AMENDMENT NO. 7 TO INDEMNIFICATION AGREEMENT

            THIS AMENDMENT NO. 7 to the Indemnification Agreement is made as of
the 11th day of June, 2003 (as supplemented or modified from time to time, this
"Agreement") by and among AJG Financial Services, Inc., by its Vice President,
General Counsel, as agent (the "Major Shareholder Agent") for Bernard J. Zahren,
Finova Mezzanine Capital Corp., AJG Financial Services, Inc., ("AJG")
Environmental Opportunities Fund (for itself and as successor to) Environmental
Opportunities Fund Cayman, Fredric Rose, M&R Associates, Martin F. Laughlin,
Richard J. Augustine and Michael J. Carolan (each, an "Initial Major
Shareholder"), Stephen Rosenberg, US Energy Biogas Corp. (formerly known as
Zahren Alternative Power Corporation), a Delaware corporation ("ZAPCO "), U.S.
Energy Systems, Inc., a Delaware corporation ("USE"), and Cinergy Energy
Solutions, Inc., a Delaware corporation ("CES"). Unless indicated otherwise,
capitalized terms shall have the same meanings herein as they have in the
Indemnification Agreement (as defined below).

                              W I T N E S S E T H:

            WHEREAS, the parties hereto, the Initial Major Shareholders and USE
Acquisition Corp, which was merged into ZAPCO, have previously entered into that
certain Indemnification Agreement dated as of November 28, 2000 (as amended by
Amendment No. 1 dated as of May 11, 2001, Amendment No. 2 dated as of November
1, 2002, Amendment No. 3 dated as of February 10, 2003, Amendment No. 4 dated as
of March 13, 2003, Amendment No. 5 dated as of April 15, 2003 and Amendment No.
6 dated as of May 14, 2003, the "Indemnification Agreement");

            WHEREAS, the parties hereto now wish to amend the Indemnification
Agreement:

            NOW, THEREFORE, in consideration of $10.00 and other consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

            1.    Section 4(a)(i) of the Indemnification Agreement is hereby
                  amended by deleting the existing section in its entirety and
                  inserting in its place the following section:

                  i. unless a Notice of Claim (as defined herein) has been
            delivered to the Major Shareholders, on or prior to June 30, 2003
            provided that notwithstanding anything to the contrary in this
            Section 4(a)(i) Notices of Claim arising from or relating to
            breaches of Section 3.10, 3.17 and 3.20 of the Merger Agreement may
            be delivered prior to the sixth anniversary of the Closing Date;

            2.    Clause (i) in Section 4(a) of the Indemnification Agreement
                  following "The ZAPCO Indemnitees shall not be entitled to
                  recover under Section 3(b):" is hereby amended by deleting the
                  existing clause in its entirety and inserting in its place the
                  following clause:

<PAGE>

                  i. unless a Notice of Claim (as defined herein) has been
            delivered to the Beneficiaries, on or prior to June 30, 2003 except
            that Notices of Claim arising from or relating to the breaches of
            Sections 4.09, 4.15 and 4.18 of the Merger Agreement may be
            delivered prior to the sixth anniversary of the Closing Date;

            3.    Except as amended hereby, the Indemnification Agreement is
                  hereby ratified and confirmed and, as so amended, remains in
                  full force and effect on the date hereof.

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be Executed as of the date first written above.

                                        US ENERGY BIOGAS CORP:

                                        By: ____________________________________
                                            Name:
                                            Title:


                                        MAJOR SHAREHOLDER AGENT:
                                        AJG FINANCIAL SERVICES, INC.

                                        By: ____________________________________
                                            Name:
                                            Title:


                                        CINERGY ENERGY SOLUTIONS, INC.:

                                        By: ____________________________________
                                            Name:
                                            Title:


                                        U.S. ENERGY SYSTEMS, INC.:

                                        By: ____________________________________
                                            Name:
                                            Title: