Document:

Filed by Bowne Pure Compliance

Exhibit 4.4

NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR UNDER ANY STATE SECURITIES LAW AND MAY
NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT WITH RESPECT
THERETO IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ANY
APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (II) EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT AND THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF
APPLICABLE STATE SECURITIES LAWS ARE AVAILABLE.

$1,000,000

RENEGY HOLDINGS, INC.

CONVERTIBLE SUBORDINATED PROMISSORY NOTE

August 13, 2008

Renegy Holdings, Inc., a Delaware corporation (the “Company”), the principal office of
which is located at 301 W. Warner Road, Suite 132, Tempe, Arizona 85284, for value received hereby
promises to pay to The Robert M. Worsley and Christi M. Worsley Revocable Trust (the
“Holder”), or its registered assigns, the sum of one million dollars ($1,000,000), or such
lesser amount as shall then be outstanding hereunder. The principal amount hereof and any unpaid
accrued interest hereon, as set forth below, shall be due and payable on the earlier to occur of
(i) December 31, 2009, or (ii) when declared due and payable by the Holder upon the occurrence of
an Event of Default (as defined below). Payment for all amounts due hereunder shall be made by mail
to the registered address of the Holder. Simultaneously with the execution of this Note, the
Holder and the Company shall execute a waiver (in the form attached hereto as Exhibit B) of
various provisions of that certain Contribution and Merger Agreement among Catalyica Energy
Systems, Inc.; the Company; Snowflake Acquisition Corporation; Renegy, LLC; Renegy Trucking, LLC;
Snowflake White Mountain Power, LLC; Robert M. Worsley; Christi M. Worsley; and the Holder dated
May 8, 2007 (the “Merger Agreement”).

The following is a statement of the rights of the Holder of this Note and the conditions to
which this Note is subject, and to which the Holder hereof, by the acceptance of this Note, agrees:

1. Definitions. As used in this Note, the following terms, unless the context
otherwise requires, have the following meanings:

(i) “Company” includes any corporation which shall succeed to or assume the
obligations of the Company under this Note.

(ii) “Holder,” when the context refers to a holder of this Note, shall mean any
person who shall at the time be the registered holder of this Note.

 

 

 

2. Interest. Upon the maturity of this Note, the Company shall pay interest at the
rate of ten percent (10.0%) per annum (the “Initial Interest Rate”) on the principal
outstanding during the period beginning on the date of issuance of this Note and ending on the date
that the principal amount of this Note becomes due and payable. In the event that the principal
amount of this Note is not paid in full when such amount becomes due and payable, interest at the
rate equal to the lesser of (a) the Initial Interest Rate plus three percent (3.0%) or (b) the
highest rate then permitted by law shall continue to accrue on the balance of any unpaid principal
until such balance is paid.

3. Events of Default. If any of the events specified in this Section 3 shall
occur (herein individually referred to as an “Event of Default”), the Holder of the Note
may, so long as such condition exists, declare the entire principal and unpaid accrued interest
hereon immediately due and payable, by notice in writing to the Company:

(i) Default in the payment of the principal and unpaid accrued interest of this Note
when due and payable if such default is not cured by the Company within ten (10) days after
the Holder has given the Company written notice of such default; or

(ii) The institution by the Company of proceedings to be adjudicated as bankrupt or
insolvent, or the consent by it to institution of bankruptcy or insolvency proceedings
against it or the filing by it of a petition or answer or consent seeking reorganization or
release under the federal Bankruptcy Act, or any other applicable federal or state law, or
the consent by it to the filing of any such petition or the appointment of a receiver,
liquidator, assignee, trustee, or other similar official of the Company, or of any
substantial part of its property, or the making by it of an assignment for the benefit of
creditors, or the taking of corporate action by the Company in furtherance of any such
action; or

(iii) If, within sixty (60) days after the commencement of an action against the
Company (and service of process in connection therewith on the Company) seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution, or similar relief under
any present or future statute, law, or regulation, such action shall not have been resolved
in favor of the Company or all orders or proceedings thereunder affecting the operations or
the business of the Company stayed, or if the stay of any such order or proceeding shall
thereafter be set aside, or if, within sixty (60) days after the appointment without the
consent or acquiescence of the Company of any trustee, receiver, or liquidator of the
Company or of all or any substantial part of the properties of the Company, such appointment
shall not have been vacated; or

(iv) Any declared default of the Company under any Senior Indebtedness (as defined
below) that gives the holder thereof the right to accelerate such Senior Indebtedness, and
such Senior Indebtedness is in fact accelerated by the holder.

