TING FIBER, INC. and TING INC. (as Borrowers) - and - TUCOWS INC. (as a Guarantor) - and - THE LENDERS FROM TIME TO TIME PARTY TO THIS AGREEMENT (as Lenders) - and - BANK OF MONTREAL as Administrative Agent CREDIT AGREEMENT August 18, 2016

▇▇▇▇▇▇.▇▇▇ CO.

TING FIBER, INC. and

TING INC.

(as Borrowers)

 Page

ARTICLE I - INTERPRETATION

1.01

Definitions  

 1

1.02

Accounting Principles

 24

1.03

Currency References

 24

1.04

References to Statutes

 24

1.05

Extended Meanings 

 25

ARTICLE II - FACILITY A

2.01

Establishment of Facility A 

26

2.02

Purpose

 26

2.03

Revolving Nature

 26

2.04

Repayment

 26

2.05

Availment Options

 27

2.06 

Interest and Fees under Tranche A-1

 27

2.07

Swingline (Tranche A-2) 

 29

2.08

Letters of Credit under Facility A 

 31

2.09

Voluntary Cancellation 

 33

ARTICLE III - FACILITY B

3.01

Establishment of Facility B

 34

3.02

Purpose

 34

3.03

Revolving Nature

 34

3.04

Repayment

 34

3.05

Availment Options

 35

3.06

Interest and Fees under Facility B

 36

3.07

Voluntary Cancellation 

 37

4.02

Purpose 

 38

4.03

Non-Revolving Nature

 38

4.04

Repayment

 38

4.05

Availment Options

 40

4.06

Interest and Fees under Facility C 

 41

4.07

Voluntary Cancellation; Voluntary Repayments

 42

4.08

Accordion

 42

4.09

Hedging Agreements

 43

ARTICLE V - GENERAL CONDITIONS

5.14

▇▇▇▇▇▇ ▇.▇

 53

Exhibits  

“A”

-

Lenders and Lenders’ Commitments

“B”

-

Draw Request

“C” 

-

Rollover Notice

“D”

-

Conversion Notice

“E”

-

Repayment Notice

“F”

-

Compliance Certificate

“G”

-

Excess Cash Flow Certificate

“H”

-

Form of BA Equivalent Note

“I”

-

CBA Model Provisions

Schedules

6.01(b)

-

 Corporate Information

6.01(h)

-

 Material Permits

6.01(i)

-

 Specific Permitted Liens

6.01(j)

-

 Owned Properties

6.01(k)

-

 Material Leased Properties

1.01

Definitions

Total Funded Debt to

EBITDA Ratio

Applicable Margin for

Canadian Prime Rate

Loans, U.S. Base Rate

Loans, U.S. Prime Rate

Loans and Overdrafts

Applicable Margin for

Bankers' Acceptances,

BA Equivalent Loans,

LIBOR Loans and

Letters of Credit

Applicable Margin for

Standby Fee

less than 1.00:1

0.75%

2.00%

0.40%

equal or greater than 1.00:1, but less than 2.00:1

1.00%

2.25%

0.45%

equal or greater than 2.00:1

1.50%

2.75%

0.55%

●

in respect of each corporation which has become a Subsidiary of Tucows Inc. in such fiscal period, EBITDA shall be determined as if such corporation had been a Subsidiary of Tucows Inc. during the entire fiscal period; and

●

in respect of each corporation which has ceased to be a Subsidiary of Tucows Inc. in such fiscal period, EBITDA shall be determined as if such corporation had not been a Subsidiary of Tucows Inc. during the entire fiscal period.

(a)

Cash Taxes in respect of such Fiscal Year;

(b)

Unfunded Capital Expenditures paid during such Fiscal Year, to the extent incurred in compliance with Section 7.02(f);

(c)

Interest paid in cash during such Fiscal Year in respect of Permitted Funded Debt (except the portion of any such Interest which constitutes a Distribution); and

(d)

scheduled principal payments paid during such Fiscal Year in respect of Permitted Funded Debt (except the portion of any such principal payments which constitute Distributions);

●

such Person ceases to carry on its business; or commits an act of bankruptcy or becomes insolvent (as such terms are used in the BIA); or makes an assignment for the benefit of creditors, files a petition in bankruptcy, makes a proposal or commences a proceeding under Insolvency Legislation; or petitions or applies to any tribunal for, or consents to, the appointment of any receiver, trustee or similar liquidator in respect of all or a substantial part of its property; or admits the material allegations of a petition or application filed with respect to it in any proceeding commenced in respect of it under Insolvency Legislation; or takes any corporate action for the purpose of effecting any of the foregoing; or

●

any proceeding or filing is commenced against such Person seeking to have an order for relief entered against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment or composition of it or its debts under any Insolvency Legislation, or seeking appointment of a receiver, trustee, custodian or other similar official for it or any of its property or assets; unless (i) such Person is diligently defending such proceeding in good faith and on reasonable grounds; and (ii) such proceeding does not materially adversely affect the ability of such Person to carry on its business and to perform and satisfy all of its obligations.

(e)

any LIBOR Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another month, in which case such LIBOR Period shall end on the immediately preceding Business Day;

●

the Required Lenders in their discretion shall have provided their prior written consent to such Acquisition after conducting such due diligence they may consider appropriate in the circumstances (for greater certainty, specifically including the terms and conditions of the purchase agreement and due diligence in respect of financial matters including projections for the subsequent five (5) years and the capital expense budget, material contracts, the corporate and capital structure of such Person, key management, and business, environmental, regulatory, tax and legal matters, and Tucows Inc. shall provide all information requested by the Required Lenders in connection with such due diligence at least ten (10) Business Days prior to the proposed completion of such Acquisition); provided however that the prior written consent of the Required Lenders shall not be required in connection with an Acquisition (hereinafter referred to as a “small Acquisition”) if (i) all other criteria listed in this definition are satisfied in respect of such Acquisition; (ii) the purchase price for such Acquisition plus the amount of any Funded Debt assumed in connection therewith does not exceed One Million Dollars ($1,000,000); and (iii) the aggregate purchase price for such Acquisition and all other small Acquisitions previously completed in the same Fiscal Year plus the amount of all Funded Debt assumed in connection therewith does not exceed Two Million Dollars ($2,000,000);

●

such Person is engaged in a business similar to one or more of the businesses conducted by the Borrowers as at the date of this Agreement;

●

the Acquisition does not involve a hostile or unsolicited take-over;

●

the Acquisition shall be accretive to EBITDA on a twelve month pro forma prospective basis, after giving effect to (i) normalization adjustments and (ii) pro forma synergies reasonably expected to result from such Acquisition, in each case as may be advised by Tucows Inc. and approved by the Required Lenders;

●

in the case of a share purchase, immediately thereafter such Person will be a wholly-owned Subsidiary of Tucows Inc.;

●

in the case of a share purchase (i) upon the completion of such Acquisition all Funded Debt (except Funded Debt which will constitute Permitted Funded Debt hereunder) of such Person shall be repaid and the holders of all Liens (except Liens which will constitute Permitted Liens hereunder) affecting the assets of such Person shall provide an undertaking to release and discharge such Liens within thirty (30) days thereafter; and (ii) within thirty (30) days following the completion of such Acquisition all Liens (except Liens which will constitute Permitted Liens hereunder) affecting the assets of such Person shall be released and discharged and such Person shall provide a Guarantee and all other Security required herein to be provided by a Subsidiary of Tucows Inc. hereunder (including registrations, searches, legal opinions and ancillary documentation);

●

in the case of an asset purchase (i) the Required Lenders shall have received satisfactory evidence that the requirements of the Bulk Sales Act (Ontario) or any similar applicable legislation shall be satisfied; (ii) upon the completion of such Acquisition all Funded Debt (except Funded Debt which will constitute Permitted Funded Debt hereunder) secured by the acquired assets shall be repaid and the holders of all Liens (except Liens which will constitute Permitted Liens hereunder) affecting such assets shall provide an undertaking to release and discharge such Liens within thirty (30) days thereafter; and (iii) within thirty (30) days following the completion of such Acquisition all Liens (except Liens which will constitute Permitted Liens hereunder) affecting such assets shall be released and discharged and all Security required herein to be provided to the Agent in respect of such assets (including registrations, searches, legal opinions and ancillary documentation) shall be provided;

●

the Acquisition does not involve the assumption of any material environmental liabilities, and all representations and warranties contained herein with respect to environmental matters shall be true and correct both immediately before and immediately after such Acquisition; and if as a result of the Acquisition any Company will acquire ownership of any Land, Tucows Inc. shall have provided an environmental questionnaire in form and substance satisfactory to the Agent in respect of such Land which evidences compliance with all such representations and warranties;

●

Tucows Inc. and the Borrowers are in compliance with all covenants and representations and warranties in all material respects under this Agreement and will remain in compliance after giving effect to such Acquisition; and no Default or Event of Default shall have occurred and be continuing or would result from the completion of such Acquisition;

●

if any Company proposes to incur Subordinated Debt to finance all or any portion of such Acquisition, the terms and conditions of such Subordinated Debt shall be satisfactory to the Required Lenders, and the holder(s) of such Subordinated Debt shall enter into a subordination and postponement agreement with the Agent containing terms and conditions contemplated in the definition of “Subordinated Debt” herein;

(a)

Statutory Liens in respect of any amount which is not at the time overdue;

(b)

Statutory Liens in respect of any amount which may be overdue but the validity of which is being contested in good faith and in respect of which reserves have been established in accordance with GAAP;

(c)

Liens or rights of distress reserved in or exercisable under any lease for rent not at the time overdue or for compliance with the terms of such lease not at the time in default; and security deposits given under leases not in excess of six (6) months' rent;

(d)

any obligations or duties affecting any Land due to any public utility or to any municipality or government, or to any statutory or public authority, with respect to any franchise, grant, licence or permit in good standing and any defects in title to structures or other facilities arising solely from the fact that such structures or facilities are constructed or installed on Land under government permits, leases or other grants in good standing; which obligations, duties and defects in the aggregate do not materially impair the use of such property, structures or facilities for the purpose for which they are held;

(e)

Liens incurred or deposits of cash made or pledged to secure obligations under workers' compensation legislation or similar legislation, or in connection with contracts, bids, tenders or expropriation proceedings, surety or appeal bonds, costs of litigation when required by law, public and statutory obligations, and warehousemen's, storers', repairers', carriers' and other similar Liens and deposits;

(f)

security given to a public utility or any municipality or government or to any statutory or public authority to secure obligations incurred to such utility, municipality, government or other authority in the ordinary course of business and not at the time overdue;

(g)

Liens and privileges arising out of judgments or awards in respect of which: an appeal or proceeding for review has been commenced; a stay of execution pending such appeal or proceedings for review has been obtained; and reserves have been established in accordance with GAAP;

(h)

any Lien arising in connection with the construction or improvement of any Land or arising out of the furnishing of materials or supplies therefor, provided that such Lien secures moneys not at the time overdue (or if overdue, the validity of which is being contested in good faith and in respect of which and reserves have been established as reasonably required by the Required Lenders), notice of such Lien has not been given to the Agent or any Lender and such Lien has not been registered against title to such Land;

(i)

Minor Title Defects;

(j)

Permitted Purchase-Money Security Interests;

(k)

the Specific Permitted Liens;

(l)

the Security; and

(m)

Liens securing Subordinated Debt;

●

any realization thereof, whether occurring as a result of enforcement or otherwise;

●

any sale, expropriation, loss or damage or other disposition of the Collateral or any portion thereof (other than a disposition of Collateral made pursuant to Section 7.02(c)); and

●

the dissolution, liquidation, bankruptcy or winding-up of any Company or any other distribution of its assets to creditors;

●

in the context of such Lender's obligation to make Advances under any Facility or Tranche, such Lender's Commitment to make Advances under such Facility or Tranche divided by the aggregate amount of all Lenders' Commitments to make Advances under such Facility or Tranche;

●

in the context of such Lender's entitlement to receive a portion of the standby fee in respect of any Facility or Tranche, such Lender's Commitment to make Advances under such Facility or Tranche divided by the aggregate amount of all Lenders' Commitments to make Advances under such Facility or Tranche;

●

subject to Section 11.03, in the context of any Lender's entitlement to receive payments of principal, interest or fees (other than standby fees) in respect of any Facility or Tranche, the Outstanding Advances due to such Lender under such Facility or Tranche divided by the aggregate amount of the Outstanding Advances due to all Lenders under such Facility or Tranche; and

●

in any other context, such Lender's Commitment divided by the aggregate of all Lenders' Commitments.

