Document:

exh10-3_0609.htm

    Exhibit
10.3

    

     

     

    June
24, 2009

    

    Re:  Terms
of Employment

    

    Mr.
Thomas H. Stoner, Jr.

    

    Dear
Mr. Stoner:

    

    We are pleased to confirm the offer we
have discussed with you for the position of President & CEO of Evergreen
Energy Inc. (“Evergreen”).  Effective June 22, 2009, you were
appointed to the Evergreen Board of Directors.  Please review the
following terms of your employment offer:

    

    
      
        
          	
                  Positions:

                	
                  President,
      Chief Executive Officer and Director of Evergreen.

                
	 
      	 
      
	
                  Start
      Date:

                	
                  June
      24, 2009 for the positions of President & Chief Executive
      Officer.

                
	 
      	 
      
	
                  Base
      Pay:

                	
                  Three
      Hundred Thousand Dollars ($300,000) spread out over 26 pay periods,
      subject to applicable tax withholding and payroll taxes.  For
      the first year of employment, you will receive 1/3 of the base pay in
      Evergreen stock and 2/3’s in cash.

                
	 
      	 
      
	
                  Benefits:

                	
                  Twenty
      seven (27) days per year of Paid Time off (vacation and sick leave
      combined) will be offered on an accrual basis.  Your PTO will
      accrue 8.31 hours per pay period beginning with your date of hire, which
      was May 7, 2009. You will be eligible for medical, dental and vision
      insurance beginning the first of the month following 30 days of employment
      or July 1, 2009.

                
	 
      	 
      
	
                  Initial
      Equity Award:

                	
                  500,000
      options, priced at the close of business on June 24, 2009 and a term of
      five (5) years.  Upon termination, Mr. Stoner shall have twelve
      (12) months from the date of termination to exercise all or part of the
      Initial Equity Award.  Upon Mr. Stoner’s death, his estate shall
      also have twelve (12) months from his death to exercise all or part of the
      Initial Equity Award.

                
	 
      	 
      
	
                  Performance
      based

                	 
      
	
                  Equity
      Awards:

                	
                  The
      Equity Awards set forth below have a term of four (4) years from the date
      hereof to meet the specific requirements set for below and vest or each
      traunche not vested shall terminate and have not further force or
      effect.

                
	 
      	 
      
	 
      	
                  1,000,000
      shares when the Evergreen share price closes at or above $1.50 per share
      for 60 consecutive days.

                
	 
      	 
      
	 
      	
                  500,000
      shares when the Evergreen share price closes at or above $2.00 per share
      for 60 consecutive calendar days.

                
	 
      	 
      
	 
      	
                  500,000
      shares when the Evergreen share price closes at or above $2.50 per share
      for 60 consecutive calendar
days.

                

        

      

    

    
 

     

    
      
        
          
            

            
              Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

            

          

           

        

        
           

          
            

          

        

        
          

        

         

         

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              	 
      	
                                                      500,000
      shares when the Evergreen share price closes at or above $3.00 per share
      for 60 consecutive calendar days.

                                                    
	 
      	 
      
	 
      	
                                                      500,000
      shares when the Evergreen share price closes at or above $4.00 per share
      for 60 consecutive calendar days.

                                                    
	 
      	 
      
	
                                                      Inducement
      Grants:

                                                    	
                                                      All
      equity awards provided for herein are inducement grants and the grants
      shall not be awarded for any of Evergreen’s equity incentive stock
      plans.

                                                    
	 
      	 
      
	
                                                      Performance
      based

                                                    	 
      
	
                                                      Cash
      Award:

                                                    	
                                                      A
      variable annual performance award targeted at 50% of base pay based upon
      meeting individual and company objectives.  For the remainder of
      2009, the targeted bonus award will be $150,000 even though it is for a
      less than one year period.  All compensation awards are
      contingent on Evergreen Board of Director’s approval.

                                                    
	 
      	 
      
	
                                                      Adjustments
      for Stock

                                                    	 
      
	
                                                      Split,
      Stock Dividend,

                                                    	 
      
	
                                                      Etc.:

                                                    	
                                                      If
      Evergreen shall at any time increase or decrease the number of its
      outstanding shares of stock or change in any way the rights and privileges
      of such shares by means of the payment of a stock dividend or any other
      distribution upon such shares payable in stock, or through a stock split,
      subdivision, consolidation, combination, reclassification or
      recapitalization involving the stock, then in relation to the stock that
      is affected by one or more of the above events, the numbers, rights,
      vesting requirements and privileges of the following shall be increased,
      decreased or changed in like manner.

                                                    
	 
      	 
      
	
                                                      Tax
      Obligations:

                                                    	
                                                      Evergreen
      assumes no obligation in assisting Mr. Stoner with any tax issues he
      assumes, including if and when vesting occurs on the Equity Based
      Performance Awards.

                                                    
	 
      	 
      
	
                                                      No
      Early Vesting:

                                                    	
                                                      Without
      Evergreen’s Board of Directors approval, there will be no early vesting or
      granting of Performance Based Equity or Cash Awards for any reason,
      including Mr. Stoner’s termination with or without cause or for a change
      of control of the Board of Directors; provided however, that if a merger
      or acquisition occurs which includes substantially all of Evergreen’s
      assets or shares and the price per share of such transaction exceeds a
      vesting target price, then early vesting for the traunche(s) below the
      transaction share price will occur without the requirement of the 60 day
      condition being satisfied.

                                                    
	 
      	 
      
	
                                                      Other
      Conditions:

                                                    	
                                                      You
      have previously executed Evergreen’s standard Non-Disclosure Agreement and
      Information Verification Agreement.  This offer assumes that you
      have no desire to alter or change your execution of those
      documents.  Evergreen can request that anyone be drug tested
      based on reasonable suspicion and Evergreen can do random drug site tests
      at any time.  Your employment is at will and either you or
      Evergreen may terminate the relationship at any
  time.

                                                    

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
          
            

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

           

        

        
           

          
            

          

        

        
           

        

        

         

         

      

    

     

    If
the foregoing is in accordance with your understanding, please indicate so by
signing below and returning to me.

    

    

    

    Evergreen
Energy Inc.

    

    

    /s/
M. Richard Smith

    M.
Richard Smith

    Chairman
of the Board of Directors

    

    

    

    Approved
and accepted this 24th day of
June, 2009

    

    

    /s/
Thomas H. Stoner, Jr.

    Thomas
H. Stoner, Jr.

     

     

     

    
      Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430exh10-4_0609.htm

    Exhibit
10.4

    

     

     

    July
21, 2009

    

    Mr.
Theodore Venners

    1225
17th
Street, Suite 1300

    Denver,
CO 80202

    

    Re:  Transition
Agreement

    

    Dear
Mr. Venners:

    

    This
agreement and the attachments hereto (“Transition Agreement”) sets forth the
agreement between you and Evergreen Energy Inc. and its subsidiaries
(“Evergreen”) to effect an orderly, efficient and effective procedure for
implementing your transition from all officer positions and board seat(s) of
Evergreen to a position of Senior Advisor to the CEO.  The parties
therefore agree as follows:

    

    
      	
               
      

            	
              1.

            	
              If
      required by the SEC, you and Evergreen shall coordinate the preparation
      and release of an announcement pertaining to this Transition
      Agreement..  The announcement shall include a statement, that
      during the period covered by the Transition Agreement (the “Transition
      Period”), you will be assisting with the proper, smooth and seamless
      transition of various C-Lock Technology, Inc. projects to others within
      the C-Lock organization.  The announcement shall include a quote
      in which you, as Founder of Evergreen and as a major shareholder, state
      your confidence, support and commitment to the Evergreen team and its
      success.  During the Transition Period, you will conduct your
      performance and relationships in and out of the company in conformity with
      the announcement.

            

    

    

    
      	
               
      

            	
              2.

            	
              The
      Transition Period shall be for term of nine (9) months, commencing as of
      July 1, 2009 (the “Effective Date”) and, during the Transition Period, you
      will be expected to work between sixty (60) and ninety (90) hours per
      month.  You or your designee shall be paid at the rate of
      $22,500 per month.

            

    

    

    
      	
               
      

            	
              3.

            	
              During
      the Transition Period you will report to and take direction from
      Evergreen’s CEO and work closely with him to insure effective coordination
      between your activities and the Evergreen business plan.  The
      projects on which you will work will be as directed, altered or changed by
      Evergreen’s CEO.  To provide management updates on your assigned
      projects, you are expected to initiate and participate in a minimum of one
      telephone call with Evergreen’s CEO or his designee every week during the
      Transition Period.

            

    

    

    
      	
               
      

            	
              4.

            	
              During
      the Transition Period, Evergreen will not furnish or maintain a regular
      office for your use.  All of your services will be performed
      outside of Evergreen’s offices except when you are in Denver, during which
      time Evergreen will make
reasonable

            

    

    
      
        
           

          1

          Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

        

         

      

      
        
        

        
          

        

      

      
        
          

           

        

      

    

    
      	
               
      

            	
              efforts
      to provide temporary office space for your use in performing the
      transition work contemplated by this
Agreement.

            

    

    

    
      	
               
      

            	
              5.

            	
              During
      the Transition Period, Evergreen will provide you with reasonable
      administrative and technical support, using Evergreen employees or others
      designated by Evergreen’s CEO, for the Evergreen projects on which you
      will be working.

            

    

    

    
      	
               
      

            	
              6.

