Document:

<PAGE>   1

                                                                   EXHIBIT 10.01

               PG&E ENERGY SERVICES SUBCONTRACTOR MASTER AGREEMENT
                    FOR ENERGY RELATED EQUIPMENT AND SERVICES

THIS SUBCONTRACTOR MASTER AGREEMENT ("Master Agreement"), effective as of August
23, 1999 ("Effective Date), is made and entered into between PG&E ENERGY
SERVICES CORPORATION, a California corporation with principal offices at 345
California Street, Suite 3200, San Francisco, California 94104 ("PG&E ES") and
DEMARCO ENERGY SYSTEMS OF AMERICA, INC., a Utah Corporation, with principal
offices au 12885 Highway 183, Suite 108-A, Austin, Texas 78750
("SUBCONTRACTOR").

ARTICLE 1. RECITALS

1.1 Whereas, SUBCONTRACTOR is in the business of providing, among other products
and services, certain energy related equipment and services (as hereinafter
defined) to its customers; and

1.2 Whereas, PG&E ES has or will be executing agreements with various Customers,
including Facility owners and/or tenants ("Customers"), to provide certain
energy related equipment; and

1.3 Whereas, PG&E ES desires to retain SUBCONTRACTOR to design, provide, install
and optionally maintain and/or operate certain specified energy related
equipment ("Energy Related Equipment") hereinafter described; and

1.4 Whereas, this Master Agreement sets forth the general terms and conditions
for SUBCONTRACTOR to design, provide, install and optionally maintain and/E
operate the Energy Related Equipment, as requested by FG&E ES on a work order
basis ("Work Order, as a subcontractor to E&E ES. Individual Work Orders will be
issued under his Master Agreement which shall constitute Amendments to this
Master Agreement and will be fully incorporated herein. Each Work Order will
identify the Customer: individual Site Locations where the work will be
performed: Scope of Work including description of Energy Related Equipment and
other related equipment to be provided; Project Schedule; compensation: any
changes to Warranty provisions for equipment provided; if the Operations and
Maintenance ("O&M") provisions shall apply and any modifications to such C&M
provisions that shall apply to the Work Order: changes to the insurance
requirements for SUBCONTRACTOR's subcontractors; and whether or not Performance
Bonds shall be required tr the Work Order work; and

NOW. THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, the Parties agree as follows:

--------------------------------------------------------------------------------
"PG&E Energy Services is not the same company as Pacific Gas and Electric
Company. the utility PG&E Energy Services is not regulated by the California
Public Utilities Commission; and you do not have to buy PG&E Energy Services
products in order to continue to receive quality regulated services from Pacific
Gas and Electric Company. the utility."

                                       -1-

<PAGE>   2

ARTICLE 2. WORK ORDER

2.1 GENERAL PROVISIONS. Work under this Master Agreement shall be performed on a
Work Order basis as requested by PG&E ES. Each Work Order issued by PG&E ES
shall be executed by both Parties and will serve as authorization for
SUBCONTRACTOR to commence work as described in the Work Order. Each Work Order
shall be subject to all the terms and conditions of this Master Agreement, but
shall constitute a separate and independent performance obligation of the part
of SUBCONTRACTOR and payment obligation of PG&E ES. The Work Order may not
modify the Master Agreement general terms and conditions except in regards to
the Warranty; Operations and Maintenance obligations; SUBCONTRACTOR's
subcontractors insurance coverage; and whether or not Performance Bonds will be
required for the Work Order Work. Each Work Order. a sample form is attached as
EXHIBIT A to this Master Agreement. may include additional information but shall
include all of the following information:

A)   PG& E ES Contract Number assigned to this Master Agreement; and

B)   Date of the Work Order and Work Order Number; and

C)   Identification of Customer who owns and/or leases the Facility, or
     Facilities, where the Work will be performed; and

D)   All Facility Site Locations where Work will be performed,' and

E)   Scope of Work, including description of the Energy Related Equipment to be
     provide; and

F)   Project Schedule, including commencement date, substantial completion date,
     and Operational Date; and

G)   Contract Amount for Work Order including schedule of payment, and payment
     terms; and

H)   Indication of whether or not standard Operations and Maintenance ("O&M")
     provisions apply and if so, details of the O&M provisions and any changes
     or modifications to the O&M terms; and

I)   Changes to standard Warranty provisions. if any.

Any other changes or modifications to the general terms and conditions of the
Master Agreement shall require an amendment to the Master Agreement.

2.2 EFFECT OF CHANGES AND MODIFICATIONS TO MASTER AGREEMENT O&M AND WARRANTY
PROVISIONS. Each Work Order may include changes and/or modifications to the
standard Master Agreement provisions as to O&M, Warranty, Performance Bond, and
insurance requirements tr SUBCONTRACTOR's lower tiered subcontractors. If such
changes are made, those changes shall affect only the individual Work Order and
shall not affect the standard Master Agreement provisions or previously and/or
subsequently issued Work Orders.

                                      -2-

<PAGE>   3

ARTICLE 3. SCOPE OF WORK

3.1 GENERAL PROVISIONS. SUBCONTRACTOR shall design, procure, install, and
optionally, operate, and maintain at each Site Location the Energy Related
Equipment, and any other material, hardware, or software, as identified in the
Work Order.

3.2 PERMITS. SUBCONTRACTOR shall obtain any and all necessary permits to
complete the Work, as described herein, and as identified in the Work Order.

3.3 INSTALLATION/CONSTRUCTION PHASE. SUBCONTRACTOR shall provide or cause the
Work to be performed including, but not limited to, providing all labor,
ma-dais, equipment, tools, transportation and other facilities and services
necessary for the proper design. procurement and installation of the Energy
Related Equipment. If Work includes Construction, as defined in Exhibit B, the
terms and conditions of Article 6 herein shall apply.

3.4 LICENSING. SUBCONTRACTOR shall possess any and all licenses required by
Applicable Laws to complete the Work, and if specified in the Work Order, to
operate and maintain the installed Energy Service Equipment. If SUBCONTRACTOR
does not possess a required license- SUBCONTRACTOR shall either acquire the
license prior to start of Work or shall subcontract such Work to a contractor
who possesses the required license to perform the Work and who shall perform the
Work for which a license is required.

ARTICLE 4. PERFORMANCE

4.1 PROJECT SCHEDULE AND STANDARD OF PERFORMANCE. SUBCONTRACTOR shall
diligently, and competently perform the Work set forth in all Work Orders, All
work performed will comply with standards for comparable work performed by
reputable contractors working in the same geographical area where the Work will
be performed. A Project Schedule will be attached to each Work Order,

4.2 ACCESS TO SITE LOCATIONS. SUBCONTRACTOR shall be solely responsible for
coordinating directly with the Customer regarding all issues related to access C
he Site Location to perform the Work.

4.3 DIRECTION TO SUBCONTRACTOR. SUBCONTRACTOR shall take direction only from
PG&E ES, or as otherwise designated in writing by PG&E ES, and -or from Customer
or others, unless directed because of immediate safety concerns- All requests
for additional Work, changes - Work, and/or direction from the Customer or
others shall Ce forwarded to PO&E ES' Project Manager for prior written approval
Dr denial prior to acting on such requests- If SUBCONTRACTOR performs such work
requested without PG&E ES' prior written approval, SUBCONTRACTOR shall not
receive any additional compensation or time for such unauthorized work.

4.4 REQUESTS FOR ADDITIONAL WORK. SUBCONTRACTOR shall perform the Work as
specified in each Work Order. SUBCONTRACTOR is under no obligation to perform
additional work which exceeds the Scope of Work described in the Work Order.
During the performance of Work, PG&E ES may request SUBCONTRACTOR E perform
additional work, outside the Scope of Work, and such new work shall be
authorized by a new or amended Work Order. If, during the performance of the
Work, SUBCONTRACTOR is requested to perform work under the existing Work Order
that SUBCONTRACTOR believes is outside the Scope of Work identified in the Work
Order,

                                      -3-
<PAGE>   4

SUBCONTRACTOR shall provide written notice of same to PG&E ES within three (3)
working days of SUBCONTRACTOR receipt of notice of such request If the Work is
teemed by PG&E ES to be outside the original Scope of Work, a new or amended
Work Order for the additional work shall be issued. If PG&E ES deems said work
to be within the Work Order Scope of Work, SUBCONTRACTOR shall perform such
work. But may do so under protest for additional compensation and/or time and
such protests shall be resolved in accordance with terms of Section 11.3 herein.

4.5 MATERIAL CHANGED CONDITION. If, during the performance of the Work,
SUBCONTRACTOR believes that a Material Changed Condition is impacting or will
impact the Work requiring additional time and/or compensation, SUBCONTRACTOR
shall provide written notice of same to PG&E ES within Three (S) working days of
SUBCONTRACTOR's notice of such Changed Condition, the anticipated time of delay
and/or the estimated additional costs associated with the Material Changed
Condition. SUBCONTRACTOR shall continuously update PO&E ES as to the impact of
the Material Change Condition. If PG&E ES agrees that there is a Material
Changed Condition, a new or amended Work Order shall be issued to increase time
and/or compensation. A Material Changed Condition shall be defined as one or
more of the following conditions that impact the Project Schedule ("Time".)
and/or Cost: 1) parties outside the control of SUBCONTRACTOR caused delays in
Project Schedule; 2) discovery of differing and unexpected site conditions which
were not previously disclosed by Customer and could not have been readily
discoverable by SUBCONTRACTOR prior start of Work; 3) discovery of hazardous
wastes or material which was not previously disclosed: (4) adverse weather
conditions not reasonably anticipated: and (5) any other condition that could
not have been reasonably anticipated by the Parties and is outside
SUBCONTRACTOR's control, If there is a disagreement between PG&E ES and
SUBCONTRACTOR as to whether or not there 5 a Material Change Condition, those
disputes shall be resolved in accordance with the provisions of Section 11.3 of
this Master Agreement.

4.6 OWNERSHIP OF ENERGY RELATED EQUIPMENT. Until the Operational Date,
Substantial Completion. and PG&E ES has made final payment of the Contract
Amount as defined in the Work Order, all rights and liabilities of ownership of
such Energy Related Equipment shalt remain with the SUBCONTRACTOR, or its
subcontractors, hereunder.

4.7 FORCE MAJEURE. SUBCONTRACTOR shall use its best efforts to achieve
completion of each Work Order in accordance with the Project Schedule set forth
n the applicable Work Order, Performance by either PG&E ES and SUBCONTRACTOR
shall not be deemed in default nor shall either Panty be held responsible for
any delays that are caused by acts of God, flood, earthquake, unusually severe
weather, drought, fire, lightning or other natural catastrophes: or events
outside their control including war riot: civil disturbance or disobedience;
sabotage; terrorism; strikes; unavoidable accidents: relocation or construction
of facilities by others, or shutdown of facilities for repair, maintenance or
failure by others: strike; lockout; labor disturbance; freight embargoes; acts
or failure to act of any regulatory public or governmental agency or entity; or
any other matter beyond the reasonable control of the Party so obligated,
whether similar to matters herein enumerated or not. in the event either Party
experiences a delay in performance that was caused by events beyond its control,
the delayed Party shall provide a written notice of same within three (3)
working days to the other Panty. Delayed performance shall be excused for the
period of delay, and the time for performance shall be extended for a period
equivalent to the period of delay; provided, however, that the Party delayed or
prevented from

                                      -4-

<PAGE>   5

performance of Work per the terms of the Work Order has notified the other of
such delay or prevention of performance within three (3) days of the inception
thereof; and n-as thereafter kept said Panty regularly informed of the status of
such delay or prevention of performance.

