**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.










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:
            
            
            By:Name:
            
            
            Name:Title:
            
            
            Title:




**CESI-SCR**CESI-SCR,
                INC.By:Name:Title:




**EMPLOYEE**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:Name: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
                to12.5%,
                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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