exh4-5_0908.htm


    Exhibit
4.5

    
 

    whitebox

    


    September
30, 2008

    


    


    


    Ms.
Diana L. Kubik

    Chief
Financial Officer

    Evergreen
Energy Inc.

    1225
17th Street, Suite 1300

    Denver,
CO 80202

    


    Re:
3(a)(9)
Exchange

     

    Dear
Diana:

     

    This
letter agreement (this “Agreement”) confirms our agreement to exchange (the
“Exchange”) $6,255,000 in aggregate principal amount of the 8.00% Convertible
Secured Notes due 2012 (the “Notes”), CUSIP No. 30024BAA2,
of  Evergreen Energy Inc., a Delaware corporation (the “Company”), for
an aggregate of 5,282,494 shares of the Company’s common stock, par value $.001
per share (the “Common Stock”), pursuant to Section 3(a)(9) of the Securities
Act of 1933, as amended (the “Act”), on terms specified below:

     

    Subject
to the satisfaction (or waiver) of the conditions set forth in Sections 4 and 5
below, the Company agrees to issue to each fund listed in column (1) of Schedule I attached
hereto (each, a “Fund” and together, the “Funds”) on the Closing Date (as
defined below) that number of shares of Common Stock as is set forth opposite
such Fund’s name in column (2) of Schedule I attached
hereto in exchange for that principal amount of the Notes as is set forth
opposite such Fund’s name in column (3) of Schedule I attached
hereto.

     

    The
date and time of the closing (the “Closing Date”) shall be 10:30 a.m., Eastern time, on October 1, 2008 after
notification of satisfaction (or waiver) of the conditions to the closing set
forth in Sections 4 and 5 below (or such later date as is mutually agreed to by
the Company and each Fund). 

     

    The
Exchange will be subject to the following terms and conditions:

     

    
      	
              (1)

            	
              The
      Funds will privately exchange the Notes for the Common Stock, subject to
      the following settlement payment and other
  terms:

            


    

     

    
      	
               
      

            	
              a.

            	
              Each
      Fund will receive unlegended Common Stock on each Closing Date that may be
      sold without restrictions into the public market, subject to the accuracy
      of such Fund’s representations in Section 3
  below.

            


    

     

    
      	
               
      

            	
              b.

            	
              The
      Common Stock issuable and deliverable upon the exchange of the Notes shall
      be transferred by Deposit / Withdrawal at Custodian (DWAC) to each Fund’s
      DTC participant account: Whitebox Convertible Arbitrage Partners LP;
      DTC0005; account number 00226067; Whitebox
  Special

            


    

     


    
      
        
          3033
Excelsior Boulevard | Suite 300 | Minneapolis, MN 55416 


        

      

      
        1

        
          

        

      

      
         


      

    


    
      	
               

            	
              Opportunities
      Partners, Series B, LP; DTC573; account number 10609070.  Each
      of the Funds shall deliver the Notes being exchanged by them to the
      Company as promptly as practicable after the Exchange.
  

            


    

     

    
      	
               
      

            	
              c.

            	
              Each Fund that represents the principal amount of
      the Notes as is set forth opposite such Fund’s name in column (3) of
      Schedule
      I attached hereto hereby agrees to
      consent as of the date hereof to the amendments to the Indenture (the
      “Indenture”) governing the Notes set forth in the Supplemental Indenture
      attached hereto as Exhibit A (the “Supplemental Indenture”). Such consents
      shall be irrevocable and not subject to the satisfaction of any condition
      on any obligation of either party set forth in this
      agreement.

            


    

     

    
      	
               
      

            	
              d.

            	
              Notwithstanding
      anything to the contrary contained in the Indenture or otherwise, with
      respect to any guarantees by any subsidiaries of the Company contained in
      the Indenture, the Company and each of the Funds hereby agrees that each
      such guarantee issued pursuant to the Indenture, prior to each exchange of
      Notes for Common Stock hereunder, shall be null and void with respect to
      such Notes being exchanged such that, at the time of each Exchange, such
      Notes being exchanged shall not be guaranteed securities and shall be
      solely securities of the Company.

