Document:

exh4-1_093008.htm

EXHIBIT
4.1

    FIRST
SUPPLEMENTAL INDENTURE

     

    This
FIRST SUPPLEMENTAL INDENTURE, dated as of September 30, 2008 (this “Supplemental Indenture”), is
entered into by and among EVERGREEN ENERGY INC., a Delaware corporation (the
“Company”), each of the
Guarantors party hereto (the “Guarantors”), and U.S. BANK
NATIONAL ASSOCIATION, as trustee (the “Trustee”).

    

    

    WITNESSETH:

    

    WHEREAS,
the Company, the Guarantors and the Trustee have heretofore executed and
delivered the Indenture, dated as of July 30, 2007 (the “Indenture”), pursuant to which
the Company issued an aggregate principal amount of $95,000,000 of 8.00%
Convertible Secured Notes due 2012 (the “Notes”).

    

    WHEREAS,
Section 11.02 of the Indenture provides that the Company, the Guarantors and the
Trustee may, with the consent of the holders of at least a majority in aggregate
principal amount of the Notes then outstanding (the “Requisite Consents”), enter
into a supplemental indenture for the purpose of amending the Indenture (the
“Amendments”).

    

    WHEREAS,
the Company and the Guarantors have been authorized by their respective Boards
of Directors and members to enter into this Supplemental Indenture.

    

    NOW, THEREFORE, in consideration of the
promises, covenants and agreements contained herein, and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, and for the equal and proportionate benefit of the holders of the
Notes, the Company, the Guarantors and the Trustee hereby agree as
follows:

    

    

    ARTICLE
I

    

    DEFINITIONS

    

    Section 1.01.  Definitions.  Unless
otherwise indicated, capitalized terms used herein and not defined shall have
the respective meanings given such terms in the Indenture.

    

    

    ARTICLE
II

    

    AMENDMENTS
TO INDENTURE

    

    Section 2.01.  Deleted
Definitions.  All definitions in the Indenture that are used
exclusively in the sections and subsections deleted pursuant to this Article II
of this Supplemental Indenture are hereby deleted.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section 2.02.  Amendments to
Indenture.

    

    (a)           Section
4.02 of the Indenture shall be amended and restated, in its entirety, to read as
follows:

    

    “Section
4.02.  Conversion
upon Redemption Notice.

     

    (a)  
If the Company elects to redeem the Securities, in whole or in part, the Company
shall pay to any Holder that elects to convert its Securities (whether or not
such Securities are called for redemption) during the period from and including
the date the Company gives its Redemption Notice to and including the Business
Day immediately preceding the Redemption Date, in addition to the amount of
Common Stock and/or Cash specified pursuant to Section 4.14, the amount of any
accrued and unpaid interest on the Securities being converted, together with the
Coupon Make-Whole Payment for such Securities (such aggregate amount, the “Additional
Amount”).

     

    (b)  
The Company may elect to pay any Additional Amount in Cash or in shares of
Common Stock by notice given to Holders of Securities in the case of any
Additional Amounts payable in connection with a redemption of Securities, in the
Company’s Redemption Notice; provided that if the Company
does not make such election, the Company shall pay the Additional Amounts solely
in Cash.

     

    (c)  
If the Company elects to pay any Additional Amounts in shares of Common Stock,
the number of shares payable for each $1,000 principal amount of Securities
shall equal the Additional Amount per $1,000 principal amount of Securities
divided by 95% of the average of the Daily Volume-weighted Average Prices of the
Common Stock over the applicable measurement period, which shall be in the case
of any Additional Amounts payable in connection with a redemption of Securities,
the 10 Trading Days beginning on the 12th Scheduled Trading Day prior to the
Redemption Date.”

    

    (b)           Section
5.02(a) of the Indenture shall be amended and restated, in its entirety, to read
as follows:

    

    “(a) The Company shall file with the
Trustee, within 15 calendar days after the Company files with the SEC, copies of
its annual report and the information, documents and other reports which the
Company files with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act; provided that any
such reports, information or documents filed with the SEC pursuant to its
Electronic Date Gathering, Analysis and Retrieval (or EDGAR) system shall be
deemed filed with the Trustee.  The Company shall comply with the
provisions of TIA Section 314(a), whether or not the Company is required to
file reports with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act.  Notwithstanding anything to the contrary herein, the Trustee shall
have no duty to review such documents for purposes of determining compliance
with any provisions of this Indenture or any applicable law.”

    

    (c)           Sections
5.09, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15, 5.16, 5.17, and 8.01(e) of the
Indenture shall be deleted and, in the case of each such section or subsection,
insert in lieu thereof the phrase “Intentionally Omitted”, and any and all
references thereto, any and all

    
      
         

      

      
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    obligations
thereunder and any events of default related thereto are hereby deleted
throughout the Indenture, and such sections, subsections and references shall be
of no further force or effect.

