Exhibit 4.3

                                CDN. $30,000,000
                            REVOLVING CREDIT FACILITY

                           MITEL NETWORKS CORPORATION,
                                   As Borrower

                                     - and -

                                BANK OF MONTREAL,
                            As Administrative Agent,
                            Lead Arranger and Lender

                                    - and -

                          THE LENDERS FROM TIME TO TIME
                                 PARTIES HERETO

                    ---------------------------------------
                     AMENDED AND RESTATED CREDIT AGREEMENT
                          MADE AS OF FEBRUARY 27, 2003
                    ---------------------------------------


<PAGE>

                                TABLE OF CONTENTS

                                    ARTICLE 1
                                 INTERPRETATION

         1.1       Definitions................................................2
         1.2       Headings..................................................16
         1.3       Extended Meanings.........................................16
         1.4       References to the Administrative Agent and Lenders........16
         1.5       Accounting Terms and Practices............................16
         1.6       Non-Banking Days..........................................17
         1.7       References to Time of Day.................................17
         1.8       Severability..............................................17
         1.9       Currency..................................................17
         1.10      References to Statutes....................................17
         1.11      References to Agreements..................................17
         1.12      Consents and Approvals....................................17
         1.13      Schedules.................................................18

                                    ARTICLE 2
                                  THE FACILITY

         2.1       The Facility..............................................18
         2.2       Purpose...................................................18
         2.3       Availability..............................................18
         2.4       Making of an Advance......................................19
         2.5       Participation of Each Lender..............................20
         2.6       Repayment of the Facility.................................20
         2.7       Cancellation or Reduction of the Facility.................21
         2.8       Application of Repayments.................................22
         2.9       Interest on Prime Rate Advances...........................23
         2.10      Interest on U.S. Base Rate Advances.......................23
         2.11      Libor Advances............................................23
         2.12      Method and Place of Payment...............................24
         2.13      Commitment Fees...........................................25
         2.14      Conversion Options........................................25
         2.15      Execution of Notices......................................27
         2.16      Evidence of Indebtedness..................................27
         2.17      Interest on Unpaid Costs and Expenses.....................28
         2.18      Criminal Rate of Interest.................................28
         2.19      Compliance with the Interest Act (Canada).................28
         2.20      Nominal Rate of Interest..................................28


                                      -i-
<PAGE>

                                    ARTICLE 3
                                LETTERS OF CREDIT

         3.1       Term and Availability.....................................28
         3.2       Reimbursement.............................................29
         3.3       Indemnity for Costs.......................................30
         3.4       Fees......................................................30

                                    ARTICLE 4
                 BANKERS' ACCEPTANCES AND BA EQUIVALENT ADVANCES

         4.1       Form of Bankers' Acceptance Advance and Interest..........30
         4.2       Minimum Amount............................................31
         4.3       Term and Interest Periods.................................31
         4.4       Purchase of Drafts, Acceptance Fee and Interest...........31
         4.5       Payment on Maturity.......................................31
         4.6       Waiver of Days of Grace...................................32
         4.7       No Market.................................................32

                                    ARTICLE 5
                   CHANGE OF CIRCUMSTANCES AND INDEMNIFICATION

         5.1       Increased Costs...........................................32
         5.2       Illegality................................................34

                                    ARTICLE 6
                        CONDITIONS PRECEDENT TO DRAWDOWN

         6.1       Conditions for Closing....................................34
         6.2       Conditions for Subsequent Drawdowns.......................37

                                    ARTICLE 7
                         REPRESENTATIONS AND WARRANTIES

         7.1       Representations and Warranties............................37
         7.2       Survival of Representations and Warranties................42

                                    ARTICLE 8
                                    COVENANTS

         8.1       Affirmative Covenants.....................................42
         8.2       Negative Covenants........................................48
         8.3       Financial Covenants.......................................50

                                    ARTICLE 9
                                   GUARANTEES

         9.1       Guarantors to Provide Guarantees..........................51


                                      -ii-
<PAGE>

                                   ARTICLE 10
                                    SECURITY

         10.1      Borrower's Security Documents.............................51
         10.2      Guarantors' Security Documents............................52

                                   ARTICLE 11
                            DEFAULT AND ACCELERATION

         11.1      Events of Default.........................................53
         11.2      Acceleration..............................................55
         11.3      Remedies Cumulative and Waivers...........................56
         11.4      Suspension of Lenders' Obligations........................56
         11.5      Application of Payments After an Event of Default.........56

                                   ARTICLE 12
                               SUCCESSOR COMPANIES

         12.1      Certain Requirements in Respect of Merger, Etc............57
         12.2      Vesting of Powers in Successor............................58

                                   ARTICLE 13
                       COSTS, EXPENSES AND INDEMNIFICATION

         13.1      Costs and Expenses........................................59
         13.2      Indemnification by the Borrower...........................59
         13.3      Funds.....................................................59
         13.4      General Indemnity.........................................60
         13.5      Environmental Claims......................................61

                                   ARTICLE 14
                            THE ADMINISTRATIVE AGENT

         14.1      The Administrative Agent..................................62
         14.2      The Administrative Agent's Responsibility.................62
         14.3      Administrative Agent's Duties.............................64
         14.4      Protection of Administrative Agent........................64
         14.5      Indemnification of Administrative Agent...................65
         14.6      Termination or Resignation of Administrative Agent........65
         14.7      Rights of Administrative Agent as Lender..................66
         14.8      Authorized Waivers, Variations and Omissions..............66
         14.9      Financial Information Concerning Borrower.................66
         14.10     Knowledge of Financial Situation of Borrower..............66
         14.11     Legal Proceedings.........................................66
         14.12     Capacity as Administrative Agent..........................67
         14.13     Capacity as Lead Arranger.................................67
         14.14     Deposits or Loans Respecting the Borrower.................67


                                     -iii-
<PAGE>

                                   ARTICLE 15
                                     GENERAL

         15.1      Term......................................................67
         15.2      Survival..................................................67
         15.3      Benefit of the Agreement..................................67
         15.4      Notices...................................................68
         15.5      Amendment and Waiver......................................68
         15.6      Governing Law.............................................69
         15.7      Further Assurances........................................69
         15.8      Enforcement and Waiver by the Lenders.....................69
         15.9      Execution in Counterparts.................................69
         15.10     Assignment by the Borrower................................69
         15.11     Assignments and Transfers by the Lenders..................70
         15.12     Set-Off...................................................70
         15.13     Time of the Essence.......................................71
         15.14     Judgment Currency.........................................71
         15.15     Equal Ranking of Lenders..................................71
         15.16     Sharing of Information....................................72
         15.17     Continuing Obligations and Liabilities....................72

SCHEDULE A - BORROWING BASE CERTIFICATE
SCHEDULE B - DRAWDOWN NOTICE
SCHEDULE C - CONVERSION NOTICE
SCHEDULE D - ROLLOVER NOTICE
SCHEDULE E - [Intentionally deleted]
SCHEDULE F - PERMITTED ENCUMBRANCES
SCHEDULE G - LITIGATION
SCHEDULE H - NON-COMPLIANCE MATTERS
SCHEDULE I - SUBSIDIARIES
SCHEDULE J - TRANSFER AGREEMENT
SCHEDULE K - COMMITTED AMOUNTS
SCHEDULE L - BUSINESS PLAN


                                      -iv-
<PAGE>

                      AMENDED AND RESTATED CREDIT AGREEMENT

      MEMORANDUM OF AGREEMENT made as of the 27th day of February, 2003.

B E T W E E N:

                        MITEL NETWORKS CORPORATION,
                        a corporation incorporated under the laws of
                        Canada, as borrower

                        (hereinafter referred to as the "Borrower"),

                                     - and -

                        THE LENDERS FROM TIME TO TIME PARTIES HERETO,

                        (hereinafter referred to as the "Lenders"),

                                     - and -

                        BANK OF MONTREAL,

                        a Canadian chartered bank, as Administrative Agent
                        and Lead Arranger

                        (hereinafter referred to in its own capacity as
                        "BMO" and in its capacity as administrative agent
                        on behalf of the Lenders, as the "Administrative
                        Agent"),

            WHEREAS  pursuant to a credit  agreement made as of May 11, 2001, as
amended  and  restated  by an  agreement  made as of  January  21,  2002  and as
subsequently  amended by amending agreement made the 12th day of February,  2002
(collectively,  as amended, the "Original Credit Agreement"), a revolving credit
facility was made  available  to the Borrower  upon and subject to the terms and
conditions therein set forth;

            AND WHEREAS the  Borrower  and the Lenders have agreed to extend the
Maturity  Date and further  amend and restate the Original  Credit  Agreement by
executing and delivering this Agreement;

            NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
premises, the covenants herein contained and other valuable  consideration,  the
parties hereto agree as follows:

<PAGE>
                                      -2-


                                    ARTICLE 1
                                 INTERPRETATION

1.1         Definitions

            In this Agreement:

      "Acceptance Fee" means, with respect to each Bankers'  Acceptance drawn by
      the Borrower as borrower hereunder,  an amount equal to the product of (i)
      the  Applicable  Margin,  (ii)  the  Face  Amount  of each  such  Bankers'
      Acceptance purchased by a Lender on the relevant Drawdown Date and (iii) a
      fraction  (x) the  numerator of which is the number of days in the term to
      maturity of such Bankers'  Acceptance and (y) the  denominator of which is
      365 days;

      "Accounts" means the accounts kept by the Administrative Agent pursuant to
      Section 2.16(a) to record the Borrower's liabilities to the Administrative
      Agent and each Lender under this Agreement;

      "Additional Compensation" has the meaning specified in Section 5.1;

      "Administrative  Agent" means BMO, in its capacity as administrative agent
      for the Lenders hereunder, or any successor Administrative Agent appointed
      pursuant to Section 14.6;

      "Administrative  Agent's Counsel" means the firm of Davies Ward Phillips &
      Vineberg LLP, Toronto, Ontario, or such other firm of legal counsel as the
      Administrative Agent may from time to time designate;

      "Advance" means a Prime Rate Advance, a Bankers' Acceptance Advance, Libor
      Advance  or a U.S.  Base Rate  Advance or the issue of a Letter of Credit,
      and "Advances" means all of them;

      "Affiliate" means an affiliated body corporate, partnership, joint venture
      or other  entity and,  for the  purposes of this  Agreement,  (i) one body
      corporate,  partnership,  joint venture or other entity is affiliated with
      another if one such body  corporate,  partnership,  joint venture or other
      entity  is the  Subsidiary  of or is  Controlled  by the other or both are
      Subsidiaries  of the same body  corporate,  partnership,  joint venture or
      other entity or each of them is  Controlled by the same Person and (ii) if
      two bodies corporate,  partnerships,  joint ventures or other entities are
      affiliated  with the same body  corporate,  partnership,  joint venture or
      other entity at the same time,  they are deemed to be affiliated with each
      other;

      "Agreement" means this agreement and all Schedules attached hereto, as the
      same from time to time may be amended, restated, replaced or superseded;

      "Agreement Currency" shall have the meaning specified in Section 15.14;

<PAGE>
                                      -3-


      "Applicable Law" means, with respect to any Person, property,  transaction
      or event, all present or future  applicable laws,  statutes,  regulations,
      rules,  orders,   codes,   treaties,   conventions,   judgments,   awards,
      determinations  and  decrees of any  governmental,  regulatory,  fiscal or
      monetary  authority or court of competent  jurisdiction  in any applicable
      jurisdiction;

      "Applicable  Margin"  means,  (i)  until  such  time as the  Borrower  has
      received net proceeds of $20,000,000  from the issue of equity pursuant to
      a Confidential  Offering  Memorandum dated September  25,2002 from persons
      other than any Affiliate of the Borrower,  2.5% per annum in the case of a
      Prime Rate Advance or a U.S. Base Rate Advance, 3.5% per annum in the case
      of a Libor Advance or a Bankers' Acceptance Advance,  and (ii) thereafter,
      1.5% per annum in the case of a Prime  Rate  Advance  or a U.S.  Base Rate
      Advance,  2.5%  per  annum in the case of a Libor  Advance  or a  Bankers'
      Acceptance Advance;

      "Arm's  Length" has the meaning  ascribed  thereto for the purposes of the
      Income Tax Act (Canada) in effect as of the date hereof;

      "Available  Amount"  means,  at any time, the lesser of: (a) the Committed
      Amount or its  Equivalent  Amount in U.S.  Dollars,  and (b) the Borrowing
      Base;

      "BA Purchase  Price" means the difference  between (i) the result (rounded
      to the nearest  whole cent,  with  one-half of one cent being  rounded up)
      obtained by dividing the Face Amount of such  Bankers'  Acceptance  by the
      sum of one  plus  the  product  of (x)  the  BA  Reference  Discount  Rate
      multiplied by (y) a fraction, the numerator of which is the number of days
      in the term to maturity of such Bankers'  Acceptance,  and the denominator
      of which is 365 and (ii) the Acceptance Fee;

      "BA Reference Discount Rate" means the average rate applicable to bankers'
      acceptances  denominated  in Canadian  Dollars for the  applicable  period
      appearing  on  the   "Reuters   Screen  CDOR  Page"  (as  defined  in  the
      International  Swaps and Derivatives  Association,  Inc. 2000 Definitions)
      rounded up to the nearest 1/100th of 1% at approximately 10:00 a.m. on the
      relevant Drawdown Date;  provided that if such rate is not available,  the
      "BA Reference  Discount  Rate" shall mean the  arithmetic  mean of the bid
      rates  quoted  by Bank of  Montreal  and the  other  Lenders,  if any,  at
      approximately 10:00 a.m. for the purchase,  on the relevant Drawdown Date,
      of bankers' acceptances or drafts having an aggregate Face Amount equal to
      and with a term to maturity  the same as the  Bankers'  Acceptances  to be
      purchased by the Lenders on such Drawdown Date;

      "Bankers'  Acceptance" means a draft or other bill of exchange in Canadian
      Dollars drawn by the Borrower and accepted by a Lender in accordance  with
      Article 4;

      "Bankers'  Acceptance  Advance" means the advance of funds to the Borrower
      as borrower by way of creation  and  issuance of Bankers'  Acceptances  in
      accordance with the provisions of Article 4;

      "Banking Day" means a day,  other than a Saturday or a Sunday or other day
      on which banks are  required  or  authorized  to close in either  Toronto,
      Canada or New York, New

<PAGE>
                                      -4-


      York and,  where used in the context of a Libor  Advance,  which is also a
      day on which  banks are not  required  or  authorized  to close in London,
      England and dealings are carried on in the London interbank market;

      "Base  Rate" means the greater of (i) the  variable  rate of interest  per
      annum,  expressed  on the basis of a year of 365 or 366 days,  as the case
      may be,  established  or quoted from time to time by BMO as the  reference
      rate of interest  then in effect for  determining  interest  rates on U.S.
      Dollar  denominated  commercial  loans made by it in Canada;  and (ii) the
      Federal Funds  Effective Rate  multiplied by a fraction,  the numerator of
      which is the  actual  number  of days in the year and the  denominator  of
      which is 360, plus 1/2 of 1% per annum;

      "BMO" means Bank of Montreal, a Canadian Schedule I chartered bank and any
      successor;

      "Borrower" means Mitel Networks  Corporation,  a corporation  incorporated
      under the Canada Business  Corporations Act, and its permitted  successors
      and assigns;

      "Borrower's Security" has the meaning specified in Section 10.1;

      "Borrower's Security Documents" has the meaning specified in Section 10.1;

      "Borrowing Base" shall mean, at any time, the sum of:

              (i) 75% of Eligible Accounts Receivable; plus

             (ii) 90% of EDC Receivables; plus

            (iii) 100% of trade  accounts  of the  Borrower  and the  Guarantors
                  which are  secured  by bank  letters  of  credit or  guarantee
                  satisfactory  to the  Required  Lenders  which bank letters of
                  credit  or   guarantees   shall  have  been  assigned  to  the
                  Administrative  Agent if so  requested  by the  Administrative
                  Agent; less

             (iv) an amount equal to the principal  amount  outstanding  at such
                  time under the EDC Facility.

      For  purposes  of  calculating  the  Borrowing  Base,   Eligible  Accounts
      Receivable and EDC  Receivables of the Borrower and the Guarantors and the
      principal amount outstanding under the EDC Facility, shall be expressed in
      Canadian  Dollars based on the Equivalent  Amount of the value of any such
      amounts in U.S. Dollars, Sterling or Euros;

      "Borrowing  Base  Certificate"  shall mean a certificate to be executed by
      the Borrower and  delivered  by the Borrower to the  Administrative  Agent
      from time to time in the form attached to this Agreement as Schedule A;

<PAGE>
                                      -5-


      "Business" means the communications  systems business,  including research
      and development of  communications  and related products carried on, or to
      be carried on, by the Borrower and its Subsidiaries;

      "Business Plan" has the meaning specified in Section 6.1(n);

      "Canadian  Dollars"  and "Cdn.  $" mean the lawful  currency  of Canada in
      immediately available funds;

      "change in law" has the meaning specified in Section 5.1;

      "Claims" has the meaning specified in Section 13.4(a);

      "Closing Date" means February 27, 2003;

      "Commitment"  means,  with  respect  to a  Lender,  the  amount  set forth
      opposite the name of such Lender on Schedule K, or the  Equivalent  Amount
      in U.S. Dollars, subject to reduction pursuant to Section 2.7;

      "Committed  Amount" means Cdn.  $30,000,000,  or the Equivalent  Amount in
      U.S. Dollars, subject to reduction pursuant to Section 2.7;

      "Control"  and  its  derivatives  means,  with  respect  to  control  of a
      corporation by a Person,  the holding (other than by way of security only)
      by or for the  benefit of that  Person,  or  affiliates  of that Person or
      others with whom that Person does not deal at Arm's  Length of  securities
      of such  corporation  or the  right  to  vote  or  direct  the  voting  of
      securities of such  corporation to which,  in the aggregate,  are attached
      more  than 50% of the  votes  that may be cast to elect  directors  of the
      corporation,  provided  that the votes  attached to those  securities  are
      sufficient,  if  exercised,  to elect a majority of the  directors  of the
      corporation  and means,  with  respect to control of a Person other than a
      corporation,  the power to direct or cause the direction of the management
      and policies of such Person,  directly or indirectly,  and whether through
      the ownership or control of voting securities,  voting rights, contract or
      otherwise, without the cooperation of others;

      "Conversion" means the conversion of an Advance pursuant to Section 2.14;

      "Conversion  Notice" means a notice  substantially  in the form set out in
      Schedule C;

      "Corporate Distribution" has the meaning specified in Section 8.2(h);

      "Counsel to the  Borrower"  means  Gowling  Lafleur  Henderson LLP or such
      other  firm  of  legal  counsel  as the  Borrower  may  from  time to time
      designate with the approval of the Administrative Agent, such approval not
      to be unreasonably withheld;

      "Debt" of any Person  means,  at any date,  without  duplication,  (i) all
      obligations  of such Person for borrowed  money,  (ii) all  obligations of
      such Person evidenced by bonds,  debentures,  notes,  letters of credit or
      other similar instruments, (iii) all obligations of such Person to pay the
      deferred  purchase  price of property or services,  except trade  accounts

<PAGE>
                                      -6-


      payable within 90 days that arise in the ordinary course of business, (iv)
      all  obligations  of such  Person  as  lessee  which  are  capitalized  in
      accordance  with GAAP, (v) all  indebtedness,  liabilities and obligations
      secured by a Lien on any asset of such Person,  whether or not the same is
      otherwise  indebtedness,  liabilities or obligations of such Person,  (vi)
      all indebtedness, liabilities and obligations of others which is, directly
      or  indirectly,  guaranteed by such Person or which such Person has agreed
      (contingently  or otherwise) to purchase or otherwise  acquire,  (vii) all
      indebtedness,   liabilities   and  obligations  in  respect  of  financial
      instruments  which are  classified  as a liability on the balance sheet of
      such Person, and (viii) all obligations of such Person to otherwise assure
      a creditor against loss;

      "Default"  means an event which,  with the giving of notice or the passage
      of time or the making of any  determination or any combination  thereof as
      provided for herein, could become an Event of Default;

      "Drawdown" means a drawdown of an Advance;

      "Drawdown Date" means, in relation to any Advance,  the date,  which shall
      be a Banking  Day, on which the  Drawdown  of such  Advance is made by the
      Borrower pursuant to a Drawdown Notice;

      "Drawdown  Notice"  means a  notice  substantially  in the form set out in
      Schedule B;

      "EBITDA" means, for any Person on a consolidated basis and for any period,
      without duplication,  the amount equal to net income less interest income,
      income tax  recoveries  and any  non-cash  income  included in net income,
      plus,  to  the  extent  deducted  from  net  income,   interest   expense,
      depreciation expense,  amortization  expense,  other non-cash expenses and
      income tax expenses;  provided that foreign  exchange  gains or losses and
      extraordinary or unusual gains or losses, including gains or losses on the
      disposition  of  assets  outside  the  ordinary  course  of  business  and
      restructuring charges, shall not be included in EBITDA;

      "EDC" means Export Development Canada and its successors;

      "EDC  Facility"  means  the  credit  facility  in  the  aggregate  maximum
      principal  amount  of  Sterling  4,100,000  made  available  to MNL by EDC
      pursuant to a loan agreement dated on or about the date hereof;

      "EDC Receivables"  means trade accounts of the Borrower and MNI insured by
      EDC;

      "Eligible Accounts Receivable" means the combined Canadian,  United States
      and United  Kingdom trade  accounts of the Borrower and the  Guarantors as
      determined in accordance with GAAP, but excluding the following:

      (a)   any trade accounts which are  outstanding for more than 90 days from
            the date of  invoice,  except a  limited  number  of  extended  term
            accounts  agreed by the  Required  Lenders to be  Eligible  Accounts
            Receivable;

<PAGE>
                                      -7-


      (b)   trade accounts if the account  debtors are located in a jurisdiction
            other  than  Canada,  the  United  States  or in the  case of  trade
            accounts of MNL only, the United Kingdom;

      (c)   trade  accounts  which are payable in a currency other than Canadian
            Dollars,  U.S. Dollars or in the case of trade accounts of MNL only,
            Sterling or Euros;

      (d)   trade accounts if the account debtors are Affiliates of the Borrower
            or the  Guarantors  including,  for greater  certainty,  Breconridge
            Manufacturing Solutions,  Inc., Breconridge  Manufacturing Solutions
            Corporation and Breconridge Manufacturing Solutions Limited;

      (e)   accounts  subject to a right of  set-off  if a claim of set-off  has
            been asserted by the account debtor;

      (f)   doubtful or disputed accounts;

      (g)   EDC Receivables;

      (h)   those  accounts  referred to in sub-part  (iii) of the definition of
            Borrowing Base; and

      (i)   any accounts, including any account not specifically excluded above,
            determined  by  any  Lender,  in  its  sole  discretion,  not  to be
            eligible;

      "Environmental Claims" means any and all enforcement, clean-up, removal or
      other   governmental  or  regulatory   actions,   orders,   directions  or
      proceedings  instituted,  pending  or  completed  or,  to the  best of the
      knowledge of the Borrower and the  Guarantors,  threatened or  anticipated
      pursuant to any Environmental  Laws and all claims made or, to the best of
      the knowledge of the Borrower and the Guarantors, threatened, by any third
      party against the Borrower or any of the  Guarantors,  any property of the
      Borrower  or any of the  Guarantors  or any of their  Subsidiaries  or any
      party having  charge,  management or control of any property of any of the
      Borrower,  the  Guarantors  or  their  Subsidiaries  relating  to  damage,
      contribution,  cost recovery,  compensation, loss or injury resulting from
      any violation or alleged violation of Environmental Laws;

      "Environmental  Laws"  means any  present  or future  applicable  federal,
      provincial,  state,  municipal or other local law, statute,  regulation or
      by-law, code, ordinance, decree, directive, standard, policy, rule, order,
      treaty, convention, judgment, award or determination for the protection of
      the environment or human health and safety, present or future;

      "Equivalent  Amount"  on any  given  date  in  one  currency  (the  "first
      currency")  of any amount  denominated  in another  currency  (the "second
      currency") means the amount of the first currency which could be purchased
      with such amount of the second  currency at the rate of exchange quoted by
      BMO at 11:00  a.m.  (Toronto  time) on such date for the  purchase  of the
      first currency with the second currency;

<PAGE>
                                      -8-


      "Euro"  means the lawful  currency  of the member  states of the  European
      Union that have adopted the single  currency in accordance with the Treaty
      establishing the European Community,  as amended by the Treaty on European
      Union;

      "Event of Default" means any of the events described in Section 11.1;

      "Face  Amount"  means,  in respect of a  Bankers'  Acceptance,  the amount
      payable  to the holder  thereof  on the  maturity  thereof  and means,  in
      respect of a Letter of Credit, the maximum amount payable to a beneficiary
      thereunder;

      "Facility" means the revolving  credit facility in an aggregate  principal
      amount  of up to  Cdn.  $30,000,000  (or  the  Equivalent  Amount  in U.S.
      Dollars) to be made  available to the Borrower by the Lenders as set forth
      in Article 2;

      "Federal Funds Effective Rate" means, for any particular day, the variable
      rate of interest per annum,  calculated  on the basis of a 360-day year as
      determined by BMO for the actual number of days elapsed, equal to:

             (i)  the weighted  average of the rates on overnight  federal funds
                  transactions  with  members  of  the  Federal  Reserve  System
                  arranged by federal  funds  brokers as published  for such day
                  (or, if such day is not a Banking Day, for the next  preceding
                  Banking Day) by the Federal Reserve Bank of New York, or

            (ii)  for any Banking Day on which such rate is not so  published by
                  the  Federal  Reserve  Bank of New York,  the  average  of the
                  quotations for such day for such transactions  received by BMO
                  from  three  federal  funds  brokers  of  recognized  standing
                  selected by BMO in consultation with the Borrower;

      "GAAP" means those generally accepted accounting  principles  consistently
      applied in Canada;

      "Governmental  Receivables" means trade accounts of the Borrower where the
      account debtors are the federal  government of Canada or the United States
      of America or any  provincial  government  or any state  government or any
      territorial  government or any political  subdivision  thereof,  or of any
      political  subdivision of a political  subdivision thereof, and any entity
      exercising executive, legislative, judicial, regulatory, administrative or
      other function of or pertaining to government;

      "Guarantees" means,  collectively,  (i) the amended and restated guarantee
      and  security  agreement  dated as of January 21, 2002 between MNI and the
      Administrative Agent, (ii) the amended and restated guarantee and security
      agreement dated as of January 21, 2002 between MNSI and the Administrative
      Agent,  and (iii) the guarantee and indemnity  dated July 25, 2001 between
      MNL and the  Administrative  Agent,  and, in each case, as may be amended,
      supplemented  or restated from time to time and  "Guarantee"  means any of
      them;

<PAGE>
                                      -9-


      "Guarantors" means, collectively,  MNI, MNSI and MNL, and their respective
      permitted successors and assigns and "Guarantor" means any of them;

      "Guarantors' Security" has the meaning specified in Section 10.2;

      "Guarantors'  Security  Documents"  has the meaning  specified  in Section
      10.2;

      "Hazardous  Material" means any  contaminant,  pollutant or substance that
      causes harm or  degradation  to the  surrounding  environment or injury to
      human health and,  without  restricting  the  generality of the foregoing,
      includes any pollutant,  contaminant,  waste, hazardous waste, deleterious
      substance  or  dangerous  good  present in such  quantity or state that it
      contravenes or is regulated under any Environmental  Laws or gives rise or
      could give rise to any  liability or  obligation  under any  Environmental
      Law;

      "Indemnifying Party" has the meaning specified in Section 13.4(c);

      "Indemnitee" has the meaning specified in Section 13.4(a);

      "Intercreditor  Agreement" means the intercreditor  agreement made between
      the  Administrative  Agent,  for and on behalf of the  Lenders,  EDC,  the
      Borrower and the Guarantors, dated the date of this Agreement;

      "Interest Date" means the first day of each calendar month;

      "Interest  Period"  means,  with  respect  to a Libor  Advance,  a  period
      commencing  (i) in the  case  of the  initial  Interest  Period  for  such
      Advance,  on the  date  of  such  Advance;  and  (ii)  in the  case of any
      subsequent  Interest  Period  for  such  Advance,  on the  last day of the
      immediately  preceding  Interest Period applicable  thereto and ending, in
      either  case,  on the last day of such  period as shall be selected by the
      Borrower  pursuant to the  provisions  hereof;  provided that if any Libor
      Advance  arises as a result of a  Conversion  of  another  type of Advance
      pursuant to the provisions  hereof,  the initial  Interest Period for such
      Libor Advance  after such  Conversion  shall  commence on the date of such
      Conversion;

      "Lenders"  means the Persons listed as lenders on Schedule K and any other
      Person that shall have become a party hereto in accordance  with the terms
      of Section 14.11;

      "Letter of Credit" means a term letter of credit,  sight letter of credit,
      standby  letter  of  credit or  documentary  letter of credit  issued by a
      Lender at the request of the Borrower pursuant to Section 3.1;

      "Libor  Advance"  means a loan  made by a Lender to the  Borrower  in U.S.
      Dollars on which interest is payable at the Libor Rate plus the Applicable
      Margin;

      "Libor  Interest  Payment  Date"  has the  meaning  specified  in  Section
      2.11(c);

      "Libor Rate" means,  for each Interest  Period for each Libor  Advance,  a
      rate of interest per annum, calculated on the basis of a year of 360 days,
      equal to the London interbank offered rate for U.S. Dollars, at 11:00 a.m.
      (London, England time) on the day that is two

<PAGE>
                                      -10-


      Banking Days prior to the first day of such Interest Period,  and having a
      term  equal to such  Interest  Period,  as such  rate is  reported  on the
      display designated as "page 3750" (or any replacement page) by "Telerate -
      the Financial Information Network" published by Telerate Systems, Inc. (or
      such other company or service as may be nominated by the British  Bankers'
      Association  as the  information  vendor  for the  purpose  of  displaying
      British  Bankers'  Association  Interest  Settlement Rates for deposits in
      U.S.  Dollars)  and,  if such  rate is not  available,  then  the  rate of
      interest  per  annum,  calculated  on the basis of a year of 360 days,  at
      which BMO is offered deposits in U.S. Dollars by prime banks in the London
      interbank market at approximately  11:00 a.m.  (London,  England time) two
      Banking Days prior to the first day of such  Interest  Period for a period
      comparable to such Interest Period and in an amount approximately equal to
      the amount of the Libor  Advance to be  outstanding  during such  Interest
      Period;

      "Liens" means mortgages,  pledges,  liens,  hypothecs,  charges,  security
      agreements or other  encumbrances or other  arrangements that in substance
      secure  payment  or  performance  of an  obligation,  statutory  and other
      non-consensual liens or encumbrances and includes the interest of a vendor
      or lessor under any  conditional  sale  agreement,  capital lease or other
      title retention agreement;

      "Loan  Documents"  means,  collectively,   this  Agreement,  the  Security
      Documents and the Intercreditor

      Agreement;

      "Losses" has the meaning specified in Section 13.4(a);

      "Material  Agreement"  means any agreement,  contract or document which is
      material to the  Business or to the  operations,  financial  condition  or
      prospects of the Borrower or any of the Guarantors;

      "Maturity Date" means February 26, 2004;

      "MNI" means Mitel Networks, Inc. a corporation incorporated under the laws
      of Delaware and an indirect wholly-owned Subsidiary of the Borrower;

      "MNL" means Mitel Networks  Limited,  a private  company limited by shares
      incorporated in England and Wales under number 1309629,  whose  registered
      office  is at  Portskewett,  Monmouthshire,  NP2G  5YR,  and  an  indirect
      wholly-owned Subsidiary of the Borrower;

      "MNSI" means Mitel Networks  Solutions,  Inc., a corporation  incorporated
      under  the laws of the  State of  Delaware  and an  indirect  wholly-owned
      Subsidiary of the Borrower;

      "Notice of Amount" has the meaning specified in Section 5.1;

      "Notification Date" has the meaning specified in Section 13.5(c);

      "Officer's  Certificate"  means  a  certificate  signed  by any one of the
      following officers of the Borrower:  (i) the Chief Executive Officer, (ii)
      the Chief Operating Officer,  (iii) the Chief Financial  Officer,  or (iv)
      the Treasurer;

<PAGE>
                                      -11-


      "Original  Credit  Agreement"  shall  have the  meaning  specified  in the
      recitals to this Agreement;

      "Other  Taxes" means any present or future stamp or  documentary  taxes or
      any other excise or property taxes,  charges or similar levies which arise
      from any  payment  made  hereunder  or from  the  execution,  delivery  or
      registration  of, or  otherwise  with respect to, this  Agreement,  or any
      other document in connection herewith;

      "Outstanding Amount" has the meaning specified in Section 2.6(b);

      "Participation"  of a Lender  means the  percentage  which  such  Lender's
      Commitment  with  respect to the  Facility is of the  aggregate  Committed
      Amount,  as such percentage may be adjusted pursuant to this Agreement and
      subject to the Administrative  Agent's authority to make allocations among
      the  Lenders  as  herein  provided,  or,  as  the  context  requires,  the
      percentage determined as aforesaid of such Lender in any issue of Bankers'
      Acceptances, in any Advance or in any repayment thereof or, as the context
      may require, in any payment of interest or fees or other payment;

      "Permits" has the meaning specified in Section 7.1(i);

      "Permitted Debt" means:

               (i)   Debt owing hereunder and under the Security Documents;

              (ii)   Subordinated Debt;

             (iii)   trade debt and similar unsecured  indebtedness  incurred in
                     the ordinary course of business (but excluding indebtedness
                     for borrowed  money not  outstanding  for more than 90 days
                     other  than  certain  indebtedness  of MNL  owing  to Mitel
                     Networks International Limited on account of royalties);

              (iv)   intercorporate  Debt owed by any Subsidiary to the Borrower
                     or any of the Guarantors;

               (v)   intercorporate   Debt   between   the   Borrower   and  the
                     Guarantors;

              (vi)   intercorporate Debt owed by any wholly-owned  Subsidiary of
                     the  Borrower   (other  than  the  Guarantors)  to  another
                     wholly-owned Subsidiary of the Borrower;

             (vii)   Debt in an aggregate amount not exceeding Cdn.  $15,000,000
                     (or its Equivalent Amount in another currency)  incurred in
                     connection with the obligations of a Person as lessee which
                     are capitalized in accordance with GAAP;

            (viii)   Debt incurred pursuant to performance  bonds, bid bonds and
                     other  similar  instruments  entered  into in the  ordinary
                     course of business;

<PAGE>
                                      -12-


              (ix)   Debt  for  borrowed  money  in  an  aggregate   amount  not
                     exceeding (pound)15,000,000 incurred pursuant to overdraft,
                     working  capital  credit  facilities  and any other form of
                     financing  by  Subsidiaries  of the  Borrower  carrying  on
                     business  in the United  Kingdom  and Europe  (including  a
                     (pound)7.5  million real estate  mortgage dated January 24,
                     2002  granted by MNL in favour of  Barclays  Bank plc and a
                     (pound)5  million  chattel  mortgage dated October 31, 2001
                     granted by MNL in favour of Barclays  Bank plc, as each may
                     be amended, restated, supplemented or replaced from time to
                     time with the consent of the Required Lenders);

               (x)   Debt  pursuant  to letters of credit in an  aggregate  face
                     amount not exceeding Cdn. $800,000 issued in respect of the
                     Borrower's supplemental executive retirement plan;

              (xi)   Debt  incurred  or assumed  in  connection  with  Permitted
                     Purchase Money Security Interests;

             (xii)   Debt  secured  by  assets  or  properties  at the  time  of
                     entering into an agreement with respect to the  acquisition
                     of such assets or properties and assumed in connection with
                     such acquisition and Debt of a corporation  existing at the
                     time such corporation  becomes a Subsidiary of the Borrower
                     provided,  in either case,  that such Debt was not incurred
                     in anticipation  of such  acquisition or in anticipation of
                     such  corporation  becoming a Subsidiary  and excluding any
                     extensions or renewals of any such Debt;

            (xiii)   unsecured  Debt  incurred in connection  with  transactions
                     entered  into for the purpose of hedging  foreign  exchange
                     risk  of the  Borrower  and  its  Subsidiaries  or for  the
                     purpose of hedging interest rate exposure on Permitted Debt
                     (but, in either case not for speculative purposes);

             (xiv)   unsecured  Debt in an aggregate  amount not exceeding  Cdn.
                     $15,000,000 (or its Equivalent  Amount in another currency)
                     pursuant to a daylight  overdraft  facility incurred solely
                     to facilitate the clearance of inter-corporate Debt;

              (xv)   Debt  represented  by  obligations of MNL in respect of its
                     defined benefit pension plan;

             (xvi)   Debt  in  an  aggregate   principal  amount  not  exceeding
                     Sterling  4,100,000  under  the  EDC  Facility  (including,
                     without duplication,  Debt represented by guarantees issued
                     by the Borrower, MNI and MNSI in connection therewith); and

            (xvii)   unsecured Debt not included in any of the foregoing and not
                     exceeding  Cdn.  $5,000,000  (or its  Equivalent  Amount in
                     another currency), in the aggregate;

<PAGE>
                                      -13-


      "Permitted Encumbrances" has the meaning specified in Schedule F;

      "Permitted  Purchase  Money  Security  Interest"  means  any  Lien  on any
      property  or asset  created,  issued or assumed to secure  Debt  incurred,
      assumed or issued to satisfy,  in whole or in part,  the purchase price of
      such property or asset  (including  installation  costs) and  expenditures
      made  for  any  repairs,   alterations,   construction,   development   or
      improvements performed thereon or added thereto,  provided that such Lien,
      or any agreement or other instrument under which such Lien is constituted,
      is  limited to the  property  or asset  acquired  in  connection  with the
      assumption,  issuance or incurring of such Debt and is created,  issued or
      assumed concurrently with the acquisition of such property or assets;

      "Permitted  Securitization  Transactions" means any transaction  providing
      for the sale,  securitization  or other  asset-backed  financing  of trade
      accounts  receivable  of or owing to the Borrower or a  Subsidiary  of the
      Borrower,  and  excluding any  Canadian,  United States or United  Kingdom
      trade  accounts  receivable,  provided that such  disposition  of accounts
      receivable  pursuant  to  the  securitization   transactions  are  without
      recourse to the Borrower or such Subsidiary and provided  further that the
      aggregate  amount  of  accounts  receivable  sold  does  not  exceed  Cdn.
      $3,000,000 at any time;

      "Person" means an individual,  company, partnership (whether or not having
      separate legal  personality),  corporation  (including a business  trust),
      joint stock company, trust, unincorporated  association,  joint venture or
      other entity, or a government,  state or political  subdivision thereof or
      any agency of such government, state or political subdivision;

      "Prime Rate" means the greater of (i) the arithmetic  mean of the variable
      rates of interest  per annum,  expressed  on the basis of a year of 365 or
      366 days, as the case may be,  established  or quoted from time to time by
      BMO and the other Lenders,  if any, as the reference rate of interest then
      in effect for determining  interest rates on Canadian  Dollar  denominated
      commercial loans made by it in Canada and (ii) the sum of (x) the rate per
      annum for Canadian  Dollar bankers'  acceptances  having a term of 30 days
      that  appears  on the  display  page  designated  as the CDOR Page (or any
      replacement page) by Reuters Money Market Service (or its successor) as of
      10:00 a.m. on the date of determination as reported by the  Administrative
      Agent, and (y) 1.0% per annum;

      "Prime  Rate  Advance"  means a loan  made by a Lender  to a  Borrower  in
      Canadian  Dollars on which  interest is payable at the Prime Rate plus the
      Applicable Margin;

      "Priority Claims" means, at any time, the aggregate of any amounts due and
      payable  prior to such time, to the extent not paid by the Borrower or any
      of the Guarantors in respect of:

      (a)   wages, salaries, commissions or other remunerations;

      (b)   vacation pay;

<PAGE>
                                      -14-


      (c)   deductions at source for employees,  federal and  provincial  income
            taxes, Canada Pension Plan and Employment Insurance;

      (d)   GST and PST (net of input tax credits);

      (e)   Workers' Compensation Board premiums or similar premiums;

      (f)   all taxes  under the  federal  and state laws of the  United  States
            including,  but not limited to, all  federal,  state or local net or
            gross income, gross receipts, net proceeds,  sales, use, ad valorem,
            value added, franchise,  withholding,  payroll, employment,  excise,
            sales, use, property,  alternative or add-on minimum,  environmental
            or  other  taxes,   assessments,   duties,  fees,  levies  or  other
            governmental  charges of any nature  whatever,  whether  disputed or
            not,  together  with any  interest,  penalties,  additions to tax or
            additional amounts with respect thereto;

      (g)   all payments in connection  with an employee  benefit plan,  program
            and arrangement including, without limitation, any "employee benefit
            plan" as defined in Section 3(3) of the Employee  Retirement  Income
            Security  Act  of  1974,   as  amended   ("ERISA"),   maintained  or
            contributed  to by the  Borrower  or any of the  Guarantors,  or any
            other  applicable law covering  employee  benefit plans  (including,
            without  limitation,  the Internal Revenue Code of 1986, as amended)
            or  any  applicable  agreement  controlling  such  employee  benefit
            plan(s);

      (h)   all payments in  connection  with  workers'  compensation,  workers'
            disability  insurance,  or any  similar  program as  required by any
            applicable state or federal law, such as, for example,  the New York
            State  "Workers'  Compensation  Law"  (New  York  Consolidated  Laws
            Chapter 67, ss.ss.1 et seq.);

      (i)   property taxes;

      (j)   rent;

      (k)   value  added tax  (VAT)  and all  deductions,  taxes,  premiums  and
            payments  which may be payable  by MNL and which are  similar to the
            deductions,  taxes,  premiums and payments referred to in paragraphs
            (c),  (d),  (e),  (f), (g) and (h) of this  definition  of "Priority
            Claims"; and

      (l)   claims  which may rank in  priority  to the  Administrative  Agent's
            security interest in respect of accounts receivable.

      "rate of exchange" has the meaning specified in Section 15.14;

      "Release" has the meaning specified in Section 7.1(j);

      "Reorganization" has the meaning specified in Section 12.1;

<PAGE>
                                      -15-


      "Required Lenders" means, at any time, Lenders having undrawn  Commitments
      or outstanding  Advances  representing  more than two-thirds of the sum of
      the total Committed Amount or outstanding Advances at such time;

      "Rollover"  means  a  rollover  of a  Libor  Advance  pursuant  to  and in
      accordance  with  Section  2.11 or a  rollover  of a  Bankers'  Acceptance
      Advance pursuant to and in accordance with Section 4.5;

      "Rollover Notice" means a notice substantially in the form of Schedule D;

      "Security"   means,   collectively,   the  Borrower's   Security  and  the
      Guarantors' Security;

      "Security   Documents"  means,   collectively,   the  Borrower's  Security
      Documents and the Guarantors' Security Documents;

      "Sterling"  means the lawful currency of the United Kingdom in immediately
      available funds;

      "Stock"  shall  mean all  shares,  options,  warrants,  general or limited
      partnership interests or other equivalents  (regardless of how designated)
      of or in a  corporation,  partnership,  limited  partnership or equivalent
      entity whether voting or non-voting or participating or non-participating;

      "Subordinated  Debt" shall mean Debt of the  Borrower or any  Guarantor or
      Subsidiary  subordinated  to all amounts at any time due and payable under
      any of the  Loan  Documents  in a  manner  and  form  satisfactory  to the
      Required Lenders in their sole discretion, as to right and time of payment
      and as to any other rights and remedies thereunder;

      "Subsidiary"  means any corporation  more than 50% of the Voting Shares of
      which at the time of  determination  are beneficially  owned,  directly or
      indirectly, by the Borrower or any corporation, joint venture, partnership
      or other entity which is subject to the direct or indirect  Control of the
      Borrower;

      "Successor Corporation" has the meaning specified in Section 12.1;

      "Take-Over  Bid"  means  an  offer  to  acquire  made by the  Borrower,  a
      Guarantor or a Subsidiary of the Borrower,  alone or acting  jointly or in
      concert with any other Person or Persons (collectively, the "Offeror"), to
      any holder of Voting Shares or  securities  convertible,  exchangeable  or
      exercisable  into  Voting  Shares  (the  "Target  Shares")  of the offeree
      issuer,  which has not been  solicited  by or made at the  request  of the
      board of  directors  of the offeree  issuer,  or with respect to which the
      board of directors of the offeree issuer has not  recommended  acceptance,
      where the Target Shares subject to the offer to acquire, together with the
      Target  Shares  held by or on  behalf  of the  offeror  on the date of the
      offer,  constitute,  in aggregate, 20% (or such lesser percentage as would
      require compliance with the formal  requirements  governing take-over bids
      (such as the delivery of circulars or equivalent  disclosure  documents to
      shareholders  under  Applicable  Law)) or more of the  outstanding  Target
      Shares at the date of the offer to acquire, but

<PAGE>
                                      -16-


      excluding  any  such  offer  which,   under  the  Applicable  Law  of  the
      jurisdiction in which such offer is made, would be exempt from such formal
      requirements;

      "Taxes"  includes  all present  and future  income,  corporation,  capital
      gains, capital and value-added, and goods and services taxes and all stamp
      and other  taxes and  levies,  imposts,  deductions,  duties,  charges and
      withholdings  whatsoever together with interest thereon and penalties with
      respect thereto, if any, and charges, fees and other amounts made on or in
      respect thereof;

      "Transferee" has the meaning specified in Section 15.11(a);

      "U.S.  Base Rate Advance" means a loan made by a Lender to the Borrower on
      which interest is payable at the Base Rate plus the Applicable Margin;

      "U.S.  Dollars" and "U.S. $" mean the lawful currency of the United States
      of America in immediately available funds; and

      "Voting  Shares"  means  shares of any class of any  corporation  carrying
      voting rights under all  circumstances,  provided that, for the purpose of
      this definition,  shares which only carry the right to vote  conditionally
      on the happening of an event shall not be considered  Voting Shares unless
      such right has become exercisable.

1.2         Headings

            The division of this  Agreement  into  Articles and Sections and the
insertion  of an index and headings are for  convenience  of reference  only and
shall not affect the  construction  or  interpretation  hereof.  The terms "this
Agreement",   "hereof",  "hereunder"  and  similar  expressions  refer  to  this
Agreement and not to any particular Article, Section, paragraph or other portion
hereof and include any agreement supplemental hereto. Save as expressly provided
herein,  references herein to Articles and Sections are to Articles and Sections
of this Agreement.

1.3         Extended Meanings

            Words  importing  the singular  number only shall include the plural
and vice versa,  and words  importing any gender shall include all genders.  The
term "including" means "including without limitation".

1.4         References to the Administrative Agent and Lenders

            Any reference in this Agreement to the Administrative  Agent and any
Lender  shall  be  construed  so as to  include  its  successors  and  permitted
transferees or assigns hereunder in accordance with its respective interests.

1.5         Accounting Terms and Practices

            Unless otherwise  provided herein,  all accounting terms referred to
herein shall be construed in accordance  with Canadian GAAP as established  from
time  to  time  by the  Canadian  Institute  of  Chartered  Accountants  and all
financial data submitted pursuant to this Agreement

<PAGE>
                                      -17-


shall be prepared  in  accordance  with such  principles,  consistently  applied
except for the absence of footnotes in unaudited statements.

1.6         Non-Banking Days

            Whenever any payment to be made hereunder  shall be stated to be due
or any action to be taken  hereunder  shall be stated to be required to be taken
on a day other than a Banking  Day,  such  payment  shall be made or such action
shall  be  taken  on the next  succeeding  Banking  Day and,  in the case of the
payment of any monetary amount,  the extension of time shall be included for the
purposes of computation of interest or fees thereon.

1.7         References to Time of Day

            Except  as  otherwise  specified  herein,  a time  of day  shall  be
construed as a reference to Toronto, Canada time.

1.8         Severability

            In the event that one or more of the  provisions  contained  in this
Agreement shall be invalid,  illegal or  unenforceable  in any respect under any
applicable  law,  the  validity,  legality or  enforceability  of the  remaining
provisions hereof shall not be affected or impaired thereby.

1.9         Currency

            All monetary  amounts in this  Agreement  refer to Canadian  Dollars
unless otherwise specified.

1.10        References to Statutes

            Except as otherwise provided herein, any reference in this Agreement
to a statute  shall be  construed  to be a reference to such statute as the same
may have been, or may from time to time be, amended or re-enacted.

1.11        References to Agreements

            Except as otherwise  provided  herein,  any reference herein to this
Agreement  or any  other  agreement  or  document  shall  be  construed  to be a
reference to this Agreement or such other agreement or document, as the case may
be, as the same may have  been,  or may from time to time be,  amended,  varied,
novated or supplemented.

1.12        Consents and Approvals

            Whenever  the consent or approval of a party hereto is required in a
particular  circumstance,  unless otherwise expressly provided for therein, such
consent or approval shall not be unreasonably withheld or delayed by such party.

<PAGE>
                                      -18-


1.13        Schedules

            The following are the Schedules  attached hereto and incorporated by
reference and deemed to be part hereof:

            Schedule A     -     Borrowing Base Certificate
            Schedule B     -     Drawdown Notice
            Schedule C     -     Conversion Notice
            Schedule D     -     Rollover Notice
            Schedule E     -     [Intentionally deleted]
            Schedule F     -     Permitted Encumbrances
            Schedule G     -     Litigation
            Schedule H     -     Non-Compliance Matters
            Schedule I     -     Subsidiaries
            Schedule J     -     Transfer Agreement
            Schedule K     -     Committed Amounts
            Schedule L     -     Business Plan

                                   ARTICLE 2
                                  THE FACILITY

2.1         The Facility

            Upon the terms and  subject to the  conditions  hereof,  each of the
Lenders hereby severally  agrees to make the Facility  available to the Borrower
up to the  maximum  amount of its  Participation.  For  greater  certainty,  any
amounts  outstanding  under the  Original  Credit  Agreement on the Closing Date
shall be deemed to be and the  parties  hereto  confirm  that such  amounts  are
outstanding  hereunder  in  the  amounts  specified  in  the  certificate  to be
delivered  pursuant  to  Section  6.1(o).  The  failure of any Lender to make an
Advance  required  to be made  available  hereunder  by it shall not relieve any
other Lender of its obligations hereunder; provided that the obligations of each
Lender  hereunder  with respect to its  Participation  are several and no Lender
shall be responsible for any other Lender's failure to make Advances as required
hereunder.

2.2         Purpose

            The Facility is being made  available to the Borrower by the Lenders
to finance the Borrower's  working capital  requirements  and general  corporate
purposes.

2.3         Availability

      (a) The  Facility  shall be  available by way of Drawdown of an Advance by
the Borrower in a minimum  amount of Cdn.  $1,000,000  (or such lesser amount as
may from time to time be agreed to by the Lenders at their sole  discretion) and
integral  multiples  of Cdn.  $100,000  in  excess  thereof  (or,  if not such a
multiple,  the then remaining  Available Amount), at the option of the Borrower,
by way of Prime Rate Advance or Bankers' Acceptance Advance or the issue of

<PAGE>
                                      -19-


a Letter  of  Credit or in a minimum  amount  of Cdn.  $1,000,000  and  integral
multiples of Cdn.  $100,000 in excess  thereof (or, if not such a multiple,  the
then remaining  Available  Amount) (a minimum amount of Cdn. $10,000 in the case
of Letters of Credit  denominated in Canadian  Dollars) or, at the option of the
Borrower,  by way of Libor  Advance or U.S.  Base Rate Advance or the issue of a
Letter of Credit in a minimum amount of U.S.  $1,000,000 and integral  multiples
of U.S.  $100,000  in  excess  thereof  (or,  if not such a  multiple,  the then
remaining  Available  Amount) (a minimum  amount of U.S.  $10,000 in the case of
Letters of Credit  denominated in U.S. Dollars),  or any combination  thereof by
irrevocable Drawdown Notice given to the Administrative Agent not later than (i)
10:00 a.m. on the Banking Day prior to the Drawdown  Date in the case of a Prime
Rate Advance or a Bankers'  Acceptance  Advance in an amount not exceeding  Cdn.
$10,000,000  or a U.S.  Base Rate  Advance  or issue of a Letter of Credit in an
amount not exceeding U.S. $10,000,000; (ii) 10:00 a.m. on the second Banking Day
prior to the  Drawdown  Date in the case of a Prime  Rate  Advance or a Bankers'
Acceptance  Advance in an amount exceeding Cdn.  $10,000,000 or a U.S. Base Rate
Advance in an amount  exceeding  U.S.  $10,000,000;  or (iii)  10:00 a.m. on the
third  Banking Day prior to the  relevant  Drawdown  Date in the case of a Libor
Advance.  Subject to the terms and  conditions  contained  herein,  the Borrower
shall  have the  right  and  option  to  determine  in which of these  forms the
Facility  shall be utilized  from time to time and the  Borrower  shall have the
right to convert the manner in which the  Facility is utilized  from one form to
another as it sees fit, subject to Section 2.14.

      (b) The  Borrower  may not make a  Drawdown  under the  Facility  if, as a
result of such  Drawdown,  the aggregate of (i) the aggregate  principal  amount
outstanding  under the Facility and (ii) the maximum  amount  payable  under all
outstanding Letters of Credit, in each case expressed in Canadian Dollars (based
on the Equivalent Amount of any obligations in U.S.  Dollars),  would exceed the
Available  Amount.  The Lenders  shall have no obligation to make any Advance or
issue any  Letters of Credit  hereunder  at any time after  demand has been made
pursuant to Section  11.2 hereof or at any time that the  Borrower or any of the
Guarantors  has failed to observe or perform any of its covenants or obligations
hereunder or under any of the Security Documents and such default is continuing,
regardless of whether the  Administrative  Agent or the Lenders have made demand
pursuant to Section 11.2 hereof.

      (c) All or any portion of the amount outstanding under the Facility may be
repaid and reborrowed  from time to time.  The Facility  shall  terminate on the
Maturity Date.

      (d)  Notwithstanding  Section  2.3(a),  the Borrower  may, by delivering a
Drawdown  Notice to the  Administrative  Agent not later than 10:00 a.m.  on any
Drawdown  Date,  make a Drawdown  on such  Drawdown  Date by way of a Prime Rate
Advance in an amount not exceeding Cdn. $2,000,000 or by way of a U.S. Base Rate
Advance in an amount not exceeding U.S. $2,000,000.

2.4         Making of an Advance

            If the  Borrower  delivers  a  Drawdown  Notice in  accordance  with
Section  2.3,  the  Administrative  Agent shall  promptly  notify each Lender in
writing of the amount of the Advance and such Lender's  portion  thereof and, if
on the  proposed  Drawdown  Date the amount of such  Advance is equal to or less
than the Available Amount, then:

<PAGE>
                                      -20-


                   (i)  each  Lender  shall,  not later than  11:00 a.m.  on the
                        Drawdown Date,  make, or procure to be made, its portion
                        of the Advance  available to the  Administrative  Agent;
                        and

                  (ii)  the  Agent  shall,  not  later  than  4:00  p.m.  on the
                        Drawdown  Date,  make  such  Advance  available  to  the
                        Borrower.

2.5         Participation of Each Lender

      (a) The amount of the Participation of each Lender in any Advance or issue
of Bankers'  Acceptances  shall be  determined  by the  Administrative  Agent by
reference,  subject to the Administrative  Agent's authority pursuant to Section
2.5(b),  to each such Lender's  Participation,  as such  Participation  shall be
immediately  prior to the  making of the  Advance  or the issue of the  Bankers'
Acceptances.

      (b) The Administrative Agent is authorized by the Borrower and each Lender
to  allocate  amongst  the Lenders  the  Bankers'  Acceptances  to be issued and
purchased  in such  manner  and  amounts  as the  Agent  may,  in its  sole  and
unfettered  discretion acting  reasonably,  consider  necessary,  rounding up or
down,  so as to ensure  that no Lender is  required  to accept  and  purchase  a
Bankers'  Acceptance  for a fraction of Cdn.  $100,000,  and in such event,  the
Lenders'  respective   Participations  in  any  such  Bankers'  Acceptances  and
repayments  thereof shall be altered  accordingly.  Further,  the Administrative
Agent is  authorized  by the  Borrower  and  each  Lender  to cause  one or more
Lenders'  Commitment  to be  exceeded by not more than Cdn.  $100,000  each as a
result of such  allocations  provided that the principal  amount of Advances and
Bankers'  Acceptances   outstanding  shall  not  thereby  exceed  the  aggregate
Committed Amount.

2.6         Repayment of the Facility

      (a) Provided that the Facility is not prepaid or accelerated in accordance
with Article 11, the Borrower  shall repay the principal  amount of all Advances
outstanding  under the  Facility,  together  with  accrued  and unpaid  interest
thereon, on the Maturity Date.

      (b) In the event  that the sum of (i) the  aggregate  principal  amount of
Prime Rate  Advances,  (ii) the Face Amount of Bankers'  Acceptances,  (iii) the
maximum amount which may be drawn in Canadian Dollars and the Equivalent  Amount
in Canadian  Dollars of the maximum  amount  which may be drawn in U.S.  Dollars
under  Letters of Credit  which have been issued and are  outstanding,  (iv) the
Equivalent Amount in Canadian Dollars of the aggregate principal amount of Libor
Advances,  and (v) the  Equivalent  Amount in Canadian  Dollars of the aggregate
principal amount of U.S. Base Rate Advances,  in each case outstanding under the
Facility (such amount being referred to in this Section 2.6 as the  "Outstanding
Amount"),  exceeds the amount allowed  pursuant to Section 2.3(b) for any reason
whatsoever (including changes in the Canadian Dollar/U.S. Dollar exchange rate),
then any Lender may, by notice to the  Borrower,  require the Borrower to repay,
within  two  Banking  Days  of  receipt  of such  notice,  that  portion  of the
Outstanding  Amount which is in excess of the maximum amount allowed pursuant to
Section 2.3(b) determined on the date of such notice; provided, however, that if
the Outstanding Amount exceeds the Available Amount solely because of changes in
the Canadian Dollar/U.S. Dollar exchange rate (and does not exceed the amount of
the Borrowing Base), then unless the amount

<PAGE>
                                      -21-


by which the  Outstanding  Amount  exceeds the Available  Amount is greater than
Cdn. $750,000,  the Borrower shall not be obliged to make a repayment  hereunder
until the next following Interest Date,  Drawdown Date, date of Rollover or date
of Conversion (whichever is the first to occur following receipt of such notice)
and provided  further that if such repayment  would result in the repayment of a
Bankers'  Acceptance  Advance  prior to its maturity  date or the repayment of a
Libor Advance prior to the last day of its Interest Period, the Borrower may, at
its  option  and in lieu  of  repayment  of  such  Advances,  deposit  with  the
Administrative  Agent  cash  collateral  in an  amount  equal  to  the  required
repayment  amount  to be held by the  Administrative  Agent  as  repayment  of a
Bankers' Acceptance Advance on its maturity date or repayment of a Libor Advance
on the  last  day of its  then  current  Interest  Period,  as the  case may be.
Notwithstanding the foregoing,  in the event that the Outstanding Amount exceeds
the amount  allowed  pursuant  to Section  2.3(b)  because of a decrease  in the
amount of the  Borrowing  Base,  the  Borrower  shall repay,  concurrently  with
delivery of the Borrowing Base Certificate pursuant to Section 8.1(a)(iv),  that
portion  of the  Outstanding  Amount  which is in excess of the  maximum  amount
pursuant to Section 2.3(b)  determined on the date of delivery of such Borrowing
Base Certificate  without any requirement for notice of a required payment to be
given by the Administrative Agent or any Lender to the Borrower.

      (c) Without limiting the obligations of the Borrower under Section 2.3(b),
the Borrower may, upon giving the Administrative Agent three Banking Days' prior
written notice, repay any outstanding Advances,  provided further, however, that
repayment of Libor  Advances shall be subject to the provisions of Section 2.11.
All repayments of the Facility by the Borrower,  other than repayments  pursuant
to paragraphs  (a) and (b) of this Section 2.6,  shall be in a minimum amount of
Cdn.  $100,000 or the  Equivalent  Amount in U.S.  Dollars and amounts in excess
thereof in integral  multiples  of Cdn.  $100,000  (or, if less,  the  remaining
amount of the relevant  Advance) and shall be made to the  Administrative  Agent
for the ratable  account of the Lenders.  Repayments of any Advance  outstanding
under the  Facility  shall be made in the  currency  in which  such  Advance  is
denominated.

      (d) If the  Required  Lenders,  at any  time,  become  concerned  with the
payment  of  Priority  Claims  by the  Borrower  or any of the  Guarantors,  the
Administrative Agent may, at the direction of the Required Lenders but otherwise
in its  absolute  sole  discretion,  reduce the  Borrowing  Base by the Priority
Claims.  Priority  Claims from time to time shall be deducted from the Borrowing
Base for the purpose of  determining  the  Available  Amount  until the Required
Lenders otherwise direct.

2.7         Cancellation or Reduction of the Facility

            The  Borrower  may at any time,  upon giving at least three  Banking
Days' prior notice to the Administrative  Agent, cancel in full or, from time to
time,  cancel  in part any  undrawn  portion  of the  Facility  and  reduce  the
Committed Amount of the Facility accordingly;  provided,  however, that any such
reduction shall be in minimum amounts of Cdn.  $1,000,000 and integral multiples
of Cdn.  $100,000 in excess thereof.  Any such  cancellation  shall  permanently
reduce the Facility and may not be reinstated.

<PAGE>
                                      -22-


2.8         Application of Repayments

      (a)  Except  as  otherwise  indicated  herein,  all  payments  made to the
Administrative  Agent by or for the  Borrower  for the account of the Lenders in
connection  herewith  shall be  distributed  the same day by the  Administrative
Agent,  in accordance with its normal  practice,  in funds having same day value
among the Lenders to the  accounts  last  designated  in writing by such Lenders
respectively  to the  Administrative  Agent pro rata in  accordance  with  their
respective  Participations.  Amounts  so  distributed  shall be  applied  by the
Lenders as follows:

              (i)    to  amounts   due   hereunder   in   respect  of   Bankers'
                     Acceptances;

             (ii)    to amounts (other than principal or interest) due under any
                     Loan  Document  in  respect  of fees,  expenses  and  other
                     amounts;

            (iii)    to amounts  due  hereunder  in respect of  interest  on any
                     outstanding Advances; and

             (iv)    to the principal amount of any outstanding Advances.

Further,  payments  of interest or  principal  received by the Lenders  shall be
applied against Advances in order of:

              (v)    in the  case of  Prime  Rate  Advances  or U.S.  Base  Rate
                     Advances,  their  respective  Drawdown  Dates  or  dates of
                     Conversion, as the case may be, commencing with the earlier
                     or earliest thereof;

             (vi)    in the case of Libor  Advances,  the day following the last
                     day of their respective  Interest Periods,  commencing with
                     the earlier or earliest thereof; and

            (vii)    in the  case  of  Bankers'  Acceptances,  their  respective
                     maturity  dates,  commencing  with the  earlier or earliest
                     thereof.

Payments received by the  Administrative  Agent on the Maturity Date of Bankers'
Acceptances  shall be  distributed  pro rata  among the  Lenders  based on their
Participation   in  each   Bankers'   Acceptance.   Payments   received  by  the
Administrative  Agent on account of the Principal Amount of Bankers' Acceptances
which are  maturing  or which  have  previously  matured,  whether  pursuant  to
enforcement of remedies or otherwise, shall also be so distributed.

      (b) Where a sum is to be paid  hereunder  by the Borrower or any Lender to
the  Administrative   Agent  for  the  account  of  another  party  hereto,  the
Administrative  Agent  shall not be obliged to make the same  available  to that
other party hereto, whether such party is the Borrower or a Lender, until it has
been able to establish  that it has actually  received  such sum, but if it does
pay out a sum and it proves to be the case that it had not actually received the
sum it paid out,  then the party hereto to whom such sum was so made  available,
whether such party is the Borrower or a Lender, shall on request ensure that the
amount so made available is refunded to the  Administrative  Agent, and shall on
demand indemnify the  Administrative  Agent against any cost or loss it may have
suffered or incurred by reason of its having paid out such sum prior

<PAGE>
                                      -23-


to its having  received such sum;  provided that nothing in this Section  2.8(b)
shall limit any rights or remedies that the Borrower may otherwise  have against
a defaulting  Lender or the rights and remedies that a Lender may otherwise have
against the Borrower or a defaulting Lender.

2.9         Interest on Prime Rate Advances

            Interest on each Prime Rate Advance shall accrue at a rate per annum
equal to the  Applicable  Margin plus the Prime Rate in effect from time to time
during  the  period of time that the Prime Rate  Advance  is  outstanding.  Such
interest shall be payable in Canadian Dollars monthly in arrears on the Interest
Date of each calendar month  commencing  with the Interest Date occurring in the
calendar  month  following  the  initial  Drawdown  Date for the period from and
including  the Drawdown  Date for such Advance (or, if  applicable,  the date on
which such Advance was  converted  into a Prime Rate  Advance) or the  preceding
Interest Date for such Prime Rate Advance,  as the case may be, to and including
the day  preceding  such  Interest Date and shall be calculated on the principal
amount of the Prime Rate Advance outstanding during such period and on the basis
of the actual  number of days elapsed in a year of 365 or 366 days,  in the case
of an Interest  Date  occurring in a leap year.  Changes in the Prime Rate shall
cause an automatic  and  immediate  adjustment  of the interest  rate payable on
Prime Rate Advances without the necessity of any notice to the Borrower.

2.10        Interest on U.S. Base Rate Advances

            Interest on each U.S.  Base Rate Advance  shall accrue at a rate per
annum equal to the  Applicable  Margin plus the Base Rate in effect from time to
time during the period of time that the U.S.  Base Rate Advance is  outstanding.
Such  interest  shall be  payable  in U.S.  Dollars  monthly  in  arrears on the
Interest Date of each calendar month commencing with the Interest Date occurring
in the calendar  month  following the initial  Drawdown Date for the period from
and including the Drawdown Date for such Advance (or, if applicable, the date on
which such Advance was converted into a U.S. Base Rate Advance) or the preceding
Interest  Date for such  U.S.  Base  Rate  Advance,  as the case may be,  to and
including  the day  preceding  such Interest Date and shall be calculated on the
principal  amount of the U.S. Base Rate Advance  outstanding  during such period
and on the basis of the  actual  number of days  elapsed in a year of 365 or 366
days, in the case of an Interest Date  occurring in a leap year.  Changes in the
U.S. Base Rate shall cause an automatic and immediate adjustment of the interest
rate payable on U.S. Base Rate  Advances  without the necessity of any notice to
the Borrower.

2.11        Libor Advances

            (a) Libor Advances  shall be available in U.S.  Dollars in a minimum
principal amount of U.S.  $1,000,000 and integral  multiples of U.S. $100,000 in
excess thereof. The Drawdown Notice and each Conversion Notice or Rollover shall
specify the applicable  Interest  Period for the Libor Advance.  The duration of
each such Interest Period shall be for periods of approximately  one, two, three
or six  months  (or  such  other  period  as may be  agreed  to by the  Required
Lenders),  as the  Borrower  may  select  in  the  applicable  Drawdown  Notice,
Conversion  Notice or  Rollover  Notice.  No Libor  Advance may have an Interest
Period ending after the Maturity Date. If any Interest Period would end on a day
which is not a Banking Day, such  Interest  Period shall be extended to the next
succeeding Banking Day unless such next

<PAGE>
                                      -24-


succeeding  Banking  Day falls in the next  calendar  month,  in which case such
Interest Period shall be shortened to end on the immediately  preceding  Banking
Day.

      (b) If a Lender  determines that deposits of the necessary  amount for the
relevant  Interest Period are not available in the London interbank market or if
for any other reason a Lender,  acting  reasonably,  is unable to determine  the
applicable  Libor Rate,  then the relevant Libor Advance will not be made to the
Borrower,   such  Lender   shall  notify  the   Administrative   Agent  and  the
Administrative  Agent will notify the Borrower of such event  forthwith and will
discuss with the Borrower the particular  circumstances and implications of such
event. In the event that such determination is made by a Lender in the case of a
proposed  Rollover of an existing  Libor  Advance or a proposed  Conversion of a
U.S.  Base Rate Advance into a Libor  Advance,  the proposed  Libor Advance will
automatically be deemed to be a U.S. Base Rate Advance.

      (c) Interest on any Libor  Advance shall be calculated at a rate per annum
equal to the Libor Rate plus the Applicable Margin, shall accrue from day to day
and shall be  calculated  on the  basis of the  actual  number  of days  elapsed
(including  the first day of each  Interest  Period but  excluding  the last day
thereof) and divided by 360.  Interest on any Libor  Advance shall be payable in
U.S. Dollars in arrears on the last day of the Interest Period relating thereto;
provided,  however, that if the Interest Period is for a term of more than three
months,  interest  shall be  payable  on the last day of the  first  three-month
period and on the last day of each three-month period thereafter,  as well as on
the last day of the  Interest  Period  (each such  payment date being the "Libor
Interest Payment Date").

      (d) If a Libor  Advance is neither  repaid on the last day of an  Interest
Period nor  converted  into  another  type of Advance on such date  pursuant  to
Section 2.14, and if the Administrative Agent has not received a Rollover Notice
or a Conversion  Notice specifying the term of the next Interest Period for such
Libor Advance on or before 10:00 a.m. on the third Banking Day prior to the last
day of the then current  Interest  Period,  then the  outstanding  Libor Advance
shall be deemed to be  converted,  by way of  Conversion  on the last day of the
then current Interest Period, to a U.S. Base Rate Advance.

      (e) Except as  otherwise  provided  herein,  Libor  Advances  shall not be
repaid, prepaid or converted into another type of Advance except on the last day
of any  Interest  Period  relating  thereto  unless  the  Borrower  pays  to the
Administrative  Agent  for the  account  of a Lender  any  amounts  which may be
payable under Section 13.2.

2.12        Method and Place of Payment

            All payments of principal, interest and fees hereunder shall be made
for value at or before  12:00  noon on the day such  amount is due by deposit or
transfer  thereof to an  account of the  Borrower  maintained  at the  principal
office  of the  Administrative  Agent  in  Toronto  or such  other  place as the
Borrower  and the  Administrative  Agent may from time to time  agree.  Payments
received after such time shall be deemed to have been made on the next following
Banking Day. Each payment to be made by the Borrower under this Agreement  shall
be made without  deduction,  set-off or counterclaim.  Repayments of any Advance
and  payments of interest on any Advance  shall be made in the currency in which
such Advance is denominated.

<PAGE>
                                      -25-


The Borrower hereby irrevocably  authorizes and directs the Administrative Agent
to deduct and set-off  from such  account all amounts due to the  Administrative
Agent from time to time hereunder.

2.13        Commitment Fees

            The Borrower shall pay to the  Administrative  Agent for the ratable
account  of the  Lenders a  commitment  fee  calculated  monthly  for the period
commencing  on the Closing Date and ending on the Maturity  Date at the rate per
annum  specified  below  in this  Section  2.13  on the  average  daily  undrawn
Committed Amount of the Facility,  determined on the basis of the number of days
elapsed  in a year of 365 days or 366 days in the case of a period  ending  in a
leap  year.  Such  commitment  fee shall  accrue  daily  and be due and  payable
monthly,  in arrears,  on the first  Banking Date of each  calendar  month.  The
applicable rate per annum for the commitment fee shall be as follows:

              (i)    if  the  daily  average  outstanding  principal  amount  of
                     Advances  under the  Facility for any month is less than or
                     equal to 33.3% of the  Committed  Amount  of the  Facility,
                     then 0.70%;

             (ii)    if  the  daily  average  outstanding  principal  amount  of
                     Advances  under the  Facility for any month is greater than
                     33.3%  but less  than or  equal  to 66.7% of the  Committed
                     Amount of the Facility, then 0.60%; and

            (iii)    if  the  daily  average  outstanding  principal  amount  of
                     Advances  under the  Facility for any month is greater than
                     66.7% of the Committed Amount of the Facility, then 0.50%.

2.14        Conversion Options

            Subject to the  provisions  of this  Agreement  (including,  without
limitation, Sections 2.11 and 4.7), the Borrower may convert any type of Advance
outstanding under the Facility into another type of Advance as follows:

              (i)    provided  that no  Event of  Default  has  occurred  and is
                     continuing,  a Prime Rate Advance or a portion thereof into
                     a Bankers'  Acceptance Advance by giving the Administrative
                     Agent a  Conversion  Notice no later than 10:00 a.m. on the
                     Banking Day prior to the date of the proposed Conversion;

             (ii)    the Face  Amount  of a  Bankers'  Acceptance  or a  portion
                     thereof into a Prime Rate  Advance on the maturity  date of
                     the Bankers' Acceptance by giving the Administrative  Agent
                     a Conversion Notice no later than 10:00 a.m. on the Banking
                     Day prior to the date of the proposed Conversion;

            (iii)    provided  that no  Event of  Default  has  occurred  and is
                     continuing,  a U.S. Base Rate Advance or a portion  thereof
                     into a Libor Advance by giving the  Administrative  Agent a
                     Conversion  Notice no later than 10:00 a.m.  three  Banking
                     Days prior to the date of the proposed Conversion;

<PAGE>
                                      -26-


              (iv)   a Libor Advance or a portion  thereof into a U.S. Base Rate
                     Advance  on the  last  day of the  Interest  Period  of the
                     relevant Libor Advance by giving the Administrative Agent a
                     Conversion  Notice no later than 10:00 a.m.  on the Banking
                     Day prior to the date of the proposed Conversion;

               (v)   a Prime Rate Advance or a portion  thereof into a U.S. Base
                     Rate  Advance  in  the  Equivalent  Amount  by  giving  the
                     Administrative  Agent a  Conversion  Notice  no later  than
                     10:00  a.m.  on the  Banking  Day  prior to the date of the
                     proposed Conversion;

              (vi)   provided  that no  Event of  Default  has  occurred  and is
                     continuing,  a Prime Rate Advance or a portion thereof into
                     a Libor  Advance  in the  Equivalent  Amount by giving  the
                     Administrative  Agent a  Conversion  Notice  no later  than
                     10:00  a.m.  three  Banking  Days  prior to the date of the
                     proposed Conversion;

             (vii)   the Face  Amount  of a  Bankers'  Acceptance  or a  portion
                     thereof  into a U.S.  Base Rate  Advance in the  Equivalent
                     Amount on the maturity  date of the Bankers'  Acceptance by
                     giving  the  Administrative  Agent a  Conversion  Notice no
                     later than 10:00 a.m.  on the Banking Day prior to the date
                     of the proposed Conversion;

            (viii)   provided  that no  Event of  Default  has  occurred  and is
                     continuing,  the Face Amount of a Bankers'  Acceptance or a
                     portion  thereof  into a Libor  Advance  in the  Equivalent
                     Amount on the maturity  date of the Bankers'  Acceptance by
                     giving  the  Administrative  Agent a  Conversion  Notice no
                     later than 10:00 a.m.  three Banking Days prior to the date
                     of the proposed Conversion;

              (ix)   a U.S. Base Rate Advance or a portion  thereof into a Prime
                     Rate  Advance  in  the  Equivalent  Amount  by  giving  the
                     Administrative  Agent a  Conversion  Notice  no later  than
                     10:00  a.m.  on the  Banking  Day  prior to the date of the
                     proposed Conversion;

               (x)   provided   no  Event  of  Default  has   occurred   and  is
                     continuing,  a U.S. Base Rate Advance or a portion  thereof
                     into  a   Bankers'   Acceptance   Advance   by  giving  the
                     Administrative  Agent a  Conversion  Notice  no later  than
                     10:00  a.m.  on the  Banking  Day  prior to the date of the
                     proposed Conversion;

              (xi)   a Libor  Advance  or a portion  thereof  into a Prime  Rate
                     Advance  in the  Equivalent  Amount  on the last day of the
                     Interest Period of the relevant Libor Advance by giving the
                     Administrative  Agent a  Conversion  Notice  no later  than
                     10:00  a.m.  on the  Banking  Day  prior to the date of the
                     proposed Conversion; and

             (xii)   provided   no  Event  of  Default  has   occurred   and  is
                     continuing,  a Libor  Advance or a portion  thereof  into a
                     Bankers' Acceptance Advance in the Equivalent Amount on the
                     last day of the Interest Period of the relevant

<PAGE>
                                      -27-


                     Libor  Advance  by  giving  the   Administrative   Agent  a
                     Conversion  Notice no later than 10:00 a.m.  on the Banking
                     Day prior to the date of the proposed Conversion.

