Document:

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                                                                   Exhibit 10.16

                      AMENDMENT NO. 5 AND WAIVER TO AMENDED
                          AND RESTATED CREDIT AGREEMENT

     This Amendment and Waiver (this "Amendment") is entered into as of November
16, 1999 by and among Luigino's, Inc., a Minnesota corporation (the "Borrower"),
Bank One, NA (f/k/a The First National Bank of Chicago), and individually and as
agent ("Agent"), and the other financial institutions signatory hereto (the
"Lenders").

                                    RECITALS

     A. The Borrower, the Agent and the Lenders are party to that certain credit
agreement dated as of February 4, 1999 (as amended, the "Credit Agreement").
Unless otherwise specified herein, capitalized terms used in this Amendment
shall have the meanings ascribed to them by the Credit Agreement.

     B. The Borrower, the Agent and the Lenders wish to amend the Credit
Agreement and waive certain provisions thereof on the terms and conditions set
forth below.

     Now, therefore, in consideration of the mutual execution hereof and other
good and valuable consideration, the parties hereto agree as follows:

          1. Amendment. Upon the effectiveness hereof pursuant to Section 3
     below, Section 6.19 of the Credit Agreement is amended in its entirety to
     read as follows effective as of November 16, 1999:

               6.19 Capital Expenditures. The Borrower will not, nor will it
          permit any Subsidiary to, expend, or be committed to expend for,
          Capital Expenditures (including, without limitation, for the
          acquisition of fixed assets) on a non-cumulative basis in the
          aggregate for the Borrower and its Subsidiaries more than (a) (i)
          $10,000,000 in the aggregate for the first three quarters of the
          Borrower's fiscal year 1999 or (ii) $23,000,000 in the aggregate for
          the entirety of the Borrower's fiscal year 1999 (excluding, in either
          case, Capital Expenditures made by the Borrower in connection with the
          Borrower's buyback of that certain Lease Agreement (Equipment), dated
          as of August 4, 1994, between FBS Business Finance Corporation, as
          lessor, and the Borrower, as lessee), or (b) $12,000,000 in any fiscal
          year of the Borrower occurring after fiscal year 1999.

          2. Consent and Waiver. The Lenders hereby waive any breach of Section
     6.19 of the Credit Agreement occurring in the third quarter of the
     Borrower's fiscal year 1999.

          3. Effective Date. This Amendment shall be deemed effective as of the
     date hereof upon (a) the execution and delivery hereof by the Borrower, the
     Agent and the Required
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     Lenders (without respect to whether it has been executed and delivered by
     all Lenders) and (b) the payment by the Borrower to the Agent for the
     ratable (based upon Commitment) account of the Lenders of an amendment fee
     in the aggregate amount of $25,000.

          4. Miscellaneous.

               (a) The execution, delivery and effectiveness of this Amendment
          shall not operate as a waiver of any right, power or remedy of the
          Agent or any Lender under the Credit Agreement or any Loan Document,
          nor constitute a waiver of any provision of the Credit Agreement or
          any Loan Document, except as specifically set forth herein.

               (b) Section headings in this Amendment are included herein for
          convenience of reference only and shall not constitute a part of this
          Amendment for any other purposes.

               (c) This Amendment may be executed in any number of counterparts,
          each of which when so executed shall be deemed an original but all
          counterparts shall constitute one and the same instrument.

          5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
     ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS
     PROVISIONS) OF THE STATE OF ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS
     APPLICABLE TO NATIONAL BANKS.

                            [signature page follows]

                                      -2-
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     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
and year first above written.

                                        LUIGINO'S, INC.

                                        By:  /s/ Joel C. Kozlak
                                             ----------------------------------

                                        Its:  Chief Financial Officer
                                             ----------------------------------

                                        BANK ONE, NA (f/k/a THE FIRST NATIONAL
                                        BANK OF CHICAGO), Individually and
                                        as Agent

                                        By:  /s/ Lisa Whatley
                                             ----------------------------------

                                        Its:  Vice President
                                             ----------------------------------

                                        U.S. BANK NATIONAL ASSOCIATION (f/k/a
                                        FIRST BANK NATIONAL ASSOCIATION)

                                        By:  /s/ William Umscheid
                                             ----------------------------------

                                        Its:  Vice President
                                             ----------------------------------

                                      -3-2.a  02 CUC Phase I

                                 CUC-PG-97-C057

                                     PRIVATE
              AGREEMENT FOR DESIGN, SUPPLY OF PLANT AND EQUIPMENT,
                  CONSTRUCTION, MAINTENANCE AND OPERATION, AND
                              TRANSFER OF OWNERSHIP

                  This Agreement dated as of June 10, 1997 (`Agreement') is made
        and entered into between: The Commonwealth Utilities  Corporation,  P.O.
        Box 1220 Lower  Base,  Saipan,  MP 96950,  its  successors  and  assigns
        (`CUC"),   and  Telesource   CNMI,   Inc.  its  successors  and  assigns
        ("Contractor").

             WITNESSETH:

            Whereas,  CUC desires to have built a fully  operational 10 Megawatt
      expandable (`MW") Power Plant (the "Plant") on the Island of Tinian in the
      Commonwealth of the Northern  Mariana  Islands  (`CNMI") and to ultimately
      own and operate the Plant;

            Whereas, CUC represents that it has the authority and power to enter
      into this Agreement and to fully and faithfully  comply with its terms and
      conditions,.   but  not  limited  to,  those   governing   CUC's   payment
      obligations,  and that CUC and its  representatives are aware of no reason
      why CUC is, may or will be  prevented  from  fulfilling  all terms of this
      Agreement

          Whereas,  Contractor represents that it has the authority and power to
     enter into this Agreement and to fully and faithfully comply with its terms
     and conditions and that Contractor and its authorized  representatives  are
     aware  of no  reason  why  Contractor  is,  may or will be  prevented  from
     fulfilling all terms of this Agreement.

          Whereas,  Contractor  desires and is willing,  in accordance  with the
     terms of this  Agreement,  to:  design and  construct  the  Plant;  procure
     necessary  equipment  and  materials;  arrange all shipping to the CNMI and
     then to the Site; initially own and maintain and operate the Plant; prepare
     all operating  manuals for the Plant;  provide for training and start-up of
     the Plant;  and  transfer  ownership of the Plant to CUC (all such work and
     activities shall hereinafter be referred to as the "Project"); and

          Whereas, CUC and Contractor both desire to proceed with the Project on
     the basis of trust, good faith and fair dealing.

          Now therefore,  in consideration of the mutual promises and agreements
    hereinafter set forth, the parties agree as follows:

    1)       INTERPRETATION.

    1.1) In this  Agreement,  expressions  defined in  Schedule I shall bear the
    respective meanings set out therein;

    1.2) In the event of any conflict,  inconsistency or variation  between this
    document and any of the Exhibits, Schedules or drawings attached hereto, the
    teams and provisions of this document shall prevail;

    1.3) headings and paragraph  numbers are for  convenience  only and shall be
    ignored in construing this Agreement;

                                      146
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    1.4)     the singular includes the plural and vice versa;

                                      147
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    1.5)  references to Clauses,  Recitals and schedules are, unless the context
    otherwise requires,  references to Causes of, and Schedules and Recitals to,
    this Agreement; and

    1.6) references to any agreement, enactment, ordinance or regulation include
    any amendment thereof or any agreement,  enactment,  ordinance or regulation
    replacing or superseding the same in whole or in part.

    2) SCOPE OF WORK

    2.1)  Scope of Work.  "Scope of Work"  means the  following  obligations  of
    Contractor  in  complete  accordance  with  this  Agreement,  including  the
    Description of Plant Equipment,  Capabilities and Related Services set forth
    in Exhibit A. The scope of the  Project and the Work to be  performed  under
    this  Agreement  shall  be in  accordance  with  this  Agreement,  including
    Exhibits A through D hereof.

2.2)         Contractor's Services Prior to Substantial Completion.

    2.2.1) Site Preparation.

    (i) Basic Site  Preparation.  Contractor  shall be responsible  for all site
    preparation of the Site. Site preparation shall include,  preparation of the
    Site for  construction  of the  Plant  (including  setting  out the Work and
    protecting and preserving all material reference points, aids and other data
    used in  laying  out the Work in  accordance  with this  Agreement)  and all
    offsite  construction  and the  provision of all  excavation  and  backfill,
    temporary and permanent drainage and drainage  structures  (implementing any
    requirements  necessitated by historic flood  conditions and patterns in the
    region and at the Site),  removal of debris,  all  necessary  investigation,
    analysis,  testing and determination  concerning the condition,  contents or
    integrity of the foundation and  substructure  of any part thereof,  and all
    reasonable investigation, analysis, testing and determination concerning the
    condition, contents or integrity of the subsurface, underground and/or soils
    conditions  of the  Site.  Except  for  unknown  or  Pre-Existing  Hazardous
    Materials,   Contractor,  in  performance  of  site  preparation.  shall  be
    responsible  for and assumes the cost of any  construction,  engineering  or
    structural conditions,  including,  without limitation,  those caused by the
    presence of organic materials other than Pre-Existing Hazardous Materials.

    (ii) Hazardous and Toxic  Conditions.  To the extent  Contractor  encounters
    subsurface Pre-Existing Hazardous Materials during construction,  Contractor
    shall promptly provide written notice to CUC of such  condition(s) and shall
    endeavor to minimize  the  consequences  to the Project  schedule of dealing
    with  such  condition(s).  Consistent  with  considerations  of  safety  and
    prudence,  Contractor  shall take  appropriate  action to  mitigate  further
    contamination caused by such hazardous or toxic substances. Contractor shall
    not be responsible for or have any obligations  pursuant to this Contract or
    otherwise with respect to the removal, handling, transportation, or disposal
    of any Pre-Existing  Hazardous  Materials or other  pre-existing  hazardous,
    unsafe, or unhealthful or  environmentally  unsound condition or activity or
    materials  on e Site.  Contractor  shall  be  responsible  for the  removal,
    handling,  transportation,  or disposal of any  Hazardous  Material or other
    hazardous,  unsafe, or unhealthful or  environmentally  unsound condition or
    activity or materials which causes to be present or occur on the Site.

    (iii) Oil Spills. Contractor shall assume full control of and responsibility
    for the safe storage and handling of all fuel oil  transported to or located
    at the Site. Contractor shall be strictly liable ad shall defend,  indemnify
    and hold  harmless  CUC against any losses,  liabilities,  damages or claims
    arising out of any spill, seepage, leakage or discharge of such fuel oil, no
    matter how  arising,  from the Day  Contractor  assumes  control of the Site
    until Final Plant Turnover.

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    2.2.2)  Construction and Installation.  Contractor shall provide and furnish
    to CUC the  following  services in  accordance  with all terms,  conditions,
    drawings, specifications and standards set forth in this Agreement.

    (i) Within  forty-five  (45) Days  after the  execution  of this  Agreement,
    Contractor  shall  prepare and deliver to CUC, for CUCs  reference,  a draft
    comprehensive Project implementation plan, which shall include a Schedule of
    Work, an organizational chart and a document distribution chart;

    (ii) Contractor shall prepare and update all progress  schedules and include
    such in written progress reports to CUC each month;

    (iii)  Contractor  shall provide all design and  engineering for the Project
    and the Site, including the preparation of all drawings;

    (iv) Contractor shall furnish all labor, supervision and all tools necessary
    to perform the Work and  construct  the  Project,  and shall  construct  the
    Project  and direct  and  support  start-up  and  operation  of the Plant as
    delineated in this Agreement;

      (v)  Contractor  shall procure and provide all Plant  Equipment  (together
    with all services in relation  thereto),  transport all Plant  Equipment and
    materials  to the  Site,  including  the  cost  of  ocean  freight  and  the
    fulfillment of all applicable  import and customs  requirements,  procedures
    and formalities;

    (vi) With the cooperation of CUC,  Contractor  shall use reasonably  prudent
    construction practices to (a) perform the Work,  (b)coordinate all Work with
    CUC, (c) coordinate all Work  performed by its  Subcontractors,  (d) keep to
    Work on schedule,  (e) timely  report the status of the progress of the Work
    to CUC, (f) pay its  Subcontractors in a timely manner, and (g) cause all of
    its Subcontractors to comply with all applicable terms of this Agreement;

     (vii)  Contractor  shall provide Plant  inspection,  Plant start-up,  Plant
    testing, and operations training;

    (viii) In accordance  with Section 12 hereof,  Contractor  shall correct all
    nonconforming Work and any deficiencies in the Plant.  During  construction,
    inadequate,  nonconforming  or  damaged  equipment  and  materials  shall be
    replaced or repaired by Contractor after full consultation with CUC;

    (ix) Subject to the  provisions of Section 5,  Contractor  shall perform all
    Change  Orders  and  all  other  necessary  acts  to  fulfill   Contractor's
    obligations under this Agreement; and

(x) Contractor shall provide all necessary  housing  facilities and construction
    utilities,  including  power and water,  necessary  to fulfill  Contractor's
    obligations to provide the Plant as set forth in this  Agreement.  CUC shall
    assist Contractor fulfilling in fulfilling this obligation.

    2.2.3) Drawings.

    (i) Design  Documents.  Upon CUC's request,  Contractor shall furnish to CUC
    copies  of:  all  drawings  prepared  (including   revisions,   addenda  and
    modifications);  all Subcontractor and  vendor/supplier  furnished drawings;
    Plant operating manuals; maintenance manuals; performance data for all Plant
    engineered equipment;  civil, electrical,  mechanical.  and Plant structural
    and  construction  drawings;   Plant  piping  and  instrumentation  diagrams
    ("PID's");  all general  arrangement  drawings;  Plant  electrical  one-line
    diagrams;  Plant relay and  metering  drawings  and all other  drawings  and
    documents prepared by Contractor or Subcontractors  relating to the Project;
    complete documentation of Plant control systems logic and programs including
    distributed controls;  and Plant design calculations,  excluding proprietary
    information  not  reasonably  required  for  CUC's  use of the  drawings  as
    intended.

                                                                        Page 3

                                      149
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    (ii) Operations and Maintenance  Manuals;  Other  Documentation/Information.
    Contractor  shall provide to CUC: Plant  operating and  maintenance  manuals
    prior  to  Plant  operations   training  and  all  other  documentation  and
    information  reasonably necessary for obtaining all required Permits and for
    compliance   with  the  applicable   standards.   All  Plant  operating  and
    maintenance  manuals  shall be in  Contractor's  standard  form  and  style;
    content and format are to be in accordance with Good Utility Practice.

    (iii)  As-Builts.  Contractor shall maintain a set of drawings and the other
    manuals,  drawings,  diagrams  and other  documents  at the  Site,  and such
    drawings  shall be maintained  and updated as appropriate to reflect the "as
    built" conditions of the Work.

        2.2.4) Permits.

      (i) Required  Permits.  Contractor shall make every  reasonable  effort to
    obtain and maintain, at its sole cost and expense, (a) all Permits necessary
    for the conduct of Contractor's  business and for its operations (insofar as
    such  business  and/or  operations  relate to this  Project)  on Saipan  and
    Tinian, (b) all Permits required for construction, building, transportation.
    water and power (during  construction  and building) of and for the Project,
    (c) all Permits necessary for temporary utility hookup and provision for the
    entire Project, and (d) all Permits required for the shipment, transport and
    entry (including customs clearance) of machinery, equipment and materials in
    the CNMI and to the  Site,  (e) all  Permits,  including  additional  future
    Permits as may required  pertaining to the operation and  maintenance of the
    Plant,  excluding  only those  Permits that CUC may be required to obtain or
    assist in obtaining pursuant to this Section 2.2.4 or Section 10.

    (ii)Application by Contractor. All applications for the issuance and renewal
    of Permits required to be obtained by Contractor  pursuant to this Agreement
    from  any  governmental  authority,  agency  or  court  (federal,  national,
    provincial,  municipal,  local or other) of the CNMI, Saipan or Tinian shall
    be made by the Contractor in the form, if any, prescribed by applicable laws
    and regulations.

    (iii)  Support  of CUC.  CUC  shall  in good  faith:  assist  Contractor  in
    obtaining  any of the  Permits  that  Contractor  is  required to obtain and
    maintain as specified in Paragraph (i) above;  provide  Contractor  with any
    information  which is required in connection  with the  application for such
    Permits;  and  directly  assist  Contractor  throughout  the  processing  of
    Contractor's  application for Permits. In the case of applications submitted
    to CUC, CUC shall ensure their approval.

    2.2.5) Plant  Equipment and Materials.  Contractor  shall be responsible for
    procurement of all Plant  Equipment and all parts,  components and materials
    necessary for construction and operation of the Plant.  When procuring Plant
    Equipment,  Contractor shall also be responsible for providing to CUC a list
    of spare parts for all Plant  Equipment  incorporated  into the Plant (which
    list shall identify the supplier of such spare parts).

    2.2.6) Subcontractors,  Suppliers and Vendors. Unless otherwise specifically
    provided  in this  Agreement,  Contractor  shall be solely  responsible  for
    coordinating and handling all  communications  and negotiations with and the
    supervision, administration and control of its own Subcontractors, suppliers
    and vendors. During construction,  Contractor shall be fully responsible for
    all Plant Equipment,  materials,  labor or other matters related to the Work
    and any part of the Work accomplished by its own  Subcontractors,  suppliers
    and  vendors;  provided,  however,  that in no  event  shall  Contractor  be
    obligated to assist in the  administration  of such  obligations  or perform
    under this  Agreement  beyond the date that is ten (10) years after the date
    of Substantial Completion of the Project.

    2.2.7)  Security.  From the date that  Authorization to Proceed is issued to
    Contractor and until the date of Substantial  Completion,  Contractor  shall
    provide all security at the Site for all Work and for Work  performed in the
    vicinity  of the  Site,  including  but not  limited  to,  security  for all
    personnel,

                                                                         Page 4

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    Plant Equipment  materials and other items thereon,  the Plant,  and for all
    equipment  and  personnel  being  transported  by Contractor to and from the
    Site.

    2.2.8)  Contractor's  Safety  Program.   During  the  construction  process,
    Contractor  shall initiate,  maintain,  and supervise all reasonable  safety
    precautions  and  programs  in  connection  with  the  performance  of  this
    Agreement.  Contractor shall take all reasonable  precautions for the safety
    of and shall provide reasonable  protection  against damage,  injury or loss
    to: (i) Contractor's  employees  performing the Work and all persons who may
    reasonably  be  anticipated  to be affected  thereby (ii) the Work and Plant
    Equipment to be incorporated therein, whether in storage off or on the Site,
    under the care custody or control of Contractor  and/or its  Subcontractors;
    (iii) all other  property  on the Site or adjacent  thereto,  such as trees,
    shrubs,  lawns,  walks,  pavements,  roadways,  structures and utilities not
    designated for removal,  or replacement  in the course of  construction  and
    (iv) public road and rail systems used in performing the Work.

    2.2.9) Waste  Materials  and Debris.  Subject to the  provisions  of Section
    2.2.1(ii)  relating to hazardous  materials,  Contractor shall keep the Site
    and surrounding area reasonably free from accumulation of waste materials or
    rubbish caused by the Work and, at completion of the Work,  Contractor shall
    remove from and about the Site all waste materials, debris, rubble, rubbish,
    and  remove  from  and  about  the  Site  Contractor's  tools,  construction
    equipment,  machinery and surplus materials. If Contractor fails to clean up
    as so provided  herein,  CUC may do so and the cost thereof shall be charged
    to Contractor.

    2.2.10) Operator  Training  Program.  At any time during this Agreement upon
    (90) Days' written notice provided by CUC,  Contractor shall provide one (1)
    session of up to one hundred ten (110) hours of  operations  training for up
    to six (6) CUC  designated  personnel.  The  training  shall be conducted by
    qualified instructors and Contractor  representatives and shall be conducted
    on the Site in a classroom  lecture  format.  Training  will be hands-on and
    address  Plant   Equipment   manufacturers'   operating   instructions   and
    instruction  on  the  operation  of  the  Plant.  Contractor  shall  utilize
    schematic  diagrams  and  illlustrations  to instruct  the  trainees  how to
    start-up,  operate,  troubleshoot  and  shutdown  the Plant and its  various
    Systems.  In  addition,   training  programs  offered  by  Contractor,   its
    Subcontractors  and equipment  vendors on specific major Plant  equipment is
    included and may be conducted at Contractor's,  Subcontractor's  or vendor's
    facility.

    2.2.11) Commissioning and Testing. Contractor shall provide CUC with advance
    notice of at least ten (10) Days before Plant  Completion  Testing and shall
    allow CUC to observe such testing. Contractor shall perform all tests as are
    reasonably  required to ensure the adequate  completion and commissioning of
    and the safe and orderly start-up of the Plant.

    2.3) CUC Jobsite Access and Inspection.

    2.3.1)  Quality  Control  and  CUC's  Right to  Inspect  the  Work.  CUC and
    Contractor  agree  to  coordinate  their  efforts  and work to  achieve  the
    successful  implementation of all Plant facilities.  Contractor shall notify
    CUC of the results of any quality control and quality  assurance  related to
    the  construction of the Plant. CUC shall be notified and allowed to observe
    testing  that  Contractor  may conduct at all stages of Plant  construction.
    Contractor, upon CUC's request and authorization, shall allow CUC to inspect
    and review all Work  (including,  without  limitation.  requisite  drawings,
    plans and  specifications) in connection with the design and construction of
    the Plant;  provided  that such  inspection  and review do not  unreasonably
    interfere with the normal performance and progress of the Work.

    2.3.2) Office  Facilities.  Contractor shall provide a temporary office area
    on the Site with furnishings (and  air-conditioning and heating equipment as
    appropriate)  until  thirty (30) Days after  Substantial  Completion  of the
    associated permanent office facilities described in Exhibit A.
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    2.4)  Compliance  with Plans and  Specifications.  Contractor  shall design,
    engineer and construct the Plant in accordance  with this  Agreement so that
    the Plant satisfies in all material respects the applicable requirements and
    standards  of care,  and is capable of accepting  and  operating on the fuel
    (including without  limitation,  the components  comprising the fuel and the
    specifications of range of quality,  pressure, and measurement) required for
    Plant operation pursuant to Exhibit A.

    2.5) Taxes and Duties.  Contractor  and CUC shall  cooperate with and assist
    each other in order to minimize  liability for any taxes,  duties or similar
    charges imposed.

    2.6) Site  inspection.  Contractor,  by  executing  and  entering  into this
    Agreement  with  CUC,  represents  that it has  visited  and  inspected  the
    proposed  Site and has  familiarized  itself  with  the  general  and  local
    conditions  and  circumstances  under  which  the  Work is to be  performed,
    including,  but not  limited  to, the  following:  water  supply and quality
    conditions affecting  transportation,  harbor conditions,  access, disposal,
    handling and storage of materials at the; availability of labor (skilled and
    unskilled);  availability of housing;  climatic conditions and seasons;  and
    all equipment and  facilities  needed for  performance  of the Work. CUC has
    provided  the  estimated  location  of  Interconnection  Points.  The  final
    Interconnection Points shall be located in the vicinity of the Site.

3.)       CONTRACT TIME.

    3.1)  Commencement of the Work. The Work shall commence on or about the date
    CUC satisfies the  conditions to  Contractor's  obligations  as set forth in
    Section 9 and so  notifies  Contractor  in  writing,  and shall  proceed  in
    general  accordance with the Schedule of Work prepared by Contractor as such
    schedule may be amended from time to time.

    3.2) Substantial Completion.  The date of Substantial Completion of the Work
    shall be no later than  Fourteen (14) months after the  Commencement  of the
    Work as set forth in Section 3.1,  subject to adjustment in accordance  with
    the provisions of Sections 4 and 5 hereof

    3.3) Final  Plant  Turnover.  Final  Plant  Turnover  shall be the date that
    Contractor  turns  over  all  title  and  interest  in the  Plant  to CUC in
    accordance with Section 24.2 hereof. Final Plant Turnover shall occur on the
    date falling ten (10) years after the date of Substantial  Completion of the
    Plant  assuming  that at such time  Contractor  has  received  all  payments
    required pursuant to Section 24.2 hereof.

    4)      DELAYS IN THE WORK.

    4.1) If causes beyond  Contractor's  control delay the progress of the Work,
    then  Contractor  shall be entitled  to a Change  Order in  accordance  with
    Section  5.1,  which shall  modify the date of  Substantial  Completion  and
    assess  additional  charges  due to such delay as  appropriate.  Such causes
    shall include but not be limited to:  changes  ordered in the Work;  acts or
    omissions of CUC or separate  contractors employed by CUC; actions by CUC to
    prevent  Contractor  from  performing the Work pending  dispute  resolution;
    hazardous and toxic materials;  differing site  conditions,  adverse weather
    conditions not reasonably anticipated,  fire, unusual transportation delays,
    labor disputes,  or unavoidable  accidents or circumstances;  and any causes
    that are beyond the control and without the fault of Contractor.  Contractor
    shall be entitled to  additional  compensation  and an extension of time for
    all  events  or  actions  that  are in whole or in part  caused  by CUC.  At
    minimum,  Contractor shall be entitled to an extension of time and equitable
    adjustment in compensation for all delay events that are beyond its control

    4.2) In the event delays to the Project are encountered for any reason,  the
    parties hereto agree to undertake reasonable steps to mitigate the effect of
    such delays.
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    5)        CHANGES IN THE WORK.

    5.1) Change  Orders.  A Change Order is a written  instrument,  issued after
    execution of this  Agreement,  signed by CUC and  Contractor  stating  their
    agreement  upon a change and any  adjustment in the Work, the price therefor
    and the date of Substantial Completion.  Payment for a Change Order shall be
    made by CUC  promptly  upon CUC's  receipt of an  invoice  unless  otherwise
    agreed in writing.

    5.2) No Obligation to Perform.  Contractor shall not be obligated to perform
    changed Work until a Change Order has been executed by CISC and Contractor.

     5.3) Unknown or Hazardous  Conditions.  If in the  performance  of the Work
    Contractor  finds (i) Pre-Existing  Hazardous  Materials and/or (ii) latent,
    concealed or subsurface physical conditions which differ from the conditions
    Contractor could have reasonably  anticipated,  or are materially  different
    from those normally  encountered and generally recognized as inherent in the
    kind of work provided for in this  Agreement,  then CUC shall issue a change
    order to reflect increased costs attributable to the conditions  encountered
    and shall extend the date of Substantial Completion.

    6)      CONTRACT PRICE AND PAYMENT TERMS.

    6.1) Guaranteed Price and Fee For Associated Services.

    6.1.1) Guaranteed Price.

    (i) CUC shall pay Contractor  for the  performance of the Work the total sum
    of   Twenty-One   Million  Six  Hundred   Thousand   Dollars   ($21,600,000)
    ("Guaranteed  Price")  payable in one hundred and twenty (120)  consecutive,
    equal  monthly   installments  of  One  Hundred  Eighty   ($180,000),   each
    represented by a separate  promissory note in accordance with Section 6.1.2,
    and each  payable on the last day of each month,  commencing  with the first
    month that follows the date of Substantial Completion.

