PROJECT # 2172901
                               TRADE CODE # 15050


                                      HVAC


                     TERMINAL ONE JFK INTERNATIONAL AIRPORT

                                   SUBCONTRACT

                          KSW MECHANICAL SERVICES, INC.
                                37-17 23RD STREET
                           LONG ISLAND CITY, NY 11101




                  CONSTRUCTION MANAGER:
                  MORSE DIESEL INTERNATIONAL, INC.
                  1633 BROADWAY
                  NEW YORK, NY  10019


<PAGE>

 INDEX                                                              PAGE

ARTICLE 1:          Subcontract Price; Scope of the Work.............4
ARTICLE 2:          Certain Obligations of the Subcontractor to the
                    Construction Manager and Architect...............5
ARTICLE 3:          Terms of Payment.................................6
ARTICLE 4:          Scheduling.......................................9
ARTICLE 5:          Progress.........................................9
ARTICLE 6:          Timing...........................................9
ARTICLE 7:          Bonds............................................9
ARTICLE 8:          Sub-Subcontracts and Purchase Orders............10
ARTICLE 9:          Certain Warranties and Guarantees...............10
ARTICLE 10:         Insurance.......................................11
ARTICLE 11:         Default.........................................12
ARTICLE 12:         No Waiver Except in Writing.....................14
ARTICLE 13:         Merger..........................................14
ARTICLE 14:         Amendments......................................14
ARTICLE 15:         Additional Terms and Conditions.................14
ARTICLE 16:         Captions........................................14
ARTICLE 17:         Notices.........................................14
ARTICLE 18:         Miscellaneous...................................15
ARTICLE 19:         No Third Party Beneficiary......................15
ARTICLE 20:         Termination.....................................15
ARTICLE 21:         Disputes........................................16
ARTICLE 22:         Assignments.....................................17

                    LIST OF EXHIBITS

<PAGE>

                ARCHITECT: WILLIAM NICHOLAS BODOUVA + ASSOCIATES


                              S U B C O N T R A C T


THIS SUBCONTRACT AGREEMENT is entered into as of the 1 day of May, 1996 by and
between KSW Mechanical Services, Inc., a Delaware Corporation, as an independent
contractor (the "Subcontractor"), and MORSE DIESEL INTERNATIONAL, INC., a
Delaware Corporation (the "Construction Manager"), as
construction manager.

          WHEREAS, the Construction Manager has entered into a Construction
Management Agreement dated July 14, 1994 (the "CM Agreement") with Terminal One
Group Association, L.P. a New York Limited Partnership (the "Owner"), as Owner,
to provide construction management services in connection with the construction
of the Owner's Terminal One at John F. Kennedy International Airport in Jamaica,
New York (the "Project"); and

          WHEREAS, the Construction Manager has awarded this subcontract for the
Work, as hereinafter defined, to the Subcontractor and the Subcontractor has
agreed to enter into this Agreement and to perform such Work;

          NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, the Subcontractor and the Construction Manager agree
as follows:

<PAGE>

ARTICLE 1: SUBCONTRACT PRICE; SCOPE OF THE WORK.

          1.1 Subject to all of the terms and conditions herein contained, the
Subcontractor shall receive the total subcontract price of Sixteen million five
hundred thousand and 00/100---- Dollars ($16,500,000.00) (the "Subcontract
Price") (which price is firm, not subject to escalation, and includes all
applicable federal, state and municipal taxes) for the full and faithful
performance and completion of all of its obligations under this Agreement,
including but not limited to the performance and completion of all construction
contemplated by the Subcontract Documents, as hereinafter defined, including all
labor necessary to complete such construction, all materials and equipment
(whether for temporary or permanent use) incorporated or to be incorporated in
such construction and all other services, facilities, tools and equipment
necessary to complete such construction (the "Work"), all of the foregoing
necessary to complete the following:

                                    HVAC WORK

          1.2 The foregoing Work shall include, without limitation, the
preparation, delivery and installation or erection, as the ease may be, of
materials and machinery, scaffolding, tools, equipment, and all transportation,
cartage, loading and hoisting, patterns, models, surveys, field measurements or
other measurement, shop drawings, temporary light, protection of work and labor
from winter conditions, and payment of royalties. Without limitation of any
provision of the General Conditions, as hereinafter defined, any Work shown on
drawings and not mentioned in specifications, or described in specifications and
not shown on drawings, shall be included in the Work. The Subcontractor shall
faithfully and diligently undertake and complete the Work to comply in every
respect with this Agreement and the other Subcontract Documents

          1.3 For purposes of the Agreement, the "Subcontract Documents" shall
consist of this Agreement, the documents listed on "List of Exhibits" (page 16)
attached hereto and any addenda or modifications thereto hereafter issued, any
supplementary General Conditions or Special Conditions hereafter issued, the
relevant terms and conditions of the Prime Contract and Port Site Lease as
hereinafter described in the event of any inconsistency between the terms and
conditions of this Agreement, the documents listed on "List of Exhibits" and any
addenda or modifications thereto hereafter issued, any supplementary General
Conditions or Special Conditions hereafter issued, the Prime Contract or the
Port Site Lease, the more restrictive provisions, as applied to the
Subcontractor, shall govern. Subcontractor shall perform the work hereinafter
described all in accordance with the terms and conditions stated in this
Subcontract The contract between Morse Diesel International and Terminal One
Group Association L P. dated July 14, 1994 is incorporated herein and made part
of this Subcontract except as set forth below

 LIST OF EXCLUDED PRIME CONTRACT SECTIONS

Section 2 03.A
Section 2 03.B. 2(a):  paragraphs 2 and 3
Section 2 03.B. 3(a), (b), (e)
Section 2 03 B. 19 (second paragraph)
Section 2 04.A
Section 2.06.C
Section 3
Section 4.01: Change "Notice-to-Proceed" to "Letter or Intent "
Section 5
Section 6
Section 7
Section 8.01.F
Section 11
Exhibit 2
Exhibit 3

          For the purpose of incorporating the Prime Contract into this
Subcontract, unless this Subcontract or the Prime Contract requires otherwise,
to the extent that the Construction Manager is obligated to the Owner under the
Prime Contract, the Subcontractor and its Sub-subcontractors shall be equally
obligated to the Construction Manager and the Owner for the work to be performed
or provided by Subcontractor or sub-subcontractors under this Subcontract. The
Subcontractor shall be bound to the same extent Construction Manager is so bound
by all of the relevant terms and conditions of the Prime Contract and to the
same extent that the Owner is so bound by all of the relevant thrills and
conditions of the Port Site Lease, which is incorporated in and made part of
this Subcontract. The Subcontractor will be responsible for assuring that its
performance of this Subcontract is planned and executed in accordance with the
terms and conditions of the Prime Contract and Port Site Lease. For purposes of
this Agreement, any reference in the General Conditions to the "Contract
Documents" shall mean the Subcontract Documents as defined herein.

          1.4 This Agreement is solely between the Construction Manager and the
Subcontractor and shall not be deemed to create a contractual relationship
between the Owner and the Subcontractor.


ARTICLE 2:  CERTAIN OBLIGATIONS OF THE SUBCONTRACTOR TO THE CONSTRUCTION
            MANAGER AND ARCHITECT.

          2.1 The Subcontractor affirms that it has visited the site and has
become familiar with all conditions at the site, including, without limitation,
the condition described in Article 1 of the General Conditions. Without
limitation of any other provision hereof, the Subcontractor shall perform the
Work and its obligations under this Agreement in accordance with and subject to
each of the provisions of the General Conditions to the fullest extent that each
such provision is applicable to the Work. It being intended that the General
Conditions supplement the terms and provisions of this Agreement, in the event
of any inconsistency between the terms and conditions of this Agreement and such
General Conditions, the more restrictive provision, as applied to the
Subcontractor shall govern. The Subcontractor expressly agrees that to the
extent the General Conditions require the performance of any act or thing by
(including, without limitation, representations or warranties), or impose any
obligation on, the Construction Manager in connection with the performance or
completion of any part or the Work, the Subcontractor hereby assumes the
performance of any such act, thing or obligation, and the Subcontractor shall
perform the same to the fullest extent that the General Conditions require such
performance of tile Construction Manager. The Construction Manager shall have
the same rights and remedies against the Subcontractor with respect to such
acts, things and obligations as the Owner may have against the Construction
Manager under the General Conditions with the same force and effect as if every
such right or remedy were set forth in full herein. Any claims (or actions
arising therefrom) by the Subcontractor against the Construction Manager shall
be subject to the conditions and limitations set forth in the General
Conditions.

          2.2 The Subcontractor shall undertake and complete the Work under the
direction and supervision of, and to the entire satisfaction of the Construction
Manager and the Architect. The Construction Manager shall provide the
subcontractor with one (1) set of drawings and specifications for the Work.
Additional copies of drawings and specifications will be provided at the
Subcontractor's expense. The Architect shall provide such additional drawings,
details and explanations as may be necessary to detail and illustrate the Work,
and the Subcontractor shall conform to and abide by any such drawings, details
and explanations.

          2.3 The Subcontractor, if it subcontracts any part of the Work, shall
enter into agreements substantially similar to this Agreement with each sub-tier
subcontractor and shall require that each sub-tier subcontractor read and
expressly agree in writing to be bound by all provisions of the General
Conditions applicable to its work.


