<PAGE>

[Scotia LOGO]

P.O. Box 247, St. Catharines, Ontario L2R 6T3

                                                               January 20, 1999.

Fantom Technologies Inc.
1110 Hansler Road
Welland, Ontario
L3B 5Sl

Dear Sirs:

    We are pleased to confirm that subject to acceptance by you, The Bank of
Nova Scotia (the "Bank") will make available to Fantom Technologies Inc. (the
"Borrower"), credit facilities on the terms and conditions set out in the
attached Terms and Conditions Sheet and 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 February
12, 1999, 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/ R.W. Jeffery
                                         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:


FANTOM TECHNOLOGIES INC.
Name

By:   /s/ Stephen Doorey & Allen Millman
      --------------------------------------
Title:

Date:  1/29/99
<PAGE>

                                                                          Page 1

                             TERMS AND CONDITIONS


CREDIT NUMBER:  01                               AUTHORIZED AMOUNT:  $15,000,000
--------------------------------------------------------------------------------

TYPE

     Revolving - Operating

PURPOSE

     General operating requirements

CURRENCY

     Canadian dollars and/or U.S. dollar equivalent thereof.

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 minimum amounts of $500,000 and in multiples of $100,000 and
      having terms of maturity of 30 to 180 days without grace) and/or by way of
      direct advances evidenced by Demand Promissory Notes for U.S. Funds.

INTEREST RATE/FEES

     At Borrower's option:

     (CAD dollars) The Bank's Prime Lending Rate# from time to time, with
     interest payable monthly.

     (U.S. dollars) The Bank's U.S. Dollar Base Rate# in Canada, from time to
     time, with interest payable monthly.

     (U.S. dollars) The Bank's London Interbank Offer Rate (LIBOR), plus 3/4%#
     per annum, for periods of 1, 2, 3, 6 or 12 months, the rate to be
     established at 12:00 noon (London time) two (2) business days prior to each
     drawdown or rollover (Interest Adjustment Date) with interest payable
     monthly in arrears.

     (Bankers' Acceptances) The Bank's Corporate Bankers' Acceptance Fee#,
     (subject to revision at any time), subject to a minimum fee of $500 per
     transaction, payable at the time of each acceptance.

     #NOTE: Interest rate spread as outlined above, will be amended each quarter
            on January 1st,,April 1st, July 1st and October 1st, based on the
            Borrower's consolidated Debt: Tangible Net Worth (TNW) position as
            determined by the Borrower's quarterly consolidated financial
            statements 3 months prior (for example, pricing as at January 1st
            will be based on the quarterly financial statement as at September
            30th) based on the following pricing grid:
<PAGE>

                                                                          Page 2
<TABLE>
<CAPTION>
       Debt: TNW Level         Pricing
       ---------------         -------
       <S>                     <C>
       2.0:1 or below          Prime/BRCAN/CORPBA/LIBOR + 3/4%
       2.1:1 - 2.5:1           Prime + 1/4%/BRCAN + 1/4%/CORPBA + 1/4%/LIBOR + 1%
       2.6:1 - 3.0:1           Prime + 1/2%/BRCAN + 1/2%/CORPBA + 1/2%/LIBOR + 1 1/4%
       3.1:1 - 3.5:1           Prime + 3/4%/BRCAN + 3/4%/CORPBA + 3/4%/LIBOR + 1 1/2%
       Over 3.5:1              Prime + 1%/BRCAN + 1%/CORPBA + 1%/LIBOR + 1 3/4%
</TABLE>

DRAWDOWN

   Direct advances are to be made in minimum multiples of $100,000.

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 to the extent not
   already obtained, is to be provided prior to any advances or availment being
   made under the Credit:

       Bankers' Acceptance Agreement.

       Agreement re Operating Credit Line.

CREDIT NUMBER 02                                  AUTHORIZED AMOUNT:  $4,000,000
--------------------------------------------------------------------------------

TYPE

   Revolving Term

PURPOSE

   To assist with capital expenditures

CURRENCY

   Canadian and/or U.S. dollar equivalent thereof.

AVAILMENT

   The Borrower may avail the Credit by way of direct advances evidenced by Term
   Promissory Notes and/or Bankers' Acceptances in Canadian dollars (in minimum
   amounts of $500,000 and in multiples of $100,000 and having terms of maturity
   of 30 to 180 days without grace) and/or Lease Agreements and/or Conditional
   Sales Contracts, with appropriate supporting documentation.
<PAGE>

                                                                          Page 3

INTEREST RATE

    At Borrower's option:

    Direct Advances
    ---------------

    (CAD Dollars)   The Bank's Prime Lending Rate from time to time, plus 1/2%#
    per annum with interest payable monthly.

    (U.S. Dollars)   The Bank's U.S. Dollar Base Rate in Canada, from time to
    time, plus 1/2%# per annum with interest payable monthly.

    (U.S. Dollars)   The Bank's London Interbank Offer Rate (LIBOR), plus 1
    1/4%# per annum, for periods of 1, 2, 3, 6 or 12 months, the rate to be
    established at 12:00 noon (London time) two (2) business days prior to each
    drawdown or rollover (Interest Adjustment Date) with interest payable at
    the end of the LIBOR period or if the period is for more than 3 months,
    payable quarterly in arrears.

    (Bankers' Acceptances) The Bank's Corporate Bankers' Acceptance Fee,
    (subject to revision at any time), plus 1/2%# per annum, subject to a
    minimum fee of $500 per transaction, payable at the time of each
    acceptance.