            	
              Evergreen
      will provide and pay for your personal health insurance until you reach
      the age of 65.  Evergreen will provide and you will pay for
      personal health insurance for your wife, Lori, unless you can obtain
      alternative coverage for Lori.

            

    

    

    
      	
               
      

            	
              7.

            	
              You
      will retain your ownership of 4,000 shares of C-Lock Technology, Inc.;
      provided however, that you agree to convert your ownership to shares of
      Evergreen stock if and when, and on the same terms as an exchange of
      shares negotiated and consummated by Vince Cook and Jim
      Bitonti.

            

    

    

    
      	
               
      

            	
              8.

            	
              Upon
      execution of this Transition Agreement and its exhibits, you will be
      compensated thirty thousand dollars ($30,000) for your costs pertaining to
      the organization of Green Search, LLC and for your legal costs in the
      preparation of this Transition
Agreement.

            

    

    

    
      	
               
      

            	
              9.

            	
              You
      will execute the Non Solicitation and Non-Compete Agreement attached
      hereto as Exhibit A.

            

    

    

    
      	
               
      

            	
              10.

            	
              The
      parties will execute the Severance Agreement, Waiver and Release attached
      hereto as Exhibit B.

            

    

    

    
      	
               
      

            	
              11.

            	
              During
      the Transition Period, you may maintain and use as appropriate the title
      of “Founder of Evergreen”.

            

    

    

    
      	
               
      

            	
              12.

            	
              At
      the request of Evergreen’s CEO, you agree to properly and appropriately
      introduce the CEO or others with whom you and the CEO mutually agree, to
      various key individuals with whom you have a relationship, including, but
      not limited to, Dean Gus Speth of Yale, WRI Chairman, EDF team, Governors
      Freudenthal and Perry, UN officials and numerous individuals in the
      legislative and executive branch of the federal
  government.

            

    

    

    
      	
               
      

            	
              13.

            	
              The
      Employment Agreement between you and KFx Inc., (predecessor in name to
      Evergreen), dated December 21, 2005 (the “Employment Agreement”) is hereby
      terminated; provided however that: (a) the 600,000 shares of stock
      provided for in Section 3 of the Employment Agreement shall vest, at your
      election, at the end of the Transition Period, upon the sale by Evergreen
      of substantially all of the assets or all of the stock of Buckeye
      Industrial Mining Company, or upon the receipt
  by

            

    

    
      
        
           

          
            2

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

    
      	
               
      

            	
              Evergreen
      of financing in excess of $30 million;  and (b) Section 3(g)
      pertaining to Tax Withholding shall survive the termination of the
      Employment Agreement as provided for herein.  All outstanding
      stock options which you own will immediately vest upon execution of this
      Transition Agreement.

            

    

    

    
      	
               
      

            	
              14.

            	
              Administrative provisions
      include the following:

            

    

    

    
      
        
          
            
              
                	
                        A.

                      	
                        Reimbursable
      Expenditures.  Subject to prior approval of expenses in
      excess of $2,000 by Evergreen’s CEO, you shall be reimbursed for the
      reasonable costs of travel, subsistence, lodging and out-of-pocket
      expenses (such as, but not limited to, long distance telephone calls,
      photocopying and the like).  Air travel shall be
      coach.  No other expense shall be reimbursable by
      Evergreen.

                      

              

            

          

        

      

    

    

    
      
        	
                B.

              	
                Confidential
      Information.  All computer programs, drawings, designs,
      maps, plans, know how, patents, inventions, data, reports and other
      physical and intellectual property prepared by or on your behalf during
      the Transition Period shall be the sole property of
      Evergreen.  All property in your possession that is owned by
      Evergreen shall be delivered to Evergreen by you at the end of the
      Transition Period, and shall not be reprinted, distributed, published, or
      disclosed to third parties by you without the prior written consent of
      Evergreen’s CEO.  Unpublished information (graphic or verbal)
      concerning Evergreen for which you are aware, is disclosed to you by
      Evergreen or developed by you through performance of your work shall not
      be disclosed to third parties by you without the prior written consent of
      Evergreen’s CEO.  This provision shall survive termination of
      this Transition Agreement.

              

      

    

    

    
      
        	
                C.

              	
                Early
      Termination.  Evergreen may terminate this Transition
      Agreement upon ten (10) days written notice.  If Evergreen
      terminates this Transition Agreement prior to six (6) months after the
      Effective Date, you shall be paid for the entire period ending six (6)
      months after the Effective
Date.

              

      

    

    

    
      
        	
                D.

              	
                Inspection of
      Work.  You shall permit Evergreen’s CEO or his designee
      to inspect your work product, or any part thereof, and request periodic
      reports as the same
progresses.

              

      

    

    

    
      
        	
                E.

              	
                Record
      Keeping.  You shall maintain accurate and complete
      records in connection with the performance of the assignments on which you
      are working.

              

      

    

    

    
      
        	
                F.

              	
                Controlling
      Law.  This Transition Agreement shall be governed by and
      interpreted in accordance with the laws of the State of Colorado except
      those addressing conflicts of law.  Each party hereby consents
      and agrees that any claims or disputes between the parties hereto arising
      out of or related to this Transition Agreement shall be brought and
      maintained in any federal or state court of competent jurisdiction sitting
      in Denver County, State of
Colorado.

              

      

    

    
      
        
           

          
            3

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

     

    
       

      
        
          	
                  G.

                	
                  Sole
      Agreement.  This Transition Agreement and the
      Exhibits contains and sets forth the entire agreement between you and
      Evergreen with respect to your retirement from Evergreen, all previous
      agreements (including the Employment Agreement) being expressly superseded
      and replaced by this Letter Agreement.  No modification,
      alteration, or extension of this Letter Agreement shall be effective
      unless in writing executed by the
  parties.

                

        

      

    

     

    
      
        	
                H.

              	
                Counterparts;
      Facsimile.  This Letter Agreement may be signed in
      counterparts, and it shall be as effective when counterparts have been
      executed by the Parties as if each party had signed the same
      counterpart.   This Agreement may be delivered by
      facsimile.

              

      

    

    

    

    To
signify your approval of this Transition Agreement and all of the terms and
conditions, please execute and return one copy of this Transition Agreement and
Exhibits A and B to the undersigned.

    

    

    Very
truly yours,

    

    

    Evergreen
Energy Inc.

    

    By:
/s/ Thomas H. Stoner,
Jr.

    Thomas H. Stoner, Jr.

    President & CEO

    

    

    

    Accepted
and approved this 22 day of July, 2009

    

    /s/
Theodore Venners

    Theodore
Venners

    

    

    
      
        
           

          
            4

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

    Exhibit
A

    To

    Transition
Agreement

    Dated
Effective July 1, 2009

    

    

    NON-SOLICITATION AND
NON-COMPETITION AGREEMENT

    

    In
exchange for one dollar and other good and valuable consideration, the receipt
and sufficiency of which I now acknowledge, I agree that:

     

    1.           I
have or will obtain in the course of my employment and the Transition Period
confidential information about, personal knowledge of, and influence over
Customers (as defined in section 10 below) and Prospective Customers (as defined
in section 10 below) of Evergreen Energy Inc. and it subsidiaries (“Evergreen”).
For this reason, I covenant with Evergreen in the terms set out in sections 2 to
5 inclusive below.

    

    2.           I
will not, during the course of the Transition Period (regardless of whether I am
required to attend work or not), make any contact, whether formal or informal,
written or oral, with any of Evergreen’s past or current Customers or
Prospective Customers with whom I have or had dealings pursuant to my employment
or consulting with Evergreen for any purpose other than furthering Evergreen’s
legitimate business interests. Without limiting the generality of the preceding
restriction, I expressly agree and acknowledge that it shall be a breach of this
section (2) if I make any such unauthorized contact in connection with or
concerning my intention to set up or to seek or take employment with a Competing
Business.

    

    3.           I
will not directly or indirectly, during the course of the Transition Period
(regardless of whether I am required to attend work or not) either on my own
behalf or on behalf of any other person, firm, or company:

    

    a)           solicit
or seek orders for business from any Customer or Prospective Customer;
or

    

    b)           solicit
or endeavour to entice away from or discourage from being employed by Evergreen
any person who, to my knowledge, is an employee or a prospective employee of
Evergreen nor will I employ or offer employment to or procure the making of an
offer of employment to any such employee on my own or on any third party’s
account.

    

    4.           For
a period of three (3) months after the expiration of the Transition Period (or
for such period thereafter that I am performing services for Evergreen pursuant
to a consulting or similar agreement), I will not, without the consent in
writing of the CEO of Evergreen, in connection with the carrying on of any
business related to or similar to Evergreen’s business,

    
      
        
           

          
            5

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

    whether
on my own behalf or on behalf of any other person, firm, or company, either
alone or jointly with any other person, firm, or company, do any of the
following:

    

    a)           directly
or indirectly solicit or seek to procure orders for business from any person,
firm, or company who or which was during the three (3) month period immediately
before the expiration of the Transition Period:

    

    i)           a
Customer with whom, in the course of  my employment, I had dealings
(other than minimal dealings) during the three (3) month period immediately
before the expiration of the Transition Period; or

    

    ii)           a
Prospective Customer with whom in the course of my employment, I had dealings
(other than minimal dealings) during the three (3) month period immediately
before the expiration of the Transition Period;

    

    b)           directly
or indirectly do business with or for any such person, firm or company as is
referred to in sections 4 a) i) and ii) above; or

    

    c)           interfere
with or attempt to interfere with the business relations of Evergreen with any
of Evergreen’s Customers or Prospective Customers with whom or which I had
dealings (other than minimal dealings) during the three (3) month period
immediately before the expiration of the Transition Period.

    

    5.           Nothing
in section 4 above shall be construed as prohibiting me from seeking, procuring,
or transacting business which is not a Competing Business.

    

    6.           I
undertake that I will not at any time during the three (3) month period
immediately after the expiration of the Transition Period (or for such period
thereafter that I am performing services for Evergreen pursuant to a consulting
or similar agreement), directly or indirectly on my own behalf or on behalf of
any third party, knowingly offer employment to or seek to procure an offer of
employment for any of Evergreen’s employees with whom I had dealings (other than
minimal dealings) during the three (3) month period immediately before the
expiration of the Transition Period.

    

    7.           I
will not at any time directly or indirectly entice or endeavour to entice any
person to breach the terms, whether written, verbal or customary, of his or her
employment with Evergreen.

    

    8.           The
restrictions set out above in sections 2 to 7 inclusive shall survive the
expiration of the Transition Period.

    

    9.           The
restrictions set out above in sections 2 to 7 inclusive do not exceed what is
reasonable and necessary in all of the circumstances to preserve and protect
Evergreen’s

    
      
        
           

          
            6

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

    legitimate
interests and its connections with Customers and Prospective Customers for whom
or which I will have become a key business contact as a result of my employment
with Evergreen. Should any of the restrictions set out above in sections 2 to 7
inclusive prove to be unenforceable for any reason, it is hereby agreed and
declared that each of the restrictions is separate and distinct and shall be
construed and applied separately from every other of the restrictions. Further,
if any of the restrictions is found by a court of competent jurisdiction to be
invalid because it exceeds what is reasonable and necessary in all of the
circumstances to preserve and protect Evergreen’s legitimate interests and its
connections with Customers and Prospective Customers but the restriction in
question would be valid if some part were deleted or amended, the restriction in
question shall apply with such deletions or amendments or both as may be
necessary to make it valid.

    

    10.           For
purposes of this Agreement, the following terms shall have the following
meanings:

    

    a)           “Competing Business” means any
business which competes with a business carried on by Evergreen at the
expiration of the Transition Period provided that I was involved in the business
in question (other than minimal dealings) at any time within the three (3) month
period immediately before that date;

    b)           “Customer” means any person,
firm, or company to or for whom or which Evergreen provides services in the
course of its business;

    c)           “Prospective Customer” means
any person, firm, or company to or for whom or which Evergreen has been in
negotiations with a view to providing services to or for such person, firm, or
company, always provided that such person, firm, or company shall not be a
Prospective Customer if any such person, firm, or company has informed Evergreen
that he or she or it does not want Evergreen to provide the services which have
been the subject of such negotiations or has appointed another person, firm, or
company to provide such services; and

    

     

    11.           This
Agreement may be signed in counterparts, and it shall be as effective when
counterparts have been executed by the Parties as if each party had signed the
same counterpart.   This Agreement may be delivered by facsimile
or PDF.

    

    

    Executed
this 22 day of July, 2009.

    

    

    THEODORE
VENNERS

    

    /s/
Theodore Venners

    

    

    
      
        
           

          
            7

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

    

    Accepted
and approved this 22 day of July, 2009

    

    EVERGREEN
ENERGY INC.

    

    

    By:
/s/ Tom Stoner

    Tom Stoner

    President & CEO

    

    

    
      
        
           

          
            8

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

    Exhibit
B

    To

    Transition
Agreement

    Dated
effective July 1, 2009

    

    SEVERANCE
AGREEMENT, WAIVER AND RELEASE

    

    

    This
Severance Agreement, Waiver and Release (the “Agreement”) is entered into
between Evergreen Energy Inc. (the “Company”), and Theodore Venners (the
“Employee”).  The “Effective Date” of this Agreement is as defined
below in Paragraph 7.

    

    In
consideration of the conditions, covenants and agreements set forth below, for
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the Company and the Employee (collectively called the “Parties”)
agree as follows:

     

    
            1.          The
Employee was the Founder of the Company and has been employed by the Company
since its founding until his separation from employment at the termination of
the Transition Agreement to which this Agreement is attached.  The
purpose of this Agreement is to settle all issues relating to his employment and
separation from employment.

      

            2.          The
Company and the Employee, each without admitting any liability or wrongdoing,
desire to resolve amicably, and in the spirit of compromise, all issues and
differences between them in accordance with and in consideration of the terms of
this Agreement.

       

            3.          The
Employee understands and acknowledges that whether or not he signs this
agreement, he is entitled to any earned but unpaid salary through July 1, 2009,
commissions, vacation pay, paid time off, expenses, or other amounts to which
the Employee already is entitled in accordance with the terms of the Company’s
established policy.

       

    

    4.          Further
Payment.  Pursuant to the Transition Agreement to, Company
agrees to pay the Employee as set forth therein

    

    5.        Mutual
Waiver and Release of Claims. In exchange for
this Agreement and in consideration of the payments and other benefit provided
in the Transition Agreement, which is in addition to anything of value to which
the Employee already is entitled, the Employee hereby irrevocably and
unconditionally releases and forever discharges the Company and its officers,
members, agents, directors, shareholders, supervisors, employees,
representatives, affiliates, and their successors and assigns, and all persons
acting by, through, under, or in concert with any of them, from any and all
charges, complaints, demands, damages, costs, expenses, causes of action,
action, rights, benefits, complaints, claims and liabilities of any kind or
nature

    
      
        
           

          
            9

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

    whatsoever,
known or unknown, suspected or unsuspected, certain or contingent, which the
Employee at any time had or claimed to have regarding events that occurred up to
and including the Effective Date of this Agreement, including but not limited to
any and all such claims arising out of, related to, or in any manner incidental
to the Employee’s employment with the Company or his separation from
employment.

     

              Similarly, in
consideration of the rights and obligations created by this Agreement, the
Company, and its officers, members, agents, directors, shareholders,
supervisors, employees, representatives, affiliates, and their successors and
assigns, and all persons acting by, through, under, or in concert with the
Company, hereby irrevocably and unconditionally release and forever discharge
the Employee and his heirs, successors, and assigns from any and all charges,
complaints, demands, damages, costs, expenses, causes of action, action, rights,
benefits, complaints, claims and liabilities of any kind or nature whatsoever,
known or unknown, suspected or unsuspected, certain or contingent, which the
Company at any time had or claimed to have regarding events that occurred up to
and including the Effective Date of this Agreement.

     

    6.           Specific
Claims Released.  This release includes, but is not limited to,
all claims arising under any federal, state or municipal law, including the
Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964,
Equal Pay Act, Fair Labor Standards Act, Family and Medical Leave Act, Age
Discrimination in Employment Act, National Labor Relations Act, Occupational
Safety and Health Act, Employee Retirement Income Security Act (except as
specified below in this section), Colorado Wage Claim Act, the Colorado
Anti-Discrimination Act, and other statutes and the common law of the state of
Colorado, including claims for tort, breach of express or implied employment
contract, wrongful discharge, intentional infliction of emotional distress, and
defamation or injuries incurred on the job or upon separation from
employment.  The Parties understand and agree that they are waiving
and releasing any and all claims that they now have or might claim to have
against each other based on events up to the Effective Date of this Agreement,
regardless of their nature or origin, and the fact that such claim is not listed
above does not mean it is not included in this release.

    

    This release does not preclude an
action by either party to enforce the specific terms of this Agreement or the
Transition Agreement. It does not preclude workers’ compensation claims, if any,
that have already been filed or that pertain to on-the-job injuries that have
already been reported.  This release does not preclude claims for
benefits in which the Employee has become vested under the Employee Retirement
Income Security Act.

     

    7.           ADEA Release; Effective
Date.  The Employee acknowledges, understands, and agrees as
follows:

    

    a.           He
has carefully read and fully understands all of the provisions of this
Agreement, including the release provisions.

    
      
        
           

          
            10

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

    b.           He
knowingly and voluntarily agrees to all of the terms set forth in this
Agreement, and he intends to be legally bound by them.

    

    c.           Through
this Agreement, he is releasing the Company from any and all claims, including
claims under the Age Discrimination in Employment Act (ADEA) and all other
claims described above in Paragraphs 5 and 6 that he may have against
the Company and the other persons described above.

    

    d.           He
understands that rights or claims under the ADEA that may arise after the
Effective Date of this Agreement are not waived.

    

    e.           He
has been advised to, and has had the opportunity to, consult with an attorney
before executing this Agreement.

    

    f.           By
receiving the Severance Payment specified in this Agreement, he is receiving
valuable consideration in addition to anything to which he already is
entitled.

    

    g.           He
has been given the opportunity to have up to twenty-one (21) days in which to
consider this Agreement before signing it, and if he chooses to sign it before
the 21-day period has expired, he does so knowingly, voluntarily, and without
any compulsion from the Company or anyone else.

    

    h.           He
has seven (7) days after signing this Agreement to revoke it.  This
Agreement will become effective as to both Parties upon the expiration of the
seven-day revocation period (the “Effective Date”), if the Employee has not
revoked this Agreement.  To be effective, revocation must be in
writing and received by William G. Laughlin, General Counsel of the Company,
within the seven-day period.  The notice of revocation must be sent or
delivered by letter or transmitted via facsimile to Mr. Laughlin at the
Company’s office in Denver, Colorado, and must be received by him within the
specified period.