ARTICLE 5. COMPENSATION

5.1 GENERAL PROVISIONS. For performance of Work as set for I-n each Work Order,
PG&E ES will pay SUBCONTRACTOR Contract Amount and in the manner indicated in
each Work Order. PO&E ES will pay progress payments for Work completed to date,
or for the entire Work on a lump sum basis after the Work is completed, or other
payment arrangement. as specified in the Work Order, upon receipt for
SUBCONTRACTOR's invoice and in accordance with Section 5-3 herein.

5.2 INVOICES. SUBCONTRACTOR shall submit its invoice for payment to PC&E ES on a
monthly basis, or as specified in the Work Order, to the PG&E ES Project Manager
identified in the Work Order.

5.3 PAYMENT/RETENTION. Al invoices properly submitted by SUBCONTRACTOR, inducing
applicable waivers and releases, in accordance with this Master Agreement and
applicable Work Order will be paid by PG&E ES within fifteen (15) days of
receipt of such invoice, less a ten (-D%) retention ("Retention") (identified by
SUBCONTRACTOR in each invoice). unless an invoice contains a disputed amount,
whereupon PC&E ES shall make a partial payment to SUBCONTRACTOR for the
undisputed amount, minus the Retention, and PG&E ES shall withhold the disputed
amount until the dispute is resolved by the Parties. Except for Retention
amounts expended by PG&E ES to correct SUBCONTRACTOR's defective work or to
complete the Work not completed by SUBCONTRACTOR, the -'Il Retention amount
shall be paid to SUBCONTRACTOR a te time of the Work Order final payment.

ARTICLE 6. CONSTRUCTION ACTIVITIES

6.1 GENERAL PROVISIONS. This Article shall apply only to those Work Orders that
include Construction as defined herein that will be performed by SUBCONTRACTOR,
or SUBCONTRACTOR's subcontractor.

6.2 CONSTRUCTION DEFINED. Work to be performed shall be defined as Construction
Work if it includes any of the activities defined as Construction in EXHIBIT 3.
Definitions, attached hereto and incorporated herein.

6.3 LICENSING. if the Work to re performed by SUBCONTRACTOR includes
Construction. as defined in EXHIBIT B, any and all Construction activities must
be performed by Licensed Contractors, or speciality Licensed Contractors (such
as required when disturbing asbestos or other Hazardous Materials), as required
by Applicable Law. If Construction Work includes certain design work that
requires engineering plans, specifications, and/or drawings. such documents must
be signed by an appropriately licensed engineer, and/or architect as required by
Applicable Law. if SUBCONTRACTOR does not possess any of the required license or
licenses, SUBCONTRACTOR shall subcontract that portion of the Work to a
subcontractor, or subcontractors, who possess the required license or licenses
and who shall perform such work at no additional cost to PS&E ES.

                                      -5-
<PAGE>   6

6.4 PERFORMANCE BONDS.

6.4.1 PERFORMANCE BOND. SUBCONTRACTOR shall provide PG&E ES at the time of
executing a Work Order, unless otherwise specified in the Work Order, an
executed Performance Bond for the Construction portion. or all, of the Work.
Such Performance Bond shall be in the amount of one hundred percent (100%) of
the Contract Amount for the Construction Work portion. or all, of the Work
defined in the Work Order, in a form and secured by a surety acceptable to PG&E
ES, that shall condition the faithful performance of the Construction Work
within the time identified in the Work Order. If SUBCONTRACTOR fails to complete
the Construction Work within such time, or such extension thereof as may be
allowed, the Work Order may be terminated and if so terminated. PG&E ES shall
not thereafter pay or allow SUBCONTRACTOR any further compensation for any
Construction Work cone by SUBCONTRACTOR under said Work Order, and SUBCONTRACTOR
or its surety shall be liable to POSE ES for all loss or damage which it may
suffer because of SUB CONTRACTOR's failure to complete the Construction Work
within such time.

6.4.2 NOTIFICATION OF SURETY COMPANIES. All the surety companies providing the
Performance Bond shall familiarize themselves with all or the terms and
conditions of the Master Agreement and Work Order and they waive tine right of
special notification of any change or modification of the Master Agreement, Work
Order, extension of time; of decreased or increased work. of the cancellation of
the Work Order, or of any other act or acts by PG&E ES or its authorized agents,
under the terms of the Master Agreement or Work Order; and failure to -so notify
the aforesaid surety companies of changes shall in no way relieve the surety
companies of their obligation under the Master Agreement or Work Order.

6.5 WAIVERS AND RELEASES.

6.5.1 UNCONDITIONAL WAIVER AND RELEASE. If SUBCONTRACTOR uses subcontractors to
complete any part of the Construction Work, prior to PG&E ES making any progress
or final payment to SUBCONTRACTOR, SUBCONTRACTOR shall provide to POSE ES from
each Construction subcontractor an Unconditional Waiver and Release at time of
invoicing, in a form acceptable to PG&E ES. that states that the subcontractor
has been paid in full to date for all labor, services, equipment or materials
furnished to the Project at SUBCONTRACTOR's request, and thereby waives and
releases any right to a mechanic's lien, stop notice, or any right against any
bond. except for any disputed amount identified in the release.

6.5.2 CONDITIONAL WAIVER AND RELEASE. In addition to the requirements of Section
6.5.1 herein, prior to PG&E ES making any progress or final payment to
SUBCONTRACTOR. SUBCONTRACTOR shall provide to PG&E ES a Conditional Waiver and
Release at time of invoicing, in a form acceptable to PG&E ES, that states that
upon receipt of payment from PG&E ES for Work under the Work Order,
SUBCONTRACTOR shall waive and release any right to a mechanic's lien, stop
notice, or any right against any bond for Work completed to date, except for any
disputed amount identified in the waiver and release.

                                      -6-

<PAGE>   7

ARTICLE 7. OPERATION AND MAINTENANCE

7.1 GENERAL PROVISIONS. If tie Work Order specifies that SUBCONTRACTOR shall
provide O&M services on behalf of the Customer for the installed Energy Related
Equipment. SUBCONTRACTOR shall be responsible for the O&M of said equipment as
specified in The Work Order. The Work Order shall provide the terms and
conditions under which SUBCONTRACTOR shall provide the O&M services. Such O&M
services may extend beyond the Master Agreement Term, and any such expiration of
the Term shall not affect the obligations of either Priority under the
outstanding and/or incomplete Work Order including the application of the terms
and conditions of the Master Agreement to such Work Order.

7.2 ACCESS TO EQUIPMENT. If SUBCONTRACTOR agrees in an individual Work Order to
be responsible for the O&M of the Energy Related Equipment provided and
installed by SUBCONTRACTOR, SUBCONTRACTOR shall seek from the Customer,
permission for SUBCONTRACTOR C reasonably access said equipment to perform O&M
responsibilities in accordance with the Master Agreement and Work Order. After
termination of the Work Order O&M provisions. SUBCONTRACTOR shall not have any
O&M responsibility for the Energy Related Equipment.

ARTICLE 8. WARRANTY

SUBCONTRACTOR warrants that the Energy Related Equipment and its installation as
specified in each Work Order shall conform to applicable specifications,
drawings, and descriptions and shall be fit for the particular purpose, shall be
merchantable, of good workmanship and material, and free from defect.
SUBCONTRACTOR assumes responsibility for workmanship and warrants the Energy
Related Equipment to be free from defects and is suitable for the purposes
intended by PG&E ES and Customer. SUBCONTRACTOR '5 warranties shall run to PG&E
ES and Customer, shall not E deemed exclusive and shall be in effect for a
period of One (I) Year from the Operational Date of the Energy Related
Equipment, or such Warranty period as specified in the Work Order. If PG&E ES or
the Customer notifies, or SUBCONTRACTOR has notice of any equipment defect or
non-conforming work, SUBCONTRACTOR shall promptly correct the equipment defect
or non-conforming work at its own cost and expense.

ARTICLE 9. TERM OF AGREEMENT

This Master Agreement shall remain-n effect for an initial term of one (1) year
('Term') commending on the Effective Date, and such Term shall be automatically
extended for additional one (1) year terms, unless the Master Agreement is
terminated earlier in accordance with of Article 10 herein. Unless otherwise
stated in a Notice of termination, any termination shall not affect the
obligations of either Panty under any outstanding and/or incomplete Work Order.

ARTICLE 10. TERMINATION

10.1 TERMINATION FOR CAUSE. I either Parity defaults in the performance its
obligations under this Master Agreement. unless such default is due to causes
beyond the control of the defaulting Party per Section 4.7, Force Majeure, and
such default continues for a period of thirty (30) calendar days after the
defaulting Party receives written notice of the default from the non-defaulting
Parity. and the defaulting Party does not -Ere the default or receive written
approval of a proposal and schedule to cure

                                      -7-

<PAGE>   8

the default that is acceptable to the non-defaulting Party within such time, the
non-defaulting Party may terminate this Master Agreement and/or exercise any
right or remedy, provided by law or equity. Upon termination of this Master
Agreement, each Parity shall forthwith return to the other all papers.
materials, and property of the other held by such Parity in connection herewith.
Each Party shall also assist the other in the orderly termination of this Master
Agreement and the transfer of all aspects hereof, tangible and intangible, as
may be necessary for the orderly, non-disrupted business continuation of each
Party.

10.2 TERMINATION FOR INSOLVENCY. Either Party may terminate this Master
Agreement immediately by written notice to the other if: (1) the other Parity
ceases to carry on its business; or (2) a receiver or similar officer's
appointed for the other Party: or (3) the other Parity becomes insolvent, admits
in writing its inability to pay debts as they mature, is adjudicated bankrupt,
or makes an assignment for the benefit of its creditors or another arrangement
of similar import; or (4) voluntary proceedings under bankruptcy or insolvency
laws are commenced by he other Panty, or involuntary proceedings are commenced
and such proceedings have not been discharged within forty-five (45) days.

10.3 TERMINATION FOR CONVENIENCE. PG&E ES shall have the right to terminate
tints Master Agreement at any time during the Term of the Master Agreement for
is convenience upon sixty (60) days advance written Notice to SUBCONTRACTOR.
Upon such termination. each Party shall forthwith return to the other all
papers, materials. and property of the other held by such Party in connection
herewith. Earn Party shall also assist the other in the orderly termination of
this Master Agreement and the transfer of all aspects hereof, tangible and
intangible. as may be necessary for the orderly. non-disrupted business
continuation of each Parity. Notwithstanding the above. SUBCONTRACTOR shall
complete Work under an existing Work Order unless terminated per Sections 10.1
and 10.2 herein.

ARTICLE 11. LIABILITY

11.1 INDEMNIFICATION. Each Panty hereby agrees to protect, indemnify and hold
the other harmless. and to defend the other. with competent counsel reasonably
satisfactory to the indemnified Party, from and against any and all Claims and
the assertion thereof to the extent arising from the negligence, breach of
contractor willful misconduct of tine indemnifying Party, except That neither
Party shall be responsible for Calms arising from the sole negligence or
intentional misconduct of the other Party. In no event shall PG&E ES be liable
to SUBCONTRACTOR, Customer, or others for any indirect, incidental,
consequential or special damages of any kind whatsoever, including without
limitation any loss of revenue or loss of profit, loss of savings. loss of
goodwill. cost of any substitute Energy Related Equipment downtime cost of
capitol, loss of qualification, increased cost of operation. cost of replacement
power or fuel or claims of SUBCONTRACTOR or other third parties, by reason of
anything done or omitted to be done by-PG&E ES in connection with any Work Order
issued under this Master Agreement.

