REGISTRATION RIGHTS AGREEMENT


                  THIS REGISTRATION  RIGHTS AGREEMENT  ("Agreement") is dated as
of November 28, 2000 between U.S. ENERGY SYSTEMS,  INC., a Delaware  corporation
(the  "Company")  and the persons  identified on Schedule A annexed hereto (such
person,  together with the persons to whom the benefit of this  agreement may be
properly  assigned,   collectively   referred  to  as  the  "Holders"  and  each
individually, a "Holder").


                                    RECITALS


                  I. Pursuant to, among other things, that certain Agreement and
Plan of  Reorganization  and Merger dated as of November 28, 2000,  by and among
the Company, USE Acquisition Corp. and Zahren Alternative Power Corporation,  as
may be amended  from time to time (the  "Merger  Agreement"),  the  Company  has
agreed to provide the Holders  certain  registration  rights with respect to the
shares  of the  Company's  Common  Stock  (a)  issued  pursuant  to  the  Merger
Agreement, (b) issued and issuable upon the conversion of the Company's Series C
Convertible  Preferred  Stock  issued  pursuant  to the  Merger  Agreement  (the
"Preferred  Stock"),  (c)  issued and  issuable  upon  exercise  of the Series C
Redeemable  Common  Stock  Purchase  Warrants  issued  pursuant  to  the  Merger
Agreement (the "Series C Warrants"), and (d) issued or issuable upon exercise of
the Company's  Series B Warrants  (the "Series B Warrants")  to Purchase  Common
Stock   that  may  be   acquired   by   stockholders   of  Zapco   prior  to  or
contemporaneously  with the  Effective  Date (all of such shares of Common Stock
being referred to herein as the "Restricted Shares").

                  II.  Capitalized  terms used but not otherwise  defined herein
shall have the meanings ascribed thereto in the Merger Agreement.


                                    AGREEMENT


                  NOW, THEREFORE, in consideration of the premises and covenants
set forth in the Subscription Agreement, the parties agree as follows:

                  1.       INCIDENTAL (PIGGYBACK) REGISTRATION RIGHTS.

                                       1

<PAGE>

                           (a) Subject to  the limitations  set  forth  in  this
Agreement, if  the  Company  at  any time  more  than twelve  months after  the
Effective  Date (or earlier (but in no event earlier than  nine months after the
Effective  Date)  if the  Company in  good faith  believes that the registration
statement  referred to  below will continue  to be in effect and effective after
the first anniversary of the Effective Date) and prior to  the tenth anniversary
of the Effective Date proposes to file on its behalf or on behalf of  any  other
Person (the "Other Person")a registration statement (a "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), on any form
(other than  a Registration Statement  on Form S-4 or S-8 or  any successor form
not  available for registering the Restricted Shares, or any form for securities
to be offered in a transaction of the type referred  to  in Rule  145 under  the
Securities Act or to employees of the Company  pursuant to any employee  benefit
plan,  respectively)  for the general registration  of securities to be sold for
cash with respect to its Common Stock or any other class of equity security  (as
defined in Section 3(a) (11) of the Securities Exchange Act of 1934, as amended)
of the Company, it will give written notice to the  Holders at least thirty (30)
days  before the initial filing with the Securities and Exchange Commission (the
"Commission")  of such Registration  Statement, which notice shall set forth the
intended  method of disposition of the  securities proposed to be registered  by
the  Company.  The notice shall offer to include in  such filing  the  aggregate
number of shares of Restricted  Shares as the Holders may request subject to the
limitations  set forth in this Agreement.