    

    8.           Covenant Not to
Sue.  The Parties expressly covenant and agree never to
institute or participate in any suit or action, at law or in equity,
arbitration, administrative proceeding, or other proceeding, against each other
by reason of the claims released in this Agreement.  This covenant and
agreement specifically includes, without limitation, administrative actions,
arbitrations, actions in court of law and equity, class actions, and any type of
action or proceeding that may be filed in the future, but does not include an
action or claim to enforce the rights and obligations created by this
Agreement.

     

    9.           Non-Disparagement.  The
Employee agrees that he will not make any negative, disparaging, derogatory, or
adverse statements, remarks, comments, or other communications, in any form or
format, to any third party regarding the Company; any of its officers,
directors, employees, or agents; or any of its products.  The Company
agrees that its officers, directors, and agents will not make any negative,
disparaging, derogatory, or adverse statements, remarks,

    
      
        
           

          
            
              11

              Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

            

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

     

    comments,
or other communications, in any form or format, to any third party regarding the
Employee.

    

    10.           Non-Disclosure.  The
Employee agrees to keep the circumstances regarding the negotiations, existence,
conditions, and terms of this Agreement strictly confidential.  The
Employee agrees that he will not disclose any of these items to any person,
including but not limited to any former, current, or prospective employee of the
Company, with the exceptions that the Employee may disclose the terms of this
Agreement to his financial advisor, attorney(s), accountant, family, or by order
of, or in response to inquiry by, a court of law or administrative
agency.  It is further agreed that if the Employee discloses the terms of
this Agreement to any family member, the Employee will be responsible for any
breach of this Agreement by that family member.  It is expressly agreed that this
Non-Disclosure provision is an essential and material provision of this
Agreement.

    

    11.           Confidential
Information.  The Employee agrees that he will not at any time,
during or after the termination of his/her employment, reveal, divulge, or make
known to any person any confidential or proprietary information (“Confidential
Information”) that was made known to him as a result of his employment with the
Company.  “Confidential Information” shall mean any trade secret or
information of a secret, proprietary, or confidential nature to the Company and
its business operations that the Employee acquired during and as a result of his
employment, including but not limited to all methods, processes, products,
techniques, know-how, marketing strategies and plans, data, financial statements
and projections, business plans, inventions, improvements, or discoveries
(whether or not patentable or copyrightable), price lists, forecasts, customer
lists, customer files, and customer requirements, unless such information is in
the public domain to such an extent as to be readily available to
competitors.  This section shall survive the termination of this
Agreement.

    

    12.           Breach of Provisions by
Employee.  The Employee and the Company enter into this
Agreement with the understanding that all of the terms and provisions of this
Agreement, including but not limited to Paragraphs 5 through 11 inclusive, are
material and important terms of this Agreement, and that the amount of the
Severance Payment made to the Employee has been based in part on the value to
the Company of these provisions.  In the event that the Employee
breaches any of the provisions of Paragraphs 5 through 11, the Company, in
addition to all remedies available to it at law and equity, shall be released
from its obligation to make any further payments or installments of the
Severance Payment.  However, in such event, the Employee’s covenants
and obligations in this Agreement shall remain in full force and
effect.  Further, the Employee agrees and acknowledges that any
violation by him/her of Paragraphs 5 through 11 will result in irreparable
damage to the Company and, therefore, the Company may obtain injunctive or other
equitable relief for any breach or threatened breach of these Paragraphs, in
addition to any other remedies available to the Company.

    

    13.           Non-Admission of
Liability.  This Agreement is not, and shall not be construed
as, an admission by either party of any wrongdoing or liability, or as an
admission by either party

    
      
        
           

          
            12

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

    of
any violation of the rights of any person, or of any violation of any order,
law, statute, duty, or contract.

     

    

    14.           Intentionally left
blank

    

    15.           Intentionally left
blank

    

    16.           Personnel File and Release
of Information.  The Parties agree that a copy of this
Agreement shall be maintained in the Employee’s personnel file, and that the
Company shall respond to any inquiries concerning his employment by providing a
neutral reference verifying only his position, dates of employment, final salary
rate and that his position at the Company had been eliminated.

    

    17.           Unemployment Claims.
The Company agrees not to contest any claim for unemployment benefits made by
the employee to the State of Colorado and agrees that a claim for unemployment
benefits would not violate the release provisions of Paragraphs 5 through
8.  The parties understand that despite the Non-Disclosure provisions
of Paragraph 11 of this Agreement, the Employee may provide, or may be required
by the unemployment agency to provide, information regarding the existence and
amount of the Severance Payment provisions of this Agreement in connection with
his claim for unemployment benefits.

