Document:

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Exhibit 10.4

                         REVOLVING CREDIT AGREEMENT

         THIS REVOLVING CREDIT AGREEMENT (this "Agreement") is made and entered
into as of June 13, 2002, by and among THE LACLEDE GROUP, INC., a Missouri
corporation ("Borrower"), and U.S. BANK NATIONAL ASSOCIATION, formerly
known as Firstar Bank, N.A., a national banking association ("Lender").

                                 WITNESSETH:
                                 ----------

         WHEREAS, Borrower has applied for a revolving credit facility from
Lender consisting of Loans in an aggregate principal amount of up to
$20,000,000; and

         WHEREAS, Lender is willing to make said revolving credit facility
available to Borrower upon, and subject to, the terms, provisions and
conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby mutually covenant and agree as
follows:

SECTION 1.  DEFINITIONS.
-----------------------

         1.01 Definitions. In addition to the terms defined elsewhere in
              -----------
this Agreement or in any Exhibit or Schedule hereto, when used in this
Agreement, the following terms shall have the following meanings (such
meanings shall be equally applicable to the singular and plural forms of the
terms used, as the context requires):

         Borrower's Obligations shall mean any and all present and future
         ----------------------
indebtedness (principal, interest, fees, collection costs and expenses,
attorneys' fees and other amounts), liabilities and obligations (including,
without limitation, indemnity obligations) of Borrower to Lender evidenced
by or arising under or in respect of this Agreement, the Note and/or any of
the other Transaction Documents.

         Business Day shall mean any day except a Saturday, Sunday or legal
         ------------
holiday observed by Lender.

         Default shall mean any event or condition the occurrence of that
         -------
would, with the lapse of time or the giving of notice or both, become an
Event of Default.

         Eurodollar Business Day shall mean any Business Day on which
         -----------------------
commercial banks are open for international business (including dealings in
dollar deposits) in London.

         Event of Default shall have the meaning ascribed thereto in
         ----------------
Section 6.

         GAAP shall mean, at any time, generally accepted accounting
         ----
principles at such time in the United States.

         Guaranty shall mean the Guaranty dated as of June 13, 2002 executed
         --------
by SM&P in favor of Lender.

         Interest Period shall mean with respect to each LIBOR Loan:
         ---------------

                  (a) initially, the period commencing on the date selected
         by Borrower in the applicable Interest Rate Selection Notice and
         ending 1, 2, 3 or 6 months thereafter as Borrower may elect in the
         applicable Interest Rate Selection Notice; and

                  (b) thereafter, each period commencing on the last day of
         the immediately preceding Interest Period applicable to such LIBOR
         Loan and ending 1, 2, 3 or 6 months, as Borrower may elect in the
         applicable Interest Rate Selection Notice;

         provided that:

                  (c) no Interest Period for a LIBOR Loan shall extend
         beyond a date on which Borrower is required to make a scheduled
         payment of principal on the Loan unless the sum of (A) the
         aggregate principal amount of

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         outstanding Prime Loans plus (B) the aggregate principal amount of
         outstanding LIBOR Loans with Interest Periods expiring on or
         before the date such scheduled principal payment is due equals or
         exceeds the aggregate principal amount to be paid on the Loan on
         such principal payment date;

                  (d) subject to clauses (e) and (f) below, any Interest
         Period that would otherwise end on a day that is not a Eurodollar
         Business Day shall be extended to the next succeeding Eurodollar
         Business Day unless such Eurodollar Business Day falls in another
         calendar month, in which case such Interest Period shall end on
         the immediately preceding Eurodollar Business Day;

                  (e) subject to clause (f) below, any Interest Period that
         begins on the last Eurodollar Business Day of a calendar month (or
         on a day for which there is no numerically corresponding day in
         the calendar month at the end of such Interest Period) shall end
         on the last Eurodollar Business Day of a calendar month; and

                  (f) no Interest Period may extend beyond the maturity date
         of the Loan.

         Interest Rate Selection Notice shall have the meaning ascribed
         ------------------------------
thereto in Section 2.02(a).

         Lender's Revolving Credit Commitment shall mean the sum of
         ------------------------------------
$20,000,000.

         LIBOR Base Rate shall mean, with respect to the applicable Interest
         ---------------
Period, (a) the LIBOR Index Rate for such Interest Period, if such rate is
available or (b) if the LIBOR Index Rate is not available, the average
(rounded upward, if necessary, to the next higher 1/10,000 of 1%) of the
respective rates per annum of interest at which deposits in U.S. Dollars are
offered to Lender in the London interbank market by two (2) Eurodollar
dealers of recognized standing, selected by Lender in its sole discretion,
at or about 11:00 a.m. (London time) on the date two (2) Eurodollar Business
Days before the first day of such Interest Period, for delivery on the first
day of the applicable Interest Period for a number of days comparable to the
number of days in such Interest Period and in an amount approximately equal
to the principal amount of the LIBOR Loan to which such Interest Period is
to apply.

         LIBOR Index Rate shall mean, with respect to the applicable
         ----------------
Interest Period, a rate per annum (rounded upwards, if necessary, to the
next higher 1/10,000 of 1%) equal to the British Bankers' Association
interest settlement rates for U.S. Dollar deposits for such Interest Period
as of 11:00 a.m. (London time) on the day two (2) Eurodollar Business Days
before the first day of such Interest Period as published by Bloomberg
Financial Services, Dow Jones Market Service, Telerate, Reuters or any other
service from time to time used by Lender.

         LIBOR Loan shall mean any portion of the Loan bearing interest
         ----------
based on the LIBOR Rate.

         LIBOR Margin shall mean 725/1000 Percent (.725%) per annum.
         ------------

         LIBOR Rate shall mean (a) the quotient of the (i) LIBOR Base Rate
         ----------
divided by (ii) one minus the applicable LIBOR Reserve Percentage plus
                                                                  ----
(b) the LIBOR Margin. The LIBOR Rate shall be adjusted automatically on and as
of the effective date of any change in the LIBOR Reserve Percentage and/or
the LIBOR Margin.

         LIBOR Reserve Percentage shall mean for any day that percentage
         ------------------------
(expressed as a decimal) which is in effect on such day, as prescribed by
The Board of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirement (including, without limitation,
any basic, supplemental, emergency, special or marginal reserves) with
respect to "Eurocurrency liabilities" as defined in Regulation D or with
respect to any other category of liabilities which includes deposits by
reference to which the interest rate on LIBOR Loans is determined, whether
or not Lender has any Eurocurrency liabilities subject to such reserve
requirement at such time. LIBOR Loans shall be deemed to constitute
Eurocurrency liabilities and as such shall be deemed subject to reserve
requirements without the benefit of any credits for proration, exceptions or
offsets which may be available from time to time to Lender. The LIBOR Rate
shall be adjusted automatically on and as of the effective date of any
change in the LIBOR Reserve Percentage.

         Loan and Loans shall have the meaning ascribed thereto in
         ----     -----
Section 2.01(a).

         Material Adverse Effect shall mean (a) a material adverse effect on
         -----------------------
the properties, assets, liabilities, business, operations, prospects, income
or condition (financial or otherwise) of Borrower and its Subsidiaries taken
as a whole, (b) material impairment of Borrower's ability to perform any of
its obligations under this Agreement, the Note or any of the

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other Transaction Documents or (c) material impairment of the enforceability
of the rights of, or benefits available to, Lender under this Agreement, the
Note or any of the other Transaction Documents.

         Moody's shall mean Moody's Investors Service, Inc.
         -------

         Note shall have the meaning ascribed thereto in Section 2.03(a).
         ----

         Notice of Borrowing shall have the meaning ascribed thereto in
         -------------------
Section 2.02(a).

         Person shall mean any individual, sole proprietorship, partnership,
         ------
joint venture, limited liability company, trust, unincorporated
organization, association, corporation, institution, entity or government
(whether national, Federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body
or department thereof).

         Prime Loan shall mean any portion of the Loan bearing interest
         ----------
based on the Prime Rate.

         Prime Rate shall mean the interest rate announced from time to time
         ----------
by Lender as its "prime rate" (which rate shall fluctuate as and when said
prime rate shall change). Borrower acknowledges that such "prime rate" is a
reference rate and does not necessarily represent the lowest or best rate
offered by Lender to its customers.

         Regulation D shall mean Regulation D of the Board of Governors of
         ------------
the Federal Reserve System, as amended.

         Regulatory Change shall have the meaning ascribed thereto in
         -----------------
Section 2.10.

         Revolving Credit Period shall mean the period commencing on the
         -----------------------
date of this Agreement and ending June 12, 2003; provided, however, that the
Revolving Credit Period shall end on the date the Lender's Revolving Credit
Commitment is terminated pursuant to Section 6 or otherwise.

         S&P shall mean Standard & Poor's Ratings Group.
         ---

         SM&P shall mean SM&P Utility Resources, Inc., an Indiana corporation.
         ----

         Subsidiary shall mean any corporation or other entity of which more
         ----------
than Fifty Percent (50%) of the issued and outstanding capital stock or
other equity interests entitled to vote for the election of directors or
persons performing similar functions (other than by reason of default in the
payment of dividends or other distributions) is at the time owned directly
or indirectly by Borrower or any Subsidiary.

         Total Revolving Credit Outstandings shall mean, as of any date, the
         -----------------------------------
aggregate principal amount of all Loans outstanding as of such date.

         Transaction Documents shall mean this Agreement, the Note and any
         ---------------------
and all other agreements, documents and instruments heretofore, now or
hereafter delivered to the Agent or any Bank with respect to or in
connection with or pursuant to this Agreement, any Loans made hereunder or
any of the other Borrower's Obligations, and executed by or on behalf of
Borrower, all as the same may from time to time be amended, modified,
extended, renewed or restated.

SECTION 2. LOANS.
----------------

         2.01     Loans.
                  -----

         (a) Subject to the terms and conditions set forth in this Agreement
and so long as no Default or Event of Default has occurred and is
continuing, during the Revolving Credit Period, Lender agrees to make such
loans to Borrower (individually, a "Loan" and collectively, the "Loans") as
Borrower may from time to time request pursuant to Section 2.02. Each Loan
under this Section 2.01(a) which is a LIBOR Loan shall be for an aggregate
principal amount of at least $500,000 or any larger multiple of $100,000.
The aggregate principal amount of Loans that Lender shall be required to
have outstanding under this Agreement as of any date shall not exceed the
amount of Lender's Revolving Credit Commitment as of such date. Within the
foregoing limits, Borrower may borrow under this Section 2.01(a), prepay
under Section 2.08 and reborrow at any time during the Revolving Credit
Period under this Section 2.01(a). All Loans not paid prior to the last day
of the Revolving

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Credit Period, together with all accrued and unpaid interest thereon and all
fees and other amounts owing by Borrower to Lender with respect thereto,
shall be due and payable on the last day of the Revolving Credit Period.

         (b) If the amount of Lender's Revolving Credit Commitment on any
date is less than the Total Revolving Credit Outstandings on such date,
whether as a result of Borrower's election to decrease the amount of
Lender's Revolving Credit Commitment pursuant to Section 2.01(c) or
otherwise, Borrower shall be automatically required (without demand or
notice of any kind by Lender, all of which are hereby expressly waived by
Borrower) to immediately repay the Loans in an amount sufficient to reduce
the amount of the Total Revolving Credit Outstandings to an amount equal to
or less than the amount of Lender's Revolving Credit Commitment.

         (c) Borrower may, upon five (5) Business Days' prior written notice
to Lender, terminate entirely at any time, or reduce from time to time by an
aggregate amount of $1,000,000 or any larger multiple of $1,000,000 the
unused portions of Lender's Revolving Credit Commitment; provided, however,
that (i) at no time shall the amount of Lender's Revolving Credit Commitment
be reduced to a figure less than the Total Revolving Credit Outstanding,
(ii) at no time shall the amount of Lender's Revolving Credit Commitment be
reduced to a figure greater than zero (0) but less than $5,000,000 and (iii)
any such termination or reduction shall be permanent and Borrower shall have
no right to thereafter reinstate or increase, as the case may be, Lender's
Revolving Credit Commitment.

         2.02     Method of Borrowing.
                  -------------------

         (a) Borrower shall give Lender oral or written notice (a "Notice of
Borrowing") by 10:00 a.m. (St. Louis time) on the Business Day of each Prime
Loan to be made to Borrower, and by 10:00 a.m. (St. Louis time) at least
three (3) Eurodollar Business Days before each LIBOR Loan to be made to
Borrower, specifying: (i) the date of such Loan, which shall be a Business
Day during the Revolving Credit Period in the case of a Prime Loan and a
Eurodollar Business Day during the Revolving Credit Period in the case of a
LIBOR Loan, (ii) the aggregate principal amount of such Loan, (iii) whether
such Loan is to be a Prime Loan or a LIBOR Loan, and (iv) in the case of a
LIBOR Loan, the duration of the initial Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period.

         (b) A Notice of Borrowing shall not be revocable by Borrower.

         (c) Subject to the terms and conditions of this Agreement, provided
that Lender has received the Notice of Borrowing, Lender shall (unless
Lender determines that any applicable condition specified in Section 3 has
not been satisfied) make the applicable Loan to Borrower by crediting the
amount of such Loan to a demand deposit account of Borrower at Lender
specified by Borrower (or such other account mutually agreed upon in writing
between Lender and Borrower) not later than 2:30 p.m. (St. Louis time) on
the Business Day specified in said Notice of Borrowing.

         (d) If Lender makes a new Loan under this Agreement on a day on
which Borrower is required to or has elected to repay all or any part of an
outstanding Loan, Lender shall apply the proceeds of its new Loan to make
such repayment and only an amount equal to the difference (if any) between
the amount being borrowed and the amount being repaid shall be made
available by Lender to Borrower.

         (e) Borrower hereby irrevocably authorizes Lender to rely on
telephonic, telegraphic, telecopy, telex or written instructions of any
individual identifying himself or herself as one of the individuals listed
on Schedule 2.02 attached hereto (or any other individual from time to time
authorized to act on behalf of Borrower pursuant to a document signed by the
Chairman of the Board of Borrower and certified by the Secretary of Borrower
and delivered to Lender) with respect to any request to make a Loan or a
repayment under this Agreement, and on any signature that Lender believes to
be genuine, and Borrower shall be bound thereby in the same manner as if
such individual were actually authorized or such signature were genuine.
Borrower also hereby agrees to defend and indemnify Lender and hold Lender
harmless from and against any and all claims, demands, damages, liabilities,
losses and reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) relating to or arising out of or in
connection with the acceptance of instructions for making Loans or
repayments under this Agreement.

         2.03     Revolving Credit Note.
                  ---------------------

         (a) The Loans of Lender to Borrower shall be evidenced by a
Revolving Credit Note of Borrower payable to the order of Lender in a
principal amount equal to the maximum amount of Lender's Revolving Credit
Commitment, which Revolving Credit Note shall be in substantially the form
of Exhibit A attached hereto and incorporated herein by reference
   ---------

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(with appropriate insertions) (as the same may from time to time be amended,
modified, extended, renewed or restated, the "Revolving Credit Note").

         (b) Lender shall record in its books and records the date, amount,
type and Interest Period (if any) of each Loan made by it to Borrower and
the date and amount of each payment of principal and/or interest made by
Borrower with respect thereto; provided, however, that the obligation of
Borrower to repay each Loan made by Lender to Borrower under this Agreement
shall be absolute and unconditional, notwithstanding any failure of Lender
to make any such recordation or any mistake by Lender in connection with any
such recordation. The books and records of Lender showing the account
between Lender and Borrower shall be conclusive in the absence of manifest
error.

         2.04     Duration of Interest Periods and Selection of Interest Rates.
                  ------------------------------------------------------------

         (a) The duration of the initial Interest Period for each LIBOR Loan
shall be as specified in the applicable Notice of Borrowing. Borrower shall
elect the duration of each subsequent Interest Period applicable to such
LIBOR Loan and the interest rate to be applicable during such subsequent
Interest Period (and Borrower shall have the option (i) in the case of any
Prime Loan, to elect that such Loan become a LIBOR Loan and the Interest
Period to be applicable thereto, and (ii) in the case of any LIBOR Loan, to
elect that such Loan become a Prime Loan), by giving notice of such election
to Lender by 10:00 a.m. (St. Louis time) on the Business Day of, in the case
of the election of the Prime Rate, and by 10:00 a.m. (St. Louis time) at
least three (3) Eurodollar Business Days before, in the case of the election
of the LIBOR Rate, the end of the immediately preceding Interest Period
applicable thereto, if any; provided, however, that notwithstanding the
foregoing, in addition to and without limiting the rights and remedies of
Lender under Section 6 of this Agreement, so long as any Default or Event of
Default under this Agreement has occurred and is continuing, Borrower shall
not be permitted to renew any LIBOR Loan as a LIBOR Loan or to convert any
Prime Loan into a LIBOR Loan. If Lender does not receive a notice of
election for a Loan pursuant to this Section 2.04(a) within the applicable
time limits specified herein, Borrower shall be deemed to have elected to
pay such Loan in whole pursuant to Section 2.08 on the last day of the
current Interest Period with respect thereto and to reborrow the principal
amount of such Loan on such date as a Prime Loan.

         (b) Borrower may not have outstanding and Lender shall not be
obligated to make more than eight (8) LIBOR Loans at any one time.

         2.05     Interest Rates and Interest Payments. (a) So long as no
                  ------------------------------------
Event of Default has occurred and is continuing, each Prime Loan shall bear
interest on the outstanding principal amount thereof for each day until paid
at a rate per annum equal to the Prime Rate. So long as any Event of Default
has occurred and is continuing, each Prime Loan shall bear interest on the
outstanding principal amount thereof for each until it is paid, at a rate
per annum equal to Five Percent (5%) over and above the Prime Rate. Such
interest shall be payable monthly in arrears on the last day of each
calendar month commencing June 30, 2002 and at the maturity of the Note
(whether by reason of acceleration or otherwise). From and after the
maturity of the Note, whether by reason of acceleration or otherwise, each
Prime Loan shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to Five Percent (5%) over and above the Prime
Rate.

         (b) So long as no Event of Default has occurred and is continuing,
each LIBOR Loan shall bear interest on the outstanding principal amount
thereof for each Interest Period applicable thereto at a rate per annum
equal to the LIBOR Rate. So long as any Event of Default has occurred and is
continuing, each LIBOR Loan shall bear interest on the outstanding principal
amount thereof for each Interest Period applicable thereto at a rate per
annum equal to Five Percent (5%) over and above the LIBOR Rate. Such
interest shall be payable for each Interest Period on the last day thereof,
unless the duration of such Interest Period exceeds three (3) months, in
which case such interest shall be payable on the last day of each three (3)
month period during such Interest Period and on the last day of such
Interest Period, and at the maturity of the Note (whether by reason of
acceleration or otherwise). From and after the maturity of the Note, whether
by reason of acceleration or otherwise, each LIBOR Loan shall bear interest,
payable on demand, for each day until paid, at a rate per annum equal to
Five Percent (5%) over and above the higher of (i) the LIBOR Rate applicable
to such LIBOR Loan for the immediately preceding Interest Period or (ii) the
Prime Rate.

         (c) Lender shall determine each interest rate applicable to the
Prime Loans and LIBOR Loans hereunder and its determination thereof shall be
conclusive in the absence of manifest error.

         2.06     Computation of Interest. Interest on Prime Loans hereunder
                  -----------------------
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day).
Interest on

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LIBOR Loans shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed, calculated as to each Interest Period
from and including the first day thereof to but excluding the last day
thereof.

         2.07     Fees. From and including the date of this Agreement to but
                  ----
excluding the last day of the Revolving Credit Period, Borrower shall pay a
nonrefundable commitment fee on the unused portion of Lender's Revolving
Credit Commitment (determined by subtracting the Total Revolving Credit
Outstandings from the amount of Lender's Revolving Credit Commitment) at a
percentage rate of 17.5/100 Percent (.175%). Said commitment fee shall be
(i) calculated on a daily basis, (ii) payable quarterly in arrears on each
June 30, September 30, December 31, and March 31 during the Revolving Credit
Period commencing June 30, 2002, and on the last day of the Revolving Credit
Period and (iii) calculated on an actual day, 360-day year basis.

         2.08     Prepayments. (a) Borrower may, upon notice to Lender
                  -----------
specifying that it is paying any Prime Rate Loan, pay without penalty or
premium the Prime Loan in whole at any time or in part from time to time, by
paying the principal amount to be paid, provided that partial prepayments
shall be in an aggregate amount of at least $2,000,000.00 or any larger
multiple of $1,000,000.00. Borrower may, upon at least three (3) Eurodollar
Business Day`s irrevocable prior written notice to Lender, prepay all at any
time or any portion from time to time of the unpaid principal balance of any
LIBOR Loan prior to maturity provided that (i) contemporaneously with each
such prepayment Borrower shall pay all accrued and unpaid interest on the
portion of the LIBOR Loan being prepaid to and including the date of
prepayment; (ii) partial prepayments shall be in an aggregate amount of at
least $2,000,000.00 or any larger multiple of $1,000,000.00; (iii) in no
event may Borrower make any prepayment on any LIBOR Loan that results in the
remaining LIBOR Loans with respect to which a given Interest Period applies
being greater than $0.00 but less than $1,000,000.00 and (iv) if Borrower is
making a prepayment of a LIBOR Loan, contemporaneously with such prepayment,
Borrower shall pay Lender the funding losses and other amounts, if any,
required under Section 2.10.

         (b) In addition to any voluntary prepayments made by Borrower under
Section 2.08(a) above, until the Loan has been paid in full, Borrower
covenants and agrees to pay to Lender within ten (10) days after receipt
thereof, One Hundred Percent (100%) of the net cash proceeds up to the
amount received by Borrower from Borrower's issuance of any capital stock,
membership interest or other equity interest, from any other debt issuance
or equity issuance (or any hybrid thereof, including the issuance of
trust-preferred securities), or any subordinated debt received subsequent to
the date of this Agreement.

         2.09     General Provisions as to Payments. Borrower shall make each
                  ---------------------------------
payment of principal of, and interest on, the Loan and of fees and all other
amounts payable by Borrower under this Agreement, not later than 12:00 noon
(St. Louis time) on the date when due and payable in Federal or other funds
immediately available in St. Louis, Missouri, to Lender at its address
referred to in Section 7.05. All payments received by Lender after 12:00
noon (St. Louis time) shall be deemed to have been received by Lender on the
next succeeding Business Day. Whenever any payment of principal of, or
interest on, the Loan or of fees shall be due on a day which is not a
Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon, at the then
applicable rate, shall be payable for such extended time.

         2.10     Funding Losses. Notwithstanding any provision contained in
                  --------------
this Agreement to the contrary, (a) Borrower shall make any payment of
principal with respect to any LIBOR Loan on any day other than the last day
of the Interest Period applicable thereto, whether as a result of a
scheduled payment, a voluntary prepayment, a mandatory prepayment, maturity,
acceleration or otherwise or (b) any LIBOR Loan is converted to a Prime Loan
pursuant to Section 2.04, Section 2.11 or Section 2.12 on any day other than
the last day of the Interest Period applicable thereto, contemporaneously
with each such payment or conversion Borrower shall reimburse Lender on
demand for any resulting losses and expenses incurred by Lender, including,
without limitation, any losses incurred in obtaining, liquidating, or
employing deposits from third parties provided that Lender shall have
delivered to Borrower a certificate as to the amount of such losses and
expenses, which certificate shall be conclusive in the absence of manifest
error.

         2.11     Basis for Determining Interest Rate Inadequate or Unfair.
                  --------------------------------------------------------
If with respect to any Interest Period:

                  (a) deposits in U.S. Dollars (in the applicable amounts)
          are not being offered to Lender in the relevant market for such
          Interest Period, or

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                  (b) Lender determines in good faith that the LIBOR Rate as
          determined pursuant to the definition thereof will not adequately
          and fairly reflect the cost to Lender of maintaining or funding
          the LIBOR Loans for such Interest Period,

Lender shall forthwith give notice thereof to Borrower whereupon until
Lender notifies Borrower that the circumstances giving rise to such
suspension no longer exist, (i) the LIBOR Rate shall not be available to
Borrower as an interest rate option on any portion of the Loan and (ii) all
of the then outstanding LIBOR Loans shall automatically convert to Prime
Loans on the last day of the then current Interest Period applicable to each
such LIBOR Loan. Interest accrued on each such LIBOR Loan prior to any such
conversion shall be due and payable on the date of such conversion together
with any funding losses and other amounts due under Section 2.10.

         2.12     Illegality. If, after the date of this Agreement, the
                  ----------
adoption of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
governmental or regulatory authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
Lender with any request or directive (whether or not having the force of
law) of any such governmental or regulatory authority, central bank or
comparable agency (a "Regulatory Change") shall make it unlawful or
impossible for Lender to make, maintain or fund its LIBOR Loans to Borrower,
Lender shall forthwith give notice thereof to Borrower. Upon receipt of such
notice, Borrower shall convert all of its then outstanding LIBOR Loans on
either (a) the last day of the then current Interest Period applicable to
such LIBOR Loan if Lender may lawfully continue to maintain and fund such
LIBOR Loan to such day or (b) immediately if Lender may not lawfully
continue to fund and maintain such LIBOR Loan to such day, to a Prime Loan
in an equal principal amount. Interest accrued on each such LIBOR Loan prior
to any such conversion shall be due and payable on the date of such
conversion together with any funding losses and other amounts due under
Section 2.10.

         2.13     Increased Cost. (a) If (i) Regulation D or (ii) a Regulatory
                  --------------
Change: (A) shall subject Lender to any tax, duty or other charge with
respect to the LIBOR Loans, the Note or its obligation to make LIBOR Loans,
or shall change the basis of taxation of payments to Lender of the principal
of or interest on its LIBOR Loans or any other amounts due under this
Agreement in respect of its LIBOR Loans or its obligation to make LIBOR
Loans (except for taxes on or changes in the rate of tax on the overall net
income of Lender); or (B) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System), special deposit, capital or
similar requirement against assets of, deposits with or for the account of,
or credit extended or committed to be extended by, Lender or shall, with
respect to Lender impose, modify or deem applicable any other condition
affecting Lender's LIBOR Loans, the Note or Lender's obligation to make
LIBOR Loans; and the result of any of the foregoing is to increase the cost
to (or in the case of Regulation D, to impose a cost on or increase the cost
to) Lender of making or maintaining any LIBOR Loan, or to reduce the amount
of any sum received or receivable by Lender under this Agreement or under
its Note with respect thereto, by an amount deemed by Lender to be material,
and if Lender is not otherwise fully compensated for such increase in cost
or reduction in amount received or receivable by virtue of the inclusion of
the reference to "LIBOR Reserve Percentage" in the calculation of the LIBOR
Rate, then upon notice by Lender to Borrower, which notice shall set forth
Lender's supporting calculations and the details of the Regulatory Change,
Borrower shall pay Lender, as additional interest, such additional amount or
amounts as will compensate Lender for such increased cost or reduction. The
determination by Lender under this Section of the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount or amounts, Lender may use any
reasonable averaging and attribution methods.

         (b) If Lender demands compensation under Section 2.13(a) above,
Borrower may at any time, upon at least three (3) Eurodollar Business Day's
prior notice to Lender, convert its then outstanding LIBOR Loans to Prime
Loans in an equal principal amount. Interest accrued on each such LIBOR Loan
prior to any such conversion shall be due and payable on the date of such
conversion together with any funding losses and other amounts due under
Section 2.10 and this Section 2.13.

         2.14     Prime Loans Substituted for Affected LIBOR Loans. If notice
                  ------------------------------------------------
has been given by Lender pursuant to Sections 2.11 or 2.12 or by Borrower
pursuant to Section 2.04 requiring LIBOR Loans to be repaid or converted to
Prime Loans, then, unless and until Lender notifies Borrower that the
circumstances giving rise to such repayment or conversion no longer apply,
any portion of the Loans that would otherwise be made by Lender to Borrower
as LIBOR Loans shall be made instead as Prime Loans. Lender shall promptly
notify Borrower if and when the circumstances giving rise to such repayment
no longer apply.

         2.15     Capital Adequacy. If, after the date of this Agreement,
                  ----------------
Lender shall have determined in good faith that a Regulatory Change has
occurred which has or will have the effect of reducing the rate of return on
Lender's capital in respect

                                     55

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<PAGE>

of its obligations hereunder to a level below that which Lender could have
achieved but for such adoption, change or compliance (taking into
consideration Lender's policies with respect to capital adequacy), then from
time to time Borrower shall pay to Lender upon demand such additional amount
or amounts as will compensate Lender for such reduction. All determinations
made in good faith by Lender of the additional amount or amounts required to
compensate it in respect of the foregoing shall be conclusive in the absence
of manifest error. In determining such amount or amounts, Lender may use any
reasonable averaging and attribution methods.

         2.16     Survival of Indemnities. All indemnities and all provisions
                  -----------------------
relating to reimbursement to Lender of amounts sufficient to protect the
yield to Lender with respect to the Loan, including, without limitation,
Sections 2.10, 2.13 and 2.15 hereof, shall survive the payment of the Note
and the other Borrower's Obligations and the expiration or termination of
this Agreement. Notwithstanding the foregoing, if Lender fails to notify
Borrower of any event that will entitle Lender to compensation pursuant to
Sections 2.10, 2.13 and/or 2.15 hereof within one hundred eighty (180) days
after Lender obtains knowledge of such event, then Lender shall not be
entitled to any compensation from Borrower for any loss, expense, increased
cost and/or reduction of return arising from such event.

         2.17     Discretion of Lender as to Manner of Funding. Notwithstanding
                  --------------------------------------------
any provision contained in this Agreement to the contrary, Lender shall be
entitled to fund and maintain its funding of all or any part of its LIBOR
Loans in any manner it elects, it being understood, however, that for
purposes of this Agreement all determinations hereunder (including, without
limitation, the determination of Lender's funding losses and expenses under
Section 2.10) shall be made as if Lender had actually funded and maintained
each LIBOR Loan through the purchase of deposits having a maturity
corresponding to the maturity of the applicable Interest Period relating to
the applicable LIBOR Loan and bearing an interest rate equal to the
applicable LIBOR Base Rate.

SECTION 3.  PRECONDITIONS TO LOANS.
----------------------------------

         3.01     Initial Loan. Notwithstanding any provision contained in this
                  ------------
Agreement to the contrary, Lender shall have no obligation to make the
initial Loan under this Agreement unless Lender shall have first received:

                  (a) this Agreement and the Note, each duly executed
         by Borrower;

                  (b) the Guaranty, duly executed by SM&P;

                  (c) a copy of resolutions of the Board of Directors of
         Borrower, duly adopted, which authorize the execution, delivery
         and performance of this Agreement, the Note and the other
         Transaction Documents, certified by the Secretary of Borrower;

                  (d) a copy of resolutions of the Board of Directors
         of SM&P, duly adopted, which authorize the execution, delivery and
         performance of the Guaranty, certified by the Secretary of SM&P;

                  (e) a copy of the Articles of Incorporation of Borrower,
         including any amendments thereto, certified by the Secretary of
         Borrower;

                  (f) a copy of the Articles of Incorporation of SM&P,
         including any amendments thereto, certified by the Secretary of SM&P;

                  (g) a copy of the By-Laws of Borrower, including any
         amendments thereto, certified by the Secretary of Borrower;

                  (h) a copy of the By-Laws of SM&P, including any
         amendments thereto, certified by the Secretary of SM&P;

                  (i) an incumbency certificate, executed by the Secretary
         of Borrower, which shall identify by name and title and bear the
         signatures of all of the officers of Borrower executing any of the
         Transaction Documents;

                  (j) an incumbency certificate, executed by the Secretary
         of SM&P, which shall identify by name and title and bear the
         signatures of all of the officers of SM&P executing the Guaranty;

                                     56

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<PAGE>

                  (k) a certificate of corporate good standing of Borrower
         issued by the Secretary of State of the State of Missouri;

                  (l) a certificate of corporate good standing of SM&P
         issued by the Secretary of State of the State of Indiana;

                  (m) an opinion of the General Counsel of Borrower and
         of SM&P, in form and substance  satisfactory to Lender and Lender's
         counsel;

                  (n) UCC search results from the Missouri Secretary of
         State for Borrower and from the Indiana Secretary of State for SM&P;

                  (o) copies of all financial statements and other
         exhibits and schedules required by this Agreement and the other
         Transaction Documents;

                  (p) a letter of direction from Borrower with respect
         to the disbursement of the proceeds of the initial Loan under this
         Agreement; and

                  (q) such other agreements, documents, instruments
         certificates as Lender may reasonably request.

         3.02     All Loans. Notwithstanding any provision contained in this
                  ---------
Agreement to the contrary, Lender shall have no obligation to make any Loan
under this Agreement unless:

                  (a) Lender shall have received a Notice of Borrowing
         for such Loan as required by Section 2.02(a);

                  (b) both immediately before and immediately after
         giving effect to such Loan, no Default or Event of Default shall
         have occurred and be continuing;

                  (c) no change to cause a Material Adverse Effect
         shall have occurred since the date of this Agreement and be
         continuing; and

                  (d) all of the representations and warranties made by
         Borrower in this Agreement and/or in any other Transaction Document
         shall be true and correct in all material respects on and as of the
         date of such Loan as if made on and as of the date of such Loan
         (and for purposes of this Section 3.02(d), the representations and
         warranties made by Borrower in Section 4.04 shall be deemed to
         refer to the most recent financial statements of Borrower delivered
         to Lender pursuant to Section 5.01(a)).

Each request for a Loan by Borrower under this Agreement shall be deemed to
be a representation and warranty by Borrower on the date of such Loan as to
the facts specified in clauses (b), (c) and (d) of this Section 3.02.

SECTION 4.  REPRESENTATIONS AND WARRANTIES.
------------------------------------------

         Borrower hereby represents and warrants to Lender that:

         4.01     Corporate Existence and Power. Borrower: (a) is duly
                  -----------------------------
incorporated, validly existing and in good standing under the laws of the
State of Missouri; (b) has all requisite corporate powers required to carry
on its business as now conducted; (c) has all requisite governmental and
regulatory licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except such licenses,
authorizations, consents and approvals the failure to have could not
reasonably be expected to have a Material Adverse Effect; and (d) is
qualified to transact business as a foreign corporation in, and is in good
standing under the laws of, all states in which it is required by applicable
law to maintain such qualification and good standing except for those states
in which the failure to qualify or maintain good standing could not
reasonably be expected to have a Material Adverse Effect.

                                     57

<PAGE>
<PAGE>

         4.02    Corporate Authorization. The execution, delivery and
                 -----------------------
performance by Borrower of this Agreement, the Note and the other
Transaction Documents are within the corporate powers of Borrower and have
been duly authorized by all necessary corporate and other action on the part
of Borrower.

         4.03    Binding Effect. This Agreement, the Note and the other
                 --------------
Transaction Documents have been duly executed and delivered by Borrower and
constitute the legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

         4.04    Financial Statements. Borrower has furnished Lender with the
                 --------------------
following financial statements: consolidated balance sheets and statements
of income, retained earnings and cash flows of Borrower and its Subsidiaries
as of and for the fiscal year of Borrower ended September 30, 2001, all
certified by Borrower's independent certified public accountants, which
financial statements have been prepared in accordance with GAAP consistently
applied. Borrower further represents and warrants to Lender that (a) said
balance sheets and their accompanying notes (if any) fairly present the
condition of Borrower and its Subsidiaries as of the dates thereof, (b)
there has been no material adverse change in the condition or operation,
financial or otherwise, of Borrower and its Subsidiaries taken as a whole
since September 30, 2001 except as disclosed in Borrower's filings with the
Securities and Exchange Commission since such date, and (c) neither Borrower
nor any of its Subsidiaries had any direct or contingent liabilities which
were not disclosed on said financial statements or the notes thereto (to the
extent such disclosure is required by GAAP).

         4.05    Compliance With Other Instruments; None Burdensome. None of
                 --------------------------------------------------
the execution and delivery by Borrower of the Transaction Documents, the
performance by Borrower of its obligations under the Transaction Documents
or the borrowing and/or repayment of the Loan by Borrower under this
Agreement will conflict with, or result in a breach of the terms, conditions
or provisions of, or constitute a default under or result in any violation
of, any law, rule, regulation, order, writ, judgment, injunction, decree or
award binding on Borrower, any of the provisions of the Articles of
Incorporation or By-Laws of Borrower or any of the provisions of any
indenture, agreement, document, instrument or undertaking to which Borrower
is a party or subject, or by which Borrower or any property or assets of
Borrower is bound, or result in the creation or imposition of any security
interest, lien or encumbrance on any of the property or assets of Borrower
pursuant to the terms of any such indenture, agreement, document, instrument
or undertaking; provided however, that Lender acknowledges and agrees that
nothing in this Agreement and no action by Borrower or SM&P relative to the
Guaranty of this Agreement to be executed by SM&P constitutes a breach or
default of the Loan Agreement executed by Borrower and Lender on January 28,
2002, or SM&P's Guaranty dated January 28, 2002 of that Loan Agreement. No
order, consent, approval, license, authorization or validation of, or
filing, recording or registration with, or exemption by, any governmental,
regulatory, administrative or public body, instrumentality, authority,
agency or official, or any subdivision thereof, or any other Person is
required to authorize, or is required in connection with, (a) the execution,
delivery or performance of, or the legality, validity, binding effect or
enforceability of, any of the Transaction Documents and/or (b) the borrowing
and/or repayment of the Loan by Borrower under this Agreement.

         4.06    Regulation U. Borrower is not engaged principally, or as one
                 ------------
of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of The Board of Governors of the Federal Reserve System, as
amended) and no part of the proceeds of the Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately
(a) to purchase or carry margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock, or to refund or repay
indebtedness originally incurred for such purpose or (b) for any purpose
that entails a violation of, or which is inconsistent with, the provisions
of any of the Regulations of The Board of Governors of the Federal Reserve
System, including, without limitation, Regulations U, T or X thereof, as
amended. If requested by Lender, Borrower shall furnish to Lender a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in Regulation U.

         4.07    Investment Company Act of 1940; Public Utility Holding Company
                 --------------------------------------------------------------
Act of 1935. Borrower is not an "investment company" as that term is defined
-----------
in, and is not otherwise subject to regulation under, the Investment Company
Act of 1940, as amended. Borrower is an exempt holding company pursuant to
15 U.S.C. Section 79c(a)(1).

         4.08    No Default. No Default or Event of Default under this
                 ----------
Agreement has occurred and is continuing. There is no existing default or
event of default under or with respect to any indenture, contract,
agreement, lease or other instrument to which Borrower is a party or by
which any property or assets of Borrower is bound or affected, a default

                                     58

<PAGE>
<PAGE>

under which could reasonably be expected to have a Material Adverse Effect.
Borrower has and is in full compliance with and in good standing with
respect to all governmental permits, licenses, certificates, consents and
franchises necessary to continue to conduct its business as previously
conducted by it and to own or lease and operate its properties and assets as
now owned or leased by it, the failure to have or noncompliance with which
could reasonably be expected to have a Material Adverse Effect. Borrower is
not in violation of any applicable statute, law, rule, regulation or
ordinance of the United States of America, of any state, city, town,
municipality, county or of any other jurisdiction, or of any agency thereof,
a violation of which could reasonably be expected to have a Material Adverse
Effect; provided however, that Lender acknowledges and agrees that nothing
in this Agreement and no action by Borrower or SM&P relative to the Guaranty
of this Agreement to be executed by SM&P constitutes a Default or Event of
Default of the Loan Agreement executed by Borrower and Lender on January 28,
2002, or SM&P's Guaranty dated January 28, 2002 of that Loan Agreement.

SECTION 5.  COVENANTS.
---------------------

         5.01     Covenants of Borrower. Borrower covenants and agrees that,
                  ---------------------
so long as any of the Borrower's Obligations remain unpaid:

         (a) Information. Borrower will deliver to Lender:
             -----------

                  (i) within one hundred (100) days after the end of each
          fiscal year of Borrower: (A) a consolidated balance sheet of
          Borrower and its Subsidiaries as of the end of such fiscal year
          and the related consolidated statements of income, retained
          earnings and cash flows for such fiscal year, setting forth in
          each case, in comparative form, the figures for the previous
          fiscal year, all such financial statements to be prepared in
          accordance with GAAP consistently applied and reported on by and
          accompanied by the unqualified opinion of independent certified
          public accountants selected by Borrower and reasonably acceptable
          to Lender; provided, however, that delivery to Lender of the
          Annual Report on Form 10-K of Borrower for such fiscal year filed
          with the Securities and Exchange Commission shall be deemed to
          satisfy the requirements of this Section 5.01(a)(i);

                  (ii) within fifty (50) days after the end of the first
          three (3) fiscal quarters of each fiscal year of Borrower, a
          consolidated balance sheet of Borrower and its Subsidiaries as of
          the end of such fiscal quarter and the related consolidated
          statements of income, retained earnings and cash flows for such
          fiscal quarter and for the portion of Borrower's fiscal year ended
          at the end of such fiscal quarter, setting forth in each case in
          comparative form, the figures for the corresponding fiscal quarter
          and the corresponding portion of Borrower's previous fiscal year,
          all in reasonable detail and satisfactory in form to Lender and
          certified (subject to normal year-end adjustments and absence of
          footnote disclosures) as to fairness of presentation, consistency
          and compliance with GAAP by the chief financial officer of
          Borrower; provided, however, that delivery to Lender of copies of
          the Quarterly Report on Form 10-Q of Borrower for such fiscal
          quarter filed with the Securities and Exchange Commission shall be
          deemed to satisfy the requirements of this Section 5.01(a)(ii);

                  (iii) simultaneously with the delivery of each set of
          financial statements referred to in Sections 5.01(a)(i) and (ii)
          above, a certificate of an authorized officer of Borrower in the
          form attached hereto as Exhibit B and incorporated herein by
          reference (A) stating whether there exists on the date of such
          certificate any Default or Event of Default and, if any Default or
          Event of Default then exists, setting forth the details thereof
          and the action which Borrower is taking or proposes to take with
          respect thereto and (B) certifying that all of the representations
          and warranties made by Borrower in this Agreement and/or in any
          other Transaction Document are true and correct in all material
          respects on and as of the date of such certificate as if made on
          and as of the date of such certificate; and

                  (iv) with reasonable promptness, such further information
          regarding the business, affairs and financial condition of
          Borrower as Lender may from time to time reasonably request.

         (b) Corporate Existence. Borrower will do all things necessary to
             -------------------
(i) preserve and keep in full force and effect at all times its corporate
existence and all permits, licenses, franchises and other rights material to
its business and (ii) be duly qualified to do business and be in good
standing in all jurisdictions where the nature of its business or its
ownership of property or assets requires such qualification except for those
jurisdictions in which the failure to qualify or be in good standing could
not reasonably be expected to have a Material Adverse Effect.

                                     59

<PAGE>
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         (c) Compliance with Laws, Regulations, Etc. Borrower will comply
             --------------------------------------
with any and all laws, ordinances and governmental and regulatory rules and
regulations to which Borrower is subject and obtain any and all licenses,
permits, franchises and other governmental and regulatory authorizations
necessary to the ownership of its properties or assets or to the conduct of
its business, which violation or failure to obtain could reasonably be
expected to have a Material Adverse Effect.

         (d) Further Assurances. Borrower will execute and deliver to
             ------------------
Lender, at any time and from time to time, any and all further agreements,
documents and instruments, and take any and all further actions which may be
required under applicable law, or which Lender may from time to time
reasonably request, in order to effectuate the transactions contemplated by
this Agreement and the other Transaction Documents.

         (e) Consolidation or Merger. Borrower will not directly or indirectly
             -----------------------
merge or consolidate with or into any other Person.

         (f) Debt Ratings. Borrower's utility subsidiary, Laclede Gas
             ------------
Company, shall maintain the following minimum debt ratings: Moody's senior
secured- A3, S&P Long Term Issuer- A-.

         (g) Stock and Assets of Subsidiaries. Unless the prior written
             --------------------------------
consent of Lender is obtained, Borrower will not create, incur or assume or
suffer to be incurred or to exist any lien on any of the common stock of
Laclede Gas Company and SM&P or on the accounts receivable of SM&P.

         5.02     Use of Proceeds. Borrower covenants and agrees that (a) the
                  ---------------
proceeds of the Loan will be used solely for general corporate purposes, (b)
no part of the proceeds of the Loan will be used in violation of any
applicable law, rule or regulation and (c) no part of the proceeds of the
Loan will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately (i) to purchase or carry margin stock or to
extend credit to others for the purpose of purchasing or carrying margin
stock, or to refund or repay indebtedness originally incurred for such
purpose or (ii) for any purpose which entails a violation of, or which is
inconsistent with, the provisions of any of the Regulations of The Board of
Governors of the Federal Reserve System, including, without limitation,
Regulations U, T or X thereof, as amended.

SECTION 6. EVENTS OF DEFAULT.
----------------------------

         If any of the following (each of the following herein sometimes
called an "Event of Default") shall occur and be continuing:

         6.01     Borrower shall fail to pay any of Borrower's Obligations
constituting interest, fees or other amounts (other than principal due under
the Loan) within five (5) Business Days after the date the same shall first
become due and payable, whether by reason of demand, maturity, acceleration
or otherwise;

         6.02     Any representation or warranty made by Borrower in this
Agreement, in any other Transaction Document or in any certificate,
agreement, instrument or written statement furnished or made or delivered
pursuant hereto or thereto or in connection herewith or therewith, shall
prove to have been untrue or incorrect in any material respect when made or
effected;

         6.03     Borrower shall fail to perform or observe any term,
covenant or provision contained in Section 5.01(e) or Section 5.02;

         6.04     Borrower shall fail to perform or observe any other term,
covenant or provision contained in this Agreement (other than those
specified in Sections 6.01 or 6.02 above) and any such failure shall remain
unremedied for thirty (30) days after the earlier of (i) written notice of
default is given to Borrower by Lender or (ii) any officer of Borrower
obtaining actual knowledge of such default;

         6.05     This Agreement or any of the other Transaction Documents shall
at any time for any reason (other than termination of this Agreement or such
other Transaction Documents, as the case may be, in accordance with its
terms) cease to be in full force and effect or shall be declared to be null
and void by a court of competent jurisdiction, or if the validity or
enforceability thereof shall be contested or denied by Borrower, or if the
transactions completed hereunder or thereunder shall be contested by
Borrower or if Borrower shall deny that it has any further liability or
obligation hereunder or thereunder;

                                     60

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         6.06     Borrower shall (i) voluntarily commence any proceeding or file
any petition seeking relief under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, receivership,
liquidation or similar law, (ii) consent to the institution of, or fail to
contravene in a timely and appropriate manner, any such proceeding or the
filing of any such petition, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator or similar official of
itself or of a substantial part of its property or assets, (iv) file an
answer admitting the material allegations of a petition filed against itself
in any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any corporate or
other action for the purpose of effecting any of the foregoing;

         6.07     An involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of Borrower, or of a substantial part of the property or
assets of Borrower, under Title 11 of the United States Code or any other
Federal, state or foreign bankruptcy, insolvency, receivership, liquidation
or similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official of Borrower or of a substantial part of the
property or assets of Borrower or (iii) the winding-up or liquidation of
Borrower, and such proceeding or petition shall continue undismissed for
sixty (60) consecutive days or an order or decree approving or ordering any
of the foregoing shall continue unstayed and in effect for sixty (60)
consecutive days;

         6.08     Borrower shall be declared by Lender to be in default under or
in respect of (i) any other present or future obligation to Lender,
including, without limitation, any other loan, line of credit, revolving
credit, guaranty or letter of credit reimbursement obligation, or (ii) any
other present or future agreement purporting to convey to Lender a security
interest in, or a lien or encumbrance upon, upon any property or assets of
Borrower;

         6.09     The occurrence of any default or event of default under or
within the meaning of any agreement, document or instrument evidencing,
securing, guaranteeing the payment of or otherwise relating to any
indebtedness of Borrower for borrowed money (other than the Borrower's
Obligations) having an aggregate outstanding principal balance in excess of
$5,000,000.00 that is not cured or waived in writing within any applicable
cure or grace period; or

         6.10     Borrower shall have a judgment in an amount in excess of
$5,000,000.00 entered against it by a court having jurisdiction in the
premises and such judgment shall not be appealed in good faith (and
execution of such judgment stayed during such appeal) or satisfied by
Borrower within thirty (30) days after the entry of such judgment;

         THEN, and in each such event (other than an event described in
Sections 6.06 or 6.07), Lender may declare the entire outstanding principal
balance of and all accrued and unpaid interest on the Note and all of the
other Borrower's Obligations to be forthwith due and payable, whereupon all
of the unpaid principal balance of and all accrued and unpaid interest on
the Note and all of such other Borrower's Obligations shall become and be
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower,
and Lender may exercise any and all other rights and remedies which it may
have under any of the other Transaction Documents or under applicable law;
provided, however, that upon the occurrence of any event described in
Sections 6.06 or 6.07, the entire outstanding principal balance of and all
accrued and unpaid interest on the Note and all of the other Borrower's
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower, and Lender may exercise any and all
other rights and remedies which it may have under any of the other
Transaction Documents or under applicable law.

SECTION 7.  GENERAL.
-------------------

         7.01     No Waiver. No failure or delay by Lender in exercising any
                  ---------
right, remedy, power or privilege under this Agreement or under any other
Transaction Document shall operate as a waiver thereof; nor shall any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege. The rights
and remedies provided in this Agreement and in the other Transaction
Documents are cumulative and not exclusive of any remedies provided by law.
Nothing herein contained shall in any way affect the right of Lender to
exercise any statutory or common law right of banker's lien or set-off.

         7.02     Right of Set-Off. Upon the occurrence and during the
                  ----------------
continuance of any Event of Default, Lender is hereby authorized at any time
and from time to time, without notice to Borrower (any such notice being
expressly waived by Borrower) and to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time

                                     61

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<PAGE>

or demand, provisional or final, but specifically excluding any trust or
segregated accounts) at any time held by Lender and any and all other
indebtedness at any time owing by Lender to or for the credit or account of
Borrower against any and all of the Borrower's Obligations irrespective of
whether or not Lender shall have made any demand under this Agreement or
under any of the other Transaction Documents and although such obligations
may be contingent or unmatured. Lender agrees to promptly notify Borrower
after any such set-off and application made by Lender, provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of Lender under this Section 7.02 are in
addition to any other rights and remedies (including, without limitation,
other rights of set-off) which Lender may have. Nothing contained in this
Agreement or any other Transaction Document shall impair the right of Lender
to exercise any right of set-off or counterclaim it may have against
Borrower and to apply the amount subject to such exercise to the payment of
indebtedness of Borrower unrelated to this Agreement or the other
Transaction Documents.

         7.03     Cost and Expenses. Borrower agrees, whether or not any Loan
                  -----------------
is made under this Agreement, to pay or reimburse Lender upon demand for (a)
all out-of-pocket costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses up to a maximum amount of $3,000)
incurred by Lender in connection with the preparation, documentation,
negotiation and/or execution of this Agreement and/or any of the other
Transaction Documents, (b) all recording, filing and search fees and
expenses incurred by Lender in connection with this Agreement and/or any of
the other Transaction Documents, (c) all out-of-pocket costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred by Lender in connection with the (i) the preparation,
documentation, negotiation and execution of any amendment, modification,
extension, renewal or restatement of this Agreement and/or any of the other
Transaction Documents or (ii) the preparation of any waiver or consent under
this Agreement or under any of the other Transaction Documents and (d) if an
Event of Default occurs, all out-of-pocket costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) incurred by
Lender in connection with such Event of Default and collection and other
enforcement proceedings resulting therefrom. Borrower further agrees to pay
or reimburse Lender upon demand for any stamp or other similar taxes which
may be payable with respect to the execution, delivery, recording and/or
filing of this Agreement and/or any of the other Transaction Documents. All
of the obligations of Borrower under this Section 7.03 shall survive the
satisfaction and payment of the Borrower's Obligations and the termination
of this Agreement.

         7.04     General Indemnity. In addition to the payment of expenses
                  -----------------
pursuant to Section 7.03, whether or not the transactions contemplated
hereby shall be consummated, Borrower hereby agrees to defend, indemnify,
pay and hold Lender and any holders of the Note, and the officers,
directors, employees, agents and affiliates of Lender and such holders
(collectively, the "Indemnitees") harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, disbursements, costs and expenses of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Indemnitees shall be designated a party
thereto), that may be imposed on, incurred by or asserted against the
Indemnitees, in any manner relating to or arising out of this Agreement, any
of the other Transaction Documents or any other agreement, document or
instrument executed and delivered by Borrower in connection herewith or
therewith, the statements contained in any commitment letters delivered by
Lender, the agreement of Lender to make the Loan under this Agreement or the
use or intended use of the proceeds of the Loan under this Agreement
(collectively, the "indemnified liabilities"); provided that Borrower shall
have no obligation to an Indemnitee hereunder with respect to indemnified
liabilities directly and solely resulting from the gross negligence or
willful misconduct of that Indemnitee as determined by a court of competent
jurisdiction in a final, nonappealable order. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, Borrower shall contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of
all indemnified liabilities incurred by the Indemnitees or any of them. The
provisions of the undertakings and indemnification set out in this Section
7.04 shall survive satisfaction and payment of the Borrower's Obligations
and the termination of this Agreement.

         7.05     Notices. Each notice, request, demand, consent, confirmation
                  -------
or other communication under this Agreement shall be in writing and
delivered in person or sent by facsimile or registered or certified mail,
return receipt requested and postage prepaid, to the applicable party at its
address or facsimile number set forth on the signature pages hereof, or at
such other address or facsimile number as any party hereto may designate as
its address for communications hereunder by notice so given. Such notices
shall be deemed effective on the day on which delivered or sent if delivered
in person or sent by facsimile (with answerback confirmation received), or
on the fourth (4th) Business Day after the day on which mailed, if sent by
registered or certified mail.

                                     62

<PAGE>
<PAGE>

         7.06     Consent to Jurisdiction; Waiver of Jury Trial. BORROWER
                  ---------------------------------------------
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE
COURT SITTING IN THE COUNTY OF ST. LOUIS, MISSOURI OR ANY UNITED STATES OF
AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI, EASTERN DISTRICT,
AS LENDER MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. BORROWER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR
PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS. BORROWER
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
THAT BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND BORROWER FURTHER
IRREVOCABLY WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. BORROWER
AUTHORIZES THE SERVICE OF PROCESS UPON BORROWER BY REGISTERED MAIL SENT TO
BORROWER AT ITS ADDRESS DETERMINED PURSUANT TO SECTION 7.05. BORROWER, AND
LENDER HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO
ANY ACTION IN WHICH BORROWER AND LENDER ARE PARTIES RELATING TO OR ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION
DOCUMENTS.

         7.07     Governing Law. This Agreement shall be governed by and
                  -------------
construed in accordance with the substantive laws of the State of Missouri
(without reference to conflict of law principles).

         7.08     Amendments and Waivers. Any provision of this Agreement, the
                  ----------------------
Note or any of the other Transaction Documents to which Borrower is a party
may be amended or waived if, but only if, such amendment or waiver is in
writing and is signed by Borrower and Lender.

         7.09     References; Headings for Convenience. Unless otherwise
                  ------------------------------------
specified herein, all references herein to Section numbers refer to Section
numbers of this Agreement, all references herein to Exhibits "A" and "B"
                                                    --------
refer to annexed Exhibits "A" and "B" that are hereby incorporated herein by
                 --------
reference and all references herein to Schedule 2.02 refers to annexed
                                       -------------
Schedule 2.02 that is hereby incorporated herein by reference. The Section
-------------
headings are furnished for the convenience of the parties and are not to be
considered in the construction or interpretation of this Agreement.

         7.10     Successors and Assigns. The provisions of this Agreement
                  ----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Borrower may not assign or
otherwise transfer any of its rights or delegate any of its obligations or
duties under this Agreement.

         7.11     NOTICE REQUIRED BY SECTION 432.045 R.S.Mo.; ENTIRE AGREEMENT
                  ------------------------------------------------------------
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND OR RENEW
SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER), AND US (CREDITOR)
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING
SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER
AGREE IN WRITING TO MODIFY THEM. This Agreement embodies the entire
agreement and understanding between the parties hereto and supersedes all
prior agreements and understandings (oral or written) relating to the
subject matter hereof.

         7.12     Severability. In the event any one or more of the provisions
                  ------------
contained in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.

         7.13     Counterparts. This Agreement may be executed in any number of
                  ------------
counterparts (including facsimile counterparts), each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument.

         7.14     Confidentiality. Any information received by Lender from
                  ---------------
Borrower and clearly marked as confidential shall be treated as confidential
by Lender in accordance with its customary practices and procedures.
Notwithstanding such agreement, nothing herein contained shall limit or
impair the right or obligation of Lender to disclose such information: (a)
to its auditors, attorneys, trustees, employees, directors, officers,
advisors, affiliates or agents, (b) when

                                     63

<PAGE>
<PAGE>

and as required by any law, ordinance, subpoena or governmental order, rule
or regulation, (c) as may be required, requested or otherwise appropriate in
any report, statement or testimony submitted to any municipal, state,
provincial or federal regulatory body or any self-regulatory body having or
claiming to have jurisdiction over Lender, (d) which is publicly available
or readily ascertainable from public sources, or which is received by Lender
from a third Person which or which is not known by Lender to be bound to
keep the same confidential, (e) in connection with any proceeding, case or
matter pending (or on its face purported to be pending) before any court,
tribunal or any governmental agency, commission, authority, board or similar
entity, (f) in connection with protection of its interests under this
Agreement, the Note or any of the other Transaction Documents, including,
without limitation, the enforcement of the terms and conditions of this
Agreement, the Note and the other Transaction Documents, or (g) to any
entity utilizing such information to rate the creditworthiness of Lender or
to rate or classify the debt or equity securities of Lender or report to the
public concerning the industry of which such Lender is a part. It is agreed
and understood that Lender shall not be liable to Borrower or any other
Person for failure to comply with the foregoing except in any case involving
Lender's gross negligence or willful misconduct as determined by a court of
competent jurisdiction in a final, nonappealable order.

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

                                       Borrower:

                                       THE LACLEDE GROUP, INC.

                                       By: /s/ Ronald L. Krutzman

                                       Print Name: Ronald L. Krutzman

                                       Title: Treasurer and Assistant Secretary

                                       Address:

                                       720 Olive Street, Suite 1525
                                       St. Louis, Missouri 63101
                                       Attention: Treasurer
                                       Facsimile No.: (314) 421-1979

                                       Lender:

                                       U.S. BANK NATIONAL ASSOCIATION,
                                       formerly known as Firstar Bank, N.A.

                                       By: /s/ J. Eric Hartman

                                       Print Name: J. Eric Hartman

                                       Title: Vice President

                                       Address:

                                       One U.S. Bank Plaza, 12th Floor
                                       St. Louis, Missouri 63101
                                       Attention: Large Corporate Department
                                       Facsimile No.: (314) 418-3571

                                     64

<PAGE>
<PAGE>

                                SCHEDULE 2.02
                                -------------

                           Authorized Individuals
                           ----------------------

                              Douglas H. Yaeger
                           Gerald T. McNeive, Jr.
                             Ronald L. Krutzman
                              Lynn D. Rawlings
                               Denise T. Hicks

                                     65

<PAGE>
<PAGE>

                                  EXHIBIT A
                                  ---------

                            REVOLVING CREDIT NOTE
                            ---------------------

$20,000,000.00                                           St. Louis, Missouri
                                                               June 13, 2002

         FOR VALUE RECEIVED, THE LACLEDE GROUP, INC., a Missouri corporation
("Borrower"), hereby promises to pay to the order of U.S. BANK NATIONAL
ASSOCIATION, formerly known as Firstar Bank, N.A. ("Lender"), the principal
sum of Twenty Million Dollars ($20,000,000.00), or such lesser sum as may
then constitute the aggregate unpaid principal amount of all Loans made by
Lender to Borrower pursuant to the Agreement (defined below). The aggregate
principal amount of Revolving Credit Loans that Lender shall be committed to
have outstanding under this Revolving Credit Note (this "Note") at any one
time shall not exceed Twenty Million Dollars ($20,000,000.00), which amount
may be borrowed, paid, reborrowed and repaid, in whole or in part, subject
to the terms and conditions of this Note and of the Agreement.

         All payments received by Lender under this Note shall be allocated
among the principal, interest, collection costs and expenses and other
amounts due under this Note in such order and manner as Lender shall elect.
The amount of interest accruing under this Note shall be computed on an
actual day, 360-day year basis.

         All payments of principal and interest under this Note shall be
made in lawful currency of the United States in Federal or other immediately
available funds at the office of Lender located at One U.S. Bank Plaza, 7th
Street & Washington Avenue, 12th Floor, St. Louis, Missouri 63101, or such
other place as Lender may from time to time designate in writing.

         This Note is the Note referred to in that certain Revolving Credit
Agreement dated as of the date hereof by and between Borrower and Lender, as
the same may from time to time be amended, modified, extended, renewed or
restated (the "Agreement"). The Agreement, among other things, contains
provisions for acceleration of the maturity of this Note upon the occurrence
of certain stated events and also for prepayments on account of principal of
this Note and interest on this Note prior to the maturity of this Note upon
the terms and conditions specified therein. All capitalized terms used and
not otherwise defined in this Note shall have the respective meanings
ascribed to them in the Loan Agreement.

         If Borrower shall fail to make any payment of any principal or
interest due under this Note as and when the same shall become due, then the
entire outstanding principal balance of this Note and all accrued and unpaid
interest thereon may be declared to be immediately due and payable in the
manner and with the effect as provided in the Loan Agreement.

         In the event that any payment of any principal or interest due
under this Note is not paid when due, whether by reason of maturity,
acceleration or otherwise, and this Note is placed in the hands of an
attorney or attorneys for collection, or if this Note is placed in the hands
of an attorney or attorneys for representation of Lender in connection with
bankruptcy or insolvency proceedings relating to or affecting this Note,
Borrower hereby promises to pay to the order of Lender, in addition to all
other amounts otherwise due on, under or in respect of this Note, the costs
and expenses of such collection and representation, including, without
limitation, reasonable attorneys' fees and expenses (whether or not
litigation shall be commenced in aid thereof). Borrower hereby waives
presentment for payment, demand for payment, protest, notice of protest and
notice of dishonor.

                                     66

<PAGE>
<PAGE>

         This Note shall be governed by and construed in accordance with the
substantive laws of the State of Missouri (without reference to conflict of
law principles).

                                  THE LACLEDE GROUP, INC.

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

                                  Print Name:
                                             -------------------------------

                                  Title:
                                        ------------------------------------

                                     67

<PAGE>
<PAGE>

                                  EXHIBIT B
                                  ---------

                                   [Date]

U.S. Bank National Association
One U.S. Bank Plaza, 12th Floor
St. Louis, Missouri 63101
Attention: Large Corporate Division

Ladies and Gentlemen:

         Reference is hereby made to that certain Revolving Credit Agreement
dated June 13, 2002, by and between The Laclede Group, Inc., and U.S. Bank
National Association, as the same may from time to time amended, modified,
extended, renewed or restated (the "Agreement"). All capitalized terms used
and not otherwise defined herein shall have the respective meanings ascribed
to them in the Agreement.

         Borrower hereby certifies to Lender that as of the date hereof:

         (a) except as set forth below, all of the representations and
warranties made by Borrower in the Agreement and/or in any of the other
Transaction Documents are true and correct in all material respects on and
as of the date of this Certificate as if made on and as of the date of this
Certificate:

Exceptions:
           ----------------------------------------------------------------

---------------------------------------------------------------------------

---------------------------------------------------------------------------

----------------------;

         (b) except as set forth below, no Default or Event of Default under or
within the meaning of the Agreement has occurred and is continuing:

Exceptions:
           ----------------------------------------------------------------

---------------------------------------------------------------------------

---------------------------------------------------------------------------

----------------------; and

         (c) the financial statements of Borrower and its Subsidiaries
delivered to you with this letter are true, correct and complete in all
material respects and have been prepared in accordance with GAAP (subject,
in the case of any interim financial statements, to normal year-end
adjustments and absence of footnote disclosures).

                                  Very truly yours,

                                  THE LACLEDE GROUP, INC.

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

                                  Print Name:
                                             -------------------------------

                                  Title:
                                        ------------------------------------

                                     68Exhibit 10.1 - Merger Agreement

        This Agreement made as of the 12th day of February, 2002, with
        effective date as of December 1st, 2001, between McKENZIE BAY
        INTERNATIONAL, LTD., incorporated in the State of Delaware,
        United States of America and with administrative offices at
        3362 Moraine Drive, Brighton, MI USA 48114 (hereinafter "MKBY"),
        and JACQUELIN DERY, whose address is 663 McEachran Ave., Outremont,
        Quebec H2V 3C6 CANADA (hereinafter "Dery"), and LAURENT MONDOU,
        whose address is 451 Le Royer Street, St. Lambert, Quebec, J4R 1M7
        CANADA (hereinafter "Mondou"), and EXPERTS CONSEILS DERMOND INC.,
        incorporated under the laws of Canada, whose address is 663 McEachran
        Ave., Outremont, Quebec H2V 3C6 CANADA (hereinafter "Dermond").

W I T N E S S E T H :

        WHEREAS, Dery and Mondou are collectively the owners of all of
        the issued and outstanding shares of Dermond which corporation
        is the owner of the technology known as the Dermond Wind Generator,
        and

        WHEREAS, MKBY is desirous of purchasing all of the issued and
        outstanding shares of the common stock of Dermond, and

        WHEREAS, Dery and Mondou have agreed to sell all of the issued and
        outstanding shares of the common stock of Dermond, that is 125,200
        class "A" shares (the "Shares") to MKBY on the terms and conditions
        set out in this agreement.

        NOW, THEREFORE, this agreement witnesses that in consideration of the
        mutual covenants and agreements contained herein, Dery and Mondou, as
        Sellers, and MKBY, as Purchaser, covenant and agree with each other as
        follows:

1.      Purchase and Sale.

        A.      Subject to the due fulfillment of the conditions set out in
                paragraph 3 below, Dery and Mondou shall sell and MKBY shall
                purchase all of the Shares.

        B.      The closing date shall be a date mutually agreed upon between
                the parties but in any event, no later than 60 days from and
                after the date of execution of this agreement.

2.      Consideration.  The consideration for the sale of the Shares
        shall be:

        A.      The issuance to Dery of 50,000 shares of the common stock of
                MKBY.

        B.      The payment to Dery of Twenty Five Thousand Dollars ($25,000.00)
                CDN.

        C.      The issuance to Mondou of 50,000 shares of the common stock of
                MKBY.

        D.      The payment to Mondou of Twenty Five Thousand Dollars
                ($25,000.00) CDN.

        E.      At closing, MKBY shall agree to pay, be liable for, perform,
                observe, discharge and fully satisfy when due (i) all of the
                liabilities and obligations of Dermond existing on the date of
                closing, provided, however, that the liability of MKBY pursuant
                to such assumption of liabilities shall not exceed Six Thousand
                Canadian Dollars ($6,000.00CDN), as well as to assume and pay
                (ii) Dermond's debt owed to CAI, Affaires Corporatives
                International, in the amount of $8,600.00 CDN (which includes
                all applicable taxes) (the "CAI Debt").

3.      Conditions.

The completion of this agreement shall be conditional upon the parties executing
the following agreements on the closing date contemporaneous with the completion
of this agreement:

        A.      A 5-year employment agreement between Dermond, as Employer, and
                Dery, as Employee, in the form which is attached hereto as
                Exhibit A to this agreement.

        B.      A 5-year employment agreement between Dermond, as Employer, and
                Mondou, as Employee, in the form which is attached hereto as
                Exhibit B to this agreement.

        C.      A royalty agreement between MKBY and Dery in the form which is
                attached hereto as Exhibit C to this agreement.

        D.      A royalty agreement between MKBY and Mondou in the form which is
                attached hereto as Exhibit D to this agreement.

        E.      Dery and Mondou will, on the date of closing contemporaneous
                with the completion of this agreement, execute a non-competition
                and non-disclosure agreement in the form which is attached
                hereto as Exhibit E of this agreement.

4.      Completion.

Completion shall take place on the closing date. The sale shall be completed at
the offices of Lavery, de Billy, attorneys for MKBY, located at 1, Place Ville-
Marie, Montreal, Quebec, H3B 4M4.

        A.      On the closing date, the parties shall mutually execute and
                deliver to one another the agreements set forth in paragraph 3 A
                thru E above.

        B.      On the closing date, Dery and Mondou shall deliver to MKBY's
                representatives duly executed forms of stock transfer together
                with accompanying certificates in respect of the Dermond shares,
                and the resignations of all directors of Dermond.

        C.      On the closing date, MKBY shall deliver to Dery and Mondou  the
                cash payments and the agreement to assume the outstanding
                obligations of Dermond referred to in section 2 above.

        D.      The MKBY shares shall be delivered to Dery and Mondou in
                accordance with section 2 above within three (3) business days
                following the granting of a prospectus exemption by the Quebec
                Securities Commission.

5.      Representations, Warranties and Covenants of Dery, Mondou and Dermond.
        In consideration of this agreement, Dery, Mondou and Dermond represent
        and warrant to MKBY as follows:

        A.      Dermond is a corporation duly incorporated, duly organized and
                validly subsisting under the laws of Canada and is authorized,
                qualified and licensed to own its properties and to carry on its
                businesses as presently owned and carried on by it.

        B.      The Shares owned by Dery and Mondou and which are to be
                transferred to MKBY, are validly issued and outstanding as fully
                paid and non-assessable shares and are the only issued and
                outstanding shares of Dermond.  Dery and Mondou are the sole
                beneficial and registered owners of the Shares with good and
                valid title to said shares.  There is no contract, agreement,
                option or other right of any person or entity binding upon or
                which at any time in the future may become binding upon Dermond
                to sell, transfer, assign, pledge, charge, mortgage or in any
                other way dispose of or encumber any of the Shares. No person or
                entity has any contract, agreement, option or any right or
                privilege capable of becoming a contract including convertible
                securities, warrants or convertible obligations of any nature
                for any purchase, subscription, allotment or issuance of any of
                the unissued shares in the share capital of Dermond.

        C.      The Board of Directors of Dermond has duly authorized and
                approved the transactions contemplated by this agreement and any
                and all agreements, documents or instruments to be executed
                and/or delivered in connection herewith and the performance of
                its obligations hereunder and thereunder.  No other corporate
                action by Dermond or otherwise is required in connection with
                the foregoing.

        D.      Dermond has no subsidiaries or interest in the shares of any
                other company wheresoever incorporated.

        E.      Dery and Mondou are the sole inventors of the Vertical Axis
                Windmill and Self-Erecting Structure Therefor and wind generator
                technology related to said wind generator and off-grid power
                system technology (the "Invention") and all intellectual
                property rights thereto related (collectively the "Intellectual
                Property") and they have developed the Invention exclusively for
                the benefit of Dermond.