1.02

Accounting Principles

1.03

Currency References

1.04

References to Statutes

1.05

Extended Meanings

1.06

Exhibits and Schedules

Exhibits  

“A”

-

Lenders and Lenders’ Commitments

“B”

-

Draw Request

“C” 

-

Rollover Notice

“D”

-

Conversion Notice

“E”

-

Repayment Notice

“F”

-

Compliance Certificate

“G”

-

Excess Cash Flow Certificate

“H”

-

Form of BA Equivalent Note

“I”

-

CBA Model Provisions

Schedules

6.01(b)

-

 Corporate Information

6.01(h)

-

 Material Permits

6.01(i)

-

 Specific Permitted Liens

6.01(j)

-

 Owned Properties

6.01(k)

-

 Material Leased Properties

2.01

Establishment of Facility A

(a)

Subject to the terms and conditions in this Agreement, each Facility A Lender hereby establishes a committed, revolving credit facility for the Borrowers in the maximum principal amount indicated opposite such Lender's name in Exhibit “A” under the heading “Facility A Commitments”. The said credit facilities are established by the Facility A Lenders severally and not jointly, and are hereinafter collectively referred to as “Facility A”. Each Advance by a Tranche A-1 Lender under Tranche A-1 shall be made by such Lender in its Proportionate Share of Tranche A-1. Each Advance under Tranche A-2 (also referred to herein as the Swingline) shall be made only by the Swingline Lender, as more particularly set out in Section 2.07.

(b)

The Outstanding Advances at any time under Tranche A-1 shall not exceed the Tranche A-1 Limit. In addition, the maximum aggregate amount of the Outstanding Advances to each Borrower noted below under Tranche A-1 shall not at any time exceed the applicable sublimit designated below, provided that the Borrowers may by notice in writing to the Agent from time to time (for greater certainty, without the consent of the Agent or any Lender) reallocate such sublimits among the Borrowers:

▇▇▇▇▇▇.▇▇▇ Co. - $1,000,000

Ting Fiber, Inc. - $3,000,000

Ting Inc. - $500,000

2.02

Purpose

2.03

Revolving Nature

2.04

Repayment

2.05

Availment Options

(a)

Subject to the restrictions contained in this Agreement (and in particular, Sections 5.02 and 5.03) each Canadian Borrower may receive Advances under Facility A by any one or more of the following Availment Options (or any combination thereof):

(i)

Canadian Prime Rate Loans;

(ii)

U.S. Base Rate Loans;

(iii)

Bankers' Acceptances, each having a maturity between 28 and 182 days (inclusive), subject to availability;

(iv)

BA Equivalent Loans from Non-BA Lenders with a maturity between 28 and 182 days (inclusive), subject to availability; or

(v)

LIBOR Loans with a LIBOR Period of one (1), two (2) or three (3) months, subject to availability; or

(vi)

Letters of Credit, subject to Section 2.08.

(b)

Subject to the restrictions contained in this Agreement (and in particular, Sections 5.02 and 5.03) each U.S. Borrower may receive Advances under Facility A by any one or more of the following Availment Options (or any combination thereof):

(i)

U.S. Prime Rate Loans; or

(ii)

LIBOR Loans with a LIBOR Period of one (1), two (2) or three (3) months, subject to availability; or

(iii)

Letters of Credit, subject to Section 2.08.

(c)

Bankers' Acceptances, BA Equivalent Loans, LIBOR Loans and Letters of Credit will not be issued which in the opinion of the Lenders could result in the Facility A Limit being exceeded at any time. The Outstanding Advances under Facility A in the form of any above Availment Option may be converted into another form of Availment Option, subject to and in accordance with the terms and conditions of this Agreement (but for greater certainty, Bankers' Acceptances, BA Equivalent Loans, LIBOR Loans and Letters of Credit may not be converted into another Availment Option prior to the maturity thereof).

2.06

Interest and Fees under Tranche A-1

(a)

interest on Canadian Prime Rate Loans at the Canadian Prime Rate plus the Applicable Margin per annum, payable monthly in arrears on the last day of each and every month and on the Maturity Date;

(b)

interest on U.S. Base Rate Loans at the U.S. Base Rate plus the Applicable Margin per annum, payable monthly in arrears on the last day of each and every month and on the Maturity Date;

(c)

in respect of each Bankers’ Acceptance, a stamping fee equal to the Applicable Margin in effect at the time of issuance, multiplied by the face amount of the Bankers’ Acceptance with the product thereof further multiplied by the number of days to maturity of the Bankers’ Acceptance and divided by 365, payable at the time of acceptance;

(d)

in respect of each BA Equivalent Note, a stamping fee equal to the Applicable Margin in effect at the time of issuance multiplied by the face amount of the BA Equivalent Note with the product thereof further multiplied by the number of days to maturity of the BA Equivalent Note and divided by 365, payable at the time of acceptance;

(e)

interest on LIBOR Loans at the LIBO Rate plus the Applicable Margin per annum calculated on the basis of a year of three hundred and sixty (360) days, payable in the manner set out in Section 5.10(b);

(f)

in respect of each Letter of Credit, an administrative fee equal to one-quarter of one percent (0.25%) of the face amount of such Letter of Credit (without regard to the number of days to expiry of the Letter of Credit), payable to the Issuing Bank (for its own account) at the time of issuance of the said Letter of Credit;

(g)

the following fees in respect of each Letter of Credit: (i) in respect of the period from the date of issuance of such Letter of Credit to the last day of the then current Fiscal Quarter, a fee equal to the Applicable Margin in effect on the date of issuance multiplied by the face amount of such Letter of Credit multiplied by the number of days in such period (including the first day but excluding the last day of such period) and divided by three hundred and sixty-five (365), payable on the last Business Day of such Fiscal Quarter; (ii) in respect of each subsequent Fiscal Quarter (other than the Fiscal Quarter in which the Letter of Credit shall expire), a fee equal to the Applicable Margin in effect on the first Business Day of such Fiscal Quarter multiplied by the face amount of such Letter of Credit multiplied by the number of days in such Fiscal Quarter (including the first day but excluding the last day) and divided by three hundred and sixty-five (365), payable on the last Business Day of such Fiscal Quarter; and (iii) in respect of the Fiscal Quarter in which such Letter of Credit shall expire, a fee equal to the Applicable Margin in effect on the first day of such Fiscal Quarter multiplied by the face amount of such Letter of Credit multiplied by the number of days in such period (including the first day but excluding the last day of such period) and divided by three hundred and sixty-five (365), payable on the said expiry date;

(h)

an application fee of Fifty Dollars ($50) per Letter of Credit, plus any administrative fees charged by the Issuing Bank in accordance with its usual practice from time to time in respect of the amendment and renewal of Letters of Credit;

(i)

a standby fee with respect to the unused portion of ▇▇▇▇▇▇▇ ▇-▇, calculated on a daily basis as being the difference between (i) the Facility A Limit (less the Commitments of any Non-Funding Lenders under Facility A), less the Swingline Limit and (ii) the Outstanding Advances under ▇▇▇▇▇▇▇ ▇-▇, multiplied by the Applicable Margin and divided by 365; which standby fee shall be payable quarterly in arrears on the last day of each Fiscal Quarter based on the number of days in such Fiscal Quarter (including the first day and excluding the last day in such Fiscal Quarter) and on the Maturity Date; and for the purpose of calculating such standby fee, the U.S. Dollar equivalent of Outstanding Advances in Canadian Dollars shall be determined by reference to the spot rate of exchange for converting Canadian Dollars into U.S. Dollars quoted by the Bank of Canada at approximately noon (Toronto time) on the first Business Day of the month in which such standby fee is calculated; and

(j)

such fees payable to the Agent (for its own account) as may be agreed in writing from time to time between the Borrowers and the Agent relating to any cash management services which may be provided by the Agent for the Borrowers from time to time.

2.07

Swingline (Tranche A-2)

(a)

The Outstanding Advances at any time under the Swingline shall not exceed the Swingline Limit. In addition, the maximum aggregate amount of the Outstanding Advances to each Borrower noted below under the Swingline shall not at any time exceed the applicable sublimit designated below, provided that the Borrowers may by notice in writing to the Swingline Lender from time to time (for greater certainty, without notice to or the consent of any other Lender or the Agent) reallocate such sublimits among the Borrowers:

(b)

Advances to each Borrower under the Swingline shall be made by way of Overdrafts in U.S. Dollars or Canadian Dollars in the following manner. The Swingline Lender will make Advances into one or more accounts designated by the applicable Borrower as required in order to honour cheques drawn by such Borrower on such accounts which are presented to the Swingline Lender for payment. As deposits are made into such accounts by such Borrower, the Swingline Lender shall withdraw funds from such accounts from time to time and apply such funds as repayments under the Swingline. Advances to each Borrower and repayments by each Borrower under the Swingline shall be made without notice and shall be on a dollar for dollar basis (i.e. not subject to minimum amounts or multiples). Notwithstanding the foregoing, due to internal system requirements of the Swingline Lender, each U.S. Borrower is required to provide prior written notice to the Swingline Lender in respect of any Advances it may request under the Swingline.

(c)

In respect of each Canadian Borrower, interest on Overdrafts in Canadian Dollars under the Swingline shall be payable at the Canadian Prime Rate plus the Applicable Margin per annum, payable monthly in arrears on the last day of each and every month and on the Maturity Date, and interest on Overdrafts in U.S. Dollars under the Swingline shall be payable at the U.S. Base Rate plus the Applicable Margin per annum, payable monthly in arrears on the last day of each and every month and on the Maturity Date.

(d)

In respect of each U.S. Borrower, interest on Overdrafts in U.S. Dollars under the Swingline shall be payable at the U.S. Prime Rate plus the Applicable Margin per annum, payable monthly in arrears on the last day of each and every month and on the Maturity Date.

(e)

Each Borrower may also receive Advances under the Swingline by means of the issuance of Letters of Credit by the Swingline Lender as provided in Section 2.08. Fees in respect of such Letters of Credit shall be payable in the same amounts and in the same manner as provided in Sections 2.06(g) and (h) herein.

(f)

The Borrowers jointly and severally agree to pay a standby fee with respect to the Swingline to the Swingline Lender (for its own account), calculated on a daily basis as being the difference between the Swingline Limit and the Outstanding Advances under the Swingline, multiplied by the Applicable Margin and divided by 365; which standby fee shall be payable quarterly in arrears on the last day of each Fiscal Quarter based on the number of days in such Fiscal Quarter (including the first day and excluding the last day in such Fiscal Quarter) and on the Maturity Date; and for the purpose of calculating such standby fee, the U.S. Dollar equivalent of Outstanding Advances in Canadian Dollars shall be determined by reference to the spot rate of exchange for converting Canadian Dollars into U.S. Dollars quoted by the Bank of Canada at approximately noon (Toronto time) on the first Business Day of the month in which such standby fee is calculated.

(g)

The Swingline Lender may in its discretion at any time, by written notice to the Borrowers, require the Borrowers to reduce the Outstanding Advances under the Swingline by a specified amount (in this paragraph called the “Swingline Reduction Amount”). Each Borrower agrees to promptly comply with any such request by making a repayment on the Swingline from its own resources, or by requesting an Advance under ▇▇▇▇▇▇▇ ▇-▇, the proceeds of which shall be applied to reduce the Outstanding Advances under the Swingline accordingly. If the Borrowers fail to comply with any such request from the Swingline Lender within two (2) Business Days after receipt thereof, the Lenders agree that upon request by the Swingline Lender they will make Advances under Tranche A-1 in an aggregate amount equal to the Swingline Reduction Amount, the proceeds of which shall be applied to reduce the Outstanding Advances under the Swingline.

2.08

Letters of Credit under Facility A

(a)

Letters of Credit shall be available in in Canadian Dollars or U.S. Dollars (or such other major currency as the Issuing Bank or the Swingline Lender, as applicable may agree in its discretion).

(b)

The Equivalent Amount expressed in U.S. Dollars of the aggregate face amount of all Letters of Credit outstanding under Facility A at any time may not exceed One Million Dollars ($1,000,000). In addition, the Equivalent Amount expressed in U.S. Dollars of the aggregate face amount of all Letters of Credit issued at any time to each Borrower noted below under Facility A shall not at any time exceed the applicable sublimit designated below, provided that the Borrowers may by notice in writing to the Agent from time to time (for greater certainty, without the consent of the Agent or any Lender) reallocate such sublimits among the Borrowers:

(c)

Each fee in respect of a Letter of Credit issued in Canadian Dollars or U.S. Dollars shall be paid in the same currency as the currency of such Letter of Credit. Each fee in respect of a Letter of Credit issued in any other currency shall be paid in U.S. Dollars; and for the purposes of calculating such fee in respect of any Fiscal Quarter, the Equivalent Amount (expressed in U.S. Dollars) of the face amount of such Letter of Credit shall be calculated on the basis of the Bank of Canada noon spot rate on the first Business Day of the month in which such fee is calculated.

(d)

Letters of Credit will not be issued for the purpose of guaranteeing obligations of any Person (except a Company).

(e)

Each Letter of Credit shall have a term not in excess of one (1) year (but for greater certainty, a Letter of Credit may have a longer term if it contains a provision which permits the issuer thereof to terminate such Letter of Credit by written notice to the beneficiary on an annual basis).

(f)

Each request for the issuance of a Letter of Credit shall be delivered by the applicable Borrower to the Agent in accordance with the notice requirements set out in Section 5.02(a) herein, together with the customary form of application and indemnity agreement required by the Issuing Bank or the Swingline Lender (as applicable) completed to its satisfaction and the proposed form of the Letter of Credit (which shall be satisfactory to the Issuing Bank or the Swingline Lender, as applicable) and such other certificates, documents and other papers and information as the Issuing Bank or the Swingline Lender (as applicable) may reasonably request.

(g)

Concurrently with each request for the issuance of a Letter of Credit, the applicable Borrower shall notify the Agent in writing whether: (i) the Letter of Credit is to be issued by the Swingline Lender on its own behalf under the Swingline, or (ii) the Letter of Credit is to be issued by the Issuing Bank on behalf of the Lenders under Tranche A-1 (a “Syndicated Letter of Credit”). The Agent shall notify each Lender of the principal amount, the reference number and the expiration date of each Syndicated Letter of Credit and the amount of such Lender's participation therein. By the issuance of a Syndicated Letter of Credit hereunder and without further action on the part of the Issuing Bank or the Lenders, each said Lender hereby accepts from the Issuing Bank a participation (which participation shall be without recourse to the Issuing Bank) in such Syndicated Letter of Credit in such Lender's Proportionate Share of ▇▇▇▇▇▇▇ ▇-▇, effective upon the issuance of such Syndicated Letter of Credit. Each Lender hereby absolutely and unconditionally assumes, as primary obligor and not as a surety, and agrees to pay and discharge and to indemnify and hold the Issuing Bank harmless from liability in respect of, such Lender's said Proportionate Share of the amount of any drawing under a Syndicated Letter of Credit. Each said Lender acknowledges and agrees that its obligation to acquire participations in each Syndicated Letter of Credit issued by the Issuing Bank and its obligation to make the payments specified herein, and the right of the Issuing Bank to receive the same, in the manner specified herein, are absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or Event of Default hereunder, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. The Issuing Bank shall review each draft and any accompanying documents presented under a Syndicated Letter of Credit and shall notify each said Lender of any such presentment. Promptly after it shall have ascertained that any draft and any accompanying documents presented under such Syndicated Letter of Credit appear on their face to be in substantial conformity with the terms and conditions of the Syndicated Letter of Credit, the Issuing Bank shall give notice to each said Lender and the applicable Borrower of the receipt and amount of such draft and the date on which payment thereon will be made, and each said Lender shall, by 11:00 a.m. Toronto time on the date such payment is to be made, pay its said Proportionate Share of the amount so drawn under the Syndicated Letter of Credit in immediately available funds, and the Issuing Bank shall make the appropriate payment to the beneficiary of such Syndicated Letter of Credit. The applicable Borrower agrees to immediately reimburse each said Lender in an amount equal to the said payment by such Lender with interest thereon payable at the same rate and in the same manner as Canadian Dollar Prime-Based Loans under Facility A. The obligation of the applicable Borrower under this Section to reimburse the said Lenders and the Issuing Bank, as applicable, for all drawings under Letters of Credit shall be absolute, unconditional and irrevocable and shall be satisfied strictly in accordance with their terms, irrespective of:

(i)

any lack of validity or enforceability of any Letter of Credit;

(ii)

the existence of any claim, setoff, defence or other right which the applicable Borrower or any other Person may at any time have against the beneficiary under any Letter of Credit, the Issuing Bank or any Lender (other than the defence of payment in accordance with the terms of this Agreement or a defence based on the gross negligence or wilful misconduct of the Issuing Bank or any Lender) or any other Person in accordance with this Agreement or other transaction;

(iii)

any draft or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; and

(iv)

any other circumstance or event whatsoever, whether or not similar to any of the foregoing.

(h)

In making any payment under any Letter of Credit (i) the Issuing Bank's exclusive reliance on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever and (ii) any non-compliance in any immaterial respect of the documents presented under such Letter of Credit with the terms thereof shall, in each case, not be deemed wilful misconduct or negligence of the Issuing Bank or any Lender.

(i)

The Issuing Bank and its correspondents may accept and act upon the name, signature, or act of any party purporting to be the executor, administrator, receiver, trustee in bankruptcy or other legal representative of any party designated in any Letter of Credit in the place of the name, signature, or act of such party.

(j)

On or before the Maturity Date the Borrowers shall (i) arrange for the cancellation and return of all outstanding Letters of Credit to the Issuing Bank or (ii) provide cash collateral in favour of the Agent in respect of all outstanding Letters of Credit in an amount equal to the aggregate of the face amounts of all such Letters of Credit, plus an additional amount determined by the Issuing Bank and the Swingline Lender to be necessary to cover their customary fees and expenses associated with the settlement of such Letters of Credit. For greater certainty, the Agent shall have no obligation to release all or any portion of the Security unless and until all Letters of Credit are cancelled or such cash collateral is provided in respect thereof to the satisfaction of the Issuing Bank and the Swingline Lender.

2.09

Voluntary Cancellation

3.01

Establishment of Facility B

(a)

Subject to the terms and conditions in this Agreement, each Facility B Lender hereby establishes a committed, revolving, reducing credit facility for the Borrowers in the maximum principal amount indicated opposite such Lender's name in Exhibit “A” under the heading “Facility B Commitments”. The said credit facilities are established by the Facility B Lenders severally and not jointly, and are hereinafter collectively referred to as “Facility B”. Each Advance by a Facility B Lender under Facility B shall be made by such Lender in its Proportionate Share of Facility B.

(b)

The Outstanding Advances at any time under Facility B shall not exceed the Facility B Limit. In addition, the maximum aggregate amount of the Outstanding Advances to each Borrower noted below under Facility B shall not at any time exceed the applicable sublimit designated below, provided that the Borrowers may by notice in writing to the Agent from time to time (for greater certainty, without notice to or the consent of the Agent or any Lender) reallocate such sublimits among the Borrowers:

3.02

Purpose

3.03

Revolving Nature

3.04

Repayment

(a)

Notwithstanding all other provisions in this Section 3.04, the obligations under Facility B shall become due and payable on the earliest of: (i) the Acceleration Date; and (ii) the Maturity Date.

(b)

Following the end of each Fiscal Year (referred to in this Section 3.04 as the “subject Fiscal Year”), on the last day of each Fiscal Quarter thereafter the Borrowers shall make a Repayment under Facility B (in addition to all other Repayments required pursuant to this Section 3.04) equal to one-sixteenth (1/16) of the aggregate amount of all Advances under Facility B made in the subject Fiscal Year for the purpose of Share Repurchases (or to repay indebtedness incurred prior to the Closing Date for such purpose).

(c)

Following the end of the subject Fiscal Year, on the last day of each Fiscal Quarter thereafter the Borrowers shall make a Repayment under Facility B (in addition to all other Repayments required pursuant to this Section 3.04) equal to one-twentieth (1/20) of the aggregate amount of all Advances under Facility B made in the subject Fiscal Year for the purpose of Domain Purchases and Permitted Acquisitions (or to repay indebtedness incurred prior to the Closing Date for such purpose).

(d)

Following the end of the subject Fiscal Year, on the last day of each Fiscal Quarter thereafter the Borrowers shall make a Repayment under Facility B (in addition to all other Repayments required pursuant to this Section 3.04) equal to one-twenty-eighth (1/28) of the aggregate amount of all Advances under Facility B made in the subject Fiscal Year for the purpose of FTTH Capital Expenditures (or to repay indebtedness incurred prior to the Closing Date for such purpose).

(e)

If at any time the Outstanding Advances under Facility B exceed the Facility B Limit for any reason (specifically including as a result of a fluctuation in currency exchange rates), the Borrowers shall immediately make a Repayment under Facility B in such amount as will result in the Outstanding Advances under Facility B not exceeding the Facility B Limit.

(f)

In addition to all other Repayments required in respect of Facility B pursuant to this Section 3.04, Repayments shall be required under Facility B as provided in Sections 4.04(e) and (f).

3.05

Availment Options

(a)

Subject to the restrictions contained in this Agreement (and in particular, Sections 5.02 and 5.03) each Canadian Borrower may receive Advances under Facility B by any one or more of the following Availment Options (or any combination thereof):

(i)

Canadian Prime Rate Loans;

(ii)

U.S. Base Rate Loans;

(iii)

Bankers' Acceptances, each having a maturity between 28 and 182 days (inclusive), subject to availability;

(iv)

BA Equivalent Loans from Non-BA Lenders with a maturity between 28 and 182 days (inclusive), subject to availability; or

(v)

LIBOR Loans with a LIBOR Period of one (1), two (2) or three (3) months, subject to availability.

(b)

Subject to the restrictions contained in this Agreement (and in particular, Sections 5.02 and 5.03) each U.S. Borrower may receive Advances under Facility B by any one or more of the following Availment Options (or any combination thereof):

(i)

U.S. Prime Rate Loans; or

(ii)

LIBOR Loans with a LIBOR Period of one (1), two (2) or three (3) months, subject to availability.

(c)

Bankers' Acceptances, BA Equivalent Loans and LIBOR Loans will not be issued which in the opinion of the Lenders could result in the Facility B Limit being exceeded at any time. The Outstanding Advances under Facility B in the form of any above Availment Option may be converted into another form of Availment Option, subject to and in accordance with the terms and conditions of this Agreement (but for greater certainty, Bankers' Acceptances, BA Equivalent Loans and LIBOR Loans may not be converted into another Availment Option prior to the maturity thereof).

