SHAREHOLDERS AGREEMENT



                                     between



                                 Goran Ernstson,

                       Scandinavian Energy Finance Limited

                                       and

                Lansforsakringar Liv Forsakringsaktiebolag (publ)



                                for the shares of


                              Gigantissimo 2321 AB

                    to be renamed Narvarme Acquisition III AB


<PAGE>


                                      INDEX
<TABLE>
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1.         Definitions.................................................................................3
1.1        Terms used..................................................................................3
1.2        Schedules...................................................................................5
1.3        Clause Headings.............................................................................5
1.4        Interpretation..............................................................................5
2.         Scope of the Agreement......................................................................5
2.1        Purpose.....................................................................................5
2.3        Priority of Agreement.......................................................................6
3.         The Company.................................................................................6
3.1        Issued Share Capital........................................................................6
3.2        Convertible Debentures......................................................................6
3.3        Articles of Association.....................................................................6
3.4        Purpose of the Company......................................................................6
3.5        Dividend Policy.............................................................................7
3.6        Management..................................................................................7
4.         The Board...................................................................................8
4.1        The Directors...............................................................................8
4.2        Directors Resignation.......................................................................9
4.3        Board Meetings..............................................................................9
4.4        Quorum......................................................................................9
4.5        Auditors....................................................................................9
4.6        Covenants Against Claims....................................................................9
5.         Minority Protection........................................................................10
5.1        Minority Shareholders' Rights..............................................................10
5.2        Redemption of Shares.......................................................................11
6.         Transfer of Shares.........................................................................11
6.1        Transfer of Shares.........................................................................11
6.2        New Issue of Shares........................................................................12
6.3        Duty to Transfer of Shares.................................................................13
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
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6.4        Valuation of Shares........................................................................13
6.5        Drag Along.................................................................................14
6.6        Side by Side...............................................................................15
6.7        Exit.......................................................................................15
7.         Dealing in Shares..........................................................................17
7.1        Written Consent............................................................................17
7.2        Letter of Undertaking......................................................................18
7.3        Transfer of shares under Option............................................................18
8.         Confidential Information...................................................................19
8.1        Confidentiality............................................................................19
8.2        Disclosure of Confidential Information.....................................................19
9.         Announcements..............................................................................20
9.1        Shareholder Access to Information..........................................................20
9.2        Announcement, Communication or Circular....................................................20
9.3        Content of Announcement....................................................................20
10.        Compliance with this Agreement.............................................................21
11.        Death and estate distribution..............................................................21
12.        Term and termination.......................................................................21
12.1       Entry into Force...........................................................................21
12.2       Termination................................................................................21
13.        Notices....................................................................................22
13.1       Addresses e t c............................................................................22
13.2       Details....................................................................................22
13.3       Communication Served.......................................................................24
14.        Financing..................................................................................24
14.1       Security...................................................................................24
14.2       Capital....................................................................................24
15.        Budgets and Financial Information..........................................................24
16.        Amendment..................................................................................24
17.        Invalidity.................................................................................25
18.        Waiver.....................................................................................25
19.        Assignment.................................................................................25

</TABLE>
<PAGE>

<TABLE>
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20.        Counterparts...............................................................................25
21.        No Partnership or Agency...................................................................25
22.        Applicable Law.............................................................................26
23.        Arbitration................................................................................26

</TABLE>
<PAGE>


                             SHAREHOLDERS AGREEMENT


This Agreement is made this 11th day of March, 2002 between


1.              Goran Ernstson, a Swedish citizen with the address
                Skoldungavagen 23 B, 131 46 NACKA, ("Ernstson").


2.              Scandinavian Energy Finance Limited, a company incorporated in
                Ireland, with the address c/o Michael Ryan, McCann Fitzgerald, 2
                Harbourmaster Place, International Financial Service Centre,
                Dublin 1, Ireland ("SEFL").


3.              Lansforsakringar  Liv  Forsakringsaktiebolag  (publ),  a
                Swedish  company  with  registration  number 516401-6627 and its
                registered office in Stockholm ("Lansforsakringar").


WHEREAS Ernstson presently owns 100% of the shares of Gigantissimo 2321 AB to be
renamed Narvarme Acquisition III AB, org. nr 556 614-6642 (the "Company"); and


WHEREAS SEFL is the holder of a convertible debenture note issued by the Company
in the amount of SEK 470,000,000 that entitle them to convert into 12,500 shares
of the Company; and


WHEREAS Lansforsakringar shall subscribe for 6,250 shares corresponding to 5 %
of the Shares of the Company on a fully diluted base; and


WHEREAS Lansforsakringar shall subscribe for a convertible debenture note issued
by the Company in the amount of SEK 30,000,000 that entitle them to convert into
6250 shares of the Company; and


WHEREAS Lansforsakringar shall enter into an option agreement with
Lantbrukskredit AB (publ) ("Lantbrukskredit") comprising an undertaking to sell
and pledge shares to Lantbrukskredit ("LF Option"); and


WHEREAS SEFL is the holder of the Option; and

<PAGE>

WHEREAS the parties hereto wish to lay down rules for their holding of shares in
the Company.


NOW, THEREFORE, the parties have agreed as follows.