ARTICLE 3:  TERMS OF PAYMENT.

          3.1 If the Subcontractor is making satisfactory progress with the Work
(in the Construction Manager's reasonable opinion), is not in default under this
Agreement or under any other Subcontract Document, and is in compliance with all
the documentation requirements of this Agreement and the General Conditions, and
if (but only to the extent that) the Construction Manager has received payment
from the Owner for such Work, the construction Manager will, subject to the
Section 3.2 below, make periodic payments to the subcontractor equal to the
value of Work performed, less retention as set forth in Article 15 of the
General Conditions. The Construction Manager will submit monthly statements to
the Owner for work performed during the previous month. It is anticipated that
the Construction Manager will receive payment from the Owner within
approximately thirty-five days after submission of each such statement, subject
to actions of the Port Authority of New York and New Jersey. The Subcontractor
recognizes that an essential terms of the Subcontract shall be that the
Subcontractor shall not be entitled to payment or demand or claim payment from
Construction Manager unless or until construction Manager as a condition
precedent receives payment for the workscope of the Subcontractor from the
Owner. In the event payment is not made for any reason whatsoever, including,
but not limited to, default by the Owner or non-payment by the Trustee, the
subcontractor shall look exclusively to the Owner for payment of any and all
funds due under the Subcontract. The Subcontractor further agrees that delay in
payment or non-payment by the Owner does not create any separate obligation of
the Construction Manager to pay regardless of the extent of the delay. Retention
shall be paid to the Subcontractor in accordance with Article 15 of the General
Conditions, less in any event any amounts the Construction Manager has applied
to cure any default by the Subcontractor under the Contract Documents.

          3.2 In order to receive any payment for the Work, the subcontractor
must comply with the terms and conditions of Article 15 of the General
Conditions and must furnish such other documentation or information as may be
required by Construction Manager. 3.3 Notwithstanding anything to the contrary
in this Agreement or the existence of any performance or labor and material
payment bond but without limitation of the provisions of Article 15 of the
General Conditions, the Construction Manager is hereby empowered but not
required at any time to withhold from the Subcontractor an amount or amounts
equal in he opinion of the Construction Manager to the amounts necessary to
complete the entire Work, or any part thereof, and to pay and fully discharge
any claims or liens arising out of the Work performed under this Agreement that
may arise and be unpaid, for which, if established, the Construction Manager or
the Owner may become liable. Without limitation of any other rights or remedies
of Construction Manager, the amount of all such payments of the Subcontractor's
obligations by the Construction Manager shall be deducted from the Subcontract
Price then unpaid. If any such obligations, claims or liens exceed the amount of
the Subcontract Price then unpaid, or arise after Construction Manager has paid
or otherwise satisfied the full Subcontract Price in accordance with and subject
to the terms and conditions hereof, the Subcontractor, immediately upon demand,
shall pay to the Construction Manager all monies that the Construction Manager
may have paid to discharge such obligations, liens or claims with respect to the
Project.

          3.4 The Subcontractor expressly agrees that said Subcontract Price
includes (a) all Work provided for in the drawings and specifications, together
with all work reasonably inferable therefrom (consistent with the scope of the
Project described in the General Conditions), and (b) all increases in cost,
foreseen or unforeseen, including, without limiting the generality of the
foregoing, taxes, labor and materials, the cost of all of which is to be borne
solely by the Subcontractor. All loss or damage arising from any of the Work
through unforeseen or unusual obstructions, difficulties or delays which may be
encountered in the prosecution of same or through the action of the elements
shall be borne by the Subcontractor. It is mutually agreed between the parties
hereto that no payment made under this Agreement shall be conclusive evidence of
the performance of this Agreement by the Subcontractor, either wholly or in
part, nor shall it be construed to be an acceptance of defective Work or
materials, or an approval of any of the items in any requisitions made or
invoice rendered. All invoices or requests for payments must be presented in
writing in such form as may be required by Construction Manager. Provided
payments are made to the Subcontractor as provided for hereunder, Subcontractor
shall pay all costs necessary for the satisfactory completion of the Work in
accordance with the Subcontract Documents.

          3.5 Subcontractor shall use the sums advanced to it pursuant to this
Article 3 solely for the purpose of performance of the work and the
construction, furnishing, and equipping of the Project in accordance with
Contract Documents. Any and all funds paid to Subcontractor hereunder are hereby
declared to constitute trust funds in the hands of Subcontractor to be applied
before application to any other purpose to the payment of (a) claims of sub-
subcontractors, sub-laborers, materialmen or other persons arising out of the
Work and employed by Subcontractor, (b) to claims for utilities furnished and
taxes imposed, and to the payment of premiums on surety bonds and other bonds
filed and premiums on insurance accruing during the construction of the Work,
and (c) any indemnity obligations of Subcontractor hereunder.

ARTICLE 4:  SCHEDULING.

          Concurrently with the execution of this Subcontract, the Subcontractor
shall give the Construction Manager a proposed detailed time and manpower
schedule, providing for completion of the Work within the time necessary, in the
Construction Manager's reasonable opinion, to allow completion of the Project by
the Construction Manager by the date specified by the Construction Manager,
taking into account all work by all other subcontractors necessary to complete
the Project. The Subcontractor also shall furnish, upon request by Construction
Manager from time to time, cash flow projections, on a month by month basis,
including, without limitation, an estimate of its total expenditures for labor
for its Work (which shall include the estimated payroll for each of the trades
it will employ by subcontract). At the Construction Manager's request, the
Subcontractor shall revise the schedule and such projections until same are
satisfactory to the Construction Manager. The Construction Manager intends to
and shall use the above referenced schedule in preparing the master Project
Schedule to list the dates for completion of the various segments of the Work.
Without limitation of any provision of the General Conditions, the Subcontractor
shall complete the Work in accordance with the Project Schedule, including any
revisions thereto provided by Construction Manager. The Construction Manager
exclusively shall control scheduling, including the periodic updating thereof,
if any, and the Subcontractor shall comply therewith. The Construction Manager
shall have the right to schedule other work at the same time and in the same
areas as the Subcontractor's Work. The Subcontractor shall coordinate its Work
with any other subcontractor's work in such manner as the Construction Manager
may direct to avoid conflict or interference with such work of others, shall
participate in the preparation of coordinated drawings of congested areas and
shall conform the Work to the work of other subcontractors to prevent
discrepancies (and to avoid unnecessary cutting or patching) with contiguous
work. At its sole discretion, the Construction Manager may schedule Work during
a time of, and from time to time during, winter conditions. The determination of
when winter conditions exist shall rest exclusively with the Construction
Manager.


 ARTICLE 5: PROGRESS.

          5.1 The Subcontractor shall keep itself informed at all times of the
progress of the Project, and of the progress of others whose work may affect, or
who may be affected by, its progress. At the Construction Manager's request, the
Subcontractor shall inform the Construction Manager about materials on hand,
progress made in the manufacturing and fabricating of materials for the Work, or
any other matters relating to the condition or progress of the Work. The
Construction Manager, Owner's representatives, and the Architect at all times
shall have free access to the office, shops and yards of the Subcontractor to
verify any information about the Work given by the Subcontractor.

          5.2 The Subcontractor, upon twenty-four (24) hours notice, in person
or by duly authorized representative having power to act and acceptable to
Construction Manager, shall attend, at its own expense, all meetings or
conferences that the Owner, Architect or Construction Manager may call, at the
building site or elsewhere, for the purpose of discussing progress of the Work,
safety at the site, or ways to expedite the completion of the Project.


ARTICLE 6:  TIMING.

          TIME IS OF THE ESSENCE OF THIS AGREEMENT. The Construction Manager
and/or the Owner may sustain financial loss if the whole Project or any part
thereof is delayed because the Subcontractor fails to perform any part of the
Work in accordance with the Subcontract Documents, including, without
limitation, a failure to comply with the Construction Manager's directions or
the Project Schedule. The Subcontractor shall begin the Work at the time
directed by the Construction Manager and shall perform its obligations under
this Agreement with diligence and with sufficient manpower to maintain the
progress of the Work as scheduled, without delaying other trades or areas of
work. At the request of the Construction Manager, the Subcontractor shall
perform certain parts of the Work before other parts, add extra manpower, or
other overtime labor in order to comply with the Project Schedule, all without
any increase in the Subcontract Price (unless otherwise specifically provided in
the General Conditions).


ARTICLE 7:  BONDS.

          The Subcontractor shall furnish a performance bond and a labor and
material payment bond, within five (5) days after execution of this Agreement,
at its own expense. Such bonds shall be with a corporate surety licensed in New
York rated by Best's Key Rating Guide as B+ or better and acceptable to the
Construction Manager and the Owner, in the amount of the Subcontract Price and
shall name the Owner (and each member thereof) and Owner's mortgagee, if any, as
additional obligees thereunder. Such bonds shall include provisions to the
effect that the Subcontractor shall faithfully, promptly and with due diligence
(i) perform all of the terms and provisions of this Agreement on its part to be
performed, (ii) pay all of the Subcontractor's obligations to its employees,
agents, all subcontractors, material men, suppliers or other relating to the
Work, and (iii) complete the various portions of the Work in accordance with the
terms of the Subcontract Documents, and such bonds shall otherwise be in form
and substance mutually satisfactory to the Construction Manager and Owner. To
the extent, if any, that the Subcontract Price is increased in accordance with
the Subcontract Documents, Subcontractor shall, upon request of the Owner or
Construction Manager, cause the amount of such bonds to be increased accordingly
and shall promptly deliver satisfactory evidence of such increase to
Construction Manager. The bonds shall further provide that no change or
alteration of this Agreement (including, without limitation, an increase in the
Subcontract Price, as aforesaid), extensions of time, premature payment or
overpayment to the Subcontractor, will release the surety.


