exh4-3_q0907.htm

Exhibit 4.3

    EXECUTION
      COPY

    


    


    SECURITY
      AGREEMENT

    


    


    dated
      as of

    


    


    July
      30, 2007

    


    among

    


    


    EVERGREEN
      ENERGY INC.,

    


    EVERGREEN
      OPERATIONS, LLC

    


    KFX
      PLANT, LLC,

    


    KFX
      OPERATIONS, LLC,

    


    LANDRICA
      DEVELOPMENT COMPANY,

    


    BUCKEYE
      INDUSTRIAL MINING CO.

    


    


    and

    


    


    U.S.
      BANK NATIONAL ASSOCIATION,

    as
      Trustee and Collateral Agent


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    TABLE
      OF CONTENTS

    _________________

     

     

    
      	 	 	
               Page

            
	 	 	 
	 	Section
              1.  Definitions 	
               
                 1

            
	 	Section
              2.  Grant of Transaction Liens 	
               
                 8

            
	 	Section
              3.  General Representations and
              Warranties  	
               
                 9

            
	 	Section
              4.  Further Assurances; General
              Covenants 	
               11

            
	 	Section
              5.  Investment
              Property                   	
               12

            
	 	Section
              6.  Investment Property Collateral
              Accounts 	
               15

            
	 	Section
              7.  Controlled Deposit
              Accounts  	
               15

            
	 	Section
              8.  Cash Collateral Account 	
               16

            
	 	Section
              9.  Operation of Collateral
              Accounts   	
               17

            
	 	Section
              10.  Transfer Of Record
              Ownership    	
               19

            
	 	Section
              11.  Right to Vote
              Securities   	
               20

            
	 	Section
              12.  Certain Cash
              Distributions  	
               20

            
	 	Section
              13.  Remedies upon Event of Default	
               21

            
	 	Section
              14.  Application of Proceeds	
               21

            
	 	Section
              15.  Fees and Expenses; Indemnification	
               21

            
	 	Section
              16.  Authority to Administer Collateral	
               22

            
	 	Section
              17.  Limitation on Duty in Respect of
              Collateral	
               23

            
	 	
              Section
                18.  General Provisions Concerning the Collateral
                Agent

            	
               23

            
	 	
              Section
                19.  Termination of Transaction Liens; Release of
                Collateral

            	
               25

            
	 	
              Section
                20.  Notices

            	
               25

            
	 	
              Section
                21.  No Implied Waivers; Remedies Not
                Exclusive

            	
               26

            
	 	Section
              22.  Successors and Assigns	
               26

            
	 	Section
              23.  Amendments, Waivers and Additional Lien
              Grantors	
               26

            
	 	Section
              24.  Choice of Law	
               27

            
	 	Section
              25.  Waiver of Jury Trial	
               27

            
	 	Section
              26.  Severability	
               27

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULES:

     

    
      	
              Schedule
                1

            	
              Pledged Investment
                Property and Deposit Accounts Owned by Original Lien
                Grantors

            


    

     

    EXHIBITS:

     

    
      	
              Exhibit
                A

            	
              Security
                Agreement Supplement

            


    

     

    
      	
              Exhibit
                B

            	
              Perfection
                Certificate

            


    

     

    



    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    


    SECURITY
      AGREEMENT

     

    THIS
      SECURITY AGREEMENT (this
“Agreement”) is entered into as of July 30, 2007 (the
“Effective Date”) by EVERGREEN ENERGY INC., a Delaware
      corporation (the “Issuer”), EVERGREEN OPERATIONS, LLC, a
      Delaware limited liability company (“Evergreen Operations”),
      KFX PLANT, LLC, a Wyoming limited liability company (“KFx
      Plant”), KFX OPERATIONS, LLC, a Wyoming limited liability company
      (“KFx Operations”), LANDRICA DEVELOPMENT COMPANY, a South
      Dakota corporation (“Landrica”), and BUCKEYE INDUSTRIAL MINING
      CO., an Ohio corporation (“Buckeye,” and together with
      Evergreen Operations, KFx Plant, KFx Operations and Landrica, the
“Subsidiary Guarantors”) in favor of U.S. BANK NATIONAL
      ASSOCIATION, in its capacity as Collateral Agent and Trustee (the
“Collateral Agent”) for the benefit of the Holders (as defined
      below).

    


    RECITALS

     

    WHEREAS,
      the Issuer, the Subsidiary Guarantors and the Collateral Agent, have entered
      into an Indenture, dated as of July 30, 2007 (as amended, restated, supplemented
      or otherwise modified from time to time, the “Indenture”),
      providing for the issuance of the 8.00% Convertible Senior Notes due 2012 (the
      “Notes”) of the Issuer, all as contemplated therein (with the
      holders from time to time of Notes being referred to herein as the
“Holders” and, together with the Collateral Agent, as the
“Secured Parties”);

    


    WHEREAS,
      pursuant to Article 13 of the Indenture, each Subsidiary Guarantor has jointly
      and severally guaranteed to the Secured Parties the payment when due of all
      the
      Secured Obligations (as hereinafter defined);

    


    WHEREAS,
      it is a condition precedent to the issuance of the Notes by the Issuer that
      each
      Lien Grantor shall have executed and delivered to the Collateral Agent this
      Agreement;

    


    NOW,
      THEREFORE, in consideration of the foregoing and other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      parties hereto agree as follows:

     

    Section
      1.  Definitions.

     

    (a)        Terms
      Defined in Indenture.  Terms defined in the Indenture and not
      otherwise defined in subsection (b) or (c) of this Section 1 have, as used
      herein, the respective meanings provided for therein.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    (b)        Terms
      Defined in UCC.  As used herein, each of the following terms has
      the meaning specified in the UCC:

     

    
      	
              Term

            	
              UCC

            
	
              Authenticate

            	
              9-102

            
	
              Certificated
                Security

            	
              8-102

            
	
              Deposit
                Account

            	
              9-102

            
	
              Entitlement
                Holder

            	
              8-102

            
	
              Entitlement
                Order

            	
              8-102

            
	
              Financial
                Asset

            	
              8-102
                & 103

            
	
              Investment
                Property

            	
              9-102

            
	
              Securities
                Account

            	
              8-501

            
	
              Securities
                Intermediary

            	
              8-102

            
	
              Security

            	
              8-102
                & 103

            
	
              Security
                Entitlement

            	
              8-102

            
	
              Supporting
                Obligations

            	
              9-102

            
	
              Uncertificated
                Security

            	
              8-102

            


    

    


    (c)        Additional
      Definitions.  The following additional terms, as used herein,
      have the following meanings:

     

    “Agreement”
      has the meaning specified in the preamble hereto.

     

    “Buckeye”
      has the meaning specified in the preamble hereto.

     

    “Cash
      Collateral Accounts” mean, collectively, the Issuer Cash Collateral
      Account and each of the Subsidiary Guarantor Cash Collateral
      Accounts.

     

    “Cash
      Distributions” means dividends, interest and other distributions and
      payments (including proceeds of liquidation, sale or other disposition) made
      or
      received in cash upon or with respect to any Collateral.

     

    “Collateral”
      has the meaning specified in Section 2(a).

     

     “Collateral
      Accounts” means the Cash Collateral Accounts, the Controlled Deposit
      Accounts, the Controlled Securities Accounts and the Investment Property
      Collateral Accounts.

     

    “Collateral
      Agent” has the meaning specified in the preamble hereto.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    “Collateral
      Price Trigger” has the meaning specified in the Indenture.

     

     “Control”
      has the following meanings:

     

    (a)        when
      used with respect to any Security or Security Entitlement, the meaning specified
      in UCC Section 8-106, and

     

    (b)        when
      used with respect to any Deposit Account, the meaning specified in UCC Section
      9-104.

     

    “Controlled
      Deposit Account” means a Deposit Account (i) that is subject to a
      Deposit Account Control Agreement or (ii) as to which the Collateral Agent
      is
      the Depositary Bank’s “customer” (as defined in UCC Section 4-104).

     

    “Controlled
      Securities Account” means a Securities Account that (i) is maintained
      in the name of a Lien Grantor at an office of a Securities Intermediary located
      in the United States and (ii) together with all Financial Assets credited
      thereto and all related Security Entitlements, is subject to a Securities
      Account Control Agreement among such Lien Grantor, the Collateral Agent and
      such
      Securities Intermediary.

     

    “Deposit
      Account Control Agreement” means, with respect to any Deposit Account
      of any Lien Grantor, a deposit account control agreement among such Lien
      Grantor, the Collateral Agent and the relevant Depositary Bank, (i) providing
      that such Depositary Bank will comply with instructions originated by the
      Collateral Agent directing disposition of the funds in such Deposit Account
      without further consent by such Lien Grantor and (ii) subordinating to the
      relevant Transaction Lien all claims of the Depositary Bank to such Deposit
      Account (except its right to deduct its normal operating charges and any
      uncollected funds previously credited thereto), which agreement shall be in
      form
      and substance satisfactory to the Collateral Agent.

     

    “Depositary
      Bank” means a bank at which a Controlled Deposit Account is
      maintained.

     

    “Effective
      Date” has the meaning specified in the preamble hereto.

     

    “Environmental
      Laws” means all laws, rules, regulations, codes, ordinances, orders,
      decrees, judgments, injunctions, notices or binding agreements issued,
      promulgated or entered into by any Governmental Authority, relating in any
      way
      to the environment, the preservation or reclamation of natural resources, the
      management, release or threatened release of any Hazardous Material or health
      and safety matters.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    “Environmental
      Liability” means any liability, contingent or otherwise (including any
      liability for damages, costs of remediation, fines, penalties or indemnities),
      of any Credit Party directly or indirectly resulting from or based on (a)
      violation of any Environmental Law, (b) the generation, use, handling,
      transportation, storage, treatment or disposal of any Hazardous Material, (c)
      exposure to any Hazardous Material, (d) the release or threatened release of
      any
      Hazardous Material into the environment or (e) any contract, agreement or other
      consensual arrangement pursuant to which liability is assumed or imposed with
      respect to any of the foregoing.

     

    “Escrow
      Amount” has the meaning specified in Section 8(b)(i).

     

    “Evergreen
      Operations” has the meaning specified in the preamble
      hereto.

     

    “Excluded
      Accounts” has the meaning specified in Section 2(a).

     

    “Federal
      Government” means the federal government of the United States or any
      agency or instrumentality thereof.

     

    “Governmental
      Authority” means the government of the United States, any other nation
      or any political subdivision thereof, whether state or local, and any agency,
      authority, instrumentality, regulatory body, court, central bank or other entity
      exercising executive, legislative, judicial, taxing, regulatory or
      administrative powers or functions of or pertaining to government.

     

    “Hazardous
      Materials” means all explosive or radioactive substances or wastes and
      all hazardous or toxic substances, wastes or other pollutants, including
      petroleum or petroleum distillates, asbestos or asbestos-containing materials,
      polychlorinated biphenyls, radon gas, infectious or medical wastes and all
      other
      substances or wastes of any nature regulated pursuant to any Environmental
      Law.

     

    “Holders”
      has the meaning specified in the recitals hereto.

     

    “Indenture”
      has the meaning specified in the recitals hereto.

     

    “Investment
      Property Collateral Account” has the meaning specified in Section
      9.

     

    “Issuer”
      has the meaning specified in the preamble hereto.

     

    “Issuer
      Cash Collateral Account” is the account named under the caption
“Issuer Cash Collateral Account” in Part IV of Schedule
      1.

     

    “KFx
      Operations” has the meaning specified in the preamble
      hereto.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    “KFx
      Plant” has the meaning specified in the preamble hereto.

     

    “Landrica”
      has the meaning specified in the preamble hereto.

     

     “Lien
      Grantors” means the Issuer and the Subsidiary Guarantors.

     

    “Liquid
      Investment” means a Permitted Investment (other than commercial paper)
      that matures within 30 days after it is first included in the
      Collateral.

     

    “LLC
      Interest” means a membership interest or similar interest in a limited
      liability company.

     

    “Notes”
      has the meaning specified in the recitals hereto.

     

    “Noteholder
      Documents” means the Indenture, the Notes and the Security
      Documents.

     

     “Opinion
      of Counsel” means a written opinion of legal counsel (who may be
      counsel to a Lien Grantor or other counsel, in either case approved by the
      Collateral Agent) addressed and delivered to the Collateral Agent.

     

    “Original
      Lien Grantor” means any Lien Grantor that grants a Lien on any of its
      assets hereunder on the Effective Date.

     

    “own”
      refers to the possession of sufficient rights in property to grant a security
      interest therein as contemplated by UCC Section 9-203, and
“acquire” refers to the acquisition of any such
      rights.

     

    “Partnership
      Interest” means a partnership interest, whether general or
      limited.

     

     “Perfection
      Certificate” means, with respect to any Lien Grantor, a certificate
      substantially in the form of Exhibit B, completed and supplemented with the
      schedules contemplated thereby to the satisfaction of the Collateral Agent,
      and
      signed by an officer of such Lien Grantor.

     

    “Permitted
      Investments” means investments in:

     

    (a)           direct
      obligations of, or obligations the principal of and interest on which are
      unconditionally guaranteed by, the United States (or by any agency thereof
      to
      the extent such obligations are backed by the full faith and credit of the
      United States), in each case maturing within one year from the date of
      acquisition thereof;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    (b)           commercial
      paper maturing within 270 days from the date of acquisition thereof and having,
      at such date of acquisition, the highest credit rating obtainable from S&P
      or from Moody’s;

     

    (c)           certificates
      of deposit, banker’s acceptances and time deposits maturing within 180 days from
      the date of acquisition thereof issued or guaranteed by or placed with, and
      money market deposit accounts issued or offered by, any domestic office of
      any
      commercial bank organized under the laws of the United States or any State
      thereof which has a combined capital and surplus and undivided profits of at
      least $500,000,000; and

     

    (d)           fully
      collateralized repurchase agreements with a term of not more than 30 days for
      securities described in clause (a) above and entered into with a financial
      institution satisfying the criteria described in clause (c) above.

     

    “Permitted
      Liens” has the meaning specified in the Indenture.

     

    “Pledged”,
      when used in conjunction with any type of asset, means at any time an asset
      of
      such type that is included (or that creates rights that are included) in the
      Collateral at such time.

     

    “Pledged
      Equity Interest” means the Equity Interests in Evergreen
      Operations.

     

     “Proceeds”
      means all proceeds of, and all other profits, products, rents or receipts,
      in
      whatever form, arising from the collection, sale, lease, exchange, assignment,
      licensing or other disposition of, or other realization upon, any Collateral,
      including all claims of the relevant Lien Grantor against third parties for
      loss
      of, damage to or destruction of, or for proceeds payable under, or unearned
      premiums with respect to, policies of insurance in respect of, any Collateral,
      and any condemnation or requisition payments with respect to any
      Collateral.

     

    “Securities
      Account Control
      Agreement” means, when used with respect to a Securities Account, a
      securities account control agreement among the relevant Securities Intermediary,
      the relevant Lien Grantor and the Collateral Agent to the effect that such
      Securities Intermediary will comply with Entitlement Orders originated by the
      Collateral Agent with respect to such Securities Account without further consent
      by the relevant Lien Grantor, which agreement shall be in form and substance
      satisfactory to the Collateral Agent.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    “Security
      Agreement Supplement” means a Security Agreement Supplement,
      substantially in the form of Exhibit A, signed and delivered to the Collateral
      Agent for the purpose of adding a Lien Grantor as a party hereto pursuant to
      Section 23 and/or adding additional property to the Collateral.

     

    “Security
      Documents” has the meaning set forth in the Indenture.

     

    “Security
      Interest” has the meaning set forth 2(a).

     

    “Secured
      Obligations” has the meaning set forth 2(a).

     

    “Secured
      Parties” has
      the meaning specified in the recitals hereto.

     

    “Subsidiary
      Guarantor Cash Collateral Account” has the meaning specified in Section
      10.

     

    “Subsidiary
      Guarantors” has the meaning specified in the preamble.

     

    “Termination
      Date”
means for all Lien Grantors, the date which is the earlier to occur
      of (a)
      payment in full of the Secured Obligations (other than contingent indemnity
      obligations) of all Lien Grantors or (b) the satisfaction of the Collateral
      Price Trigger by the Issuer.

    


    “Transaction
      Liens” means the Liens granted by the Lien Grantors under the Security
      Documents.

     

    “UCC”
      means the Uniform Commercial Code as in effect from time to time in the State
      of
      New York; provided that, if perfection or the effect of perfection or
      non-perfection or the priority of any Transaction Lien on any Collateral is
      governed by the Uniform Commercial Code as in effect in a jurisdiction other
      than New York, “UCC” means the Uniform Commercial Code as in effect from time to
      time in such other jurisdiction for purposes of the provisions hereof relating
      to such perfection, effect of perfection or non-perfection or
      priority.

     

    (d)        Terms
      Generally.  The definitions of terms herein (including those
      incorporated by reference to the UCC or to another document) apply equally
      to
      the singular and plural forms of the terms defined.  Whenever the
      context may require, any pronoun includes the corresponding masculine, feminine
      and neuter forms.  The words “include”,
“includes” and “including” shall be deemed to
      be followed by the phrase “without limitation”.  The
      word “will” shall be construed to have the same meaning and
      effect as the word “shall”.  Unless the context
      requires otherwise, (i) any definition of or reference to any agreement,
      instrument or other document herein shall be construed as referring to such
      agreement, instrument or other document as from time to time
      amended,

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    supplemented
      or otherwise modified (subject to any restrictions on such amendments,
      supplements or modifications set forth herein), (ii)any reference herein to
      any
      Person shall be construed to include such Person’s successors and
      assigns, (iii) the words “herein”,
“hereof” and “hereunder”, and words of similar
      import, shall be construed to refer to this Agreement in its entirety and not
      to
      any particular provision hereof, (iv) all references herein to Sections,
      Exhibits and Schedules shall be construed to refer to Sections of, and Exhibits
      and Schedules to, this Agreement and (v) the word
“property” shall be construed to refer to any and all tangible
      and intangible assets and properties, including cash, securities, accounts
      and
      contract rights.

     

    Section
      2.  Grant of Transaction
      Liens.

     

    (a)        Each
      Lien Grantor hereby collaterally assigns and pledges to the Collateral Agent,
      its successors and assigns, for the ratable benefit of the Secured Parties,
      and
      hereby grants to the Collateral Agent, its successors and assigns, for the
      ratable benefit of the Secured Parties, as security for the payment or
      performance in full of the Obligations of such Grantor under the Noteholder
      Documents (the “Secured Obligations”), a security interest (the
“Security Interest”) in all right, title and interest of such
      Lien Grantor in, to and under any and all of the following assets and properties
      now owned or at any time hereafter acquired by such Grantor or in which such
      Grantor now has or at any time in the future may acquire any right, title or
      interest (collectively, the “Collateral”):

     

    (i)            all
      Deposit Accounts;

     

    (ii)            all
      Pledged Equity Interests;

     

    (iii)            all
      Investment Property other than Evergreen Operations Equity Interests in Buckeye,
      Landrica, KFx Plant and KFx Operations;

     

    (iv)            all
      of such Lien Grantor’s ownership interest in (1) its Collateral
      Accounts, (2) all Financial Assets credited to its Collateral Accounts from
      time to time and all Security Entitlements in respect thereof, (3) all cash
      held in its Collateral Accounts from time to time and (4) all other money
      in the possession of the Collateral Agent; and

     

    (v)            all
      Proceeds of the Collateral described in the foregoing clauses (i) through
      (iv);

     

    provided
      that the following property is excluded from the foregoing security
      interests: (A) any Deposit Account or Securities Account
      created in connection with one or more Projects (as defined in the Indenture)
      and (B) any Deposit Account or Securities Account holding cash that has been
      posted, segregated or


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    otherwise
      set aside in connection with certain regulatory and contractual obligations,
      including environmental remediation (clauses (A) and (B) collectively, the
      “Excluded Accounts”) .

    


    (b)        With
      respect to each right to payment or performance included in the Collateral
      from
      time to time, the Transaction Lien granted therein includes a continuing
      security interest in (i) any Supporting Obligation that supports such
      payment or performance and (ii) any Lien that (x) secures such right to
      payment or performance or (y) secures any such Supporting
      Obligation.

     

    (c)        The
      Transaction Liens are granted as security only and shall not subject the
      Collateral Agent or any other Secured Party to, or transfer or in any way affect
      or modify, any obligation or liability of the Issuer with respect to any of
      the
      Collateral or any transaction in connection therewith.

     

    Section
      3.  General Representations and
      Warranties.  (I) Each Original Lien Grantor represents and
      warrants that:

     

    (a)        Such
      Lien Grantor is duly organized, validly existing and in good standing under
      the
      laws of the jurisdiction identified as its jurisdiction of organization in
      its
      Perfection Certificate.

     

    (b)        Schedule
      1 lists, as of the Effective Date, (i) all Securities owned by such Lien Grantor
      that are Pledged pursuant to this Agreement, (ii) all Securities Accounts to
      which Financial Assets are credited in respect of which such Lien Grantor owns
      Security Entitlements, and (iii) all Deposit Accounts owned by such Lien
      Grantor.

     

    (c)        Such
      Lien Grantor has good and marketable title to all its Collateral (subject to
      exceptions that are, in the aggregate, not material), free and clear of any
      Lien
      other than Permitted Liens.

     

    (d)        Such
      Lien Grantor has not performed any acts that might prevent the Collateral Agent
      from enforcing any of the provisions of the Security Documents or that would
      limit the Collateral Agent in any such enforcement.  No financing
      statement, security agreement, mortgage or similar or equivalent document or
      instrument covering all or part of the Collateral owned by such Lien Grantor
      is
      on file or of record in any jurisdiction in which such filing or recording
      would
      be effective to perfect or record a Lien on such Collateral, except financing
      statements, mortgages or other similar or equivalent documents with respect
      to
      Permitted Liens.  After the Effective Date, no Collateral owned by
      such Lien Grantor will be in the possession or under the Control of any other
      Person having a claim thereto or security interest therein, other than a
      Permitted Lien.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    (e)        Such
      Lien Grantor has delivered a Perfection Certificate to the Collateral
      Agent.  The information set forth therein is correct and complete as
      of the Effective Date. Within 60 days after the Effective Date, such Lien
      Grantor will furnish to the Collateral Agent a file search report from each
      UCC
      filing office listed in its Perfection Certificate, showing the filing made
      at
      such filing office to perfect the Transaction Liens on its
      Collateral.

     

    (f)        When
      UCC financing statements describing the Collateral have been filed in the
      offices specified in such Perfection Certificate, the Transaction Liens will
      constitute perfected security interests in the collateral described therein
      owned by such Lien Grantor to the extent that a security interest therein may
      be
      perfected by filing pursuant to the UCC, prior to all Liens and rights of others
      therein except Permitted Liens. Except for the filing of such UCC financing
      statements, no registration, recordation or filing with any governmental body,
      agency or official is required in connection with the execution or delivery of
      the Security Documents or is necessary for the validity or enforceability
      thereof or for the perfection or due recordation of the Transaction Liens or
      for
      the enforcement of the Transaction Liens.

     

    (II)          The
      Issuer represents and warrants that:

     

    (a)           The
      Issuer owns and holds the Pledged Equity Interests directly (i.e., not
      through a Subsidiary, a Securities Intermediary or any other Person) as of
      the
      Effective Date.

     

    (b)           All
      Pledged Equity Interests owned by the Issuer are owned by it free and clear
      of
      any Lien other than (g) the Transaction Liens and (h) any inchoate tax
      liens.  All shares of capital stock included in such Pledged Equity
      Interests (including shares of capital stock in respect of which the Issuer
      owns
      a Security Entitlement) have been duly authorized and validly issued and are
      fully paid and non-assessable.  None of such Pledged Equity Interests
      is subject to any option to purchase or similar right of any
      Person.  The Issuer is not and will not become a party to or otherwise
      bound by any agreement (except the Noteholder Documents) which restricts in
      any
      manner the rights of any present or future holder of any Pledged Equity Interest
      with respect thereto.

     

    (III)         Evergreen
      Operations represents and warrants that:

     

    (a)           Evergreen
      Operations hereby (i) acknowledges the security interest of the Collateral
      Agent
      in such Pledged Equity Interest granted by the Issuer hereunder, (ii) confirms
      that it has not received notice of any other Lien (except Permitted Liens)
      as of
      the Effective Date in such Pledged Equity Interests (and has not agreed to
      accept instructions from any other Person in respect of such Pledged Equity
      Interests), (iii) agrees that it will comply with the instructions
      with

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    respect
      to such Pledged Equity Interests originated by the Collateral Agent without
      further consent of the Issuer and (iv) otherwise agrees that it will be bound
      by
      the terms of this Agreement relating to the Pledged Equity Interests issued
      by
      it.

     

    (b)           Evergreen
      Operations hereby consents to the extent required by applicable organizational
      documents to the pledge by the Issuer, pursuant to the terms hereof, of the
      Pledged Equity Interests, and upon the occurrence and during the continuance
      of
      an Event of Default, to the transfer of such Pledged Equity Interests to the
      Collateral Agent or its nominee and to the substitution of the Collateral Agent
      or its nominee as the substituted partner or member in such limited liability
      company with all rights, powers and duties of a limited member.

     

    Section
      4.  Further Assurances; General
      Covenants.  Each Lien Grantor covenants as
      follows:

     

    (a)        Such
      Lien Grantor will, from time to time, at the Issuer’s expense, execute, deliver,
      file and record any statement, assignment, instrument, document, agreement
      or
      other paper and take any other action (including any filing of financing or
      continuation statements under the UCC) that from time to time may be necessary
      or desirable, or that the Collateral Agent may request, in order
      to:

     

    (i)            create,
      preserve, perfect, confirm or validate the Transaction Liens on such Lien
      Grantor’s Collateral;

     

    (ii)            in
      the case of Pledged Deposit Accounts and Pledged Investment Property, cause
      the
      Collateral Agent to have Control thereof;

     

    (iii)           enable
      the Collateral Agent and the other Secured Parties to obtain the full benefits
      of the Security Documents; or

     

    (iv)           enable
      the Collateral Agent to exercise and enforce any of its rights, powers and
      remedies with respect to any of such Lien Grantor’s Collateral.

     

    To
      the extent permitted by applicable law, such Lien Grantor authorizes the
      Collateral Agent to execute and file such financing statements or continuation
      statements without such Lien Grantor’s signature appearing
      thereon.  Such Lien Grantor agrees that a carbon, photographic,
      photostatic or other reproduction of this Agreement or of a financing statement
      is sufficient as a financing statement.

     

    (b)        Such
      Lien Grantor will not (i) change its name or corporate structure, (ii)
      change its location (determined as provided in UCC Section 9-307) or (iii)
      become bound, as provided in UCC Section 9-203(d) or otherwise, by a security
      agreement entered into by another Person, unless it shall

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    have
      given the Collateral Agent prior notice thereof and delivered an Opinion of
      Counsel with respect thereto in accordance with Section 4(c).

     

    (c)        At
      least 30 days before it takes any action contemplated by Section 4(b), such
      Lien
      Grantor will, at the Issuer’s expense, cause to be delivered to the Collateral
      Agent an Opinion of Counsel, in form and substance satisfactory to the
      Collateral Agent, to the effect that (i) all financing statements and
      amendments or supplements thereto, continuation statements and other documents
      required to be filed or recorded in order to perfect and protect the Transaction
      Liens against all creditors of and purchasers from such Lien Grantor after
      it
      takes such action (except any continuation statements specified in such Opinion
      of Counsel that are to be filed more than six months after the date thereof)
      have been filed or recorded in each office necessary for such purpose, (ii)
      all fees and taxes, if any, payable in connection with such filings or
      recordations have been paid in full and (iii) such action will not
      adversely affect the perfection or priority of the Transaction Lien on any
      Collateral to be owned by such Lien Grantor after it takes such action or the
      accuracy of such Lien Grantor’s representations and warranties herein relating
      to such Collateral.

     

    (d)        Such
      Lien Grantor will not sell, lease, exchange, assign or otherwise dispose of,
      or
      grant any option with respect to, any of its Collateral (it being understood
      that such Lien Grantor may withdraw, or direct the disposition of, funds held
      in
      any Collateral Account (except the Cash Collateral Accounts) subject to the
      provisions of Section 9 hereto).

     

    (e)        Such
      Lien Grantor will, promptly upon request, provide to the Collateral Agent all
      information and evidence concerning such Lien Grantor’s Collateral that the
      Collateral Agent may reasonably request from time to time to enable it to
      enforce the provisions of the Security Documents.

     

    (f)        From
      time to time upon request by the Collateral Agent, such Lien Grantor will,
      at
      the Issuer’s expense, cause to be delivered to the Secured Parties an Opinion of
      Counsel satisfactory to the Collateral Agent as to such matters relating to
      the
      transactions contemplated hereby as the Collateral Agent may reasonably
      request.

     

    Section
      5.  Investment
      Property.  Each Lien Grantor represents, warrants and
      covenants as follows:

     

    (a)        Certificated
      Securities.  On the Effective Date, (in the case of an Original
      Lien Grantor) or the date on which it signs and delivers its first Security
      Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor
      will deliver to the Collateral Agent as Collateral hereunder all certificates
      representing Pledged Certificated Securities owned by such Lien
      Grantor.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    Thereafter,
      whenever such Lien Grantor acquires any other certificate representing a Pledged
      Certificated Security in any Subsidiary Guarantor, such Lien Grantor will
      immediately deliver such certificate to the Collateral Agent as Collateral
      hereunder.

     

    (b)        Uncertificated
      Securities.  On the Effective Date, (in the case of an Original
      Lien Grantor) or the date on which it signs and delivers its first Security
      Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor
      will enter into (and cause the relevant Subsidiary Guarantor to enter into)
      an
      Issuer Control Agreement in respect of each Pledged Uncertificated Security
      then
      by such Lien Grantor and deliver such Issuer Control Agreement to the Collateral
      Agent (which shall enter into the same).  In connection therewith,
      such Lien Grantor shall caused to be delivered to the Collateral Agent an
      Opinion of Counsel satisfactory to the Collateral Agent as to the creation
      and
      perfection of the security interests contemplated by this sub-clause (b) and
      such other matters as the Collateral Agent may reasonably request. Thereafter,
      whenever such Lien Grantor acquires any other Pledged Uncertificated Security
      in
      any Subsidiary Guarantor, such Lien Grantor will enter into (and cause the
      relevant issuer to enter into) an Issuer Control Agreement in respect of such
      Pledged Uncertificated Security and deliver such Issuer Control Agreement to
      the
      Collateral Agent (which shall enter into the same).  The provisions of
      this subsection are subject to Section 10(c).

     

    (c)        Security
      Entitlements.  Not later than 90 days from the Effective Date (in
      the case of an Original Lien Grantor) or the date on which it signs and delivers
      its first Security Agreement Supplement (in the case of any other Lien Grantor),
      such Lien Grantor will, with respect to each Security Entitlement then owned
      by
      it, enter into (and cause the relevant Securities Intermediary to enter into)
      a
      Securities Account Control Agreement in respect of such Security Entitlement
      and
      the Securities Account to which the underlying Financial Asset is credited
      and
      will deliver such Securities Account Control Agreement to the Collateral Agent
      (which shall enter into the same). In connection therewith, such Lien Grantor
      shall caused to be delivered to the Collateral Agent an Opinion of Counsel
      satisfactory to the Collateral Agent as to the creation and perfection of the
      security interests contemplated by this sub-clause (c) and such other matters
      as
      the Collateral Agent may reasonably request. Thereafter, whenever such Lien
      Grantor acquires any other Security Entitlement, such Lien Grantor will, as
      promptly as practicable, cause the underlying Financial Asset to be credited
      to
      a Controlled Securities Account.  The provisions of this subsection
      are subject to Section 10(c).