            


    

     

    (2)       The
Company represents, warrants and agrees that:

     

    
      	
               
      

            	
              a.

            	
              The
      Company shall comply with all, and this transaction shall not contravene
      any, applicable securities laws and the rules and regulations promulgated
      thereunder, including Section 3(a)(9) of the
  Act.

            


    

     

    
      	
               
      

            	
              b.

            	
              The
      Company has a sufficient number of authorized and unissued shares of
      Common Stock to consummate the
Exchange.

            


    

     

    
      	
               
      

            	
              c.

            	
              To
      the knowledge of the Company, no Event of Default (as defined in the
      Notes) has occurred and is continuing as of the date
    hereof.

            


    

     

    
      	
               
      

            	
              d.

            	
              The
      Company is a corporation duly organized and validly existing in good
      standing under the laws of the State of Delaware, and has the requisite
      corporate power and authorization to own its properties and to carry on
      its business as now being
conducted.

            


    

     

    
      	
               
      

            	
              e.

            	
              The
      Company is duly qualified as a foreign corporation to do business and is
      in good standing in every jurisdiction in which its ownership of property
      or the nature of the business conducted by it makes such qualification
      necessary, except to the extent that the failure to be so qualified or be
      in good standing would not reasonably be expected to have a Material
      Adverse Effect.  As used in this Agreement, “Material Adverse
      Effect” means any material adverse effect on the business, properties,
      assets, operations, results of operations, or financial condition of the
      Company, taken as a whole, or on the transactions contemplated by this
      Agreement or by the agreements and instruments to be entered into in
      connection with

            


    

     


    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    
      	
               

            	
              this
      Agreement, or on the authority or ability of the Company to perform its
      obligations under this Agreement.

            


    

     

    
      	
               
      

            	
              f.

            	
              The
      Company has the requisite power and authority to enter into and perform
      its obligations under this Agreement and to issue the Common Stock as
      required by and in accordance with the terms hereof.  The
      execution and delivery of this Agreement by the Company and the
      consummation by the Company of the transactions contemplated hereby,
      including, without limitation, the exchange and issuance of the Common
      Stock for the Notes have been duly authorized by the Company’s Board of
      Directors and no further consent or authorization is required by the
      Company, its Board of Directors or its
  stockholders.

            


    

     

    
      	
               
      

            	
              g.

            	
              The
      Company has duly executed and delivered this Agreement and this Agreement
      constitutes the legal, valid and binding obligations of the Company,
      enforceable against the Company in accordance with their respective terms,
      except as such enforceability may be limited by general principles of
      equity or applicable bankruptcy, insolvency, reorganization, moratorium,
      liquidation or similar laws relating to, or affecting generally, the
      enforcement of applicable creditors’ rights and
  remedies.

            


    

     

    
      	
               
      

            	
              h.

            	
              The
      execution, delivery and performance of this Agreement by the Company and
      the consummation by the Company of the transactions contemplated hereby
      (including, without limitation, the exchange and issuance of the Common
      Stock will not (i) result in a violation of the Certificate of
      Incorporation of the Company, any capital stock of the Company or the
      Bylaws of the Company or (ii) conflict with, or constitute a default (or
      an event which with notice or lapse of time or both would become a
      default) under, or give to others any rights of termination, amendment,
      acceleration or cancellation of, any agreement, indenture or instrument to
      which the Company is a party, or (iii) result in a violation of any law,
      rule, regulation, order, judgment or decree (including federal and state
      securities laws and regulations and the rules and regulations of The NYSE
      Arca Exchange (the “Principal Market”)) applicable to the Company or by
      which any property or asset of the Company is bound or affected, except
      with respect to clauses (ii) or (iii) for any conflicts, defaults,
      accelerations, terminations, cancellations or violations, that will not
      have a Material Adverse Effect.