    # NOTE:  Interest rate spread, as outlined above, will be amended each
    -------
             quarter on January 1st, April 1st, July 1st and October 1st, based
             on the Borrower's consolidated Debt: Tangible Net Worth (TNW)
             position as determined by the Borrower's quarterly consolidated
             financial statements 3 months prior (for example, pricing as at
             January 1st will be based on the quarterly financial statement as
             at September 30th.) based on the following pricing grid:

<TABLE>
<CAPTION>
    Debt: TNW Level         Pricing
    ---------------         -------
    <S>                     <C>
    2.0:1 or below          Prime + 1/2%/BRCAN + 1/2%/CORPBA + 1/2%/LIBOR + 1 1/4%
    2.1:1 - 2.5:1           Prime + 3/4%/BRCAN + 3/4%/CORPBA + 3/4%/LIBOR + 1 1/2%
    2.6:1 - 3.0:1           Prime + 1%/BRCAN + 1%/CORPBA + 1%/LIBOR + 1 3/4%
    3.1:1 - 3.5:1           Prime + 1 1/4%/BRCAN + 1 1/4%/CORPBA + 1 1/4%/LIBOR + 2%
    Over 3.5:1              Prime + 1 1/2%/BRCAN + 1 1/2%/CORPBA + 1 1/2%/LIBOR
                            + 2 1/4%

</TABLE>

    Lease and/or Conditional Sales Contracts
    ----------------------------------------

    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% per annum, or the Bank's U.S. Dollar Base Rate in Canada plus 1%
    per annum, calculated and payable monthly.  The total periodic payment will
    be adjusted monthly with changes in the Bank's Prime Lending Rate.
<PAGE>

                                                                          Page 4

     The Borrower has the option to fix the payments for the balance of the term
     of the contract provided that the Borrower is not then in default under any
     credits. This option must be exercised prior to the commencement of the
     last third of the initial term of the contract. Although the fixed rate
     will be set on the date notification is received by the Bank, the new rate
     will be effective on the next payment due date (provided the next payment
     due date is at least 10 days from receipt of the notice). A fee of $200
     plus GST per occurrence is payable when this option is exercised. The fixed
     rate will be quoted on request/based on Scotia Leasing's Base Rate at the
     time the option to fix the rate is exercised plus 1.25% per annum,
     calculated and payable monthly.

STANDBY FEE

     A Standby Fee of 1/8% per annum on the daily unused portion of the Credit
     payable in Canadian dollars, continues to be payable monthly.

REPAYMENT

     Direct Advances
     ---------------

     Individual advances are repayable in 36 equal monthly instalments of
     principal commencing 30 days after drawdown.

     Scotia Lease/Conditional Sales Contracts
     ----------------------------------------

     Leases and/or conditional sales contracts are repayable in accordance with
     the terms and conditions of each respective lease or conditional sale
     contract as established and agreed to by Scotia Leasing. The maximum term
     of any such lease or conditional sale contract shall not exceed 5 years.

     Option to Convert to Non-Revolving Term Facility
     ------------------------------------------------

     The Borrower shall have the option up to one year to convert all
     outstanding direct advances to a Non-revolving facility based on an overall
     5 year term and repayment. The interest rate applicable to Non-Revolving
     loans will be based on the Bank's Prime Lending Rate from time to time,
     plus 1% per annum with interest payable monthly.

PREPAYMENT

     Direct advances
     ---------------

     Provided 2 business days prior written notice has been given to the Bank,
     prepayment is permitted without fee, premium, bonus or penalty at any time
     in whole or in part.

     Prepayments are to be applied against instalments of principal in the
     inverse order of their maturities.
<PAGE>

                                                                          Page 5

     Leases/Conditional Sales Contracts
     ----------------------------------

     Contracts are not cancellable, and no prepayments 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 to the extent not
      already obtained, is to be provided prior to any advances or availment
      being made under the Credit:

          Chattel Mortgages/Lease Agreements/Conditional Sales Contracts
          covering equipment leased/financed.

          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.

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:

          Direct advances under the Credit are limited to 75% of invoice costs.


CREDIT NUMBER 03                                 AUTHORIZED AMOUNT:  $20,000,000
--------------------------------------------------------------------------------

TYPE

     Revolving Term - 364 days

PURPOSE

     General Operating requirements

CURRENCY

     Canadian and/or U.S. dollar equivalent thereof.

AVAILMENT

     The Borrower may avail the Credit by way of direct advances evidenced by
     Term Promissory Notes and/or Bankers' Acceptances in Canadian dollars (in
     minimum amounts of $500,000 and in multiples of $100,000 and having terms
     of maturity of 30 to 180 days without grace).
<PAGE>

                                                                          Page 6

INTEREST RATE AND FEES

     At Borrower's option:

     (CAD dollars) The Bank's Prime Lending Rate# from time to time, with
     interest payable monthly.

     (U.S. dollars) The Bank's U.S. Dollar Base Rate# in Canada, from time to
     time, with interest payable monthly.

     (U.S. dollars) The Bank's London Interbank Offer Rate (LIBOR), plus 3/4%#
     per annum, for periods of 1, 2, 3, 6 or 12 months, the rate to be
     established at 12:00 noon (London time) two (2) business days prior to each
     drawdown or rollover (Interest Adjustment Date) with interest payable
     monthly in arrears.

     (Bankers' Acceptances) The Bank's Corporate Bankers' Acceptance Fee#,
     (subject to revision at any time), subject to a minimum fee of $500 per
     transaction, payable at the time of each acceptance.

