Share Pledge Agreement

EXHIBIT 10.2

EXECUTION VERSION

SHARE PLEDGE AGREEMENT made by

U.S. ENERGY SYSTEMS, INC.,

as Pledgor

in favor of

SILVER POINT FINANCE L.L.C.,

as Collateral Agent

Dated as of May 31, 2007

TABLE OF CONTENTS

Page

ARTICLE I DEFINED TERMS 1

Section 1.1

Definitions 1

Section 1.2

Other Definitional Provisions 3

ARTICLE II PLEDGE OF STOCK 3

ARTICLE III REPRESENTATIONS AND WARRANTIES 3

Section 3.1

Title; No Other Liens 3

Section 3.2

Perfected First Priority Liens 3

Section 3.3

Pledged Stock 4

ARTICLE IV COVENANTS 4

Section 4.1

Delivery of Instruments and Certificated Securities 4

Section 4.2

Payment of Obligations 4

Section 4.3

Maintenance of Perfected Security Interest; Further Documentation 4

Section 4.4

Changes in Name, etc 4

Section 4.5

Notices 5

Section 4.6

Pledged Stock 5

ARTICLE V REMEDIAL PROVISIONS 6

Section 5.1

Pledged Stock 6

Section 5.2

Application of Proceeds 6

Section 5.3

Code and Other Remedies 7

Section 5.4

Private Sale 7

Section 5.5

Deficiency 8

ARTICLE VI THE COLLATERAL AGENT 8

Section 6.1

Collateral Agent' s Appointment as Attorney-in-Fact, etc 8

Section 6.2

Duty of Collateral Agent 9

Section 6.3

Authorization to File Financing Statements 10

Section 6.4

Authority of Collateral Agent 10

ARTICLE VII MISCELLANEOUS 10

Section 7.1

Amendments in Writing 10

Section 7.2

Notices 10

Section 7.3

No Waiver by Course of Conduct; Cumulative Remedies 10

Section 7.4

Successors and Assigns 11

Section 7.5

Counterparts 11

Section 7.6

Severability 11

Section 7.7

Section Headings 11

Section 7.8

Integration 11

Section 7.9

GOVERNING LAW 11


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Section 7.10

Submission To Jurisdiction; Waivers 11

Section 7.11

Acknowledgements 12

Section 7.12

Releases 12

Section 7.13

WAIVER OF JURY TRIAL 13

SCHEDULES

Schedule 1

Notice Address

Schedule 2

Pledged Stock

Schedule 3

Perfection Matters


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SHARE PLEDGE AGREEMENT SHARE PLEDGE AGREEMENT, dated as of May 31, 2007, made by U.S. ENERGY SYSTEMS, INC., a Delaware corporation (the " Pledgor" ), in favor of SILVER POINT FINANCE LLC, as collateral agent (in such capacity, the " Collateral Agent" ) for the banks and other financial institutions or entities (the " Lenders" ) from time to time party to the Credit and Guaranty Agreement, dated as of May 31, 2007 (as amended, supplemented or otherwise modified from time to time, the " Credit Agreement" ), among U.S. ENERGY BIOGAS CORP., a Delaware corporation (the " Borrower" ), certain Subsidiaries of U.S. ENERGY BIOGAS CORP., the Lenders and SILVER POINT FINANCE, LLC, as administrative agent.

WITNESSETH :

WHEREAS, pursuant to the Credit Agreement, dated as of May 31, 2007, between the Borrower, the Collateral Agent and the Lenders, the Lenders have agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein; and

WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement that the Pledgor shall have executed and delivered this Agreement to the Collateral Agent;

NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make its respective extensions of credit to the Borrower thereunder, the Pledgor hereby agrees with the Collateral Agent, as follows: ARTICLE I

DEFINED TERMS Section 1.1 Definitions . Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms are used herein as defined in the New York UCC (as defined herein): Certificated Security and Instruments.

The following terms shall have the following meanings:

" Agreement" : this Share Pledge Agreement, as the same may be amended, supplemented or otherwise modified from time to time.

" Capital Stock" : any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation and any and all warrants, rights or options to purchase any of the foregoing. " Collateral" : as defined in Section 2.

" Event of Default" : a Default as defined in the Credit Agreement. " Issuer" : U.S. Energy Biogas Corp., a Delaware corporation. " Lien" : any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).

" New York UCC" : the Uniform Commercial Code as from time to time in effect in the State of New York.

" Obligations" : the collective reference to the unpaid principal of and interest on the Loans and Obligations and all other obligations and liabilities of the Borrower (including, without limitation, interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and Obligations and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy or reorganization relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to the Agents or any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, the NPI Agreement, this Agreement, the other Credit Documents whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements).

