mail transmission shall be
as effective as delivery of a manually executed counterpart hereof.

 

4.             Except as expressly supplemented hereby, the Security Agreement
shall remain in full force and effect.

 

5.             This Supplement shall be construed in accordance with and
governed by the laws of the State of New York, without regard to the conflict of
laws principles thereof.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, each New Grantor and Secured Party have duly executed this
Supplement to the Security Agreement as of the day and year first above written.

 

NEW GRANTORS:

[Name of New Grantor]

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

[Name of New Grantor]

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

SECURED PARTY:

CENTURION CREDIT FUNDING LLC

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

[SIGNATURE PAGE TO SUPPLEMENT TO PLEDGE AND SECURITY AGREEMENT]

 

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EXHIBIT A

 

COPYRIGHT SECURITY AGREEMENT

 

This COPYRIGHT SECURITY AGREEMENT (this “Copyright Security Agreement”) is made
this      day of March, 2009, among Grantors listed on the signature
pages hereof (collectively, jointly and severally, “Grantors” and each
individually “Grantor”), and CENTURION CREDIT FUNDING LLC (together with its
successors, the “Secured Party”).

 

W I T N E S S E T H:

 

WHEREAS, the Secured Party and EVERGREEN ENERGY INC. and EVERGREEN OPERATIONS,
LLC and BUCKEYE INDUSTRIAL MINING CO. (collectively, the “Companies” and each
individually a “Company”) are parties to that certain Note Purchase Agreement
bearing even date herewith (as may be amended, restated, supplemented, replaced
or otherwise modified from time to time, the “Purchase Agreement”), and

 

WHEREAS, pursuant to the terms and conditions of the Purchase Agreement, the
Secured Party has agreed to extend loans to the Companies, repayment of which is
evidenced by the Notes, and

 

WHEREAS, in order to induce the Secured Party to enter into the Notes, the
Purchase Agreement and the other Transaction Documents and to induce the Secured
Party to make financial accommodations to the Companies as provided for in the
Purchase Agreement, Grantors have executed and delivered to Secured Party that
certain Security Agreement of even date herewith (including all annexes,
exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the “Security Agreement”);

 

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Secured Party this Copyright Security Agreement;

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as follows:

 

1.             DEFINED TERMS.  All capitalized terms used but not otherwise
defined herein have the meanings given to them in the Security Agreement or the
Notes or the Purchase Agreement.

 

2.             GRANT OF SECURITY INTEREST IN COPYRIGHT COLLATERAL.  Each Grantor
hereby unconditionally grants, assigns and pledges to Secured Party a Security
Interest in all of such Grantor’s right, title and interest in and to the
following, whether now owned or hereafter acquired or arising and wherever
located (collectively, the “Copyright Collateral”):

 

(a)           all of such Grantor’s Copyrights including those referred to on
Schedule I hereto; and

 

(b)           all Proceeds of the foregoing.

 

--------------------------------------------------------------------------------

 

3.             SECURITY FOR OBLIGATIONS.  This Copyright Security Agreement and
the Security Interest created hereby secures the payment and performance of the
Secured Obligations, whether now existing or arising hereafter.  Without
limiting the generality of the foregoing, this Copyright Security Agreement
secures the payment of all amounts which constitute part of the Secured
Obligations and would be owed by Grantors, or any of them, to Secured Party
whether or not they are unenforceable or not allowable due to the existence of
an Insolvency Proceeding involving any Grantor.

 

4.             SECURITY AGREEMENT.  The Security Interest granted pursuant to
this Copyright Security Agreement is granted in conjunction with the Security
Interest granted to Secured Party pursuant to the Security Agreement.  Each
Grantor hereby acknowledges and affirms that the rights and remedies of Secured
Party with respect to the Security Interest in the Copyright Collateral made and
granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.  To the extent there is any inconsistency between this Copyright
Security Agreement and the Security Agreement, the Security Agreement shall
control.

