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Escrow Agreement, As Amended (the "escrow Agreement - U S ENERGY SYSTEMS INC - 4-14-2004

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Escrow Agreement, As Amended (the "escrow Agreement - U S ENERGY SYSTEMS INC - 4-14-2004 Powered By Docstoc
					                                                 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.
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
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
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, Chairman
                                                 Exhibit 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)

                                                       1
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)

                                                       2
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
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
(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
(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
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
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
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
                                                         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
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

                                                        11
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

                                                          12
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
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
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

                                                        15
                         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              $               $           $




                                 16
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
                                                    Exhibit 10.84

                                Amendment No. 1 to Shareholders' Agreement

This Amendment No. 1 to the Shareholders' Agreement is made as of the [> ] day of February 2003 (as
supplemented or modified from time to time, "this Agreement") by and among Scandinavian Energy Finance
Limited, an Irish corporation (the "Company"), Endoray Investments, B.V. a Dutch company ("USE") which is a
wholly owned subsidiary of US Energy Systems, Inc. ("USE Parent"), USE Parent, EIC Investments (Jersey)
Limited, a Jersey company ("EIC") which is a wholly owned subsidiary of A&A EIC Electricity Investment
Company, a Swiss corporation ("EIC Parent") and EIC Parent.

RECITALS

WHEREAS the parties hereto have previously entered into that certain Shareholders' Agreement dated as of
March, 2002 (the "Shareholders' Agreement");

WHEREAS on or about March 11, 2002 the Company and certain entities associated with it entered into a
transaction for the financing of the acquisition and development of certain district heating systems located in
Sweden by Gigantissimo 2321 AB, a Swedish AB now known as Energisystem Sverige AB ("ESS") and its
direct and indirect subsidiaries (the "Swedish Heating Project Transaction");

WHEREAS as part of such Swedish Heating Project Transaction, the Company, USE Parent, ESS,
Gigantissimo 2323 AB ("ESS-2"), Jan Pettersson ("JP") and Narvarme Sverige AB ("NS"), entered into a
Registration Rights and Adjustment Agreement dated as of March 11, 2002 (the "Adjustment Agreement")
which, among other things, created a contingent obligation on the part of USE Parent to pay additional shares of
USE Parent common stock to USE which would in turn remit payment to the Company, which would in turn
remit payment to ESS, which would in turn remit payment to ESS-2 which would in turn remit payment to JP and
NS. Pursuant to the terms of such contingent obligation, USE Parent is obligated to issue 38,166 additional
common shares (27,261 shares to NS and 10,905 shares to JP) through the chain described above (the
"Additional Sham Issuance");

WHEREAS USE is prepared to transfer 38,166 common shares of USE Parent to the Company which transfer
shall be for no consideration and shall not be repayable and which may be distributed, subject to the Articles of
Association of the Company, at the absolute discretion of the Board of Directors and that the payments and
transfer shall not constitute a loan or other form of financial assistance and shall have no assistance and no interest
earning capability and the payments and transfer referred to herein shall be credited directly to the reserves of the
Company (being a reserve titled "Profit and Loss Reserve") or such similar description as may be agreed with the
Company's auditors) and it shall not constitute either share capital or share premium as it is unrelated to any share
issue;

WHEREAS the parties hereto now wish to amend the Shareholders' Agreement.

                                                          1
NOW THEREFORE in consideration of the foregoing the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

1. Section 1.2(a) of the Shareholders' Agreement is hereby amended by deleting the word "five" and replacing it
with the word "seven".

2. Section 1.2(b) of the Shareholders' Agreement is hereby amended by deleting the words "three" and "two" and
replacing them with the words "four" and "three" respectively.

3. Section 1.2(c) of the Shareholders' Agreement is amended by deleting the existing section in its entirety and
replacing it with the following section:

"(c) Board of Directors.

The Board of Directors of the Company as of the date of Amendment No. 1 will consist of the following persons:

                   ----------------------------------------------------------------
                   Name of Directors                        Designating Shareholder

                   ----------------------------------------------------------------
                   Goran Mornhed                                      USE
                   ----------------------------------------------------------------
                   Allen J. Rothman                                   USE
                   ----------------------------------------------------------------
                   David Godkin                                       USE
                   ----------------------------------------------------------------
                   Michael Ryan                                       USE
                   ----------------------------------------------------------------
                   Dominique Candrian                                 EIC
                   ----------------------------------------------------------------
                   Marcel Bruehwiler                                  EIC
                   ----------------------------------------------------------------
                   Derek Maltby                                       EIC
                   ----------------------------------------------------------------




Each of such persons shall hold office until such person's death, resignation or removal, or until such person's
successor shall have been duly designated, where applicable and elected by the Shareholders."

4. Section 1.3, prefractory paragraph, of the Shareholders' Agreement is hereby amended by deleting the word
"four" and replacing it with the word "six".

5. Section 1.4(a)(i) of the Shareholders' Agreement is hereby amended by deleting the word "four" and replacing
it with the word "six".

6. Section 1.16 of the Shareholders' Agreement is hereby amended by adding the following phrase to the end
definition of "Investments" contained in the third sentence:

"but shall exclude any Profit and Loss Reserve".

7. The Shareholders' Agreement is hereby amended by deleting all references to "Goran Ernstson" and replacing
them with "Kenneth Juhlin".

8. Except as amended hereby, the Shareholders' Agreement is hereby ratified and confirmed and, as so
amended, remains in fill force and effect on the date hereof.

                                                         2
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed as of the date first
written above.

                                  ENDORAY INVESTMENTS, B.V.

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




                                   U.S. ENERGY SYSTEMS, INC.

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




                                   EIC INVESTMENTS (JERSEY)
                                           LIMITED

                           By:_____________________________________
                                    Name: Dominique Candrian
                                          Title: Director

                                      A & A EIC ELECTRICITY
                                     INVESTMENT COMPANY

                           By:_____________________________________
                                    Name: Dominique Candrian
                                          Title: C.E.O.

                                   PRESENT when the Common Seal
                                   of SCANDINAVIAN ENERGY
                                   FINANCE LIMITED was affixed
                                             hereto:


                                               Director


                                          Director/Secretary

                                                   3
                                               Exhibit 10.85

                             Amendment No. 2 to Shareholders' Agreement

This Amendment No. 2 to the Shareholders' Agreement is made as of the 1st day of October 2003 (as
supplemented or modified from time to time, "this Agreement") by and among Scandinavian Energy Finance
Limited, an Irish corporation (the "Company"), Endoray Investments, B.V. a Dutch company ("USE"), which is a
wholly owned subsidiary of US Energy Systems, Inc. ("USE Parent"), USE Parent, and EIC Electricity SA, a
Swiss company ("EIC").

                                               RECITALS

WHEREAS the parties hereto have previously entered into that certain Shareholders' Agreement dated as of
March, 2002 which was amended by Amendment No. 1 dated as of the 19th of, February 2003 (collectively the
"Shareholders' Agreement");

WHEREAS as of September 30, 2003, USE has transferred beneficial ownership of 2,000 Ordinary Shares
("Transferred Shares") to Borg Energi AB ("BE") ("Ordinary Share Transfer").

WHEREAS between September 24, 2003 and October 27, 2003 EIC has exented a Shareholder Loan to the
Company of mSEK 9.8 and USE Parent has extended a Shareholder Loan to the Company of mSEK 10.2
(collectively the "Shareholder Loans").

                                                     1
WHEREAS it is expected that the Company and ESS AB require additional funding of up to mSEK 28 from the
date of this Agreement until the end of 2003 and EIC will extend such additional funding to the Company and/or
ESS AB and/or its subsidiaries in the form of priority shareholder loans (the "Priority Shareholder Loans").

WHEREAS in consideration of the Shareholder Loans and the Priority Shareholder Loans the parties have
agreed to certain distribution priorities ("the Distribution Priorities").

WHEREAS in consideration of EIC contributing additional funding to the Company and/or ESS AB and/or its
subsidiaries during the remainder of 2003 and USE, USE Parent and BE not contributing additional capital during
2003, the parties have agreed to a dilution giving effect to an immediate increase of EIC's shareholding in the
Company from 49% to 66.666%.

WHEREAS the parties have agreed to change the respective service agreements with USE and EIC effective as
of the date of this Agreement, so that from the date hereof the service fees payable to USE and EIC shall be pro-
rated to the shareholding of the respective party, failing such change to the respective agreements with USE and
EIC, both parties undertake that payments made under such service agreements will give effect to the Distribution
Priorities provided herein.

WHEREAS the parties hereof now wish to amend the Shareholders' Agreement.

                                                       2
NOW THEREFORE in consideration of the foregoing the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

1. Capitalized Terms herein shall have the same meaning as the meaning ascribed to them in the Shareholders'
Agreement unless indicated otherwise.

2. Section 1.2(a) of the Shareholders' Agreement is hereby amended by deleting the word "seven" and replacing
it with the word "six".

3. Section 1.2(b) of the Shareholders' Agreement is hereby amended by replacing the first sentence with the
sentence: USE and EIC shall have the right to designate two individuals and four individuals, respectively, as
nominees for election as Directors and as directors of any future direct or indirect subsidiary of the Company (a
"Future Subsidiary").

4. Section 1.2(c) of the Shareholders' Agreement is amended by deleting the existing section in its entirely and
replacing it with the following section:

"(c) Board of Directors.

The Board of Directors of the Company as of the date of Amendment No. 2 will consist of the following persons:

                                                         3
                    ---------------------------------------------------------------
                    Name of Directors                   Designating Shareholder
                    ---------------------------------------------------------------
                    Goran Mornhed                                 USE
                    ---------------------------------------------------------------
                    Allen J. Rothman                              USE
                    ---------------------------------------------------------------
                    Michael Ryan                                  EIC
                    ---------------------------------------------------------------
                    Dominique Candrian                            EIC
                    ---------------------------------------------------------------
                    Derek Maltby                                  EIC
                    ---------------------------------------------------------------




Each of such persons shall hold office until such person's death, resignation or removal, or until such person's
successor shall have been duly designated, where applicable and elected by the Shareholders."

5. Section 1.3, prefractory paragraph, of the Shareholders' Agreement is hereby amended by deleting the word
"six" and replacing it with the word "five".

6. Section 1.3, shall be amended by deleting the list of Required Matters and replacing it with the following:

Subject to Section 1.9 hereof, demand additional capital from the Shareholders.

Subject to Section 1.3A hereof, borrow money or guarantee the obligations of any Person not in the ordinary
course of business, or mortgage, pledge or grant a security interest in assets not in the ordinary course of
business, in any one transaction or a series of related transactions.

Enter into a transaction or agreement with an Affiliate of a Shareholder or amend any such agreement other than
as specifically set forth in this Agreement.

Dispose of assets not in the ordinary course of business.

                                                         4
Subject to Section 1.9 hereof, authorise or issue any additional Ordinary Shares or other equity interests of the
Company or any option or warrant to purchase such equity interests.

Engage in a business activity other than the Business.

Subject to Section 1.3A hereof, commence any process of dissolution, liquidation, winding up, insolvency,
examinership or voluntary bankruptcy.

Approve any merger or consolidation of the Company.

Subject to Section 1.3A hereof, amend or modify any credit agreement or implement any change in capital
structure not in the ordinary course of business.

Subject to Section 1.3A and Section 13.9 hereof, commence or settle any litigation that involves an amount in
excess of $100,000.

Engage or terminate principal auditors of the Company.

Subject to Section 1.3A hereof, take any material action or exercise or waive any material right with respect to
the Company's financing agreements with Lantbrukskredit AB.

Take any action that would create or expand recourse to or the financial or legal exposure of a Shareholder or an
Affiliate of a Shareholder (other than SEFL, ESS or its subsidiaries) in relation to the Company, ESS or their
subsidiaries.

Take any action that would create adverse tax or regulatory consequences to a Shareholder or an Affiliate of a
Shareholder (other than SEFL, ESS or its subsidiaries) in relation to the Company or ESS or their subsidiaries.

7. Section 1.3, third unlettered paragraph is hereby amended by deleting the fourth sentence and replacing it with:
Therefore, for example if the Company had the right to nominate members of Gigantissimo 2321 AB board as of
the date of Amendment No. 2., EIC would have the right to designate a majority of designees.

8. Section 1.3A is added and reads as follows:

The Shareholders acknowledge and recognize that due to current liquidity issues at SEFL and ESS and disputes
with LBK (i) the capital structure of the

                                                         5
Company and/or its subsidiaries, (ii) the terms and conditions of its loan with Landbrukskredit, (iii) the terms,
conditions and structure of its holdings in ESS and/or its subsidiaries are all expected to be restructured and/or
(iv) the Shareholder and/or the Company and its subsidiaries may have to commence litigation procedures against
certain third parties to give effect to the restructuring (the "Restructuring"). For purposes of this Agreement a sale
of the assets or stock of SEFL and/or ESS are not part of a Restructuring. In recognition that EIC has committed
to fund a disproportionate share of the cash requirements of SEFL and ESS for the remainder of 2003 and in
order to facilitate a successful Restructuring, which is in the best interest of the Company, USE and EIC agree
that:

a) EIC shall assume the lead role in the Restructuring and as such subject to Sections 1.3 and 1.9 hereof shall be
primarily authorized to and responsible for formulating and negotiating with relevant counterparties the terms and
conditions of such Restructuring, provided that the terms and conditions of the Restructuring, proposed by EIC
(i) are from the standpoint of the Shareholders reasonably prudent under the circumstances, and (ii) do not
provide any direct or indirect economic benefit to any Shareholder or their affiliate other than economic benefits
which are disclosed to all shareholders and which will be allocated amongst the shareholders in accordance with
section 1.10 hereof.

b) EIC shall keep USE fully informed on a contemporaneous basis of all developments in the Restructuring and
shall provide USE with all correspondence and draft and final documentation respecting the Restructuring. EIC
shall not execute any binding documentation regarding the Restructuring without providing USE with complete
and accurate copies of

                                                          6
such documentation in advance in order to afford USE a meaningful opportunity to review such documentation
and discuss such documentation with EIC and the Company's advisors.

9. Section l.4(a)(i) of the Shareholders' Agreement is hereby amended by deleting the word "six" and replacing it
with the word "five".

10. Section 1.9(e) of the Shareholder Agreement is amended by deleting the unnumbered paragraph and
replacing it with the following: then the shareholder whose directors voted in favor of the capital call may fund
additional Priority Shareholder Loans, which shall not exceed the Company's, or ESS and its subsidiaries' cash
requirements to achieve their purposes, as reasonably determined from time to time by the Company based on
reasonable line item budgets provided to the Shareholders by the Company and/or ESS which shall bear an
interest rate of STIBOR 90 + 200bp per annum compounded quarterly and which shall be paid from the
Company's cash in accordance with the Distribution Priorities as defined herein. In the event of a funding pursuant
to the immediately preceding sentence, the Company shall issue new Ordinary Shares to the Shareholder
supplying the funding at a subscription price of 1 Euro per share in accordance with the dilution mechanism
immediately below (the "Dilution Mechanism").

                                                        7
                                               Dilution Mechanism

The Company shall issue 1,893 Ordinary Shares at a subscription price of Euro 1 per share for every SEK 1
million of additional Priority Shareholder Loans to the Company funded pursuant to this Section 1.9(e).

The shareholder whose directors voted against the capital call referred to above shall irrevocably undertake to
vote all of its shares in the Company and direct its nominee directors to vote in favor of an resolution required to
give effect to the provisions contained in this paragraph
1.9(e). For purposes of this section 1.9 the Company's "purposes" shall not include the payment of principal and
interest due on Shareholder Loans and or Priority Shareholder Loans.

11. A new subparagraph 1.9(f) is hereby added which states as follows:

Notwithstanding anything to the contrary herein, EIC shall fund the cash requirements of the Company and ESS
AB through December 31, 2003 ("2003 Cash Requirements") under the following terms and conditions:

i) EIC shall fund all 2003 Cash Requirements up to MSEK 28 as Priority Shareholder Loans in accordance with
Section 1.9(e) above and in consideration of EIC's commitment to make such funding, the Company shall issue
EIC 52'998 Ordinary Shares at a subscription price of Euro 1 per share.

ii) EIC will consider additional funding of all 2003 Cash Requirements in excess of MSEK 28 as a Priority
Shareholder Loan in accordance with
Section 1.9(e) above and upon such funding, the Company shall issue EIC additional

                                                         8
Ordinary Shares of Euro 1 per share in accordance with the Dilution Mechanism. For the avoidance of doubt,
this does not constitute a commitment by EIC.

11. Section 1.10 is hereby replaced with the following paragraph:

1.10 Distribution Priorities. The parties shall, subject to applicable law disburse the cash of the Company as
follows:

1. Payment of services extended by third parties (including amount others audit, tax and accounting services) and
taxes.

2. Payment of scheduled interest and principal under the Lantbrukskredit loan.

3. Payment of scheduled interest and principal under any other 3rd party loan.

4. Payment of accrued interest under the Priority Shareholder Loans pro-rata to the respective amounts extended
by the shareholders. In case of certain Priority Shareholder Loans have been lent to ESS AB and/or its
subsidiaries, the Company shall instruct ESS AB to make such payment.

5. Repayment of principal of the Priority Shareholder Loans pro-rata to the respective amounts extended by the
shareholders until such Priority Shareholder Loans are fully repaid. In case of certain Priority Shareholder Loans
have been lent to ESS AB and/or its subsidiaries, the Company shall instruct ESS AB to make such payment.

                                                         9
6. Payment of accrued interest under the Shareholder Loans pro-rata to the respective amounts extended by the
shareholders.

7. Repayment of principal of the Shareholder Loans pro-rata to the respective amounts extended by the
shareholders until such Shareholder Loans are fully repaid.

8. On a pari-passu basis, payment of accrued service fees to USE up to the amount accrued to the date of this
Agreement at ESS and to EIC up to the amount accrued to the date of this Agreement at SEFL. In the case of
payment of service fees to USE, the Company shall instruct ESS AB to make such payment. For the avoidance
of doubt, the total payments to USE and EIC made by the Company and ESS under this paragraph 8 shall be
split 49% to EIC and 51% to USE, except invoiced out-of-pocket expenses, which amounts shall be paid to the
party that incurred the expense.

9. All remaining distributions shall be in accordance with the percentage of ownership of Ordinary Shares as of
the date of such distribution. For purposes of this Section 1.10 all payments described above from ESS AB shall
be deemed to have been made by the Company.

12. Section 1.16 is hereby deleted in its entirety.

                                                      10
13. Except as amended hereby, the Shareholders' Agreement is hereby ratified and confirmed and, as so
amended, remains in full force and effect on the date hereof.

14. Pursuant to article 33 (4) of the articles of association of the Company, USE and EIC hereby consent to the
Ordinary Share Transfer.

15. The Shareholders agree to cause the Company to amend Article 34 of the articles of association of the
Company in the form annexed as schedule A hereto.

16. So long as EIC is the controlling Shareholder of the Company, EIC shall use reasonable efforts to cause the
Company to deliver monthly income statements and balance sheets as reasonably required by the Shareholders.

17. The Shareholders shall cause the Directors designated by them to approve this Amendment No. 2 on behalf
of the Company.

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

                                                       11
                                 ENDORAY INVESTMENTS, B.V.

                                 By: /s/ Goran Mornhed
                                     -------------------------------
                                     Name: Goran Mornhed
                                     Title: Director




                                   U.S. ENERGY SYSTEMS, INC.

                                          By: Goran Mornhed

Name: Goran Mornhed Title: President

                                       EIC ELECTRICITY SA

                                 By: /s/ Dominique Candrian
                                     -------------------------------
                                     Name: Dominique Candrian
                                     Title: Director

                                 By: /s/ Marcel Bruehwiler
                                     -------------------------------
                                     Name: Marcel Bruehwiler
                                     Title: Director




                                                 12
PRESENT when the Common Seal
of SCANDINAVIAN ENERGY

                                    FINANCE LIMITED was affixed
                                              hereto:

                                   /s/ Derek Maltby
                                   -------------------------------
                                   Derek Maltby
                                   Director

                                   /s/ Carolm Brougham
                                   -------------------------------
                                   FOR AND ON BEHALF OF
                                   AIB INTERNATIONAL FINANCIAL
                                   SERVICES LTD.
                                   AS SECRETARY




                                        BORG ENERGY AB

                                           By: Tomas Borg

Name: Tomas Borg Title: Director

                                                 13
        Exhibit 10.86



   LOAN AGREEMENT

Dated as of August 20, 2003

          Between

Scandinavian Energy Finance Ltd
         as Company

             and

      EIC Electricity SA
         as Lender
                                TABLE OF CONTENTS

                                                                              Page
                                                                              ----
SECTION   1 DEFINITIONS AND INTERPRETATION ......................................1
SECTION   2 THE LOAN FACILITY ...................................................3
SECTION   3 AVAILABILITY OF THE LOAN FACILITY ...................................3
SECTION   4 INTEREST ............................................................4
SECTION   5 REPAYMENT ...........................................................4
SECTION   6 PAYMENTS BY THE COMPANY .............................................4
SECTION   7 REPRESENTATIONS AND WARRANTIES ......................................5
SECTION   8 COVENANTS ...........................................................5
SECTION   9 EVENTS OF DEFAULT ...................................................6
SECTION   10 NOTICES ............................................................8
SECTION   11 ASSIGNMENTS AND TRANSFERS ..........................................9
SECTION   12 CONFIDENTIALITY ....................................................9
SECTION   13 GOVERNING LAW .....................................................10
SECTION   14 MISCELLANEOUS .....................................................10




                                         (i)
                                          EXHIBITS

Exhibit 1 Form of Drawdown Notice and Receipt

                                                (ii)
This LOAN AGREEMENT (this "Loan Agreement"), dated as of August 20, 2003 is entered into between
Scandinavian Energy Finance Ltd., a limited liability company with its head office at AIB International Centre
IFSC Dublin 1, Ireland (the "Company") and EIC Electricity SA, a cooperation with its head office at 62, route
de Frontenex, 1211 Geneva 6, Switzerland ( "EIC" or the "Lender") (each, a "Party" and collectively, the
"Parties").

                                                    RECITALS

WHEREAS, the Company is jointly owned by Endoray Investments B.V. ("Endoray"), a wholly owned
subsidiary of US Energy Systems Inc. ("USE"), USE and EIC Electricity SA.

WHEREAS, Endoray, USE and EIC have entered into a certain Shareholders' Agreement, dated March 11,
2002 subsequently amended on February 19, 2003 and on October 1, 2003 (the "Shareholders' Agreement").

WHEREAS, on August 20, 2003, USE and the Company entered into a Loan Agreement (the "USE Loan
Agreement") for the provision of a loan by USE to the Company of SEK 10'200'000.

WHEREAS, in order for the Company to increase its funding to EnergiSystem Sverige AB ("ESS") and fund
costs associated with its operation, the Lender is prepared to make a loan to the Company in accordance with
the terms set out herein;

NOW, THEREFORE, in consideration of the agreements set forth in this Loan Agreement, and for other good
and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties agree as
follows:

SECTION 1

                                 DEFINITIONS AND INTERPRETATION

Section 1.1 Definitions. Unless otherwise defined herein, all capitalized terms, when used herein or in any Exhibit,
shall have the following meanings:

"Advance" means a disbursement made or to be made by the Lender hereunder.

"Availability Period" has the meaning set forth in Section 3.1.

"Available Commitment" means, at any time and save as otherwise provided herein: the Loan Facility, less the
aggregate amount, which the Lender has advanced at such time.

"Business Day" means every day of the week except for (i) Saturdays and Sundays and (ii) bank holidays in
Sweden.
"Company" has the meaning set forth in the introductory paragraph hereto.

"Drawdown Notice" means a notice sent by the Company requesting an Advance, such notice being substantially
in the form attached hereto as Exhibit 1.

"EIC" has the meaning set forth in the introductory paragraph hereto.

"Endoray" has the meaning set forth in the recitals hereto.

"Event of Default" means each of the events described as such in
Section 9.1.

"Interest Period" means the 3-month period between two immediately succeeding Interest Payment Dates.

"Interest Payment Date" means with respect to a calendar quarter March 1, June 1, September 1, December 1,
provided, however, that (i) if any Interest Payment Date would fall on a day which is not a Business Day, such
Interest Payment Date shall be changed to the next succeeding Business Day and
(ii) the first Interest Payment Date shall be December 1, 2003.

"Lender" has the meaning set forth in the introductory paragraph hereto.

"Loan Agreement" has the meaning set forth in the introductory paragraph hereto.

"Loan Facility" has the meaning set forth in Section 2.1.

"Outstanding Principal Balance" means at my time the sum of (i) the aggregate principal amount of Advances
extended by the Lender and (ii) the accrued interest capitalized as set forth in Section 4.3, less the aggregate
repayments as set forth in Section 5.

"Party" and "Parties" has the meaning set forth in the introductory paragraph hereto.

"Reference Rate" means the 3 months STIBOR rate as set for the respective Interest Period on the first Business
Day of such Interest Period.

"SEK" means the lawful currency of Sweden.

"Shareholders' Agreement" has the meaning set forth in the recitals hereto.

"USE" has the meaning set forth in the recitals hereto.

"USE Loan Agreement" has the meaning set forth in the recitals hereto.

Section 1.2 Interpretation. In this Loan Agreement:

(a) headings to Sections are given for convenience only and shall not affect interpretation hereof;

                                                            2
(b) words expressed in the singular number shall include the plural and vice versa; and the word "person" shall
include corporate entities, unincorporated associations and partnerships; and

(c) the Exhibit to this Loan Agreement shall be an integral part hereof.

SECTION 2

                                             THE LOAN FACILITY

Section 2.1 Grant of the Loan Facility. The Lender grants to the Company, upon the terms and subject to the
conditions hereof, a loan in an aggregate maximum amount of SEK 9'800'000 (the "Loan Facility").

Section 2.2 Purposes and Application. The Loan Facility is intended to finance additional funding to ESS to be
provided by the Company in the form of additional loans and to fund costs associated with the Company's
operations. Accordingly, the Company shall apply all amounts borrowed by it hereunder exclusively in or
towards satisfaction of such purposes.

SECTION 3

                                AVAILABILITY OF THE LOAN FACILITY

Section 3.1 Availability Period. The Availability Period is the period during which the Company has the right to
request Advances from the Lender. The Availability Period commences on Aug. 20, 2003 and ends on
December 31, 2003. The Available Commitment shall automatically be cancelled at the end of the Availability
Period.

Section 3.2 Conditions Precedent for all Drawdowns. Except to the extent the Lender shall have waived such
conditions, the Lender shall only be obliged to make an Advance to the Company if:

(a) the Lender has received a drawdown notice substantially in the form of Exhibit 1.

(b) the proposed date for the making of such Advance is a Business Day falling prior to December 31, 2003;

(c) the proposed amount of such Advance is less than or equal to the Available Commitment;

(d) The Company has at the same time of requesting an Advance pursuant to this Loan Agreement requested an
advances from USE pursuant to

                                                         3
the USE Loan Agreement equal to 51/49 of the Advance requested hereunder and the aggregate Advances
made by the Lender equal 49/51 of the aggregate advances made by USE pursuant to the USE Loan
Agreement.

SECTION 4

                                                  INTEREST

Section 4.1 Calculation of Interest. Interest on any Outstanding Principal Balance for any Interest Period is
calculated on the basis of the actual number of days on which interest has accrued and a 365-day year applying
the interest rate determined in accordance with Section 4.2.

Section 4.2 Interest Rate. The Interest Rate per annum is equal to the Reference Rate plus a credit margin of
200bp.

Section 4.3 Payment of Interest. Interest shall accrue on the Outstanding Principal Balance on a quarterly basis
and become payable upon the Company's Board decision taking into account the Distribution Priorities as
defined in the Shareholders' Agreement.

SECTION 5

                                                REPAYMENT

The Company's Board will decide on repayment upon availability of sufficient cash flow taking into account the
Distribution Priorities as defined in the Shareholders' Agreement.

SECTION 6

                                     PAYMENTS BY THE COMPANY

Section 6.1 General. Payments by the Company hereunder to the Lender shall be made in SEK, for value on the
due date, at such bank or banks, during business hours and in such place or places, for the account of the
Lender, as the Lender shall from time to time designate.

Section 6.2 No Set-Off. All payments required to be made by the Company hereunder shall be calculated
without reference to any set-off or counterclaim and shall be made free and clear of and without any deduction
for or on account of any set-off or counterclaim.

                                                        4
Section 6.3 Currency of Account and Payment. The SEK is the currency of account and payment for each and
every sum at any time due from the Company hereunder.

SECTION 7

                               REPRESENTATIONS AND WARRANTIES

Section 7.1 Representations and Warranties. The Company hereby makes the representations and warranties set
out in paragraphs (a) to (c) of this
Section 7.1 as of the date hereof, on each date on which an Advance is made and on each Interest Payment
Date.

(a) Status. The Company is a limited liability company duly organized and existing under the laws of Ireland.

(b) Due authorization. The Company has power to enter into this Loan Agreement and to exercise its rights and
perform its obligations hereunder and all corporate and other action required to authorize its execution of this
Loan Agreement has been duly taken.

(c) Binding obligations. The obligations expressed to be assumed by the Company in this Loan Agreement are
legal and valid obligations binding on it in accordance with the terms hereof and thereof.

Section 7.2 Reliance. The Company hereby acknowledges that the Lender is entering into this Loan Agreement
in reliance on the representations and warranties contained in Section 7.1 above.

Section 7.3 Governmental Authorizations. The Company hereby acknowledges that all authorizations and other
actions by or with any governmental authority necessary to authorize the borrowings hereunder or required for
the validity of enforceability against the Company of this Loan Agreement, have been obtained or performed and
are valid and existing in full force.

SECTION 8

                                                 COVENANTS

(a) Direct Communications with Auditors. The Company shall authorise its auditors (whose fees and expenses
shall be for the account of the Company) to communicate directly with the Lender at any time regarding the
Company's accounts and operations, and furnish to the Lender a copy of such authorisation.

                                                        5
(b) Representations and Warranties. The Company shall, before the making of any Advance requested therein,
notify the Lender of the occurrence of any event, which results in or may reasonably be expected to result in any
of the representations and warranties contained in Section 7 being untrue at or before the time of the making of
such Advance.

(c) Events of Default. The Company shall promptly inform the Lender of the occurrence of any Event of Default
of which it is aware (having made all due inquiries) and, upon receipt of a written request to that effect from the
Lender, confirm to the Lender that, save as previously notified to the Lender or as notified in such confirmation,
no Event of Default has occurred.

(d) Ranking with Other Creditors. The Company shall ensure that at all times the claims of the Lender against it
under this Loan Agreement rank pari passu with the claims of USE under the USE Loan Agreement.

(e) Litigation. The Company shall promptly notify the Lender of the details of any litigation, arbitration or
administrative proceeding issued, pending or (to the best of the Company's knowledge and belief) threatened
against the Company.

SECTION 9

                                             EVENTS OF DEFAULT

Section 9.1 Events of Default. Each of the following, unless expressly waived in writing by the Lender, is an Event
of Default:

(a) Non-payment. Default shall have occurred in the payment of any principal of, or interest on, the Loan and
such default shall have continued for a period of five days.

(b) Representations and Warranties. Any representation or warranty confirmed or made in or pursuant to Section
7.1 or in connection with any request for Advances under this Loan Agreement shall be found to have been
incorrect in any material respect.

(c) Insolvency and Rescheduling. The Company shall have requested a moratorium or suspension of payment of
debts from any court, or instituted proceedings or taken action to be liquidated or adjudicated bankrupt or
insolvent, or consented to the institution of bankruptcy or insolvency proceedings against it, or filed a petition or
answer or consent seeking a concordat or other form of composition with its creditors or reorganisation or relief
under any applicable law, or

                                                          6
consented to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or of any substantial part of its property or other assets, or
made an assignment for the benefit of creditors, or admitted in writing its inability to pay its debts generally as they
become due.

(d) Winding-Up. The Company takes my corporate action for its winding-up, dissolution, administration or re-
organisation or for the appointment of a liquidator, receiver, administrator, administrative receiver, custodian,
trustee or similar officer of it or of any substantial part of its revenues and assets or there shall have been entered
against the Company a decree or order by a court for any of the above or any petition is filed by any person
seeking any of the above and is not dismissed within 30 days.

(e) Execution or Distress. Any execution or distress is levied against, or an encumbrancer takes possession of,
the whole or any substantial part of, the property, undertaking or assets of the Company.

(f) Analogous Events. Any event happens which under the laws of any jurisdiction has a similar or analogous
effect to any of those events mentioned in paragraphs (c), (d) or (e) above.

(g) Licences and Approvals. Any license, approval or consent necessary for the carrying out of the Company's
business and operations generally or for the performance by the Company of its obligations under this Loan
Agreement is not obtained when required or otherwise ceases to be in full force and effect and such license,
approval or consent is not restored within 30 days after the Lender has given notice thereof to the Company.

(h) Invalidity of this Loan Agreement. Any provision of this Loan Agreement is or becomes invalid, illegal or
unenforceable, and such provision has not been replaced by alternative provisions satisfactory to the Lender
within a period of 30 days after the Lender has given notice thereof to the Company.

(i) Governmental Intervention. By or under the authority of any government:

(i) the management of the Company is wholly or partially displaced or the authority of the Company in the
conduct of its business is wholly or partially curtailed; or

(ii) all or a majority of the issued shares of the Company or the whole or any substantial part of its revenues or
assets are seized, nationalized, expropriated or compulsorily acquired.

                                                           7
Section 9.2 Acceleration and Cancellation. Subject to Section 9.3, if one or more of Events of Default shall have
happened and be continuing, then the Lender may, by written notice to the Company:

(a) declare the Outstanding Principal Balance to be immediately due and payable (whereupon the same shall
become so payable together with accrued interest thereon and any other sums then owed by the Company
hereunder); and/or

(b) declare that any undrawn portion of the Facility shall be cancelled, whereupon the same shall be cancelled
and the Available Commitment of the Lender shall be reduced to zero,

Section 9.3 Automatic Acceleration. Notwithstanding Section 9.2 above or any other provision of this Loan
Agreement, if (i) the Company shall have become voluntarily or involuntarily dissolved, or become bankrupt
(however such bankruptcy may be evidenced) or (ii) of substantially all of the assets of the Company and/or ESS
and its direct or indirect subsidiaries are sold:

(a) the Outstanding Principal Balance shall forthwith become immediately due and payable together with accrued
interest thereon and any other sums then owed by the Company hereunder to the fullest extent permitted by law;
and

(b) any undrawn portion of the Loan Facility shall forthwith be cancelled and the Available Commitment of the
Lender shall be reduced to zero,

without any presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the
Company.

SECTION 10

                                                     NOTICES

Section 10.1 Addresses. Any notice or correspondence to be sent hereunder shall be sent in the English language
and be either (i) delivered personally, (ii) sent by registered mail or (iii) sent by fax. The addresses for service of
notice shall be the following or such other address as one Party may notify to the other in accordance with this
Section 10:

                                                          8
                          To the Lender:              EIC Electricity SA

                                 Address:             62, Route de Frontenex
                                                      P.O. Box 6525
                                                      1211 Geneva 6
                                                      Switzerland

                               Attention:             President

                         To the Company:              Scandinavian Energy Finance Ltd.

                                 Address:             AIB International Centre, IFSC
                                                      Dublin 1, Ireland
                                                      Attention: The Company Secretary




Section 10.2 Timing of Notices. A notice given as herein provided shall:

(a) if delivered by hand or sent by fax, be deemed to have been received on the day of receipt or, if sent outside
8:30 a.m. to 6:30 p.m. on any Business Day, at 8:30 a.m. on the next Business Day; and

(b) if sent by registered mail, be deemed to have been received 10 Business Days after the mailing thereof.

SECTION 11

                                     ASSIGNMENTS AND TRANSFERS

Section 11.1 By the Company. The Company shall not be entitled to assign or transfer all or any of its rights,
benefits or obligations hereunder.

Section 11.2 By the Lender. The Lender shall be entitled to assign or transfer all or any of its rights, benefits or
obligations hereunder to any of its subsidiaries or affiliated companies.

SECTION 12

                                              CONFIDENTIALITY

The Company shall not disclose any information about this Loan Agreement without Lender's prior written
consent which shall not be unreasonably withheld or delayed. The Lender shall have the right to disclose any
information about this Loan Agreement to any

                                                          9
potential transferee of its shares in the Company and to any financial institution, to its auditors and as required by
law.

SECTION 13

                                               GOVERNING LAW

The construction, validity and performance of this Loan Agreement shall in all respects be governed by the laws
of Ireland. The venue is the court of Dublin.

SECTION 14

                                               MISCELLANEOUS

Section 14.1 Entire Agreement. This Loan Agreement, including the exhibits hereto, constitutes the entire
agreement between the Parties in relation to the subject matter hereof and supersedes any or all previous
agreements or arrangements, whether oral or written, between the Parties.

Section 14.2 Amendments. No amendment to this Loan Agreement shall be valid unless it is in writing and signed
by a duly authorized representative of each Party.

Section 14.3 Waiver. The failure with or without intent of any Party to insist upon the performance by any other
Party of any term or provision of this Loan Agreement in strict conformity with the literal requirements hereof shall
not be treated or deemed to constitute a modification of any term or provision hereof, nor shall such failure or
election be deemed to constitute a waiver of the right of such Party at any time whatsoever thereafter to insist
upon performance by the other, strictly in accordance with any term or provision hereof. All terms, conditions
and obligations under this Loan Agreement shall remain in full force and effect at all times during the term of this
Loan Agreement, except as otherwise changed or modified by any mutual written agreement of the Parties.

Section 14.4 Severability. Should any provision of this Loan Agreement be declared invalid or unenforceable by
any court of competent jurisdiction or any other entity empowered to do so, the remainder of this Loan
Agreement shall be valid and enforceable to the fullest extent permitted by applicable law.

Section 14.5 Language. This Loan Agreement is written in English and English is the binding language of this
document.

                                                          10
IN WITNESS WHEREOF, the Parties have executed this Loan Agreement by their duly authorised
representatives as of the day and year first above written.

                                 Scandinavian Energy Finance Ltd.

                              By: /s/ Carolyn Brougham
                                  -------------------------------
                                  Name: Carolyn Brougham
                                  Title: FOR AND ON BEHALF OF
                                         AIB INTERNATIONAL FINANCIAL
                                         SERVICES LTD.
                                         AS SECRETARY




                                         EIC Electricity SA

                                By: /s/ Marcel Bruehwiler
                                    -------------------------------
                                    Name: Marcel Bruehwiler
                                    Title: Director

                                By: /s/ Dominique Candrian
                                    -------------------------------
                                    Name: Dominique Candrian
                                    Title: Director




WITNESS:

US Energy Systems Inc.

