Document:

AMENDMENT NO. 2 TO INDEMNIFICATION AGREEMENT

                  THIS AMENDMENT NO. 2 to the Indemnification Agreement is made
as of the   1st day of November, 2002 (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"), and Cinergy Energy Solutions, Inc., a Delaware corporation
("CES").  Unless indicated otherwise, capitalized terms shall have the same
meanings herein as they have in the Indemnification Agreement (as defined
below).

                              W I T N E S S E T H:

                  WHEREAS, the parties hereto, the Initial Major Shareholders
and USE Acquisition Corp, which was merged into ZAPCO, have previously entered
into that certain Indemnification Agreement dated as of November 28, 2000 (as
amended by Amendment No. 1 dated as of May 11, 2001, the "Indemnification
Agreement");

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

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

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

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

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

<PAGE>

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

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

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

                                      U.S. ENERGY BIOGAS CORPORATION

                                      By: /s/Frank Fitzgerald
                                             ----------------
                                      Name:  Frank Fitzgerald
                                      Title: Treasurer

                                       MAJOR SHAREHOLDER AGENT:

                                      By: /s/ John C. Rosengren
                                              -------------------
                                         Name:  John C. Rosengren
                                         Title: Vice President &
                                                General Counsel for
                                                AJG Financial Services, Inc.

                                      CINERGY ENERGY SOLUTIONS, INC.:

                                      By: /s/  Donna Robichaud
                                               ---------------
                                         Name: Donna Robichaud
                                         Title:Vice President

                                      U.S. ENERGY SYSTEMS, INC.:

                                      By: /s/   Goran Mornhed
                                              -------------------------
                                          Name: Goran Mornhed
                                         Title: Chief Executive OfficerAMENDMENT NO. 2 TO ESCROW AGREEMENT

                  THIS AMENDMENT NO. 2 to the Escrow Agreement is made as of the
1st day of November, 2002 (as supplemented or modified from time to time, this
"Agreement") by and  among AJG Financial Services, Inc., through its  Vice-
President, General Counsel as agent (the "Major Shareholder Agent") for Bernard
J. Zahren, Finova Mezzanine  Capital Corp., AJG Financial Services, Inc.,
Environmental Opportunities Fund (by itself and as successor to Environmental
Opportunities Fund Cayman), Fredric Rose, M&R  Associates, Martin F. Laughlin,
Richard  C. Augustine  and Michael J. Carolan (each, an "Initial Major
Shareholder") and for Stephen Rosenberg, U.S. Energy Systems, Inc., a Delaware
corporation ("USE"), and Zahren Alternative Power Corporation, as the successor
to 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 & Hirschtritt LLP having an office at 900 Third Ave., New York,
New York, 10022 (the "Escrow Agent"). Unless indicated otherwise, capitalized
terms shall have the same meanings herein as they have in the Escrow 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 Escrow Agreement dated as of November
28, 2000 (as amended by Amendment No. 1 dated as of May 11, 2001, the "Escrow
Agreement");

                  WHEREAS, the parties hereto now wish to amend the Escrow
Agreement;

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

                  1.  The last sentence of Section 3(d) of the Escrow Agreement
                      is hereby amended by deleting the existing sentence in its
                      entirety and inserting in its place the following
                      sentence:

                      The "Release Date" shall be the date twenty one months
                      following the Closing Date.

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

<PAGE>

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

                                      MAJOR SHAREHOLDER AGENT:
                                      AJG FINANCIAL SERVICES, INC.

                                      By: /s/ John C. Rosengren
                                              -----------------
                                         Name:John C. Rosengren
                                         Title: Vice President & General Counsel
                                         For: AJG Finacial Services, Inc.

                                         CINERGY ENERGY SOLUTIONS, INC.:

                                         By:/s/  Donna Robichaud
                                                 ---------------
                                            Name: Donna Robichaud
                                            Title:Vice President

                                         U.S. ENERGY SYSTEMS, INC.:

                                         By: /s/  Goran Mornhed
                                                 --------------------
                                            Name: Goran Mornhed
                                            Title:Chief Executive Officer

                                         U.S. ENERGY BIOGAS CORPORATION

                                         By: /s/ Frank Fitzgerald
                                                 ----------------
                                            Name:Frank FItagerald
                                            Title: Treasurer

                                           ESCROW AGENT:

                                           TANNENBAUM HELPERN SYRACUSE &
                                           HIRSCHTRITT LLP

                                           By: /s/ Stephen Rosenberg
                                               -------------------------
                                                   Stephen Rosenberg
                                                   A Member of the FirmAMENDMENT NO. 6
                            TO AGREEMENT AND PLAN OF
                            REORGANIZATION AND MERGER
                     BY AND AMONG U.S. ENERGY SYSTEMS, INC.,
                            USE ACQUISITION CORP. AND
                      ZAHREN ALTERNATIVE POWER CORPORATION

                  This Amendment No. 6 to Agreement and Plan of Reorganization
and Merger (the "Amendment") is made as of the 1st day of November, 2002 by and
between U.S. Energy Systems, Inc. ("Parent") and), and Zahren Alternative Power
Corporation (the "Surviving Corporation"), as the surviving corporation of the
merger with USE Acquisition Corp.("Merger Sub"). Unless indicated otherwise,
capitalized terms shall have the same meanings herein as they have in the Merger
Agreement (as defined below).

                               W I T N E S S E T H
                  WHEREAS, Parent, Merger Sub and the Surviving Corporation
previously entered into that certain Agreement and Plan of Reorganization and
Merger dated as of November 28, 2000 as amended by Amendment No. 1, Amendment
No. 2, Amendment No. 3, Amendment No. 4 and Amendment No. 5 (collectively the
"Merger Agreement"); and

                  WHEREAS, the Parent and the Surviving Corporation now wish to
amend the Agreement.

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

          1. Clause (B) of Section 2.01(a) of the Merger Agreement is
         hereby amended by deleting the existing clause in its entirety and
         inserting in its place the following clause:

<PAGE>

                  (B) a contingent obligation of Merger Sub to pay $800,000 in
         cash on the date which is twenty one months after the Effective Date
         (the "Contingent Merger Payment") (of which Contingent Merger Payment
         62.5% of the payment is guaranteed severally but not jointly by USE and
         37.5% of the payment is guaranteed severally but not jointly by CSHC
         pursuant to guarantees of USE and CSHC, respectively (the
         "Guarantees"), substantially in the form of Exhibits 2.01(a-2) and
         2.01(a-3)),

                  2. Parent and Surviving Corporation hereby waive until
         February 11, 2003 compliance with section 2.05(a)(ii) of the Merger
         Agreement to the extent of the submission of the response and objection
         to the Draft Effective Date Balance Sheet.

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

                   IN WITNESS WHEREOF, Parent and the Surviving Corporation have
caused this Agreement to be executed as of the date first written above.

                                       U.S. ENERGY SYSTEMS, INC.

                                       By: /s/   Goran Mornhed
                                               ------------------
                                           Name: Goran Mornhed
                                           Title:Chief Executive Officer

                                        U.S. ENERGY BIOGAS CORPORATION

                                        By: /s/ Frank Fitzgerald
                                                ----------------
                                            Name:Frank Fitzgerald
                                            Title: Treasurer

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