                                      -8-

<PAGE>   9

11.2 INSURANCE. SUBCONTRACTOR shall maintain the following insurance coverage.
SUBCONTRACTOR is also responsible for its lower-tiered Subcontractors
maintaining sufficient limits of the same insurance coverage. (1) Workers'
Compensation and Employers' Liability: Workers' Compensation insurance or
self-insurance indicating compliance with any applicable labor codes, acts, laws
or statutes, state or federal, where SUBCONTRACTOR performs Work. Employers'
Liability insurance shall not be less than $1,000,000 for injury or death each
accident. (2) Commercial General Liability: Coverage shall be at least as broad
as the Insurance Services Office (ISO) Commercial General Liability Coverage
'occurrence' form, with no coverage deletions. The limit shall not be less than
$1,000,000 each occurrence for bodily injury, property damage, and personal
injury. If coverage is subject to a general aggregate limit this aggregate limit
shall be twice the occurrence limit, Coverage shall: a) by 'Additional Insured'
endorsement add as insured PG&E ES. its directors, officers, agents and
employees with respect to liability arising out of Work performed by or for tine
SUBCONTRACTOR: b) be endorsed to specify that the SUBCONTRACTOR's insurance is
primary and that any insurance or self-insurance maintained by POSE ES shall not
contribute with it, (3) Business Auto: Coverage shall be at least as broad as
Insurance Services Office (ISO) Business Auto Coverage form covering Automobile
Liability, Code 1 "any auto.' The limit shall not be less than $1,000,000 each
accident for bodily injury and property damage. (4) Builders Risk: An 'all risk'
Builders Risk insurance policy, including earthquake and flood, shall be
maintained during the course of Construction. Policy shall include coverage for
materials anc equipment to be used while at the Site, offsite or while in
transit to the Site. Coverage shall be written to cover the full replacement
cost of the property. Limits and deductibles shall be approved by PG&E ES. PG&E
ES shall be named as Loss Payee. (5) Additional Insurance Provisions: Before
commencing performance of Work, SUBCONTRACTOR shall furnish PG&E ES with
certificates of insurance and endorsements of all required insurance for
SUBCONTRACTOR. The documentation shall state that coverage shall not be canceled
except after thirty (30) days prior written notice has been give to PG&E ES. The
documentation must be signed by a person authorized by that insurer to bind
coverage on its behalf and shall be submitted to: PG&E Energy Services,
Contracts Department, 345 California Street, Suite 3200, San Francisco, CA
94104. PG&E ES may inspect the original polices or require complete certified
copies upon request. Upon request, SUBCONTRACTOR shall furnish PG&E ES the same
evidence of insurance for its lower-tiered subcontractors as PG&E ES requires of
SUBCONTRACTOR.

11.3 DISPUTE RESOLUTION. In E.-e event of a dispute, controversy, or claim
arising out of or relating to this Master Agreement. the Parties shall confer
and attempt to resolve such matter informally. If such dispute or claim can not
be resolved in this manner, then the dispute or claim shall be referred first to
the Panties' executive officers for their review and resolution. If the dispute
or claim still can not be resolved by such officers, then tine Parties may agree
to submit to non-binding mediation or either Party may file a written demand for
arbitration with the American Arbitration Association ("AAA") and shall send a
copy of such demand to the other Party. The arbitration shall be conducted
pursuant to the Arbitration Rules of the AM in effect at the time the
arbitration is commenced. The award rendered by the arbitrator shall be final
and binding on the Parties and shall be deemed enforceable in any count having
jurisdiction thereof and of 'he Parties. The arbitration shall be heard by one
mutually agreeable arbitrator, who shall have experience in the general subject
matter to which tine dispute relates. The arbitration shall take place in San
Francisco, California unless both Parties mutually agree to a different venue
for arbitration.

                                      -9-

<PAGE>   10

11.4 ATTORNEYS' FEES. In the event that binding arbitration or other litigation
is initiated between PG&E ES and SUBCONTRACTOR, the prevailing Party, as
determined by the Arbitrator or Count, shall be awarded its reasonable
attorneys' fees and costs.

ARTICLE 12. MISCELLANEOUS

12.1 DEFINITIONS. For the purposes of This Master Agreement, including all Work
Orders and Exhibits, the defined terms shall have the meaning as set forth in
EXHIBIT B, Definitions, attached hereto and incorporated herein.

12.2 INDEPENDENT CONTRACTOR. SUBCONTRACTOR's performance of Work under this
Master Agreement and all Work Orders shall be as an independent contractor to
PG&E ES, and not as an employee, representative or agent of PG&E ES, and shall
be responsible for its own work. As an independent contractor, SUBCONTRACTOR
shall employ, at its own expense, all personnel necessary to perform the Work,
represents that all personnel engaged in performing such Work are fully
qualified. authorized, and permitted to do so under all Applicable Laws, and
shall be responsible for all matters including payment of its employees,
compliance with social security. workers compensation requirements. and
withholding for federal, local, and state taxes. In no event shall PG&E ES shall
be held responsible for any actor omission of SUBCONTRACTOR.

12.3 COMPLIANCE WITH LAWS. Each Panty agrees that it shall comply with all
Applicable Laws including federal, state and local laws, ordinances,
regulations, and codes in the performance of this Master Agreement including but
not limited to acquiring licenses, insurance, permits. authorizations.
registrations. or other governmental requirements necessary for performance of
each Party's obligations hereunder.

12.4 GOVERNING LAW/VENUE. This Master Agreement shall be governed by, and
interpreted and construed in accordance with, the laws of the State of
California, without reference to its rules of conflict of laws. For the
enforcement of any dispute resolved pursuant to Articles 10 and 11 of this
Master Agreement, the Parties hereby consent to personal and exclusive
jurisdiction and venue of the State and Federal Courts within the City and
County of San Francisco, California.

12.5 SEVERABILITY. In the event that any provision of this Master Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void. this Master Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the benefits or burdens of this Master
Agreement to either PG&E ES or Customer.

12.6 ASSIGNMENT. SUBCONTRACTOR shall not transfer or assign any rights or
interests in this Master Agreement or individual Work Orders without the prior
written consent PG&E ES.

                                      -10-
<PAGE>   11

12.7 CHANGES/MODIFICATION/WAIVER. No change or modification to this Master
Agreement nor an: waiver of any rights hereunder, shall be effective unless it
is consented to in writing by both Parties. The failure of a Party to insist
upon compliance with the strict forms of this Master Agreement or to act or
react upon a default in the performance of any obligation hereunder shall not
excuse or constitute any form of waiver of that Party's rights or the other
Party's obligation. The waver of any breach or default shall not constitute a
waiver of any other right hereunder or any subsequent breach or default. 12.8
NOTICES. Any notices hereunder shall be given in writing and shall be delivered
by hand or by first class certified U.S. Mail, return receipt requested to the
addresses set forth below, or to such other address as either Panty may
substitute by written notice to the other in the matter contemplated herein, and
will be deemed given when delivered, or, if delivery is not accomplished by some
fault of the addressee. when tendered.

To PG&E ES:
With copy to;
To SUBCONTRACTOR:

PG&E Energy Services Corporation
6900 East Camelback E. Suite 800
Scottsdale, AZ 86261
Attn: Robert Holmes, -Program Manager,
Phone Number: (480)874-4067
Fax Number: (480) 994-4438

PG&E Energy Services Corporation
345 California Street, Suite 3200
San Francisco, CA 94104
Attention: Manager, Contract
Contract Services
DeMarco Energy Services of America, Inc,
2885 Highway 183, Suite 10&A
Austin, Texas .78750
Attention: Peter Des Camps, Sr. VP
Phone Number: (512)335-1494
Fax Number. (512)335-6380

12.9 THIRD PARTY BENEFICIARIES. This Master Agreement shall not create any third
party beneficiary obligations with respect to any third party.

12.10 CONFIDENTIAL AGREEMENT. The terms and conditions of this Master Agreement
shall be subject. to that certain Mutual Non-Disclosure Agreement between PG&S
ES and SUBCONTRACTOR dated April 12, 1999 which is attached hereto as EXHIBIT C
and incorporated herein.

12.11 DUPLICATE ORIGINALS. Two (2) duplicate originals of this Master Agreement
shall be executed each of which shall be deemed an original but both of which
together shall constitute one and the same instrument.

                                      -11-

<PAGE>   12

12.12 ENTIRE AGREEMENT. This Master Agreement contains the entire agreement
between the Parties and there are no oral or written representations.
understandings. or agreements between the Parties respecting the subject matter
of, this Master Agreement, which are not fully expressed herein.

12.13 EXHIBITS. The Exhibits to this Master Agreement are listed as following
and are fully incorporated herein:

EXHIBIT A Work Order Sample Form
EXHIBIT B Definitions
EXHIBIT C Executed Mutual Non-Disclosure Agreement

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

PG&E Energy Services Corporation             DeMarco Energy Systems of America,
                                             Inc.

By:                                          By:
Michael Coffin (signature)                   Victor M. DeMarco

Name:                                        Name:
Michael Coffin                               Victor M. DeMarco

Title:                                       Title:
Vice President                               President/CEO

                                      -12-
<PAGE>   13

                                    EXHIBIT A
                             WORK ORDER SAMPLE FORM

PG&E ENERGY SERVICES                               PG&E ES CONTRACT NUMBER: 2131

                           WORK ORDER # _____________

                         SUBCONTRACTOR MASTER AGREEMENT
                    FOR ENERGY RELATED EQUIPMENT AND SERVICES

         THE SUBCONTRACTOR MASTER AGREEMENT (Master Agreement), entered into
[Month, Day, Year] by and between PG&E ENERGY SERVICES CORPORATION, a California
corporation with principal offices at 345 California Street, Suite 3200. San
Francisco, California 94104 ("PG&E ES") and DEMARCO ENERGY SYSTEMS OF AMERICA,
INC., a Utah corporation ("SUBCONTRACTOR"), with principal offices at 12885
Highway 183, Suite 108-A, Austin. Texas 78750 is hereby amended on this date
[ADD DATE OF WORK ORDER] by this Work Order which is fully incorporated into the
MASTER AGREEMENT as follows:

1. CUSTOMER. The Customer for whom the Work will be performed is ______________.
The address and phone number of the customer is _________________________.

2. SCOPE OF WORK/SITE LOCATIONS. The Scope of Work at each Site Location,
including the description of the Energy Related Equipment and other materials to
be provided and installed and any other Work to be performed; Warranty
provisions; and the Operations and Maintenance provisions. if any: to be
provided under this Work Order is identified on ATTACHMENT 1 - "SCOPE OF
WORK/SITE LOCATIONS" attached hereto and incorporated herein, Unless otherwise
described herein. SUBCONTRACTOR shall be responsible for me disposal of alt
lights and ballasts removed from facilities as pant of me Work herein, including
responsibility of such light and ballasts that are deemed hazardous materials.