 

5.             AUTHORIZATION TO SUPPLEMENT.  Grantors shall give Secured Party
prompt (and in any event within fifteen (15) Business Days) notice in writing of
any additional United States copyright registrations or applications therefor
after the date hereof.  Grantors hereby authorize Secured Party unilaterally to
modify this Agreement by amending Schedule I to include any future United States
registered copyrights or applications therefor of Grantors.  Notwithstanding the
foregoing, no failure to so modify this Copyright Security Agreement or amend
Schedule I shall in any way affect, invalidate or detract from Secured Party’s
continuing Security Interest in all Collateral, whether or not listed on
Schedule I.

 

6.             TERMINATION AND RELEASE.  Upon indefeasible payment in full in
cash of the Obligations in accordance with the provisions of the Notes and the
Purchase Agreement, the Security Interest granted hereby shall terminate and all
rights to the Copyright Collateral shall revert to Grantors or any other Person
entitled thereto.  At such time, Secured Party shall execute and deliver, and
authorize the filing of, appropriate termination and release statements or other
documents to terminate and release such Security Interests.

 

7.             COUNTERPARTS.  This Copyright Security Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original,
but all such separate counterparts shall together constitute but one and the
same instrument.  In proving this Copyright Security Agreement or any other
Transaction Document in any judicial proceedings, it shall not be necessary to
produce or account for more than one such counterpart signed by the party
against whom such enforcement is sought.  Any signatures delivered by a party by
facsimile transmission or by e-mail transmission shall be deemed an original
signature hereto.

 

8.             CONSTRUCTION.  Unless the context of this Copyright Security
Agreement or any other Transaction Document clearly requires otherwise,
references to the plural include the singular, references to the singular
include the plural, the terms “includes” and  “including” are not limiting, and
the term “or” has, except where otherwise indicated, the inclusive meaning
represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Copyright Security Agreement or any other
Transaction Document refer to

 

2

--------------------------------------------------------------------------------

 

this Copyright Security Agreement or such other Transaction Document, as the
case may be, as a whole and not to any particular provision of this Copyright
Security Agreement or such other Transaction Document, as the case may be. 
Section, subsection, clause, schedule, and exhibit references herein are to this
Copyright Security Agreement unless otherwise specified.  Any reference in this
Copyright Security Agreement or in any other Transaction Document to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein or in the other Transaction Documents).  Any reference herein
or in any other Transaction Document to the satisfaction or repayment in full of
the Obligations shall mean the repayment in full in cash (or cash
collateralization in accordance with the terms hereof) of all Obligations other
than unasserted contingent indemnification Obligations.  Any reference herein to
any Person shall be construed to include such Person’s successors and assigns. 
Any requirement of a writing contained herein or in any other Transaction
Document shall be satisfied by the transmission of a Record and any Record so
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.

 

9.             GOVERNING LAW.  THE VALIDITY OF THIS COPYRIGHT SECURITY AGREEMENT
AND THE OTHER TRANSACTION DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY
IN ANOTHER TRANSACTION DOCUMENT IN RESPECT OF SUCH OTHER TRANSACTION DOCUMENT),
THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE
RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

[SIGNATURE PAGE FOLLOWS]

 

3

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, each Grantor has caused this Copyright Security Agreement to
be executed and delivered by its duly authorized officer as of the date first
set forth above.

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

ACCEPTED AND ACKNOWLEDGED BY:

 

 

 

CENTURION CREDIT FUNDING LLC

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

[SIGNATURE PAGE TO COPYRIGHT SECURITY AGREEMENT]

 

--------------------------------------------------------------------------------

 

SCHEDULE I
TO
COPYRIGHT SECURITY AGREEMENT

 

U.S. COPYRIGHT REGISTRATIONS AND APPLICATIONS

 

Grantor

 

Title

 

Registration /
Application No.

 

Registration /
Application Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COPYRIGHT SECURITY AGREEMENT

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

PATENT SECURITY AGREEMENT

 

This PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made this
       day of March, 2009, among the Grantors listed on the signature
pages hereof (collectively, jointly and severally, “Grantors” and each
individually “Grantor”), and CENTURION CREDIT FUNDING LLC (together with its
successors, the “Secured Party”).