3.06

Interest and Fees under Facility B

(a)

interest on Canadian Prime Rate Loans at the Canadian Prime Rate plus the Applicable Margin per annum, payable monthly in arrears on the last day of each and every month and on the Maturity Date;

(b)

interest on U.S. Base Rate Loans at the U.S. Base Rate plus the Applicable Margin per annum, payable monthly in arrears on the last day of each and every month and on the Maturity Date;

(c)

in respect of each Bankers’ Acceptance, a stamping fee equal to the Applicable Margin in effect at the time of issuance, multiplied by the face amount of the Bankers’ Acceptance with the product thereof further multiplied by the number of days to maturity of the Bankers’ Acceptance and divided by 365, payable at the time of acceptance;

(d)

in respect of each BA Equivalent Note, a stamping fee equal to the Applicable Margin in effect at the time of issuance multiplied by the face amount of the BA Equivalent Note with the product thereof further multiplied by the number of days to maturity of the BA Equivalent Note and divided by 365, payable at the time of acceptance;

(e)

interest on LIBOR Loans at the LIBO Rate plus the Applicable Margin per annum calculated on the basis of a year of three hundred and sixty (360) days, payable in the manner set out in Section 5.10(b); and

(f)

a standby fee with respect to the unused portion of Facility B, calculated on a daily basis as being the difference between (i) the Facility B Limit (less the Commitments of any Non-Funding Lenders under Facility B) and (ii) the Outstanding Advances under Facility B, multiplied by the Applicable Margin and divided by 365; which standby fee shall be payable quarterly in arrears on the last day of each Fiscal Quarter based on the number of days in such Fiscal Quarter (including the first day and excluding the last day in such Fiscal Quarter) and on the Maturity Date; and for the purpose of calculating such standby fee, the U.S. Dollar equivalent of Outstanding Advances in Canadian Dollars shall be determined by reference to the spot rate of exchange for converting Canadian Dollars into U.S. Dollars quoted by the Bank of Canada at approximately noon (Toronto time) on the first Business Day of the month in which such standby fee is calculated.

3.07

Voluntary Cancellation

4.01

Establishment of Facility C

(a)

Subject to the terms and conditions in this Agreement, each Facility C Lender hereby establishes a committed, non-revolving credit facility for the Borrowers in the maximum principal amount indicated opposite such Lender's name in Exhibit “A” under the heading “Facility C Commitments”. The said credit facilities are established by the Facility C Lenders severally and not jointly, and are hereinafter collectively referred to as “Facility C”. Each Advance by a Facility C Lender under Facility C shall be made by such Lender in its Proportionate Share of Facility C.

(b)

The Outstanding Advances at any time under Facility C shall not exceed the Facility C Limit. In addition, the maximum aggregate amount of the Outstanding Advances to each Borrower noted below under Facility C shall not at any time exceed the applicable sublimit designated below, provided that the Borrowers may by notice in writing to the Agent from time to time (for greater certainty, without notice to or the consent of the Agent or any Lender) reallocate such sublimits among the Borrowers:

4.02

Purpose

4.03

Non-Revolving Nature

4.04

Repayment

(a)

Notwithstanding all other provisions in this Section 4.04, the obligations under Facility C shall become due and payable on the earliest of: (i) the Acceleration Date; and (ii) the Maturity Date.

(b)

In respect of each Advance under Facility C made for the purpose of Share Repurchases (or to repay indebtedness incurred prior to the Closing Date for such purpose), on the last day of each Fiscal Quarter following such Advance the Borrowers shall make a Repayment under Facility C (in addition to all other Repayments required pursuant to this Section 4.04) equal to one-sixteenth (1/16) of the amount of such Advance.

(c)

In respect of each Advance under Facility C made for the purpose of Domain Purchases or Permitted Acquisitions (or to repay indebtedness incurred prior to the Closing Date for such purpose), on the last day of each Fiscal Quarter following such Advance the Borrowers shall make a Repayment under Facility C (in addition to all other Repayments required pursuant to this Section 4.04) equal to one-twentieth (1/20) of the amount of such Advance.

(d)

In respect of each Advance under Facility C made for the purpose of FTTH Capital Expenditures (or to repay indebtedness incurred prior to the Closing Date for such purpose), on the last day of each Fiscal Quarter following such Advance the Borrowers shall make a Repayment under Facility C (in addition to all other Repayments required pursuant to this Section 4.04) equal to one-twenty-eighth (1/28) of the amount of such Advance.

(e)

In addition to all other Repayments required under this Section 4.04, if the Total Funded Debt to EBITDA Ratio at the end of any Fiscal Year is greater than 2.00 to 1, the Borrowers shall make a Repayment in an amount equal to fifty percent (50%) of the Excess Cash Flow in such Fiscal Year. Such Repayments shall be made not later than thirty (30) days after the date of delivery to the Agent of the Year-end Financial Statements for such Fiscal Year. Each Repayment made pursuant to this paragraph (e) shall be applied firstly against the Outstanding Advances under Facility C and thereafter against the Outstanding Advances under Facility B.

(f)

In addition to all other Repayments required pursuant to this Section 4.04, the following Repayments shall be required:

(i)

If any Company receives proceeds from a policy of insurance the Borrowers shall make a Repayment to the Agent in an amount equal to the portion of such proceeds not permitted to be retained by such Company as provided in Section 8.08, within three (3) Business Days after receipt thereof.

(ii)

If any Company receives proceeds (net of transaction expenses) from the raising of capital by way of equity or Subordinated Debt the Borrower shall make a Repayment to the Agent in an amount equal to the amount of such net proceeds, within three (3) Business Days after receipt thereof.

(iii)

If any Company receives proceeds (net of transaction expenses, applicable taxes and usual adjustments, if applicable) from a transaction involving the sale or other disposition, not in the ordinary course of business, of any individual asset or group of related assets (other than Domain Names) in one or a series of related transactions, within 180 days after such disposition the Borrowers shall make a Repayment to the Agent in an amount equal to the portion of such net proceeds not used to purchase similar assets within such 180 days period. Notwithstanding the foregoing however, the first Five Hundred Thousand Dollars ($500,000) of net proceeds under this clause (iii) in the aggregate in any Fiscal Year shall not be required to be applied as a Repayment.

(iv)

If at the end of any Fiscal Quarter in a Fiscal Year the proceeds (net of transaction expenses, applicable taxes and usual adjustments, if applicable) from the disposition of Domain Names by the Companies in such Fiscal Year exceeds Eight Million Dollars ($8,000,000), the amount in excess of Eight Million Dollars ($8,000,000) shall be applied as a Repayment within 180 days after the end of such Fiscal Quarter, except to the extent such excess net proceeds were used to purchase similar assets within such 180 day period.

(g)

If at any time the Outstanding Advances under Facility C exceed the Facility C Limit for any reason (specifically including as a result of a fluctuation in currency exchange rates), the Borrowers shall immediately make a Repayment under Facility C in such amount as will result in the Outstanding Advances under Facility C not exceeding the Facility C Limit.

4.05

Availment Options

(a)

Subject to the restrictions contained in this Agreement (and in particular, Sections 5.02 and 5.03) each Canadian Borrower may receive Advances under Facility C by any one or more of the following Availment Options (or any combination thereof):

(i)

Canadian Prime Rate Loans;

(ii)

U.S. Base Rate Loans;

(iii)

Bankers' Acceptances, each having a maturity between 28 and 182 days (inclusive), subject to availability;

(iv)

BA Equivalent Loans from Non-BA Lenders with a maturity between 28 and 182 days (inclusive), subject to availability; or

(v)

LIBOR Loans with a LIBOR Period of one (1), two (2) or three (3) months, subject to availability.

(b)

Subject to the restrictions contained in this Agreement (and in particular, Sections 5.02 and 5.03) each U.S. Borrower may receive Advances under Facility C by any one or more of the following Availment Options (or any combination thereof):

(i)

U.S. Prime Rate Loans; or

(ii)

LIBOR Loans with a LIBOR Period of one (1), two (2) or three (3) months, subject to availability.

(c)

Bankers' Acceptances, BA Equivalent Loans and LIBOR Loans will not be issued which in the opinion of the Lenders could result in the Facility C Limit being exceeded at any time. The Outstanding Advances under Facility C in the form of any above Availment Option may be converted into another form of Availment Option, subject to and in accordance with the terms and conditions of this Agreement (but for greater certainty, Bankers' Acceptances, BA Equivalent Loans and LIBOR Loans may not be converted into another Availment Option prior to the maturity thereof).

4.06

Interest and Fees under Facility C

(a)

interest on Canadian Prime Rate Loans at the Canadian Prime Rate plus the Applicable Margin per annum, payable monthly in arrears on the last day of each and every month and on the Maturity Date;

(b)

interest on U.S. Base Rate Loans at the U.S. Base Rate plus the Applicable Margin per annum, payable monthly in arrears on the last day of each and every month and on the Maturity Date;

(c)

in respect of each Bankers’ Acceptance, a stamping fee equal to the Applicable Margin in effect at the time of issuance, multiplied by the face amount of the Bankers’ Acceptance with the product thereof further multiplied by the number of days to maturity of the Bankers’ Acceptance and divided by 365, payable at the time of acceptance;

(d)

in respect of each BA Equivalent Note, a stamping fee equal to the Applicable Margin in effect at the time of issuance multiplied by the face amount of the BA Equivalent Note with the product thereof further multiplied by the number of days to maturity of the BA Equivalent Note and divided by 365, payable at the time of acceptance;

(e)

interest on LIBOR Loans at the LIBO Rate plus the Applicable Margin per annum calculated on the basis of a year of three hundred and sixty (360) days, payable in the manner set out in Section 5.10(b); and

(f)

a standby fee with respect to the unused portion of Facility C, calculated on a daily basis as being the difference between (i) the Facility C Limit (less the Commitments of any Non-Funding Lenders under Facility C) and (ii) the Outstanding Advances under Facility C, multiplied by the Applicable Margin and divided by 365; which standby fee shall be payable quarterly in arrears on the last day of each Fiscal Quarter based on the number of days in such Fiscal Quarter (including the first day and excluding the last day in such Fiscal Quarter) and on the Maturity Date; and for the purpose of calculating such standby fee, the U.S. Dollar equivalent of Outstanding Advances in Canadian Dollars shall be determined by reference to the spot rate of exchange for converting Canadian Dollars into U.S. Dollars quoted by the Bank of Canada at approximately noon (Toronto time) on the first Business Day of the month in which such standby fee is calculated.

4.07

Voluntary Cancellation; Voluntary Repayments

(a)

The Borrowers may at any time and from time to time upon not less than two (2) Business Days' prior written notice to the Agent, without penalty or fee, cancel any unadvanced portion of Facility C in a minimum amount and a multiple of One Hundred Thousand Dollars ($100,000), in which event the Facility C Limit shall be reduced by the amount so cancelled.

(b)

Upon delivery of an executed Repayment Notice to the Agent not less than two (2) Business Days’ prior to making a Repayment, the Borrowers may make Repayments on account of the Outstanding Advances under Facility C from time to time in a minimum amount of One Hundred Thousand Dollars ($100,000) without payment of any penalty or fee, provided however that Bankers’ Acceptances, BA Equivalent Loans and LIBOR Loans may not be repaid prior to the maturity thereof. Each such Repayment under Facility C shall be applied against the scheduled Repayments payable under Facility C in reverse chronological order.

4.08

Accordion

(a)

At the request of the Borrowers, any one or more of the Facility C Lenders may agree to increase their respective Facility C Commitments from time to time (and the Facility C Limit shall be increased accordingly), provided that the following conditions are satisfied:

(i)

after such increased Facility C Commitments have taken effect (in this Section called the “effective date”), the Facility C Limit shall not exceed Fifty-Five Million Dollars ($55,000,000);

(ii)

all representations and warranties in Section 6.01 herein are true and correct in all material respects immediately prior to the effective date and will remain true and correct in all material respects immediately after the effective date;

(iii)

no Default, Event of Default or Material Adverse Change has occurred and is continuing immediately prior to or immediately after the effective date;

(iv)

Tucows Inc. shall have provided a certificate to the Agent, supported by such financial projections as may be reasonably required by the Agent, confirming that after the effective date Tucows Inc. will be in compliance with all financial covenants set out in Section 7.03 herein throughout the twelve (12) month period immediately following the effective date; and

(v)

the Agent and the Issuing Bank shall have provided their written consent to the said increased Facility C Commitments, such consent not to be unreasonably withheld or delayed.