4. Subordination. The indebtedness evidenced by this Note is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, in right of payment to the
prior payment in full of all the Company’s Senior Indebtedness, as hereinafter defined.

4.1 Senior Indebtedness. As used in this Note, the term “Senior Indebtedness” shall
mean the principal of and unpaid accrued interest on: (i) all indebtedness of the Company to banks,
commercial finance lenders, insurance companies, or other financial institutions regularly engaged
in the business of lending money, which is for money borrowed by the Company (whether or not
secured), and (ii) any such indebtedness or any debentures, notes, or other evidence of
indebtedness issued in exchange for or to refinance such Senior Indebtedness, or any indebtedness
arising from the satisfaction of such Senior Indebtedness by a guarantor; provided,
however, that the aggregate balance of all Senior Indebtedness outstanding at any given time shall not exceed $65.0 million in principal amount
unless the Holder consents in writing to an amount of Senior Indebtedness in excess of this amount.

 

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4.2 Default on Senior Indebtedness. If there should occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization, or arrangements
with creditors (whether or not pursuant to bankruptcy or other insolvency laws), sale of all or
substantially all of the assets, dissolution, liquidation, or any other marshalling of the assets
and liabilities of the Company, or if this Note shall be declared due and payable upon the
occurrence of an event of default with respect to any Senior Indebtedness, then (i) no amount shall
be paid by the Company in respect of the principal of or interest on this Note at the time
outstanding, unless and until the principal of and interest on the Senior Indebtedness then
outstanding shall be paid in full, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right to receive any
payments in respect of the principal of and interest on this Note, except subject to the payment in
full of the principal of and interest on all of the Senior Indebtedness then outstanding. If there
occurs an event of default that has been declared in writing with respect to any Senior
Indebtedness, or in the instrument under which any Senior Indebtedness is outstanding, permitting
the holder of such Senior Indebtedness to accelerate the maturity thereof, then, unless and until
such event of default shall have been cured or waived or shall have ceased to exist, or all Senior
Indebtedness shall have been paid in full, no payment shall be made in respect of the principal of
or interest on this Note, unless within three (3) months after the happening of such event of
default, the maturity of such Senior Indebtedness shall not have been accelerated.

4.3 Effect of Subordination. Subject to the rights, if any, of the holders of Senior
Indebtedness under this Section 4, including the right to receive cash, securities, or
other properties otherwise payable or deliverable to the Holder of this Note, nothing contained in
this Section 4 shall impair, as between the Company and the Holder, the obligation of the
Company, subject to the terms and conditions hereof, to pay to the Holder the principal hereof and
interest hereon as and when the same become due and payable, or shall prevent the Holder of this
Note, upon default hereunder, from exercising all rights, powers, and remedies otherwise provided
herein or by applicable law.

4.4 Subrogation. Subject to the payment in full of all Senior Indebtedness and until
this Note shall be paid in full, the Holder shall be subrogated to the rights of the holders of
Senior Indebtedness (to the extent of payments or distributions previously made to such holders of
Senior Indebtedness pursuant to the provisions of Section 4.2 above) to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the Company and its
creditors, other than the holders of Senior Indebtedness and the Holder, be deemed to be a payment
by the Company to or on account of this Note; and for the purpose of such subrogation, no payments
or distributions to the holders of Senior Indebtedness to which the Holder would be entitled except
for the provisions of this Section 4 shall, as between the Company and its creditors, other
than the holders of Senior Indebtedness and the Holder, be deemed to be a payment by the Company to
or on account of the Senior Indebtedness.

4.5 Undertaking. By its acceptance of this Note, the Holder agrees to execute and
deliver such documents as may be reasonably requested from time to time by the Company or the
lender of any Senior Indebtedness in order to implement the foregoing provisions of this
Section 4.

5. Prepayment. Upon prior written notice to the Holder, the Company may at any time
prepay in whole or in part the principal sum, plus accrued interest to date of payment, of this
Note.

 

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6. Conversion.

