exv10w3






Exhibit 10.3




[RENEGY LETTERHEAD]




December 18, 2008




Scott Higginson

60 E. Rio Salado Parkway

Suite 1012

Tempe, Arizona 85281





			
	Re:	 	Your Employment Agreement dated May 8, 2007





Dear Scott:




     This letter agreement is intended to amend certain provisions and to clarify and confirm our
mutual understanding concerning certain aspects of your Employment Agreement dated May 8, 2007
(your “Employment Agreement”), between you and Renegy Holdings, Inc. (the
“Company”). All capitalized terms not defined herein shall have the meaning ascribed
thereto in your Employment Agreement.



     The Company has agreed to the following terms, and would like to confirm your acceptance of
the same:



     1. Terms of Employment.



          a. Effective January 3, 2009, your employment will be reduced to part-time status and at such
time you shall no longer be deemed to be an officer of the Company. Thereafter, until termination
of your employment as provided herein, you agree to dedicate a minimum of eight hours per week to
the Company, with your specific schedule being at your reasonable discretion. Your salary will be
$1,200 per week plus $150 per hour for any time in excess of eight hours per week to the extent
such excess hours are agreed to by you and the Company. Your fixed salary will be prepaid by the
Company on the first business day of each month. Your overtime hours will be paid in accordance
with the regular bi-weekly payroll cycle. In the event of termination of your employment during a
month in which you have received prepayment of salary, you shall promptly refund any amounts
received for such portion of the month following the termination date, and the Company shall have
the right to offset any severance payments owed to you against such amount. You agree not to
terminate your employment or otherwise resign from the Company prior to March 31, 2009, except in
the event of the consummation of a Change of Control or for Good Reason (including in the event the
Company fails to provide timely payment of amounts due under this letter agreement, including
Severance Benefits (as defined below) that is not cured within five business days of providing
notice thereof to the Company). The Company agrees not to terminate your employment prior to March
31, 2009 except for Cause or in the event of the consummation of a Change of Control transaction.




          b. You agree to continue to perform your duties either at the Company’s offices in Tempe or,
commencing December 15, 2008, you may perform your duties at your personal residence. Effective
January 3, 2009, the Company may, but will not be obligated to,



 









 






furnish you with office space, secretarial and support staff or other facilities and services,
except for such equipment (e.g., computer, printer, etc.) and services as may be reasonably
necessary to perform your duties from your personal residence. The Company acknowledges that your
computer and monitor are of nominal value and that ownership of the same shall transfer to you upon
the termination of your employment with the Company.




          c. You may actively seek or engage in any other employment, occupation or consulting activity
for any direct or indirect remuneration without violating the terms of your Employment Agreement;
provided, however, that you will remain subject to Section 13 of your Employment Agreement with
respect to the noncompete and non-solicitation covenants made therein; provided, however, that
notwithstanding any provision in Section 12 of your Employment Agreement, following termination of
your employment with the Company you shall be permitted to work for any entity in Competition with
the Company provided that such entity is not engaged in the business of converting forest-fueled
biomass to electricity in any of Navajo, Apache or Gila counties in Arizona.




          d. The Company will continue to reimburse you for reasonable business expenses (including,
without limitation, travel, mileage, cell phone expenses) incurred in the performance of your
duties in accordance with the terms of your Employment Agreement. You will no longer accrue
vacation and sick days commencing January 3, 2009, and you will not be entitled to any bonus or
other incentive compensation.




     2. Severance Benefits. Notwithstanding any provision in your Employment Agreement to
the contrary, your severance benefits (“Severance Benefits”) shall be as follows:



          a. Your Severance Benefits will be triggered and become payable in accordance with the terms
set forth herein upon the earliest to occur of (i) termination of your employment by the Company
without Cause, (ii) termination of your Employment Agreement by you for Good Reason, and (iii)
January 3, 2009 (the earliest of such dates being referred to herein as the “Severance
Date”). The Severance Benefits shall not be deemed to limit your rights against the Company in
the event your employment is terminated by the Company without Cause prior to March 31, 2009 in
violation of Section 1.a., other than with respect to your rights to severance benefits.




          b. Subject to Section 1.a. and Section 3, your Severance Benefits shall include cash payments
in the aggregate of $100,000 as follows:




               (i) In the event the Company has received proceeds from a tax equity transaction relating to
the biomass power plant in Snowflake, Arizona having substantially the terms contemplated as of the
date of this letter agreement (a “Tax Equity Transaction”) on or prior to the Severance
Date, (A) $75,000 shall be payable on the Severance Date and (B) $25,000 shall be payable equally
over 12 months, and as a part of the regular bi-weekly payroll cycle, without interest, beginning
with the first full pay period following the Severance Date.



