Exhibit 10.1

 

LOGO [g44820image001.jpg]

 

THE MANUFACTURERS LIFE

INSURANCE COMPANY

 

- and -

 

PRIMUS TELECOMMUNICATIONS

CANADA INC.

 

- and -

 

3082833 NOVA SCOTIA COMPANY

 

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SECOND AMENDED AND RESTATED LOAN AGREEMENT

 

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FOGLER, RUBINOFF LLP

Suite 1200,

95 Wellington Street West

Toronto-Dominion Centre

Toronto, Ontario

M5J 2Z9

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TABLE OF CONTENTS

 

ARTICLE 1 INTERPRETATION

   2     1.1         INTERPRETATION    2     1.2         SCHEDULES    9
    1.3         ACCOUNTING PRINCIPLES    9     1.4         BUSINESS DAY    10
    1.5         PERMITTED LIENS    10

ARTICLE 2 THE LOAN

   10

    2.1         CREDIT

   10

    2.2         ADVANCE

   10

    2.3         LETTERS OF CREDIT

   10

ARTICLE 3 PAYMENT OF PRINCIPAL AND INTEREST

   11

    3.1         PAYMENT OF INTEREST

   11

    3.2         INTEREST ON CHARGES

   11

    3.3         YEAR

   12

    3.4         MAXIMUM INTEREST RATE

   12

    3.5         PLACE AND MANNER OF PAYMENT

   12

    3.6         NO SET-OFF

   13

ARTICLE 4 PREPAYMENT AND REPAYMENT

   13

    4.1         MANDATORY REPAYMENT OF PRINCIPAL

   13

    4.2         PREPAYMENT OF PRINCIPAL

   13

    4.3         NOTICE OF PREPAYMENT

   14

ARTICLE 5 SECURITY

   14

    5.1         SECURITY FOR ADVANCE

   14

    5.2         NO PREJUDICE

   15

    5.3         FORM OF SECURITY

   15

    5.4         REGISTRATION OF SECURITY

   16

    5.5         RANKING OF SECURITY

   16

    5.6         SUPPLEMENTAL SECURITY

   16

    5.7         PARAMOUNTCY

   17

    5.8         PROHIBITED SECURITY

   17

    5.9         CHANGE OF ENTITY

   17

ARTICLE 6 REPRESENTATIONS AND WARRANTIES

   18

    6.1         REPRESENTATIONS AND WARRANTIES

   18

    6.2         SURVIVAL OF REPRESENTATIONS AND WARRANTIES

   25

ARTICLE 7 CONDITIONS OF CLOSING

   25

    7.1         CLOSING CONDITIONS

   25

    7.2         CONDITIONS FOR SUBSEQUENT ADVANCES

   27

    7.3         MATERIAL INACCURACY

   27

    7.4         CONDITIONS SOLELY FOR LENDERS' BENEFIT

   28

ARTICLE 8 COVENANTS

   28

    8.1         POSITIVE COVENANTS

   28

    8.2         NEGATIVE COVENANTS

   35

    8.3         AGENT ENTITLED TO PERFORM COVENANTS.

   39

    8.4         CERTAIN PERMITTED TRANSACTIONS.

   40

ARTICLE 9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES

   40

 

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    9.1           SURVIVAL.

   40

ARTICLE 10 EVENTS OF DEFAULT

   40

    10.1         DEFAULT

   40

    10.2         ACCELERATION

   43

    10.3         CONSULTANT

   43

    10.4         REMEDIES CUMULATIVE

   44

    10.5         BENEFIT OF SECURITY; SET-OFF; SHARING OF PAYMENT

   44

ARTICLE 11 FEES

   44

    11.1         EXPENSES

   44

    11.2         ARRANGEMENT FEE

   44

ARTICLE 12 LENDER COVENANT

   44

    12.1         ONLINE AMALGAMATION

   44

ARTICLE 13 THE AGENT

   45

    13.1         APPOINTMENT

   45

    13.2         INDEMNITY FROM LENDERS

   45

    13.3         EXCULPATION

   45

    13.4         RELIANCE ON INFORMATION

   46

    13.5         KNOWLEDGE AND REQUIRED ACTION

   46

    13.6         REQUEST FOR INSTRUCTIONS

   47

    13.7         EXCHANGE OF INFORMATION

   47

    13.8         THE AGENT, INDIVIDUALLY

   47

    13.9         RESIGNATION AND TERMINATION

   47

    13.10       ACTIONS BY LENDERS

   47

    13.11       PROVISIONS FOR BENEFIT OF LENDERS ONLY

   48

ARTICLE 14 GENERAL

   48

    14.1         NO WAIVER OF RIGHTS

   48

    14.2         NO WAIVER OF DEFAULTS

   48

    14.3         NOTICES

   48

    14.4         METHOD OF PAYMENT

   49

    14.5         SUCCESSORS AND ASSIGNS

   49

    14.6         GOVERNING LAW

   49

    14.7         ENTIRE AGREEMENT

   50

    14.8         MODIFICATION

   50

    14.9         HEADINGS

   50

    14.10       NUMBER

   50

    14.11       WORDS AND PHRASES

   50

    14.12       PERMISSIBLE FORMS OF WRITING

   51

    14.13       STATUTORY REFERENCES

   51

    14.14       SEVERABLE PROVISIONS

   51

    14.15       EXECUTION OF ADDITIONAL DOCUMENTS

   51

    14.16       OTHER DEFINITIONAL TERMS

   51

    14.17       COUNTERPARTS

   51

    14.18       CONFLICT

   51

 

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SECOND AMENDED AND RESTATED LOAN AGREEMENT

 

THIS AGREEMENT dated as of the 25th day of January, 2006

 

A M O N G:

 

PRIMUS TELECOMMUNICATIONS CANADA INC.,

a company amalgamated under the laws of the Province of Ontario

 

(hereinafter called the “Borrower”)

 

- and -

 

3082833 NOVA SCOTIA COMPANY

a unlimited liability company amalgamated under the laws of Nova Scotia

 

(hereinafter called the “Shareholder”)

 

- and -

 

THE MANUFACTURERS LIFE INSURANCE COMPANY,

a corporation incorporated under the laws of Canada and each other financial
institution or person which is now or hereafter becomes a signatory hereto

 

(hereinafter called the “Lenders”)

 

- and -

 

THE MANUFACTURERS LIFE INSURANCE COMPANY,

a corporation incorporated under the laws of Canada

 

(hereinafter called the “Agent”)

 

WHEREAS a predecessor to the Borrower, a predecessor to the Shareholder, the
Lenders and the Agent entered into a loan agreement dated for reference
February 11th, 2003 to provide the Borrower with a secured non-revolving term
loan credit facility;

 

AND WHEREAS the aforesaid loan agreement was amended by a First Amendment to the
Loan Agreement dated March 18th, 2003 and by a Second Amendment to the Loan
Agreement dated December 8, 2003;

 

AND WHEREAS the aforesaid loan agreement was amended and restated pursuant to an
Amended and Restated Loan Agreement dated April 8, 2004;

 

AND WHEREAS the said amended and restated loan agreement was amended by an
amendment to the loan agreement dated October 5, 2004;

 

AND WHEREAS the Borrower has requested and the Lenders have agreed to extend the
maturity date of the secured non-revolving term loan credit facility;

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AND WHEREAS the parties hereto desire to set forth the terms and conditions that
shall govern the establishment and continuation of the said secured term loans
and to amend and restate the aforesaid amended and restated loan agreement, as
amended;

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants
and agreements hereinafter set out and other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged) it is agreed by
the parties hereto as follows:

 

ARTICLE 1

INTERPRETATION

 

1.1 Interpretation

 

In this agreement, unless there is something in the subject matter or context
inconsistent therewith, the following words and phrases shall have the following
meanings respectively:

 

  (a) “Act” means the Business Corporations Act (Ontario) as in effect on the
date hereof;

 

  (b) “Advances” means the principal amount of all outstanding advances or
drawings of the Loan;

 

  (c) “Affiliate” of any Person means any other Person which, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person, and for the purposes of this definition, “control” (including with
correlative meanings the terms “controlled by” and “under common control with”)
means the power to direct or cause the direction of the management and policies
of any Person, whether through the ownership of shares or by contract or
otherwise;

 

  (d) “Agent” means The Manufacturers Life Insurance Company as agent for the
Lenders in the manner and to the extent described here as such, its successors
and permitted assigns;

 

  (e) “Annual Business Plan” means, in respect of any Fiscal Year, the annual
business plan with respect to the operations of the Borrower for such Fiscal
Year, approved by the board of directors of the Borrower containing a forecasted
balance sheet, statement of profits and losses and statement of changes in
financial position and such other information that is, or can be, prepared
internally by the Borrower, as is reasonably requested by any Lender, all in
such detail as such Lender may reasonably require;

 

  (f) “Applicable Law” shall mean, with respect to any Person, property,
transaction, event or other matter, any law, rule, statute, regulation, order,
judgment, decree, treaty, directive or other requirement having the force of law
relating or applicable to such Person, property, transaction, event or other
matter, and shall also include any interpretation thereof by any Person having
jurisdiction over it or charged with its administration or interpretation;

 

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  (g) “Arm’s Length” has the meaning specified in the definition of “Non-Arm’s
Length”;

 

  (h) “Associate” has the meaning given in the Act;

 

  (i) “Business” means the business of the provision of telecommunication,
internet services and equipment and professional, advertising and other services
and products offered to the Borrower’s customers;

 

  (j) “Business Day” means any day other than a Saturday, Sunday or a day on
which financial institutions generally are closed for business in Toronto,
Ontario;

 

  (k) “Capital Expenditures” as used herein means any expenditures made which,
in accordance with GAAP, are chargeable to a capital or a fixed asset account
and include, without limitation, real estate, Capital Lease Obligations and
expenditures made in connection with the acquisition of fixed assets, machinery
and/or equipment;

 

  (l) “Capital Lease Obligations” of any Person at any time means any
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) personal property which obligations
are required to be classified and accounted for as liabilities on a balance
sheet prepared in accordance with GAAP;

 

  (m) “Cash and Cash Equivalents” means cash held in specie or on deposit in
banks, trust companies or other financial institutions where the funds on
deposit can be withdrawn immediately or within 6 months of the date of
determination;

 

  (n) “CLEC” means Globility and MIPPS or either of them;

 

  (o) “Closing Date” means January 31, 2006, or such earlier or later date as
may be mutually agreed upon by the parties hereto;

 

  (p) “Consolidated” means, when used to describe the calculation of any amount
relating to any Person and/or its subsidiaries, consolidated in accordance with
GAAP;

 

  (q) “Consolidated Net Income” means, in respect of any Person for any fiscal
period, the consolidated net earnings of such Person for such fiscal period
after deductions on account of income taxes, as classified and calculated in
accordance with GAAP;

 

  (r) “Current Assets” of any Person at any time means the value of all assets
(calculated on a consolidated basis) of such Person at that time which, in
accordance with GAAP, would normally be regarded as current, save and except for
any portion thereof recorded on account of (i) deferred income taxes and
(ii) deferred marketing costs;

 

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  (s) “Current Liabilities” of any Person at any time means the aggregate of all
liabilities (calculated on a consolidated basis) of such Person at that time
which, in accordance with GAAP, would normally be regarded as current other
than:

 

  (i) the principal amount of the Loan then outstanding;

 

  (ii) obligations to vendors in connection with acquisitions approved by the
Lenders in accordance with Section 8.2(k) hereof during the term of this
Agreement as the same may be amended, modified, supplemented or restated from
time to time; and

 

  (iii) deferred revenue and accrued carrier costs of acquired companies whose
acquisition was approved by the Lenders in accordance with Section 8.2(k)
hereof;

 

  (t) “Current Ratio” at any time means the fraction, the numerator of which
shall be Current Assets at that time and the denominator of which shall be
Current Liabilities at that time;

 

  (u) “Dollars” or “$” and all statements of or reference to dollar amounts mean
lawful money of Canada, except as otherwise specifically provided;

 

  (v) “EBITDA” means, in respect of any Person and in respect of any fiscal
period, the Consolidated Net Income calculated on a consolidated basis for such
fiscal period plus:

 

  (i) amounts deducted in calculating the Consolidated Net Income in respect of
depreciation and amortization; plus

 

  (ii) amounts deducted in calculating the Consolidated Net Income in respect of
Interest Expense; plus

 

  (iii) amounts deducted in calculating the Consolidated Net Income in respect
of income taxes, whether or not deferred; plus

 

  (iv) amounts deducted in calculating Consolidated Net Income in respect of
intercorporate fees permitted hereunder;

 

from which total shall be excluded any addition or deduction, as the case may
be, relating to:

 

  (v) any gain or loss attributable to the sale, conversion or other disposition
of assets other than in the ordinary course of business; and

 

  (vi) any other extraordinary, non-recurring or unusual items, all calculated
in accordance with GAAP;

 

Notwithstanding the above, for the purpose of calculating the EBITDA of the
Borrower, the EBITDA of Globility (calculated on a consolidated basis) shall be
added to the EBITDA of the Borrower calculated on the basis that Globility is a
wholly owned subsidiary of the Borrower.

 

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  (w) “Environmental Laws” means all Applicable Laws relating in full or in part
to the protections of the environment, product liability and employee and public
health and safety, and includes, without limitation, those Environmental Laws
relating to the storage, generation, use, handling, manufacture, processing,
labelling, advertising, sale, display, transportation, treatment, release and
disposal of Hazardous Substances;

 

  (x) “Event of Default”, “Events of Default” and “Default” have the respective
meanings set out in Article 10 hereof;

 

  (y) “Financial Statements” means the audited consolidated financial statements
of the Shareholder for the fiscal years ending December 31, 2003 and 2004 and
the unaudited consolidated financial statements of the Shareholder and
unconsolidated financial statements of the Borrower for the fiscal year ending
December 31, 2005, respectively;

 

  (z) “Forward Subscription Agreement” means the Forward Subscription Agreement
between the Borrower and the Immediate Parent dated the 1st day of March, 2004;

 

  (aa) “GAAP” means, subject to Section 1.3, generally accepted accounting
principles in Canada, consistently applied from period to period;

 

  (bb) “Globility” means Globility Communications Corporation, a company
incorporated under the laws of Canada, its successors and assigns;

 

  (cc) “Globility Guarantee and Security Agreement” means the guarantee and
general security agreement dated April 8, 2004 given by the Borrower to the
Agent as security for the $3 million dollar non-revolving term loan provided to
Globility by the Lenders;

 

  (dd) “Governmental Authority” means any government, regulatory authority,
governmental department, agency, commission, board, tribunal, crown corporation
or court or other law, rule or regulation-making entity having or purporting to
have jurisdiction on behalf of any nation, or province or state or other
subdivision thereof or any municipality, district or other subdivision thereof;

 

  (ee) “Hazardous Substance” means any solid, liquid, gas, odor, heat, sound,
vibration or radiation, or combination thereof, that may impair the natural
environment, injure or damage human or other animal life, plant life, or
property or impair the health of any individual including, without limitation,
useful products such as petroleum, asbestos-containing materials, lead-based
paint, polychlorinated biphenyl-containing fluids, urea-formaldehyde foam and
any substance named or listed as hazardous, toxic, adulterated, misbranded, or
dangerous in any Environmental Law;

 

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  (ff) “Immediate Parent” means Primus Telecommunications International, Inc., a
Delaware corporation, its successors and assigns;

 

  (gg) “Indentures” means:

 

  (i) Indenture, dated October 15, 1999, between Ultimate Parent and Wachovia
Bank, N.A.;

 

  (ii) Indenture, dated February 24, 2000, between Ultimate Parent and Wachovia
Bank, N.A.;

 

  (iii) Indenture dated January 16, 2004, among Ultimate Parent, Intermediate
Parent and Wachovia Bank, N.A.; and

 

  (iv) Indenture dated September 15, 2003, between Ultimate Parent and Wachovia
Bank, N.A.

