Document:

AMENDMENT NO. 1 TO INDEMNIFICATION AGREEMENT

                  THIS AMENDMENT NO. 1 to the Indemnification Agreement is made
as of the  [   ] day of May 2001 (as supplemented or modified from time to time,
this "Agreement") by and among AJG Financial Services, Inc., by its Vice
President, General Counsel, as agent (the "Major Shareholder Agent") for BernarD
J. Zahren, Finova Mezzanine Capital Corp., AJG Financial Services, Inc., ("AJG")
Environmental Opportunities Fund (for itself and as successor to) Environmental
Opportunities Fund Cayman, Fredric Rose, M&R Associates, Martin F. Laughlin,
Richard J. Augustine and Michael J. Carolan (each, an "Initial Major
Shareholder"), Stephen Rosenberg, Zahren Alternative Power Corporation, a
Delaware corporation ("ZAPCO "), U.S. Energy Systems, Inc., a Delaware
corporation ("USE"), USE Acquisition Corp., a Delaware corporation (the "Sub"
and together with USE, the "Beneficiaries") and Cinergy Energy Solutions, Inc.,
a Delaware corporation ("CES").  Unless indicated otherwise, capitalized terms
shall have the same meanings herein as they have in the Indemnification
Agreement (as defined below).

                              W I T N E S S E T H:

                  WHEREAS, the parties hereto and the Initial Major Shareholders
have previously entered into that certain Indemnification Agreement dated as of
November 28, 2000 (the "Indemnification Agreement");

                  WHEREAS, the parties hereto and the Initial Major Shareholders
wish to add Stephen Rosenberg as a "Major Shareholder" as such term is used in
the Indemnification Agreement;

                  WHEREAS, Zapco has not posted a bond required by the City of
Garland in connection with Zapco's project in Garland, Texas (the "Garland
Project");

                  WHEREAS, Zapco and certain subsidiaries and affiliates of
Zapco have agreed that unless certain conditions are met, the "Debt Service
Reserve Minimum Amount" under the Indenture of Trust and Security Agreement
among Zapco, those subsidiaries and affiliates and the Chase Manhattan Bank, as
Trustee, shall increase by $200,000 and a Debt Service Reserve Account of such
amount shall be funded by Zapco by June 30, 2001;

                  WHEREAS, pursuant to the terms of the Construction and Term
Loan Agreement by and between ABB Energy Capital L.L.C. ("ABB") and BMC Energy
LLC, Brookhaven Energy Partners LLC and Countryside Genco LLC dated as of April
30, 2001 (the "ABB Loan Agreement"), ZAPCO is required to obtain an insurance
policy providing for a payoff of the loan (the "ABB Loan") pursuant to the ABB
Loan Agreement in the event of a condemnation which in ABB's judgment would
cause future cash revenues from the Countryside Project to be inadequate to
fully pay for debt service due in respect of the ABB Loan, which policy shall be
in form and substance satisfactory to the ABB in all respects ("Condemnation
Insurance");

                                       1
<PAGE>
                  WHEREAS, the following documents, among others, have been
executed and delivered in connection with the Note Purchase Agreement and the
Hancock Notes:

1.       First Amendment dated as of October 13, 2000 to Note Purchase
         Agreement.

2.       Second Amendment dated as of April 30, 2001 to Note Purchase Agreement.

3.       Third Amendment dated as of May 11, 2001 to Note Purchase Agreement.

4.       Indenture of Trust and Security Agreement dated as of November 30,
         1999.

5.       First Amendment dated as of March 14, 2000 to Indenture of Trust and
         Security Agreement.

6.       First Supplemental Indenture of Trust and Security Agreement dated as
         of October 13, 2000.

7.       Second Supplemental Indenture of Trust and Security Agreement dated as
         of December 21, 2000.

8.       Second Amendment dated as of December 22, 2000 to Indenture of Trust
         and Security Agreement.

9.       Third Amendment dated as of May 11, 2001 to Indenture of Trust and
         Security Agreement.

10.      Third  Supplemental  Indenture  of Trust and  Security  Agreement dated
         as of April 30,  2001 (the "Third Supplemental Indenture"); and

11.      The  Consent  Letter  Agreement  among  ZAPCO and  certain of its
         Affiliates,  Hancock and certain of its Affilitates  and investors
         and Mellon Bank,  N.A., as trustee,  dated as of May 11, 2001
         (collectively the "New Hancock Documents"); and

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

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

                                       2

1.                         The prefatory paragraph and the signature page of the
                           Indemnification Agreement are amended to include
                           Stephen Rosenberg as a "Major Shareholder." By his
                           signature hereto, Stephen Rosenberg represents and
                           warrants that he has read the Indemnification
                           Agreement, as amended by this Agreement, and agrees
                           to be bound by its terms as a Major Shareholder as if
                           he were an original signatory thereto.

2.       Section 3(a)(viii) of the Indemnification Agreement is hereby amended
         by deleting the existing paragraph in its entirety and inserting in
         its place the following paragraph:

                           (viii.) any breach by ZAPCO of, or failure by ZAPCO
                           to comply with, any of its covenants or obligations
                           under the YESCO Agreement and the other agreements
                           (collectively, the "YESCO Documents") executed and
                           delivered in connection with the YESCO Transaction,
                           including all agreements and documents (the "YESCO
                           Financing Documents") executed and delivered in
                           connection with the financing (the "YESCO Financing")
                           of the YESCO Transaction, in each case only to the
                           extent such breach or failure arises or accrues
                           before the Effective Time, including (A) the ABB Loan
                           Agreement and the other agreements (collectively, the
                           "ABB Loan Documents") executed and delivered in
                           connection with the loan (the "ABB Loan ") pursuant
                           to the ABB Loan Agreement and (B) the Term Loan
                           Agreement by and between AJG Financial Services, Inc.
                           and BMC Energy LLC and Morris Genco LLC dated as of
                           March 30, 2001 and the other agreements (collectively
                           the "AJG Loan Documents") executed and delivered in
                           connection with the loan (the "AJG Loan") pursuant to
                           the AJG Loan Agreements and any breach by ZAPCO of,
                           or failure by ZAPCO to comply with, any of its
                           covenants or obligations under the YESCO Documents,
                           the YESCO Financing Documents and any liability of
                           ZAPCO in connection with the YESCO Transaction and
                           the YESCO Financing in each case only to the extent
                           such breach or failure arises or accrues before the
                           Effective Time;

3.       Section 3(a) of the Indemnification Agreement is hereby amended by
         inserting at the end thereof the following paragraphs:

                           (xii.)   (a) all Claims relating to or arising from
                           the failure to obtain a performance bond (the
                           "Garland Bond") relating to the Garland Project, (b)
                           any amounts paid for the premiums and other charges
                           of the issuer of the Garland Bond for issuing and
                           maintaining such Bond (but not including any amounts
                           paid to obtain or maintain any collateral or security
                           for such Bond or any amounts deposited or otherwise
                           posted as collateral or security therefor), and (c)
                           the Lost Opportunity Costs with respect to the
                           collateral, if any, posted in connection with any
                           Garland Bonds; for purposes of this clause, Lost

                                       3
<PAGE>
                           Opportunity Costs means (i) the aggregate amount of
                           any collateral multiplied by 20% per annum less (ii)
                           any amount received by Zapco as interest or other
                           earnings on such collateral, discounted to present
                           value using a 20% discount factor;

