<PAGE> 1
[THE BANK OF NOVA SCOTIA LETTERHEAD]
[SCOTIABANK LOGO]
November 1, 2000
International Menu Solutions, Inc.
350 Creditstone Road
Suite 202
Concord, Ontario, L5K3Z2
Attention: M.A. Steel, President
Dear Sir:
We are pleased to confirm that, subject to acceptance by you, The Bank of
Nova Scotia (the "Bank") will make available to International Menu Solutions
Inc. (the "Borrower"), credit facilities on the terms and conditions set out in
the attached Terms and Conditions Sheet and in Schedule "A".
If the arrangements set out in this letter, and in the attached Terms and
Conditions Sheet and Schedule "A" (collectively the "Commitment Letter") are
acceptable to you, please sign the enclosed copy of this letter in the space
indicated below and return the letter to us by the close of business on
November 14, 2000 after which date this offer will lapse.
This Commitment Letter replaces all previous commitments issued by the
Bank to the Borrower.
Yours very truly,
/s/ Clare W. Mac Donald /s/ Zenon A.G. Iwackiw
________________________________ _____________________________
Clare W. Mac Donald Zenon A.G. Iwackiw
Senior Account Manager Asst. General Manager
& Centre Manager
The arrangements set out above and in the attached Terms and Conditions
Sheet and Schedule "A" (collectively the "Commitment Letter") are hereby
acknowledged and accepted by:
GUARANTORS
INTERNATIONAL MENU SOLUTIONS INC. PRIME FOODS PROCESSING INC.
_________________________________ ______________________________
By: /s/ MICHAEL STEELE By: /s/ MICHAEL STEELE
______________________________ ______________________________
Title: Title:
By: By:
______________________________ ______________________________
Title: Title:
Date:____________________________ Date:_________________________
<PAGE> 2
- 2 -
GUARANTORS (cont'd)
TRANSCONTINENTAL GOURMET FOODS INC. TASTY SELECTIONS INC.
---------------------------------- ----------------------------------
Name Name
BY: /s/ MICHAEL STEELE BY: /s/ MICHAEL STEELE
--------------------------- ---------------------------
Title: DIRECTOR Nov 3/00 Title: DIRECTOR Nov 3/00
D.C. FOOD PROCESSING INC./
HUXTABLE'S KITCHENS INC. 1005549 ONTARIO LIMITED
---------------------------------- ----------------------------------
Name Name
By: /s/ MICHAEL STEELE By: /s/ MICHAEL STEELE
--------------------------- ---------------------------
Title: DIRECTOR Title: DIRECTOR
Date: Nov 3/00 Date: Nov 3/00
--------------------------- ---------------------------
THE ULTIMATE COOKIE CO. INC. INTERNATIONAL MENU SOLUTIONS CORP.
---------------------------------- ----------------------------------
Name Name
By: /s/ ALLAN GREENSPOON By: /s/ MICHAEL STEELE
--------------------------- ---------------------------
ALLAN GREENSPOON Title: PRESIDENT
Title: DIRECTOR Date: Nov 3/00
Date: Nov 3/00 ---------------------------
---------------------------
By: /s/ MICHAEL STEELE
---------------------------
MICHAEL STEELE
Date: Nov 3/00
---------------------------
<PAGE> 3
Page 1
TERMS AND CONDITIONS
CREDIT NUMBER: 01 AUTHORIZED AMOUNT: $10,000,000
________________________________________________________________________________
TYPE
Operating
PURPOSE
General operating requirements
CURRENCY
Canadian dollars and/or U.S. Dollar equivalent (maximum U.S. Dollar
availment $2,000,000 at any time).
AVAILMENT
The Borrower may avail the Credit by way of direct advances evidenced
by Agreement re Operating Credit Line and/or Bankers' Acceptances in
Canadian dollars in multiples of $500,000 and having terms of maturity
of 30 to 180 days without grace and/or Letters of Guarantee and/or
Standby Letters of Credit (with each availment subject to completion
of an Application and Agreement for Letter of Guarantee and/or
Irrevocable Standby Letter of Credit in a form satisfactory to the
Bank). Availment by way of Letters of Guarantee and/or Standby Letters
of Credit is not to exceed an aggregate of $300,000 CAD.
NOTE: DURING THE PERIOD JANUARY 1ST THROUGH JULY 31ST, MAXIMUM
AGGREGATE AVAILMENT UNDER THIS FACILITY IS LIMITED TO
$7,500,000 CAD.
