Exhibit 10.39

CONFIDENTIAL

PROGRAM MANAGEMENT AGREEMENT

EVERGREEN ENERGY INC.
AND
BECHTEL POWER CORPORATION

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TABLE OF CONTENTS

|ARTICLE IDEDICATED PROGRAM MANAGEMENT TEAM        |  | 4                                                           
|-------------------------------------------------- |  | ------------------------------------------------------------
|1.1.                                               |  | Executive Sponsors.                                         
|1.2.                                               |  | Program Management Team.                                    
|1.3.                                               |  | Representatives.                                            
|1.4.                                               |  | Dedicated Personnel.                                        
|ARTICLE IIPROGRAM MANAGEMENT TEAM RESPONSIBLITIES |  | 5                                                           
|2.1.                                               |  | Responsibilities.                                           
|2.2.                                               |  | Rights to Use Work Product and Intellectual Property Rights.
|2.3.                                               |  | Standard Plant Program.                                     
|2.4.                                               |  | TSA Phase.                                                  
|2.5.                                               |  | Scope Book Phase.                                           
|2.6.                                               |  | EPC Contract Phase.                                         
|2.7.                                               |  | Delays.                                                     
|ARTICLE IIIBECHTEL BUSINESS DEVELOPMENT           |  | 9                                                           
|ARTICLE IVTERM AND TERMINATION                    |  | 9                                                           
|4.1.                                               |  | Term.                                                       
|4.2.                                               |  | Evergreen Termination.                                      
|4.3.                                               |  | Bechtel Termination.                                        
|ARTICLE VEXCLUSIVITY AND TERMINATION FEE          |  | 10                                                          
|5.1.                                               |  | Exclusivity.                                                
|5.2.                                               |  | Termination Fee.                                            
|ARTICLE VIASSIGNMENT                              |  | 11                                                          
|ARTICLE VIINOTICES                                |  | 11                                                          
|ARTICLE VIIIMISCELLANEOUS                         |  | 11                                                          
|8.1.                                               |  | Entire Agreement.                                           
|8.2.                                               |  | Equitable Adjustments.                                      
|8.3.                                               |  | Amendments.                                                 
|8.4.                                               |  | Binding Nature.                                             
|8.5.                                               |  | Headings.                                                   
|8.6.                                               |  | Governing Law.                                              
|8.7.                                               |  | Management Negotiations.                                    
|8.8.                                               |  | Mediation/Arbitration of Disputes.                          
|8.9.                                               |  | Third Party Beneficiaries.                                  

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|8.10. |  | Confidentiality.        |  | 13
|----- |  | ----------------------- |  | --
|8.11. |  | No Waiver.              |  | 13
|8.12. |  | Further Assurances.     |  | 13
|8.13. |  | Independent Contractor. |  | 13
|8.14. |  | Counterparts.           |  | 13
|8.15. |  | Consequential Damages.  |  | 13

|
|

|EXHIBIT A |  | FORM OF CONFIDENTIALITY AND RELEASE |  | 
|--------- |  | ----------------------------------- |  | 
|EXHIBIT B |  | FORM OF EPC AGREEMENT               |  | 

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PROGRAM MANAGEMENT AGREEMENT

THIS PROGRAM MANAGEMENT AGREEMENT (AMENDS AND RESTATES THE PREVIOUS "UMBRELLA AGREEMENT" DATED FEBRUARY 15, 2007 WHICH IS HEREBY TERMINATED AND HAS NO
FURTHER EFFECT) (this "Agreement") is made and entered into as of September 19, 2007 (the "Effective
Date") by and among Evergreen Energy Inc., a Delaware corporation, having an office and place of business at 1225 17th Street
Suite 1300, Denver, Colorado, 80202 ("Evergreen"), and Bechtel Power Corporation, a Nevada corporation having an office and place of business at
5275 Westview Drive, Frederick, MD 21703-8306 (hereinafter "Bechtel"). Evergreen and Bechtel may be referred to herein individually
as a "party" and collectively as the "parties".