                           (xiii.) any breach by ZAPCO of, or failure by ZAPCO
                           to comply with, any of its covenants or obligations
                           under the Purchase and Sale Agreement by and among
                           AIG GAS, LLC, AJG, and ZAPCO dated as of December 22,
                           2000 (the "AIG Agreement") and the other agreements
                           (collectively, the "AIG Documents") executed and
                           delivered in connection with the AIG Agreement and
                           any breach by ZAPCO of, or failure by ZAPCO to comply
                           with, any of its covenants or obligations under the
                           AIG Documents and any liability of ZAPCO in
                           connection with the AIG Documents in each case only
                           to the extent such breach or failure arises or
                           accrues before the Effective Time;

                           (xiv) any breach by ZAPCO of, or failure by ZAPCO to
                            comply with, any of its covenants or obligations
                            under the New Hancock Documents and any breach by
                            ZAPCO of, or failure by ZAPCO to comply with, any
                            of its covenants or obligations under the New
                            Hancock Documents and any liability of ZAPCO in
                            connection with the New Hancock Documents in each
                            case only to the extent such breach or failure
                            arises or accrues before the Effective Time;

                            (xv) all Claims relating to or arising from an
                             event of default under Section 5.01(s) of the
                             Security Agreement as such term is defined in the
                             Third Supplemental Agreement;

                            (xvi) So long as ABB refuses to release funds from
                             the Countryside Projects because ZAPCO has not
                             obtained Condemnation Insurance with respect to the
                             Countryside Properties, the net present value of
                             the cash distributions that would have been made to
                             Zapco or its Affiliates from the Project Control
                             Account during the relevant period pursuant to
                             Sections 4.4(ii) and (vii) of the ABB Loan
                             Agreement if ABB had not withheld any such funds
                             from distribution to Zapco or its Affiliates due to
                             a failure to obtain Condemnation Insurance pursuant
                             to such Sections 4.4(ii) and (vii), less the net
                             present value of the cash distributions that were
                             actually received by Zapco and its Affiliates from
                             the Project Control Account during such relevant
                             period pursuant to Sections 4.4(ii) and (vii) of
                             the ABB Loan Agreement (including earnings on such
                             distributions). Such net present value calculations
                             shall account for the timing and amount of the
                             putative and actual cash distributions described
                             above and shall use a 20% per annum discount
                             factor;

                                       4
<PAGE>

                             (xvii) The premiums and other charges paid to the
                             insurance company for issuing and maintaining the
                             Condemnation Insurance (in excess of the amounts
                             held in escrow by ABB from the proceeds of the ABB
                             Loan applied to obtain and maintain such
                             Condemnation Insurance plus any residual amounts
                             paid to Zapco from such escrow);

                             (xviii) Any amounts to be paid to ABB for obtaining
                             ABB's agreement to waive or modify the Condemnation
                             Insurance or self-insure (in excess of the amounts
                             held in escrow by ABB from the proceeds of the ABB
                             Loan applied to obtain such agreement by ABB plus
                             any residual amounts paid to Zapco from such
                             escrow);

                             (xix) If ZAPCO refinances the loans and credit
                             arrangements obtained pursuant to the ABB Loan
                             Agreement (the "Refinancing"), the aggregate of (a)
                             the breakage fee or other amounts paid to ABB to
                             terminate the ABB Loan Documents, (b) ZAPCO's
                             transaction costs, including, without limitation,
                             legal and other professional fees and expenses, out
                             -of-pocket costs and any points or other initiation
                             charges for obtaining the Refinancing, plus, if a
                             positive number, or minus, if a negative number the
                             present value of the change in interest expense
                             resulting from the change in the interest rates
                             from the ABB loan to the new loan discounted at the
                             interest rate of such new loan.