     

    (d)        Perfection
      as to Certificated Securities.  When such Lien Grantor delivers
      the certificate representing any Pledged Certificated Security owned by it
      to
      the Collateral Agent and complies with Section 5(h) in connection with
      such

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    delivery, (i)
      the Transaction Lien on such Pledged Certificated Security will be perfected,
      subject to no prior Liens or rights of others, (ii) the Collateral Agent
      will have Control of such Pledged Certificated Security and (iii) the
      Collateral Agent will be a protected purchaser (within the meaning of UCC
      Section 8-303) thereof.

     

    (e)        Perfection
      as to Uncertificated Securities.  When such Lien Grantor, the
      Collateral Agent and the issuer of any Pledged Uncertificated Security owned
      by
      such Lien Grantor enter into an Issuer Control Agreement with respect
      thereto, (i) the Transaction Lien on such Pledged Uncertificated Security
      will be perfected, subject to no prior Liens or rights of others, (ii) the
      Collateral Agent will have Control of such Pledged Uncertificated Security
      and (iii) the Collateral Agent will be a protected purchaser (within the
      meaning of UCC Section 8-303) thereof.

     

    (f)        Perfection
      as to Security Entitlements.  So long as the Financial Asset
      underlying any Security Entitlement owned by such Lien Grantor is credited
      to a
      Controlled Securities Account or to its Investment Property Collateral
      Account, (i) the Transaction Lien on such Security Entitlement will be
      perfected, subject to no prior Liens or rights of others (except Liens and
      rights of the relevant Securities Intermediary that are Permitted
      Liens), (ii) the Collateral Agent will have Control of such Security
      Entitlement and (iii) no action based on an adverse claim to such Security
      Entitlement or such Financial Asset, whether framed in conversion, replevin,
      constructive trust, equitable lien or other theory, may be asserted against
      the
      Collateral Agent or any other Secured Party.

     

    (g)        Agreement
      as to Applicable Jurisdiction.  In respect of all Security
      Entitlements owned by such Lien Grantor, and all Securities Accounts to which
      the related Financial Assets are credited, the Securities Intermediary’s
      jurisdiction (determined as provided in UCC Section 8-110(e)) will at all times
      be located in the United States.

     

    (h)        Delivery
      of Pledged Certificates.  All Pledged Certificates, when
      delivered to the Collateral Agent, will be in suitable form for transfer by
      delivery, or accompanied by duly executed instruments of transfer or assignment
      in blank, with signatures appropriately guaranteed, all in form and substance
      satisfactory to the Collateral Agent.

     

    (i)        Communications.  Each
      Lien Grantor will promptly give to the Collateral Agent copies of any notices
      and other communications received by it with respect to (i) Pledged
      Securities registered in the name of such Lien Grantor or its nominee
      and (ii) Pledged Security Entitlements as to which such Lien Grantor is the
      Entitlement Holder.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    (j)        Compliance
      with Applicable Foreign Laws.  If and so long as the Collateral
      includes (i) any Investment Property issued by, a legal entity organized
      under the laws of a jurisdiction outside the United States or (ii) any
      Security Entitlement in respect of a Financial Asset issued by such a foreign
      legal entity, the relevant Lien Grantor will take all such action as may be
      required under the laws of such foreign jurisdiction to ensure that the
      Transaction Lien on such Collateral ranks prior to all Liens and rights of
      others therein.  If and so long as the Collateral includes any Pledged
      Uncertificated Security issued by such a foreign legal entity, the relevant
      Lien
      Grantor will comply with this subsection, and will not be required to comply
      with Section 5(b), with respect thereto.

     

    Section
      6.  Investment Property Collateral
      Accounts.  (a) At any time when an Event of Default has occurred
      and is continuing, the Collateral Agent will establish, at an office located
      in
      the United States, a Securities Account with respect to each Lien Grantor (such
      Lien Grantor’s “Investment Property Collateral Account”), in
      the name and under the exclusive control of the Collateral Agent, to which
      there
      shall be credited from time to time (i) all Securities that are to be credited
      thereto pursuant to Section 10(a) or any other provision of any Security
      Document, (ii) any other Financial Assets that underlie Security Entitlements
      included in such Lien Grantor’s Collateral and (iii) the cash proceeds
      thereof.  Each Investment Property Collateral Account will be operated
      as provided in Section 9.

     

    (b)        The
      Collateral Agent and each Lien Grantor agree (and will cause the relevant
      Securities Intermediary, if other than the Collateral Agent, to agree)
      that (i) such Lien Grantor’s Investment Property Collateral Account will be
      a Securities Account, (ii) the Collateral Agent will be the Entitlement
      Holder with respect thereto and (iii) all property (whether Investment
      Property, financial asset, security, instrument, cash or other property)
      credited to such account will be treated as Financial Assets.

     

    Section
      7.  Controlled Deposit
      Accounts.  Each Lien Grantor represents, warrants and
      covenants as follows:

     

    (a)        Not
      later than 90 days from the Effective Date (in the case of an Original Lien
      Grantor) or the date on which it signs and delivers its first Security Agreement
      Supplement (in the case of any other Lien Grantor), such Lien Grantor will,
      with
      respect to each of such Lien Grantor’s Deposit Account (other than the Excluded
      Accounts) enter into (and cause the relevant Depository Bank to enter into)
      a
      Deposit Account Control Agreement in respect of such Deposit Account and will
      deliver such Deposit Account Control Agreement to the Collateral Agent (which
      shall enter into the same). In connection therewith, such Lien Grantor shall
      caused to be delivered to the Collateral Agent an Opinion of Counsel
      satisfactory to the Collateral Agent as to the creation and perfection of the
      security interests

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    contemplated
      by this sub-clause (a) and such other matters as the Collateral Agent may
      reasonably request.

     

    (b)        All
      cash owned by such Lien Grantor will be deposited, upon or promptly after the
      receipt thereof, in one or more Controlled Deposit Accounts. Each Controlled
      Deposit Account will be operated as provided in Section 9.

     

    (c)        In
      respect of each Controlled Deposit Account, the Depositary Bank’s jurisdiction
      (determined as provided in UCC Section 9-304) will at all times be a
      jurisdiction in which Article 9 of the Uniform Commercial Code is in
      effect.

     

    (d)        So
      long as the Collateral Agent has Control of a Controlled Deposit Account, the
      Transaction Lien on such Controlled Deposit Account will be perfected, subject
      to no prior Liens or rights of others (except the Depositary Bank’s right to
      deduct its normal operating charges and any uncollected funds previously
      credited thereto).

     

    (e)        Materiality
      Exception.  The Lien Grantors have the right not to comply with
      the foregoing provisions of this Section with respect to Deposit Accounts having
      total collected balances that do not at any time exceed $1,500,000 in the
      aggregate for all Lien Grantors.  However, if an Event of Default
      occurs and is continuing, the Collateral Agent may terminate the foregoing
      right
      not to comply, or reduce the amount thereof, by giving at least 10 Business
      Days’ notice of such termination or reduction to the relevant Lien
      Grantors.

     

    Section
      8.  Cash Collateral
      Account.  (a) (i) The Collateral Agent will establish with
      respect to the Issuer, the Issuer Cash Collateral Account, in the name and
      under
      the exclusive control of the Collateral Agent, into which all amounts owned
      by
      Issuer that are to be deposited therein pursuant to the Noteholder Documents
      shall be deposited from time to time, and (ii) if and when required for purposes
      hereof, the Collateral Agent will establish with respect to each Subsidiary
      Guarantor an account (each, a “Subsidiary Guarantor Cash Collateral
      Account”), in the name and under the exclusive control of the
      Collateral Agent, into which all amounts owned by such Subsidiary Guarantor
      that
      are to be deposited therein pursuant to the Noteholder Documents shall be
      deposited from time to time.  Each Cash Collateral Account will be
      operated as provided in this Section.

     

    (b)        The
      Collateral Agent shall deposit the following amounts, as and when received
      by
      it, as follows:

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    


    (i)             on
      the Effective Date, $18,000,000 (the “Escrow Amount”) to be
      deposited into the Issuer’s Cash Collateral Account as required by Section
      6.01(c) of the Indenture; and

    
       

      (ii)     
each
        amount required by Section 5.13(a)(v) of the Indenture to be deposited into
        Issuer’s Cash Collateral Account or such Subsidary Guarantor’s Cash Collateral
        Account, as applicable; and

    

    
       

      (iii)    
each
        amount
        realized or otherwise received by the Collateral Agent with respect to the
        assets of the Lien Grantors upon any exercise of remedies pursuant to any
        Noteholder Document in the Issuer’s Cash Collateral Account or such Subsidiary
        Guarantor’s Cash Collateral Account, as applicable.

    

    
       

    

    (c)        The
      Collateral Agent shall maintain such records and/or establish such sub-accounts
      as shall be required to enable it to identify the amounts held in the Cash
      Collateral Accounts from time, as applicable. All withdrawals and application
      of
      amounts from the Cash Collateral Accounts shall be in accordance with this
      Section 8, Section 9 and Article 5 or 6 of the Indenture.

     

    (d)        If
      an Event of Default shall have occurred and is continuing, the Collateral Agent
      may (a) liquidate any or all investments held in the Cash Collateral Accounts
      and/or (b) withdraw any amounts held therein and apply such amounts as provided
      in Article 6 of the Indenture.

     

    (e)        Upon
      the termination of the Transaction Liens in accordance with Section 19(a)
      hereof, to the extent that any amounts credited to such Cash Collateral Account
      shall have not withdrawn by the Collateral Agent and applied in accordance
      with
      the terms of the Indenture, such amounts shall, at the relevant Lien Grantor’s
      request, be withdrawn and returned to such Lien Grantor if and when permitted
      by
      the terms of the Indenture (it being understood that the Collateral Agent shall
      be entitled to deduct such amounts owing to it under the Indenture or this
      Agreement and any amounts returned to such Lien Grantor shall be net of the
      foregoing amounts).

     

    Section
      9.  Operation of Collateral
      Accounts.  (a) All Cash Distributions received with respect to assets
      held in any Collateral Account shall be deposited therein promptly upon receipt
      thereof.