                  (b) If any Holder desires to have Restricted Shares registered
under this  Section 1, such Holder  shall  advise the Company in writing  within
fifteen  (15) days after the date of  receipt  of such  offer from the  Company,
setting forth the amount of such  Restricted  Shares for which  registration  is
requested.  The  Company  shall  thereupon  include in such filing the number of
shares of Restricted  Shares for which  registration  is so requested;  provided
that nothing  herein shall  prevent the Company from  abandoning or delaying any
such  registration  at any time. In the event that the proposed  registration by
the  Company  is,  in whole or in  part,  an  underwritten  public  offering  of
securities  of the Company,  the Company shall not be required to include any of
the Restricted  Shares in such  underwriting  unless the Holder agrees to accept
the offering on the same terms and conditions as the shares of Common Stock,  if
any,  otherwise being sold through  underwriters  under such  registration,  and
provided, further, that if the managing underwriter advises the Company that the
inclusion of all Restricted Shares proposed to be included by the Holders in the
underwritten  public offering and other issued and outstanding  shares of Common
Stock proposed to be included therein by the persons other than the Holders (the
"Other Shares") would jeopardize the success of the Company's offering, then the
Company  shall be required to include in the offering (in addition to the number
of shares to be sold by the  Company and the Other  Person)  only that number of
Restricted Shares that the managing underwriter believes will not jeopardize the
success of the Company's  offering and the number of Restricted Shares and Other
Shares not included in such  underwritten  public  offering shall be reduced pro
rata  based  upon the number of shares of  Restricted  Shares  and Other  Shares
requested by the holders  thereof to be registered in such  underwritten  public
offering.  In the event the Company chooses a registration form which limits the
size  offering  either in terms of the  number of shares or dollar  amount,  the
Company  shall not be required to include in the  offering  (in  addition to the
number of shares to be sold by the Company) Restricted Shares which would exceed
such limits.

                                       2

<PAGE>



                  (c) Notwithstanding anything to the contrary contained in this
Section  1, in the event  that there is a firm  commitment  underwritten  public
offering of  securities  of the  Company  pursuant  to a  registration  covering
Restricted  Shares and a Holder does not elect to sell such Holder's  Restricted
Shares to the  underwriters of the Company's  securities in connection with such
offering  (and the Company  nonetheless  permits  such  shares to be  registered
pursuant to such registration statement), such Holder shall refrain from selling
such  Restricted  Shares so  registered  pursuant  to this  Section 1 during the
period of distribution of the Company's  securities by such underwriters and the
period in which the  underwriting  syndicate  participates  in the after market;
provided,  however,  that such Holder shall,  in any event,  be entitled to sell
such Holder's  Restricted  Shares commencing on the 90th day after the effective
date of such registration statement.


                  2.       DEMAND REGISTRATION RIGHTS.

                           (a) If  at  any time  at least  12 months  after  the
Effective Date  and prior to  the  tenth  anniversary of the Effective Date (the
"Registration Period"), the Company shall  receive a written request or requests
from  the  Holders of  Restricted  Shares  holding at  least 33 1/3% of the then
remaining Restricted Shares (including for the purposes of such computation  the
shares of Common  Stock  previously issued  upon  exercise or  conversion of the
Series B   Warrants  and Series  C Warrants  (collectively, the "Warrants") and
Preferred  Stock , as  the  case may be, and  the shares  of Common  Stock  then
issuable upon exercise or conversion of the Warrants and Preferred Stock, as the
case may be) with  an aggregate market  value (based  on the last reported sales
price of the Common Stock as of the business day immediately  preceding the date
that such demand is made) of not less than $750,000 (a "Registration  Request")
that the Company effect the registration on Form  S-3, of  all or any portion of
the Restricted Shares owned by  such holder(s),  the Company  will,  if eligible
to  do  so  on  such form: (i) promptly  give  written notice  of  the  proposed
registration  to all other  Holders of Restricted Shares from whom a request has
not  been  received;  and (ii) shall use  reasonable  efforts  to  cause  the
Restricted  Shares  to be  registered  under  the Securities Act and to promptly
effect and comply with  all such  requirements as may be necessary to permit the
sale or  other transfer  of  such Restricted Shares. The Company  shall  not  be
obligated  to (x)  conduct  a  special audit of its financial statements, unless
the Commission  requests such special audit or in the  case  the Holders seeking
the registration of such Restricted Shares undertake to pay the costs associated
with  such audit nor  to  (y) file and cause to become effective more than three
registration  statements in which Restricted Shares  are  to  be  sold  pursuant
to  this  Section   2(a)  (the   "Quantity Requirement).