 

  (hh) “Intercorporate Note” means the promissory note dated January 1, 2000
between the Borrower as debtor and the Shareholder as holder in the original
principal amount of Cdn. $98,000,000.00 as amended by an amendment to promissory
note dated February 11, 2003, as further amended by a second amendment to the
promissory note dated October 5, 2004 and as further amended by a third
amendment to the promissory note dated January 25, 2006;

 

  (ii) “Interest Expense” means, for any period, the aggregate of the amounts
paid or payable by any Person during such period on account of interest for
borrowed money (net of interest income), including the interest portion of
Capital Lease Obligations, the amortization of deferred financing fees, all as
determined in accordance with GAAP;

 

  (jj) “Intermediate Parent” means Primus Telecommunications Holding, Inc., a
Delaware Corporation, its successors and assigns;

 

  (kk) “Lenders” means The Manufacturers Life Insurance Company and each other
financial institution or person which is now or becomes a signatory hereto and
“Lender” means any one of them;

 

  (ll) “Leverage Ratio” of a Person at any time means the fraction, the
numerator of which is Total Debt of such Person and the denominator of which
shall be EBITDA for the most recently completed four fiscal quarters of such
Person;

 

  (mm) “Lien” shall mean any mortgage, charge, pledge, hypothecation, lien
(statutory or otherwise), security interest or other encumbrance of any nature
however arising, or any other security agreement or other arrangement creating
in favour of any creditor a right in respect of any particular property that is
prior to the right of any other creditor in respect of such property, and
includes any blocked account arrangement, title retention and the right of a
lessor relative to a Capital Lease Obligation;

 

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  (nn) “Loan” has the meaning set out in Section 2.1 hereof;

 

  (oo) “Loan Agreement” or “Agreement” means this agreement entitled “Loan
Agreement” and all instruments supplemental hereto or in amendment or
confirmation hereof. The expressions “Article”, “Section”, “Subsection” and
“Schedule” followed by a number or letter mean and refer to the specified
Article, Section, Subsection or Schedule of this Agreement, respectively;

 

  (pp) “Loan Documents” means this Agreement, the Promissory Note, the Security,
and any and all documents, trust deeds, intercreditor agreements, certificates
and instruments delivered by either Obligor or the Parents or any Affiliates
thereof to the Lenders or the Agent whether on, before or after execution
hereof, including any and all amendments, replacements and supplements thereto
or thereof made from time to time;

 

  (qq) “Loan Interest Rate” or means seven and three quarters (7.75%) percent
per annum;

 

  (rr) “Make Whole Premium” has the meaning set out on Schedule A hereof;

 

  (ss) “Material Adverse Effect” means a material adverse effect (i) on or in
relation to the financial condition, operations, assets, liabilities, business,
prospects or properties of the Obligors, or on or in relation to the Borrower’s
ability to carry on the Business (or a significant portion thereof), or (ii) on
or in relation to the ability of an Obligor to perform its obligations under the
Loan Documents or under any Material Contracts to which it is a party, and
“Material Adverse Change” means any event, change, circumstance or occurrence
which has or may have a Material Adverse Effect;

 

  (tt) “Material Contract” means each agreement, arrangement or understanding
entered into by any of the Obligors, whether written, oral or established by
custom or practice, which, if not complied with, could reasonably be expected to
have a Material Adverse Effect;

 

  (uu) “Maturity Date” means April 8, 2008;

 

  (vv) “Mipps” means Mipps Inc., a company amalgamated under the laws of the
Province of Ontario, its successors and assigns;

 

  (ww) “Non-Arm’s Length Person” and similar phrases have the meaning attributed
thereto for the purposes of the Income Tax Act (Canada), and “Arm’s Length”
shall have the opposite meaning;

 

  (xx) “Notes” means the indebtedness issued by the Parents under the
Indentures;

 

  (yy) “Obligors” means the Borrower and the Shareholder and “Obligor” means any
of them;

 

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  (zz) “Operating Lease Obligations” means the obligations to pay rent or other
amounts under a lease of (or other agreement conveying the right to use)
personal property or real property, which obligations are not required to be
classified and accounted for as Capital Lease Obligations in accordance with
GAAP;

 

  (aaa) “Parents” means the Immediate Parent, the Intermediate Parent and the
Ultimate Parent;

 

  (bbb) “Permitted Encumbrances” means, collectively:

 

  (i) Liens for taxes, assessments, governmental charges or levies not at the
time due and delinquent in respect of which each Obligor has set aside on its
books reserves considered by the Lenders, acting reasonably, to be adequate
therefor;

 

  (ii) Liens given to a public utility or any municipality or governmental or
other public authority when required by such utility or other authority in
connection with the operations of the Business, all in the ordinary course of
the Business;

 

  (iii) the Lien created by the Term Debenture;

 

  (iv) Liens with respect to additional debt permitted pursuant to subsection
8.2(n)(iii) hereof;

 

  (v) statutory Liens incurred in the ordinary course of business in connection
with workers compensation, unemployment insurance and other types of social
security statutory obligations; and

 

  (vi) the Liens described in Schedule B;

 

  (ccc) “Person” means any individual, sole proprietorship, partnership, limited
partnership, joint venture, unincorporated association, unincorporated
syndicate, unincorporated organization, trust, body corporate, Governmental
Authority, and a natural person in such person’s capacity as trustee, executor,
administrator or other legal representative;

 

  (ddd) “Promissory Note” means the grid promissory note executed and delivered
by the Borrower to the Agent on the Closing Date;

 

  (eee) “Restricted Subsidiary” shall have the meaning set forth in the
Indentures;

 

  (fff) “Security” means the documents listed in Section 5.1 of this Agreement
and all other documents and instruments provided from time to time by the
Obligor and/or the Parents as security for the Loan;

 

  (ggg) “Shareholder” means 3082833 Nova Scotia Company, its successors and
assigns;

 

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  (hhh) “Term Debenture” means the debenture in the principal amount of
$237,227,000 dated the 1st day of March, 2004 issued by the Borrower in favour
of the Shareholder;

 

  (iii) “Total Debt” of any Person means the aggregate (calculated on a
consolidated basis), without duplication, at the date of determination, of all
liabilities, obligations and indebtedness of such Person and its subsidiaries,
of any kind or nature, now or hereafter owing, arising, due or payable,
howsoever evidenced, created, incurred, acquired or owing, whether primary,
secondary, direct, fixed or otherwise; provided that Total Debt shall not
include (i) the Intercorporate Note, or (ii) any indebtedness that is
specifically subordinated and postponed to the obligations of the Borrower, on
terms satisfactory to the Agent to the obligations of the Borrower to the Agent
and the Lenders;

 

  (jjj) “Ultimate Parent” means Primus Telecommunications Group, Incorporated, a
Delaware corporation, its successors and assigns;

 

1.2 Schedules

 

The Schedules listed below and attached hereto form part of this agreement:

 

Schedule A

  Lenders’ Make Whole Premium        

Schedule B

 

Permitted Liens

       

Schedule 6.1(j)

 

Material Adverse Changes

       

Schedule 6.1(l)

 

Taxes

       

Schedule 6.1(m)

 

Outstanding Obligations

       

Schedule 6.1(o)

 

Leased Property

       

Schedule 6.1(q)

 

Insurance

       

Schedule 6.1(r)

 

Guarantees

       

Schedule 6.1(u)

 

Intellectual Property

       

Schedule 6.1(z)

 

Restrictions on Business

       

Schedule 6.1(cc)

 

Labour Matters

       

Schedule 7.1(i)

 

Litigation

       

Schedule 8.1(k)(iv)

 

Compliance Certificates

       

Schedule 8.2(o)

 

Management Fees

       

 

1.3 Accounting Principles

 

Any reference to GAAP includes the current accounting principles recommended by
the Canadian Institute of Chartered Accountants in the “CICA Handbook” at the
relevant time, or in the event that the matter is not covered in the CICA
Handbook, principles having general acceptance among accounting professionals in
Canada at the particular time. Accounting principles as they exist as of the
date of this Agreement shall be consistently applied over the term of this
Agreement unless otherwise required or recommended by the Canadian Institute of
Chartered Accountants.

 

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1.4 Business Day

 

If any action required by this Agreement is to be taken on a day which is not a
Business Day, such action shall be taken on the next following Business Day,
except in the case of any payment required to be made hereunder in which case
such payment shall be made on the immediately preceding Business Day.

 

1.5 Permitted Liens

 

Except as expressly provided therein, any reference in any of the Loan Documents
to a Permitted Lien is not intended to and shall not be interpreted as
subordinating or postponing, or as an agreement to subordinate or postpone, any
Lien created by any of the Loan Documents to any Permitted Lien.

 

ARTICLE 2

THE LOAN

 

2.1 Credit

 

Subject to the terms and conditions hereof, including the Borrower’s fulfilment
of the conditions precedent set out herein, the Lenders hereby agree to make
available to the Borrower, on a non-revolving basis the sum of thirty-two
million ($32,000,000) dollars (the “Loan”). All Advances to the Borrower shall
be denominated in Cdn. Dollars. Advances shall each be in multiples of not less
than one million ($1,000,000) dollars and shall be made available on not less
than five (5) Business Days notice from the Borrower to the Agent provided that
an Event of Default has not occurred and provided further that all conditions
for such Advance have been satisfied. No Advances shall be permitted on or after
the commencement of the twenty third month following the Closing Date.

 

2.2 Advance

 

The indebtedness resulting from each Advance of the Loan shall be evidenced by
entries recorded by the Agent on the reverse side of the Promissory Note (the
“Entries”) delivered April 8, 2004. The Entries shall be prima facie evidence of
the amount of the Loan owing hereunder.

 

2.3 Letters of Credit

 

The parties acknowledge and agree that:

 

  (a) Notwithstanding the provisions of Section 2.1, the Borrower may request
certain letters of credit to be issued by Manulife Bank of Canada to constitute
an availment of the Loan;

 

  (b) the applicable letters of credit shall be one or more Letters of Credit
(the “Letters of Credit”) issued by Manulife Bank of Canada on behalf of the
Borrower or a Corporation designated by the Borrower, provided that (i) the face
amount outstanding at any time of the issued Letters of Credit shall not exceed
in aggregate five million ($5,000,000) dollars ( the “Letter of Credit
Carve-out”), (ii) no Letters of Credit shall have an expiration date later than
the Maturity Date and (iii) the form and content of each Letter of Credit shall
be acceptable to each of the Borrower, the Lender and Manulife Bank of Canada;

 

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  (c) the ability of the Borrower to utilize the Loan by way of Advances
pursuant to Section 2.1 of the Loan Agreement and the availability of the Loan
shall be reduced at any time by the aggregate of the face amounts of the Letters
of Credit outstanding at such time;

 

  (d) any drawdown on any Letter of Credit will be reimbursed to Manulife Bank
of Canada by way of an Advance made pursuant to the Loan Agreement on the same
terms and conditions as any other Advance made pursuant to the Loan Agreement,
and the amount of any such Advance shall no longer be available for utilization
by way of Letter of Credit and the Letter of Credit Carve-out will be reduced by
the amount of such Advance;

 

  (e) to the extent the Lenders are obliged to reimburse Manulife Bank of Canada
with respect to any drawdown made under any Letter of Credit issued as set out
in Section 2.3(d) above, any Advances made to so reimburse Manulife Bank of
Canada shall be secured by the Security. Notwithstanding the terms hereof, if
Manulife Bank of Canada requires any additional indemnity or other document
executed to support the issuance of any Letter of Credit the Borrower agrees to
provide such indemnities and other documents in connection therewith; and

 

  (f) the Borrower shall pay a fee to the Lenders in an amount equal to two
(2.0%) percent per annum of the face value of Letter of Credit payable on the
date of issuance thereof with the minimum fee for each Letter of Credit issued
pursuant to the provisions of this Section 2.3 being two (2.0%) percent of the
face value of each Letter of Credit.

 

ARTICLE 3

PAYMENT OF PRINCIPAL AND INTEREST

 

3.1 Payment of Interest

 

Interest on all Advances shall accrue and the Borrower shall be liable for and
pay interest in respect of Advances made available to it, commencing on and from
the date of Advance and continuing while the Loan or any part thereof is
outstanding, both before and after maturity, demand, Default and judgment, at
the Loan Interest Rate. Interest as aforesaid shall be calculated daily from the
date of the First Advance and shall be payable monthly on the last day of each
month in arrears.

 

3.2 Interest on Charges

 

Unless otherwise specifically provided herein, if any amount payable to the
Agent or the Lenders hereunder or under any other Loan Document (including any
amount payable under Sections 2.3, 3.1, 3.2, 10.2(b) and Article 11) is not paid
when due, such amount will be subject to and bear interest payable on demand, at
the Loan Interest Rate calculated as described in Section 3.1, with, in the case
of overdue interest, interest on interest at such rate, compounded

 

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monthly, plus, to the extent permitted by Applicable Law, an additional 2% per
annum. Such interest shall be calculated daily and compounded monthly in arrears
both before and after maturity, the occurrence of an Event of Default, demand
and judgement.

 

3.3 Year

 

Unless otherwise specified, all annual rates of interest referred to herein are
based on a calendar year of three hundred and sixty-five (365) or three hundred
and sixty-six (366) days, as the case may be. For the purposes hereof, whenever
interest is calculated on the basis of a period of other than three hundred and
sixty-five (365) days, each rate of interest determined pursuant hereto
expressed as an annual rate for the purposes of the Interest Act (Canada) is
equivalent to such rate as so determined multiplied by the number of days in the
calendar year in which the same is ascertained and divided by the number of days
in the relevant interest period under consideration. The rates of interest
stipulated in this Agreement are intended to be nominal rates and not effective
rates or yields.

 

3.4 Maximum Interest Rate

 

Notwithstanding anything herein to the contrary, in no event shall any interest
rate or rates referred to above (together with other fees payable hereunder
which are construed by a court of competent jurisdiction to be interest or in
the nature of interest) exceed the maximum interest rate permitted by Applicable
Law. If such maximum interest rate would be exceeded by the terms hereof, the
rates of interest payable hereunder shall be reduced to the extent necessary so
that such rates (together with any other fees which are construed by a court of
competent jurisdiction to be interest or in the nature of interest) equal the
maximum interest rate permitted by applicable law, and any overpayment of
interest received by the Agent or the Lenders theretofore shall be applied,
forthwith after determination of such overpayment, to pay all then outstanding
interest, and thereafter to pay outstanding principal on the Loan (and any
Lender’s Make Whole Premium related thereto), as if the same were a prepayment
of principal and treated accordingly hereunder.

 

3.5 Place and Manner of Payment

 

All payments of principal, interest (including under Section 3.6) and all other
amounts payable to the Lenders shall be made by the Borrower to the Lenders at
the Lenders’ addresses shown on the execution pages hereof by 2:00 p.m. (Toronto
time) on the day specified herein for payment. Payments received after 2:00 p.m.
(Toronto time) shall be considered as having been received on the next Business
Day following receipt. The Lenders shall promptly notify the Borrower, the Agent
and the other Lenders of any failure to receive payment. If any Lender so
chooses, the Borrower shall make arrangements to authorize the Lender to debit
automatically, by mechanical, electronic or manual means, any bank accounts
maintained by the Borrower with such Lender (if any) for all amounts payable by
the Borrower to such Lender under this Agreement, including the repayment of
principal and the payment of interest and any other amounts due hereunder. Such
Lender shall notify the Borrower as to the particulars of those debits in the
normal course.

 

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3.6 No Set-Off

 

All payments to be made by the Borrower or any other party pursuant to this
Agreement are to be made in freely transferable, immediately available funds and
without set-off, withholding or deduction of any kind whatsoever except to the
extent required by Applicable Law, and if any such set-off, withholding or
deduction is so required and is made, the Borrower or any other party will, as a
separate and independent obligation to each Lender, be obligated to pay to each
Lender all such additional amounts as may be required to fully indemnify and
save harmless such Lender from such set-off, withholding or deduction and as
will result in the effective receipt by such Lender of all the amounts otherwise
payable to it in accordance with the terms of this Agreement.

 

ARTICLE 4

PREPAYMENT AND REPAYMENT

 

4.1 Mandatory Repayment of Principal

 

Unless the Loan shall have been accelerated or otherwise required to be paid at
an earlier date pursuant to the terms hereof, the Borrower shall repay the Loan
as follows:

 

  (a) on the eighth day of each of April, July and October, 2007, the sum of one
million ($1,000,000) dollars shall be repaid by the Borrower; and

 

  (b) the balance of the Loan and all other amounts due pursuant to this
Agreement shall be repaid on the Maturity Date.

 

For greater certainty, no Make-Whole Premium is payable in respect of payments
made pursuant to this Section 4.1.

 

4.2 Prepayment of Principal

 

  (a) The Borrower may not, except in accordance with paragraph (b) of this
Section 4.2, prepay any amount of the Loan. Amounts prepaid under said paragraph
(b) cannot thereafter be drawn down or re-borrowed by the Borrower.

 

  (b) The Borrower shall have the right, at any time, to prepay in whole or in
part, all or any portion of the principal amount of the Loan then outstanding;
provided that in connection therewith (i) the Borrower pays all accrued and
unpaid interest on the principal portion of the Loan so prepaid to the date of
payment, including all accrued and unpaid additional interest thereon under
Sections 3.1 and 3.2, (ii) the minimum principal amount prepaid shall not be
less than one million ($1,000,000) dollars, (iii) the Borrower provides written
notice of such prepayment as required under Section 4.3, and (iv) the Borrower
pays to the Lenders an additional amount, calculated by the Agent, equal to the
Make Whole Premium (calculated in accordance with Schedule A, which calculation
shall be conclusive, absent manifest error), calculated based on the amount of
principal so prepaid or such lesser amount as is set out below:

 

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PREPAYMENT DATE

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

 

MAKE WHOLE PREMIUM

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

Before 1st Anniversary of Loan Agreement   100% of Make Whole Premium

After 1st Anniversary and before 18 months

 

After 18 Months

 

70% of Make Whole Premium

 

60% of Make Whole Premium

 

  (c) In the event that the Borrower (i) prepays the entire principal amount of
the Loan then outstanding, in accordance with paragraph (b) of this Section 4.2
and (ii) has fulfilled all of its other obligations to the Lenders under this or
any other Loan Document, the Lenders shall, at the Borrower’s cost, promptly
enter into appropriate termination and release documentation and release and
discharge all of the security held by the Lenders pursuant to Article 8 hereof.

 

4.3 Notice of Prepayment

 

The Borrower shall give written notice to the Agent and the Lenders at least
four (4) days prior to the Borrower prepaying any principal amounts under the
Credit. If a notice of prepayment is given, the Borrower shall prepay the amount
designated in the notice of prepayment on the date so designated therein,
together with accrued interest to the date of such prepayment and any applicable
Make Whole Premium. Each notice of prepayment shall be irrevocable and binding
upon the Borrower. All prepayments shall be made rateably amongst the Lenders.
The Borrower shall indemnify the Agent and the Lenders against any loss or
expense incurred by the Agent and the Lenders as a result of any failure on the
part of the Borrower to prepay the amounts specified on the dates specified for
such prepayment, including, without limitation, any loss or expense incurred by
reason of the liquidation or re-employment of deposits or other funds.

 

ARTICLE 5

SECURITY

 

5.1 Security for Advance

 

As evidence of the Advances and/or continuing security for the due payment and
performance of the Loan and as an additional inducement otherwise to the Lenders
to extend the Loan to the Borrower on the terms contemplated by this Agreement
and the other Loan Documents, the applicable Obligors shall, and where
applicable, the Parents shall on or before the Closing Date (and thereafter if
and as the context below indicates or implies) to execute and deliver to the
Agent and the Lenders, the following documents in form and content satisfactory
to the Agent and the Lenders:

 

  (a) the Loan Agreement;

 

  (b) the Promissory Note;

 

  (c) a general security agreement of the Borrower;

 

  (d) a hypothec of the Borrower;

 

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  (e) a general assignment of book debts;

 

  (f) guarantees executed by each of the Parents and the Shareholder and
confirmations in respect of same;

 

  (g) a subordination and postponement agreement executed by each of the Parents
with respect to all indebtedness of the Obligors and acknowledgements in
connection with same;

 

  (h) a subordination and postponement agreement executed by each of the Parents
with respect to the obligations of the Borrower pursuant to the Globility
Guarantee and Security Agreement;

 

  (i) an amended and restated subordination and postponement agreement executed
by the Shareholder with respect to all indebtedness of the Borrower owing to it;

 

  (j) fire and all risk insurance in an amount and on terms satisfactory to the
Lender in accordance with the provisions of this Agreement which policies will
note the Lender as loss payee as its interest may appear;

 

  (k) landlord waiver agreements from landlords, in a form satisfactory to the
Agent shall have been executed by the landlords of real property leased to the
Obligors at the following premises: 151 Front Street West, Toronto; 555 West
Hastings Street, Vancouver; Suite 245, 605 1st Street SW, Calgary; 740 Rue Notre
Dame, Montreal and 5343 Dundas Street West, Suite 400, Toronto, and copies of
each shall have been delivered to the Agent;

 

  (l) a licence agreement in relation to the trademarks utilized by the
Borrower;

 

  (m) such other security as the Lender reasonably requests and is permitted
pursuant to the Subordination Agreement.

 

If any of the above listed documents have been previously delivered to the
Lenders and the Agent, they shall remain in full force and effect as continuing
security for the Loan, save and except as specifically amended hereby.

 

5.2 No Prejudice

 

Nothing contained herein or in any Security, nor any act of the Agent or the
Lenders with respect to any such Security shall in any way prejudice or affect
the rights, remedies or powers of the Agent or the Lenders with respect to any
other security at any time held by the Agent or the Lenders.

 

5.3 Form of Security

 

The Security shall be in such form as is satisfactory to the Agent and its legal
counsel.

 

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5.4 Registration of Security

 

The Borrower shall cause the Security (and instruments supplemental or ancillary
thereto) to be registered or filed from time to time in all places where, in the
opinion of counsel to the Agent and the Lenders, registration or filing is
required or advisable to protect any interest created thereby. The Agent on
behalf of the Lenders may, at the reasonable expense of the Borrower, register,
file or record the Security or notices in respect thereof in all offices where
such registration, filing or recording is, in the reasonable opinion of the
Agent or its counsel, necessary or of advantage to the creation, perfection and
preservation of the security interests arising pursuant thereto. The Agent on
behalf of the Lenders may, at the Borrower’s expense, renew such registrations,
filings and recordings from time to time as and when required to keep them in
full force and effect. Each Obligor acknowledges that unless otherwise expressly
indicated, the forms of security have been prepared based upon the laws of the
Province of Ontario, in effect at the date of execution thereof and that such
laws may change, and that the laws of other jurisdictions may require the
execution and delivery of different forms of security instruments in order to
grant to the Lenders the rights intended to be granted by the Security. Each
Obligor shall, on request from the Agent from time to time, execute and deliver
to the Agent on behalf of the Lenders such additional security instruments and
will amend or supplement any Security theretofore provided to the Lenders:

 

  (a) to reflect any changes in such laws, whether arising as a result of
statutory amendments, court decisions or otherwise;

 

  (b) to facilitate the registration of appropriate forms of Security in all
appropriate jurisdictions; or

 

  (c) if any entity having delivered security amalgamates with any other Person
or enters into any corporate reorganization,

 

in each case in order to confer on the Agent and the Lenders such security
interests with

such priority, as are intended to be created by the Security.

 

The Borrower will pay or indemnify the Agent and the Lenders against any and all
stamp duties, registration fees and similar taxes or charges which may be
payable or determined to be payable in connection with the execution, delivery,
performance, registration or enforcement of this Agreement or any other document
or any of the transactions contemplated hereby or thereby.

 

5.5 Ranking of Security

 

Subject to the Permitted Encumbrances, the Security shall be a first charge over
the assets of the Borrower.

 

5.6 Supplemental Security

 

All real or personal property other than shares acquired by the Borrower, or any
subsidiary thereof on or after the date of execution of the Security (the
“After-Acquired Property”) shall be made, contemporaneously with the closing of
such acquisition(s), subject to security interests of the same nature and rank
as real or personal property of a similar type or nature already subject to the
Security and the Borrower, or any subsidiary thereof on request by the Agent on
behalf of the Lenders, shall forthwith execute, deliver and register at their
own expense, such

 

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instruments supplemental to the Security in form and substance satisfactory to
the Agent on behalf of the Lenders as may be necessary or desirable to ensure
that, subject to the Permitted Encumbrances, the Security constitutes in favour
of the Lenders an effective charge over such After-Acquired Property having an
identical ranking to the real or personal property of a similar type or nature
already subject to the Security.

 

5.7 Paramountcy

 

In the event of any conflict between the provisions of any Security and the
provisions of this Loan Agreement, the provisions of this Loan Agreement shall
be paramount.

 

5.8 Prohibited Security

 

Notwithstanding anything herein or in the Security to the contrary, the Obligors
acknowledge that neither the Agent nor any Lender has any intent to take
security over any asset of any Obligor which (i) requires the consent of any
other Person which cannot be obtained, (ii) is prohibited by or contrary to
Applicable Law, or (iii) would render the transaction herein contemplated void.
In respect of any security having or which may have the effect described in
clauses (ii) and (iii), the Agent and the Lenders hereby disclaim any such
security, for so long as same is prohibited by or contrary to Applicable Law or
would render the transaction hereby contemplated void. In respect of any
security described in clause (i) or in respect of which clause (i) may become
applicable, the Borrower shall cause all requisite consents to be obtained on or
before the Closing Date (or forthwith after the need for such consent is
identified, if the need for such consent did not exist on the Closing Date), and
if not so obtained on or before the Closing Date, the Borrower shall obtain all
requisite consents as soon as possible after the Closing Date, so that in each
instance, the relevant asset may be subjected absolutely and unconditionally to
the security in favour of the Agent and the Lenders contemplated in Section 5.1,
and until such consent is obtained, the security interest therein shall be
deemed to have been created and given to the Agent on behalf of the Lenders
effective upon the relevant Obligor acquiring an interest therein, subject to
the conditional defeasance of such security interest therein if (i) any such
consent is not obtained, (ii) the Person required to consent in connection
therewith objects in writing to such security interest, and (iii) the Agent, in
response to such objection, determines to resolve such objection by renouncing
such security interest, whereupon the Borrower shall (and shall cause each
relevant Obligor to) hold, and the Borrower and relevant Obligor shall be deemed
ab initio to have always held, the relevant asset as trustee for and on behalf
of the Agent and the Lenders, and the Borrower shall not (and shall cause each
relevant Obligor not to) encumber, dispose of or otherwise deal with such asset,
except with the written consent of the Agent on behalf of the Lenders.

 

5.9 Change of Entity

 

Without limiting the generality of the restriction contained in Section 8.2(b),
each Obligor acknowledges and agrees that, if it amalgamates with any other
company or companies, it is the intention of the parties hereto that the
mortgages, charges and security interests created by the Security, to the extent
given by such Obligor, shall: (a) extend to all collateral and charged premises
owned at the time of amalgamation by each of the amalgamating companies and the
amalgamated company, and to any collateral and charged premises thereafter owned
or acquired by the amalgamated company, such that the term “Obligor” when used
herein would apply to each of the amalgamating companies and the amalgamated
company; and (b) secure the

 

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Indebtedness thereafter arising of the amalgamated company to the Agent and the
Lenders; and (c) attach to all such additional collateral and charged premises
at the time of amalgamation and to any collateral and charged premises
thereafter owned or acquired by the amalgamated company at the time at which
such collateral and charged premises become owned or otherwise acquired.

 

ARTICLE 6

REPRESENTATIONS AND WARRANTIES

 

6.1 Representations and Warranties

 

The Obligors jointly and severally make and give to the Agent and the Lenders
the representations and warranties set out below, upon each of which the Agent
and the Lenders have relied in entering into this Agreement, in making the Loan
available hereunder and in otherwise performing their obligations hereunder.

 

  (a) Valid Incorporation

 

Each Obligor is a company duly incorporated or continued, and validly subsisting
under the laws of the jurisdiction of its incorporation. Each Obligor is duly
qualified to carry on the Business in all jurisdictions in which the Business is
carried on by it and where the failure to be so qualified would have a Material
Adverse Effect on the Borrower, and is in good standing in all material respects
under the laws of each of such jurisdictions.

 

  (b) Subsidiaries

 

The Borrower has no direct subsidiaries other than Primus Telecommunications
Europe (Holdings) Limited and Telesonic Communications Inc. and the Business in
Canada is conducted solely by the Borrower.

 

  (c) Authorized and Issued Capital

 

The authorized and issued capital of the Borrower and the Shareholder and the
registered and beneficial owners of such issued capital are as follows:

 

Borrower:

 

Authorized Capital

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

  

Issued Capital

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

  

Registered & Beneficial Owner

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

unlimited common shares    825,104 common shares    Shareholder

 

Shareholder:

 

Authorized Capital

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

  

Issued Capital

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

  

Registered & Beneficial Owner

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

unlimited common shares    1,262 common shares    Immediate Parent

 

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  (d) Corporate Authority

 

Each Obligor has the corporate power and authority to carry on the Business in
the manner presently carried on, and each Obligor has the power and authority to
own its property, to enter into this Agreement, to provide the Security and do
all such acts and things as are required hereunder or thereunder to be done,
preserved or performed.

 

  (e) Security Authorization

 

The execution and delivery of this Agreement and the issuance of the Security
and other Loan Documents have been duly authorized by all necessary action on
the part of the Obligors and, where applicable the Parents. This Agreement and
the Security constitute valid and legally binding obligations of the Obligors
and where applicable, the Parents enforceable in accordance with the terms
thereof and this Agreement.

 

  (f) Ranking of Security

 

By virtue of the Security, the Lenders have, subject only to the Permitted
Encumbrances and any exceptions specifically set out in the Security:

 

  (i) a valid first fixed and floating specific charge and security interest in
all assets, property and undertaking of the Borrower; and

 

  (ii) a valid assignment of all insurance on the inventory, machinery,
equipment, chattels, lands and buildings of the Borrower.

 

  (g) No Defaults

 

No Obligor is in default or in breach of, or aware of any state of facts which
after notice or lapse of time, or both, would constitute a breach of the
obligations of an Obligor in any material respect under any material contract or
other instrument to which an Obligor is a party or will be a party on the
Closing Date or by which it may be bound, including contracts with any
customers.

 

  (h) Litigation

 

There are no actions or proceedings pending against any Obligor or, to the best
of its knowledge, threatened against or affecting an Obligor before any court or
administrative agency which could result in a Material Adverse Effect.

 

  (i) No Conflict

 

Neither the execution and delivery of the Loan Documents, the consummation of
the transactions therein contemplated nor compliance with the terms and
provisions of the Loan Documents will conflict with or result in a breach of any
of the terms, conditions and provisions of the articles and other constating
documents of an Obligor or any predecessor of any of them, or of any law or any
regulation or order to which an Obligor is subject, or, of any agreement to
which any Obligor is a party or will be a party on the Closing Date or by which
an Obligor may be bound.

 

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  (j) Financial Statements

 

The Financial Statements present fairly the financial position of the respective
companies delivering same in respect of the Business as at the date of such
statements and the results of the operations and changes in financial position
of each of them in accordance with GAAP. Except as set out in Schedule 6.1(j),
since December 31, 2005 there has been no Material Adverse Change in the
business operations, affairs or conditions of the Borrower relating to the
Business or of the Parents, financial or otherwise, or arising as a result of
any legislative or regulatory change, revocation of any licence or right to do
business, fire, explosion, accident, casualty, labour trouble, flood, drought,
riot, storm, condemnation, act of God or otherwise.

 

  (k) Conduct of Business

 

The Business has been conducted in compliance in all material respects with all
Laws. No Obligor is in material breach of any Applicable Law to the extent that
its ability to carry on the Business is impaired or which affects in any way the
value of its properties and assets and each is duly licensed, registered or
qualified to do business in all jurisdictions in which it owns or leases
property or carries on business, to enable the Business to be carried on as now
conducted and all property and assets to be owned, leased and operated, and all
such licenses, registrations and qualifications are valid and subsisting and in
good standing.

 

  (l) Taxes

 

Except as set out on Schedule 6.1(l), no Obligor is in default in the filing of
any tax returns required to be filed by it and each has paid all taxes which are
due and payable and has paid all assessments and reassessments greater than
one-hundred thousand ($100,000) dollars and all other taxes, governmental
charges, penalties, interests and fines due and payable by it on or before the
date hereof. Except as set out on Schedule 6.1(l), there are no actions, suits,
proceedings, investigations or claims now threatened or pending against any
Obligor, in respect of taxes, governmental charges or assessments or any matters
under discussion with any Governmental Authority relating to taxes, governmental
charges or assessments asserted by any such Governmental Authority. Each Obligor
has withheld from each payment made to any of its past or present officers,
directors and employees, amounts in respect of all taxes (including but not
limited to income tax), and other deductions required to be withheld therefrom
and has paid the same to the proper tax or other receiving officers within the
time required under any Applicable Law; and, except for taxes contested in good
faith, has set up, or caused to be set up, an adequate reserve for the payment
of all taxes required to be paid in respect of the period covered by such
returns and has paid all instalments of income taxes when due.

 

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  (m) Outstanding Obligations

 

Except as described in Schedule 6.1(m) hereto and any amounts payable to the
Shareholder, to the Parents or to any Restricted Subsidiary from time to time,
there are no bonds, purchase money mortgages, debentures, security agreements,
promissory notes, Capital Lease Obligations, (having a principal amount
outstanding in excess of three-hundred thousand ($300,000) dollars) conditional
sales contracts (having a principal amount outstanding in excess of twenty-five
thousand ($25,000) dollars), or other evidences of secured indebtedness
outstanding affecting the Business or the property or assets of the Obligors
other than the notes evidencing the Loan, the Security, and the Term Debenture.
As of the Closing Date, (i) there is no intercorporate indebtedness of the
Borrower to the Shareholder and/or either of the Parents other than the
indebtedness evidenced by the Intercorporate Note and the Term Debenture,
(ii) the Term Debenture has not been amended, (iii) the Intercorporate Note is
unsecured; (iv) save and except for the amendments dated February 11,
2003, October 5, 2004 and January 25, 2006, the Intercorporate Note has not been
amended, and (v) as of December 31, 2005 the principal amount outstanding under
the Intercorporate Note was $55,102,689.

 

  (n) Title to Assets

 

Each Obligor owns, possesses, and has good and marketable title to their
respective undertaking, property and assets free and clear of any and all liens,
claims or demands of any nature howsoever arising, except for the Security and
the Permitted Encumbrances.

 

  (o) Leased Property

 

Except for the leases described on Schedule 6.1(o) hereto, the Borrower is not a
party to nor is bound by any lease or agreement in the nature of a lease or
providing for an Operating Lease Obligation, whether as lessor or lessee in
which the annual rental exceeds two-hundred thousand ($200,000) dollars. Each
lease described on Schedule 6.1(o) is in good standing and in full force and
effect without amendment thereto. No Obligor is in breach of any of the material
covenants, conditions or agreements contained in each such lease. Except as
noted on Schedule 6.1(o), the entering into of this Loan Agreement, the granting
of the Security and the performance of the obligations hereunder and thereunder
will not result in the violation of any of the terms of such leases and
agreements.

 

  (p) Real Property

 

No Obligor has entered into or is bound by any agreement to acquire real
property. No Obligor is the owner in fee simple of real property. The uses to
which the real property owned or subject to the lease(s) described on Schedule
6.1(o) have been put are not in breach of any statutes, by-laws, zoning by-laws,
ordinances, regulations, covenants, restrictions or official plans, other than
minor variances or breaches of which the Borrower is not aware and which do not
materially affect the conduct of the Business. Neither Obligor is currently
under notice from any Governmental Authority or any landlord in respect of any
such breaches or breaches of the leases. There are no outstanding work orders
relating to the properties owned or subject to the leases or agreements
described on Schedule 6.1(o) hereto from or required by any police or fire
department, sanitation, health, environmental or factory authorities or from any
other federal, provincial or municipal authority or any matters under discussion
with any such departmental authorities relating to work orders and no Obligor
has received notice of any such work orders.

 

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  (q) Insurance

 

The property and undertaking of the Obligors is insured against loss or damage
and attached hereto as Schedule 6.1(q) is a true and complete schedule setting
out particulars of all such insurance policies. No Obligor is in default with
respect to any of the provisions contained in any such insurance policy and nor
has it failed to give any notice or present any claim under any insurance policy
in a due and timely fashion.

 

  (r) Guarantees

 

Except as listed on Schedule 6.1(r), no Obligor is a party to or bound by any
agreement of guarantee, indemnification, assumption, endorsement or any other
like commitment of the obligations, liabilities (contingent or otherwise) or
indebtedness of any other Person.

 

  (s) Securities

 

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 an Obligor (except sales of
inventory in the ordinary course of business) or for the purchase, subscription,
allotment or issuance of any of the unissued shares in the capital of any
Obligor.

 

  (t) Loan Proceeds

 

The proceeds of the Loan shall be used for general corporate purposes.

 

  (u) Intellectual Property

 

Other than applications for patents and trade marks which are proceeding and in
respect of which no Obligor has reason to believe that such applications will be
unsuccessful or opposed, each Obligor has taken or caused to be taken all
necessary action to secure all rights to the licenses, trademarks and patents
necessary or desirable in connection with its business, including those set out
in Schedule 6.1(u), and such licences, trade marks and patents, together with
all other disclosures on Schedule 6.1(u), constitute all of the intellectual
property necessary to enable it to carry on or as is otherwise desirable in
connection with its business as presently carried on, without interference from
or fear of any claim whatsoever by any Person. There is no intellectual property
necessary or useful to the Business, other than that disclosed in Schedule
6.1(u), that is owned by any Person, other than the Borrower. No Obligor is in
breach, in any material respect, of any Material IP Agreement (as defined in
Section 8.2(q))or has received any notice of termination in respect of any
Material IP Agreement. No Obligor has any current plans to pursue any course of
action which might in any way whatsoever result in a breach of any Material IP
Agreement.

 

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  (v) Material/Facts

 

All information furnished in writing by it to the Agent for the purposes of or
in connection with this Agreement or any transaction contemplated hereby does
not, and all such information hereafter furnished in writing by the Obligors to
the Agents or the Lenders will not, contain any inaccurate statement of a
material fact. To the knowledge of the Borrower, all material information
relating to the Business has been provided to the Agent.

 

  (w) Assets in Good Condition

 

All of the assets and properties of the Obligors, that are necessary for the
operation of the Business are in good working condition, consistent with prudent
business practice and industry standards, ordinary wear and tear excepted, and
are able to serve the function for which they are currently being used and are
subject to the Security. There are no tangible assets, including real or
personal property, necessary for or to the on-going operation of the Business
which are not owned by the Borrower (or leased as set out on Schedule 6.1(o))
and charged pursuant to the Security.

 

  (x) Inventories

 

All inventories are of currently merchantable quality and do not include any
items which are no longer useable or saleable for any reason (including, without
limitation, as a consequence of changes of advertising claims, recipes or
physical deterioration) that is not fully provided for.

 

  (y) No Default

 

No Default or Event of Default has occurred and is continuing or will occur as a
result of the completion of the transactions contemplated by this Agreement.

 

  (z) No Restriction on Business

 

Except for the contracts described on Schedule 6.1(z), no Obligor is a party to
and no property of the Obligors is subject to or bound by any exclusive purchase
contract, futures contract, covenant not to compete, take or pay or other
agreement which restricts its ability to conduct its business and which is
having or may reasonably be expected to have a Material Adverse Effect.

 

  (aa) No Excluded Assets

 

There are no assets, including real, personal and intangible property, necessary
to or useful in a material respect in connection with the on-going operation of
the Business which are not owned or leased by or licensed to the Obligors and in
which the interest of the Obligors therein is not charged pursuant to the
Security.

 

  (bb) Exclusive Contracts

 

No Obligor is party to nor is any of its property subject to or bound by any
Material Contract, the substance of which may involve without limitation, an
exclusive purchase contract, a futures contract, a covenant not to compete, take
or pay or other agreement, or which restricts its ability to conduct business in
the ordinary course and which is having or may reasonably be expected to have a
Material Adverse Effect on the condition or business of either of them.

 

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  (cc) Labour Matters

 

Except as set forth in Schedule 6.1(cc), there are no strikes or other labour
disputes against any Obligor that are pending or threatened. All payments due
from the Obligors on account of workers compensation, Canada Pension Plan,
Quebec Pension Plan, employee health plans, social security and insurance of
every kind and employee income tax source deductions and vacation pay have been
paid. Except as set forth in Schedule 6.1(cc), no Obligor has any obligation
under any collective bargaining agreement. To the knowledge of the Borrower,
there is no organizing activity involving any Obligor by any labour union or
group of employees. Except as set forth in Schedule 6.1(cc), no labour
organization or group of employees has made a pending demand for recognition and
there are no complaints or charges against any Obligor pending or threatened to
be filed with any Governmental Authority or arbitrator based on, arising out of,
in connection with, or otherwise relating to the employment or termination of
employment by the Borrower of any individual. Hours worked by and payment made
to employees of the Obligors have not been in violation of any Laws. The
Obligors are in material compliance with the terms and conditions of all
collective bargaining agreements, consulting agreements, management agreements
and employee agreements and all other labour agreements. Except for the benefit
plans as set forth on Schedule 6.1(cc), there are no pension plans, employee
benefit plans, written employment agreements with respect to which any Obligor
is bound.

 

  (dd) No Hazardous Substances

 

Other than as disclosed to the Agent in the documents delivered to the Agent
relating to the environmental audits and site reconnaissances carried out prior
to the date hereof.

 

  (i) no claims, demands, liabilities, investigations, litigation,
administrative proceedings, whether pending or threatened, or judgments or
orders relating to any Environmental Laws, including any law relating to
Hazardous Substances, have been asserted or, to the best of its knowledge,
threatened against any Obligor or in relation to any of its property, currently
or formerly owned, leased or operated. The Obligors currently operate the
Business in compliance in all material respects with all Environmental Laws; and

 

  (ii) no Hazardous Substances (including asbestos and urea formaldehyde foam)
are or have been stored by the Obligors or were otherwise located by it in
violation in any material respect of any Environmental Law and no underground
storage tanks are located by it on any real property owned or leased by any
Obligor and no part of any real property or ground water in, on or under such
property is presently contaminated by any hazardous substances or materials
caused by it. No Hazardous Substances are stored or located in violation of any
Environmental Law and no underground storage tanks are located on any real
property currently leased or used by any Obligor and no part of any real
property or ground water in, on or under such property or any property adjacent
to its property, is presently contaminated by any Hazardous Substances. The
Obligors have and maintain all material permits, licences, authorizations, and
other documentation required by all applicable environmental laws required to
carry on the Business.

 

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  (ee) Term Debenture

 

The Term Debenture is in good standing and the Borrower has not committed any
event of default thereunder.

 

  (ff) BDC Indebtedness

 

The obligations of the Obligors to Business Development Bank of Canada is less
than $100,000 in the aggregate.

 

6.2 Survival of Representations and Warranties

 

Each of the representations and warranties contained in Section 6.1 shall
survive the closing of this Agreement until the full repayment of the Loan.

 

ARTICLE 7

CONDITIONS OF CLOSING

 

7.1 Closing Conditions

 

The Lenders shall not be called upon to make any Advances if the Agent and the
Lenders shall not have received on or prior to the Closing Date, in form and
content and dated as of a date acceptable to the Agent, the following documents,
or the Agent and the Lenders shall not otherwise be satisfied with respect to
any of the following matters:

 

  (a) Security

 

The Loan Documents and the Security referred to in Section 5.1 hereof shall have
been duly authorized, executed, delivered to the Agent and registered
wheresoever required to protect and preserve the charges contained therein and
registration particulars shall have been provided to counsel for the Agent.

 

  (b) Corporate Proceedings

 

Certified copies of all proceedings by the directors and, if applicable, by the
shareholders of the Obligors where required, necessary to authorize the
execution and delivery of this Agreement and, the Security and performance of
their respective provisions shall have been executed and delivered to the Agent.

 

  (c) Constating Documents

 

Certified copies of all constating documents of the Obligors shall have been
executed and delivered to the Agent.

 

  (d) Opinion of Counsel

 

A corporate opinion from Goodmans LLP, counsel for the Obligors, in form and
substance satisfactory to the Agent and its counsel shall have been executed and
delivered to the Agent and its counsel.

 

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  (e) Compliance with Agreement

 

The Obligors shall be in compliance with all of the terms, covenants and
conditions of this Agreement which are binding upon them and an Event of Default
shall not have occurred.

 

  (f) Report on Loan Documents

 

The Agent and the Lenders shall have received a satisfactory opinion from its
counsel as to the form, content, and legal sufficiency of the Loan Documents.

 

  (g) Forecasts

 

The Lenders shall be satisfied with the Borrower’s Annual Business Plan for
2006.

 

  (h) Landlord Waivers

 

Landlord waiver agreements from landlords, in a form satisfactory to the Agent
shall have been executed by the landlords of real property leased to the
Obligors at the following premises: 151 Front Street West, Toronto; 555 West
Hastings Street, Vancouver; 605 1st Street SW, Calgary; 740 Rue Notre Dame,
Montreal and 5343 Dundas Street West, Suite 400, Toronto, and copies of each
shall have been delivered to the Agent.

 

  (i) Litigation

 

Except as set out in Schedule 7.1(i), there shall be no action or proceeding or
investigation pending or threatened against any Obligor which would, if
successful, result in the payment by any Obligor of more than one million
($1,000,000) dollars or have a Material Adverse Effect upon the ability of any
Obligor to perform its respective obligations under this Agreement.

 

  (j) No Substantial Damage

 

There shall have been no substantial damage by fire or other hazard to the
property or assets of any Obligor prior to the Closing Date.

 

  (k) No Material Adverse Change

 

There shall have been no Material Adverse Change since December 31, 2005 in the
affairs, assets, liabilities, financial condition or prospects of the Business
or of the Obligors or the Parents.

 

  (l) Governmental Approvals

 

Any and all government and/or regulatory approvals shall have been obtained, if
necessary, to the execution of this Agreement, the Security and satisfactory
evidence of same delivered to the Agent for review and approval.

 

  (m) Financial Position

 

The Lenders shall have made such investigations of the financial position of the
Obligors and the Parents and their respective property and assets and such other
matters relating to the Obligors and the Parents and the Business so as to have
satisfied itself as to the current financial position and future profitability
of the Business and other matters pertaining to the Obligors and the Parents
having a bearing on the Loan and the Security.

 

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  (n) Insurance

 

The Agent shall have received certified copies of insurance policies required to
be maintained pursuant to this Agreement on all assets of the Obligors; and the
Lender shall be named on such policies as a loss payee as its interest may
appear.