1.       Definitions

1.1      Terms used

        a)       "Act" means the Swedish Companies Act (1975:1385);

        b)       "Affiliate" means in relation to any party hereto, including
                  without limitation, any direct or indirect shareholder holding
                  share capital with more than 40% of the voting rights in that
                  party or controlling that party, or any company in which more
                  than 40% of the voting rights attached to the share capital is
                  owned directly or indirectly by that party or which is under
                  the control of that party or in relation to any party any
                  related person as defined in section 12.7 of the Act and in
                  addition an Affiliate of SEFL shall also include any company
                  within the group of US Energy Inc. or the group of A&A EIC
                  Electricity Investment Company;

        c)        the "Agreement" and this "Agreement" shall mean the agreement
                  between the parties, being the subject hereof;

        d)        the "Articles of Association" shall mean the articles of
                  association of the Company as to be seen from the document
                  attached hereto (Schedule 1);

        e)       "Auditors" means the auditors of the Company for the time
                  being;

        f)        the "Board" shall mean the board of directors of the Company;

        g)        "Business" shall mean Biomass fuelled district heating
                   systems;

        h)        "Business Day" means any day (other than a Saturday or Sunday)
                  on which  clearing  banks in the city of Stockholm are open
                  for business;

        i)       "Closing Date" shall mean March 11, 2002;

        j)       the "Company"  shall mean  Gigantissimo  2321 AB to be renamed
                 Narvarme  Acquisition  III, registered with number 556614-6642;

        k)       "Confidential  Information"  means all  information (not in the
                 public domain)  including but not limited to that  information

<PAGE>

                 concerned  with the operation of any process;  trade  secrets,
                 the  manufacture, design or  development  of any  products; the
                 marketing  of any  products or  services  (including customer
                 lists,  financial information, sales statistics, survey reports
                 and market share data); and any  additional  specific  know-how
                 likely to subsist in or in respect of the  business  of the
                 Company  and its  subsidiaries  existing  in  whatever  form
                 including  but not  limited  to data, specifications, formulae,
                 experience,  drawings,  manuals, component lists, instructions,
                 designs and diagrams;


        l)       the "Directors" shall mean the directors of the Company;

        m)      "Fair Value" means the market value calculated in accordance
                with the provisions of Clause 6.4;

        n)      "Group" means the Company and its subsidiaries from time to
                 time;

        o)      "Minority Shareholders" means Lansforsakringar and SEFL if and
                when SEFL having become Shareholder only as a result of
                conversion. SEFL shall however cease to be defined as a Minority
                Shareholder  if and when SEFL has exercised the Option in whole
                or in part;

        p)      "Offer Notice" means the notice from the Company pursuant to
                 Clause 6.1.3 stating the number of Sale Shares and the price
                 per Sale Share specified in the Transfer Notice (if any);

        q)       "Option"  means the option  issued by  Ernstson  entitling  the
                 holder of the option to acquire his shares in the Company;

        r)      "Purchasing Shareholder" means a member who intends to purchase
                 any Sale Shares pursuant to clause 6.1;

        s)      "Sale Shares" means the shares specified in the Transfer Notice;

        t)      "Selling Shareholder" means a Minority Shareholder intending to
                sell its shares to the Company;

        u)      a "Shareholder" shall mean any holder of Shares from time to
                time;

        v)      the "Shares" shall mean all stocks, convertible bonds, warrants,
                debentures, options to subscribe for new shares and securities
                of any kind now or hereafter issued by the Company including for
                the  avoidance of doubt,  any preference shares,  whether
                convertible or not, and carrying a right of participation in the

<PAGE>

                profit or assets of the company, in each case including all
                allotments, offers, rights, bonuses benefits and advantages
                whatsoever which accrue, are offered or arise in respect thereof
                , and a reference to the Shares of a party hereto shall mean all
                Shares held by that party at any time;

        w)      "Transferee"  means any person to whom shares have been
                transferred  pursuant to the term of this  Agreement or the
                Articles of Association;


        x)      "Transfer Notice" means the notice given pursuant to Clause  6.2
                 of the intention to transfer any Shares specifying the number
                 and class of shares to be transferred and the price (if any)
                 per share;

        y)       "Third Party" means any person other than a party hereto,
                 shareholder, a holder of a convertible debenture issued by the
                  Company or an Affiliate of any of the foregoing.

1.2        Schedules

           The Schedules form part of this Agreement and shall have the same
           force and effect as if set out in the body of this Agreement and
           references to this Agreement include the Schedules.

1.3        Clause Headings
           Clause headings are for convenience of reference only and shall not
           affect the construction of this Agreement.

1.4        Interpretation
           In this Agreement, unless the contrary intention appears, a reference
           to

           a)     a clause or schedule shall be construed as a reference to a
                  clause of this  Agreement or a schedule thereto, respectively;

           b)     a provision of law is a reference to that law as amended or
                  re-enacted;

           c)     a person includes its successors and assigns;

           d)     a "subsidiary" shall be construed in accordance with the Act;

2.         Scope of the Agreement

2.1        Purpose

<PAGE>
           The purpose of this Agreement is to lay down the terms of the
           co-operation between the Shareholders in respect of their
           shareholdings in the Company.


2.3        Priority of Agreement
           As between the parties hereto, in case of any inconsistency between
           this Agreement and the Articles of Association, this Agreement shall
           prevail unless specifically stated herein.

3.         The Company

3.1        Issued Share Capital
           The Company shall have an issued share capital of SEK 106,250 divided
           into 106,250 shares with a par value of SEK 1. The registered office
           of the Company shall be in Taby.

3.2        Convertible Debentures

3.2.1      The Company shall issue one subordinated convertible loan to
           Lansforsakringar in the amount of SEK 30,000,000 which after full
           conversion will give Lansforsakringar 10 % of the Shares on a fully
           diluted base, including its present shareholding of 5% of the shares
           on a fully diluted base.

3.2.2      The Company shall issue one convertible loan to SEFL in the amount of
           470,000,000 which after full conversion will give SEFL 10 % of the
           Shares on a fully diluted base.

3.3        Articles of Association
           The Articles of Association shall be in accordance with Schedule 1.

3.4        Purpose of the Company
           The Company shall directly or indirectly own, develop and manage
           projects within the field of biomass fuelled district heating system.
           Each party further confirms that so long as a party is a debenture
           holder of the Company or a shareholder in the Company and so long as
           Lantbrukskredit approves such project and grants the Company such
           waivers as are necessary to allow the Company to pursue such project,
           it shall direct and allocate all additional biomass fuelled district
<PAGE>

           heating system projects within Sweden to the Company or its
           subsidiaries.

3.5        Dividend Policy

           The Board shall adopt a dividend policy which shall seek to maximise
           payment of dividends subject to applicable law and with due regard
           the Company's current and future liabilities and cash reserve
           requirements.

3.6        Management

3.6.1      The parties agree

           (i)    not to change the purpose of Company; or

           (ii)   not amend the Articles of Association in a discriminatory
                  manner for the Minority Shareholders; or

           (iii)  that the Company shall not enter into any Agreement with any
                  Affiliate to the Company or SEFL not being on arms length term
                  (and any agreement shall in any event without limitation be
                  considered to be on arms length if the Company's auditors have
                  made a judgement to that effect)

           without the consent of the Minority Shareholders provided that the
           Minority Shareholders confirm their consent to the following
           agreements:

           a) Subordinated Loan Agreement between Swedco 1 and SEFL

           b) Financing Agreement between the Company and SEFL

           c) Convertible Debenture issued by the Company to SEFL

           d) Convertible Debenture issued by the Company to Lansforsakringar

           e) Option from Goran Ernstson to SEFL

           f) Shareholders Agreement relating to the Company

           g) Security Holders Agreement between SEFL and Goran Ernstson

           h)Services Agreement between the Company, USE Energy Canada Corp. and
             SEFL

<PAGE>

3.6.2    The Company shall not file for bankruptcy or liquidation without prior
         notice to the Minority Shareholders.

3.6.3    All  incentive  programs  for the  employees  shall be approved  by the
         Board and shall be on Swedish  market terms (and such program shall in
         any event without limitation be considered to be on Swedish market
         terms if the Company's auditors have made a judgement to that effect).

3.6.4    The issuance of any shares by the Company (except if expressly
         authorized herein) or the incurrence of any loan indebtedness to a
         non-Shareholder shall be approved by the Board.

3.6.5    Subject to being permissible under applicable laws, the provisions of
         Section 3.6 shall not prevent the Company from paying Ernstson such
         amount as is necessary to reimburse Ernstson (including settlement
         costs and reasonable legal, accounting and other expenses for
         investigation or defence) on an after tax basis for any wealth tax
         payable by him in connection with his ownership of shares of the
         Company provided that Ernstson advises Lantbrukskredit, SEFL and
         Lansforsakringar of any such tax assessed and takes any reasonable
         lawful action jointly suggested by Lantbrukskredit, SEFL and
          Lansforsakringar to reduce such tax liability before paying such tax.

4.       The Board

         The business and affairs of the Company shall be managed by the Board
         in accordance with this Agreement, the Articles of Association and
         applicable law.

4.1      The Directors

          The Board shall upon request by Ernstson consist of 6 Directors
          appointed by the Shareholders at a shareholders' meeting. After
          consultation between the parties, Ernstson shall nominate up to 5
          Directors and 2 alternate Directors and Lansforsakringar shall
          nominate 1 Director and 1 alternate Director. In shareholders'
          meetings the parties shall vote for the election of the Directors so
          nominated. If and when SEFL becomes a Shareholder as a result of
          conversion of any part of its debenture the Board shall on SEFL
          request be extended with one Director and one alternate Director to
          be nominated by SEFL.
<PAGE>

4.2        Directors Resignation

           At the time of the completion of any sale, assignment, transfer or
           other disposition of all of the Shares held by any of the
           Shareholders, such Shareholder shall procure the resignation of each
           director and alternate member appointed by it provided it is
           understood that if the Option is exercised, the party exercising the
           Option shall be entitled to nominate the same numbers of Directors
           and alternate Directors as Ernstson is entitled to nominate under
           this Agreement in addition to the Directors SEFL is entitled to
           nominate pursuant to section 4.1.

4.3        Board Meetings

           Board meetings shall be summoned by the chairman and shall be held at
           least 4 times annually. Meetings shall be summoned by at least 7 days
           written notice in advance and the material forming the basis of board
           resolutions shall be presented no later than one week in advance.
           Telephone meetings may be held where this is expedient.

4.4        Quorum

           In order for the Board to constitute a quorum, the meeting must have
           been called no later than seven (7) days in advance, stating the
           agenda, and no less than a majority of the Directors, including the
           Director appointed by Lansforsakringar, must participate in the
           meeting. If such a quorum is not present within 30 minutes from the
           time appointed for the meeting or if during a meeting, such a quorum
           ceases to be present, the meeting shall be adjourned for 7 days and
           at that adjourned meeting, the Directors present, representing not
           less than a majority of the Directors, shall, even if the
           representative of Lansforsakringar is absent, constitute the quorum.
           Board resolutions may be passed by a simple majority of votes. In
           case of equal votes, the chairman shall have a casting vote.

4.5        Auditors

           One auditor and one alternate auditor shall be appointed by Ernstson.

4.6        Covenants Against Claims

<PAGE>

           The Shareholders (other than Ernstson) undertake not to and to cause
           their affiliates from time to time not to make or submit any claim
           against Goran Ernstson regarding any matter resulting from, arising
           out of or relating to Ernstson's actions as a managing director
           described herein, provided that this restriction shall not prevent
           claims against Ernstson based on (i) actions, measures or omissions
           by Ernstson after the closing date which constitute gross negligence
           or fraud or other criminal acts; (ii) knowing violation of the
           Swedish Companies Act; (iii) a breach of an agreement to which
           Ernstson is a party; (iv) breach of any agreement to which the
           Company and/or its direct or indirect subsidiaries is a party
           committed by the Company and/or its direct or indirect subsidiaries,
           if such breach is knowingly caused by the acts of Ernstson.