            


    

     

    
      	
               
      

            	
              i.

            	
              The
      Company is not required to obtain any consent, authorization or order of,
      or make any filing or registration with, any court, governmental agency or
      any regulatory or self-regulatory agency or any other person in order for
      it to execute, deliver or perform any of its obligations under or
      contemplated by this Agreement, in each case in accordance with the terms
      hereof, other than obtaining other consents and execution of the
      Supplemental Indenture by the Trustee to effectuate the amendments to the
      Indenture.  All consents, authorizations, orders, filings and
      registrations which the Company is required to obtain pursuant to the
      preceding sentence have been obtained or effected on or prior to the
      Closing Date (other than obtaining other consents and execution of
      the

            


    

     


    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    
      	
               

            	
              Supplemental
      Indenture by the Trustee to effectuate the amendments to the Indenture),
      and the Company and is unaware of any facts or circumstances which might
      prevent the Company from obtaining or effecting any of the registration,
      application or filings pursuant to the preceding sentence.  The
      Company is not in violation of the listing requirements of the Principal
      Market and has no knowledge of any facts which would reasonably lead to
      delisting or suspension of the Common Stock in the foreseeable
      future.

            


    

     

    
      	
               
      

            	
              j.

            	
              There
      is no action, suit, proceeding, inquiry or investigation before or by
      either Principal Market, any court, public board, government agency,
      self-regulatory organization or body pending or, to the knowledge of the
      Company, threatened against or affecting the Company, the Common Stock or
      any of the Company’s officers or directors in their capacities as such,
      that is expected to have a Material Adverse
  Effect.

            


    

     

    
      	
               
      

            	
              k.

            	
              The
      Company is not, and has never been, an issuer identified in Rule 144(i)(1)
      of the Act.

            


    

     

    
      	
               
      

            	
              l.

            	
              Neither
      the Company nor any of its Subsidiaries has taken any steps to seek
      protection pursuant to any bankruptcy law nor does the Company have any
      knowledge or reason to believe that its creditors intend to initiate
      involuntary bankruptcy proceedings or any actual knowledge of any fact
      which would reasonably lead a creditor to do so.  The Company
      and its Subsidiaries, individually and on a consolidated basis, are not as
      of the date hereof, and after giving effect to the transactions
      contemplated hereby to occur at the closing, will not be Insolvent (as
      defined below).  For purposes of this Section 2(l), “Insolvent”
      means, with respect to any person, (i) the present fair saleable value of
      such person’s assets is less than the amount required to pay such person’s
      total indebtedness, (ii) such person is unable to pay its debts and
      liabilities, subordinated, contingent or otherwise, as such debts and
      liabilities become absolute and matured, (iii) such person intends to
      incur or believes that it will incur debts that would be beyond its
      ability to pay as such debts mature or (iv) such person has unreasonably
      small capital with which to conduct the business in which it is engaged as
      such business is now conducted and is proposed to be
      conducted.

            


    

     

    
      	
               
      

            	
              m.

            	
              For
      the purposes of Rule 144 under the Act, the Company acknowledges that the
      holding period of the Common Stock issued hereunder may be tacked onto the
      holding period of the Notes, and the Company agrees not to take a position
      contrary to this Section.  All shares of Common Stock issued
      hereunder shall be issued without any restrictive
  legend.

            


    

     

    
      	
              (3)

            	
              Each
      Fund, severally and not jointly, hereby represents, warrants and agrees
      that:

            


    

     

    
      	
               
      

            	
              a.

            	
              Such
      Fund has the requisite power and authority to enter into this Agreement
      and to perform its obligations under and the transactions contemplated by
      this Agreement on behalf of the Funds, and the representations and
      warranties contained in (b) through (f) below are accurate with respect to
      such Fund.