    (ii) The  Guaranteed  Price shall be  inclusive of Nine Million Nine Hundred
    Fifty-Nine  Thousand Dollars  ($9,959,000) for construction and installation
    costs,   and  Eleven  Million  Six  Hundred   Forty-One   Thousand   Dollars
    ($11,641,000) for financing costs and fees for associated services. provided
    by this Agreement

    (iii)  Said  Guaranteed  Price  for the Work  shall  be a fixed  sum and not
    subject to any alteration except as provided in Section 6.1.3 (Prepayment).

    6.1.2)  Promissory Notes.

    (i) Execution of Promissory  Notes.  Concurrently with the execution of this
    Agreement,  CUC shall execute and deliver to Contractor  one hundred  twenty
    (120)  promissory  notes  substantially  in the  form of  Exhibit  "B'  (the
    `Note").  Each Note shall be in the amount of One  Hundred  Eighty  Thousand
    Dollars  ($180,000)  and shall be due and  payable  in  accordance  with the
    monthly payments scheduled in Section 6.1.1, supra. Each Note shall serve to
    further evidence CUC's  corresponding  obligation to tender monthly payments
    on the Guaranteed  Price,  but any failure by CUC to execute and deliver the
    Notes shall not affect CUC's obligations under this Section 6.

    (ii) Retirement of Promissory Notes. Upon receipt of the required payment in
    accordance   with  this  Section  6.1,  the  Note  evidencing  such  monthly
    obligation shall thereupon be retired and cancelled
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    (iii) Incorporation by Reference.  The terms and conditions of the Notes are
    hereby incorporated by reference into this Agreement with the same force and
    effect as if fully set forth herein

    6.1.3) Prepayment.

          Notwithstanding any other provision of this Agreement to the contrary,
    upon at least ninety (90) days notice prior to Substantial Completion or the
    applicable  anniversary  date CUC may without  penalty  discharge the entire
    outstanding  balance of the Guaranteed  Price by paying a discounted  amount
    equal to the  Adjusted  Guaranteed  Price in  accordance  with the  attached
    Schedule II. Upon Contractor's  receipt of the prepayment amount as required
    by this Section 6.1.3, all then  outstanding  Notes executed by CUC pursuant
    to Section 6.1.2 (i) shall be retired.

    6.2)  Operation,  Production  and  Maintenance  Fees.  In  addition  to  the
    Guaranteed Price, CUC shall pay Contractor the following fees:

    6.2.1)  Operations  and  Maintenance  Fee. CUC shall pay an  Operations  and
    Maintenance Fee in the amount of Fifty Thousand Dollars  ($50,000) per month
    for  services  rendered by  Contractor  in  managing  power  production  and
    operating the Plant from the date of Substantial  Completion and for as long
    as the Operations and Maintenance  portion of this Agreement is in effect in
    accordance  with Section 16.1 hereof.  Such Fees shall be due and payable to
    Contractor on the first day of the mouth  following  completion of the prior
    month's service

    6.2.2)  Production  Fee. CUC shall pay a Production Fee of Two Cents ($0.02)
    per  Plant  produced  kilowatt  hour to cover the  costs of  lubricant  oils
    consumables and spare parts from the date of Substantial  Completion and for
    as long as the  Operations and  Maintenance  portion of this Agreement is in
    effect in accordance with Section 16.1 hereof.  CUC, at its own cost,  shall
    be  responsible  for providing all fuel necessary for operating the facility
    at full capacity through the period of Final Plant Turnover. Such Production
    Fee shall be due upon CUC's receipt of Contractor's  invoice therefore,  but
    in no event in excess of twice per month.

    6.2.4) GDPIPD Adjustment. The fees due under this Section 6.2 shall be fixed
    for the first two (2) years after Substantial  Completion.  Beginning on the
    third  anniversary  date of Substantial  Completion and on each  anniversary
    date thereafter, the Operations and Maintenance and Production Fees shall be
    adjusted at a rate equal to One percent (1%) over the previous  year's Gross
    Domestic Product Implicit Price Deflector.

    6.3) General Provisions as to Payments. CUC shall pay each installment of to
    Guaranteed Price not later than 3:00 P.M. (Local line) on the date when due,
    in immediately  available U.S.  Dollars,  to Contractor at Contractor's CNMI
    address in Section 23 hereof.  Whenever any  installment  of the  Guaranteed
    Price (or any payment of an Operations and Maintenance Fee,  Production Fee,
    late  charge or other  amount) is due on a day which is not a Business  Day,
    the date  for  payment  thereof  shall be  extended  to the next  succeeding
    Business Day.

    6.4) Late Charges.  If CUC fails to pay any  installment  of the  Guaranteed
    Price,  or fails to pay any fee or other  amount  due with  respect  to this
    Agreement, any Note, the Security Agreement or the Escrow Agreement,  within
    ten (10)  Days  after  the date  such  payment  was due,  CUC  shall  pay to
    Contractor  a late charge  equal to five  percent (5%) of the amount of such
    payment.
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    7)   SECURITY.

    The obligation of CUC to pay the Guaranteed Price,  applicable late charges,
    and  all  other  debts,  liabilities  and  obligations  of  CUC  under  this
    Agreement,  the  Notes,  and all other  agreements  to which CUC is a party,
    shall be secured and supported, as provided in this Section 7, by:

    7.1)Security Agreement.

    Concurrently  with the execution of this  Agreement,  CUC shall duly execute
    and deliver to Contractor a Pledge and Security  Agreement (with appropriate
    financing statements),  in the form of Exhibit C (the "Security Agreement"),
    pursuant  to  which  Contractor  shall  obtain  a valid,  first,  prior  and
    perfected  Lien upon all  personal  property  and  fixtures of CUC which may
    constitute any part of the Site, the Plant and Plant Equipment,  whether now
    owned or hereafter  acquired,  and all accounts,  accounts  receivable,  and
    contract  rights,  in any way derived from or connected with any part of the
    Plant and Plant Equipment or the operation  thereof,  including all revenues
    from the  production  and sale of power and all proceeds and products of the
    foregoing.

    7.2)       EscrowAgreement.

    Concurrently  with the execution of this  Agreement,  CUC shall duly execute
    and deliver to Contractor  an Escrow,  Pledge and Security  Agreement  (with
    appropriate  financing  statements)  in the form of  Exhibit D (the  "Escrow
    Agreement"),  pursuant to which CISC shall be  obligated  to  establish  and
    maintain an escrow account of not less than $360,000 at a bank  satisfactory
    to CUC and  Contractor as to which escrow  account  Contractor  shall have a
    valid first, prior and perfected Lien.

    7.3)         Rights to Plant on the Occurrence of a CUC Event of Default

    Upon  and  during  to   continuance   of  a  CUC  Event  of   Default,   and
    notwithstanding  the obligation of Contractor to transfer title to the Plant
    and Plant Equipment  pursuant to Section 24, Contractor may, in its sole and
    absolute discretion,  sell, lease, assign,  transfer or otherwise dispose of
    all or any part of the Plant  and  Plant  Equipment  in  accordance  with to
    provisions of Section 7.2 of the Security  Agreement,  free and clear of any
    claims,  rights or Liens of CUC. In such  event,  the  proceeds  realized by
    Contractor from any such disposition shall be applied in accordance with the
    provision  of  Section  7.5 of the  Security  Agreement;  and in  connection
    therewith,  Contractor shall be entitled to the benefit of the provisions of
    Sections  7.3,7.4,7.8,8.1  and 8.2 of the Security Agreement as if the Plant
    and Plant Equipment were Collateral thereunder.

    7.4)         Incorporation by Reference.

    The terms and conditions of the Notes,  the Security  Agreement,  the Escrow
    Agreement and all related documents and instruments are hereby  incorporated
    by reference  into this Agreement with the same force and effect as if fully
    set forth herein.

    8)       CONDITIONS TO CUC'S OBLIGATIONS.

    CUC's  obligation to commence and continue  performance  of its duties under
    this  Agreement  is  subject  to  the  execution  and  delivery  to  CUC  or
    Contractor,  as the case may be, of a legal and valid leasehold  interest in
    the Site,  provided  however,  that CUC shall put forth its best  efforts to
    obtain or cause Contractor to be vested with such leasehold interest. In the
    event no leasehold is obtained within commercially reasonable time after the
    execution of this Agreement, this Agreement shall be of no force and effect.
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    9)  CONDITIONS TO CONTRACTOR'S OBLIGATIONS.

    Contractor's  obligation to commence and continue  performance of its duties
    under  this  Agreement  is  subject  to the  satisfaction  of the  following
    conditions:

    (i) the due execution and delivery by CUC of the Notes, the Security
    Agreement, and the Escrow Agreement;

    (ii)the due execution and delivery by CUC or the Government, as the case may
    be, of such  documentation as Contractor shall reasonably  require providing
    Contractor   with  the  right  to  occupy  and  utilize  the  Site  for  the
    construction,  operation and maintenance of the Plant and Plant Equipment at
    least  through  and up to  Final  Payment  Date  and the  transfer  of title
    pursuant to Section 24.2 hereof;

    (iii) the receipt by Contractor, of a title insurance policy satisfactory to
    Contractor  ensuring that  Contractor is vested with good and marketable fee
    title to the Plant  (subject to no Liens or  exceptions  to title  except as
    agreed to by Contractor) and containing such affirmative  insurance coverage
    and endorsement as Contractor may reasonably require;

    (iv) evidence  satisfactory  to  Contractor  and  Contractor's  counsel that
    Contractor holds a valid, first, prior and perfected Lien upon, and security
    interest in, all of the Collateral; and

    (v) such other  documentation  and  satisfaction of such other conditions as
    Contractor shall reasonably require.

    10) CUC'S RESPONSIBILITY;INFORMATION AND SERVICES PROVIDED BY CUC.

    10.1) Information.

    CUC shall provide full information in a timely manner regarding requirements
    for the  Project,  including  CUC's  operations  program and other  relevant
    information.  Contractor  shall be entitled to rely on the  completeness and
    accuracy of the following  information  and services which shall be provided
    by CUC to Contractor.

    10.1.1) all necessary,  available and requested  information  describing the
    physical  characteristics of the Site, including surveys,  Site evaluations,
    legal  descriptions,   existing  conditions,  subsurface  and  environmental
    studies, reports and Investigations in CUC's possession;

    10.1.2)  inspection and testing services during  construction as required by
    Law or as  mutually  agreed to enable CUC to inspect or witness  the Work in
    accordance with Section 11.1 of this Agreement.

    10.2) On request,  CUC will deliver to Contractor a sworn written  assurance
    indicating  that funds will be available to make  payments to  Contractor as
    provided by this Agreement and the Escrow Agreement.

    10.3) CUC Responsibilities During Construction.

    10.3.1) Subject to Section 2.2.1 of this Agreement regarding the disposal of
    Pre-Existing Hazardous Materials, CUC shall provide the Site "as is".

    10.3.2)  CUC shall  allow  access to the Site so as to allow  Contractor  to
    perform the Work.

    10.3.3) CUC shall review the Schedule of Work and respond to its obligations
    in a timely manner.
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    10.3.4) If CUC  becomes  aware of an error,  omission or failure to meet the
    requirements  of the  Agreement  or any document or  instrument  executed in
    connection  with this Agreement or the Project or any fault or defect in the
    Work, CUC shall give prompt written notice to Contractor.

    10.3.5) CUC shall  communicate with Contractor's  Subcontractors,  suppliers
    and architect/engineers only through Contractor.

    10.3.6)  Where  reasonably   requested  by  Contractor,   CUC  shall  assist
    Contractor in obtaining all required  Permits,  including  obtaining written
    authorization  from the  Government  of the CNMI, or any other Public Sector
    Entity which has lawful authority to regulate CUC. To the extent a permit is
    obtainable  only by CUC us a matter of law,  then CUC shall be  required  to
    promptly  obtain  such  Permit.   Contractor  shall  provide  CUC  with  any
    information  in  Contractor's  possession  or control  which is  required in
    connection with CUC's application for such Permits.

    10.3.7)  Contractor  shall pay applicable CNMI sales taxes (if any) based on
    the costs of the Work, the Plant Equipment or any portion thereof.

    10.4) CUC Responsibilities During Commissioning and Testing.

    10.4.1) CUC shall provide fuel to the Interconnection Points on the Day that
    is one hundred  eighty (180) Days prior to the scheduled date of Substantial
    Completion  of the Plant.  Such fuel  shall be of  sufficient  quantity  and
    quality for Contractor to conduct commissioning and testing and such related
    Work as Contractor  is obligated  and/or  entitled to undertake  during such
    time pursuant to this Agreement

    10.4.2)  On the Day  that is one  hundred  eighty  (180)  Days  prior to the
    scheduled  date  of  Substantial  Completion  of the  Plant  and  every  Day
    thereafter,  CUC  shall  ensure  that  all  interconnection  facilities  and
    transmission  facilities  are  sufficiently  complete  to be able to receive
    electrical  energy  generated  by the  Plant in an amount up to 10 MW for 24
    hour per day continuous operation.

    11) CUC REVIEW.

    11.1) CUC reserves the right throughout the term of this Agreement to review
    all  drawings  prepared as soon as such  drawings  become  available  and to
    inspect Work at all stages at the Site; or to witness  inspections  and test
    at Contractor's premises or its Subcontractors'  premises;  and to designate
    others to review to  drawings  and  inspect  or  witness  the Work as may be
    necessary. On reasonable notice, Contractor shall provide access to the Site
    as may be necessary or appropriate for CUC inspection and for the servicing,
    maintaining,  modifying,  or  upgrading  of the land or  facilities  located
    thereon  provided  that such access  does not  interfere  with  Contractor's
    performance of Work.  Notwithstanding  the foregoing,  Contractor shall have
    the right to maintain the security of its property at the Site.

    11.2) Before starting certain Work identified in any Drawing, Contractor may
    submit such  Drawing to CUC for review.  CUC shall  respond  within five (5)
    Business Days of actual receipt by CUC of the Drawing. After such review CUC
    shall return one copy of each such Drawing to Contractor marked  "Reviewed",
    "Reviewed with comments" or "Comments" as  appropriate  and with  sufficient
    explanation  to  enable  Contractor  to  determine  the  basis  for any such
    comments.  Contractor may proceed to  implementation in the case of Drawings
    marked  "Reviewed".  Such Drawings  marked  "Reviewed  with Comments" may be
    corrected by Contractor as appropriate  but need not be re-submitted to CUC.
    Drawings marked "Comments" shall be corrected by Contractor and re-submitted
    to CUC. CUC, in reviewing  such  re-submitted  Drawings  shall be limited to
    review of matters related to or affected by the previous "Comments'.  If CUC
    does not  respond  within  five (5)  Business  Days of actual  receipt  of a
    Drawing by CUC, Contractor shall proceed as
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    though  CUC has no  comments  and CUC shall be deemed to have  returned  the
    Drawing to Contractor marked "Reviewed".

    12) DEFECTS LIABILITY; CERTAIN REPRESENTATIONS, COVENANTS AND GUARANTEES.

    Contractor's  obligations  to provide the Plant free of material  defects or
    deficiencies are set forth below:

    12.1) Plant.

    Contractor  covenants  and agrees that the Plant (and all other  portions of
    Plant  Work)  shall be  provided  to CUC  free of any  material  defects  or
    deficiencies.

    12.2) Engineering Design and Performance.

    12.2.1)  The  engineering  and  design of the  Project,  including,  without
    limitation,  the preparation of the drawings, shall meet the requirements of
    this  Agreement.  Contractor  shall,  to the extent required by Good Utility
    Practice, verify the completeness and accuracy of the requirements for Plant
    design,  and any other  information  used by Contractor  in connection  with
    performance of the Work.

    12.2.2)  Without  prejudice to any of  Contractor's  obligations  under this
    Agreement,  Contractor  will  use  reasonable  effort  to  obtain  from  its
    Subcontractors  and  suppliers a commitment  that the Work  provided by such
    Subcontractors shall be free of material defects or deficiencies.

    12.2.3) The  performance  of the Plant  equipment and related  systems shall
    meet  in all  material  respects  or  exceed  the  performance  requirements
    referred in Exhibit A. Contractor  shall be deemed to have complied with and
    satisfied its obligations  herein upon achieving  Substantial  Completion as
    set forth in this Agreement

    12.3) Equipment and Materials.

    12.3.1)  Contractor  covenants and represents  that all Plant  Equipment and
    material shall be new when first installed in the Project.

    12.3.2)  Contractor  covenants and represents that the Plant will be fit for
    the purposes of generating electricity.

    12.4) Defects Liability Period.

             Except  as  otherwise  specifically  provided  in  this  Agreement,
    Contractor  shall  provide  to CUC the Plant  free of  material  defects  or
    deficiencies, and ensure compliance with the requirements of this Section 12
    as they  relate to the Plant  Work for a period  commencing  on the date the
    Work or Plant  Equipment is completed or  installed,  and  continuing  for a
    period of twelve (12) months after the date of Substantial Completion.

    12.5) Remedy Limitation.

    12.5.1)  Contractor  does not covenant or guarantee the Project,  the Plant,
    the Plant  Equipment,  Systems,  or any  components  of any thereof  against
    normal  wear and  tear.  Nor  does  Contractor  covenant  or  guarantee  any
    equipment not in the Work.  However,  with respect to the Project Contractor
    shall remedy at Contractor's expense any damage to real or personal property
    owned  or  controlled  by  CUC  when  that  damage  is  the  result  of  (i)
    Contractor's  failure  to  conform to the  requirements  of this  Agreement,
    including damage caused by Contractor's failure to conform to the
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    Minimum Operations and Maintenance Requirements submitted to CUC pursuant to
    Section  16.1.2 of this  Agreement or (ii) any martial  defect or deficiency
    with respect to the Plant.

    13) Suspension by Contractor.

    13.1) At any time prior to the daze of Substantial Completion,  in the event
    of CUC's failure to pay Contractor any undisputed  amounts when due pursuant
    to the terms of this  Agreement or any change  order issued  pursuant to the
    reams of this  Agreement,  Contractor  shall have the right to  suspend  the
    Work.

    13.2) If  Contractor  elects  to  suspend  the Work and such  suspension  is
    subsequently  removed and the Work is  continued by  Contractor,  Contractor
    shall be entitled to a Change Order in  accordance  with Section 5.1,  which
    shall modify the date of Substantial  Completion and assess additional costs
    due to such delay.

    14) Suspension By CUC For Convenience.

    14.1) CUC may order Contractor in writing to suspend, delay or interrupt all
    or any part of the Work  without  cause  for such  period of time as CUC may
    determine to be appropriate for its convenience.

    14.2) Adjustments caused by any such suspension, delay or interruption shall
    be made by Change Order in accordance  with Section 5.1.  which shall assess
    additional  charges due to such delay and/or extend the date of  Substantial
    Completion.

    15)COMPLETION TESTING.

    15.1) Plant Completion Test Procedures.

    15.1.1) Specific test procedures for all necessary completion testing of the
    Plant  (the  "Completion  Testing")  will  be  developed  by  Contractor  in
    cooperation  with CUC.  Completion  Testing  will  demonstrate,  among other
    things,  that the Plant satisfies in all material  respects the requirements
    of this  Agreement as amended from time to time by written  agreement of the
    Parties.

    15.1.2) Proposed test procedures for all Completion Testing will be prepared
    by  Contractor  in  cooperation  with  CUC and  submitted  to CUC for  final
    approval at least one  hundred  eighty  (180) Days prior to the  anticipated
    scheduled start of Completion Testing.

    15.2) Completion Test Notification.

    15.2.1) The Plant will be deemed  ready for  Completion  Testing when all of
    the following have been completed:

    (i)      all required Systems are ready for normal and continuous operation;

    (ii) all applicable written operating  procedures,  troubleshooting  manuals
    and  operator  training  as  required by this  Agreement  are  substantially
    complete; and

    (iii) all required  Permits to be obtained by Contractor are complete and in
    the possession of Contractor.

    15.2.2)  At least  ten (10) Days  prior to the  commencement  of  Completion
    Testing,  Contractor  shall  deliver  to  CUC  a  "Completion  Test  Notice"
    proposing the date upon which  Completion  Testing will begin, a list of all
    Systems and major components  thereof to be tested, and a Completion Testing
    schedule.
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    15.2.3) Within ten (10) Days of receipt of the Completion  Test Notice,  CUC
    shall deliver to Contractor:

    (i)  confirmation that the Completion Testing will be conducted on the
    proposed date; or

    (ii) notice denying  Completion Testing stating with particularity the facts
    upon which denial is based,  and the specific  conditions  which must be met
    before Completion Testing can proceed.

    15.2.4) CUC's failure to respond to the Completion Test Notice in accordance
    with Section 15.2.3 shall act as CUC's  confirmation that Completion Testing
    shall proceed as planned by Contractor.

    15.3) Reapplication for Completion Testing.

    15.3.1) Upon receipt of CUC's notice denying  Completion Testing pursuant to
    Section  15.2.3(ii),  Contractor shall take such action as is appropriate to
    remedy the conditions described in such notice from CUC.

    15.3.2) After  Contractor has taken action to remedy the noticed  condition,
    Contractor  shall deliver to CUC a new Completion Test Notice  conforming to
    the  requirements  of this Section 15 and the provisions of this  subsection
    shall  apply with  respect to such new  Completion  Test  Notice in the same
    manner as they applied to the  original  Completion  Test Notice,  except as
    follows:

    (i) the date for the Completion Testing shall be no earlier than seventy-two
    (72)  hours  later than the time of  delivery  of such new  Completion  Test
    Notice to CUC; and

    (ii) the time within  which CUC must give a new notice  verifying or denying
    the  requested  Completion  Testing is no more than  forty-eight  (48) hours
    after CUC's receipt of the new Completion Test Note from Contractor.

    15.3.3) The  foregoing  procedure  shall be  repeated as often as  necessary
    until CUC no longer reasonably rejects the Completion Test Notice.

    15.4) Completion Testing.

    15.4.1) It is CUC's s  responsibility  to notify all other  Persons that are
    required to witness any such testing.

    15.4.2)   Contractor  shall  provide  CUC  and  all  persons  receiving  the
    Completion Test Notice the opportunity to observe the Completion  Testing at
    the time specified in such Completion Test Notice.

    15.4.3) If Completion  Testing fails or is terminated prior to completion of
    such testing by Contractor  and testing is not restarted  within twenty four
    (24) hours,  the notice  requirements  of Section 15.2.3 above,  shall apply
    prior to restarting testing.

    16)      SUBSTANTIAL COMPLETION OF PLANT.

    If the Plant has passed to  Completion  Testing  procedure,  or the Plant is
    ready  for  normal  and  continuous  operation  or the  Plant it  ready  for
    beneficial  occupancy,  then CUC shall,  upon written request by Contractor,
    issue to Contractor a Certificate of Substantial  Completion evidencing that
    all Work has been  completed  except  for punch list  Items.  When all Plant
    Punch  List items  have been  completed  by  Contractor,  CUC shall  issue a
    Certificate  of Final  Acceptance.  CUC's failure to issue a Certificate  of
    Substantial Completion or a Certificate of Final Acceptance shall not
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    preclude a finding that the Plant is  substantially  complete or ready for a
    Certificate of Final Acceptance.

    16.1) Operation and Maintenance of System/Plant.

    16.1.1) It is contemplated by the parties that the operation and maintenance
    of the Plant shall remain under the care,  custody and control of Contractor
    from the date of  Substantial  Completion  through  the date of Final  Plant
    Turnover  by  Contractor  to  CUC  unless  otherwise  terminated  by  CUC as
    specified  herein.  As long as Contractor is operating and  maintaining  the
    Plant,  Contractor shall be responsible for operation and maintenance of the
    Plant and all Systems including start-up scheduling and directing all System
    operations for the Plant.

    16.1.2)  Contractor  shall perform all  maintenance  and  operation  work in
    accordance  with Good Utility  Practice and in  accordance  with the Minimum
    Operations and Maintenance Requirements as subsequently agreed to in writing
    by CUC and Contractor. Contractor shall operate the Plant in accordance with
    the manufacturers'  fuel consumption  specifications as set forth in Exhibit
    E, which is hereby incorporated by reference.

    16.1.3)  Refitting of Plant.  Contractor is responsible for carrying our its
    obligations  so that  the  Plant  operates  safely  and  compiles  with  all
    applicable law and  regulation and Permits;  however in the event any future
    Permit  requirement  coming  into  effect  after  the  date  of  Substantial
    Completion shall require a material alteration in the structure of the Plant
    or Plant equipment in order to insure compliance, the cost of such refitting
    shall be borne solely by CUC.

    16.1.4)  Contractor  may  subcontract  to other  parties  some or all of its
    obligations  under this Section 16 only with the express  written consent at
    CUC, which consent shall not be unreasonably withheld.

    16.1.5) CUC may terminate the  Operations  and  Maintenance  portion of this
    Agreement  for its own  convenience  upon  issuing a six (6) month notice of
    termination provided that the date of actual termination falls on the end of
    any given project  fiscal year.  The first project fiscal year will commence
    on to date that  Contractor  assumes  responsibility  of the maintenance and
    operation of the Plant.  Otherwise the Operations and Maintenance portion of
    this Agreement will be automatically renewed every project fiscal year.

    17) INSURANCE.

    17.1) Contractor's Insurance.

    17.1.1)  Contractor  shall  obtain and maintain  insurance  coverage for the
    following  claims which may arise out of the  performance of this Agreement,
    whether  resulting  from  Contractor's  operations or the  operations of any
    Subcontractor,  anyone in the employ of any of them,  or by an individual or
    entity for whose acts they may be liable:

    a)  Workers' compensation, disability benefit and other employee benefit
    claims under acts applicable to the Work;

    b)  Bodily  injury,  occupational  sickness,  disease  or  death  claims  of
    Contractor's employees as required by applicable employers' liability law;

    c) Bodily injury,  sickness,  disease or death claims for damages to persons
    not employed by Contractor;

    d)  Personal  injury  liability  claims for damages  directly or  indirectly
    related to the person's employment by Contractor or for damages to any other
    person;

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    e) Damage to or destruction of tangible property,  including  resulting loss
    of use, claims for property other than the Work itself;

    f) Bodily  Injury,  death or property  damage  claims  resulting  from motor
    vehicle liability in the use, maintenance or ownership of any motor vehicle;
    and

    g) Contractual  or  professional  liability  claims  involving  Contractor's
    obligations under this Agreement

    h) Claims made and required to be insured against by Contractor  pursuant to
    Paragraph 17.4 hereof.

    17.2)  Policy Limits.

    Contractor's  Commercial  General,  Automobile,  and Professional  Liability
    Insurance as required by  Paragraph  17.1 shall be written for not less than
    the following limits of liability:

    17.2.1) Commercial General Liability Insurance,

    a.  Each Occurrence Limit $ 1,000,000.00

    b.  General Aggregate: $  2,000,0000.00

    17.2.2) Comprehensive Automobile Liability Insurance.

    a.  Combined Single Limit Bodily Injury and Property Damage: $ 500.000.00
        Each Occurrence

    or

    b. Bodily Injury: $25,000.00 Each Person, $500,000.00Each Occurrence

    c.Property Damage: $  1,000,000.00 Each Occurrence

    17.2.3) Professional Liability Insurance: $    250,000.00  .