INTEREST RATE
The Bank's Prime Lending Rate from time to time, plus 1/2% per annum
with interest payable monthly.
The Bank's U.S. Dollar Base Rate in Canada, from time to time, plus
1/2% per annum with interest payable monthly.
FEE
Bankers' Acceptance Fee of 2% per annum, subject to a minimum fee of
$500 per availment, payable at time of acceptance.
COMMISSION LETTERS OF GUARANTEE/STANDBY LETTERS OF CREDIT
1% per annum, calculated on the issue amount, based on increments of
30 days or multiples thereof, from date of issuance to expiry date.
Periods of less than 30 days will be counted as a thirty day
increment. The amount is subject to the Bank's minimum fee as well as
revision at any time and is payable upon issuance.
REPAYMENT
Advances are repayable on demand.
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Page 2
REPAYMENT
Advances are repayable on demand.
SPECIFIC SECURITY
The following security, evidenced by documents in form satisfactory to the
Bank and registered or recorded as required by the Bank, is to be provided
prior to any advances or availment being made under the Credit:
Bankers' Acceptance Agreement.
SPECIFIC CONDITION
Until all debt and liabilities under the Credit have been discharged in
full, the following conditions will apply in respect of the Credit:
Combined Operating loans, Bankers' Acceptances, Letters of Guarantee
and Standby Letters of Credit are not to exceed at any time the
"Borrowing Base" which is defined as the aggregate of 80% of good
quality accounts receivable (excluding accounts over 90 days, accounts
due by employees, offsets and inter-company accounts) less security
interests or charges held by other parties and specific payables which
have or may have priority over the Bank's security plus 35% of net
inventory in frozen category, less security interests or charges held
by other parties and specific payables which have or may have priority
over the Bank's security. Advances against inventory are limited to
$2,500,000 apart from the period September 5, 2000 to November 30,
2000, when advances against inventory are limited to $4,000,000. Net
Inventory is defined as the sum of finished goods, work-in-progress
and raw materials valued at the lower of cost or market. Under 30 day
payables are not deducted from inventory. (US Dollar deposits are
deducted from outstanding loans when calculating Borrowing Base).
CREDIT NUMBER: 02 AUTHORIZED AMOUNT: $4,000,000
TYPE
Special Operating, available until January 15, 2002
PURPOSE
General Operating Requirements
CURRENCY
Canadian dollars
AVAILMENT
The Borrower may avail the Credit by way of direct advances evidenced by
Agreement to Operating Credit Line and/or demand promissory notes. (The
amount availed under the credit is limited to the amount of the guarantee
provided by Foundation Trust)
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INTEREST RATE
The Bank's Prime Lending Rate from time to time, plus 1/2% per annum with
interest payable monthly.
REPAYMENT
Advances are repayable on or before January 15, 2002 or on demand,
whichever comes first. In any event the amount of the credit is to reduce
to $3,000,000 by December 31, 2000.
SPECIFIC SECURITY
The following security, evidenced by documents in form satisfactory to the
Bank and registered or recorded as required by the Bank, is to be provided
prior to any advances or availment being made under the Credit:
Guarantee given by the following with corporate seal and resolution in
the amount shown with recourse under the guarantee limited to the
value of the good quality bonds and stocks referred to below:
NAME AMOUNT
Foundation Trust $4,000,000
To be reduced to $3,000,000 by December 31, 2000 in conjunction
with "Repayment" above.
To be secured by hypothecation of good quality bonds and stocks
listed on a recognized stock exchange and having a minimum value
of $5 per share.
SPECIFIC CONDITION
Until all debts and liabilities under the Credit have been discharged in
full, the following condition will apply in respect of the Credit:
Good quality readily realizable securities to margin Operating Loans
by 50% at all times, increasing to 100% at all times as at January 1,
2001. (If Government of Canada and/or Provincial Treasury Bills and/or
cash is provided as security, then these are to fully cover operating
loans at all times).
CREDIT NUMBER: 03 AUTHORIZED AMOUNT $3,500,000
--------------------------------------------------------------------------------
TYPE
364 Day Revolving Term
This facility may be drawn down up to and including August 3, 2001. The
Borrower has the option, provided at least 60 days written notice has been
provided to request extension of the facility for a further 364 days, with
such extension subject to no event of default having occurred and subject
to Bank approval.
PURPOSE
To finance sundry equipment
CURRENCY
Canadian dollars
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AVAILMENT
The Borrower may avail the Credit by way of direct advances evidenced by
Demand Promissory Notes.