            


    

     


    
      
         


      

      
        4

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              b.

            	
              Such
      Fund has not acted on behalf of the Company and has received no commission
      or remuneration from the Company other than as contemplated in this
      Agreement.

            


    

     

    
      	
               
      

            	
              c.

            	
              Such
      Fund was not solicited by anyone on behalf of the Company to enter into
      this transaction, and it has not solicited any other holder of the
      Company’s Notes to participate in this
  transaction.

            


    

     

    
      	
               
      

            	
              d.

            	
              Such
      Fund has sufficient knowledge and experience in financial and business
      matters so as to be capable of bearing the economic risks of participation
      in this transaction, and it is capable of evaluating the merits and risks
      of participating in this transaction, including any risks associated with
      surrendering any rights related to the Notes in exchange for the rights
      and risks related to the Common
Stock.

            


    

     

    
      	
               
      

            	
              e.

            	
              Neither
      such Fund nor any of its affiliates is, and for three months immediately
      preceding the date hereof, has been an officer, director or “beneficial
      owner” (as defined for purposes of Rule 13d-3 of the Securities Exchange
      Act of 1934, as amended (the “Exchange Act”)) of 10% or more of the
      Company’s Common Stock.

            


    

     

    
      	
              (4)

            	
              Conditions
      to the Company’s obligations hereunder on the Closing
  Date:

            


    

     

    The
obligations of the Company to each Fund hereunder are subject to the
satisfaction of each of the following conditions, provided that these conditions
are for the Company’s sole benefit and may be waived by the Company at any time
in its sole discretion by providing such Fund with prior written notice
thereof:

     

    
      	
               
      

            	
              a.

            	
              Each
      Fund shall have executed this Agreement and delivered the same to the
      Company.

            


    

     

    
      	
               
      

            	
              b.

            	
              The
      representations and warranties of each Fund in Section 3 shall be true and
      correct in all material respects (except for those representations and
      warranties that are qualified by materiality or Material Adverse Effect,
      which shall be true and correct in all respects) as of the date when made
      and as of the Closing Date as though made at that time (except for
      representations and warranties that speak as of a specific date, which
      shall be true and correct as of such specified date) and each Fund shall
      have performed, satisfied and complied in all material respects with the
      covenants, agreements and conditions required by this Agreement to be
      performed, satisfied or complied with by the Company at or prior to the
      Closing Date.

            


    

     

    
      	
              (5)

            	
              Conditions
      to each Fund’s obligations hereunder on each of the Closing
      Date:

            


    

     

    The
obligations of each Fund hereunder are subject to the satisfaction of each of
the following conditions, provided that these conditions are for each such
Fund’s sole benefit and may be waived by such Fund at any time in its sole
discretion by providing the Company with prior written notice
thereof:

     


    
      
         


      

      
        5

        
          

        

      

      
         


      

    


    a.         The
Company shall have duly executed and delivered to each Fund (i) this Agreement
and (ii) the Common Stock being issued to such Fund at the closing pursuant to
this Agreement.

     

    
      	
               
      

            	
              b.

            	
              The
      representations and warranties of the Company in Section 2 shall be true
      and correct in all material respects (except for those representations and
      warranties that are qualified by materiality or Material Adverse Effect,
      which shall be true and correct in all respects) as of the date when made
      and as of the Closing Date as though made at that time (except for
      representations and warranties that speak as of a specific date, which
      shall be true and correct as of such specified date) and the Company shall
      have performed, satisfied and complied in all material respects with the
      covenants, agreements and conditions required by this Agreement to be
      performed, satisfied or complied with by the Company at or prior to the
      Closing Date.  Each Fund shall have received a certificate,
      executed by the Chief Executive Officer or Chief Financial Officer of the
      Company, dated as of the Closing Date, to the foregoing effect in the form
      attached hereto as Exhibit
      B.

            


    

     

    
      	
               
      

            	
              c.