5.         Minority Protection

5.1        Minority Shareholders' Rights

           Notwithstanding that each of the Minority Shareholders is the owner
           of less than 10% of the shares and votes of the Company, the Parties
           have agreed that each of them with respect to minority protection
           under the Act shall be treated as a holder of 10% of the shares of
           the Company, including but not limited to,.

           (i)  request a minimum dividend under Section 12 Clause 3 of the Act;

           (ii) demand that an additional auditor is appointed in addition to
                what is stated in Clause 4.4 herein under Section 10 Clause 9 of
                the Act; or

           (iii)demand that an examiner makes a special examination of the
                administration and accounts of the company under Section 11
                Clause 2 of the Act.

           In case the Minority Shareholders so demand, Ernstson shall subject
           to applicable law, vote in favour of any necessary resolutions to
           protect a minority shareholder as a holder of 10% of the shares of
           the Company under the Act.

<PAGE>

5.2        Redemption of Shares

           Notwithstanding the fact that Ernstson owns 95% of the shares of the
           Company, Ernstson shall not be entitled to redeem the shares from the
           Minority Shareholders, and undertakes not to initiate such
           redemption.

6.         Transfer of Shares

6.1        Transfer of Shares

6.1.1      If Lansforsakringar intends to transfer its Shares ("Selling
           Shareholder"), except when they intend to sell its Shares to an
           Affiliate or to Lantbrukskredit under the LF Option, it must first
           offer the Shares to the holders of other Shares in the Company on the
           terms of this Clause by giving a Transfer Notice to the Company. The
           Transfer Notice shall specify the number of Sale Shares offered for
           sale (which shall be for all of the Shares held by the Selling
           Shareholder and not part only) and the price for the Sale Shares.

6.1.2      Within 7 days after receipt by the Company of the Transfer Notice the
           Sale Shares shall be offered to the other Shareholders.

6.1.3      The offer shall be made by an Offer Notice. The offer shall include
           all the Sale Shares. If the offer is not accepted within 30 days
           after the Offer Notice is given, the offer shall be deemed to be
           declined. For the purpose of this Clause an offer shall be deemed to
           be accepted when the acceptance is received by the Company. The
           acceptance must include all of the Sale Shares.

6.1.4      If the offer is deemed to be declined or if the other Shareholders
           declare that he does not wish to acquire the shares offered, the
           Selling Shareholder shall be entitled to sell the Sale Shares within
           90 days from the expiration of the 30 days period in clause 6.1.3 on
           terms no less favourable to the term offered to the other
           Shareholders. If no such sale is completed within the said ninety
           days period a new offering procedure as herein set forth has to take
           place before the shares may be disposed of.

6.1.5      If the Company is notified  within the periods  specified in Clause
           6.1.3 that the offer is accepted it shall give notice to the Selling
           Shareholder, and the Selling Shareholder shall be bound upon  payment

<PAGE>

           of the price due in respect of all the Sale Shares  comprised in that
           notice to transfer  those Sale Shares to the Purchasing  Shareholders
           within  14 days from the  giving of that  notice. The  Selling
           Shareholder shall sell the Sale Shares free from all liens,  charges
           and  encumbrances  and together with all rights attaching to them and
           all  dividends  and  distributions  declared  made or paid on them on
           or  after  the  date of the Transfer  Notice.  If more than one
           shareholder wants to purchase the Sale Shares, they shall be entitled
           to purchase the Sale Shares pro rata to their previous shareholding
           in the Company.

6.2        New Issue of Shares

6.2.1      If the Company issues any Shares other than as a result of conversion
           of the  outstanding  convertible debenture  loans, a direct issue in
           connection with an acquisition or in relation to an incentive program
           for the employees  approved  pursuant to Section 3.6.3 hereof,  each
           Shareholder shall  have the  right but not  the obligation  to
           participate  and  subscribe for such Shares on a pro rata basis in
           relation to its Shareholding in the Company. In connection with a
           direct issue for an acquisition,  a Minority  Shareholder shall be
           entitled to  subscribe,  for that number of Shares as is necessary to
           maintain, after giving effect to the acquisition, the same percentage
           ownership in the Company such Minority  Shareholder  had immediately
           prior to the acquisition in both cases on a fully diluted basis. Such
           subscription  shall be made at a price  per  share  equal to the per
           share valuation of the Company's shares  employed in the acquisition.
           The subscription  shall be made within 7 days form the date of the
           Shareholders  Meeting.  If any  Shareholder  does not wish to
           participate  and subscribe for Shares in accordance with the terms of
           this  clause,  it accepts  thereby that the share  capital of the
           Company  will be  increased and that its shareholding  of the Company
           will  be  diluted. In  relation to an incentive program, the Minority
           Shareholders  shall  be  entitled to  maintain  the  same  percentage
           ownership  in the  Company as such shareholder had  immediately prior
           thereto on a fully diluted basis and the parties shall use their good
           faith efforts to agree an arrangement to achieve such result.

6.2.2      If a Minority Shareholder decides not to subscribe for additional
           shares Ernstson may pass a resolution for a directed issue of new
           shares in the Company to be subscribed for, at Ernstson's choice, by
           a new investor provided such new investor become part to this
           Shareholders Agreement. Such direct issue cannot be made on terms
<PAGE>

           more favourable to the new investor than those offered to the
           Minority Shareholders under section 6.2.1 above.

6.3        Duty to Transfer of Shares

           If the holder of any Shares goes into liquidation for other reasons
           than reorganising its business and the shares therefore will be
           transferred to an Affiliate or has an administration or bankruptcy
           order made against it or has an administrative receiver or receiver
           appointed over all or any material part of its assets, he shall
           forthwith be deemed to give and not withdraw a Transfer Notice in
           respect of all those shares in accordance with Clause 6.1.1 above and
           Clauses 6.1 above shall apply in such event as modified by this
           Clause 6.3. Such Transfer Notice shall not include any price, which
           shall be determined in accordance with section 6.4 below.

