Federico's Business Plan
Fderico's First Media Release

Federicos Gondolas Inc.

www.federicos.ca

And

www.gondolas.ca



TERM SHEET



Debenture and Share Acquisition



Issuer



Federicos Gondolas Inc., a company incorporated under the Business Corporations Act (Ontario) October, 2001.



Business



Federicos has been formed to take advantage of the increasing demand for entertainment and adventure travel combined. It will serve the Ottawa and off season Florida markets. The demand for this type of service tracks closely with tourism and economic growth.



Management, Directors and Shareholders



Federicos principal shareholders are Mr. Darcy McRae, B. Comm., Federico Carmosino, B. Comm., residents of Ottawa, Canada and M. H. Milford Holdings Inc., an ottawa based company.



Directors and officers who manage BHSC are:



Mr. Darcy McRae, Director and President of Federicos;

Mr. Fred M. Carmosino, Director and Vice President of Federicos.



Share Structure



Federicos has an unlimited number of Class A Common Shares authorized. Debenture investors will be issued ClassA shares (as detailed below).



Offering Details



Offering: Debenture with total Principal Amount of $45,000 to $60,000



Amortization: Over five years



Interest: Eight percent per annum calculated as blended monthly payments as to principal and interest.

Amount: Maximum principal: $60,000

Minimum principal: $1,500



Equity Bonus: Debenture holder is entitled to Class A shares of Federicos via an Option which provides for acquisition of 95 Class A shares for a nominal consideration for every $1,500 of debenture purchased. This Option shall be exercisable by the debenture holder as defined below for the number of shares defined, for the total subscription price of $1.00.

Tickets: Each debenture holder shall be entitled to two free adult tickets for each $1,500 of debenture purchased in each of the first five years of operation of Federicos.



Use of Proceeds



The proceeds from this debenture, together with other financing, will be used to prepare for the launch of Federicos Gondolas Inc.



Dividend Policy and Dividend Protection



The Company does not intend to pay dividends over the next three years. The Company's intention is to apply its earnings to invest in expansion of its business and to build up retained earnings to strengthen its balance sheet. If the Company chooses to declare dividends at any time during the term of the debenture, the Company will notify all debenture holders, and debenture holders will have the right to exercise their options before the date of record for the declaration of the dividend.



Timing of Option for Shares



At the option of the holder, the debenture holder may exercise the Option for shares during year three of the debenture (after 24 months but before the end of 36 months). Debenture holders may exercise their Option for shares prior to 24 months as follows: Federicos will give notice to debenture holders before any significant pending share transaction or dividend payment such that debenture holders may exercise their share option before such transaction should that be advantageous to the debenture holder.



Voting Rights



Debenture holders do not have voting rights, other than through common share ownership.



Security



Fixed and floating charge over all assets of the Company, subject to higher ranking security in favour of small business loan, fixed asset lease financing and bank debt, if any.



Default Right



In the event that:



(i) The Company is in arrears with respect its interest payments on the debenture; and



(ii) One or more debenture holders give notice to all debenture holders and constitute a debenture holders' meeting comprising at least 25% of the total amount outstanding; and



(iii) A vote at the meeting comprising more than 50% of the dollar amount represented at the meeting declare the Company in default;



the Company shall be in default under the debenture. The usual rights and privileges would follow from declaring the Company in default with respect to the debenture.



Closing



Closing will occur on or before January 31st, 2002 and at a later date at the discretion of Federicos. This offer may be withdrawn at any time at the discretion of Federicos.



For further information please contact:

Mr. Darcy McRae, President,

Federicos Gondolas Inc.

Telephone:

(613) 276- 8886

Email: darcymcrae@federicos.ca



Schedule A







Share Issue Price for Debenture Holders' Options



Initial equity investments in Federicos have been committed by the shareholders .



Shares will be issued at the initial price of 10 cents CDN per share. A total of 15,152 Class A shares have been issued as to:



Darcy McRae 7,652 shares

Fred Carmosino 2,500 shares

Milford Holdings 5,000 shares

Total 15,152 shares



Share options issued to debenture holders are defined such that 95 shares will be issued to a debenture holder for each $1,500 of debenture. Thus, debenture holders would receive a 20% equity participation on a fully diluted basis if all options are exercised, viz:



Total Initial Shares 15,152 80%

Options 3,800 20%*

New Total 18,952 100%



* If all options are exercised.



Interest and Amortization Payments



Interest accrues at zero per cent per annum until July 1, 2002. Thereafter, the full principal amount will be repaid on a fully amortized basis over the remaining five-year (60 months) period. The table below shows these payment amounts for a $1,500 initial debenture investment.



Initial Principal Amount: $1,500

Cumulative Interest stub period (0%): nil

Principal Amount: $1,500

Amortization Period (months): 60

Monthly Payments: $30.41

Total 60 Payments: $1,824.60



Option for Shares (# shares): 95

Approximately: .5%



Free Tickets per annum for the first five years: 2 adult tickets





NOTICE OF INTENT



To Participate in the



Debenture and Share Acquisition

Offered by Federicos Gondolas Inc.







I,

hereby give notice to Federicos Gondolas Inc. (Federicos) that I intend to participate in the debenture and share acquisition for the development of the gondola business of Federicos under terms and conditions as outlined in the attached Term Sheet dated October 10, 2001.



I give notice that I intend to participate with the principal amount of $

I intend to participate in this venture under my own name YES / NO.

If NO, I will participate through the following entity:





I may be contacted at:

Telephone at work:_____________________

Telephone at home: ____________________

Fax number: __________________________

E-mail address:________________________

and by mail as above, or personally at:





Signed at this day of 2001





Record of Investment

for Debenture and Share Ownership

in Federicos Gondolas Inc.



Whereas a corporation was incorporated under the laws of Ontario with the name Federicos Gondolas Inc. October 2001;



Federicos Gondolas Inc. hereby acknowledges and certifies that it has received and acknowledges this investment:





($ )



from:





who is the beneficial owner of the debenture with amount specified above as defined in the attached Term Sheet dated April 10, 2001 and will enjoy all the rights and privileges therefrom.



Dated at Ottawa this day of , 2001.



Federicos Gondolas Inc.,

Per: