Document:

Exhibit 10.82

October 16,2003

Tannenbaum Helpern Syracuse & Hirschtritt
900 Third Avenue
New York, New York 10022
Attn: Stephen Rosenberg

      Re: Escrow Agreement, as amended (the "Escrow Agreement"), by and among
Stephen Rosenberg, AJG Financial Services, through its Vice-President, General
Counsel as agent (the "Major Shareholder Agent") for the Major Shareholders,
Finova Mezzanine Capital Corp., AJG Financial Services, Inc., Environmental
Opportunities Fund (by itself and as successor to Environmental Opportunities
Fund Cayman), Frederic Rose M&R Associates, Martin F. Laughlin, Richard C.
Augustine and Michael J. Carolan (each a "Major Shareholder"), U.S. Energy
Systems, Inc., a Delaware corporation ("USE") and USE Acquisition Corp., a
Delaware corporation (the "Sub" and together with USE, the USE Parties"),
Cinergy Energy Solutions, Inc., a Delaware corporation ("CES") and together with
the USE Parties, the "Beneficiaries") and Tannenbaum Helpern Syracuse and
Hirschtritt LLP (the "Escrow Agent").

Gentlemen:

      Pursuant to the Escrow Agreement, the Escrow Agent is holding the Working
Capital Escrow Fund and the Indemnification Escrow Fund. All capitalized terms
used herein and not defined herein, shall have the meaning set forth in the
Escrow Agreement.

      It is our understanding that the Release Date has occurred and that all
disputed amounts have been settled. Thus, there is no Disputed Amount.
Accordingly, pursuant to Escrow Agreement, the Major Shareholder Agent hereby
gives notice to the Escrow Agent and the Beneficiaries that the Escrow Agent
should disburse all the amounts in the Working Capital Escrow Fund and the
Indemnification Escrow Fund as follows:

      1.    Disburse $1,100,000 from the Working Capital Escrow Fund to US
            Energy Biogas Corp.

      2.    Transfer to USE from the Working Capital Escrow Fund 41,463 shares
            of Parent Common Stock and 2,667 shares of Parent Series C Preferred
            Stock.

<PAGE>

      3.    Transfer to USE from the Indemnification Escrow Fund 18,350 shares
            of Parent Common Stock.

      4.    Disburse and/or transfer to the Major Shareholder Agent for the
            benefit of the Shareholders all of the remaining assets in the
            Working Capital Escrow. The Major Shareholder Agent will disburse
            the assets to the Shareholders.

      5.    Disburse and/or transfer to the Major Shareholder Agent for the
            benefit of the Major Shareholders all of the remaining assets in the
            Indemnification Escrow Fund. The Major Shareholder Agent will
            disburse the assets to the Major Shareholders.

      For any cash mounts to be transferred to US Energy Biogas Corp., please
wire the funds to the following account:

                         Fleet National Bank
                         777 Main Street
                         Hartford CT 06115
                         Bank Account Name: US Energy Biogas Corporation
                         Account # 6545-8499
                         ABA #     0119-00571

      For any Securities to be delivered to USE, please arrange for such
securities to be delivered to:

                         US Energy Systems, Inc.
                         Attention: Allen J. Rothman
                         One North Lexington Avenue
                         Fourth Floor
                         White Plains, NY 10601

      For any cash amounts to be transferred to the Major Shareholder Agent,
please wire the funds to the following account:

                 Harris Trust and Savings Bank
                 Chicago, IL
                 ABA Number 071000288
                 Account Name: AJG Financial Services, Inc
                 Account Number: 160-458-6

<PAGE>

      For any securities to be delivered to the Major Shareholder Agent, please
arrange for such securities to be delivered to:

                 AJG Financial Services, Inc.
                 The Gallagher Centre
                 Two Pierce Place
                 Itasca, IL 60143-4131
                 Attn: Kerry S. Abbott,
                         Asst General Counsel

After receipt of the funds and securities, the Major Shareholder Agent shall
distribute the funds and cause the securities to be delivered to the
Shareholders and the Major Shareholders.