6.4        Valuation of Shares

           The parties to the transaction shall split the cost of the assessment
           procedure pro rata. An Offer Notice given may not be withdrawn upon
           ascertainment of the value of the Sale Shares. Where the price of
           Shares is to be set under section 6.3 of this Agreement, the price
           will be the Fair Value determined by the Auditors (acting as experts
           and not as arbitrators) on the basis set out below:

           a)   by determining the sum which a willing buyer would offer to a
                willing seller for the whole of the issued share capital of the
                Company assuming the Company will continue to carry on its
                business as a going concern;

           b)   by attributing to the Shares such proportion of the sum
                calculated in accordance with Clause 6.4 a) above as the
                Auditors shall consider appropriate having regard (inter alia)
                to the degree of control over the affairs of the Company that
                attaches to the Shares which are subject to the Transfer Notice;

           c)   by taking into account the rights and  restrictions  attaching
                to the Shares including but not limited to the Option in respect
                of income and capital; and

           d)   by taking into account the size of holdings of Shares which are
                subject to the Transfer Notice and any restriction on the
                transferability and voting rights of such Shares contained in
                this Agreement.

<PAGE>

6.5        Drag Along

6.5.1      In case Ernstson, subject to restrictions in other agreements with
           SEFL, wishes to sell the shares of the Company to a Third Party (in
           this case Third Party shall not include Affiliates of SEFL), the
           Minority Shareholder has an obligation and a right to convert and
           sell its shares in the Company on the terms and conditions including
           the same per share price as being accepted by Ernstson for his own
           disposal, without Section 6.1 being applicable and subject to
           restrictions in the LF Option. If the sale does not include all of
           Ernstson's shares in the Company, the Minority Shareholder has a
           right but not an obligation to sell the number of shares pro rata to
           its shareholding.

6.5.2      In case Ernstson, subject to restrictions on such sales in other
           agreements with SEFL, sells all or substantially all of the assets of
           the Company or its subsidiaries to a Third Party (in which case Third
           Party shall not include an Affiliate of SEFL), the Shareholders
           shall, at a shareholders meeting to be held within two weeks from
           notice, adopt all necessary resolution in order to make such sale on
           terms being accepted by Ernstson. The consideration for the assets
           shall be split between the Shareholders pro rata to their
           shareholdings on a fully diluted basis at the time of consummation of
           such sale.


6.5.3      Notwithstanding  Sections 6.5.1 and 6.5.2 the Minority  Shareholder
           shall be exempted from the  requirements of Sections  6.5.1 and 6.5.2
           if within ten days of  receiving  notice of the sale to the Third
           Party,  the Minority  Shareholder  notifies  Ernstson  that it wishes
           to sell its shares and the shares  issuable upon conversion  to
           Ernstson  for such  Minority  Shareholders pro rata portion (measured
           on a fully  diluted basis) of the value of the  equity of the Company
           calculated  as  follows on a  consolidated  basis:  7 x EBITDA
           (previous three years) less debts (the "Formula") it being understood
           that "debts" shall include without limitation the outstanding balance
           of the loan from  Lantbrukskredit to SEFL under a financing agreement
           for an amount of MSEK 470 between  Lantbrukskredit,  SEFL and EIC of
           even date herewith and shall exclude  the  outstanding  balance of
           the  convertible  debenture  loan from SEFL to the  Company.  If such
           notice is sent by the Minority Shareholder  it shall be exempted from
           the  requirements  of Sections 6.5.1 and 6.5.2  provided it tenders
           such shares to Ernstson for  purchase free and clear of claims, liens
           and encumbrances  (except the pledge to  Lantbrukskredit under the LF
           Option  or under Section  7.1.4. below) prior  to or  at  the

<PAGE>

           consummation  of the transaction  with the Third Party.  The parties
           will co-operate to permit  Ernstson  to  consummate  the  purchase of
           the  Minority  Shareholders'  shares  as  part of the consummation of
           the Third Party  transaction,  without Section 6.1 being  applicable.
           If such Third Party transaction  is not  consummated  Ernstson  shall
           not be under any obligation to purchase the shares of the Minority
           Shareholders.

6.6        Side by Side

           In the event of a firm offer from a Third Party to acquire Shares
           held by Ernstson, Ernstson hereby agrees, subject to the obligations
           under Clause 6.1, not to execute such transfer without having first
           given the other shareholder possibility to simultaneously and on the
           same terms and conditions, including the same per share price,
           transfer their Shares to the Third Party. Ernstson shall notify the
           Company by registered mail with acknowledgement of receipt their
           intent to make such transfer. In such case the other shareholder will
           have fourteen days upon receipt of such notification in order to
           notify the Third Party of their intent to transfer their own Shares
           on the same terms and conditions. If the acquirer does not want to
           purchase all the number of Shares so offered, the Shares sold should
           be proportioned pro rata between the transferring Parties.

6.7        Exit

6.7.1      Change of Control

           In case of a change of control in SEFL, SEFL shall, on
           Lansforsakringar's request, acquire all of the shares owned by
           Lansforsakringar after conversion of its convertible debenture free
           and clear of all claims, liens and encumbrances (except the pledge to
           Lantbrukskredit under the LF Option or under Section 7.1.4 below)
           without Section 6.1 being applicable at a price equal to the
           effective price per share (based on the implicit valuation of the
           Company in the change of control transaction assuming full exercise
           of the Option by SEFL and full conversion of all Convertibles) paid
           by the purchaser in the change of control transaction. For the
           purpose of this clause, change of control means a transfer of more
           than 50% ownership of SEFL to a party other than Endoray Investments
           Company B.V., EIC Electricity Investment (Jersey) Limited or their
           Affiliates. The exercise of the Option granted by Ernstson shall not
           be deemed as a change of control. Thus for example if, after assuming
           an exercise of the Option and the conversion of all convertibles,

<PAGE>

           SEFL owned 90 shares of the Company and Lansforsakringar owned 10
           shares of the Company and the shareholders sold 662/3 % of the shares
           of SEFL for SEK 60,000,000 then the implicit value of the Company
           would be SEK 1,000,000 per share and Lansforsakringar would be
           entitled to SEK 10,000,000 for all of its shares including shares
           issued upon conversion of its debenture.