                  (b)  Notwithstanding  the  foregoing,  the Company  may, for a
period  not to exceed 90 days (the  "Delay  Period")  postpone  the  filing  the
registration  statement  if the  Company  determines  in good  faith  that  such
registration (i) might interfere with or affect the negotiation or completion of
any material  transaction that is being pursued by the Company (whether or not a

                                       3

<PAGE>

final decision has been made to effect such transaction) or (ii) involve initial
or continuing disclosure  obligations that might not be in the best interests of
the Company's  stockholders;  provided,  however,  that the Delay Periods in any
twelve  consecutive  months may not exceed 180  consecutive  days.  If,  after a
registration  statement  becomes  effective,  the Company advises the Holders of
Restricted  Shares registered  pursuant to such registration  statement that the
Company  considers it appropriate for the registration  statement to be amended,
the Holders of  Restricted  Shares that have so been  registered  shall  suspend
immediately any further sales of such shares until the Company advises them that
the registration statement has been amended, provided, however, that the Company
shall, in good faith, amend such registration  statement as promptly as it deems
appropriate  and  provided,  further,  that the period in which such  offers and
sales shall be suspended shall be added to the  distribution  period  calculated
pursuant to Section 3(c) herein.

                  (c) In the event that after making a Registration Request, the
person(s)  making  the  request  (i)  withdraw  same,  (ii) do not  include  (or
withdraw) their Restricted Shares from the Registration Statement to be filed or
filed  pursuant to such request or (iii) do not comply with Section 3(b) hereof,
such request shall  nonetheless be counted in  calculating  whether the Quantity
Requirement has been satisfied.

                  3.       REGISTRATION PROCEDURES.

                           (a)      In connection  with  the filing  of a
registration statement pursuant hereto, the Company will:

                           (i)      prepare and file with the Commission a
registration statement with respect to such  securities  and use its  reasonable
efforts  to cause  such  registration statement to  become and  remain effective
for the  period of  distribution contemplated thereby (as determined pursuant to
Section 3(c) herein);

                           (ii)  prepare  and  file  with  the  Commission  such
amendments and supplements to  such  registration statement and  the  prospectus
used in connection  therewith  as  may be  necessary to  keep  such registration
statement effective  (and to  remain effective for  the period  of  distribution
contemplated  thereby  (as determined pursuant to Section 3(c) herein))  and  to
comply with the  provisions of the  Securities  Act with respect to the  sale or
other disposition of all securities  covered by such registration statement;

                           (iii) furnish to the Holders (except as may otherwise
be expressly provided or as the context requires,  the term  Holders  as used in
this Section 3(a) shall refer only to those  persons whose  securities are being
registered)  such number of copies of a summary  prospectus or other prospectus,
including a  preliminary prospectus,  in conformity with the requirements of the
Securities Act, and such other documents, as the Holders may reasonably request;

                           (iv) use its  reasonable  efforts  to register or
qualify  the securities covered by such  registration statement under such other
securities or  blue sky  laws of such jurisdictions  within the United States as
the Holders of  such securities  shall reasonably  request  (provided,  however,

                                       4

<PAGE>

the Company shall not be obligated to qualify  as a  foreign  corporation  to do
business  under  the  laws of any jurisdiction in which it is not then qualified
or to file any  general consent  to service or  process), and  do  such  other
reasonable  acts and things as may be required  of it  to enable the  Holders to
consummate  the  disposition  in such jurisdiction  of the securities covered by
such registration statement;

                           (v) enter  into  customary  agreements (including an
underwriting agreement in customary form)  and take  such other actions  as  are
reasonably  required in order to expedite or facilitate the  disposition of such
Common Stock and as shall be required in connection with the action taken by the
Company; and

                           (vi) promptly notify in  writing the Holders  of  the
happening of any event, during the  period of distribution, as a result of which
the  registration  statement includes an untrue  statement of a material fact or
omits to state any material fact required to be stated therein  or necessary  to
make  the  statements therein not misleading in light of the  circumstances then
existing (in which case, if so requested by the Company in writing,  the Holders
shall  promptly take action to cease making any offers of the Restricted  Shares
until receipt and distribution of a revised or supplemental prospectuses).