        F.      Dery and Mondou have duly assigned the rights in the
                Intellectual Property to Dermond and Dermond is the exclusive
                and complete owner of the Intellectual Property. To the best of
                their knowledge, no third party has any right or title to the
                Intellectual Property.

        G.      Dery, Mondou and Dermond have duly applied for a patent
                application in Canada on or about January 24, 2002 in order to
                adequately protect the Invention and Dery, Mondou and Dermond
                have not acted in any manner as to invalidate the patent
                application or render the patent unenforceable, such as, but not
                limited to, public disclosuer of the Invention beyond the legal
                delays.

        H.      All persons to whom the Invention has been disclosed have signed
                a non-disclosure agreement.

        I.      The Intellectual Property is free and clear of any hypothec,
                lien or encumbrance of any nature.

        J.      As of the date hereof, Dermond, Dery and Mondou have taken all
                reasonable and proper steps to safeguard the trade secrets and
                confidential information of Dermond's Intellectual Property.

        K.      All liabilities, including contingent liabilities of Dermond as
                of the closing date, shall be disclosed to MKBY and listed on
                Schedule A to this agreement.  At the closing date, Dermond
                shall have no liabilities other than the liabilities disclosed
                on Schedule A to this agreement and further, such liabilities
                shall not exceed the sum of Six Thousand Canadian Dollars
                ($6,000.00CDN) as of the date of closing, with the exception of
                the CAI Debt.

        L.      Without limiting the generality of the foregoing, Dermond is not
                engaged in any litigation nor aware of any contract, claim,
                notice matter or thing on the part of any third party which
                might reasonably be expected to lead to the threat of litigation
                whether successful or not.

        M.      Dery and Mondou jointly and severally hereby covenant and agree
                with MKBY to hold harmless and indemnify both MKBY and Dermond
                in respect of any breach of or non-fulfillment of any
                representation, warranty, covenant or agreement on the part of
                Dery and Mondou under this agreement.

        N.      Dery and Mondou hereby covenant and agree with MKBY to use
                reasonable efforts to obtain and, on and after completion of the
                transaction contemplated hereby, deliver to MKBY all financial,
                intellectual property, know-how, knowledge, business and related
                documents and materials held by Dery and Mondou or Dermond.

        O.      Dery, Mondou and Dermond hereby covenant and agree to continue
                to take all reasonable and proper steps to safeguard the trade
                secrets and confidential information of Dermond as outlined
                above up to and following the completion of the transactions
                contemplated hereby.

        P.      Dermond is entitled to the exclusive and uninterrupted use of
                the Intellectual Property without payment of any royalty or
                fees.  No person has any right, title or interest in any of the
                Intellectual Property other than Dermond.  No person has
                challenged the validity of Dermond's rights to any of the
                Intellectual Property. To the best of their knowledge, neither
                the Intellectual Property nor the conduct of Dermond's business
                infringes upon the industrial or intellectual property rights of
                any other person, nor has any other person infringed upon
                Dermond's rights to the Intellectual Property.

6.      Representations, Warranties and Covenants of MKBY. In consideration of
        this agreement, MKBY represents and warrants to Dery and Mondou as
        follows:

        A.      MKBY is a corporation duly incorporated and is in good standing
                under the laws of the State of Delaware and is authorized,
                qualified and licensed to own its properties and to carry on its
                businesses as presently owned and carried on by it.

        B.      The Board of Directors of MKBY has duly authorized and approved
                the transaction contemplated by this agreement and any and all
                agreements, documents or instruments to be executed and/or
                delivered in connection herewith and the performance of its
                obligations hereunder and thereunder. No other corporate action
                by MKBY or otherwise is required in connection with the
                foregoing.

        C.      When issued to Dery and Mondou pursuant to paragraph 2 above,
                the MKBY shares shall be fully paid and non-assessable shares in
                the capital of MKBY and will be owned by Dery and Mondou
                respectively as beneficial and registered owner with good and
                valid title thereto, free and clear of any and all liens or
                encumbrances.

7.      Acknowledgement and Representation Regarding the MKBY Shares.
        Dery and Mondou each individually acknowledge that the MKBY shares have
        not been registered under the Securities Act of 1933 ("SA-1933") and are
        being issued under an exemption under the SA-1933. In accordance
        therewith, Dery and Mondou each individually represent to MKBY that:

        A.      Dery and Mondou each individually are acquiring the MKBY shares
                for investment for their own account only and not with a view
                for reselling same. Neither Dery nor Mondou intend to divide
                their participation with others or to resell or otherwise
                dispose of all or any part of the MKBY shares unless and until
                each determine at some future date on the basis of information
                not currently at their disposal or conditions not currently
                existing, that such resale or disposition is advisable.

        B.      In no event will either Dery or Mondou sell the MKBY shares
                prior to the registration of the MKBY shares under the SA-1933
                unless such sale is made pursuant to a valid exemption under the
                SA-1933 including without limitation the exemption established
                in Rule 144 adopted by the Securities and Exchange Commission.

8.      Mutual Undertakings.

        A.      The parties hereto agree that the terms of this agreement and
                all matters arising under it shall be confidential to the
                parties and their advisors and no disclosure of the terms or
                contents of this agreement shall be made to any third party
                except as required for the implementation or authorization of
                this agreement and its completion.

        B.      The parties shall execute and procure the execution of all such
                further documents or other things as shall be required to secure
                the full performance and implementation of the terms of this
                agreement and shall undertake all such further acts as shall be
                necessary to bring into effect the terms of this agreement,
                including but not limited to any filings required under any
                Securities Acts of any of the Canadian jurisdictions in relation
                to the issuance of MKBY shares to each of Dery and Mondou in
                accordance with section 2 of this agreement.

        C.      The representations and warranties of the parties set out in
                this agreement or any other agreement, certificate or instrument
                delivered pursuant to this agreement shall survive the
                completion of the transactions contemplated herein.

9.      General.

        A.      Any notice to be delivered hereunder shall be in writing signed
                by a party or a duly authorized representative of a party
                serving such notice and shall be delivered to the other party or
                parties by hand or facsimile or by registered post to the
                address shown above or such other address as shall be specified
                for service. In the case of service by post, such notice shall
                be deemed to be received seven days after dispatch.

        B.      This agreement and all matters arising under it shall be subject
                to the laws and application of said laws of the Province of
                Quebec and laws of Canada applicable therein, and the parties
                hereby submit to the exclusive venue in the Province of Quebec
                to resolve any disputes arising hereunder. The parties agree
                that if a dispute arises, they will submit same to arbitration
                pursuant to the applicable provisions of the Code of Civil
                Procedure of Quebec  and said decision will be binding upon
                both.

        C.      This agreement constitutes the entire agreement between the
                parties pertaining to the subject matter of this agreement and
                supersedes all prior agreements, understandings, negotiations
                and discussions whether oral or written. There are no
                conditions, warranties, representations or other agreements
                between the parties in connection with the subject matter of
                this agreement (whether oral or written, express or implied,
                statutory or otherwise) except as specifically set out in this
                agreement.

        D.      The parties hereby acknowledge that they have requested that
                this agreement and all related documents be drawn up in the
                English language. Les parties aux presentes reconnaissent
                qu'elles ont exige que la presente convention et tous les
                documents qui s'y rattachent soient rediges en anglais.

        IN WITNESS WHEREOF, this agreement has been executed by the parties
        as of the 12th day of February 2002, with effective date as of
        December 1, 2001.

                                    McKENZIE BAY INTERNATIONAL, LTD.

                        per:    /s/ Gary L. Westerholm
                                    President

                                    EXPERTS CONSEILS DERMOND, INC.

                                    LAURENT MONDOU

                        per:    /s/ Laurent Mondou
                                    Vice-President

                                    JACQUELIN DERY

                        per:    /s/ Jacquelin Dery
                                    President

SCHEDULE A

Disclosure of Dermond's liabilities pursuant to section 5(K)

EXHIBIT A

Employment Agreement with Dery

EXHIBIT B

Employment Agreement with Mondou

EXHIBIT C

Royalty Agreement with Dery

EXHIBIT D

Royalty Agreement with Mondou

EXHIBIT E

Non-Competition and Non-Disclosure Agreement

================================================================================
SCHEDULE A - Disclosure of Dermond's liabilities pursuant to section 5(K)

<table>
<caption>
                                            <c>
Dermond as of February 12, 2002

Bank Account:                                  $   132.04

Accounts Receivable:
  TPS,TVQ Return                               $   598.22
  MKBY Invoice#01-12-1                         $15,141.82
  MKBY Invoice#01-02-2                         $36,329.91
                                              ------------
TOTAL Bank account and Receivables             $52,201.99

Accounts Payable
  Third Party:
    Dermond contibution to business plan       $ 8,626.87 (CAI Invoice #2860)
    Patent Filing                              $ 5,606.15 (Goudreau Gage Dubuc #111785)
    Bell Canada                                $   148.85 (invoice 02/04/02)
                                               --------------
  TOTAL Third Party                            $14,381.87

  Shareholders:
     Mr. Jaquelin Dery                         $20,307.09
     Mr. Laurent Mondou                        $19,021.51
                                               --------------
    TOTAL Sharholders Payable                  $39,710.47
                                               ==============
TOTAL Accounts Payable                         $53,710.47

NET:                                           ($1,508.48)

</table>

<table>
<caption>
                             <c>             <c>              <c>
DETAILS DUE TO SHAREHOLDERS:
                                Mr. J. Dery     Mr. L. Mondou    Total

Invoice to MKBY #01-12-1        $ 7,075.00      $  5,925.00      $13,000.00
  Advance, Nov 13               $   550.00      $    550.00      $ 1,100.00
  Advance, Dec 20               $   325.00      $    325.00      $   650.00
Invoice to MKBY #01-2-2
  Services Dec.1-31             $ 5,416.67      $  5,416.67      $10,833.34
  Services Jan.1-31             $ 5,416.67      $  5,416.67      $10,833.34
  Services Feb.1-11             $ 1,354.17      $  1,354.17      $ 2,708.34
  Expenses, trip to Alaska      $   106.73      $     -          $   106.73
Meetings with Lavery, DeBilly   $    62.85      $     34.00      $    96.85
                               --------------   --------------  ------------
Total, Shareholders Payable     $20,307.09      $ 19,021.51      $39,328.60

</table>

================================================================================
EXHIBIT A - Employment Agreement - Jacquelin Dery

EMPLOYMENT AGREEMENT entered into on February 12, 2002, in the City of Montreal,
province of Quebec.

BETWEEN:   JACQUELIN DERY, domiciled and residing at 663 McEachran Avenue,
Outremont, Quebec, H2V3C6;

                  (hereinafter referred to as the "Employee")

AND:    EXPERTS CONSEILS DERMOND INC., a corporation duly incorporated under the
Canada Business Corporations Act, having its registered office at 663 McEachran
Avenue, Outremont, Quebec, H2V 3C6, represented herein by Gary L. Westerholm,
director, duly authorized as he so declares;

                     (hereinafter referred to as "Dermond")

WHEREAS as of the date hereof, the Employee sold all of his shares in the share
capital of Dermond to McKenzie Bay International Ltd. ("MKBY");

WHEREAS Dermond wishes to retain the Employee;

WHEREAS the Employee and Dermond are desirous of entering into an agreement for
the Employee's employment, all subject to the terms and conditions set forth in
this Agreement;

NOW IT IS HEREBY AGREED:

1.      INTERPRETATION

1.1     Definitions

In this Agreement, the following words and expressions have the respective
meanings ascribed to them below:

        (a)     "Affiliate" with respect to a Person means a Person that
                controls, is controlled by or under common control with such
                Person.  For purposes of this definition, "control" when used
                with respect to any Person means the power to direct the
                management and policies of such Person, directly or indirectly,
                whether through the ownership of voting securities, by contract
                or otherwise, and the terms "controlling" and "controlled" have
                meaning collative to the foregoing;

        (b)     "Agreement" means this employment agreement;

        (c)     "Board of Directors" means the board of directors of Dermond;

        (d)     "Business" means the fabrication, sale or lease of the Dermond
                Wind Generator and related technology;

        (e)     "Cause" shall include, but not be limited to the following, as a
                basis for termination of employment, (i) wilful misconduct
                involving bad faith by the Employee in respect of his
                obligations under this Agreement, which misconduct causes or is
                intended by the Employee to cause significant injury to Dermond,
                (ii) gross malfeasance, (iii) conduct by Employee which
                constitutes a breach of the Employee's fiduciary duty or (iv)
                repeated refusal by the Employee to perform reasonable and
                lawful job assignments which are not materially inconsistent
                with his duties and responsibilities under this Agreement and
                such failure continues for a period of ten (10) days after
                Dermond has given the Employee written notice of such failure
                and requested the Employee to remedy such failure.

        (f)     "Commencement Date" means February12, 2002;

        (g)     "Disability" shall mean, with respect to the Employee, being
                physically or mentally disabled, whether totally or partially,
                so that he is substantially unable to perform his duties under
                this Agreement for a longer period than twelve (12) consecutive
                months, or if he shall be disabled at different times for more
                than twelve (12) months (whether working days or not) in any one
                period of eighteen (18) consecutive months;

        (h)     "Discoveries and Works" includes by way of example but without
                limitation, intellectual property, trade secrets and other
                confidential information, patents and patent applications,
                trademarks and trademark registrations and applications, service
                marks and service mark registrations and applications, trade
                names, copyrights and copyright registrations and applications;

        (i)     "Employment Year" means the period beginning on February 12,
                2002 and ending on February 11, 2003, and each consecutive
                twelve- month period;

        (j)     "Parties" means Dermond and the Employee and "Party" means one
                or the other as the case may be;

        (k)     "Person" means any individual, corporation, proprietorship,
                firm, partnership, limited partnership, limited liability
                company, trust, association or other entity;

        (l)     "Restriction Period" means the period of time covering the Term
                plus a period equivalent to eighteen (18) months following
                Employee's Termination Date;

        (m)     "Subsidiary" means a corporation controlled by Dermond, or by
                another subsidiary of Dermond;

        (n)     "Term", "Initial Term", and "Additional Term" shall have the
                meaning set forth in Section 4;

        (o)     "Termination Date" means the effective date of the Employee's
                termination of employment with Dermond, regardless of the
                reason;

        (p)     "Territory" means the world.

2.      EMPLOYMENT

Dermond hereby employs the Employee as President of Dermond as well as to:

        (a)     provide technical expertise in furthering the development of the
                Dermond Wind Generator;

        (b)     provide technical expertise in developing off-grid power system
                technology; and

        (c)     provide technical expertise to potential and actual customers,
                vendors and partners of Dermond and its Affiliates and
                Subsidiaries, as well as other duties Dermond may from time to
                time request, without additional compensation. The Employee
                hereby accepts employment from Dermond to perform the duties
                described above upon the terms and conditions set forth in this
                Agreement.

3.      DUTIES AND RESPONSIBILITIES

3.1     During the Term of this Agreement, the Employee shall devote his full
        time and efforts to the performance of his duties and responsibilities
        under this Agreement and to the business and affairs of Dermond, its
        Subsidiaries and Affiliates, in general, and the Employee shall use his
        best efforts to promote the interests thereof and shall faithfully and
        to the best of his ability serve as the President of Dermond.

3.2     It is expressly understood and agreed that the Employee shall not engage
        in any other business or business opportunity, whether or not such
        business activity is pursued for gain, profit or other pecuniary
        advantage, provided however that:

        (a)     the Employee may engage in personal, charitable, professional
                and investment activities to the extent such activities do not
                conflict or interfere with the Employee's duties and obligations
                under this Agreement or Employee's ability to perform his duties
                and responsibilities under this Agreement; and

        (b)     the Employee shall not be prevented from investing his assets in
                such form or manner as will not require any substantial amount
                of time or services on the part of the Employee in the operation
                of the affairs of the enterprises in which such investments are
                made.

3.3     The Employee shall be subject to the direction of, and report only to,
        the Board of Directors.

3.4     The Employee shall also perform duties commensurate with his position
        and such specific duties and services as the Board of Directors shall
        reasonably request consistent with the Employee's position.

3.5     It is contemplated that the Employee will be obliged from time to time
        and for reasonable period of time to travel in the performance of his
        duties and obligations under this Agreement. However, the principal
        place of employment of the Employee which the Employee shall report for
        work will be at the Montreal, QuEbec office of Dermond.

4.      TERM

        Unless sooner terminated as provided for in this Agreement, the terms of
        the Employee's employment shall commence on February12, 2002 and shall
        continue for five (5) year(s) (the "Initial Term"), provided, however,
        that the Initial Term of the Employee's employment under this Agreement
        shall automatically be extended for additional periods of twelve (12)
        months each (an "Additional Term") unless and until either Dermond or
        the Employee shall have given the other notice, not less than three (3)
        months prior to the expiration of the Initial Term or any subsequent
        Additional Term, of the termination by the notifying party of the
        Employee's employment effective as of the next succeeding anniversary
        date of the expiration of the Initial Term or Additional Term (the
        Initial Term and any Additional Term(s) are collectively referred to as
        the "Term" in this Agreement).

5.      COMPENSATION

        During the Term of this Agreement, Dermond shall pay to the Employee an
        annual base salary of sixty-five thousand Canadian dollars ($65,000
        CDN). Such salary shall be paid to the Employee in monthly instalments
        of $5,416.67 CDN (less applicable taxes and other deductions at source),
        on the first business day of each month. However, upon the completion of
        the first sale of a Dermond Wind Generator by MKBY, Dermond or any of
        its Subsidiaries, the Employee's salary will increase to eighty-five
        thousand Canadian dollars ($85,000 CDN) per year, paid in monthly
        instalments, less any applicable taxes or deductions at source. The
        compensation committee of the Board of Directors shall review the annual
        base salary of the Employee each year and as a result of such review
        shall increase the annual base salary, effective as of the commencement
        of each successive Employment Year, to such greater amount as the Board
        of Directors may deem reasonable in the light of the then business and
        financial affairs of Dermond and such other factors as in the then
        circumstances of Dermond may be appropriate.