     

    (b)        Funds
      held in any Controlled Securities Account or Investment Property Collateral
      Account may, until withdrawn, be invested and reinvested in such Permitted
      Investments as the relevant Lien Grantor shall request from time

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    to
      time; provided that, if an Event of Default shall have occurred and be
      continuing, Collateral Agent may select such Permitted Investments.

     

    (c)        Funds
      held in any Controlled Deposit Account or Cash Collateral Account may, until
      withdrawn, be invested and reinvested in such Liquid Investments as the relevant
      Lien Grantor shall request from time to time; provided that (i) if an
      Event of Default shall have occurred and be continuing, Collateral Agent may
      select such Liquid Investments and (ii) if such Liquid Investments are to
      be held in a Securities Account, either (x) the Collateral Agent is the
      Entitlement Holder with respect to such Liquid Investments or (y) the relevant
      Entitlement Holder and the relevant Securities Intermediary shall have
      theretofore entered into a Securities Account Control Agreement with respect
      to
      such Securities Account and delivered it to the Collateral Agent (which shall
      enter into the same).

     

    (d)        With
      respect to each Collateral Account (except a Cash Collateral Account, as to
      which Section 8 applies), the Collateral Agent will instruct the relevant
      Securities Intermediary or Depositary Bank that the relevant Lien Grantor may
      withdraw, or direct the disposition of, funds held therein unless and until
      the
      Collateral Agent rescinds such instruction.  The Collateral Agent will
      not rescind such instructions unless an Event of Default shall have occurred
      and
      be continuing. With respect to each Cash Collateral Account, the Collateral
      Agent will instruct the relevant Depository Bank that no funds therein may
      be
      withdrawn for any purpose or released to the relevant Lien Grantor unless such
      instruction is given pursuant to the terms of the Indenture, provided that
      in no
      event shall the Escrow Amount be released to the Issuer until the
      Collateral Agent notifies the Depository Bank that the Termination Date has
      occurred.

     

    (e)        No
      Lien Grantor will cause funds to be transferred from a Collateral Account to
      any
      other account owned by the Issuer or its Subsidiaries unless such other account
      is a Collateral Account, provided that, subject to subsection (c)
      above, a Lien Grantor may transfer funds from any Collateral Account (except
      a
      Cash Collateral Account) to any account that is not a Collateral Account unless,
      immediately after such transfer, the aggregate amount held in all such accounts
      that are not Collateral Accounts would exceed $1,500,000.

     

    (f)        If
      an Event of Default shall have occurred and be continuing, the Collateral Agent
      may (i) retain, or instruct the relevant Securities Intermediary or
      Depositary Bank to retain, all cash and investments then held in any Collateral
      Account, (ii) liquidate, or instruct the relevant Securities Intermediary or
      Depositary Bank to liquidate, any or all investments held therein and/or (iii)
      withdraw any amounts held therein and apply such amounts as provided in Section
      14.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    


    (g)        If
      immediately available cash on deposit in any Collateral Account is not
      sufficient to make any distribution or withdrawal to be made pursuant hereto,
      the Collateral Agent will cause to be liquidated, as promptly as practicable,
      such investments held in or credited to such Collateral Account as shall be
      required to obtain sufficient cash to make such distribution or withdrawal
      and,
      notwithstanding any other provision hereof, such distribution or withdrawal
      shall not be made until such liquidation has taken place.

     

    Section
      10.  Transfer Of Record
      Ownership.  (a)At any time when an Event of Default shall have
      occurred and be continuing, the Collateral Agent may (and to the extent that
      action by it is required, the relevant Lien Grantor, if directed to do so by
      the
      Collateral Agent, will as promptly as practicable):

     

    (i)          cause
      each of the Pledged Security (or any portion thereof specified in such
      direction) to be (x) transferred of record into the name of the Collateral
      Agent
      or its nominee or (y) credited to the relevant Lien Grantor’s Investment
      Property Collateral Account; and

     

    (ii)         cause
      the Financial Asset underlying each Pledged Security Entitlement to be credited
      to the relevant Lien Grantor’s Investment Property Collateral
      Account.

     

    (b)        Perfection
      upon Transfer of Record Ownership. If and when any Pledged
      Security (whether certificated or uncertificated) owned by such Lien Grantor
      is
      transferred of record into the name of the Collateral Agent or its nominee
      pursuant to Section 10(a), (i) the Transaction Lien on such Pledged Security
      will be perfected, subject to no prior Liens or rights of others, (ii) the
      Collateral Agent will have Control of such Pledged Security and (iii) the
      Collateral Agent will be a protected purchaser (within the meaning of UCC
      Section 8-303) thereof.  If and when any Pledged Security owned by
      such Lien Grantor is credited to its Investment Property Collateral Account
      pursuant to Section 10(a), Section 5(f) will apply to the resulting Security
      Entitlement.

     

    (c)        Provisions
      Inapplicable after Transfer of Record Ownership.  If the
      provisions of Section 10(a) are implemented, Sections 5(b) and 5(c) shall not
      thereafter apply to (i) any Pledged Security that is registered in the name
      of
      the Collateral Agent or its nominee or (ii) any Security Entitlement in respect
      of which the Collateral Agent or its nominee is the Entitlement
      Holder.

     

    (d)        Communications
      after Transfer of Record Ownership.  The Collateral Agent will
      promptly give to the relevant Lien Grantor copies of any notices and other
      communications received by the Collateral Agent with respect to (i) Pledged
      Securities registered in the name of the Collateral Agent or

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    


    its
      nominee and (ii) Pledged Security Entitlements as to which the Collateral
      Agent or its nominee is the Entitlement Holder.

     

    Section
      11.  Right to Vote
      Securities.  (a) Unless an Event of Default shall have occurred
      and be continuing, each Lien Grantor will have the right, from time to time,
      to
      vote and to give consents, ratifications and waivers with respect to any Pledged
      Security owned by it and the Financial Asset underlying any Pledged Security
      Entitlement owned by it, and the Collateral Agent will, upon receiving a written
      request from such Lien Grantor, deliver to such Lien Grantor or as specified
      in
      such request such proxies, powers of attorney, consents, ratifications and
      waivers in respect of any such Security that is registered in the name of the
      Collateral Agent or its nominee or any such Pledged Security Entitlement as
      to
      which the Collateral Agent or its nominee is the Entitlement Holder, in each
      case as shall be specified in such request and be in form and substance
      satisfactory to the Collateral Agent.  Unless an Event of Default
      shall have occurred and be continuing, the Collateral Agent will have no right
      to take any action which the owner of a Pledged Partnership Interest or Pledged
      LLC Interest is entitled to take with respect thereto, except the right to
      receive payments and other distributions to the extent provided
      herein.

     

    (b)        If
      an Event of Default shall have occurred and be continuing, the Collateral Agent
      will have the right to the extent permitted by law (and, in the case of a
      Pledged Partnership Interest or Pledged LLC Interest, by the relevant
      partnership agreement, limited liability company agreement, operating agreement
      or other governing document) to vote, to give consents, ratifications and
      waivers and to take any other action with respect to the Pledged Investment
      Property, the other Pledged Equity Interests (if any) and the Financial Assets
      underlying the Pledged Security Entitlements, with the same force and effect
      as
      if the Collateral Agent were the absolute and sole owner thereof, and each
      Lien
      Grantor will take all such action as the Collateral Agent may reasonably request
      from time to time to give effect to such right.

     

    Section
      12.  Certain Cash
      Distributions.  Cash Distributions with respect to
      assets held in a Collateral Account shall be deposited and held therein, or
      withdrawn therefrom, as provided in Section 9.  Cash Distributions
      with respect to any Pledged Equity Interest that is not held in a Collateral
      Account (whether held in the name of a Lien Grantor or in the name of the
      Collateral Agent or its nominee) shall be deposited, promptly upon receipt
      thereof, in a Controlled Deposit Account of the relevant Lien Grantor;
provided that, if an Event of Default shall have occurred and be
      continuing, the Collateral Agent may deposit, or direct the recipient thereof
      to
      deposit, each such Cash Distribution in the relevant Lien Grantor’s Cash
      Collateral Account.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    


    Section
      13.  Remedies upon Event of
      Default.  (a) If an Event of Default shall have occurred and be
      continuing, the Collateral Agent may exercise (or cause its sub-agents to
      exercise) any or all of the remedies available to it (or to such sub-agents)
      under the Security Documents.

     

    (b)        Without
      limiting the generality of the foregoing, if an Event of Default shall have
      occurred and be continuing, the Collateral Agent may exercise on behalf of
      the
      Secured Parties all the rights of a secured party under the UCC (whether or
      not
      in effect in the jurisdiction where such rights are exercised) with respect
      to
      the Collateral and, in addition, the Collateral Agent may, without being
      required to give any notice, except as herein provided or as may be required
      by
      mandatory provisions of law, withdraw all cash held in the Collateral
      Accounts  and apply such cash as provided in Section 14 and, if there
      shall be no such cash or if such cash shall be insufficient to pay all the
      Secured Obligations in full, sell, lease, license or otherwise dispose of the
      Collateral or any part thereof.  Notice of any such sale or other
      disposition shall be given to the relevant Lien Grantor(s) as required by
      Section 16.

     

    Section
      14.  Application of
      Proceeds.  (a)  If an Event of Default shall have occurred
      and be continuing, the Collateral Agent may apply (i) any cash held in the
      Collateral Accounts and (ii) the proceeds of any sale or other disposition
      of
      all or any part of the Collateral (after payment of any amounts payable to
      the
      Collateral Agent pursuant to Section 9.06 of the Indenture) for the ratable
      benefit of the Secured Parties against all or any part of the Secured
      Obligations in accordance with the terms of the Indenture, as the case may
      be.  Any surplus of such cash or cash proceeds held by the Collateral
      Agent and remaining on the Termination Date for the Issuer shall be paid over
      to
      the Issuer or to whomsoever may be lawfully entitled to receive such
      surplus.