 

W I T N E S S E T H:

 

WHEREAS, the Secured Party and EVERGREEN ENERGY INC. and EVERGREEN OPERATIONS,
LLC and BUCKEYE INDUSTRIAL MINING CO. (collectively the “Companies” and each
individually a “Company”) are parties to that certain Note Purchase Agreement
bearing even date herewith (as may be amended, restated, supplemented, replaced
or otherwise modified from time to time, the “Purchase Agreement”), and

 

WHEREAS, pursuant to the terms and conditions of the Purchase Agreement, the
Secured Party has agreed to extend loans to the Companies, repayment of which is
evidenced by the Notes, and

 

WHEREAS, in order to induce the Secured Party to enter into the Notes, the
Purchase Agreement and the other Transaction Documents and to induce the Secured
Party to make financial accommodations to the Companies as provided for in the
Purchase Agreement, Grantors have executed and delivered to Secured Party that
certain Security Agreement of even date herewith (including all annexes,
exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the “Security Agreement”);

 

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Secured Party this Patent Security Agreement;

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:

 

1.             DEFINED TERMS.  All capitalized terms used but not otherwise
defined herein have the meanings given to them in the Security Agreement or the
Notes or the Purchase Agreement.

 

2.             GRANT OF SECURITY INTEREST IN PATENT COLLATERAL.  Each Grantor
hereby unconditionally grants, assigns and pledges to Secured Party a Security
Interest in all of such Grantor’s right, title and interest in and to the
following, whether now owned or hereafter acquired or arising and wherever
located (collectively, the “Patent Collateral”):

 

(a)           all of its Patents including those referred to on Schedule I
hereto; and

 

(b)           all Proceeds of the foregoing.

 

--------------------------------------------------------------------------------

 

3.             SECURITY FOR OBLIGATIONS.  This Patent Security Agreement and the
Security Interest created hereby secures the payment and performance of the
Secured Obligations, whether now existing or arising hereafter.  Without
limiting the generality of the foregoing, this Patent Security Agreement secures
the payment of all amounts which constitute part of the Secured Obligations and
would be owed by Grantors, or any of them, to Secured Party whether or not they
are unenforceable or not allowable due to the existence of an Insolvency
Proceeding involving any Grantor.

 

4.             SECURITY AGREEMENT.  The Security Interest granted pursuant to
this Patent Security Agreement is granted in conjunction with the Security
Interest granted to Secured Party pursuant to the Security Agreement.  Each
Grantor hereby acknowledges and affirms that the rights and remedies of Secured
Party with respect to the Security Interest in the Patent Collateral made and
granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.  To the extent there is any inconsistency between this Patent Security
Agreement and the Security Agreement, the Security Agreement shall control.

 

5.             AUTHORIZATION TO SUPPLEMENT.  If any Grantor shall obtain rights
to any new patentable inventions or become entitled to the benefit of any patent
application or patent for any reissue, division, or continuation, of any patent,
the provisions of this Patent Security Agreement shall automatically apply
thereto. Grantors shall give prompt (and in any event within fifteen (15)
Business Days) notice in writing to Secured Party with respect to any such new
patent rights.  Without limiting Grantors’ obligations under this Section 5,
Grantors hereby authorize Secured Party unilaterally to modify this Agreement by
amending Schedule I to include any such new patent rights of Grantors.
 Notwithstanding the foregoing, no failure to so modify this Patent Security
Agreement or amend Schedule I shall in any way affect, invalidate or detract
from Secured Party’s continuing Security Interest in all Collateral, whether or
not listed on Schedule I.

 

6.             TERMINATION AND RELEASE.  Upon indefeasible payment in full in
cash of the Obligations in accordance with the provisions of the Notes and the
Purchase Agreement, the Security Interest granted hereby shall terminate and all
rights to the Patent Collateral shall revert to Grantors or any other Person
entitled thereto.  At such time, Secured Party shall execute and deliver, and
authorize the filing of, appropriate termination and release statements or other
documents to terminate and release such Security Interests.