6.1 Voluntary Conversion. Commencing on December 31, 2008, the Holder of this Note
has the right, at the Holder’s option and by delivering notice to the Company pursuant to
Section 6.3.1, to convert the outstanding principal and accrued interest under this Note,
in whole but not in part, into fully paid and nonassessable shares of the Company’s Common Stock,
par value $0.001 per share (“Common Stock”) at a per share conversion price equal to the
closing price of the Company’s Common Stock as quoted on the Nasdaq Capital Market (or such other
national securities exchange or other quotation medium that publishes quotes of the Common Stock)
on the date prior to the date of such notice of conversion; provided, however, that
Holder’s right to convert this Note pursuant to Section 6.1, shall be subject at all times
to applicable Marketplace Rules of the Nasdaq Stock Market, LLC regarding stockholder approval (for
so long as the Company’s securities are subject to such rules). The conversion price of this Note
determined pursuant to this Section 6.1 shall be referred to herein as the “Conversion
Price.”

6.2 Automatic Conversion. If, prior to December 31, 2009, (x) the Company obtains at
least $5,000,000 of equity financing pursuant to the Company’s issuance of equity securities of the
Company (or securities convertible into equity securities of the Company) pursuant to a private
placement to one or more bona fide third-party investors (an “Equity Funding Event”), then
upon the completion of the Equity Funding Event, the entire principal amount of this Note together
with accrued interest thereon shall be automatically converted as part of such financing into the
same type of securities issued in the Equity Funding Event and at the same purchase price and on
the same terms as such equity securities issued in the Equity Funding Event.

6.3 Conversion Procedure.

6.3.1 Notice of Conversion Pursuant to Section 6.1. Before the Holder shall be
entitled to convert this Note into shares of Common Stock pursuant to Section 6.1, it shall
surrender this Note at the office of the Company and shall give written notice by mail, postage
prepaid, to the Company at its principal corporate office, of the election to convert the same
pursuant to Section 6.1, and shall state therein the name or names in which the certificate
or certificates for shares of Common Stock are to be issued. The Company shall, as soon as
practicable thereafter, issue and deliver at such office to the Holder of this Note a certificate
or certificates for the number of shares of Common Stock to which the Holder of this Note shall be
entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the
close of business on the date of such surrender of this Note, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of such date.

6.3.2 Notice of Conversion Pursuant to Section 6.2. If this Note is automatically
converted pursuant to Section 6.2, written notice shall be delivered to the Holder of this
Note at the address last shown on the records of the Company for the Holder or given by the Holder
to the Company for the purpose of notice or, if no such address appears or is given, at the place
where the principal executive office of the Company is located, notifying the Holder of the
conversion to be effected, specifying the type and amount of the equity securities into which the
Note will be converted, the principal amount of the Note to be converted, the amount of accrued
interest to be converted, the date on which such conversion will occur and calling upon such Holder
to surrender to the Company, in the manner and at the place designated, the Note. Upon such
conversion of this Note, Holder agrees to execute and deliver to the Company all transaction
documents entered into by other purchasers participating in the Equity Funding Event, provided that
Holder shall have the right to review and comment on such transaction documents during the
transaction process.

 

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6.4 Mechanics and Effect of Conversion. No fractional shares of Common Stock or other
equity securities shall be issued upon conversion of this Note. In lieu of the Company issuing any
fractional shares to the Holder upon the conversion of this Note, the Company shall pay to the
Holder the amount of outstanding principal that is not so converted, such payment to be in the form
as provided below. Upon the conversion of this Note pursuant to Section 6.1 or 6.2
above, the Holder shall surrender this Note, duly endorsed, at the principal office of the Company.
At its expense, the Company shall, as soon as practicable thereafter, issue and deliver to such
Holder at such principal office a certificate or certificates for the number of shares of such
Common Stock or other equity securities which the Holder shall be entitled upon such conversion
(bearing such legends as are required by applicable state and federal securities laws in the
opinion of counsel to the Company), together with any other securities and property to which the
Holder is entitled upon such conversion under the terms of this Note, including a check payable to
the Holder for any cash amounts payable as described above. In the event of any conversion of this
Note pursuant to Section 6.2 above, such conversion shall be deemed to have been made
immediately prior to the event causing the automatic conversion, and on and after such date the
Holder of this Note entitled to receive the shares of Common Stock or other equity securities
issuable upon such conversion shall be treated for all purpose as the record Holder of such shares.
Upon conversion of this Note, the Company shall be forever released from all its obligations and
liabilities under this Note, except that the Company shall be obligated to pay the Holder, within
ten (10) days after the date of such conversion, any interest accrued and unpaid or unconverted to
and including the date of such conversion, and no more.