Pledge and Security Agreement : means that certain Pledge and Security Agreement, dated as of May 31, 2007, by and among made by each of the Grantors, in favor of the Collateral Agent for the banks and other financial institutions or entities. " Pledged Stock" : as defined in Section 2.

" Proceeds" : all " proceeds" as such term is defined in Section 9-102(a)(64) of the New York UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Stock, collections thereon or distributions or payments with respect thereto.

" Requirement of Law" : as to any Person, the Certificate of Incorporation and By Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

" Securities Act" : the Securities Act of 1933, as amended.

" Secured Parties" : the Lenders and the Collateral Agent (each a " Secured Party" ).


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Section 1.2 Other Definitional Provisions . The words " hereof," " herein" , " hereto" and " hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified.

The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

ARTICLE II

PLEDGE OF STOCK

As security for the payment or performance, as the case may be, in full of the Obligations, the Pledgor hereby grants and pledges to the Collateral Agent, its successors and assigns, a security interest in all of the Pledgor' s right, title and interest in, to and under (a) all present and future Capital Stock of the Issuer and any certificates representing all such Capital Stock, including, without limitation, the certificates identified on Schedule 2 attached hereto, (collectively, the " Pledged Stock" ), (b) all payments of dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other proceeds received in respect of, the Pledged Stock; (c) all rights and privileges of the Pledgor with respect to the Pledged Stock and other property referred to in clause (b) above; and (d) all Proceeds of any of the foregoing (the items referred to in clauses (a) through (d) above being collectively referred to as the " Collateral" ).

ARTICLE III

REPRESENTATIONS AND WARRANTIES

To induce the Lenders to make their respective extensions of credit to the Pledgor under the Credit Agreement, the Pledgor hereby represents and warrants to the Secured Parties that:

Section 3.1 Title; No Other Liens . Except for the security interest granted to the pursuant to this Agreement, the Pledgor owns the Collateral free and clear of any and all Liens or claims of others. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Collateral Agent or with respect to which the Pledgor has delivered an authorized termination statement to terminate any such financing statement.

Section 3.2 Perfected First Priority Liens . The security interests granted pursuant to this Agreement (a) upon completion of the filings and other actions specified on Schedule 3 (which, in the case of all filings and other documents referred to on said Schedule, have been delivered to the Collateral Agent in completed and duly executed form) will constitute valid perfected security interests in all of the Collateral in favor of the Collateral Agent, as collateral security for the Obligations, enforceable in accordance with the terms hereof against all creditors of the Pledgor and any Persons purporting to purchase any Collateral from the Pledgor and (b) are prior to all other Liens on the Collateral in existence on the date hereof.


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Section 3.3 Pledged Stock . The shares of Pledged Stock constitute all the issued and outstanding shares of all classes of the Capital Stock of the Issuer.

All the shares of the Pledged Stock have been duly and validly issued and are fully paid and nonassessable.

The Pledgor is the record and beneficial owner of, and has good and marketable title to, the Pledged Stock, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by this Agreement.

ARTICLE IV

COVENANTS

The Pledgor covenants and agrees with the Collateral Agent that, from and after the date of this Agreement until the Obligations shall have been paid in full: Section 4.1 Delivery of Instruments and Certificated Securities . If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Certificated Security, such Instrument or Certificated Security shall be immediately delivered to the Collateral Agent, duly indorsed in a manner satisfactory to the Collateral Agent, to be held as Collateral pursuant to this Agreement.

Section 4.2 Payment of Obligations . The Pledgor shall pay, and save the Collateral Agent and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying any and all stamp, excise, sales or other taxes (other than any Tax on the overall net income of such Person) which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.

Section 4.3 Maintenance of Perfected Security Interest; Further Documentation . The Pledgor shall maintain the security interest created by this Agreement as a perfected first priority security interest and shall defend such security interest against the claims and demands of all Persons whomsoever, subject to the rights of the Pledgor under the Credit Agreement to dispose of the Collateral.

At any time and from time to time, upon the written request of the Collateral Agent, and at the sole expense of the Pledgor, the Pledgor will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Collateral Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein. Section 4.4 Changes in Name, etc . The Pledgor will not, except upon 15 days' prior written notice to the Collateral Agent and delivery to the Collateral Agent of all additional financing statements and other documents reasonably requested by the Collateral Agent to


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maintain the validity, perfection and priority of the security interests provided for herein, (i) change its jurisdiction of organization or the location of its chief executive office or sole place of business or principal residence or (ii) change its name or corporate identity.

Section 4.5 Notices . The Pledgor will advise the Collateral Agent promptly, in reasonable detail, of:


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