                                By: /s/ Goran Mornhed
                                    -------------------------------
                                    Name: Goran Mornhed
                                    Title: CEO

                                By: /s/ Allen Rothman
                                    -------------------------------
                                    Name: Allen Rothman
                                    Title: UP+GC
                                                  EXHIBIT 1

                                            Form of Drawdown Notice

                                   [LETTERHEAD OF THE COMPANY]

                                                      [Date]

EIC Electricity SA
[address]

US Energy Systems Inc.
[address]

Ladies and Gentlemen:

                                            Drawdown Notice No. (1)

1. Please refer to (i) the Loan Agreement dated [date], 2003, by and among Scandinavian Energy Finance Ltd.
(the "Company") and EIC Electricity SA ("EIC") (the "EIC Loan Agreement") and to (ii) the Loan Agreement
dated
[date], 2003 by and among the Company and US Energy Systems Inc. ("USE") (the "USE Loan Agreement").
All terms used but not defined herein are used as defined in the Loan Agreements.

2. The Company hereby requests the respective Advance from EIC and USE, on or before [date], of the amount
of (i) [SEK ] in accordance with the provisions of Section 3 of the EIC Loan Agreement and (ii) [SEK ] in
accordance with the provisions of Section 3 of the USE Loan Agreement. You are requested to pay such
respective amount in accordance with the Company's instructions [Account Name and Number: Wiring
Instructions].

3. Attached hereto as Appendix I is a signed but undated receipt for the amount hereby requested to be
advanced to the Company and the Company hereby authorizes EIC and USE respectively to date such receipt
as of the date of the actua1 advance by EIC and USE of the funds hereby requested to be advanced.

4. The Company hereby certifies as follows:

(a) no Event of Default has occurred and is continuing in respect of which the Lender has not given a written
waiver.

(b) The Company is in full compliance with a11 covenants as outlined in
Section 8 of the EIC Loan Agreement and the USE Loan Agreement.


(1) Requests shall be numbered in series.
The above certifications are effective as of the date of this Drawdown Notice and will continue to be effective as
of the date of the Advance hereby requested. If any of these certifications is no longer valid as of or prior to the
date of Advance hereby requested, the Company will immediately notify the Lender and will repay the amount
advanced upon demand by the Lender if the Advance is made prior to the receipt of such notice.

Very truly yours,

By: Scandinavian Energy Finance Ltd.

[Name of authorized persons signing for the Company]

                                                         2
                                                  Appendix I

                                                  Page 1 of 1

                                     Form of Loan Drawdown Receipt

                                  [LETTERHEAD OF THE COMPANY]

                                                   [Date](2)

[LENDER]
[address]

Ladies and Gentlemen:

                                         Drawdown Receipt No.(3)

We, Scandinavian Energy Finance Ltd. hereby acknowledge receipt of the sum of [__________] advanced to us
by you pursuant to the Loan Agreement dated
[________], 2003 between ourselves and you.

Yours faithfully,

                                     Scandinavian Energy Finance Ltd.

                                                    By:
                                         Authorized Representative


(2) To be dated by Lender as of the date of advance of relevant funds.

(3) Each receipt must be numbered in series, the number corresponding to the number in the heading of the
relevant drawdown notice.
        Exhibit 10.87



   LOAN AGREEMENT

Dated as of November 3, 2003

          Between

Scandinavian Energy Finance Ltd
         as Company

             and

      EIC Electricity SA
         as Lender
                                TABLE OF CONTENTS

                                                                             Page
                                                                             ----

SECTION   1 DEFINITIONS AND INTERPRETATION ......................................1
SECTION   2 THE LOAN FACILITY ...................................................3
SECTION   3 AVAILABILITY OF THE LOAN FACILITY ...................................3
SECTION   4 INTEREST ............................................................4
SECTION   5 REPAYMENT ...........................................................4
SECTION   6 PAYMENTS BY THE COMPANY .............................................4
SECTION   7 REPRESENTATIONS AND WARRANTIES ......................................5
SECTION   8 COVENANTS ...........................................................5
SECTION   9 EVENTS OF DEFAULT ...................................................6
SECTION   10 NOTICES ............................................................8
SECTION   11 ASSIGNMENTS AND TRANSFERS ..........................................9
SECTION   12 CONFIDENTIALITY ....................................................9
SECTION   13 GOVERNING LAW .....................................................10
SECTION   14 MISCELLANEOUS .....................................................10




                                         (i)
                                          EXHIBITS

Exhibit 1 Form of Drawdown Notice and Receipt

                                                (ii)
This LOAN AGREEMENT (this "Loan Agreement"), dated as of Nov. 3, 2003 is entered into between
Scandinavian Energy Finance Ltd., a limited liability company with its head office at AIB International Centre
IFSC Dublin 1, Ireland (the "Company") and EIC Electricity SA, a cooperation with its head office at 62, route
de Frontenex, 1211 Geneva 6, Switzerland ("EIC" or the "Lender") (each, a "Party" and collectively, the
"Parties").

                                                    RECITALS

WHEREAS, the Company is jointly owned by Endoray Investments B.V. ("Endoray"), a wholly owned
subsidiary of US Energy Systems Inc. ("USE"), USE and EIC Electricity SA.

WHEREAS, Endoray, USE and EIC have entered into a certain Shareholders' Agreement, dated March 11,
2002 subsequently amended on February 19, 2003 and on October 1, 2003 (the "Shareholders' Agreement").

WHEREAS, on August 20, 2003, USE and the Company entered into a Loan Agreement for the provision of a
loan by USE to the Company of SEK 10'200'000.-- and on August 20, 2003, EIC and the Company entered
into a Loan Agreement for the provision of a loan by EIC to the Company of SEK 9'800'000.-- (together: the
"Shareholder Loan Agreements").

WHEREAS, in order for the Company to increase its funding to EnergiSystem Sverige AB ("ESS") and fund
costs associated with its operation, the Lender is prepared to make a loan to the Company in accordance with
the terns set out herein;

NOW, THEREFORE, in consideration of the agreements set forth in this Loan Agreement, and for other good
and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties agree as
follows:

SECTION 1

                                 DEFINITIONS AND INTERPRETATION

Section 1.1 Definitions. Unless otherwise defined herein, all capitalized terms, when used herein or in any Exhibit,
shall have the following meanings:

"Advance" means a disbursement made or to be made by the Lender hereunder.

"Availability Period" has the meaning set forth in Section 3.1,

"Available Commitment" means, at any time and save as otherwise provided herein: the Loan Facility, the
aggregate amount, which the Lender has advanced at such time.
"Business Day" means every day of the week except for (i) Saturdays and Sundays and (ii) bank holidays in
Sweden.

"Company" has the meaning set forth in the introductory paragraph hereto.

"Drawdown Notice" means a notice sent by the Company requesting an Advance, such notice being substantially
in the form attached hereto as Exhibit 1.

"EIC" has the meaning set forth in the introductory paragraph hereto.

"Endoray" has the meaning set forth in the recitals hereto.

"Event of Default" means each of the events described as such in
Section 9.1.

"Interest Period" means the 3-month period between two immediately succeeding Interest Payment Dates.

"Interest Payment Date" means with respect to a calendar quarter March 1, June 1, September 1, December 1,
provided, however, that (i) if any Interest Payment Date would fall on a day which is not a Business Day, such
Interest Payment Date shall be changed to the next succeeding Business Day and
(ii) the first Interest Payment Date shall be December 1, 2003.

"Lender" has the meaning set forth in the introductory paragraph hereto.

"Loan Agreement" has the meaning set forth in the introductory paragraph hereto.

"Loan Facility" has the meaning set forth in Section 2.1.

"Outstanding Principal Balance" means at any time the sum of (i) the aggregate principal amount of Advances
extended by the Lender and (ii) the accrued interest capitalized as set forth in Section 4.3. less the aggregate
repayments as set forth in Section 5.

"Party" and "Parties" has the meaning set forth in the introductory paragraph hereto.

"Reference Rate" means the 3 months STIBOR rate as set for the respective Interest Period on the first Business
Day of such Interest Period.

"Shareholders' Agreement" has the meaning set forth in the recitals hereto.

"Shareholder Loan Agreements" has the meaning set forth in the recitals hereto.

"SEK" means the lawful currency of Sweden.

"USE" has the meaning set forth in the recitals hereto.

                                                            2
Section 1.2 Interpretation. In this Loan Agreement:

(a) headings to Sections are given for convenience only and shall not affect interpretation hereof;

(b) words expressed in the singular number shall include the plural and vice versa; and the word "person" shall
include corporate entities, unincorporated associations and partnerships; and

(c) the Exhibit to this Loan Agreement shall be an integral part hereof.

SECTION 2

                                             THE LOAN FACILITY

Section 2.1 Grant of the Loan Facility. The Lender grants to the Company, upon the terms and subject to the
conditions hereof, a loan in an aggregate maximum amount of SEK 16'000'000.-- (the "Loan Facility").

Section 2.2 Purposes and Application. The Loan Facility is intended to finance additional funding to ESS AB
and/or its subsidiaries to be provided by the Company in the form of additional loans and to fund costs
associated with the Company's operations. Accordingly, the Company shall apply all amounts borrowed by it
hereunder exclusively in or towards satisfaction of such purposes.

SECTION 3

                                AVAILABILITY OF THE LOAN FACILITY

Section 3.1 Availability Period. The Availability Period is the period during which the Company has the right to
request Advances from the Lender. The Availability Period commences on Nov. 3, 2003 and ends on December
31, 2003. The Available Commitment shall automatically be cancelled at the end of the Availability Period.

Section 3.2 Conditions Precedent for all Drawdowns. Except to the extent the Lender shall have waived such
conditions, the Lender shall only be obliged to make an Advance to the Company if

(a) the Lender has received a drawdown notice substantially in the form of Exhibit 1.