ARTICLE 8:  SUB-SUBCONTRACTS AND PURCHASE ORDERS.

          Within thirty (30) days' of the award of this Subcontract, or such
earlier time as the Construction Manager may schedule, the Subcontractor shall
execute all purchase orders, enter into all sub-subcontracts for the Work, and
give to the Construction Manager a complete list of all its sub-subcontractors
and suppliers for all parts of the Work. The Subcontractor shall notify the
Construction Manager in writing of any proposed changes in its
sub-subcontractors or suppliers not less than five (5) days' prior to such
change, which notice shall specify the reasons for such proposed change. Without
limiting, diminishing or otherwise affecting the Subcontractor's obligations
thereunder, any such change shall be subject to the approval of Construction
Manager, which approval shall not be unreasonably withheld or delayed.


ARTICLE 9:  CERTAIN WARRANTIES AND GUARANTEES.

          9.1 Promptly upon completion of the Work, the Subcontractor shall
deliver to the Construction Manager or the Owner (as the Construction Manager
may direct) all warranties and guarantees from third parties for materials,
equipment and labor incorporated into or used in connection with the Work.

          9.2 The Subcontractor warrants to the Construction Manager that all
materials and equipment furnished under this Agreement will be new, unless
otherwise specified, and that all Work will be of good quality, free from liens
and encumbrances, free from improper workmanship and defective materials and in
conformance with the Subcontract Documents.

          9.3 Without limitation of the foregoing or any other obligation of the
Subcontractor provided for in the Subcontract Documents (including, without
limitation, Article 8 of the General Conditions), immediately upon the
Construction Manager's demand, the Subcontractor, at its own expense, shall
repair, replace, restore or rebuild, at the Construction Manager's option, any
Work in which defects in materials or workmanship may appear, or which is
otherwise not in conformance with the other warranties of Subcontractor
thereunder, or to which damage may occur because of such defects or lack of
conformance, within one (1) year, or such longer period as required by the
specifications, from the date of the Owner's and Architect's final acceptance of
the Project. Such repair, replacement, restoration or rebuilding, as the case
may be, shall be carried out by the Subcontractor promptly upon such demand by
Construction Manager and shall be performed in accordance with Article 13 of the
General Conditions. If the Subcontractor fails to comply, the Construction
Manager may correct such defect or lack of conformance, as the case may be, and
the Subcontractor shall immediately reimburse the Construction Manager thereof.

          9.4 The existence of the foregoing warranties and undertakings by the
Subcontractor shall not relieve the Subcontractor of, or reduce the
Subcontractor's, liability for latent defects and shall be in addition to all of
the Construction Manager's other rights and remedies thereunder, under any other
Subcontract Document or under law, and to any other guarantees or other
warranties, whether express or implied.


ARTICLE 10: INSURANCE.

          10.1 The Owner intends to implement a wrap-up insurance program as
described in Schedule "L" to this Agreement. In the event that the Subcontractor
is designated as an Accepted Subcontractor under such program, the Subcontract
Price shall be reduced by $ -0- . The Subcontractor hereby certifies that the
Subcontract Price as so reduced excludes all costs for insurance within the
coverage and limits provided by the Owner's wrap-up program. The Subcontract
shall comply fully with the requirements of Schedule "L," including without
limitation the requirement thereof relating to insurance coverage to be procured
by Accepted Subcontractors or by subcontractors not designated as Accepted
Subcontractors.

          10.2 The following provisions shall apply to all insurance coverage to
be procured by the Subcontractor under the terms of Schedule "L" and shall be in
addition to the requirements of Schedule "L." The Subcontractor, at its own
expense, shall obtain and submit to the Construction Manager, before undertaking
any part of the Work, policies and certificates with receipts for the payment of
premiums from the Subcontractor's insurance carriers indicating coverage from
companies, in amounts and on such other terms as provided for hereinafter and in
Schedule "L." Any "deductible" with respect to such coverage shall be submitted
to, and must be approved in writing by, Construction Manager, provided that any
cost not covered by any such approved deductible shall in any event be borne by
the Subcontractor. All such insurance shall be maintained by the Subcontractor,
at its expense, until the Work has been completed and all obligations of the
Subcontractor under the Subcontract Documents have been satisfied. Any policy of
insurance covering the Subcontractor's tools, equipment or facilities against
loss by physical damage, shall provide that the underwriters waive their rights
of subrogation against the Construction Manager, the Owner, and their respective
members, officers, directors, employees, agents and servants. All policies
required of the Subcontractor thereunder shall provide for notice to the
Construction Manager and Owner sixty (60) days before any change in or
cancellation of such insurance, and shall otherwise be acceptable to the
Construction Manager. Upon request, the Subcontractor shall furnish the
Construction Manager with evidence of insurance satisfactory to the Construction
Manager for each sub-subcontractor employed by it. The insurance required herein
shall in any event include blanket (broad form) contractual liability insurance.
The existence of insurance shall not be construed to limit the Subcontractor's
liability under this Agreement.


 ARTICLE 11:  DEFAULT.

          11.1 Any one or more of the following shall constitute an event of
default by the Subcontractor:

                  A.   The Subcontractor shall fail or refuse to perform
         or comply with any term,  condition or provision of this
         Agreement or of any of the other Subcontract Documents.

                  B.   The Subcontractor shall fail or refuse to pay any of its
         sub-subcontractors, suppliers, or workers for any materials, labor or
         other things incorporated into, or used in connection with, the Work
         when such payments are due; provided, however, that if the
         Subcontractor disputes the amount due to a worker, sub-subcontractor or
         supplier, the Subcontractor, within two (2) days of the due date of
         such payment, at its own expense, posts a bond for the disputed payment
         in amount and form satisfactory to the Construction Manager as security
         for such payments, then such non-payment shall not constitute an event
         of default hereunder.

                  C.    The Subcontractor shall abandon the Work or
         reduce its labor force to a  number insufficient, in the Construction
         Manager's opinion, to complete the Work within the scheduled time.

                  D.    Without limitation of the foregoing, any of the
         events described in  Paragraph 5.B.8 of the General Conditions shall
         occur.

          11.2 If any event of default described in Section 11.1 above occurs,
then the Construction Manager, at its option, at any time may:

                  A.       Order the Subcontractor immediately to comply
         with any term, condition  or provision of this Agreement or such other
         Subcontract Document;

                  B.       Order the Subcontractor, within a specified time,
         to remove any defective  work or materials and to replace such work or
         materials with satisfactory work or materials;

                  C.       Accept any defective work or materials and reduce
         the Subcontract Price accordingly;

                  D.       Perform or arrange to have performed any of
         Subcontractor's duties  hereunder;

                  E.       Make any payments to satisfy the Subcontractor's
         obligations relating to  the Work for labor, materials, equipment,
         insurance or other items;

                  F.       Refuse to make any payments to the Subcontractor
         for Work performed  until the event of default is cured to
         the satisfaction of Construction Manager; and/or

                   Upon three (3) days' written notice to the Subcontractor,
         terminate this Agreement and take possession of all materials, tools,
         equipment, and appliances of the Subcontractor and finish the Work by
         whatever means, method or agency which the Construction Manager, in its
         sole discretion, may choose, and take any other steps the Construction
         Manager, in its sole discretion, may choose to secure any labor,
         materials, equipment and services, and, in such event, the Construction
         Manager shall have a lien on and may take over all the Subcontractor's
         equipment, tools, appliances and materials (whether on or off-site) and
         complete the Work; provided, however, that if the default involves any
         breach of safety laws, regulations or requirements, only one (1) day's
         notice (whether oral or written) shall be required.

          If the Construction Manager terminates this Agreement, as aforesaid,
the Construction Manager shall have no obligations to pay for any work performed
after such termination, and will have no obligation to make any further payments
to the Subcontractor for work performed before such termination until the
Project has been completed, accepted by the Owner and the Construction Manager
has received full payment for the Project from the Owner, and the Construction
Manager determines to tis complete satisfaction that potential expenses, charges
and claims relating to the performance of the Work have been satisfied or
satisfactorily bonded over. Such payments to the Subcontractor shall in any
event be reduced by the amount due to the Construction Manager under the terms
of this Agreement or any of the other Contract Documents.

          11.3 The Construction Manager's choice of any remedy shall not operate
to waive any rights or remedies provided hereunder, or by law, against the
Subcontractor or its surety. The Construction Manager, at his option, may choose
more than one remedy or choose one or more particular remedies at different
times.

          11.4 The Subcontractor shall pay, immediately upon demand therefore,
all costs, losses, damages and expenses, including, without limitation, all
costs and expenses described in Section 11.2 above and all administrative,
management, overhead and other direct or indirect expenses, including reasonable
attorneys' fees (the "Costs") incurred by the Construction Manager in connection
with any default by the Subcontractor or exercise of any right or remedy upon
Subcontractor's default. If the Subcontractor does not pay the Costs
immediately, the Construction Manager may deduct all Costs from any payments of
the Subcontract Price. If payments due to the Subcontractor for completed
portions of the Work are not sufficient to cover the Costs, the Subcontractor
immediately shall pay to Construction Manager the full amount of any such excess
with interest thereon until paid in full at three (3) percentage points in
excess of the rate of interest announced from time to time to Chase Manhattan
Bank as its prime rate or if it is less, at the maximum interest rate permitted
by law. The liability of the Subcontractor hereunder shall extend to and
include, without limitation, the full amount of Costs incurred and obligations
assumed by the Construction Manager in good faith under the reasonable belief
that such Costs or obligations were necessary or required, whether actually
necessary or required or not, (i) in completing the Work and providing labor,
materials, equipment, supplies and other items therefore or resubcontracting the
Work, and/or (ii) in settlement, discharge or compromise of any claims, demands,
suits and judgments pertaining to or arising out of the Work. An itemized
statement of such obligations and payments shall be prima facie evidence of the
Subcontractor's liability.


ARTICLE 12: NO WAIVER EXCEPT IN WRITING.

          No action or failure to act by the Construction Manager shall
constitute a waiver of any default in that or any other instance, except to the
extent the Construction Manager specifically states in writing.


ARTICLE 13: MERGER.

          All previous orders, proposals, letters, oral or written promises and
understandings relating to the subject matter of this Agreement, are hereby
declared to be null and void. This Agreement is complete and shall not be
interpreted by any reference to any previous letter, proposal, document or
understanding, written or oral, or other document or agreement, except as
specifically provided in this Agreement.


ARTICLE 14: AMENDMENTS.

          No amendment to this Agreement shall change or modify this Agreement
unless it is in writing and signed by both the Construction Manager and the
Subcontractor.


ARTICLE 15: ADDITIONAL TERMS AND CONDITIONS.

          Additional terms and conditions of, and Schedules to, this Agreement,
if any, are provided for on the "List of Exhibits" attached hereto.


ARTICLE 16: CAPTIONS.

          The captions to the provisions of this Agreement are for convenience
only and are not a part of this Agreement.


ARTICLE 17: NOTICES.

          Any notice required to be given by the terms and provisions of this
Agreement or by any law or governmental regulation, either by the Construction
Manager or the Subcontractor (or which either party may desire to give
hereunder), shall be in writing and shall be personally delivered or forwarded
by registered or certified mail, return receipt requested, and shall be
addressed to the party hereto to whom directed, at its address, as herein stated
to the attention of JOHN L. BABIERRACKI for Construction Manager with a copy to
Executive Vice President of Finance and Administration, Morse Diesel
International, Inc., 1633 Broadway, New York, NY 10019; notice to AMEC plc shall
be addressed attention of Group Secretary, AMEC plc, Sandiway House, Hartford,
Norwich, Cheshire CW8 2YA England, or FLOYD WARKOL, CHAIRMAN/CEO for the
Subcontractor. Copies of notices relating to default to termination shall be
sent to the Ehasz Giacalone Associates, 431 Conklin Street, Farmingdale, NY
11735 addressed to the attention of the Principal Louis P. Giacalone. Either
party may change the address to which any notice referred to herein is to be
sent by giving written notice of such change of address to the other party in
the manner provided above. Notice personally delivered pursuant to this Article
17 shall be effective on the date of delivery. Notice given by mail shall be
effective on the date of receipt appearing on the return receipt, or, in the
absence of a return receipt, the date of attempted delivery.


ARTICLE 18: MISCELLANEOUS.

          Each of the Exhibits attached hereto is hereby made a part hereof. If
any provision of this Agreement or the application thereof any person or
situation, to any extent shall be held invalid or unenforceable, the remainder
of said Agreement, and the application of such provision to persons or
situations other than those to which it shall have been held invalid or
unenforceable, shall not be affected thereby, but shall continue valid and
enforceable to the fullest extent permitted by law. All provisions of this
Agreement which by their terms require performance by either party hereto after
termination of this Agreement shall survive any such termination.


ARTICLE 19: NO THIRD PARTY BENEFICIARY.

          Except as otherwise provided herein, no provision of this Agreement
shall in any way inure to the benefit of any third person (including the public
at large) so as to constitute any such person a third party beneficiary of this
Agreement or of any one or more of the terms hereof or otherwise give rise to
any cause of action in any person not a party hereto.


ARTICLE 20: TERMINATION.

          20.1 Except to the extent provided for in Section 20.2 below and
without limitation of any provision of the General Conditions, if the CM
Agreement is terminated for any reason whatsoever, the Construction Manager may
(by notice to the Subcontractor) terminate this Agreement and in such event,
even though the Subcontractor may not be in default hereunder, the Construction
Manager shall only be liable to pay the Subcontractor such amount as shall be
due for that portion of the Work satisfactorily performed by the Subcontractor
prior to the date of termination, reduced, however, by an amount determined by
the Construction Manager to be appropriate compensation for any damages suffered
by reason of any default by the Subcontractor.