               (ii) In the event the Company has not received proceeds from a Tax Equity Transaction on or
prior to the Severance Date, $100,000 shall be payable equally over 24 months, and as a part of the
regular bi-weekly payroll cycle, without interest, beginning with the



 









 







first full pay period following the Severance Date, provided, however, that in the event the
Company receives proceeds from a Tax Equity Transaction subsequent to the Severance Date and not
later than March 31, 2009, $75,000 shall be payable to you upon receiving such proceeds from the
Tax Equity Transaction and the remaining $25,000 less severance payments already made shall be paid
out equally over the remaining months of the 12 month period following the Severance Date (instead
of the 24 month period described above) in the manner described above.



          c. Upon termination of your employment with the Company, or otherwise upon your loss of
coverage under the Company’s group health plans as a result of your reduction in employment as
contemplated by this letter agreement, if applicable, and subject to you timely electing
continuation coverage under Title X of the Consolidated Budget Reconciliation Act of 1985
(“COBRA”), the Company shall subsidize you and your eligible dependents’ COBRA premiums so
that you pay the same premium as an active employee of the Company for the period ending on the
earlier of December 31, 2009 and the date on which you become eligible for coverage under the group
health plans of another employer with comparable group health benefits and levels of coverage.




          d. The Company agrees not to terminate any policies relating to life insurance or disability
that have been paid for as of the date of this letter agreement and which expire in September 2009.
You agree and acknowledge that, except with respect to such life and disability insurance, and
except as provided in Sections 2.c. and 2.e., there are no other employee benefit plans that you
will be entitled to participate in.




          e. You will be entitled to continuing participating in the Company’s 401(k) plan in accordance
with the terms of such plan as of the date of this letter agreement until the termination of your
employment with the Company (including with respect to severance payments under Section 2.b. or
Section 3). You agree and acknowledge that your right to participate in the 401(k) plan will cease
upon termination of your employment with the Company.




          f. Your accrued and unpaid vacation days shall be paid in cash upon the earlier to occur of
your termination with the Company (for any reason) and January 3, 2009 in accordance with
established payroll practices.




          g. In the event the Company terminates your employment on or prior to March 31, 2009, as a
result of (i) your commission of any act of fraud, theft or personal dishonesty in connection with
your responsibilities as an employee that involves the Company or its business and that is intended
to result in substantial personal enrichment to you, or (ii) any willful act or gross negligence by
you that results or is reasonably likely to result in injury to the Company, or in the event you
terminate your employment with the Company prior to March 31, 2009 in violation of this letter
agreement, the Company shall have no obligation to you for Severance Benefits, except for any
Severance Benefits which may have become due and payable to Employee up to and as of the date of
termination in accordance with Section 2.b., and except with respect to accrued an unpaid vacation
days as set forth in Section 2.f.




          h. Your right to receive Severance Benefits is specifically conditioned on your execution of a
standard confidentiality agreement with the Company. Your right to receive




 









 




Severance Benefits is also specifically conditioned on your continued compliance with Section 13 of
your Employment Agreement with respect to the noncompete and non-solicitation covenants made
therein, as modified by this letter agreement. In addition, (A) your right to receive Severance
Benefits following the Severance Date is subject to you executing and not revoking a standard
release of claims in favor of the Company (a “Release”), and (B) your right to continue
receiving Severance Benefits following termination of your employment with the Company is subject
to you executing and not revoking a new Release (or reaffirmation of your original Release as the
Company may determine), provided that such Releases shall preserve all of your indemnification
rights and all other rights you may have under the currently existing indemnification agreement or
similar agreement with the Company. Upon any breach of Section 13 of your Employment Agreement or
the Releases, all Severance Benefits shall immediately cease.