7. Conversion Price Adjustments.

7.1 Adjustments for Stock Splits and Subdivisions. In the event the Company should at
any time or from time to time after the date of issuance hereof fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock
(hereinafter referred to as “Common Equivalents”) without payment of any consideration by
such holder for the additional shares of Common Stock or the Common Equivalents, then, as of such
record date (or the date of such dividend distribution, split, or subdivision if no record date is
fixed), the Conversion Price of this Note shall be appropriately decreased so that the number of
shares of Common Stock issuable upon conversion of this Note shall be increased in proportion to
such increase of outstanding shares.

7.2 Adjustments for Reverse Stock Splits. If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the Conversion Price
for this Note shall be appropriately increased so that the number of shares of Common Stock
issuable on conversion hereof shall be decreased in proportion to such decrease in outstanding
shares.

7.3 Notices of Record Date, etc. In the event of:

7.3.1 Any taking by the Company of a record of the holders of any class of securities of the
Company for the purpose of determining the holders thereof who are entitled to receive any dividend
(other than a cash dividend payable out of earned surplus at the same rate as that of the last such
cash dividend theretofore paid) or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or property, or to
receive any other right; or

 

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7.3.2 Any capital reorganization of the Company, any reclassification or recapitalization of
the capital stock of the Company, or any transfer of all or substantially all of the assets of the
Company to any other person or any consolidation or merger involving the Company; or

7.3.3 Any voluntary or involuntary dissolution, liquidation, or winding up of the Company,

then the Company will mail to the holder of this Note at least ten (10) days prior to the earliest
date specified therein, a notice specifying:

7.3.3.1 The date on which any such record is to be taken for the purpose of such dividend,
distribution, or right, and the amount and character of such dividend, distribution, or right; and

7.3.3.2 The date on which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation, or winding up is expected to become effective and the record date
for determining stockholders entitled to vote thereon.

7.4 Reservation of Stock Issuable Upon Conversion. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common Stock or other
equity securities solely for the purpose of effecting the conversion of the Note such number of its
shares of Common Stock or other equity securities as shall from time to time be sufficient to
effect the conversion of the Note; and if at any time the number of authorized but unissued shares
of Common Stock or other equity securities shall not be sufficient to effect the conversion of the
entire outstanding principal amount and accrued interest of this Note, in addition to such other
remedies as shall be available to the holder of this Note, the Company will use its best efforts to
take such corporate action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock or other equity securities) to such number of shares
as shall be sufficient for such purposes.

8. Assignment. Subject to the restrictions on transfer described in Section
10 below, the rights and obligations of the Company and the Holder of this Note shall be
binding upon and benefit the successors, assigns, heirs, administrators, and transferees of the
parties.

9. Waiver and Amendment. Any provision of this Note may be amended, waived, or
modified upon the written consent of the Company and Holder.

10. Transfer of This Note or Securities Issuable on Conversion Hereof. With respect
to any offer, sale, or other disposition of this Note or securities into which such Note may be
converted, the Holder will give written notice to the Company prior thereto, describing briefly the
manner thereof, together with a written opinion of such Holder’s counsel, to the effect that such
offer, sale, or other distribution may be effected without registration or qualification (under any
federal or state law then in effect). Promptly upon receiving such written notice and reasonably
satisfactory opinion, if so requested, the Company shall notify such Holder that such Holder may
sell or otherwise dispose of this Note or such securities, all in accordance with the terms of the
notice delivered to the Company. If a determination has been made pursuant to this Section
10 that the opinion of counsel for the Holder is not reasonably satisfactory to the Company,
the Company shall so notify the Holder promptly after such determination has been made. Each Note
thus transferred and each certificate representing the securities thus transferred shall bear a
legend as to the applicable restrictions on transferability in order to ensure compliance with the
Securities Act, unless in the opinion of counsel for the Company such legend is not required. The
Company may issue stop transfer instructions to its transfer agent in connection with such
restrictions.

 

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11. Treatment of Note. To the extent permitted by generally accepted accounting
principles and applicable tax laws, the Company will treat, account, and report the Note as debt
and not equity for accounting purposes and with respect to any returns filed with federal, state,
or local tax authorities.

