Document:

exh4-2.htm

Exhibit 4.2

 

THE WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND THUS MAY NOT BE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER THAT ACT OR SUCH LAWS OR UNLESS, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.

 

Form of Warrant to Purchase Common Stock

of

EVERGREEN ENERGY Inc.

 

 

Warrant Shares: 200,000                                                                                     Initial Exercise Date: [Date of Issuance]

Warrant Number:________

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _____________ (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the first anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Evergreen Energy Inc., a Delaware corporation (the “Company”), up to 200,000 shares (the “Warrant Shares”) of Common Stock.  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.     Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Note Purchase Agreement dated as of February 1, 2011, among the Company, Centurion Credit Funding LLC and Level 3 Capital Fund LP.

 

Section 2.     Exercise.

 

	
  

	
a)

	
Exercise of Warrant.

 

	
  

	
i.

	
Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company) of this Warrant and a duly executed copy of the Notice of Exercise Form annexed hereto; and within five (5) Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received  payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a bank authorized to do business in the United States or any state or territory thereof.

 

  

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b)

	
Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be [the closing price of the Company’s common stock on the Final Settlement Date] per share, subject to adjustment hereunder (the “Exercise Price”).  The Exercise Price shall be payable in cash or other immediately available funds in United States Dollars.

 

	
  

	
c)

	
Mechanics of Exercise.

 

	
  

	
i.

	
Delivery of Certificates Upon Exercise.  Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is then a participant in such system within a reasonable time not exceeding three (3) Trading Days after such exercise (such date, the “Warrant Share Delivery Date”).  This Warrant shall be deemed to have been exercised on the first date on which all of the foregoing have been delivered to the Company.  The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(c)(v) prior to the issuance of such shares, having been paid.

 

	
  

	
ii.

	
Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

	
  

	
iii.

	
Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then, the Holder will have the right to rescind such exercise.

 

	
  

	
iv.

	
No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

  

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v.

	
Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant, when surrendered for exercise, shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

	
  

	
vi.

	
Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

d)           Buy-in. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder  a certificate or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times, (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of shares of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000.  The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant as required pursuant to the terms hereof.

 

 

  

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Section 3.     Certain Adjustments.

 

	
  

	
a)

	
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding subdivides the outstanding shares of Common Stock, or issues a stock dividend on the outstanding shares of Common Stock, the Exercise Price in effect immediately prior to such subdivision or the issuance of such stock dividend shall be proportionately decreased, and the number of shares receivable upon the exercise thereof shall be proportionately increased, and if the Company at any time combines the outstanding shares of Common Stock, the Exercise Price in effect immediately prior to such combination shall be proportionately increased, and the number of Shares receivable upon the exercise thereof shall be proportionately decreased, effective at the close of business on the date of such subdivision, stock dividend or combination, as the case may be.  In the event of any reclassification or change of the outstanding shares of Common Stock or of any reorganization of the Company or any similar corporate reorganization on or after the date hereof, then and in each such case the Holder, upon the exercise of warrants at any time after the consummation of such reclassification, change, or reorganization, shall be entitled to receive, in lieu of the shares receivable upon the exercise hereof prior to such consummation, the equity interests or other securities or property to which the Holder would have been entitled upon such consummation if the Holder had exercised the Warrant immediately prior thereto, all subject to further adjustment pursuant to the provisions of this Section.

 

	
  

	
b)

	
Pro Rata Distributions.  If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to the Holders) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the closing market price of the Common Stock on the principal trading market for the Common Stock (the “Market Price”) determined as of the record date mentioned above, and of which the numerator shall be such Market Price on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness or rights or warrants so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith.  In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.  Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

 

	
  

	
c)

	
Merger or Consolidation.  In the event the Company shall propose to enter into any consolidation or merger with or into any other corporation or entity (other than a consolidation or merger which does not result in any reclassification or change of the outstanding voting securities (a “Trigger Event”)), the corporation or entity formed by or resulting from such consolidation or merger shall execute and deliver to each Holder a supplemental warrant agreement whereby the Holder of this Warrant shall thereafter be entitled to purchase (in lieu of the number of Warrant Shares which such Holder would have been entitled to purchase immediately prior to such Trigger Event) the shares of stock or other securities or property to which such number of Warrant Shares would have

 

  

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been entitled at the time of such Trigger Event, at an aggregate purchase price equal to that which would have been payable if such number of Warrant Shares had been purchased immediately prior thereto.  In case of any such Trigger Event, lawful, adequate and appropriate provision shall be made with respect to the rights and interests thereafter of the Holder such that all the provisions of this Warrant shall thereafter be applicable, as nearly as practicable, to such stock or other securities (“Replacement Securities”) and/or property thereafter deliverable upon the exercise of this Warrant. The supplemental warrant agreement shall contain the express assumption by such successor corporation or entity of the due and punctual performance and observation of every provision of this Warrant to be performed and observed by the Company and of all liabilities and obligations of the Company hereunder and thereunder.  Upon consummation of any such transaction, the term “Common Stock” as used herein, shall be deemed to mean, as appropriate, such Replacement Securities and/or property, including without limitation, the definition of Warrant Shares as used herein.

 

	
  

	
d)

	
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

	
  

	
e)

	
Notice to Holder.