                  (b) In connection with any registration hereunder,  the Holder
will (i) prior to or  contemporaneously  with issuing a Registration  Request or
notifying the Company of such Holder's intent to include  Restricted Shares in a
registration  statement  to be filed by the  Company,  agree  in  writing  (such
writing to be in form and substance reasonably  satisfactory to the Company) to,
in the case of the Preferred Stock and the Warrants, convert or exercise, as the
case may be, the  securities  necessary  to provide  such  Holder that number of
shares of Common Stock to be sold  pursuant to the  registration  statement  not
later  than  immediately  prior  to the  effective  date  of  such  registration
statement,  (ii) furnish the Company in writing such information with respect to
such Holder and the proposed distribution by such Holder as reasonably requested
by the Company and all such information  necessary in order to assure compliance
with Federal and applicable state securities laws and (iii) if the Holder elects
to sell the Restricted Shares to underwriters,  enter into an agreement with the
managing  underwriters  in such  form  and  containing  such  provisions  as are
customary in the  securities  business  for such an  arrangement  between  major
underwriters  and  companies  of the  Company's  size  and  investment  stature,
provided that such agreement shall not contain any provisions  applicable to the
Company which are inconsistent with the provisions hereof and, provided further,
that the time and place of the  closing of such  agreement  shall be as mutually
agreed upon between the Company and the managing underwriter.

                  (c) For  purposes  of  Section  3(a)  hereof,  the  period  of
distribution  of  Restricted  Shares in a firm  commitment  underwritten  public
offering  shall be deemed to extend until each  underwriter  has  completed  the
distribution of all securities purchased by it (but in no event more than twelve
months from the effective date of such registration  statement),  and the period
of distribution of Restricted Shares in any other  registration  shall be deemed
to extend until the earlier of the sale of all Restricted Shares covered thereby
or twelve  months after the  effective  date  thereof.  The Company shall not be
required to keep a  registration  statement  current after the expiration of the
distribution  period with respect to the securities  registered pursuant to such
registration statement.

                                       5
<PAGE>

                  (d) In connection  with a  distribution  of Restricted  Shares
effected pursuant to a registration  statement on a non-underwritten  basis, the
Holders shall provide the Company with information regarding the status of their
sales of such Restricted  Shares,  as and when such  information is requested by
the Company.

                  4.       EXPENSES.

                  (a) All expenses  incurred in complying  with this  Agreement,
including,  without  limitation,  all  registration  and filing  fees,  printing
expenses,   fees  and  disbursements  of  counsel  for  the  Company,  fees  and
disbursements  of legal  counsel  to the  Holders  (whose  securities  are being
registered),  if any, (which fees and  disbursements  shall not exceed $3,000 in
the  aggregate  for any  registration  of  Restricted  Shares  pursuant  to this
Agreement (the "Permitted Amount")) and expenses (including  attorneys' fees) of
complying with the securities or blue sky laws of any  jurisdictions,  except to
the extent  required to be paid by  participating  selling  security  holders by
state  securities  or blue sky laws,  and except as  provided  by  Section  2(a)
herein, shall be paid by the Company.

                  (b)  Notwithstanding  anything  to the  contrary  herein,  the
Holders whose  securities  are being  registered  (and not the Company) shall be
liable for (i) fees and  disbursements  of legal  counsel to the  Holders to the
extent  same  exceed  the  Permitted  Amount,  (ii)  all  fees,   discounts  and
commissions to any underwriter or broker,  if any, and (iii) all transfer taxes,
if any.