3. PROJECT SCHEDULE. The Project Schedule for each Site Location where Work
shall be performed by SUBCONTRACTOR pursuant to this Work Order. including
Commencement Date, Substantial Completion Date, and Operational Date is
identified on "ATTACHMENT 2 -PROJECT SCHEDULE" attached hereto and incorporated
herein

4. CONTRACT AMOUNT FOR WORK ORDER. The total Contract Amount for performance of
this Work Order, schedule of payment, and payment terms is as follows: [ ADD
HERE____________]

5. GENERAL TERMS AND CONDITIONS. All other Terms and Conditions provided in the
Master Agreement remain unchanged.

                                      -13-
<PAGE>   14

         IN WITNESS WHEREOF, the Parties hereto have executed this Work Order as
of the day and year first above written.

PG&E ENERGY SERVICES CORPORATION             DEMARCO ENERGY SYSTEMS OF AMERICA,
                                             INC.

By:                                          By:
Name:                                        Name:
Title:                                       Title:

"PG&E Energy Services is not the same company as Pacific Gas and Electric
Company, the utility. PG&E Energy Services is not regulated by the California
Public utilities Commission: and you do not have to buy PG&E Energy Services
products in order to continue to receive quality regulated services from Pacific
Gas and Electric Company, the utility."

                                      -14-

<PAGE>   15

PG&E ENERGY SERVICES                               PG&E ES CONTRACT NUMBER: 2131

                                    EXHIBIT B

                                   DEFINITIONS

         For the purposes of its Master Agreement, including all Work Orders and
Exhibits, the defined terms herein shall have the meaning set forth as follows:

1. APPLICABLE LAWS: "Applicable Laws" shall mean all laws, building codes,
rules, regulations, or orders of any federal, state, county, local, or other
governmental body, agency, or other authority having jurisdiction over the
performance of the Work, as may be in effect at the time the work is completed.

2. CUSTOMER: "Customer" shall mean the owner and/or tenant of the Facility where
SUBCONTRACTOR shall perform the Work pursuant to an applicable Work Order,

3. CLAIMS: "Claims" shall mean any and all actions, claims, losses, damages,
expenses or liabilities of either Party arising from or a result of this Master
Agreement.

4. CONSTRUCTION: "Construction" shall mean any Work to be performed that
involves any and all construction, alteration, repair, addition to, subtraction
from, improving, moving, wrecking or demolishing any building, highway, road,
parking facility, excavation, or other structure or improvement, or to do any
pant thereof, including the erection of scaffolding or other structures or works
in connection therewith, and the cleaning of grounds or structures in connection
with any of the above activities.

5. CONTRACT AMOUNT: "Contract Amount" shall mean the amount of compensation that
shall be paid to SUBCONTRACTOR by PG&E ES for satisfactorily providing and
installing the equipment, and optionally providing operational and maintenance
services for such equipment. described in each Work Order.

6. EFFECTIVE DATE: "Effective Date" shall mean the date this Master Agreement is
fully executed as noted above and is the date the Master Agreement is in full
force and effect.

7. ENERGY RELATED EQUIPMENT: Energy Related Equipment' shall mean the certain
equipment provided and installed, and possibly operated and maintained if
requested in the Work Orders, by SUBCONTRACTOR and includes any and all other
material, hardware, or software, as specified in each Work Order. Such Energy
Related Equipment is and shall remain the personal property of SUBCONTRACTOR,
with all the rights and liabilities associated with such ownership, until the
final acceptance by the Customer, the Operational Date, and PG&E ES has made
final payment to SUBCONTRACTOR of the Contract Amount defined in the Work Order.

8. FACILITY OR FACILITIES: "Facility" or "Facilities" shall mean the
building(s), structure(s) and or other fixtures on the Site Location where Work
shall be performed pursuant to an applicable Work Order,

9. HAZARDOUS SUBSTANCES. "Hazardous Substances" shall mean any hazardous, toxic,
or dangerous wastes, substances, chemicals, constituents. Contaminants,
pollutants, and materials and any other carcinogenic, corrosive, ignitable,
radioactive, reactive, toxic, or otherwise hazardous substances or mixtures
(whether solids, liquids, or gases) now or at any time subject to regulation,
control, remediation, or otherwise addressed under Applicable Laws.

10. INSTALLATION: "Installation" shall mean the setting up and placement of the
Energy Related Equipment in accordance with all Applicable Laws, in the manner
it will be operated, and as defined in the Work Order. Installation wilt not be
deemed complete until the Operational Date and final acceptance by PG&E ES and
the Customer.

11. MASTER AGREEMENT: "Master Agreement" shall mean this Energy Related
Equipment and Services Master Agreement and all Exhibits attached hereto which
are incorporated herein, as the same may be amended or modified from time to
time in accordance with the provisions hereof.

                                      -15-

<PAGE>   16

12.MATERIAL CHANGED CONDITION: "Material Changed Condition" shall mean changes
to the Work, outside the Scope of Work, as defined in Section 4.5, Material
Changed Conditions, herein.

13. OPERATIONAL DATE: "Operational Date" shall mean the date when the Energy
Related Equipment, and other related equipment, is fully installed and
operational. SUBCONTRACTOR shall provide written notice of such date to PG&E ES.
Unless PG&E ES disputes, for reasonable cause, the validity of the notice within
15 days of receiving such report, the same shall be deemed accepted by PG&E ES
as the Operational Date.

14. OPERATIONS AND MAINTENANCE SERVICES OR O&M: "Operations and Maintenance
Services", or O&M, shall mean the provision of operations and maintenance
services for the equipment, and any and all other material, hardware, or
software provided and installed by SUBCONTRACTOR, in accordance with Article 7
herein.

15. PARTY OR PARTIES: "Party" or "Parties" shall mean PG&E ES, SUBCONTRACTOR.-
each or both of them, as the context may require pursuant to the terms and
conditions of this Master Agreement.

16. PROJECT: "Project" shall mean the entirety of Work to be performed by
SUBCONTRACTOR, as well as all efforts of PG&E ES, CITGO, Customer. and other
entities, all as an integrated whole.

17. SITE LOCATION: "Site Location" shall mean the location of the facility where
the Energy Related Equipment, other related equipment, and any Test Equipment
will be installed, as described and identified in the Work Order.

18. TIME: "Time" shall mean the time period within which the SUBCONTRACTOR shall
complete the Work in accordance with the Work Order Project Schedule.

19. RETENTION: "Retention" shall mean the amount to be withheld by PG&E ES from
each payment to SUBCONTRACTOR, in the amount of ten (10%) percent, to ensure
SUBCONTRACTOR'S performance and completion of the Work as defined in the Work
Order.

20. WARRANTY: "Warranty" shall mean, unless otherwise defined in the Work Order,
the Energy Related Equipment provided and installed by SUBCONTRACTOR shall
conform to applicable specifications and shall be fit for the particular
purpose, shall be merchantable. of good workmanship and material, and free from
defect for a period of one (1) year from the Operational Date as defined herein.

21. WORK: "Work" shall mean the all the equipment and services described in each
Work Order to be provided. installed and performed by SUBCONTRACTOR. Depending
on the terms of each Work Order, the Work may include SUBCONTRACTOR designing,
supplying, installing, maintaining. operating, and warranting of certain Energy
Related Equipment, and providing any other energy-related services specified in
the Work Order. The Work described in each Work Order shall also include all
labor necessary to produce such services, all materials, fabrications,
assemblies, and equipment incorporated or to be incorporated in such
installation.

22. WORK ORDER: "Work Order" shall mean the document more fully described in
Article 3 of this Master Agreement. To be effective, each Work Order must be
executed by both Parties.

                                      -16-<PAGE>   1

                                                                   EXHIBIT 10.02

STRATEGIC PARTNERSHIP AGREEMENT

This Agreement is by and between Lighting Management Consultants, Inc.
(hereinafter, "LMC") with its principal place of business at 5626 Star Lane,
Houston, Texas 77057 and DeMarco Energy Systems of America, Inc. (hereinafter,
"DEMARCO")with its principal place of business at PO Box 201057, Austin, Texas
78720-1057.

NATURE OF THE PARTNERSHIP
It is with mutual understanding between LMC and DEMARCO to enter into a
strategic partnership agreement, where DEMARCO has relationships and contracts
with various organizations to perform energy efficient lighting retrofits and
energy management services, and LMC is in the energy efficient lighting business
and agrees to become the primary company rendering for DeMarco services such as:
energy audits, energy-related feasibility studies, lighting system
removal/demolition, lighting system installation/retrofit, and energy management
services for commercial, industrial and institutional applications. The
relationship description, contributions, terms, conditions, and other covenants
are set forth herein.

1)       PURPOSE. The purpose of this agreement is to engage LMC to perform as
         PROJECT MANAGER the services described in Articles 1, 2, and 3 herein
         for the contracts and/or work orders issued to DEMARCO. DEMARCO will
         perform their duties and responsibilities as described in Article 4,
         10, 11, and 12, plus any other duties and responsibilities required to
         assist LMC with performing their obligations. Each party will perform
         all individual duties, responsibilities and requirements as set forth
         in this agreement.

2)       COMMENCEMENT. Effective immediately, DEMARCO will issue all work
         relating to lighting systems installation, retrofit and/or demolition
         to LMC, and LMC agrees to perform the services required of each work
         order or contract for and on behalf of DEMARCO.

3)       DURATION. The duration of this agreement is perpetual until such time
         either party wishes to terminate the relationship, and does so by
         furnishing written notice of their intent to terminate at least 60 days
         prior to the effective date. All contracts in-works, services being
         performed at that time and work orders under construction by LMC will
         be performed through completion, regardless of time requirements to
         fulfill the project's work scope. Failure to perform will result in a
         reduction in final payment, based upon percentage of completion, less
         reasonable expenses.

4)       MUTUAL NON-DISCLOSURE. It is understood that DEMARCO and LMC have
         individually entered into Mutual Non-Disclosure Agreements with certain
         companies, and each agrees to honor and carry-out the terms of the
         others agreement(s), unless otherwise agreed to in writing and attached
         hereto. A mutual Non-Disclosure agreement has been executed between
         DEMARCO and LMC and is attached hereto.

5)       NON-COMPETE. DEMARCO and LMC agree to not compete with each other for
         the same contracts or work orders for the duration of this agreement.
         It is understood that each have individually negotiated and/or earned
         contracts prior to this agreement, or have contracts or work orders not
         yet issued, but are considered in process to be issued, and that these
         work orders or agreements are not in direct competition between DEMARCO
         and LMC. It is further agreed each company will establish a system to
         notify the other of contracts under negotiation and subsequent date
         awarded, and that either company will not individually bid for the
         other company's work contracts without receiving prior written
         permission to conduct such activities from that company. If for
         whatever reason a contract (regardless of status `under negotiation' or
         `awarded') is considered to be in competition between either company,
         then the default shall go to LMC, unless it is reasonably determined
         otherwise by each party, or that DEMARCO had made initial contact or
         introduction first and was capable of performing services required to
         fulfill its obligations under such contract.

6)       COMPENSATION FOR SERVICES. DEMARCO agrees to pay to LMC the entire bid
         amount for each contract awarded to DEMARCO for the services agreed to
         be performed and completed by LMC. It is understood by each party that
         each bid submitted by LMC to DEMARCO shall include and reflect a five
         percent profit for DEMARCO, calculated and added to the sum total of
         LMC's bid. Upon receipt of final payment for each project, DEMARCO will
         retain their five percent profit and distribute the balance to

<PAGE>   2

         LMC within ten days of receipt, unless otherwise agreed to in writing
         prior to each project's bid submission.