WITNESSETH:

WHEREAS, Evergreen owns and operates the Ft. Union K-Fuel® plant and an adjacent coal mine in Wyoming (the
"Existing Plant") which is the first commercial plant producing refined coal using Evergreen's K- Fuel® patented process to
transform high moisture, low-Btu coals into more efficient, lower-emission fuel (the "K- Fuel® process");

WHEREAS,
Evergreen anticipates building standardized mine mouth and K-Direct (i.e., located at a power plant) refining
facilities using its K- Fuel® process (each such facility, a "Plant" and collectively, the
"Plants") for which Evergreen will engage Bechtel to perform the engineering, procurement and construction services for the initial projects having
aggregate capital costs of at least one billion dollars ($1 billion) (such Plants or their replacements, collectively, the "Identified Plants");

WHEREAS,
Evergreen desires to utilize Bechtel's services on an integrated basis to oversee both technical development and implementation of all new facilities (the Evergreen's Capital
Programs);

WHEREAS,
Evergreen is seeking a contractor with experience in the engineering, procurement and construction of integrated coal-fired power plants and coal processing
facilities in order to perform engineering, procurement and construction services (collectively, the "EPC Services") in connection with the Identified
Plants;

WHEREAS,
Bechtel is experienced in providing such EPC Services and desires to provide such EPC Services to Evergreen;

WHEREAS,
Evergreen desires Bechtel to support the development of, and business development efforts for, Evergreen projects;

WHEREAS,
Evergreen desires that Bechtel support the technical development of the standard plant offering for K-Fuel® (and K-Direct) facilities;

WHEREAS,
Bechtel has entered into that certain Services Agreement, dated as of September 21, 2006 (the "TSA"), with Evergreen to
provide (1) technical services, construction management and project management services thereunder in connection with the Existing Plant and (2) business development support, scope book
design and technical services towards a standard plant design of the Identified Plants (the "TSA Services");

WHEREAS,
Bechtel has entered into that certain Loaned Employee Agreement, dated as of January 11, 2007 (the "Loaned Employee
Agreement"), with Evergreen to provide personnel to work under Evergreen's direction at the Existing Plant;

WHEREAS,
Evergreen will engage Bechtel to perform Program Management Services in order to manage and oversee the standardized plant initiatives;

WHEREAS,
the parties desire to reflect the basis of their mutual understanding and intention to proceed together on a mutually exclusive basis with the development of the scope of the
EPC Services to be performed in connection with each of the Identified Plants and the execution of engineering,

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procurement
and construction agreements (each, an "EPC Contract") for each of the Identified Plants; and

WHEREAS,
the parties desire to agree to certain matters common to the TSA, the Loaned Employee Agreement and the EPC Contracts.

NOW,
THEREFORE, for and in consideration of these premises and the agreements herein contained, the parties, intending to be legally bound, mutually covenant and agree as follows:

ARTICLE IDEDICATED PROGRAM MANAGEMENT TEAM

1.1.Executive Sponsors.

Each of the parties hereby appoints the following individual, respectively, as its Executive Sponsor (each, an "Executive
Sponsor") to establish the strategy and objectives for the work at the Existing Plant and the development and execution of the Identified Plants:

Evergreen:

Kevin Collins; andBechtel:

Jeffry Brightman.


Each
party may replace its Executive Sponsor by notice to the other party designating the new Executive Sponsor.

1.2.Program Management Team.

The parties shall establish a Program Management Team comprised of one representative of each party appointed in accordance with Section 1.3 below to
provide strategic direction and to set priorities consistent with the direction provided by the Executive Sponsors. Decisions of the Program Management Team will be by consensus. Failure to reach a
consensus by the Program Management Team within ten (10) days will require the decision to be escalated to the Executive Sponsors for consideration and resolution.

The
Program Management Team will oversee the development of the standard plant, technology modifications and testing, and execution of studies for K-Fuel® and
K-Direct plants. Planning and structuring to facilitate multiple plant equipment purchases and other synergies amongst the K-Fuel®/K-Direct plants to be
built will be implemented by the Program Management Team.

1.3.Representatives.

Each of the parties hereby appoints the following individual, respectively, as its initial representative to the Program Management Team (each, a
"Representative"):

Evergreen:

Steve Wolff; andBechtel:

William R. Elliott.


Each
party may replace its Representative by notice to the other party designating the new Representative, provided that Bechtel will obtain the approval of Evergreen's Executive Sponsor
(which approval shall not be unreasonably withheld or delayed) to any replacement of its Representative.



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1.4.Dedicated Personnel.