     # NOTE:  Interest rate spread, as outlined above, will be amended each
       -----
              quarter on January 1st, April 1st, July 1st and October 1st, based
              on the Borrower's consolidated Debt: Tangible Net Worth (TNW)
              position as determined by the Borrower's quarterly consolidated
              financial statements 3 months prior (for example, pricing as at
              January 1st will be based on the quarterly financial statement as
              at September 30th) based on the following pricing grid:
<TABLE>
<CAPTION>
     Debt: TNW Level          Pricing
     ---------------          -------
     <S>                      <C>
     2.0:1 or below           Prime/BRCAN/CORPBA/LIBOR + 3/4%
     2.1:1  -  2.5:1          Prime + 1/4%/BRCAN + 1/4%/CORPBA + 1/4%/LIBOR + 1%
     2.6:1  -  3.0:1          Prime + 1/2%/BRCAN + 1/2%/CORPBA + 1/2%/LIBOR + 1 1/4%
     3.1:1  -  3.5:1          Prime + 3/4%/BRCAN + 3/4%/CORPBA + 3/4%/LIBOR + 1 1/2%
     Over 3.5:1               Prime + 1%/BRCAN + 1%/CORPBA + 1%/LIBOR + 1 3/4%
</TABLE>

STANDBY FEE

          A Standby Fee of 1/8% per annum on the daily unused portion of the
          Credit payable in Canadian dollars, continues to be payable monthly.

REPAYMENT

          The credit shall revolve and may be drawn up to 364 days after
          acceptance of this Commitment Letter. Upon expiry of the current 364
          day term, advances under the credit are repayable in full unless
          renewed at the Bank's option.
<PAGE>

                                                                          Page 7

     The Borrower shall have the option to request the Bank annually to extend
     the availability period for an additional year.  The Borrower will make
     each such request before August 31st in each year and the Bank will reply
     after completion of the Annual Review.

     Option to Convert to Non-Revolving Term Facility
     ------------------------------------------------

     The Borrower shall have the option up to one year to convert all
     outstanding direct advances to a Non-revolving facility based on an overall
     5 year term and repayment.  The interest rate applicable to Non-Revolving
     loans will be based on the Bank's Prime Lending Rate from time to time,
     plus 3/4% per annum with interest payable monthly.  Repayment either
     monthly or quarterly.

     The Borrower shall have the option to request the Bank annually to extend
     the availability period for an additional year.  The Borrower will make
     each such request before August 31st in each year and the Bank will reply
     after completion of the Annual Review. This extension is at the Bank's
     option. [If the Revolving Term feature is renewed by the Bank (see
     Repayment above), the Option to Convert to a Non-Revolving facility will be
     reinstated for a further year inclusive of the 5 year repayment.]

PREPAYMENT (If converted to Non-Revolving Facility)

     Prepayment is permitted without fee, premium, bonus or penalty at any time
     in whole or in part.

     Prepayments are to be applied against installments of principal in the
     inverse order of their maturities.

CREDIT NUMBER  04                                AUTHORIZED AMOUNT:  $20,000,000
--------------------------------------------------------------------------------

TYPE

     Non-revolving

PURPOSE

     To assist with research and development expenditures.

CURRENCY

     Canadian and/or U.S. dollar equivalent thereof.

AVAILMENT

     The Borrower may avail the Credit by way of direct advances evidenced by
     Term Promissory Notes and/or Bankers' Acceptances in Canadian dollars (in
     minimum amounts of $500,000 and in multiples of $100,000 and having terms
     of maturity of 30 to 180 days without grace).
<PAGE>

                                                                          Page 8

DRAWDOWN

      The unavailed portion of this Non-Revolving facility is subject to review
      at the end of five years (from date of acceptance).

INTEREST RATE AND FEES

     At Borrower's option:

     (CAD dollars) The Bank's Prime Lending Rate plus 1% per annum# from time to
     time, with interest payable monthly.

     (U.S. dollars) The Bank's U.S. Dollar Base Rate plus 1% per annum# in
     Canada, from time to time, with interest payable monthly.

     (U.S. dollars) The Bank's London Interbank Offer Rate (LIBOR), plus 1 3/4%#
     per annum, for periods of 1, 2, 3, 6 or 12 months, the rate to be
     established at 12:00 noon (London time) two (2) business days prior to each
     drawdown or rollover (Interest Adjustment Date) with interest payable
     monthly in arrears.

     (Bankers' Acceptances) The Bank's Corporate Bankers' Acceptance Fee plus
     1%#, (subject to revision at any time), subject to a minimum fee of $500
     per transaction, payable at the time of each acceptance.