AJG FINANCIAL SERVICES, INC., as
  Major Shareholder Agent

By: ________________________________
       John C. Rosengren, Vice President
       And General Counsel

CINERGY ENERGY SOLUTIONS, INC.

By: ________________________________
Title: _____________________________

U.S. ENERGY SYSTEMS, INC.

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

US ENERGY BIOGAS CORP

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

<PAGE>

      For any securities to be delivered to the Major Shareholder Agent, please
arrange for such securities to be delivered to:

                 AJG Financial Services, Inc.
                 The Gallagher Centre
                 Two Pierce Place
                 Itasca, IL 60143-4131
                 Attn: Kerry S. Abbott,
                         Asst General Counsel

After receipt of the funds and securities, the Major Shareholder Agent shall
distribute the funds and cause the securities to be delivered to the
Shareholders and the Major Shareholders.

AJG FINANCIAL SERVICES, INC., as
  Major Shareholder Agent

By: ________________________________
       John C. Rosengren, Vice President
       And General Counsel

CINERGY ENERGY SOLUTIONS, INC.

By: /s/ Donald R. Snider
    --------------------------------
Title: President

U.S. ENERGY SYSTEMS, INC.

By: ________________________________
        Goran Mornhed, CEO

US ENERGY BIOGAS CORP

By: ________________________________
        Goran Mornhed, ChairmanExhibit 10.83

     THIS AMENDED AND RESTATED SUBORDINATED NOTE HAS BEEN ACQUIRED FOR
     INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
     1933, AS AMENDED (THE "ACT"), OR REGISTERED OR OTHERWISE QUALIFIED
     FOR SALE UNDER THE SECURITIES LAWS OF ANY STATE. THIS SUBORDINATED
     NOTE MAY NOT BE TRANSFERRED OR SOLD OR OFFERED FOR SALE OR OTHERWISE
     TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH
     REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER SUCH
     ACT AND SUCH LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
     ISSUER HAS BEEN DELIVERED TO THE ISSUER TO THE EFFECT THAT SUCH
     REGISTRATION IS NOT REQUIRED.

                     AMENDED AND RESTATED SUBORDINATED NOTE

                                                                        Avon, CT

$5,728,883*]                                                  [October 15, 2003]

      U.S. ENERGY BIOGAS CORP., formerly known as Zahren Alternative Power
Corporation, a Delaware corporation whose principal place of business is located
at 40 Tower Lane, Avon, CT 06001 (the "Company"), for value received, promises
to pay to the order of AJG FINANCIAL SERVICES, INC., or its successors and
assigns (the "Holder"), the aggregate principal sum of five million seven
hundred twenty eight thousand, eight hundred and eighty three dollars
($5,728,883.00 Dollars consisting of the components described in Exhibit A
hereto (the "Principal Amount"), in lawful money of the United States of
America, on the terms and conditions hereinafter specified.

      1. Payment of Principal and Interest.

            (a) Quarterly principal payments in accordance with the Amortization
      Schedules described below plus accrued interest shall be payable quarterly
      beginning on [April 30**], 2004 and ending on January 1, 2011 (the
      "Maturity Date"), subject to Paragraph (c)

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<PAGE>

      below. Additionally, a special amortization payment of $250,000 (the
      "Special Payment") shall be due on July 30, 2004 provided that if a
      Canadian Income Fund does not acquire or refinance the Company's project
      indebtness on or before July 30, 2004 such Special Payment shall not be
      made. An amortization schedule for the quarterly principal and interest
      payments including the Special Payment is attached hereto as Exhibit B and
      an amortization excluding the Special Payment is annexed as Exhibit C (the
      "Amortization Schedules"). At the Maturity Date, or upon any acceleration
      of the Principal Amount pursuant to Section 2 below, the unpaid Principal
      Amount of this Amended and Restated Subordinated Note (the "Subordinated
      Note") and all other sums payable hereunder shall be due and payable in
      full, notwithstanding any other provision hereof.