7)       PERFORMANCE REQUIREMENTS. LMC agrees to perform the services, duties
         and obligations as outlined in the contracts, work orders and Articles
         of this Agreement to the best of their abilities, and based upon their
         historical performance and capabilities of providing such services,
         duties, and obligations.

8)       DEFAULT AND REMEDIES. Upon determination that a default or breach has
         occurred under any portion of this agreement by either party, the
         affected party shall give 30 days to the defaulting party to cure the
         default. If the default has not been cured according to the terms of
         this agreement or with reasonable satisfaction of the affected party,
         this agreement shall become terminated within 30 days. Upon termination
         of this Agreement, both parties shall fulfill all outstanding
         obligations incurred prior to the date of termination through to the
         effective termination date.

9)       COUNTERPARTS. This Agreement may be executed in several counterparts,
         each of which shall constitute 1 (one) Agreement, binding on all
         parties hereto, notwithstanding that all the parties have not signed
         the same counterpart.

10)      ARTICLES OUTLINING THE WORKING RELATIONSHIP. The following Articles
         outline the working relationship between LMC and DEMARCO. Hereinafter,
         the term Project Manager refers to LMC and their identified
         sub-contractor position with DEMARCO and as identified within
         agreement(s) relating to energy efficient lighting retrofit and energy
         management services.

<PAGE>   3

ARTICLE 1
PROJECT MANAGER'S RESPONSIBILITIES

1.1               PROJECT MANAGER'S SERVICES

1.1.1             The Project Manager & Services consist of those services
               performed by the Project Manager. Project Manager's employees and
               Project Manager's consultants as enumerated in Articles 2 and 5
               of this Agreement and any other services included in Article 13.

1.1.3             The Project Manager shall provide sufficient organization,
               personnel and management to carry out the requirements of this
               agreement on an expeditious and economical manner consistent with
               the interest with DEMARCO, and when appropriate recruit, select
               and train personnel for placement within the DEMARCO
               organization.

1.1.4             The services covered by this Agreement are subject to the
              limitations contained in sub paragraph 13.

ARTICLE 2
SCOPE OF PROJECT MANAGER'S BASIC SERVICES

2.1               Definition

2.1.1             The Project Manager's Basic Services consist of those
               described in Paragraph 2.2 and 2.3 and any other services
               identified in Article 13 as part of Basic Services.

2.2      PRE - PROJECT PHASE

2.2.1             The Project Manager shall review the program furnished by
               DEMARCO to ascertain the requirements of the Project and shall
               arrive at a mutual understanding of such requirements with
               DEMARCO.

2.2.2             The Project Manager shall provide a preliminary evaluation
               of DEMARCO's program, schedule and Project budget requirements,
               each on terms of the other.

2.2.3             Based on previously performed audits and other energy
               management services criteria prepared by DEMARCO, the Project
               Manager shall prepare preliminary estimates of Project cost for
               program requirements using logistical, volume and/or similar
               conceptual estimating LMCniques. The Project Manager shall
               provide cost evaluations of alternative materials and systems.

2.2.4              The Project Manager shall expeditiously review design
               documents during their development and advise on proposed site
               use and improvements, selection of materials, building systems
               and equipment, and methods of Project delivery. The Project
               Manager shall provide recommendations on relative feasibility of
               Project methods, availability of materials and labor, time
               requirements for procurement, installation and Project, and
               factors related to Project cost including, but not limited to
               costs of alternative designs or materials, preliminary budgets
               and possible economics of geographic locations plus other
               productive factors.

2.2.5               The Project Manager shall prepare and periodically update a
               Project Schedule for DEMARCO's review and DEMARCO's acceptance.
               The Project Manager shall obtain DEMARCO's approval for the
               portion of the preliminary Project schedule relating to the
               performance requirements of PG&E ES energy management services.
               In the Project

<PAGE>   4

               Schedule, the Project Manager shall coordinate and integrate the
               Project Manager's services, and DEMARCO's responsibilities with
               anticipated Project schedules, highlighting critical and
               long-lead-time items.

2.2.6               As DEMARCO progresses with the preparation of the Project
               Documents, the Project Manager shall prepare and update, at
               appropriate intervals agreed to by DEMARCO and Project Manager,
               estimates of Project Cost of increasing detail and refinement.
               The estimated cost of each Contract shall be indicated with
               supporting detail. Such estimates shall be provided for DEMARCO's
               approval. The Project Manager shall advise DEMARCO if it appears
               that the Project Cost may exceed the latest approved Project
               budget and make recommendations for corrective action.

2.2.7               The Project Manager shall consult with DEMARCO regarding the
               Project Documents and make recommendations whenever
               retrofit/installation details adversely affect specific or
               overall project logistics, cost or schedules.

2.2.8               The Project Manager shall provide recommendations and
               information to DEMARCO regarding the assignment of
               responsibilities for temporary Project facilities and equipment
               materials and services for common use of the Contractors. The
               Project Manager shall verify that such requirements and
               assignments of responsibilities are included in the proposed
               Contract Documents.

2.2.9               The Project Manager shall provide recommendations and
               information to DEMARCO regarding the allocation of
               responsibilities for safety programs among the Contractors.

2.2.10              The Project Manager shall advise on the divisions of the
               Project into individual Contracts for various categories of Work,
               including the method to be used for selecting Contractors and
               awarding Contracts. If multiple Contracts are to be awarded, the
               Project Manager shall review the Project Documents and make
               recommendations as required to provide that (1) the Work of the
               Contractors is coordinated, (2) all requirements for the Project
               have been assigned to the appropriate Contractor, (3) the
               likelihood of jurisdictional disputes has been minimized, and (4)
               proper coordination has been provided for phased Project.

2.2.11              The Project Manager shall prepare a Project completion
               schedule providing for the components of the Work, including
               phasing of Project, times of commencement and completion required
               of each Contractor ordering and delivery of products requiring
               long lead time, and the occupancy requirements of DEMARCO. The
               Project Manager shall provide the current Project completion
               schedule for each set of bidding documents.

2.2.12              The Project Manager shall expedite and coordinate the
               ordering and delivery of materials requiring long lead-time
               through DEMARCO.

2.2.13              The Project Manager shall provide an analysis of the types
               and quantities of labor required for the Project and review the
               availability of appropriate categories of labor required for
               critical phases. The Project Manager shall make recommendations
               for actions designed to minimize adverse effects of labor
               shortages. 2.2.15 The Project Manager shall assist DEMARCO in
               obtaining information regarding applicable requirements for equal
               employment opportunity programs for inclusion in the Contract
               Documents.

2.2.16              Following DEMARCO's approval of the Project Documents, the
               Project Manager shall update and submit the latest estimate of
               Project cost and the Project completion schedule for DEMARCO's
               review and approval.

2.2.17              The Project Manager shall submit the list of prospective
               bidders for DEMARCO's approval.

<PAGE>   5

2.2.18              The Project Manager shall develop bidders' interest in the
               Project and establish bidding schedules. The Project Manger, with
               DEMARCO's Assistance, shall issue bidding documents to bidders
               and conduct pre-bid conferences with prospective bidders. The
               Project Manager shall assist DEMARCO with regard to questions
               from bidders and with issuance of addenda.

2.2.19              The Project Manager shall receive bids, prepare bid analysis
               and make recommendations to DEMARCO for DEMARCO's award of
               Contracts or rejection of bids.

2.2.20              The Project Manager shall assist DEMARCO in preparing
               Project Contracts and advise DEMARCO on the acceptability of
               Subcontractors and material suppliers proposed by Contractors.

2.2.21              The Project Manager shall assist DEMARCO in obtaining
               building permits and special permits for permanent improvements,
               except for permits required to be obtained directly by the
               various Contractors. The Project Manager shall assist DEMARCO in
               connection with DEMARCO's responsibility for filing documents
               required for the approvals of governmental authorities having
               jurisdiction over the Project.

2.3                 PROJECT PHASE - ADMINISTRATION OF THE PROJECT CONTRACT

2.3.1               The Project Phase will commence with the award of the
               initial Project Contract, Work Order or purchase order and,
               together with the Project Manager's obligation to provide Basic
               Services under this Agreement, will end 30 Days after final
               payment to all Contractors is due.

2.3.2               The Project Manager shall provide administration of the PG&E
               ES Master Agreement and subsequent Work Orders throughout the
               Project in cooperation with the guidelines established and
               performance requirements of PG&E ES and DEMARCO.

2.3.3               The Project Manger shall provide administrative management
               and related services to coordinate scheduled activities and
               responsibilities of the Contractors with each other and with
               those of the Project Manager and DEMARCO to endeavor to manage
               the Project in accordance with the approved estimate of Project
               Cost, the Project Schedule and the Contract Documents.

2.3.4               The Project Manager shall schedule and conduct meetings to
               discuss such matters as procedures, progress and scheduling. The
               Project Manager shall prepare and promptly distribute minutes to
               DEMARCO, and Contractors when required.

2.3.5               Utilizing the Project Schedules provided by the Contractors,
               the Project Manager shall update the Project completion schedule
               incorporating the activities of the Contractor's progress
               throughout the Project, including activity sequences and
               duration, allocations of labor and materials, processing of
               Drawings, Product Data and Samples, and delivery of products
               requiring long lead time and procurement. The Project completion
               schedule shall include DEMARCO's occupancy requirements showing
               portions of the Project having occupancy priority. The Project
               Manager shall update and reissue the Project completion schedule
               as required to show current conditions. If an update indicates
               that the previously approved Project completion schedule may not
               be met, the Project Manager shall recommend corrective action to
               DEMARCO.

<PAGE>   6

2.3.6               Consistent with the various holding documents and utilizing
               information from the Contractors the Project Manager shall
               coordinate the sequence of Project and assignment of space in
               areas where the Contractors are performing Work.

2.3.7               The Project Manager shall endeavor to obtain satisfactory
               performance from each of the Contractors. The Project Manager
               shall recommend courses of action to DEMARCO when requirements of
               a Contract are not being fulfilled.

2.3.8               The Project Manager shall monitor the approved estimate of
               Project Cost. The Project Manager shall show actual costs for
               activities in progress as estimated for uncompleted tasks by way
               of comparison with such approved estimate.

2.3.9               The Project Manager shall develop cash flow reports and
               forecast for the Project and advise DEMARCO as to variances
               between actual and budgeted on estimated costs.

2.3.10              The Project Manager shall maintain accounting records on
               authorized Work performed under unit costs, additional Work
               performed on the basis of actual costs of Labor and materials,
               and other Work requiring accounting records.

2.3.11              The Project Manager shall develop and improve procedures for
               the review and processing of applications by Contractors for
               progress and final payment.

2.3.11.1            Based on the Project Manager's observations and evaluations
               of each Contractor's Application for Payment, the Project Manager
               shall review and apply the amounts due the respective
               Contractors.

2.3.11.2            The Project Manager shall prepare a Project Application for
               Payment based on the Contractors' Certificates for Payment.

2.3.11.3            The Project Manager's certification for payment shall
               continue a representation to DEMARCO, based on the Project
               Manger's determinations at the site as provided in Subparagraph
               2.3.12 and on the data comprising the Contractor's Applications
               for Payment, that to the best of the Project Manager's knowledge,
               information and belief, the Work has progressed to the point
               indicated and the quality of the Work is in accordance with the
               Contract Documents. The foregoing representations are subject to
               an evaluation of the Work for conformance with the Contract
               Documents upon Substantial Completion, to results of subsequent
               tests and inspections, to minor deviations from the Contract
               Documents correctable prior to completion and to specific
               qualifications expressed by the Project Manager. The issuance of
               a Certificate for Payment shall further constitute a
               representation that the Contractor is entitled to payment in the
               amount certified.