    

    (d)           Section
6.01 of the Indenture shall be amended and restated, in its entirety, to read as
follows:

    

    “Section 6.01.  Collateral.   Upon
execution of the Supplemental Indenture, the Securities shall become unsecured
Obligations of the Company and the Security Agreement shall be
terminated.  In connection with the Supplemental Indenture, the Liens
granted pursuant to the Security Agreement shall be terminated and the Trustee
(acting as the Collateral Agent pursuant to the Security Agreement) shall take
the following actions: (a) return to the Company the Evergreen Operations, LLC
Unit Certificate number 1 relating to 100 Units issued to the Company, dated
July 30, 2007 (the “Pledged
Securities”); (b) return to the Company the Unit Power endorsed in blank
by the Company regarding the Pledged Securities; (c) transfer all funds in the
Cash Collateral Account (as defined in the Security Agreement) to any account
designated by the Company; (d) pursuant to that certain Securities Account
Control Agreement (the “Wells
Fargo Control Agreement”), dated as of October 26, 2007, by and among the
Trustee, the Company and Wells Fargo Brokerage Services, LLC (“Wells Fargo”), send Wells
Fargo written notice of the termination of the Security Agreement and to
terminate the Wells Fargo Control Agreement; (e) pursuant to that certain
Securities Account Control Agreement (the “Credit Suisse Control
Agreement”), dated as of October 26, 2007, by and among Credit Suisse
Securities (USA) LLC (“Credit
Suisse”), Pershing LLC, the Company and the Trustee, send Credit Suisse a
notice of termination in substantially the form of Exhibit B to the Credit
Suisse Control Agreement; (f) pursuant to that certain Blocked Account Control
Agreement (“JPMorgan Control
Agreement”), dated as of October 26, 2007, by and among the Company, the
Trustee and JPMorgan Chase Bank, N.A. (“JPMorgan”), send JPMorgan
written notice to terminate the JPMorgan Control Agreement pursuant to Section 7
of the JPMorgan Control Agreement; and (g) pursuant to that certain Blocked
Account Control Agreement (“JPMorgan/Buckeye Control
Agreement”), dated as of October 26, 2007, by and among Buckeye
Industrial Mining Co., the Trustee and JPMorgan Chase Bank, N.A. (“JPMorgan”), send JPMorgan
written notice to terminate the JPMorgan/Buckeye Control Agreement pursuant to
Section 7 of the JPMorgan/Buckeye Control Agreement.”

    

    (e)           Section
13.03 of the Indenture shall be amended and restated, in its entirety, to read
as follows:

    

    “Section
13.03.  Discharge;
Reinstatement.  Each Subsidiary Guarantor’s obligations hereunder
shall be automatically and unconditionally released upon the payment in full of
the principal of, premium, if any, and interest on the Securities and all other
amounts payable by the Company under this Indenture. If at any time any payment
of the principal of, premium, if any, or interest on any Security or any other
amount payable by the Company under this Indenture is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of the Company, each Subsidiary Guarantor’s obligations hereunder with respect
to such payment shall be reinstated as though such payment had been due but not
made at such time.”

     

    
      
         

      

      
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    ARTICLE
III

    

    MISCELLANEOUS

    

    Section 3.01.  Continuing Effect of
Indenture.  Except as expressly provided herein, all of the
terms, provisions and conditions of the Indenture and the Securities outstanding
thereunder shall remain in full force and effect.

    

    Section 3.02.  Construction of Supplemental
Indenture.  The Supplemental Indenture is executed as and shall
constitute an indenture supplemental to the Indenture and shall be construed in
connection with and as part of the Indenture.

    

    Section 3.03.  Entire
Agreement.  This Supplemental Indenture, together with the
Indenture as amended hereby, contains the entire agreement of the parties, and
supersedes all other representations, warranties, agreements and understandings
between the parties, oral or otherwise, with respect to the matters contained
herein and therein.

    

    Section 3.04.  Governing
Law.  This Supplemental Indenture shall be governed by,
construed, interpreted, and the rights of the parties determined in accordance
with the laws of the State of New York without regard to principles of conflicts
of laws.

    

    Section 3.05.  Trust Indenture Act
Controls.  If any provision of this Supplemental Indenture
limits, qualifies or conflicts with another provision of this Supplemental
Indenture or the Indenture that is required to be included by the Trust
Indenture Act of 1939, as amended (“TIA”), as in force at the date
as of which this Supplemental Indenture is executed, the provision required by
the TIA shall control.

    

    Section 3.06.  Counterparts.  This
Supplemental Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

    

    Section 3.07.  Effectiveness.  This
Supplemental Indenture shall become effective and binding upon the Company, the
Guarantors, the Trustee and the holders of Notes immediately upon its execution
and delivery by the parties hereto.

    

    Section 3.08.  Trustee.  The
Trustee makes no representations as to the validity or sufficiency of this
Supplemental Indenture. The recitals and statements herein are deemed to be
those of the Company and not of the Trustee.

    

     

    [Signatures on following
page]

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to
be executed as of the day and year first above written.

    

      
        	
                Company:

              
	 
	
                EVERGREEN
      ENERGY INC.

              
	 
      
	 
	 
	
                By:  /s/ KEVIN R.
      COLLINS

              
	
                Name:  Kevin
      R. Collins

              
	
                Title:    Chief
      Executive Officer and President

              
	 
      
	 
      
	
                Guarantors:

              
	 
	
                EVERGREEN
      OPERATIONS, LLC

              
	
                KFX
      PLANT, LLC

              
	
                KFX
      OPERATIONS, LLC

              
	
                LANDRICA
      DEVELOPMENT COMPANY

              
	 
      
	 
      
	 
      
	
                By:  /s/ KEVIN R.
      COLLINS

              
	
                Name:  Kevin
      R. Collins

              
	
                Title:    Chief
      Executive Officer and President of each of

                            the
      above Guarantors

              
	 
      
	
                BUCKEYE
      INDUSTRIAL MINING CO.

              
	 
      
	 
      
	 
      
	
                By:  /s/ DIANA L.
      KUBIK

              
	
                Name:  Diana
      L. Kubik

              
	
                Title:    Vice
      President and Chief Financial Officer

              
	 
      
	
                Trustee:

              
	 
      
	
                U.S.
      BANK NATIONAL ASSOCIATION

              
	 
      
	 
	 
	
                By:  /s/ RICK
      PROKOSCH

              
	
                Name:  Rick
      Prokosch

              
	
                Title:    Vice
      President

              

      

    

     

     

     

    5<PAGE>

EXHIBIT 4.8

                         WARRANT CLARIFICATION AGREEMENT

      THIS WARRANT CLARIFICATION AGREEMENT ("CLARIFICATION AGREEMENT") is made
as of the __ day of September, 2008, by and among Strasbaugh, a California
corporation (the "Company"), and each of the investors identified on the
Schedule of Investors attached hereto as EXHIBIT A (individually an "INVESTOR"
and collectively, the "INVESTORS").

                                    RECITALS

      A.    The Company and the Investors (the "PARTIES") entered into that
certain Securities Purchase Agreement dated May 24, 2007 (the "PURCHASE
AGREEMENT"), pursuant to which the Company issued to the Investors, among other
securities, warrants (the "WARRANTS") to purchase shares of the Company's common
stock.

      B.    The Warrants issued pursuant to the Purchase Agreement may not be
exercised, offered or sold in the absence of an exemption from the registration
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT").

      C.    Each of the Purchase Agreement and the Warrants contains a
restricted securities legend with respect to the exercise, offer and/or sale of
the Warrants.

      D.    It has come to the attention of the Company that the description of
the restricted securities legend contained in the Purchase Agreement is not
consistent with the restricted securities legend contained in the Warrant and in
neither case does the restricted securities legend accurately describe the
Parties' initial agreement with respect to the limitations on transfer.

      E.    The Parties now desire to amend certain provisions of each of the
Purchase Agreement and the Warrant to clarify the transfer restrictions imposed
upon the Warrants and to make each consistent with the other, so as to
accurately evidence the initial agreement of the Parties at the time the Parties
entered into the Purchase Agreement and the Warrant on May 24, 2007.

      NOW THEREFORE, in consideration of the foregoing premises and the
respective promises and agreements of the parties set forth herein, and for good
and valuable consideration, the amount and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

      1.    DEFINITIONS. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings ascribed thereto in the Purchase
Agreement.

      2.    AMENDMENTS.

            (a)   Section 5.1(a) of the Purchase Agreement is hereby amended by
      deleting such section in its entirety and inserting in its place the
      following:

                  "(a)  The Investors covenant that the Securities will only be
            disposed of pursuant to an effective registration statement under,
            and in compliance with the requirements of the Securities Act or

<PAGE>

            pursuant to an available exemption from the registration
            requirements of the Securities Act, and in compliance with any
            applicable state securities laws. The Investors further covenant
            that the Warrants will be exercised in compliance with the
            requirements of, the Securities Act pursuant to an available
            exemption from the registration requirements of the Securities Act
            and in compliance with any applicable state securities laws. In
            connection with any transfer of Securities other than pursuant to an
            effective registration statement or to the Company, the Company may
            require the transferor to provide to the Company an opinion of
            counsel selected by the transferor, the form and substance of which
            opinion shall be reasonably satisfactory to the Company, to the
            effect that such transfer does not require registration under, and
            does not constitute and will not result in a violation of, the
            Securities Act. Notwithstanding the foregoing, the Company hereby
            consents to and agrees to register on the books of the Company and
            with its transfer agent, without any such legal opinion, except to
            the extent that the transfer agent requests such legal opinion, any
            transfer of Securities by an Investor to an Affiliate of such
            Investor, provided that the transferee certifies to the Company that
            it is an "accredited investor" as defined in Rule 501(a) under the
            Securities Act and provided that such Affiliate does not request any
            removal of any existing legends on any certificate evidencing the
            Securities."

            (b)   Section 5.1(b) of the Purchase Agreement is hereby amended by
      deleting such section in its entirety and inserting in its place the
      following:

                  "(b)  The certificates representing the Securities will bear a
            legend denoting the restrictions on transfer. Each Investor agrees
            to sell, assign, transfer, exercise or convert the Securities only
            in accordance with such restrictions, as applicable. The Investors
            agree to the imprinting, so long as is required by this SECTION
            5.1(B), of a legend which shall be in substantially the following
            form on any certificate evidencing any of the Securities:

                  NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON THE
                  [EXERCISE/CONVERSION] OF THESE SECURITIES HAVE BEEN REGISTERED
                  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
                  ACT"), OR ANY STATE SECURITIES LAWS. THE SECURITIES
                  REPRESENTED HEREBY MAY NOT BE EXERCISED, OFFERED, SOLD,
                  TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED (EACH
                  A "TRANSFER") EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
                  STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
                  EXEMPTION FROM, OR IN A TRANSFER NOT SUBJECT TO, THE
                  REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (B) TO THE
                  EXTENT THE TRANSFER DOES NOT CONSTITUTE AND WILL NOT RESULT IN
                  A VIOLATION OF APPLICABLE FEDERAL OR STATE SECURITIES LAWS, AS
                  EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
                  SUCH EFFECT (TO THE EXTENT REQUESTED BY COUNSEL OF THE
                  COMPANY), THE SUBSTANCE OF WHICH SHALL BE REASONABLY
                  ACCEPTABLE TO THE COMPANY. THE HOLDER HEREOF AGREES THAT IT

<PAGE>

                  WILL DELIVER, OR CAUSE TO BE DELIVERED, TO EACH PERSON TO WHOM
                  THE SECURITIES HEREBY REPRESENTED ARE TRANSFERRED A NOTICE
                  SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THESE SECURITIES
                  AND THE SECURITIES ISSUABLE UPON [EXERCISE/CONVERSION] OF
                  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
                  MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

            Certificates evidencing Securities shall not be required to contain
      such legend (i) while a registration statement covering the resale of the
      Securities (including the Securities that may be issued upon exercise or
      conversion of the Securities) is effective under the Securities Act, (ii)
      following any sale of such Securities pursuant to Rule 144 if the holder
      provides the Company with a legal opinion (and the documents upon which
      the legal opinion is based) reasonably acceptance to the Company to the
      effect that the Securities (including the Securities that may be issued
      upon exercise or conversion of the Securities) can be sold under Rule 144,
      (iii) if the holder provides the Company with a legal opinion (and the
      documents upon which the legal opinion is based) reasonably acceptable to
      the Company to the effect that the Securities (including the Securities
      that maybe issued upon exercise or conversion of the Securities) are
      eligible for unlimited resale under Rule 144(b), or (iv) if the holder
      provides the Company with a legal opinion (and the documents upon which
      the legal opinion is based) reasonably acceptable to the Company to the
      effect that the legend is not required under applicable requirements of
      the Securities Act (including controlling judicial interpretations and
      pronouncements issued by the Staff of the SEC)."

            (c)   The legend that appears on the face of each of the Warrants
      issued pursuant to the Purchase Agreement is hereby amended by deleting
      such legend in its entirety and inserting in its place a legend
      substantially in the form of the legend appearing in Section 2.2 of this
      Clarification Agreement.

      3.    CLARIFICATIONS. The Parties hereby acknowledge and agree that the
provisions set forth in Section 2 of this Clarification Agreement evidence the
understandings and agreements of the Parties at the time the Parties entered
into the Purchase Agreement and the Warrants on May 24, 2007.

      4.    MISCELLANEOUS. Except as modified and amended pursuant to this
Clarification Agreement, the Purchase Agreement and the Warrants are and shall
remain in full force and effect. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. This Amendment will
become binding on each Investor when one or more counterparts hereof,
individually or taken together, will bear the signatures of such Investor and
the Company as signatories.

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Clarification Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

The Company:                              STRASBAUGH

                                          By: /s/ Richard Nance
                                             ---------------------------
                                          Name: Richard Nance
                                          Title: Chief Financial Officer

Investor:                                 [                             ]
                                           -----------------------------

                                          By:
                                             ---------------------------
                                          Name:
                                          Title:

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