            (b) Reference is made to that certain Indenture of Trust and
      Security Agreement, dated as of November 30, 1999 among the Company, the
      Affiliates and Subsidiaries of the Company party thereto (collectively,
      the "Issuers") and JPMorgan Chase Bank (formerly known as The Chase
      Manhattan Bank), as trustee (the "Trustee"), as amended and supplemented
      from time to time (the "Security Agreement"). Notwithstanding the
      foregoing, quarterly principal and interest payments hereunder shall only
      be payable in the event of the Company's receipt of disbursements pursuant
      to Section 3.03(b)(viii) of the Security Agreement with respect to such
      calendar quarter. Further, principal and

----------
(footnote continued from previous page)

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<PAGE>

      interest payments shall only be payable from the Company's "Free Cash
      Flow", defined as the quarterly disbursement pursuant to Section
      3.03(b)(viii) of the Security Agreement less all costs actually incurred
      by the Company and its subsidiaries which have not been funded by the
      Trustee and capex actually incurred or reasonably reserved for by the
      Company and its subsidiaries which has not been funded or reserved for by
      the Trustee but before payment of shareholder loans or dividends to
      Company shareholders. If the Company's Free Cash Flow is insufficient to
      pay a scheduled principal and interest payment, any shortfall shall accrue
      but such event shall not be an Event of Default under Section 2 hereof. In
      such event, the Company shall prepare a revised Amortization Schedule and
      the quarterly payment amount recited in Section 1(a) shall be increased in
      accordance with the revised Amortization Schedule.

            (c) Interest shall accrue at a rate equal to five percent (5%) per
      annum. Interest shall be calculated on the basis of a 365-day year and the
      actual number of days elapsed.

            (d) From and after the Maturity Date, interest on the unpaid
      Principal Amount shall accrue and be due and payable at the Default Rate
      (as defined herein), provided, however, that if such unpaid Principal
      Amount shall be due to the insufficiency of the Company's Free Cash Flow
      on the Maturity Date, interest will continue to accrue at the interest
      rate recited in Section 1(c) hereof and such event shall not be an Event
      of Default under Section 2 hereof.

            (e) Principal Amount and all other sums due hereunder shall be
      payable, without set-off or deduction, at the offices of the Holder or at
      such other place as the Holder from

                                       3
<PAGE>

      time to time may designate to the Company in writing, in cash, certified
      check or check of the Company that the Holder has agreed in writing in
      advance to accept or a wire transfer to such account as the Holder may
      have previously designated to the Company in writing.

            (f) Subject to the subordination terms hereinafter provided, the
      Company shall have the right to prepay any portion of the Principal
      Amount, in whole or in part, from time to time without penalty.

            (g) Subject to the subordination terms hereinafter provided, upon a
      sale or recapitalization of the Company, the Principal Amount shall be
      pre-paid to the extent of 50% of proceeds available after payment of all
      Company debt, transaction related costs, transaction related taxes and
      other liabilities and funding of all reserves and escrows required by such
      transaction, but before repayment of shareholder loans or dividends to
      Company shareholders. For the purposes of this Section 1(g), the sale or
      recapitalization of an individual Company subsidiary shall not trigger a
      pre-payment obligation hereunder.

      2. Events of Default. The following events are hereby defined for all
purposes of this Subordinated Note as Events of Default:

            (a) Subject to Section 1(b) hereof, failure of the Company to pay
      any principal or interest hereunder when and as the same shall become due
      and payable within five (5) business days after the giving of a notice to
      the Company that such payment is due and payable and has not been
      received.