    17.3) CUC's Liability Insurance.

    CUC shall be  responsible  for obtaining and  maintaining  its own liability
    Insurance.  Insurance  for claims  arising  out of the  performance  of this
    Agreement may be purchased and maintained at CUC's discretion.

    17.4) Insurance to Protect Project

    17.4.1) Contractor shall obtain and maintain property insurance covering the
    entire Project for the full cost of replacement at the time of any loss in a
    form  acceptable to CUC. This insurance shall include as named insureds CUC,
    Contractor,  and Subcontractors.  Insurance coverage shall include loss from
    the  perils of fire and  extended  coverage,  and shall  include  "all risk"
    insurance  for physical  loss or damage  including  without  duplication  of
    coverage  loss  due  to  theft,  vandalism,   malicious  mischief,  transit,
    collapse,  falsework,  temporary buildings,  debris removal, flood, typhoon,
    tropical storm,  windstorm,  earthquake,  testing, and damage resulting from
    defective design, workmanship or material.
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    17.4.2)  Contractor  shall  increase  limits of coverage,  if necessary,  to
    reflect estimated replacement cost.

    17.4.3)  Contractor shall be responsible for any  co-insurance  penalties or
    deductibles.

    17.4.4) If CUC  intends to occupy or use a portion of the Plant prior to the
    date of  Substantial  Completion,  such  occupancy or use shall not commence
    prior to a time  mutually  agreed to by CUC and  Contractor  or prior to the
    time the insurance  company or companies  providing  the property  insurance
    have consented by endorsing the policy or policies. This insurance shall not
    be canceled or lapse on account of partial occupancy.  Consent of Contractor
    to such early occupancy or use shall not be unreasonably withheld.

    17.4.5) Contractor shall obtain and maintain boiler and machinery  insurance
    as necessary.  The interests of CUC, Contractor and its Subcontractors shall
    be protected under this coverage.

    17.4.6)  Contractor  shall  purchase and maintain  insurance to protect CUC,
    Contractor,  and Subcontractors against loss of use of CUC's property due to
    those perils insured pursuant to Section 17.1.1(e). Such policy will provide
    coverage for expediting  the payment of expenses for materials,  overhead of
    CUC, Contractor,  and Subcontractors,  necessary expense including overtime,
    loss of income  by CUC and other  determined  exposures.  Exposures  of CUC,
    Contractor,  and Subcontractors shall be determined by mutual agreement with
    separate limits of coverage fixed for each item.

    17.4.7) Upon contract award, Contractor shall provide CUC with a copy of all
    required policies.  Copies of any subsequent endorsements shall be furnished
    to CUC.  CUC  shall be given  thirty  (30)  Days'  notice  of  cancellation,
    non-renewal, or any endorsements restricting or reducing coverage.

    17.4.8)  Contractor shall give written notice to CUC before  commencement of
    the Work if C Contractor will not be obtaining property  insurance.  In that
    case CUC may obtain  insurance  in order to protect its interest in the Work
    as well as the interest of any Subcontractors in the Work.  Contractor shall
    provide a change order to CUC for the cost of this insurance.

    17.4.9) If CUC is damaged by failure of  Contractor  to purchase or maintain
    property insurance or to so notify CUC, Contractor shall bear all reasonable
    costs incurred by CUC arising from the damage.

    17.5) Property Insurance Loss Adjustment.                            -

    17.5.1) Any insured loss shall be adjusted with CUC and  Contractor and made
    payable  to CUC  and  Contractor  as  trustees  for to  insureds,  as  their
    interests may appear.

    17.5.2) Upon the  occurrence  of an insured  loss,  monies  received will be
    deposited in a separate account and the trustees shall make  distribution in
    accordance with the agreement of the parties in interest,  or in the absence
    of such  agreement,  in accordance  with an  arbitration  award  pursuant to
    Section 25. If the trustees are unable to agree  between  themselves  on the
    settlement of the loss,  such dispute shall also be submitted for resolution
    pursuant to Section 25.

    17.6) Waiver Of Subrogation.

    17.6.1) CUC and Contractor  waive all rights against each other,  and any of
    their respective  employees,  consultants,  and  Subcontractors  for damages
    caused by risks  covered by  insurance as provided in this Section 17 to the
    extent  they are covered by that  insurance,  except such rights as they may
    have to the  proceeds  of such  insurance  held  by CUC  and  Contractor  as
    trustees.
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    Contractor  shall require similar waivers from all  Subcontractor  and shall
    require each of them to include similar waivers in their subsubcontracts and
    consulting agreements.

    17.6.2) CISC waives subrogation  against  Contractor,  and Subcontractors on
    all  property and  consequential  loss  policies  carried by CUC on adjacent
    properties and under property and consequential  loss policies purchased for
    the Project after its completion.

    17.6.3) If the policies of insurance  referred to in Section 17.2 require an
    endorsement  to provide for  continued  coverage  where there is a waiver of
    subrogation,  the insured parties under such policies shall cause them to be
    so endorsed.

    18) INDEMNITY: LIABLIIY.

    18.1) Contractor's  Indemnity.  Contractor shall defend,  indemnify and hold
    harmless CUC against any losses, liabilities,  damages or claims against CUC
    arising  out of (i) any  failure  of  Contractor  promptly  to  perform  any
    obligations of Contractor under this Agreement provided such failure was not
    caused by any act or omission of CUC, the failure of CUC to take  reasonable
    steps to mitigate such loss, liability, damage or claims or by events beyond
    the  reasonable  control of  Contractor;  (ii) any  misconduct,  negligence,
    malfeasance  or  misfeasance  on  the  part  of  the  Contractor,  or of its
    officers,  employees or its Subcontractors;  or (iii) any acts of Contractor
    or  Subcontractors  or  their  respective  employees  beyond  the  scope  of
    Contractor's authority hereunder not authorized or ratified by CUC.

    18.2)  CUC  Indemnity.   CUC  shall  defend,  indemnify  and  hold  harmless
    Contractor  against  any  losses,  liabilities,  damages  or claims  against
    Contractor or its  Subcontractors  arising out of failure of CUC promptly to
    perform any  obligations of CUC under this  Agreement  provided such failure
    was not caused by any act or omission of Contractor  or its  Subcontractors,
    the failure of Contractor or its  Subcontractors to take reasonable steps to
    mitigate  such loss,  liability,  damage or claims,  or by events beyond the
    reasonable control of CUC; (ii) any misconduct,  negligence,  malfeasance or
    misfeasance  on the part of CUC, or of its officers or  employees;  or (iii)
    any acts of CUC or its  employees  beyond the scope of CUC's  authority  not
    authorized or ratified by Contractor.

    18.3) Double Jeopardy.

    Both CUC and Contractor shall be entitled to an indemnity under this Section
    18 only to the extent that they have not received payment for the same loss,
    damage, death or injury under a policy of insurance.

    18.4) Consequential Losses.

    In no case  shall  the  indemnities  in  Sections  18.1 and 18.2  extend  to
    indirect or consequential loss or damage,  including but not limited to loss
    of use, loss of profits, and loss of production.

    19) TERMINATION.

    19.1) CUC Events of Default.

    19.1.1) Each of the following shall constitute a CUC Event of Default:

    19.1.1.1) Work has been suspended or a thirty (30) Day period:

    (a) under  court  order,  or order of other  governmental  authority  having
    jurisdiction, as a result of any action or inaction by CUC;
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    (b) pursuant to Section 13 because of CUC's failure to pay Contractor;

    19.1.1.2) Work is suspended by CUC for sixty (60) Days;

    19.1.1.3)  CUC's failure to cure a CISC action or omission which  Contractor
    reasonably  determines will delay  Contractor in the performance of the Work
    for a  period  of at  least  sixty  (60)  Days,  within  five  (5)  Days  of
    Contractor's notice to CUC of such determination;

    19.1.1.4) CUC fails to furnish reasonable evidence that sufficient funds are
    available and committed for the entire cost of the Project;

    19.1.1.5) CUC shall fail to pay when due or within five (5) Days  thereafter
    any  installment of the Guaranteed  Price or any other amount payable to CUC
    under this Agreement,  any of the Notes, the Security Agreement,  the Escrow
    Agreement, or any related document or instrument;

    19.1.1.6)  CUC shall fail to observe or perform any  covenant  or  agreement
    contained in this Agreement,  any of the Notes, the Security Agreement,  the
    Escrow  Agreement or any other related  document or  instrument  (other than
    those covered by Subsection  19.1.1.6  immediately  above) and shall fail to
    cut such failure within fifteen (15) Days after written notice thereof shall
    have been given to CUC by Contractor;

    19.1.1.7)   any   material   misrepresentation   regarding   any   warranty,
    certification  or statement  made by CUC in this  Agreement,  any Note,  the
    Security  Agreement,  the  Escrow  Agreement  or  any  related  document  or
    instrument,  or in any  certificate,  financial  statement or other document
    delivered pursuant hereto or thereto;

    19.1.1.8)  CUC  takes  any  affirmative  action  that  causes  the  Security
    Agreement,  the Escrow  Agreement or any related  document or  instrument to
    cease to create a valid and  perfected  first  priority  pledge and security
    interest  in and to all or any part of the  Collateral  or  causes  any such
    document or instrument to cease to be of full force and effect;

    19.1.1.9)  CUC shall (aa)  commence  a  voluntary  case or other  proceeding
    seeking  liquidation,  reorganization or other relief with respect to itself
    or its debts under any  bankruptcy,  insolvency  or other similar law now or
    hereafter  in effect or seeking  the  appointment  of a  trustee,  receiver,
    liquidator,   custodian  or  other  similar   official  for  itself  or  any
    substantial  part of its property,  or shall (bb) consent to the appointment
    of or the taking of possession by any such offcial in an involuntary case or
    other  proceeding  commenced  against  it,  or  shall  (cc)  make a  general
    assignment  for the benefit of  creditors,  or shall (dd) take any action to
    authorize any of the foregoing;

    19.1.1.10)  an  involuntary  case or other  proceeding  shall  be  commenced
    against CUC seeking liquidation, reorganization or other relief with respect
    to it or its debts under any bankruptcy, insolvency or other similar law now
    or hereafter in effect or seeking the  appointment  of a trustee,  receiver,
    liquidator,  custodian or other similar  official for CUC or any substantial
    part of its property,  and such  involuntary  case or other proceeding shall
    remain  undismissed  and unstayed  for a period of ninety (90) Days,  and an
    order for relief shall be entered  against CUC under  applicable  bankruptcy
    laws as now or hereafter in effect; or

    19.1.1.11) a material adverse change has occurred in the financial condition
    of CUC since the date of this Agreement, such adverse change gives rise to a
    reasonable  possibility that CUC will not be able to perform its obligations
    hereunder or carry on its business substantially as now being conducted, and
    CUC shall fail to correct  such  change to the  satisfaction  of  Contractor
    within  fifteen (15) Days after written notice thereof shall have been given
    to CUC by Contractor;

    19.1.2.)  If any CUC Event of Default  referenced  in Section  19.1.1  shall
    occur and be continuing,  then in each and every such event Contractor shall
    at its option by written notice to
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    CUC declare the present value of the  outstanding  principal  portion of the
    Guaranteed  Price as of the date of  default,  in addition to the balance of
    all  payments  then  due and  owing  on the  Guaranteed  Price to be due and
    payable;  provided  however,  that upon the  occurrence  of any CUC Event of
    Default specified in Subsection  19.1.9 or 19.1.1.10,  the entire balance of
    Guaranteed Price shall immediately become due and payable.

    19.1.3)  Termination  by Contractor  For Cause.  Upon written notice to CUC,
    Contractor  may  terminate  this  Agreement  upon any of the CUC  Events  of
    Default referenced in Section 19.1.1.

    19.1.4) Upon  termination  by Contractor  in  accordance  with Section 19.1,
    Contractor shall be entitled to recover from CUC all damages as set forth in
    Section 19.3.

    192) Contractor Event of Default.

    19.2.1) If  Contractor  shall fail to observe  or perform  any  covenant  or
    agreement  contained in this  Agreement  and shall fail to cure such failure
    within  fifteen (15) Days after written notice thereof shall have been given
    to CUC by Contractor

    19.2.2)  If  any  material   misrepresentation   regarding   any   warranty,
    certification  or  statement in this  Agreement  or any related  document or
    instrument,  or in any  certificate,  financial  statement or other document
    delivered pursuant hereto or thereto;

    192.2)  Upon a  Contractor  Event of Default  CUC may,  after ten (10) Days'
    written notice to Contractor,  during which period  Contractor  fails to use
    its best  efforts to perform  such  obligation,  undertake  to perform  such
    obligations for  Contractor.  CUC shall be entitled to any proven loss, cost
    or expense incurred or paid by CUC in connection with  Contractor's  default
    under this  Agreement,  including but not limited to any additional  cost to
    CUC of performing any of Contractor's  obligations  hereunder and all actual
    and consequential damages.

    19.2.3)  Termination by CUC For Cause.  CUC may terminate this Agreement for
    any of the  following  reasons  if upon ten (10)  Days'  written  notice  to
    Contractor fails to take any action to remedy the any of the following:

    19.2.3. 1) In the event Contractor  persistently fails to abide by the
    orders,  regulations,  roles,  ordinances or laws of governmental
    authorities having jurisdiction; or

    19.2.3.2) In the event Contractor otherwise materially breaches any material
    provision of this

    19.2.3.3)   Contractor  shall  (aa)  commence  a  voluntary  case  or  other
    proceeding seeking liquidation,  reorganization or other relief with respect
    to itself or its debts under any bankruptcy, insolvency or other similar law
    now or  hereafter  in  effect  or  seeking  the  appointment  of a  trustee,
    receiver, liquidator,  custodian or other similar official for itself or any
    substantial  part of its property,  or shall (bb) consent to the appointment
    of or the taking of possession by any such official in an  involuntary  case
    or other  proceeding  commenced  against  it or shall  (cc)  make a  general
    assignment  for the benefit of  creditors,  or shall (dd) take any action to
    authorize any of the foregoing;

    19.2.4) In the event CUC properly terminates this Agreement pursuant to this
    Section  19.2.  CUC shall be  entitled to any proven  loss,  cost or expense
    incurred or paid by CUC in connection with this Agreement, including but not
    limited to any  additional  cost to CUC of  performing  any of  Contractor's
    obligations hereunder and all actual and consequential damages.

    19.2.4.1) If such event occurs prior to Substantial Completion,  CUC without
    prejudice to any other right or remedy,  may take possession of the Site and
    complete the Work utilizing any
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    reasonable  means  and CUC  shall be  entitled  to  reduce  the  outstanding
    principal  portion of the  Guaranteed  Price to an amount  equivalent to its
    present value as of the date of termination  calculated upon a rate of 11.5%
    and  further  reduced  by the cost to CUC of  performing  the  remainder  of
    Contractor's obligations hereunder; provided, however that in no event shall
    CUC entitled to reduce such amount by the cost to CUC of  performing  any of
    Contractor's  obligations  to manage and operate the Plant after the date of
    Substantial Completion.

    19.2.4.2). If such event occurs after Substantial  Completion,  CUC shall he
    entitled to reduce the outstanding principal portion of the Guaranteed Price
    to an amount  equivalent to its present value as of the date of  termination
    calculated upon rate of 11.5%;  provided Contractor shall be entitled to the
    balance of all payments then due and owing on the Guaranteed  Price plus all
    Operations and Maintenance  Fees and Production Fees currently due and owing
    under  Sections  6.2 and 6.3 hereof  including  all lam charges  pursuant to
    Section 6.4.

    19.2.4.3) In the event CUC terminates this Agreement, CUC shall be obligated
    to mitigate  Its damages and minimize  all costs  incurred in its  continued
    performance   abandonment  of  the  Project,  or  delay  in  reprocuring  or
    identifying substitute performance.

    19.2.5).  In the event CUC exercises its rights under  Subsection  19.2.1 or
    19.2.3,  CUC shall  provide  Contractor a detailed  accounting  of all costs
    incurred by CUC under Subsection 19.2.2 or 19.2.4, as the case may be.

    19.3) Wrongful Termination By CUC

    19.3.1)  If CUC  terminates  this  Agreement  other  than  as set  forth  in
    Subsection 19.2.2 or Section

    19.4,  CUC shall  pay  Contractor  all Work  performed  through  the date of
    termination based upon the Schedule of Values which CUC and Contractor shall
    negotiate and agree upon following execution of this Agreement,  and for any
    other  proven  loss,  cost or  expense  incurred  or paid by  Contractor  in
    connection with the Work, including but not limited to all proposal/contract
    preparation  costs,  all  demobilization  costs,  all accrued Business Gross
    Revenue  Tax,  all  incurred  construction  financing  fees and  costs,  all
    incurred Insurance and loan management expenses, and Contractor's actual and
    consequential  damages.  In  addition,  Contractor  shall be paid an  amount
    calculated as set forth below:

    19.3.1.1) 1f CUC terminates  this Agreement prior to the date of Substantial
    Completion, Contractor shall be paid ten percent (10%) of the unpaid portion
    of the Schedule of Values (lost profit).

    193.1.2) [Reserved.]

    19.3.1.3) If CUC  terminates  this  Agreement  after the date of Substantial
    Completion,  CUC shall pay  Contractor  in  addition  to the  balance of all
    payments then due and owing on the Guaranteed Price, an amount equivalent to
    the present value of the  outstanding  principal  portion of the  Guaranteed
    Price as of the date of termination  calculated at a rate of 11.5% per annum
    plus all Operations and  Maintenance  Fees and Production Fees due and owing
    under  Sections 6.2 and 6.3 hereof,  including all late charges  pursuant to
    Section  6.4,  and the balance of the  Operations  and  Maintenance  Fee and
    Production  Fee payable under Sections 6.2 and 6.3 up through the end of the
    then current project fiscal year as set forth in Subsection 16.1.2.

    19.3.1.4)  CUC shall  also pay to  Contractor  fair  compensation  either by
    purchase or rental at the election of CUC for any equipment  retained,  plus
    interest.  CUC shall assume and become liable for  obligations,  commitments
    and unsettled  claims that Contractor has previously  undertaken or incurred
    in good faith in connection  with the Work or as a result of the termination
    of this  Agreement.  Contractor  shall cooperate wit CUC by taking all steps
    necessary to  accomplish  the legal  assignment of  Contractor's  rights and
    benefits  to CUC  including  the  execution  and  delivery  of all  required
    permits, documents and instruments.
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    19.4) Termination by Mutual Consent.  Contractor's  receipt of prepayment by
    CUC of the balance of the Guaranteed  Price pursuant to Subsection 6.1.3 and
    proper  termination  of the  Operations  and  Maintenance  portion  of  this
    Agreement  with due notice  pursuant  to Section  16.1.  shall  operate as a
    termination  of this entire  Agreement by consent of the  parties;  provided
    however,

    that such  termination  shall not  prejudice  any rights or  remedies of the
    parties which shall have accrued prior to such termination.

    19.5) Acceleration of Debt Due to Default or Termination.

    19.5.1) In the event  Contractor is entitled to payment by CUC of any amount
    specified in Sections 19.1,  19.2 or 19.3  (depending on the basis therefor)
    such amounts shall immediately become due and payable to Contractor.

    19.5.2)  All  amounts due and  payable  under this  Section  19.4 shall bear
    interest  at a rate  of  11.5%  from  the  date  of  written  notice  of the
    declaration of default or the date of termination, as the case may be, until
    the date payment is received.  Such amount shall immediately  become due and
    payable  without any further  notice to CUC or any other act by  Contractor,
    and without presentment, demand, protest or other notice of any kind, all of
    which ate hereby waived by CUC.

    19.6) Other Remedies in the Event of Default or Termination.

    If a Event of Default shall occur and be continuing,  or if the Agreement is
    terminated, then in each and every such event Contractor and CUC may proceed
    to protect ad enforce their respective rights under this Agreement,  any and
    each Note,  the Security  Agreement,  the Escrow  Agreement  and any related
    document or instrument by exercising  such remedies as are available to each
    of them in respect thereof under applicable law, either by suit in equity or
    by action at law or both, for specific  performance of any covenant or other
    agreement  contained In this Agreement,  any of the Notes, or any such other
    document or in aid of the exercise of any power  granted  herein or therein.
    No failure or delay by Contractor  or CUC in  exercising  any right power or
    privilege under this Agreement or any of such other documents or instruments
    shall operate as a waiver  thereof nor shall any single or partial  exercise
    thereof preclude my other or further exercise thereof or the exercise of any
    other right,  power or privilege.  The rights and remedies  herein  provided
    shall be cumulative and not excessive of any rights or remedies  provided by
    law.

    20) KEY PERSONNEL.

    Contractor  shall ensure that there are at all times at the Site  sufficient
    suitably qualified ad experienced staff to supervise the Work In particular,
    but without  limitation,  Contractor  shall appoint  suitably  qualified and
    experienced  persons to fill the posts of  Contractor  Project  Manager  and
    Contractor Site  Representative in accordance with the provisions of Section
    22 hereof

    21) ASSIGNMENT.

    21.1) Neither CUC nor Contractor  shall assign their  respective  rights and
    obligations under this Agreement in whole or in part to any Person,  without
    the  prior  written  consent  of  the  other,  which  consent  shall  not be
    unreasonably  withheld or delayed.  Consent may be withheld if any  assignee
    proposed is not in the opinion of the consenting  parry  reasonably  able to
    fulfill the terms and obligations of this  Agreement.  including the payment
    of any unpaid  obligations  owed or which may become  due  pursuant  to this
    Agreement

    21.2) All Contractor's subcontracts, including. without limitation, material
    supply  contracts,  orders for Plant Equipment,  and permitted  assignments,
    shall be in  writing  and  assignable  by  Contractor  to CUC,  without  the
    execution  of any  documents  by the other  party to any such  contracts  or
    assignments.
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    22)      CUC AND CONTRACTOR REPRESENTATIVES.

    22.1) CUC Project Manager.

    22.1.1) The CUC Project Manager shall be the primary  representative  of CUC
    and shall  exercise such  authority as is specified in this  Agreement or is
    delegated to him by CUC. The general duties of the CUC Project Manager shall
    be, inter alia, to act on behalf of CUC as follows

    (i) to review, comment, audit and monitor the design, construction,
    commissioning and performance of the Work

    (u) to inspect,  examine and/or  witness,  the materials.  Plant  Equipment,
    testing and workmanship used or carried out in connection with the Work; and

    iii) to certify payments and testing, in each case in order to report to CUC
    on the progress of the Work and to report  whether the Work is being carried
    out in accordance with this Agreement.

    22.1.2) The CUC Project Manager shall also carry out the following duties

    (i) other duties that CUC designates are to be performed by the CUC Project
    Manager; and

    (ii) any other duties which we specified in this Agreement.

    22.2) CUC Site Representative

    CUC shall designate a CUC Site Representative who shall represent CUC at the
    Site during  construction and shall communicate with the CUC Project Manager
    the Contractor Project Manager and the Contractor Site  Representative,  and
    shall  exercise all other  authority of CUC as permitted or required by this
    Agreement.

    22.3) Designation of CUC Representatives.

    22.3.l) The CUC Project Manger shall be:

    Name:    Timothy P. Villagomez or his Designee

    Address: Lower Base, Post Office Box 1220, Saipan, MP 96950

    223.2) The CUC Site  Representative  promptly shall be identified in writing
    to Contractor

    22.4) The Contractor Project Manager

    Contractor   shall   designate  a  Contractor   Project  Manager  who  shall
    communicate with the CUC Project Manager or the CUC Site Representative. The
    Contractor Project Manager shall be responsible for Contractor's performance
    of this Agreement and shall assist CUC whenever necessary to ensure complete
    and  satisfactory  performance  of this  Agreement  The  Contractor  Project
    Manager  will have  authority  to act on behalf  of  Contractor  and to bind
    Contractor on all matters relating to this Agreement.

    22.5) The Contractor Site Representative.

    22.5.1) The Contractor Site Representative will represent  Contractor on the
    Site during  construction.  The Contractor Site Representative will maintain
    an office on the Site for purposes of remaining,  in close  proximity to the
    Work and  communicating  with the CUC  Project  Manager  and/or the CUC Site
    Representative. The Contractor Site Representative will advise and consult
                                                                        Page23

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    with  the CUC  Project  Manager  and the CUC Site  Representative  as to the
    performance of the Work under this Agreement.

    (22.5.2) The  Contractor  Site  Representative  shall have  knowledge of the
    Work, the construction means, methods, techniques,  sequences or procedures,
    and for safety precautions and programs in connection with the Work.

    22.6) Designation of Contractor's Representatives

    22.6.1) The Contractor Site Representative shall be identified in writing to
    CUC.

    22.6.2) The Contractor Project Manager shall be:
             Name:            ___________________________________
             Address:         ___________________________________

    23) NOTICES.

    23.1) All notices, requests, directions, or other communications required by
    this  Agreement,  required  or  permitted,  shall be in writing and shall be
    considered properly given when: i) delivered in person:

    (ii) sent via confirmed fax:

    (iii) sent certified mall confirmed by a signed return receipt; or

    (iv)  delivered  to an express  courier,  correctly  addressed  and  postage
    prepaid.

    23.2) Notices or other  communications given in accordance with this Section
    23 shall be deemed  effective on the date delivered or fax confirmed in this
    case of Sections  23(i) and (ii) above or upon actual receipt in the case of
    Sections 23 (iii) and (iv).

    Horiguchi Building, 5th Floor, PPP 402, Box 10000, Saipan, MP 96950,

    23.3) Notice shall be given to Contractor as follows:

    Name:                 Telesource CNMI

    Attn:    General Manager

    Address: Horiguchi Building, 5th Floor
                          PPP 402, Box 10000, Saipan, MP 96950
    Phone:   (670) 233-4501
    Fax:                  (670) 233-4505

                                                                      Page 24

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    23.4) Notice shall be given to CUC as follows:

    Name:         Commonwealth Utilities Corporation
    Attn:         Executive Director
    Address: Lower Base
                  Post Office Box 1220, Saipan, MP 96950
    Phone:        (670) 322-4033
    Fax:          (670) 3224323

    24)      TITLE AND RISK OF LOSS.

    24.1) Title in Contractor.

    24.1.1) Unencumbered legal title in and to the Plant and each piece of Plant
    Equipment and all material used in connection with the Plant,  including all
    Work and Systems and all  components and items which are ancillary to all of
    same,  including  all  machinery,  apparati,  materials  equipment and other
    things to be provided in  connection  with the  construction,  operation and
    maintenance of the Plant,  including but not limited to the power generation
    system,  the  sewer  treatment  plant,  all  utilities  at the  Site and all
    connections   to  utilities   not  on  the  Site,   transformers   and  grid
    interconnectors,  the fuel storage system the waste oil storage and disposal
    system and the SCADA  system,  whether  such  property be real or  personal,
    tangible or intangible, shall be vested in Contractor from the moment of its
    acquisition,   procurement,  installation  or  construction  by  or  at  the
    instruction of Contractor for and throughout the period expiring on the date
    as of which CUC has paid Contractor the full amount of the Guaranteed Price,
    and all other amounts then owing to  Contractor  under this  Agreement  (the
    "Final Payment Date")

    24.1.2) Legal title to all work in progress and all  construction  and other
    services  related  to the  Plant  will be vested  in  Contractor  so long as
    services are being  performed in  connection  with the  construction  of the
    Plant by or at the instruction of Contractor, during the period set forth in
    this Section  24.1.  Throughout  such period,  it is fully  understood  that
    Contractor shall retain  responsibility for risk of loss of the Plant, Plant
    Equipment,   Systems,   materials  and  work  in  progress  related  to  the
    construction,   operation  or  maintenance  of  the  Plant,   including  the
    responsibility  for claims for damage or loss to any of same, and Contractor
    shall  provide CUC with  satisfactory  evidence of  liability  and  extended
    coverage  insurance  for all of same as shall be in such amounts and against
    such risks as shall be standard customary in similar  circumstances,  and in
    accordance  with  Section  17  hereof  which  insurance  shall  name  CUC as
    additional  insured and loss payee to the extent of its interest pursuant to
    the terms of this  Agreement.  During such period as  Contractor  shall have
    legal title as aforesaid, neither Contractor, CUC nor any other person shall
    allow any such property to be subject to any Lien, except for government tax
    Liens or labor or  materialmen  or other  Liens which may arise by virtue of
    Law.

    24.2) Title In CUC.

    Subject to Section 7 of this  Agreement,  legal  title in and to the revenue
    from sale of power  produced  by  operation  of the  Plant  from the Date of
    Substantial Completion shall be vested in CUC.

    24.3) Transfer of Title.

    24.3.1)  Within  thirty  (30)  Days  following  the Final  Payment  Date and
    provided no CUC Event of Default  then exists,  Contractor  shall effect the
    immediate  delivery and transfer of unencumbered  legal title to CUC (or its
    affiliate or designee), in and to the Plant, Plant, Equipment, Work

    Systems and all of the above-referenced related property and materials
    without further
                                                                        Page25

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<PAGE>

    consideration  payable to Contractor and CUC and Contractor agree to execute
    such  documentation  and do all such further  actions as may be necessary or
    appropriate to effect same.

    24.3.2)  Immediately  upon transfer of legal title  pursuant to this Section
    24.2,  the risk of loss for all property so  transferred  shall  immediately
    pass to CUC,  and CUX  shall  be  responsible  for  carrying  all  requisite
    liability and extended coverage insurance in connection therewith; provided,
    however, that CUC shall name Contractor as additional insured and loss payee
    to the extent of its interest  pursuant to the terms of this  Agreement  and
    any other agreement related to the Plant to which Contractor is a party.

    24.3.4)  At the time that  delivery  and  legal  title  are  transferred  by
    Contractor  in accordance  with the terms of this Section  24.2,  Contractor
    shall  contemporaneously  assign to CUC or such other  person all right tide
    and interest which Contractor may at such time have in any lease or sublease
    for the Site. CUC shall pay all taxes, filing fees and recording,  legal and
    other fees necessary to effect such  deliveries and assignments and transfer
    of legal title.

    24.4) Transfer of Title; No Release.

    It is understood  and agreed that the  possession or transfer of legal title
    as set forth in this  Agreement  shall  not  release  Contractor's  or CUC's
    lawful  responsibility,   respectively,  to  fully  carry  out  all  of  its
    obligations  under this  Agreement  and all other  referenced  agreements to
    which it is a party or otherwise  affect the  provisions on risk of loss set
    forth in this Agreement

    25)   RESOLUTION OF DISPUTES.

    25.1) In General.

    Claims  disputes or other  matters in  question  between the parties to this
    Agreement shall first be subject to mediation before  arbitration.  A demand
    for  mediation  shall be made within a reasonable  time after the dispute or
    claim has arisen.

    25.2) Mediation.

    Any mediation  shall be held in accordance  with the  Construction  Industry
    Mediation Rules of the American Arbitration  Association currently in effect
    unless the parties mutually agree otherwise.  The mediation shall take place
    at a mutually convenient  location in Saipan.  Demand for mediation shall be
    filed  in  writing  with the  other  party  to this  Agreement  and with the
    American Arbitration Association. In no event shall the demand for mediation
    be made after the date when  institution  of legal or equitable  proceedings
    based upon such claim,  dispute or other matter in question  would be barred
    by the applicable statute of limitations.

    25.3) Arbitration.

    Any  dispute or  difference  arising  out of, or in  connection  with,  this
    Agreement which cannot be amicably  settled between the parties by mediation
    shall be finally settled under the Rules of Construction  Arbitration of the
    American  Arbitration  Association.  The  arbitration  shall take place at a
    mutually convenient location in Saipan The resulting arbitral decision shall
    be final and binding on the parties. Judgment upon any award rendered by the
    arbitrators  may be entered in any court having  jurisdiction  thereof.  The
    prevailing  party in any  arbitration  shall be entitled to recover from the
    other  petty all  attorneys'  fees,  expenses  and other  costs  incurred in
    asserting or defending any claim arising under or related to this Agreement
                                                                        Page 26

                                      172
<PAGE>

    25.4) Administrative Review.

    Any disputes arising under this contract between CUC and Contractor shall be
    submitted  to  administrative  review and appeal as provided  for in Section
    5-201 of the CUC  Procurement  Regulations  (Commonwealth  Register Vol. 12,
    No.6 (June 15, 1990))before any action may be brought at law or equity for a
    remedy.

    26) MISCELLANEOUS.

    26.1) Severability of Provisions.

    26.1.1)  In  the  event  that  any  provision  of  this  Agreement,  or  the
    application  thereof,  is held by any court of competent  jurisdiction to be
    illegal or  unenforceable,  the parties shall attempt in good faith to agree
    upon an equitable  adjustment to this  Agreement in order to overcome to the
    extent possible the effect of such illegality or unenforceability.

    26.1.2) The  provisions  of this  Agreement  are intended to be performed in
    accordance  with,  and  only to the  extent  permitted  by,  all  applicable
    requirements of law.

    26.13) If any provision of any of the Agreement or the  application  thereof
    to any Persons or circumstance  shall, for any reason and to any extent,  be
    invalid or  unenforceable,  neither the  remainder of the  Agreement nor the
    application  of such  provision  to other Person or  circumstances  or other
    instruments  referred to in the  Agreement  shall be affected  thereby  but,
    rather, the same shall be enforced to the greatest extent permitted by law.

    26.2) Entire Agreement.

    This Agreement including all schedules,  exhibits,  attachments and drawings
    referenced herein,  represents the entire understanding  between the parties
    in relation to the subject matter hereof and supersedes any and all previous
    agreements  or  arrangements  between the parties in respect of this Project
    (whether  Oral or written),  including  without  limitations  all letters of
    intent and clarifications submitted in response to requests for proposals or
    otherwise.

    26.3) Counterparts.

    This Agreement may be executed in any number of  counterparts,  or by use of
    counterpart or faxed counterpart  signature pages, each of which shall be an
    original, but all of which together shall constitute but one instrument.

    26.4) Applicable Law.

    This  Agreement  shall be governed  by and  construed  according  to Laws of
    Commonwealth of the Northern Mariana Islands  excluding any conflict of laws
    provisions  which  would  result in the  application  of the Laws of another
    jurisdiction  to the  interpretation  of  this  Agreement,  and  any  action
    whatsoever for the enforcement of, or for damages under this Agreement shall
    be brought exclusively In the Federal or Commonwealth Courts of the Northern
    Mariana Islands.

    26.5) Successors and Assigns.

    All of the terms of this Agreement shall apply to, be binding upon and inure
    to the benefit of the parties hereto, their respective successors, permitted
    assigns and all other Persons claiming by, through or under them.
                                                                         Page27

                                      173
<PAGE>

    26.6) Non-Objection by CNMI.

    The  effectiveness  of this Agreement shall be conditioned  upon delivery by
    CUC to  Contractor  of written  notice  stating that the  Government  of the
    Commonwealth  of the Northern  Mariana Islands has not objected to the terms
    of this Agreement and all related documents and instruments.

    26.7) Inspection of Book and Records.

    As  required  by Section  404 of Public Law 3-91,  Contractor  warrants  and
    agrees chat Contractor and any  Subcontractor at any level shall provide the
    Public  Auditor of the  Commonwealth  of the Northern  Mariana  Islands with
    access to, and the right to examine and copy,  any  records,  data or papers
    relevant to this Agreement for a period beginning with the execution of this
    Agreement  and  continuing  for a period of three (3) years from the date of
    Final Plant Turnover.

    26.8) No Waiver.

    Any  failure at any time by either  party to enforce any  provision  of this
    Agreement  shall not  constitute a waiver of such provision or prejudice the
    right of either parry to enforce such provision at any subsequent time.

    26.9) No Third Parry Beneficiary.

    Except as otherwise provided elsewhere herein, this Agreement and all rights
    hereunder are intended for the sole benefit of the parties  hereto and shall
    not imply or create any rights on the part of, or obligations  to, any other
    entity or individual not a party to this Agreement.

    26.10) Regulations Controlling.

    This  Contract  is null and void if  either  the  procurement  processes  or
    contract execution fails to comply with the CUC Procurement Regulations. Any
    procurement action of a government official or employee in violation of said
    regulations  is not authorized by the government and is an act for which the
    government  will not take  responsibility  or be liable  for in any  manner.
    Contractor and CUC's Contracting  Officer hereby certify that they have both
    read and understand said procurement  regulations and have complied with all
    such regulations.

    26.11) Penalties for Violation of Regulations

    If this Agreement is in violation of the procurement regulations referred to
    above,  Contractor may be subject to debarment or suspension from government
    contracting and CUC's  Contracting  Officer may be personally liable for any
    damages  incurred,  in addition to other  penalties  provided  for by law or
    regulations.

    26.12) Gratuities.

    It shall be a breach of this  Agreement  for  Contractor  to offer,  give or
    agree to give,  any  employee  or former  employee,  or for any  employee or
    former  employee  to  solicit,  demand,  accept  or  agree  to  accept  from
    Contractor,  a gratuity or an offer of  employment  in  connection  with any
    decision approval,  disapproval,  recommendations or preparation of any part
    of a program  requirement or a purchase request,  influencing the content of
    any   specification   or   procurement   standard,   rendering   of  advice,
    investigation,  auditing or in any other advisory capacity in any proceeding
    or application, request for ruling, determination,  claim or controversy, or
    other particular matter, pertaining to any program requirement or a contract
    or subcontract or to any solicitation or proposal therefore.
                                     Page 28

                                      174
<PAGE>

    26.13) Kickbacks.

    It shall be a breach of this Agreement for any payment, gratuity or offer of
    employment  to be made on  behalf of a  Subcontractor  under a  contract  to
    Contractor or any person associated therewith as an adducement for the award
    of a subcontract or order.

    26.14) Representation of Telesource Concerning Contingent Fees.

    Contractor  hereby represents that it has not retained any person to solicit
    or secure  government  contracts  upon an agreement or  understanding  for a
    commission,   percentage,  brokerage  or  contingent  fee,  except  for  the
    retention of bona fide employees or bona fide established commercial selling
    agencies for the purpose of securing business.

    26.15) Relationship.

    For the purpose of this  Agreement,  Contractor  shall be  considered  as an
    independent  entity and not as a agent or  representative  of CUC, and it is
    understood  that neither  Contractor  nor its employees or  Subcontractor(s)
    shall act for,  represent or bind CUC in any capacity or manner  whatsoever,
    except as specified  elsewhere in this Agreement or as authorized in writing
    by the Contracting Officer.

    26.16) Attorney Fees.

    Notwithstanding,  and in addition to any other remedy  available  under this
    Agreement,  in the event court action is initiated  for  enforcement  of, or
    damages under,  this  Agreement;  the prevailing  party shall be entitled to
    receive  from the  non-prevailing  party all  reasonable  cost and  expenses
    incurred  by the party  with  respect  to such  action,  including  (without
    limitation) all costs and expenses of investigating  the  circumstances  and
    events  surrounding or relating to the action,  and any and all fees charged
    by, and expenses of,  professional  consultants and advisers,  including but
    not limited to attorneys,  accountants or engineers.  Attorneys'  fees shall
    include,  but not be limited to,  cost and  expenses  of  attorneys,  expect
    witnesses, paralegals,  secretaries, office support, document production and
    copying and other  miscellaneous  expenses reasonably incurred before trial,
    at trial, and on appeal.

    26.17) Representation of Counsel.

    CUC and Contractor  each  acknowledge  that it was represented by counsel in
    the  negotiation  and execution of this  Agreement.  Both CUC and Contractor
    shall be deemed to have  drafted  this  Agreement  for purposes of resolving
    ambiguities in this Agreement.
                                                                       Page 29

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<PAGE>

IN WITNESS WEREOF, the parties have executed this Agreement as of the date first
set forth above.

The Commonwealth Utilities Corporation
Chief Procurement Officer

            I hereby  certify that to the best of my  knowledge  and belief this
contract is in compliance with the CUC Procurement Regulations,  is for a public
purpose and dose not waste or abuse public funds.

     /s/ Frank T. Flores                                              5/19/97
     ------------------------------------------------------    -----------------
     ------------------------------------------------------    -----------------
     By:      Frank T. Flores                                             Date
     Title:   Special Advisor, Procurement & Supply

The Commonwealth Utilities Corporation
Corporate Comptroller, CUC

     /s/ Yenny Tom                                                       6/10/97
     ------------------------------------------------------    -----------------
     ------------------------------------------------------    -----------------
     By:      Yenny Tom                                                   Date
     Title:   Comptroller

The Commonwealth Utilities Corporation
Attorney General

     /s/ Robert B. Dunlap II                                             6/10/97
     ------------------------------------------------------    -----------------
     ------------------------------------------------------    -----------------
     By:      Robert B. Dunlap II                                         Date
     Title:   Acting Attorney General

The Commonwealth Utilities Corporation

     /s/ Timothy P. Villagomez                                           5/16/97
     ------------------------------------------------------    -----------------
     ------------------------------------------------------    -----------------
     By:      Timothy P. Villagomez                                       Date
     Title:   Executive Director

                                                                        Page 30

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<PAGE>

     /s/ Benjamin A. Sahian                                              5/16/97
     ------------------------------------------------------    -----------------
     ------------------------------------------------------    -----------------
     By:      Benjamin A. Sahian                                          Date
     Title:   Chairman, Board of Directors

     /s/ Juan S. Tenorio                                                 9/17/97
     ------------------------------------------------------    -----------------
     ------------------------------------------------------    -----------------
     By:      Juan S. Tenorio                                             Date
     Title:   Chairperson of the Board

                                                                        Page 31

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<PAGE>

      LIST OF EXHIBITS

          EXHIBIT A    Description of Plant Equipment, Capabilities and Related
                       Services
          EXHIBIT  B Form  of  Promissory  Note  EXHIBIT  C Form of  Pledge  and
          Security  Agreement  EXHIBIT D Form of  Escrow,  Pledge  and  Security
          Agreement EXHIBIT E Manufacturer's Fuel Consumption Specifications

       LIST OF SCHEDULES

           Schedule I    Definitions

           Schedule II   Prepayment Schedule

                                                                      Page32

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<PAGE>

                                             SCHEDULE 1:      DEFINITIONS

                   The defined terms used in this  Agreement and in all Exhibits
shall have the meanings specified In this Schedule I.

          "Adjusted Guaranteed Price" has the meaning set forth in Section 6.1.3
          and Schedule II.

          "Agreement"  means this  document,  the  attached  Schedules,  and the
          attached  Exhibits  "A" through  "D,"  inclusive.  In the event of any
          conflict,  inconsistency or variation between this document and any of
          the Schedules or Exhibits,  the terms and  provisions of this document
          shall prevail.

          "Authorization  to  Proceed"  shall mean  written  notice  from CUC to
          Contractor  warranting  to  Contractor  that  CUC  has  fulfilled  all
          conditions  precedent  as  set  forth  in  Section  9 and  authorizing
          Contractor to begin  Commencement  of the Work as set forth in Section
          3.1.

          "Business Day" means each Day on which banks are legally  permitted to
          be open for  business  in the  Commonwealth  of the  Northern  Mariana
          Islands.

          "Certificate of Final Acceptance" has the meaning set forth in
          Section 14.

          "Certificate of Substantial Completion" has the meaning set forth in
          Section 14.

          "Change Order" has the meaning set fort in Section 5.1.

          "CNMI" has the meaning set forth in the first "Whereas" clause of this
          Agreement.

          "Collateral"  means all property  which is subject or is to be subject
          to a Lien created by the Security Agreement.

          "Complete Testing" has the meaning set forth in Section 13.1.1.

          "Completion Test Notice" has the meaning set forth in Section 13.2.2.

          "Contractor" has the meaning set forth in the preamble to this
          Agreement.

          "Contractor  Project  Manager" means the Person  identified in Section
          20.6.2  and  designated  by  Contractor  as  agent  to  perform  those
          responsibilities and duties set forth in Section 20.5.

          "Contractor  Site  Representative"  means  the  Person  designated  by
          Contractor as agent to perform those  responsibilities  and duties set
          forth in Section 20.4.. "Contractor's Commercial General,  Automobile,
          and Professional  Liability  Insurance"  means the required  insurance
          coverages set forth in Section 15.1.

          "CUC" has the meaning set forth in the preamble to this Agreement.

          "CUC Events of Default" are the events enumerated in Section 17.1.

          "CUC Project  Manager"  means the Person  identified in Section 20.3.1
          and whose duties are described in Section 20.2.

                                Schedule 1 Page 1

                                      179
<PAGE>

            "CUC Site  Representative"  means the Person to be identified by CUC
            pursuant to Section 20.3.2.

           "Day" or "Days" means calendar days unless otherwise specifically
           defined.

           "Dollars" means United States of America (U.S.) dollars.

           "Environmental  Laws"  shall  mean  all  Federal,  state,  and  local
           statutes,  laws, codes, rules,  regulations,  ordinances,  orders and
           decrees,  including  without  limitation,  the Clean  Water Act,  the
           Rivers  and  Harbors  Act,  the  Coastal  Zone  Management  Act,  the
           Comprehensive  Environmental Response,  Compensation and Recovery Act
           of 1980,  the Resource  Conservation  and  Recovery Act of 1976,  the
           Toxic Substances Control Act, the Hazardous Materials  Transportation
           Act and any other statutes  regulations and ordinances  which pertain
           to the protection of human health or animal habitats, environmentally
           sensitive areas or the quality, use or condition of air, soil, water,
           shorelines or wetlands.

          "Escrow Agreement" has the meaning set forth in Section 7.2.

          "Exhibit" means each of the exhibits attached to this Agreement and
          marked "A" through "D."

          "Final Acceptance" has the meaning set forth in Section 14.

          "Final Payment Date" has the meaning set forth in Section 22.1.1.

          "Final Plant Turnover" has the meaning set forth in Section 3.3.

          "Good  Utility   Practice"  means  that  the  Work  and   Contractor's
          performance  with respect to the Work shall be in accordance  with all
          applicable  Laws, the professional  practices,  standards and codes of
          the electric power generating  industry of the United States and shall
          be performed in a workmanlike  manner  consistent with those used by a
          reasonable,  prudent  construction  contractor under contracts for the
          design,  supply of plant and  equipment and  construction  of electric
          power   generation   facilities   under  similar   circumstances   and
          conditions. Good Utility Practice is not intended to be limited to the
          optimum practice or method to the exclusion of all others,  but rather
          to be a spectrum of  reasonable  and prudent  practices and methods of
          the  industry and  Contractor.  In applying the standard to any matter
          under this Agreement,  equitable  consideration should be given to the
          circumstances, requirements and obligations of each the Parties.

         "Guaranteed Price" has the meaning set forth in Section 6.1.1.

          "Hazardous  Material"  means  all  hazardous  toxic;  infectious,   or
          radioactive substances, hazardous wastes, or materials listed, defined
          or regulated by any Environmental  Law and specifically  shall include
          petroleum, oil and its fractions,  asbestos, urea formaldehyde,  radon
          and any  other  hazardous,  toxic or  dangerous  waste,  substance  or
          material.

          "Interconnection   Points"  means  the  tie-points  of  the  Plant  to
          facilities  owned or under the  control of  Parsons  other than CUC or
          Contractor.

          "Law"  means  any  law,  including,   without  limitation,   any  act,
          requirement,  ordinance,  rule, order,  statutory  revisionary  order,
          executive  order,  decree,  judicial  decision,  notification or other
          similar directive (to the extent any such notification or directive is
          mandatory),  resolution or regulation of any governmental authority or
          agency (federal,  national,  provincial,  municipal,  local or other),
          court or tribunal that is at any time  applicable to the Project,  the
          Premises or the Work or any part

                                Schedule 1 Page2

                                      180
<PAGE>

            thereof,  and shall include,  without limitation,  the Standards and
            all applicable  environmental  and hazardous waste laws, as any such
            law, act, requirement,  ordinance,  rule, resolution,  regulation or
            Standard may be amended from time to time.

           "Lien" means, with respect to any asset, any material mortgage, lien,
           pledge,  charge,  security  interest  or  encumbrance  of any kind in
           respect to such asset  (including  the interest of a vendor or lessor
           under any conditional  sale  agreement,  capital lease or other title
           retention agreement relating to such asset).

          "Local Time" means the time in the CNMI.

          "MW" has the meaning set forth in the first "Whereas" clause of this
          Agreement.

          "Note" has the meaning set forth in Section 6.1.2(i).

          "Operation and Maintenance Fee" has the meaning set forth in
          Section 6.2.1.

          "Party" means one of the parties to this Agreement

          "Permits" means all approvals, consents, authorization, notifications,
          concessions,  acknowledgments,   agreements,  licenses,  decisions  or
          similar items  legitimately and lawfully  required to be obtained from
          any  Person  for  Contractor  to perform  its  obligations  under this
          Agreement.

           "Person"  means an  individual,  partnership,  corporation,  business
           trust,  joint  stock  company,   limited  liability  company,  trust,
           trustee,  unincorporated  association,  joint  venture,  governmental
           entity or authority or agency.

           "PID's" has the meaning set fort in Section 2.2.3(i).

         "Plant" means the complete power generation  facility to be constructed
         on the Premises as contemplated  by this Agreement,  including all Work
         and Systems and all  ancillaries of all such works and such  facilities
         to be constructed  pursuant to this Agreement (including all machinery,
         apparatus,  materials  and  other  things  to be  provided  under  this
         Agreement for incorporation into such power generation facility).

         "Plant Equipment" means the generators, buildings, other structures and
         all other  engineered,  manufactured  and  produced  items,  materials,
         supplies and goods required to be  incorporated  into the Plant for the
         construction  and  operation  of the  Plant  in  accordance  with  this
         Agreement.

         "Plant Fixtures" has the meaning set forth in the Security Agreement

         "Plant Punch List" unfinished items of Plant  construction which do not
         affect  the  operation,  safety  or  integrity  of the Plant and do not
         impact the performance or life of the Plant Equipment, but are included
         in the Work.

         "Pre-Existing  Hazardous Material" means any and all Hazardous Material
         on the Site, whether known or unknown,  before the date of the issuance
         of the Authorization to Proceed hereunder.

         "Production Fee" has the meaning set forth in Section 6.2.2 hereof.

                                Schedule I Page 3

                                      181
<PAGE>

        "Project" has the meaning set forth in the third  "Whereas" clause of
        this Agreement.

        "Public Sector Entity" means any governmental authority, agency or court
        (federal, national,  provincial,  municipal, local or other) of the CNMI
        and Tinian  Island that has lawful  jurisdiction  over the Project,  the
        Work or any part thereof.

        "Schedule of Values"  means the listing of: (a) all Work to be performed
        and  Plant  Equipment  to be  provided  on  the  Project,  and  (b)  the
        corresponding  amount of the  construction  and  installation  costs set
        forth in Section  6.1.1(ii)  hereof that Contractor shall be entitled to
        for  providing  such Work and Plant  Equipment.  The  Schedule of Values
        shall  identify  both  principal   portion  of  the   construction   and
        installation  costs as well as those  additional  interest amounts which
        represent construction phase financing.

        "Schedule of Work" means the schedule developed by CUC and Contractor to
        govern  their  performance  of this  Agreement,  as amended from time to
        time.

        "Scope of Work" has the meaning set forth in Section 2.1.

        "Security Agreement" has the meaning set forth in Section 7.1.

        "Site" means the location where the Plant is to be constructed.

        "Subcontractor"  means any Person,  including  without  limitation,  all
        suppliers,  vendors and manufacturers of Plant Equipment,  and permitted
        assignees of Contractor, any other subcontractor or such Person, who has
        a contract with, agreement with, or order from, Contractor.

        "Substantial Completion" has the meaning set forth in Section 3.2.

        "System"  means  the  Plant  Equipment  and all  associated  components,
        including,  but not limited to,  piping,  valves,  wiring,  controls and
        supports and other equipment and components  agreed to in writing by the
        Parties,  which are required to perform a given  function or combination
        of functions on or with respect to the Plant.

        "Work"  means all Plant Work to be provided and all work and services to
        be carried out by Contractor under and in accordance with this Agreement
        (including without limitation,  the design,  engineering,  construction,
        completion, commissioning, testing, training and start-up, including the
        manufacture , procurement, delivery, installation and respective testing
        of the Project),  and the Description of Plant  Equipment,  Capabilities
        and Related Services set forth in Exhibit A.

                                Schedule I Page4

                                      182
<PAGE>

                                     SCHEDULE 2
                      (Inclusive of Construction Financing Costs)

                   Prepayment Date                             Amount In U.S.$

                  Substantial Completion                         12,250,000.00

                  End of Year 3                                   9,783,000.00
                  End of Year 4                                   8,821,000.00
                  End of Year 5                                   7,750,000.00
                  End of Year 6                                   6,540,000.00
                  End of Year 7                                   5,200,000.00
                  End of Year 8                                   3,900,000.00

                                      183
<PAGE>

                                   EXHIBIT "A"

          Design construction of Power Generation Plant on the island of Tinian,
consisting of the following:

1. The design,  engineering and erection of a power generation  facility capable
   of self-sustained operation with 10MW load.

2. Performance of all site civil works and related services.

3. Supply,  installation,  testing,  and commissioning of four 2.5MW, 4.6KV, 720
   RPM, 60Hz diesel  generator  sets with all required  auxiliaries  for a fully
   integrated operational system, in addition to a 300KW, 1800RPM,  housekeeping
   diesel  generator,  and SCADA system for the  automatic  control of the power
   plant.

4. Provision and installation of station transformers.

5. Provision and installation of 420,000 gal. capacity fuel storage tank.

6. Design and construction of adequate  buildings to house the diesel generators
   and   auxiliaries,   storage  and   administration   facilities  as  per  CUC
   requirements.