12. Notices. Any notice, request, or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given on the date of service if
personally served on the party to whom such notice is to be given, on the date of transmittal of
service via telecopy to the party to whom notice is to be given (with a confirming copy delivered
within 24 hours thereafter), or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified mail, postage prepaid, or via a
recognized overnight courier providing a receipt for delivery and properly addressed at the
respective addresses of the parties as set forth herein. Any party hereto may by notice so given
change its address for future notice hereunder.

13. No Stockholder Rights. Nothing contained in this Note shall be construed as
conferring upon the Holder or any other person the right to vote or to consent or to receive notice
as a stockholder in respect of meetings of stockholders for the election of directors of the
Company or any other matters or any rights whatsoever as a stockholder of the Company; and no
dividends or interest shall be payable or accrued in respect of the Common Stock or other equity
securities obtainable hereunder until, and only to the extent that, this Note shall have been
converted.

14. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Arizona, excluding that body of law relating to conflict of laws.

15. Heading; References. All headings used herein are used for convenience only and
shall not be used to construe or interpret this Note. Except where otherwise indicated, all
references herein to Sections refer to Sections hereof.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Company has caused this Note to be issued this 13 day of August, 2008.

	 	 	 	 	 
	 	RENEGY HOLDINGS, INC.

 	 
	 	By:  	/s/ Robert W. Zack
 	 
	 	 	Robert W. Zack, Executive Vice President and 	 
	 	 	Chief Financial Officer 	 
	 

	 	 	 
	Name of Holder:

	 	Robert M. Worsley and Christi M. Worsley Revocable Trust
	 
	 	 
	Address:

	 	The Worsley Family Revocable Trust
	 

	 	3418 N. Val Vista Drive
	 

	 	Mesa, AZ 85213

 

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EXHIBIT A

NOTICE OF CONVERSION

(To Be Signed Only Upon Conversion of Note)

The undersigned, the holder of the foregoing Note, hereby surrenders such Note for conversion
into shares of Common Stock of Renegy Holdings, Inc., to the extent of $
 _____ 
unpaid principal
amount of such Note, and requests that the certificates for such shares be issued in the name of,
and delivered to,                     , whose address is                                         

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 

	 	 	 
	 

	 	 
	 

	 	(Signature must conform in all respects to name of
	 

	 	holder as specified on the face of the Note)
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	(Address)

 

 

 

EXHIBIT B

FORM OF WAIVER

August 13, 2008

Robert Worsley

Robert M. Worsley and Christi M. Worsley Revocable Trust

3418 N. Val Vista Drive

Mesa, AZ 85213

Dear Mr. Worsley:

Reference is made to that certain Merger Agreement, dated May 8, 2007, among Catalyica Energy
Systems, Inc.; Renegy Holdings, Inc.; Snowflake Acquisition Corporation; Renegy, LLC; Renegy
Trucking, LLC; Snowflake White Mountain Power, LLC; Robert M. Worsley; Christi M. Worsley; and the
Robert M. Worsley and Christi M. Worsley Revocable Trust (the “Merger Agreement”). All
capitalized terms contained herein not otherwise defined herein shall have the meanings assigned to
them in the Merger Agreement.

Section 11.12 of the Merger Agreement permits waivers of provisions of the Merger Agreement if
such waiver is executed in writing by the party to be bound thereby. In addition, to be binding on
Catalytica, Holdings, or the Companies, any such waiver of the Merger Agreement shall be consented
to in writing by the Special Committee. This letter agreement is intended to be such a waiver.

Catalytica, Holdings, and the Companies hereby consent to the issuance to the Robert M.
Worsley and Christi M. Worsley Revocable Trust of any shares of Holdings’ Common Stock or other
equity securities that may be issuable pursuant to the terms of that certain Convertible
Subordinated Promissory Note, dated August 13, 2008, issued to the Robert M. Worsley and Christi M.
Worsley Revocable Trust (the “Trust”) in the principal amount of $1,000,000. Such waiver shall
apply to similar notes of like tenor that may be issued to the Trust or its affiliates from time to
time by the Company. All other provisions of the Merger Agreement shall remain in full force and
effect.