(b) the proposed date for the making of such Advance is a Business Day falling prior to December 31, 2003;

                                                         3
(c) the proposed amount of such Advance is less than or equal to the Available Commitment.

SECTION 4

                                                  INTEREST

Section 4.1 Calculation of Interest. Interest on any Outstanding Principal Balance for any Interest Period is
calculated on the basis of the actual number of days on which interest has accrued and a 365-day year applying
the interest rate determined in accordance with Section 4.2.

Section 4.2 Interest Rate. The Interest Rate per annum is equal to the Reference Rate plus a credit margin of
2OObp.

Section 4.3 Payment of Interest. Interest shall accrue on the Outstanding Principal Balance on a quarterly basis
and become payable upon the Company's Board decision taking into account the Distribution Priorities as
defined in the Shareholders' Agreement.

SECTION 5

                                                REPAYMENT

The Company's Board will decide on repayment upon availability of sufficient cash flow taking into account the
Distribution Priorities as defined in the Shareholders' Agreement.

SECTION 6

                                     PAYMENTS BY THE COMPANY

Section 6.1 General. Payments by the Company hereunder to the Lender shall be made in SEK, for value on the
due date, at such bank or banks, during business hours and in such place or places, for the account of the
Lender, as the Lender shall from time to time designate.

Section 6.2 No Set-Off. All payments required to be made by the Company hereunder shall be calculated
without reference to any set-off or counterclaim and shall be made free and clear of and without any deduction
for or on account of any set-off or counterclaim.

                                                        4
Section 6.3 Currency of Account and Payment. The SEK is the currency of account and payment for each and
every sum at any time due from the Company hereunder.

SECTION 7

                               REPRESENTATIONS AND WARRANTIES

Section 7.1 Representations and Warranties. The Company hereby makes the representations and warranties set
out in paragraphs (a) to (c) of this
Section 7.1 as of the date hereof, on each date on which an Advance is made and on each Interest Payment
Date.

(a) Status. The Company is a limited liability company duly organized and existing under the laws of Ireland.

(b) Due authorization. The Company has power to enter into this Loan Agreement and to exercise its rights and
perform its obligations hereunder and all corporate and other action required to authorize its execution of this
Loan Agreement has been duly taken.

(c) Binding obligations. The obligations expressed to be assumed by the Company in this Loan Agreement are
legal and valid obligations binding on it in accordance with the terms hereof and thereof.

Section 7.2 Reliance. The Company hereby acknowledges that the Lender is entering into this Loan Agreement
in reliance on the representations and warranties contained in Section 7.1 above.

Section 7.3 Governmental Authorizations. The Company hereby acknowledges that all authorizations and other
actions by or with any governmental authority necessary to authorize the borrowings hereunder or required for
the validity of enforceability against the Company of this Loan Agreement, have been obtained or performed and
are valid and existing in full force.

SECTION 8

                                                 COVENANTS

(a) Direct Communications with Auditors. The Company shall authorise its auditors (whose fees and expenses
shall be for the account of the Company) to communicate directly with the Lender at any time regarding the
Company's accounts and operations, and furnish to the Lender a copy of such authorisation.

                                                        5
(b) Representations and Warranties. The Company shall, before the making of any Advance requested therein,
notify the Lender of the occurrence of any event, which results in or may reasonably be expected to result in any
of the representations and warranties contained in Section 7 being untrue at or before the time of the making of
such Advance.

(c) Events of Default. The Company shall promptly inform the Lender of the occurrence of any Event of Default
of which it is aware (having made all due inquiries) and, upon receipt of a written request to that effect from the
Lender, confirm to the Lender that, save as previously notified to the Lender or as notified in such confirmation,
no Event of Default has occurred.

(d) Ranking with Other Creditors. The Company shall ensure that at all times the claims of the Lender against it
under this Loan Agreement rank senior to the claims of USE and EIC under the Shareholder Loan Agreements.

(e) Litigation. The Company shall promptly notify the Lender of the details of any litigation, arbitration or
administrative proceeding issued, pending or (to the best of the Company's knowledge and belief) threatened
against the Company.

SECTION 9

                                             EVENTS OF DEFAULT

Section 9.1 Events of Default. Each of the following, unless expressly waived in writing by the Lender, is an Event
of Default:

(a) Non-payment. Default shall have occurred in the payment of any principal of, or interest on, the Loan and
such default shall have continued for a period of five days.

(b) Representations and Warranties. Any representation or warranty confirmed or made in or pursuant to Section
7.1 or in connection with any request for Advances under this Loan Agreement shall be found to have been
incorrect in any material respect.

(c) Insolvency and Rescheduling. The Company shall have requested a moratorium or suspension of payment of
debts from any court, or instituted proceedings or taken action to be liquidated or adjudicated bankrupt or
insolvent, or consented to the institution of bankruptcy or insolvency proceedings against it, or filed a petition or
answer or consent seeking a concordat or other form of composition with its creditors or reorganisation or relief
under any applicable law, or

                                                          6
consented to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or of any substantial part of its property or other assets, or
made an assignment for the benefit of creditors, or admitted in writing its inability to pay its debts generally as they
become due.

(d) Winding-Up. The Company takes any corporate action for its winding-up, dissolution, administration or re-
organisation or for the appointment of a liquidator, receiver, administrator, administrative receiver, custodian,
trustee or similar officer of it or of any substantial part of its revenues and assets or there shall have been entered
against the Company a decree or order by a court for any of the above or any petition is filed by any person
seeking any of the above and is not dismissed within 30 days.

(e) Execution or Distress. Any execution or distress is levied against, or an encumbrancer takes possession of,
the whole or any substantial part of, the property, undertaking or assets of the Company.

(f) Analogous Events. Any event happens which under the laws of any jurisdiction has a similar or analogous
effect to any of those events mentioned in paragraphs (c), (d) or (e) above.

(g) Licences and Approvals. Any license, approval or consent necessary for the carrying out of the Company's
business and operations generally or for the performance by the Company of its obligations under this Loan
Agreement is not obtained when required or otherwise ceases to be in full force and effect and such license,
approval or consent is not restored within 30 days after the Lender has given notice thereof to the Company.

(h) Invalidity of this Loan Agreement. Any provision of this Loan Agreement is or becomes invalid, illegal or
unenforceable, and such provision has not been replaced by alternative provisions satisfactory to the Lender
within a period of 30 days after the Lender has given notice thereof to the Company.

(i) Governmental Intervention. By or under the authority of any government:

(i) the management of the Company is wholly or partially displaced or the authority of the Company in the
conduct of its business is wholly or partially curtailed; or

(ii) all or a majority of the issued shares of the Company or the whole or any substantial part of its revenues or
assets are seized, nationalized, expropriated or compulsorily acquired.

                                                           7
Section 9.2 Acceleration and Cancellation. Subject to Section 9.3, if one or more of Events of Default shall have
happened and be continuing, then the Lender may, by written notice to the Company:

(a) declare the Outstanding Principal Balance to be immediately due and payable (whereupon the same shall
become so payable together with accrued interest thereon and any other sums then owed by the Company
hereunder); and/or

(b) declare that any undrawn portion of the Facility shall be cancelled, whereupon the same shall be cancelled
and the Available Commitment of the Lender shall be reduced to zero,

Section 9.3 Automatic Acceleration. Notwithstanding Section 9.2 above or any other provision of this Loan
Agreement, if (i) the Company shall have become voluntarily or involuntarily dissolved, or become bankrupt
(however such bankruptcy may be evidenced) or (ii) if substantially all of the assets of the Company and/or ESS
and its direct and indirect subsidiaries are sold:

(a) the Outstanding Principal Balance shall forthwith become immediately due and payable together with accrued
interest thereon and any other sums then owed by the Company hereunder to the fullest extent permitted by law;
and

(b) any undrawn portion of the Loan Facility shall forthwith be cancelled and the Available Commitment of the
Lender shall be reduced to zero,

without any presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the
Company.

SECTION 10

                                                     NOTICES

Section 10.1 Addresses. Any notice or correspondence to be sent hereunder shall be sent in the English language
and be either (i) delivered personally, (ii) sent by registered mail or (iii) sent by fax. The addresses for service of
notice shall be the following or such other address as one Party may notify to the other in accordance with this
Section 10:

                                                          8
                             To the Lender:        EIC Electricity SA

                                    Address:       62, Route de Frontenex
                                                   P.O. Box 6525
                                                   1211 Geneva 6
                                                   Switzerland

                                  Attention:       President

                            To the Company:        Scandinavian Energy Finance Ltd.

                                    Address:       AIB International Centre, IFSC
                                                   Dublin 1, Ireland
                                                   Attention: The Company Secretary




Section 10.2 Timing of Notices. A notice given as herein provided shall:

(a) if delivered by hand or sent by fax, be deemed to have been received on the day of receipt or, if sent outside
8:30 a.m. to 6:30 p.m. on any Business Day, at 8:30 a.m. on the next Business Day; and

(b) if sent by registered mail, be deemed to have been received 10 Business Days after the mailing thereof.

SECTION 11

                                     ASSIGNMENTS AND TRANSFERS

Section 11.1 By the Company. The Company shall not be entitled to assign or transfer all or any of its rights,
benefits or obligations hereunder.

Section 11.2 By the Lender. The Lender shall be entitled to assign or transfer all or any of its rights, benefits or
obligations hereunder to any of its subsidiaries or affiliated companies.

SECTION 12

                                              CONFIDENTIALITY

The Company shall not disclose any information about this Loan Agreement without Lender's prior written
consent which shall not be unreasonably withheld or delayed. The Lender shall have the right to disclose any
information about this Loan Agreement to any

                                                          9
potential transferee of its shares in the Company and to any financial institution, to its auditors and as required by
law.