Bechtel and its affiliates shall make available and maintain staff that are dedicated to fulfillment of its obligations under this Agreement, the TSA, the Loaned
Employee Agreement, any EPC Contract that is executed and any other agreement between the parties or their respective affiliates with respect to the Existing Plant or the Identified Plants
(collectively, the "Program Documents"). Such personnel shall have the technical and managerial expertise to manage and execute the TSA Services and the
EPC Services in accordance with the requirements of the Program Documents, including key staff members for the management of the EPC Services both on and off-site who shall be supported by
area and discipline superintendents and personnel as required.

ARTICLE IIPROGRAM MANAGEMENT TEAM RESPONSIBILITIES

2.1.Responsibilities.

The parties, through their respective Representatives, shall work jointly to fully define their respective rights and obligations, including the TSA Services and
the EPC Services to be provided by Bechtel with respect to the work at the Existing Plant and the development and execution of the Identified Plants.

2.2.Rights to Use Work Product and Intellectual Property Rights.



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2.3.Standard Plant Program.

It is recognized that the overall objectives with respect to the Identified Plants (the "Standard Plant
Objectives") are as set out below: (a) Bechtel to develop PFD's for a standardized plant ("Standard Plant Basic Design") (b) Bechtel to develop additional
detailed design materials for a standardized plant ("Standard Plant Detailed Design") (c) optimization of plant operation and performance; (d) standardization of equipment supply across
all Identified Plants; (e) standardization of operation and maintenance practices across all Identified Plants; (f) Bechtel will use the lessons learned from previously executed
Identified Plants for which it was engaged as well as its current technology resources in enhancing the execution of an EPC Contract; and (g) maximum enhancement of the schedule for
engineering, procurement, construction and completion of each Identified Plant for which Bechtel is engaged to perform EPC Services. This Standard Plant Detailed Design will be the design materials of
a level of specificity included in a standard preliminary scope book. In the course of performance of the TSA Services and the EPC Services, Bechtel shall use commercially reasonable efforts to assist
Evergreen in the realization of the Standard Plant Objectives and shall plan and execute its TSA Services and EPC Services so as to ensure the realization of the Standard Plant Objectives to the
maximum practical extent.

2.4.TSA Phase.

The parties through their Representatives shall perform the following activities under the TSA with respect to the Existing Plant and the development of the
Identified Plants (the "TSA Phase"):



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2.5.Scope Book Phase.

The Scope Book Phase shall not be finalized until the successful demonstration test of the Existing Plant (as agreed by the parties in Section 2.4.1) has
been completed. The parties through their Representatives shall perform the following activities under the TSA with respect to the finalization of certain terms for each of the Identified Plants
("Scope Book Phase"):



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2.6.EPC Contract Phase.

Subject to the other provisions of this Agreement, the parties, through their Representatives, shall enter into EPC Contracts in the form of Exhibit B to
this Agreement. The parties shall additionally coordinate with respect to the timing and schedule for the Notice to Commence Construction with respect to each executed EPC Contract
("EPC Phase"). During the EPC Phase Bechtel will perform detailed engineering, procurement and construction of the Identified Plants. The Notice to
Commence Construction for a Plant will not be issued until satisfaction of the following conditions precedent:



2.7.Delays.

Each party shall promptly notify the other party as to any conditions arising which are likely to cause delays in the completion of a particular item of TSA
Services or EPC Services, its anticipated duration, and such party's proposed remedial action.

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ARTICLE IIIBUSINESS DEVELOPMENT

ARTICLE IVTERM AND TERMINATION

4.1.Term.

Except as expressly set forth in this Agreement, the terms and conditions of this Agreement shall be in full force and effect from the date hereof until the
earlier to occur of (a) the termination of this Agreement by Evergreen pursuant to Section 4.2; (b) the termination of this Agreement by Bechtel pursuant to Section 4.3;
and (c) execution of the EPC Contract for the last of the Identified Plants. Except for the provisions of this Agreement that expressly survive the termination of this Agreement, upon execution
of the EPC Contract for any Plant, this Agreement shall cease to apply with respect to that Plant and the parties' respective rights, obligations and liabilities with respect to the EPC Services for
that Plant shall be exclusively governed by the terms of such EPC Contract.

4.2.Evergreen Termination.