6.7.2      From March 1 2012, Lansforsakringar may request Ernstson to acquire
           all of the Shares owned by Lansforsakringar including the shares
           underlying its convertible debenture free and clear of all claims,
           liens and encumbrances (except the pledge to Lantbrukskredit under
           the LF Option or under Section 7.1.4 below) and provided
           Lansforsakringar converts its debenture and Ernstson undertakes to
           acquire such Shares free and clear of all claims, liens and
           encumbrances (except the pledge to Lantbrukskredit under the LF
           Option or under Section 7.1.4 below) for a purchase price equal to
           Lansforsakringar's pro-rata portion (measured on a fully diluted
           basis) of the equity of the Company calculated as the Formula x 7.

6.7.3      From March 1 2012 Ernstson may request Lansforsakringar to sell all
           of the Shares owned by Lansforsakringar including the shares
           underlying its convertible debenture free and clear of all claims,
           liens and encumbrances (except the pledge to Lantbrukskredit under
           the LF Option or under Section 7.1.4 below) and Lansforsakringar
           undertakes to convert its debenture, sell such Shares free and clear
           of all claims, liens and encumbrances (except the pledge to
           Lantbrukskredit under the LF Option or under Section 7.1.4 below) for
           a price equal to Lansforsakringar's pro-rata portion (measured on a
           fully diluted basis) of the equity of the Company calculated as the
           Formula x 1.3.

6.7.4      In the event of a breach of the following  sections of this Agreement
           to the detriment of  Lansforsakringar, by a party other than
           Lansforsakringar  which is not cured within 20 days after  receipt by
           the  breaching party of a  written notice  from Lansforsakringar
           specifying such breach,  Lansforsakringar may request the breaching
           party to acquire all of  Lansforsakringar's  Shares,  including those
           underlying its debenture, free and clear of all claims,  liens and
           encumbrances  (except the pledge to  Lantbrukskredit  under the LF
           Option or under Section 7.1.4 below) and provided  Lansforsakringar
           converts its debenture, such breaching party undertakes to purchase
           such shares free and clear of all claims,  liens and encumbrances

<PAGE>

           (except the pledge  to  Lantbrukskredit  under the LF Option or under
           Section  7.1.4  below)  for a price  equal to Lansforsakringar's  pro
           rata portion (measured or a fully diluted basis) of the value of the
           equity, of the  Company calculated as the Formula:

           a)       Section 3.4, second sentence.

           b)       Section 3.6 except that this Section 6.7.4 shall only apply
                    as to 3.6.1 (iii) in the case of an agreement or a series of
                    related agreements with a value in excess of SEK 250.000 per
                    year and shall only apply as to 3.6.3 as to incentive
                    programmes with a value in excess os SEK 250.000.

           c)       Section 4.1.

           d)       Section 6.2.

           e)       Section 6.5.1 and 6.5.3.

           f)       Section 6.6.

           g)       Section 6.7.1 and 6.7.2.

           h)       Section 6.7.5.

6.7.5      In order to enable Lansforsakringar to exercise its rights under this
           Section 6.7 also as regards any shares underlying any convertible
           debentures Ernstson shall procure that the Company will cooperate
           reasonably with Lansforsakringar so that it may convert any
           convertible debentures into Shares in a timely manner.

7.         Dealing in Shares

7.1        Written Consent

           Other than in accordance with the provisions of this Agreement no
           Shareholder shall except with the prior written consent of the other
           Shareholders:

7.1.1      pledge, mortgage, charge or otherwise encumber any Share or any
           interest in any Share; except for the current pledge by Ernstson to
           SEFL and by SEFL to Lantbrukskredit (which Lansforsakringar hereby
           consents to); or

7.1.2      grant an option over any Share or any interest in any Share other
           than the Option and the LF Option; or

<PAGE>

7.1.3      enter into any agreement in respect of the votes attached to any
           Share except in any shareholders agreement regarding the shareholding
           in SEFL.

7.1.4      After the expiration or termination of Lansforsakringar's pledge over
           its shares to  Lantbrukskredit  under the LF Option and to the extent
           it is  necessary for Ernstson to secure any  borrowing by the Company
           for the  business of the Company from a Third Party and he  therefore
           pledges his shares in the  Company,  the Minority  Shareholder shall,
           upon the request of Ernstson, pledge their shares on a pro rata basis
           and execute  such  documentation  and  take  such  actions  and taken
           by the  other  shareholders  with such adjustments as are appropriate
           to reflect  differences  in  shareholdings  provided that (i) the
           foregoing obligation  shall be subject to the consent of the Minority
           Shareholder,  which shall not be unreasonably withheld,  it being
           understood  that  Lansforsakringar  may  reasonably withhold  its
           consent e.g.  if the pledgee  does not recognise  that
           Lansforsakringar's  rights under Section 6.7 of this Agreement shall
           survive  such  pledge and (ii) if a Minority  Shareholder  refuses to
           pledge its shares  pursuant  to this Section, Ernstson shall have the
           right to purchase the Minority Shareholders' shares for a price equal
           to the Formula pro rated to such shares and the Minority  Shareholder
           shall  co-operate  in such sale so that it occurs on or before the
           borrowing in question.