    # NOTE:  Interest rate spread, as outlined above, will be amended each
      -----
             quarter on January 1st, April 1st, July 1st and October 1st, based
             on the Borrower's consolidated Debt: Tangible Net Worth (TNW)
             position as determined by the Borrower's quarterly consolidated
             financial statements 3 months prior (for example, pricing as at
             January 1st will be based on the quarterly financial statement as
             at September 30th) based on the following pricing grid:

<TABLE>
<CAPTION>
     Debt: TNW Level         Pricing
     ---------------         -------
     <S>                     <C>
     2.0:1 or below          Prime + 1%/BRCAN + 1%/CORPBA + 1%/LIBOR + 1 3/4%
     2.1:1  -  2.5:1         Prime + 1 1/4%/BRCAN + 1 1/4%/CORPBA + 1 1/4%/LIBOR + 2%
     2.6:1  -  3.0:1         Prime + 1 1/2%/BRCAN + 1 1/2%/CORPBA + 1 1/2%/LIBOR
                             + 2 1/4%
     3.1:1  -  3.5:1         Prime + 1 3/4%/BRCAN + 1 3/4%/CORPBA + 1 3/4%/LIBOR
                             + 2 1/2%
     Over 3.5:1              Prime + 2%/BRCAN + 2%/CORPBA + 2%/LIBOR + 2 3/4%
</TABLE>
<PAGE>

                                                                          Page 9

     Fixed Rate Options
     ------------------

     The Borrower has the option available to fix the interest rate for a
     maximum period of 8 years, providing the loan balance is $5,000,000 or
     more. Subject to availability, rates will be quoted on request. Based on
     today's prevailing rates, an indicative rate for a 8 year term would be
     7.20%.

                                       or

     Subject to availability, and to execution of mutually satisfactory
     documentation, based on the Bank's standard International Swap Dealers
     Association (ISDA) Master Agreement and Schedule, incorporating all
     security held pursuant to this Commitment Letter, the Borrower shall have
     the option, available until December 31, 2003 (5 years) to enter into
     Interest Rate Swap transactions. The Swap transactions are limited to
     Canadian currency, for terms not exceeding 8 years. The aggregate amount of
     all outstanding transactions at any one time is not to exceed $20,000,000
     Cdn. (Minimum availment $5,000,000 Cdn.).

STANDBY FEE

      A Standby Fee of 1/8% per annum on the daily unused portion of the Credit
      payable in Canadian dollars, continues to be payable monthly.

REPAYMENT

      Advances are to be repaid over an 8 year term. No principal payments are
      required in Years 1 and 2, followed by monthly repayment of the original
      principal amount as follows:

          Year 3:  5%
          Year 4:  10%
          Year 5:  15%
          Year 6:  20%
          Year 7:  25%
          Year 8:  25%

          (Quarterly payments at Borrower's option.)

PREPAYMENT

     Floating
     --------

     Prepayment is permitted without fee, premium, bonus or penalty at any time
     in whole or in part.

     Prepayments are to be applied against installments of principal in the
     inverse order of their maturities.
<PAGE>

                                                                         Page 10

     Fixed
     -----

     Prepayment of any individual fixed advance in whole 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
     entire principal amount; and

     ii)  the amount, if any, by which the interest at the rate applicable to
     the loan exceeds interest at the prevailing rate at the time of prepayment
     calculated on the entire principal amount for the remaining term of the
     loan. The "prevailing rate at the time of prepayment" is defined as that
     rate at which the Bank would then lend to the Borrower, based on the same
     security, for the remaining term of the loan.

     Interest Rate Swap
     ------------------

     Any unwinding of a Swap transaction would be subject to the terms and
     conditions set out in the Master Agreement.

SPECIFIC CONDITION

     Until all debts and liabilities under the Credit have been discharged in
     full, the following conditions will apply in respect of the Credit:

          Each individual transaction in excess of $5,000,000 requires the
          Bank's prior written approval, which will not be unreasonably
          withheld. (Borrower to provide details of expenditure such as purpose,
          assets to be acquired, benefits to Borrower, long range impact, etc.)

CREDIT NUMBER:  05                                  AUTHORIZED AMOUNT:  $100,000
--------------------------------------------------------------------------------

TYPE

     Corporate VISA - Availment, interest rate and repayment as per Cardholder
     Agreement.

CREDIT NUMBER:  06
------------------

TYPE

     Forward Exchange Contracts, terms up to three years. Daily settlement limit
     $10,000,000.

CURRENCY

     U.S. dollars
<PAGE>

                                                                         Page 11

AVAILMENT

     Subject to availability and execution of mutually satisfactory
     documentation, the Borrower may enter into Forward Exchange Contracts with
     the Bank for maximum terms up to three years.

     Maximum aggregate Forward Exchange Contracts outstanding at any one time
     are not to exceed $203,000,000 USD.

GENERAL FEES, SECURITY TERMS, AND CONDITIONS APPLICABLE TO ALL CREDITS
----------------------------------------------------------------------

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:

          A fee of $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;

     The imposition or collection of these fees does not constitute an express
     or implied waiver by the Bank of any event of default or of 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.

GENERAL SECURITY
----------------

     The following security, evidenced by documents in form satisfactory to the
     Bank and registered or recorded as required by the Bank to the extent not
     already obtained, is to be provided prior to any advances or availment
     being made under the Credits:

          General Assignment of Book Debts.

          Security under Section 427 of the Bank Act with appropriate insurance
          coverage, loss, if any, payable to the Bank.

          General Security Agreement over all present and future personal
          property, to incorporate "intellectual property" i.e., the Dual-
          Cyclonic technology with appropriate insurance coverage, loss if any,
          payable to the Bank.

          Updated/revised addendums or schedules will be required from time to
          time to enable the Bank to register all newly acquired assets,
          including intellectual property, patents, etc.

          Collateral Mortgage providing a first fixed charge over 1110 Hansler
          Road, Welland, Ontario, with replacement cost fire insurance coverage,
          loss, if any, payable to the Bank as mortgagee.
<PAGE>

                                                                         Page 12

          Acknowledged Assignment and Direction To Pay under Export Development
          Corporation's (EDC) global insurance policy, loss, if any, payable to
          the Bank.