INTEREST RATE
The Bank's Prime Lending Rate from time to time, plus 1 1/4% per annum with
interest payable monthly.
FEE
A Standby Fee of 1/2% per annum on the daily unused portion of the Credit
is payable monthly from August 1, 1999, with the proviso that if in any
given month the average utilization is $2,500,000 or more, no Standby Fee
will apply.
DRAWDOWN
Advances are to be made in minimum multiples of $250,000.
REPAYMENT
Advances are repayable on demand.
PREPAYMENT
Prepayment is permitted without penalty at any time in whole or in part.
SPECIFIC SECURITY
The following security, evidenced by documents in form satisfactory to the
Bank and registered or recorded as required by the Bank, is to be provided
prior to any advances or availment being made under the Credit:
Schedule "A" to the General Security Agreement covering the equipment
purchased.
SPECIFIC CONDITION
Until all debts and liabilities under the Credit have been discharged in
full, the following condition will apply in respect of the Credit:
Prior to any drawdown, the Bank is to be satisfied with the quality,
value and eligibility of all assets to be financed.
OPTIONAL AVAILMENTS WITHIN CREDIT NO. 3 ABOVE
The Borrower has the following availment options under the Credit:
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OPTION 1 - TERM PROMISSORY NOTES
At any time during the 364 day period, provided no event of default exists,
the Borrower may convert to a term facility the whole, or a portion of
outstandings as follows:
AMOUNT: Minimum of $250,000 per note amount
AVAILMENT: By Term Promissory Note
TERM: Up to 5 years
FLOATING RATE: The Bank's Prime Lending Rate from time to time plus 1 1/4%
per annum with interest payable monthly.
FIXED RATE: The rate applicable to each advance will be set on the date
of conversion based upon the Bank's Base for Fixed Rates
plus 2 3/4% per annum, calculated and payable monthly.
REPAYMENT
Each advance is repayable in up to 60 equal monthly installments of
principal commencing within one month of each drawdown. The term of each
advance is not to exceed 5 years and the amortization is not to exceed 5
years.
PREPAYMENT
Floating Rate
Prepayment is permitted without penalty at any time in whole or in part.
Fixed Rate
Prepayment of the loan in whole or in part is permitted at any time on
payment of an amount equal to the greater of:
i) three months simple interest at the rate applicable to the loan on the
principal amount prepaid; and
ii) the amount, if any, by which interest at the rate applicable to the
loan exceeds interest at the prevailing rate at the time of prepayment
calculated on the amount of the principal prepayment for the remaining
term of the loan. The "prevailing rate at the time of prepayment" is
the rate applicable to the loan adjusted to reflect any change in the
Bank's all-in cost of funds for the remaining term of the loan as
determined by the Bank.
OPTION 2 - NON-REVOLVING (SCOTIA LEASING)
AMOUNT
Minimum of $250,000 per Lease contract
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AVAILMENT
The Borrower and the Alternate Borrowers as listed below may avail the
credit by Lease Agreements/Conditional Sales Contracts with appropriate
supporting documentation:
Borrower Maximum Permitted
-------- -----------------
International Menu Solutions Inc. $ 100,000
Prime Foods Processing Inc. 430,000
Transcontinental Gourmet Foods Inc. 1,020,000
Tasty Selections Inc. 1,030,000
D.C. Food Processing Inc. 830,000
The Ultimate Cookie Co. Inc. 90,000
----------
$3,500,000
==========
INTEREST RATE
Floating Rate
The base payment applicable to each contract will be set on the
commencement date of the contract based upon the Bank's Prime Lending Rate
plus 1 1/4% per annum, calculated and payable monthly. The total periodic
payment will be adjusted monthly with changes in the Bank's Prime Lending
Rate.
Fixed Rate
The payment applicable to each contract will be set on the commencement
date of the contract based on the published Scotia Leasing's Base Rate plus
2 3/4% per annum, calculated and payable monthly.
REPAYMENT
Leases and/or conditional sale contracts are repayable in accordance with
the terms and conditions of each respective lease or conditional sale
contract. The maximum term of any such lease or conditional sale contract
shall not exceed 60 months.
At the end of the term to option, the lessee shall elect one of the
following options:
a. purchase the equipment for not more than 20% of the original cost;
b. allow a third party who has agreed with the Bank to purchase the
equipment for not more than 20% of the original cost;
c. rent the equipment for an additional term and revised rent payment to
be authorized by the Bank.