(b)

At the request of the Borrowers, subject to obtaining the written consent of the Agent and the Issuing Bank not to be unreasonably withheld or delayed, a financial institution which is not a Lender at the date of this Agreement may establish a new Facility C Commitment, provided that all conditions set out in paragraph (a) are satisfied. Such financial institution shall thereby become a Facility C Lender for all purposes of this Agreement.

(c)

The establishment of any such increased or new Facility C Commitment shall be subject to the execution and delivery of an amendment to this Agreement made among Tucows Inc., the Borrowers, the Agent, the Issuing Bank and those Facility C Lenders which have agreed to increase their Facility C Commitments or establish new Facility C Commitments, as the case may be, together with security confirmations, guarantee confirmations, officers’ certificates, legal opinions and other documents as the Agent may consider necessary or desirable. Any such amendment shall be binding upon all Lenders, without the necessity of any notice to such other Lenders by the Borrowers or the Agent.

(d)

For greater certainty, no Facility C Lender shall be required to increase its Facility C Commitment unless it expressly agrees to do so in its discretion.

4.09

Hedging Agreements

(a)

BMO (for greater certainty, in its capacity as a Lender hereunder and not in its capacity as the Agent) shall act as lead swap arranger for all Interest Rate Hedging Agreements to be entered into between any Borrower and the Lenders hereunder, and shall offer the Lenders an opportunity to participate in a pro-rata portion of such Interest Rate Hedging Agreements pursuant to such arrangements as may be agreed between BMO and the other Lenders, respectively.

(b)

Each Borrower may deal directly with the respective Lenders in connection with the establishment of Currency Hedging Agreements.

(c)

Each Hedging Agreement between a Borrower and a Lender shall be upon such terms and conditions as may be offered by such Lender in its discretion (not inconsistent with the terms of this Agreement), and such Borrower agrees to execute and deliver to such Lender all such agreements as it may reasonably require (for greater certainty, specifically including an ISDA master agreement). Each Hedging Agreement between the Borrower and a Lender shall include such Lender's standard early termination events. Without limiting the generality of the foregoing, each Hedging Agreement shall also stipulate that the termination of all or any of the Facilities shall constitute an Early Termination Event (as defined in the applicable ISDA Master Agreement) and the Affected Party (as defined in such ISDA Agreement) shall be the counter-party to the Lender in such contract. Such Lender shall have the right to choose the payment measure and the payment method (as such terms are understood in the ISDA Master Agreement) in respect of such Early Termination Event.

(d)

Hedging Agreements may not be entered into for speculative purposes. Without limiting the generality of the foregoing, if requested in writing by the Agent from time to time upon the instructions of the Required Lenders, the Borrowers shall promptly take all actions which may be necessary to unwind one or more Interest Rate Hedging Agreements in whole or in part to the extent necessary to ensure that the aggregate notional amount of all outstanding Interest Rate Hedging Agreements does not at any time exceed the Outstanding Advances at such time.

(e)

The term of each Interest Rate Hedging Agreement shall expire not later than the Maturity Date.

(f)

The term of each Currency Hedging Agreement shall expire not later than the earlier of (a) eighteen (18) months from the date of such Hedging Agreement, and (b) the Maturity Date.

(g)

The Security shall secure all obligations of the Borrowers under or in respect of each Hedging Agreement on a pari passu basis with all other Obligations. Each Lender acknowledges that the enforcement of the Security is a matter which requires the approval of the Required Lenders.

(h)

If a Lender continues to be a party to one or more Hedging Agreements with any Borrower after all other indebtedness and obligations of the Borrowers to such Lender hereunder have been repaid and satisfied in full (or assigned by such Lender to an assignee), for greater certainty such Lender shall continue to be a Lender for all purposes of this Agreement and the obligations under such Hedging Agreement(s) shall continue to be secured by the Security as provided herein, but such Lender shall not be a “Required Lender” as such term is defined herein.

(i)

On or before the Maturity Date the Borrowers shall (i) unwind all Hedging Agreements (and pay all applicable unwinding costs in respect thereof); or (ii) provide cash collateral in favour of the Agent in respect of all outstanding Hedging Agreements in an amount satisfactory to the Agent. For greater certainty, the Agent shall have no obligation to release all or any portion of the Security unless and until all Hedging Agreements are terminated or such cash collateral is provided in respect thereof.

5.01

Matters relating to Interest

(a)

Unless otherwise indicated, interest on any outstanding principal amount shall be calculated daily and shall be payable monthly in arrears on the last day of each and every month and on the Maturity Date. If the last day of a month is not a Business Day, the interest payment due on such day shall be made on the next Business Day, and interest shall continue to accrue on the said principal amount and shall also be paid on such next Business Day. Interest shall accrue from and including the day upon which an Advance is made or is deemed to have been made, and ending on but excluding the day on which such Advance is repaid or satisfied. Any change in the Canadian Prime Rate shall cause an immediate adjustment of the interest rate applicable to Canadian Prime Rate Loans and Overdrafts in Canadian Dollars, and any change in the U.S. Base Rate shall cause an immediate adjustment of the interest rate applicable to U.S. Base Rate Loans and Overdrafts in U.S. Dollars, and any change in the U.S. Prime Rate shall cause an immediate adjustment of the interest rate applicable to U.S. Prime Rate Loans, in each case without the necessity of any notice to the Borrowers.

(b)

Unless otherwise stated, in this Agreement if reference is made to a rate of interest, fee or other amount “per annum” or a similar expression is used, such interest, fee or other amount shall be calculated on the basis of a year of three hundred and sixty-five (365) or three hundred and sixty-six (366) days, as the case may be. If the amount of any interest, fee or other amount is determined or expressed on the basis of a period of less than one year of three hundred and sixty-five (365) or three hundred and sixty-six (366) days, as the case may be, the equivalent yearly rate is equal to the rate so determined or expressed, divided by the number of days in the said period, and multiplied by the actual number of days in that calendar year.

(c)

Notwithstanding any other provisions of this Agreement, if the amount of any interest, premium, fees or other monies or any rate of interest stipulated for, taken, reserved or extracted under the Loan Documents would otherwise contravene the provisions of Section 347 of the Criminal Code (Canada), Section 8 of the Interest Act (Canada) or any successor or similar legislation, or would exceed the amounts which any Lender is legally entitled to charge and receive under any law to which such compensation is subject, then such amount or rate of interest shall be reduced to such maximum amount as would not contravene such provision; and to the extent that any excess has been charged or received such Lender shall apply such excess against the Outstanding Advances and refund any further excess amount.

(d)

Any change in the Applicable Margin in respect of any Availment Option under a Facility shall be determined by the Agent based upon the information contained in the most recent Compliance Certificate received by the Agent, and shall take effect commencing on the fifth (5th) Business Day following receipt of such Compliance Certificate by the Agent (in this paragraph called the “effective date”). For greater certainty:

(i)

the interest rates and fees applicable to all Advances made on or after the effective date shall be based upon the said revised Applicable Margin;

(ii)

from and after the effective date, the interest rates and fees applicable to all Loans outstanding on the effective date shall be based upon the said revised Applicable Margin;

(iii)

no readjustment shall be made in respect of any Bankers’ Acceptance or BA Equivalent Loan which is outstanding on the effective date, and the said revised Applicable Margin all apply to all Bankers’ Acceptances and BA Equivalent Loans issued or made on or after the effective date; and

(iv)

in respect of each Letter of Credit which is outstanding on the effective date there shall be a readjustment to the fee initially paid upon the issuance thereof, as follows: the fee relating to the period from the date of issuance to but excluding the effective date shall be based upon the Applicable Margin in effect during such period; and the fee relating to the period from and including the effective date to but excluding the date of expiry of such Letter of Credit shall be based upon the Applicable Margin in effect from after the effective date; and the Agent and the Borrower agrees to promptly make all such payments as the Agent may advise are required in order to effect such adjustments.

5.02

Notice Periods

(a)

The Borrowers shall provide written notice to the Agent in respect of Advances, Rollovers, Conversions and Repayments as follows:

(i)

no notice is required in respect of Advances and repayments in respect of Overdrafts;

(ii)

except in respect of Overdrafts, two (2) Business Days’ notice is required before 11:00 a.m. Toronto time in respect of any Advance, Rollover, Conversion or Repayment; and

(iii)

notwithstanding the foregoing, three (3) Business Days’ notice is required before 11:00 a.m. Toronto time in respect of an Advance, Rollover or Repayment relating to a LIBOR Loan or a Letter of Credit, and in respect of a Conversion of another Availment Option into a LIBOR Loan.

(b)

Notice of any Advance, Rollover, Conversion or voluntary Repayment referred to in paragraph (a) above shall be given in the form of a Draw Request, Rollover Notice, Conversion Notice or Repayment Notice, as the case may be, attached hereto as Exhibits. All such notices shall be given to the Agent at its address set out in Section 13.07.

(c)

If notice is not provided as contemplated herein with respect to the maturity of a Bankers’ Acceptance, BA Equivalent Loan or LIBOR Loan, the Agent may convert the Bankers’ Acceptance, BA Equivalent Loan or LIBOR Loan upon its maturity into a Canadian Prime Rate Loan, a U.S. Base Rate Loan or a U.S. Prime Rate Loan, as the case may be.

(d)

Any Conversion from one form of Availment Option to another shall be subject to satisfaction of all of the terms and conditions applicable to the form of the new Availment Option as herein provided.

5.03

Minimum Amounts, Multiples and Procedures re Draws, Conversions and Repayments

(a)

Advances under the Swingline shall be on a dollar for dollar basis and not subject to a minimum amount or a required multiple.

(b)

Subject to paragraph (a), each request by a Borrower for an Advance or Conversion in the form of a Canadian Prime Rate Loan shall be in a minimum amount of CDN$500,000 and a multiple of CDN$100,000, and each request by a Borrower for an Advance or Conversion in the form of a U.S. Base Rate Loan or a U.S. Prime Rate Loan shall be in a minimum amount of $500,000 and a multiple of $100,000.

(c)

Each request by a Canadian Borrower for an Advance by way of Bankers' Acceptances and BA Equivalent Notes shall be for an aggregate face amount of Bankers' Acceptances and BA Equivalent Notes of not less than CDN$1,000,000 and in a multiple of CDN$100,000, and in such amount as will result in the face amount of each Bankers' Acceptance or BA Equivalent Note issued by a Lender being in a multiple of CDN$100,000.

(d)

Each request by a Borrower for an Advance in the form of a LIBOR Loan, and each request by a Borrower for a Conversion of any Availment Option (including existing LIBOR Loans) into a LIBOR Loan, shall be for an aggregate principal amount of not less than $1,000,000 and in a multiple of $100,000.

(e)

Upon receipt of a Draw Request under any Facility, the Agent shall promptly notify each Lender under such Facility of the contents thereof and such Lender's Proportionate Share of the Advance. Such Draw Request shall not thereafter be revocable.

(f)

Each Advance shall be made by the applicable Lenders to the Agent at its address referred to in Section 13.07 or such other address as the Agent may designate by notice in writing to the Lenders from time to time. Each Lender shall make available its Proportionate Share of each said Advance to the Agent. Unless the Agent determines that any condition of the Advance has not been satisfied or waived, the Agent shall make the funds so received from the Lenders available to a Borrower by 2:00 p.m. (Toronto time) on the requested date of the Advance. No Lender shall be responsible for any other Lender's obligation to make available its Proportionate Share of the said Advance.

(g)

Each Borrower agrees to deliver in favour of each Lender such other agreements and documentation as such Lender may reasonably require (not inconsistent with this Agreement) in respect of such Lender's requirements for the acceptance of Bankers' Acceptances or the issuance of BA Equivalent Notes.

(h)

All payments of principal, interest and other amounts made by a Borrower to the Agent in respect of the Outstanding Advances under a Facility (other than the Swingline) shall be paid by the Agent to the respective Lenders, each in accordance with its Proportionate Share thereof.

5.04

Place of Advances, Repayments

(a)

Advances by any Lender to a Canadian Borrower shall be made by such Lender to the Agent from such Lender's Lending Office in Canada. All payments of principal, interest and other amounts to be made by a Canadian Borrower pursuant to this Agreement shall be made to the Agent at its address noted in Section 13.07 or to such other address in Canada as the Agent may direct in writing from time to time. All such payments received by the Agent on a Business Day before 2:00 p.m. (Toronto time) shall be treated as having been received by the Agent on that day; and payments made after such time on a Business Day shall be treated as having been received by the Agent on the next Business Day.

(b)

Advances by the Swingline Lender to a U.S. Borrower shall be made by the Swingline Lender from its Lending Office in the United States. All payments of principal, interest and other amounts to be made by a U.S. Borrower pursuant to this Agreement shall be made to the Agent at its address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or to such other address in the United States as the Agent may direct in writing from time to time. All such payments received by the Agent on a Business Day before 2:00 p.m. (Chicago time) shall be treated as having been received by the Agent on that day; payments made after such time on a Business Day shall be treated as having been received by the Agent on the next Business Day.

(c)

Whenever any payment shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. Interest shall continue to accrue and be payable thereon as provided herein, until the date on which such payment is received by the Agent.

(d)

Each of the Borrowers hereby irrevocably authorizes the Agent to debit any account maintained by such Borrowers with the Agent from time to time in order to pay any amount of principal, interest, fees, expenses or other amounts payable by the Borrowers pursuant to this Agreement, if such amount is not paid in full by the Borrowers within thirty (30) days after receipt of a written request from the Agent for payment of such amount.

5.05

Evidence of Obligations (Noteless Advances)

5.06

Determination of Equivalent Amounts

5.07

Purchase of Bankers' Acceptances and BA Equivalent Notes

(a)

In connection with the issuance by a Borrower of a Bankers' Acceptance or BA Equivalent Note, the amount payable by the purchaser thereof to the Borrower shall be determined in accordance with the following formula:

(b)

Each BA Lender which is a bank listed in Schedule I of the Bank Act (Canada) agrees to purchase those Bankers' Acceptances which it has accepted at a discount from the face amount thereof equal to the CDOR Rate for the relevant period in effect on the issuance date thereof; provided however that if BMO is the only BA Lender under a Facility, the discount rate shall be the applicable discount rate established by BMO on the issuance date thereof.

(c)

Each BA Lender which is a bank listed in Schedule II or Schedule III of the Bank Act (Canada) agrees to purchase those Bankers' Acceptances which it has accepted at a discount from the face amount thereof equal to the CDOR Rate for the relevant period in effect on the issuance date thereof plus a premium determined by such BA Lender not in excess of one-tenth of one percent (0.10%) per annum.

(d)

Each Non-BA Lender agrees to purchase BA Equivalent Notes issued by it hereunder at a discount from the face amount thereof equal to the CDOR Rate for the relevant period in effect on the issuance date thereof.

(e)

The discount applicable to each Bankers' Acceptances and BA Equivalent Note shall be determined on the basis of a year of 365 days.

5.08

Provisions Regarding Bankers’ Acceptances

(a)

The Borrower agrees to provide for each Bankers' Acceptance by payment of the face amount thereof to the Agent on behalf of the BA Lender on the maturity of the Bankers' Acceptance or, prior to such maturity, on the Acceleration Date; and the Agent shall remit the said amount to such BA Lender and such BA Lender shall in turn remit such amount to the holder of the Bankers' Acceptance. If the Borrower fails to provide for the payment of the Bankers' Acceptance accordingly, any amount not so paid shall be immediately payable by the Borrower to the Agent on behalf of the BA Lender together with interest on such amount calculated daily and payable monthly at the rate and in the manner applicable to Canadian Prime Rate Loans under the Facility under which such Bankers' Acceptance was issued. The Borrower agrees not to claim any days of grace for the payment at maturity of any Bankers' Acceptance and agrees to indemnify and save harmless the BA Lender in connection with all payments made by the BA Lender (or by the Agent on its behalf) pursuant to Bankers' Acceptances accepted by the BA Lender, together with all reasonable costs and expenses incurred by the BA Lender in this regard. The Borrower hereby waives any defences to payment which might otherwise exist if for any reason a Bankers' Acceptance is held by the BA Lender for its own account at maturity.

(b)

If at any time and from time to time the Agent determines, acting reasonably, that there no longer exists a market for Bankers' Acceptances for the term requested by the Borrower, or at all, the Agent shall so advise the Borrower, and in such event the BA Lenders shall not be obliged to accept and the Borrower shall not be entitled to issue Bankers' Acceptances.

(c)

The Borrower hereby appoints each BA Lender as its true and lawful attorney to complete and issue Bankers' Acceptances on behalf of the Borrower in accordance with written (including facsimile) transmitted instructions provided by the Borrower to the Agent on behalf of such BA Lender, and the Borrower hereby ratifies all that its said attorney may do by virtue thereof. The Borrower agrees to indemnify and hold harmless the Agent and the BA Lenders and their respective directors, officers and employees from and against any charges, complaints, costs, damages, expenses, losses or liabilities of any kind or nature which they may incur, sustain or suffer, arising from or by reason of acting, or failing to act, as the case may be, in reliance upon this power of attorney, except to the extent caused by the gross negligence or wilful misconduct of the Agent or the BA Lender or their respective directors, officers and employees. The Borrower hereby agrees that each Bankers' Acceptance completed and issued and accepted in accordance with this Section by a BA Lender on behalf of the Borrower is a valid, binding and negotiable instrument of the Borrower as drawer and endorser. The Borrower agrees that each BA Lender's accounts and records will constitute prima facie evidence of the execution and delivery by the Borrower of Bankers' Acceptances. This power of attorney shall continue in force until written notice of revocation has been served upon the Agent by the Borrower at the Agent's address set out in Section 13.07.

5.09

Provisions regarding BA Equivalent Notes

(a)

The Borrower agrees to provide for each BA Equivalent Note by payment of the face amount thereof to the Agent on behalf of the Non-BA Lender on the maturity of the BA Equivalent Note or, prior to such maturity, on the Acceleration Date; and the Agent shall remit the said amount to such Non-BA Lender and such Non-BA Lender shall in turn remit such amount to the holder of the BA Equivalent Note. If the Borrower fails to provide for the payment of the BA Equivalent Note accordingly, any amount not so paid shall be immediately payable by the Borrower to the Agent on behalf of the Non-BA Lender together with interest on such amount calculated daily and payable monthly at the rate and in the manner applicable to Canadian Prime Rate Loans under the Facility under which such BA Equivalent Note was issued. The Borrower agrees not to claim any days of grace for the payment at maturity of any BA Equivalent Note and agrees to indemnify and save harmless the Non-BA Lender in connection with all payments made by the Non-BA Lender (or by the Agent on its behalf) pursuant to BA Equivalent Notes accepted by the Non-BA Lender, together with all reasonable costs and expenses incurred by the Non-BA Lender in this regard. The Borrower hereby waives any defences to payment which might otherwise exist if for any reason a BA Equivalent Note is held by the Non-BA Lender for its own account at maturity.

(b)

The Non-BA Lender shall have no obligation to make BA Equivalent Loans during any period in which the BA Lenders' obligation to issue Bankers' Acceptances is suspended pursuant to Section 3.5 of the CBA Model Provisions.

(c)

The Borrower hereby appoints the Non-BA Lender as its true and lawful attorney to complete BA Equivalent Notes on behalf of the Borrower in accordance with written (including facsimile) transmitted instructions delivered by the Borrower to the Agent, and the Borrower hereby ratifies all that its said attorney may do by virtue thereof. The Borrower agrees to indemnify and hold harmless the Agent and the Non-BA Lender and their respective directors, officers and employees from and against any charges, complaints, costs, damages, expenses, losses or liabilities of any kind or nature which they may incur, sustain or suffer, arising from or by reason of acting, or failing to act, as the case may be, in reliance upon this power of attorney except to the extent caused by the gross negligence or wilful misconduct of the Agent or the Non-BA Lender or their respective directors, officers and employees. The Borrower hereby agrees that each BA Equivalent Note completed by the Non-BA Lender on behalf of the Borrower is a valid, binding and negotiable instrument of the Borrower as drawer and endorser. The Borrower agrees that the Non-BA Lender's accounts and records will constitute prima facie evidence of the execution and delivery by the Borrower of BA Equivalent Notes. This power of attorney shall continue in force until written notice of revocation has been served upon the Agent on behalf of the Non-BA Lender by the Borrower at the Agent's address provided in Section 13.07.

5.10

Provisions Regarding LIBOR Loans

(a)

Upon receipt by the Agent from the Borrower of a Draw Request, Conversion Notice or Rollover Notice in respect of a LIBOR Loan, the Agent will promptly advise the Borrower of the LIBO Rate, such rate to be determined as at approximately 11:00 a.m. London, England time, two (2) LIBOR Business Days before the commencement of the LIBOR Period for such LIBOR Loan.

(b)

Interest in respect of any LIBOR Loan shall be calculated on the basis of a year of three hundred and sixty (360) days. Interest in respect of any LIBOR Loan with a LIBOR Period of between one (1) and three (3) months (inclusive) shall be payable at the time the principal amount of such LIBOR Loan is payable.

(c)

The Borrower acknowledges that the ability of the Lenders to maintain or provide any LIBOR Loan and/or to charge interest on any LIBOR Loan at the LIBO Rate is and will be subject to any statute, law, regulation, rule or direction by any Governmental Authority having jurisdiction which may prohibit or restrict or limit such loans and/or such interest. The Borrower agrees that the Lenders shall have the right to comply with any such requirements and, if the Agent determines it to be necessary as a result of such requirement, the Agent may convert any LIBOR Loan to a U.S. Base Rate Loan or require immediate repayment of all LIBOR Loans.

5.11

No Repayment of Certain Availment Options

5.12

Illegality

5.13

Advances in the United States

5.14

▇▇▇▇▇▇ ▇.▇.

6.01

Representations and Warranties

(a)

Status – Each Company has been duly incorporated (or amalgamated) and organized and is validly subsisting under the laws of its jurisdiction of incorporation and is up-to-date in respect of all material corporate filings.

(b)

Information – Schedule 6.01(b) attached hereto contains a list of all Companies as at the date of this Agreement, and the following information in respect of each Company: its present and all prior corporate names, including the names of all corporate predecessors, jurisdiction of incorporation or establishment, present governing jurisdiction, registered office, principal place of business, all locations at which it has places of business or owns assets, its bank accounts, the number and classes of its issued and outstanding shares and a list of its shareholders, partners or members, as applicable, including the number and class of shares (or proportionate membership or partnership interest) held by each. Schedule 6.01(b) also identifies those Companies which are Unsecured Companies.

(c)

Solvency – Each Company is Solvent.

(d)

No Pending Changes – No Person has any agreement or option or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement, including convertible securities, warrants or convertible obligations of any nature, for the purchase of any properties or assets of any Company out of the ordinary course of business or for the purchase, subscription, allotment or issuance of any debt or equity securities of any Company.

(e)

No Conflicting Agreements – Neither the execution and delivery of the Security, nor compliance with the terms, provisions and conditions of this Agreement or the Security will conflict with, result in a breach of, or constitute a default under the charter documents or by-laws of any Secured Company or any agreement or instrument to which it is a party or is otherwise bound, and does not require the consent or approval of any Person, other than those which have been obtained.

(f)

No Conflict with Charter Documents – There are no provisions in the charter documents, by-laws or partnership agreement of any Secured Company or in any unanimous shareholder agreement affecting it which restrict or limit its powers to borrow money, issue debt obligations, guarantee the payment or performance of the obligations of others, or otherwise encumber all or any of its property, now owned or subsequently acquired.