                  5.       INDEMNIFICATION.

                           (a) INDEMNIFICATION  BY THE COMPANY.  In the event of
any registration of any Restricted  Shares  under the Securities Act pursuant to
this  Agreement, the Company shall indemnify and hold harmless the Holders, each
underwriter  of the  Restricted  Shares, if any, each  such broker or any  other
person, if any, who controls any of the foregoing persons, within the meaning of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which  any of the  foregoing  persons  may become  subject under the
Securities  Act or  otherwise, insofar  as  such  losses, claims, damages  or
liabilities (or actions in respect  thereof)  arise  out of or are based upon an
untrue  statement  of a material fact  contained in  the Registration  Statement
under which such Restricted Shares were registered under the Securities Act, any
final prospectus contained therein,  or any amendment or supplement  thereto, or
arise out of or are based upon the  omission  to state  therein a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading  or, with  respect to any  final prospectus, necessary  to make  the
statements  therein in  light of the  circumstances  under which they were made,
not misleading;  and shall reimburse the Holders, such underwriter,  broker and
each such controlling person for any legal expenses  reasonably  incurred by any
of them in connection with  defending any such loss, claim, damage, liability or
action;  provided, however,  that  the  Company  shall not be  obligated  to  so
indemnify  the Holders, such underwriter, broker or any such controlling  person
insofar as such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged  omission

                                       6
<PAGE>


made in  said Registration Statement, said final prospectus or said amendment or
supplement in reliance upon and in conformity with  information furnished to the
Company or such  underwriter  or broker by one or more of the Holders in writing
for use in preparation thereof.

                  (b) INDEMNIFICATION BY HOLDERS.  Before Restricted Shares held
by the Holders shall be included in any Registration  Statement pursuant to this
Agreement,  the  Holder  whose  Restricted  Shares  are being  registered  shall
indemnify  and hold  harmless  (in the same manner and to the same extent as set
forth in Section  5(a)  hereof  for the  indemnification  of the  Holders by the
Company) the Company,  each director of the Company, each officer of the Company
who shall sign such  Registration  Statement  and any person  who  controls  the
Company  within the meaning of the  Securities  Act,  with respect to any untrue
statement  or omission  from such  Registration  Statement  or final  prospectus
contained  therein  or any  amendment  or  supplement  thereto,  if such  untrue
statement  or omission  was (i) made in  reliance  upon and in  conformity  with
information  furnished  to the  Company by such Holder in writing for use in the
preparation of such  Registration  Statement,  final  prospectus or amendment or
supplement or (ii) contained in any Registration Statement which was utilized by
such  Holder or any  controlling  person or  affiliate  of the Holder  after the
Holder was  notified,  in accordance  with Section  3(a)(vi)  hereof,  that such
Registration  Statement  contained  an untrue  statement  of a material  fact or
omitted to state any material fact.

                  (c) INDEMNIFICATION  PROCEDURES.  Promptly after receipt by an
indemnified  party of notice of the commencement of any action involving a claim
referred  to in this  Section  5, such  indemnified  party  will,  if a claim in
respect thereof is made against any indemnifying  party,  give written notice to
the latter of such claim and/or the  commencement  of such  action.  In case any
such action is brought against an indemnified party, the indemnifying party will
be entitled to participate in and assume the defense  thereof,  jointly with any
other indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying  party to such indemnified  party of its election to assume the
defense thereof,  the  indemnifying  party shall be responsible for any legal or
other  expenses  subsequently  incurred  by the  latter in  connection  with the
defense  thereof,  provided that if any indemnified  party shall have reasonably
concluded  that  there  may be one or  more  legal  defenses  available  to such
indemnified party which conflict in any material respect with those available to
the indemnifying  party, or that such claim or litigation involves or could have
an effect upon matters beyond the scope of the indemnity  agreement  provided in
this Section 5, such  indemnifying  party shall reimburse such indemnified party
and shall not have the right to assume the  defense of such  action on behalf of
such  indemnified  party  and  such  indemnifying  party  shall  reimburse  such
indemnified  party and any person  controlling such  indemnified  party for that
portion of the fees and  expenses  of any counsel  retained  by the  indemnified
party  which are  reasonably  related to the  matters  covered by the  indemnity
agreement  provided in this Section 5. The indemnifying party shall not make any
settlement  of any claims  indemnified  against  thereunder  without the written
consent  of the  indemnified  party  or  parties,  which  consent  shall  not be
unreasonably withheld.  Notwithstanding the foregoing provisions of this Section