    

    18.           Authority and
Non-Assignment.  The Parties represent and warrant that they
have full authority to enter into this Agreement and that they have not assigned
or otherwise transferred, to any other person or entity, any interest in any
claim, demand, action and/or cause of action that they have, may have, or may
claim to have against each other.

    

    19.           Accord and
Satisfaction.  The Parties expressly acknowledge that the
Further Payment made pursuant to Paragraph 4 and the promises made herein
constitute a full accord and satisfaction of any and all claims between the
Parties.

    

    20.           Warranties and
Acknowledgments.  The Parties expressly warrant and represent
to each other the following:  (a) that no promise or inducement
has been offered except as expressly provided in this Agreement; (b) that
this Agreement is not in violation of or in conflict with any other agreement of
the Parties; and (c) that the Parties have had the opportunity to resolve
all questions concerning the meaning, legal nature, and binding effect of this
Agreement with counsel of their choosing.

     

    21.           Cooperation with the
Company.  The Employee agrees to make himself available at
reasonable times by telephone or otherwise to assist the management of the
Company in connection with their requests, investigations, or inquiries
concerning events or matters relevant to the period of time the Employee was
with the Company and related to the scope of his duties.  Employee
shall be entitled to reimbursement of reasonable expenses incurred in connection
with such assistance and, should such assistance be required following the
expiration of the Transition

    
      
        
           

          
            13

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

    Period,
a reasonable hourly consulting fee for Employee’s time spent in excess of two
hours per month rendering such assistance  The Employee shall fully
cooperate with the Company in the defense or prosecution of any claims or
demands related to the period of time he was with the Company.  This
cooperation would include voluntarily submitting to interviews, providing
information, or appearing in court or discovery proceedings as requested by
attorneys or other authorized representatives of the
Company.   Employee shall be entitled to reimbursement of
expenses but no other compensation in connection with appearances in court or to
otherwise provide testimony.

     

    22.       
   Miscellaneous.

    

    a.           Successors and
Assigns.  This Agreement shall be binding in all respects upon,
and shall inure to the benefit of, the heirs, successors, and assigns of the
Parties.

    

    b.           Severability.  In
the event that a court of competent jurisdiction enters a final judgment holding
invalid any material provision of this Agreement, the remainder of this
Agreement shall be fully enforceable.

    

    c.           Integration.  This
Agreement constitutes the entire agreement of the Parties and a complete merger
of prior negotiations and agreements with respect to the matters set forth
herein. This Agreement shall not be modified except in writing signed by the
Parties or their authorized representatives.

    

    d.           Waiver.  No
term or condition of this Agreement shall be deemed to have been waived, nor
shall there be an estoppel against the enforcement of any provision of this
Agreement, except in a written document signed by the party charged with the
waiver or estoppel.  No written waiver shall be deemed a continuing
waiver unless specifically stated herein, and the written waiver shall operate
only as to the specific term or condition waived.

    

    e.           Mistake.  The
Company and the Employee each forever waive all rights to assert that this
Agreement, or any provision of it, was the result of a mistake in law or in
fact. Further, they forever waive all rights to assert that any or all of the
legal theories or factual assumptions used for negotiating purposes are for any
reason inaccurate or inappropriate, or that this Agreement is incomplete or
otherwise unenforceable, in any respect.

     

    f.           Fees and
Costs.  In any action to enforce, interpret, or seek damages
for violation of this Agreement, the prevailing party shall recover all
reasonable attorney fees, litigation expenses, and court costs.

    

    g.           Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado and, where applicable, of the
United States.

    
      
        
           

          
            14

            Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303) 293-8430

          

        

         

      

      
         

        
          

        

      

      
        
          

           

        

      

    

    

    h.           Priority of
Documents.  If there is any conflict between this Agreement and
the Transition Agreement to which this Agreement is an Exhibit, the Transition
Agreement shall prevail.

     

    i.           Counterparts;
Facsimile.  This Agreement may be signed in counterparts, and
it shall be as effective when counterparts have been executed by the Parties as
if each party had signed the same counterpart.   This Agreement
may be delivered by facsimile.

    

    
      	
              Theodore
      Venners

               

              /s/ Theodore Venners

               

              Dated:
      July 22, 2009

            	
              Evergreen
      Energy Inc.

               

               

              By:
      /s/ Thomas H.
      Stoner, Jr.

                       Thomas
      H. Stoner, Jr.

                        President
      & CEO

              Dated:
      July 22, 2009

               

            

    

    

     

     

    
      15

      Evergreen
Energy Inc. │ 1225 Seventeenth Street │ Suite 1300 │ Denver, Colorado 80202 │
Tel: (303) 293-2992 │ Fax: (303)
293-8430

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