(g)

Loan Documents – Each Credit Party has the corporate capacity, power, legal right and authority to borrow from the Lenders, perform its obligations under this Agreement and provide the Security required to be provided by it hereunder; and each other Secured Company has the corporate capacity, power, legal right and authority to guarantee payment to the Agent and the Lenders of the Borrowers’ obligations and provide the Security required to be provided by it hereunder. The execution and delivery of the Loan Documents by the Secured Companies and the performance of their respective obligations therein have been duly authorized by all necessary corporate action. This Agreement and the other Loan Documents constitute legal, valid and binding obligations of the Secured Companies, enforceable against them in accordance with the terms and provisions thereof, subject to laws of general application affecting creditors’ rights (including Insolvency Legislation) and the discretion of the court in awarding equitable remedies.

(h)

Conduct of Business; Material Permits – Each Company is in compliance in all material respects with all Applicable Laws of each jurisdiction in which it carries on business and is duly licensed, registered and qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the property owned or leased by it make such qualification necessary, except to the extent that the failure to hold any such licences, registrations and permits would not constitute a Material Adverse Change. Attached hereto as Schedule 6.01(h) is a true and complete list of all Material Permits, and all such Material Permits are valid and subsisting and in good standing.

(i)

Ownership of Assets; Specific Permitted Liens – Each Company owns, and possesses its property free and clear of any and all Liens except for Permitted Liens. No Company has any commitment or obligation (contingent or otherwise) to grant any Liens except for Permitted Liens. No event has occurred which constitutes, or which with the giving of notice, lapse of time or both would constitute, a material default under any Lien which has been granted by any of the Companies. Schedule 6.01(i) attached hereto contains a true and complete list of the Specific Permitted Liens.

(j)

Owned Properties – The Companies do not own any real property other than the real property listed in Schedule 6.01(j) attached hereto.

(k)

Material Leased Properties – Schedule 6.01(k) attached hereto contains a true and complete list of all Material Leased Properties and the Leases and other agreements relating thereto, including, the names of the parties; the address of the Material Leased Property; the rent and other amounts payable under the Material Lease; the term of the Material Lease and all renewal options, and the existence of any purchase option or right of first refusal in respect of the purchase of the Material Leased Property.

(l)

Intellectual Property – Each Company possesses or has the right to use all Intellectual Property material to the conduct of its business. Attached hereto as Schedule 6.01(l) is a list of all such material Intellectual Property held by the Companies as at the Closing Date, including a description of the nature of such rights. No Person has asserted any written claim in respect of the validity of such Intellectual Property or the Companies’ rights therein, and the Credit Parties are not aware of any valid basis for the assertion of any such claims. To the knowledge of the Credit Parties, the conduct and operations of the businesses of each Company do not infringe, misappropriate, dilute or violate any Intellectual Property rights held by any other Person.

(m)

Insurance – The Companies have obtained insurance which satisfies all requirements set out in Section 7.01(h) herein.

(n)

Material Agreements – Each Material Agreement to which any Company is a party is in good standing and in full force and effect; and none of the Borrowers, or, to the knowledge of the Credit Parties, any of the other parties thereto, is in material breach of any of the terms or conditions contained therein. Attached hereto as Schedule 6.01(n) is a true and complete list of all Material Agreements to which the Companies are a party as at the Closing Date.

(o)

Labour Agreements – Schedule 6.01(o) attached hereto contains a true and complete list of all contracts with labour unions and employee associations to which the Companies are a party, and the Borrowers are not aware of any attempts to organize or establish any other labour union or employee association.

(p)

Environmental Laws – Except to the extent disclosed in Schedule 6.01(p) attached hereto:

(i)

each Company and its business, operations, assets, equipment, property, leaseholds and other facilities is in compliance in all material respects with all Requirements of Environmental Law, specifically including all Requirements of Environmental Law concerning the storage and handling of Hazardous Materials;

(ii)

each Company holds all material permits, licenses, certificates and approvals from Governmental Authorities which are required in connection with air emissions, discharges to surface or groundwater, noise emissions, solid or liquid waste disposal, the use, generation, storage, transportation or disposal of Hazardous Materials and all other Requirements of Environmental Law;

(iii)

there has been no material emission, spill, release, or discharge into or upon the air, soils (or any improvements located thereon), surface water or groundwater or the sewer, septic system or waste treatment, storage or disposal system servicing the premises, of any Hazardous Materials at or from any of the Properties;

(iv)

no complaint, order, directive, claim, citation, or notice from any Governmental Authority or any other Person has been received by any Company with respect to any of the Properties in respect of air emissions, spills, releases, or discharges to soils or improvements located thereon, surface water, groundwater or the sewer, septic system or waste treatment, storage or disposal systems servicing any of the Properties, noise emissions, solid or liquid waste disposal, the use, generation, storage, transportation, or disposal of Hazardous Materials or other Requirements of Environmental Law affecting the Properties;

(v)

there are no legal or administrative proceedings, investigations or claims now pending, or to the Borrowers’ knowledge, threatened in writing, with respect to the presence on or under, or the discharge, emission, spill, radiation or disposal into or upon any of the Properties, the atmosphere, or any watercourse or body of water, of any Hazardous Material; nor are there any material matters under discussion between any Company and any Governmental Authority relating thereto; and to the knowledge of the Credit Parties there is no valid basis for any such proceedings, investigations or claims; and

(vi)

the Companies have no material indebtedness, obligation or liability, absolute or contingent, matured or not matured, with respect to the storage, treatment, cleanup or disposal of any Hazardous Materials, including without limitation any such indebtedness, obligation, or liability under any Requirements of Environmental Law regarding such storage, treatment, cleanup or disposal.

(q)

No Litigation – There are no actions, suits or proceedings pending, or to the knowledge of the Credit Parties, threatened in writing, against any Company in any court or before or by any Governmental Authority, except: (i) litigation disclosed in Schedule 6.01(q) attached hereto; and (ii) other litigation in which all amounts claimed against the Companies do not in the aggregate exceed Five Hundred Thousand Dollars ($500,000). To the knowledge of the Credit Parties, there are no investigations by any Governmental Authority (specifically including any Canadian federal or provincial Governmental Authority or any U.S. federal or state Governmental Authority) with respect to the conduct of any Credit Party's business.

(r)

Pension Plans – Schedule 6.01(r) attached hereto contains a true and complete list of all Pension Plans established by the Companies, and no Pension Plan listed therein is a defined benefit pension plan. No steps have been taken to terminate any such Pension Plan (in whole or in part), no contribution failure has occurred with respect to any such Pension Plan sufficient to give rise to a Lien under any applicable laws of any jurisdiction, and no condition exists and no event or transaction has occurred with respect to any such Pension Plan which might result in the incurrence by any Company of any material liability, fine or penalty. Each such Pension Plan is in compliance in all material respects with all Applicable Law, (i) all contributions (including employee contributions made by authorized payroll deductions or other withholdings) required to be made to the appropriate funding agency in accordance with all applicable laws and the terms of such Pension Plan have been made in accordance with all Applicable Law and the terms of such Pension Plan, (ii) to the extent applicable, all liabilities under such Pension Plan are funded, on a going concern and solvency basis, in accordance with the terms of the respective Pension Plans, the requirements of applicable pension benefits laws and of applicable regulatory authorities and the most recent actuarial report filed with respect to the Pension Plan, and (iii) no event has occurred and no conditions exist with respect to any such Pension Plan that has resulted or could reasonably be expected to result in such Pension Plan having its registration revoked or refused for the purposes of any Applicable Law or being placed under the administration of any relevant pension benefits regulatory authority or being required to pay any Taxes or penalties under any Applicable Law.

(s)

Financial Statements – The most recent Year-end Financial Statements and Interim Financial Statements delivered to the Agent and the Lenders have been prepared in accordance with GAAP (except in the case of the Interim Financial Statements, subject to normal year-end adjustments and the absence of footnotes) on a basis which is consistent with the previous fiscal period, and present fairly (in each case, subject to normal year-end adjustments):

(i)

the assets and liabilities (whether accrued, absolute, contingent or otherwise) and financial condition of Tucows Inc. on a consolidated basis as at the dates therein specified;

(ii)

the sales, earnings and results of operations of Tucows Inc. on a consolidated basis during the periods covered thereby; and

(iii)

in the case of the Year-end Financial Statements, the changes in financial position of Tucows Inc. on a consolidated basis;

(t)

Financial and Other Information – All financial and other written information provided by or in respect of the Companies to the Agent and the Lenders was true, correct and complete in all material respects when provided. No written information, exhibit, or report furnished by the Companies to the Agent or the Lenders contains any material misstatement of fact or omits to state a material fact or any fact necessary to make the statement contained therein not materially misleading in the circumstances in which it was made.

(u)

No Guarantees – No Guarantees have been granted by any Company, except for (i) Guarantees which comprise part of the Security; and (ii) Guarantees in respect of Permitted Funded Debt incurred by any other Company;

(v)

Taxes – Each Company has duly and timely filed all tax returns required to be filed by it, and has paid all Taxes which are due and payable by it except for Taxes being contested in good faith and in respect of which reserves have been established in accordance with GAAP. Each Company has also paid all other Taxes, charges, penalties and interest due and payable under or in respect of all assessments and re-assessments of which it has received written notice except for Taxes being contested in good faith and in respect of which reserves have been established in accordance with GAAP. There are no actions, suits, proceedings, investigations or claims pending, or to the knowledge of the Credit Parties, threatened in writing, against any Company in respect of Taxes, governmental charges or assessments except for any such actions, suits, proceedings, investigations or claims which are being contested in good faith and in respect of which reserves have been established in accordance with GAAP.

(w)

Statutory Liens – Each Company has remitted on a timely basis all amounts required to have been withheld and remitted (including withholdings from employee wages and salaries relating to income tax, employment insurance and Canada Pension Plan contributions), goods and services tax and all other amounts which if not paid when due could result in the creation of a Statutory Lien against any of its property, except for Permitted Liens.

(x)

No Default, etc. – No Default, Event of Default or Material Adverse Change has occurred and is continuing.

(y)

Transactions with Related Persons – The Companies are not party to any contract, commitment or transaction (including by way of loan) with any Related Person thereto which contains any terms which are not commercially reasonable.

6.02

Additional Representations and Warranties in respect of U.S. Companies

(a)

Margin Stock – It is not engaged in the business of purchasing or carrying margin stock, or extending credit to others for the purpose of purchasing or carrying margin stock, in violation of any of the provisions of Regulations T, U or X of the Board of Governors of the U.S. Federal Reserve System), and no part of the proceeds of any Advance or any other extension of credit made hereunder will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock.

(b)

Investment Company – It is not an “investment company’ nor a company “controlled” by an “investment company,” nor is it required to register as an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

(c)

ERISA – Compliance by the U.S. Companies with the provisions hereof and the credit events contemplated hereby will not involve any prohibited transactions within the meaning of ERISA or Section 4975 of the Revenue Code. With respect to each Plan, it and each other member of its Controlled Group has fulfilled its obligations under the minimum funding standards of and is in compliance in all material respects with ERISA and the Revenue Code to the extent applicable to it and has not incurred any liability to the PBGC or under Title IV of ERISA, other than a liability to the PBGC for premiums under Section 4007 of ERISA; and it does not have any contingent liabilities with respect to any post-retirement benefits under a Welfare Plan, other than liability for continuation coverage described in article 6 of Title I of ERISA or as required under U.S. State law requirements for health continuation coverage. Neither a Reportable Event nor a Prohibited Transaction has occurred and is continuing with respect to any Plan; no notice of intent to terminate a Plan has been filed, nor has any Plan been terminated; no circumstances exist which constitute grounds entitling the PBGC to institute proceedings to terminate, or appoint a trustee to administer, a Plan, nor has the PBGC instituted any such proceedings; neither it nor any member of its Controlled Group has completely or partially withdrawn from a Multiemployer Plan; it and all members of its Controlled Group have met their minimum funding requirements under ERISA with respect to all of their Plans and the present value of all vested benefits under each Plan exceeds the fair market value of all Plan assets allocable to such benefits, as determined on the most recent valuation date of the Plan and in accordance with the provisions of ERISA; and neither it nor any member of its Controlled Group has incurred any liability to the PBGC under ERISA, in each case, which could reasonably be expected to result in a Material Adverse Change.