2.3.11.4            The issuance of a Certificate for Payment shall not be a
               representation that the Project Manager has (1) made exhaustive
               or continuous on-site inspections to check the quality or
               quantity of the Work, (2) reviewed Project means, methods,
               LMCniques, sequences for the Contractor's own Work, or
               procedures, (3) reviewed copies of requisitions received from
               Subcontractors and material suppliers and other data requested by
               DEMARCO to substitute the Contractor's right to payment or, (4)
               ascertained how or for what purpose the Contractor has used money
               preciously paid on account of the Contract Sum.

2.3.12              The Project Manager shall determine in general that the Work
               of each Contractor is being performed in accordance with the
               requirements of the Contract Documents, endeavoring to guard
               DEMARCO against defects and

<PAGE>   7

              deficiencies in the Work. As appropriate, the Project Manager
              shall have authority, upon written authorization from DEMARCO, to
              require additional inspection or testing of the Work in accordance
              with the provisions of the Contract Documents, whether or not such
              Work is fabricated, installed or completed. The Project Manager in
              consultation with DEMARCO may reject Work, which does not conform
              to the requirements of the Contract Documents.

2.3.13              The Project Manager shall schedule and coordinate the
               sequence of Project in accordance with the Contract Documents and
               the latest approved Project completion schedule.

2.3.14              With respect to each Contractor's own Work, the Project
               Manager shall not have control over or charge of and shall not be
               responsible for Project means, methods, LMCniques, sequences or
               procedures, or for safety precautions and programs in connections
               with the Work of each of the Contractors, since these are solely
               the Contractor's responsibility under the Contract for Project.
               The Project Manager shall not be responsible for a Contractor's
               failure to carry out the Work in accordance with the respective
               Contract Documents. The Project Manager shall not have control
               over or charge of acts or omissions of the Contractor's,
               Subcontractors, or their agents or employees, or any other
               persons performing portions of the Work not directly employed by
               the Project Manager.

2.3.15              The Project Manager shall transmit to DEMARCO requests for
               interpretations of the meaning on intent of the Drawings and
               Specifications, and assist in the resolution of questions that
               may arise.

2.3.16              The Project Manager shall review requests for changes,
               assist in negotiating Contractor's proposals, submit
               recommendations to DEMARCO, and, if they are accepted, prepare
               Change Orders and Project Change Directives which incorporate
               DEMARCO's modifications to the Documents.

2.3.17              The Project Manager shall assist DEMARCO in the review,
               evaluation and documentation of Claims.

2.3.18              The Project Manager shall receive certificates of insurance
               from the Contractors and forward them to DEMARCO.

2.3.19              In collaboration with DEMARCO, the Project Manager shall
               establish and implement procedures for expediting the processing
               and approval of Drawings, Product Data, Samples and other
               submittals. The Project Manager shall review all Shop Drawings,
               Product Data, Samples and other submittals from the Contractors.
               The Project Manager shall coordinate submittals with information
               obtained in related documents and transmit to DEMARCO those such
               have been approved by the Project Manager. The Project Manager's
               actions shall be taken with such reasonable promptness as to
               cause no delay in the Work or in the activities of DEMARCO of
               Contractors.

2.3.20              The Project Manager shall record the progress of the
               Project. The Project Manager shall submit written progress
               reports to DEMARCO including information on each Contractor and
               each Contractor's Work, as well as the entire Project showing
               percentage of completion. The Project Manager shall keep a daily
               log containing a record of weather, each Contractor's Work on the
               site, number of workers, identification of equipment, Work
               accomplished, problems encountered, and other similar relevant
               data as DEMARCO may require.

2.3.21              The Project Manager shall maintain at the Project site for
               DEMARCO one record copy of all Contracts, Drawings,
               Specifications, addenda, Change Orders and other modifications,
               in good order and marked currently to record changes and
               selections made during Project, and in addition, approved
               Drawings, Product Data, Samples and similar required submittals.
               The Project Manager shall maintain records, in duplicate, of
               principal building layout lines, engineering specifications,
               electrical drawing layouts, as well as any other relevant data or
               drawing required to

<PAGE>   8

               perform the services required, and as certified by a qualified
               surveyor or professional engineer. The Project Manager shall make
               all such records available to DEMARCO and upon completion of the
               Project shall deliver them to DEMARCO.

2.3.22              The Project Manager shall arrange for the delivery, storage,
               protection and security of DEMARCO purchased materials, systems
               and equipment that are a part of the Project until such items are
               incorporated into the Project.

2.3.23              With DEMARCO's maintenance personnel or consent with when
               absent, the Project Manager shall review the Contractor's final
               Customer Completion Certificate, or observe as available the
               testing and start-up of the retrofit systems and equipment.

2.3.24              When the Project Manager considers each Contractor's Work or
               a designated portion thereof substantially complete, the Project
               Manager shall, jointly with the Contractor, prepare a list of
               incomplete of unsatisfactory items and a schedule for their
               completion. The Project Manager shall assist DEMARCO in
               conducting inspections to determine whether the Work or
               designated portion thereof is substantially complete.

2.3.25              The Project Manager shall coordinate the correction and
               completion of the Work. Following issuance of a Certificate of
               Substantial Completion of the Work or a designated portion
               thereof, the Project Manager shall evaluate the completion of the
               Work of the Contractors and make recommendations to DEMARCO when
               Work is ready for final inspection. The Project Manager shall
               assist DEMARCO in conduction of final inspections, or receive
               suitable assurances from Quality Control of their final
               completion.

2.3.26              The Project Manager shall secure and transmit to DEMARCO
               warranties and similar submittals required by the Contract
               Documents and deliver all keys, manuals, record drawings and
               maintenance stocks to DEMARCO. The Project Manager shall forward
               to DEMARCO a final Project Application for Payment upon
               compliance with the requirements of the Contract Documents.

2.3.27         Duties, responsibilities and limitations of authority of the
               Project Manager as set forth in the Contract Documents shall not
               be restricted, modified or extended without written consent of
               DEMARCO, Project Manager, and Contractors. Consent shall not be
               unreasonably withheld.

ARTICLE 3
ADDITIONAL SERVICES

3.1                 GENERAL

3.1.1               The services described in this Article 3 are not included in
               Basic Services unless so identified in Article 13, and they shall
               be paid for by DEMARCO as provided in this Agreement, in addition
               to the compensation for Basic Services. The Optional Additional
               Services described under paragraph 3.3 shall only be provided if
               authorized or confirmed in writing by DEMARCO. If services
               described under Contingent Additional Services in Paragraph 3.2
               are required due to circumstances beyond the Project Manager's
               control, the Project Manager shall notify DEMARCO prior to
               commencing such services. If DEMARCO deems that such services
               described under paragraph 3.2 are not required DEMARCO shall give
               prompt written notice to the Project Manager. If DEMARCO
               indicates in writing that

<PAGE>   9

               all or part of such Contingent Additional Services are not
               required, the Project Manager shall have no obligation to provide
               those services.

3.2                 CONTINGENT ADDITIONAL SERVICES

3.2.1               Providing services required because of significant changes
               in the Project including, but not limited to, changes in size,
               quality, complexity or DEMARCO's schedule.

3.2.2               Providing consultation concerning replacement of Work
               damaged by fire or other cause during Project, and furnishing
               services required in connection with the replacement of such
               Work.

3.2.3               Providing services made necessary by the termination or
               default of DEMARCO or a Contractor, by major defects or
               deficiencies in the Work of a Contractor, or by failure of
               performance of either DEMARCO or Contractor under a Contract for
               Project.

3.2.4               Providing services in evaluating an extensive number of
               claims submitted by a Contractor or others in connection with the
               Work.

3.2.5               Providing services in evaluating an extensive number of
               claims submitted by a Contractor or others in connection with the
               Work.

3.3                  OPTIONAL ADDITIONAL SERVICES

3.3.1               Providing services relative to the recruitment, selection,
               and training of personnel, acquisition of future facilities,
               systems implementation and integration, and equipment purchases.

3.3.2               Providing services to investigate existing conditions or
               facilities or to provide measured drawings thereof.

3.3.3               Providing services to verify the accuracy of drawings or to
               provide measured drawings thereof.

3.3.4               Providing services to verify the accuracy of drawings or
               other information furnished by DEMARCO.

3.3.5               Providing services required for or in connection with
               DEMARCO's selection or procurement of furniture, furnishings and
               related equipment included in fee.

3.3.6               Providing services for tenant improvements.

3.3.7               Providing any other services not otherwise included in this
               Agreement.

<PAGE>   10

ARTICLE 4
OWNER'S RESPONSIBILITY

4.1                 DEMARCO shall provide full information regarding
               requirements for the Project including a program which shall set
               forth DEMARCO's objective, schedule, constraints and criteria,
               including space requirements and relationships, flexibility,
               expansion capabilities, special equipment, systems, and site
               requirements.

4.2                 DEMARCO shall establish and update an overall budget for the
               Project based on consultation with the Project Manager which
               shall include the Project Cost, DEMARCO's other costs and
               reasonable contingencies related to all of these costs.

4.3                 If requested by the Project Manager, DEMARCO shall furnish
               evidence that financial arrangements have been made to fulfill
               DEMARCO's other costs and reasonable contingencies related to all
               of these costs.

4.4                 If requested by the Project Manager, DEMARCO shall furnish
               evidence that financial arrangements have been made to fulfill
               DEMARCO's obligations under this Agreement.

4.5                 DEMARCO shall designate a representative authorized to act
               on DEMARCO's behalf with respect to the Project. DEMARCO or such
               authorized representative, shall render decisions in a timely
               manner pertaining to documents submitted by the Project Manager
               in order to avoid unreasonable delay in the orderly and
               sequential progress of the Project Manager's service.

4.6                 DEMARCO shall furnish structural, mechanical, chemical, air
               and water pollution tests, tests for hazardous materials, and
               other laboratory and environmental tests, inspections and reports
               required by law or the Contract Documents.

4.7                 DEMARCO shall furnish all legal, accounting and insurance
               counseling services as may be necessary at any time for the
               Project, including auditing services DEMARCO may require to
               verify the Contractors' Applications for Payment or to ascertain
               how or for what purposes the Contractors have used the money paid
               by or on behalf of DEMARCO.

4.8                 DEMARCO shall furnish the Project Manager with a sufficient
               quantity of Project Documents.

4.9                 The services, information and reports required by Paragraph
               4.6 through 4.8 shall be furnished at DEMARCO's expense, and the
               Project Manager shall be entitled to rely upon the accuracy and
               completeness thereof.

4.10                Prompt written notice shall be given by DEMARCO or to the
               Project Manager if DEMARCO becomes aware of any fault or defect
               in the Project or nonconformance with the Contract Documents.

4.11                DEMARCO reserves the right to perform Project and operations
               related to the Project with DEMARCO's own forces, and to award
               contracts in connection with the Project which are not part of
               the Project Manager's responsibilities under this Agreement. The
               Project Manager shall notify DEMARCO if any such independent
               action will interfere with the Project Manager's ability to
               perform the Project Manager's responsibilities under this
               Agreement. When performing Project or operations related to the
               Project, DEMARCO agrees to be subject to the same obligations and
               to have the same rights as the Contractors.