            	
              The
      Common Stock (A) shall be designated for quotation or listed on the
      Principal Market and (B) shall not have been suspended, as of the Closing
      Date, by the SEC or the Principal Market from trading on the Principal
      Market nor shall suspension by the SEC or the Principal Market have been
      threatened, as of the Closing Date, either (A) in writing by the SEC or
      the Principal Market or (B) by falling below the minimum listing
      maintenance requirements of the Principal
  Market.

            


    

     

    
      	
               
      

            	
              d.

            	
              The
      Company shall have obtained all governmental, regulatory or third party
      consents and approvals, if any, necessary for the issuance of the
      Securities, including, without limitation, any approvals or notifications
      required by the Principal Market.

            


    

     

    
      	
              (6)

            	
              Termination.

            


    

     

    In
the event that the closing does not occur by the fifth (5th) trading date after
the date hereof, due to the Company’s or any Fund’s failure to satisfy the
conditions set forth in Sections 4 and 5 hereof (and the nonbreaching party’s
failure to waive such unsatisfied conditions(s)), the nonbreaching party shall
have the option to terminate their obligations to consummate the transactions
contemplated hereby at the close of business on such date without liability of
any party to any other party.

     

    
      	
              (7)

            	
              Additional
      Covenants.

            


    

     

    
      	
               
      

            	
              a.

            	
              Each
      party shall use its best efforts timely to satisfy each of the covenants
      and the conditions to be satisfied by it as provided in Sections 4, 5 and
      7 of this Agreement.

            


    

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              b.

            	
              On
      the first business day following the date of this Agreement, on or before 8:30 a.m., Eastern time, the Company shall file a
      Current Report on Form 8-K describing the terms of the transactions
      contemplated by this Agreement
      in the form required by the Exchange Act (the “8-K Filing”).  As
      of the date and time of the 8-K Filing with the SEC, the Company hereby
      acknowledges and agrees that neither the Company, nor any of its
      subsidiaries nor any of its respective officers, directors, employees or
      agents has provided any Fund with material, nonpublic information that is
      not disclosed in the 8-K
Filing.

            


    

     

    
      	
               
      

            	
              c.

            	
              Notwithstanding
      each Fund’s agreement to consent to the Supplemental Indenture, if the
      Supplemental Indenture is put into effect at any time that either Fund
      owns or is deemed to own the Notes being exchanged pursuant to this
      Agreement, the Company hereby acknowledges and agrees that it will treat
      each Fund holding such notes as if the Supplemental Indenture was not
      effective and be contractually bound to each Fund by the terms and
      conditions of the Indenture prior to such Supplemental Indenture. Further,
      if any of the conditions, obligations, representations, and warranties
      contained herein with respect to the company’s Exchange of the Notes are
      not met, the Funds listed below shall retain the Notes and the Company
      hereby acknowledges and agrees that it will treat each Fund holding such
      notes as if the Supplemental Indenture was not effective and be
      contractually bound to each Fund by the terms and conditions of the
      Indenture prior to such Supplemental
Indenture.

            


    

     

    
      	
              (8)

            	
              Miscellaneous.

            


    

     

    
      	
               
      

            	
              a.

            	
              This
      Agreement may be executed in two or more identical counterparts, all of
      which shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered
      to the other party; provided that a facsimile signature shall be
      considered due execution and shall be binding upon the signatory thereto
      with the same force and effect as if the signature were an original, not a
      facsimile signature.

            


    

     

    
      	
               
      

            	
              b.

            	
              The
      headings of this Agreement are for convenience of reference and shall not
      form part of, or affect the interpretation of, this
    Agreement.

            


    

     

    
      	
               
      

            	
              c.