(d)

OFAC – It is not in violation of any of the country or list based economic and trade sanctions administered and enforced by OFAC. No Borrower nor any other Company (i) is a Sanctioned Person or a Sanctioned Entity, (ii) has any assets located in a country or territory subject to sanctions administered and enforced by OFAC, or (iii) except where such restrictions conflict with applicable Canadian laws, knowingly derives any revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. Except where such restrictions conflict with applicable Canadian laws, no proceeds of any Advance made under this Agreement will knowingly be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.

(e)

Patriot Act – To the extent applicable, it is in compliance with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and the Patriot Act. No part of the proceeds of the loans made hereunder will be used by any U.S. Companies or any of their Affiliates, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

(f)

Foreign Corrupt Practices Act – Each of the U.S. Companies and each of its Subsidiaries is in compliance in all material respects with the United States Foreign Corrupt Practices Act of 1977, as amended and the U.S. Companies and each Subsidiary has procedures and internal controls reasonably designed to ensure compliance with the United States Foreign Corrupt practices Act of 1977, as amended. No part of the proceeds of the loans made hereunder will be used by the Borrowers, any U.S. Company or any of their Affiliates, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

6.03

Survival of Representations and Warranties

7.01

Positive Covenants

(a)

Prompt Payment – in the case of the Borrowers, pay all principal, interest and other amounts due hereunder at the times and in the manner specified herein;

(b)

Preservation of Corporate Existence – except for corporate changes made in compliance with the requirements of Section 7.02(h) herein, maintain its corporate existence, continue to carry on its business, preserve its rights, powers, licences, privileges, franchises and goodwill, exercise any rights of renewal or extensions of any leases, licences, concessions, franchises or any other rights whatsoever which are material to the conduct of its business, maintain all qualifications to carry on business in each jurisdiction in which such qualifications are required, carry on and conduct its business in a proper and efficient manner so as to protect its property and income and not materially change the nature of its business;

(c)

Compliance with Laws – comply in all material respects with Applicable Law (specifically including, for greater certainty, Requirements of Environmental Law), use the proceeds of all Advances hereunder for legal and proper purposes, and obtain and maintain in good standing all material leases, licences, permits and approvals from any and all Governmental Authorities required in respect of its business and operations;

(d)

Payment of Taxes, etc. – pay when due all rents, Taxes, rates, levies, assessments and governmental charges, fees and dues lawfully levied, assessed or imposed in respect of its property which are material to the conduct of its business, and deliver to the Agent upon request receipts evidencing such payments; except for rents, Taxes, rates, levies, assessments and governmental charges, fees or dues in respect of which an appeal or review proceeding has been commenced, a stay of execution pending such appeal or review proceeding has been obtained, reserves have been established in accordance with GAAP; and the amounts in question do not in the aggregate materially detract from the ability of the Companies to carry on their businesses and to perform and satisfy all of their respective obligations hereunder;

(e)

Maintain Records – maintain adequate books, accounts and records in accordance with GAAP;

(f)

Maintenance of Assets – keep its property and assets in good repair and working condition;

(g)

Inspection – permit the Agent and the Lenders and their respective employees and agents (during normal business hours and in a manner which does not materially interfere with its operations) to enter upon and inspect its properties, assets, books and records from time to time and make copies of and abstracts from such books and records, and discuss its affairs, finances and accounts with any of its officers, directors, accountants and auditors;

(h)

Insurance – obtain from financially responsible insurance companies and maintain liability insurance, all-risks property insurance on a replacement cost basis (less a reasonable deductible not to exceed amounts customary in the industry for similar businesses and properties), business interruption insurance and insurance in respect of such other risks as the Agent upon the instructions of the Required Lenders may reasonably require from time to time; all of which policies of insurance shall be in such amounts as may be reasonably required by the Required Lenders and shall include a standard mortgage clause approved by the Insurance Bureau of Canada (or an equivalent clause in respect of all U.S. Companies); and the interest of the Agent shall be noted as an additional insured on all liability insurance policies and as first mortgagee and loss payee on all other insurance policies (except in respect of property insurance for the Unsecured Companies); and the Agent shall be provided with certificates of insurance and certified copies of such policies from time to time upon request;

(i)

Perform Obligations – fulfil all covenants and obligations required to be performed by it under those Loan Documents to which it is a party and any other agreement or undertaking now or hereafter made between it and the Lenders or the Agent;

(j)

Notice of Certain Events – provide prompt notice to the Agent of: (i) the occurrence of any Default (for greater certainty, whether or not such Default is continuing); (ii) the incorrectness in any material respect of any representation or warranty in this Agreement and any material changes to the information contained in the Schedules attached hereto; (iii) any material contravention of or non-compliance by any Company with any terms and conditions of any Loan Document; (iv) any Material Adverse Change; (v) any litigation in which the amount claimed against any one or more of the Companies and not covered by insurance is greater than Five Hundred Thousand Dollars ($500,000); (vi) any notice of default, termination or suspension received by any Company in respect of Funded Debt or in respect of any Material Agreement or Material Permit; (vii) the adoption by any Company of any material accounting change promptly thereafter; (viii) the issuance of any management letter to Tucows Inc. by its auditor; and (ix) a proposed change of name of any Company, which notice shall be given at least thirty (30) days prior to such change becoming effective;

(k)

Bank Accounts and Service Agreements – maintain all of its bank accounts and Service Agreements with BMO and its Affiliates, subject to the following exceptions:

(i)

Within 150 days from the Closing Date, (A) all bank accounts maintained by ▇▇▇▇▇▇.▇▇▇ Co. with The Toronto-Dominion Bank in Canada and the United States existing at the date of this Agreement (in this clause referred to as the “permitted accounts”) shall be closed and shall be moved to BMO and its Affiliates; or (B) ▇▇▇▇▇▇.▇▇▇ may continue to maintain its permitted accounts provided that (i) ▇▇▇▇▇▇.▇▇▇ Co., such bank and the Agent shall have entered into a deposit account control agreement in respect of each permitted account in form and substance satisfactory to the Agent; and (ii) if at any time the aggregate amount in the permitted accounts exceeds the Equivalent Amount of Five Hundred Thousand Dollars ($500,000) ▇▇▇▇▇▇.▇▇▇ Co. shall promptly (without the necessity of any notice or request by the Agent) transfer monies from the permitted accounts into a bank account maintained by it with the Agent such that immediately after such transfer the amount in the permitted accounts does not exceed Five Hundred Thousand Dollars ($500,000);

(ii)

Tucows Corp. may continue to maintain its bank account with Bankcorp South Starkville existing at the date of this Agreement provided that (i) the amount on deposit in such account shall not exceed One Hundred Thousand Dollars ($100,000) at any time; and (ii) if requested by the Agent at any time, Tucows Corp., such bank and the Agent shall enter into a deposit account control agreement in respect of such account in form and substance satisfactory to the Agent;

(iii)

Blue Ridge Websoft, LLC (doing business under the name and style of “Blue Ridge Internetworks”) may continue to maintain its bank account with Middleburg Bank existing at the date of this Agreement provided that (i) the amount on deposit in such account shall not exceed Three Hundred Fifty Thousand Dollars ($350,000) at any time; and (ii) if requested by the Agent at any time, Blue Ridge Websoft, LLC, such bank and the Agent shall enter into a deposit account control agreement in respect of such account in form and substance satisfactory to the Agent; and

(iv)

EPAG Domainservices GmbH may continue to maintain its bank accounts with Deutsche Bank and Commerzbank existing at the date of this Agreement provided that the aggregate amount on deposit in such accounts shall not exceed Five Hundred Thousand Euros (€500,000) at any time;

(l)

Use of Advances – utilize the proceeds of all Advances for the respective Borrowers’ own business purposes; and not permit such proceeds to be used, directly or indirectly, by any other Person or for any other purpose;

(m)

Environmental Information – if requested by the Agent from time to time upon the instructions of the Required Lenders: (i) provide the Agent with an environmental questionnaire in the Agent’s standard form completed by a knowledgeable officer of Tucows Inc. in respect of any Owned Property or Material Leased Property; and (ii) if the information contained therein is inconsistent in any material respect with the representations in Section 6.01(p) herein, provide the Agent with a phase I environmental report in respect of such Owned Property or Material Leased Property, and promptly take all such action as may be required to comply with all recommendations contained therein;

(n)

ERISA – in the case of the U.S. Companies, promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed could result in the imposition of a Lien other than a Permitted Lien against any of its properties; promptly notify the Agent of (i) the occurrence of any Reportable Event with respect to a Plan, (ii) receipt of any notice from the PBGC of its intention to seek termination of any Plan or appointment of a trustee therefor, (iii) its intention to terminate or withdraw from any Plan, and (iv) the occurrence of any event with respect to any Plan which would result in the incurrence by it or any Subsidiary of any material liability, fine or penalty, or any material increase in its contingent liability with respect to any post-retirement Welfare Plan benefit;

(o)

Patriot Act – in the case of the U.S. Companies, the Borrowers acknowledge and agree that pursuant to the provisions of the USA Patriot Act (Title III of the Pub. L. 107-56) signed into law October 26, 2001 (the “Patriot Act”), the Agent and any Lender may be required to obtain, verify and record information with respect to the U.S. Companies; and each Borrower hereby agrees to cooperate with the Administrative Agent and each Lender and provide them with all information they may require in order to fulfil their obligations under the Patriot Act; and without limiting the generality of the foregoing, each Borrower agrees to use commercially reasonable efforts to obtain the consent of any of its officers, directors and employees whose consent to the disclosure of any such information is required under applicable privacy legislation in Canada; and

(p)

Further Assurances – provide the Agent and the Lenders with such further information, financial data, documentation and other assurances as they may reasonably require from time to time in order to ensure ongoing compliance with the terms of this Agreement.

7.02

Negative Covenants

(a)

Funded Debt – create, incur or assume any Funded Debt, except Permitted Funded Debt;

(b)

Liens – grant or suffer to exist any Lien in respect of any of its property, except Permitted Liens;

(c)

Disposition of Assets – directly or indirectly sell or otherwise dispose of any of its assets, except that:

(i)

each Company may sell or transfer assets to any other Secured Company; and

(ii)

each Company may sell or dispose of Domain Names from time to time, and Section 4.04(f) (to the extent applicable) shall apply in respect of all such dispositions; and

(iii)

each Company may sell or dispose of inventory and other assets (excluding Domain Names) from time to time in the ordinary course of business (but for greater certainty, a sale and leaseback transaction shall not be considered to be in the ordinary course of business); and Section 4.04(f) (to the extent applicable) shall apply in respect of all such dispositions;

(d)

Guarantees – become obligated under Guarantees except: (i) Guarantees which comprise part of the Security; (ii) Guarantees in respect of Permitted Funded Debt incurred by any Company; and (iii) Guarantees in respect of trade obligations incurred by any Company in the ordinary course of business;

(e)

Investments – make or acquire any Investments, except that the following Investments may be made or acquired if both immediately before and immediately after each such Investment no Default or Event of Default has occurred and is continuing:

(i)

Permitted Acquisitions;

(ii)

Investments in a Secured Company;

(iii)

Investments in an Unsecured Company, provided that the aggregate amount of all Investments made by the Companies in Unsecured Companies does not at any time exceed Two Million Five Hundred Thousand Dollars ($2,500,000);

(iv)

Investments in direct obligations of Canada or the United States of America, including Canadian or United States of America federal, provincial or state obligations, with maturities of one (1) year or less from the date of acquisition of the investment, provided that if required by the Required Lenders, the Company making such Investment shall provide such additional items of Security as the Agent may require in order that such investments shall be specifically pledged to the Agent; and

(v)

Investments in certificates of deposit having maturities of less than one (1) year, issued by BMO.

(f)

Capital Expenditures – incur Capital Expenditures, except that the following Capital Expenditures may be incurred if both immediately before and immediately after each such Capital Expenditure no Default or Event of Default has occurred and is continuing:

(i)