4.12                Information or services under DEMARCO's control shall be
               furnished by DEMARCO with reasonable promptness to avoid delay in
               the orderly progress of the Project Manager's services and the
               progress of the Work.

<PAGE>   11

ARTICLE 5
PROJECT COSTS

5.1                 DEFINITION

5.1.1               The Project Costs shall be the total cost or estimated cost
               of DEMARCO of all elements of the Project.

5.1.2               The Project Cost shall include the cost a current market
               rates of labor and materials furnished by DEMARCO and equipment
               designed, specified, selected, or specially provided for by
               DEMARCO, plus a reasonable allowance for the Contractors'
               overhead and profit. In addition, a reasonable allowance for
               contingencies shall be included for market conditions at the time
               Except as provided in Subparagraph 5.1.3; Project cost shall also
               include the compensation of the Project Manager and Project
               Manager's consultants.

5.1.3               Project Cost does include the compensation of DEMARCO and
               Owners' consultant, costs of the land, right-of-way, financing or
               other costs which are the responsibility s DEMARCO as provided in
               Article 4. If any portion of the Project Manager's compensation
               is based upon a percentage of Project Cost, then Project Cost,
               for the purpose of determining such portion, shall include the
               compensation of the Project Manager or Project Manager's
               consultants.

5.2                 RESPONSIBILITY FOR PROJECT COST

5.2.1               Evaluations of DEMARCO's Project budget, preliminary
               estimates of Project Cost and detailed estimates of Project Cost
               prepared by the Project Manager represent the Project Manger's
               best judgement as a person or entity familiar with the Project
               industry. It is recognized, however, that neither the Project
               Manager nor DEMARCO has control over the cost of labor, materials
               or equipment, over Contractor's methods of determining bid
               prices, or over competitive bidding, market or negotiating
               conditions. Accordingly, the Project Manager cannot and does not
               warrant or represent that bids or negotiated prices will not vary
               from the Project budget proposed, established or approved by
               DEMARCO, or from any cost estimate or evaluation prepared by the
               Project Manger.

5.2.2               No fixed limit of Project Cost shall be established as a
               condition of this Agreement by the furnishing, proposal or
               establishment of a Project budget unless such fixed limit has
               been agreed upon in writing and signed by the parties hereto. If
               such a fixed limit has been established, the Project Manager
               shall be permitted to include contingencies for design, bidding,
               and price escalation, and shall consult with DEMARCO to determine
               what materials, equipment, component systems and types of Project
               are to be included in the Project Documents, to suggest inclusion
               of alternate bids in the Project Documents to adjust the Project
               Cost to the fixed limit. Fixed limits, if any, shall be increased
               in the amount of any increase in the Contract Sums occurring
               after execution of the Contracts for Project.

5.2.3               If the Bidding or Negotiating Phase has not commenced within
               90 days after submittal of the Project Documents to DEMARCO, any
               Project budget or fixed limit of Project Cost shall be adjusted
               to reflect changes in the general level of prices in the Project
               industry between the date of submission of the Project Documents
               to DEMARCO and the date on which proposals are sought.

<PAGE>   12

5.2.4               If a fixed limit of Project Cost (adjusted as provided in
               Subparagraph 5.2.3) is exceeded by the sum of the lowest bonafide
               bids or negotiated proposals plus the Project Manager's estimate
               or other elements of Project Cost for the Project, DEMARCO shall:

              11)  give written approval or an increase in such fixed limit;

              12)  authorize rebidding or renegotiating of the Project within a
                   reasonable time;

              13)  if the Project is abandoned, terminate in accordance with
                   paragraphs 3; or

              14)  cooperate in revising the Project scope and quality as
                   required to reduce the Project Cost.

ARTICLE 6
PROJECT SUPPORT ACTIVITIES

6.1                 Project Support activities, if provided by the Project
               Manager, shall be governed by separate contractual agreements
               unless otherwise provided in Article 13.

6.2                 Reimbursable expenses listed in Article 13 for Project
               support activities nay be subject to trade discounts, rebates,
               refunds and amounts received from sales or surplus materials and
               equipment which shall accrue to DEMARCO, and the Project Manager
               shall make provisions so that they can be accrued.

ARTICLE 7
OWNERSHIP AND USE OF OWNER'S DRAWINGS,
SPECIFICATIONS AND OTHER DOCUMENTS

7.1                 The Drawings, Specifications and other Documents prepared by
               DEMARCO are instruments of DEMARCO's service through which the
               Work to be executed by the Contractors is described. The Project
               may retain one record set. The Project Manager shall not own or
               claim a copyright in the Drawings, Specifications and other
               Documents prepared by PG&E ES, DEMARCO, OR CUSTOMER; and copies
               thereof furnished to the Project Manager, are for the use solely
               with the respect to this Project. They are not to be used by the
               Project Manager on other Projects or for additions to this
               Project outside the scope of the Work without the specific
               written consent of DEMARCO. The Project Manager is granted a
               limited license to use and reproduce applicable portions of the
               Drawings. Specifications and other documents prepared by the
               Architect appropriate to and for use in the performance of the
               Project Manager's services under this Agreement.

               All copies made under this license shall bear the statutory
               copyright notice, if any, shown on the Drawings, Specifications
               and other Documents prepared by the Architect of such drawing.
               Submittal or distribution to meet official regulatory
               requirements or for other purposes in connection with this
               Project is not to be construed as publication in derogation of
               the Architect's copyright or other reserved rights. This
               Agreement shall be specifically enforceable in accordance with
               applicable law in any court having jurisdiction thereof.

<PAGE>   13

ARTICLE 8
TERMINATION, SUSPENSION OR ABANDONMENT

9.1                 This Agreement may be terminated by either party upon not
               less than seven days' written notice should the other party fail
               substantially to perform in accordance with the terms of this
               Agreement through no fault of the party initiating the
               termination.

9.2                 If the Project is suspended by DEMARCO for more than 30
               consecutive days, the Project Manager shall be compensated for
               services performed prior to notice of such suspension. When the
               Project is resumed, the Project Managers' compensation shall be
               equitable adjusted to provide for expenses incurred in the
               interruption and resumption of the Project Manager's services.

9.3                 This Agreement may be terminated by DEMARCO upon not less
               than seven days' written notice to the Project Manager in the
               event that the Project is permanently abandoned. If the Project
               is abandoned by DEMARCO for more than 90 consecutive days, the
               Project Manager may terminate this Agreement by giving written
               notice.

9.4                 Failure of DEMARCO to make Payments to the Project Manager
               in accordance with this Agreement shall be considered substantial
               nonperformance and cause for termination.

9.5                 If DEMARCO fails to make payment when due the Project
               Manager for services and expenses, the Project Manager may, upon
               seven days' written notice to DEMARCO, suspend performance of
               services under this Agreement. Unless payment in full is received
               by the Project Manager within seven days of the date of the
               notice, the suspension shall take effect without further notice.
               In the event of a suspension of services, the Project Manager
               shall have no liability to DEMARCO for delay or damage caused to
               DEMARCO because of such suspension of services.

9.6                 In the event of termination not the fault of the Project
               Manager, the Project Manager shall be compensated for services
               performed prior to termination, together with Reimbursable
               Expenses then due and all Termination Expenses as defined in
               Paragraph 9.7

9.7                 Termination Expenses are those costs directly attributable
               to termination for which the Project Manager is not otherwise
               compensated.

ARTICLE 9
MISCELLANEOUS PROVISIONS

10.1                Unless otherwise provided this Agreement shall be governed
               by the law of the place where the Project is located.

10.2                Terms in this Agreement shall have the same meaning as those
               in the edition of AIA Document A201/Cma. General Conditions of
               the Contract for Project. Project Manager-Advisor Edition,
               current as of the date of this Agreement.

10.3                Causes of action between the parties to this Agreement
               pertaining to acts of failures to act shall be deemed to have
               accrued and the applicable status of limitations shall commence
               to run not later than either the date of Substantial Completion
               for acts or failures to act occurring prior to Substantial
               Completion, or the date of issuance of the final Project
               Certificate for Payment for acts or failures to act occurring
               after Substantial Completion.

10.4                Waiver of Subrogation. DEMARCO and Project Manager waive all
               rights against each other and against PG&E ES, the Contractors,
               consultants, agents and any of them, for damages, but only to the
               extent covered by property

<PAGE>   14

               insurance during Project, except such rights as they may have to
               the proceeds of such insurance as set forth in the edition of AIA
               Document A201/Cma General Conditions of the Contract for Project,
               Project Manager-Advisor Edition, current as of the date of this
               Agreement. DEMARCO and Project Manager each shall require similar
               waivers from their Contractors, Architect, consultants, agents,
               and persons or entities awarded separate contracts administered
               under DEMARCO's own forces.

10.5                DEMARCO and Project Manager, respectively, bid themselves,
               their partners, successors, assigns and legal representatives to
               the other party to this Agreement and to the partners,
               successors, assigns and legal representatives of such other party
               with respect to all covenants of this Agreement. Neither Owner
               nor Project Manager shall assign this Agreement without the
               written consent of the other.

10.6                This Agreement represents the entire and integrated
               agreement between DEMARCO and Project Manager and supercedes all
               prior negotiations, representations or agreements, either written
               or oral. This Agreement may be amended only by written instrument
               signed by both Owner and Project Manager.

10.7                Nothing contained in this Agreement shall create a
               contractual relationship with or a cause of action in favor of a
               third party against either DEMARCO or Project Manager.

10.8                Unless otherwise provided in this Agreement, the Project
               Manager and the Project Manager's consultants shall have no
               responsibility for the discovery, presence, handling, removal or
               disposal of or exposure of persons to hazardous materials in any
               form at the Project site, including but not limited to asbestos,
               asbestos products, polychlorinated bipheryl (PCB) of other toxic
               substances.

ARTICLE 10
INSURANCE

11.1                PROJECT MANAGER'S LIABILITY INSURANCE

11.1.1              The Project Manager shall purchase from and maintain in a
               company or companies lawfully authorized to do business in the
               jurisdiction In which the Project is located such insurance as
               will protect the Project Manager from claims set forth below
               which may arise out of or result from the Project Manager's
               operations under this Agreement and for which the Project Manager
               may be legally liable.

1.                       Claims under workers compensation, disability benefit
                    and other similar employee benefit acts which are applicable
                    to the operation to be performed;

2.                       Claims for damages because of bodily injury,
                    occupational sickness or disease, or death of the Project
                    Manager's employees;

3.                       Claims for damages because of bodily injury, sickness,
                    or disease, or death of any person other than the Project
                    Manager's employees;

4.                       Claims for damages insured by usual personal injury
                    liability coverage which are sustained (1) by a person as a
                    result of an offense directly or indirectly related to
                    employment of such person by the Project Manager, or (2) by
                    another person;

5.                       Claims for damages, other than to the Work itself,
                    because of injury to or destruction of tangible property,
                    including loss of use resulting therefrom;

<PAGE>   15

6.                       Claims for damages because of bodily injury, death of a
                    person or property damage arising out of ownership,
                    maintenance or use of a motor vehicle.

11.1.2              The insurance required by subparagraph 11.1.1 shall be
               written for not less than limits of liability specified in
               Article 13 or required by law, whichever coverage is greater.
               Coverages, whether written on an occurrence or claims-made basis,
               shall be maintained without interruption from date of
               commencement of operations under this Agreement until date of
               final Payment and termination of any coverage required to be
               maintained after final payment.