 

7.             COUNTERPARTS.  This Patent Security Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, but
all such separate counterparts shall together constitute but one and the same
instrument.  In proving this Patent Security Agreement or any other Transaction
Document in any judicial proceedings, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom such
enforcement is sought.  Any signatures delivered by a party by facsimile
transmission or by e-mail transmission shall be deemed an original signature
hereto.

 

8.             CONSTRUCTION.  Unless the context of this Patent Security
Agreement or any other Transaction Document clearly requires otherwise,
references to the plural include the singular, references to the singular
include the plural, the terms “includes” and  “including” are

 

3

--------------------------------------------------------------------------------

 

not limiting, and the term “or” has, except where otherwise indicated, the
inclusive meaning represented by the phrase “and/or.”  The words “hereof,”
“herein,” “hereby,” “hereunder,” and similar terms in this Patent Security
Agreement or any other Transaction Document refer to this Patent Security
Agreement or such other Transaction Document, as the case may be, as a whole and
not to any particular provision of this Patent Security Agreement or such other
Transaction Document, as the case may be.  Section, subsection, clause,
schedule, and exhibit references herein are to this Patent Security Agreement
unless otherwise specified.  Any reference in this Patent Security Agreement or
in any other Transaction Document to any agreement, instrument, or document
shall include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein or in the other
Transaction Documents).  Any reference herein or in any other Transaction
Document to the satisfaction or repayment in full of the Obligations shall mean
the repayment in full in cash (or cash collateralization in accordance with the
terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations.  Any reference herein to any Person shall be
construed to include such Person’s successors and assigns.  Any requirement of a
writing contained herein or in any other Transaction Document shall be satisfied
by the transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.

 

9.             GOVERNING LAW.  THE VALIDITY OF THIS PATENT SECURITY AGREEMENT
AND THE OTHER TRANSACTION DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY
IN ANOTHER TRANSACTION DOCUMENT IN RESPECT OF SUCH OTHER TRANSACTION DOCUMENT),
THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE
RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

[SIGNATURE PAGE FOLLOWS]

 

4

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

ACCEPTED AND ACKNOWLEDGED

 

BY:

 

 

 

CENTURION CREDIT FUNDING LLC

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

[SIGNATURE PAGE TO PATENT SECURITY AGREEMENT]

 

--------------------------------------------------------------------------------

 

SCHEDULE I
TO
PATENT SECURITY AGREEMENT

 

U.S. PATENT REGISTRATIONS AND APPLICATIONS

 

Grantor

 

Title

 

Registration /
Application No.

 

Registration /
Application Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PATENT SECURITY AGREEMENT

 

--------------------------------------------------------------------------------

 

EXHIBIT C

 

Annex 1 to Pledge and Security Agreement

 

PLEDGED INTERESTS ADDENDUM

 

This Pledged Interests Addendum, dated as of                          ,
20      , is delivered pursuant to Section 6 of the Security Agreement referred
to below.  The undersigned hereby agrees that this Pledged Interests Addendum
may be attached to that certain Security Agreement, dated as of March     , 2009
(as amended, restated, supplemented or otherwise modified from time to time, the
“Security Agreement”), made by the undersigned, together with the other Grantors
named therein, to CENTURION CREDIT FUNDING LLC, as Secured Party.  Initially
capitalized terms used but not defined herein shall have the meaning ascribed to
such terms in the Security Agreement or the Notes or the Purchase Agreement. 
The undersigned hereby agrees that the additional interests listed on this
Pledged Interests Addendum as set forth below shall be and become part of the
Pledged Interests pledged by the undersigned to the Secured Party in the
Security Agreement and any pledged company set forth on this Pledged Interests
Addendum as set forth below shall be and become a “Pledged Company” under the
Security Agreement, each with the same force and effect as if originally named
therein.