 

  (o) Bank of Montreal

 

Discharges of all personal property security registrations in favour of Bank of
Montreal or in the alternative, evidence satisfactory to the Agent that the
security interests therein are limited to cash collateral of $370,000.00
provided as security for an outstanding letter of credit.

 

  (p) Prior Amalgamation

 

A confirmation and acknowledgement from the Borrower in connection with the
amalgamation of Echo Online Internet Inc. and Globility Online Inc. with the
Borrower.

 

7.2 Conditions for Subsequent Advances

 

The Lenders shall not be called upon to make any Advances following the Closing
Date if the Agent and the Lenders shall have not received in form and content
acceptable to the Agent on the date of each subsequent Advance the following
documents, or the Agent and the Lenders shall not be satisfied with respect of
any of the following matters:

 

  (a) Representations and Warranties

 

A certificate of the president of each Obligor confirming the representations
and warranties set out in Article 6 hereof shall be true and correct as of the
date of such Advance.

 

  (b) No Default

 

The Obligors shall be in compliance with all of the terms, covenants and
conditions of this agreement which are binding upon them and an Event of Default
shall not have occurred and be continuing.

 

7.3 Material Inaccuracy

 

If at any time prior to the Closing Date or the date of any other Advance, the
Lenders or their professional advisors shall have been apprised of or shall have
determined on their own behalf that there is a material inaccuracy in written
information given by the Borrower, or any Obligor or other persons acting for or
on behalf of the Borrower or any Obligor, to the Lenders or others on their
behalf concerning the Borrower or the Business, the Lenders, acting reasonably,
may terminate this Agreement by written notice to the Borrower, and all monies
advanced hereunder, if any, prior to that time shall, together with all other
amounts then due to the Lenders on an acceleration of the Loan, be repayable
forthwith and the Borrower shall pay all reasonable legal fees incurred by the
Lender until the date of repayment.

 

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7.4 Conditions Solely for Lenders’ Benefit

 

All conditions precedent to the Loan set forth in Section 7.1 and Section 7.2
are imposed solely and exclusively for the benefit of the Lenders and their
successors and assigns, and no other Person is entitled to require satisfaction
of such conditions. Notwithstanding the non-fulfilment of any condition referred
to above, the Lenders may, in their sole and unfettered discretion, make
Advances of the Loan, and the making of the Advances by the Lenders, either
before or after the fulfilment of all applicable conditions, will not constitute
an approval, acceptance or waiver by the Lenders of any other condition or
Default.

 

ARTICLE 8

COVENANTS

 

8.1 Positive Covenants

 

The Obligors jointly and severally covenant and agree that so long as any
portion of the Loan shall be outstanding, the Borrower shall, unless varied or
waived in whole or in part from time to time in writing by the Lenders:

 

  (a) Payment

 

Punctually make or cause to be made all payments pursuant to Article 2,
Article 3 and Article 4 hereof and all other sums required to be paid by it
hereunder, on the dates, at the places and in the manner mentioned herein.

 

  (b) Business Licences

 

Do or cause to be done all things necessary to keep in full force and effect all
contracts, rights, franchises, leases, licenses and qualifications required for
the Borrower to carry on the Business in each jurisdiction in which it carries
on business or owns property.

 

  (c) Comply with Security

 

Comply at all times with all of the terms, provisions and obligations of the
Loan Documents.

 

  (d) Comply with Agreements

 

Comply with all of the terms, provisions and obligations contained in the Term
Debenture, the Capital Lease Obligations and the Operating Lease Obligations and
do, observe and perform or cause to be done, observed or performed all of its
obligations under all agreements, leases, licences, contracts and indentures and
do, observe and perform or cause to be done, observed and performed all matters
necessary to be done, observed or performed whether under Applicable Law or
otherwise, in each case where non-compliance would have a Material Adverse
Effect.

 

  (e) Maintain Authority

 

Continue to have good right and lawful authority to mortgage and charge its
undertaking, properties, rights and assets as provided in and by this Agreement.

 

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  (f) Business Operations

 

Carry on and conduct the Business (including the collection of accounts
receivable on a timely basis) in a proper and efficient manner and keep or cause
to be kept proper books of record and account and make or cause to be made
therein entries properly recording all dealings and transactions in relation to
its business all in accordance with GAAP, and at all reasonable times furnish or
cause to be furnished to the Lenders or its duly authorized agent or attorney
such information relating to its business as the Lenders may reasonably require.

 

  (g) Employee Benefit Plans

 

Pay and/or remit all employee and employer contributions under any pension plan
and employee benefit plan operated or maintained by each Obligor and, in all
other material respects, remain in compliance with the terms thereof in
accordance with such terms and applicable regulatory requirements and the rules
of such plans.

 

  (h) Taxes

 

Pay or cause to be paid all rents, taxes, tax instalments, rates, levies or
assessments, ordinary or extraordinary, government fees, dues or other
obligations to pay money validly levied, assessed or imposed upon the Obligors
or upon their respective undertaking, property and assets or any part thereof as
and when the same become due and payable, save and except when and so long as
the validity of any such rents, taxes, rates, levies, assessments, fees, dues or
obligations to pay is in good faith contested by the Borrower, as the case may
be, provided that in such case the Borrower shall satisfy the Lenders, and, if
reasonably required, furnish security satisfactory to the Lenders, that any such
contestation will involve no forfeiture of any part of the property or assets of
the Borrower, and exhibit to the Lenders, when required, the receipts and
vouchers establishing such payment and duly observe and conform to all
requirements of any governmental or municipal authority relative to any of its
undertaking, property and assets and all covenants, terms and conditions upon or
under which any of its undertaking, property and assets are held.

 

  (i) Maintain Security

 

Fully and effectually maintain and keep maintained the Security as valid and
effective security at all times.

 

  (j) Obtain Discharge

 

Obtain and register discharges of all security granted to third parties other
than the Lenders or the Agent and to lessors under Capital Lease Obligations and
Permitted Encumbrances as soon as possible after the obligations secured by such
security are discharged and, in any event, no later than 3 months following the
payment in full of all amounts owing pursuant to such Capital Lease Obligations
and Permitted Encumbrances.

 

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  (k) Financial Statements

 

Furnish to the Agent and the Lenders:

 

  (i) Monthly Statements – as soon as possible and, in any event, within thirty
(30) days after the end of each month a monthly income statement for the prior
month;

 

  (ii) Quarterly Statements - as soon as possible and, in any event, within
forty-five (45) days after the end of each quarter, a calculation of EBITDA for
the quarter, a quarterly and fiscal year to date financial report consisting of
consolidated and, if applicable unconsolidated unaudited financial statements of
the Borrower and the Shareholder and any subsidiaries of the Borrower conducting
any portion of its business in Canada, consisting of a balance sheet, a
statement of retained earnings, a statement of income and a statement of changes
in financial position on a consolidated basis, along with a comparison to budget
and the previous fiscal year and comments on any significant variances from
budget and a calculation of EBITDA for each month during the quarter;

 

  (iii) Annual Financial Statements - as soon as practicable and in any event
within ninety (90) days after the end of each fiscal year of the Borrower, the
audited consolidated financial statements of the Borrower and, if applicable,
the unaudited non-consolidated financial statements of the Borrower and any
subsidiaries of the Borrower conducting any portion of its business in Canada,
and in each case, consisting of a balance sheet, a statement of retained
earnings, a statement of income and a statement of changes in financial position
as at the end of and for the period commencing with the end of the previous
fiscal year and ending with the end of the current fiscal year, setting forth,
in each case, in comparative form, the figures for the previous fiscal year;

 

  (iv) Quarterly Compliance Certificates - within forty-five (45) days of each
quarter (commencing with the quarter ending March 31, 2006), a compliance
certificate in the form attached as part of Schedule 8.1(k)(iv) hereto signed by
the president and the vice-president, finance of the Borrower or any other
senior officer of the Borrower acceptable to the Lender certifying, among other
things, in their capacity as officers, compliance with all of the financial
covenants contained herein and setting forth in reasonable detail the
calculations set forth in Sections 8.1(t), (u), (v), (w) and 8.2(z) hereof; or
if not in compliance, setting forth in reasonable detail the reasons for such
non-compliance and the steps that will be taken to correct it;

 

  (v) Business plan and budget - as soon as practicable and, in any event not
later than thirty (30) days prior to the end of each fiscal year an Annual
Business Plan and a capital and operating budget for each of the twelve
(12) months in the forthcoming fiscal year with respect to the (A) balance
sheet, and (B) statement of earnings, together with such other information as
may be reasonably requested by the Lender and (C) statement of changes in
financial position; and

 

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  (vi) Other information - such other information respecting the affairs and
property of the Obligors and the Business as may reasonably be requested by the
Lenders.

 

  (l) Leases

 

Pay all rents and do, observe and perform in all material respects all other
obligations and all matters and things that are necessary or expedient to be
done, observed or performed under or by virtue of any leases or licences forming
part of the assets, property, undertaking of each Obligor, including all leases
described in Schedule 6.1(o) hereof;.

 

  (m) Corporate Existences

 

At all times maintain their corporate existence and diligently preserve all of
the rights, powers, privileges and goodwill owned by them.

 

  (n) Inspections

 

Permit the authorized agents of the Agent and the Lenders to inspect from time
to time the contracts, facilities, property, plant, books and records of each
Obligor at all times upon reasonable notice whether or not such times are during
normal business hours so as not to unduly interfere with the Business.

 

  (o) Insurance

 

Insure and keep insured with insurers acceptable to the Agent all buildings,
plant, structures, machinery, equipment, apparatus, materials and supplies of
the Obligors as are customarily insured by companies operating or owning similar
properties against loss or damage by such perils as are customarily insured
against by companies carrying on a similar business or operating or owning
similar properties and maintain fire and extended coverage, third party
liability, and business interruption insurance in amounts satisfactory to the
Agent; to obtain insurance reviews on an annual basis at the expense of the
Borrower, from Intech or another consultant satisfactory to the Agent and to
update insurance coverages in accordance with such consultant’s reports; and in
respect to all such policies the Lenders shall be named as loss payees as its
interests may appear; and on a timely basis pay all premiums and all other sums
of money payable for maintaining such insurance and give to the Agent evidence
of such insurance, the payment of such premiums and such assignments to the
Lenders at such times as the compliance certificates to be delivered to the
Agent and the Lenders pursuant to Section 8.1(k) are due, and deliver an
acknowledgement from the insurer that such policies may not be terminated or
cancelled without at least thirty (30) days’ prior notice to the Agent; provided
that, if premiums on the insurance required to be maintained by the Borrower
pursuant to this agreement are not paid, then such premiums may be paid by the
Lender and treated in all respects as part of the principal monies secured by
the Loan and shall bear interest at the Loan Interest Rate; to complete all
proof of loss forms in connection with any loss in such manner and at such time
or times as the Agent requires.

 

  (p) Repair

 

Maintain and keep all property and assets owned or held under lease by the
Obligors and used in the Business in good repair, working order and condition,
reasonable wear and tear

 

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excepted, and from time to time make all needed repairs, renewals and
replacements, and defend the same against all claims to preserve the Security,
continue to own, and will continue to be lawfully in possession of or have a
right of possession to all of its property and assets from time to time and will
continue to have good, right and lawful authority to mortgage, pledge and charge
its property and assets as provided for herein.

 

  (q) Government Approvals

 

Comply in all material respects with all Applicable Laws and obtain and maintain
in good standing all leases, licenses, permits and approvals from any and all
Governmental Authorities required from time to time with respect to carrying on
the Business.

 

  (r) Default

 

Notify the Lenders and the Agent immediately by telephone, and within five
(5) Business Days thereof in writing, upon obtaining knowledge of:

 

  (i) any Event of Default hereunder; or

 

  (ii) any event which but for notice or lapse of time or both would be an Event
of Default hereunder.

 

  (s) Litigation

 

Give to the Agent and the Lenders notice, including reasonable particulars, of
any action, suit or proceedings, to the knowledge of the Borrower, pending or
threatened against or affecting an Obligor before any court or before any
governmental department, commission or agency, or any arbitrator, in Canada or
elsewhere, which:

 

  (i) could involve a claim for money damages exceeding one million ($1,000,000)
dollars (excluding any portion of such claim the payment of which would be
covered by any insurance policy then in effect); or

 

  (ii) could result in any Material Adverse Effect.

 

  (t) Minimum EBITDA

 

Maintain EBITDA calculated on a consolidated basis of no less than ten million
five hundred thousand ($10,500,000) dollars per quarter measured at the end of
each fiscal quarter commencing March 31, 2006 until the Loan is repaid in full.

 

  (u) Leverage Ratio

 

Maintain at all times a Leverage Ratio, calculated on a consolidated basis
commencing March 31, 2006 until the Loan is repaid in full, of not more than
2.5:1 at the end of each quarter.

 

  (v) Current Ratio

 

Maintain at all times a Current Ratio, calculated on a consolidated basis, of no
less than 0.75:1 at all times.

 

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  (w) Forecasted EBITDA

 

Maintain at all times forecasted EBITDA of no less than forty-two million
($42,000,000) dollars calculated on a consolidated basis for the twelve month
period ending on the anniversary of the date of calculation.

 

  (x) Cash Balance

 

Maintain at the end of each quarter a cash balance, consisting of Cash and Cash
Equivalents of not less than five million ($5,000,000) dollars.

 

  (y) Environmental Laws

 

Conduct its business so as to comply in all respects with all applicable
Environmental Laws and regulations, including, without limitation,
environmental, land use, occupational safety or health laws, rules, regulations,
requirements or permits in all jurisdictions in which it is or may at any time
be doing business, including without limitation, the Canadian Environmental
Protection Act (Canada), the Environmental Protection Act (Ontario), the Clean
Air Act (U.S.), the Clean Water Act (U.S.), the Solid Waste Management Act
(U.S.), the Occupational Safety and Health Act (U.S.), the Consumer Product
Safety Act (U.S.) and the Hazardous Materials Transportation Act (U.S.);
provided however, that nothing contained in this subsection shall prevent the
Borrower from contesting, in good faith by appropriate legal proceedings, any
such law, regulation, interpretation thereof or application thereof, provided
further, that the Borrower shall comply with the order of any court or other
governmental body of applicable jurisdiction relating to such laws unless it
shall currently be prosecuting an appeal or proceedings for review and shall
have secured a stay of enforcement or execution or other arrangement postponing
enforcement or execution pending such appeal or proceedings for review.

 

  (z) Environmental Claim

 

Notify the Agent and the Lenders as soon as practicable and in any event within
five (5) days of receipt of any notice in connection therewith, if any Obligor:

 

  (i) receives notice of any violation or potential violation of any
Environmental Laws which may have occurred or been committed or is about to
occur or be committed;

 

  (ii) receives notice that any administrative or judicial complaint or order
has been issued or filed or is about to be issued or filed against an Obligor
alleging violations of any Environmental Laws or requiring the taking of any
action in connection with any Hazardous Substance;

 

  (iii) learns of the enactment of any Environmental Laws or the issuance of any
environmental orders which may have a Material Adverse Effect on the Business;
or

 

  (iv) knows that any Hazardous Substance has been brought onto any part of the
premises occupied by an Obligor in violation of Environmental Laws or that there
is any actual, threatened or potential release of any Hazardous Substance on,
from, in or under any part of such premises.

 

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  (aa) Hazardous Substances Indemnity

 

Shall, and shall cause each Obligor to, at all times defend, indemnify and hold
harmless the Agent and the Lenders and their respective directors, officers,
employees and agents, against any and all claims, liabilities, suits, actions,
debts, damages, costs, losses, obligations, judgments, charges and expenses, of
any nature whatsoever suffered or incurred by the Agent and the Lenders, whether
upon realization of the Security, or as a lender, or as successor to or assignee
of any right or interest of any Obligor, or as a result of any order,
investigation or action by any governmental authority relating to any business
or property, or as mortgagee in possession or successor or successor-in-interest
of any Obligor, or as a result of any taking of possession of all or any real
property by foreclosure, power of sale, deed in lieu of foreclosure or by any
other means relating to any Obligor under or on account of any applicable
Environmental Law (including without limitation the assertion of any Lien
thereunder) with respect to:

 

  (i) the Release of a Hazardous Substance, the threat of the Release of any
Hazardous Substance, or the presence of any Hazardous Substance affecting the
real or personal property interest of any Obligor (other than the presence of a
Hazardous Substance that is in compliance with Environmental Law), whether or
not the Hazardous Substance originates or emanates from the property of any
Obligor or any contiguous real property or personal property located thereon,
including any loss of value of such property as a result of any of the
foregoing;

 

  (ii) any costs of removal or remedial action incurred by any governmental
authority or any costs incurred by any other Person or damages from injury to,
destruction of, or loss of natural resources in relation to, the real property
or personal property of the Obligors or any contiguous real property or personal
property located thereon, including reasonable costs of assessing such injury,
destruction or loss incurred pursuant to Environmental Law;

 

  (iii) liability for personal injury or property damage arising by reason of
any civil law offences or quasi-criminal offences or under any statutory law or
common tort law theory including, without limitation, damages assessed for the
maintenance of a public or private nuisance or for the carrying on of a
dangerous activity at, near or with respect to the real or personal property of
any Obligor or elsewhere; and/or

 

  (iv) any other matter relating to the environment and Environmental Law
affecting the property or the operations and activities of any Obligor within
the jurisdiction of any Governmental Authority.

 

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  (bb) Further Assurances

 

At any and all times and at its expense, do, execute, acknowledge and deliver or
will cause to be done, executed, acknowledged and delivered all further acts,
deeds, conveyances, mortgages, transfers and assurances in law as the Lenders
shall reasonably require to carry out the intent of this Agreement. In
particular, the Borrower shall deliver within 30 days of the Closing Date, (i) a
corporate opinion from counsel for the Parents in form and substance
satisfactory to the Agent and its counsel in respect of the authorization,
execution, delivery and enforceability of the Security delivered by the Parents
in a form substantially similar to the opinions delivered by such counsel on or
about April 8, 2004; and (ii) an acknowledgement from Business Development Bank
of Canada (“BDC”) that the obligations of the Borrower to BDC consist solely of
the outstanding obligations pursuant to the letter of offer of credit dated
October 19, 2003.

 

  (cc) Parent and Shareholder Distributions

 

  (dd) Notify the Lender contemporaneously with the making of any distributions
or payments to the Parents, the Shareholder, Primus Telecommunications IHC, Inc.
(“IHC”) and Primus Telecommunications, Inc. (“PTI”) permitted pursuant to
Sections 8.2(h) and 8.2(k) hereof if the aggregate of all such distributions in
any rolling twelve month period ending on the date of the distribution exceed
forty-eight million ($48,000,000) dollars (plus amounts permitted to be paid to
PTI in accordance with section 8.2(o) hereof).

 

  (ee) Forward Subscription Agreement

 

Enforce on a timely basis all of the obligations of the Immediate Parent
pursuant to the Forward Subscription Agreement.

 

  (ff) Globility Guarantee and Security Agreement

 

Perform on a timely basis all of the covenants and honor all obligations
contained in the Globility Guarantee and Security Agreement.

 

8.2 Negative Covenants

 

The Obligors jointly and severally covenant and agree that so long as any
portion of the Loan shall be outstanding, neither the Borrower, nor where
applicable, the Shareholder, shall, without the prior written consent of the
Lenders:

 

  (a) Representations and Warranties

 

Cause or permit to exist any facts or things which would render untrue at any
time during which this Agreement is in effect, any representation or warranty
set forth in Article 6 hereof as at the date of any Advance.

 

  (b) Reorganization

 

Enter into any transaction that changes the current corporate structure of the
Obligors (whether by way of reconstruction, reorganization, consolidation,
amalgamation, merger, transfer, sale, lease or otherwise) or cause the existing
Business (other than that portion currently carried on by the Borrower’s
subsidiaries) to be conducted by any Subsidiary or Person controlled by the
Borrower (including the Borrower’s existing subsidiaries).

 

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  (c) Articles of Amendment

 

Effect any change to the constating documents of any Obligor.

 

  (d) Fiscal Year

 

Change its fiscal year end from December 31.

 

  (e) Change of Name

 

Change its name.

 

  (f) Business Plan

 

Amend or deviate in any material manner from the Annual Business Plan provided
to the Lender.

 

  (g) Liens

 

Except for Permitted Encumbrances, as otherwise permitted herein or as provided
for in the Senior Facility Agreement, create, issue, incur or suffer to exist
any Lien on all or any part of the property, assets or undertaking of any
Obligor, nor dispose of all or any part of the assets subject to the Security if
the proceeds of such disposition exceed one hundred thousand ($100,000) dollars
in any single instance with an aggregate limit of one million ($1,000,000)
dollars, out of the ordinary course of business without the prior written
approval of the Lenders, provided that the Lenders shall provide partial
releases, as are required in connection with the deminumus exceptions outlined
above.

 

  (h) Loans

 

Except as otherwise permitted herein, lend money to or invest money in any
Person, whether by loan, acquisition of shares, acquisition of debt obligations,
incorporation or in any other manner whatsoever or guarantee, endorse or
otherwise become surety for or upon the obligations of others except by
endorsement of negotiable instruments for deposit or collection in the ordinary
course of the Business in the aggregate in excess of one million ($1,000,000)
dollars, provided however that nothing herein shall prevent the making of
advances to the Shareholder or the Parents if at the time of such advance there
shall be no default under any of the financial covenants contained in
subsections 8.1(t), 8.1(u), 8.1(v), 8.1(w), 8.1(x) or 8.2(z).

 

  (i) Disposal of Assets

 

Except as otherwise permitted in Section 8.4 hereof, attempt to sell or sell or
otherwise dispose of all or substantially all or any portion of the property
necessary to conduct the Business, or the assets or undertaking of each Obligor
by conveyance, transfer or lease or sale in bulk.

 

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  (j) Capital Expenditures

 

Incur or make commitments to incur Capital Expenditures in excess of twenty-five
million ($25,000,000) dollars in any fiscal year (other than as permitted
pursuant to Section 8.1(k) hereof, provided that after the occurrence of a
Default or Event of Default which is continuing or to the extent a Default or
Event of Default would occur as a result thereof, no Capital Expenditures in
excess of one-hundred thousand ($100,000) dollars shall be permitted without the
consent of the Lenders.

 

  (k) Acquisitions

 

All or substantially all the acquired assets or shares of any Person, or a
division of any Person where total acquisition costs exceed five million
($5,000,000) dollars without first obtaining the written consent of the Lender.

 

  (l) Deleted Intentionally.

 

  (m) Expansion

 

Carry on any business other than the Business, reasonable expansions thereof,
make acquisitions (other than as permitted pursuant to Section 8.2(k) hereof),
or change in any manner, the nature of the Business.

 

  (n) Additional Debt

 

Except as otherwise permitted herein or with the written consent of the Lenders,
incur any additional debt for borrowed money or Operating Lease Obligations
(including rentals of new locations for the Business in excess of two-hundred
thousand ($200,000) dollars per annum per location but not including renewals at
market rates), nor enter into any Capital Lease Obligations nor assume, directly
or indirectly, any additional indebtedness for borrowed money, except:

 

  (i) loans from direct or indirect shareholders or any Restricted Subsidiary;

 

  (ii) any subordinated shareholders’ loans and any other subordinated debt on
terms approved by the Agent, provided that the Agent and the Lenders have
received any such postponement and subordination agreements from such lenders as
the Agent and the Lenders reasonably require;

 

  (iii) other indebtedness for Capital Lease Obligations not exceeding at any
one time two million ($2,000,000) dollars in the aggregate;

 

  (iv) the assumption of indebtedness in relation to an acquisition permitted
pursuant to Section 8.2(k) hereof; and

 

  (v) indebtedness not exceeding two million ($2,000,000) dollars incurred for
the purpose of completing an acquisition permitted pursuant to section 8.2(k)
hereof.

 

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  (o) Non-Arm’s Length Transactions

 

Except as otherwise permitted herein or for bona fide commercial transactions
with respect to the CLEC which have commercial value of not more than five
million ($5,000,000) dollars which transactions have been approved by all
shareholders of CLEC and ongoing service contracts between CLEC and the Borrower
at prices not less advantageous to the Borrower than prices for similar services
from arm’s length third parties and management fees set out on Schedule 8.2(o),
make any loan to, or enter into any contracts or other arrangements (written or
oral) material to its business or operations with, any of the officers,
directors or shareholders of either Obligor or any member of their immediate
families, or any firm or corporation in which such persons have an ownership
interest, or any Affiliate of the foregoing or engage in any business
relationship with respect to the sale of products produced or services provided
by or to the Business to or from any Shareholder, provided however that the
Borrower may, (i) on ordinary commercial terms at approximately fair market
value, purchase international traffic from PTI and (ii) incur obligations to IHC
with respect to royalties of up to 2.5% of gross revenues.

 

  (p) Sale of Shares

 

Sell or permit a sale or issuance of shares, options or other securities of the
Borrower or any subsidiary thereof.

 

  (q) Intellectual Property

 

Permit any licenses, trademarks or patents of any Obligor to fall into default
prior to the expiry thereof where same may be expected to have a Material
Adverse Effect, or commit any breach (or do any act or expend any funds in
furtherance of any course of action which may result in a breach) of any patent,
trademark or other intellectual licencing arrangement necessary or material to
the Business (collectively, the “Material IP Agreements”); provided that the
Borrower shall seek the Agent’s prior written consent on behalf of the Lenders
to any course of action that may permit any termination of such rights under the
Material IP Agreements, or result in any adverse claim against the Borrower
thereunder or in connection therewith, and in connection with any proposed
course of action, the Borrower shall provide the Lenders with all such opinions
as the Lenders shall, acting reasonably, require in connection therewith in
order to permit the Lenders to make their own determination (with the assistance
of counsel) as to the propriety of the Borrower’s proposed course of action.

 

  (r) Material Contracts

 

Enter into, revise, supplement, restate, replace or terminate any Material
Contract, except in the ordinary course of business, or assign its interest in
any Material Contract.

 

  (s) Auditors

 

Change its auditors from Deloitte & Touche LLP or another accounting firm
acceptable to the Lenders, acting reasonably.

 

  (t) Articles

 

Amend its Articles of Incorporation.

 

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  (u) Change of Control

 

Permit a change of control of the Borrower or the Shareholder.

 

  (v) Distributions, Dividends, Loan Repayments to Affiliates

 

Except as otherwise permitted herein, make to any Affiliiates (i) any payments
on account of the supply of goods or services (ii) loan repayments,
(iii) payments of interest or (iv) declare any dividends or (v) otherwise make
any distributions if after the making of such payment or distribution any
Obligor would be in Default of any terms of this Agreement.

 

  (w) Negative Pledge

 

Except as set out in Section 8.4 hereof, the Shareholder shall not assign nor
pledge, encumber or in any way permit a Lien to attach to the issued and
outstanding shares of the Borrower.

 

  (x) Intercorporate Note

 

Transfer, assign, pledge, encumber or in any way permit a Lien to attach to the
Intercorporate Note except for a transfer, assignment, pledge, encumbrance or
Lien to or in favour of the Ultimate Parent or any Restricted Subsidiary.

 

  (y) Amendments

 

Modify, amend supplement or in any way alter the terms of the Term Debenture,
the Forward Subscription Agreement or the Intercorporate Note.

 

  (z) Margin

 

Permit the aggregate of (i) the amount of the Loan outstanding and (ii) three
million ($3,000,000) dollars to exceed the aggregate of:

 

  (i) sixty-five (65%) percent of accounts receivable from customers which are
less than ninety (90) days old and unbilled charges for usage consumed or
utilized by customers during the prior forty-five (45) days of the Borrower
(which for greater certainty shall not include any amounts owing to the Borrower
from any Affiliate of the Borrower or CLEC); and

 

  (ii) fifteen million ($15,000,000) dollars.

 

8.3 Agent Entitled to Perform Covenants.

 

If any Obligor fails to perform any covenant on its part to be performed
hereunder, the Agent on behalf of the Lenders may in its sole and unfettered
discretion perform any of such covenants capable of being performed by it and,
if any such covenant requires the payment or expenditure of money, the Agent on
behalf of the Lenders may make payments or expenditures with its own funds, or
with money borrowed by or advanced to it for such purpose, but shall be under no
obligation to do so; and all sums so expended or advanced shall be at once
payable by the Borrower on demand and form part of the Indebtedness and shall
bear interest at the combined rate of interest set out in Sections 3.1 and 3.2
until paid, and shall be payable out of any funds coming into the possession of
the Agent and/or the Lenders in priority to the Indebtedness secured hereby;
provided, however, that no such performance or payment shall be deemed to
relieve the Borrower from any default or breach hereunder.

 

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8.4 Certain Permitted Transactions.

 

Notwithstanding anything to the contrary set forth in this Agreement, any other
Loan Document or any agreement executed in connection herewith or therewith,
until such time as an event of default shall have occurred as a result of a
default under any financial covenant contained in clauses (t), (u), (v), (w) or
(x) of Section 8.1 or subsection (z) of Section 8.2 hereof or an event of
default as a result of a failure to pay principal or interest to the Lenders
when due hereunder, nothing contained in this Agreement, any other Loan
Document, or any agreement executed in connection herewith or therewith shall
impose any encumbrance or restriction of any kind on the ability of any
Borrower, either Parent or any Restricted Subsidiary to (i) pay dividends or
make any other distributions permitted by applicable law on its capital stock,
(ii) pay any indebtedness owed to either Parent or any Restricted Subsidiary,
(iii) make loans or advances to either Parent or any Restricted Subsidiary, or
(iv) transfer to either Parent or to any Restricted Subsidiary any of its
property or assets that do not secure the Loan.

 

ARTICLE 9

SURVIVAL OF REPRESENTATIONS AND WARRANTIES

 

9.1 Survival.

 

All representations, warranties, covenants and agreements made herein and any
certificate, opinion or other document delivered by or on behalf of the Obligors
shall conclusively be deemed to have been relied upon by the Agent and the
Lenders, notwithstanding any prior or subsequent investigation by the Agent and
the Lenders and shall survive the making of all advances and the fulfilment of
all other transactions and deliveries contemplated hereunder, all of which shall
continue in full force and effect so long as any amount of principal or interest
under the Loan remains outstanding and unpaid. All statements contained in any
certificate or other document delivered to the Agent and Lenders under this
Agreement or in connection with any of the transactions contemplated hereunder
shall be deemed to be representations and warranties by the party making the
same.

 

ARTICLE 10

EVENTS OF DEFAULT

 

10.1 Default

 

It shall be an Event of Default (in each case, a “Default”) upon the happening
of any one or more of the following events:

 

  (a) Payment Default

 

The Borrower fails to pay any instalment of interest or principal or other
amount hereunder when due, with or without demand therefor having been made by
or on behalf of the Lender.

 

  (b) Financial Covenants

 

The Borrower fails to be in compliance with any of the covenants contained in
Sections 8.1(t), 8.1(u), 8.1(v), 8.1(w), 8.1(x) or Section 8.2(z).

 

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  (c) Security or Covenant Default

 

The Borrower or any subsidiary fails to perform or be in compliance with any of
the other terms or covenants of this Agreement or of any document constituting
the Security and such failure or non-compliance continues unremedied for a
period of ten (10) days after written notice thereof shall have been given by
the Agent to the Borrower.

 

  (d) Other Borrower Payment Obligations

 

The Borrower fails to pay, within ten (10) days of the date such payment is due,
any principal or interest in respect of the Capital Lease Obligations, whether
or not such obligation is declared to be due and payable prior to the express
maturity thereof, provided however that the failure to pay any disputed portion
of any Capital Lease Obligation in the context of a bona fide dispute with the
lessor under any applicable capital lease shall not be an Event of Default under
paragraph 10.1(d) hereof.

 

  (e) Other Obligations

 

Any Obligor has committed an event of default as defined and contained in
(i) the Globility Guarantee and Security Agreement (including the obligation to
post cash collateral as set out therein), (ii) the Intercorporate Note or any
other indebtedness for borrowed monies owed to the Shareholder, any of the
Parents or any subsidiary of any of them, (iii) any Capital Lease Obligation,
Operating Lease Obligation or any conditional sales contract, or (iv) any
instrument, indenture or document evidencing any of the above, or any other
agreement for borrowed money and has failed to remedy the same within any
curative period provided for therein and such event of default involves a
payment obligation in excess of fifty thousand ($50,000) dollars or has not been
waived by the applicable lender or security holder, and such event of default is
continuing.

 

  (f) Parent Obligations

 

Any Parent commits an event of default (as such term is defined in the
Indentures) with respect to any indebtedness under the Notes and any action is
taken by a creditor to accelerate and enforce its rights with respect to such
indebtedness. Any Parent commits an event of default (as such term is defined
therein) with respect to any indebtedness under the Term Loan Agreement dated
February 18, 2005 among the Intermediate Parent, the Ultimate Parent, the
Lenders noted therein, Lehman Brothers Inc. as Arranger and others and any
action is taken by or on behalf of a creditor to accelerate and enforce its
rights with respect to such indebtedness.

 

  (g) Liquidation

 

An order is made or a resolution is passed for the winding-up, dissolution or
liquidation of any Obligor or if a petition is filed or other process taken
diligently for the winding-up, dissolution or liquidation of any Obligor and
such petition is not diligently disputed by the Obligor in good faith within ten
(10) days of notification thereof.

 

  (h) Insolvency

 

Any Obligor commits or threatens to commit an act of bankruptcy or becomes
insolvent or goes into liquidation or makes a general assignment for the benefit
of its creditors or otherwise acknowledges its insolvency or if a bankruptcy
petition is filed or presented against any Obligor and is not diligently
contested in good faith and discharged within thirty (30) days after it is filed
or presented.

 

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A court having jurisdiction enters a decree or order for (i) relief in respect
of either Parent in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, (ii) appointment of
a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of either Parent or for all or substantially all of the property and
assets of either Parent, or (iii) the winding up or liquidation of the affairs
of either Parent and, in each case, such decree or order shall remain unstayed
and in effect for a period of 30 consecutive days.

 

  (i) CCAA

 

Any proceedings with respect to any Obligor are taken with respect to a
compromise or arrangement under the Companies Creditors Arrangement Act (or any
Act substituted therefor) or similar legislation of any other jurisdiction.

 

Either Parent (i) commences a voluntary case under any applicable bankruptcy,
insolvency or other similar law now as hereafter in effect, or consents to the
entry of an order for relief in an involuntary case under any such law,
(ii) consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
either Parent or for all or substantially all of the property and assets of
either Parent or (iii) effects any general assignment for the benefit of
creditors.

 

  (j) Distress

 

An encumbrancer or landlord takes possession of any part of the property or
leased premises of any Obligor, or if a distress or execution or any similar
process becomes enforceable or is enforced against any Obligor in connection
with a debt or claim in excess of one-hundred thousand ($100,000) dollars,
except where same is being contested actively and diligently in good faith by
appropriate and timely proceedings, or if a custodian or sequestrator or a
receiver or receiver and manager or any other officer with similar powers is
appointed for any Obligor or for any part of the property of any Obligor.

 

  (k) False Representation

 

Any representation or warranty contained herein or made in any certificate or
other document delivered by any Obligor or Parent or any persons acting for or
on behalf of any of them to the Agent or the Lenders shall have been determined
by the Agent, acting reasonably, to be false or is incorrect in any material
respect as of its date of making unless the Obligor and/or the Parent shall have
taken steps within ten (10) days of determining that such representation or
warranty is false or misleading, or having received written notice to that
effect from the Agent, to make such representation or warranty true and correct.

 

  (l) Cease to Carry on Business

 

Any Obligor shall cease to carry on in the ordinary course the Business or a
substantial part thereof.

 

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  (m) Default

 

Any Obligor defaults in observing or performing any of the agreements or
covenants in any material lease, licence, debenture, deed of trust or agreement
whereby any material property or rights of such Obligor may become liable for
forfeiture or where any such material lease, licence, debenture, deed of trust
or agreement would be subject to termination, the affected Obligor fails to cure
such default within any curative period provided for therein, and such default
has not been waived.

 

  (n) Share Ownership

 

Any shares of the Borrower cease to be wholly owned, directly or indirectly, by
the Ultimate Parent or any Restricted Subsidiary.

 

  (o) Employment

 

Any Obligor fails to meet its obligations to remit any withholding taxes in
respect of employee obligations within three (3) Business Days of the payment
date therefor.

 

10.2 Acceleration

 

At any time any one or more Events of Default shall have occurred and be
continuing:

 

  (a) all indebtedness of the Borrower to the Lenders hereunder shall, at the
option of the Lenders, immediately become due and payable upon written notice to
but without requirement for presentment, demand, protest or other notice of any
kind to the Borrower;

 

  (b) all indebtedness of the Borrower to the Lenders hereunder, if the same
shall have become immediately due and payable pursuant to this Section 10.2,
shall be paid as if the same were a prepayment pursuant to Article 4 and, in
particular, the Borrower shall be responsible for the Make Whole Premium and all
expenses payable pursuant to Article 11 hereof;

 

  (c) the Borrower shall pay to the Lenders as additional security for the
obligations of Globility to the Lenders or the Agent pursuant to the Globility
Guarantee and Security Agreement cash collateral in an amount equal to the
aggregate of (i) the principal amount of the loan advanced by the Lenders to
Globility (ii) all interest thereon for the period commencing on the date of the
Event of Default and ending on the Maturity Date and (iii) all other amounts
payable to the Lenders or the Agent pursuant to the loan agreement between the
Lenders, the Agent, Globility and MIPPS dated April 8, 2004, as amended and/or
restated from time to time;

 

  (d) all Security and other Loan Documentation shall thereupon, at the option
of the Lenders, become enforceable by the Agent on behalf of the Lenders.

 

10.3 Consultant

 

The Obligors agree that, at any time while an Event of Default has occurred and
is continuing, upon written request delivered by the Agent, they shall appoint a
financial consultant (hereinafter referred to as the “Consultant”), for the
purposes of reviewing their respective operations from time to time. The terms
of the Consultant’s scope of duties shall be settled by the Borrower with

 

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the consent of the Agent, provided that such terms may be settled by the Agent
if agreement with the Borrower is not reached within fifteen (15) days of the
date of the notice. The Obligors consent at all times to a free exchange of
information between the Agent and the Consultant, whether or not the Obligors
are apprised of the occurrence of such exchange of information or the
particulars of any such information exchanged at any time.

 

10.4 Remedies Cumulative

 

The rights and remedies of the Agent and the Lenders hereunder are cumulative
and in addition to and not in substitution for any rights or remedies provided
by law.

 

10.5 Benefit of Security; Set-Off; Sharing of Payment

 

All Security shall be held by the Agent for the rateable benefit of all of the
Lenders, and all proceeds therefrom which are distributable to the Lenders shall
be applied for the rateable benefit of the Lenders irrespective of any priority
to which any Lender may otherwise be entitled. Notwithstanding the foregoing or
any other provision of this Agreement, if there shall exist at any time any
amount payable by any Lender to any other Lender or the Agent pursuant to any
provision of the Loan Documents, then such amount shall be taken into account
when calculating, and an appropriate portion thereof shall be paid from, any
proceeds of Security otherwise payable to such first Lender.

 

ARTICLE 11

FEES

 

11.1 Expenses

 

Whether or not any monies are advanced under the Loan, the Borrower agrees to
pay from time to time all reasonable out-of-pocket expenses, disbursements and
reasonable legal expenses of the Agent and the Lenders in connection with its
due diligence on the Obligors and the Parents, the preparation of this agreement
and the Loan Documents, and reasonable costs in connection with the ongoing
maintenance and enforcement of the Security and renewals of registrations when
necessary. On the Closing Date, the legal fees and disbursements and other
disbursements incurred by the Agent or the Lenders to such date shall be paid by
the Borrower.

 

11.2 Arrangement Fee

 

An arrangement fee of two hundred and forty thousand ($240,000) dollars for
services rendered up to and including the Closing Date shall be payable by the
Borrower to the Lenders on the Closing Date.

 

ARTICLE 12

LENDER CONSENT

 

12.1 Online Amalgamation

 

The Agent on behalf of the Lenders hereby acknowledges that on March 31, 2005
Primus Telecommunications Canada Inc. (predecessor to the Borrower) amalgamated
with Magma Communications Ltd. (the “Magma Amalgamation”) to form Primus
Telecommunications Canada Inc. (“Amalco”) and on December 31,2005 Amalco
amalgamated with Echo Online

 

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Internet Inc. and Globility Online Incorporated to form the Borrower (the
“Online Amalgamation”). The Agent on behalf of the Lenders hereby consents to
the Magma Amalgamation and to the Online Amalgamation.

 

ARTICLE 13

THE AGENT

 

13.1 Appointment

 

The Lenders hereby appoint the Agent to act as their agent as herein specified
and, except as may be specifically provided to the contrary herein, each of the
Lenders hereby irrevocably authorizes the Agent, as the agent of such Lender, to
take such action on its behalf under or in connection with the Loan Documents
and to exercise such powers thereunder as are delegated to the Agent by the
terms thereof and such other powers as are reasonably incidental thereto which
it may be necessary for the Agent to exercise in order that the provisions of
the Loan Documents are carried out. The Lenders hereby acknowledge and agree
that the Agent is the holder of an irrevocable power of attorney (within the
meaning of the Civil Code of Quebec) from the Lenders for the purpose of holding
any of the Security or any other security granted by any Person with respect to
the liabilities of the Borrower under the Loan Documents, and the Agent hereby
agrees to act in such capacity. The Agent may perform any of its duties under
the Loan Documents by or through its agents. The Borrower shall not be concerned
to enquire whether the powers which the Agent is purporting to exercise have
become exercisable or otherwise as to the propriety or regularity of any other
action on the part of the Agent, and accordingly insofar as the Borrower is
concerned, the Agent shall for all purposes hereof be deemed to have authority
from the Lenders to exercise the powers and take the actions which are in fact
exercised and taken by it.

 

13.2 Indemnity from Lenders

 

The Lenders agree to rateably indemnify the Agent (to the extent that the Agent
is not promptly reimbursed by the Borrower on demand) from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any nature or kind whatsoever which
may be imposed on, incurred by, or asserted against the Agent in its capacity as
agent hereunder which in any way relate to or arise out of the Loan Documents or
any action taken or omitted by the Agent under the Loan Documents; provided that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements which result from the Agent’s gross negligence or wilful
misconduct. Without limitation, each Lender agrees to reimburse the Agent
promptly upon demand for its rateable share of out-of-pocket expenses (including
all fees and disbursements of legal counsel) incurred by the Agent in connection
with the preparation of the Loan Documents and the determination or preservation
of any rights of the Agent or the Lenders under, or the enforcement of, or legal
advice in respect of rights or responsibilities under, the Loan Documents, to
the extent that the Agent is not promptly reimbursed for such expenses by the
Borrower on demand.

 

13.3 Exculpation

 

The Agent shall have no duties or responsibilities except those expressly set
forth in the Loan Documents. Neither the Agent nor any of its officers,
directors, employees or agents shall be

 

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liable for any action taken or omitted to be taken under or in connection with
the Loan Documents, unless such act or omission constitutes gross negligence or
wilful misconduct. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of the Loan
Documents a fiduciary relationship with any Lender (unless and to the extent
that the Agent receives money or property on behalf of a Lender) and nothing in
the Loan Documents, express or implied, is intended to or shall be construed as
to impose upon the Agent any obligation except as expressly set forth therein.
None of the Lenders shall have any duties or responsibilities to any of the
other Lenders except as expressly set forth in the Loan Documents. The Agent
shall not be responsible for any recitals, statements, representations or
warranties in any of the Loan Documents or which may be contained in any other
document subsequently received by the Agent or the Lenders from or on behalf of
any Obligor or for the authorization, execution, effectiveness, genuineness,
validity or enforceability of any of the Loan Documents, and shall not be
required to make any inquiry concerning the performance or observance by any
Obligor of any of the terms, provisions or conditions of any of the Loan
Documents. Each of the Lenders severally represents and warrants to the Agent
that it has made and will continue to make such independent investigation of the
financial condition and affairs of the Obligors as such Lender deems appropriate
in connection with its entering into of any of the Loan Documents and the making
and continuance of any Advances hereunder, that such Lender has and will
continue to make its own appraisal of the creditworthiness of the Obligors and
that such Lender in connection with such investigation and appraisal has not
relied upon any information provided to such Lender by the Agent.

 

13.4 Reliance on Information

 

The Agent shall be entitled to rely upon any writing, notice, statement,
certificate, facsimile, telex or other document or communication believed by it
to be genuine and correct and to have been signed, sent or made by the proper
person or persons, and, with respect to all legal matters pertaining to the Loan
Documents and its duties thereunder, upon the advice of counsel selected by it.

 

13.5 Knowledge and Required Action

 

The Agent shall not be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default (other than the non-payment of any principal,
interest or other amount to the extent the same is required to be paid to the
Agent for the account of the Lenders) unless the Agent has received notice from
a Lender or the Borrower specifying such Default or Event of Default and stating
that such notice is given pursuant to this Section 13.5. In the event that the
Agent receives such a notice, it shall give prompt notice thereof to the
Lenders, and shall also give prompt notice to the Lenders of each non-payment of
any amount required to be paid to the Agent for the account of the Lenders. The
Agent shall, subject to Section 13.6, take such action with respect to such
Default or Event of Default as shall be directed by the Lenders in accordance
with Article 13; provided that, unless and until the Agent shall have received
such direction, the Agent may, but shall not be obliged to, take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders; and
provided further that the Agent in any case shall not be required to take any
such action which it determines to be contrary to the Loan Documents or to any
Applicable Law.

 

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13.6 Request for Instructions

 

The Agent may at any time request instructions from the Lenders with respect to
any actions or approvals which, by the terms of any of the Loan Documents, the
Agent is permitted or required to take or to grant, and the Agent shall be
absolutely entitled to refrain from taking any such action or to withhold any
such approval and shall not be under any liability whatsoever as a result
thereof until it shall have received such instructions from the Lenders who have
committed to advance 50.1% of the Loan. No Lender shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting under the Loan Documents in accordance with instructions from all the
Lenders. The Agent shall in all cases be fully justified in failing or refusing
to take or continue any action under the Loan Documents unless it shall have
received further assurances to its satisfaction from all the Lenders of their
indemnification obligations under Section 13.2 against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
such action, and unless it shall be secured in respect thereof as it may deem
appropriate.

 

13.7 Exchange of Information

 

The Borrower agrees that each Lender and the Agent may provide to the other
Lenders or the Agent such information concerning the financial position and
property and operations of the Obligors as, in the opinion of such Lender or the
Agent, is relevant to the ability of each of the Obligors to fulfil its
respective obligations under or in connection with the Loan Documents.

 

13.8 The Agent, Individually

 

With respect to the share of the Loan made available by it and the Loan
Documents to which it is a party, the Agent shall have the same rights and
powers hereunder as any other Lender and may exercise such rights and powers as
though it were not the Agent, and the term “Lenders” shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity.