Evergreen shall have the right, exercisable at any time upon written notice to Bechtel, to terminate this Agreement. Such notice of termination shall be treated
as contemporaneous notice of termination of the TSA and the Loaned Employee Agreement and any termination of the TSA shall be treated as a contemporaneous notice of termination of this Agreement. In
the event of a termination of this Agreement, Evergreen shall within thirty (30) days thereafter, make payment to Bechtel of the amounts due under Section 9.3 of the TSA, the Loaned
Employee Agreement and Section 5.2 of this Agreement.

4.3.Bechtel Termination.

Bechtel shall have the right, exercisable at any time upon written notice to Evergreen, to terminate this Agreement. Such notice of termination shall not be
treated as a notice of termination of the TSA or the Loaned Employee Agreement, provided that any termination of the TSA by Bechtel pursuant to Section 9.4 of the TSA shall be treated as a
contemporaneous notice of termination of this Agreement.

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ARTICLE VEXCLUSIVITY AND TERMINATION FEE

5.1.Exclusivity.

Evergreen covenants and agrees that during the term of this Agreement, none of Evergreen or its affiliates will engage, or agree to engage, or participate in any
discussions with any other contractor regarding the engagement of, any contractor other than Bechtel or one of its affiliates to provide EPC Services or to act in the role of an engineering,
procurement or construction contractor with respect to the Identified Plants. For the avoidance of doubt, the parties acknowledge that Bechtel's scope or work for the Identified Plants will not
include: (i) procurement of the processor equipment to be obtained from Lurgi South Africa (Pty) Ltd.; and (ii) process design, both of which will be provided by Evergreen (the
"Owner-Provided Procurement and Design"). The parties agree that Identified Plants will have an
aggregate capital cost of at least one billion dollars ($1 billion) and shall include the first Plant to be developed by Evergreen after the Existing Plant.

5.2.Termination Fee.



Aggregate Capital Cost

Termination FeeEqual to or greater than $1,000,000,000

$
0$760,000,000 - $999,999,999

$
2,000,000$570,000,000 - $759,999,999

$
4,000,000$380,000,000 - $569,999,999

$
6,000,000$191,000,000 - $379,999,999

$
8,000,000$0 - $190,999,999

$
10,000,000




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ARTICLE VIASSIGNMENT

Neither this Agreement nor any rights, duties or obligations hereunder may be assigned in whole or in part by either party without the express written consent of
the other and any such purported assignment without such written consent shall be null and void.

ARTICLE VIINOTICES

All notices or other communications provided for or required by this Agreement ("Notices") shall be in writing and
shall be effective upon receipt given to the following addresses:

To Company:

Evergreen Inc.
1225 17th Street Suite 1300,
Denver, Colorado, 80202
Attention: Executive Vice PresidentEngineering
With a simultaneous copy to: General CounselTo Contractor:

Bechtel Power Corporation
5275 Westview Drive
Frederick, MD 21703-8306
Attention: William R. Elliott
With a simultaneous copy to: Principal Counsel, Bechtel Power Corporation


All
Notices shall be given by (1) personal delivery or by electronic communication with a confirmation copy sent by mail, return receipt requested or (2) by registered or
certified mail, return receipt requested. All Notices shall be effective and shall be deemed delivered (i) if by personal delivery on the date of delivery, (ii) if by electronic
communication on the next business day following transmittal, and (iii) if solely by mail on the date of actual receipt. Company or Contractor may change its address for notice from time to
time by so notifying the other in accordance with this Article.

ARTICLE VIIIMISCELLANEOUS

8.1.Entire Agreement.

This Agreement and Exhibits hereunder incorporated herein, together with the TSA, the Loaned Employee Agreement and the Confidentiality Agreement described in
Section 8.10 below, constitute the entire Agreement between the parties with respect to the subject matter hereof as of the date first above shown. With the exception of the TSA, the Loaned
Employee Agreement and the Confidentiality Agreement, this Agreement shall supersede all previous specifications, proposals, representations, understandings, negotiations and letters of intent, oral
or written, expressed or implied, with respect to the subject matter hereof between the parties hereto or their representatives.

8.2.Equitable Adjustments.

In the event that any of the provisions, or portions or applications thereof, of this Agreement are held to be unenforceable or invalid by a court of competent
jurisdiction, Evergreen and Bechtel shall negotiate an equitable adjustment in the provision(s) of this Agreement with a view toward effecting the purpose of this Agreement and the validity and
enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby.

8.3.Amendments.

This Agreement may not be changed, altered, modified, or amended, except by a written amendment executed by both parties.

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8.4.Binding Nature.

This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.

8.5.Headings.

The Article and Section headings are for purposes of reference only and shall not control or otherwise affect the information set forth therein.

8.6.Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of the State of New York, but otherwise without giving effect to principles of
conflicts of law. This Section 8.6 shall survive the termination of this Agreement.

8.7.Management Negotiations.

Any disputes arising under this Agreement (each, a "Dispute") that are not resolved between Evergreen and Bechtel within ten (10) business days after
receipt by either party from the other party of a notice of such Dispute, shall be referred by either Evergreen's or Bechtel's Representative to the Executive Sponsors of Evergreen and Bechtel for
resolution. If such Executive Sponsors, negotiating in good faith, fail to reach an agreement within a reasonable period of time, not exceeding twenty (20) days after such referral, then either
Evergreen or Bechtel may bring a claim pursuant to the terms of Section 8.8 below. This Section 8.7 shall survive the termination of this Agreement.

8.8.Mediation/Arbitration of Disputes.



8.9.Third Party Beneficiaries.

The provisions of this Agreement are intended for the sole benefit of Evergreen and Bechtel and there are no third-party beneficiaries hereof.

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8.10.Confidentiality.

All information provided pursuant to this Agreement by or on behalf of a party, its affiliates or its representatives to the other party or its affiliates or
representatives shall be governed by that certain Confidentiality Agreement, dated August 11, 2006, by and between Bechtel and Evergreen (the "Confidentiality
Agreement"). This Section 8.10 shall survive the termination of this Agreement.

8.11.No Waiver.

Except as expressly provided to the contrary herein, any failure by either party at any time to enforce or require the strict keeping and performance by the other
party of any of the terms and conditions of this Agreement shall not constitute a waiver by such party of the particular term or condition, and shall, under no circumstances, affect or impair the
right of such party (a) thereafter to enforce or require performance of such term or condition or (b) thereafter to avail itself of any remedy provided under this Agreement which it may
have for any breach of such term or condition.

8.12.Further Assurances.

Evergreen and Bechtel will each use its reasonable efforts to implement the provisions of this Agreement, and for such purpose each, at the reasonable request of
the other, will, without further consideration, promptly execute and deliver or cause to be executed and delivered to the other such assistance, or assignments, consents or other instruments in
addition to those required by this Agreement, in form and substance satisfactory to the other, as the other may reasonably deem necessary or desirable to implement any provision of this Agreement.

8.13.Independent Contractor.

Bechtel is an independent contractor, and nothing contained herein shall be construed as constituting any relationship with Evergreen other than that of owner and
independent contractor, or as creating any relationship whatsoever between Evergreen and Bechtel's employees. Except as may be expressly provided otherwise in the Loaned Employee Agreement, neither
Bechtel nor any of its employees is or shall be deemed to be an employee of Evergreen.

8.14.Counterparts.

This Agreement may be executed in counterparts, and any party hereto may execute any such counterpart, each of which when executed and delivered shall be deemed
to be an original and all of which counterparts taken together shall constitute but one and the same instrument. This Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto. The parties agree that the delivery of this Agreement may be affected by means of an exchange of facsimile signatures with original copies to
follow by mail or courier service.

8.15.Consequential Damages.

In no event shall either party be liable to the other party, whether in contract, in tort (including, but not limited to, negligence and strict liability), under
any warranty, or otherwise, for any indirect, incidental, special or consequential loss or damages (including, but not limited to loss of profits, loss of interest or other financing charges or loss
of use). For the avoidance of doubt, the parties acknowledge that this Section 8.15 shall not affect Evergreen's liability for payment of the applicable Termination Fee under this Agreement.
This Section 8.15 shall survive the termination of this Agreement.

[The
remainder of this page is intentionally left blank.]

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

|EVERGREEN ENERGY INC.     |                                                           
|------------------------- | ----------------------------------------------------------
|By:                       | /s/KEVIN COLLINS                                          
|                          | Kevin Collins
Title: President and Chief Executive Officer
|BECHTEL POWER CORPORATION |                                                           
|By:                       | /s/J. JEFFRY BRIGHTMAN                                    
|                          | J. Jeffry Brightman
Title: Principal Vice President       

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