                                       4
<PAGE>

            (b) The institution by the Company or any subsidiary of proceedings
      to be adjudicated a bankrupt or insolvent, or the consent by it to the
      institution of bankruptcy or insolvency proceedings against it, or the
      filing by it of a petition or answer or consent seeking relief under Title
      11 of the United States Code, as now constituted or hereafter in effect,
      or any other applicable Federal or State bankruptcy, insolvency or other
      similar law, or the consent by it to the institution of proceedings
      thereunder or the filing of any such petition or to the appointment of a
      receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
      similar official) of the Company or any subsidiary or of any substantial
      part of the property of either, or the making by the Company or any
      subsidiary of an assignment for the benefit of creditors, or the admission
      by the Company or any subsidiary in writing of its inability to pay its
      debts generally as they become due;

            (c) The entry of a decree or order by a court having jurisdiction
      for relief in respect of the Company or any subsidiary, or adjudging the
      Company or any subsidiary a bankrupt or insolvent, or approving a properly
      filed petition seeking reorganization, arrangement, adjustment or
      composition of or in respect of the Company or any subsidiary under Title
      11 of the United States Code, as now constituted or hereafter in effect,
      or any other applicable Federal or State bankruptcy, insolvency or other
      similar law, or appointing a receiver, liquidator, assignee, trustee (or
      other similar official) of the Company or any subsidiary or of any
      substantial part of the property of either, or ordering the winding-up or
      liquidation of its affairs, and the continuance of any such decree or
      order unstayed and in effect for a period of 60 consecutive days; or

                                       5
<PAGE>

            (d) An event of default shall be declared under any other agreement,
      document or instrument to which the Company or any subsidiary is a party
      and such event of default is not cured within any applicable grace period
      or waived in writing, and such event of default (i) involves the failure
      to make any payment when due in respect of any indebtedness (other than
      the Principal Amount and interest hereon) of the Company or any
      indebtedness of any subsidiary with recourse to the Company in excess of
      One Million Dollars ($1,000,000) in the aggregate, or (ii) causes such
      indebtedness or a portion thereof in excess of One Million Dollars
      ($1,000,000) in the aggregate to become due prior to its stated maturity
      or prior to its regularly scheduled dates of payment, or (iii) permits any
      holder of such indebtedness or a trustee to cause such indebtedness or a
      portion thereof in excess of One Million Dollars ($1,000,000) in the
      aggregate to become due prior to its stated maturity or prior to the
      regularly scheduled dates of payment and such event of default is not
      cured or waived within 30 days after the occurrence thereof.

            (e) A final, non-appealable judgment or final non-appealable
      judgments (other than any judgment as to which a reputable insurance
      company has accepted full liability) for the payment of money are entered
      by a court or courts of competent jurisdiction against the Company or any
      subsidiary of the Company and remain undischarged for a period of 60 days,
      provided that the aggregate of all such judgments exceeds One Million
      Dollars ($1,000,000). Notwithstanding the foregoing, any final
      non-appealable judgment against the Company with respect that certain Term
      Loan Agreement between Holder as Lender and BMC Energy LLC and Morris
      Genco, L.L.C. as Borrowers dated 03/30/03 or

                                       6
<PAGE>

      under any of the related transaction documents, as such documents may be
      amended from time to time, shall not be considered an Event of Default for
      the purposes of Section 2.

      If one or more Events of Default shall happen and be continuing, then,
subject to the subordination terms hereinafter provided, and in each and every
such case, the Holder, at its option, by notice in writing to the Company, may
declare the entire Principal Amount and any other sums due hereunder, if not
already due and payable, to be immediately due and payable. If there shall occur
an Event of Default described in Sections 2(c) or 2(d), then, subject to the
subordination terms hereinafter provided, the entire unpaid balance of the
Principal Amount and all other sums due under this Subordinated Note shall be
immediately due and payable without notice to the Company. If the entire unpaid
balance shall, as a result of either of the preceding two sentences, be
immediately due and payable, the unpaid balance of the Principal Amount shall
accrue interest thereafter at the per annum rate equal to the interest rate
provided in Section 1(c) hereof plus five (5%) percent, compounded annually (the
"Default Rate") and all other sums due by the Company hereunder shall also be
immediately due and payable; and payment thereof may be enforced and recovered
in whole or in part at any time by one or more of the remedies provided to the
Holder in this Subordinated Note or under applicable law. In such case, the
Holder may also recover all costs of suit and other expenses in connection
therewith, together with reasonable attorney's fees for collection, together
with the interest on any judgment obtained by the Holder at the Default Rate,
including interest at that rate from and after the date of any execution,
judicial or foreclosure sale until actual payment is made to the Holder of the
full amount due the Holder.

                                       7
<PAGE>

      3. Subordination. Reference is made to that certain Note Purchase
Agreement, dated as of November 30, 1999 among the Company, the Issuers, John
Hancock Life Insurance Company (formerly known as John Hancock Mutual Life
Insurance Company) ("Hancock"), John Hancock Variable Life Insurance Company
("Variable"), Investors Partner Life Insurance Company ("Investors") and Mellon
Bank, N.A., solely in its capacity as Trustee for the Bell Atlantic Master Trust
("Mellon", and together with Hancock, Variable and Investors, the "Purchasers"),
as amended (the "Note Purchase Agreement"). By its acceptance hereof, the Holder
acknowledges that the indebtedness evidenced by this Subordinated Note is the
same indebtedness as is described in Part B of Schedule 10.2 to the Note
Purchase Agreement, which indebtedness has been outstanding at all times since
November 30, 1999. By its acceptance hereof, the Holder acknowledges and agrees
that this Subordinated Note and all liabilities of the Company with respect
hereto are subject in all respects to the Subordination Agreement dated as of
November 30, 1999 (the "Subordination Agreement") among the Issuers, the Holder
and the Trustee under the Security Agreement. Without limiting the generality of
the foregoing, the Holder further acknowledges and agrees that this Subordinated
Note constitutes part of the "Subordinate Liabilities" for all purposes of the
Subordination Agreement and that the payments hereon shall only be made to the
extent that payment on Subordinate Liabilities are permitted under the
Subordination Agreement. The Trustee, the Purchasers, the Issuers and their
respective successors, transferees and assigns are each a third party
beneficiary of the provisions of this paragraph and paragraph 6(c) below.

                                       8
<PAGE>

      4. Omissions. No delay or omission of the Holder to exercise any rights or
powers accruing upon any default which shall not have been remedied shall impair
any such right or power, or shall be construed to be a waiver of any such
default or acquiescence therein; and every power and remedy given by this
Subordinated Note to the Holder may be exercised from time to time and as often
as may be deemed expedient by the Holder.

      5. Notices. Unless otherwise provided, any notice required or permitted
under this Subordinated Note shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified, or by
telecopy with a confirmation of receipt, or upon deposit with a reputable
overnight courier or with the United States Post Office, by registered or
certified mail, postage prepaid, and addressed to the party to be notified at
the following addresses:

      If to the Company:        U.S. Energy Biogas Corp.
                                40 Tower Lane
                                Avon, CT 06001
                                Attn: President
                                Fax: 860-677-6054

      With a copy to:           U.S. Energy Systems, Inc.
                                1 North Lexington Avenue
                                White Plains, NY 10601

                                       9
<PAGE>

                                Attn: President
                                Fax: 914-993-5190

      If to the Holder:         AJG Financial Services, Inc.
                                Two Pierce Place
                                Itasca, IL 60143-3141
                                Attn: Kerry S. Abbott, Esq.
                                     Asst. General Counsel
                                Fax: 630-285-4272

      6. Miscellaneous.

            (a) The Company hereby waives presentment, demand, protest, notice
      of demand, notice of nonpayment or dishonor, notice of protest and all
      other notices of any kind in connection with the delivery, acceptance,
      performance, default or enforcement of the payment of this Subordinated
      Note. No failure to exercise, and no delay in exercising any rights
      hereunder on the part of the Holder hereof shall operate as a waiver of
      such rights.