 

13.9 Resignation and Termination

 

If at any time (i) the Agent shall deem it advisable, in its sole discretion, it
may deliver to each of the Lenders and the Borrower written notification of its
resignation insofar as it acts on behalf of the Lenders pursuant to this
Article 13, or (ii) the Agent is in default of any of its obligations hereunder
and the Lenders shall deem it advisable, in their sole discretion, they may
deliver to the Agent and the Borrower written notification of the termination of
the Agent’s authority to act on behalf of the Lenders pursuant to this
Article 13, such resignation or termination to be effective upon the date of the
appointment by the Lenders of a successor which shall assume all of the rights,
powers, privileges and duties of the Agent hereunder, which appointment shall be
promptly made from among the remaining Lenders and written notice thereof shall
be given to the Borrower concurrently with such appointment. If in the case of
notice of resignation by the Agent no appointment of a successor Agent has been
made by the Lenders within thirty (30) days after such notice has been
delivered, the resigning Agent may make such appointment.

 

13.10 Actions by Lenders

 

Any approval (including without limitation any approval of or authorization for
any amendment to any of the Loan Documents), instruction or other expression of
the Lenders

 

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hereunder may be obtained by an instrument in writing signed in one or more
counterparts by all the Lenders (which instrument in writing, for greater
certainty, may be delivered by facsimile as provided in Section 14.3).

 

13.11 Provisions for Benefit of Lenders Only

 

The provisions of this Article 13 shall be operative as between the Lenders and
the Agent only, and the Borrower shall not have any rights under or be entitled
to rely for any purposes upon such provisions.

 

ARTICLE 14

GENERAL

 

14.1 No Waiver of Rights

 

No course of dealing between any Obligor and the Lenders and no delay on the
part of the Agent or any Lender under this Agreement or any other agreement
between the Agent, the Lenders and the Obligor shall operate as a waiver of any
rights of the Agent or the Lenders hereunder.

 

14.2 No Waiver of Defaults

 

No failure or delay on the part of the Agent or any Lender in exercising any
right or privilege hereunder and no waiver as to any default by the Shareholder
or any Obligor shall operate as a waiver thereof unless made in writing and
signed by the appropriate officer of the Agent. Any written waiver by the Agent
or the Lenders will not preclude the further or other exercise by the Agent or
the Lenders of any right, power or privilege hereunder or extend or apply to any
further default by any Obligor. For greater certainty, any failure or delay on
the part of the Agent or the Lenders in requiring strict compliance with any
time period prescribed herein, will not preclude the Agent or the Lenders from
reasserting the strict compliance with any such time period whereupon the
Obligors shall so comply.

 

14.3 Notices

 

Any notice to be given hereunder shall be in writing and may be effectively
given by delivering the same at the addresses hereinafter set forth or by
sending the same by prepaid registered mail, or telefax to the Lenders or the
Borrower at such addresses. Any notice so mailed shall be deemed to have been
received on the third (3rd) Business Day following the mailing thereof and if
given by delivery or telefax, the same shall be deemed to have been received
upon delivery or upon transmission (with appropriate answer back). The delivery,
mailing, and telefax address of the parties for the purpose hereof shall be:

 

  (a) as to the Borrower and the Shareholder:

 

     5343 Dundas Street West

     Suite 400

     Toronto, ON M9B 6K5

     Attention: President

     Telecopier: (416) 236-7391

 

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  (b) as to the Lenders and the Agent:

 

     The Manufacturers Life Insurance Company

     200 Bloor St. East NT - 6

     Toronto, ON M4W 1E5

 

     Attention:      Assistant Vice-President

     Telecopier:     416-926-5737

 

14.4 Method of Payment

 

All payments to be made by the Borrower to the Lenders hereunder shall be made
by means of cheque of immediately available funds to such bank accounts as the
Lenders advise from time to time.

 

14.5 Successors and Assigns

 

This Agreement shall be binding upon and enure to the benefit of the parties
hereto and their successors and assigns; provided however, the Borrower shall
not assign any of its rights or obligations hereunder without the prior written
consent of the Lenders. In addition to any transfer required to be made to any
other Lender hereunder or required by Applicable Law to be made to any Person, a
Lender may assign or transfer any part of its rights and obligations in respect
of its commitment to make Advances hereunder or any portion of the Loan held by
it, to such Persons, at such times and upon such terms as it may determine,
without any obligation to obtain any consent of any Obligor or Parent; provided
that:

 

  (i) so long as no Event of Default has occurred and is then continuing,
(A) such Lender shall have first received the prior written consent of the Agent
and each other Lender permitting it to do so; (B) such Lender shall have
received the prior consent of the Borrower acting reasonably; (C) the proposed
assignee or transferee shall not be a non-resident of Canada as such term is
defined in the Income Tax Act (Canada); and (D) such Lender shall not assign or
transfer its rights to a competitor of the Business; it being agreed that the
foregoing restrictions shall not apply where an Event of Default has occurred
and is continuing; and

 

  (ii) the assigning or transferring Lender (the “Assignor”) shall obtain from
the assignee (the “Assignee”) an undertaking of the Assignee, addressed to the
parties to this Agreement (as such parties may be constituted at such time),
whereby the Assignee agrees to be bound by this Agreement in the place and stead
of the Assignor to the extent of the rights and obligations of the Assignor in
respect of the amount of the Loan agreed to be advanced by such Lender that has
been assigned or transferred to the Assignee.

 

14.6 Governing Law

 

This Agreement, the Security and all certificates and other documentation
delivered to the Agent or the Lenders shall be construed and interpreted in
accordance with the laws of the Province of Ontario except as expressly stated
in any other document and each Obligor agrees to attorn to the jurisdiction of
the Province of Ontario.

 

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14.7 Entire Agreement

 

This Agreement embodies the entire agreement and understanding between the
parties hereto and supersedes all prior agreements and undertakings whether oral
or written relative to the subject matter hereof, including the loan agreement
dated for reference February 11, 2003 and the First Amendment to the Loan
Agreement dated March 18, 2003 and by a Second Amendment to the Loan Agreement
dated December 8, 2003 the amended and restated loan agreement dated April 8,
2004 and the first amendment to the amended and restated loan agreement dated
October 5, 2004 (collectively, the “Original Loan Agreement”), the term sheet
from the Lender dated February 9, 2004 and the Offer to Finance dated
February 19, 2004.

 

This Agreement is and shall for all purposes be deemed to be an amendment and
restatement of the provisions of the Original Loan Agreement. This Agreement
shall supersede the Original Loan Agreement insofar as it constitutes the entire
agreement between the parties concerning the subject matter of this Agreement,
but does not constitute a novation of the Original Loan Agreement. All principal
amounts outstanding under the Original Loan Agreement and interest accrued
thereon shall be deemed to be principal amounts outstanding and interest accrued
thereon under this Agreement.

 

14.8 Modification

 

Except as specifically set out herein, no term or provision hereof may be
changed, modified, waived, terminated or discharged, in whole or in part, except
by a writing which is dated and signed by the Borrower and the Agent on behalf
of the Lenders.

 

14.9 Headings

 

The division of this Agreement into sections and subsections and the insertion
of headings are for convenience and reference only and shall not affect the
construction or interpretation of this Agreement.

 

14.10 Number

 

Words importing the singular number only shall include the plural and vice
versa, words importing the masculine gender shall include the feminine and
neuter genders and words importing persons shall include firms and corporations
and vice versa.

 

14.11 Words and Phrases

 

Words such as “hereunder”, “hereto”, “hereof”, and “herein” shall, unless the
context clearly indicates to the contrary, refer to the whole of this Agreement
and not to any particular article, section, subsection, paragraph or schedule
hereof. Words importing the singular include the plural thereof, and vice versa,
and words importing gender include the masculine, feminine and neuter genders
and words importing individual persons shall include firms and corporations and
vice versa. The word “including” shall mean including, without limitation.

 

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14.12 Permissible Forms of Writing

 

In this Agreement, the words “in writing “ or “written” means any form of
written communication, and shall include a communication by means of telecopier
or facsimile device.

 

14.13 Statutory References

 

Any reference in this Agreement to any Act or Statute or section thereof shall
be deemed to be a reference to such Act or Statute or section as it exists now.

 

14.14 Severable Provisions

 

The provisions of this Agreement are severable, and if any one or more
provisions may be determined to be unreasonable or illegal or otherwise
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable. In the event that any provision of this Agreement is
found to be unenforceable, the parties agree to reform such provision, to the
maximum extent permitted by law and if a court indicates what reforms would make
such provision enforceable, the parties will abide by what that court
determines.

 

14.15 Execution of Additional Documents

 

From time to time, the Obligors shall, at the request of the Agent or the
Lenders, execute and deliver such additional transfers, instruments, documents
and other assurances as may, in the opinion of counsel for the Agent or the
Lenders, be reasonably required effectually to carry out the intent of this
agreement. Such additional transfers, instruments, documents and other
assurances shall be in form satisfactory to counsel for the Agent and the
Lenders.

 

14.16 Other Definitional Terms

 

The terms “this Agreement”, “hereby”, “herein”, “hereunder”, “hereto” and
similar expressions refer to this Agreement and not to any particular section,
subsection or portion thereof and include every amendment or instrument
supplementary thereto or an implementation hereof.

 

14.17 Counterparts

 

This Agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original and all of which together shall constitute one and
the same agreement.

 

14.18 Conflict

 

To the extent that any term, condition, representation, covenant or other
provision contained in the Security or other instruments delivered pursuant to
this Agreement is at any time inconsistent or conflicts with any term,
condition, representation, covenant or other provision contained in this
Agreement, then this Agreement shall govern and the Borrower shall be deemed not
to be in default under such first-mentioned term, condition, representation,
covenant or other provision, so long as it complies with the terms, conditions,
representations, covenants and other provisions contained in this Agreement. For
greater certainty, to the extent the Security contains any covenants,
representations, warranties or events of default which are not in any way
addressed or contained in this Agreement, such covenants, representations,
warranties or events of default shall not be considered inconsistent with or
conflict with this Agreement.

 

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14.19 Confidentiality

 

Except as required by law and other than to its employee and professional
advisors, there shall be no public announcements or disclosures by any Obligor
regarding this transaction or the identity of the Lender. Prior to making any
required disclosure with respect to the transaction contemplated by this Loan
Agreement, the Agent will provide a draft copy of the disclosure materials and
provide the Agent with the opportunity to comment thereon.

 

[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]

 

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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first above written.

 

THE MANUFACTURERS LIFE INSURANCE COMPANY Per:  

 

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

Name:     Title:     Per:  

 

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

Name:     Title:    

PRIMUS TELECOMMUNICATIONS

CANADA INC.

Per:  

 

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

Name:     Title:     Per:  

 

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

Name:     Title:     3082833 NOVA SCOTIA COMPANY Per:  

 

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

Name:     Title:     Per:  

 

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

Name:     Title:    

 

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SCHEDULE A

MAKE WHOLE PREMIUM

 

In the Loan Agreement and this Schedule:

 

“Make Whole Premium” means the present value of the Monthly Cashflow Shortfall
Amounts until the Maturity Date discounted utilizing the Monthly Discount Rate.
The Make Whole Premium shall not be less than zero.

 

“Monthly Cashflow Shortfall Amounts” means the amounts calculated at the end of
each month, commencing the month in which prepayment is made until the Maturity
Date, being the product of the Monthly Loan Principal Differential multiplied by
the Monthly Interest Differential.

 

“Monthly Loan Principal Differential” means the differential calculated at the
end of each month, commencing the month in which prepayment is made until the
Maturity Date of the Loan, between (i) the Loan balance outstanding owing to the
Lender at the end of each month without regard for the prepayment; and (ii) the
Loan balance owing to the Lender outstanding at the end of each month after
giving effect to the prepayment.

 

“Monthly Interest Differential” means the differential between (i) the Loan
Interest Rate divided by 12; and (ii) the Monthly Discount Rate. In the event
that the Monthly Interest Differential is less than zero, the Make Whole Premium
shall be zero.

 

“Maturity Date” has the meaning set out in Section 1.1(uu) of the Loan
Agreement.

 

“Monthly Discount Rate” means the Monthly Equivalent Reinvestment Rate divided
by 12.

 

“Monthly Equivalent Reinvestment Rate” means the annual interest rate compounded
monthly that is equivalent to the Reinvestment Rate compounded monthly.

 

“Reinvestment Rate” means the Government of Canada Bond Rate plus 50 basis
points.

 

“Government of Canada Bond Rate” means the average annual yield to maturity on a
Government of Canada bond, compounded semi-annually, with a term equal to the
then remaining term to the Maturity Date of the Loan, as published in a
nationally recognized financial business publication, in effect at the close of
business (Toronto time) two (2) Business Days prior to the date of
determination.

 

“Loan Interest Rate” has the meaning set out in Section 1.1(qq) of the Loan
Agreement.

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SCHEDULE 8.1(k)(iv)

 

COMPLIANCE CERTIFICATE

 

TO:    THE MANUFACTURERS LIFE INSURANCE COMPANY (“Manulife”) AND TO:    [INSERT]
FROM:    PRIMUS TELECOMMUNICATIONS CANADA INC. (the “Borrower”) RE:    SECOND
AMENDED AND RESTATED LOAN AGREEMENT DATED AS OF January     , 2006, (the “LOAN
AGREEMENT”) AMONG, THE BORROWER, 3082833 NOVA SCOTIA COMPANY AND MANULIFE

 

All capitalized terms used in this Certificate shall have the meaning ascribed
thereto in the Loan Agreement unless otherwise indicated.

 

We,                                         , President,
and                                         , Vice-President, Finance and Chief
Financial Officer of the Borrower, do hereby certify in our capacity as officers
of, and for and on behalf of the Borrower, and without personal liability, that
[during the fiscal quarter of the Borrower from                                ,
to                                  or the fiscal year of the Borrower ended ·,
20     (the “Period”)]:

 

2. Calculations: For the purposes of the calculation of the Borrower’s
compliance with certain covenants contained in the Loan Agreement for the
Period, the following was utilized:

 

(a)    Current Assets

   =   

$•

    

(b)    Current Liabilities

   =   

$•

    

(c)    EBITDA

   =   

$•

    

(d)    Interest Expense

   =   

$•

    

(e)    Total Debt

   =   

$•

    

(f)     Amounts paid to Shareholder, Parent PTI, and IRC in past twelve months
other than payments for international traffic.

 

3. Minimum EBITDA – Section 8.1 (t): EBITDA for each of the last quarter in the
Period was •

 

4. Leverage Ratio - Section 8.1(u): The Leverage Ratio at the end of the Period
was •.

 

5. Current Ratio - Section 8.1(v): The Current Ratio at the end of the Period
was •.

 

6. Forecasted EBITDA – Section 8.1 (w): Forecasted EBITDA for the twelve month
period ending on the 1st anniversary of the last day of the Period is greater
than/less than [delete one] $42,000,000.

 

7. Cash Balance- Section 8.1 (x) – The cash balance at the end of the Period
calculated in accordance with Section 8.1 (x) was $•.

 

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8. Distributions - Sections 8.2(h) and (v): No distributions or payments of any
kind have been made contrary to Sections 8.2(h) or (v) of the Loan Agreement.

 

9. Capital Expenditures - Section 8.2(j): Capital Expenditures during the
current fiscal year to the end of the current Period are $•.

 

10. Margin – Section 8.2(z). The amount of accounts receivable of the Borrower
calculated as described in section 8.2(z) at the end of the Period was ·.

 

11. All representations and warranties contained in the Loan Agreement are true
and correct as of the date hereof and there exists no Event of Default under the
Loan Agreement as of the date hereof.

 

[If any of the above items are not in compliance with the Loan Agreement,
provide reasonable details of non-compliance and corrective measures.]

 

CERTIFIED this      day of                     , 200·.

 

 

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President

 

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

Vice-President, Finance and Chief Financial Officer

 

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