          Hypothecation of all common shares of the wholly owned or controlled
          subsidiaries detailed below under Guarantees.

          Guarantees given by the following (with corporate seals and
          resolutions as applicable) in the amounts shown:

               NAME                                               AMOUNT
               ----                                               ------
               Fantom Technologies USA Holdings Inc.#             Unlimited
               Fantom Technologies Direct Inc.#                   Unlimited
               Fantom Technologies USA Inc.#                      Unlimited
               Fantom Technologies Intellectual Property Inc.     Unlimited

        #  To be Supported By:

               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.

               Hypothecation of all common shares in wholly owned or controlled
               subsidiaries now owned or to be owned.

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:

          Combined Operating loans and Bankers' Acceptances under Credit 01 and
          Credit 03 are not to exceed at any time the "Borrowing Base" which is
          defined as the aggregate of:

            75% good quality accounts receivable (inclusive of "Direct Response"
            accounts of Fantom Technologies Direct Inc. which are limited to a
            maximum allowance of $2,000,000) excluding accounts over 90 days,
            accounts due by employees, offsets and inter-company accounts plus
            90% of all accounts receivable insured by the Export Development
            Corporation or an alternate insurer acceptable to the Bank, less
            security interests or charges against current assets held by other
            parties and specific payables (i.e. statutory deductions) which have
            or may have priority over the Bank's security, plus 30% of net
            inventory, less specific payables. Maximum advances against net
            inventory are limited to $7,500,000. The quality of uninsured
            accounts receivable in excess of $50,000 are to be supported by
            Bank/Credit reports satisfactory to the Bank.
<PAGE>

                                                                         Page 13

          Net Inventory is defined as the sum of finished goods, raw materials
          and other categories, valued at the lower of cost or market, less
          unpaid inventory received from suppliers during the past 30 days.

          On a consolidated basis, the ratio of Debt (including deferred taxes)
          to Tangible Net Worth (TNW) is not to exceed 2.5:1.

          TNW is defined as the sum of share capital, minority interests in
          affiliates, earned and contributed surplus and postponed funds less
                                                                         ----
          (i) amounts due from officers/affiliates, (ii) investments in
          unconsolidated affiliates, and (iii) intangible assets in accordance
          with GAAP.

          On a consolidated basis, the ratio of current assets to current
          liabilities is to be maintained at all times at 1.1:1 or better.

          The ratio of EBITDA to interest expenses plus the current portion of
          long term debt and capital leases, calculated on a rolling four
          quarter basis, is to be maintained at all times at 1.5:1 or better.

          No new outside secured debt in excess of $500,000 is to be entered
          into by the company or any wholly owned/controlled subsidiaries
          without the Bank's prior written consent.  The wholly owned/controlled
          subsidiaries are not to issue common or preferred stock which would
          result in the subsidiaries or the Borrower relinquishing control.  If
          Fantom Technologies Inc. disposes of any part of its interest in a
          wholly owned/controlled subsidiary through a public offering, the
          proceeds of such offering will be used to pay any advances under
          Credit No. 4 unless otherwise agreed to by the Bank.

          Net proceeds in excess of $1,000,000 in aggregate from the sale of any
          capital assets (if not securing advances under Credit #2) are to be
          applied against outstanding loans under Credit #4.

          No mergers, amalgamations or significant change in the Borrower's line
          of business (from home care products/services) are permitted without
          the Bank's prior written consent. Consent not to be unreasonably
          withheld.  Subject to annual review.

          Investments in and/or advances to unconsolidated affiliates or
          unconsolidated subsidiaries are not in aggregate to exceed $5,000,000
          without the Bank's prior written consent.  Consent not to be
          unreasonably withheld.
<PAGE>

                                                                         Page 14

          Payment of dividends is permitted subject to the conditions outlined
          in this Commitment Letter being met both before and after such
          payments and upon the Borrower's ability to continue to meet the
          conditions during the ensuing year based on the annual financial
          statement projections as provided.

          The Bank is to be formally advised of any significant change in
          ownership of which the Borrower receives formal notification.

          At the Borrower's option, Montreal Trust is to be given the
          opportunity to be named Transfer Agent for the Borrower's shares.

          The Borrower is to provide written authorization for the Borrower and
          its Auditors to meet with Bank officials annually to discuss the
          Borrower's affairs with the right of the Borrower to be present at
          such meeting.

          Additional terms and conditions in Schedule A are to apply.

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 the Borrower
          within 120 days of the Borrower's fiscal year end, duly signed.

          Annual Prepared Unconsolidated Financial Statements of the Borrower
          and the Guarantors within 120 days of the Borrower's fiscal end, duly
          signed.

          Business Plan and Budget, including financial statement and cash flow
          projections covering the ensuing year are to be provided annually in
          conjunction with the year end financial statement reporting, to
          include Capital Expenditure Program.  Annual budget as previously
          provided will suffice along with copy of 10K filing.

          Quarterly Unaudited Consolidated Interim Financial Statements of the
          Borrower, within 60 days of period end.

          Borrowing Base Calculation monthly, to include information on
          inventory, accounts receivable and accounts payable, within 30 days of
          period end.

          Aged Listing of Accounts Receivable and Accounts Payable upon request.

          Annual Officer's Certificate of the Chief Financial Officer, that the
          Borrower has not received notice that it is in default of the terms
          and conditions of its licence/technology agreements relative to the
          "Dual-Cyclonic" system within 120 days of the Borrower's fiscal year
          end.
<PAGE>

                                                                         Page 15

          Listing of existing patents, certified by the Chief Financial Officer,
          upon request.

CONFLICTS
---------

      If there is any conflict or inconsistency between the provisions of this
      Commitment Letter and the provisions of any security or other agreements,
      documents or instruments delivered to the Bank in connection herewith, the
      provisions of this Commitment letter shall govern and apply.
<PAGE>

                                                                         Page 16

                                   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.

2.   Interest on loans/advances made in U.S. 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 360 day year for the actual number of days elapsed both
     before and after demand of payment or default and/or judgment. The rate of
     interest based on a 360 day year is equivalent to a rate based on a
     calendar year of 365 days of 365/360 times the rate of interest that
     applies to the U.S. dollar loans/advances.

Interest on Overdue Interest
----------------------------

3.   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.

Indemnity Provision
-------------------

4.   Applicable to all U.S. dollar credits. If the introduction of, or any
     change in, or in the interpretation of, or any change in its application to
     the Borrower of, any law or regulation, or compliance with any guideline
     from any central bank or other governmental authority (whether or not
     having the force of law) has the effect of increasing the cost to the Bank
     of performing its obligations hereunder or otherwise reducing its effective
     return hereunder or on its capital allocated in support of the credits,
     then the Bank shall give prompt written notice thereof to the Borrower and
     upon demand from time to time the Borrower shall compensate the Bank for
     such cost or reduction pursuant to a certificate reasonably prepared by the
     Bank.
<PAGE>

                                                                         Page 17

     (a)  Prepayment without fee
          ----------------------

          In the event of the Borrower becoming liable for such costs, the
          Borrower shall have the right to cancel without fee, premium, bonus or
          penalty all or any unutilized portion of the affected credit (other
          than any portion in respect of which the Borrower has requested
          utilization of the credit in which case cancellation may be effected
          upon indemnification of the Bank for any reasonable funding breakage
          costs incurred by the Bank thereby), and to prepay, without fee or
          penalty the outstanding principal balance thereunder other than the
          face amount of any document or instrument issued or accepted by the
          Bank for the account of the Borrower, such as a Letter of Credit, a
          Guarantee or a Bankers' Acceptance.

     (b)  Prepayment of Fixed Rate Advances
          ---------------------------------

          If any prepayment is made, for any reason, of an advance bearing a
          fixed rate of interest, including without limitation a LIBOR advance,
          the Borrower shall compensate the Bank for the cost of any early
          termination of its funding arrangements in accordance with its normal
          practices, such costs to be notified to the Borrower in a certificate
          reasonably prepared by the Bank. In the case of any fixed loan under
          Credit #4, any such cost shall be reduced by any amount paid to the
          Bank in respect thereof under the prepayment section of that credit.

Calculation and Payment of Bankers' Acceptance Fee
--------------------------------------------------

5.  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.

Calculation and Payment of Standby Fee
--------------------------------------

6.  Standby fees shall be calculated daily and payable monthly on the basis of a
calendar year for Canadian dollar credits and on the basis of a 360 day year for
U.S. dollar credits from the date of acceptance by the Borrower of this
Commitment Letter.

Environment
-----------

7.  The Borrower agrees:

    (a)  to obey in all material respects all applicable laws and requirements
         of any federal, provincial, or any other governmental authority which
         are material to the environment and the operation of the business
         activities of the Borrower and/or Guarantors taken as a whole;
<PAGE>

                                                                         Page 18

     (b)  to allow the Bank access at all reasonable times upon reasonable prior
          notice during nomal business hours to the business premises of the
          Borrower and/or Guarantors to monitor and inspect all property and
          business activities of the Borrower and Guarantors provided that such
          right of access shall be exercised so as not to interfere with the
          Borrower's or Guarantors' normal business operations;

     (c)  to notify the Bank from time to time of any material change in
          business activity conducted by the Borrower and/or Guarantors which
          involves the use or handling of hazardous materials or wastes and
          which increases the environmental liability of the Borrower and/or
          Guarantors in any material adverse manner;

     (d)  to notify the Bank of any proposed change in the use or occupation of
          the property of the Borrower and/or Guarantors which increases the
          environmental liability of the Borrower or the Guarantor in any
          material adverse manner prior to any change occurring;

     (e)  to provice the Bank with prompt written notice of any environmental
          incident which has a material adverse effect on the consolidated
          property, equipment, or business activities of the Borrower and its
          consolidated subsidiaries taken as a whole and with any other
          environmental information reasonably requested by the Bank from time
          to time;

     (f)  to conduct all environmental investigations and remedial activities
          which a commercially reasonable person would perform in similar
          circumstances to meet its  environmental responsibilities imposed by
          applicable law; and

     (g)  to pay for any environmental investigations, assessments or remedial
          activities with respect to any property of the Borrower and/or
          Guarantors that may be reasonably performed for or by the Bank from
          time to time pursuant to its right under subsection (f) above.

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 and/or Guarantors or any of the
property, equipment, or business activities of the Borrower and/or Guarantors
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 and/or Guarantors of the Bank's
decision concerning the adverse change.
<PAGE>

                                                                         Page 19

      If the Bank decides or is required to incur expenses in compliance or to
      verify the Borrower's and/or Guarantors' compliance with applicable
      environmental or other regulations, the Borrower and/or Guarantors shall
      indemnify the Bank in respect of any such expenses reasonably incurred,
      which will constitute further advances by the Bank to the Borrower under
      this Agreement.

Notice of Drawdown/Payments/Prepayments
---------------------------------------

8.  The Borrower shall give the Bank prior notice of a drawdown, payment or
    prepayment of any loan/advance three bank business days when the amount is
    $7 million dollars or more.

Initial Drawdown
----------------

9.  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 consolidated financial condition or the
    environmental condition of the Borrower and its consolidated subsidiaries
    taken as a whole.

Judgement Currency
------------------

10. The obligation of the Borrower and Guarantors hereunder to make payments in
    any currency of payment and account shall not be discharged or satisfied by
    any tender or recovery pursuant to any judgement expressed in or converted
    into any other currency except to the extent to which such tender or
    recovery shall result in the effective receipt by the Bank of the full
    amount of such currency of payment and account so payable and accordingly
    the obligation of the Borrower and guarantors shall be enforceable as an
    alternative or additional cause of action for the purpose of recovery in the
    other currency of the amount (if any) by which such effective receipt shall
    fall short of the full amount of such currency of payment and account so
    payable and shall not be affected by any judgement being obtained for any
    other sums due hereunder.

Periodic Review
---------------

11. The obligation of the Bank to make further advances or other accommodation
    available under any Credits of the Borrower under which the indebtedness or
    liability of the Borrower is payable on demand, is subject to periodic
    review and to no material adverse change occurring in the consolidated
    financial condition or the environmental condition of the Borrower and its
    consolidated subsidiaries taken as a whole.

Evidence of Indebtedness
------------------------

12. The Bank's accounts, books and records constitute, in the absence of
    manifest error, prima facie evidence of the advances made under this Credit,
    repayments on account thereof and the indebtedness of the Borrower to the
    Bank.
<PAGE>

                                                                         Page 20

Acceleration
------------

13.  (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;

     (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 and is continuing
          and has not been waived:

          (i)       the Borrower or any guarantor fails to pay when due, whether
                    on demand or at a fixed payment date, by acceleration or
                    otherwise, any payment of principal payable to the Bank
                    under this Commitment Letter;

          (ii)      The Borrower fails to pay when due any interest, fees,
                    commissions or other amounts payable to the Bank under this
                    Commitment Letter and such failure continues for 3 business
                    days after receipt by the Borrower of notice from the Bank
                    of such non-payment;

          (iii)     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, and such breach
                    continues unremedied for 30 days after receipt by the
                    Borrower of Notice from the Bank of such breach;

          (iv)      any material breach 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 and such breach continues to be
                    unremedied for 30 days after receipt by the Borrower of
                    notice from the Bank of each breach;

          (v)       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 Material guarantor and, if instituted
                    against the Borrower or any Material 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. A Material guarantor is defined as a guarantor
                    whose consolidated assets or gross revenues represent more
                    than 5% of the consolidated assets or gross revenue of the
                    Borrower and its consolidated subsidiaries;
<PAGE>

                                                                         Page 21

          (vi)      a receiver is appointed over all or any substantial part of
                    the property of the Borrower and its Consolidated
                    Subsidiaries taken as a whole or any material judgement or
                    material order or any material process of any court becomes
                    enforceable against the Borrower or any Material guarantor
                    or any property of the Borrower or any Material guarantor or
                    any creditor takes possession of all or any substantial part
                    of the property of the Borrower and its consolidated
                    subsidiaries taken as a whole;

          (vii)     any course of action is undertaken by the Borrower or any
                    Material guarantor or with respect to the Borrower or any
                    Material guarantor which would result in the Borrower's or
                    Material guarantor's reorganization, amalgamation or merger
                    with another corporation or the transfer of all or
                    substantially all of the Borrower's or any Material
                    guarantor's assets without the Bank's prior written consent;

          (viii)    any guarantee of indebtedness and liability under the Credit
                    Line is withdrawn or determined by a court of competent
                    jurisdiction to be invalid or otherwise rendered
                    ineffective;

          (ix)      any material adverse change occurs in the consolidated
                    financial condition of the Borrower and its consolidated
                    subsidiaries taken as a whole,

          (x)       any material adverse change occurs in the environmental
                    condition of:

                    (A)  the Borrower and its consolidated subsidiaries taken as
                         a whole; or

                    (B)  the consolidated property, equipment, or business
                         activities of the Borrower and its consolidated
                         subsidiaries taken as a whole.

Costs
-----

14.  All reasonable costs, including reasonable 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 10 business days after a detailed
     invoice thereafter has been provided to the Borrower.
<PAGE>

                                                                         Page 22

GENERAL ACCEPTED ACCOUNTING PRINCIPLES
--------------------------------------

      Where the character or amount of any asset or liability or terms of
      revenue or expense is required to be determined, or any consolidation or
      other accounting computation is required to be made for the purposes of
      this Commitment Letter or any specific or general security document or
      other document of instrument issued or accepted by the Bank for the
      account of the Borrower, such determination or calculation shall, unless
      the parties otherwise agree, be made in accordance with generally accepted
      accounting principles applied on a consistent basis. "Generally accepted
      accounting principles" means generally accepted accounting principles from
      time to time approved by the Canadian Institute of Chartered Accountants,
      or any successor institute, including those set out in the Handbook of the
      Canadian Institute of Chartered Accountants.