7.2        Letter of Undertaking

           No Shareholder shall effect any transfer of shares without the
           transferee accepting to be bound by the terms of this Agreement by
           signing a letter of undertaking as if the Transferee had been a
           Shareholder at all times for the purposes of this Agreement and had
           assumed the benefit of the rights and the burden of the obligation(s)
           of a Shareholder under this Agreement. Such undertaking shall be
           delivered to the Company at its registered office and a certified
           copy shall be delivered to the other Shareholders.

7.3        Transfer of shares under Option

           In case SEFL exercises its Option, it shall acquire and assume all
           the rights and obligations of Ernstson under the Shareholders
           Agreement. The exercise by SEFL of the Option (or an option with
           substantially similar terms which has replaced the Option), or a
           transfer of the shares owned by Ernstson to a third party or a resale
           of the shares by SEFL to a third party as long as the Option (or an

<PAGE>

           option with substantially similar terms which has replaced the
           Option) remaining outstanding and valid, shall in no cases be
           considered as a transfer of shares under Section 6 of the
           Shareholders Agreement for any purpose. Such transfer from Ernstson
           to a third party or SEFL or from SEFL to a third party upon exercise
           of the Option is however subject to Lansforsakringar's prior consent
           which consent shall not be unreasonable withheld. It is understood
           that the primary criteria for approving the purchaser shall be the
           moral standing and district energy experience of the purchaser.
           Lansforsakringar may consider factors which shall be of secondary
           importance including whether or not the purchaser has a poor
           financial history provided that lack of a substantial net worth shall
           not be a relevant factor in considering such purchaser.
           Lansforsakringar's consent shall, however, not be necessary for such
           transfer if Lantbrukskredit's consent is required under the financing
           document, between Lantbrukskredit and SEFL, and Lantbrukskredit has
           duly approved the purchaser and the shares transferred to a third
           party are subject to a new option agreement substantially similar to
           the Option Agreement and subject to a pledge to Lantbrukskredit (it
           being understood that such actions are permitted without the consent
           of Lantbrukskredit).

8.         Confidential Information

8.1        Confidentiality

The Shareholders shall:

a)       not make use of or disclose to any person  Confidential  Information
         belonging  to and/or used by the Group; and

b)       take all reasonable  steps to prevent the use or disclosure of
         Confidential  Information  belonging to and/or used by the Group.

8.2      Disclosure of Confidential Information

         Clause 8.1 does not apply to:

a)       disclosure of Confidential Information to Affiliate;

b)       use or disclosure of Confidential  Information  required  to be used or
         disclosed  by law or by any other competent authority;

<PAGE>

c)       disclosure of Confidential Information to a director, officer or a
         relevant Shareholder or to partners, lender and other investors of the
         Company or to an employee, whose function requires that he has
         possession of the Confidential Information;

d)       disclosure of Confidential Information to an adviser for the purpose of
         advising the Shareholders in connection with this Agreement provided
         that such disclosure is subject to the terms set out in Clauses 8.1
         and 8.2;

e)       confidential Information  which becomes  publicly known  except  as a
         result of the  Shareholders'  breach of Clauses 8.1 or 8.2; or

f)       information independently developed by the respective Shareholder.

9.       Announcements

9.1      Shareholder Access to Information

         A Shareholder shall have complete access to any information regarding
         the Company and its business, and shall be entitled to have such
         information examined by a chartered accountant in the premises of the
         Company during normal business hours. Any cost for such inspection
         shall be for the account of the Shareholder.

9.2      Announcement, Communication or Circular

         Subject to Clause 9.3, the Shareholders shall not without the other
         Shareholders' written consent, make or send any announcement,
         communication or circular relating to the subject matter of this
         Agreement such consent not to be unreasonably withheld.

         The Shareholders may however give adequate market information
         relating to their investment in the Company which information shall
         be disclosed to the chairman of the board of director of the Company
         prior to it being released.

9.3      Content of Announcement

         Clause 9.2 does not apply to an announcement, communication or
         circular required by law or by the rules of any stock exchange or by
         any governmental authority, in which event the party required to make
         or send such announcement, communication or circular shall, where

<PAGE>
           practicable, first consult with the Company as to the content of such
           announcement.

10.      Compliance with this Agreement

         Each Shareholder undertakes to the other that it shall take all
         practicable steps including, without limitation, the exercise of
         votes it directly or indirectly controls at meetings of the Board and
         general meetings of the Company and any subsidiaries of the Company,
         as the case may be, to ensure that the terms of this Agreement are
         complied with and to procure that the Board and the Company and any
         subsidiaries of the Company, as the case may be, complies with its
         obligations and that it shall do all such other acts and things as
         may be necessary or desirable to implement this Agreement.

11.      Death and estate distribution
         Should Ernstson die or his estate become subject to estate
         distribution the shares held by him shall be deemed immediately
         offered to SEFL or its designee at nominal value.

         In the event that Ernstson shall marry, he shall use all reasonable
         efforts to procure that the Shares held by him shall be his personal
         property (Sw: enskild egendom).

12.      Term and termination

12.1     Entry into Force
         This Agreement shall become effective on the Closing Date.

12.2     Termination
         This Agreement shall remain in force until the earlier of February
         28, 2027 and the date on which a Third Party (to any of the parties
         hereto) becomes a shareholder in the Company due to Lantbrukskredit
         enforcing its pledge over Ernstson's Shares.

         This Agreement shall terminate with immediate effect as against any
         party ceasing to hold Shares without breaching the terms of this
         Agreement.

<PAGE>

         The duties of confidentiality and non-competition shall remain in
         force after the termination of the Agreement.

13.      Notices

13.1     Addresses e t c

         Any notice or other communication pursuant to, or in connection with,
         this Agreement shall be in writing and delivered personally, or sent
         by reputable overnight courier, to the party due to receive such
         notice at its registered office from time to time (or to such other
         address as may from time to time have been notified in writing to the
         other party in accordance with this Clause)

13.2     Details

         The addresses and facsimile numbers of each Party for all notices
         under or in connection with this Agreement are:

           a) in the case of the SEFL;

           Scandinavian Energy Finance Limited
           c/o Michael Ryan
           Mc Cann Fitzgerald
           2 Harbourmaster Place
           International Financial Service Centre
           Dublin 1, Ireland
           Fax: +353 1 824 0010

           with a copy to

           President
           US Energy Systems Inc.
           One Lexington
           Fourth Floor
           White Plains N.Y. 10601
           Fax: 914 993 5190
<PAGE>

           With a copy to

           EIC Partners AG
           Generale-Wille Strasse 59 P.O. Box 35
           CH-8706 Feldmeilen Switzerland
           Fax: 41 1318 3411 until 15 April 2002

                  41 4384 410 01 as of 15 April 2002

           b) in the case of the Ernstson;
           Goran Ernstson
           Skoldungavagen 23B
           S-131 46 Nacka
           Sweden

           with a copy to

           Scandinavian Energy Finance Limited
           c/o Michael Ryan
           Mc Cann Fitzgerald
           2 Harbourmaster Place
           International Financial Service Centre
           Dublin 1, Ireland
           Fax: +353 1 824 0010

           c) in the case of Lansforsakringar;
           Lansforsakringar AB
           Attn. Martin Anthonsen
           Tegeluddsvagen 11-13
           SE-106 50 Stockholm
           Sweden
           Fax: +46-8-588 413 00

           or such other as a Party may notify to the other Party by no less
than five (5) business day's notice.

           All notices and communication between the Parties shall be in English
unless otherwise agreed.

<PAGE>

13.3    Communication Served

        Subject to Clause 12.1, any notice or other communication shall be
        deemed to have been served:

a)       if delivered personally, when left at the address referred to in Clause
         12.3;

b)       if sent by overnight courier, the day after sending it;

c)       if a notice is given or deemed given at a time or on a date
         which is not a Business Day, it shall be deemed to have been
         given on the next Business Day.

14.      Financing

14.1     Security

         Subject to Clause 7.1.4, no Shareholder shall be obliged to guarantee
         or provide security for any indebtedness of the Company.

14.2     Capital

         Except as otherwise provided in this Agreement, no Shareholder shall
         be obliged to provide any capital to the Company by way of
         subscription for further Shares, or by way of loans or subscription
         of loan stock.

15.      Budgets and Financial Information

         Each of the Shareholders shall be entitled to examine the books,
         records and accounts to be kept by the Company and each member of the
         Group and to be supplied with all information including monthly
         management accounts and operating statistics and other financial
         information in the agreed form and such other information as each
         Shareholder may reasonably require to keep it properly informed about
         the business and affairs of the Group.

16.      Amendment

         This Agreement can not be amended unless made in writing and duly
         signed by or on behalf of all parties.

<PAGE>

17.      Invalidity

         If any provision of this Agreement is held to be unenforceable or
         illegal, in whole or in part, such provision or part shall to that
         extent be deemed not to form part of this Agreement but the
         enforceability of the remainder of this Agreement shall remain
         unaffected.

18.      Waiver

         The failure to exercise or delay in exercising any right or remedy
         under this Agreement shall not constitute a waiver of the right or
         remedy or a waiver of any other rights or remedies and no single or
         partial exercise of any right or remedy under this Agreement shall
         prevent any further exercise of the right or remedy or the exercise
         of any other right or remedy.

         The parties' rights and remedies contained in this Agreement are in
         addition to, and not exclusive of, any other rights or remedies
         available at law.

19.      Assignment

         This Agreement is personal to the parties and neither the Agreement
         nor any of the benefits arising under them may be assigned without
         the prior written consent of the other party and neither party shall
         purport to assign or transfer the same. If the Option is exercised
         Ernstson's rights and obligations will be assigned to the person
         exercising the Option.

20.      Counterparts

         This Agreement may be executed in any number of counterparts and by
         each of the parties on separate counterparts each of which when
         executed and delivered shall be deemed to be an original, but all the
         counterparts together shall constitute one and the same agreement.

21.      No Partnership or Agency

         Nothing in this Agreement (or any of the arrangements contemplated
         hereby) shall be deemed to constitute a partnership between the
         parties nor, save as may be expressly set out herein, constitute any
         party the agent of any other party for any purpose.

<PAGE>

         In addition, unless otherwise agreed in writing between the parties,
         none of them shall enter into contracts with third parties as agent
         for any member of the Group or for the other party nor shall any
         party describe itself as agent as aforesaid or in any way hold itself
         out as being an agent as aforesaid.

22.      Applicable Law

         This Agreement shall be governed by and construed in accordance with
         the laws of Sweden.

23.      Arbitration

         Any dispute, controversy or claim arising out of or in connection
         with this Agreement, or the breach, termination or invalidity
         thereof, shall be settled by arbitration in accordance with the Rules
         of the Arbitration Institute of the Stockholm Chamber of Commerce.
         The arbitral tribunal shall be composed of three arbitrators. The
         place or arbitration including the making of the award shall be
         Stockholm, Sweden. The language to be used in the arbitral
         proceedings shall be English.



                                ________________




           In witness whereof the parties hereto have signed this Agreement on
the date first above written:



                                            Lansforsakringar Liv
         /s/  Goran Ernstson                 Forsakringsaktiebolag (publ)
              --------------
              Goran Ernston



           ________________________
           Scandinavian Energy Finance      /s/ Bo Ennerberg
           Limited                              -------------------
                                                Bo Ennerberg

                                            /s/ Olle Tornell
                                                -------------------
                                                Olle Tornell
PRESENT when the Common Seal
of SCANDINAVIAN ENERGY FINANCE
LIMITED was affixed hereto:




___________________________
Director


___________________________
Director/Secretary