                                       7
<PAGE>

5, if pursuant to an  underwritten  public  offering  of the Common  Stock,  the
Company, the Holders and the underwriters enter into an underwriting or purchase
agreement  relating  to  such  offering  which  contains   provisions   covering
indemnification among the parties thereto in connection with such offering,  the
indemnification  provisions  of this Section 5 shall be deemed  inoperative  for
purposes of such offering.



<PAGE>

                  6.       CERTAIN LIMITATIONS ON REGISTRATION RIGHTS.

                           Notwithstanding  the  other provisions  of  this
Agreement, the Company shall not be obligated to register the Restricted  Shares
of a Holder if, in the opinion of counsel  to the  Company,  the sale  or  other
disposition of such  Holder's Restricted Shares may be effected pursuant to Rule
144(k) (including the  related provisions of  Rule 145) promulgated  under  the
Securities Act.

                  7.       MISCELLANEOUS.

                           (a) NOTICE GENERALLY. Any notice, demand, request,
consent, approval, declaration, delivery or other communication  hereunder to be
made pursuant to the provisions of this Agreement shall be sufficiently given or
made if in writing and either (i) delivered in person with receipt acknowledged,
(ii) delivered  by  reputable overnight  courier, telecopied and  confirmed
separately in writing by a copy mailed as follows or (iii) sent by registered or
certified mail,  return receipt requested, postage prepaid, addressed as follows
(or such  other address as may  be designated by notice  given pursuant to  this
Section 7):

 if to the Company, at    U.S. Energy Systems, Inc.
                          One North Lexington Avenue, 4th Floor
                          White Plains, New York 10601
                          Attention: President

     with a copy to       Robinson Brog Leinwand Greene Genovese & Gluck P.C.
                          1345 Avenue of the Americas
                          New York, New York 10105-0143
                          Attn: Allen J. Rothman, Esq.

if to the Holders, at     the address of the Major Shareholder Agent (as
                          defined in the Indemnification Agreement) set forth in
                          Section 19 of the Indemnification Agreement.


The  Company  shall have no  liability  for the  failure of any Holder to notify
Company of a Holder=s address change.

                  (b) SUCCESSORS AND ASSIGNS.  This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto;  provided,  however,  that,  the Holders'  rights  hereunder  may not be

                                       8
<PAGE>

assigned or transferred without the prior written consent of the Company,  which
may be withheld in the Company's sole and absolute discretion.

                  (c)  GOVERNING  LAW. This  Agreement  shall be governed by the
laws of the State of Delaware, without regard to the provisions thereof relating
to choice of laws.

                  (d) SEVERABILITY.  Wherever  possible,  each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provisions shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provision or the remaining provisions of this Agreement.

                  (e) ENTIRE AGREEMENT;  AMENDMENTS.  This Agreement constitutes
the entire  agreement of the parties with respect to the subject  matter hereof.
This  Agreement may not be modified or amended  except by a writing  executed by
(i) the Company and (ii)  holders of a majority  of the  Restricted  Shares then
outstanding.

                  (f) COUNTERPARTS. This Agreement may be executed in any number
of separate  counterparts,  each of which  shall  collectively  and  separately,
constitute one agreement.

                  (g)  EFFECTIVE   DATE.   This  Agreement  shall  be  effective
beginning  with the Effective  Date and no party hereto shall have any rights or
obligations hereunder until such time.

                  (h) DEFINITION OF RESTRICTED SHARES.  Notwithstanding anything
to the contrary herein the term "Restricted  Shares" shall not include shares of
Common  Stock  that  are  (i)  disposed  of in  accordance  with a  registration
statement  filed  pursuant to this  Agreement or (ii)  distributed to the public
pursuant to Rule 144 under the Securities Act.

                  (i) ADDITIONAL  HOLDERS.  The persons who are  stockholders of
Zahren Alternative Power Corporation as of the date of the Merger Agreement may,
prior to the Effective  Date and subject to applicable  law,  become  parties to
this Agreement with respect to the Restricted  Shares  issuable to them pursuant
to the Merger  Agreement.  In such  event,  the Company is  authorized  to amend
Schedule A annexed hereto to give effect to such addition.

                                       9
<PAGE>

                  IN WITNESS WHEREOF,  the Company and the Holders have executed
this Agreement as of the date first above written.

                            U.S. ENERGY SYSTEMS, INC.


                            By: /s/ Goran Mornhed
                                    ------------------------
                                    Goran Mornhed, President



HOLDER

/s/ Bernard J. Zahren
------------------------------------
    Bernard J. Zahren


Finova Mezzanine Capital Corp.


By: /s/ Kevin Pearce
------------------------------------


AJG Financial Services, Inc.


By: /s/ Mark Strauch
-----------------------------------


Environmental Opportunities Fund


By: /s/ Kenneth Leung
-----------------------------------


Environmental Opportunities Fund Cayman


By: /s/ Kenneth Leung
-------------------------------------


/s/ Frederic Rose
------------------------------------
    Frederic Rose


                                       10
<PAGE>


M&R Associates


By: /s/ Frederic Rose
--------------------------------

/s/ Martin F. Laughlin
------------------------------------
    Martin F. Laughlin

/s/ Richard J. Augustine
------------------------------------
    Richard J. Augustine

/s/ Michael Carolan
------------------------------------
    Michael J. Carolan

                                       11

<PAGE>



                                   Schedule A

Name and Address of Holder

Bernard J. Zahren
the address of the Major  Shareholder  Agent
(as defined in the  Indemnification Agreement)
set forth in Section 19 of the Indemnification Agreement.


Finova Mezzanine Capital Corp.
the address of the Major Shareholder Agent
(as defined in the Indemnification Agreement)
set forth in Section 19 of the Indemnification
Agreement.


AJG Financial Services, Inc.
the address of the Major Shareholder Agent
(as defined in the Indemnification Agreement)
set forth in Section 19 of the Indemnification
Agreement.

Environmental  Opportunities Fund
the address of the Major Shareholder Agent
(as defined  in the  Indemnification  Agreement)
set forth in Section 19 of the Indemnification Agreement.


Environmental  Opportunities Fund Cayman
the address of the Major Shareholder Agent
(as defined in the Indemnification Agreement)
set forth in Section 19 of the Indemnification Agreement.

                                       12

<PAGE>

Frederic Rose
the address of the Major Shareholder Agent
(as defined in the  Indemnification Agreement)
set forth in Section 19 of the Indemnification Agreement.

M&R Associates
the address of the Major Shareholder Agent
(as defined in the Indemnification Agreement)
set forth in Section 19 of the Indemnification Agreement.

Martin F. Laughlin
the address of the Major Shareholder Agent
(as defined in the  Indemnification Agreement)
set forth in Section 19 of the Indemnification Agreement.


Richard J. Augustine
the address of the Major Shareholder Agent
(as defined in the  Indemnification Agreement)
set forth in Section 19 of the Indemnification Agreement.


Michael J. Carolan
the address of the Major Shareholder Agent
(as defined in the Indemnification Agreement)
set forth in Section 19 of the Indemnification Agreement.

                                       13