     

    Section
15.  Fees
      and Expenses;
      Indemnification.  (a)  The Issuer will forthwith upon demand
      pay to the Collateral Agent:

     

    (i)            the
      amount of any taxes that the Collateral Agent may have been required to pay
      by
      reason of the Transaction Liens or to free any Collateral from any other Lien
      thereon;

     

    (ii)            the
      amount of any and all reasonable out-of-pocket expenses, including transfer
      taxes and reasonable fees and expenses of counsel and other experts, that the
      Collateral Agent may incur in connection with (x) the administration or
      enforcement of the Security Documents, including such expenses as are incurred
      to preserve the value of the Collateral or the validity, perfection, rank or
      value of any Transaction Lien, (y) the collection, sale or other disposition
      of
      any

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    Collateral
      or (z) the exercise by the Collateral Agent of any of its rights or powers
      under
      the Security Documents;

     

    (iii)            the
      amount of any fees that the Issuer shall have agreed in writing to pay to the
      Collateral Agent and that shall have become due and payable in accordance with
      such written agreement; and

     

    (iv)         
        the amount required to indemnify the Collateral Agent for, or hold
      it harmless and defend it against, any loss, liability or expense (including
      the
      reasonable fees and expenses of its counsel and any experts or sub-agents
      appointed by it hereunder) incurred or suffered by the Collateral Agent in
      connection with the Security Documents, except to the extent that such loss,
      liability or expense arises from the Collateral Agent’s gross negligence or
      willful misconduct or a breach of any duty that the Collateral Agent has under
      this Agreement (after giving effect to Sections 17 and 18).

     

    (b)        If
      any transfer tax, documentary stamp tax or other tax is payable in connection
      with any transfer or other transaction provided for in the Security Documents,
      the Issuer will pay such tax and provide any required tax stamps to the
      Collateral Agent or as otherwise required by law.

     

    (c)        The
      Issuer shall indemnify each of the Secured Parties, their respective affiliates
      and the respective directors, officers, agents and employees of the foregoing
      (each an “Indemnitee”) against, and hold each Indemnitee
      harmless from, any and all liabilities, losses, damages, costs and expenses
      of
      any kind (including reasonable expenses of investigation by engineers,
      environmental consultants and similar technical personnel and reasonable fees
      and disbursements of counsel) arising out of, or in connection with any and
      all
      Environmental Liabilities.  Without limiting the generality of the
      foregoing, each Lien Grantor waives all rights for contribution and all other
      rights of recovery with respect to liabilities, losses, damages, costs and
      expenses arising under or related to Environmental Laws that it might have
      by
      statute or otherwise against any Indemnitee.

     

    Section
      16.  Authority to Administer
      Collateral.  Each Lien Grantor irrevocably appoints the
      Collateral Agent its true and lawful attorney, with full power of substitution,
      in the name of such Lien Grantor, any Secured Party or otherwise, for the sole
      use and benefit of the Secured Parties, but at the Issuer’s expense, to the
      extent permitted by law to exercise, at any time and from time to time while
      an
      Event of Default shall have occurred and be continuing, all or any of the
      following powers with respect to all or any of such Lien Grantor’s
      Collateral:

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    


    (a)        to
      demand, sue for, collect, receive and give acquittance for any and all monies
      due or to become due upon or by virtue thereof,

     

    (b)        to
      settle, compromise, compound, prosecute or defend any action or proceeding
      with
      respect thereto,

     

    (c)        to
      sell, lease, license or otherwise dispose of the same or the proceeds or avails
      thereof, as fully and effectually as if the Collateral Agent were the absolute
      owner thereof, and

     

    (d)        to
      extend the time of payment of any or all thereof and to make any allowance
      or
      other adjustment with reference thereto;

     

    provided
      that, the Collateral Agent will give the relevant Lien Grantor at least ten
      days’ prior written notice of the time and place of any public sale thereof or
      the time after which any private sale or other intended disposition thereof
      will
      be made. Any such notice shall (i) contain the information specified in UCC
      Section 9-613, (ii) be Authenticated and (iii) be sent to the parties
      required to be notified pursuant to UCC Section 9-611(c); provided
      that, if the Collateral Agent fails to comply with this sentence in any respect,
      its liability for such failure shall be limited to the liability (if any)
      imposed on it as a matter of law under the UCC.

     

    Section
      17.  Limitation on Duty in Respect of
      Collateral.  Beyond the exercise of reasonable care in
      the custody and preservation thereof, the Collateral Agent will have no duty
      as
      to any Collateral in its possession or control or in the possession or control
      of any sub-agent or bailee or any income therefrom or as to the preservation
      of
      rights against prior parties or any other rights pertaining
      thereto.  The Collateral Agent will be deemed to have exercised
      reasonable care in the custody and preservation of the Collateral in its
      possession or control if such Collateral is accorded treatment substantially
      equal to that which it accords its own property, and will not be liable or
      responsible for any loss or damage to any Collateral, or for any diminution
      in
      the value thereof, by reason of any act or omission of any sub-agent or bailee
      selected by the Collateral Agent in good faith, except to the extent that such
      liability arises from the Collateral Agent’s gross negligence or willful
      misconduct.

     

    Section
      18.  General Provisions Concerning the
      Collateral Agent.  (a) Authority.  The
      Collateral Agent is authorized to take such actions and to exercise such powers
      as are delegated to the Collateral Agent by the terms of the Security Documents,
      together with such actions and powers as are reasonably incidental
      thereto.

     

    (b)        Rights
      and Powers as a Secured Party.  The bank serving as the
      Collateral Agent shall, in its capacity as a Secured Party, have the same rights
      and

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    


    powers
      as any other Secured Party and may exercise the same as though it were not
      the
      Collateral Agent.  Such bank and its Affiliates may accept deposits
      from, lend money to and generally engage in any kind of business with the
      Issuer, its Subsidiaries or Affiliate thereof as if it were not the Collateral
      Agent hereunder.

     

    (c)        Limited
      Duties and Responsibilities.  The Collateral Agent shall not have
      any duties or obligations under the Security Documents except those expressly
      set forth therein.  Without limiting the generality of the
      foregoing, (i) the Collateral Agent shall not be subject to any fiduciary
      or other implied duties, regardless of whether an Event of Default has occurred
      and is continuing, (ii) the Collateral Agent shall not have any duty to
      take any discretionary action or exercise any discretionary powers, except
      discretionary rights and powers expressly contemplated by the Noteholder
      Documents that the Collateral Agent is required in writing to exercise by the
      Noteholders, and (iii) except as expressly set forth in the Noteholder
      Documents, the Collateral Agent shall not have any duty to disclose, and shall
      not be liable for any failure to disclose, any information relating to the
      Issuer or its Subsidiaries that is communicated to or obtained by the bank
      serving as Collateral Agent or any of its Affiliates in any
      capacity.  The Collateral Agent shall not be liable for any action
      taken or not taken by it with the consent or at the request of the Noteholders
      (or such other number or percentage of the Noteholders as shall be necessary
      under the circumstances as provided in the Indenture) or in the absence of
      its
      own gross negligence or wilful misconduct. The Collateral Agent shall not be
      responsible for the existence, genuineness or value of any Collateral or for
      the
      validity, perfection, priority or enforceability of any Transaction Lien,
      whether impaired by operation of law or by reason of any action or omission
      to
      act on its part under the Security Documents. The Collateral Agent shall be
      deemed not to have knowledge of any Event of Default unless and until written
      notice thereof is given to the Collateral Agent by the Issuer or a Secured
      Party, and the Collateral Agent shall not be responsible for or have any duty
      to
      ascertain or inquire into (A) any statement, warranty or representation
      made in or in connection with any Security Document, (B) the contents of any
      certificate, report or other document delivered thereunder or in connection
      therewith, (C) the performance or observance of any of the covenants,
      agreements or other terms or conditions set forth in any Security
      Document, (D) the validity, enforceability, effectiveness or genuineness of
      any Security Document or any other agreement, instrument or document,
      or (E) the satisfaction of any condition set forth in any Security
      Document.

     

    (d)        Authority
      to Rely on Certain Writings, Statements and Advice.  The
      Collateral Agent shall be entitled to rely on, and shall not incur any liability
      for relying on, any notice, request, certificate, consent, statement,
      instrument, document or other writing believed by it to be genuine and to have
      been signed or

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    


    sent
      by the proper Person.  The Collateral Agent also may rely on any
      statement made to it orally or by telephone and believed by it to be made by
      the
      proper Person, and shall not incur any liability for relying
      thereon.  The Collateral Agent may consult with legal counsel (who may
      be counsel for the Issuer), independent accountants and other experts selected
      by it, and shall not be liable for any action taken or not taken by it in
      accordance with the advice of any such counsel, accountant or
      expert.

     

    (e)        Information
      as to Secured Obligations and Actions by Secured Parties.  For
      all purposes of the Security Documents, the Collateral Agent will be entitled
      to
      rely on information from (i) its own records for information as to the Secured
      Obligations outstanding under the Indenture and actions taken by the holders
      thereof, (ii) any Secured Party for information as to its Secured Obligations
      and actions taken by it, and (iii) the Issuer, to the extent that the Collateral
      Agent has not obtained information from the foregoing sources.

     

    (f)        The
      Collateral Agent may refuse to act on any notice, consent, direction or
      instruction from any Secured Parties or any agent, trustee or similar
      representative thereof that, in the Collateral Agent’s opinion, (i) is
      contrary to law or the provisions of any Security Document, (ii) may expose
      the
      Collateral Agent to liability (unless the Collateral Agent shall have been
      indemnified, to its reasonable satisfaction, for such liability by the Secured
      Parties that gave such notice, consent, direction or instruction) or (iii)
      is unduly prejudicial to Secured Parties not joining in such notice, consent,
      direction or instruction.

     

    Section
      19.  Termination of Transaction Liens;
      Release of Collateral.  (a)  On the Termination Date, the
      Transaction Liens granted by each Lien Grantor shall automatically terminate
      and
      all rights to the Collateral of such Lien Grantor shall revert to such Lien
      Grantor.

     

    (b)        Upon
      any termination of the Transaction Liens, the Collateral Agent will, at the
      expense of the relevant Lien Grantor, execute and deliver to such Lien Grantor
      such documents as such Lien Grantor shall reasonably request to evidence the
      termination of such Transaction Lien or the release of such Collateral, as
      the
      case may be.

     

    Section
      20.  Notices.  Each
      notice, request or other communication given to any party hereunder shall be
      in
      writing (which term includes facsimile or other electronic transmission) and
      shall be effective (i) when delivered to such party at its address specified
      below, (ii) when sent to such party by facsimile or other electronic
      transmission, addressed to it at its facsimile number or electronic address
      specified below, and such party sends back an electronic confirmation of receipt
      or (iii) ten days after being sent to such party by certified or registered
      United States mail, addressed to it at its address specified on its signature
      page, with first class or airmail postage prepaid. Any party may change its
      address, facsimile number and/or e-mail address for purposes of this Section
      by
      giving

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    notice
      of such change to the Collateral Agent and the Lien Grantors in the manner
      specified above.

