Renegy Holdings, Inc. 60 E. Rio Salado Parkway, Suite 1012 Tempe, AZ 85281 December 31, 2008
Exhibit 10.17
December 31, 2008
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx
Revocable Trust
0000 X. Xxx Xxxxx Xxxxx
Xxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx
Revocable Trust
0000 X. Xxx Xxxxx Xxxxx
Xxxx, Xxxxxxx 00000
Dear Xxx and Xxxxxxx:
The purpose of this letter is to modify your obligations relating to the funding of the DSR
Account (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 (“SWMP”), CoBank, ACB, as
Administrative Agent and Collateral Agent, the LC Issuer as defined therein, and the Lenders party
thereto (the “Credit Agreement”)) pursuant to the letter agreement dated August 13, 2008 between
each of you and the Company (the “Second Letter Agreement”), and to finalize your obligations to
the Company to guarantee payment of the remaining Project Costs under the Overrun Guaranty, the
Contribution and Merger Agreement, the First Letter Agreement (as each of such terms are defined
below) and the Second Letter Agreement.
Pursuant to the Second Letter Agreement, you agreed to satisfy the obligation of SWMP to fund
the DSR Account up to and in the amount of $2,762,342 on or prior to the Term-Conversion Date (as
defined in the Credit Agreement), for such time as the Credit Agreement shall remain in effect,
less any DSR Reductions (as defined in the Second Letter Agreement). The Second Letter Agreement
provides that you may satisfy the foregoing obligation by providing a letter of credit as
specifically provided in the Credit Agreement.
The Company anticipates that Comerica Bank (“Comerica”) will provide, pursuant to an amendment
to the current credit agreement between the Company and Comerica or pursuant to a new credit
agreement between the parties (in either case, the “Comerica Agreement”), a DSR Letter of Credit
(as defined in the Credit Agreement) for the account of the Company, on or prior to the
Term-Conversion Date (as defined in the Credit Agreement), to satisfy SWMP’s obligation to fund the
DSR Account under the Credit Agreement. Comerica has indicated that its preference is to issue the
DSR Letter of Credit for the account of the Company rather than to issue it for your account under
a separate agreement with you, as was contemplated under the Second Letter Agreement. Accordingly,
under the terms of the Comerica Agreement, the Company will agree to
reimburse Comerica for any amounts drawn on the DSR Letter of Credit (the “Reimbursement
Obligation”).
The Company and the Special Committee have agreed to accept the structure proposed by
Comerica, subject to the following terms, and would like to confirm your acceptance of these terms:
1. For such time as the Credit Agreement shall remain in effect, in the event the
Administrative Agent draws upon the DSR Letter of Credit to fund the DSR Account, you agree to
directly reimburse Comerica in accordance with the terms of the Comerica Agreement up to the amount
of $2,762,342 in order to satisfy the Reimbursement Obligation. Further, for such time as the
Credit Agreement shall remain in effect, your obligations with respect to the DSR Account pursuant
to the Second Letter Agreement shall continue to apply to the extent that the DSR Letter of Credit
is for any reason unavailable to fund the DSR Account as required under the Credit Agreement,
including during the period between the date of this letter and the amendment of the current credit
agreement between the Company and Comerica, or the execution of a new credit agreement between the
parties, to provide for the issuance of the DSR Letter of Credit by Comerica.
2. Your obligations with respect to the DSR Account, the DSR Letter of Credit and the
Reimbursement Obligation pursuant to Section 1 above, and your guarantee obligations with respect
to the Reimbursement Obligation pursuant to the last sentence of Section 3 below, shall continue to
be subject to the DSR Reduction as provided in the Second Letter Agreement.
3. You agree to continue to personally guarantee all of the Company’s obligations under the
Company’s current credit agreement with Comerica, which provides for a non revolving line of credit
facility for a principal amount of up to $7,250,000, until such time that all borrowings under such
credit facility and all other amounts due pursuant to the credit agreement are paid in full. In
addition, you agree to personally guarantee the Company’s Reimbursement Obligation with respect to
the DSR Letter of Credit for such time as the Credit Agreement shall remain in effect and the DSR
Letter of Credit remains outstanding.
4. Provided that the closing shall occur with respect to the tax equity financing transaction
contemplated by the definitive agreements executed by the Company and an institutional investor on
or about the date of this letter, and except as provided in this letter, the Company agrees that
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, the First Letter Agreement
(as each of such terms are defined below) and the Second Letter Agreement shall be deemed satisfied
in full by each of you, including, without limitation, with respect to your obligation to use
commercially reasonable efforts to make available to the Company one or more loans in the aggregate
principal amount of $4,000,000 pursuant to the Second Letter Agreement.
5. If you default on the terms of this letter, your obligations under this letter 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 letter may not be satisfied by stock of the Company and
shall be satisfied by you solely in cash, or in the case of Section 1, as otherwise provided in the
Credit Agreement.
6. You agree that this letter 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 letter to its successors and assigns.
7. You agree that irreparable damage would occur in the event that any of the provisions of
this letter 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 letter shall be entitled to an injunction or injunctions to prevent breaches of
this letter and to enforce specifically the terms and provisions of this letter 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).
Once agreed and accepted by you, this letter shall be an enforceable agreement and an
enforceable amendment to 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”), the Overrun Guaranty dated as of October 1, 2007 by and between each of you and the
Company (the “Overrun Guaranty”), the letter agreement dated February 12, 2008 between each of you
and the Company (the “First Letter Agreement”), and the Second 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, all terms and conditions of the Contribution and Merger Agreement, the Overrun
Guaranty, the First Letter Agreement and the Second Letter Agreement shall remain in full force and
effect. Unless otherwise defined herein, all capitalized terms in this letter shall have the same
meanings as set forth in the Contribution and Merger Agreement, the Overrun Guaranty, the First
Letter Agreement and the Second Letter Agreement.
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| Very truly yours, |
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| /s/ Xxxxxxx Xxxx | ||||
| Xxxxxxx Xxxx, Chair of the Special | ||||
| Committee of the Board of Directors | ||||
| Renegy Holdings, Inc. |
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| /s/ Xxxxxx Xxxx | ||||
| Xxxxxx Xxxx | ||||
| Chief Financial Officer | ||||
Accepted and agreed as of this
31st day of December, 2008
31st day of December, 2008
| /s/ Xxxxxx X. Xxxxxxx | ||
| Xxxxxx X. Xxxxxxx | ||
| /s/ Xxxxxxx X. Xxxxxxx | ||
| Xxxxxxx X. Xxxxxxx | ||
Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx Revocable Trust
| /s/ Xxxxxx X. Xxxxxxx
|
/s/ Xxxxxxx X. Xxxxxxx
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