SECTION 13

                                               GOVERNING LAW

The construction, validity and performance of this Loan Agreement shall in all respects be governed by the laws
of Ireland. The venue is the court of Dublin.

SECTION 14

                                               MISCELLANEOUS

Section 14.1 Entire Agreement. This Loan Agreement, including the exhibits hereto, constitutes the entire
agreement between the Parties in relation to the subject matter hereof and supersedes any or all previous
agreements or arrangements, whether oral or written, between the Parties.

Section 14.2 Amendments. No amendment to this Loan Agreement shall be valid unless it is in writing and signed
by a duly authorized representative of each Party.

Section 14.3 Waiver. The failure with or without intent of any Party to insist upon the performance by any other
Party of any term or provision of this Loan Agreement in strict conformity with the literal requirements hereof shall
not be treated or deemed to constitute a modification of any term or provision hereof, nor shall such failure or
election be deemed to constitute a waiver of the right of such Party at any time whatsoever thereafter to insist
upon performance by the other, strictly in accordance with any term or provision hereof. All terms, conditions
and obligations under this Loan Agreement shall remain in full force and effect at all times during the term of this
Loan Agreement, except as otherwise changed or modified by any mutual written agreement of the Parties.

Section 14.4 Severability. Should any provision of this Loan Agreement be declared invalid or unenforceable by
any court of competent jurisdiction or any other entity empowered to do so, the remainder of this Loan
Agreement shall be valid and enforceable to the fullest extent permitted by applicable law.

Section 14.5 Language. This Loan Agreement is written in English and English is the binding language of this
document.

                                                          10
IN WITNESS WHEREOF, the Parties have executed this Loan Agreement by their duly authorised
representatives as of the day and year first above written.

                                 Scandinavian Energy Finance Ltd.

                              By: /s/ Caroln Brougham
                                  -------------------------------
                                  Name: Caroln Brougham
                                  Title: FOR AND ON BEHALF OF
                                         AIB INTERNATIONAL FINANCIAL
                                         SERVICES LTD.
                                         AS SECRETARY




                                         EIC Electricity SA

                                By: /s/ Marcel Bruchwiler
                                    -------------------------------
                                    Name: Marcel Bruchwiler
                                    Title: Director

                                By: /s/ Dominique Candrian
                                    -------------------------------
                                    Name: Dominique Candrian
                                    Title: Director




WITNESS:

US Energy Systems Inc.

                                By: /s/ Goran Mornhed
                                    -------------------------------
                                    Name: Goran Mornhed
                                    Title: CEO

                                By: /s/ Allen Rothman
                                    -------------------------------
                                    Name: Allen Rothman
                                    Title: UP+GC.
                                                  EXHIBIT 1

                                            Form of Drawdown Notice

                                   [LETTERHEAD OF THE COMPANY]

                                                      [Date]

EIC Electricity SA
[address]

Ladies and Gentlemen:

                                            Drawdown Notice No. (1)

1. Please refer to (i) the Loan Agreement dated [date], 2003, by and among Scandinavian Energy Finance Ltd.
(the "Company") and EIC Electricity SA ("EIC") ("the Loan Agreement") All terms used but not defined herein
are used as defined in the Loan Agreements.

2. The Company hereby requests an Advance from EIC, on or before [date], of the amount of (i) [SEK ] in
accordance with the provisions of Section 3 of the Loan Agreement. You are requested to pay such respective
amount in accordance with the Company's instructions [Account Name and Number:
Wiring Instructions].

3. Attached hereto as Appendix I is a signed but undated receipt for the amount hereby requested to be
advanced to the Company and the Company hereby authorizes EIC to date such receipt as of the date of the
actual advance by EIC of the funds hereby requested to be advanced.

4. The Company hereby certifies as follows:

(a) no Event of Default has occurred and is continuing in respect of which the Lender has not given a written
waiver.

(b) The Company is in full compliance with all covenants as outlined in
Section 8 of the Loan Agreement.


(1) Requests shall be numbered in series.
The above certifications are effective as of the date of this Drawdown Notice and will continue to be effective as
of the date of the Advance hereby requested. If any of these certifications is no longer valid as of or prior to the
date of Advance hereby requested, the Company will immediately notify the Lender and will repay the amount
advanced upon demand by the Lender if the Advance is made prior to the receipt of such notice.

Very truly yours,

By: Scandinavian Energy Finance Ltd.

[Name of authorized persons signing for the Company]

                                                         2
                                                  Appendix I

                                                  Page 1 of 1

                                     Form of Loan Drawdown Receipt

                                  [LETTERHEAD OF THE COMPANY]

                                                   [Date](2)

[LENDER]
[address]

Ladies and Gentlemen:

                                         Drawdown Receipt No.(3)

We, Scandinavian Energy Finance Ltd. hereby acknowledge receipt of the sum of [__________] advanced to us
by you pursuant to the Loan Agreement dated
[__________], 2003 between ourselves and you.

Yours faithfully,

                                     Scandinavian Energy Finance Ltd.

                                                    By:
                                         Authorized Representative


(2) To be dated by Lender as of the date of advance of relevant funds.

(3) Each receipt must be numbered in series, the number corresponding to the number in the heading of the
relevant drawdown notice.
                                SCANDINAVIAN ENERGY FINANCE LTD

                                              Appendix 1

                                          November 14, 2003

EIC Electricity SA
c/o EIC Partners AG
General-Wille Str. 59
8706 Feldmeilen / Switzerland

Ladies and Gentlemen:

                                       Drawdown Receipt No. 1

We, Scandinavian Energy Finance Ltd. hereby acknowledge receipt of the sum of SEK 12'000'000 advanced to
us by you pursuant to the Loan Agreement dated November 3, 2003 between ourselves and you.

Yours faithfully,

                                   Scandinavian Energy Finance Lid.

                                                 By:
                                      Authorized Representative
                                                  Exhibit 10.88

                                   U.S. ENERGY SYSTEMS, INC.
                                 2003 FINANCE INCENTIVE PLAN
                      Approved by the Compensation Committee on March 19, 2003

1 - Plan Objectives

The following documents an incentive plan to recognize and reward employees who make positive contributions
to U.S. Energy Systems growth and profitability goals through financing.

This plan is designed to provide an incentive for employees to increase sales, revenues and income by financing
the Company and its growth. This incentive plan is independent from and additive to other U.S. Energy Systems
compensation plans for which employees may be eligible except that employees cannot benefit twice from the
same accomplishment.

2 - Eligible Employees

This plan is primarily structured to motivate and reward those employees involved in the Financing activities.
However, all U.S. Energy Systems employees are eligible to participate, as there may be occasions when
engineering, legal, tax or other corporate and/or other operating unit employees play a role in Financing.

Receipt of awards under the Plan shall be limited to individuals employed by the Company on the date of awards.

3 - Plan Awards

Individual employees or a team of employees, who are responsible for Financing or Re-financing of Equity, Debt
or other types of Financing, will be eligible to receive a cash award for their accomplishments.

4 - Plan Administration

The Plan will be administered by the CEO and the President. Awards under the Plan will be made by the
Compensation Committee of the Board of Directors. Award recommendations will be made to the
Compensation Committee of the Board by an Awards Committee that will include three senior managers of the
company, including the CEO.

                                                         1
5 - Awards Procedures

1. The employee leading the Financing effort will make nominations for awards under this plan.

2. The nominations shall be sent to the Awards Committee and shall include:

o A copy of the Financing documents.

o A calculation of the net proceeds to the Company after repayment of debt and transaction costs.

o Identification of other tangible benefits to the Company.

o Identification of the employee/employees recommended for the award and the proposed incentive percentage
for each employee.

3. The Awards Committee will make recommendations to the Compensation Committee of the Board, which will
make the awards in accordance with this plan.

6 - Awards Determination

The total dollar value of the award will be calculated as follows:

o Financing with Equity or Equity Hybrids:

- 3% of net proceeds to the Company, net of transaction costs but before repayment of debt, if any;

- if a placement agent, arranger or advisor has been retained by the Company, the award pool will be reduced to
2%.

o Financing with Debt or Debt-like Instruments:

- 1.5% of net proceeds to the Company, net of transaction costs but before repayment of debt, if any;

- if a placement agent, arranger or advisor has been retained by the Company, the award pool will be reduced to
1.0%.

o Financing with a Company sponsored Income Fund:

- Award based on equity financing for the percentage of the fund capitalization received from the issuance of trust
certificates or equal.

- Award based on debt financing for the percentage of the fund capitalization funded by debt.

                                                          2
o The Compensation Committee may adjust the amount of the award by 20% (increase or decrease) to reflect
the relative competitiveness of the terms of the Financing for which the award is made.

The award under this plan will be distributed to one or more employees who were responsible for the Financing
or contributed to the success in relation to each employee's relative contribution and considering any other
compensation that the employee may receive for the same financing. The final allocation of the award between the
employees will be determined by the Compensation Committee of the Board.

7 - Awards Distribution Timing

All nominations for awards will be acted upon within 30 days following submittal to the Awards Committee.

The awards approved under this program will be distributed at the later of Closing and Funding of the Financing,
and 30 days following submittal to the Awards Committee.

8 - Other Plan Features

The Company reserves the right to terminate or amend the plan to any extent and in any manner at any time at the
Company's sole discretion.

Eligibility or participation in the Plan does not imply nor constitute any type of an employment agreement between
the participant and the Company.

This 2003 Finance Incentive Plan shall apply to debt and equity financing transactions closed on or after April 1,
2003.

                                                       ###

                                                         3
                                                    Exhibit 10.89

                                    U.S. ENERGY SYSTEMS, INC.
                        2003 CORPORATE DEVELOPMENT INCENTIVE PLAN
                       Approved by the Compensation Committee on March 19, 2003

1 - Plan Objectives

The following documents an incentive plan to recognize and reward employees who make positive contributions
to U.S. Energy Systems growth and profitability goals through corporate development, including the
development, acquisition, monetization or sale of projects, assets or investments..