     3. Change of Control Transactions. In the event definitive agreements for a Change of
Control or Going Private (as defined below) transaction are executed on or prior to June 30, 2009,
then the cash portion of the Severance Benefits set forth in Section 2.b. above shall be increased
from an aggregate of $100,000 to $250,000, subject to the consummation of such a Change of Control
transaction on or prior to December 31, 2009. Upon the consummation of such a Change of Control or
Going Private transaction, all remaining severance amounts (after giving effect to the increase
described in this Section 3) shall be paid in full within five business days thereof. For the
avoidance of doubt, the increase in the cash portion of the Severance Benefits from that set forth
in Section 2.b. (and monthly cash payment amounts) shall not be payable unless and until a Change
of Control or Going Private transaction, as applicable, described in this Section 3 shall have been
consummated on or prior to December 31, 2009. For the purposes of this letter agreement, a
“Going Private” transaction shall mean a transaction effected for the purpose of
eliminating substantially all of the minority shareholders of the Company. For the avoidance of
doubt, a “Going Private” transaction shall not include a “going dark,” “opt-out” or similar
transaction that does not result in the elimination of substantially all of the minority
shareholders of the Company and is effected primarily for the purpose of delisting from the Nasdaq
Capital Market and/or deregistering as a reporting company under the Securities Exchange Act of
1934, as amended.



     The definitive agreements for any Change of Control transaction shall require the Company’s
successor (or purchaser of its assets) to expressly assume all obligations of the Company under
this letter agreement to the extent any of the Company’s obligations for Severance Benefits under
Section 2 or Section 3 remain outstanding or will not otherwise be satisfied upon the consummation
of the Change of Control transaction as may be contemplated in this letter agreement, including
without limitation and as allowed by applicable law the obligations of the Company under Section
2.c.



     Renegy agrees to work with you as you may reasonably request to structure all payments
contemplated by this letter agreement to provide you with the highest level of net payment
consistent with the terms of this letter agreement.



     In the event the Company fails to make any required severance payment required by Section 2.b.
or Section 3 on the applicable due date, interest shall accrue on such past due amount commencing
as of the required due date at the rate of 10% per annum until such past due



 









 







amount, together with interest, is paid in full. In the event such balance past due
specifically related to severance payments required by Section 2.b., plus accrued interest thereon,
is not paid in full by the second severance payment date (in accordance with the regular bi-weekly
payroll cycle described in Section 2) following the missed payment, then the entire applicable
severance amount under Section 2.b., plus the accrued interest on the past due amount, shall become
immediately due and payable. Further, until the balance due is paid in full, interest shall accrue
on such amounts due and payable.  For the purposes of this paragraph, only those payments expressly
described in Section 2.b. shall be deemed to be required severance payments that may accrue
interest or result in the acceleration of your remaining severance payments.



     The Company agrees to reimburse you for the reasonable attorney fees, costs and expenses
incurred by you in connection with any action brought by you to enforce your rights hereunder,
provided such action is not decided in favor of the Company.



     By signing this letter agreement, you expressly acknowledge and agree that: (i) the execution
of this letter agreement and the performance of the parties hereunder does not entitle you to
receive any severance benefits described in your Employment Agreement for termination for Good
Reason, including, without limitation, as a result of you no longer serving as an officer of the
Company, the reduction of your employment to part-time basis, and your reduced duties and
responsibilities as provided for herein; (ii) as of the date of this letter agreement, you do not
have Good Reason to terminate your Employment Agreement; (iii) the obligations of the Company set
forth herein shall be in lieu of any severance obligations of the Company under Section 7 and
Section 14 of your Employment Agreement, whether or not such termination is in connection with a
Change of Control or Pending Change of Control and regardless of the reason for termination; and
(iv) the execution of definitive agreements for, or the consummation of, a Tax Equity Transaction
shall not constitute a Change of Control or Pending Change of Control under your Employment
Agreement.



     The intent of this letter agreement is for all payments made hereunder to comply with the
requirements of Section 409A; to the extent any terms of this letter agreement are ambiguous, such
terms shall be interpreted in accordance with such intent.



     Except as described in the above amendments, this letter agreement does not change your
Employment Agreement in any way. In the event of any conflict between this letter agreement and
your Employment Agreement, the terms of this letter agreement shall govern.



     This instrument may be executed in several counterparts, each of which shall be deemed to be
an original, but all of which together will constitute one and the same instrument.



[Signature Page Follows]




 









 








     Please confirm you understanding and agreement to the above by signing in the place indicated
below.



	 	 	 	 	 
	 	Very truly yours,





RENEGY HOLDINGS, INC.

 	 
	 	/s/ Robert M. Worsley
 	 
	 	Name:  	Robert M. Worsley 	 
	 	Title:  	CEO and Chairman 	 
	 



Agreed and Accepted:




	 	 	 
	/s/ Scott Higginson

	 	 
	 
	 	 
	Scott Higginson