Notice
------

      Any demand, notice or communication to be made or given hereunder shall be
      in writing and may be made or given by personal delivery, by registered
      mail or by transmittal by facsimile addressed to the respective parties as
      follows:

      To the Borrower:

      Fantom Technologies Inc.
      1110 Hansler Road
      Welland, Ontario
      L3B 5SI

      Attention:  Chief Financial Officer
      Facsimile:  1-905-734-9955

      To the Borrower:

      The Bank of Nova Scotia
      P.O. Box 247
      St. Catharines, Ontario
      L2R 6T3

      Attention:  Manager
      Facsimile:  1-905-684-8445

      or to such other mailing or facsimile address as any party may from time
      to time notify the others in accordance with this provision. Any demand,
      notice of communication made or given by personal delivery shall be
      conclusively deemed to have been given on the day of actual delivery
      thereof, or, if made or given by registered mail, on the fifth business
      day following deposit thereof in the mail or, if made or given by
      facsimile on the first business day following the transmittal thereof.  If
      the party making or giving such demand, notice or communication knows or
      ought reasonably to know of difficulties with the postal system which
      might affect the delivery of mail, any such demand, notice or
      communication shall not be mailed but shall be made or given by personal
      delivery or by facsimile.
<PAGE>

                                     -2-

(6)  The terms and conditions of the Commitment Letter replace all previous
     commitments issued by the Bank to any of you. In the event of any conflict
     or inconsistency between the terms and conditions of any prior agreements
     between the Bank and any of you and the terms and conditions contained in
     the Commitment Letter and the Banking Documentation, the terms and
     conditions contained in the Commitment Letter and the Banking Documentation
     shall prevail.

The Bank acknowledges that each of you is entering into the Banking
Documentation in reliance upon this agreement.


DATED this 14th day of April, 2000


THE BANK OF NOVA SCOTIA

Per: /s/    R.W. Jeffery
        -----------------------------
          Authorized Signatory
<PAGE>

                                   SCHEDULE A

Fantom Technologies Inc.
------------------------

1.  Banker's Acceptances Agreement

2.  Agreement re Operating Line of Credit

3.  Promissory Note (Credit #2)

4.  Promissory Note (Credit #3)

5.  Promissory Note (Credit #4)

6.  Via Cardholder Agreement

7.  General Assignment of Book Debts

8.  Application for Credit and Promise to give Bank Act Security

9.  Notice of Intention to give Bank Act Security

10. Security under Section 427(1) of the Bank Act

11. Agreement as to Loans and Advances under the Bank Act

12. General Security Agreement

13. Collateral Mortgage over 1110 Hansler Road, Welland, Ontario

14. Acknowledged Assignment and Direction to Pay under Export Development
    Corporation's global insurance policy (loss payable to Lender)

15. Hypothecation

16. Power of Attorney to transfer securities


Fantom Technologies Direct, Inc.
--------------------------------
17. Guaranty

18. General Assignment of Book Debts

19. General Security Agreement

20. Hypothecation

21. Power of Attorney to transfer Securities


Fantom Technologies U.S.A. Holdings, Inc.
-----------------------------------------

22. Guaranty Agreement
<PAGE>

TO:       FANTOM TECHNOLOGIES INC.
          FANTOM TECHNOLOGIES U.S.A. HOLDINGS INC.
          FANTOM TECHNOLOGIES DIRECT, INC.
          FANTOM TECHNOLOGIES U.S.A. INC.
          FANTOM TECHNOLOGIES INTELLECTUAL PROPERTY INC.

RE:       Commitment Letter dated January 20, 1999 between The Bank of Nova
          Scotia and Fantom Technologies Inc.
--------------------------------------------------------------------------------

Reference is made to the captioned commitment letter (the "Commitment Letter")
and the guarantees, security agreements and other documents entered into by each
of you in favour of The Bank of Nova Scotia (the "Bank") pursuant to the
Commitment Letter, including, without limitation, those agreements listed in the
attached Schedule A (collectively the "Banking Documentation").

The Bank agrees with each of you as follows:

(1) Unless an Event of Default under the Commitment Letter has occurred and is
    continuing, the Bank will not contact customers and account debtors or
    others with whom you conduct business or have dealings to enforce any
    security under the Banking Documentation.

(2)  Unless an Event of Default under the Commitment Letter has occurred and is
     continuing, the Bank will not require any of you to hold any money received
     by you separate and apart from your other monies or in trust for the Bank.

(3)  Unless an Event of Default under the Commitment Letter has occurred and is
     continuing, the Bank will permit any of you or any of your subsidiaries to
     make payments to any of you or your subsidiaries (whether payment of
     dividends, payment of intercorporate accounts or otherwise), and will not
     prohibit any of you or your subsidiaries from receiving any such payments.

(4)  Unless an Event of Default under the Commitment Letter has occurred and is
     continuing, the Bank will not act on any power of attorney contained in the
     Banking Documentation.

(5)  In the event of any conflict or inconsistency between the terms and
     conditions of any Banking Documentation and the terms conditions contained
     in the Commitment Letter (including without limitation reporting and other
     additional obligations, covenants relating to environmental matters,
     occurrences or circumstances constituting events of default, enforcement or
     the manner of giving notice), the terms and conditions of the Commitment
     Letter shall prevail and the conflicting or inconsistent terms and
     conditions of the Banking Documentation shall be superceded to the extent
     necessary to give full force and effect to the Commitment Letter.
<PAGE>

                                     -2-
23.  Security Agreement

24.  Pledge Agreement

25.  Stock Transfer Power


Fantom Technologies U.S.A. Inc.
-------------------------------

26.  Guarantee

27.  Security Agreement


Fantom Technologies Intellectual Property, Inc.
-----------------------------------------------

28.  Guaranty Agreement

29.  Security Agreement