          20.2(a) Subcontractor shall not assign this Agreement in whole or in
part, or hypothecate, pledge or assign any payments due it under this Agreement,
without the Construction Manager's prior approval. Any such attempted
unauthorized assignment shall be null and void. In any event, no subcontract or
approved assignment shall relieve or release in any way the Subcontractor from
its obligations hereunder or under the other Subcontract Documents.

          This Agreement may, with written notice, be assigned to another entity
designated by the Construction Manager without the need for any action by the
Construction Manager or approval by Subcontractor and in such event the
Subcontractor agrees to and shall continue to be bound by this Agreement, and in
the event of such an assignment, Subcontractor shall continue to look solely to
the Owner and assignee for payment and performance hereunder.

          In the event of default by Construction Manager or its assignee,
Subcontractor shall provide a minimum of thirty (30) days prior written notice
to Construction Manager, assignee, and AMEC plc of the default and shall provide
Construction Manager, assignee, and AMEC plc with the ability to cure any such
default before taking any further action with respect to such default.

          20.2(b) In the event any such assignment of this Agreement is not
accepted or is rejected outright, then upon written notice from Owner that the
Construction Management Agreement has been terminated by reason of a default by
Construction Manager thereunder and that the Owner has elected to accept this
Agreement, this Agreement shall be assigned to and assumed by the Owner or
another person or entity designated by the Owner without the need for any action
by the Construction Manager or Subcontractor and in such event the Subcontractor
agrees to and shall continue to be bound by this Agreement and, in the event of
such an assignment, Subcontractor shall look solely to the Owner for payment and
performance hereunder. Upon request of the Owner, the Subcontractor further
agrees that it shall enter into an agreement directly with the Owner
acknowledging the foregoing conditional assignment of this Agreement to the
Owner and agreeing to be bound thereby.

          20.3 This Agreement may be terminated by the Construction Manager
without cause upon ten (10) days prior written notice. In the event of such
termination, Subcontractor shall be reimbursed such amount as shall be due the
Subcontractor for (1) that portion of the Work satisfactorily performed prior to
the effective date of termination, and (2) reasonable costs directly incurred
(but specifically excluding lost overhead, profits and consequential damages or
other lost opportunity costs) as directed result of such termination.


ARTICLE 21: DISPUTES.

          21.1 The disputes procedure set forth in Section 7 "Disputes" of the
Prime Contract and set forth below is specifically incorporated herein and made
a part of this Subcontract Agreement. Subcontractor agrees to pursue and exhaust
first said procedure before commencing any other action for claims it may have
arising out of its performance of the Work herein. Upon Subcontractor's written
request, Construction Manager agrees to pass on to the Owner all proper claims
submitted by Subcontractor under the disputes procedure of the Prime Contract on
behalf of and to the extend required by the Subcontractor. Subcontractor agrees
to be responsible for preparation and active prosecution of the claims to the
extent permitted and shall reimburse Construction Manager all expenses and
costs, including attorneys' fees, incurred by Construction Manager on behalf of
Subcontractor. Construction Manager agrees to pay Subcontractor whatever amount
it receives from the Owner for the Subcontractor's claim(s) less a ZERO percent
(0%) markup. Subcontractor agrees that Construction Manager's liability herein
is strictly limited to the amount(s) Construction Manager receives from the
Owner, less the above noted markup. Construction Manager shall have no liability
or obligation to the Subcontractor beyond what is recovered from the Owner on
behalf of the Subcontractor (less the markup and costs referred to above)
pursuant to this provision.


ARTICLE 22: ASSIGNMENT.

          The Agreement between Construction Manager and Subcontractor may, upon
written notice by Owner, be assigned by Construction Manager to Owner without
the need for any action by Construction Manager and Subcontractor and in such
event the Subcontractor agrees to and shall continue to be bound by this
Agreement and shall continue to look to the Owner for payment and performance
hereunder.

<PAGE>


 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

CONSTRUCTION MANAGER:                  MORSE DIESEL INTERNATIONAL, INC.
                                       a Delaware Corporation

                                       By: -----------------------------
                                                   John Babieracki
                                           Title:  Executive Vice
President

Date: ________                              _________________________
                                            Witness

SUBCONTRACTOR:                              KSW MECHANICAL SERVICES, INC.
                                            a Delaware Corporation

                                             By:-----------------------------
                                                        Floyd Warkol
                                                Title:  Chairman/CEO


Date: ________                              ---------------------------------
                                                            Witness