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 ”).

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:

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.

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.

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

(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