 

	
  

	
i.

	
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

	
  

	
ii.

	
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such

 

  

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dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.  The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice  except as may otherwise be expressly set forth herein.

 

Section 4.     Transfer of Warrant.

 

	
  

	
a)

	
Transferability.  Subject to compliance with any applicable securities laws this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

	
  

	
b)

	
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

  

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c)

	
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

	
  

	
d)

	
Representation by the Holder.  The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act

 

	
  

	
e)

	
Notwithstanding anything to the contrary set forth in this Warrant, at no time may the Holder of this Warrant exercise this Warrant if the number of shares of Common Stock to be issued pursuant to such exercise would exceed, when aggregated with all other shares of Common Stock owned by the Holder at such time, the number of shares of Common Stock which would result in such holder beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder) in excess of 4.99% of all of the Common Stock outstanding at such time; provided, however, that upon the Holder of this Warrant providing the Company with sixty-one (61) days notice (pursuant to Section 5(h) hereof) that such holder would like to waive this Section 4(e) with regard to any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 4(e) will be of no force or effect with regard to all or a portion of the Warrant referenced in such notice; provided, further, that this Section 4(e) shall be of no further force or effect during the sixty-one (61) days immediately preceding the expiration of the term of this Warrant.

 

	
  

	
f)

	
Notwithstanding anything to the contrary set forth in this Warrant, at no time may the Holder of this Warrant exercise this Warrant if the number of shares of Common Stock to be issued pursuant to such exercise would exceed, when aggregated with all other shares of Common Stock owned by the Holder at such time, the number of shares of Common Stock which would result in such holder beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder) in excess of 9.99% of all of the Common Stock outstanding at such time; provided, however, that upon the Holder of this Warrant providing the Company with sixty-one (61) days notice (pursuant to Section 5(h) hereof) that such holder would like to waive this Section 4(e) with regard to any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 4(e) will be of no force or effect with regard to all or a portion of the Warrant referenced in such notice; provided, further, that this Section 4(e) shall be of no further force or effect during the sixty-one (61) days immediately preceding the expiration of the term of this Warrant.

 

 

  

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Section 5.     Miscellaneous.

 

	
  

	
a)

	
 No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i).

 

	
  

	
b)

	
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

	
  

	
c)

	
Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

	
  

	
d)

	
Authorized Shares.  The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the stock exchange upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue

 

  

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fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

	
  

	
e)

	
Choice of Law/Jurisdiction.  This Warrant shall be governed by, and construed in accordance with, the laws of the State of New York, without reference to its principles of conflicts of laws that would result in the application of the law of any other jurisdiction, and any claims or causes of action arising out of, or in any way relating to, the terms and conditions of this Warrant may be brought and enforced in any court which may properly assert jurisdiction with respect thereto.

 

	
  

	
f)

	
Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

	
  

	
g)

	
Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Settlement Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

	
  

	
h)

	
Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Settlement Agreement.

 

	
  

	
i)

	
Limitation of Liability.  No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

  

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j)

	
Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

	
  

	
k)

	
Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

	
  

	
l)

	
Amendment.  This Warrant may not be modified or amended nor the provisions hereof waived without the written consent of the Company and the Holder.

 

	
  

	
m)

	
Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

	
  

	
n)

	
Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

(Signature Pages Follow)

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

 

 

	
EVERGREEN ENERGY INC.

 

 

	
By:__________________________________________

     Name:

     Title:

 

  

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NOTICE OF EXERCISE

TO:           EVERGREEN ENERGY INC.

(1)      The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any;

 

(2)      Payment of the exercise price shall be in lawful money of the United States;

 

(3)      Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

_______________________________

_______________________________

_______________________________

(4)  Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:

_________________________________________________

Authorized Signatory of Investing Entity:

_________________________________________________

Name of Authorized Signatory:

_________________________________________________

Title of Authorized Signatory:

Date: ________________________________________

 

  

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ASSIGNMENT FORM

(To assign the foregoing Warrant, execute

this form and supply required information.

Do not use this form to exercise the Warrant.)

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated:  ______________, _______

 

                   Holder’s Signature:     _____________________________

 

                   Holder’s Address:      _____________________________

 

                                                     _____________________________

Signature Guaranteed:  ___________________________________________

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.exh10-1.htm

Exhibit 10.1

Execution Version

FORBEARANCE AND SETTLEMENT AGREEMENT

This Forbearance and Settlement Agreement (hereinafter “Settlement Agreement”) is made and entered into as of February 1, 2011, among Evergreen Energy Inc. (“Evergreen”), BIMCO, Inc. (f/k/a Buckeye Industrial Mining Co.) (“Buckeye”), the holders of 8% Convertible Secured Notes Due 2012 issued by Evergreen identified in Exhibit A (the “Settling ’07 Noteholders”), Centurion Credit Funding LLC (“Centurion”) and Level 3 Capital Fund LP (“Level 3”).  Evergreen and Buckeye are sometimes referred to herein collectively as the “Company.”  Centurion and Level 3 are sometimes referred to herein as the “’09 Noteholders.” Evergreen, Buckeye, the Settling ’07 Noteholders, Centurion and Level 3 are sometimes referred to herein collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Evergreen, certain subsidiary guarantors including Buckeye (the “Guarantors”), and U.S. Bank National Association (the “’07 Trustee”), executed and delivered an Indenture, dated as of July 30, 2007 (the “’07 Note Indenture”), pursuant to which Evergreen issued an aggregate principal amount of $95,000,000 of 8.00% Convertible Secured Notes due 2012 (the “’07 Notes”);

 

WHEREAS, Evergreen, the Guarantors and the ’07 Trustee entered into the First Supplemental Indenture dated as of September 30, 2008 (the “’07 Supplemental Indenture”; together with the ‘07 Note Indenture, the “’07 Indenture”);

 

WHEREAS, Evergreen, Buckeye, Evergreen Operations, LLC (“Operations”) and Centurion entered into a Note Purchase Agreement dated as of March 20, 2009 (the “’09 Note

 

  

  

  

Purchase Agreement”) pursuant to which up to $15,000,000 in principal amount of Notes (the “’09 Notes”) were issued;

 

WHEREAS, certain of the ’09 Notes were transferred to Level 3;

 

WHEREAS, on January 12, 2010, Evergreen, Buckeye and Operations entered into a Second Amendment and Forbearance Agreement to the ‘09 Note Purchase Agreement (the “’09 Note Purchase Amendment”) with Centurion and Level 3 altering the repayment terms for the ’09 Notes;

 

WHEREAS, on March 12, 2010, Evergreen, Buckeye and Rosebud Industrial Mining Co. (“Rosebud”) entered into an Asset Purchase Agreement (“the Asset Purchase Agreement”) pursuant to which certain assets were transferred (the “Asset Purchase”) to Rosebud in exchange for certain consideration;

 

WHEREAS, pursuant to the terms of the Asset Purchase Agreement , an escrow account (the “Asset Purchase Escrow”) was created upon the closing under the Asset Purchase Agreement;

 

WHEREAS, $19,250,194.93 of the consideration received from the Asset Purchase was paid to Centurion and Level 3 in satisfaction of obligations owed by Evergreen and Buckeye under the ’09 Notes, the ’09 Note Purchase Agreement and the ’09 Note Purchase Amendment and to release security interests in certain of the assets transferred to Rosebud;

 

WHEREAS, certain of the Settling ’07 Noteholders filed suit against Evergreen, Buckeye, Centurion and Level 3 in the Court of Common Pleas (the “Court”) in Columbiana County, Ohio (captioned AQR Absolute Return Master Account, L.P., et al., v. Centurion Credit

 

  

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Funding LLC, et al., Case No. 10 CV 340), asserting, among other things, that the incurring by Buckeye of obligations under the ’09 Notes and the granting by Buckeye of liens on its assets in connection therewith, and certain transfers to Centurion, Level 3 and Evergreen of funds derived from the Asset Purchase, constituted fraudulent transfers or fraudulent conveyances (the “Litigation”);

 

WHEREAS, all Parties have denied the allegations of liability asserted against them in the Litigation;

 

WHEREAS, in response to an affirmative defense asserted by Evergreen and Buckeye in the Litigation, certain of the Settling ’07 Noteholders caused certain notices of acceleration of the ’07 Notes (the “Notices of Acceleration”) to be delivered to Evergreen and the ’07 Trustee;

 

WHEREAS, in response to the Notices of Acceleration, Evergreen and Buckeye asserted counterclaims against certain of the Settling ’07 Noteholders alleging, among other things, that the Notices of Acceleration had been wrongfully delivered to Evergreen and the ’07 Trustee and tortiously interfered with Evergreen’s contractual and prospective contractual relationships;

 

WHEREAS, on or about August 27, 2010, Evergreen transferred to the ’07 Trustee funds sufficient to make the August 2010 interest payment (the “August Payment”) called for under the ’07 Note Indenture and ’07 Supplemental Indenture; however, the ’07 Trustee refused to distribute the interest payment to the holders of the then outstanding ’07 Notes, including the Settling ’07 Noteholders, citing the Notices of Acceleration;

 

WHEREAS, the ’07 Trustee has filed a motion to intervene (the “Motion to Intervene”) in the Litigation; and

 

  

3

  

WHEREAS, in order to avoid the delay, cost and burden of further litigation, the Parties desire to settle and release any and all claims, demands or controversies, known or unknown, between or among them, and to fully and completely settle the Litigation, including all claims and counterclaims asserted, or which could have been asserted, in the Litigation or which otherwise may in the future arise from disputes relating in any way to the ’07 Note Indenture, the ’07 Supplemental Indenture, or the subject matter of the Litigation.

 

TERMS

 

NOW, THEREFORE, in consideration of the premises, the Parties hereto hereby agree as follows:

 

1.           Simultaneously with the execution and delivery of this Settlement Agreement, Evergreen will pay or cause to be paid to the Settling ’07 Noteholders in the amounts set forth opposite their names on Exhibit A annexed hereto One Million Four Hundred Fifty Thousand U.S. Dollars (US$1,450,000) (the “Initial Payment”) in consideration of the forbearance granted, and obligations undertaken, by the Settling ’07 Noteholders under this Settlement Agreement, to reimburse certain of the Settling ’07 Noteholders for their legal and other professional fees and expenses incurred to date in connection with the Litigation and in connection with the negotiation and preparation of this Settlement Agreement.

 

2.           From the date of the execution and delivery of this Settlement Agreement and the payment of the Initial Payment to the earliest of (i) February 4, 2011, or, if the Closing (as hereinafter defined) occurs and all deliveries required in Section 4 are timely made, the Final Settlement Day (as hereinafter defined), (ii) the occurrence of any default in the obligations of the Company or the ’09 Noteholders hereunder or under any of the documents, instruments or

  

4

  

agreements delivered in connection herewith, (iii) the occurrence of any Event of Default under Section 8.01 of the ’07 Note Indenture, other than an Event of Default (a) as to which a Notice of Acceleration was given prior to the date hereof pursuant to Section 8.02 of the ’07 Note Indenture or (b) as a result of any default by Evergreen in payment on, and on account of, a Fundamental Change Purchase Date (as defined in the ’07 Note Indenture) resulting from a Fundamental Change (as defined in the ’07 Note Indenture) arising pursuant to Section 3.03 A. (iii) of the ’07 Note Indenture (a “Delisting Default”), which Delisting Default shall be tolled until 100 days after the Closing or, if an involuntary petition under any chapter of title 11, U.S.C. (other than an involuntary petition filed or solicited by, or participated in, directly or indirectly, by any of the Settling ’07 Noteholders with respect to an Event of Default (as defined in the ’07 Indenture) as to which a notice of acceleration in accordance with Section 8.02 of the Indenture has been given prior to the date hereof or with respect to a Delisting Default) is filed against Evergreen or Buckeye or any of their subsidiary guarantors of the ’07 Notes on or before the earlier of (1) and (2) in Section 12. A., hereto without reference to the proviso thereto, (x) no order for relief has been entered or consented to, (y) the involuntary petition has not been dismissed and (z) Evergreen, Buckeye or the subsidiary guarantors of the ’07 Notes, or any or all of them, as the case may be, are diligently proceeding to contest the involuntary petition, 130 days after the Closing, but not waived, and (iv) the failure of Evergreen and Buckeye to deliver or cause to be delivered to the Settling ’07 Noteholders Two Million U.S. Dollars (US$2,000,000) on or before April 10, 2011 (anything in Section 6. A. concerning the timing of such delivery to the contrary, notwithstanding), provided such failure is caused by Evergreen or Buckeye, or both, (the “Forbearance Period”), the Parties shall forbear from any discovery or any other or further prosecution or defense of the Litigation or the claims asserted therein (unless the

  

5

  

Court orders otherwise over the objection of the Parties) and shall cooperate to prepare and file any reasonably necessary and appropriate motions or communications with the Court to seek extensions of any due dates which may be imposed by law, rule or order of the Court in the Litigation, including extensions of any due dates which may arise or be occasioned by activity commenced by parties or proposed parties to the Litigation not a party to this Settlement Agreement.

 

3.           During the Forbearance Period:

 

	
  

	
A.

	
Evergreen shall direct, and the Settling ’07 Noteholders shall request (without any obligation to provide any direction or indemnification pursuant to Section 8.05 of the ’07 Note Indenture), that the ’07 Trustee release the August Payment to the holders of the ’07 Notes currently entitled to receive such August Payment;

 

	
  

	
B.

	
no Settling ’07 Noteholder shall transfer or convey its right, title or interest in the ’07 Notes or encumber such interest in any way that would prevent such Settling ’07 Noteholder from delivering its ’07 Notes to Evergreen free and clear from such encumbrances, as required by the terms of this Settlement Agreement;

 

	
  

	
C.

	
the Settling ’07 Noteholders shall, to the extent permitted under the ’07 Note Indenture and ’07 Supplemental Indenture, request (without any obligation to provide any direction or indemnification pursuant to Section 8.05 of the ’07 Note Indenture) that the ’07 Trustee withdraw its Motion to Intervene in the Litigation without prejudice to the ’07 Trustee’s ability to renew the Motion to Intervene should Evergreen or any Settling ’07

  

6

  

	
  

	
Noteholder fail to comply with the conditions of this Settlement Agreement;

 

	
  

	
D.

	
to the extent that the ’07 Trustee does not agree to withdraw its Motion to Intervene, the Settling ’07 Noteholders (without any obligation to provide any direction or indemnification pursuant to Section 8.05 of the ’07 Note Indenture), Evergreen and Buckeye agree to use their best efforts to persuade the ’07 Trustee to (i) grant extensions beyond the end of the Forbearance Period of (A) the time for the Settling ’07 Noteholders to respond to the Motion to Intervene and (B) the time for the Parties to answer the ’07 Trustee’s complaint and (ii) to forbear from serving discovery or otherwise participating in the Litigation until the end of the Forbearance Period;

 

	
  

	
E.

	
the Settling ’07 Noteholders shall use commercially reasonable efforts to contact any former clients who may have held ’07 Notes in their accounts with the Settling ’07 Noteholders and request that such former clients contact Evergreen concerning their ’07 Notes;

 

	
  

	
F.

	
in the event Evergreen shall, prior to the Final Settlement Day, pursue the development of, or transactions with respect to, the K-Fuel technology, including through a spin-off, joint venture or other means, and enter into any agreements in connection therewith, the Settling ’07 Noteholders shall not assert that any such activity either directly, or with the giving of notice and the passage of time, or both, constitutes an Event of Default under Section 8.01 of the ’07 Note Indenture, provided that no such activity or agreement will, upon its consummation, alter the rights of the ’07 Notes

  

7

  

	
  

	
with respect to the K-Fuel technology prior to the Final Settlement Day; and

 

	
  

	
G.

	
the Parties shall jointly move the Court, as necessary or appropriate, for extensions and continuances of all deadlines that may be imposed in the Litigation by statute, rule or order including, without limitation, deadlines for discovery, pleadings, motion practice (including the ’07 Trustee’s Motion to Intervene) and trial.  The Parties agree that their joinder in seeking any such extensions and continuances shall not be used by any Party against any other Party as a basis to later prevent any such relief from eventually being granted.

 

4.           A closing (the “Closing”) under this Settlement Agreement shall be held on February 4, 2011 at 10:00 a.m. EST at the offices of K&L Gates LLP, 599 Lexington Avenue, New York, New York.  At the Closing, Evergreen shall convey or cause to be conveyed to the Settling ’07 Noteholders, in exchange for Fourteen Million One Hundred Three Thousand U.S. Dollars (US$14,103,000) original principal amount of the ’07 Notes to be delivered (provided the Final Settlement Day occurs and the conditions set forth in Section 6 of this Settlement Agreement are satisfied) by the Settling ’07 Noteholders in the original principal amounts set forth opposite their names on Exhibit A (the “Respective Principal Amount”):

 

	
  

	
A.

	
Three Million Three Hundred Nine Thousand Five Hundred U.S. Dollars (US$3,309,500), to be paid to the Settling ’07 Noteholders in the amounts set forth opposite their names on Exhibit A annexed hereto;

 

	
  

	
B.

	
Five Hundred and Thirty-One Thousand, Two Hundred and Fifty (531,250) warrants for the issuance of Evergreen Common Stock (the “Common Stock”) at an exercise price (the “Exercise Price”) of $7.20 per

  

8

  

	
  

	
share, said warrants to be in the form of Exhibit B, annexed hereto.  If the Company at any time subdivides the outstanding shares of Common Stock, or issues a stock dividend on the outstanding shares of Common Stock, the Exercise Price in effect immediately prior to such subdivision or the issuance of such stock dividend shall be proportionately decreased, and the number of shares receivable upon the exercise thereof shall be proportionately increased, and if the Company at any time combines the outstanding shares of Common Stock, the Exercise Price in effect immediately prior to such combination shall be proportionately increased, and the number of Shares receivable upon the exercise thereof shall be proportionately decreased, effective at the close of business on the date of such subdivision, stock dividend or combination, as the case may be.  In the event of any reclassification or change of the outstanding shares of Common Stock or of any reorganization of the Company or any similar corporate reorganization on or after the date hereof, then and in each such case the settling ’07 Noteholders, upon the exercise of warrants at any time after the consummation of such reclassification, change, or reorganization, shall be entitled to receive, in lieu of the shares receivable upon the exercise hereof prior to such consummation, the equity interests or other securities or property to which such settling ’07 Noteholders would have been entitled upon such consummation if such settling ’07 Noteholders had exercised the Warrant immediately prior thereto, all subject to further adjustment pursuant to the provisions of this Section;

  

9

  

	
  

	
C.

	
Releases in the form annexed hereto as Exhibits C and D; and

 

	
  

	
D.

	
to collateralize the Company’s obligations under Section 6.A. hereof, a valid, perfected, first priority lien on, and security interest in, (i) all of Evergreen’s and Buckeye’s right, title and interest in and to the funds on deposit from time to time in the Asset Purchase Escrow, (ii) any investments of the funds in the Asset Purchase Escrow or other investment property related thereto and any distributions, dividends or other amounts paid or payable with respect thereto, (iii) any other rights of Evergreen and/or Buckeye arising under the Asset Purchase Agreement or that certain Escrow Agreement dated as of March 12, 2010 among Rosebud, Evergreen, Buckeye and KeyBank, N.A.,, as escrow agent, to, or with respect to, the funds in the Asset Purchase Escrow, including the rights (but not the obligations) of Evergreen and/or Buckeye to oppose any claims by Rosebud to the funds in the Asset Purchase Escrow, and (iv) all proceeds, products and accessions of and to any item contained in clause (i), (ii) or (iii) in this Section 4.D., to secure the payment of the amounts owed to the Settling ’07 Noteholders in accordance with Section 6(A) hereof, including, without limitation, the delivery of a fully executed security agreement in the form annexed hereto as Exhibit E and such other documents, in form and substance reasonably satisfactory to the Settling ’07 Noteholders, necessary to perfect such security interest.

 

 

  

10

  

5.           Upon execution and delivery of this Settlement Agreement by all Parties hereto, Evergreen may publicly announce the Settlement Agreement, provided that any and all disclosures/press releases concerning the Settlement Agreement shall first be approved in form and substance by the Settling ’07 Noteholders, Centurion and Level 3, which approval (i) shall not be unreasonably withheld and (ii) shall be provided on or before the date hereof, provided such disclosure and/or press releases shall have been provided to the Settling ’07 Noteholders, Centurion and Level 3 for review at least one day prior thereto.

 

6.           On the Final Settlement Day, simultaneously, provided the Forbearance Period has not previously terminated pursuant to the terms of Section 2, hereof:

 

	
  

	
A.

	
Evergreen and Buckeye shall deliver or cause to be delivered to the Settling ’07 Noteholders Evergreen’s and Buckeye’s interest in the funds and property on deposit in, and the proceeds of, the Asset Purchase Escrow in the amount of Two Million U.S. Dollars (US$2,000,000), the payment of which is to be secured by the security interest to be granted pursuant to Section 4.D. hereof; provided, however, that in the event the funds and property in the Asset Purchase Escrow are released on or before the Final Settlement Day, Evergreen and Buckeye shall deliver or cause to be delivered to the Settling ’07 Noteholders such Two Million U.S. Dollars (US$2,000,000) immediately upon such release.  In the event that the funds in the Asset Purchase Escrow are not released on or before the Final Settlement Day, or the amount so released from the Asset Purchase Escrow to the Settling ’07 Noteholders from the Asset Purchase Escrow on or before the Final Settlement Day is less than Two Million U.S. Dollars (US$2,000,000), Evergreen shall pay to the Settling ’07 Noteholders on the Final Settlement Day, or upon the earlier release of the

  

11

  

	
  

	
funds and property from the Asset Purchase Escrow, the positive difference between (i) Two Million U.S. Dollars (US$2,000,000) minus (ii) the amount released from the Asset Purchase Escrow.  In the event that more than Two Million U.S. Dollars (US$2,000,000), in the aggregate, is released from the Asset Purchase Escrow, Evergreen and Buckeye shall, upon payment of all amounts owed by them pursuant to this Section 6.A. to the Settling ’07 Noteholders, be entitled to the balance of the funds released from the Asset Purchase Escrow in excess of Two Million U.S. Dollars, (US$2,000,000).

 

	
  

	
B.

	
The Settling ‘07 Noteholders shall:

 

	
  

	
(1)

	
deliver or cause to be delivered to Evergreen notices in the form annexed hereto as Exhibit F addressed to the ’07 Trustee rescinding the Notices of Acceleration pursuant to Section 8.02 of the Indenture (the “Default Rescission Notices”);

 

	
  

	
(2)

	
transfer their interest in their Respective Principal Amount of the ’07 Notes to Evergreen by electronic means using the DTC deposit/withdrawal at custodian (DWAC) system and provide whatever assistance may reasonably be requested by Evergreen to complete said transfers, which transfer shall include the transferor’s right to receive any interest due and payable on the’07 Notes in 2011 after the regularly scheduled payment of interest due February 1, 2011 is made to, and received by, the Settling ’07 Noteholders;

  

12

  

	
  

	
(3)

	
a UCC-3 termination statement and such other or further documents as may reasonably be necessary to release the security interest granted pursuant to Section 4.D. hereof; provided, however, that such termination statement and other documents shall be delivered on such earlier date on which, pursuant to the terms of Section 6. A., hereof, the Two Million U.S. Dollars to be paid pursuant to such section, is paid by Evergreen and Buckeye to the Settling ’07 Noteholders;

 

	
  

	
(4)

	
execute and deliver to each of Evergreen and Buckeye, a release in the form annexed hereto as Exhibit 6;

 

	
  

	
C.

	
The Settling ’07 Noteholders shall deliver to Centurion and Level 3:

 

	
  

	
(1)

	
Three Million Two Hundred Thousand U.S. Dollars (US$3,200,000) original principal amount of the ’07 Notes to be delivered by the Settling ’07 Noteholders in the original principal amounts set forth opposite their names on Exhibit A by electronic means using the DTC deposit/withdrawal at custodian (DWAC) system and provide whatever assistance may reasonably be requested by Centurion and Level 3 to complete said transfers, which transfer shall include the transferor’s right to receive any interest due and payable on the ’07 Notes in 2011 after the regularly scheduled payment of interest due February 1, 2011 is made to, and received by, the Settling ’07 Noteholders;

  

13

  

	
  

	
(2)

	
releases of Centurion and Level 3 in the form annexed hereto as Exhibit H;

 

	
  

	
D.

	
Centurion and Level 3 shall deliver to the Settling ’07 Noteholders:

 

	
  

	
(1)

	
One Million Six Hundred Thousand Dollars (US$1,600,000) in the amounts set forth opposite the Settling ’07 Noteholders’ names on Exhibit A;

 

	
  

	
(2)

	
releases of each Settling ’07 Noteholder in the form annexed hereto as Exhibit I;

 

	
  

	
E.

	
Centurion and Level 3 shall deliver to Evergreen:

 

	
  

	
(1)

	
releases of Evergreen and Buckeye in the forms annexed hereto as Exhibits J and K;

 

	
  

	
F.

	
Evergreen and Buckeye shall deliver to Centurion and Level 3:

 

	
  

	
(1)

	
releases of Centurion and Level 3 in the forms annexed hereto as Exhibits L and M;

 

	
  

	
G.

	
the Parties shall execute and deliver to each other a Notice of Dismissal of Claims and Counterclaims in the form annexed hereto as Exhibit N (the “Notice of Dismissal”) dismissing the Litigation with prejudice and without costs to any Party.  The Notice of Dismissal may be filed in the Litigation by any Party after the delivery thereof.  The applicable provisions of the Stipulated Protective Order as entered in the Litigation on May 26, 2010 shall remain effective following the dismissal of the Litigation.

  

14

  

 

7.   In the event the Final Settlement Day shall not occur, (i) the Parties shall not be required to make any of the deliveries required of them in Section 6, provided that Evergreen and Buckeye shall nevertheless be required to fulfill their obligations under Section 6. A., hereof, on or before 100 days after the Closing or, if an involuntary petition under any chapter of title 11, U.S.C. (other than an involuntary petition filed or solicited by, or participated in, directly or indirectly, by any of the Settling ’07 Noteholders with respect to an Event of Default (as defined in the ’07 Indenture) as to which a notice of acceleration in accordance with Section 8.02 of the Indenture has been given prior to the date hereof or with respect to a Delisting Default) is filed against Evergreen or Buckeye or any of their subsidiary guarantors of the ’07 Notes on or before the 100th Day, (x) no order for relief has been entered or consented to, (y) the involuntary petition has not been dismissed and (z) Evergreen, Buckeye or the subsidiary guarantors of the ’07 Notes, or any or all of them, as the case may be, are diligently proceeding to contest the involuntary petition, 130 days after the Closing, (ii) all property received by the Settling ’07 Noteholders under this Settlement Agreement shall be retained by them and, other than the Initial Payment, which constitutes consideration to induce the Settling ’07 Noteholders to enter into this Agreement and forbear on the terms and conditions, and to the extent provided for, herein, be deemed to be payment on account of the obligations owing by Evergreen and Buckeye to the Settling ’07 Noteholders on the ’07 Notes and (iii) all claims, causes of action and defenses asserted, or which could be asserted, by the Parties in the Litigation (other than those claims, causes of action and defenses against the Settling ’07 Noteholders released as a result of the execution and delivery to the Settling ’07 Noteholders of the releases pursuant to Section 4. C., hereof) shall be preserved and may be asserted by the Parties as if this Settlement Agreement had never been entered into and the Closing had never occurred.

 

  

15

  

 

8.           It is understood and agreed between the Parties that, notwithstanding the transfer of any of the ’07 Notes pursuant to Section 6, hereof, the Settling ’07 Noteholders shall retain the right to receive all interest payments associated with such ’07 Notes payable August 2010 and February 2011.  The Company agrees to work cooperatively with the Settling ’07 Noteholders to cause the Trustee, the Registered Holder (as defined in the ’07 Indenture), Evergreen’s DTC Participant and each Settling ’07 Noteholder’s DTC Participant to promptly pay or cause such interest to be paid directly to the Settling ’07 Noteholders, to the extent that any such interest payment has not previously been paid to the Settling ’07 Noteholders.

 

9.           All payments made to any Party under this Settlement Agreement shall be made by wire transfer in immediately available funds.

 

10.           In the event that Evergreen or Buckeye shall default in their obligations under this Settlement Agreement, time being of the essence, and the Settling ’07 Noteholders do not, in their sole and absolute discretion, waive such default, the Settling ’07 Noteholders may, at their option, (i) continue the Litigation, in which event Evergreen, Buckeye, Centurion and Level 3 shall have no further obligations under this Settlement Agreement, or (ii) seek to enforce the terms of this Settlement Agreement.

 

11.           In the event that the Settling ’07 Noteholders shall default in their obligations to any other Party under this Settlement Agreement and the non-defaulting Parties shall have all performed the obligations required of them prior to said default, time being of the essence, Evergreen and Buckeye’s exclusive remedy against the Settling ’07 Noteholders shall be to seek enforcement of this Settlement Agreement.  In such an action, all Parties understand and

 

  

16

  

 

acknowledge that money damages are insufficient to fully compensate Evergreen and Buckeye for any failure of the Settling ’07 Noteholders to deliver the items described in Section 6 of this Settlement Agreement and the Settling ’07 Noteholders specifically authorize and consent to a court of competent jurisdiction entering an order directing specific performance of said Settling ’07 Noteholders’ delivery obligations as the sole and exclusive remedy for any such default.  In such an enforcement action, the prevailing party shall be entitled to recover all costs and expenses incurred in bringing or defending such action, including all experts’ and attorneys’ fees and expenses.

 

12.           As used in this Settlement Agreement

 

	
  

	
A.

	
The term “100th Day” shall mean the earlier of (1) the 100th day following (i) the execution and delivery by Evergreen and Buckeye of all items required to be delivered by them at the Closing and (ii) the clearance of all funds paid, or caused to be paid, by Evergreen and Buckeye at the Closing, and (2) the date reasonably determined by the Parties to be at least 91 days after the occurrence of the events described in clauses (i) and (ii) in Section 12. A. (1), above, as such date would be calculated for purposes of determining, pursuant to 11 U.S.C. § 547 or any similar state law, whether or not a transfer could be avoided as a preference, provided

  

17

  

	
  

	
(a) the Forbearance Period has not previously terminated pursuant to the terms of Section 2, hereof, and (b) neither Evergreen nor Buckeye nor any of their subsidiary guarantors of the ’07 Notes has, on or prior to the earlier of (1) and (2) in this Section 12. A., above, without reference to the proviso thereto, filed a voluntary petition, or had filed against it an involuntary petition, under any chapter of title 11, U.S.C. (other than an involuntary petition filed or solicited by, or participated in, directly or indirectly, by any of the Settling ’07 Noteholders on account of an Event of Default (as defined in the ’07 Indenture) as to which a notice of acceleration in accordance with Section 8.02 of the Indenture has been given prior to the date hereof or on account of a Delisting Default);

 

	
  

	
B.

	
The term “Final Settlement Day” shall mean the later of (i) the 100th Day or (ii) if an involuntary petition under any chapter of title 11, U.S.C. (other than an involuntary petition filed or solicited by, or participated in, directly or indirectly, by any of the Settling ’07 Noteholders with respect to an Event of Default (as defined in the ’07 Indenture) as to which a notice of acceleration in accordance with Section 8.02 of the Indenture has been given prior to the date hereof or with respect to a Delisting Default) is filed against Evergreen or Buckeye or any of their subsidiary guarantors of the ’07 Notes on or before the earlier of (1) and (2) in Section 12. A., above, without reference to the proviso therein, (x) no order for relief has been entered or consented to, (y) the involuntary petition has not been dismissed and (z) Evergreen, Buckeye or the subsidiary guarantors of the

  

18

  

	
  

	
’07 Notes, or any or all of them, as the case may be, are diligently proceeding to contest the involuntary petition, the date on or before the 130th day following the Closing on which the involuntary petition is dismissed (and no stay of the order dismissing the involuntary petition is then in effect), provided the Forbearance Period has not previously terminated pursuant to the terms of Section 2, hereof.

 

13.           Any notices required to be given pursuant to this Settlement Agreement shall be sent by national overnight delivery service to the Parties as follows:

 

If to Evergreen or Buckeye, to:

 

William Laughlin, Esq.

Evergreen Energy Inc.

1225 17th Street

Suite 1300

Denver, CO  80202-5506

With a copy to:

Mark I. Wallach, Esq.

Calfee, Halter & Griswold, LLP

1400 KeyBank Center

800 Superior Avenue

Cleveland, Ohio 44114

If to Centurion:

David Levy

Centurion Credit Funding LLC

152 West 57th Street, 54th Floor

New York, NY  10019

If to Level 3:

Will Slota

Level 3 Capital Fund LP

152 West 57th Street, 4th Floor

New York, NY  10019

  

19

  

In each case with a copy to:

Jeremy Gilman

Benesch, Friedlander, Coplan & Aronoff LLP

200 Public Square, Suite 2300

Cleveland, OH  44114-2378

If to the Settling ’07 Noteholders, to:

 

 

 

 

 

With a copy to:

 

 

 

 

 

 

14.           Each of the Parties represents and warrants that it has read this Settlement Agreement, been fully advised by counsel as to the terms thereof, and fully understands and agrees to the terms of the same.

 

15.           Each of the Parties represents and warrants to each other that the below-named individuals who have signed this Settlement Agreement have full legal authority to do so and further that all lawful conditions precedent to their execution and delivery of this Settlement Agreement have been fully accomplished.

 

16.           Each Settling ’07 Noteholder represents and warrants that it holds the face amount of ’07 Notes indicated in Exhibit A free of any liens or other encumbrances, that it has complete

 

  

20

  

 

power and authority to convey to Evergreen the ’07 Notes indicated in Exhibit A without restriction according to the terms of this Settlement Agreement, and that it has full power and authority to agree to the terms of this Settlement Agreement.

 

17.           This Settlement Agreement may be executed in counterparts, all of which will be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that all Parties need not sign the same counterpart.

 

18.           The terms of this Settlement Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof and the Parties agree that they have not relied on any other representations, written or oral, in entering into this Settlement Agreement.

 

19.           This Settlement Agreement may not be modified or amended except by an agreement in writing signed by the Party against whom such modification or amendment is sought to be enforced.

 

20.           This Settlement Agreement is the result of negotiations between all the Parties (and their respective counsel) and no Party shall be considered the drafter hereof.

 

21.           This Settlement Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without reference to its principles of conflicts of laws that would result in the application of the law of any other jurisdiction and any claims or causes of action arising out of, or in any way relating to, the terms and conditions of this Settlement Agreement may be brought and enforced in any court which may properly assert jurisdiction with respect thereto.

  

21

  

 

IN WITNESS WHEREOF, the Parties hereto have executed this Settlement Agreement as of the date first above written.

	
EVERGREEN ENERGY INC.

	
BIMCO, INC. (F/K/A BUCKEYE

INDUSTRIAL MINING CO.)

	  	  
	 	 
	
By:  _______________________________

	
By:  _______________________________

	
Name:

	
Name:

	
Title:

	
Title:

	  	  
	
CENTURION CREDIT FUNDING LLC

	
LEVEL 3 CAPITAL FUND LP

	  	  
	 	 
	  	  
	
By:  _______________________________

	
By:  _______________________________

	
Name:

	
Name:

	
Title:

	
Title:

[Signatures of Settling '07 Noteholders]

 

 

 

 

 

 

22

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