	 	 	 	 	 
	 	On behalf of the Special Committee,

 	 
	 	/s/ Ricardo B. Levy
 	 
	 	Ricardo B. Levy, ChairmanFiled by Bowne Pure Compliance

Exhibit 10.3

Renegy Holdings, Inc.

60 E. Rio Salado Parkway, Suite 1012

Tempe, AZ 85281

August 13, 2008

Robert M. Worsley

Christi M. Worsley

Robert M. Worsley and Christi M. Worsley

             Revocable Trust

3418 N. Val Vista Drive

Mesa, Arizona 85213

Dear Bob and Christi:

The purpose of this letter is to set forth our understanding regarding the obligations under
your agreements with Renegy Holdings, Inc. (the “Company”) relating to the payment of Project Costs
(as defined in the Credit Agreement dated as of September 1, 2006, as amended, among Renegy, LLC,
Renegy Trucking, LLC, Snowflake White Mountain Power, LLC, CoBank, ACB, as Administrative Agent and
Collateral Agent, the LC Issuer as defined therein, and the Lenders party thereto (the “Credit
Agreement”), and as modified by the Overrun Guaranty dated as of October 1, 2007 by and between
each of you and the Company (the “Overrun Guaranty”), and as modified by the letter agreement dated
February 12, 2008 between each of you and the Company (the “Letter Agreement”).

Since the date of the Letter Agreement, additional costs have been incurred in connection with
the Plant; there is uncertainty as to what portion of such additional costs are properly
characterized as Project Costs, or as Project Costs necessary to achieve “Commercial Operation,”
pursuant to the Letter Agreement and the Overrun Guaranty, the Credit Agreement, and the
Contribution and Merger Agreement dated as of May 8, 2007, as amended, by and among you, the
Company, and certain affiliated parties (the “Contribution and Merger Agreement”) (as such
agreements are modified by the Letter Agreement).

The Company has received notification from the Arizona Public Service Company that the
conditions precedent set forth in the definition of “Commercial Operation Date” in the Amended and
Restated Transaction Confirmation, effective August 16, 2006 (the “APS Agreement”), have been
satisfied or expressly waived by the parties as of June 10, 2008, and therefore such date is the
Commercial Operation Date for the Plant for purposes of the APS Agreement. The Salt River Project
Agricultural Improvement and Power District also confirmed that the “commercial operation date” had
been achieved as of June 10, 2008 under the Second Amended and Restated Renewable Energy Purchase
and Sale Agreement, dated as of August 18, 2006 (the “SRP Agreement”), and therefore such date is the Delivery Commencement Date for purposes of the SRP
Agreement.

 

 

 

The Company and the Special Committee have agreed to the following and would like to confirm
your acceptance of these provisions:

1. “Commercial Operation” as defined in the Overrun Guaranty and Credit Agreement has been
achieved as of June 10, 2008.

2. The additional costs incurred in connection with the Plant since the date of the Letter
Agreement and through June 30, 2008 are approximately $8,000,000 (“Additional Costs”).

3. All of your remaining obligations to the Company to guarantee payment of the remaining
Project Costs under the Overrun Guaranty, the Contribution and Merger Agreement and the Letter
Agreement, shall be deemed satisfied in full by each of you as follows.

	 	A.	 	Your payment to the Company of $5,000,000 in cash, which you
previously made on March 4, 2008.
	 
	 	B.	 	Your satisfaction, on behalf of the Borrowers (as defined in
the Credit Agreement), of the Borrowers’ obligation to fund the DSR Account
(as defined in the Credit Agreement) in accordance with the requirements of
the Credit Agreement, up to and in the amount of $2,762,342 on or prior to the
Term-Conversion Date (as defined in the Credit Agreement), and for such time
as the Credit Agreement shall remain in effect, less any DSR Reductions, as
defined below. You may satisfy the foregoing obligations by providing a
letter of credit as specifically provided in the Credit Agreement.

4. Your obligation with respect to the funding of the DSR Account shall be reduced pursuant to
Section 3.B above by an amount (the “DSR Reduction”) equal to, as of the end of each month, 70% of
the product obtained by multiplying (A) the number of megawatt-hours produced from operation of the
Plant in excess of 576 megawatt-hours (“MWh”) on any given day during such month, and (B) the rate
paid by APS under the APS Agreement per MWh during such month. The calculation and DSR Reduction
(if any) shall be calculated monthly on or about the 10th day of each month for the
preceding month.