            (b) Subject to the provisions of the Note Purchase Agreement and the
      other Senior Loan Documents (as defined in the Subordination Agreement),
      the Holder and the Company may from time to time enter into written
      agreements amending or changing any

                                       10
<PAGE>

      provisions of this Subordinated Note or the rights of the Holder or the
      Company hereunder or thereunder, or may grant written waivers or consents
      to a departure from the due performance of the obligations of the Company
      hereunder or thereunder, provided however, that the subordination terms of
      Section 3 hereunder shall not be amended without the consent of the
      Purchasers or their successors, assigns or transferees for so long as any
      Senior Liabilities (as defined in the Subordination Agreement) remain
      outstanding.

            (c) This Subordinated Note and the indebtedness evidenced hereby
      shall at all times constitute unsecured obligations of the Company (and
      not any other Issuer), and the Holder shall have no recourse to the assets
      of any other Issuer other than the Company in an Event of Default (as
      described above).

            (d) The Company agrees that its liability under this Subordinated
      Note shall be without regard to the liability of any other party. No
      course of dealing and no delay or failure of the Holder in exercising any
      right, power, remedy or privilege under this Subordinated Note shall
      affect any other or future exercise thereof or operate as a waiver
      thereof; nor shall any single or partial exercise thereof or any
      abandonment or discontinuance of steps to enforce such a right, power,
      remedy of privilege preclude any further exercise thereof or of any other
      right, power, remedy or privilege. The rights and remedies of the Holder
      under this Subordinated Note are cumulative and not exclusive of any
      rights or remedies which they would otherwise have. Any waiver, permit,
      consent or approval of any kind or character on the part of the Holder of
      any breach or default under

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<PAGE>

      this Subordinated Note or any such waiver of any provision or condition of
      this Subordinated Note must be in writing and shall be effective only to
      the extent specifically set forth in such writing.

            (e) Whenever any payment or action to be made or taken hereunder
      shall be stated to be due on a day which is not a business day, such
      payment or action shall be made or taken on the next following business
      day, and such extension of time shall be included in computing interest or
      fees, if any, in connection with such payment or action.

            (f) Except with respect to paragraph 3 above, the provisions of this
      Subordinated Note are intended to be severable. If any provision of this
      Subordinated Note other than paragraph 3 shall be held invalid or
      unenforceable in whole or in part in any jurisdiction such provision
      shall, as to such jurisdiction, be ineffective to the extent of such
      invalidity or unenforceability without in any manner affecting the
      validity or enforceability thereof in any other jurisdiction or the
      remaining provisions hereof in any jurisdiction.

            (g) Except as set forth herein (including without limitation as set
      forth in paragraph 3 above), this Subordinated Note and any other
      documents delivered in connection herewith supersede all prior
      understandings and agreements, whether written or oral, between the
      parties hereto and thereto relating to the transactions provided for
      herein and therein.

            (h) All representations and warranties of the Company contained
      herein or made in connection herewith shall survive and shall not be
      waived by the execution and

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<PAGE>

      delivery of this Subordinated Note or by any investigation by the Holder,
      but shall terminate upon the Company's full satisfaction and payment of
      the outstanding Principal Amount of and interest on this Subordinated
      Note.

            (i) This Subordinated Note shall be binding upon and shall inure to
      the benefit of the Holder, the Company and their respective successors and
      assigns, except that the Company may not assign or transfer any of its
      rights and obligations hereunder or any interest herein.

            (j) Whenever the Holder's consent is required to be obtained under
      this Subordinated Note as a condition to any action, inaction, condition
      or event, the Holder shall be authorized to give or withhold such consent
      in its sole and absolute discretion and to condition its consent upon the
      giving of collateral, the payment of money or any other matter.

            (k) The representations, warranties and covenants contained herein
      shall be independent of each other and no exception to any representation,
      warranty or covenant shall be deemed to be an exception to any other
      representation, warranty or covenant contained herein unless expressly
      provided, nor shall any such exceptions be deemed to permit any action or
      omission that would be in contravention of applicable law.

            (l) This Subordinated Note shall be governed by, and construed in
      accordance with, the laws of the State of Illinois, excluding, however,
      the rules relating to conflicts of law. The Company irrevocably consents
      to the jurisdiction of the courts of the State of

                                       13
<PAGE>

      Illinois and of any federal court located in such State in connection with
      any action or proceeding arising out of or relating to this Subordinated
      Note, any document or instrument delivered pursuant to, in connection
      with, or simultaneously with this Subordinated Note, or a breach of this
      Subordinated Note or any such document or instrument. The Company waives,
      to the full extent permitted by law, any objection which it may now or
      hereafter have to the laying of venue of any action or proceeding arising
      out of or relating to this Subordinated Note brought in the State of
      Illinois, and further irrevocably waives, to the full extent permitted by
      law, any claim that any such action or proceeding brought in such State
      has been brought in an inconvenient forum. In any such action or
      proceeding, the Company waives, to the full extent permitted by law,
      personal service of any summons, complaint, or other process and agrees
      that service thereof may be made on the Company by certified or registered
      U.S. mail or by personal delivery.

            (m) In no event shall the rate of interest payable under this
      Subordinated Note exceed the maximum rate of interest permitted to be
      charged by applicable law (including the choice of law rules) and any
      interest paid in excess of the permitted rate shall be refunded to the
      Company. Such refund shall be made by application of the excessive amount
      of interest paid against any sums outstanding and shall be applied in such
      order as the Holder may determine. If the excessive amount of interest
      paid exceeds the sums outstanding, the portion exceeding the said sums
      outstanding shall be refunded in cash by the Holder. Any such crediting or
      refund shall not cure or waive any default by the Company hereunder. The
      Company agrees, however, that in determining whether or not

                                       14
<PAGE>

      any interest payable under this Subordinated Note exceeds the highest rate
      permitted by law, any non-principal payment, other than interest payments,
      including, without limitation, fees and late charges, shall be deemed, to
      the extent permitted by law, to be an expense, fee, premium or liquidated
      damages, rather than interest.

            (n) THE COMPANY AND THE HOLDER HEREBY WAIVE TRIAL BY JURY IN ANY
      ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND DIRECTLY OR
      INDIRECTLY ARISING OUT OF OR RELATED TO THIS SUBORDINATED NOTE OR ANY ACT
      OR OMISSION WHICH EITHER PARTY ASSERTS RESULTED IN ANY LIABILITY TO THE
      COMPANY, THE HOLDER OR THEIR RESPECTIVE OFFICERS, DIRECTORS, STOCKHOLDERS,
      PARTNERS, EMPLOYEES OR AGENTS, TO THE FULL EXTENT PERMITTED BY LAW.

      IN WITNESS WHEREOF, the Company, intending to be legally bound hereby, has
caused this Subordinated Note to be duly executed by its authorized officer on
the day and year first above written.

                                        U.S. ENERGY BIOGAS CORP.

                                        By: __________________________________
                                            Name:  Richard J. Augustine
                                            Title: President

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<PAGE>

                                   SCHEDULE A

                              AMORTIZATION SCHEDULE

Payment Due Date           Interest         Principal         Total Payment
----------------           --------         ---------         -------------
03/01/04                   $                $                 $
06/01/04                   $                $                 $
09/01/04                   $                $                 $
12/01/04                   $                $                 $
03/01/05                   $                $                 $
06/01/05                   $                $                 $
09/01/05                   $                $                 $
12/01/05                   $                $                 $
03/01/06                   $                $                 $
06/01/06                   $                $                 $
09/01/06                   $                $                 $
12/01/06                   $                $                 $
03/01/07                   $                $                 $
06/01/07                   $                $                 $
09/01/07                   $                $                 $
12/01/07                   $                $                 $

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<PAGE>

03/01/08                   $                $                 $
06/01/08                   $                $                 $
09/01/08                   $                $                 $
12/01/08                   $                $                 $
03/01/09                   $                $                 $
06/01/09                   $                $                 $
09/01/09                   $                $                 $
12/01/09                   $                $                 $
03/01/10                   $                $                 $
06/01/10                   $                $                 $
09/01/10                   $                $                 $
12/01/10                   $                $                 $
01/01/11                   $                $                 $

                                       17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}]]