MODIFICATION AGREEMENT

This Modification Agreement is made and entered into as of November 7, 2007 by
and among William J. McMahon III (the “Employee”), SCR-Tech, LLC (“SCR-Tech”),
CESI-SCR, Inc., a wholly owned subsidiary of Catalytica Energy Systems, Inc.
(“Catalytica”) and the manager of SCR-Tech (“CESI-SCR”), and CoaLogix Inc.
(“Buyer”). Acorn Factor, Inc (“Acorn”) enters into this Modification Agreement
solely for the purpose of guaranteeing the obligations of Buyer and SCR-Tech as
provided herein.

WHERAS, the Employee, Catalytica, SCR-Tech and CESI-SCR are parties to that
certain employment agreement dated as of January 1, 2007 (the “Employment
Agreement”);

WHEREAS, Catalytica, Renegy Holdings, Inc., Acorn and Buyer have entered into a
Stock Purchase Agreement dated as of the date hereof (the “Stock Purchase
Agreement”) pursuant to which Buyer shall acquire directly or indirectly all of
the equity interests of Catalytica in CESI-SCR and SCR-Tech;

WHEREAS, in connection with transactions contemplated under the Stock Purchase
Agreement, the obligations of Catalytica under the Employment Agreement are
being assumed by Buyer;

WHEREAS, Buyer desires to become a party to the Employment Agreement in full
substitution of the Company;

WHEREAS, Buyer, Employee and members of Buyer’s senior management desire to
outline the terms of certain additional compensation that Employee and such
senior management shall receive from Buyer subsequent to the date hereof; and

WHEREAS, Acorn desires to guarantee the obligations of Buyer and SCR-Tech to
Employee as provided herein.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows.

1. Defined Terms. Except as otherwise defined herein, any and all defined terms
used herein shall have the meanings ascribed to them in the Employment
Agreement.

2. Buyer Assumption under Employment Agreement. As of the date hereof, Buyer
agrees and undertakes to perform the obligations of Catalytica under the
Employment Agreement, whether arising prior to, on or subsequent to the date
hereof, and agrees to be bound by the terms and conditions of the Employment
Agreement in every way as if Buyer were named as a party to the Employment
Agreement in place of the Company. Whenever the term the “Company” is used in
the Employment Agreement, as amended by this Modification Agreement, it shall be
deemed to refer to Buyer.
 

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3. Restatement of Section 1 (a) of Employment Agreement.
Section 1 (a) of the Employment Agreement is hereby superseded and replaced in
its entirety as follows:
 
“(a) Positions and Duties. As of the Effective Date, Employee will continue to
serve as President of SCR-Tech, and Employee will serve as Chief Executive
Officer of Buyer. Employee will render such business and professional services
in the performance of his duties, consistent with Employee's positions within
SCR-Tech and Buyer, as shall reasonably be assigned to him, by the Chief
Executive Officer of Acorn, the board of directors of CESI-SCR (the "Board") or
their designee. The period of Employee's employment under this Agreement is
referred to herein as the "Employment Term." The Employee will continue to serve
as President of CESI-SCR, to the extent determined by the board of directors of
CESI-SCR in its sole discretion.”

4. Restatement of Section 5 (a) (i) of Employment Agreement. Section 5 (a) (i)
of the Employment Agreement is hereby superseded and replaced in its entirety as
follows:

“ (i) Severance and Non-Competition Payment. Within ten (10) days following the
employment termination date, a lump sum cash payment in an amount equal to two
hundred percent (200%) of Employee's Annual Compensation. Of this amount, one
hundred percent (100%) of Employee’s Annual Compensation is paid specifically in
exchange for Employee entering into and not breaching the non-competition
provisions of Section 6 hereof.”

5. Restatement of Section 9(c) of Employment Agreement. Section 9(c) of the
Employment Agreement is hereby superseded and replaced in its entirety as
follows:

“(i) The transactions contemplated by the Stock Purchase Agreement;

(ii) The transactions completed on October 1, 2007 pursuant to the Contribution
and Merger Agreement (the “Contribution and Merger Agreement”) dated as of
May 8, 2007, as amended, by and among (i) Catalytica, (ii) Renegy Holdings,
Inc., (iii) Snowflake Acquisition Corporation, (iv) Renegy, LLC, (v) Renegy
Trucking, LLC, (vi) Snowflake White Mountain Power, LLC, (vii) Robert M.
Worsley, (viii) Christi M. Worsley, and (ix) the Robert M. Worsley and Christi
M. Worsley Revocable Trust;

(iii) Any “person” (as such term is defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
Acorn representing more than fifty percent (50%) of the total voting power
represented by Acorn’s then outstanding voting securities;
 
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(iv) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) other than Acorn becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing more than fifty percent
(50%) of the total voting power represented by the Company's then outstanding
voting securities;

(v) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than the Acorn, Company,
CESI-SCR or an affiliated entity, becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of SCR-Tech
representing more than fifty percent (50%) of the total voting power represented
by SCR-Tech's then outstanding voting securities;

(vi) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than Acorn, the Company or
an affiliated entity, becomes the "beneficial owner" (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of CESI-SCR representing
more than fifty percent (50%) of the total voting power represented by the
CESI-SCR's then outstanding voting securities;