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

                            (ii)            for Damages to the extent such
                                            Damages (other than pursuant to
                                            3(a)(iii), 3(a)(vi), 3(a)(xii),
                                            3(a)(xv), 3(a)(xvi), 3(a)(xvii),
                                            3(a)(xviii) and 3(a)(xix)) do not
                                            exceed $500,000 in the aggregate;

5.                         Section 17 of the Indemnification Agreement is hereby
                           amended by deleting the existing section in its
                           entirety and inserting in its place the following
                           section:

                           None of the terms or provisions of this Agreement may
                           be amended, supplemented or otherwise modified except
                           by a written instrument executed by the Major
                           Shareholder Agent (acting on behalf of the Major
                           Shareholders), CES and the Beneficiaries except that
                           Sections 4(a)(iii) and 4(a)(vi) of the
                           Indemnification Agreement may not be modified
                           respecting any Major Shareholder without the written
                           consent of such Major Shareholder.

                                       5
<PAGE>

6.                         A new Section 26 is added to the Indemnification
                           Agreement as follows:

                           In the event that, at any time prior to the Release
                           Date (as defined in the Escrow Agreement), Zapco is
                           required to deposit $200,000 to fund the Debt Service
                           Reserve Account (the "Reserve Account") described in
                           Section 3.02(f) of the Third Supplemental Indenture
                           of Trust and Security Agreement, dated as of April
                           30, 2001, among Zapco, certain of its subsidiaries
                           and The Chase Manhattan Bank, as Trustee, then the
                           Escrow Agent shall promptly transfer $200,000 in cash
                           from the Indemnification Escrow Fund to the Reserve
                           Account. If such $200,000 funding (the "Reserve
                           Funding") is released from the Reserve Account before
                           the later of (i) the Release Date and (ii) the
                           resolution of all Claims outstanding on the Release
                           Date (as such terms are defined in the Escrow
                           Agreement), the Reserve Funding shall be returned to
                           the Escrow Agent so that it can be deposited in the
                           Indemnification Escrow Fund. If it is subsequently
                           released from the Indemnification Escrow Fund
                           pursuant to the Escrow Agreement, the Reserve Funding
                           shall be distributed to the Major Shareholders in
                           proportion to the respective amounts they contributed
                           to the Reserve Account. In the event all or part of
                           the initial Reserve Funding is drawn upon by the
                           indenture trustee, Zapco shall promptly replenish the
                           Reserve Account in the amount of any such draw (but
                           in no event by more than $200,000 with respect to any
                           single drawing). The disposition of such replenished
                           funds shall be governed by the second sentence of
                           this Section 26 as if such funds had been part of the
                           initial Reserve Funding. With respect to such
                           disposition, in no event shall the amount distributed
                           to the Major Shareholders under the second section of
                           this Section 26 exceed $200,000 in the aggregate.

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

                                       6
<PAGE>

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

                                   ZAHREN ALTERNATIVE POWER
                                         CORPORATION:

                                      /s/ Bernard J. Zahren
                                          ------------------------
                                          Name:  Bernard J. Zahren
                                          Title:  President and CEO

                                    MAJOR SHAREHOLDER AGENT:

                                     /s/ John C. Rosengren
                                         -----------------------
                                         Name:  John C. Rosengren
                                         Title:  Vice President and General
                                                 Counsel
                                         For:  AJG Financial Services, Inc.

                                     CINERGY ENERGY SOLUTIONS, INC.:

                                      /s/ Donna L. Robichaud
                                          ------------------------
                                          Name:  Donna L. Robichaud
                                          Title:  Vice President

                                       U.S. ENERGY SYSTEMS, INC.:

                                      /s/ Goran Mornhed
                                          ------------------------
                                          Name:  Goran Mornhed
                                          Title: President and Chief Operating
                                          Counsel

                                        USE ACQUISITION CORP.:

                                       /s/ Goran Mornhed
                                           ------------------------
                                           Name:  Goran Mornhed
                                           Title:  President

                                        /s/Stephen Rosenberg
                                           -------------------------
                                           Stephen Rosenberg

                                       7Exhibit 10.1

                        INTERCORPORATE SERVICES AGREEMENT

     This INTERCORPORATE  SERVICES AGREEMENT (the "Agreement"),  effective as of
January 1, 2002,  amends and supersedes the  Intercorporate  Services  Agreement
effective  as of  January  1,  2001  between  CONTRAN  CORPORATION,  a  Delaware
corporation  ("Contran"),  and COMPX INTERNATIONAL INC., a Delaware  corporation
("Recipient").