 

The undersigned hereby certifies that the representations and warranties set
forth in Section 4 of the Security Agreement of the undersigned are true and
correct as to the Pledged Interests listed herein on and as of the date hereof.

 

 

[                                      ]

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title

 

 

PLEDGED INTERESTS ADDENDUM

 

--------------------------------------------------------------------------------

 

Name of Pledgor

 

Name of Pledged
Company

 

Number of
Shares/Units

 

Class of
Interests

 

Percentage of
Class Owned

 

Certificate
Nos.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLEDGED INTERESTS ADDENDUM

 

--------------------------------------------------------------------------------

 

EXHIBIT D

 

TRADEMARK SECURITY AGREEMENT

 

This TRADEMARK SECURITY AGREEMENT (this “Trademark Security Agreement”) is made
this        day of March, 2009, among Grantors listed on the signature
pages hereof (collectively, jointly and severally, “Grantors” and each
individually “Grantor”), and CENTURION CREDIT FUNDING LLC (together with its
successors, the “Secured Party”).

 

W I T N E S S E T H:

 

WHEREAS, the Secured Party and EVERGREEN ENERGY INC. and EVERGREEN OPERATIONS,
LLC and BUCKEYE INDUSTRIAL MINING CO. (collectively, the “Companies” and each
individually a “Company”) are parties to that certain Note Purchase Agreement
bearing even date herewith (as may be amended, restated, supplemented, replaced
or otherwise modified from time to time, the “Purchase Agreement”), and

 

WHEREAS, pursuant to the terms and conditions of the Purchase Agreement, the
Secured Party has agreed to extend loans to the Companies, repayment of which is
evidenced by the Notes, and

 

WHEREAS, in order to induce the Secured Party to enter into the Notes, the
Purchase Agreement and the other Transaction Documents and to induce the Secured
Party to make financial accommodations to the Companies as provided for in the
Purchase Agreement, Grantors have executed and delivered to Secured Party that
certain Security Agreement of even date herewith (including all annexes,
exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the “Security Agreement”);

 

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Secured Party this Trademark Security Agreement;

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:

 

1.             DEFINED TERMS.  All capitalized terms used but not otherwise
defined herein have the meanings given to them in the Security Agreement or the
Notes or the Purchase Agreement.

 

2.             GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL.  Each Grantor
hereby unconditionally grants, assigns and pledges to Secured Party a Security
Interest in all of such Grantor’s right, title and interest in and to the
following, whether now owned or hereafter acquired or arising and wherever
located (collectively, the “Trademark Collateral”):

 

(a)           all of its Trademarks including those referred to on Schedule I
hereto; and

 

(b)           all Proceeds of the foregoing.

 

--------------------------------------------------------------------------------

 

3.             SECURITY FOR OBLIGATIONS.  This Trademark Security Agreement and
the Security Interest created hereby secures the payment and performance of the
Secured Obligations, whether now existing or arising hereafter.  Without
limiting the generality of the foregoing, this Trademark Security Agreement
secures the payment of all amounts which constitute part of the Secured
Obligations and would be owed by Grantors, or any of them, to Secured Party
whether or not they are unenforceable or not allowable due to the existence of
an Insolvency Proceeding involving any Grantor.

 

4.             SECURITY AGREEMENT.  The Security Interest granted pursuant to
this Trademark Security Agreement is granted in conjunction with the Security
Interest granted to Secured Party pursuant to the Security Agreement.  Each
Grantor hereby acknowledges and affirms that the rights and remedies of Secured
Party with respect to the Security Interest in the Trademark Collateral made and
granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.  To the extent there is any inconsistency between this Trademark
Security Agreement and the Security Agreement, the Security Agreement shall
control.

 

5.             AUTHORIZATION TO SUPPLEMENT.  If any Grantor shall obtain rights
to any new trademarks, the provisions of this Trademark Security Agreement shall
automatically apply thereto. Grantors shall give prompt (and in any event within
fifteen (15) Business Days) notice in writing to Secured Party with respect to
any such new trademarks or renewal or extension of any trademark registration. 
Without limiting Grantors’ obligations under this Section 5, Grantors hereby
authorize Secured Party unilaterally to modify this Agreement by amending
Schedule I to include any such new trademark rights of Grantors. 
Notwithstanding the foregoing, no failure to so modify this Trademark Security
Agreement or amend Schedule I shall in any way affect, invalidate or detract
from Secured Party’s continuing Security Interest in all Collateral, whether or
not listed on Schedule I.

 

6.             TERMINATION AND RELEASE.  Upon payment in full in cash of the
Obligations in accordance with the provisions of the Notes and the Purchase
Agreement, the Security Interest granted hereby shall terminate and all rights
to the Trademark Collateral shall revert to Grantors or any other Person
entitled thereto.  At such time, Secured Party shall execute and deliver, and
authorize the filing of, appropriate termination and release statements or other
documents to terminate and release such Security Interests.

 

7.             COUNTERPARTS.  This Trademark Security Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original,
but all such separate counterparts shall together constitute but one and the
same instrument.  In proving this Trademark Security Agreement or any other
Transaction Document in any judicial proceedings, it shall not be necessary to
produce or account for more than one such counterpart signed by the party
against whom such enforcement is sought.  Any signatures delivered by a party by
facsimile transmission or by e-mail transmission shall be deemed an original
signature hereto.

 

8.             CONSTRUCTION.  Unless the context of this Trademark Security
Agreement or any other Transaction Document clearly requires otherwise,
references to the plural include the singular, references to the singular
include the plural, the terms “includes” and  “including” are not limiting, and
the term “or” has, except where otherwise indicated, the inclusive meaning

 

2

--------------------------------------------------------------------------------

 

represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Trademark Security Agreement or any other
Transaction Document refer to this Trademark Security Agreement or such other
Transaction Document, as the case may be, as a whole and not to any particular
provision of this Trademark Security Agreement or such other Transaction
Document, as the case may be.  Section, subsection, clause, schedule, and
exhibit references herein are to this Agreement unless otherwise specified.  Any
reference in this Trademark Security Agreement or in any other Transaction
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein or in the other Transaction
Documents).  Any reference herein or in any other Transaction Document to the
satisfaction or repayment in full of the Obligations shall mean the repayment in
full in cash (or cash collateralization in accordance with the terms hereof) of
all Obligations other than unasserted contingent indemnification Obligations and
other than any Hedge Agreement Obligations that, at such time, are allowed by
the applicable Hedge Agreement Provider to remain outstanding and that are not
required by the provisions of the Credit Agreement to be repaid or cash
collateralized.  Any reference herein to any Person shall be construed to
include such Person’s successors and assigns.  Any requirement of a writing
contained herein or in any other Transaction Document shall be satisfied by the
transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.

 

9.             GOVERNING LAW.  THE VALIDITY OF THIS TRADEMARK SECURITY AGREEMENT
AND THE OTHER TRANSACTION DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY
IN ANOTHER TRANSACTION DOCUMENT IN RESPECT OF SUCH OTHER TRANSACTION DOCUMENT),
THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE
RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

[SIGNATURE PAGE FOLLOWS]

 

3

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, each Grantor has caused this Trademark Security Agreement to
be executed and delivered by its duly authorized officer as of the date first
set forth above.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

ACCEPTED AND ACKNOWLEDGED BY:

 

 

 

 

CENTURION CREDIT FUNDING LLC

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

[SIGNATURE PAGE TO TRADEMARK SECURITY AGREEMENT]

 

--------------------------------------------------------------------------------

 

SCHEDULE I
to
TRADEMARK SECURITY AGREEMENT

 

U.S. Trademark Registrations/Applications

 

Grantor

 

Mark

 

Application/
Registration No.

 

App/Reg Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TRADEMARK SECURITY AGREEMENT

 

--------------------------------------------------------------------------------