This plan is designed to provide an incentive for employees to increase sales, revenues and income by developing
or acquiring projects and assets, and to increase liquidity by monetizing or selling assets or investments. This
incentive plan is independent from and additive to other U.S. Energy Systems compensation plans for which
employees may be eligible except that employees cannot benefit twice from the same accomplishment.

2 - Eligible Employees

This plan is primarily structured to motivate and reward those employees involved in the corporate development
activities. However, all U.S. Energy Systems employees are eligible to participate, as there may be occasions
when engineering, legal, tax or other corporate and/or other operating unit employees play a role in closing a deal.

Receipt of awards under the Plan shall be limited to individuals employed by the Company on the date of awards.

3 - Plan Awards

Individual employees or a team of employees, who make positive contributions to U.S. Energy Systems growth
and profitability goals through corporate development, including the development, acquisition, monetization or
sale of projects, assets or investments, will be eligible to receive a cash award for their accomplishments.

3.1 For corporate development involving the development or acquisition of projects, assets or investments, the
bonus award will be calculated based on the anticipated net present value of the after tax cash flow with
consideration for the following items among other things:

- Certainty and risk of the transaction.

- Other intangible attributes and benefits gained as a result of the transaction.
3.2 For corporate development involving the monetization or sale of assets, projects or investments, the bonus
award will be calculated based on the anticipated present value of the net proceeds to the Company (after
repayment of debt and transaction costs) with consideration for the following items among other things:

- Net cash consideration paid to the Company

- Value of non-cash consideration

- Risk associated with deferred consideration

- Book value of asset or investment

4 - Plan Administration

The Plan will be administered by the CEO and the President. Awards under the Plan will be made by the
Compensation Committee of the Board of Directors. Award recommendations will be made to the
Compensation Committee of the Board by an Awards Committee that will include three senior managers of the
company, including the CEO.

5 - Awards Procedures

1. The employee leading the corporate development effort will make nominations for awards under this plan.

2. The nominations shall be sent to the Awards Committee and shall include:

- A memorandum describing the transaction

- A copy of the transaction documents

- A calculation of the Net Present Value or Present Value to the Company

- A financial proforma reflecting future cash flow, where applicable

- Identification of other tangible and intangible benefits to the Company.

- Identification of the employee/employees recommended for the award and the proposed incentive percentage
for each employee

3. The Awards Committee will make recommendations to the Compensation Committee of the Board, which will
make the awards in accordance with this plan.

6 - Awards Determination

6.1 For corporate development involving the development or acquisition of projects , assets or investments, the
bonus award will be calculated based on the anticipated Net Present Value of the after tax cash flow to the
company.

                                                         2
The total dollar value of the award will be 4% of the NPV of the after tax Free Cash Flow, discounted at the
risk-adjusted WACC (Weighted Average Cost of Capital) (typically 7.5% - 9.5%) for the project, as per the
proforma approved by the Board at the time of the transaction, and incorporating all aspects of the transaction.
The WACC will be determined for each project, using CAPM (Capital Assets Pricing Model) and Miller-
Modigliani, as included in the proforma approved by the Board.

6.2 For corporate development involving the monetization or sale of assets, projects or investments, the bonus
award will be calculated based on the anticipated present value of the net proceeds to the Company net of debt
repayment and transaction costs, with consideration for the following items:

The total dollar value of the award will be a percentage of the anticipated present value of the consideration, with
any deferred consideration discounted at the risk-adjusted WACC (typically 7.5% - 9.5%) for the asset or
investment:

- 2% of the net proceeds up to net book value

- 4% of the net proceeds in excess of book value

6.3 The award will be distributed to one or more employees who were responsible for the achievement or
contributed to the success in relation to each employee's relative contribution and considering any other
compensation that the employee may receive for the same achievement. The final allocation of the award between
the employees will be recommended by the Awards Committee and determined by the Compensation
Committee of the Board.

7 - Awards Distribution Timing

All nominations for awards will be acted upon within 30 days following submittal to the CEO and the President.

7.1 For corporate development involving the development or acquisition of projects or assets, the bonus award
will be distributed as follow:

- Step 1: 50% at transaction closing

- Step 2: 30% at commercial operation of the new asset, project or asset or project underlying an investment
(after plant acceptance) and after true up of the NPV that was used for the initial bonus, by taking into account
the actual construction cost and other potential changes in the project. The second award will be the difference
between 80% of the revised bonus and the step 1 distributed bonus. In the case of a transaction involving assets
or projects in commercial operation at the time of closing, Step 2 award distribution shall be paid at closing.

                                                         3
- Step 3: 20% after one year of operation in the case of assets or projects to be developed and after one year
from closing in the case of assets or projects in operation at the time of closing, and after true up of the NPV that
was used for the second bonus, by taking into account the actual operating cost and other potential changes in the
project. The third award will be the difference between the new revised bonus and step 1 plus step 2 distributed
bonuses.

For projects, assets or investments with expected sales growth, the three NPV calculations above will be done,
for each step, with sales corresponding to signed underlying contracts at that time, and not including additional,
not yet executed, contracts that were expected in the initial proforma approved by the Board.

7.2 For corporate development involving the monetization or sale of assets or investments, the bonus award will
be distributed as follow:

- Step 1: The percentage of the award equal to the percentage of the net proceeds paid at closing, will be paid at
the time of closing

- Step 2: The remaining portion of the award relating to the deferred consideration will be paid one year after
closing, and after true up of the present value calculation that was used to determine the initial award. Net
proceeds paid into escrow at closing shall be considered deferred consideration.

8 - Other Plan Features

The Company reserves the right to terminate or amend the plan to any extent and in any manner at any time at the
Company's sole discretion.

Eligibility or participation in the Plan does not imply nor constitute any type of an employment agreement between
the participant and the Company.

This 2003 Corporate Development Incentive Plan applies to projects, assets or investments acquired, initiated,
sold or monetized on or after April 1, 2003.

                                                       ###

                                                         4
                                                     Exhibit 18

                     [LETTERHEAD OF KOSTIN, RUFFKESS & COMPANY, LLC]

                                                   April 14, 2003

U.S. Energy Systems, Inc.
One North Lexington Avenue
White Plain, NY 10601

RE: Annual Report on Form 10K for fiscal year ended December 31, 2003 of U.S. Energy Systems, Inc. (the
"Company")

Ladies and Gentlemen:

This letter shall confirm that, in our judgment, the change in the Company's accounting policy pertaining to the tax
accounting of the Illinois rate incentive by its Illinois-based biogas to energy projects effective April 1, 2001 and
the adjustment made to the purchase accounting respecting the 2001 merger with Zahren Alternative Power
Corporation (both described in Note S - Accounting Changes to the Consolidated Financial Statement included
in the Company's Annual Report on Form 10K for fiscal year ended December 31, 2003 and reflected in the
Consolidated Financial Statements to such Annual Report) are preferable under the circumstances to the
accounting policies and purchase accounting previously employed by the Company respecting such matters.

                                      Kostin, Ruffkess & Company, LLC

                                  By: /s/ Kostin, Ruffkess & Company, LLC
                                      -----------------------------------
Exhibit 23 - Consent of Independent Accountants

We hereby consent to the incorporation by reference in the Company's Registration Statements on Form S-8
(No. 333-31030), Form S-8 (No. 333-75690), Form S-3 (No. 333-36307), Form S-3 (No. 333-40004),
Form S-3 (No. 333-55872) and Form S-3 (No. 333-87264)of our report dated April 8, 2004, which appears
in the Annual Report on Form 10-K of U.S. Energy Systems, Inc. and subsidiaries for the year ended December
31, 2003.

                                  /s/ KOSTIN, RUFFKESS & COMPANY, LLC

                                  KOSTIN, RUFFKESS & COMPANY, LLC
                                  Farmington, CT April 8, 2004
Exhibit 31.1

SECTION 302 CERTIFICATION

I, Goran Mornhed, the Chief Executive Officer, certify that:

1. I have reviewed this Annual Report on Form 10-K of U.S. Energy Systems, Inc.

2. Based upon my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report.

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;

(b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period
covered by this report based on such evaluation; and

(c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant's internal controls over financial reporting.

                                 Dated: April 14, 2004


                                                       /s/ Goran Mornhed
                                                 ------------------------------
                                                        Goran Mornhed
                                                     Chief Executive Officer
                                                    U.S. Energy Systems, Inc
Exhibit 31.2

SECTION 302 CERTIFICATION

I, Thomas J. Noonan, the Chief Accounting Officer, certify that:

1. I have reviewed this Annual Report on Form 10-K of U.S. Energy Systems, Inc.

2. Based upon my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report.

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;

(b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period
covered by this report based on such evaluation; and

(c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting.

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing equivalent functions):

(d) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and

(e) any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant's internal controls over financial reporting.

                               Dated: April 14, 2004


                                                   /s/ Thomas J. Noonan
                                           -------------------------------------
                                                      Thomas J. Noonan
                                                   Chief Accounting Officer
                                                   U.S. Energy Systems, Inc
                                                     Exhibit 32

                                      CERTIFICATION PURSUANT TO
                                         18 U.S.C. SECTION 1350,
                                       AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of US Energy Systems Inc (the "Company") on Form 10-K for the year
ending December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Goran Mornhed the Chief Executive Officer and Thomas J. Noonan the Chief Accounting Officer,
certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of
1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and
result of operations of the Company.

Dated: April 14, 2004

U. S. ENERGY SYSTEMS, INC.

                                    By:          /s/ GORAN MORNHED
                                          ----------------------------------
                                                    Goran Mornhed
                                               Chief Executive Officer
                                            (Principal Executive Officer)


                                    By:         /s/ THOMAS J. NOONAN
                                          ----------------------------------
                                                  Thomas J. Noonan
                                              Chief Accounting Officer
                                           (Principal Accounting Officer)