PREPAYMENT
Leases and/or conditional sale contracts are not cancellable, and no
prepayments of principal are permitted.
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SPECIFIC SECURITY
The following security, evidenced by documents in form satisfactory to the
Bank and registered or recorded as required by the Bank, is to be provided
prior to any advances or availment being made under the Credit:
Lease Agreements/Conditional Sale Contracts covering equipment
leased/financed, together with applicable supporting documentation.
Comprehensive General Liability insurance for a minimum of $2,000,000
per occurrence with the Bank recorded as an additional name insured.
All risks insurance covering the replacement value of the equipment
with the Bank recorded as loss payee and additional named insured.
Resolution of Directors authorizing leases.
Progress Payment Agreement under which the Borrower may act on behalf
of the Bank in the ordering and acquisition of equipment to be
leased. The total cost of the equipment to be acquired under this
agreement shall not exceed the amount of this credit.
SPECIFIC CONDITION
Until all debts and liabilities under the Credit have been discharged in
full, the following condition will apply in respect of the Credit:
Prior to any drawdown, the Bank is to be satisfied with the quality,
value, and eligibility of all assets to be leased or financed.
NOTE: THE AGGREGATE OF OUTSTANDINGS UNDER THE 364 DAY REVOLVING TERM AND
OPTIONS 1 AND 2 AVAILED BY THE BORROWER AND/OR THE ALTERNATE
BORROWERS IS NOT TO EXCEED $3,500,000 AT ANY TIME.
CREDIT NUMBER: 04 AUTHORIZED AMOUNT: $1,500,000
--------------------------------------------------------------------------------
TYPE
Non-Revolving
PURPOSE
To finance 70% of the cost sundry equipment (30% down payment required
up-front).
CURRENCY
Canadian dollars
AVAILMENT
The Borrower may avail the Credit by way of direct advances evidenced by
Demand Promissory Notes.
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INTEREST RATE
Floating Rate
The Bank's Prime Lending Rate from time to time, plus 1 1/2% per annum
with interest payable monthly.
Fixed Rate
The Borrower has the option to fix the interest rate for the balance
of the term of the loan at any time until December 31, 2000, subject
to availability. Rates will be quoted upon request.
DRAWDOWN
Advances are to be made in minimum multiples of $100,000.
The loan is to be fully drawn down by December 31, 2000.
REPAYMENT
Each advance is repayable in 60 equal instalments of principal
commencing within 30 days of each drawdown. The term of each advance
is 5 years and the amortization is 5 years.
PREPAYMENT
Floating Rate
Prepayment is permitted without penalty at any time in whole or in
part.
Fixed Rate
Prepayment of the loan in whole or in part is permitted at any time on
payment of an amount equal to the greater of:
i) three months simple interest at the rate applicable to the
loan on the principal amount prepaid; and
ii) the amount, if any, by which interest at the rate applicable
to the loan exceeds interest at the prevailing rate at the
time of prepayment calculated on the amount of the principal
prepayment for the remaining term of the loan. The
"prevailing rate at the time of prepayment" is the rate
applicable to the loan adjusted to reflect any change in the
Bank's all-in cost of funds for the remaining term of the
loan as determined by the Bank.
SPECIFIC SECURITY
The following security, evidenced by documents in form satisfactory to
the Bank and registered or recorded as required by the Bank, is to be
provided prior to any advances or availment being made under the
Credit:
Schedule "A" to the General Security Agreement covering the
equipment purchased.
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SPECIFIC CONDITION
Until all debts and liabilities under the Credit have been discharged in
full, the following condition will apply in respect of the Credit:
Prior to any drawdown, the Bank is to be satisfied with the quality,
value and eligibility of all assets to be financed.
OPTIONAL AVAILMENTS WITHIN CREDIT NO. 4 ABOVE
---------------------------------------------
The Borrower has the following availment option under the Credit:
OPTION 1 - NON-REVOLVING (SCOTIA LEASING)
-----------------------------------------
AMOUNT
Minimum of $100,000 per Lease contract representing up to 70% of cost of
item leased with 30% lease deposit required up-front, and held until the
end of the lease term.
AVAILMENT
Lease Agreements/Conditional Sales Contract with appropriate supporting
documentation.
INTEREST RATE
Floating Rate
-------------
The base payment applicable to each contract will be set on the
commencement date of the contract based upon the Bank's Prime Lending Rate
plus 1 1/2% per annum, calculated and payable monthly. The total periodic
payment will be adjusted monthly with changes in the Bank's Prime Lending
Rate.