5. You have advanced to the Company additional amounts of $600,000 on June 30, 2008 and
$400,000 on July 7, 2008 (collectively, the “Advanced Amounts”). The Advanced Amounts shall be
evidenced by a Promissory Note in the form attached hereto as, and containing such terms (including
conversion into equity of the Company) as is set forth in, Exhibit A.

 

 

 

6. 824,341 (representing 5,770,386 as adjusted pursuant to the terms of the Warrants) of the
common stock Warrants issued to you on October 1, 2007 shall be vested as of June 10, 2008 as a
result of the achievement of Commercial Operation of the Plant prior to July 1, 2008 in accordance
with the terms of the Project Documents and there not having occurred an Event of Default (as
defined in the Credit Agreement) or an other material breach or default by any of the Companies,
and there being no events or circumstances existing that could reasonably be expected to
constitute, or result in, an Event of Default or other material breach or default, under the
Project Documents.

7. You agree to use commercially reasonable efforts to make available to the Company one or
more loans (each, a “Loan”) in the aggregate principal amount of $4,000,000 (the “Debt Line”). The
Company may elect to draw on all or any portion of the Debt Line at any time during the period
commencing October 1, 2008 through the earlier of (a) December 31, 2009, or (b) the date upon which
the Company completes an Equity Funding Event (as defined in the Promissory Note in the form
attached hereto as Exhibit A). Draws shall be in increments of $100,000 and you agree to fund such
loan within 10 days of such election. Once repaid, Loans may not be reborrowed. The Company may
prepay any portion of the Loans without premium or penalty. Each of such loans shall contain such
other terms (including with respect to conversion into equity of the Company) and be documented by
means of a Promissory Note in the form attached hereto as Exhibit A.

8. If you default on the terms of this Agreement, your obligations under this Agreement shall
not be subject to either the Basket or the Cap in the Contribution and Merger Agreement. Any
claims the Company may make for breach of this Agreement may not be satisfied by stock of the
Company and shall be satisfied by you solely in cash, or in the case of Section 3.B as otherwise
provided in the Credit Agreement.

9. You agree that this Agreement is personal to you and that it is not assignable without the
written consent of the Company. The Company shall have the right to assign the rights, benefits
and obligations of this agreement to its successors and assigns.

10. You agree that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that, without limiting the availability of any other remedies,
each of the parties to this agreement shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement
exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the
State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a
particular matter, any state or federal court within the State of Delaware). Notwithstanding the
foregoing this Section 10 shall not apply to the covenants contained in Section 7 hereof.

 

 

 

Once agreed and accepted by you, this letter agreement shall be an enforceable amendment to
the Contribution and Merger Agreement, the Overrun Guaranty, and the Letter Agreement and shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. You agree that there is sufficient consideration for this
agreement. Except as specified in this letter agreement, all terms and conditions of the Letter
Agreement, the Contribution and Merger Agreement, and the Overrun Guaranty shall remain in full
force and effect; provided that notwithstanding the foregoing, the parties agree that upon
execution of this agreement, there are no further future obligations to be performed under the
Overrun Guaranty. Unless otherwise defined herein, all capitalized terms in this letter agreement
shall have the same meanings as set forth in the Contribution and Merger Agreement, the Overrun
Guaranty and the Letter Agreement.

[Remainder of page intentionally left blank]

 

 

 

	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	 

	 	/s/ Ricardo Levy
	 

	 	 
	 

	 	Ricardo Levy, Chair of the Special
	 

	 	Committee of the Board of Directors
	 
	 	 
	 

	 	Renegy Holdings, Inc.
	 
	 	 
	 
	 	 
	 

	 	/s/ Robert Zack
	 

	 	 
	 

	 	Robert Zack
	 

	 	Chief Financial Officer

Accepted and agreed as of this

13th day of August, 2008

	 	 	 
	/s/ Robert M. Worsley
 

Robert M. Worsley

	 	 
	 
	 	 
	/s/ Christi M. Worsley
 

Christi M. Worsley

	 	 

Robert M. Worsley and Christi M. Worsley Revocable Trust

	 	 	 
	/s/ Robert M. Worsley

	 	/s/ Christi M. Worsley
	 

	 	 
	Robert M. Worsley, Trustee

	 	Christi M. Worsley, Trustee

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