7. Insure adequacy and compliance with all relevant regulations.

8. Operation   and   maintenance   of  the  station  (as  an  option)  based  on
   manufacturers   recommendations   and  applicable   international  codes  and
   standards to insure efficient and safe operation.

9. Provision of all necessary documentation and training to CUC personnel.

                                      184
<PAGE>

                                   EXHIBIT "B"
                                  NEGOTIABLE
                                 PROMISSORY NOTE

              $180,000.00                             ___________________, 1997

            FOR VALUE RECEIVED,  the  undersigned,  The  Commonwealth  Utilities
Corporation,  a ___________________ (the "Maker"),  promises to pay to the order
of Telesource  CNMI,  Inc. (the  "Holder"),  at Horiguchi  Building,  5th Floor,
PPP4O2, Box 10000, Saipan, MP 96950, or such other place as the Holder may later
designate to Maker in writing,  in lawful money of the United States, the amount
of One Hundred Eighty Thousand Dollars ($180,000.00) (the "Note Amount"),  which
Note Amount  comprises  principal and interest  thereon,  in accordance with the
terms set forth herein (this "Note").

Section 1. Payments and Maturity.

            The Note  Amount  shall be due and payable , [1st day of each month,
for a period of 120 months,  commencing  the first month  following  Substantial
Completion, as defined in the Contract].

Section 2. Late Charges.

            To the extent  permitted by  applicable  law, if Maker shall fail to
make a payment due under the terms of this Note  within  fifteen  (15)  calendar
days after the date such payment is due,  Maker shall pay Holder,  on demand,  a
late charge equal to three percent (3%) of the Note Amount.

Section 3. Application and Place of Payments.

            All payments  made on account of this Note shall be applied first to
the payment of any expenses or late charges  then due  hereunder,  and second to
the unpaid Note  Amount.  All  payments on account of this Note shall be paid in
lawful  money of the United  States of America in  immediately  available  funds
during regular business hours at Holder's aforestated address.

Section 4. Prepayment

            Upon ten (10) days written notice to Holder, Maker may, at any time,
prepay  all (but not less  than  all) of the Note  Amount  by paying to Payee an
amount equal to the aggregate  balance of all then outstanding  promissory notes
(the "Other  Notes")  executed and  delivered to Holder in  connection  with the
construction of a power plant on Tinian,  Commonwealth  of the Northern  Mariana
Islands,  as such  balance may be  discounted  in  accordance  with the attached
Schedule.  Maker acknowledges and agrees that such prepayment values represent a
reasonable  and fair  estimate  of  compensation  for the loss that  Holder  may
sustain from the prepayment of this Note.

Section 5. Events of Default.

            The following shall constitute Events of Default hereunder:

                             Promissory Note Page 1

                                      185
<PAGE>

            (a) If Maker  fails to pay to Holder when due the Note Amount or any
other amount due under this Note;

            (b). If Maker falls to pay the Holder when due any amount owing
under any of the Other Notes;

            (c)  If  Maker  breaches  or  violates  any  covenant  or  agreement
contained  herein,  in any of the Other Notes, or in the Security  Agreement (as
defined in Section 7 below) or in any document or instrument  referenced  herein
or therein.

            (d) If Maker shall (i) make a general  assignment for the benefit of
creditors,  or (ii)  apply for or  consent  to the  appointment  of a  receiver,
trustee or liquidator for itself or all or a substantial part of its assets,  or
(iii) be adjudicated a bankrupt or insolvent,  or (iv) file a voluntary petition
in  bankruptcy  or file a petition  or an answer  seeking  reorganization  or an
arrangement  with  creditors  or  seeking  to take  advantage  of any  other law
relating to relief of debtors, or admit (by answer, by default or otherwise) the
material  allegations  of  a  petition  filed  against  it  in  any  bankruptcy,
reorganization, insolvency or other proceeding relating to relief of debtors, or
(v)  suffer  or permit  to  continue  unstayed  and in  effect  for  sixty  (60)
consecutive  days any judgment,  decree or order entered by a court of competent
jurisdiction,  which approves an involuntary petition seeking  reorganization of
Maker  or  appoints,  pursuant  to  such a  petition,  a  receiver,  trustee  or
liquidator for it or all or a substantial part of its assets.

Section 6. Remedies.

            (a)  Upon the  happening  of an Event of  Default,  Holder  may,  in
Holder's  sole and absolute  discretion  and without  notice or demand to Maker,
declare the entire Note Amount,  together with all amounts owing under the Other
Notes,  immediately due and payable,  whereupon, the same shall forthwith become
and be due and payable without any presentment, protest, demand or notice of any
kind, all of which are expressly waived by Maker.

            (b) If an.  Event of Default  shall  occur,  the Maker shall pay the
Holder,  on demand by the Holder,  all reasonable costs and expenses incurred by
the Holder in connection with the collection and enforcement of this Note and/or
all of the Other Notes,  including reasonable  attorneys' fees, and Holder shall
have all of the rights,  power and  remedies  available  under the terms of this
Note and all applicable documents, instruments and laws.

Section 7. Security.

            This is one of the Notes  referred  to in that  certain  Pledge  and
Security Agreement by and between Maker and Holder,  dated of even date herewith
(the  "Security  Agreement"),  and the  indebtedness  evidenced  by this Note is
secured pursuant to the Security Agreement.  All terms,  covenants,  provisions,
conditions and promises contained in the Security Agreement to be kept, observed
and performed by Maker are incorporated in and made a part of this Note, by this
reference,  to the same extent and force as if they were fully set forth in this
Note,  and  Maker  unconditionally  agrees to keep,  observe  and  perform  them
strictly in accordance with the terms and provisions of the Security Agreement.

Section 8. Miscellaneous.

            (a) This Note shall be deemed to be made and entered  into under the
laws of the  Commonwealth  of the Northern  Mariana Islands and for all purposes
shall  be  construed  and  enforced  in  accordance  with  the  laws of the said
jurisdiction.
                             Promissory Note Page 2

                                      186
<PAGE>

            (b) This Note shall be binding upon Maker and Maker's successors and
assigns  and shall inure to the benefit of Holder and  Holder's  successors  and
assigns;  except  that Maker may not  assign or  otherwise  transfer  any of its
obligations  under  this Note  without  prior  written  consent  of Payee.  Each
reference  herein to Maker or to Payee  shall,  except  where the context  shall
otherwise require, be deemed to include its respective successors and assigns.

            (c) Any notice,  request, or demand to or upon Maker or Holder shall
be deemed to have been properly given or made when delivered.

            (d) In the  event  any  provision  of this  Note (or any part of any
provision) is held by a court of competent jurisdiction to be invalid,  illegal,
or   unenforceable   in   any   respect,   such   invalidity,   illegality,   or
unenforceability  shall not affect any other provision (or remaining part of the
affected  provision)  of this Note;  but this Note shall be construed as if such
invalid,  illegal,  or  unenforceable  provision  (or part thereof) had not been
contained  in this Note,  but only to the extent  that such  provision,  or part
thereof, is invalid, illegal, or unenforceable.

            (e) The captions  herein set forth are for  convenience of reference
only and shall not be deemed to define, limit or describe the scope or intent of
this Note.

            (f) Maker consents, without notice, to any and all extensions in the
maturity of this Note,  to the  acceptance of partial  payments  before or after
maturity,  and to the  acceptance,  release and  substitution  of security,  all
without prejudice to Holder.

            (g) Maker  agrees  that in the event this Note,  or the  obligations
evidenced  by this Note,  shall at any time be held to be subject to the payment
of any  documentary  stamp,  intangible or other tax (other than income taxes of
Holder),  Maker will pay such tax, together with interest and penalties thereon,
if any.

            (h) Holder  shall have the right to  transfer or convey this Note or
transfer,  assign or sell  participations  in this Note to any Person;  provided
that no  participation  shall adversely  affect Maker's or Holder's  obligations
hereunder.

            (i) Maker certifies that this Note evidences a commercial obligation
of Maker to Holder.

            (j) Any failure or delay by Holder to  exercise  any right or remedy
hereunder shall not constitute a waiver of the right to exercise the same or any
other right or remedy at any subsequent  time, and no single or partial exercise
of any right or remedy shall preclude  other or further  exercise of the same or
any other right or remedy.

            (k) None of the terms and provisions hereof may be waived,  altered,
modified,  or amended  except by an  agreement  in  writing  signed by Maker and
Holder.

           (1) THE MAKER HEREBY KNOWINGLY,  VOLUNTARILY AND INTENTIONALLY WAIVES
THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING  BASED UPON, OR RELATED
TO, THIS NOTE. THE PAYEE FURTHER  ACKNOWLEDGES  THAT IT HAS BEEN  REPRESENTED IN
THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY  INDEPENDENT  LEGAL
COUNSEL,  SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE  OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.  THE FOREGOING  WAIVER OF A TRIAL BY JURY IS A
MATERIAL INDUCEMENT FOR THE PAYEE TO MAKE
                             Promissory Note Page 3

                                      187
<PAGE>

THE LOAN EVIDENCED BY THIS NOTE. Any legal action or proceeding  with respect to
this Note or any document  related hereto shall be brought in the Superior Court
of the  Commonwealth  of the Northern  Mariana  Islands,  and by  execution  and
delivery of this Note,  the Holder  hereby  accepts for itself and in respect of
its  property,  generally and  unconditionally,  the  jurisdiction  of aforesaid
courts.   The   Holder   hereby   knowingly,   voluntarily,    irrevocably   and
unconditionally  waives  any  objection,   including,  without  limitation,  any
objection  to the  laying  of venue or based on the  grounds  of the  forum  non
conveniens  which it now or  hereafter  may have to the bringing of an action or
proceeding in such respective jurisdictions.

          TN WITNESS  WHEREOF,  Maker has caused this Note to be executed by its
duly authorized officers as of the day and year first above written.

                                   THE COMMONWEALTH UTILITIES CORPORATION

                                  By: __________________________________________

                             Promissory Note Page 4

                                      188
<PAGE>

                                                                   EXHIBIT "C"

                          PLEDGE AND SECURITY AGREEMENT
                               Dated as of , 1997

                                     between

               The Commonwealth Utilities Corporation, as Obligor,

                                       and

                              Telesource CNMI, Inc.
                              as the Secured Party

                                            Pledge & Security Agreement Page 1

                                      189
<PAGE>

            TABLE OF CONTENTS

       Article          Section                                  Page
          I.           DEFINITIONS
                           1.1.     Definitions

          II.     SECURITY INTERESTS
                           2.1.     Grant of Security Interests
                           2.2.    Power of Attorney

          III.    GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
                           3.1.    Necessary Filings
                           3.2.    No Liens; Other Financing Statements
                           3.3.    Chief Executive Office; Name; Records
                           3.4.    Location of Equipment, Inventory, Records
                                   and Fixtures
                           3.5.    No Warehouse Receipts, Bills of Lading or
                                   Other Document of Title
                           3.6.    Fair Labor Standards Act
                           3.7.    Vehicles
                           3.8.    Additional Covenants
                           3.9.    Further Documentation
                           3.10.   Further Actions

          IV.     SPECIAL PROVISIONS CONCERNING ACCOUNTS, ASSIGNED AGREEMENTS
                  AND GOVERNMENT CONTRACTS
                           4.1.     Additional Representations and Warranties
                           4.2.     Maintenance of Records
                           4.3.     Modifications of Terms, etc.
                           4.4.     Collection
                           4.5.     Remedies

          V.      SPECIAL PROVISIONS CONCERNING ASSIGNED AGREEMENTS,
                           5.1.    Rights and Duties of Obligor under Assigned
                                   Agreements,
                                   Government Contracts and Insurance Contracts
                           5.2.    Obligor Remains Liable
                           5.3.    Remedies

         VI. [Reserved]

         VII.    REMEDIES UPON OCCURRENCE OF CUC EVENT OF DEFAULT
                           7.1.    Remedies; Obtaining the Collateral upon
                                   Default
                           7.2.    Remedies; Disposition of the Collateral
                           7.3.    Waiver
                           7.4.    Expenses of Disposition of Collateral
                           7.5.    Application of Proceeds; Obligor Liable for
                                   Deficiency
                           7.6.    Remedies Cumulative; No Waiver
                           7.7.    Discontinuance of Proceedings
                           7.8.    Secured Party's Duty as to Collateral

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                                      190
<PAGE>

      VIII. INDEMNITY
                           8.1.     Indemnity
                           8.2.     Contract Obligations, Survival

      IX.          MISCELLANEOUS
                           9.1.     Notices
                           9.2.     Amendments, Waivers, etc.
                           9.3.     Successors and Assigns
                           9.4.     Severability
                           9.5.     Heading Descriptive
                           9.6.     Counterparts
                           9.7.     Expenses
                           9.8.     Governing Law
                           9.9.     Submission to Jurisdiction
                           9.10.    Waiver of Trial by Jury
                           9.11.    Obligor's Duties
                           9.12.    Termination and Reinstatement
                           9.13.    Security Interest Absolute
                           9.14.    Recourse
                           9.15.    Conflicting Terms

List of Schedules

Schedule A                          Assigned Agreements
Schedule B                          Insurance Contracts
Schedule C                          Locations of Collateral

                                            Pledge & Security Agreement Page 3

                                      191
<PAGE>

                            PLEDGE AND SECURITY AGREEMENT

              THIS PLEDGE AND SECURITY AGREEMENT, dated as of ________, 1997, is
      made by The Commonwealth  Utilities Corporation (the "Obligor"),  in favor
      of  Telesource  CNMI,  Inc.,  a  corporation  of the  Commonwealth  of the
      Northern Mariana Islands (the "Secured Party").

                                     WITNESSSETH:

              WHEREAS,  pursuant to that certain Agreement for Design, Supply of
      Plant and Equipment, Construction,  Maintenance and Operation and Transfer
      of Ownership (as amended,  restated,  supplemented  or otherwise  modified
      from time to time, the  "Contract"),  dated as of the date hereof,  by and
      between the Secured Party and the Obligor, the Secured Party has agreed to
      design,  construct and finance, operate and maintain the Plant (as defined
      herein); and

              WHEREAS,  it is a  condition  precedent  to  the  Secured  Party's
design, construction, financing, operation and maintenance of the Plant that the
Obligor executes and delivers this Agreement to the Secured Party;

              NOW,  THEREFORE,  in  consideration of the foregoing and for other
      good and valuable consideration,  the receipt and sufficiency of which are
      hereby acknowledged, the parties hereto hereby agree as follows:

                                           ARTICLE I   DEFINITIONS

              1.1.  Definitions.  As used herein, the following terms shall have
      the  meanings  herein  specified  unless the context  otherwise  requires.
      Defined terms in this Agreement  shall include in the singular  number the
      plural and in the plural number the singular.  All capitalized  terms used
      herein and not otherwise defined herein shall have the meaning provided in
      the Contract.

              "Account  Obligor"  shall mean  "account  obligor,"  as defined in
      Section 9-105(1)(a) of the UCC.

              "Account  Records"  shall  mean  (a) all  original  copies  of all
      documents,  instruments or other writings evidencing the Accounts, (b) all
      books,  correspondence,  credit or other files, records,  ledger sheets or
      cards,  invoices  and other papers  relating to the  Accounts  (including,
      without  limitation,  all tapes,  cards,  computer tapes,  computer discs,
      computer  runs,  record  keeping  systems and other  papers and  documents
      relating to the Accounts)  whether in the  possession or under the control
      of the Obligor or any computer bureau or agent from time to time acting on
      behalf of the  Obligor,  (c) all  evidences  of the  filing  of  financing
      statements and the  registration  of other  instruments in connection with
      any Accounts and amendments,  supplements or other modifications  thereto,
      notices  to  other   creditors  or  secured   parties  and   certificates,
      acknowledgments,  or other writings,  including,  without limitation, lien
      search reports, from filing or other registration officers, (d) all credit
      information,  reports and  memoranda  relating to any Accounts and (e) all
      other written or non-written  forms of  information  related in any way to
      the foregoing or any Accounts.

              "Accounts"  shall mean those  "accounts"  in which the Obligor has
     any right,  title or interest,  as defined in Section  9-106 of the UCC and
     which  represent all of the  Obligor's  rights to payment for goods sold or
     leased or services  rendered,  whether or not earned by performance,  which
     are related in any way to the Plant,  including,  without  limitation,  all
     rights to payment for the sale or

                                            Pledge & Security Agreement Page 4

                                      192
<PAGE>

production  of  power by the  Plant,  and (i) all such  rights  evidenced  by an
account, note, contract, security agreement,  chattel paper or other evidence of
indebtedness or security,  (ii) all amounts and claims for amounts payable to or
for the  account  of the  Obligor  under the  Assigned  Agreements  or the other
Collateral, (iii) all claims, rights, privileges and remedies on the part of the
Obligor,  whether arising under the Assigned  Agreements or the other Collateral
or by  statue  or at law or in  equity  or  otherwise  or  arising  out of or in
connection with any failure by any party to any Assigned Agreements or the other
Collateral,  to receive any payment assigned hereunder, (iv) all amounts payable
by any party  pursuant to any Assigned  Agreements or the other  Collateral as a
result of the exercise of any such claim, right, privilege or remedy, including,
without  limitation,  all rights and claims of the  Obligor  under any  bonding,
insurance,  indemnities,  guaranties,  warranties and liquidated damages arising
out  of  or  in  connection  therewith,  (v)  all  security  pledged,  assigned,
hypothecated  or granted to or held by the  Obligor to secure any and all of the
foregoing  and (vi) all rights of the Obligor to exercise any election or option
or to give or  receive  any  notice,  consent,  waiver or  approval  under or in
respect of the Assigned  Agreements or the other  Collateral  and the right (but
not the  obligation)  to exercise or enforce  any and all  covenants,  remedies,
powers and privileges  thereunder and to do any and all other things the Obligor
is entitled to do  thereunder,  together with full power and  authority,  in the
name of the Obligor or otherwise, to enforce,  collect, receive and give receipt
for any and all of the foregoing.

               "Agreement" shall mean this Pledge and Security  Agreement as the
same may from time to time  hereafter  be  amended,  restated,  supplemented  or
modified in accordance with its terms.

               "Assigned Agreements" shall mean each of the agreements set forth
on  Schedule  A hereto as the same may from time to time be  amended,  restated,
supplemented or modified in accordance with their respective terms.

               "Chattel Paper" shall mean all "chattel paper" related in any way
to the Plant in which the Obligor has any right,  title or interest,  as defined
in Section 9-105(1)(b) of the UCC.

               "Collateral" shall have the meaning provided in Section 2.1.

               "Contract" shall have the meaning provided in the first "Whereas"
clause of this Agreement.

               "Contract  Obligations"  means  any  and  all  of  the  Obligor's
obligations,  financial or otherwise, under the Contract and each and all of the
Assigned  Agreements,  including,  but  not  limited  to,  the  payment  of  the
Guaranteed Price and all accrued interest thereon.

               "Contract  Proceeds"  shall  mean any and all  proceeds  from the
Contract and the Assigned Agreements,  in which the Obligor has any right, title
or interest.

               "CUC Event of Default" shall have the meaning provided in the
Contract.

               "Deposit  Accounts" shall mean each and every deposit account and
each and every securities  account (general or special)  relating to the design,
construction,  financing,  operation,  maintenance  or  ownership  of the Plant,
including,  without  limitation,  "deposit  accounts,"  as  defined  in  Section
9-105(1)(e)  of the UCC,  together with all funds,  instruments  and other items
credited  to any such  account  from  time to time,  and all  interest  or other
distribution thereon and all claims of the Obligor with respect thereto.

               "Documents" shall mean all "documents"  related in any way to the
Plant in which the  Obligor  has any  right,  title or  interest,  as defined in
Section 9-105(l)(f) of the UCC.

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<PAGE>

               "Equipment" shall mean all "equipment"  related in any way to the
Plant in which the  Obligor  has any  right,  title or  interest,  as defined in
Section  9-109(2) of the UCC and which shall  include,  but shall not be limited
to, all (i) Plant Equipment and Systems,  (ii) all machinery,  office equipment,
furniture,  appliances,  tools,  furnishings,  Vehicles  and any other goods and
equipment  used  in  connection  with  the  design,  engineering,  construction,
maintenance,   operation  or   ownership  of  the  Plant,   (iii)  any  manuals,
instructions,   blueprints,   computers,  data  processing  equipment,  computer
software and similar items which relate to any of the foregoing and (iv) any and
all additions,  substitutions and replacements of any of the foregoing, together
with all improvements thereon and all attachments,  components, parts, equipment
and accessories installed thereon or affixed thereto.

               "Fixtures"  shall mean all  "fixtures"  related in any way to the
Plant in which the  Qbligor  has any  right,  title or  interest,  as defined in
Section 9-313(1)(a) of the UCC.

               "General   Intangibles"  shall  mean  all  "general  intangibles"
related in any way to the Plant in which the  Obligor  has any  right,  title or
interest,  as defined in Section 9-106 of the UCC and, which shall include,  but
shall  not be  limited  to,  (i)  rights to the  payment  of money  (other  than
Accounts),  (ii) all limited and general partnership interests and joint venture
interests,  (iii) all Federal, state and local income tax refunds and all claims
therefor,  (iv) all trade secrets and other proprietary rights, (v) all payments
due in connection with any requisition,  confiscation,  condemnation, seizure or
forfeiture of all or any part of the  Collateral by any  Governmental  Authority
(or any Person acting under color of Governmental Authority),  (vi) all residual
interests  in trusts and credits  with and other  claims  against any Person and
(vii) any  collateral for any of the foregoing and the rights under any security
agreement granting a security interest in such collateral.

               "Governmental  Authority"  means  the  government  of the  United
States of America,  the government of the  Commonwealth of the Northern  Mariana
Islands,  and all local  and  municipal  governments  on the  Island of  Tinian,
including any department, division, organziation, agency or branch thereof.
               "Guaranteed Price" shall have the meaning provided in the
                Contract

               "Indemnitee" shall have the meaning provided in Section 8.1.

               "Instruments" shall mean all "instruments"  related in any way to
the Plant in which the Obligor has any right,  title or interest,  as defined in
Section 9-105(1)(i) of the UCC.

               "Insurance  Contracts"  shall mean all  insurance  contracts  and
policies  procured or maintained by the Obligor related in any way to the Plant,
including,  but not  limited to,  those set forth on Schedule B hereto,  and all
amendments, renewals and modifications thereof.

               "Inventorv" shall mean all "inventory"  related in any way to the
Plant in which the  Obligor  has any  right,  title or  interest,  as defined in
Section  9-109(4) of the UCC and which shall  include,  but shall not be limited
to,  inventory,  goods,  mobile goods,  merchandise and other personal  property
(whether such  inventory,  goods,  mobile goods,  merchandise and other personal
property are in the possession of the Obligor or of a bailee or other Person for
sale,  lease,  storage,  transit,  processing,  use  or  otherwise  and  whether
consisting  of whole goods,  spare  parts,  components,  supplies,  materials or
consigned or returned or repossessed inventory, goods, mobile goods, merchandise
and other personal property), including, without limitation, all such inventory,
goods, mobile goods,  merchandise and other personal property which are held for
sale or lease or are furnished or to be furnished under any contract of service,
which are raw  materials or work in progress or material used or consumed in the
Obligor's business.

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               "Obligor" shall have the meaning provided in the introductory
paragraph to this Agreement.

               "Permits" shall mean all applicable authorizations, certificates,
licenses, approvals, waivers, exemptions, variances, franchises, permissions and
permits of any  Governmental  Authority  required or obtained in connection with
(i) the  purchase,  acquisition,  design,  construction,  testing,  maintenance,
ownership,  maintenance  and operation of the Plant and the Plant  Equipment and
Systems, and (ii) the transactions  contemplated by the Construction Contract or
the Assigned Agreements.

               "Permitted Encumbrance(s)" shall mean                         .

               "Plant" shall have the meaning provided in the Contract.

               "Plant Equipment" and "System" shall have the meanings provided
in the Contract.

               "Proceeds" shall mean all "proceeds" in which the Obligor has any
right,  title or interest,  as defined in Section  9-306(1) of the UCC and which
shall include,  but not be limited to, (i) any and all proceeds of any Insurance
Contracts,  indemnity,  warranty or guaranty payable to the Secured Party or the
Obligor  from  time to time,  and  claims  for  insurance  under  any  Insurance
Contracts,  indemnity,  warranty or guaranty effected or held for the benefit of
the Obligor, with respect to any of the Collateral except to the extent that any
proceeds  of  Collateral  described  in this  clause (i) are payable to a Person
other than the  Secured  Party or the Obligor as  permitted  by the terms of the
Construction Contract, (ii) any and all proceeds of any of the Deposit Accounts,
(iii) any and all payments (in any form  whatsoever)  made or due and payable to
the Obligor from time to time in connection with any requisition,  confiscation,
condemnation,  seizure or forfeiture of all or any part of the Collateral by any
Governmental  Authority  (or any  person  acting  under  color  of  Governmental
Authority)  and (iv) any and all other amounts from time to time paid or payable
to or for the  benefit of the  Obligor  under or in  connection  with any of the
Collateral.

               "Property"  or "Site" means that certain  parcel of real property
located at ___________, and on which the Plant will be situated.

               "Records"  shall  mean all  books,  records,  computer  software,
computer  printouts,  customer  lists,  blueprints,   technical  specifications,
manuals and similar items in which the Obligor has any right, title or interest,
and which relate to any Collateral.

               "Secured   Party"   shall  have  the  meaning   provided  in  the
introductory paragraph to this Agreement.
               "UCC"  or  "Uniform  Commercial  Code"  shall  mean  the  Uniform
Commercial  Code as in  effect  from  time to  time in the  Commonwealth  of the
Northern Mariana Islands.

               "Vehicles" shall mean all cars,  trucks,  trailers,  construction
equipment and other  vehicles  covered by a  certificate  of title law which are
used in connection with the construction, maintenance, operation or ownership of
the Plant,  and in which the Obligor has any right,  title or interest,  and all
tires and other appurtenances to any of the foregoing.

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<PAGE>

                              ARTICLE II
                         SECURITY INTERESTS

         2.1.  Grant of  Security  Interests.  As  security  for the  prompt and
complete payment and performance in full of Obligor's Contract Obligations,  the
Obligor hereby grants, mortgages,  assigns, pledges and transfers to the Secured
Party a continuing  security  interest in all of the Obligor's right,  title and
interest  in, to and under the  following  property,  in each case,  whether now
owned or existing or hereafter acquired or arising, and wherever located (all of
which being hereinafter collectively called the "Collateral"):
         (a)      all Accounts;
         (b)      all Account Records;
         (c)      all Assigned Agreements;
         (d)      all Chattel Paper;
         (e)      all Deposit Accounts;
         (f)      all Documents;
         (g)      all Equipment;
         (h)      all Fixtures;
         (i)      all General Intangibles;
         (j)      all Contract Proceeds;
         (k)      all Instruments;
         (1)      all Insurance Contracts;
         (n)      all Inventory;
         (n)      all Records;
         (o)      all Permits  owned by or granted to or for the benefit of the
                  Obligor or related to the design and  Construction  of
                  the Plant;
         (p)      all replacements, substitutions, additions or accessions to
                  or for any of the foregoing; and
         (q)      all Proceeds and products of any or all of the foregoing  and,
                  to the extent not otherwise  included,  all cash  constituting
                  proceeds of the Collateral.

The  assignment  of the  payments  and  rights  and the  grant  of the  security
interests provided for in this Section 2.1 shall be effective  concurrently with
the execution and delivery of this Agreement and shall not be  conditioned  upon
the  occurrence  of any  default  hereunder,  under  the  Contract  or under any
Assigned Agreements or of any other contingency or event.

         2.2. Power of Attorney.

         (a) The Obligor hereby irrevocably constitutes and appoints the Secured
Party,  with  full  power of  substitution,  as the  Obligor's  true and  lawful
attorney,  with  irrevocable  power and  authority in the place and stead of the
Obligor  and in the name of the  Obligor or in its own name,  from time to time,
after a CUC Event of Default has  occurred and so long as it is  continuing,  in
its sole  discretion,  to  take,  at the  Obligor's  sole  expense,  any and all
appropriate  action and to execute any and all documents and  instruments  which
may be necessary or desirable to accomplish  the purposes of this Agreement and,
without limiting the generality of the foregoing, hereby gives the Secured Party
the power and tight,  on behalf of the Obligor,  without  notice to or assent by
the Obligor,  to do, at the Obligor's  sole expense,  the following  after a CUC
Event of Default has

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occurred and so long as it is continuing:

(i) to pay or discharge taxes or Liens levied or placed on or threatened against
the Collateral,  to effect any repairs or any insurance  called for by the terms
of this Agreement, the Contract or the Assigned Agreements and to pay all or any
part of the premiums therefor and the costs thereof;

(ii) to require, demand, receive and give acquittance for any sums or moneys due
or received in connection with the Contract or any of the Assigned Agreements or
Accounts,  to exercise the rights,  powers and  remedies  relating  thereto,  to
endorse any checks or other instruments or orders in connection  therewith or to
file any claims or to take any action or  institute  any  proceedings  which the
Secured Party may deem to be necessary or advisable and to exercise any election
or option or give any notice,  consent, waiver or approval under, or deliver any
requisition  for  payment  under,  or take any other  action in respect  of, the
Contract or any of the Assigned Agreements or Accounts;

(iii) (A) to direct  any party  liable  for any  payment  under any  Collateral,
including,  without limitation,  any Account Obligor, to make payment of any and
all monies due and to become due thereunder  directly to the Secured Party or as
the Secured Party shall direct,  (B) to ask, demand,  collect,  receive and give
acquittances  and  receipts  for any and all monies due and to become due under,
arising out of, in respect of, or in connection  with any Collateral and, in the
name of the  Obligor or its own name or  otherwise,  to take  possession  of and
endorse,  sign,  assign,  deliver  and  collect  any  checks,  drafts,  notices,
acceptances  or other  instruments  for the  payment  of  monies  due  under any
Collateral,  (C) to sign and endorse  any  invoices,  freight or express  bills,
bills  of  lading,  storage  or  warehouse  receipts,  drafts  against  debtors,
assignments,  verifications  and notices in  connection  with accounts and other
documents  relating to the Collateral,  (D) to commence and prosecute any suits,
actions  or  proceedings  at  law  or  in  equity  in  any  court  of  competent
jurisdiction or to take any other action deemed appropriate by the Secured Party
to enforce the Contract or any of the Assigned Agreements, Accounts or Insurance
Contracts or to collect the Collateral or any portion thereof or any amounts due
thereunder  whenever  payable  and to enforce  any other right in respect of any
Collateral,  (E) to defend any suit,  action or proceeding  brought  against the
Obligor with respect to any Collateral,  (F) to settle, compromise or adjust any
suit, action or proceeding described above and, in connection therewith, to give
such  discharges or releases as the Secured Party may deem  appropriate  and (G)
generally to sell, assign, transfer,  pledge, make any agreement with respect to
or otherwise  deal with any of the  Collateral as fully and completely as though
the Secured Party were the absolute  owner thereof for all purposes,  and to do,
at the Secured  Party's option and the Obligor's  expense,  at any time, or from
time to time,  all acts and things  which the Secured  Party deems  necessary to
protect,  preserve  or  realize  upon the  Collateral  and the  Secured  Party's
security  interest therein in order to effect the intent of this Agreement,  all
as fully and effectively as the Obligor might do; and

(iv) to execute and file any financing or  continuation  statements  without the
signature of the Obligor to the extent  permitted by applicable  law,  under the
Uniform Commercial Code in effect in any relevant  jurisdiction,  to perfect, or
to maintain  the  perfection  of, the security  interests  granted  hereby;  the
Obligor hereby acknowledges that a carbon,  photostatic or other reproduction of
a security agreement shall be sufficient as a financing statement.

The Obligor  hereby  ratifies all that the said  attorney  shall  lawfully do or
cause to be done by virtue  hereof.  This power of attorney  is a power  coupled
with an interest and shall be  irrevocable  so long as any of the  Collateral is
subject to the security interest granted hereunder.

         (b)      The powers conferred on the Secured Party are solely to
protect the interests of the

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<PAGE>

 Secured Party in the  Collateral and shall not impose any duty upon the Secured
Party to exercise any such powers.

                                   ARTICLE III
                GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

         The Obligor represents,  warrants and covenants, which representations,
warranties  and  covenants  shall  survive the  execution  and  delivery of this
Agreement, as follows:

         3.1.  Necessary  Filings.  All filings,  registrations,  recordings and
other actions necessary or appropriate to create, preserve,  protect and perfect
the  security  interest  granted by the Obligor to the Secured  Party  hereby in
respect of the Collateral have been  accomplished  and, to the extent necessary,
will be accomplished  within the applicable  statutory grace periods in order to
obtain the date hereof as the effective date of recordation of such filing.  The
security interest granted to the Secured Party pursuant to this Agreement in and
to the  Collateral  shall  constitute a valid and  enforceable  perfected  first
priority security interest therein superior and prior to the rights of all other
Persons  (other  than  to  the  rights  of the  persons  holding  any  Permitted
Encumbrance there in) and subject to no other liens, charge or other encumbrance
(other  than  Permitted  Encumbrances)  and shall be entitled to all the rights,
priorities and benefits  afforded by the UCC or other relevant law as enacted in
any relevant  jurisdiction  applicable to perfected security interests or pledge
and assignments in the Collateral.

         3.2. No Liens: Other Financing Statements.

         (a) Except for the Liens  granted to the Secured Party  hereunder,  the
Obligor is, and as to all Collateral  acquired by it from time to time after the
date hereof,  the Obligor  will be, the sole and absolute  owner of each item of
the Collateral free and clear of any and all Liens, rights, interests and claims
of any person (other than Permitted Encumbrances),  and the Obligor shall defend
such  Collateral  against  all  claims and  demands  of all  Persons at any time
claiming the same or any interest therein adverse to the Secured Party.

         (b) There is no  financing  statement  executed  by or on behalf of the
Obligor (or similar statement or instrument of registration under the law of any
jurisdiction)  covering or  purporting  to cover any interest of any kind in the
Collateral (except those executed by Obligor in connection with the Construction
Contract  and the  Assigned  Agreements),  and the  Obligor  will not (except as
aforesaid and as is otherwise  provided herein) execute or authorize to be filed
in any public office any financing statement (or similar statement or instrument
of registration under the law of any jurisdiction) or statements relating to the
Collateral.

         3.3. Chief Executive Office:  Name: Records. The chief executive office
of the Obligor is located at _________________________________. The Obligor will
not (a) move its chief executive office or (b) change its name from, or carry on
business  under  any  name  other  than,   "unless  it  has  complied  with  the
requirements  of the last  sentence of this Section  3.3.  The  originals of all
documents  evidencing  the Collateral and the only original books of account and
records of the Obligor  relating  thereto are, and will continue to be, kept at,
and  controlled  and  directed  (including,   without  limitation,  for  general
accounting  purposes) from, such chief executive office, or at such new location
for such chief executive  office as the Obligor may establish in accordance with
the last  sentence of this Section 3.3.  The Obligor  shall not  establish a new
location  for its chief  executive  office or change  its name or the name under
which it conducts its business or effect any change in its  corporate  structure
until (i) it has given to the Secured Party not less than 60 days' prior written
notice of its

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<PAGE>

           intention  to  do  so,  clearly   describing  such  new  location  or
specifying  such  new  name,  as the  case  may be,  and  providing  such  other
information in connection  therewith as the Secured Party may reasonably request
and (ii) with respect to such new location or such new name, as the case may be,
it shall have taken all action,  satisfactory to the Secured Party, necessary to
maintain the security  interest of the Secured Party in the Collateral  intended
to be granted hereby at all times fully perfected and in full force and effect.

         3.4.  Location  of  Equipment.  Inventory.  Records and  Fixtures.  All
Equipment, Inventory, Records, Fixtures and other goods now or from time to time
included in the  Collateral  are  located in the  Commonwealth  of the  Northern
Mariana  Islands.  The Obligor  agrees that all Equipment,  Inventory,  Records,
Fixtures  and other goods now or from time to time  included  in the  Collateral
shall be kept at (or shall be in transport to) the  Commonwealth of the Northern
Mariana Islands, or such new location as the Obligor may establish in accordance
with the last sentence of this Section. The Obligor may establish a new location
for Equipment, Inventory, Records, Fixtures and other goods only if (i) it shall
have given to the Secured  Party at least 60 days' prior  written  notice of its
intention to do so,  clearly  describing  such new location and  providing  such
other  information in connection  therewith as the Secured Party may request and
(ii)  with  respect  to such new  location,  it shall  have  taken  all  action,
satisfactory  to the Secured  Party,  to maintain the  security  interest of the
Secured Party in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect.

         3.5. No Warehouse Receipts. Bills of Lading or Other Document or Title.
No Inventory or  Equipment is covered by or otherwise  subject to any  warehouse
receipt, bill of lading or other document of title (as each such term is defined
in Section  1-201 of the UCC),  and the  Obligor  agrees that any  Inventory  or
Equipment that from time to time is included in the  Collateral  will either (i)
not be covered by or otherwise  subject to any such warehouse  receipt,  bill of
lading or other  document of title or (ii) if any such Inventory or Equipment is
so covered by or otherwise subject to any such warehouse receipt, bill of lading
or other  document of title,  then the  Obligor  shall  immediately  give notice
thereof to the Secured Party in detail  reasonably  satisfactory  to the Secured
Party,  and the Obligor shall promptly deliver such warehouse  receipt,  bill of
lading or other  document of title to the Secured  Party in pledge  under and on
the terms of this  Agreement,  and the Obligor shall take all such other actions
and deliver all such other  documents or  instruments  as the Secured  Party may
deem necessary or appropriate to perfect its security interest in such warehouse
receipt,  bill of lading or other  document  of title and in the  Inventory  and
Equipment covered thereby,  and the Obligor hereby agrees that the Secured Party
may take all such actions and file all such  financing  statements  on behalf of
the Obligor; provided, however that no such warehouse receipt, bill of lading or
other documents of title shall in any event be "negotiable" as such term is used
in Section 7-104 of the UCC or under other relevant law.

         3.6. Fair Labor  Standards  Act. All Inventory  produced by the Obligor
has been,  and all Inventory  hereafter  produced by the Obligor and included in
the Collateral will be, produced in compliance with all applicable  requirements
of the Fair Labor Standards Act, as amended.

         3.7.  Vehicles.  As of the Closing Date,  the Obligor owns no Vehicles.
With  respect  to any  Vehicles  acquired  by the  Obligor  on or after the date
hereof,  within 15 days after the date of acquisition  thereof, all applications
for  certificates  of title or ownership  indicating  the Secured  Party's first
priority  Lien on the  Vehicle  covered  by  such  certificate,  and  any  other
documentation,  shall be filed in each  office  in each  jurisdiction  which the
Secured  Party may deem  necessary  or  advisable  to  perfect  its Liens on the
Vehicles. No Vehicle shall be removed from the the political  jurisdiction which
has issued the certificate of title or ownership therefor for a period in excess
of 48 days.

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         3.8.  Additional  Covenants.  The Obligor covenants and agrees that, so
long as this Security Agreement is in effect and until the Contract  Obligations
are paid in full or otherwise terminated, it will:

         (a) Pay (i) all taxes,  assessments  and  governmental  charges imposed
upon it or upon its property and (ii) all claims (including, without limitation,
claims for labor,  materials,  supplies or  services)  which  might,  if unpaid,
become a Lien upon its property,  unless,  in each case,  the validity or amount
thereof is being  contested  in good faith by  appropriate  proceedings  and the
Obligor has maintained adequate reserves with respect thereto;

         (b) Allow any  representative of the Secured Party to visit and inspect
any of the Obligor's properties,  to examine its books of record and account and
to discuss its affairs,  finances and accounts  with its  officers,  all at such
reasonable times and as often as the Secured Party may reasonably request;

         (c) Ensure that its property, Inventory and Equipment used or useful in
its  business,  in  whosoever  possession  they may be, are kept in good repair,
working order and condition (normal wear and tear excepted),  and that from time
to time there are made in such properties, Inventory and Equipment all necessary
and proper repairs, renewals, replacements,  extensions,  additions, betterments
and  improvements  thereto,  to  the  extent  and in the  manner  customary  for
companies in similar lines of business under similar circumstances; and

         (d) Execute and deliver to the Secured Party, from time to time, solely
for the Secured  Party's  convenience in maintaining a record of the Collateral,
such  written  statements  and  schedules  as the Secured  Party may  reasonably
require, designating, identifying or describing the Collateral.

         3.9. Further Documentation. At any time and from time to time, upon the
written  request of the Secured  Party,  and at the sole expense of the Obligor,
the  Obligor  will  promptly  execute  and  deliver  any  and all  such  further
instruments  and documents and take such further action as the Secured Party may
deem desirable in order to obtain the full benefits of this Agreement and of the
rights and powers granted or purported to be granted hereby, including,  without
limitation,  the filing of any financial or  continuation  statements  under the
Uniform   Commercial  Code  (or  equivalent  law)  in  effect  in  any  relevant
jurisdiction or any additional  evidence of the security interest created hereby
with any patent, trademark or copyright registry, necessary or advisable (in the
Secured Party's sole  discretion) to perfect,  or to maintain the perfection of,
the security  interests  granted hereby.  The Obligor also hereby authorizes the
Secured Party to file any such financing or continuation  statement  without the
signature of the Obligor to the extent  permitted by  applicable  law. A carbon,
photographic  or other  reproduction  of a  security  agreement  or a  financing
statement  shall be sufficient as a financing  statement.  If any amount payable
under or in connection with any of the Collateral  shall be or become  evidenced
by any Chattel Paper,  Document or Instrument,  such Chattel Paper,  Document or
Instrument shall be immediately pledged and delivered to the Secured Party, duly
endorsed in a manner satisfactory to the Secured Party.

         3.10.  Further  Actions.  The Obligor will,  at its own expense,  make,
execute, endorse,  acknowledge,  file and deliver to the Secured Party from time
to time such lists,  descriptions and  designations of its Collateral,  bills of
lading, documents of title, vouchers,  invoices,  schedules, powers of attorney,
certificates,  additional security  agreements,  reports and other assurances or
instruments  and take such further steps  relating to the  Collateral  and other
property or rights covered by the security  interest hereby  granted,  which are
necessary or desirable to create, perfect,  preserve, protect or validate (under
the Assignment of Claims Act of 1940, as amended, or

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otherwise, to the extent applicable),  any security interest granted pursuant to
this  Security  Agreement or to enable the Secured Party to exercise and enforce
its rights under this Agreement with respect to such security interest.

                                   ARTICLE IV
               SPECIAL PROVISIONS CONCERNING ACCOUNTS AND ASSIGNED
                                   AGREEMENTS

          4.1. Additional  Representations  and Warranties.  As of the time when
each of its Accounts arises, the Obligor shall be deemed to have represented and
warranted  that such  Accounts are genuine and in all respects what they purport
to be, and that all papers and  documents  (if any)  relating,  thereto (i) will
(subject to dispute, return,  replacement,  settlement or compromise) represent,
to the best knowledge of the Obligor, the legal, valid and binding obligation of
the Account Obligor for the  indebtedness  owing by such Account Obligor arising
out of the performance of labor or services or the sale or lease and delivery of
the  merchandise or services,  subject to no defense,  offset or counterclaim by
the Account Obligor, (ii) will be the only original writings containing original
signatures evidencing and embodying such obligation of the Account Obligor named
therein and (iii) will be in  compliance  and will conform  with all  applicable
laws and governmental rules and regulations,  including, without limitation, the
Assignment of Claims Act of 1940, as amended, to the extent applicable.

          4.2.  Maintenance of Records.  The Obligor will keep and maintain,  at
its own expense, complete records of its Accounts reasonably satisfactory to the
Secured Party, including,  but not limited to, records of all payments received,
all credits granted  thereon,  all  merchandise  returned and all other dealings
therewith,  and the Obligor will make the same  available to the Secured  Party,
for inspection at the Obligor's  chief  executive  office,  at the Obligor's own
expense,  at any and all reasonable times upon demand. The Obligor shall, at its
own expense, deliver all tangible evidence that the Secured Party may request of
its Accounts  (including,  without  limitation,  all  documents  evidencing  the
Accounts) and books and records to the Secured  Party or to its  representatives
(copies of which  evidence and books and records may be retained by the Obligor)
at any and all times during  business hours upon demand.  If an Event of Default
shall have occurred and be continuing,  and if the Secured Party so directs, the
Obligor shall legend,  in form and substance  satisfactory to the Secured Party,
the Accounts,  as well as books, records and documents of the Obligor evidencing
or pertaining to the Accounts with an appropriate reference to the fact that the
Accounts  have been assigned to the Secured Party and that the Secured Party has
a security interest therein.

         4.3.  Modification  of Terms.  etc.  The  Obligor  shall not rescind or
cancel any  indebtedness  evidenced  by any of the  Accounts  or modify any term
thereof or make any  adjustment  with  respect  thereto,  or extend or renew the
same,  without the prior  written  consent of the Secured  Party,  which consent
shall not be unreasonably  withheld or compromise or settle any dispute,  claim,
suit or legal  proceeding  relating  thereto,  or sell any  Accounts or interest
therein.  The  Obligor  will  duly  fulfill  all  obligations  on its part to be
fulfilled under or in connection with the Accounts and will do nothing to impair
the rights of the Secured Party in the Accounts.

         4.4.  Collection.  The Obligor shall  endeavor to cause to be collected
from each  Account  Obligor  or obligor  under the  Accounts,  and the  Assigned
Agreements,  as and when due (including,  without limitation,  amounts which are
delinquent,  such amounts to be collected in accordance with generally  accepted
collection  procedures  in accordance  with all  applicable  laws),  any and all
amounts  owing  under  or on  account  of the  applicable  Account  or  Assigned
Agreement,  and apply  forthwith upon receipt thereof all such amounts as are so
collected to the outstanding balance of such Account or Assigned Agreement.  The
costs and expenses (including, without limitation, all

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reasonable attorneys' fees and disbursements) of collection, whether incurred by
the Obligor or the Secured Party, shall be borne by the Obligor.

         4.5.  Remedies.  In addition to, and not in limitation of, the remedies
set forth in Article VII hereof,  if a CUC Event of Default  shall have occurred
and be continuing and if the Secured Party so directs, the Obligor agrees (a) to
cause all payments on account of the Accounts and the Assigned  Agreements to be
made  directly to the Secured  Party and (b) that the Secured  Party may, at its
option,  directly  notify any or all  Account  Debtors  and  obligors  under the
Assigned  Agreements  to make  payments  with  respect  thereto  directly to the
Secured Party. The Secured Party may collect,  compromise,  forgive or extend or
take any other action with respect to any right to receive any payment under any
of the Accounts or the Assigned  Agreements,  and the Secured Party may take any
other action with respect to any of the Accounts or Assigned Agreements, and the
Obligor  agrees  to be bound by any such  collection,  compromise,  forgiveness,
extension or other  action  taken by the Secured  Party with respect to any such
Accounts or Assigned Agreements.  Without notice to or assent by the Obligor, if
a CUC Event of Default shall have occurred and be continuing,  the Secured Party
may apply any or all amounts then in its  possession,  or  thereafter  deposited
with it, in the manner  provided in Section 7.5 hereof.  The costs and  expenses
(including,   without   limitation,   all   reasonable   attorneys'   fees   and
disbursements)  of  collection,  whether  incurred by the Obligor or the Secured
party, shall be borne by the Obligor.

                                    ARTICLE V
         SPECIAL PROVISIONS CONCERNING ASSIGNED AGREEMENTS AND INSURANCE
                                    CONTRACTS

         5.1.  Rights  and  Duties of  Obligor  under  Assigned  Agreements  and
Insurance Contracts.  So long as no CUC Event of Default shall have occurred and
be continuing and except as otherwise  provided in Article IV hereof or in other
provisions of this Agreement or in the Contract or the Assigned Agreements,  the
Obligor may exclusively exercise all of the Obligor's rights, powers, privileges
and remedies under the Assigned Agreements and the Insurance Contracts. Anything
herein to the contrary notwithstanding,  the Obligor shall not (unless otherwise
permitted under the Contract) exercise any right to terminate, amend, supplement
or  otherwise  modify any of the  Assigned  Agreements  or  Insurance  Contracts
provided,  however, that if the Obligor fails to perform any provision of any of
the Assigned  Agreements or Insurance  Contracts,  each in  accordance  with its
respective  terms,  and the  failure  to effect  such  performance  is likely to
adversely  affect  the  value  of the  security  granted  to the  Secured  Party
hereunder or under the Contract or the Assigned  Agreements,  the Secured  Party
may, upon written notice to the Obligor, unless the Obligor is itself diligently
pursuing a cure for such  failure  that cannot be obtained  more  quickly by the
Secured  Party's  performance as specified  herein,  itself perform  (including,
without  limitation,  by  satisfying  any  payment  obligation),  or  cause  the
performance  of,  any  such  Assigned  Agreements  or  Insurance  Contracts,  in
accordance  with the  terms  thereof,  and the  expenses  of the  Secured  Party
incurred in  connection  therewith  shall be payable by the Obligor  pursuant to
Article VIII hereof.  The Obligor shall, at its sole expense,  fully perform and
comply  with  all of the  terms  of  each  of the  Assigned  Agreements  and the
Insurance  Contracts  to be  performed  or complied  with by it, and will do all
things  necessary,  on its part to maintain  each such  Assigned  Agreement  and
Insurance  Contract in full force and effect,  will do all things  necessary  to
keep unimpaired all of its rights, powers and remedies thereunder and to prevent
any forfeiture or impairment thereof,  will enforce each such Assigned Agreement
and Insurance  Contract,  in accordance with its respective terms, and will take
all such  action  to that end or to  enforce  any such  Assigned  Agreement  and
Insurance  Contract as from time to time may be requested by the Secured  Party.
No  settlement  on account of any loss,  in excess of $25,000 per each such loss
and $125,000 in the  aggregate,  related to any  property  covered by any of the
Insurance  Contracts  shall be made  without the written  consent of the Secured
Party, which consent shall not be unreasonably withheld.

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         5.2.   Obligor  Remains   Liable.   Anything  herein  to  the  contrary
notwithstanding,  except  as set  forth in the  next  succeeding  sentence,  the
Obligor shall remain liable under each of the Assigned  Agreements and Insurance
Contracts and all other contracts and agreements  included in the Collateral and
shall fully  perform all of its duties and  obligations  thereunder  to the same
extent as if this Agreement had not been  executed.  The exercise by the Secured
Party of any of its rights  hereunder  shall not release the Obligor from any of
its duties or  obligations  under any of the  Assigned  Agreements  or Insurance
Contracts or any other  contracts  and  agreements  included in the  Collateral,
except that in the event of foreclosure upon any Collateral by the Secured Party
and the exercise by the Secured  Party of its rights to sell such  Collateral as
between the Obligor and the Secured Party, the Obligor shall be under no further
obligation to the Secured Party to perform its obligations under such Collateral
after such event.  The Secured Party shall not have any  obligation or liability
under  any of the  Assigned  Agreements  or  Insurance  Contracts  or any  other
contracts and  agreements  included in the  Collateral  solely by reason of this
Agreement or the Construction Contract, nor shall the Secured Party be obligated
to perform any of the obligations or duties of the Obligor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.

                   5.3.  Remedies.  In addition to and not in  limitation of the
remedies set forth in Article VII hereof,  if a CUC Event of Default  shall have
occurred and be continuing, the Secured party may, upon notice to the Obligor in
compliance with any mandatory requirements of applicable law, take any or all of
the following actions: (a) enforce all remedies,  rights,  powers and privileges
of the  Obligor  under  any or all of  the  Assigned  Agreements  and  Insurance
Contracts  or (b)  substitute  itself or any  nominee  or trustee in lieu of the
Obligor  as  party  to  any or all of  the  Assigned  Agreements  and  Insurance
Contracts and (c) notify the Account  Obligor of any or all  Accounts,  Assigned
Agreements,  Insurance  Contracts or General  Intangibles  (the  Obligor  hereby
agreeing to deliver,  at its own expense,  any such notice at the request of the
Secured Party) that all payments and  performance  under the relevant  Accounts,
Assigned  Agreements,  Insurance Contracts and General Intangibles shall be made
or rendered to the Secured  Party or such other person as the Secured  Party may
designate.

                                   ARTICLE VI
                                   [RESERVED]

                                   ARTICLE VII
                REMEDIES UPON OCCURRENCE OF CUC EVENT OF DEFAULT

         7.1.  Remedies:  Obtainin2 the  Collateral  Upon  Default.  The Obligor
agrees that if a CUC Event of Default  shall have  occurred  and be  continuing,
then, and in every such case, the Secured Party may exercise, in addition to all
other rights and remedies  granted to the Secured Party in this  Agreement,  the
Contract, any of the Assigned Agreements,  and any other instrument or agreement
securing,  evidencing  or  relating  to any of the  foregoing,  all  rights  and
remedies of a secured party under the Uniform  Commercial  Code in effect in any
relevant   jurisdiction   or  under  other   applicable   law  in  any  relevant
jurisdiction.  Without  limiting the  generality of the  foregoing,  the Secured
Party may do any or all of the following:

         (a)  personally,   or  by  trustees  or  attorneys,   immediately  take
possession  of the  Collateral or any part thereof from the Obligor or any other
Person who then has  possession of any part thereof,  with or without  notice or
process of law, and for that purpose may enter upon the Obligor's premises,  or,
to the extent permitted by applicable law, such other Person's premises,

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where any of the Collateral is located and remove the same and use in connection
with such removal any and all services,  supplies,  aids and other facilities of
the Obligor; and

          (b) take possession of the Collateral or any part thereof by directing
the Obligor to deliver (to the extent such  Collateral  is a physical  nature so
that it may be so  delivered)  the same to the  Secured  Party  at any  place or
places  designated  by the  Secured  Party  and  reasonably  convenient  to both
parties, in which event the Obligor shall, at its own expense:

         (i)  forthwith  cause  the same to be moved to the  place or  places so
designated by the Secured Party and there delivered to the Secured Party;

         (ii) store and keep any Collateral so delivered to the Secured Party at
such place or places pending  further action by the Secured Party as provided in
Section 7.2; and

         (iii) while the  Collateral  shall be so stored and kept,  provide such
guards and maintenance services as shall be necessary to protect the same and to
preserve and maintain them in good condition.

The  Obligor's  obligation  to deliver the  Collateral is of the essence of this
Agreement  and,  accordingly,  upon  application  to a court  of  equity  having
jurisdiction,  the Secured Party shall be entitled to obtain a decree  requiring
specific performance by the Obligor of the said obligation.

         7.2. Remedies:  Disposition of the Collateral. Any Collateral seized by
the Secured Party pursuant to this Agreement, and any other Collateral,  whether
or  not  so  seized  by the  Secured  Party,  may  be  sold,  leased,  assigned,
transferred  or  otherwise  disposed  of under one or more  agreements  or as an
entirety,  and without the  necessity  of  gathering at the place of sale of the
property to be sold,  and in general in such manner,  at such time or times,  at
such place or places and on such terms as may be commercially  reasonable and in
compliance  with  any  mandatory  requirements  of  applicable  law.  Any of the
Collateral may be sold, leased, assigned,  transferred or otherwise disposed of,
in the  condition in which the same  existed when taken by the Secured  Party or
after  any  overhaul  or  repair  which may be  commercially  reasonable  and in
compliance  with  any  mandatory   requirements  of  applicable  law.  Any  such
disposition  shall be made  upon not less  than 10 days'  written  notice to the
Obligor (which the Obligor agrees is reasonable  notification within the meaning
of Section  9-504(3) of the UCC)  specifying the time such  disposition is to be
made and, if such  disposition  shall be a public sale,  specifying the place of
such sale. Any such sale may be adjourned by  announcement at the time and place
fixed therefor,  and such sale may, without further notice,  be made at the time
and place to which it was so  adjourned.  To the extent  permitted  by law,  the
Secured Party may itself bid for and become the  purchaser of the  Collateral or
any item thereof offered for sale at a public auction without  accountability to
the  Obligor  (except to the extent of surplus  money  received  as  provided in
Section 7.5).

7.3.     Waiver.

(a) Except as otherwise  provided in this Agreement,  THE OBLIGOR HEREBY WAIVES,
TO THE EXTENT  PERMITTED  BY  APPLICABLE  LAW,  NOTICE OR  JTJDICIAL  HEARING IN
CONNECTION  WITH THE SECURED  PARTY'S TAKING  POSSESSION OR THE SECURED  PARTY'S
DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL
PRIOR  NOTICE AND HEARING FOR ANY  PREJUDGMENT  REMEDY OR REMEDIES  AND ANY SUCH
RIGHT WHICH THE  OBLIGOR  WOULD  OTHERWISE  HAVE UNDER THE  CONSTITUTION  OR ANY
STATUTE OF THE UNITED  STATES OR OF ANY STATE,  and the Obligor  hereby  further
waives:

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                  (i) all  damages  occasioned  by such  taking  of  possession,
except any damages  which are  determined to have been the result of the Secured
Party's gross negligence or willful misconduct;

                  (ii)  all other requirements as to the time, place and
                        terms of sale; and

                  (iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium  now or hereafter in force under any  applicable  law in
order to prevent or delay the enforcement of this Agreement or the absolute sale
of the Collateral or any portion  thereof,  and the Obligor,  for itself and all
who may claim under it,  insofar as it or they may now or hereafter  lawfully do
so, hereby waives the benefit of such laws.

         (b) Without  limiting  the  generality  of the  foregoing,  the Obligor
hereby:  (i) acknowledges  that the Secured Party, in the sole discretion of the
Secured  Party and  without  notice to or demand  upon the  Obligor  and without
otherwise affecting the obligations of the Obligor hereunder,  from time to time
may take and hold other  collateral (in addition to the  Collateral) for payment
of any of the Contact Obligations or any part thereof, may exchange,  enforce or
release  such  other  collateral  or any part  thereof,  may accept and hold any
endorsement  or  guarantee of payment of the  Contract  Obligations  or any part
thereof and may release or  substitute  any  endorser or  guarantor or any other
Person  granting  security  for  or in  any  way  obligated  upon  any  Contract
Obligations or any part thereof;  and (ii) waives and releases any and all right
to require the Secured Party to collect any of the Contract Obligations from any
specific item or items of Collateral or from any other party liable as guarantor
or in any other manner in respect of any of the Contract Obligations or from any
collateral (other than the Collateral) for any of the Contract Obligations.

          (c) Any sale of, or the grant of  options  to  purchase,  or any other
realization  upon,  any  Collateral  shall  operate to divest all right,  title,
interest,  claim and demand,  either at law or in equity, of the Obligor therein
and thereto and shall be a perpetual  bar both at law and in equity  against the
Obligor  and against any and all  Persons  claiming or  attempting  to claim the
Collateral  so sold,  optioned or realized  upon,  or any party  thereof,  from,
through and under the Obligor.

         7.4.  Expenses of Disposition of Collateral.  The Obligor agrees to pay
all costs and expenses of the Secured Party (including,  without limitation, all
reasonable  attorneys' fees and disbursements)  incurred by the Secured Party in
connection  with  the  collection  of any of the  Contract  Obligations  and the
enforcement of any of its rights,  remedies and privileges hereunder,  under the
Contract,  any of the Assigned  Agreements,  and under any other  instrument  or
agreement securing, evidencing or relating to any of the foregoing.

         7.5.  Application  of  Proceeds;  Obligor  Liable for  Deficiency.  The
proceeds of any Collateral realized upon pursuant hereto or disposed of pursuant
to Section 7.2 shall be applied as follows:

         (a) to the payment of any and all expenses and fees (including, without
limitation,  all reasonable  attorneys' fees and disbursements)  incurred by the
Secured Party in obtaining, taking possession of, removing, insuring, repairing,
storing and  disposing  of  Collateral  and any and all amounts  incurred by the
Secured Party in connection therewith;

         (b) next, to the payment of the Contract  Obligations  in such order as
the Secured Party may determine; and

         (c) next, if no Contract  Obligation is  outstanding,  any surplus then
remaining  shall be paid to the Obligor (or whoever  shall be lawfully  entitled
thereto) subject, however, to the rights of

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         the holders of any existing Liens of which the Secured Party has actual
notice (without any investigation required);

it being understood that the Obligor shall remain liable to the Secured Party to
the  extent  of  any  deficiency  between  the  amount  of the  proceeds  of the
Collateral  and the aggregate  amount of the sums referred to in clauses (a) and
(b) of this Section.

         7.6.  Remedies  Cumulative:  No Waiver.  Each and every  right,  power,
privilege and remedy hereby  specifically given to the Secured Party shall be in
addition to every other right,  power,  privilege and remedy  specifically given
under this Agreement or under the Contract or any of the Assigned  Agreements or
now or hereafter existing at law or in equity, or by statute, and each and every
right,  power,  privilege  and  remedy  whether  specifically  herein  given  or
otherwise  existing may be exercised from time to time or simultaneously  and as
often and in such order as may be deemed  expedient  by the Secured  Party.  All
such rights,  powers,  privileges  and  remedies  shall be  cumulative,  and the
exercise  or the  partial  exercise  of one  shall not be deemed a waiver of the
right to exercise of any other. No failure, delay or omission on the part of the
Secured  Party  in the  exercise  of any of its  rights,  remedies,  powers  and
privileges hereunder or under the Contract or any of the Assigned Agreements and
no course of dealing  between the Obligor and the Secured Party shall operate as
a waiver thereof;  nor shall any partial or single exercise thereof preclude any
other or further exercise thereof or any other right, remedy, power or privilege
hereunder  or  thereunder,  and no renewal or  extension  of any of the Contract
Obligations  shall  impair any such right,  remedy,  power or privilege or shall
constitute a waiver  thereof.  No notice to or demand on the Obligor in any case
shall entitle the Obligor to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Secured Party to
any other or further action in any circumstances without notice or demand.

         7.7. Discontinuance of Proceedings. In the case where the Secured Party
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by  foreclosure,  sale,  entry or otherwise,  and such proceeding
shall  have been  discontinued  or  abandoned  for any reason or shall have been
determined  adversely  to the  Secured  Party,  then,  in every such  case,  the
Obligor,  the Secured  Party and each holder of any of the Contract  Obligations
shall be restored to their former positions and rights hereunder with respect to
the Collateral,  subject to the security  interest created under this Agreement,
and all rights, remedies and powers of the Secured Party shall continue as if no
such proceeding had been instituted.

         7.8.  Secured  Party's Duty as to  Collateral.  The Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary  steps to
preserve  rights  against  prior  parties or any other rights  pertaining to any
Collateral.  The  Secured  Party's  sole  duty  with  respect  to  the  custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section  9-207 of the UCC or  otherwise,  shall  be to deal  with it in the same
manner as the Secured Party deals with similar  securities  and property for its
own account. Neither the Secured Party nor any of its partners, nor its or their
directors,  officers,  equity  holders,  employees or agents shall be liable for
failure to demand,  collect or  realize  upon any of the  Collateral  or for any
delay in doing so or shall be under any obligation to sell or otherwise  dispose
of any  Collateral  upon the  request of the  Obligor or any other  Person.  Any
increase or profits  (except  money)  received from any Collateral in connection
with the exercise of such powers shall  become part of the  Collateral,  and any
money so received shall be applied in accordance with Section 7.5.

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                                   ARTICLE VIII
                                    INDEMNITY
             8.1.    Indemnity.

         (a) The  Obligor  agrees to  indemnify,  defend and hold  harmless  the
Secured Party and their respective  successors,  assigns,  directors,  partners,
officers,   employees,  agents,  attorneys,   trustees  and  servants  (each  an
"Indemnitee" and, collectively, the "Indemnitees") from any and all liabilities,
obligations,  damages,  injuries,  penalties,  claims, demands,  actions, suits,
judgments and any and all costs and expenses (including, without limitation, all
reasonable attorneys' fees and disbursements) (such expenses, the "expenses") of
whatsoever  kind and nature imposed on,  asserted  against or incurred by any of
the  Indemnitees  in any way relating to,  connected  with or arising out of (i)
this  Agreement,  the  Contract,  the Assigned  Agreements,  or other  documents
executed in connection  herewith or therewith,  or in any way connected with the
enforcement of any of the terms hereof or thereof,  or the  preservation  of any
rights hereunder or thereunder, (ii) the ownership, purchase, delivery, control,
acceptance, lease, financing, possession,  operation, condition, sale, return or
other disposition, or use of, the Collateral, (iii) the violation by the Obligor
of any law or  governmental  rule,  (iv) any tort of the  Obligor  or its agents
(including,  without limitation, claims arising or imposed under the doctrine of
strict liability or products liability, or for or on account of injury to or the
death of any person  (including any  Indemnitee),  or property damage or (v) any
contract claim against the Obligor or its agents, excluding any of the foregoing
in (i) - (v)  determined  to have  arisen from the gross  negligence  or willful
misconduct of any  Indemnitee.  The Obligor agrees that,  upon written notice by
any Indemnitee of the assertion of such a liability, obligation, damage, injury,
penalty,  claim, demand, action, judgment or suit, the Obligor shall assume full
responsibility for the defense thereof.

         (b) Without  limiting the  application of Section  8.1(a),  the Obligor
agrees  to pay  each  Indemnitee  for any and all  reasonable  fees,  costs  and
expenses  of  whatever  kind  or  nature  (including,  without  limitation,  all
reasonable  attorneys' fees and  disbursements)  incurred in connection with the
creation,  preservation,  protection or validation of the Secured  Party's Liens
on, and security interest in, the Collateral, including, without limitation, all
fees, taxes and other  governmental  charges in connection with the recording or
filing of instruments and documents in public  offices,  payment or discharge of
any taxes or Liens upon or in respect of the Collateral,  premiums for insurance
with  respect  to the  Collateral  and all other  fees,  costs and  expenses  in
connection  with  protecting,  maintaining  or preserving the Collateral and the
Secured  Party's  interest  therein,  whether  through  judicial  proceedings or
otherwise,  or in defending or  prosecuting  any actions,  suits or  proceedings
arising out of or relating to the Collateral.

         (c) If and to the extent that the obligations of the Obligor under this
Section 8.1 are unenforceable for any reason,  the Obligor hereby agrees to make
the maximum  contribution to the payment and  satisfaction  of such  obligations
which is permissible under applicable law.

         8.2. Contract Obligations:  Survival. Any amounts paid by an Indemnitee
as to which such Indemnitee has the right to reimbursement  and any amounts paid
by the Secured Party in preservation of any of its rights, remedies and interest
in the  Collateral,  together  with  interest on such amounts from the date paid
until reimbursement in full at a rate per annum equal to [20%], shall constitute
Contract Obligations secured by the Collateral. The indemnity obligations of the
Obligor  contained in this Article VIII shall continue in full force and effect,
notwithstanding the full payment of the Contract Obligations and notwithstanding
the discharge thereof (but only in respect of those claims,  any of the basis of
which arises before such full payment and discharge).

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                                    ARTICLE IX
                                  MISCELLANEOUS

         9.1.  Notices.  All  notices  and  other  communications  provided  for
hereunder shall be given in accordance  with, and shall be effective as provided
in, Section 21 of the Contract and at the address and telecopy number  specified
below their respective names on the signature pages hereof.

         9.2. Amendments.  Waivers. etc. No amendment or waiver of any provision
of this  Agreement nor consent to any departure by any party from the provisions
hereof shall in any event be  effective  unless the same shall be in writing and
signed by the parties hereof,  and then in such case such  amendment,  waiver or
consent shall be effective  only in the specific  instance and for the specified
purpose for which given.

         9.3.  Successors and Assigns.  This Agreement shall create a continuing
security  interest  in the  Collateral  and shall (i)  remain in full  force and
effect until payment in full of the Contract  Obligations,  (ii) be binding upon
the  Obligor,  its  successors  and assigns and (iii) inure,  together  with the
rights and  remedies  of the  Secured  Party  hereunder,  for the benefit of the
Secured Party and their respective successors, transferees and assigns.

         9.4.  Severability.  In the case where any  provision in or  obligation
under  this  Agreement  shall  be  invalid,  illegal  or  unenforceable  in  any
jurisdiction,  the  validity,  legality  and  enforceability  of  the  remaining
provisions  or  obligations,  or of such  provision or  obligation  in any other
jurisdiction, shall not in any way be affected or impaired thereby.

         9.5. Headings Descriptive.  Headings used herein are for convenience of
reference  only and shall not in any way affect the meaning or  construction  of
any provision of this Agreement.

         9.6.  Counterparts.  This  Agreement  may be  executed in any number of
counterparts and by the different parties hereto on separate counterparts,  each
of which when so executed and delivered  shall be an original,  but all of which
shall together constitute one and the same instrument.

         9.7. Expenses. The Obligor agrees to pay on demand to the Secured Party
all reasonable costs and expenses of collection (including,  without limitation,
the fees and disbursements of counsel)  incident to the enforcement,  protection
or  preservation of any right,  remedy,  power or privilege of the Secured Party
under this Agreement.

         9.8. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED
BY, AND  CONSTRUED  IN  ACCORDANCE  WITH,  THE LAWS OF THE  COMMONWEALTH  OF THE
NORTHERN  MARIANA  ISLANDS  (WITHOUT  GIVING  EFFECT TO THE  PRINCIPLES  THEREOF
RELATING TO CONFLICTS OF LAW).

9.9 SUBMISSION TO  JURISDICTION.  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS  AGREEMENT OR THE OTHER LOAN  DOCUMENTS OR ANY DOCUMENT  RELATED  HERETO OR
THERETO AND ANY ACTION OR PROCEEDING FOR  ENFORCEMENT OF ANY JUDGMENT IN RESPECT
HEREOF OR  THEREOF  MAY BE  BROUGHT  IN THE  COURTS OF THE  COMMONWEALTH  OF THE
NORTHERN MARIANA ISLANDS, AND THE OBLIGOR HEREBY ACCEPTS FOR ITSELF AND IN

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<PAGE>

RESPECT OF ITS  PROPERTY,  GENERALLY  AN])  UNCONDITIONALLY,  THE  NON-EXCLUSIVE
JURISDICTION FOR THE AFORESAID COURTS. THE OBLIGOR HEREBY  IRREVOCABLY  CONSENTS
TO THE  SERVICE OF THE PROCESS  OUT OF ANY OF THE  AFOREMENTIONED  COURTS IN ANY
SUCH ACTION OR  PROCEEDING  BY THE MAILING OF COPIES  THEREOF BY  REGISTERED  OR
CERTIFIED  MAIL,  POSTAGE  PREPAID,  TO SUCH  OBLIGOR AT ITS  ADDRESS  SET FORTH
OPPOSITE  ITS  SIGNATURE  BELOW.  THE  OBLIGOR  HEREBY  IRREVOCABLY  WAIVES  ANY
OBJECTION  WHICH IT MAY NOW OR  HEREAFTER  HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID  ACTIONS OR PROCEEDINGS  IN RESPECT OF OR IN CONNECTION  WITH THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY DOCUMENT  RELATED HERETO OR THERETO
BROUGHT IN THE AFOREMENTIONED  COURTS AND HEREBY FURTHER  IRREVOCABLY WAIVES AND
AGREES  NOT TO  PLEAD  OR CLAIM IN ANY  SUCH  COURT  THAT  ANY  SUCH  ACTION  OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT  FORUM.
NOTHING  HEREIN SHALL AFFECT THE RIGHT OF THE SECURED  PARTY TO SERVE PROCESS IN
ANY MANNER PERMITED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE OBLIGOR IN ANY OTHER JURISDICTION.

         9.10.  WAIVER OF TRIAL BY JURY.  TO THE EXTENT  PERMITTED BY APPLICABLE
LAW, THE PARTIES HERETO HEREBY  IRREVOCABLY  WAIVE ALL RIGHT OF TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY DOCUMENT  RELATED HERETO OR THERETO
OR ANY MATTER ARISING HEREUNDER OR THEREUNDER

         9.11. Obligor's Duties.  Except as provided in Section 5.2, the Obligor
shall remain liable to perform all of its  obligations  under or with respect to
the  Collateral,  and the  Secured  Party  shall  not  have any  obligations  or
liabilities  under or with respect to any Collateral by reason of or arising out
of this Agreement  (except any duty to act in a commercially  reasonable  manner
expressly  imposed  hereunder or by applicable law), nor shall the Secured Party
be  required  or  obligated  in any  manner to  perform  or  fulfill  any of the
obligations of the Obligor under or with respect to any Collateral.

         9.12.Termination and Reinstatement.

         (a) When all Contract  Obligations have been terminated or indefeasibly
paid in full in cash or cash equivalent,  this Agreement shall terminate (except
as otherwise  provided in the Contract),  and the Secured Party,  at the request
and expense of the Obligor, will promptly execute and deliver to the Obligor the
proper  instruments  acknowledging  the termination of this Agreement,  and will
duly assign,  transfer and deliver to the Obligor (without  recourse and without
any  representation or warranty of any kind) such of the Collateral as may be in
the  possession  of the  Secured  Party  and has not  theretofore  been  sold or
otherwise applied or released pursuant to this Agreement.

         (b) This Agreement shall continue to be effective or be reinstated,  as
the case may be, if at any time any  amount  received  by the  Secured  Party in
respect of the Contract  Obligations  is rescinded or must otherwise be restored
or returned by the Secured Party upon the insolvency,  bankruptcy,  dissolution,
liquidation  or  reorganization  of the Obligor or upon the  appointment  of any
intervenor or conservator of, or trustee or similar official for, the Obligor or
any substantial  part of its assets,  or otherwise,  all as though such payments
had not been made.

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<PAGE>

         9.13.Security  Interest  Absolute.  All rights of the Secured Party,
and the security  interests granted  hereunder,  shall be absolute,
irrespective of:

          (a) any lack of  validity  or  enforceability  of the  Contract or any
other agreement or instrument relating hereto or thereto;

          (b) any change in the time,  manner or place of payment  of, or in any
other term of, all or any of the Contract  Obligations or any other amendment or
waiver  of or any  consent  to any  departure  from the  Contract  or any  other
agreement or instrument relating hereto or thereto;

          (c) any exchange,  release or  non-perfection of any other collateral,
or any  release  or  amendment  or waiver of or consent  to  departure  from any
guaranty, for all or any of the Contract Obligations; or

          (d) any other circumstance which might otherwise  constitute a defense
available  to, or a  discharge  of, the  Obligor or a third party other than the
full and indefeasible discharge of all of the Contract Obligations.

          9.14.  Recourse.  This  Agreement  is made with full  recourse  to the
Obligor and pursuant to and upon all warranties, representations,  covenants and
agreements on the part of the Obligor  contained  herein,  in the Contract,  the
Assigned  Agreements  and  otherwise  in  writing  in  connection  herewith  and
therewith;  provided,  however,  that no person  other than the Obligor (nor any
officer,  employee,  servant,  controlling person,  executive,  director, agent,
authorized  representative  or  affiliate  of the Obligor or of any other person
(herein referred to as  "Operatives"))  shall be personally  liable for payments
due hereunder or under the Contract or any of the Assigned Agreements or for the
performance of any obligation hereunder or thereunder.  The sole recourse of the
Secured Party for  satisfaction of the obligations of the Obligor  hereunder and
under the  Contract  or any of the  Assigned  Agreements  shall be  against  the
Obligor  (and not against any assets or property of any  Operatives)  and to the
security  interest and remedies  provided  hereunder  and  thereunder  as may be
provided  in any  documents  relating  hereto or  thereto.  In the event  that a
default occurs in connection with such  obligations,  no action shall be brought
against  any such other  person or the  Operatives  of the Obligor or such other
person by virtue of its direct or indirect  ownership  interest in the  Obligor,
and any judicial  proceeding  and the Secured  Party may  institute  against the
Obligor shall be limited to seeking the preservation,  enforcement,  foreclosure
or other sale or disposition of the security interests now or any time hereafter
securing the  repayment  of the  Contract  Obligations  and  performance  by the
Obligor of its other covenants and obligations  hereunder and under the Contract
or any of the Assigned Agreements.  In the event of foreclosure or other sale or
disposition  of  the  Collateral  or any  part  thereof,  no  judgment  for  any
deficiency  upon the  obligations  hereunder  or  under  the  Contract  shall be
obtainable  by the Secured  Party  against any person or the  Operatives  of the
Obligor  or such  other  person by virtue of its  direct or  indirect  ownership
interest in the Obligor.

          9.15.  Conflicting  Terms.  To the extent a term or  provision of this
Agreement  conflicts with the Contract,  the Contract shall control with respect
to such term or provision.

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<PAGE>

          IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
The Commonwealth Utilities Corporation             Telesource CNMI, Inc.
By:    ___________________________                 By:________-_________________
Title: ___________________________                 Title: ______________________

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<PAGE>

                                                                   Schedule A
                               Assigned Agreements
                                [to be reviewed]

[Ground] Lease of Real Property
Tranmission/ Wheeling Agreements
Power Distribution Agreements
Power Sales Agreements
Interconnect Agreements
Power Purchase Agreements
Invoices for Sales of Power
Fuel Supply Contracts
Insurance Contracts

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<PAGE>

                                   EXHIBIT "D"

-------------------------------------------------------------------------------
                           ESCROW, PLEDGE AND SECURITY
                                    AGREEMENT

                                      among

                               TELESOURCE CNMI INC.

                                       and

                       THE COMMONWEALTH UTILITIES CORPORATION

                                       and

                                     [AGENT]

                               Dated as of , 1997

                      ESCROW, PLEDGE AND SECURITY AGREEMENT

         AN  AGREEMENT,  dated  as of the  _____day  of___________  1997,  among
Telesource CNMI, Inc., Horiguchi Building, 5th Floor, PPP4O2, Box 10000, Saipan,
MP 96950 ("Telesource"),  The Commonwealth Utilities Corporation,  P.O. Box 1220
Lower Base, Saipan, MP 96950 ("CUC") and _______________________________  having
an address ("Agent").

                                   WITNESSETH:

WHEREAS, Telesource and CUC have entered into an Agreement for Design, Supply of
Plant and Equipment,  Construction,  Maintenance and Operation,  and Transfer of
Ownership (the  "Contract") and related  instruments,  including a series of 120
promissory  notes (the "Notes," or each "Note") and related  Pledge and Security
Agreement; and

WHEREAS,  Telesource  has  requested  and CUC has agreed to  provide  additional
security for its  obligations  under the Contract and the Notes by arranging for
the  deposit  by CUC  of  certain  assets  in a  collateral  account,  on  which
Telesource  shall have a first secured lien, to be administered by the Agent for
the benefit of Telesource; and

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                                      213
<PAGE>

WHEREAS,  the Agent agrees for an on behalf of  Telesource  as its agent to hold
and invest such assets and  administer an account in  accordance  with the terms
and conditions agreed upon by the parties.

NOW,  THEREFORE,  in  consideration  of  the  covenants  and  conditions  herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

         1. Agency  Relationship.  Telesource  and the Agent  hereby  agree that
during  the term of this  Agreement  the Agent  shall  serve as Agent for and on
behalf of Telesource and shall hold and invest the funds to be deposited with it
in an  account  in  accordance  with all of the  terms  and  conditions  of this
Agreement, which account and all assets of whatever type are herein collectively
referred to as the "Escrow Account."

         2.  Compensation and Expenses.  The Agent shall receive as compensation
during  the term of this  Agreement  a fee of  $___________  per  calendar  year
payable  annually in advance by  Telesource  on or before  ____________  of each
calendar year (commencing).  In addition,  the Agent shall be paid by Telesource
$______ per transaction and shall be reimbursed for any reasonable out-of-pocket
expenses  incurred  by the Agent in order to  perform  its  duties  as  outlined
herein.  No funds shall be distributed by the Agent in accordance with the terms
of this Agreement  unless and until the Agent has received all funds required to
be  paid  or  reimbursed  to it in  accordance  with  Sections  2 and 4 of  this
Agreement.

         3. Term. The term of this Agreement shall commence on _____________ and
shall  terminate upon the full payment and delivery by the Agent of all funds on
deposit,  together  with all interest  earned  thereon (net of losses) to CUC or
Telesource,  pursuant to the terms of this Agreement. Such term shall not exceed
twenty-seven  years unless the Agent shall be holding funds  pursuant to a court
order or pending instructions from a court regarding the distribution of funds.

         4. Indemnification and Reimbursement of Agent and Telesource.

         a.  Telesource  expressly  agrees  to  indemnify,  reimburse  and  hold
harmless  the Agent for all  liabilities,  obligations,  claims,  suits,  costs,
damages,  judgments and expenses,  including reasonable attorneys' fees, imposed
on,  asserted  against,  or suffered  or incurred by the Agent to third  parties
relating to,  arising from or in connection  with the  performance of its duties
under  this  Agreement  or its  enforcement  of any of the  terms  hereof or the
investment of the Escrow Account,  including,  without  limitation,  any suit or
proceeding in the nature of an inter-pleader  brought by or against the Agent or
the  proceeds  of part or all of the Escrow  Account;  provided,  however,  that
Telesource shall not be liable to the Agent for any costs, damages, judgments or
expenses which arise as a result of or in connection with the negligence, breach
of this  Agreement,  willful  failure or willful  misconduct or bad faith of the
Agent or its employees, agents or representatives, respectively.

         b. CUC  expressly  agrees to  indemnify,  reimburse  and hold  harmless
Telesource for all  liabilities,  obligations,  claims,  suits,  cost,  damages,
judgments  and  expenses,  including  reasonable  attorneys  fees,  imposed  on,
asserted  against,  or suffered or incurred by Telesource to the Agent or to any
third party relating to, arising from or in connection  with the  performance by
Telesource of the terms of this Agreement or its enforcement of any of the terms
hereof or its  investment  through the Agent of the Escrow  Account,  including,
without  limitation,  any suit or  proceeding  in the nature of an  interpleader
brought by or against  Telesource  or the  proceeds of part or all of the Escrow
Account, provided, however, that CUC shall not be liable to Telesource for

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                                      214
<PAGE>

any costs,  damages,  judgments  or  expenses  which  arise as a result of or in
connection  with  Telesource's  willful  failure or willful  misconduct or gross
negligence  of  Telesource  or  its   employees,   agents  or   representatives,
respectively.

        c. The  obligations  and  indemnities  contained in this Section 4 shall
continue in force notwithstanding the termination of this Agreement.

5. Liability of Agent and Telesource. The duties of the Agent and Telesource are
only such as are herein  expressly and  specifically  provided,  and neither the
Agent nor  Telesource  shall be liable or  accountable  hereunder,  to any party
except for the liability arising from (i) in the case of Telesource, the willful
failure or willful misconduct or gross negligence of Telesource,  its employees,
agents  or  representatives,  and (ii) in the  case of the  Agent,  the  willful
misconduct,  negligence, breach of this Agreement or bad faith of the Agent, its
employees, agents or representatives. The Agent shall not be bound or in any way
affected  by  any  notice  of  any  modification,  cancellation,  abrogation  or
rescission  of this  Agreement,  or of any facts or  circumstances  affecting or
alleged to affect the rights or liabilities of the parties hereto, other than as
herein set forth, or affecting or alleged to affect the rights or liabilities of
any other  persons,  unless  certified  to it in writing,  delivered  to it, and
signed by the appropriate  parties;  nor, in the case of a modification,  unless
such a  modification  shall be  satisfactory  to the Agent,  as evidenced by its
written  consent  thereto.  The Agent  shall not be required  to  recognize  any
person,  firm or corporation  as an assign or successor of either  Telesource or
CUC  unless  there  shall  be  presented  to  the  Agent   evidence   reasonably
satisfactory  to the Agent of such valid  assignment  or  succession.  The Agent
shall not have any duty to insure  that funds  required to be  deposited  by CUC
pursuant to paragraph 10 of this Agreement are in fact deposited with the Agent,
or to insure or determine  that any funds  disbursed to CUC or to  Telesource in
accordance with the terms of this Agreement are properly  applied or used by CUC
or Telesource.

6.  Right to  Interplead.  In the event  that the Agent or  Telesource  shall be
subject to any conflicting  demand as to the disposition of any assets placed in
its hands pursuant to this Agreement,  the Agent or Telesource,  as the case may
be,  shall have the tight to  interplead  any or all of such assets in its hands
into a court of competent  jurisdiction for the purpose of determining the party
or parties entitled thereto.

7. Resignation of Agent. The Agent shall have the right to resign at any time by
giving  forty-five  (45) days' written notice to CUC and  Telesource.  The Agent
shall  resign  immediately  upon  receipt of written  request  therefor  from an
Authorized Officer of Telesource.  Contemporaneously  with any resignation,  the
Agent shall assign,  transfer,  deliver and pay over the Escrow  Account and all
documents in its possession  relating to the Escrow Account or this Agreement to
the  successor  agent,  as  provided  in Section 8 thereof,  and the Agent shall
execute all documents and do all such things as shall be reasonably  required by
Telesource  to effect  same.  The  Agent  shall be paid any  monies  owing to it
pursuant to Section 2 or Section 4 thereof prior to effecting its resignation in
accordance with the foregoing terms.

8.  Successor  Agent.  In the  event  that,  prior  to the  termination  of this
Agreement, the Agent shall become unable or unwilling to serve in such capacity,
then a successor agent shall be selected by Telesource, and Telesource shall pay
all fees and expenses charged by such successor  agent,  subject to the right to
reimbursement  of same pursuant to the  provisions  of Section 4(b) hereof.  Any
successor  agent shall be a commercial  bank or trust  company  authorized to do
business in the United  States and having a combined  capital and surplus of not
less than  $100  million.  The  rights  and  obligations  of the Agent  shall be
assigned to and binding upon such successor agent, and the successor agent shall
execute and  instrument  accepting  such  appointment  and  agreeing to serve as
"Agent" in accordance with the terms of this Agreement.

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<PAGE>

If the  Agent,  or any  successor  agent  thereto,  resigns  for any  reason  in
accordance with the terms of this Agreement,  CUC agrees to take all such action
reasonably requested of it to renegotiate the terms of this Agreement, to record
or revise the  recordation  of  Telesource's'  security  interest  in the Escrow
Account and to obtain any  approvals  and  consents  which may be  required.  If
Telesource  cannot find a commercial  bank or trust company to qualify and serve
as a successor agent pursuant to this Agreement,  and, during such time, if any,
as there  shall be no  successor  agent  installed  and acting  pursuant to this
Agreement,  Telesource  may,  if  it so  elects,  hold  the  Escrow  Account  in
Telesource's'  name  in an  institution  selected  by  Telesource  until  such a
successor agent is secured,  which institution shall have a combined capital and
surplus of not less than $100  million.  In the event that for any reason CUC is
prevented from taking any action required by this Section 8, CUC hereby appoints
Telesource as its attorney-in-fact solely for purposes of taking any actions and
signing any documents required by this Section 8.

         9. Authorized  Officer of Telesource.  The term "Authorized  Officer of
Telesource" as used in this Agreement shall mean any officer of Telesource whose
name, title and signature appears on Exhibit A to this Agreement as long as such
officer  continues to hold the title listed.  Telesource at any time may provide
to the Agent a substitute  Exhibit A, provided such substitute is in the form of
the  original  Exhibit  A and  executed  by at least one  officer  listed on the
Exhibit A which is being replaced or by the President of  Telesource.  The Agent
shall have no  obligation  to verify any  replacement  Exhibit A or to determine
whether any individual holds any office which he purports to hold.

         10.   Deposit   of  Funds  to  the   Escrow   Account.   On  or  before
______________________ the Agent shall receive _______________ ($ ), which shall
constitute the original  deposit in the Escrow Account.  Additional  deposits to
the Escrow Account shall be made from time to time by CUC such that at all times
during the term of this Agreement the Escrow Account shall contain not less than
$360,000.  The Agent shall advise each of CUC and  Telesource  if the balance of
the Escrow Account at any time is less than $360,000, and CUC shall provide such
additional funds as are necessary to replenish the Escrow Account within one (1)
business  day  thereafter.  Failure by CUC to maintain the balance of the Escrow
Account in  accordance  with this  Section 10 shall  constitute  a "CUC Event of
Default"  under the Contract.  All funds  deposited  with the Agent at all times
shall be owned  beneficially  and of record by CUC and shall be  deposited  in a
separate  account with the Agent to be identified as the "Telesource  CNMI, Inc.
Secured  Account  (The  Commonwealth  Utilities  Corporation),"  or by a similar
designation.  The Agent shall keep  accurate  records  setting  forth the amount
deposited and the date of such deposit.

         11.  Investment of Funds.

         a. All funds  deposited with the Agent shall be invested and reinvested
by the Agent at the  direction of an  Authorized  Officer of  Telesource  in (i)
bills,  bonds,  notes, or other  obligations  issued or guaranteed by the United
States of America or agencies  thereof,  (ii) Federal  Farm Credit  consolidated
issues,  bonds or notes, or (iii) repurchase  agreements having a maturity of 90
days or less  with any bank or trust  company  organized  under  the laws of any
state of the United  States or any national  banking  association  or government
bond dealer reporting to, trading with and recognized as a primary dealer by the
Federal  Reserve Bank of New York,  which such agreements are (A) secured solely
by  obligations  described  in  clause  (i)  above or (B) the  obligations  of a
commercial  bank the senior debt  securities  of which are rated by a nationally
recognized rating agency in their highest category.  Telesource may instruct the
Agent to sell any investment prior to its maturity.

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                                      216
<PAGE>

         b.  If  the  Agent  does  not  receive  investment   instructions  from
Telesource,  after the Agent's  written notice of same to Telesource and to CUC,
the Agent may accept investment instructions from CUC to invest in securities or
instruments described in clauses (i), (ii) or (iii) of Section 11(a) hereof.

        c. If the Agent does not receive investment instructions,  the Agent, at
its own discretion, may invest in instruments described in clause (i) or (ii) of
Section 11(a) hereof.

         d. Neither Telesource nor the Agent shall be liable for losses incurred
on any  authorized  investments,  except as set forth in  Section 5 hereof.  The
Agent  shall not be liable  for any  failure  to make  investments  if the Agent
receives no instructions  from Telesource or from CUC. CUC hereby authorizes and
grants its power of attorney to the Agent and  Telesource  o make all  decisions
from time to time during the term of this Agreement for the investment, in whole
or in  part,  of the  Escrow  Account  in  accordance  with  the  terms  of this
Agreement, and CUC ratifies and confirms each and every such investment decision
made by the Agent or Telesource  during the term of this  Agreement.  CUC hereby
releases  the  Agent and  Telesource  from any and all loss or  liability  which
arises or which may arise by virtue of the Agent's or Telesources' investment in
whole or in part of the  Escrow  Account  in  accordance  with the terms of this
Agreement at any time during the term of this Agreement.

12. Balance of the Escrow  Account.  The phrase  "balance of the Escrow Account"
shi.i21  mean at any time the fair market  value of all funds and assets held by
the Agent in the Escrow  Account.  The fair market value of any security held in
the  Escrow  Account  shall  mean,  is  determined  as of the date of  valuation
thereof,  (i) as to obligations  which mature within six months from the date of
valuation,  the par value of such obligations,  and (ii) as to obligations which
mature more than six months after the sate of  valuation,  the lesser of (1) the
amortized cost of such  obligations,  or (2) the bid quotation  price thereof as
reported in The Wall Street Journal as of tie date of valuation, or in the event
such newspaper is not published or such price is not reported in said newspaper,
in a newspaper of general  circulation  or a financial  journal  published in Mw
York,  New  York  selected  by  Telesource,  or (3)  the  price  at  which  such
obligations are then redeemable by the holder at his option;  provided  however,
if the  balance  of  the  Escrow  Accounts  to be  determined  for  purposes  of
distributing the entire amount of the Escrow Account, then tie proceeds received
from the  disposition  of any  securities  contained  in the  Escrow  Account or
recognized  market  therefor plus any cash in the Escrow Account so distributed,
less  commission..  shall be the fair market  value of the Escrow  Account.  The
computations made under the preceding.  sentence shall include accrued interest.
The Agent and Telesource shall not be liable for any gold faith determination of
the balance of the Escrow Account,  and any such determination shall be presumed
to be  correct.  Upon  receipt  of a  request  from  an  Authorized  Officer  of
Telesource at any time, the Agent shall advise such person of the balance of the
Escrow Account or give the such person sufficient information for such person to
determine the balance of the cash collateral account.

13. Payments from the Escrow Account. Upon receipt of a written certification of
in  Authorized  Officer  of  Telesource  that  there is an amount in the  Escrow
Account in excess of tie  balance  required by Section 10 hereof and that CUC is
entitled to be paid such excess amount from the Escrow Account,  the Agent shall
release  from the Escrow  Account  and pay to CUC an amount  which  equals  such
excess amount.

         a. Upon receipt of written  certification  of an Authorized  Officer of
Telesource that CUC is no longer  obligated to Telesource  under the Contract or
any of the Notes,  the Agent shall  distribute the balance of the Escrow Account
in the manner described in the following sentence. The Agent shall distribute to
Telesource an amount equal to the lesser of (i) the balance of tie

                               Escrow, Pledge and Security Agreement Page 5

                                      217
<PAGE>

Escrow  Account  or (ii)  the  amount  certified  by an  Authorized  Officer  of
Telesource  as the  sum of all  outstanding  and  unpaid  obligations  of CUC to
Telesource pursuant to the Contract and the Notes; the Agent shall distribute to
CUC the remainder, if any, of the balance of the Escrow Account.

         b. If the Agent has not  received  notice  described  in the  foregoing
paragraph (b) on or before  ________________  the balance of the Escrow  Account
shall be distributed by the Agent to CUC.

         c. Any payments or  distributions  required to be made pursuant to this
Section  13 shall be made by the Agent  five (5)  business  days  after  written
notification  requesting such payment, or at such later date as may be requested
by the party  entitled to receive  such  payment and  approved by an  Authorized
Officer of Telesource. The Agent may, if so requested by the party receiving the
distribution,  distribute  securities  in which the funds have been  invested in
lieu of disbursing cash.

         d. If the Agent receives a certified notice of an Authorized Officer of
Telesource that a CUC Event of Default has occurred under the Contract and that,
as a result of such CUC Event of  Default,  Telesource  is  entitled to a remedy
described in the  Contract or in any of the Notes,  the Agent shall not make any
distribution  to CUC  pursuant  to Section  13(a)  hereof  until such time as an
Authorized Officer of Telesource gives written notice to the Agent that such CUC
Event of Default has been timely remedied.

         e.  Notwithstanding any provision herein contained to the contrary,  at
any time, upon the receipt of a written  certification  and request signed by an
Authorized Officer of Telesource,  the Agent shall distribute the balance of the
Escrow Account (or any portion thereof) in accordance with such request.

         f. In the event that, in accordance with Section 8 hereof, no successor
agent has been appointed by Telesource,  the balance of the Escrow Account shall
be  delivered  by the Agent to  Telesource  or, in  Telesource's  name,  to such
financial  institution  as shall be selected by  Telesource,  as provided for in
Section 8 hereof.

         g. The Agent shall be  protected  in acting  upon any  written  notice,
request,  waiver,  consent,  receipt or other paper or document furnished to it,
not only as to the document's  due execution and the validity and  effectiveness
of its provisions, but also as to the truth and acceptability of any information
therein  contained which the Agent in good faith believes to be genuine and what
it purports to be.

         h.  Notwithstanding the terms and provisions of this Section 13, if the
Agent shall have been  served  with or  otherwise  subjected  to a court  order,
injunction  or other  process or decree  restraining  or seeking to restrain the
Agent from  making any  payment  from the Escrow  Account  required by the terms
hereof,  such payment shall be made upon, but not prior to, the Agent's  receipt
of an  opinion  from its  counsel to the  effect  that a final and  unappealable
judgment or order has been  rendered  or issued  either  terminating  the order,
injunction or the process or decree  restraining  the Agent from making  payment
under this  Section 13 or  permanently  enjoining  the Agent from paying out the
Escrow Account in accordance with the terms of this Agreement.

         i. For purposes of this  Agreement,  the term "business day" shall mean
any day other than a Saturday,  Sunday,  public  holiday or bank holiday (or the
equivalent  for  banks  generally)  under  the laws of the  Commonwealth  of the
Northern Marinas Islands.

                                 Escrow, Pledge and Security Agreement Page 6

                                      218
<PAGE>

         14.  Incomes  Taxes.  Any and all federal income taxes and any state or
local income or franchise  taxes payable with respect to income or capital gains
earned on or by -reason of the Escrow  Account shall be paid by CUC from its own
assets outside the Escrow  Account.  CUC indemnifies and agrees to hold harmless
the Agent and Telesource for the amount of any such taxes,  and any penalties or
interest associated therewith,  if such taxes, penalties or interest are imposed
on the Agent or Telesource.

15.  Pledge and Security  Interest.  CUC hereby  pledges and lawfully  grants to
Telesource  a security  interest in and to the Escrow  Account and all funds and
assets at any time contained therein, whether in the form of cash, bonds, bills,
notes, securities, other instruments, or other obligations,  regardless of where
or by which person or entity the Escrow Account or such funds or assets shall be
held.  For  purposes of this  Agreement  and  Telesource's  continuing  security
interest in the Escrow Account, the Agent shall maintain at its principal office
at the address stated above in ________________, ________________, the funds and
other  assets  comprising  the  Escrow  Account  or  evidence  of record  and/or
beneficial  ownership  thereof in accordance  with the terms of this  Agreement.
This  Agreement  and  the  Escrow  Account  shall  secure,  for the  benefit  of
Telesource and its successors and assign,  all current and future obligations of
CUC to  Telesource  pursuant  to the  Contract  and the Notes and any  successor
instrument  thereto.  Each party  hereto  agrees and  covenants to take all such
action  as may be  reasonably  requested  of it to  perfect  Telesource's  first
priority  security interest in the Escrow Account;  provided however,  that such
security  interest shall not be superior to the Agent's rights to be compensated
or  indemnified in accordance  with the terms hereof.  Without the prior written
consent of Telesource,  CUC will not sell, assign, transfer or otherwise dispose
of, grant any option with respect to, or mortgage,  pledge or otherwise encumber
to any person  other than  Telesource  all or part of the Escrow  Account or any
interest therein.

         If there  occurs  any  change in the law,  rules or  regulation  or any
judicial decision or any other event or circumstance  pertaining to or affecting
rights of creditors in bankruptcy or insolvency  proceedings the result of which
would be to increase the likelihood in Telesource's view that the Escrow Account
would not or may not be  available  to  Telesource  for the  purposes  described
herein and in the  Contract,  CUC  agrees,  upon  Telesource's  request,  (i) to
negotiate in good faith with  Telesource  changes in this  Agreement  and/or the
entire mechanism by which CUC's obligations under the Contract and the Notes are
secured and (ii) to permit  Telesource to hold the balance of the Escrow Account
in an account in  Telesource's  name in an  institution  selected by Telesource,
which  institution  shall have a combined  capital  and surplus of not less than
$100  million.  Telesource  shall  bear its own costs of such  negotiations  and
associated  document  preparation.  CUC shall not be obligated to accept any new
arrangement  which  increases the amount of  collateral  that it must provide to
secure its repayment and payment obligations under this Agreement.  In the event
that there is any change in the  location of all or part of the Escrow  Account,
CUC  agrees to take all  action  requested  by  Telesource  to amend,  modify or
replace  Telesource's  filings  perfecting  its security  interest in the Escrow
Account, or to enable Telesource to effect any required new or additional filing
to perfect its said security interest.

16. Binding Effect.  This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assign.

17. Counterparts.  This Agreement may be executed  simultaneously in two or more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same Agreement.

                                Escrow, Pledge and Security Agreement Page 7

                                      219
<PAGE>

18.  Notices.  Notices under this Agreement shall be in writing and addressed as
set forth above in this  Agreement,  and shall be deemed given and received upon
receipt. Notices to the Agent shall be addressed Attention: Escrow Department.

19.  Governing  Law.  This  Agreement  shall be governed  by, and  construed  in
accordance with, the laws of the Commonwealth of the Northern Marianan Islands.

20.  Amendments.  No  amendment  or  modification  to this  Agreement  shall  be
effective unless in writing and signed by all parties hereto.

21.  Headings.  Section  headings  in this  Agreement  are  included  herein for
convenience  of reference only and shall not constitute a part of this Agreement
for any other purpose.

                                  Escrow, Pledge and Security Agreement Page 8
<PAGE>

IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized

TELESOURCE CNMI, INC.

                                    By:                Khajadour J. Semikian
                                    Title:                 President

                                    THE COMMONWEALTH UTILITIES CORPORATION

                                    By: ___________________________________

                                    Title: __________________________________

                                     By: -----------------------------------

                                     Title: __________________________________

                                   Escrow, Pledge and Security Agreement Page 9

                                      220
<PAGE>

                                                                      EXHIBIT A

                              To the Escrow, Pledge
                             and Security Agreement

TELESOURCE CNMI, INC.

                                AUTHORIZED OFFICERS

              NAME                      POSITION                   SIGNATURE

             Khajadour J. Semikian     President             ___________________

                                  Escrow, Pledge and Security Agreement Page 10

                                      221
<PAGE>

                                   EXHIBIT "E"

                        CUC D/G FUEL CONSUMPTION PER KWT
<TABLE>
<CAPTION>

       A              B             C              D              E              F             G              H
---------------- ------------- ------------- -------------- -------------- -------------- ------------- --------------
---------------- ------------- ------------- -------------- -------------- -------------- ------------- --------------
                                                                FUEL           FUEL           FUEL
    % LOAD           BHP            KW           BSFC          CONMPT.       CONSMPT.       CONSMPT.      COST PER
                                                              PER HOUR        PER KW           IN            KWT
                                                                              OUTPUT        GAL/KWT
                                               lb/BHP-HR      E=DXB(lb)        F=E/C                      H=GX$0.72
                                                                              (lb/Kw)      G=FX0.137     (cents/kwt)
---------------- ------------- ------------- -------------- -------------- -------------- ------------- --------------
---------------- ------------- ------------- -------------- -------------- -------------- ------------- --------------
<S>               <C>           <C>           <C>            <C>            <C>            <C>           <C>
      100            3600          2580          0.341          1227           0.476         0.065          4.68
---------------- ------------- ------------- -------------- -------------- -------------- ------------- --------------
---------------- ------------- ------------- -------------- -------------- -------------- ------------- --------------
      75             2700          1935          0.345           931           0.481         0.0659         4.74
---------------- ------------- ------------- -------------- -------------- -------------- ------------- --------------
---------------- ------------- ------------- -------------- -------------- -------------- ------------- --------------
      50             1800          1290          0.360           648           0.502         0.0688         4.95
---------------- ------------- ------------- -------------- -------------- -------------- ------------- --------------

</TABLE>

                                      222
<PAGE>

Architectural Drawing of CADASTRAL PLAT

                                      223
<PAGE>

                                      GRANT OF PUBLIC DOMAIN LANDS

                 This Grant,  is made and entered  into this 23rd day of March ,
         1998,  by the Division of Public Lands of the  Department  of Lands and
         Natural  Resources,  established  under  Public Law  10-57,  having the
         authority and  responsibility  over the management arid  disposition of
         Northern  Marianas  public  lands,   hereinafter  referred  to  as  the
         "GRANTOR,"  and the  COMMONWEALTH  UTILITIES  CORPORATION,  hereinafter
         referred to as the "GRANTEE."

                                   WITNESSETH:

                 WHEREAS,  all  public  lands in the  Northern  Mariana  Islands
         belong  collectively  to  the  people  of  the  Commonwealth  and it is
         intended that the  management  and  disposition  of public lands should
         ultimately benefit the people of the Commonwealth; and
                 WHEREAS,  the Grantor  desires that  certain  parcels of public
         land be used  exclusively for the  construction  and operation of a ten
         (10) megawatt (MW) electric power plant; and

                 WHEREAS,  pursuant  to  Public  Law 4-47,  Grantee  is a public
         corporation  responsible  for providing the people of the  Commonwealth
         with electrical utility service; and

                 WHEREAS,  Grantee requires the real property.  described herein
         for the  construction  and operation of a 10 MW electrical  power plant
         that will  provide  electrical  utility  service  to the  people of the
         Commonwealth; and

                  WHEREAS, Grantee, in developing and constructing an electrical
         power  plant,  has  agreed  to work in  cooperation  with  those  other
         governmental   agencies  necessary  to  construct  and  operate.   such
         facility; and

                                      224
<PAGE>

         NOW, THEREFORE, in view of the above recitals, together with the public
         objectives  to be  accomplished,  and for and in  consideration  of the
         substantial  benefits  that  the  CNMI  people  will  derive  from  the
         Grantee's  construction  and operation of an electric power plant to be
         located on the public  lands  described  hereinbelow,  Grantor  does by
         these  presents  hereby  grants  to  the  Grantee,  for  its  use,  the
         below-described properties, as follows:

                  Beginning  at the corner which is  designated  as Corner No. 1
         having plane  rectangular  coordinates of 28,598.0707  meters North and
         39,788.9639  meters East of the Mariana  Islands  District  Coordinates
         System of 1996.  Thence;  N 56(Degree)  46' 23" W, 200.000 m to Cor. 2,
         thence; 33(Degree) 13' 37" E, S 33(Degree) 13' 37" W, 100.000 m Cor. 1
         the point of beginning.

                  TO HAVE AND TO HOLD, the above-described properties,  together
         with the hereditaments and appurtenances  thereunto,  but reserving and
         excepting therefrom all existing roadways, easements and rights-of-way.
         Any  other  uses  inconsistent  with the  above-stated  purposes  shall
         nullify this Grant, and said land shall revert to Grantor.

                  IN WITNESS WHEREOF, the Grantor hereby affixes its hand on the
         day and year first above written, at Saipan, Northern Mariana Islands.

         BOARD OF PUBLIC LANDS

        /s/ Tomas B. Aldan                                             3/23/98
        -----------------------------------------------------    ---------------
        -----------------------------------------------------    ---------------
        TOMAS B. ALDAN                                                  DATE
        Chairman, Board of Public Lands

         APPROVED AS TO FORM AND LEGAL SUFFICIENCY:

        /s/Alvin S. Slome for Robert Dunlap                             3/23/98
        -----------------------------------------------------    ---------------
        -----------------------------------------------------    ---------------
        ATTORNEY GENERAL AS LEGAL COUNSEL FOR                           DATE
        Division of Public Lands

         COMMONWEALTH OF THE                )
                                                     )   55:      ACKNOWLEDGMENT
         NORTHERN MARIANA ISLANDS   )
         ---------------------------------)

                                      225
<PAGE>

                  ON THIS 23 day of March,  1998,  before me, a Notary Public in
         and for the Commonwealth of the Northern  Mariana  Islands,  personally
         appeared Tomas B. Aldan,  Chairman of the Board of Public Lands,  known
         to me to be the  person  whose  name  is  subscribed  to the  foregoing
         instrument,  and  acknowledged  to me that he executed  the same on his
         free and voluntary act and deed for the purposes therein set forth.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.

                        /s/ Gregory Stephen P. Clavo, Jr.
                                   NOTARY PUBLIC
                  SEAL             Gregory Stephen P. Clavo, Jr.
                                   NOTARY PUBLIC
                                   Commonwealth of the Northern Mariana Islands
                                   My Commission Expires on the 25 day of
                                        June, 1999

                                      226
<PAGE>

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