            	
              If
      any provision of this Agreement is prohibited by law or otherwise
      determined to be invalid or unenforceable by a court of competent
      jurisdiction, the provision that would otherwise be prohibited, invalid or
      unenforceable shall be deemed amended to apply to the broadest extent that
      it would be valid and enforceable, and the invalidity or unenforceability
      of such provision shall not affect the validity of the remaining
      provisions of this Agreement so long as this Agreement as so modified
      continues to express, without material change, the original intentions of
      the parties as to the subject matter hereof and the prohibited nature,
      invalidity or unenforceability of the provision(s) in question does not
      substantially impair the respective expectations or reciprocal
      

            


    

     


    
      
         


      

      
        7

        
          

        

      

      
         


      

    


    
      	
               

            	
              obligations
      of the parties or the practical realization of the benefits that would
      otherwise be conferred upon the parties.  The parties will
      endeavor in good faith negotiations to replace the prohibited, invalid or
      unenforceable provision(s) with a valid provision(s), the effect of which
      comes as close as possible to that of the prohibited, invalid or
      unenforceable provision(s).

            


    

     

    
      	
               
      

            	
              d.

            	
              All
      questions concerning the construction, validity, enforcement and
      interpretation of this Agreement shall be governed by the internal laws of
      the State of Delaware, without giving effect to any choice of law or
      conflict of law provision or rule (whether of the State of Delaware or any
      other jurisdictions) that would cause the application of the laws of any
      jurisdictions other than the State of Delaware.  Each party
      hereby irrevocably submits to the exclusive jurisdiction of the state and
      federal courts sitting in Wilmington Delaware, for the adjudication of any
      dispute hereunder or in connection herewith or with any transaction
      contemplated hereby or discussed herein, and hereby irrevocably waives,
      and agrees not to assert in any suit, action or proceeding, any claim that
      it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is brought in an inconvenient forum or
      that the venue of such suit, action or proceeding is
      improper.  Each party hereby irrevocably waives personal service
      of process and consents to process being served in any such suit, action
      or proceeding by mailing a copy thereof to such party at the address for
      such notices to it under this Agreement and agrees that such service shall
      constitute good and sufficient service of process and notice
      thereof.  Nothing contained herein shall be deemed to limit in
      any way any right to serve process in any manner permitted by
      law.  If any provision of this Agreement shall be invalid or
      unenforceable in any jurisdiction, such invalidity or unenforceability
      shall not affect the validity or enforceability of the remainder of this
      Agreement in that jurisdiction or the validity or enforceability of any
      provision of this Agreement in any other jurisdiction.  EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

            


    

     

    
      	
               
      

            	
              e.

            	
              This
      Agreement is intended for the benefit of the parties hereto and their
      respective permitted successors and assigns, and is not for the benefit
      of, nor may any provision hereof be enforced by, any other
      Person.

            


    

     

    
      	
               
      

            	
              f.

            	
              Each
      party shall do and perform, or cause to be done and performed, all such
      further acts and things, and shall execute and deliver all such other
      agreements, certificates, instruments and documents, as the other party
      may reasonably request in order to carry out the intent and accomplish the
      purposes of this Agreement and the consummation of the transactions
      contemplated hereby.

            


    

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              g.

            	
              The
      language used in this Agreement will be deemed to be the language chosen
      by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any
party.

            


    

     

    
      	
               
      

            	
              h.

            	
              This
      Agreement supersedes all other prior oral or written agreements between
      the Funds, the Company, their affiliates and persons or entities
      (“Persons”) acting on their behalf with respect to the matters discussed
      herein, and this Agreement and the instruments referenced herein contain
      the entire understanding of the parties with respect to the matters
      covered herein and therein and, except as specifically set forth herein or
      therein, neither the Company nor any Fund makes any representation,
      warranty, covenant or undertaking with respect to such
      matters.  No provision of this Agreement may be amended other
      than by an instrument in writing signed by the Company and each
      Fund.  No provision hereof may be waived other than by an
      instrument in writing signed by the party against whom enforcement is
      sought.  The Company has not, directly or indirectly, made any
      agreements with any of the Funds relating to the terms or conditions of
      the transactions contemplated hereby except as set forth
      herein.

            


    

     

    
      	
               
      

            	
              i.

            	
              Any
      notices, consents, waivers or other communications required or permitted
      to be given under the terms of this Agreement must be in writing and will
      be deemed to have been delivered:  (i) upon receipt, when
      delivered personally; (ii) upon receipt, when sent by facsimile (provided
      confirmation of transmission is mechanically or electronically generated
      and kept on file by the sending party); or (iii) one Business Day after
      deposit with an overnight courier service, in each case properly addressed
      to the party to receive the same.  The addresses and facsimile
      numbers for such communications shall
be:

            


    

     

    If
to the Company:

    


    Evergreen
Energy Inc.

    1225
17th Street, Suite 1300

    Denver,
CO 80206

    Telephone:  (303)293-2992

    Facsimile:   (303)293-8430

    Attention:  Ms.
Diana L. Kubik

                     Chief
Financial Officer

    


    If
to any Fund:

    c/o
Whitebox Advisors LLC

    330
Excelsior Boulevard Suite 300

    Minneapolis,
MN 55416

    Telephone:  (612)
253-6036

    Facsimile:   (612)
253-6136

    Attention:  Michael
Wietecki

    


    or
to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written
notice


    
      
         


      

      
        9

        
          

        

      

      
         


      

    


    given
to each other party five (5) days prior to the effectiveness of such
change.  Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

    


    
      	
               
      

            	
              j.

            	
              The
      representations and warranties of the Company and the Funds contained
      herein and the agreements and covenants set forth herein shall survive the
      closing until the date that is six months after the Closing
      Date.

            


    

     

    
      	
               
      

            	
              k.

            	
              Any
      Person having any rights under any provision of this Agreement shall be
      entitled to enforce such rights specifically (without posting a bond or
      other security), to recover damages by reason of any breach of any
      provision of this Agreement and to exercise all other rights granted by
      law.  Furthermore, the Company recognizes that in the event that
      it fails to perform, observe, or discharge any or all of its obligations
      under this Agreement, any remedy at law may prove to be inadequate relief
      to the Funds.  The Company therefore agrees that each Fund shall
      be entitled to seek temporary and permanent injunctive relief in any such
      case without the necessity of proving actual damages and without posting a
      bond or other security.

            


    

     

    


     

    [Signature
page to follow]

     

     


    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    Please
sign to acknowledge agreement with the above terms and return by fax to the
undersigned.

     

    


     

                                Whitebox Convertible
Arbitrage

                                Partners,
LP.

    


    


                                By: /s/ Jonathan
Wood

                                Name:  Jonathan
Wood

                                Title:  COO

    


    


                                Whitebox Special
Opportunities

                                Partners, Series B,
LP.

    


    


                                By: /s/ Jonathan
Wood

                                Name:  Jonathan
Wood

                                Title:  COO

    


    


     

    


     

    Acknowledged
and agreed to:

     

    Evergreen
Energy Inc.

    


     

    By: /s/ Diana L
Kubik

    Name:  Diana
L. Kubik

    Title:  Vice President and Chief Financial
Officer

     


    
      
         


      

      
        11

        
          

        

      

      
         


      

    


     

    SCHEDULE
I

     

    


    
      	
              (1)

            	
              (2)

            	
              (3)

            
	 	 	 
	
              
                Fund

              

            	
              
                Number
      of Shares of

                Common
      Stock

              

            	
              
                Principal
      Amount of Notes

              

            
	 	 	 
	
              Whitebox
      Convertible Arbitrage partners, LP.

            	
              4,222,617

            	
              $5,000,000

            
	 
      	 
      	 
      
	
              Whitebox
      Special Opportunities Partners, Series B, LP.

            	
              1,059,877

            	
              $1,255,000

            


    

    


    


     

     

    
12