6.      EXPENSES

        Dermond shall reimburse the Employee for all necessary and reasonable
        expenses incurred by him in the performance of his duties under this
        Agreement. The Employee shall, on being so required, provide Dermond
        with vouchers or other evidence of actual payment of the said expenses
        in a form satisfactory to Dermond.

7.      BENEFITS

7.1     Employee Plans

        During the Term of this Agreement, the Employee shall participate in all
        employee benefit and insurance plans or programs established by Dermond
        in its full discretion and from which he is not excluded from
        participating by reason of the terms and conditions in the respective
        plans or programs.

7.2     Vacation

        The Employee shall be entitled to four (4) weeks paid vacation in each
        Employment Year to be taken at such times as may be appropriate having
        regard to the requirements of Dermond's business. The Employee shall not
        be entitled to carry forward from one year to another untaken vacation
        time unless expressly agreed between Dermond and the Employee.

8.      RETURN OF DOCUMENTS AND PROPERTY

        Upon the termination of Employee's employment with Dermond, or at
        anytime upon the request of Dermond, Employee (or his heirs or personal
        representatives) shall deliver to Dermond (a) all documents and
        materials (including without limitation, computer files) containing
        trade secrets or other confidential information relating to the business
        and affairs of Dermond, and (b) all documents, materials and other
        property (including, without limitation, computer files) belonging to
        Dermond, which in either case are in the possession or under the control
        of Employee (or his heirs or personal representatives).

9.      DISCOVERIES AND WORKS

        All Discoveries and Works made or conceived by Employee during his
        employment by Dermond, jointly or with others, that relate to the
        present or anticipated activities of Dermond, or are used or usable by
        Dermond shall be owned by Dermond. Employee shall (a) promptly notify,
        make full disclosure to, and execute and deliver any documents requested
        by Dermond to evidence or better assure title to Discoveries and Works
        in Dermond, as so requested, (b) renounce any and all claims, including
        but not limited to claims of ownership and royalty, with respect to all
        Discoveries and Works and all other property owned or licensed by
        Dermond, (c) assist Dermond in obtaining or maintaining for itself at
        its own expense Canadian and foreign patents, copyrights, trade secret
        protection or other protection of any and all Discoveries and Works, and
        (d) promptly execute, whether during his employment with Dermond or
        thereafter, all applications or other endorsements necessary or
        appropriate to maintain patents and other rights for Dermond and to
        protect the title of Dermond thereto, including but not limited to
        assignments of such patents and other rights. Any Discoveries and Works
        which, within six (6) months after the Termination Date, are made,
        disclosed, reduced to a tangible or written form or description, or are
        reduced to practice by Employee and which pertain to the business
        carried on or products or services being sold or developed by Dermond at
        the time of such termination shall, as between Employee and Dermond be
        presumed to have been made during Employee's employment by Dermond.

10.     DEATH

        The Employee's employment under this Agreement shall terminate upon his
        death. In the event of the termination of the Employee's employment as a
        result of his death, Dermond shall promptly pay to any one or more
        beneficiaries designated by the Employee pursuant to a notice to Dermond
        or, failing such designation, to the Employee's estate, the annual base
        salary provided for in this Agreement through the conclusion of the
        month in which such termination occurs.

11.     DISABILITY

        The Employee's employment under this Agreement may be terminated as a
        result of Disability at the option of Dermond by notice to the Employee,
        such termination to be effective upon the receipt by the Employee of
        such notice. In the event of the termination of the Employee's
        employment as a result of Disability, Dermond shall pay the Employee two
        (2) times his full annual base salary less any credit for sick pay or
        other benefits received by the Employee deriving from any private
        medical insurance or other similar arrangements entered into by Dermond.

12.     TERMINATION FOR CAUSE BY DERMOND

        The Employee's employment under this Agreement may be terminated by
        Dermond for Cause. In the event that the Employee's employment under
        this Agreement shall validly be terminated by Dermond for Cause pursuant
        to this Section 12, Dermond shall promptly pay accrued but unpaid salary
        and reimburse or pay any other accrued but unpaid amounts due under this
        Agreement as of the date of termination, and thereafter Dermond shall
        have no further obligations under this Agreement.

13.     TERMINATION WITHOUT CAUSE

        Dermond may terminate the Employee's employment at any time or any
        reason other than those specified in Sections 10, 11 and 12 hereof or
        for no reason whatsoever, by paying the Employee, in lieu of applicable
        notice, the amount equivalent to his salary for the remaining months of
        the Term, on a prorated basis, which is to be no less than a minimum of
        three (3) months of salary and no more than a maximum of twenty-four
        (24) months salary, in effect at the time of Employee's termination, to
        be paid within forty-five (45) days after the Termination Date.

14.     CONFLICT OF INTEREST

        During the Term of this Agreement, the Employee shall not, either
        directly or in conjunction with any person, firm, association,
        syndicate, company or corporation as principal, agent, shareholder, or
        in any other manner whatsoever, carry on or be engaged in, or advise,
        lend money to, guarantee the debts or obligations of, or permit his name
        or any part of it to be used or employed by any person, firm,
        association, syndicate, company or corporation engaged in any business
        in competition with the business then carried on by Dermond or a
        Subsidiary, provided that the holding of not more than two per cent (2%)
        of the issued shares of a public company listed on any recognized stock
        exchange in Canada or traded in the Canadian over-the-counter market,
        shall not be deemed a breach of this covenant.

15.     CONFIDENTIALITY

        During the Term of this Agreement and for a period of two (2) years
        thereafter, the Employee shall keep secret and retain in strictest
        confidence, and shall not use for his benefit or for the benefit or
        others, directly or indirectly, any and all confidential information
        relating to Dermond and its Subsidiaries of which the Employee shall
        obtain knowledge by reason of his employment under this Agreement,
        including, without limitation, trade and business secrets or any other
        non-public or proprietary information concerning the business, customer
        lists, financial plans or projections, pricing policies, marketing plans
        or strategies, business acquisition or divestiture plans, new personnel
        acquisition plans, technical processes, inventions and other research
        projects, and except in connection with the performance of his duties
        under this Agreement, he shall not disclose any such information to
        anyone outside Dermond and any of its Subsidiaries, except as required
        by law (provided prior written notice is given by the Employee to
        Dermond) or except with the prior written consent of Dermond, unless
        such information is known generally to the public or the trade through
        sources other than the unauthorized disclosure by the Employee.

16.     NON-COMPETITION AND NON-SOLICITATION

16.1    The Employee acknowledges and understands that (i) he is entering into
        this Agreement and specifically agreeing to the provisions of this
        Section16 contemporaneously with a transaction in which the Employee's
        shares in Dermond, and one of the material assets represented in the
        value of said share purchase, was the goodwill of Dermond, (ii) he has
        access to Dermond's clients, channels for developing clients and
        recruiting executives for employment, and other confidential information
        of Dermond, (iii) he has direct substantial responsibility to maintain
        Dermond's business relationship with clients of Dermond whose affairs he
        handles, (iv) the non-competition and non-solicitation provisions set
        forth in this Section16 constitute a material part of the consideration
        received by Dermond under this Agreement, (v) due to the specific nature
        and limited market for Dermond's activities, the definition of Territory
        as set forth in subsection 1.1p) hereof is reasonable and justified,
        (vi) it would be unfair to Dermond if the Employee were to appropriate
        for himself or for others the benefits of Dermond's many years of
        developing such business relationships, especially when the Employee
        enjoys a relationship with clients of Dermond as a result of his being
        introduced to the client's personnel as the representative of Dermond,
        (vii) it would be unfair to Dermond if the Employee were to appropriate
        for himself or for others the benefits of the business, personnel and
        other confidential information which Dermond has developed in the
        conduct of its business, and (viii) it is therefore fair that reasonable
        restrictions as set forth below should be placed on certain activities
        of the Employee after his employment with Dermond terminates.

16.2    The Employee shall not, without the prior written consent of Dermond, at
        any time during the Restriction Period, either individually or in
        partnership or jointly or in connection with each other or any Person,
        as principal, agent, consultant, lender, contractor, employer, employee,
        investor or shareholder, or in any other manner, directly or indirectly,
        anywhere within the Territory:

        (a)     advise, manage, carry on, establish, acquire control of, work
                for, perform, render, or engage in, any business or service or
                activity that is similar to or competitive with the Business or
                any portion of the Business; or

        (b)     invest in or lend money to, or guarantee the debts or
                obligations of, any business or service or activity, or any
                Person engaged in any business or service or activity, that is
                similar to or competitive with the Business or any portion of
                the Business; or

        (c)     permit the Employee's name or any part thereof to be used or
                employed by any Person that operates, is engaged in or has an
                interest in any business or service or activity that is similar
                to or competitive with the Business or any portion of the
                Business. Without limiting the effect of the foregoing,
                competing with or competitive with the Business, includes
                without limitation, directly or indirectly, engaging in or
                permitting the solicitation or sale of any products or services
                of the type included within the meaning of term Business as of
                the termination of the Employee's employment with Dermond.

16.3    The Employee shall not during the Restriction Period, without the
        written consent of Dermond, directly or indirectly (as owner, principal,
        agent, partner, officer, employee, independent contractor, consultant,
        stockholder, or otherwise), (i) solicit any Client (as this term is
        defined below) for a purpose or objective of providing to such Client,
        or obtaining an engagement from such Client to provide, any services,
        businesses or activities included within the term or (ii) solicit for
        employment or otherwise induce any employee employed by Dermond or any
        of its Affiliates at the date of termination of the Employee's
        employment with Dermond to leave such employ or offer to employ or
        employ such employee.  The term "Client" shall mean one or more of the
        following:

        (a)     any current or former client or customer of Dermond or its
                Affiliates;

        (b)     any current client or current customer of Dermond or its
                Affiliates if at any time since the Commencement Date the
                Employee had contact with such client or customer, or personally
                solicited such client or customer, or rendered services to such
                client or customer, or otherwise developed any relationship with
                such client or customer, or

        (c)     any former client or former customer of Dermond or its
                Affiliates who was, during the thirty-six (36) months preceding
                the Termination Date, a client or customer of Dermond or its
                Affiliates, if at any time since the Commencement Date the
                Employee had contact with such client or customer, or solicited
                such client or customer, or rendered services to such client or
                customer, or otherwise developed any relationship with such
                client or customer.

16.4    Upon the termination of the Employee's employment for whatever reason,
        the Employee shall deliver to Dermond all documents, papers, records,
        accounts of all and any description relating to the affairs of Dermond
        within his possession or under his control, it being the intention of
        the Employee and Dermond that all such notes or memoranda made by the
        Employee during the course of his employment under this Agreement shall
        be the property of Dermond and shall be left at its registered office or
        principal place of business upon the termination of the Employee's
        employment.

17.     WITHHOLDING

        Dermond shall be entitled to withhold from any and all amounts payable
        to the Employee under this Agreement such amounts as from time to time
        be required to be withheld pursuant to applicable tax laws and
        regulations.

18.     GENERAL PROVISIONS

18.1    Further Assurances

        Each of the parties upon the request of any other party, whether before
        or after the date hereof, shall do, execute, acknowledge and deliver or
        cause to be done, executed, acknowledged or delivered all such further
        acts, deeds, documents, assignments, transfers, conveyances, powers of
        attorney and assurances as may be reasonably necessary or desirable to
        effect complete consummation of the transactions contemplated by this
        Agreement.

18.2    Successors in Interest

        This Agreement and the provisions hereof shall enure to the benefit of
        and be binding upon the Parties and their respective successors and
        assigns.

18.3    Notices

        Any notice, direction or other instrument required or permitted to be
        given hereunder shall be in writing and given by delivery or sent by (i)
        registered or certified mail, (ii) reputable overnight courier, (iii)
        personal delivery, (iv) telecopier or similar telecommunication device
        and addressed:

        (a)     in the case of Dermond at:

                Experts Conseils Dermond Inc.
                c/o McKenzie Bay International, Ltd.
                3362 Moraine Drive
                Brighton, Michigan
                U.S.A.  48114

                Attention: Mr. Gary L. Westerholm

                Telecopier: (810) 220-4823

        (b)     in the case of the Employee at:

                Jacquelin Dery
                663 McEachran Street,
                Outremont, Quebec
                H2V 3C6

                Telecopier: (514) 274-4858

                Any notice, direction or other instrument given as aforesaid
                shall be deemed to have been effectively given and received, if
                sent by mail on the fourth (4th) business day following such
                mailing, if sent by telecopier or similar telecommunications
                device on the next business day following such transmission or,
                if delivered, to have been given and received on the date of
                such delivery. Any party may change its address for service by
                written notice given as aforesaid.

18.4    Amendments

        This agreement may not be amended except by written instrument duly
        executed by or on behalf of all parties hereto.

18.5    Language

        The Parties hereby acknowledge that they have requested that this
        Agreement and all related documents be drawn up in the English language.
        Les parties aux presentes reconnaissent qu'elles ont exige que la
        presente convention et tous les documents qui s'y rattachent soient
        rediges en anglais.

18.6    Governing Laws

        This Agreement shall be governed by and construed in accordance with the
        Laws of the Province of Quebec and the Laws of Canada applicable
        therein. The Parties agree to submit to the jurisdiction of the Courts
        of Quebec, District of Montreal.

18.7    Gender

        Any reference in this Agreement to any gender shall include all genders
        and words used herein importing the singular number only shall include
        the plural and vice versa.

18.8    Headings

        The division of this Agreement into articles, sections, subsections and
        other subdivisions and the insertion of headings are for convenience of
        reference only and shall not affect or be utilized in the construction
        or interpretation hereof.

18.9    Severability

        Any article, section, subsection or other subdivision of this Agreement
        or any other provision of this Agreement which is, or becomes, illegal,
        invalid or unenforceable shall be severed herefrom and shall be
        ineffective to the extent of such illegality, invalidity or
        unenforceability and shall not affect or impair the remaining provisions
        hereof, which provisions shall be severed from any illegal, invalid or
        unenforceable article, section, subsection or other subdivision of this
        Agreement or any other provision of this Agreement.

18.10   Waiver

        No waiver of any of the provisions of this Agreement shall be deemed to
        constitute a waiver of any other provision (whether or not similar) nor
        shall such waiver constitute a continuing waiver unless otherwise
        expressly provided in a written document duly executed by the party to
        be bound thereby.

IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first above written.

                EXPERTS CONSEILS DERMOND INC.

        per: /s/ Gary L. Westerholm
                 Director

    Witness: /s/ Jacquelin Dery

================================================================================
EXHIBIT B

EMPLYOMENT AGREEMENT - MONDOU

EMPLOYMENT AGREEMENT entered into on February 12, 2002, in the City of Montreal,
Province of Quebec

BETWEEN: LAURENT MONDOU, domiciled and residing at 451, Le Royer Street, St.
Lambert, Quebec, J4R 1M7;

                  (hereinafter referred to as the "Employee")

AND:    EXPERTS CONSEILS DERMOND INC., a corporation duly incorporated under the
Canada Business Corporations Act, having its registered office at 663 McEachran
Avenue, Outremont, Quebec, H2V 3C6, represented herein by Gary L. Westerholm,
Director, duly authorized as he so declares;

        (hereinafter referred to as "Dermond")

WHEREAS as of the date hereof, the Employee sold all of his shares in the share
capital of Dermond to McKenzie Bay International Ltd. ("MKBY");

WHEREAS Dermond wishes to retain the Employee;

WHEREAS the Employee and Dermond are desirous of entering into an agreement for
the Employee's employment, all subject to the terms and conditions set forth in
this Agreement;

NOW IT IS HEREBY AGREED:

INTERPRETATION

Definitions

In this Agreement, the following words and expressions have the respective
meanings ascribed to them below:

"Affiliate" with respect to a Person means a Person that controls, is controlled
by or under common control with such Person.  For purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meaning collative to the foregoing;

"Agreement" means this employment agreement;

"Board of Directors" means the board of directors of Dermond;

"Business" means the fabrication, sale or lease of the Dermond Wind Generator
and related technology;

"Cause" shall include, but not be limited to the following, as a basis for
termination of employment, (i) wilful misconduct involving bad faith by the
Employee in respect of his obligations under this Agreement, which misconduct
causes or is intended by the Employee to cause significant injury to Dermond,
(ii) gross malfeasance, (iii) conduct by Employee which constitutes a breach of
the Employee's fiduciary duty or (iv) repeated refusal by the Employee to
perform reasonable and lawful job assignments which are not materially
inconsistent with his duties and responsibilities under this Agreement and such
failure continues for a period of ten (10) days after Dermond has given the
Employee written notice of such failure and requested the Employee to remedy
such failure.

"Commencement Date" means February 12, 2002;

"Disability" shall mean, with respect to the Employee, being physically or
mentally disabled, whether totally or partially, so that he is substantially
unable to perform his duties under this Agreement for a longer period than
twelve (12) consecutive months, or if he shall be disabled at different times
for more than twelve (12) months (whether working days or not) in any one period
of eighteen (18) consecutive months;

"Discoveries and Works" includes by way of example but without limitation,
intellectual property, trade secrets and other confidential information, patents
and patent applications, trademarks and trademark registrations and
applications, service marks and service mark registrations and applications,
trade names, copyrights and copyright registrations and applications;

"Employment Year" means the period beginning on February 12, 2002 and ending on
February 11, 2003, and each consecutive twelve-month period;

"Parties" means Dermond and the Employee and "Party" means one or the other as
the case may be;

"Person" means any individual, corporation, proprietorship, firm, partnership,
limited partnership, limited liability company, trust, association or other
entity;

"Restriction Period" means the period of time covering the Term plus a period
equivalent to eighteen (18) months following Employee's Termination Date;

"Subsidiary" means a corporation controlled by Dermond, or by another subsidiary
of Dermond;

"Term", "Initial Term", and "Additional Term" shall have the meaning set forth
in Section - RENV -Ref4972923

"Termination Date" means the effective date of the Employee's termination of
employment with Dermond, regardless of the reason;

"Territory" means the world.