Fixed Rate
----------
The payment applicable to each contract will be set on the commencement
date of the contract based on the published Scotia Leasing's Base Rate plus
3% per annum, calculated and payable monthly.
REPAYMENT
Leases and/or conditional sale contracts are repayable in accordance with
the terms and conditions of each respective lease or conditional sale
contract. The maximum term of any such lease or conditional sale contract
shall not exceed 60 months.
At the end of the term to option, the lessee shall elect one of the
following options:
a. purchase the equipment for not more than 30% of the original cost;
b. allow a third party who has agreed with the Bank to purchase the
equipment for not more than 30% of the original cost;
c. rent the equipment for an additional term and revised rent payment to
be authorized by the Bank.
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PREPAYMENT
Leases and/or Conditional Sale Contracts are not cancellable, and no
prepayments of principal are permitted.
SPECIFIC SECURITY
The following security, evidenced by documents in form satisfactory to the
Bank and registered or recorded as required by the Bank, is to be provided
prior to any advances or availment being made under the Credit:
Lease Agreements/Conditional Sale Contracts covering equipment
leased/financed, together with applicable supporting documentation.
Comprehensive General Liability insurance for a minimum of $2,000,000
per occurrence with the Bank recorded as an additional named insured.
All risks insurance covering the replacement value of the equipment
with the Bank recorded as loss payee and additional named insured.
Resolution of Directors authorizing leases.
Progress Payment Agreement under which the Borrower may act on behalf
of the Bank in the ordering and acquisition of equipment to be leased.
The total cost of the equipment to be acquired under this agreement
shall not exceed the amount of this credit.
SPECIFIC CONDITION
Until all debts and liabilities under the Credit have been discharged in
full, the following condition will apply in respect of the Credit:
Prior to any drawdown, the Bank is to be satisfied with the quality,
value, and eligibility of all assets to be leased or financed.
NOTE: THE AGGREGATE OF OUTSTANDINGS UNDER ADVANCES PAYABLE ON DEMAND AND
OPTION 1 IS NOT TO EXCEED $1,500,000 AT ANY TIME.
ADDITIONAL FACILITY
-------------------
Subject to availability and execution of mutually satisfactory
documentation, the Borrower may enter into Forward Exchange Contracts with
the Bank for maximum terms of up to one year.
Maximum aggregate Forward Exchange Contracts outstanding at any one time
are not to exceed $7,500,000 USD.
GENERAL FEES
------------
A Commitment Fee of $25,000 is payable upon acceptance of this commitment.
A Loan Administration Fee of $1,500 per month is payable by the Borrower.
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OTHER FEES
In addition to, and not in substitution for the obligations of the Borrower
and the rights of the Bank upon the occurrence of an event of default
herein, the Borrower shall pay to the Bank Loan Administration fees of:
a) $250 per month (or such higher amount as may be determined by the Bank
from time to time) for each month or part thereof during which the
Borrower is late in providing the Bank with financial or other
information required herein;
b) $250 per month (or such higher amount as may be determined by the Bank
from time to time) for each month or part thereof during which loan
payments of principal, interest or other amounts are past due; and
c) $1,000 per month (or such higher amount as may be determined by the
Bank from time to time) for each month or part thereof during which
the Borrower is in default of any other term or condition contained in
this Commitment Letter or in any other agreement to which the Borrower
and the Bank are parties.
The imposition or collection of fees does not constitute an expressed or
implied waiver by the Bank of any event or default or any of the terms or
conditions of the lending arrangements, security or rights arising from any
default. Fees may be charged to the Borrower's deposit account when
incurred.
CONDITIONS PRECEDENT
CONTINUATION OF EXISTING CREDITS AND PRIOR TO ANY ADVANCES BEING MADE UNDER
FACILITY (NO. 4), THE BANK IS TO BE PROVIDED WITH EVIDENCE OF INJECTION OF
A MINIMUM OF $5,800,000 ADDITIONAL EQUITY BY WAY OF DEEPLY SUBORDINATED
DEBT AND/OR CONVERTIBLE DEBENTURES AND/OR COMMON SHARES, WITH
DOCUMENTATION, AS APPROPRIATE, IN FORM AND SUBSTANCE SATISFACTORY TO THE
BANK (AS EVIDENCED BY THE SEPTEMBER 30, 2000 INTERIM FINANCIAL STATEMENTS).
GENERAL SECURITY, TERMS AND CONDITIONS APPLICABLE TO ALL CREDITS
GENERAL SECURITY
The following security, evidenced by documents in form satisfactory to the
Bank providing for a first security interest on all assets and undertakings
of the company, except for specific permitted encumbrances to be identified
and agreed to by the Bank securing loans to other creditors, registered or
recorded as required by the Bank, is to be provided prior to any advances
or availment being made under the Credits:
General Assignment of Book Debts.
General Security Agreement over all present and future personal
property with appropriate insurance coverage, loss if any, payable to
the Bank.
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Life Insurance in the face amount of $2,000,000 on the life of Michael
Steele assigned to the Bank.
Priority Agreement with Sub Debt/Debenture Lenders and Business
Development Corporation giving the Bank priority over all assets
except specific assets financed by other parties.
Guarantees given by the following (with corporate seals and
resolutions as applicable) in the amounts shown:
NAME AMOUNT
Prime Foods Processing Inc.* Unlimited
Transcontinental Gourmet Foods Inc.* Unlimited
Tasty Selections, Inc. Unlimited
D.C. Food Processing Inc./*
1005549 Ontario Limited* Unlimited
Huxtable's Kitchens Inc.* Unlimited
International Menu Solutions Corp.* Unlimited
The Ultimate Cookie Co. Inc. Unlimited
(1) 1119984 Ontario Limited o/a Soups On* Unlimited
To be secured by: (1) To be provided once acquisition
closes.
* General Security Agreement over all present and future personal
property with appropriate insurance coverage, loss if any, payable
to the Bank.
Guarantee by International Menu Solutions Inc., (with Corporate Seal
and Resolution as applicable) in an unlimited amount to each
alternate borrower as identified above under Credit No. 03 - Option
2.
Agreement re: Operating Credit Line.
GENERAL CONDITIONS
Until all debts and liabilities under the Credits have been discharged in
full, the following conditions will apply in respect of the Credits:
"Consolidation" as it appears hereunder pertains to the Consolidated
Financial Statements of International Menu Solutions Corp.
The ratio of consolidated Debt (including deferred taxes) to
consolidated Tangible Net Worth (TNW) is not to exceed 2.5:1,
improving to 2:1 by October 31, 2000 (as evidenced by the October 31,
2000 interim financial statements). For the purposes of this
calculation the amount of advances outstanding under Credit Number 02
will be excluded from the total of consolidated Debt.
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TNW is defined as the sum of share capital, earned and contributed surplus,
postponed funds, deeply subordinated debt having maturities in excess of one
year and convertible debentures (except up to $5,200,000 in deeply subordinated
loans/debentures now to be provided, having a term of 9 months from date of
closing, but on the understanding any repayment/redemption is only permitted if
all conditions remain onside subsequent to such repayment/redemption) less (i)
amounts due from officers/affiliates, (ii) investments in affiliates, and (iii)
intangible assets as defined by the Bank.
The ratio of consolidated current assets to consolidated current liabilities is
to be maintained at all times at 1:1 or better, improving to 1.25:1 by October
31, 2000 (as evidenced by the October 31, 2000 interim financial statements).
For the purposes of this calculation the amount of advances outstanding under
Credit Number 02 will be excluded from current liabilities.
Without the Bank's prior written consent (which will not be unreasonably
withheld):
No dividends, withdrawals, bonuses, advances to shareholders, management
or affiliates are permitted.
No change in ownership is permitted.
No mergers, acquisitions or change in the Borrower's line of business are
permitted (other than acquisitions consummated as at the date of this
Commitment Letter).
Cumulative consolidated capital expenditures are not to exceed $6,000,000
for the fiscal year ending December 31, 2000.
The Borrower will not grant or permit a Purchase Money Security Interest
to any supplier or creditor.
Guarantees or other contingent liabilities are not to be entered into and
assets are not to be further encumbered.
The Borrower shall permit the Bank, or its agents, access, at all reasonable
times, to all premises where the collateral covered by the Bank's security may
be located and the Bank or its agents may inspect such collateral and all
related documents and records.
For ongoing Credit Risk management purposes, all operating accounts of the
Borrower shall be maintained with the Bank as long as the Borrower has any
operating line facilities with the Bank.
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GENERAL BORROWER REPORTING CONDITIONS
Until all debts and liabilities under the Credits have been discharged in
full, the Borrower will provide the Bank with the following:
Annual Audited Consolidated Financial Statements of International Menu
Solutions Corp. within 120 days of its fiscal year end, duly signed.
Annual Prepared Unconsolidated Financial Statements for International
Menu Solutions Corp., the Borrower and all subsidiaries, within 120
days of each fiscal year end, duly signed.
Monthly Consolidated statement of International Menu Solutions Corp.
and Unconsolidated Financial Statements of the Borrower and all
subsidiaries within 60 days of period end.
A Consolidated Statement of Security monthly, to include information
on inventory, accounts receivable and accounts payable, within 20 days
of period end.
Quarterly Aged Listing of Receivables within 20 days of period end.
Quarterly Aged Listing of Trade Accounts Payable within 20 days of
period end.
Business Plan, including financial projections, for the year ended
December 31, 2001 is to be submitted by November 30, 2000.
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SCHEDULE A
ADDITIONAL TERMS AND CONDITIONS APPLICABLE
TO ALL CREDITS
(In the event of a conflict, the terms and conditions of any lease
agreement and/or conditional sale contract supersede the terms and
conditions in this Schedule A with regard to such leases and/or conditional
sale contracts).
Calculation and Payment of Interest
1. Interest on loans/advances made in Canadian dollars will be calculated on
a daily basis and payable monthly on the 22nd day of each month (unless
otherwise stipulated by the Bank). Interest shall be payable not in
advance on the basis of a calendar year for the actual number of days
elapsed both before and after demand of payment or default and/or judgment.
Interest on Overdue Interest
2. Interest on overdue interest shall be calculated at the same rate as
interest on the loans/advances in respect of which interest is overdue,
but shall be compounded monthly and be payable on demand, both before and
after demand and judgment.
Calculation and Payment of Bankers' Acceptance Fee
3. The fee for the acceptance of each Bankers' Acceptance will be payable on
the face amount of each Bankers' Acceptance at the time of acceptance of
each draft calculated on the basis of a calendar year for the actual
number of days elapsed from and including the date of acceptance to the
due date of the draft.
Indemnity Provision
4. If the introduction or implementation of, or any change in, or in the
interpretation of, or any change in its application to the Borrower of,
any law or any regulation or guideline issued by any central bank or other
governmental authority (whether or not having the force of law),
including, without limitation, any reserve or special deposit requirement
or any tax (other than tax on the Bank's general income) or any capital
requirement, has due to the Bank's compliance the effect, directly or
indirectly, of (i) increasing the cost to the Bank of performing its
obligations hereunder or under the cost to the Bank of performing its
obligations hereunder or under any availment hereunder; (ii) reducing any
amount received or receivable by the Bank or its effective return
hereunder or in respect of any availment hereunder or on its capital; or
(iii) causing the Bank to make any payment or to forgo any return based on
any amount received or receivable by the Bank hereunder or in respect of
any availment hereunder, then upon demand from time to time the Borrower
shall pay such amount as shall compensate the Bank for any such cost,
reduction, payment or forgone return (collectively "Increased Costs") as
such amounts are calculated in a certificate reasonably prepared by the
Bank.
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In the event of the Borrower becoming liable for such Increased Costs, the
Borrower shall have the right to prepay in full, without penalty, the
outstanding principal balance under the affected credit other than the face
amount of any document or instrument issued or accepted by the Bank for the
account of the Borrower, including, without limitation, a Letter of Credit,
a Letter of Guarantee or a Bankers' Acceptance. Upon any such prepayment,
the Borrower shall also pay the then accrued interest on the amount prepaid
and the Increased Costs to the date of prepayment together with such amount
as will compensate the Bank for the cost of any early termination of its
funding arrangements in accordance with its normal practices, as such
amounts are calculated in a certificate reasonably prepared by the Bank.
Environment
5. The Borrower agrees:
(a) To obey all applicable laws and requirements of any federal,
provincial, or any other governmental authority relating to the
environment and the operation of the business activities of the
Borrower;
(b) to allow the Bank access at all times to the business premises of the
Borrower to monitor and inspect all property and business activities
of the Borrower;
(c) to notify the Bank from time to time of any business activity
conducted by the Borrower which involves the use or handling of
hazardous materials or wastes or which increases the environmental
liability of the Borrower in any material manner;
(d) to notify the Bank of any proposed change in the use or occupation of
the property of the Borrower prior to any change occurring;
(e) to provide the Bank with immediate written notice of any environmental
problem and any hazardous materials or substances which have an
adverse effect on the property, equipment, or business activities of
the Borrower and with any other environmental information requested by
the Bank from time to time.
(f) to conduct all environmental remedial activities which a commercially
reasonable person would perform in similar circumstances to meet its
environmental responsibilities and if the Borrower fails to do so, the
Bank may perform such activities; and
(g) to pay for any environmental investigations, assessments or remedial
activities with respect to any property of the Borrower that may be
performed for or by the Bank from time to time.
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If the Borrower notifies the Bank of any specified activity or change or
provides the Bank with any information pursuant to subsections (c), (d), or
(e), or if the Bank receives any environmental information from other
sources, the Bank, in its sole discretion, may decide that an adverse change
in the environmental condition of the Borrower or any of the property,
equipment, or business activities of the Borrower has occurred which decision
will constitute, in the absence of manifest error, conclusive evidence of the
adverse change. Following this decision being made by the Bank, the Bank
shall notify the Borrower of the Bank's decision concerning the adverse
change.
If the Bank decides or is required to incur expenses in compliance or to
verify the Borrower's compliance with applicable environmental or other
regulations, the Borrower shall indemnify the Bank in respect of such
expenses, which will constitute further advances by the Bank to the Borrower
under this Agreement.
Initial Drawdown
6. The right of the Borrower to obtain the initial drawdown under the Credit(s)
is subject to the condition precedent that there shall not have been any
material adverse changes in the financial condition or the environmental
condition of the Borrower or any guarantor of the Borrower.
Periodic Review
7. The obligation of the Bank to make further advances or other accommodation
available under any Credit(s) of the Borrower under which the indebtedness or
liability of the Borrower is payable on demand, is subject to periodic review
and to no adverse change occurring in the financial condition or the
environmental condition of the Borrower or any guarantor.
Evidence of Indebtedness
8. The Bank's accounts, books and records constitute, in the absence of manifest
error, conclusive evidence of the advances made under this Credit, repayments
on account thereof and the indebtedness of the Borrower to the Bank.
Acceleration
9. (a) All indebtedness and liability of the Borrower to the Bank payable on
demand, is repayable by the Borrower to the Bank at any time on demand:
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(b) All indebtedness and liability of the Borrower to the Bank not payable on
demand, shall, at the option of the Bank, become immediately due and
payable, the security held by the Bank shall immediately become
enforceable, and the obligation of the Bank to make further advances or
other accommodation available under the Credits shall terminate, if any one
of the following Events of Default occurs:
(i) the Borrower or any guarantor fails to make when due, whether on
demand or at a fixed payment date, by acceleration or otherwise,
any payment of interest, principal, fees, commissions or other
amounts payable to the Bank;
(ii) there is a breach by the Borrower or any guarantor of any other
term or condition contained in this Commitment Letter or in any
other agreement to which the Borrower and/or any guarantor and the
Bank are parties;
(iii) any default occurs under any security listed in this Commitment
Letter under the headings "Specific Security" or "General Security"
or under any other credit, loan or security agreement to which the
Borrower and/or any guarantor is a party;
(iv) any bankruptcy, re-organization, compromise, arrangement, insolvency
or liquidation proceedings or other proceedings for the relief of
debtors are instituted by or against the Borrower or any guarantor
and, if instituted against the Borrower or any guarantor, are
allowed against or consented to by the Borrower or any guarantor or
are not dismissed or stayed within 60 days after such institution;
(v) a receiver is appointed over any property of the Borrower or any
guarantor or any judgement or order or any process of any court
becomes enforceable against the Borrower or any guarantor or any
property of the Borrower or any guarantor or any creditor takes
possession of any property of the Borrower or any guarantor;
(vi) any course of action is undertaken by the Borrower or any guarantor
or with respect to the Borrower or any guarantor which would result
in the Borrower's or guarantor's reorganization, amalgamation or
merger with another corporation or the transfer of all or
substantially all of the Borrower's or any guarantor's assets;
(vii) any guarantee of indebtedness and liability under the Credit Line
is withdrawn, determined to be invalid or otherwise rendered
ineffective;
(viii) any adverse change occurs in the financial condition of the
Borrower or any guarantor.
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(ix) any adverse change occurs in the environmental condition of:
(A) the Borrower or any guarantor of the Borrower: or
(B) any property, equipment, or business activities of the Borrower
or any guarantor of the Borrower.
Costs
10 All costs, including legal and appraisal fees incurred by the Bank relative
to security and other documentation and the enforcement thereof, shall be
for the account of the Borrower and may be charged to the Borrower's deposit
account when submitted.