     

    Section
21.  No
      Implied Waivers; Remedies Not
      Exclusive.  No failure by the Collateral Agent or any
      Secured Party to exercise, and no delay in exercising and no course of dealing
      with respect to, any right or remedy under any Security Document shall operate
      as a waiver thereof; nor shall any single or partial exercise by the Collateral
      Agent or any Secured Party of any right or remedy under any Noteholder Document
      preclude any other or further exercise thereof or the exercise of any other
      right or remedy.  The rights and remedies specified in the Noteholder
      Documents are cumulative and are not exclusive of any other rights or remedies
      provided by law.

     

    Section
      22.  Successors and
      Assigns.  This Agreement is for the benefit of the
      Collateral Agent and the Secured Parties.  If all or any part of any
      Secured Party’s interest in any Secured Obligation is assigned or otherwise
      transferred, the transferor’s rights hereunder, to the extent applicable to the
      obligation so transferred, shall be automatically transferred with such
      obligation.  This Agreement shall be binding on the Lien Grantors and
      their respective successors and assigns.

     

    Section
      23.  Amendments, Waivers and
      Additional Lien Grantors.

     

    (a)           No
      amendment to or waiver of any provision of this Agreement nor consent to any
      departure by any Lien Grantor herefrom, shall in any event be effective unless
      the same shall be in writing and signed by the Collateral Agent and, with
      respect to any such amendment, by each Lien Grantor, and then such waiver or
      consent shall be effective only in the specific instance and for the specific
      purpose for which given.  This Agreement shall be construed as a
      separate agreement with respect to each Lien Grantor and may be amended,
      modified, supplemented, waived or released with respect to any Lien Grantor
      without the approval of any other Lien Grantor and without affecting the
      obligations of any other Lien Grantor hereunder.

     

    (b)           Upon
      execution and delivery by the Collateral Agent and any Person of a Security
      Agreement Supplement, such Person shall become a Lien Grantor hereunder with
      the
      same force and effect as if originally named as a Lien Grantor
      herein.  The execution and delivery of any such Security Agreement
      Supplement shall not require the consent of any other Lien Grantor
      hereunder.  The rights and obligations of each Lien Grantor hereunder
      shall remain in full force and effect notwithstanding the addition of any new
      Grantor as a party to this Agreement.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    


    (c)           Upon
      the delivery by the Issuer and any other Lien Grantor of a Security Agreement
      Supplement certifying supplements to the Schedules hereto in respect of any
      Lien
      Grantor, such schedule supplements shall be incorporated into and become a
      part
      of and supplement the Schedules hereto and the Collateral Agent may attach
      such
      schedule supplements to such Schedules, and each reference to the Schedules
      shall mean and be a reference to such Schedules, as supplemented pursuant to
      any
      such Security Agreement Supplement.  For the avoidance of doubt, the
      delivery of any Security Agreement Supplement shall not effect any release
      of
      the security interest granted by any Lien Grantor hereunder unless and until
      such release shall be effective pursuant to Section 19.

     

    Section
      24.  Choice of
      Law.  This Agreement shall be construed in accordance
      with and governed by the laws of the State of New York, except as otherwise
      required by mandatory provisions of law and except to the extent that remedies
      provided by the laws of any jurisdiction other than the State of New York are
      governed by the laws of such jurisdiction.

     

    Section
      25.  Waiver of Jury
      Trial.  EACH PARTY HERETO WAIVES, TO THE FULLEST EXTENT
      PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
      LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO ANY
      SECURITY DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREBY (WHETHER BASED ON
      CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO
      (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
      HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
      THE
      EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
      (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
      ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
      CERTIFICATIONS IN THIS SECTION.

     

    Section
      26.  Severability.  If any provision of
      any Security Document is invalid or unenforceable in any jurisdiction, then,
      to
      the fullest extent permitted by law, (i) the other provisions of the Security
      Documents shall remain in full force and effect in such jurisdiction and shall
      be liberally construed in favor of the Collateral Agent and the Secured Parties
      in order to carry out the intentions of the parties thereto as nearly as may
      be
      possible and (ii) the invalidity or unenforceability of such provision in such
      jurisdiction shall not affect the validity or enforceability thereof in any
      other jurisdiction.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    


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

     

    
      	
              EVERGREEN
                ENERGY INC.

            
	 
	 
	
              By:

            	 /s/
              Diana L. Kubik
	 	
              Name:

            	 Diana
              L. Kubik
	 	
              Title:

            	 Vice
              President and Chief Financal Officer


    

    


    


    Evergreen
      Energy Inc.

    1225
      17th Street,
      Suite 1300

    Denver,
      Colorado 80202

    Attention:
      Chief Financial Officer

    Facsimile
      No.: (303) 293-8430

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    
      	
              US
                BANK NATIONAL ASSOCIATION, as

                  
                 Trustee and Collateral Agent

            
	 
	 
	
              By:

            	 /s/
              Richard Prokosch
	 	
              Name:

            	 Richard
              Prokosch
	 	
              Title:

            	 Vice
              President


    

    


     

    U.S.
      Bank National Association

               
      60 Livingston Avenue

               
      St. Paul, Minnesota 55107-2292

                Attention:
      Corporate Trust Services

                (Evergreen
      8.00% Convertible Secured Notes due 2012)

               
      Fax: (651) 495-8097

     

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Guarantors:

     

    
      	
              EVERGREEN
                OPERATIONS, LLC

            
	 
	 
	
              By:

            	 /s/
              Diana L. Kubik
	 	
              Name:

            	
               Diana
                L. Kubik

            
	 	
              Title:

            	 Vice
              President and Chief Financial Officer


    

    


     

    Evergreen
      Operations, LLC

    c/o
      Evergreen Energy Inc.

    1225
      17th Street,
      Suite 1300

    Denver,
      Colorado 80202

    Attention:
      Chief Financial Officer

    Facsimile
      No.: (303) 293-8430


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


                                                                  Guarantors:

     

    
      	
              KFX
                PLANT, LLC

            
	 
	 
	
              By:

            	 /s/
              Diana L. Kubik
	 	
              Name:

            	 Diana
              L. Kubik
	 	
              Title:

            	 Vice
              President and Chief Financial Officer


    

    


     

    KFx
      Plant, LLC

    c/o
      Evergreen Energy Inc.

    1225
      17th Street,
      Suite 1300

    Denver,
      Colorado 80202

    Attention:
      Chief Financial Officer

    Facsimile
      No.: (303) 293-8430

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


                                                                 
      Guarantors:

     

    
      	
              KFX
                OPERATIONS, LLC

            
	 
	 
	
              By:

            	 /s/
              Diana L. Kubik
	 	
              Name:

            	 Diana
              L. Kubik
	 	
              Title:

            	 Vice
              President and Chief Financial Officer


    

    


     

    KFx
      Operations, LLC

    c/o
      Evergreen Energy Inc.

    1225
      17th Street,
      Suite 1300

    Denver,
      Colorado 80202

    Attention:
      Chief Financial Officer

    Facsimile
      No.: (303) 293-8430

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


                                                                 
      Guarantors:

     

    
      	
              LANDRICA
                DEVELOPMENT COMPANY

            
	 
	 
	
              By:

            	 /s/
              Diana L. Kubik
	 	
              Name:

            	 Diana
              L. Kubik
	 	
              Title:

            	 Vice
              President and Chief Financial Officer


    

    


     

    Landrica
      Development Company

    c/o
      Evergreen Energy Inc.

    1225
      17th Street,
      Suite 1300

    Denver,
      Colorado 80202

    Attention:
      Chief Financial Officer

    Facsimile
      No.: (303) 293-8430


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


                                                                 
      Guarantors:

     

    
      	
              BUCKEYE
                INDUSTRIAL MINING CO.

            
	 
	 
	
              By:

            	 Diana
              L. Kubik
	 	
              Name:

            	 Diana
              L. Kubik
	 	
              Title:

            	 Vice
              President and Chief Financial Officer


    

    


     

    Buckeye
      Industrial Mining Co.

    c/o
      Evergreen Energy Inc.

    1225
      17th Street,
      Suite 1300

    Denver,
      Colorado 80202

    Attention:
      Chief Financial Officer

    Facsimile
      No.: (303) 293-8430


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      1

     

    PLEDGED
      INVESTMENT PROPERTY AND DEPOSIT ACCOUNTS

    OWNED
      BY ORIGINAL LIEN GRANTORS

    (as
      of the Effective Date)

     

    PART
      1 — Securities

     

    
      	
              
                Issuer

              

            	 	
              
                Jurisdiction

                of

                Organization

              

            	 	
              
                Owner
                  of Securities

              

            	 	
              
                Amount

                Owned

              

            	 	
              
                Type
                  of

                Security

              

            
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 


    

    


     

    PART
      2 — Securities Accounts

     

    The
      Original Lien Grantors own Security Entitlements with respect to Financial
      Assets credited to the following Securities Accounts:1

     

    
      	
              
                Owner

              

            	 	
              
                Securities
                  Intermediary

              

            	 	
              
                Account
                  Number

              

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 


    

    


    
 

    _____________________  
      1  If
        any
        such Securities Account holds material long-term investments and is not a
        trading account, more detailed information as to such investments could
        appropriately be required to be disclosed in this
        Schedule.

    


    
      
        
        

      

      
        S-2-1

        
          

        

      

      
        
        

      

    


    PART
      3 — Deposit Accounts

     

    The
      Original Lien Grantors own the following Deposit Accounts:

     

    
      	
              
                Lien
                  Grantor

              

            	 	
              
                Account
                  Bank

              

            	 	
              
                Account
                  Number

              

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 


    

    


    


    


    Part
      4 – Issuer Cash Collateral
      Account

    


    


    
      	
              
                Issuer

              

            	 	
              
                Account
                  Bank

              

            	 	
              
                Account
                  Number

              

            
	
              Evergreen
                Energy Inc.

            	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 


    

    



    
      
        
        

      

      
        S-2-2

        
          

        

      

      
        
        

      

    


    EXHIBIT
      A

    to
      Security Agreement

     

    SECURITY
      AGREEMENT SUPPLEMENT

     

    SECURITY
      AGREEMENT SUPPLEMENT dated as of _______, ____, between [NAME OF LIEN GRANTOR]
      (the “Lien Grantor”) and US BANK NATIONAL ASSOCIATION, as
      Collateral Agent.

     

    WHEREAS,
      Evergreen Energy Inc., the other lien grantors named therein, and the Collateral
      Agent, have entered into an Indenture, dated as of July 30, 2007 (as amended,
      restated, supplemented or otherwise modified from time to time, the
“Indenture”), providing for the issuance of the 8.00%
      Convertible Senior Notes due 2012 (the “Notes”) of the Issuer,
      all as contemplated therein (with the holders from time to time of Notes being
      referred to herein as the “Holders” and, together with the
      Collateral Agent, as the “Secured Parties”);

    


    WHEREAS,
      pursuant to Section 13 of the Indenture, each Lien Grantor (other than the
      Issuer) has jointly and severally guaranteed to the Secured Parties the payment
      when due of all the Secured Obligations (as hereinafter defined);

    


    WHEREAS,
      [name of Lien Grantor] desires to become [is] a party to the Security Agreement
      as a Lien Grantor thereunder;2
      and

     

    WHEREAS,
      terms defined in the Security Agreement (or whose definitions are incorporated
      by reference in Section
      1of the Security Agreement) and not otherwise defined herein have, as
      used herein, the respective meanings provided for therein;

     

    NOW,
      THEREFORE, in consideration of the foregoing and other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      parties hereto agree as follows:

     

    1.      Grant
      of Transaction Liens.  (a)  In order to secure the Secured
      Obligations, the Lien Grantor grants to the Collateral Agent for the benefit
      of
      the Secured Parties a continuing security interest in all the following property
      of the Lien Grantor, whether now owned or existing or hereafter acquired or
      arising and regardless of where located (the “New
      Collateral”):

     

    ____________________ 

    
      2  If
        the
        Lien Grantor is the Borrower, delete this recital and Section 1
        hereof.

       

    


    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    


    [describe
      property being added to the Collateral]

     

    (b)       With
      respect to each right to payment or performance included in the Collateral
      from
      time to time, the Transaction Lien granted therein includes a continuing
      security interest in (i) any Supporting Obligation that supports such
      payment or performance and (ii) any Lien that (x) secures such right to
      payment or performance or (y) secures any such Supporting
      Obligation.

     

    (c)       The
      foregoing Transaction Liens are granted as security only and shall not subject
      the Collateral Agent or any other Secured Party to, or transfer or in any way
      affect or modify, any obligation or liability of the Lien Grantor with respect
      to any of the New Collateral or any transaction in connection
      therewith.

     

    2.      Delivery
      of Collateral.  Concurrently with delivering this Security
      Agreement Supplement to the Collateral Agent, the Lien Grantor is complying
      with
      the provisions of Section
      5 of the Security Agreement with respect to Investment Property, in each
      case if and to the extent included in the New Collateral at such
      time.

     

    3.      Party
      to Security Agreement.  Upon delivering this Security Agreement
      Supplement to the Collateral Agent, the Lien Grantor will become a party to
      the
      Security Agreement and will thereafter have all the rights and obligations
      of a
      Lien Grantor thereunder and be bound by all the provisions thereof as fully
      as
      if the Lien Grantor were one of the original parties thereto.

     

    4.           Address
      of Lien Grantor.  The address, facsimile number and e-mail
      address of the Lien Grantor for purposes of of the Security Agreement are as
      set
      forth on its signature page appended to this Supplement3.

     

    5.           Representations
      and Warranties.4  The
      Lien Grantor is a corporation duly organized, validly existing and in good
      standing under the laws of [jurisdiction of organization].

     

    (a)       The
      Lien Grantor has delivered a Perfection Certificate to the Collateral
      Agent.  The information set forth therein is correct and

     

    ____________________ 

    
      3
        Delete Sections 3
        and 4 if the Lien Grantor is already a party to the Security
        Agreement.

       

    

    
      4  Modify
        as
        needed if the Lien Grantor is not a corporation.

       

    


    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    


    complete
      as of the date hereof.  Within 60 days after the date hereof, the Lien
      Grantor will furnish to the Collateral Agent a file search report from each
      UCC
      filing office listed in such Perfection Certificate, showing the filing made
      at
      such filing office to perfect the Transaction Liens on the New
      Collateral.

     

    (b)       The
      execution and delivery of this Security Agreement Supplement by the Lien Grantor
      and the performance by it of its obligations under the Security Agreement as
      supplemented hereby are within its corporate or other powers, have been duly
      authorized by all necessary corporate or other action, require no action by
      or
      in respect of, or filing with, any governmental body, agency or official and
      do
      not contravene, or constitute a default under, any provision of applicable
      law
      or regulation or of its organizational documents, or of any agreement, judgment,
      injunction, order, decree or other instrument binding upon it or result in
      the
      creation or imposition of any Lien (except a Transaction Lien) on any of its
      assets.

     

    (c)       The
      Security Agreement as supplemented hereby constitutes a valid and binding
      agreement of the Lien Grantor, enforceable in accordance with its terms, except
      as limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance
      or other similar laws affecting creditors’ rights generally and (ii)
      general principles of equity.

     

    (d)       Each
      of the representations and warranties set forth in Sections 3
      through 10
      of the Security Agreement is true as applied to the Lien Grantor and the New
      Collateral.  For purposes of the foregoing sentence, references in
      said Sections to a “Lien Grantor” shall be deemed to refer to the Lien Grantor,
      references to Schedules to the Security Agreement shall be deemed to refer
      to
      the corresponding Schedules to this Security Agreement Supplement, references
      to
“Collateral” shall be deemed to refer to the New Collateral, and references to
      the “Effective Date” shall be deemed to refer to the date on which the Lien
      Grantor signs and delivers this Security Agreement Supplement.

     

    6.           Governing
      Law.  This Security Agreement Supplement shall be construed in
      accordance with and governed by the laws of the State of New York.

     

    


    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Security Agreement
      Supplement to be duly executed by their respective authorized officers as of
      the
      day and year first above written.

     

     

    
      	
              [NAME
                OF LIEN GRANTOR]

            
	 
	 
	
              By:

            	 
	 	
              Name:

            	 
	 	
              Title:

            	 


    

    


     

    
      	
              US
                BANK NATIONAL ASSOCIATION, as Collateral Agent

            
	 
	 
	
              By:

            	 
	 	
              Name:

            	 
	 	
              Title:

            	 


    

    


     

     

     

     

    
 

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    


    Schedule
      1

    to
      Security Agreement

    Supplement

     

    PLEDGED
      EQUITY INTERESTS

    OWNED
      BY LIEN GRANTOR

     

     

    
      	
              
                Issuer

              

            	 	
              
                Jurisdiction

                of

                Organization

              

            	 	
              
                Percentage

                Owned

              

            	 	
              
                Number
                  of

                Shares
                  or Units

              

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 


    

     

     

     

     

    
 


    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    


    Schedule
      2

    to
      Security Agreement

    Supplement

     

    INVESTMENT
      PROPERTY AND DEPOSIT ACCOUNTS

    (other
      than Equity Interests in Subsidiaries and Affiliates)

    OWNED
      BY LIEN GRANTOR

     

    PART
      1 — Securities

     

    
      	
              
                Issuer

              

            	 	
              
                Jurisdiction

                of

                Organization

              

            	 	
              
                Amount
                  Owned

              

            	 	
              
                Type
                  of Security

              

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 


    

    


    PART
      2 — Securities Accounts

     

    The
      Lien Grantor owns Security Entitlements with respect to Financial Assets
      credited to the following Securities Accounts:5

     

    
      	
              
                Securities
                  Intermediary

              

            	 	
              
                Account
                  Number

              

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 


    

    


     

    ____________________ 

    
      5  If
        any
        such Securities Account holds material long-term investments and is not a
        trading account, more detailed information as to such investments could
        appropriately be required to be disclosed in this Schedule.

       

    


    
      
        
        

      

      
        A-6

        
          

        

      

      
        
        

      

    


    PART
      3 — Deposit Accounts

     

    The
      Lien Grantor owns the following Deposit Accounts:

     

    
      	
              
                Lien
                  Grantor

              

            	 	
              
                Account
                  Bank

              

            	 	
              
                Account
                  Number

              

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 


    

     

     

     

     

    
 


    
      
        
        

      

      
        A-7

        
          

        

      

      
        
        

      

    


    EXHIBIT
      B

    to
      Security Agreement

     

    PERFECTION
      CERTIFICATE

     

    The
      undersigned is a duly authorized officer of [NAME OF LIEN GRANTOR] (the
“Lien Grantor”).  With reference to the Security
      Agreement dated as of  July [__], 2007 among EVERGREEN ENERGY INC.,
      EVERGREEN OPERATIONS, LLC, KFX PLANT, LLC, KFX OPERATIONS, LLC, LANDRICA
      DEVELOPMENT COMPANY,  BUCKEYE INDUSTRIAL MINING CO. and US BANK
      NATIONAL ASSOCIATION, as Collateral Agent (terms defined therein being used
      herein as therein defined), the undersigned certifies to the Collateral Agent
      and each other Secured Party as follows:

     

    A.        Information
      Required for Filings and Searches for Prior Filings.

     

    1.      Jurisdiction
      of Organization.  The Lien Grantor is a corporation6
      organized under the laws of ___________.

     

    2.      Name.  The
      exact [corporate] name of the Lien Grantor as it appears in its [certificate
      of
      incorporation] is as follows:

     

    3.      Prior
      Names; Predecessors.  Set forth below is each other corporate
      name that the Lien Grantor has had since its organization, together with the
      date of the relevant change:

     

     

    


    (a)                   Except
      as set forth in Schedule I hereto, the Lien Grantor has not changed its
      corporate structure7
      in any way within the past five years.

     

    ____________________

    6   Modify
      as needed if the Lien Grantor is not a corporation.

     

    
      7   Changes
        in corporate structure would include mergers and consolidations, as well
        as any
        change in the Lien Grantor’s form of organization.  If any such change
        has occurred, include in Schedule I the information required by Part A of
        this
        certificate as to each constituent party to a merger or consolidation and
        any
        other predecessor organization.

      

        
          
            
            

          

          
            B-1

            
              

            

          

          
            
            

          

        



    

    4.      Organizational
      ID Number.  Set forth below is the Organizational Identification
      Number, if any, issued by the jurisdiction of organization of the Lien
      Grantor.

     

    5.      Chief
      Executive Office.  The chief executive office of the Lien Grantor
      (or its place of business if there is only one) is located at the following
      address:

     

    
      	
              
                Mailing
                  Address

              

            	 	
              
                County

              

            	 	
              
                State

              

            
	 	 	 	 	 
	 	 	 	 	 


    

    


    B.        Search
      Reports.

     

    Attached
      hereto as Schedule II is a true copy of a file search report from the central
      UCC filing office in each jurisdiction identified in Part A
      above with respect to each name set forth in Part A–2and
      Part A–3
      above.

     

    IN
      WITNESS WHEREOF, I have hereunto set my hand this __ day of __________,
      ____.

     

    
      	 
	
              Name:

            	 
	
              Title:

            	 


    

     

     

     

     

    
 


    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    


    SCHEDULE
      I

    


    CORPORATE
      STRUCTURE CHANGES

     

     

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      II

    


    LIEN
      SEARCHES