EMPLOYMENT

Dermond hereby employs the Employee as Vice-president of Dermond as well as to:

provide technical expertise in furthering the development of the Dermond Wind
Generator;

provide technical expertise in developing off-grid power system technology; and

provide technical expertise to potential and actual customers, vendors and
partners of Dermond and its Affiliates and Subsidiaries,

as well as other duties Dermond may from time to time request, without
additional compensation. The Employee hereby accepts employment from Dermond to
perform the duties described above upon the terms and conditions set forth in
this Agreement.

DUTIES AND RESPONSIBILITIES

During the Term of this Agreement, the Employee shall devote his full time and
efforts to the performance of his duties and responsibilities under this
Agreement and to the business and affairs of Dermond, its Subsidiaries and
Affiliates, in general, and the Employee shall use his best efforts to promote
the interests thereof and shall faithfully and to the best of his ability serve
as the Vice-president of Dermond.

It is expressly understood and agreed that the Employee shall not engage in any
other business or business opportunity, whether or not such business activity is
pursued for gain, profit or other pecuniary advantage, provided however that:

the Employee may engage in personal, charitable, professional and investment
activities to the extent such activities do not conflict or interfere with the
Employee's duties and obligations under this Agreement or Employee's ability to
perform his duties and responsibilities under this Agreement; and

the Employee shall not be prevented from investing his assets in such form or
manner as will not require any substantial amount of time or services on the
part of the Employee in the operation of the affairs of the enterprises in which
such investments are made.

The Employee shall be subject to the direction of, and report only to, the Board
of Directors.

The Employee shall also perform duties commensurate with his position and such
specific duties and services as the Board of Directors shall reasonably request
consistent with the Employee's position.

It is contemplated that the Employee will be obliged from time to time and for
reasonable period of time to travel in the performance of his duties and
obligations under this Agreement. However, the principal place of employment of
the Employee which the Employee shall report for work will be at the Montreal,
Quebec office of Dermond.

TERM

Unless sooner terminated as provided for in this Agreement, the terms of the
Employee's employment shall commence on February 12, 2002 and shall continue for
five (5) year(s) (the "Initial Term"), provided, however, that the Initial Term
of the Employee's employment under this Agreement shall automatically be
extended for additional periods of twelve (12) months each (an "Additional
Term") unless and until either Dermond or the Employee shall have given the
other notice, not less than three (3) months prior to the expiration of the
Initial Term or any subsequent Additional Term, of the termination by the
notifying party of the Employee's employment effective as of the next succeeding
anniversary date of the expiration of the Initial Term or Additional Term (the
Initial Term and any Additional Term(s) are collectively referred to as the
"Term" in this Agreement).

COMPENSATION

During the Term of this Agreement, Dermond shall pay to the Employee an annual
base salary of sixty-five thousand Canadian dollars ($65,000 CDN). Such salary
shall be paid to the Employee in monthly instalments of $5,416.67 CDN (less
applicable taxes and other deductions at source), on the first business day of
each month. However, upon the completion of the first sale of a Dermond Wind
Generator by MKBY, Dermond or any of its Subsidiaries, the Employee's salary
will increase to eighty-five thousand Canadian dollars ($85,000 CDN) per year,
paid in monthly instalments, less any applicable taxes or deductions at source.
The compensation committee of the Board of Directors shall review the annual
base salary of the Employee each year and as a result of such review shall
increase the annual base salary, effective as of the commencement of each
successive Employment Year, to such greater amount as the Board of Directors may
deem reasonable in the light of the then business and financial affairs of
Dermond and such other factors as in the then circumstances of Dermond may be
appropriate.

EXPENSES

Dermond shall reimburse the Employee for all necessary and reasonable expenses
incurred by him in the performance of his duties under this Agreement. The
Employee shall, on being so required, provide Dermond with vouchers or other
evidence of actual payment of the said expenses in a form satisfactory to
Dermond.

BENEFITS

Employee Plans

During the Term of this Agreement, the Employee shall participate in all
employee benefit and insurance plans or programs established by Dermond in its
full discretion and from which he is not excluded from participating by reason
of the terms and conditions in the respective plans or programs.

Vacation

The Employee shall be entitled to four (4) weeks paid vacation in each
Employment Year to be taken at such times as may be appropriate having regard to
the requirements of Dermond's business. The Employee shall not be entitled to
carry forward from one year to another untaken vacation time unless expressly
agreed between Dermond and the Employee.

RETURN OF DOCUMENTS AND PROPERTY

Upon the termination of Employee's employment with Dermond, or at anytime upon
the request of Dermond, Employee (or his heirs or personal representatives)
shall deliver to Dermond (a) all documents and materials (including without
limitation, computer files) containing trade secrets or other confidential
information relating to the business and affairs of Dermond, and (b) all
documents, materials and other property (including, without limitation, computer
files) belonging to Dermond, which in either case are in the possession or under
the control of Employee (or his heirs or personal representatives).

DISCOVERIES AND WORKS

All Discoveries and Works made or conceived by Employee during his employment by
Dermond, jointly or with others, that relate to the present or anticipated
activities of Dermond, or are used or usable by Dermond shall be owned by
Dermond. Employee shall (a) promptly notify, make full disclosure to, and
execute and deliver any documents requested by Dermond to evidence or better
assure title to Discoverie s and Works in Dermond, as so requested, (b) renounce
any and all claims, including but not limited to claims of ownership and
royalty, with respect to all Discoveries and Works and all other property owned
or licensed by Dermond, (c) assist Dermond in obtaining or maintaining for
itself at its own expense Canadian and foreign patents, copyrights, trade secret
protection or other protection of any and all Discoveries and Works, and (d)
promptly execute, whether during his employment with Dermond or thereafter, all
applications or other endorsements necessary or appropriate to maintain patents
and other rights for Dermond and to protect the title of Dermond thereto,
including but not limited to assignments of such patents and other rights. Any
Discoveries and Works which, within six (6) months after the Termination Date,
are made, disclosed, reduced to a tangible or written form or description, or
are reduced to practice by Employee and which pertain to the business carried on
or products or services being sold or developed by Dermond at the time of such
termination shall, as between Employee and Dermond be presumed to have been made
during Employee's employment by Dermond.

DEATH

The Employee's employment under this Agreement shall terminate upon his death.
In the event of the termination of the Employee's employment as a result of his
death, Dermond shall promptly pay to any one or more beneficiaries designated by
the Employee pursuant to a notice to Dermond or, failing such designation, to
the Employee's estate, the annual base salary provided for in this Agreement
through the conclusion of the month in which such termination occurs.

DISABILITY

The Employee's employment under this Agreement may be terminated as a result of
Disability at the option of Dermond by notice to the Employee, such termination
to be effective upon the receipt by the Employee of such notice. In the event of
the termination of the Employee's employment as a result of Disability, Dermond
shall pay the Employee two (2) times his full annual base salary less any credit
for sick pay or other benefits received by the Employee deriving from any
private medical insurance or other similar arrangements entered into by Dermond.

TERMINATION FOR CAUSE BY DERMOND

The Employee's employment under this Agreement may be terminated by Dermond for
Cause. In the event that the Employee's employment under this Agreement shall
validly be terminated by Dermond for Cause pursuant to this Section - RENV-
Ref497222905-12, Dermond shall promptly pay accrued but unpaid salary and
reimburse or pay any other accrued but unpaid amounts due under this Agreemen t
as of the date of termination, and thereafter Dermond shall have no further
obligations under this Agreement.

TERMINATION WITHOUT CAUSE

Dermond may terminate the Employee's employment at any time or any reason other
than those specified in Sections RENV -Ref756526-10, RENV-Ref756527-11 and RENV-
Ref497222905-12 hereof or for no reason whatsoever, by paying the Employee, in
lieu of applicable notice, the amount equivalent to his salary for the remaining
of the Term, on a prorated basis, which is to be no less than a minimum of three
(3) months of salary and no more than a maximum of twenty-four (24) months
salary, in effect at the time of Employee's termination, to be paid within
forty-five (45) days after the Termination Date.

CONFLICT OF INTEREST

During the Term of this Agreement, the Employee shall not, either directly or in
conjunction with any person, firm, association, syndicate, company or
corporation as principal, agent, shareholder, or in any other manner whatsoever,
carry on or be engaged in, or advise, lend money to, guarantee the debts or
obligations of, or permit his name or any part of it to be used or employed by
any person, firm, association, syndicate, company or corporation engaged in any
business in competition with the business then carried on by Dermond or a
Subsidiary, provided that the holding of not more than two per cent (2%) of the
issued shares of a public company listed on any recognized stock exchange in
Canada or traded in the Canadian over-the-counter market, shall not be deemed a
breach of this covenant.

CONFIDENTIALITY

During the Term of this Agreement and for a period of two (2) years thereafter,
the Employee shall keep secret and retain in strictest confidence, and shall not
use for his benefit or for the benefit or others, directly or indirectly, any
and all confidential information relating to Dermond and its Subsidiaries of
which the Employee shall obtain knowledge by reason of his employment under this
Agreement, including, without limitation, trade and business secrets or any
other non-public or proprietary information concerning the business, customer
lists, financial plans or projections, pricing policies, marketing plans or
strategies, business acquisition or divestiture plans, new personnel acquisition
plans, technical processes, inventions and other research projects, and except
in connection with the performance of his duties under this Agreement, he shall
not disclose any such information to anyone outside Dermond and any of its
Subsidiaries, except as required by law (provided prior written notice is given
by the Employee to Dermond) or except with the prior written consent of Dermond,
unless such information is known generally to the public or the trade through
sources other than the unauthorized disclosure by the Employee.

NON-COMPETITION AND NON-SOLICITATION

The Employee acknowledges and understands that (i) he is entering into this
Agreement and specifically agreeing to the provisions of this Section RENV-
Ref531161599 - 16 contemporaneously with a transaction in which the Employee's
shares in Dermond, and one of the material assets represented in the value of
said share purchase, was the goodwill of Dermond, (ii) he has access to
Dermond's clients, channels for developing clients and recruiting executives for
employment, and other confidential information of Dermond, (iii) he has direct
substantial responsibility to maintain Dermond's business relationship with
clients of Dermond whose affairs he handles, (iv) the non-competition and non-
solicitation provisions set forth in this Section RENV - Ref531161599-16
constitute a material part of the consideration received by Dermond under this
Agreement, (v) due to the specific nature and limited market for Dermond's
activities, the definition of Territory as set forth in subsection RENV-
Ref1209391-1., RENV-Ref1209397-p hereof is reasonable and justified, (vi) it
would be unfair to Dermond if the Employee were to appropriate for himself or
for others the benefits of Dermond's many years of developing such business
relationships, especially when the Employee enjoys a relationship with clients
of Dermond as a result of his being introduced to the client's personnel as the
representative of Dermond, (vii) it would be unfair to Dermond if the Employee
were to appropriate for himself or for others the benefits of the business,
personnel and other confidential information which Dermond has developed in the
conduct of its business, and (viii) it is therefore fair that reasonable
restrictions as set forth below should be placed on certain activities of the
Employee after his employment with Dermond terminates.

The Employee shall not, without the prior written consent of Dermond, at any
time during the Restriction Period, either individually or in partnership or
jointly or in connection with each other or any Person, as principal, agent,
consultant, lender, contractor, employer, employee, investor or shareholder, or
in any other manner, directly or indirectly, anywhere within the Territory:

advise, manage, carry on, establish, acquire control of, work for, perform,
render, or engage in, any business or service or activity that is similar to or
competitive with the Business or any portion of the Business; or

invest in or lend money to, or guarantee the debts or obligations of, any
business or service or activity, or any Person engaged in any business or
service or activity, that is similar to or competitive with the Business or any
portion of the Business; or

permit the Employee's name or any part thereof to be used or employed by any
Person that operates, is engaged in or has an interest in any business or
service or activity that is similar to or competitive with the Business or any
portion of the Business. Without limiting the effect of the foregoing, competing
with or competitive with the Business, includes without limitation, directly or
indirectly, engaging in or permitting the solicitation or sale of any products
or services of the type included within the meaning of term Business as of the
termination of the Employee's employment with Dermond.

The Employee shall not during the Restriction Period, without the written
consent of Dermond, directly or indirectly (as owner, principal, agent, partner,
officer, employee, independent contractor, consultant, stockholder, or
otherwise), (i) solicit any Client (as this term is defined below) for a purpose
or objective of providing to such Client, or obtaining an engagement from such
Client to provide, any services, businesses or activities included within the
term or (ii) solicit for employment or otherwise induce any employee employed by
Dermond or any of its Affiliates at the date of termination of the Employee's
employment with Dermond to leave such employ or offer to employ or employ such
employee.  The term "Client" shall mean one or more of the following:

any current or former client or customer of Dermond or its Affiliates;

any current client or current customer of Dermond or its Affiliates if at any
time since the Commencement Date the Employee had contact with such client or
customer, or personally solicited such client or customer, or rendered services
to such client or customer, or otherwise developed any relationship with such
client or customer, or

any former client or former customer of Dermond or its Affiliates who was,
during the thirty-six (36) months preceding the Termination Date, a client or
customer of Dermond or its Affiliates, if at any time since the Commencement
Date the Employee had contact with such client or customer, or solicited such
client or customer, or rendered services to such client or customer, or
otherwise developed any relationship with such client or customer.

Upon the termination of the Employee's employment for whatever reason, the
Employee shall deliver to Dermond all documents, papers, records, accounts of
all and any description relating to the affairs of Dermond within his possession
or under his control, it being the intention of the Employee and Dermond that
all such notes or memoranda made by the Employee during the course of his
employment under this Agreement shall be the property of Dermond and shall be
left at its registered office or principal place of business upon the
termination of the Employee's employment.

WITHHOLDING

Dermond shall be entitled to withhold from any and all amounts payable to the
Employee under this Agreement such amounts as from time to time be required to
be withheld pursuant to applicable tax laws and regulations.

GENERAL PROVISIONS

Further Assurances

Each of the parties upon the request of any other party, whether before or after
the date hereof, shall do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged or delivered all such further acts, deeds, documents,
assignments, transfers, conveyances, powers of attorney and assurances as may be
reasonably necessary or desirable to effect complete consummation of the
transactions contemplated by this Agreement.

Successors in Interest

This Agreement and the provisions hereof shall enure to the benefit of and be
binding upon the Parties and their respective successors and assigns.

Notices

Any notice, direction or other instrument required or permitted to be given
hereunder shall be in writing and given by delivery or sent by (i) registered or
certified mail, (ii) reputable overnight courier, (iii) personal delivery, (iv)
telecopier or similar telecommunication device and addressed:

in the case of Dermond at:

Experts Conseils Dermond Inc.
c/o McKenzie Bay International, Ltd.
3362 Moraine Drive
Brighton, Michigan
U.S.A.  48114

Attention: Mr. Gary L. Westerholm

Telecopier: (810) 220-4823

in the case of the Employee at:

Laurent Mondou
451 Le Royer Street
St. Laurent, Quebec
J4R 1M7

Telecopier: (514) 274-4858

Any notice, direction or other instrument given as aforesaid shall be deemed to
have been effectively given and received, if sent by mail on the fourth (4th)
business day following such mailing, if sent by telecopier or similar
telecommunications device on the next business day following such transmission
or, if delivered, to have been given and received on the date of such delivery.
Any party may change its address for service by written notice given as
aforesaid.

Amendments

This agreement may not be amended except by written instrument duly executed by
or on behalf of all parties hereto.

Language

The Parties hereby acknowledge that they have requested that this Agreement and
all related documents be drawn up in the English language. Les parties aux
presentes reconnaissent qu'elles ont exige que la presente convention et tous
les documents qui s'y rattachent soient rediges en anglais.

Governing Laws

This Agreement shall be governed by and construed in accordance with the Laws of
the Province of Quebec and the Laws of Canada applicable therein. The Parties
agree to submit to the jurisdiction of the Courts of Quebec, District of
Montreal.

Gender

Any reference in this Agreement to any gender shall include all genders and
words used herein importing the singular number only shall include the plural
and vice versa.

Headings

The division of this Agreement into articles, sections, subsections and other
subdivisions and the insertion of headings are for convenience of reference only
and shall not affect or be utilized in the construction or interpretation
hereof.

Severability

Any article, section, subsection or other subdivision of this Agreement or any
other provision of this Agreement which is, or becomes, illegal, invalid or
unenforceable shall be severed herefrom and shall be ineffective to the extent
of such illegality, invalidity or unenforceability and shall not affect or
impair the remaining provisions hereof, which provisions shall be severed from
any illegal, invalid or unenforceable article, section, subsection or other
subdivision of this Agreement or any other provision of this Agreement.

Waiver

No waiver of any of the provisions of this Agreement shall be deemed to
constitute a waiver of any other provision (whether or not similar) nor shall
such waiver constitute a continuing waiver unless otherwise expressly provided
in a written document duly executed by the party to be bound thereby.

IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first above written.

EXPERTS CONSEILS DERMOND INC.

per:     /s/ Gary L. Westerholm
             Director

Witness: /s/ Laurent Mondou

================================================================================
EXHIBIT C

ROYALTY AGREEMENT WITH DERY

        This Agreement made as of the 12th day of February, 2002 between
McKENZIE BAY INTERNATIONAL, LTD., a Delaware corporation, with administrative
offices at 3362 Moraine Drive, Brighton, Michigan USA 48114 (hereafter "MKBY"),
and JACQUELIN DERY, whose address is 663 McEachran Ave., Outremont, Quebec H2V
3C6 CANADA (hereinafter "Dery").

W I T N E S S E T H :

        WHEREAS, Dery is an employee of Experts Conseils Dermond Inc.
("Dermond") and as such employee has contributed substantially to the technology
which has developed the Dermond Wind Generator System, and

        WHEREAS, Dermond has now become a wholly-owned subsidiary of MKBY, and

        WHEREAS, the parties have agreed that Dery will receive a royalty upon
the sale or lease of a Dermond Wind Generator System,

        NOW, THEREFORE, it is agreed by and between the parties as follows:

1.      MKBY shall pay to Dery a royalty of 1.25% of all net receipts received
        by MKBY or any wholly-owned subsidiary of MKBY from all sales of the
        Dermond Wind Generator utilizing the technology developed by Dermond.
        "Net receipts" as used in this agreement means the gross receipts less
        any discounts and allowances to customers, excise and sales taxes and
        the cost of transportation.