ARTICLE 11
PAYMENTS TO THE PROJECT MANAGER

11.1                DIRECT PERSONNEL EXPENSE

11.1.1              Direct Personnel Expense is defined as the direct salaries
               of the Project Manager's personnel engaged on the Project and the
               portion of the cost of their mandatory and customary
               contributions and benefits related thereto, such as employment
               taxes and other statutory employee benefits, insurance, sick
               leave, holidays, vacations, pensions and similar contributions
               and benefits.

11.1.2              Salaries and fringes of persons designated as Project
               Managers for Projects listed in Attachment "B" as well as
               salaries; fringes of office personnel are included in the fee as
               shown in Article 13. The Project Manager's home office overhead
               is also included in the fee arrangement with the exception of
               those items identified in Article 11.2 Reimbursable expenses and
               as outlines in Attachment "C".

11.1.3              The Project Manager is required to utilize DEMARCO personnel
               in each area of the Project, and when these positions are either
               unable to satisfactorily perform or are entirely absent from the
               organization, the Project Manager may utilize their own staff and
               bill DEMARCO for the Direct Personnel Expense, coupled with a
               letter of recommendation to hire. This recommendation should
               include opinions regarding types of personnel, quantity,
               education, and experience backgrounds, plus any and all other
               qualification identifications used to assist in the recruiting,
               selection processing, training, and management of such personnel.

11.2                REIMBURSEMENT EXPENSES

11.2.1              Reimbursement Expenses are in addition to compensation for
               Basic and Additional Services and include expenses incurred by
               the Project Manager and Project Manager's employees and
               consultants in the interest of the Project, as identified in the
               following Clauses.

11.2.1              Expense of transportation in connection with the Project;
               expenses in connection with authorized out-of-town travel;
               long-distance communications; and fees paid for securing approval
               of authorities having jurisdiction over the Project.

11.2.1.2            Expense of transportation in connection with the Project;
               expenses in connection with authorized out-of-town travel;
               long-distance communications; and fees paid for securing approval
               of authorities having jurisdiction over the Project.

<PAGE>   16

11.2.1.2            Expense of reproductions, postage, express deliveries,
               electronic facsimile transmissions and handling of Drawings,
               Specifications and other documents.

11.2.1.3            If authorized in advance by DEMARCO, expense of overtime
               work requiring higher than regular rates.

11.2.1.4            Insurance- No additional charges for Insurance.

11.3                PAYMENTS ON ACCOUNT OF BASIC SERVICES

11.3.1              The payment schedule, as set forth in Paragraph 12.1, is the
               minimum payment under this Agreement.

11.3.2              Subsequent payments for Basic Services shall be made monthly
               within and, where applicable, shall be in proportion to services
               performed within each phase of service, on the basis set forth in
               Subparagraph 12.2.1.

11.3.3              If and to the extent that the time initially established in
               Subparagraph 12.5.1 of this Agreement is exceeded or extended
               through no fault of the Project Manager, compensation for any
               services rendered during the additional period of time shall be
               computed in the manner set forth in Subparagraph 12.3.1.

11.3.4              When compensation is based on a percentage of Project Cost
               and any portions of the Project are deleted or otherwise not
               constructed, compensation for those portions of the Project shall
               be payable to the extent of services are performed on those
               portions, in accordance with Subparagraph 12.2.1 based on (1) the
               lowest bona fide bids or negotiated proposals, or (2) if no such
               bids or proposals are received, the latest approved estimate of
               such portions of the Project.

11.4                PAYMENTS ON ACCOUNT OF ADDITIONAL SERVICES
          AND REIMBURSEABLE EXPENSES

11.4.1              Payments on account of the Project Manager's Additional
               Services and for Reimbursable Expenses shall be made monthly upon
               presentation of the Project Manager's statement of services
               rendered or expenses incurred.

11.5                PAYMENTS WITHHELD

11.5.1              No deduction shall be made from the Project Manager's
               compensation on account of penalty, liquidated damages or other
               sums withheld from payments to Contractors, or on account of the
               cost of changes in Work other than those for which the Project
               Manager has been found to be liable.

11.6                PROJECT MANAGER'S ACCOUNTING RECORDS

11.6.1              Records of reimbursable Expenses and expenses pertaining to
               Additional Services and Services performed on the basis of a
               multiple of Direct Personnel Expense shall be available to
               DEMARCO or DEMARCO's authorized representatives at mutually
               convenient times.

<PAGE>   17

ARTICLE 12
BASIS OF COMPENSATION

DEMARCO shall compensate the Project Manager as follows:

12.1                BASIC COMPENSATION

12.2.1              For Basic Services, as described in Article 2, and any other
               services included in Article 13 as part of Basic Services. Basic
               Compensation shall be computed as follows: 1. The Project Manager
               shall be paid a fee equal to _________________ for timely
               completion of their responsibilities and scope of work as
               outlined by DEMARCO and PG&E ES.

12.3                COMPENSATION FOR ADDITIONAL SERVICES

12.3.1              FOR ADDITIONAL SERVICES OF THE Project MANAGER, as described
               in Article 3, and any other services included in Article 13 as
               Additional Services, compensation shall be computed according to
               ATTACHMENT "D" of this Agreement.

12.4                REIMBURSABLE EXPENSES

                    See Attachment "C".

12.4.1              FOR REIMBURSABLE EXPENSES, as described in Paragraph 10.2
               and any other items included in Article 13 as Reimbursable
               Expenses, a multiple of One(1) times the expenses incurred by the
               Project Manager and the Project Manager's employees and
               consultants in the interest of the Project.

12.5                ADDITIONAL PROVISIONS

12.5.1              IF THE BASIC SERVICES covered by this Agreement have not
               been completed within Twelve (12) months or the date hereof,
               through no fault of the Project Manager, extension of the Project
               Manager's services beyond that time shall be compensated as
               provided in Subparagraphs 10.3.3 and 10.3.1.

12.5.2              Payments are due and payable Thirty (30) days from the date
               of the Project Manager's invoice. Amounts unpaid Thirty (30) days
               after the invoice date shall bear interest at the rate entered
               below, or in the absence thereof at the legal rate prevailing
               from time to time at the principal place of business of the
               Project Manger.

                    Interest rate is Prime plus Two(2) points.

                    (Usury laws and requirements under the Federal Truth in
               Lending Act, similar state and local consumer credit laws and
               other regulations at DEMARCO's and Project Manager's principal
               places of business, the location of the Project and elsewhere may
               affect the validity of this provision. Specific legal advice
               should be obtained with respect to deletions or modifications,
               and also regarding requirements such as written disclosures or
               waivers)

12.5.3              The rates and multiples set forth for Additional Services
               shall be annually adjusted in accordance with normal salary
               review practices of the Project Manager.

<PAGE>   18

ARTICLE 13
OTHER CONDITIONS OR SERVICES

                    SEE Attachment "C"

13.1                LIMITS ON INSURANCE

               The Insurance required by Article 9 shall be written for not less
               than the following limits required by law:

               Project Manager shall furnish and maintain a liability policy
               having DEMARCO a Co-Insured with minimum coverage of One Million
               Dollars ($1,000,000.00).

         This Agreement is dated the of , 1999. The laws of the State of Texas
shall govern this Strategic Partnership Agreement and venue is the County of
Travis. The parties executing this Agreement warrant and guarantee that they
have full individual and/or corporate authority to enter into such an Agreement.
All parties have read, understood, and agreed to the terms and conditions of
this Strategic Partnership Agreement.

BY: LMCLite Applied Sciences, Inc.  BY:  DeMarco Energy Systems of America, Inc.

----------------------------        ----------------------------
Jim Arvidson, President             Victor M. DeMarco, President

----------------------------        ----------------------------
Date                                Date

<PAGE>   19

ATTACHMENT "A"
PROJECT DESCRIPTION

The timely assessment and completion of the Projects of DEMARCO as submitted
specifically as energy efficient lighting retrofit service work orders issued by
Pacific Gas and Electric Energy Services (hereinafter, "PG&E ES") and as they
relate to the management of the sub-contractors and relationships with those
individuals, agents, contractors, and/or companies involved with lighting
retrofit services for and on behalf of DEMARCO projects. Where this project is
not limited to a geographic region, but wherever it is feasible to perform
lighting retrofit and energy management services as determined by DEMARCO and
LMC. Each Work Order submitted by PG&E ES to DEMARCO shall be considered an
attachment to this agreement as periodically outlined in Attachment "B", and
shall become subject to the terms of this agreement. The scope of work for each
location shall be determined by a separate agreement entitled as TURNKEY ENERGY
EFFICIENT LIGHTING RETROFIT AGREEMENT agreed to by and between the customer and
DEMARCO or as otherwise determined by a PG&E ES energy services agreement, and
shall be included as a subsection to Attachment "B" of this agreement.
Additional terms of this project and relationship are submitted as
ATTACHMENT "C."

<PAGE>   20

ATTACHMENT "B"
PROJECT LISTING

FACILITY #                          PROJECT LOCATION          BUDGET
----------                          ----------------          ------

TOTAL PROJECTS BUDGET:                                        $
                                                              ------

<PAGE>   21

ATTACHMENT "C"
REIMBURSABLE EXPENSES
(Not Included in Fee Compensation)

Cost of all travel and transportation related expenses - (Both home office and
project locations)

Project related long distance communications cost.

All fees and permits, should they be required.

Cost of reproductions and express mail delivery.

Cost of Project site office requirements.

<PAGE>   22

ATTACHMENT "D"
ADDITIONAL PROJECTS

At DEMARCO's discretion should additional Projects not included in Attachment
"A" be assigned to the Project Manager and those additional Projects run
concurrent to those in Attachment "B" a fee to be agreed upon at such date for
the costs associated with recruiting, selection processing, and training will be
added as a portion of overhead to LMC, and added after the standard bid has
been. All other terms and conditions of this Contract shall be applicable

<PAGE>   23

ATTACHMENT "E"
BASIS OF COMPENSATION

The basis for compensation is as follows:

A)       Conducting energy audits, energy feasibility studies, scope of work
         assessment, project bidding, lighting system removal or demolition,
         lighting system installation or retrofit, and energy management
         services for commercial, industrial, and institutional applications.

B)       Identifying, contracting and managing the services of field
         contractors/personnel to perform lighting retrofit services.

C)       Researching the procedures, LMCnology/products, and uniqueness in
         assemblage currently specified by Pacific Gas & Electric Energy
         Services (hereinafter, "PG&E-ES") as an acceptable energy efficient
         lighting retrofit, and then replicating such procedures,
         LMCnology/products, and uniqueness in assemblage as a DEMARCO
         commercial facility retrofit standard.

D)       Engineering and implementing a system to manage the logistics of
         personnel and inventory requirements to conduct lighting retrofit
         services.

E)       Maintaining a `Best In Class' reputation as maintained by PG&E-ES and
         as determined by overall market standards.

F)       Organizing the timely delivery standards specified by PG&E-ES and as
         outlined within their client sales contracts and work orders.

G)       Maintaining a standard of excellence in customer interaction and
         satisfaction established as tradition by PG&E-ES and jointly determined
         as the benchmark for an acceptable customer retrofit and client
         contract fulfillment.

H)       Represent LMC services as being performed by DEMARCO and conducted with
         the highest standards in customer satisfaction and service.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00020-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00020-of-00352.parquet"}]]