                                    Recitals

     A.  Employees  and  agents of Contran  and  affiliates  of Contran  perform
management,  financial and administrative functions for Recipient without direct
compensation from Recipient.

     B. Recipient does not separately  maintain the full internal  capability to
perform all necessary  management,  financial and administrative  functions that
Recipient requires.

     C. The cost of maintaining the additional  personnel by Recipient necessary
to perform the functions provided for by this Agreement would exceed the fee set
forth in Section 3 of this Agreement and that the terms of this Agreement are no
less favorable to Recipient than could  otherwise be obtained from a third party
for comparable services.

     D. Recipient  desires to continue  receiving the management,  financial and
administrative  services presently provided by Contran and affiliates of Contran
and Contran is willing to continue to provide such  services  under the terms of
this Agreement.

                                    Agreement

     For  and in  consideration  of the  mutual  premises,  representations  and
covenants herein contained, the parties hereto mutually agree as follows:

     Section 1.  Services to be Provided.  Contran  agrees to make  available to
Recipient the following services (the "Services") to be rendered by the internal
staff of Contran and affiliates of Contran:

          (a) Consultation in the development and  implementation of Recipient's
     corporate business strategies, plans and objectives;

          (b)  Consultation  in management and conduct of corporate  affairs and
     corporate governance consistent with the charter and bylaws of Recipient;

          (c)  Consultation  in maintenance  of financial  records and controls,
     including  preparation  and review of  periodic  financial  statements  and
     reports to be filed with public and regulatory  entities and those required
     to be prepared for financial  institutions  or pursuant to  indentures  and
     credit agreements;

          (d)  Consultation  in  cash  management  and  in  arranging  financing
     necessary to implement the business plans of Recipient;

          (e)  Consultation  in tax  management and  administration,  including,
     without limitation,  preparation and filing of tax returns,  tax reporting,
     examinations by government authorities and tax planning;

          (f) Consultation  with respect to employee benefit plans and incentive
     compensation arrangements;

          (g) Certain  administration  and  management  services with respect to
     Recipient's insurance and risk management needs, including:

          (i) management of claims (including  insured and self-insured  workers
     compensation and liability claims);

          (ii) budgeting and related activities;

          (iii) coordination of property loss control program; and

          (iv)  administration of Recipient's  insurance program,  excluding all
     employee benefit and welfare related programs; and

          (h) Such other  services as may be  requested  by  Recipient or deemed
     necessary and proper from time to time.

This  Agreement  does not apply to, and the Services  provided for herein do not
include,  any services  that Glenn R. Simmons or Steven L. Watson may provide to
Recipient  in their roles as members of  Recipient's  board of  directors or any
other activity related to such board of directors.

     Section 2. Miscellaneous  Services.  It is the intent of the parties hereto
that Contran provide only the Services requested by Recipient in connection with
routine  management,  financial  and  administrative  functions  related  to the
ongoing  operations  of  Recipient  and not with  respect to  special  projects,
including  corporate  investments,  acquisitions and  divestitures.  The parties
hereto  contemplate that the Services rendered in connection with the conduct of
Recipient's  business  will  be on a scale  compared  to  that  existing  on the
effective  date of this  Agreement,  adjusted for internal  corporate  growth or
contraction, but not for major corporate acquisitions or divestitures,  and that
adjustments  may be required to the terms of this Agreement in the event of such
major corporate acquisitions,  divestitures or special projects.  Recipient will
continue to bear all other costs required for outside  services  including,  but
not  limited  to,  the  outside  services  of  attorneys,   auditors,  trustees,
consultants, transfer agents and registrars, and it is expressly understood that
Contran  assumes no  liability  for any  expenses or  services  other than those
stated in Section 1. In addition to the fee paid to Contran by Recipient for the
Services provided pursuant to this Agreement,  Recipient will pay to Contran the
amount of out-of-pocket costs incurred by Contran in rendering such Services.

     Section 3. Fee for Services.  Recipient  agrees to pay to Contran  $414,500
quarterly on the first business day of each quarter, commencing as of January 1,
2002, pursuant to this Agreement.

     Section 4. Original  Term.  Subject to the  provisions of Section 5 hereof,
the original  term of this  Agreement  shall be from January 1, 2002 to December
31, 2002.

     Section  5.   Extensions.   This   Agreement   shall  be   extended   on  a
quarter-to-quarter  basis  after the  expiration  of its  original  term  unless
written  notification  is given by  Contran  or  Recipient  thirty  (30) days in
advance of the first day of each  successive  quarter or unless it is superseded
by a subsequent written agreement of the parties hereto.

     Section 6.  Limitation of Liability.  In providing its Services  hereunder,
Contran  shall  have a duty  to act,  and to  cause  its  agents  to  act,  in a
reasonably  prudent  manner,  but  neither  Contran nor any  officer,  director,
employee or agent of Contran or its affiliates  shall be liable to Recipient for
any error of judgment or mistake of law or for any loss incurred by Recipient in
connection  with the  matter  to which  this  Agreement  relates,  except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Contran.

     Section  7.  Indemnification  of  Contran  by  Recipient.  Recipient  shall
indemnify  and hold  harmless  Contran,  its  affiliates  and  their  respective
officers,  directors  and  employees  from  and  against  any  and  all  losses,
liabilities,  claims, damages, costs and expenses (including attorneys' fees and
other  expenses of  litigation)  to which  Contran or any such person may become
subject arising out of the Services provided by Contran to Recipient  hereunder,
provided that such indemnity  shall not protect any person against any liability
to  which  such  person  would   otherwise  be  subject  by  reason  of  willful
misfeasance, bad faith or gross negligence on the part of such person.

     Section 8. Confidentiality. Except as otherwise required by applicable law,
each of the parties agrees that it will maintain in confidence all  confidential
information  regarding  the  other  party  supplied  to it in the  course of the
performance of this Agreement.

     Section 9.  Further  Assurances.  Each of the parties  will make,  execute,
acknowledge and deliver such other instruments and documents,  and take all such
other actions,  as the other party may reasonably  request and as may reasonably
be required in order to effectuate  the purposes of this  Agreement and to carry
out the terms hereof.

     Section 10. Notices.  All communications  hereunder shall be in writing and
shall be addressed,  if intended for Contran,  to Three Lincoln Centre, 5430 LBJ
Freeway, Suite 1700, Dallas, Texas 75240,  Attention:  President,  or such other
address as it shall have furnished to Recipient in writing,  and if intended for
Recipient,  to Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas
75240, Attention: President, or such other address as it shall have furnished to
Contran in writing.

     Section 11. Amendment and Modification. Neither this Agreement nor any term
hereof may be changed, waived,  discharged or terminated other than by agreement
in writing signed by the parties hereto.

     Section 12.  Successors and Assigns.  This Agreement  shall be binding upon
and  inure  to the  benefit  of  Contran  and  Recipient  and  their  respective
successors  and assigns,  except that neither  party may assign its rights under
this Agreement without the prior written consent of the other party.

     Section  13.  Governing  Law.  This  Agreement  shall be  governed  by, and
construed and interpreted in accordance with, the laws of the state of Texas.

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

                               CONTRAN CORPORATION

                                         By: /s/ Steven L. Watson
                                             ----------------------------------
                                             Steven L. Watson, President

                            COMPX INTERNATIONAL INC.

                                         By: /s/ Stuart M. Bitting
                                             ----------------------------------
                                             Stuart M. Bitting, Vice President

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