2.      In the event that the Dermond Wind Generator is leased to the ultimate
        customer rather than sold, then and in that event, Dery shall receive a
        royalty equal to 1.25% of the net lease payment received by MKBY or a
        subsidiary of MKBY, as the case may be. "Net lease payment" for the
        purpose of this agreement shall mean the gross lease payment less any
        sales or excise tax. In the event of the resale or re-lease of the same
        wind generator, Dery shall receive the royalty outlined in paragraph 1
        above upon such resale or the commission outlined in this paragraph upon
        the re-lease of said unit.

3.      In the event a Dermond Wind Generator System is leased to an ultimate
        customer rather than sold through an outright sale, Dery may elect to
        receive the royalty in a lump sum upon execution of the lease agreement
        and payment of the first lease payment rather than receiving the royalty
        over the life of the lease agreement. Such election may be made by Dery
        by written notification to MKBY or the subsidiary which has made the
        sale of the Dermond Wind Generator. Such election must be made by Dery
        within 30 days of the execution of the lease agreement. Said lump sum
        royalty shall be an amount equal to 1.25% of the present value of the
        lease agreement computed using the prime rate reported by the Wall
        Street Journal as of the date of execution of the lease agreement. The
        lump sum royalty payment shall not be payable in the event of the resale
        or re-lease of the same wind generator after repossession by MKBY upon
        default of the ultimate customer.

4.      All payments to Dery shall be in Canadian dollars converted if
        applicable as of the date payment is received by MKBY or its subsidiary.

5.      Said royalties shall be paid to Dery on all Dermond Wind Generators sold
        or leased during the 10-year period commencing with the first sales or
        lease transaction of a Dermond Wind Generator. MKBY or its subsidiary,
        as the case may be, shall give notice to Dery within 10 days of the
        completion of any sale or execution of a lease agreement for any system
        which includes a Dermond Wind Generator. In addition, MKBY shall keep
        and shall cause its subsidiaries to keep full and correct records in
        respect of all Dermond Wind Generators which it shall sell or lease and
        shall prepare quarterly statements from these records and shall provide
        the same to Dery reporting how many complete Dermond Wind Generators
        were sold or put into use as a part of a lease arrangement during the
        preceding calendar quarter and setting forth the calculation of the
        royalty payments payable to Dery. These reports shall be submitted to
        Dery along with a check in payment of all royalty payments shown as
        being payable to Dery in said report within 30 days of the termination
        of each calendar quarter.

6.      In order to provide an economical and speedy resolution to any possible
        dispute between the parties, the parties agree to submit any such
        dispute to binding arbitration by the American Arbitration Association
        of Southeast Michigan, United States of America, pursuant to the
        Commercial Arbitration Rules of the American Arbitration Association
        modified as follows:

        A.      There shall be one arbitrator selected in accordance with the
                AAA rules.

        B.      All costs and expenses of arbitration shall be borne by the
                losing party.

        C.      The arbitrator shall permit discovery in the form of written
                interrogatories and depositions which discovery shall be
                completed within 60 days from submission of the answer to the
                arbitration claim.

        D.      The decision of the arbitrator shall be in writing and set forth
                written findings of fact and conclusions of law upon which the
                decision is based.

        E.      The decision of the arbitrator shall be final and binding with
                respect to matters of fact and shall be appealable only with
                respect to conclusions of law.

        F.      Judgment on the arbitration award may be entered in any court of
                competent jurisdiction as provided by law.

7.      This agreement shall be construed in accordance with and governed by the
        laws of the State of Michigan USA.

8.      The parties hereby acknowledge that they have requested that this
        agreement and all related documents be drawn up in the English language.
        Les parties aux presentes reconnaissent qu'elles ont exige que la
        presente convention et tous les documents qui s'y rattachent soient
        rediges en anglais.

                                                McKENZIE BAY INTERNATIONAL, LTD.

                                                per:/s/ Gary L. Westerholm,
                                                     President

                                                  /s/JACQUELIN DERY

================================================================================
EXHIBIT D

ROYALTY AGREEMENT WITH MONDOU

        This Agreement made as of the 12th day of February, 2002 between
McKENZIE BAY INTERNATIONAL, LTD., a Delaware corporation, with administrative
offices at 3362 Moraine Drive, Brighton, Michigan USA 48114 (hereafter "MKBY"),
and LAURENT MONDOU, whose address is 451 Le Royer Street, St. Lambert, Quebec,
J4R 1M7 CANADA J4R 1M7 (hereinafter "Mondou").

W I T N E S S E T H :

        WHEREAS, Mondou is an employee of Experts Conseils Dermond Inc.
("Dermond") and as such employee has contributed substantially to the technology
which has developed the Dermond Wind Generator System, and

        WHEREAS, Dermond has now become a wholly-owned subsidiary of MKBY, and

        WHEREAS, the parties have agreed that Mondou will receive a royalty upon
the sale or lease of a Dermond Wind Generator System,

        NOW, THEREFORE, it is agreed by and between the parties as follows:

1.      MKBY shall pay to Mondou a royalty of 1.25% of all net receipts received
        by MKBY or any wholly-owned subsidiary of MKBY from all sales of the
        Dermond Wind Generator utilizing the technology developed by Dermond.
        "Net receipts" as used in this agreement means the gross receipts less
        any discounts and allowances to customers, excise and sales taxes and
        the cost of transportation.

2.      In the event that the Dermond Wind Generator is leased to the ultimate
        customer rather than sold, then and in that event, Mondou shall receive
        a royalty equal to 1.25% of the net lease payment received by MKBY or a
        subsidiary of MKBY, as the case may be. "Net lease payment" for the
        purpose of this agreement shall mean the gross lease payment less any
        sales or excise tax. In the event of the resale or re-lease of the same
        wind generator, Mondou shall receive the royalty outlined in paragraph 1
        above upon such resale or the commission outlined in this paragraph upon
        the re-lease of said unit.

3.      In the event a Dermond Wind Generator System is leased to an ultimate
        customer rather than sold through an outright sale, Mondou may elect to
        receive the royalty in a lump sum upon execution of the lease agreement
        and payment of the first lease payment rather than receiving the royalty
        over the life of the lease agreement. Such election may be made by
        Mondou by written notification to MKBY or the subsidiary which has made
        the sale of the Dermond Wind Generator. Such election must be made by
        Mondou within 30 days of the execution of the lease agreement. Said lump
        sum royalty shall be an amount equal to 1.25% of the present value of
        the lease agreement computed using the prime rate reported by the Wall
        Street Journal as of the date of execution of the lease agreement. The
        lump sum royalty payment shall not be payable in the event of the resale
        or re-lease of the same wind generator after repossession by MKBY upon
        default of the ultimate customer.

4.      All payments to Mondou shall be in Canadian dollars converted if
        applicable as of the date payment is received by MKBY or its subsidiary.

5.      Said royalties shall be paid to Mondou on all Dermond Wind Generators
        sold or leased during the 10-year period commencing with the first sales
        or lease transaction of a Dermond Wind Generator. MKBY or its
        subsidiary, as the case may be, shall give notice to Mondou within 10
        days of the completion of any sale or execution of a lease agreement for
        any system which includes a Dermond Wind Generator. In addition, MKBY
        shall keep and shall cause its subsidiaries to keep full and correct
        records in respect of all Dermond Wind Generators which it shall sell or
        lease and shall prepare quarterly statements from these records and
        shall provide the same to Mondou reporting how many complete Dermond
        Wind Generators were sold or put into use as a part of a lease
        arrangement during the preceding calendar quarter and setting forth the
        calculation of the royalty payments payable to Mondou. These reports
        shall be submitted to Mondou along with a check in payment of all
        royalty payments shown as being payable to Mondou in said report within
        30 days of the termination of each calendar quarter.

6.      In order to provide an economical and speedy resolution to any possible
        dispute between the parties, the parties agree to submit any such
        dispute to binding arbitration by the American Arbitration Association
        of Southeast Michigan, United States of America, pursuant to the
        Commercial Arbitration Rules of the American Arbitration Association
        modified as follows:

        A.      There shall be one arbitrator selected in accordance with the
                AAA rules.

        B.      All costs and expenses of arbitration shall be borne by the
                losing party.

        C.      The arbitrator shall permit discovery in the form of written
                interrogatories and depositions which discovery shall be
                completed within 60 days from submission of the answer to the
                arbitration claim.

        D.      The decision of the arbitrator shall be in writing and set forth
                written findings of fact and conclusions of law upon which the
                decision is based.

        E.      The decision of the arbitrator shall be final and binding with
                respect to matters of fact and shall be appealable only with
                respect to conclusions of law.

        F.      Judgment on the arbitration award may be entered in any court of
                competent jurisdiction as provided by law.

7.      This agreement shall be construed in accordance with and governed by the
        laws of the State of Michigan USA.

8.      The parties hereby acknowledge that they have requested that this
        agreement and all related documents be drawn up in the English language.
        Les parties aux presentes reconnaissent qu'elles ont exige que la
        presente convention et tous les documents qui s'y rattachent soient
        rediges en anglais.

                                         McKENZIE BAY INTERNATIONAL, LTD.

                                per: /s/ Gary L. Westerholm
                                         President

                                per: /s/ Laurent Mondou

================================================================================
EXHIBIT E

NON-COMPETITION AND CONFIDENTIALITY AGREEMENT

        This Non-Competition and Confidentiality Agreement (this "Agreement")
        made and entered into as of February 12, 2002 is made and entered into
        by and among JACQUELIN DERY and LAURENT MONDOU (collectively the
        "Stockholders"), EXPERTS CONSEILS DERMOND INC. ("Dermond") and McKENZIE
        BAY INTERNATIONAL, LTD., a Delaware corporation ("MKBY") on behalf of
        itself and its Affiliated and subsidiary companies.

W I T N E S S E T H :

        WHEREAS, MKBY, has acquired from the Stockholders all of

        the issued and outstanding stock of Dermond, and

        WHEREAS, after the completion of the closing regarding the purchase of
        said stock and other transactions contemplated between the parties (the
        "Closing"), one of the primary business activities of MKBY and its
        Affiliated and subsidiary companies will include the business previously
        conducted by Dermond, and

        WHEREAS, it is a condition to the obligation of MKBY to complete the
        acquisition of said shares pursuant to a share purchase agreement
        executed on the date hereof among the Stockholders, Dermond and MKBY
        (the "Share Purchase Agreement"),

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

1.      Definitions.  The following terms shall have
        the meanings set forth below:

        A.      "Affiliate" with respect to a Person means a Person that
                controls, is controlled by or under common control with such
                Person. For purposes of this definition, "control" when used
                with respect to any Person means the power to direct the
                management and policies of such Person, directly or indirectly,
                whether through the ownership of voting securities, by contract
                or otherwise, and the terms "controlling" and "controlled" have
                meaning collative to the foregoing.

        B.      "Business" shall mean the fabrication, sale or lease of the
                Dermond Wind Generator and related technology or any related
                business.

        C.      "Competitive Business" shall mean any business or activity which
                is competitive with the Business including without limitation,
                any business or activity which provides products or services
                similar to the Business or which provides products or services
                as a replacement for or in lieu or as an alternative to products
                or services provided by the Business.

        D.      "Person" means any individual, corporation, proprietorship,
                firm, partnership, limited partnership, limited liability
                company, trust, association or other entity.

        E.      "Territory" means the world.

2.      Restrictive Covenant. For a period of three years after the date of this
        Agreement, neither of the Stockholders shall directly or indirectly
        except on behalf of either Dermond or MKBY and its Affiliates or
        subsidiaries, without the prior written consent of MKBY, within the
        Territory (a) accept employment with or render services to any Person
        engaged in the Business or a Competitive Business; (b) own, manage,
        operate, finance, control or participate in any capacity in the
        ownership, management, operation , financing or control of or be
        connected as a principal, agent, representative, consultant, advisor,
        investor, owner, partner, financier, manager or joint venture with or
        permit his or its name to be used by or in connection with any Person
        engaged in the Business or any Competitive Business; (c) contact, deal
        with or in any way solicit any Person that at any time during the
        previous five years was a customer of either Dermond or MKBY or its
        subsidiaries in an effort to cause or induce such Person to purchase or
        otherwise obtain the benefit or use of any products or services provided
        by any Person engaged in the Business or any Competitive Business; or
        (d) solicit for employment or interfere with the relationship of either
        Dermond or MKBY or any of its Affiliates or subsidiaries with any of
        their current or future employees, agents or representatives or any
        Person formerly employed or engaged by either Dermond or MKBY or any of
        its Affiliates or subsidiaries at any time during the previous 18
        months. Notwithstanding the foregoing, nothing contained in this section
        shall prevent either Stockholder from owning shares of capital stock of
        MKBY or any of its subsidiaries or investing as an investor in the
        voting securities of any Person which is a Reporting Person under the
        Securities Exchange Act of 1934 as amended as well as any Person which
        is a reporting issuer under the Securities Acts of any of the
        jurisdictions of Canada so long as the aggregate amount of such
        securities that such Stockholder owns directly or indirectly is less
        than 2% of the total outstanding voting securities of such Person, and
        such Stockholder has no other affiliation with such Person.

3.      Confidentiality. Each Stockholder acknowledges that he had in the past,
        or currently has and in the future will have access to certain
        Confidential Information (as defined below). Neither of the Stockholders
        shall at any time or in any manner, without the prior written consent of
        MKBY and/or its Affiliates, as applicable, use or disclose to any Person
        other than Dermond or MKBY and its Affiliates any Confidential
        Information. The term "Confidential Information" means any secret,
        confidential or proprietary information of Dermond or MKBY or any
        information relating to the Business or any Competitive Business
        obtained by either of the Stockholders as a consequence of their
        affiliation, agreements or position with MKBY or any of its Affiliates,
        including without limitation any trade secrets, technology, business
        strategies or plans, details of contracts, pricing, customer lists and
        marketing methods, plans or strategies. The restrictions in this section
        shall not apply to any information that is or becomes generally
        available and known by the public other than as a result of an
        unpermitted disclosure directly or indirectly by either of the
        Stockholders.

4.      Nature of Restrictions. Each of the parties hereto acknowledges that the
        restrictions and other provisions contained in this Agreement are
        reasonable, fair and equitable in scope, terms and duration. If at any
        time a court or other governmental body having jurisdiction shall refuse
        to enforce the restrictions contained in sections 2 and 3 above by
        reason of being vague or unreasonable or for any other reason, the
        parties hereto intend that such covenant shall be deemed to be amended
        without any further action of the parties and be limited to only such
        geographic area, time period, line of business, scope or other
        restrictions as shall be permitted by law.

5.      Consideration. The agreements contained herein are a necessary
        inducement to MKBY to complete the Closing and the other transactions
        contemplated by the Share Purchase Agreement, transactions from which
        the Stockholders will directly and indirectly receive substantial
        financial benefit.

6.      Injunction. Each Stockholder acknowledges and agrees that irreparable
        injury will result to Dermond or MKBY and its Affiliates and their
        respective businesses in the event of any breach by either Stockholder
        of any of the provisions of this Agreement. In recognition thereof in
        the event of any breach of any agreement of either Stockholder in this
        Agreement, Dermond and MKBY and/or its Affiliates, as applicable, shall
        be entitled, in addition to any other remedies available, to injunctive
        relief, specific performance and any other appropriate equitable remedy
        (without any bond or security being required) to restrain any violation
        of this Agreement.

7.      Miscellaneous.

        A.      No modification, amendment, addition or alteration of this
                Agreement shall be effective unless made in writing and duly
                executed by the parties hereto. No delay or failure of Dermond
                and MKBY, or any of its Affiliates, to exercise any right, power
                or privilege in this Agreement conferred hereunder shall operate
                as a waiver thereof, nor shall any waiver of any right, power or
                privilege operate as a waiver of any other right, power or
                privilege hereunder or any further exercise thereof. No waiver
                or consent on the part of either Dermond or MKBY shall be valid
                unless set forth in a written instrument signed by an authorized
                officer.

        B.      If any provision of this Agreement is finally determined to be
                invalid or unenforceable in any respect, such invalidity or
                unenforceability shall not affect the validity or enforceability
                of any other provision or part hereof or the application thereof
                to other persons or circumstances.

        C.      MKBY shall be entitled to recover from each Stockholder all
                costs and expenses incurred by either Dermond or MKBY and/or its
                Affiliates in connectio n with the enforcement of this Agreement
                against such Stockholder, including without limitation
                reasonable attorney's fees.

        D.      This Agreement may be executed in counterparts each of which
                shall be deemed an original but all of which together shall
                constitute one and the same agreement.

        E.      This Agreement shall inure to the benefit of Dermond and MKBY
                and its Affiliates and their successors and assigns and shall be
                binding upon each Stockholder and his successors, assigns,
                heirs, executors and legal representatives.

        F.      This Agreement shall be governed by and construed and
                interpreted pursuant to the internal laws (as opposed to the
                conflict of laws principles) of the province of Quebec and the
                laws of Canada applicable therein.

        G.      The parties hereby acknowledge that they have requested that
                this Agreement and all related documents be drawn up in the
                English language. Les parties aux presentes reconnaissent
                qu'elles ont exige que la presente convention et tous les
                documents qui s'y rattachent soient rediges en anglais.

        IN WITNESS WHEREOF, the parties have caused this Agreement to be
        duly executed as of the day and year first above written.

                                        McKENZIE BAY INTERNATIONAL, LTD.

                               per: /s/ Gary L. Westerholm
                                        President

                                        EXPERTS CONSEILS DERMOND INC.

                                        JACQUELIN DERY

                               per: /s/ Jacquelin Dery
                                        President

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