(vii) Any change of the composition of Acorn’s Board of Directors occurring
within a 12-month period, as a result of which fewer than a majority of the
directors are Incumbent Directors. “Incumbent Directors” shall mean directors
who either (A) are directors of Acorn as of the date hereof or (B) are elected,
or nominated for election, to Acorn’s Board of Directors with the affirmative
votes of at least a majority of the Incumbent Directors at the time of such
election or nomination (but shall not include an individual whose election or
nomination is in connection with an actual or threatened proxy contest relating
to the election of directors to Acorn’s Board of Directors);
 
(viii) The consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or such surviving entity's
parent) more than fifty percent (50%) of the total voting power represented by
the voting securities of the Company or such surviving entity or such surviving
entity's parent outstanding immediately after such merger or consolidation;
 
(ix) The consummation of a merger or consolidation of SCR Tech with any other
corporation (other than a merger or consolidation with Acorn, the Company,
CESI-SCR or an affiliated entity), other than a merger or consolidation that
would result in the voting securities of SCR Tech outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or such surviving
entity's parent) more than fifty percent (50%) of the total voting power
represented by the voting securities of SCR Tech or such surviving entity or
such surviving entity's parent outstanding immediately after such merger or
consolidation;
 
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(x) The consummation of a merger or consolidation of Acorn with any other
corporation (other than a merger or consolidation with the Company, CESI-SCR,
SCR-Tech or an affiliated entity), other than a merger or consolidation that
would result in the voting securities of Acorn outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or such surviving
entities’ parent) more than fifty percent (50%) of the total voting power
represented by the voting securities of Acorn or such surviving entity or such
surviving entities’ parent outstanding immediately after such merger or
consolidation;

(xi) The consummation of the sale or disposition by Acorn of all or seventy-five
percent (75%) or more of Acorn’s assets;

(xii) The consummation of the sale or disposition by the Company of all or
seventy-five percent (75%) or more of the Company's assets; or
 
(xiii) The consummation of the sale or disposition by SCR-Tech of all or
seventy-five percent (75%) or more of SCR-Tech's assets.”

6. Deletion of Section 9 (d). Section 9 (d) of the Employment Agreement is
hereby deleted in its entirety and existing Sections 9 (e), (f), (g) and (h) are
hereby renumbered as Section 9 (d), (e), (f) and (g), respectively.

7. Benefits and Participation in Senior Management Incentive Plan. The Company
hereby acknowledges that Employee and the other senior managers of the Company
(the “Management Team”) shall be entitled to the compensation and benefits
outlined on Exhibit A annexed hereto and to participate in the Company’s Senior
Management Incentive Plan which is to be established for senior managers of
SCR-Tech, and which Plan shall have terms substantially as set forth on Exhibit
A annexed hereto. To the extent that the terms set forth on Exhibit A have not
been finalized, the parties hereto agree to negotiate in good faith to
effectuate their full documentation.

8. Effect on Employment Agreement. Except as modified hereby, the Employment
Agreement shall remain in full force and effect in accordance with its terms.

9. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of North Carolina, without giving effect
to principles of conflicts of laws thereof.
 
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10. Counterparts. This Modification Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each party and
delivered to each other party.

11. Entire Agreement. The Employment Agreement, as amended by this Modification
Agreement, constitutes the entire agreement (and supersedes each prior agreement
and understanding, whether written or oral, including, but not limited to the
letter agreement dated June 4, 2007 by and among Acorn, William, McMahon,
Michael Mattes, Frank Wenz and Michael Cooper) among the parties regarding the
subject matter of the Employment Agreement as amended by this Modification
Agreement.

[Signature page follows]
 
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IN WITNESS WHEREOF, the parties have executed this Modification Agreement as of
the date first written above.
 
SCR-TECH
   
BUYER
       
SCR-TECH, LLC
   
COALOGIX INC.
       
By:

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By:

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Name:

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Name:

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Title:

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Title:

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CESI-SCR
             
CESI-SCR, INC.
       
 
   
By:

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Name:

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Title:

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EMPLOYEE
                   

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William J. McMahon, III
   

 
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Acorn Factor, Inc. hereby unconditionally guarantees to
Employee any and all of the obligations of Buyer and SCR-Tech set forth above in
this Modification Agreement, and Acorn Factor, Inc. hereby acknowledges and
agrees that but for its guaranty of such obligations the Employee would not
enter into this Modification Agreement and Acorn Factor, Inc. will benefit from
Employee entering into this Modification Agreement.
 
Date: November 7, 2007 

        ACORN FACTOR, INC.  
   
   
     By:  

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Name:

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Title:

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EXHIBIT A

 
1.
Cash compensation consistent with current compensation packages as previously
disclosed in writing to Acorn;

 

 
2.
Non-cash benefits consistent with current benefits packages as previously
disclosed in writing to Acorn;

 

 
3.
Granting members of the Management Team incentive stock options exercisable for
up to 12.5%, in the aggregate, of the fully diluted capital stock of the
post-acquisition company, with an exercise price equal to the closing price and
vesting over initial four year period on the basis of one-fourth each
anniversary of closing, with vesting to accelerate upon a change of control;

 

 
4.
Award of cash bonuses equal to 5%, in the aggregate, of the net gain (after
repayment of purchase price) from a subsequent sale or similar transaction
involving the post-acquisition company which results in a 30% IRR to Acorn,
payable upon the closing of such subsequent sale or similar transaction; and

 
5.
Right to participate in the financing of the acquisition under the Stock
Purchase Agreement, and any subsequent financing, at the same level and priority
as Acorn (which, in the case of the initial acquisition financing, may be funded
from accrued and unpaid cash bonuses payable to the Management Team)

 
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