Notwithstanding  the foregoing,  if a Default has occurred and is continuing,  a
Conversion  pursuant  to  clause  (i),  (iii),  (vi),  (viii),  (x) or (xii) and
conversions  into a different  currency of Advance will be permitted only in the
discretion of the Required Lenders. For purposes of Conversions of Advances from
Canadian Dollars into U.S.  Dollars or from U.S. Dollars into Canadian  Dollars,
the  Equivalent  Amount  shall  be the  Equivalent  Amount  on the  date  of the
Conversion.  For greater certainty,  Conversions of Advances into the Equivalent
Amount  in  a  different  currency  are  permitted   notwithstanding  that  such
Equivalent  Amount may not be in amounts  required in connection with a Drawdown
of an Advance in such currency.

2.15        Execution of Notices

            Each Drawdown Notice,  Conversion Notice, Rollover Notice and notice
of repayment,  prepayment or cancellation and, unless otherwise provided herein,
all other notices,  requests, demands or other communications to be given to the
Administrative  Agent by the  Borrower  hereunder  shall be  executed by any one
officer or director of the Borrower.

2.16        Evidence of Indebtedness

      (a) The  Administrative  Agent shall open and maintain in accordance  with
its usual  practice  books of  account  evidencing  all  Advances  and all other
amounts  owing by the  Borrower  to the  Administrative  Agent  and the  Lenders
hereunder.  The  Administrative  Agent  shall  enter in the  foregoing  accounts
details of every  Drawdown  Date,  date of  Rollover  or date of  Conversion  in
respect of each  Advance and of all  amounts  from time to time owing or paid by
the Borrower to the Administrative Agent, and the amounts of principal, interest
and fees payable from time to time  hereunder.  The  information  entered in the
foregoing  accounts shall  constitute,  in the absence of manifest error,  prima
facie evidence of the  obligations of the Borrower to the  Administrative  Agent
and the Lenders  hereunder,  the date each Lender made each Advance available to
the  Borrower and the amounts the Borrower has paid from time to time on account
of the principal of, interest on and fees related to the Advances.

      (b) Each  Lender  shall open and  maintain  in  accordance  with its usual
practice books of account evidencing all Advances and all other amounts owing by
the Borrower to such Lender hereunder.  Such Lender shall enter in the foregoing
accounts  details of every Drawdown Date, date of Rollover or date of Conversion
in respect of each Advance by such Lender hereunder and of all amounts from time
to time  owing  or paid by the  Borrower  to such  Lender,  and the  amounts  of
principal, interest and fees payable to such Lender from time to time hereunder.
The  information  entered in the foregoing  accounts  shall  constitute,  in the
absence of manifest  error,  prima  facie  evidence  of the  obligations  of the
Borrower  to the  Lender  hereunder,  the date such  Lender  made  each  Advance
available  to the  Borrower  and the amounts the  Borrower has paid from time to
time on  account  of the  principal  of,  interest  on and fees  related  to the
Advances made by such Lender hereunder.  These accounts shall constitute (in the
absence of manifest  error or of  contradictory  entries in the  accounts of the
Administrative  Agent  referred to in Section  2.16(a))  prima facie evidence of
their content against the Borrower and the Guarantors.

<PAGE>
                                      -28-


2.17        Interest on Unpaid Costs and Expenses

            Unless the payment of interest is  otherwise  specifically  provided
for herein,  where the Borrower  fails to pay any amount  required to be paid by
the Borrower hereunder when due, having received notice that such amount is due,
the  Borrower  shall pay  interest  on such  unpaid  amount,  including  overdue
interest  from the time such amount is due until paid at an annual rate equal to
the sum of (i) 1%, plus (ii) the Applicable  Margin,  plus (iii) the Prime Rate,
in the case of amounts payable in Canadian  Dollars,  and the U.S. Base Rate, in
the case of amounts payable in U.S.  Dollars.  Such interest shall be determined
daily,  compounded  monthly in arrears on the last Banking Day of each  calendar
month in each year and payable on demand.

2.18        Criminal Rate of Interest

            Notwithstanding  the  foregoing  provisions  of this  Article 2, the
Borrower  shall in no event be obliged to make any payments of interest or other
amounts payable to the Administrative Agent or any Lender hereunder in excess of
an  amount  or rate  which  would be  prohibited  by law or would  result in the
receipt by the Administrative Agent or any Lender of interest at a criminal rate
(as such terms are construed under the Criminal Code (Canada)).

2.19        Compliance with the Interest Act (Canada)

            For the  purposes  of  this  Agreement,  whenever  any  interest  is
calculated  on the basis of a period of time  other than a  calendar  year,  the
annual rate of interest  to which each rate of interest  determined  pursuant to
such  calculation is equivalent for the purposes of the Interest Act (Canada) is
such  rate as so  determined  multiplied  by the  actual  number  of days in the
calendar year in which the same is to be  ascertained  and divided by the number
of days used in the basis of such determination.

2.20        Nominal Rate of Interest

            The parties  acknowledge and agree that all calculations of interest
under this  Agreement  are to be made on the basis of the nominal  interest rate
described  herein and not on the basis of effective yearly rates or on any other
basis which gives effect to the  principle of deemed  reinvestment  of interest.
The parties  acknowledge that there is a material  difference between the stated
nominal  interest rates and the effective yearly rates of interest and that they
are capable of making the  calculations  required to  determine  such  effective
yearly rates of interest.

                                   ARTICLE 3
                                LETTERS OF CREDIT

3.1         Term and Availability

            Upon the terms and subject to the conditions  hereof,  BMO shall, at
the request of the Borrower,  issue as Advances  under the Facility  irrevocable
Letters of Credit in BMO's usual form and  expiring  no later than the  Maturity
Date and having a Face Amount which,  together  with the aggregate  undrawn Face
Amount of all outstanding Letters of Credit, would not exceed

<PAGE>
                                      -29-


Cdn.  $5,000,000 (or its Equivalent  Amount in U.S.  Dollars).  The Borrower may
request  Letters  of Credit to be  denominated  in  Canadian  Dollars or in U.S.
Dollars. Each Lender severally agrees to participate in Letters of Credit issued
for the account of the Borrower in accordance  with the terms of this Agreement.
Accordingly,  each  Lender  shall be  deemed  to,  and  hereby  irrevocably  and
unconditionally  agrees to, purchase from BMO a  participation  in any Letter of
Credit  outstanding  on the Closing Date which was issued by BMO pursuant to the
provisions of the Original Credit  Agreement or issued at any time following the
Closing Date in accordance  with the terms of this  Agreement in an amount equal
to such  Lender's  Participation,  multiplied  by the  amount of such  Letter of
Credit.  Each Lender hereby  severally agrees to indemnify and hold harmless BMO
with respect to any loss, cost, expense, damages or claim asserted by any Person
against BMO as a result of the  issuance by BMO of any such Letter of Credit and
agrees to  reimburse  BMO on a pro rata  basis  with the other  Lenders  for any
amounts paid by BMO under any such Letter of Credit and to make funds  available
to the  Administrative  Agent for the account of BMO in accordance  with Section
2.4(i).  Each Lender's  obligation to make Advances to reimburse BMO for amounts
drawn under such Letters of Credit,  as  contemplated by this Section 3.1, shall
be absolute  and  unconditional  and shall not be affected by any  circumstance,
including  (A) any  set-off,  counterclaim,  recoupment,  defence or other right
which such Lender may have against BMO, the Borrower or any other Person for any
reason  whatsoever;  (B) the occurrence or continuance of a Default;  or (C) any
other  occurrence,  event or  condition,  whether  or not  similar to any of the
foregoing.  Any such  reimbursement  shall not relieve or  otherwise  impair the
obligation  of the Borrower to reimburse  BMO for the amount of any payment made
by BMO under any such  Letter of Credit,  together  with  interest  as  provided
herein.

3.2         Reimbursement

            In the event that BMO is called  upon by a  beneficiary  to honour a
Letter of Credit,  BMO shall  forthwith  give notice thereof to the Borrower and
the Administrative  Agent.  Unless the Borrower has made other arrangements with
BMO with  respect  to payment  to BMO of an amount  sufficient  to permit BMO to
discharge its  obligations  under the Letter of Credit plus that amount equal to
any and all charges  and  expenses  which BMO may pay or incur  relative to such
Letter of Credit,  any such payment so payable  shall be deemed to be a Drawdown
in accordance with Sections 2.3 and 2.4 of a Prime Rate Advance if payment under
such Letter of Credit was made in  Canadian  Dollars and shall be deemed to be a
Drawdown of a U.S.  Base Rate Advance if payment under such Letter of Credit was
made in U.S.  Dollars;  provided that the provisions of Section 2.3(a) regarding
Drawdown  Notice,  the  provisions  of  Section  6.2  regarding  conditions  for
subsequent Drawdowns and the provisions of Section 11.2 relieving the Lenders of
the obligation to make further  Advances shall not apply to such Advances.  Such
drawdown  shall be deemed to be made on a pro rata basis by all of the  Lenders.
In the event that any amount so payable by BMO exceeds the amount  available  to
be  drawn  down by the  Borrower  under  the  Facility  in  accordance  with the
provisions  of Section  2.3(b),  then BMO shall so notify the  Borrower  and the
Administrative  Agent and  forthwith  upon receipt of such notice,  the Borrower
shall  provide to BMO an amount  equal to such  excess  amount and any amount so
payable  shall be deemed to be a Prime Rate Advance (if such excess amount is in
Canadian  Dollars) or a U.S. Base Rate Advance (if such excess amount is in U.S.
Dollars), payable on demand.

<PAGE>
                                      -30-


3.3         Indemnity for Costs

            The Borrower shall  indemnify BMO and the other Lenders  against any
and all actions, proceedings,  costs, damages, expenses, taxes (other than taxes
on overall  net income,  assets or  capital),  claims and demands  which BMO may
incur or sustain by reason of or arising  in any way  whatsoever  in  connection
with the  operating,  establishing  or paying of the amounts  payable under each
Letter of Credit or arising in  connection  with any amounts  payable by BMO and
the other  Lenders  thereunder  save and except for amounts  which have resulted
from the gross negligence or the wilful misconduct of BMO.

3.4         Fees

      (a) At the time of issue of a Letter of Credit  following  syndication  of
the  Facility by BMO, the  Borrower  shall pay to BMO,  for its own  account,  a
fronting fee of 0.125%  calculated on the Face Amount of the Letter of Credit on
the basis of the actual  number of days in the year for the period from the date
of issue of such Letter of Credit to the expiry date thereof.

      (b) The  Borrower  shall pay to the  Administrative  Agent for the ratable
account of the  Lenders an issuance  fee on each  Letter of Credit  equal to the
Applicable  Margin for Bankers'  Acceptance  Advances  calculated on the undrawn
portion  of the Face  Amount of the  Letter of Credit on the basis of the actual
number of days in the year for the period from the date of issue  thereof to the
expiry date thereof.  Such fee shall be paid quarterly in advance  commencing on
the date of issuance of each Letter of Credit and  thereafter  on the  quarterly
anniversary of the date of issuance.

      (c) The Borrower  shall pay to BMO for its own account an amendment fee in
respect of each amendment to any Letter of Credit in such manner as is customary
for BMO to charge its customers at the time of request for such amendment.

                                   ARTICLE 4
                 BANKERS' ACCEPTANCES AND BA EQUIVALENT ADVANCES

4.1         Form of Bankers' Acceptance Advance and Interest

            Bankers'  Acceptance  Advances  shall be  available  to the Borrower
under the Facility by way of Drawdown or Rollover or  Conversion by the Borrower
delivering to the  Administrative  Agent a Drawdown Notice or Rollover Notice or
Conversion Notice, as the case may be. To facilitate the procedures contemplated
herein,  the  Borrower  hereby  irrevocably  appoints  each  of the  Lenders  as
attorney-in-fact  of the  Borrower to execute,  endorse and deliver on behalf of
the  Borrower,  drafts in the form  prescribed  by it for  Bankers'  Acceptances
denominated in Canadian Dollars. Each Bankers' Acceptance executed and delivered
by a Lender on behalf of the  Borrower as provided  herein shall be binding upon
the  Borrower as if it had been  executed  and  delivered  by a duly  authorized
officer or officers of the  Borrower.  The dates,  maturity  dates and principal
amounts of all drafts shall be completed by the Lenders as required hereby.

<PAGE>
                                      -31-


4.2         Minimum Amount

            The aggregate of the Face Amounts of any drafts presented under this
Article 4 for any Drawdown or Conversion shall be not less than Cdn.  $1,000,000
and integral  multiples  of Cdn.  $100,000 in excess  thereof.  The minimum Face
Amount of any draft shall be Cdn. $100,000 or any integral multiple thereof.

4.3         Term and Interest Periods

                  The term of any Bankers'  Acceptance shall be specified in the
draft and in the Drawdown Notice or Rollover Notice or Conversion Notice and the
term of any Bankers' Acceptance shall be for periods of approximately 30, 60, 90
or 180  days,  unless  otherwise  agreed  to by the  Lenders.  The  term of each
Bankers'  Acceptance  shall mature on a Banking  Day. The Borrower  shall ensure
that no Bankers'  Acceptance  issued  hereunder shall have a maturity date after
the Maturity Date.

4.4         Purchase of Drafts, Acceptance Fee and Interest

            Each  Drawdown  of a  Bankers'  Acceptance  Advance  shall  be  made
pursuant to a Drawdown Notice, Conversion Notice or Rollover Notice given by the
Borrower to the  Administrative  Agent not later than 10:00 a.m. one Banking Day
prior to the  applicable  Drawdown  Date,  or date of  Conversion  or  Rollover;
provided,  however,  that in the case of a  Drawdown  of a  Bankers'  Acceptance
Advance in a Face  Amount in excess of Cdn.  $10,000,000,  the  Drawdown  Notice
shall be given by the Borrower to the Administrative  Agent not later than 10:00
a.m. two Banking  Days prior to the  applicable  Drawdown  Date.  Each  Drawdown
Notice or Rollover Notice or Conversion  Notice shall be irrevocable and binding
on the Borrower and shall specify the Drawdown Date or date of Rollover, the sum
of the aggregate Face Amount of the Bankers' Acceptances to be purchased and the
maturity date for such drafts. Not later than 12 noon on the applicable Drawdown
Date or date of Conversion or Rollover,  the Lenders shall  complete one or more
drafts in accordance  with the Drawdown  Notice,  Conversion  Notice or Rollover
Notice and the Lenders accept such drafts and purchase the Bankers'  Acceptances
thereby created for the BA Purchase Price.  Bankers' Acceptances  purchased by a
Lender  hereunder  may be held by it for its own account until the maturity date
or sold by it at any time prior thereto in any relevant market therefor,  in the
Lender's sole discretion.

4.5         Payment on Maturity

            The Borrower shall pay to the  Administrative  Agent for the account
of the Lenders on the maturity of a Bankers'  Acceptance  an amount equal to the
Face Amount of such  maturing  Bankers'  Acceptance;  provided that the Borrower
may, at its option, so reimburse the Lenders, in whole or in part, by delivering
to the  Administrative  Agent no later than 10:00 a.m.  one Banking Day prior to
the  maturity  date  of  a  maturing  Bankers'  Acceptance,  a  Rollover  Notice
specifying the term of the Bankers'  Acceptances  and  presenting  drafts to the
Lenders for  acceptance and purchase  having,  in the case of  reimbursement  in
whole by replacement Bankers' Acceptances, an aggregate Face Amount equal to the
Face Amount of the maturing Bankers' Acceptances. In the event that the Borrower
fails  to  deliver  a  Rollover   Notice  and  fails  to  make  payment  to  the
Administrative Agent in respect of the maturing Bankers'  Acceptances,  the Face

<PAGE>
                                      -32-


Amount of the maturing Bankers' Acceptances shall be deemed to be converted to a
Prime Rate Advance on the relevant  maturity date. The Borrower shall pay to the
Administrative  Agent for the account of the Lenders on the maturity date of the
maturing  Bankers'  Acceptance  the  difference  between  the Face Amount of the
maturing  Bankers'  Acceptance  and the BA Purchase  Price for such  replacement
Bankers' Acceptances.

4.6         Waiver of Days of Grace

            The Borrower renounces and shall not claim any days of grace for the
payment of any Bankers' Acceptance.

4.7         No Market

            If a Lender  determines  in good faith,  by reason of  circumstances
affecting  the  Canadian  money  market,  which  determination  shall be  final,
conclusive  and binding upon the Borrower,  that there is no market for Bankers'
Acceptances,   such  Lender  shall   notify  the   Administrative   Agent.   The
Administrative  Agent shall then notify the Borrower that there is no market for
Bankers'  Acceptances,  and the right of the  Borrower to request  the  Bankers'
Acceptance  Advances shall be suspended  until such Lender,  acting  reasonably,
determines  that the  circumstances  causing such suspension no longer exist and
the Administrative Agent so notifies the Borrower and any notice of drawing of a
Bankers'  Acceptance  Advance  which is  outstanding  shall be cancelled and the
drawing  requested  therein shall, at the option of the Borrower,  either not be
made or be made as a Prime Rate Advance. The Administrative Agent shall promptly
notify the  Borrower  of the  suspension  of the  Borrower's  right to request a
Bankers' Acceptance Advance and of the termination of any such suspension.

                                   ARTICLE 5
                   CHANGE OF CIRCUMSTANCES AND INDEMNIFICATION

5.1         Increased Costs

            In the event of (i) any  Applicable  Law coming into force after the
date  hereof  or (ii) any  change  in any  existing  Applicable  Law,  or in the
interpretation  or application  thereof by any court or by any  governmental  or
other  authority  or entity  charged  with the  administration  thereof or (iii)
compliance by a Lender with any direction,  request or  requirement  (whether or
not having the force of law) of any  governmental  or other  authority or entity
charged with the  administration  of any  Applicable  Law (each such event being
hereinafter referred to as a "change in law") which now or hereafter:

      (a)   subjects  (whether  directly,  or as a result of any  withholding or
            deduction by the  Borrower) a Lender to any Tax or changes the basis
            of taxation, or increases any existing Tax (in each case, except for
            the coming  into force of any tax or change in the basis of taxation
            or manner of  collection  of any tax in  respect of or the change in
            the rate of Tax  charged on income or capital of a Lender as a whole
            and  including  any Other  Tax that is  payable  by a Lender  on, or
            required by Applicable  Law to be withheld by the Borrower from, any
            Additional  Compensation,  as hereinafter  defined),  on payments of
            principal,  interest or other amounts payable

<PAGE>
                                      -33-


            by the Borrower to the Administrative  Agent for the account of such
            Lender hereunder or on or by reference to the amount of any Advances
            made or to be made by such Lender hereunder or on or by reference to
            the commitment of such Lender hereunder, or

      (b)   imposes,  modifies or deems applicable any reserve,  special deposit
            or similar requirements or otherwise imposes any cost on a Lender in
            funding or maintaining all or any of the Advances hereunder, or

      (c)   will have the effect of  increasing  the  amount of overall  capital
            required  to be  maintained  by a Lender,  taking  into  account the
            existence of such Lender's  participation  in any Advance  hereunder
            (including, without limitation, all or any part of its commitment),

and the result of any of the  foregoing  is to increase the cost to such Lender,
reduce the income receivable by it or reduce the effective return on the capital
of such Lender in respect of any  Advances  and/or its  Commitment  to an extent
which such Lender believes to be material, such Lender shall give notice thereof
to the  Borrower and to the  Administrative  Agent  (herein  called a "Notice of
Amount")  stating  the event by reason of which it  believes  it is  entitled to
Additional   Compensation  (as  hereinafter  defined),  such  cost  and/or  such
reduction  in such return (or such  proportion  of such  reduction as is, in the
reasonable and bona fide opinion of such Lender, attributable to its obligations
hereunder),  the amount of such Additional Compensation (as hereinafter defined)
incurred by such Lender and supplying reasonable supporting evidence (including,
in the event of change of  Applicable  Law, a photocopy  of the  Applicable  Law
evidencing such change) together with a certificate of a duly authorized officer
of such  Lender  setting  forth  the  Additional  Compensation  and the basis of
calculation of such Additional Compensation; provided that such Lender shall not
be required to disclose  any  information  required to be kept  confidential  by
Applicable  Law. In the event such Lender  subsequently  recovers all or part of
the Additional Compensation paid by the Borrower, it shall repay an equal amount
to the  Borrower.  The Borrower  shall pay to the  Administrative  Agent for the
account of such  Lender,  within 10  Banking  Days of the date of receipt of any
Notice of Amount, the amount specified in such Notice of Amount (in this Article
5  referred  to as  "Additional  Compensation").  The  obligation  to  pay  such
Additional  Compensation for subsequent  periods will continue until the earlier
of termination of the Advance or the Commitment affected by the change in law or
the  lapse  or  cessation  of the  change  in law  giving  rise  to the  initial
Additional Compensation.  Each Lender shall make reasonable efforts to limit the
incidence of any such Additional  Compensation and seek recovery for the account
of the Borrower upon the Borrower's request at the Borrower's expense,  provided
a Lender in its reasonable determination suffers no appreciable economic, legal,
regulatory or other disadvantage.  Notwithstanding the foregoing  provisions,  a
Lender shall only be entitled to rely upon the provisions of this Section 5.1 if
and for so long as it is not treating the Borrower in any  materially  different
or in any less  favourable  manner than is applicable to any other  customers of
such Lender,  where such other customers are bound by similar  provisions to the
foregoing provisions of this Section 5.1.

<PAGE>
                                      -34-


            5.2         Illegality

            If, with  respect to a Lender,  the  implementation  of any existing
provision of Applicable Law or the adoption of any Applicable Law, or any change
therein or in the  interpretation or application  thereof by any court or by any
statutory board or commission now or hereafter makes it unlawful for such Lender
to make,  fund or maintain  all or any  portion of an  outstanding  Advance,  to
maintain  all or any part of its  commitment  hereunder or to give effect to its
obligations  in respect of all or any portion of an  outstanding  Advance,  such
Lender may, by written notice thereof to the Borrower (supported, at the request
and expense of the Borrower,  by an opinion of such Lender's  counsel),  declare
the  obligations of such Lender under this Agreement to be terminated  whereupon
the  same  shall  forthwith  terminate,  and the  Borrower  shall  repay  to the
Administrative  Agent for the account of such Lender within the time required by
such law (or as promptly  as  practicable  if already  unlawful or at the end of
such longer period, if any, as such Lender, in its bona fide opinion, may agree)
the  principal  of the Advances  made by such  Lender.  If any such change shall
affect only that portion of such Lender's  obligations under this Agreement that
is, in the bona fide opinion of such  Lender,  severable  from the  remainder of
this  Agreement so that the remainder of this Agreement may be continued in full
force and effect  without  otherwise  affecting any of the  obligations  of such
Lender or the  Borrower  hereunder,  such Lender shall  declare its  obligations
under only that portion so terminated.

                                   ARTICLE 6
                        CONDITIONS PRECEDENT TO DRAWDOWN

6.1         Conditions for Closing

            The following  conditions  shall be satisfied by the Borrower on the
Closing Date:

      (a)   this Agreement and the Borrower's Security Documents, in form and on
            terms  satisfactory to the Lenders,  acting  reasonably,  shall have
            been duly authorized,  executed and delivered to the  Administrative
            Agent by the Borrower and shall constitute legal,  valid and binding
            obligations of the Borrower;

      (b)   the Guarantees and the Guarantors'  Security Documents,  in form and
            on terms satisfactory to the Lenders, acting reasonably,  shall have
            been duly authorized, executed and delivered by the Guarantors party
            thereto  to the  Administrative  Agent and shall  constitute  legal,
            valid and binding obligations of the Guarantors party thereto;

      (c)   the  Borrower  shall  have  delivered  to the  Administrative  Agent
            certified  copies of its  constating  documents and by-laws,  all as
            amended to date, the resolution  authorizing  this Agreement and the
            Borrower's Security Documents and the incumbency of officers signing
            this  Agreement  and  the  Borrower's  Security  Documents  and  any
            documents  to be  provided  pursuant  to the  provisions  hereof  or
            thereof  and a  certificate  of  compliance,  good  standing or like
            certificate  with  respect  to the  Borrower  issued by  appropriate
            government officials of the jurisdiction of its incorporation;

<PAGE>
                                      -35-


      (d)   each of the Guarantors  shall have  delivered to the  Administrative
            Agent  certified  copies of its  certificate  of  incorporation  and
            by-laws,  all as amended to date,  the  resolution  authorizing  the
            Guarantees  and the  Guarantors'  Security  Documents  to which such
            Guarantor  is a party and the  incumbency  of  officers  signing the
            Guarantee  and the  Guarantors'  Security  Documents  to which  such
            Guarantor is a party and any  documents  to be provided  pursuant to
            the provisions  hereof or thereof and a certificate of status,  good
            standing or like  certificate  with respect to such Guarantor issued
            by  appropriate  government  officials  of the  jurisdiction  of its
            incorporation;

      (e)   MNL shall have delivered to the Administrative Agent such consent or
            acknowledgement  regarding  the  continuation  of the  security  and
            applicability of the Guarantor's Security Documents to which it is a
            party,  and the Security granted  thereunder,  to the obligations of
            the Borrower under this Agreement  notwithstanding  the amendment to
            the  terms of the  Original  Credit  Agreement  in form and on terms
            satisfactory to the Lenders, acting reasonably;

      (f)   the representations and warranties set forth in Section 7.1 shall be
            true and correct in all  material  respects on and as of the Closing
            Date by reference to the facts and  circumstances  then existing and
            the Borrower shall have  delivered an Officer's  Certificate to such
            effect;

      (g)   no Default or Event of Default shall have occurred and be continuing
            and the Borrower  shall have  delivered an Officer's  Certificate to
            such effect;

      (h)   a Borrowing  Base  Certificate as at the fiscal month ending January
            26, 2003 shall have been delivered to the Administrative Agent;

      (i)   the Security and all necessary  financing  change  statements  shall
            have been duly registered,  filed and recorded in all  jurisdictions
            where such registration,  filing or recording, in the opinion of the
            Lenders,  is necessary  or  advantageous  to  preserve,  protect and
            perfect the charges and security  interest created or intended to be
            created by the Security Documents;

      (j)   the  Borrower  shall  have  delivered  to the  Administrative  Agent
            evidence of a policy of  insurance  by EDC in favour of the Borrower
            in  form  and   substance   satisfactory   to  the  Lenders  and  an
            acknowledgement  by EDC of the  direction  to pay  delivered  by the
            Borrower as part of the Borrower's Security Documents;

      (k)   all fees and expenses  payable in connection  with the  transactions
            contemplated  hereby shall be paid in full,  to the extent that such
            fees and expenses shall then be due and payable;

      (l)   opinions of Counsel to the Borrower  and counsel to the  Guarantors,
            addressed to the  Administrative  Agent and the Lenders from time to
            time  party  hereto,  in  form  and  substance  satisfactory  to the
            Administrative  Agent and each Lender,  shall have been delivered to
            the Administrative  Agent (except for the opinion of

<PAGE>
                                      -36-


            counsel to MNL,  which shall be  delivered on a date  occurring  not
            more than 3 Banking Days following the Closing Date);

      (m)   there  shall have been no  material  adverse  change in the  assets,
            liabilities,   business,   operations,   condition   (financial   or
            otherwise)  or  prospects  of the  Borrower  and  its  Subsidiaries,
            considered  as a whole,  which has occurred  since October 27, 2002,
            the end of the Borrower's second quarter of its 2003 fiscal year;

      (n)   a  business  plan (the  "Business  Plan") for the  Borrower  and its
            Subsidiaries  in the form  attached  hereto as  Schedule  L has been
            approved by the board of  directors  of the  Borrower for the period
            commencing on November 12, 2002 and ending on October 29, 2004;

      (o)   the  Borrower  shall  have  repaid  Advances  outstanding  under the
            Original  Credit  Agreement  such  that the total  principal  amount
            outstanding  on the Closing Date shall not exceed Cdn.  $25,000,000,
            provided  that the  aggregate  undrawn  Face  Amount of  outstanding
            Letters of Credit shall be deemed, for such purpose, to be principal
            amounts outstanding under Advances.  The Administrative  Agent shall
            prepare  a  statement  as to  all  Advances  outstanding  under  the
            Original Credit Agreement on the Closing Date and the Borrower shall
            provide confirmation of the details in such statement;

      (p)   all  outstanding  Debt of the Borrower and its  Subsidiaries to T.H.
            Matthews   being  an   aggregate   amount  of   approximately   Cdn.
            $21,000,000,  shall have been  subordinated  on terms and conditions
            satisfactory to the Lenders;

      (q)   the  Borrower  shall have  received net proceeds of not less than an
            aggregate amount consisting of Cdn. $10,000,000 and U.S. $7,500,000,
            or in each case the Equivalent Amount in another currency,  from the
            issuance of preferred shares to T.H. Matthews on terms  satisfactory
            to the Lenders, acting reasonably (or, in the alternative,  such net
            proceeds  shall  have  been  received  from the  Borrower  from T.H.
            Matthews by way of  subordinated  debt on terms  satisfactory to the
            Lenders, in their sole discretion);

      (r)   accounts  receivable  owing to the  Borrower  from  Mitel  Knowledge
            Corporation  in the  aggregate  amount of Cdn.  $5,195,712  and from
            Mitel Systems  Corporation in the aggregate amount of Cdn.  $733,000
            shall have been paid in full;

      (s)   the  Debt  of  BreconRidge   Manufacturing   Solutions  Corporation,
            BreconRidge    Manufacturing   Solutions,   Inc.   and   BreconRidge
            Manufacturing  Solutions Limited to the Borrower, MNI and MNL in the
            principal amount of U.S.  $2,466,346.02,  U.S.  $421,665.86 and U.S.
            $2,312,852.03,  respectively, plus accrued interest, as evidenced by
            three promissory notes dated August 31, 2001, shall have been repaid
            in full; and

      (t)   the  Administrative   Agent  shall  have  received  such  additional
            evidence,  documents or  undertakings  as the Lenders may reasonably
            request  to  establish   the   consummation   of  the   transactions
            contemplated hereby.

<PAGE>
                                      -37-


            In  each  case  where  a  document   shall  be   delivered   to  the
Administrative  Agent, the Borrower shall provide a sufficient  number of copies
for delivery of an originally executed copy of each document to each Lender. The
conditions  set forth in this  Section 6.1 are  inserted for the sole benefit of
each  Lender  and may be  waived  by each  Lender  in whole or in part,  with or
without terms or conditions.

            6.2         Conditions for Subsequent Drawdowns

            The  following  conditions  shall be satisfied by the Borrower at or
prior to the time of each Drawdown of an Advance  (other than a deemed  Drawdown
of a Prime Rate Advance  pursuant to the  provisions  of Section 3.2 or 4.5 or a
deemed  Drawdown  of a U.S.  Base Rate  Advance  pursuant to the  provisions  of
Section  2.11(b) or (d) or Section  3.2) under the  Facility  subsequent  to the
first Drawdown:

      (a)   the Borrower shall have given to the Administrative Agent a Drawdown
            Notice in accordance with the provisions of Section 2.3(a);

      (b)   the representations and warranties set forth in Section 7.1 shall be
            deemed to have been given on the Drawdown Date and shall be, mutatis
            mutandis, true and correct in all material respects on and as of the
            Drawdown  Date,  both before and after giving effect to the Drawdown
            of such Advance and to the  application  of proceeds  therefrom,  by
            reference to the facts and circumstances  then existing and assuming
            that each of such  representations  and warranties and the Schedules
            referred to therein had been amended to reflect any notices provided
            by the  Borrower  to the  Administrative  Agent  in  respect  of the
            matters dealt with therein and,  with respect to the  representation
            set forth in Section  7.1(g),  the reference to the date October 27,
            2002 shall be deemed to be a reference to the date of the  financial
            statements  of the  Borrower  most  recently  delivered  pursuant to
            Section 8.1(a) and, with respect to unaudited financial  statements,
            that such statements  fairly present the financial  condition of the
            Borrower  and its  Subsidiaries  as at such date and the  results of
            their  operations for the financial period then ended, in accordance
            with GAAP  consistently  applied,  subject to normal  year end audit
            adjustments; and

      (c)   no  Default  or  Event  of  Default   shall  have  occurred  and  be
            continuing, nor shall any such event occur as a result of making the
            Advances or the application of proceeds therefrom.

                                   ARTICLE 7
                         REPRESENTATIONS AND WARRANTIES

7.1         Representations and Warranties

            The   Borrower   represents   and   warrants   as   follows  to  the
Administrative  Agent and each Lender and  acknowledges  and  confirms  that the
Administrative  Agent and each Lender is relying upon such  representations  and
warranties:

<PAGE>
                                      -38-


      (a)   Corporate  Status.  The Borrower is a corporation duly  incorporated
            and  validly  existing  under  the  laws  of  Canada,  each  of  the
            Guarantors  other than MNL is a corporation  duly  incorporated  and
            validly  existing  under  the  laws of  Delaware,  MNL is a  private
            company  limited by shares duly  incorporated  and validly  existing
            under the laws of England and Wales, and each of their  Subsidiaries
            is a  corporation  duly  incorporated,  amalgamated  or  is  validly
            existing as a  partnership  or is  otherwise  organized  and validly
            existing under the laws of the jurisdiction of its incorporation and
            the Borrower,  each Guarantor and each of their Subsidiaries has all
            necessary  corporate  power and authority to conduct its business as
            presently conducted and to own or lease its properties and assets in
            each  jurisdiction  where such properties and assets are situated or
            such business is conducted.

      (b)   Corporate  Power and Authority.  The Borrower and each Guarantor has
            full corporate power and authority to enter into the Loan Documents,
            to which they are a party, and to do all acts and things and execute
            and deliver all documents as are required hereunder or thereunder to
            be done,  observed or performed by it in  accordance  with the terms
            hereof or thereof.

      (c)   Authorization  and  Enforceability.  This  Agreement and each of the
            other  Loan  Documents  to which  the  Borrower  is a party has been
            delivered  by the  Borrower  and  constitutes  a valid  and  legally
            binding  obligation  of  the  Borrower  enforceable  against  it  in
            accordance  with  its  terms,  subject  to  applicable   bankruptcy,
            insolvency  and other laws  affecting the  enforcement of creditors'
            rights  generally and, when delivered by a Guarantor,  the Guarantee
            and  each  of the  Guarantor's  Security  Documents  to  which  such
            Guarantor  is a party will  constitute  a valid and legally  binding
            obligation of such  Guarantor  enforceable  against it in accordance
            with its terms,  subject to applicable  bankruptcy,  insolvency  and
            other laws affecting the enforcement of creditors'  rights generally
            and general principles of equity.

      (d)   Conflict  with  Constating  Documents  and  Agreements.  Neither the
            execution and delivery of the Loan Documents nor the consummation by
            the Borrower or any Guarantor of any of the transactions  herein and
            therein  contemplated,  nor  compliance  by  the  Borrower  and  the
            Guarantors with the terms, conditions and provisions,  will conflict
            with or  result  in a  breach  of any of the  terms,  conditions  or
            provisions of:

              (i)    the  constating  documents,  certificates  or  articles  of
                     incorporation  or by-laws of the Borrower and any Guarantor
                     or any unanimous shareholders' agreement relating to any of
                     them;

             (ii)    any  resolution  of  the  shareholders,  directors  or  any
                     committee of directors of the Borrower or any Guarantor;

            (iii)    in any  material  respect,  any  agreement,  instrument  or
                     arrangement  to which the  Borrower,  any  Guarantor or any
                     Subsidiary is now a party or by

<PAGE>
                                      -39-


                     which it, or its properties  are, or may be, bound, or will
                     constitute  a  default  thereunder,  or will  result in the
                     creation or  imposition  of any Lien (other than  Permitted
                     Encumbrances)  upon any of the  properties or assets of the
                     Borrower, any Guarantor or any Subsidiary;

             (iv)    any judgment or order,  writ,  injunction  or decree of any
                     court; or

              (v)    any Applicable Law presently in effect.

      (e)   No Other Authorization or Consents Necessary.  No action (including,
            without  limitation,  the  giving of any  consent,  licence,  right,
            approval,  authorization,  registration,  order or  permit)  of,  or
            filing  with,  any  governmental  or  public  body or  authority  is
            required to authorize,  or is otherwise required in connection with,
            the  execution,  delivery  and  performance  by the  Borrower or any
            Guarantor of the Loan Documents or in order to render this Agreement
            and the Security Documents legal, valid,  binding or enforceable and
            no  consents,  approvals  or other  authorizations  are  required in
            connection  with the assignment of accounts  receivable  pursuant to
            the Security Documents except those actions which have been obtained
            or filings  which  have been made and such  consents,  approvals  or
            authorizations   which  may  be  required  in  connection  with  the
            assignment  of  Governmental  Receivables  pursuant to the Financial
            Administration  Act (Canada),  federal laws of the United States and
            comparable   provincial,   state  or   territorial   legislation  or
            legislation in any political subdivision thereof.

      (f)   No Third Party  Consents.  No consent or approval of any other party
            is  required  in  connection   with  the  execution,   delivery  and
            performance  by the Borrower or any Guarantor of the Loan  Documents
            or in  order  to  render  this  Agreement  or any  of  the  Security
            Documents legal, valid, binding or enforceable except those consents
            or approvals which have been obtained.

      (g)   Financial Statements.  The audited consolidated financial statements
            of the Borrower for the year ended April 30, 2002 and the  unaudited
            consolidated  financial  statements  of the  Borrower for the period
            ended October 27, 2002 present fairly, in all material respects, the
            financial  position of the Borrower as at each such respective date,
            subject,  in the case of the  financial  statements  for the  period
            ended  October 27, 2002, to normal year end  adjustments;  and since
            October 27, 2002,  there has been no material  adverse change in the
            assets,   liabilities,   condition  (financial  or  otherwise),   or
            prospects of the Borrower  and its  Subsidiaries,  taken as a whole,
            other than changes disclosed in writing to the Administrative Agent.

      (h)   Litigation.  Other  than (i) as  disclosed  in  Schedule  G, or (ii)
            actions,  suits or proceedings  claiming solely payment  (whether by
            way of an amount  owing,  damages  or  otherwise)  of an amount  not
            exceeding  Cdn.  $500,000  in  respect  of any  one  matter  or Cdn.
            $1,000,000  in  the  aggregate,  there  are  no  actions,  suits  or
            proceedings  pending or, to the best of the  knowledge and belief of
            the Borrower,  threatened  against or affecting  the  Borrower,  any
            Guarantor or any of their

<PAGE>
                                      -40-


            Subsidiaries or any of their  undertaking,  property and assets,  at
            law,  in  equity  or  before  any  arbitrator  or  before  or by any
            governmental department, body, commission,  board, bureau, agency or
            instrumentality  in respect of which the Borrower has  determined in
            good faith that there is a reasonable possibility of a determination
            adverse to the  Borrower,  any  Guarantor  or  Subsidiary  and which
            could, if determined adversely,  materially and adversely affect the
            legality,  validity  or  enforceability  of  this  Agreement  or the
            Security  Documents or the ability of the Borrower or any  Guarantor
            to perform its  obligations  under this  Agreement  and the Security
            Documents and none of the Borrower,  any Guarantor or any Subsidiary
            is in default with respect to any Applicable Law or any order, writ,
            injunction or award of any government,  commission,  board,  agency,
            court,  arbitrator  or  instrumentality  which  would  have any such
            effect.

      (i)   Licences,  etc. and Compliance with Laws. Other than as disclosed in
            Schedule  H,  all  licences,  franchises,   certificates,  consents,
            rights,   rights-of-way,    easements,   entitlements,    approvals,
            authorizations,  registrations,  orders and  permits  (collectively,
            "Permits") required to enable the Borrower,  the Guarantors and each
            of their Subsidiaries to carry on their respective businesses as now
            conducted by them and to own, lease and operate their properties and
            assets have been duly obtained and are currently  subsisting in good
            standing,  except for such Permits, the absence of which has not had
            and would not  reasonably  be expected to have,  a material  adverse
            effect on the  business,  operations  or financial  condition of the
            Borrower and its Subsidiaries  taken as a whole.  The Borrower,  the
            Guarantors  and  each of their  Subsidiaries  have  complied  in all
            material respects with all terms and provisions  presently  required
            to be  complied  with by them  in all  such  Permits  and  with  all
            Applicable Law (other than  Environmental  Laws) and they are not in
            violation of any of the respective provisions thereof and in respect
            of which there is a reasonable  possibility that such non-compliance
            or violation  could  materially  and adversely  affect the business,
            operations   or   financial   condition  of  the  Borrower  and  its
            Subsidiaries,  taken as a whole,  or the ability of the Borrower and
            the  Guarantors  to  perform  their   obligations   under  the  Loan
            Documents.

      (j)   Compliance  with  Environmental  Laws.  Other than as  disclosed  in
            Schedule H:

              (i)    the  Borrower,  each of the  Guarantors  and  each of their
                     Subsidiaries  and,  to the  best  of the  knowledge  of the
                     Borrower and the Guarantors after due inquiry, those of any
                     party  having  charge,  management  or  control of any real
                     property of any of the Borrower,  the  Guarantors and their
                     Subsidiaries   have  been  and  are  in   compliance   with
                     Environmental Laws which are currently  applicable to their
                     operations and the release,  emission,  deposit,  issuance,
                     discharge,  transportation  or disposal  ("Release") of any
                     Hazardous Materials; the Borrower, the Guarantors and their
                     Subsidiaries  have no contingent  liabilities in connection
                     with any Release or likely  Release and have no  conditions
                     on any property,  which now, or with the passage of time or
                     the giving of notice or both,  may give rise to  liability,
                     and in respect of which there is a  reasonable  possibility
                     that  such   non-compliance,   contingent   liabilities  or
                     conditions could have a material

<PAGE>
                                      -41-


                     adverse  effect on the  Business,  operations  or financial
                     condition of the Borrower and its Subsidiaries,  taken as a
                     whole;

             (ii)    neither  the  Borrower,  the  Guarantors  nor  any  of  the
                     Subsidiaries  of the foregoing  has received  notice of any
                     judicial  or   administrative   proceeding   alleging   the
                     violation  of  or  any   potential   liability   under  any
                     Environmental Laws and none of the Borrower, the Guarantors
                     nor any of their  Subsidiaries has received notice of or is
                     subject to any Environmental Claim; and

            (iii)    neither  of the  Borrower,  the  Guarantors,  any of  their
                     Subsidiaries  or,  to  the  best  of the  knowledge  of the
                     Borrower and the Guarantors after due inquiry, or any party
                     having  charge,  management or control of any of their real
                     property  has  ever  caused  or  permitted   any  Hazardous
                     Material to be placed, held, located, stored or disposed of
                     on, in, under,  through or at any such property or any part
                     thereof except in compliance with Environmental Laws.

      (k)   Encumbrances.   The  Borrower,   the  Guarantors  and  each  of  its
            Subsidiaries  has good and  valid  title  to all of its  assets  and
            property and there are no Liens on any of the assets or  undertaking
            of the Borrower,  the  Guarantors or their  Subsidiaries  other than
            Permitted Encumbrances.

      (l)   No Default or Event of  Default.  No Default or Event of Default has
            occurred and is continuing.

      (m)   No Action for Winding-Up or Bankruptcy.  There has been no voluntary
            or involuntary  action taken either by or against the Borrower,  any
            Guarantor or any Subsidiary for any such  corporation's  winding-up,
            dissolution,  liquidation, bankruptcy, receivership,  administration
            or similar or  analogous  events in respect of such  corporation  or
            partnership or all or any material part of its assets or revenues.

      (n)   Taxes.  The  Borrower,  each of the  Guarantors  and  each of  their
            Subsidiaries  has filed all tax  returns  which were  required to be
            filed,  paid all Taxes (including  interest and penalties) which are
            due and  payable  other  than any Tax the  payment of which is being
            contested  in good faith and for which  adequate  reserves are being
            maintained.

      (o)   Subsidiaries.  Schedule I describes all of the material Subsidiaries
            of the  Borrower  and its  interests  therein as at the date of this
            Agreement.  Each of MNI,  MNSI and MNL is an  indirect  wholly-owned
            Subsidiary of the Borrower.  Neither the Borrower nor the Guarantors
            have any  material  investment  or material  equity  interest in any
            other  Person  other than those  entities  described  in the note to
            Schedule I and any such  investment or equity acquired in accordance
            with Section 8.2(e).

<PAGE>
                                      -42-


      (p)   Location of Business.  The chief executive office of the Borrower is
            located in Ottawa,  Ontario;  the principal office of MNI is located
            in  Herndon,  Virginia  and  payments  in respect of MNI's  accounts
            receivable  are made to an  account  of MNI at Bank One in  Detroit,
            Michigan;  the  principal  office  of MNSI is  located  in  Herndon,
            Virginia and payments in respect of its accounts receivable are made
            to an  account  of MNSI at Bank  One in  Belleville,  Michigan;  the
            principal office of MNL is located at Portskewett, Monmouthshire and
            payments in respect of its accounts  receivable are made to accounts
            of MNL at Barclays  Bank plc located at  Corporate  Banking  Centre,
            Windsor Court, Windsor Place, Cardiff, Wales CF10 3ZL.

      (q)   Location of Collateral.  With the exception of inventory in transit,
            at least  95% (on a net book  value  basis) of all  tangible  assets
            comprising the Borrower's Collateral (as that term is defined in the
            Borrower's  Security  Documents)  are  situate  in the  Province  of
            Ontario.

      (r)   Registrations.  All  registrations,  filings and  recordings  as are
            necessary to preserve,  protect and perfect the charges and security
            interest  created,  or  intended  to be  created  by,  the  Security
            Documents have been made.

      (s)   Pension  Plans.  All  material  obligations  of the Borrower and the
            Guarantors   (including   fiduciary,    funding,    investment   and
            administrative  obligations)  required to be performed in connection
            with the pension  plans of the  Borrower or any  Guarantor,  and the
            funding agreements therefore, have been performed on a timely basis.

7.2         Survival of Representations and Warranties

            The  representations  and warranties set out in this Article 7 shall
survive  the  execution  and  delivery of this  Agreement  and the making of any
Advances to the Borrower,  notwithstanding  any  investigations  or examinations
which may be made by the Administrative  Agent, any Lender or the Administrative
Agent's Counsel to any of them.

                                   ARTICLE 8
                                    COVENANTS

8.1         Affirmative Covenants

            The Borrower covenants and agrees with the Administrative  Agent and
each Lender  that,  unless the  Administrative  Agent and the  Required  Lenders
otherwise  consent  in  writing,  so long as any  amount  payable  hereunder  is
outstanding:

      (a)   Financial  Reporting.  The Borrower  shall  deliver,  or cause to be
            delivered,  to the  Administrative  Agent, with sufficient  original
            copies for each Lender:

<PAGE>
                                      -43-


              (i)    not later than March 15, 2003, a  certificate  contemplated
                     by Section  8.1(a)(iii) or other evidence,  satisfactory to
                     the  Lenders,  that  EBITDA  for the fiscal  quarter  ended
                     January 26, 2003 was positive;

             (ii)    within 45 days  after  the end of each of the  first  three
                     fiscal  quarters  of the  Borrower  in  each  fiscal  year,
                     commencing  with the fiscal  quarter on the last  Sunday in
                     January   2003,   the  unaudited   consolidated   financial
                     statements of the Borrower, including balance sheet, income
                     statement  and  statement  of cash flow,  all  prepared  in
                     accordance with GAAP (except for the absence of footnotes);
                     and

            (iii)    within  120 days after the end of each  fiscal  year of the
                     Borrower  (commencing  with the fiscal  year  ending on the
                     last  Sunday  in  April  2003)  the  audited   consolidated
                     financial   statements  of  the  Borrower  for  such  year,
                     including balance sheet,  income statement and statement of
                     cash  flow   together   with  the  report   thereon  of  an
                     independent auditor of recognized national standing;

            each of such  financial  statements  referred to in clauses (ii) and
            (iii) above to be prepared in accordance with GAAP;

             (iv)    together with the financial  statements  delivered pursuant
                     to Sections  8.1(a)(i) and (ii), a certificate of the Chief
                     Financial  Officer of the  Borrower  to the effect that the
                     information  contained in such  statements  is prepared and
                     presented in  accordance  with GAAP (except for the absence
                     of  footnotes  in  unaudited  statements)  and in a  manner
                     consistent with the past practices of the Borrower and that
                     such  financial  statements  are  true and  correct  in all
                     material   respects,   subject  to  normal  year-end  audit
                     adjustments in the case of unaudited financial  statements,
                     and present fairly the results of operations and changes in
                     the  financial  position  of the  Borrower as of and to the
                     date of such  financial  statements  and  stating  that the
                     Borrower is in  compliance  with the covenants set forth in
                     Article 8 including,  without  limitation,  those financial
                     covenants  set forth in Section 8.3 and, in respect of such
                     financial   covenants   providing   detailed   calculations
                     evidencing   compliance   therewith,   that   each  of  the
                     representations and warranties of the Borrower set forth in
                     Section 7.1 is true and correct by  reference  to the facts
                     and circumstances  existing on the date of such certificate
                     (or specifying inaccuracies therein) and that no Default or
                     Event  of  Default  has  occurred  and  is  continuing  (or
                     specifying  such  non-compliance  or  Default  or  Event of
                     Default and stating what action,  if any, the  Borrower,  a
                     Guarantor  or  any   Subsidiary  is  taking  in  connection
                     therewith); and

              (v)    within  10  days  of the  end of  each  calendar  month,  a
                     Borrowing Base Certificate  together with a detailed report
                     on accounts receivable of the Borrower and each Guarantor.

<PAGE>
                                      -44-


      (b)   Corporate Status.  Subject to Section 12.1, the Borrower will remain
            a corporation  duly continued and validly  subsisting under the laws
            of Canada or a province  thereof and the  Borrower  shall cause each
            Guarantor and Subsidiary to remain a corporation  duly  incorporated
            or organized and validly  subsisting  under the laws of its existing
            jurisdiction  of  incorporation  or the laws of  Canada or any other
            province  thereof  and,  in  each  case,   registered  or  otherwise
            qualified  in all  material  respects  to carry on  business in each
            jurisdiction where necessary to conduct its business.

      (c)   Conduct  of  Business.  The  Borrower  will,  and  will  cause  each
            Guarantor  and each other  Subsidiary  to,  continue  its  business,
            except as the board of directors or duly authorized  officers of the
            Borrower  may  otherwise,  in good faith,  determine  is in the best
            interests of the  Borrower,  and will not  materially  and adversely
            affect  the  business,  operations  or  financial  condition  of the
            Borrower and its  Subsidiaries,  taken as a whole, or the ability to
            perform  any  of  their  obligations  under  this  Agreement  or the
            Security Documents. The Borrower will, and will cause each Guarantor
            and each  other  Subsidiary  to,  manage its  business  in a proper,
            prudent  and  efficient  manner  (as the board of  directors  of the
            Borrower may determine in good faith) in all material respects.

      (d)   Notice  of  Event of  Default.  The  Borrower  will  deliver  to the
            Administrative  Agent,  forthwith upon becoming aware of any Default
            or Event of Default,  a  certificate  of an officer of the  Borrower
            specifying  such  Default  or  Event  of  Default  together  with  a
            statement of an officer of the  Borrower  setting  forth  details of
            such Default or Event of Default and the action  which has been,  or
            is proposed to be, taken with respect thereto.

      (e)   Other   Notifications.   The  Borrower  shall  promptly  notify  the
            Administrative Agent of:

              (i)    any change in the name or jurisdiction of  incorporation or
                     organization  of the Borrower or any  Guarantor  and of any
                     change in the  location of the  registered  office or chief
                     executive  office or  material  assets of any of them which
                     are  subject  to a Lien  in  favour  of the  Administrative
                     Agent;

             (ii)    any action, suit, proceeding,  complaint,  notice, order or
                     material  Environmental  Claim which is commenced or issued
                     or of  which  it  becomes  aware  (and  which  has not been
                     disclosed  in  Schedule  G or H) which is pending or issued
                     against or, to the best of its  information,  knowledge and
                     belief,  affecting  the  Borrower,  any Guarantor or any of
                     their  Subsidiaries or any of their  undertaking,  property
                     and assets at law,  in equity or before any  arbitrator  or
                     before or by any governmental department, body, commission,
                     board,  bureau,  agency or  instrumentality  in  respect of
                     which the Borrower determines in good faith that there is a
                     reasonable  possibility of a  determination  adverse to the
                     Borrower,  any  Guarantor  or any  other  Subsidiary  which
                     would, if determined  adversely,  reasonably be expected to
                     materially and adversely affect the business,

<PAGE>
                                      -45-


                     operations  or condition  (financial  or  otherwise) of the
                     Borrower  and its  Subsidiaries,  taken as a whole,  or the
                     ability  to  perform  any of their  obligations  under this
                     Agreement or the Security  Documents or the  enforceability
                     of  the  Security,  and  any  action,  suit  or  proceeding
                     claiming  payment  (whether  by  way  of an  amount  owing,
                     damages or otherwise) of an amount exceeding Cdn.  $500,000
                     in  respect  of any one  matter or Cdn.  $1,000,000  in the
                     aggregate;

            (iii)    the occurrence of any default or event of default under the
                     EDC Facility;

             (iv)    any cancellation,  termination, amendment or restatement of
                     the  funding  agreement  between  Her  Majesty The Queen in
                     right of Canada, the Borrower,  March Networks  Corporation
                     and  Mitel  Knowledge  Corporation,  under  the  Technology
                     Partnerships Canada program,  signed in October,  2002 (the
                     "Technology Partnerships Canada Agreement);

              (v)    the  issuance by the Borrower or any of the  Guarantors  of
                     any  equity  or  Subordinated  Debt,  other  than  any such
                     issuances by the Borrower or the Guarantors to the Borrower
                     or any of its wholly-owned subsidiaries,  including details
                     thereof and gross proceeds and costs and expenses of issue;

             (vi)    any  trade  account  of  the  Borrower  or  the  Guarantors
                     becoming secured by way of a bank letter or guarantee, with
                     the notice  including a statement  that such security shall
                     be  assigned  by  the  Borrower   and/or   Guarantors,   as
                     applicable,  in favour of the Administrative  Agent, if the
                     Administrative Agent so requests; and

            (vii)    the results of any report providing an actuarial  valuation
                     or other  assessment of any pension plan of the Borrower or
                     any Guarantor, upon any such report being made available to
                     the Borrower,  including, without limitation, the actuarial
                     valuation  report on the  pension  plan of MNL as of August
                     31,  2003 which  report is  expected  to be received by the
                     Borrower in October 2003.

      (f)   Compliance with Applicable Laws. The Borrower shall, and shall cause
            each of the Guarantors  and each other  Subsidiary to, comply in all
            material respects with all Applicable Laws, including  Environmental
            Laws, the  non-compliance  with which would materially and adversely
            affect  the  business,  operations  or  financial  condition  of the
            Borrower and its  Subsidiaries,  taken as a whole, or the ability to
            perform  any  of  their  obligations  under  this  Agreement  or the
            Security  Documents  or the  enforceability  of the Security and the
            Borrower  shall,  and shall cause each  Guarantor  to, comply in all
            material  respects  with the  terms of and  maintain  all  consents,
            licences,  franchises,  certificates,  consents,  rights, approvals,
            authorizations, registrations, orders or permits from, and make such
            filings with,  any  governmental  or public  authority and to comply
            with  such  Applicable  Laws as may be  necessary  to  carry  on its
            respective businesses, to own, lease and

<PAGE>
                                      -46-


            operate its  properties  and to enable the  Borrower and each of the
            Guarantors  to enter into and perform their  obligations  under Loan
            Documents  or to render this  Agreement  or the  Security  Documents
            legal, valid, binding or enforceable.

      (g)   Payment of Taxes. The Borrower shall, and shall cause each Guarantor
            and each other Subsidiary to, pay or cause to be paid, when due, all
            Taxes,  property taxes,  business taxes,  social security  premiums,
            assessments  and  governmental  charges or levies imposed upon it or
            upon its income,  sales, capital or profit or any property belonging
            to it unless any such Tax,  social  security  premiums,  assessment,
            charge or levy is  contested  by it in good faith  with  appropriate
            reserves,  and to  collect  and  remit  when  due  all  payroll  and
            withholding taxes.

      (h)   Insurance.  The Borrower shall maintain,  or cause to be maintained,
            on behalf  of the  Borrower  and its  Subsidiaries,  insurance  with
            responsible  and reputable  insurance  companies or  associations in
            such  amounts  and  covering  such  risks as would  be  prudent  for
            companies   engaged  in  similar   businesses   and  owning  similar
            properties  and  assets  in the same  general  areas  in  which  the
            Borrower or such Subsidiaries (as the case may be) operate.

      (i)   Visitation  Rights.  The Borrower  shall  permit the  Administrative
            Agent and each  Lender,  at any  reasonable  time or  times,  within
            normal business hours,  following reasonable notice to the Borrower,
            to (provided the Administrative Agent and each Lender is accompanied
            by a senior  officer of the  Borrower)  visit the  properties of and
            examine and make copies of and abstracts  from the books and records
            of  the  Borrower,  the  Guarantors  and  their  Subsidiaries.   All
            information  received shall be held by the Administrative  Agent and
            each Lender in confidence  for use in respect of the  administration
            of the Facility and for no other purpose.

      (j)   Keeping of Books. The Borrower shall, and shall cause each Guarantor
            and each  other  Subsidiary  to,  keep  proper  books of record  and
            account,  in which  full and  correct  entries  shall be made of all
            financial  transactions  and the assets and business of the Borrower
            and each of its  Subsidiaries in accordance with generally  accepted
            accounting principles consistently applied.

      (k)   Compliance with Material Leases, Contracts and Other Agreements. The
            Borrower  shall,  and shall  cause  each  Guarantor  and each  other
            Subsidiary  to,  comply in all  material  respects  and  perform its
            obligations  under all leases  (whether real or personal  property),
            contracts and other agreements to which it is a party or by which it
            is bound if the  non-compliance  or  non-performance  of obligations
            thereunder  could  reasonably be expected to have a material adverse
            effect on the  business,  operations  or financial  condition of the
            Borrower and its  Subsidiaries,  taken as a whole, or the ability to
            perform  any  of  their  obligations  under  this  Agreement  or the
            Security Documents.

      (l)   Dividends to Borrower.  The Borrower will cause its  Subsidiaries to
            pay,  to the  extent  they  are  legally  able to do so,  dividends,
            interest,  amounts  due in respect  of  inter-company  accounts  and
            capital or other distributions to the Borrower in an

<PAGE>
                                      -47-


            aggregate  amount  sufficient  and as may be  required to enable the
            Borrower to satisfy its obligations  under this Agreement and to pay
            all amounts due and owing hereunder.

      (m)   Registrations. The Borrower shall, and shall cause each Guarantor to
            maintain  all such  registrations,  filings  and  recordings  as are
            necessary to preserve,  protect and perfect the charges and security
            interest  created,  or  intended  to be  created,  by  the  Security
            Documents.

      (n)   Dealings with Collateral.  The Borrower shall not, without the prior
            written consent of the Administrative  Agent,  locate any Collateral
            (as such term is defined in the  Borrower's  Security  Documents) in
            any  province  other than the  Province  of Ontario if, as a result,
            less than 95% (on a net book  value  basis) of all  tangible  assets
            comprising such Collateral, are situate in the Province of Ontario.

      (o)   MNI, MNSI and MNL to Remain  Subsidiaries.  The Borrower shall cause
            each of the  Guarantors to remain a direct or indirect  wholly-owned
            Subsidiary of the Borrower.

      (p)   Governmental  Receivables.  Upon request by the Administrative Agent
            or the Required  Lenders at any time  following the  occurrence of a
            Default or Event of Default,  the Borrower  shall  promptly  deliver
            specific  assignments  of  all  or  any  part  of  its  Governmental
            Receivables as requested by the Administrative Agent or the Required
            Lenders  and  shall  obtain  such  consents,   acknowledgements  and
            approvals or  authorizations  as may be required in connection  with
            enforcement  of  the  Lien  against  such  Governmental  Receivables
            granted by the Borrower  and the  Guarantors  to the  Administrative
            Agent  pursuant  to the  Security  Documents  as may be  required by
            applicable  law  including,   without   limitation,   the  Financial
            Administration  Act (Canada),  federal laws of the United States and
            comparable   provincial,   state  or   territorial   legislation  or
            legislation in any political subdivision thereof.

      (q)   Establishment  of EDC Facility.  On or prior to a date occurring not
            more than five (5) Banking Days  following the Closing Date, (i) the
            EDC Facility  shall have been  established  and the Borrower and MNL
            shall  have  satisfied  all  of  the  conditions  precedent  to  the
            availability  of the EDC  Facility  other  than for such  conditions
            precedent  as relate to this  Facility,  and (ii) the  Intercreditor
            Agreement,  in form and on terms satisfactory to the Lenders, acting
            reasonably, shall have been duly authorized,  executed and delivered
            to the Administrative Agent by each of the Borrower,  the Guarantors
            and EDC and shall constitute legal, valid and binding obligations of
            each of such parties.

      (r)   Drawdown  under EDC  Facility.  On or prior to a date  occurring not
            more than eight (8) Banking Days  following  the Closing  Date,  the
            Borrower  shall have fully drawn down the entire  amount of Sterling
            4,100,000  available  under the EDC Facility and shall have provided
            notice of same to the Agent pursuant to Section 8.1(s) below.

<PAGE>
                                      -48-


      (s)   Notices under EDC  Facility.  The Borrower  shall  notify,  or shall
            cause MNL to notify the Administrative  Agent in writing and provide
            to the Administrative Agent a copy of any drawdown notice or similar
            document  delivered  to EDC in  connection  with  the EDC  Facility,
            simultaneously with the delivery of the same to EDC.

      (t)   New  Equity  Round.  In the event  that,  by August  31,  2003,  the
            Borrower  shall not have  received  net  proceeds  of at least  Cdn.
            $20,000,000  from the issuance of common shares or preferred  shares
            to persons other than Affiliates of the Borrower on terms consistent
            with the  Confidential  Offering  Memorandum  of the Borrower  dated
            September  25, 2002,  the Borrower  shall pay to the  Administrative
            Agent,  for  account  of the  Lenders,  on August 31,  2003,  a risk
            premium fee equal to 1.0% of the Commitment.

8.2         Negative Covenants

            The Borrower covenants and agrees with the Administrative  Agent and
the Lenders  that,  unless the  Administrative  Agent and the  Required  Lenders
otherwise  consent  in  writing,  so long as any  amount  payable  hereunder  is
outstanding:

      (a)   No Merger, Amalgamation,  etc. The Borrower shall not, and shall not
            permit any Guarantor or other Subsidiary to, directly or indirectly,
            sell, lease, transfer, assign, convey or otherwise dispose of all or
            substantially all of its property and assets,  and will not merge or
            amalgamate  pursuant to statutory  authority  or otherwise  with any
            other Person except upon compliance with Article 12.

      (b)   Negative  Pledge.  The Borrower  shall not, and shall not permit any
            Guarantor or other Subsidiary to, create, incur, assume or permit to
            exist any Lien,  other than  Permitted  Encumbrances,  on any of its
            property, undertaking or assets now owned or hereafter acquired.

      (c)   Restriction  on Debt.  The Borrower  shall not, and shall not permit
            any  Guarantor or other  Subsidiary  to,  create,  incur,  assume or
            otherwise  become liable upon or suffer to exist (after knowledge of
            the existence thereof) any Debt other than Permitted Debt.

      (d)   Restriction on Disposition of Property.  The Borrower shall not, and
            shall not permit any  Guarantor or other  Subsidiary  to, enter into
            sale and leaseback  transactions or  securitization  transactions or
            sell,  exchange,  lease,  release or abandon or otherwise dispose of
            any of its fixed  property or other  assets to any Person other than
            (i) bona fide sales, exchanges,  leases,  releases,  abandonments or
            other  dispositions  in the  ordinary  course  of  business  for the
            purpose of  carrying  on the same,  including,  without  limitation,
            sales  of  inventory  in  the  ordinary   course;   (ii)   Permitted
            Securitization  Transactions;  (iii) sale and leaseback transactions
            completed by the Borrower,  its  Guarantors and  Subsidiaries  taken
            together,  in an aggregate amount not exceeding Cdn. $15,000,000 (or
            its Equivalent Amount in another currency); and (iv) the disposition
            by MNL of the

<PAGE>
                                      -49-


            managed service contracts portion of its business for gross proceeds
            of approximately(pound)8.4 million.

      (e)   Restriction    on   Financial    Assistance   to    Non-Wholly-Owned
            Subsidiaries.  The  Borrower  shall  not,  and shall not  permit any
            Guarantor or other  Subsidiary to, directly or indirectly,  make any
            investment  in (other than as  permitted  in this  Section  8.2(e)),
            advances to, capital contributions to, loans to or guarantees to, or
            give any  financial  assistance  to or for the benefit of any Person
            other  than (i)  financial  assistance  (including  investments  in,
            advances to, capital  contributions to or loans or guarantees to) to
            the Borrower or a direct or indirect wholly-owned  Subsidiary of the
            Borrower,  or (ii) financial assistance  (including  investments in,
            advances to, capital  contributions to or loans or guarantees to) to
            Tianchi-Mitel  Telecommunications  Corp.  or any other Persons in an
            amount not  exceeding  U.S.  $5,000,000 in the  aggregate,  it being
            acknowledged  by the  Administrative  Agent and the Lenders that the
            existing  investments  by MNL and MNI in preference  shares of Mitel
            Knowledge Corporation shall be permitted investments for purposes of
            this Section  8.2(e),  including  the  transfer of such  investments
            within members of the Mitel group of companies.

      (f)   Restriction on Take-Over Bids. The Borrower shall not, and shall not
            permit any Guarantor or other Subsidiary to, directly or indirectly,
            make any  Take-Over Bid which is financed in full or in part by this
            Facility and make  investments  in or  acquisition  of other Persons
            which are in excess of U.S.  $5,000,000 in respect of any one matter
            or U.S. $10,000,000 in the aggregate over the term of the Facility.

      (g)   Transactions with Affiliates.  The Borrower shall not, and shall not
            permit  any  Guarantor  or  other  Subsidiary  to,  enter  into  any
            transaction or series of related  transactions with any Person which
            is  Controlled  by T.H.  Matthews,  or any Affiliate of such Person,
            other than transactions  between the Borrower and one or more of the
            Guarantors or  transactions  between two or more of the  Guarantors,
            except on terms and  conditions no less  favourable to the Borrower,
            the Guarantor or the Subsidiary of the Borrower as could  reasonably
            be obtained by the Borrower, Guarantor or Subsidiary at that time in
            a comparable  transaction entered into at Arm's Length with a Person
            at Arm's Length with the Borrower and provided that the Borrower,  a
            Guarantor  or  any   Subsidiary  of  the  Borrower  may  enter  into
            employment agreements with respect to the procurement of services of
            their  respective  officers and employees in the ordinary  course of
            business, including executive compensation arrangements.

      (h)   Restriction on Distributions.  The Borrower shall not, and shall not
            permit any Guarantor or other Subsidiary,  to declare,  make, permit
            or pay (i) any  dividend  or other  distribution  on  issued  shares
            (other  than  dividends  in kind  paid by the issue of shares of the
            Borrower); (ii) the purchase,  redemption or retirement price of any
            issued  shares,  warrants or any other  options or rights to acquire
            shares of the Borrower, the Guarantors or any of the Subsidiaries of
            the  Borrower  redeemed or  purchased  by the Borrower or any of its
            Subsidiaries; (iii) loans to any shareholders thereof; (iv) loans to
            any directors or officers thereof on terms more

<PAGE>
                                      -50-


            favourable  to such  directors  or officers  than normal  commercial
            terms;  or  (v)  any  similar   distributions   (each  a  "Corporate
            Distribution") other than (vi) any Corporate  Distribution made only
            to the Borrower or a Guarantor;  and (vii)  provided that no Default
            or Event of Default would result therefrom and provided further that
            each of the  covenants of the  Corporation  set forth in Section 8.3
            would be satisfied on a pro forma basis after giving  effect to such
            Corporate Distribution.

      (i)   Pension Plan  Compliance.  The Borrower shall not (a) terminate,  or
            permit a Guarantor to  terminate,  any pension plan in a manner,  or
            take any other action with respect to any pension plan,  which would
            reasonably  be expected to result in any  material  liability of the
            Borrower or a Guarantor,  or (b) fail to make, or permit a Guarantor
            to fail to make,  full payment when due of all amounts which,  under
            the provisions of any pension plan,  agreement  relating  thereto or
            applicable  law,  the  Borrower or a Guarantor is required to pay as
            contributions thereto. In addition, the Borrower shall promptly pay,
            and shall cause the  Guarantors  to promptly  pay, not less than the
            minimum  funding  requirement  from time to time  established by any
            actuarial report with respect to any pension plan of the Borrower or
            any Guarantor.

8.3         Financial Covenants

            The Borrower covenants and agrees with the Administrative  Agent and
the Lenders  that,  unless the  Administrative  Agent and the  Required  Lenders
otherwise  consent  in  writing,  so long as any  amount  payable  hereunder  is
outstanding:

      (a)   Minimum EBITDA. The Borrower shall not permit its EBITDA (determined
            on a consolidated  basis in accordance with GAAP as in effect on the
            date of this  Agreement  and  measured  as at the  last  day of each
            fiscal  quarter of the Borrower for such fiscal quarter then ending,
            commencing  with the first such quarter to end following the date of
            this Agreement) to be less than 80% of the following amounts,  being
            the projected  EBITDA for the relevant fiscal quarter,  as set forth
            in the Business Plan:

              (i)    for  the  fiscal  quarter  ending  April  27,  2003,   Cdn.
                     $5,600,000,

             (ii)    for  the  fiscal  quarter   ending  July  27,  2003,   Cdn.
                     $6,700,000,

            (iii)    for the fiscal quarter ending October 26, 2003, $8,300,000,
                     and

             (iv)    for each  fiscal  quarter  ending on or after  January  25,
                     2004, Cdn. $10,300,000.

<PAGE>
                                      -51-


                                   ARTICLE 9
                                   GUARANTEES

9.1         Guarantors to Provide Guarantees

      (a) Each Guarantor  shall  guarantee to the  Administrative  Agent and the
Lenders the due and punctual  payment of all debts,  liabilities and obligations
of the Borrower arising hereunder and shall duly authorize,  execute and deliver
to the  Administrative  Agent and the Lenders the Guarantee and the  Guarantors'
Security  Documents,  in  substantially  the  form  of the  Borrower's  Security
Documents  or  in  such  other  form  and  terms  as  are  satisfactory  to  the
Administrative Agent and the Lenders, acting reasonably.

      (b) Each  Guarantor  shall  deliver  to the  Administrative  Agent and the
Lenders  certified copies of its constating  documents and borrowing by-laws (if
any),  a resolution  authorizing  the  Guarantee  and the  Guarantor's  Security
Documents  to which it is a party  and the  incumbency  of the  officers  of the
Guarantor signing the Guarantee and the Guarantor's  Security  Documents and any
other documents or instruments to be provided pursuant to the provisions thereof
and the provisions of this Agreement and a certificate of status,  good standing
or like  certificate  with  respect  to such  Guarantor  issued  by  appropriate
government officials of its jurisdiction of incorporation.

      (c) Each  Guarantor  shall  deliver  to the  Administrative  Agent and the
Lenders a confirmation and acknowledgement, in form and on terms satisfactory to
the Lenders,  confirming the continuing  obligations of such Guarantor under the
Guarantee and the Guarantor's Security Documents  notwithstanding the amendments
to the Original  Credit  Agreement or any subsequent  amendments,  restatements,
renewals or extensions of this Agreement and the Facility.

      (d) The Guarantors shall deliver an opinion of their counsel, addressed to
the Administrative Agent and each Lender from time to time party hereto, in form
and substance satisfactory to the Administrative Agent and each Lender.

                                   ARTICLE 10
                                    SECURITY

10.1        Borrower's Security Documents

      (a) As security  for all  Advances  made to it and as security for all its
other  liability  or  indebtedness,  both  present  and future,  hereunder,  the
Borrower shall assign, by way of security (the "Borrower's  Security") in favour
of the  Administrative  Agent as Agent for  itself and each  Lender,  all of its
receivables  howsoever  arising in connection with the sale or lease of goods or
services by the Borrower to customers located in Canada or the United States and
shall deliver, or cause to be delivered,  the following documents  (collectively
called the  "Borrower's  Security  Documents")  all in form  satisfactory to the
Administrative Agent and each Lender:

              (i)    a general security agreement of the Borrower;

<PAGE>
                                      -52-


             (ii)    a  direction  to  pay  addressed  to  EDC   respecting  the
                     receivables of the Borrower  insured by EDC acknowledged by
                     EDC;

            (iii)    a general assignment of receivables of the Borrower;

             (iv)    an assignment by the Borrower under section 427 of the Bank
                     Act; and

              (v)    such other documents as the  Administrative  Agent and each
                     Lender  may now or  hereafter  reasonably  require  to give
                     effect to,  register  and  perfect the  security  interests
                     created  by  the  Borrower's   Security  Documents  in  the
                     jurisdiction where such charged assets are located.

      (b) So  long as no  Default  or  Event  of  Default  has  occurred  and is
continuing,  any amounts received by the Administrative  Agent from EDC pursuant
to the direction to pay referred to in Section  10.1(a)(ii) shall be paid to, or
to the order of, the Borrower.

      (c) The Borrower  hereby  confirms and agrees that each of the  Borrower's
Security  Documents  previously  delivered  by  the  Borrower  and  all  of  the
Borrower's  Security continues as security for all Advances made to the Borrower
under this Agreement and as security for all of the Borrower's  liabilities  and
indebtedness,  both present and future, hereunder notwithstanding any amendments
to the  Original  Credit  Agreement  or  any  future  amendments,  restatements,
extensions or renewals of this Agreement or the Facilities.

10.2        Guarantors' Security Documents

            As security for all Advances  made to it and as security for all its
other liability or indebtedness, both present and future, hereunder, each of the
Guarantors  shall  assign,  by way of security (the  "Guarantors'  Security") in
favour of the  Administrative  Agent as Agent for itself and each Lender, all of
its receivables  howsoever arising in connection with the sale or lease of goods
or services by the  Guarantor to  customers  (i) located in Canada or the United
States in the case of MNI and MNSI,  and (ii)  located in the United  Kingdom in
the case of MNL, and shall  deliver,  or cause to be  delivered,  the  following
documents (collectively called the "Guarantor's Security Documents") all in form
satisfactory to the Administrative Agent and each Lender:

      (a)   the Guarantee;

      (b)   a general  security  agreement  of the  Guarantor  (except  for with
            respect to MNL);

      (c)   a general assignment of receivables of the Guarantor; and

      (d)   such other documents as the Administrative Agent and each Lender may
            now or hereafter  reasonably require to give effect to, register and
            perfect the security  interests created by the Guarantor's  Security
            Documents in the jurisdiction where such charged assets are located.

<PAGE>
                                      -53-


                                   ARTICLE 11
                            DEFAULT AND ACCELERATION

11.1        Events of Default

            The occurrence of any one or more of the following events (each such
event  and the  expiry  of the  cure  period,  if any,  provided  in  connection
therewith, being herein referred to as an "Event of Default") shall constitute a
default under this Agreement:

      (a)   if the  Borrower  shall fail to pay the  principal of any Advance as
            and when the same becomes due and payable;

      (b)   if the Borrower  shall fail to pay interest on any Advance or to pay
            any other amount due hereunder  within three Banking Days  following
            the due date;

      (c)   if the  Borrower,  any  Guarantor  or  any  other  Subsidiary  shall
            encumber  any of its assets  contrary to the  provisions  of Section
            8.2(b) hereof and fails to discharge such Lien within a period of 15
            days after  notice in writing  has been given by the  Administrative
            Agent to the Borrower requiring such discharge;

      (d)   if the Borrower  shall default in the  observance or  performance of
            any agreement, covenant or condition contained in Section 8.1(a) and
            such  failure  shall remain  unremedied  for 15 days after notice in
            writing has been given by the Administrative Agent to the Borrower;

      (e)   if the Borrower  shall,  or shall permit any  Guarantor or any other
            Subsidiary  to,  default in the  observance  or  performance  of any
            agreement,  covenant or  condition  contained  in Section 8.2 (other
            than Section 8.2(b)) or 8.3;

      (f)   if the Borrower, any Guarantor or any other Subsidiary shall default
            in any material  respect in the  observance  or  performance  of any
            agreement,  covenant or condition contained in this Agreement (other
            than a covenant or condition  whose breach or default in performance
            is elsewhere in this Section 11.1 specifically  dealt with) and such
            default shall not be remedied, if capable of remedy, within a period
            of 15  days  after  notice  in  writing  thereof  is  given  by  the
            Administrative Agent to the Borrower;

      (g)   if any one or more of the  Borrower,  the  Guarantors  or any  other
            Subsidiary  shall  fail to pay  the  principal  of,  or  premium  or
            interest on, any Debt outstanding in a principal amount which,  when
            aggregated with the principal amount of all other Debt in respect of
            which any of them has failed to pay the  principal of, or premium or
            interest on, exceeds Cdn.  $1,000,000  (or the Equivalent  Amount in
            any other currency) (excluding Debt due to the Lenders hereunder and
            Debt  owing  by  the   Borrower  or  a  Guarantor   to  any  of  its
            Subsidiaries)  when the same  becomes  due and  payable  (whether by
            scheduled maturity,  required  prepayment,  acceleration,  demand or
            otherwise)  and such failure  shall  continue  after the  applicable
            grace  period,  if any,  specified in the  agreement  or  instrument
            relating  to such  Debt,  or any  other  event of  default  or early
            termination event (howsoever

<PAGE>
                                      -54-


            described or designated)  shall occur or condition shall exist,  and
            shall continue after the applicable grace period, if any,  specified
            in any  agreement  or  instrument  relating to any such Debt and the
            effect of such event is to  accelerate,  or permit the  acceleration
            of,  Debt of  either  of  them in a  principal  amount  which,  when
            aggregated  with the  principal  amount of all other  Debt of any of
            them  which is, or may be,  declared  due and  payable  prior to its
            specified maturity as a result of an event of default,  exceeds Cdn.
            $1,000,000 (or the Equivalent Amount in any other currency);

      (h)   if the Borrower or any  Guarantor or any material  Subsidiary or any
            other  Subsidiary  which owns shares of a Guarantor  shall generally
            not pay its  debts as such  debts  become  due,  or  shall  admit in
            writing its inability to pay its debts  generally as they become due
            or shall make a general assignment for the benefit of creditors;  or
            any proceeding shall be instituted by or against the Borrower or any
            Guarantor or any material  Subsidiary or any other  Subsidiary which
            owns shares of a Guarantor  seeking to  adjudicate  it a bankrupt or
            insolvent,   or  seeking   liquidation,   dissolution,   winding-up,
            reorganization,   arrangement,  adjustment,  protection,  relief  or
            composition of it or its debts under any law relating to bankruptcy,
            insolvency or  reorganization  or relief of debtors,  or seeking the
            entry of an order  for  relief  or the  appointment  of a  receiver,
            trustee or other similar official for it or for any substantial part
            of its property and, in the case of any such  proceeding  instituted
            against it (but not instituted by it), either such proceeding  shall
            remain undismissed or unstayed for a period of 30 days or any of the
            actions sought in such proceeding  (including,  without  limitation,
            the entry of an order for relief against it or the  appointment of a
            receiver, trustee, custodian or other similar official for it or for
            any  substantial  part of its property) shall occur; or the Borrower
            or any Guarantor or any material  Subsidiary or any other Subsidiary
            which owns shares of a Guarantor  shall take any action to authorize
            any of the actions set forth above in this Section 11.1(h);

      (i)   if any judgment or order or series of  judgments or orders  (whether
            or not related)  for the payment of money in an aggregate  amount in
            excess of Cdn.  $1,000,000  (or the  Equivalent  Amount in any other
            currency), other than any judgment or order for which one or more of
            the Borrower,  the  Guarantors and their  Subsidiaries  will recover
            under a policy of  insurance,  shall be rendered  against any one or
            more of the Borrower,  the Guarantors and their Subsidiaries and (i)
            such  judgment  or order or series of  judgments  and/or  orders are
            final  with no  further  right of appeal  and the  Borrower  has not
            satisfied the Required Lenders, acting reasonably, that the Borrower
            or the  relevant  Guarantor  or  Subsidiary  is able to satisfy such
            judgment  or order or series of  judgments  and/or  orders;  or (ii)
            enforcement  proceedings  shall have been  commenced by any creditor
            upon such judgment or order or series of judgments and/or orders, as
            the  case  may  be;  or  (iii)  there  shall  be  any  period  of 20
            consecutive days during which a stay of enforcement of such judgment
            or order or series of judgments  and/or orders,  as the case may be,
            by reason of a pending appeal or otherwise, shall not be in effect;

<PAGE>
                                      -55-


      (j)   if any  representation  or warranty made or deemed to be made by the
            Borrower or any Guarantor in any of the Loan  Documents  shall prove
            to have been  incorrect or misleading  in any material  respect when
            made or deemed to be made;

      (k)   if the Borrower,  any Guarantor or any other Subsidiary shall be the
            subject  of  any  proceeding  or  investigation  pertaining  to  the
            discovery of any  Hazardous  Material on any property or the Release
            by such entity of any  Hazardous  Material or any  violation  of any
            Environmental  Law shall occur which, in each case, could reasonably
            be expected to have a material and adverse  effect on the  financial
            condition or position of the Borrower and its Subsidiaries  taken as
            a whole;

      (l)   if the  obligations  of the Borrower or any  Guarantor  hereunder or
            under any other Loan Document  shall cease to constitute  the legal,
            valid and binding  obligations  of the Borrower or the Guarantors or
            shall  cease to be in full force and effect or the  Borrower  or any
            Guarantor  shall  have  contested  the  validity  of any of the Loan
            Documents or denied that it had any liability  under any of the Loan
            Documents;

      (m)   if  Dr.  Terence  H.  Matthews   ceases  to  Control   (directly  or
            indirectly)  the Borrower or if any of MNI, MNSI or MNL ceases to be
            a direct or indirect wholly-owned Subsidiary of the Borrower;

      (n)   if any of the Security shall cease to be a valid and perfected first
            priority  security  interest  relative to third parties  (subject to
            Permitted Encumbrances) and such Security is not restored to being a
            valid and perfected  first priority  security  interest  within five
            Banking Days after the earlier of (i) the Borrower or any  Guarantor
            becoming aware thereof, or (ii) notice from the Administrative Agent
            or any Lender;

      (o)   if the  Technology  Partnerships  Canada  Agreement  (as  defined in
            Section  8.1(e)(iv))  is cancelled or terminated or any event occurs
            which  entitles or permits the  Government  of Canada not to provide
            funding  under such  agreement  or such  agreement is amended in any
            manner which is adverse to the Borrower;

      (p)   if the covenant in Section 8.1(q) has not been performed on or prior
            to a date not later than five (5) Banking Days following the Closing
            Date,  and such  breach  of  covenant  continues  for  more  than an
            additional three (3) Banking Days; or

      (q)   if the covenant in Section 8.1(r) has not been performed on or prior
            to a date not  later  than  eight (8)  Banking  Days  following  the
            Closing Date.

11.2        Acceleration

            Upon  the  occurrence  of an  Event  of  Default  and  at  any  time
thereafter while an Event of Default is continuing, the Administrative Agent may
or, if so  directed  by the  Required  Lenders,  shall by written  notice to the
Borrower  declare the Advances  made to the Borrower to be  immediately  due and
payable  (whereupon  the same shall  become so  payable  together  with  accrued
interest  thereon  and any other sums then owed by the  Borrower  hereunder)  or
declare

<PAGE>
                                      -56-


such Advances to be due and payable on demand of the  Administrative  Agent. If,
pursuant to this Section 11.2,  the  Administrative  Agent declares any Advances
made to the  Borrower  to be due and  payable on demand,  then,  and at any time
thereafter,  the Administrative Agent may by written notice to the Borrower call
for  repayment of such  Advances on such date or dates as it may specify in such
notice  (whereupon  the same shall become due and payable on such date  together
with  accrued  interest  thereon  and any other  sums then owed by the  Borrower
hereunder  and the  provisions  of Section  11.4 shall  apply) or  withdraw  its
declaration with effect from such date as it may specify in such notice.

11.3        Remedies Cumulative and Waivers

            It is expressly  understood  and agreed that the rights and remedies
of the  Administrative  Agent  and the  Lenders  hereunder  or under  any  other
instrument  executed  pursuant  to  this  Agreement  are  cumulative  and are in
addition to and not in substitution  for any rights or remedies  provided by law
or by equity; and any single or partial exercise by the Administrative  Agent or
any Lender of any right or remedy for a default or breach of any term, covenant,
condition or agreement  contained in this Agreement  shall not be deemed to be a
waiver of or to alter,  affect or  prejudice  any other right or remedy or other
rights  or  remedies  to which the  Administrative  Agent or any  Lender  may be
lawfully entitled for such default or breach.  Any waiver by the  Administrative
Agent and the Lenders of the strict  observance,  performance or compliance with
any  term,  covenant,  condition  or  other  matter  contained  herein  and  any
indulgence   granted,   either  expressly  or  by  course  of  conduct,  by  the
Administrative  Agent and the Lenders  shall be  effective  only in the specific
instance  and for the  purpose for which it was given and shall be deemed not to
be a waiver of any rights and remedies of the Administrative Agent or any Lender
under this  Agreement  as a result of any other  default or breach  hereunder or
thereunder.

11.4        Suspension of Lenders' Obligations

            Without prejudice to the rights which arise out of this Agreement or
by law,  the  occurrence  of a Default  or Event of  Default  shall,  while such
Default or Event of Default  shall be  continuing,  relieve  the  Lenders of all
obligations to make any Advances  hereunder (whether or not a Drawdown Notice in
respect of any such Advance shall have been received by the Administrative Agent
prior to the occurrence of a Default or Event of Default) or to accept or comply
with any  Drawdown  Notice or to convert any Advance  into a Libor  Advance or a
Bankers'  Acceptance  Advance or to accept any  Rollover  Notice in respect of a
Libor Advance or to accept or comply with any  Conversion  Notice  converting an
Advance into an Advance in a different currency.

11.5        Application of Payments After an Event of Default

            If any Event of Default shall occur and be continuing,  all payments
made by the Borrower hereunder shall be applied in the following order:

(a)   to amounts  due  hereunder  as costs and  expenses  of the  Administrative
      Agent;

(b)   to amounts due hereunder as fees;

<PAGE>
                                      -57-


(c)   to any other  amounts  (other  than  amounts  in respect  of  interest  or
      principal) due hereunder;

(d)   to amounts due hereunder as interest;

(e)   rateably to amounts due hereunder as principal; and

(f)   any balance to the Borrower or as a court of competent  jurisdiction shall
      determine.

                                   ARTICLE 12
                               SUCCESSOR COMPANIES

12.1        Certain Requirements in Respect of Merger, Etc.

            The  Borrower  shall not,  and shall not permit the  Guarantors  to,
enter into any transaction  (whether by way of  reconstruction,  reorganization,
consolidation, amalgamation, merger, transfer, sale or otherwise) whereby all or
substantially  all of its  undertaking,  property  and assets  would  become the
property of any other  Person or, in the case of any such  amalgamation,  of the
continuing company (collectively,  a "Reorganization")  resulting therefrom,  or
whereby the obligation of the Borrower to pay amounts under this Agreement would
become  subject to novation or assumed or undertaken by any other such Person or
continuing  company,  provided that (i) this Section 12.1 is not applicable to a
Reorganization  involving  the Borrower  and a  wholly-owned  Subsidiary  of the
Borrower;  provided,  however,  in the  event  of  such a  Reorganization  which
involves an amalgamation or merger of the Borrower with any of its Subsidiaries,
the  Successor  Corporation  shall  be  required  to  execute  and  deliver  the
supplemental  agreement and opinion referred to in Section 12.1(a) and take such
other  actions  and  deliver  such  other  documents  and  agreements  as may be
necessary  to ensure that the  perfection  and  priority of the  Security is not
impaired;  and (ii) it may do so and such  Person  or  continuing  company  (the
"Successor Corporation") shall become a party to this Agreement if:

      (a)   the  Successor  Corporation  shall  execute  and/or  deliver  to the
            Administrative  Agent  an  agreement  supplemental  hereto  in  form
            reasonably  satisfactory to the Administrative Agent and the Lenders
            and execute and/or deliver such other instruments,  if any, which to
            the  reasonable  satisfaction  of the  Lenders and in the opinion of
            Counsel to the Borrower  addressed to the  Administrative  Agent and
            the  Lenders,  are  necessary  to  evidence  the  agreement  of  the
            Successor  Corporation  to observe and perform all the covenants and
            obligations  of the Borrower under this Agreement and any other Loan
            Document and to be bound by all the terms of this  Agreement and any
            other Loan  Document  so far as they relate to the  Borrower,  which
            instruments, if any, shall be in form reasonably satisfactory to the
            Administrative Agent and the Lenders;

      (b)   such  transaction  shall,  to  the  reasonable  satisfaction  of the
            Administrative  Agent and the  Lenders and in the opinion of Counsel
            to the  Borrower  addressed  to the  Administrative  Agent  and  the
            Lenders, be upon such terms as to preserve and not

<PAGE>
                                      -58-


            to impair any of the rights and powers of the  Administrative  Agent
            and the Lenders;

      (c)   the perfection and priority of the Security shall not be impaired;

      (d)   all Other Taxes  payable as a result of such  transaction  have been
            paid by such Successor Corporation;

      (e)   such  transaction  will not result in any claim for increased  costs
            pursuant  to  Section  5.1 or result  in any Tax being  levied on or
            payable by the Administrative  Agent or any Lender (except for Taxes
            on the overall net income or capital of the Administrative  Agent or
            any Lender  provided  there is no increase in such Taxes as a result
            of such transaction);

      (f)   such  transaction  will  not  cause,  or  have  the  result  of  the
            Administrative   Agent  or  any  Lender  being  in  default   under,
            non-compliance with, or violation of, any Applicable Law;

      (g)   an opinion of counsel to the Successor Corporation  substantially in
            the form and as to matters  addressed  in the  opinion of Counsel to
            the  Borrower  delivered  pursuant  to  Section  6.1 shall have been
            delivered to the Administrative Agent and the Lenders;

      (h)   the creditworthiness of the Successor  Corporation (as determined by
            the  Administrative  Agent and each  Lender in its sole  discretion)
            shall not be less than the  creditworthiness  of the Borrower or the
            relevant  Guarantor  immediately  prior  to  giving  effect  to such
            transaction; and

      (i)   no Default or Event of Default shall have occurred and be continuing
            or will occur as a result of such transaction.

12.2        Vesting of Powers in Successor

            Except in the case of an amalgamation or other transaction  pursuant
to which the Successor  Corporation is liable for all of the  obligations of the
Borrower by operation of law, whenever the conditions of Section 12.1 above have
been duly observed and performed, the Administrative Agent and each Lender shall
execute and deliver the supplemental  agreement  provided for in Section 12.1(a)
and thereupon:

      (a)   the  Successor  Corporation  shall possess and from time to time may
            exercise  each and every right and power of the Borrower  under this
            Agreement  in its  own  name  or in the  name  of  the  Borrower  or
            otherwise  and  any  act or  proceeding  by any  provision  of  this
            Agreement  or  the  Security  Documents  required  to  be  done  and
            performed  with like  force  and  effect  by the like  directors  or
            officers of the Successor Corporation; and

      (b)   at the request of the Borrower,  the Borrower shall be released from
            its  liability  and   obligations   under  this  Agreement  and  the
            Administrative  Agent and the

<PAGE>
                                      -59-


            Lenders,  at the request and at the expense of the  Borrower,  shall
            execute  and  deliver  to the  Borrower  such  instruments  as shall
            reasonably be requisite to evidence such release.

                                   ARTICLE 13
                       COSTS, EXPENSES AND INDEMNIFICATION

13.1        Costs and Expenses

            The Borrower shall pay promptly,  upon request by the Administrative
Agent accompanied by reasonable supporting  documentation or other evidence, all
reasonable  costs  and  expenses  in  connection  with  preparation,   printing,
execution and delivery of this Agreement and the other documents to be delivered
hereunder including,  without limitation,  the reasonable fees and out-of-pocket
expenses of the Administrative Agent's Counsel with respect thereto.  Except for
ordinary  expenses  of the  Administrative  Agent  relating  to  the  day-to-day
administration  of  this  Agreement,  the  Borrower  further  agrees  to pay all
reasonable  costs  and  expenses  (including  reasonable  fees and  expenses  of
counsel,  accountants and other experts) in connection with the  interpretation,
preservation  or  enforcement  of  rights of the  Administrative  Agent and each
Lender  under this  Agreement  and the  Security  Documents  including,  without
limitation,  all reasonable costs and expenses  sustained by them as a result of
any  failure by the  Borrower  or any  Guarantor  to  perform  or observe  their
obligations  contained in this  Agreement  and all costs  incurred in connection
with obtaining any required consents,  approvals or authorizations  contemplated
by Section 8.1(p) and otherwise in enforcing and realizing upon the Security.

13.2        Indemnification by the Borrower

            In addition to any  liability of the Borrower to the  Administrative
Agent and each Lender  under any other  provision  hereof,  the  Borrower  shall
indemnify the  Administrative  Agent and each Lender and hold the Administrative
Agent and each Lender harmless against any reasonable costs or expenses incurred
by the  Administrative  Agent and each  Lender as a result (i) of any failure by
the Borrower or any Guarantor to fulfil any of its obligations  hereunder in the
manner  provided  herein  including,  without  limitation,  any cost or  expense
incurred by reason of the  liquidation or  re-employment  in whole or in part of
deposits or other funds required by the Administrative  Agent and each Lender to
fund or  maintain  any  Advance as a result of the  failure of the  Borrower  to
complete  a  Drawdown  or to make any  repayment  or other  payment  on the date
required  hereunder  or  specified  by it in any  notice  given  hereunder  (but
excluding costs arising solely out of loss of anticipated  profits); or (ii) the
failure of the Borrower to pay any other amount including,  without  limitation,
any interest or fee due  hereunder on its due date;  or (iii) as a result of the
prepayment  or repayment by the Borrower of any Libor  Advance prior to its date
of maturity or the last day of the then current  Interest  Period for such Libor
Advance,  including,  without  limiting the  generality  of the  foregoing,  any
repayment or prepayment resulting from the circumstances  referred to in Section
2.6(b).

13.3        Funds

            Each amount  advanced,  made available,  disbursed or paid hereunder
shall be advanced,  made  available,  disbursed or paid,  as the case may be, in
immediately available funds

<PAGE>
                                      -60-


or, after notice from the  Administrative  Agent, in such other form of funds as
may from time to time be customarily  used in Toronto,  Canada in the settlement
of banking  transactions  similar to the banking  transactions  required to give
effect to the provisions of this Agreement on the day such advance, disbursement
or payment is to be made.

13.4        General Indemnity

      (a) Indemnity.  Subject to paragraphs (b), (c) and (d) below, the Borrower
agrees to indemnify and save harmless the Administrative  Agent, each Lender and
each of their  respective  officers,  directors,  employees,  agents,  advisors,
representatives   and   affiliates   (collectively,    the   "Indemnitees"   and
individually, an "Indemnitee") from and against any and all liabilities,  costs,
claims, damages, penalties, losses and expenses (including reasonable legal fees
and  disbursements  of counsel but excluding  loss of profits and  consequential
damages)  (collectively,  the  "Losses")  as a result of any claims,  actions or
proceedings  ("Claims")  asserted against the Indemnitees by a Person other than
the Indemnitees in connection with the agreement of the Administrative Agent and
each Lender to provide the Facility,  the commitment of the Lenders to establish
the Facility and the Advances made by the Lenders including, without limitation:
(i) the costs of defending and/or counterclaiming or claiming over against third
parties in respect of any Claim; and (ii) subject to the provisions set forth in
paragraph (d) below, any Losses arising out of a settlement of any Claim made by
the Indemnitees.

      (b) Limitations to Indemnity. The foregoing obligations of indemnification
shall not apply to any Losses  suffered by the  Indemnitees or any of them or to
any Claim  asserted  against the  Indemnitees  or any of them to the extent such
Loss or Claim has resulted from the gross negligence or wilful misconduct of the
Indemnitees or any of them.

      (c) Notification. Whenever an Indemnitee shall have received notice that a
Claim has been commenced or threatened,  which, if successful, would subject the
Borrower (the "Indemnifying  Party") to the indemnity provisions of this Section
13.4,  the  Indemnitee  shall,  as soon as reasonably  possible,  notify (to the
extent permitted by law) the  Indemnifying  Party in writing of the Claim and of
all relevant  information the Indemnitee  possesses relating thereto;  provided,
however,  that failure to so notify the  Borrower  shall not release it from any
liability  which it may  have on  account  of the  indemnity  set  forth in this
Section 13.4,  except to the extent that the Indemnifying  Party shall have been
materially prejudiced by such failure.

      (d) Defence and Settlement.  The Indemnifying  Party shall have the right,
but not the obligation,  to assume the defence of any Claim in any  jurisdiction
with legal  counsel of  reputable  standard  in order to protect  the rights and
interest of the Indemnitees.  In such respect,  (i) the Indemnifying Party shall
require  the  consent  of the  Indemnitees  of the  choice of legal  counsel  in
connection with the Claim,  which consent shall not be unreasonably  withheld or
delayed;  and (ii) without  prejudice to the rights of the Indemnitees to retain
counsel and participate in the defence of the Claim, the Indemnifying  Party and
the Indemnitees shall make all reasonable efforts to co-ordinate their course of
action in  connection  with the  defence of such Claim.  The  related  costs and
expenses sustained in such respect by the Indemnitees shall be at the expense of
the  Indemnifying  Party,  provided  that the  Indemnifying  Party shall only be
liable for the costs and expenses of one firm of separate counsel in addition to
the cost of any local counsel that may be required.  If the  Indemnifying  Party
fails to assume defence of the Claim,

<PAGE>
                                      -61-


the  Indemnitees  will (upon further  notice to the Borrower)  have the right to
undertake,  at the expense of the  Borrower  and the  Guarantors,  the  defence,
compromise  or settlement of the Claim on behalf and for the account and risk of
the Indemnifying Party, subject to the right of the Indemnifying Party to assume
the defence of the Claim at any time prior to  settlement,  compromise  or final
determination thereof.

            Notwithstanding the foregoing,  in the event the Indemnitee,  acting
reasonably,  does not agree  with the  manner or  timeliness  in which the legal
counsel of the  Indemnifying  Party is carrying on the defence of the Claim, or,
pursuant to the opinion of a reputable counsel retained by the Indemnitee, there
may be one or more legal defences available different from the one carried on by
the legal counsel of the Indemnifying Party, the Indemnitee shall have the right
to assume its own defence in the Claim by appointing its own legal counsel.  The
costs and the expenses  sustained by the  Indemnitee  shall be at the expense of
the Indemnifying Party provided that the Indemnifying Party shall only be liable
for the costs and expenses of one firm of separate  counsel,  in addition to the
costs of any local counsel that may be required.

            The Indemnifying Party shall not be liable for any settlement of any
Claim  effected  without its written  consent  (which shall not be  unreasonably
withheld or delayed). In addition,  the Indemnifying Party will not, without the
prior written consent of the Indemnitee (which consent shall not be unreasonably
withheld or delayed), settle, compromise or consent to the entry of any judgment
in or otherwise  seek to terminate any Claim or  threatened  Claim in respect of
which indemnification or contribution may be sought hereunder.

            If an offer  for  settlement  made to any  Indemnitee  and which the
Indemnifying  Party has recommended for acceptance is rejected by the Indemnitee
and the final  liability  of the  Indemnitee  in respect of such  action and all
related  damages is greater than such offer,  the liability of the  Indemnifying
Party will only be to indemnify the Indemnitee up to the amount of such offer.

13.5        Environmental Claims

      (a) Indemnity.  Subject to paragraphs (b), (c) and (d) below, the Borrower
agrees to indemnify and save harmless each of the  Indemnitees  from and against
any and all Losses as a result of any Claims asserted against the Indemnitees by
a Person other than the Indemnitees with respect to any material presence or the
Release on, into,  onto, under or from any property which at any time was owned,
used,  occupied,  operated  or under the  control  of any of the  Borrower,  the
Guarantors or any of the  Subsidiaries  of any of the foregoing of any Hazardous
Material (as  hereinafter  defined) or which arises out of or in connection with
any action of, or failure to act by,  the  Borrower,  a  Guarantor  or any other
Subsidiary  or any  predecessor  or successor  thereof in  contravention  of any
Environmental  Laws including,  without  limitation:  (i) the costs of defending
and/or  counterclaiming or claiming over against third parties in respect of any
Claim;  and (ii) subject to the provisions set forth in paragraph (d) below, any
Losses arising out of a settlement of any Claim made by the Indemnitees.

      (b) Limitations to Indemnity. The foregoing obligations of indemnification
shall not apply to any Losses  suffered by the  Indemnitees or any of them or to
any  Claim  asserted  against  the  Indemnitees  or any of them  which  relates,
directly or indirectly, to any action or

<PAGE>
                                      -62-


omission  of any of the  Indemnitees  while  in  possession  or  control  of the
property of the Borrower, any Guarantor or any other Subsidiary which is grossly
negligent or constitutes wilful misconduct.

      (c) Notification. Whenever an Indemnitee shall have received notice that a
Claim has been commenced or threatened,  which, if successful, would subject the
Borrower to the indemnity provisions of this Section 13.5, the Indemnitee shall,
as soon as  reasonably  possible and in any event on or before the expiry of the
date (the "Notification Date") which is the earlier of (i) the tenth Banking Day
after the receipt of such notice by the Administrative Agent, and (ii) such date
as will  afford  sufficient  time for the  Borrower to prepare and file a timely
answer to the  Claim,  notify  the  Borrower  of the  Claim and of all  relevant
information the Indemnitee  possesses relating thereto.  If the Indemnitee shall
fail to so notify the Borrower and provide it with such information on or before
the  Notification  Date, the Borrower shall not have any liability  hereunder in
respect of any Losses  suffered by the  Indemnitees  in respect of such Claim to
the extent such Losses may be  reasonably  attributable  to such  failure by the
Indemnitee.

      (d) Defence and Settlement.  The provisions of Section 13.4(d) shall apply
to any Claims under this Section 13.5.

                                   ARTICLE 14
                            THE ADMINISTRATIVE AGENT

14.1        The Administrative Agent

            Each Lender hereby irrevocably  appoints the Administrative Agent to
act as its  Administrative  Agent in connection  with this  Agreement,  the Loan
Documents, and any matter contemplated hereunder, and authorizes irrevocably the
Administrative  Agent to exercise  such rights,  powers and  discretions  as are
delegated  to the  Administrative  Agent  pursuant to this  Agreement,  the Loan
Documents,  and any  matter  contemplated  thereunder,  together  with  all such
rights, powers and discretions as are incidental hereto or thereto. The Borrower
may in all  respects  assume  that the  Administrative  Agent has  obtained  all
necessary  authorities  from the Lenders and is acting in full  conformity  with
this  Article 14 at all times.  The  Administrative  Agent shall have only those
duties and responsibilities which are expressly specified in this Agreement, and
it may perform such duties by or through its agents or employees. This Agreement
shall not place the  Administrative  Agent under any fiduciary duties in respect
of any Lender.

14.2        The Administrative Agent's Responsibility

            The Administrative Agent may:

      (a)   assume that:

              (i)    any representation made by the Borrower in or in connection
                     with any of this Agreement or any Drawdown Notice is true;

             (ii)    no Event of Default has occurred; and

<PAGE>
                                      -63-


            (iii)    the  Borrower  is not in breach of or in default  under its
                     obligations  under any of this  Agreement  or any  Bankers'
                     Acceptances;

            and the Administrative Agent may also:

      (b)   unless it has actual  knowledge  or actual  notice to the  contrary,
            assume  that  each  Lender's  address  is that  identified  with its
            signature  below  until it has  received  from such  Lender a notice
            designating  some other office of such Lender as its address and act
            upon any such notice until the same is  superseded by a further such
            notice;

      (c)   engage  and  pay  for  the  advice  or  services  of  any   lawyers,
            accountants or other experts whose advice or services may to it seem
            necessary,  expedient  or  desirable  and rely  upon any  advice  so
            obtained;

      (d)   unless it has actual  knowledge  or actual  notice to the  contrary,
            rely as to matters of fact which might  reasonably be expected to be
            within the knowledge of the Borrower  upon a statement  signed by or
            on behalf of the Borrower;

      (e)   unless it has actual  knowledge  or actual  notice to the  contrary,
            rely  upon  any  communication  or  document  believed  by  it to be
            genuine;

      (f)   refrain from  exercising  right,  power or  discretion  vested in it
            under this  Agreement  unless and until  instructed  by the Required
            Lenders as to whether or not such right,  power or  discretion is to
            be  exercised  and,  if it is to be  exercised,  as to the manner in
            which it should be exercised;

      (g)   refrain from exercising any right,  power or discretion vested in it
            which  would or might in its  opinion be  contrary to any law of any
            jurisdiction  or any directive or otherwise  render it liable to any
            Person,  and may do anything  which is in its opinion  necessary  to
            comply with any such law or directive;

      (h)   retain for its own  benefit,  and without  liability to account for,
            any fee or other sum receivable by it for its own account;

      (i)   accept  deposits from,  lend money to, provide any advisory or other
            services to or engage in any kind of banking or other  business with
            any party (including any Affiliate thereof) to this Agreement; and

      (j)   refrain  from  acting in  accordance  with any  instructions  of the
            Required Lenders to begin any legal action or proceeding arising out
            of or in  connection  with  any of this  Agreement  or any  Bankers'
            Acceptance  until it shall have  received  such  security  as it may
            require (whether by way of payment in advance or otherwise)  against
            all costs,  claims,  expenses (including legal fees) and liabilities
            which  it will  or may  expend  or  incur  in  complying  with  such
            instruction.

<PAGE>
                                      -64-


14.3        Administrative Agent's Duties

            The Administrative Agent shall:

      (a)   promptly upon receipt thereof, inform each Lender of the contents of
            any notice, document, request or other information received by it in
            its capacity as Administrative Agent hereunder from the Borrower;

      (b)   promptly  notify  each  Lender  of the  occurrence  of any  Event of
            Default or any default by the Borrower in the due performance of its
            obligations under this Agreement or any document  incidental thereto
            to  which  it  is   expressed  to  be  a  party  and  of  which  the
            Administrative Agent has actual knowledge or actual notice;

      (c)   each time the  Borrower  requests the prior  written  consent of the
            Required Lenders,  use its best efforts to obtain and communicate to
            the Borrower  the  response of the Required  Lenders in a reasonable
            and timely manner having due regard to the nature and  circumstances
            of the request;

      (d)   subject to the foregoing  provisions  of this Section  14.3,  act in
            accordance  with  any  instructions  given  to  it by  the  Required
            Lenders; and

      (e)   if so instructed by the Required  Lenders,  refrain from  exercising
            any right,  power or discretion vested in it under this Agreement or
            any document incidental thereto.

14.4        Protection of Administrative Agent

            Notwithstanding  anything  to  the  contrary  expressed  or  implied
herein, the Administrative Agent shall not:

      (a)   be bound to enquire as to:

              (i)    whether any  representation  made by the  Borrower in or in
                     connection  with this Agreement or any document  incidental
                     thereto is true;

             (ii)    the occurrence of any Event of Default;

            (iii)    the  performance by the Borrower of its  obligations  under
                     any of this Agreement or any document incidental thereto;

             (iv)    any breach of or default  by the  Borrower  of or under its
                     obligations under this Agreement or any document incidental
                     thereto; or

              (v)    the  use  or  application  by  the  Borrower  of any of the
                     proceeds of the Facility;

<PAGE>
                                      -65-


      (b)   be bound to account to any Lender for any sum or the profit  element
            of any sum received by it for its own account;

      (c)   be bound to disclose to any Person any  information  relating to the
            Borrower if such disclosure would or might in its opinion constitute
            a breach of any law or regulation or be otherwise  actionable at the
            suit of any Person; or

      (d)   accept any  responsibility  for the accuracy and/or  completeness of
            any information supplied in connection herewith or for the legality,
            validity,   effectiveness,   adequacy  or   enforceability  of  this
            Agreement, any Bankers' Acceptance or any document incidental hereto
            or  thereto  and the  Administrative  Agent  shall  not be under any
            liability  to any Lender as a result of taking or  omitting  to take
            any action in relation to the Agreement,  any Bankers' Acceptance or
            any document  incidental hereto or thereto save in the case of gross
            negligence or wilful misconduct, and each of the Lenders agrees that
            it will not assert or seek to assert against any director,  officer,
            employee  or agent of the  Administrative  Agent  any claim it might
            have  against any of them in respect of the  matters  referred to in
            this Section 14.4.

14.5        Indemnification of Administrative Agent

            Each Lender shall, on demand by the Administrative Agent,  indemnify
the  Administrative  Agent  pro  rata in  accordance  with  each  such  Lender's
Participation  at the time of such  demand  against  any and all costs,  claims,
reasonable   expenses   (including   legal  fees)  and  liabilities   which  the
Administrative  Agent may  incur  (and  which  have not been  reimbursed  by the
Borrower),  otherwise  than by  reason  of its own  gross  negligence  or wilful
misconduct,  in  acting in its  capacity  as  Administrative  Agent  under  this
Agreement, any Bankers' Acceptance or any document incidental hereto or thereto.

14.6        Termination or Resignation of Administrative Agent

      (a)  Notwithstanding  the  irrevocable  appointment of the  Administrative
Agent,  the  Required  Lenders may (with the consent of the  Borrower  not to be
unreasonably  withheld),  upon  giving the  Administrative  Agent 90 days' prior
written notice to such effect,  terminate the Administrative Agent's appointment
hereunder provided that a successor  Administrative  Agent has been appointed at
or prior to expiry of such notice.

      (b) The Administrative  Agent may resign its appointment  hereunder at any
time without  assigning  any reason  therefor by giving  written  notice to such
effect  to each of the  other  parties  hereto.  Such  resignation  shall not be
effective until a successor Administrative Agent has been appointed.

      (c) In the event of any such  termination  or  resignation,  the  Required
Lenders  shall  appoint  a  successor  Administrative  Agent  acceptable  to the
Borrower,  deliver  copies of the  Accounts to such  successor  and the retiring
Administrative  Agent shall be discharged from any further obligation  hereunder
but shall remain  entitled to the benefit of the  provisions  of this Article 14
and the  Administrative  Agent's  successor and each of the other parties hereto
shall

<PAGE>
                                      -66-


have the same rights and obligations  among themselves as they would have had if
such successor originally had been a party hereto as Administrative Agent.

14.7        Rights of Administrative Agent as Lender

            With  respect  to  its  portion  of the  Committed  Amount  and  its
Participation,  and to Bankers' Acceptances, the Administrative Agent shall have
the same rights and powers under this Agreement and any Bankers'  Acceptances as
any other  Lender,  and it may exercise such rights and powers as though it were
not performing the duties and functions delegated to it as Administrative  Agent
hereunder,  and the term  "Lender" or any other  similar term shall,  unless the
context otherwise requires,  include the Administrative Agent in its capacity as
a Lender.

14.8        Authorized Waivers, Variations and Omissions

            If  so   authorized  in  writing  by  the  Required   Lenders,   the
Administrative  Agent  may  grant  waivers,  consents,  vary  the  terms of this
Agreement and do or omit to do all such acts and things in  connection  herewith
or  therewith.  Except  with the prior  written  agreement  of all the  Lenders,
nothing in this Section 14.8 shall  authorize (i) any decrease in the Applicable
Margin,  the  Stamping  Fee,  the  Standby  Fee or the  Libor  Margin,  (ii) any
extension  of the date for, or  alteration  in the  amount,  currency or mode of
calculation  or  computation  of any payment of  principal  or interest or other
amount,  (iii) any increase in the  Committed  Amount of a Lender (other than as
referred to in Section  2.6(b)),  (iv) any extension of the Final Maturity Date,
(v) any  change in the terms of  Articles  9, 10 or 13,  (vi) any  change in the
definition  of  Required  Lenders  (vii)  the  release  of the  Borrower  or any
Guarantor from its obligations  under any Loan Document or (viii) any amendments
to this Section 14.8.

14.9        Financial Information Concerning Borrower

            Subject to Section 14.3(a),  the Administrative Agent shall not have
any duty or responsibility  either initially or on a continuing basis to provide
any Lender with any credit or other  information  with respect to the  financial
condition and affairs of the Borrower.

14.10       Knowledge of Financial Situation of Borrower

            Each of the Lenders  represents  and warrants to the  Administrative
Agent  that it has  made  its own  independent  investigation  of the  financial
condition  and  affairs  of the  Borrower  in  connection  with the  making  and
continuation of its  Participation  in this Agreement and that it has not relied
on any  information  provided to it by the  Administrative  Agent in  connection
herewith  or  therewith,   and  each  Lender  represents  and  warrants  to  the
Administrative  Agent that it shall  continue to make its own  appraisal  of the
creditworthiness of the Borrower from time to time.

14.11       Legal Proceedings

            The  Administrative  Agent shall not be  obligated to take any legal
proceedings  against the  Borrower or any other  Person for the  recovery of any
amount due under this  Agreement  or under any Bankers'  Acceptances.  No Lender
shall bring legal proceedings against the Borrower or any other Person hereunder
or in connection herewith, or exercise any right

<PAGE>
                                      -67-


arising hereunder or in connection  herewith over the property and assets of the
Borrower or any other Person  without the prior written  consent of the Required
Lenders.

14.12       Capacity as Administrative Agent

            In performing  its functions  and duties under this  Agreement,  the
Administrative Agent shall act solely as the Administrative Agent of the Lenders
and shall not assume, and shall not be deemed to have assumed, any obligation as
agent or trustee for the Borrower or any other Person. The Administrative  Agent
shall not be under any liability or  responsibility of any kind to the Borrower,
the Lenders, or to any other Person arising out of or in relation to any failure
or delay in  performance  or breach by any Lender or Lenders or, as the case may
be, by the Borrower or any other Person  pursuant to or in any way in connection
with this Agreement.

14.13       Capacity as Lead Arranger

            The  Borrower  and the Lenders and the  Administrative  Agent hereby
agree and confirm that BMO has  performed its functions and duties in connection
with the  arrangement  of the Facility  and shall not be under any  liability or
responsibility  of any kind to the  Borrower,  the Lenders,  the  Administrative
Agent or any of them  arising out of or in relation  to the  arrangement  of the
Facility or this Agreement.

14.14       Deposits or Loans Respecting the Borrower

            The Administrative Agent and each of the Lenders may accept deposits
from,  lend  money  to and  generally  engage  in any kind of  banking  or other
business with the Borrower  without  liability to account to the  Administrative
Agent or any Lender.

                                   ARTICLE 15
                                     GENERAL

15.1        Term

            The Facility shall expire on the Maturity Date.

15.2        Survival

            All  covenants,  agreements,  representations  and  warranties  made
herein or in  certificates  delivered in connection  herewith by or on behalf of
the Borrower, the Guarantors or any other Subsidiary shall survive the execution
and  delivery of this  Agreement  and the making of the Drawdown  hereunder  and
shall  continue in full force and effect so long as there is any  obligation  of
the Borrower to the Administrative Agent or any Lender hereunder.

15.3        Benefit of the Agreement

            This Agreement shall enure to the benefit of and be binding upon the
successors  and  permitted  assigns  of the  Borrower  and  the  successors  and
permitted assigns of the Administrative Agent and the Lenders.

<PAGE>
                                      -68-


15.4        Notices

            All notices,  requests,  demands or other  communications to or from
the parties hereto shall be in writing and shall be given by overnight  delivery
service, by hand delivery or by telecopy to the addressee as follows:

              (i)    If to the Borrower:

                     Mitel Networks Corporation
                     350 Legget Drive
                     Ottawa, Ontario K2K 2W7

                     Attention:    Treasurer

                     Telecopier:   613-591-2320
                     Telephone:    613-591-2122, ext. 4431

             (ii)    If to the Administrative Agent:

                     BMO Nesbitt Burns Inc.
                     Structured and Project Lending
                     1 First Canadian Place
                     4th Floor, P.O. Box 150
                     Toronto, Ontario M5X 1H3

                     Attention:    Genga T. Arulampalam

                     Telecopier:   416-867-6977
                     Telephone:    416-359-6996

            (iii)    If to a Lender:

                     To the  address  set  forth  next to its  signature  on the
                     signature page of this Agreement

or at such  other  address  or to such  other  individual  as the  Borrower  may
designate by notice to the Administrative  Agent or the Administrative Agent may
designate by notice to the  Borrower.  If any notice,  request,  demand or other
communication  is delivered or  transmitted on a day other than a Banking Day or
after  3:00  p.m.  on any  Banking  Day,  the same  shall be deemed to have been
effectively given and received on the next following Banking Day.

15.5        Amendment and Waiver

            This  Agreement and documents  collateral  hereto may be modified or
amended and a waiver of any breach of any term or  provision  of this  Agreement
shall be effective  only if the Borrower  and the  Administrative  Agent and the
Required Lenders or each Lender, as the case

<PAGE>
                                      -69-


may be, so agree in writing.  A waiver of any breach of any term or provision of
this Agreement shall be limited to the specific breach waived.

15.6        Governing Law

            This Agreement shall be governed by and construed in accordance with
the laws of the  Province of Ontario and the federal  laws of Canada  applicable
therein.  Each of the  Administrative  Agent, the Lenders and the Borrower agree
that any legal suit,  action or proceeding  arising out of this Agreement may be
instituted in the courts of Ontario,  and each of the Administrative  Agent, the
Lenders  and  the  Borrower  hereby  accepts  and  irrevocably  submits  to  the
non-exclusive  jurisdiction of said courts and acknowledges their competence and
agrees to be bound by any judgment thereof.

15.7        Further Assurances

            The Borrower  shall  promptly  cure any default in its execution and
delivery of this Agreement.  The Borrower, at its expense, will promptly execute
and deliver, or cause to be executed and delivered,  to the Administrative Agent
and the Lenders, upon request, all such other and further documents, agreements,
certificates  and  instruments  in  compliance  with, or  accomplishment  of the
covenants and agreements of the Borrower and the  Guarantors  hereunder or under
the Security  Documents or more fully to state the  obligations  of the Borrower
and the Guarantors as set out herein or therein or to make any  recording,  file
any notice or obtain any  consents,  all as may be necessary or  appropriate  in
connection therewith.

15.8        Enforcement and Waiver by the Lenders

            The Administrative Agent and the Lenders shall have the right at all
times to enforce the provisions of this Agreement and agreements to be delivered
pursuant  hereto  in  strict  accordance  with the  terms  hereof  and  thereof,
notwithstanding  any conduct or custom on the part of the  Administrative  Agent
and the Lenders in refraining from so doing at any time or times. The failure of
the  Administrative  Agent and the  Lenders at any time or times to enforce  its
rights under such provisions, strictly in accordance with the same, shall not be
construed as having created a custom or in any way or manner  modified or waived
the same.  All rights and remedies of the  Administrative  Agent and the Lenders
are  cumulative and concurrent and the exercise of one right or remedy shall not
be deemed a waiver or release of any other right or remedy.

15.9        Execution in Counterparts

            This Agreement may be executed in counterparts,  each of which shall
be considered  an original and all of which taken  together  shall  constitute a
single agreement.

15.10       Assignment by the Borrower

            The rights and  obligations of the Borrower under this Agreement are
not  assignable  to any other  Person,  except in  accordance  with  Article 12,
without the prior written consent of the Administrative Agent and the Lenders in
its sole discretion.

<PAGE>
                                      -70-


15.11       Assignments and Transfers by the Lenders

      (a) With the prior written consent of the Borrower, such consent not to be
unreasonably withheld or delayed, any Lender may, at any time, assign all or any
of its rights and  benefits  hereunder  or transfer in  accordance  with Section
15.11(b) all or any of its rights, benefits and obligations hereunder to another
Person (the  "Transferee");  provided  that any partial  assignment  or transfer
shall be with respect to a minimum  commitment of Cdn.  $5,000,000  and integral
multiples  of Cdn.  $100,000  in excess  thereof or such  lesser  amount as will
result in each of the Lender and the Transferee  having a minimum  commitment of
Cdn. $5,000,000.  Notwithstanding the foregoing,  the consent of the Borrower is
not required in connection  with the assignment or transfer of all or any of the
rights, benefits and obligations hereunder to (i) any Subsidiary or Affiliate of
the Lender,  provided that, in either case, any such assignment or transfer does
not give rise to a claim for increased  costs  pursuant to Article 5, or (ii) to
any  financial  institution  or to any other  Person if an Event of Default  has
occurred and is continuing.

      (b) If a Lender assigns all or any of its rights and benefits hereunder in
accordance  with Section  15.11(a),  then,  unless and until the  Transferee has
agreed  with the  Lender  and the  Borrower  pursuant  to a  transfer  agreement
substantially  in the form of  Schedule  J hereto  (or such other form as may be
agreed to by the Lender and the Borrower) that the Transferee  shall be bound by
the same  obligations of the Lender as the  Transferee  would have been under if
the  Transferee  had been an original  party hereto,  the Borrower  shall not be
obliged to recognize  such  Transferee as having the rights against the Borrower
which the  Transferee  would  have had if the  Transferee  had been such a party
hereto.

      (c) A Lender may  participate  all or any part of its interest  hereunder,
provided that any such participation does not give rise to a claim for increased
costs  pursuant to Article 5. The  Borrower  shall not be obligated to deal with
any  participant  and shall be  entitled  to deal solely with the Lender and the
Lender shall not be released from any of its  obligations to the Borrower or the
Guarantors  as a result  of such  participation  except to the  extent  that the
participant has fulfilled such obligations.  Such participants shall be bound to
the same  confidentiality  provisions  with  respect to the  Facilities  and the
Borrower and each Guarantor as are applicable to the Lender.

15.12       Set-Off

            Subject to the  provisions  of the  Intercreditor  Agreement,  if an
Event of Default has  occurred  and is  continuing,  each Lender  shall have the
right to set off against any  accounts,  credits or balances  maintained  by the
Borrower  or any of the  Guarantors  with the Lender  any amount due  hereunder.
Except  for  payments  to a Lender  from the  Administrative  Agent  which  were
received  by the  Administrative  Agent  for  the  account  of  such  Lender  in
accordance  with the  provisions of this  Agreement,  if any Lender shall at any
time receive  payment or  satisfaction  of all or a part of any amounts  payable
hereunder,  whether by set-off or otherwise,  in a proportion which, in relation
to any  amounts  received  by any other  Lender  or  Lenders  at the same  time,
represents more than its pro rata  Participation,  then such Lender shall notify
the  Administrative  Agent thereof and pay to the  Administrative  Agent for the
account of the other  Lenders  such  amount as will ensure that each Lender will
receive a proportion of such payment

<PAGE>
                                      -71-


equal to such Lender's pro rata Participation. In the event that at any time any
Lender shall be required to refund any amount which has been paid to or received
by it by set-off or otherwise on account of any part of the  Advances,  interest
thereon or any other  amount  payable  hereunder  and which has been paid to any
other  Lender  pursuant to this Section  15.12,  such other Lender shall repay a
proportionate amount of the amounts so refunded without interest. If a Lender is
required to make any payment to any other Lender pursuant to this Section 15.12,
then,  subject to the foregoing  sentence,  the liability of the Borrower to the
Lender making such payment under this  Agreement  shall be treated as not having
been reduced by the amount of such payment and the  liability of the Borrower to
any Lender receiving such payment shall be treated as having been reduced by the
amount of the payment received by such Lender.

15.13       Time of the Essence

            Time shall be of the essence in this Agreement.

15.14       Judgment Currency

            To the extent  permitted by applicable law, if any judgment or order
is rendered and expressed in a currency other than the currency (the  "Agreement
Currency")  in which  amounts are payable under the Facility (i) for the payment
of any  amount  owing  by the  Borrower  in  respect  of the  Facility  or  this
Agreement,  or (ii) in respect of a judgment  or order of another  court for the
payment of any amount described in (i) above, the Administrative  Agent and each
Lender,   after  recovery  in  full  of  the  aggregate   amount  to  which  the
Administrative  Agent and each  Lender is entitled  pursuant to the  judgment or
order, will be entitled to receive  immediately from the Borrowers the amount of
any shortfall in the Agreement Currency received by the Administrative Agent and
each Lender as a consequence of sums paid in such other currency and will refund
promptly to the Borrower any excess of the  Agreement  Currency  received by the
Administrative Agent and each Lender as a consequence of sums paid in such other
currency if such  shortfall or such excess  arises or results from any variation
between the rate of exchange at which the Agreement  Currency is converted  into
the currency of the judgment or order for the purposes of such judgment or order
and the rate of  exchange at which the  Administrative  Agent and each Lender is
able, acting in a reasonable manner and in good faith in converting the currency
received into the Agreement  Currency,  to purchase the Agreement  Currency with
the amount of the  currency of the  judgment or order  actually  received by the
Administrative  Agent and each  Lender.  The term "rate of  exchange"  includes,
without  limitation,  any premiums and costs of exchange  payable in  connection
with the purchase of or conversion into the Agreement  Currency.  Any amount due
from the Borrower  under the  provisions of this Section 15.14 shall be due as a
separate debt and shall not be affected by judgment being obtained for any other
amounts due under or in respect of the Facility or this Agreement.

15.15       Equal Ranking of Lenders

            The Lenders,  and to the extent  necessary,  the Borrower,  agree as
between  themselves  that any  indebtedness  of the Borrower  towards any Lender
hereunder,  in respect of any Advance or any Bankers'  Acceptance,  or otherwise
hereunder shall at all times rank equally and without  preference or distinction
with the indebtedness of the Borrower towards any other Lender hereunder.

<PAGE>
                                      -72-


15.16       Sharing of Information

The  Borrower  agrees  that the  Administrative  Agent and the Lenders may share
amongst  themselves any information which any of them may possess concerning the
Borrower in respect of the Borrower's undertakings,  obligations or indebtedness
towards any Lender  pursuant  to this  Agreement,  any Advance and any  Bankers'
Acceptance, as well as any payment received from the Borrower by any Lender.

15.17       Continuing Obligations and Liabilities

            Each of the  Borrower  and BMO agrees and  confirms  that all of its
liabilities and obligations under the Original Credit Agreement  existing on the
Closing  Date are amended and  restated by this  Agreement  and continue in full
force and effect hereunder, except to the extent amended by this Agreement.

            IN WITNESS WHEREOF the parties hereto have executed this Agreement.

                                                MITEL NETWORKS CORPORATION

                                                by
                                                   -----------------------------
                                                     Name:
                                                     Title:

                                                by
                                                   -----------------------------
                                                     Name:
                                                     Title:

                                                BANK OF MONTREAL, As
                                                Administrative Agent And Lead
                                                Arranger

                                                by
                                                   -----------------------------
                                                     Name:
                                                     Title:

                                                by
                                                   -----------------------------
                                                     Name:
                                                     Title:

<PAGE>
                                      -73-


Address:
                                                BANK OF MONTREAL, As Lender
BMO Nesbitt Burns Inc.
Structured and Project Financing                by
1 First Canadian Place                             -----------------------------
4th Floor, P.O. Box 150                            Name:
Toronto, Ontario                                   Title:
M5X 1H3
                                                by
                                                   -----------------------------
                                                   Name:
                                                   Title:


<PAGE>

                     SCHEDULE A - BORROWING BASE CERTIFICATE


<PAGE>

                          SCHEDULE B - DRAWDOWN NOTICE

To:         Bank of Montreal
            Structured and Project Lending
            100 King Street West
            1 First Canadian Place
            4th Floor, P.O. Box 150
            Toronto, Ontario
            M5X 1H3

            Attention:    Manager

            This Drawdown Notice is being delivered  pursuant to the amended and
restated loan  agreement  made as of February 27, 2003 (the "Credit  Agreement")
made between the Borrower, the Administrative Agent and the Lenders. Capitalized
terms used herein but not defined  herein  shall have the  meanings  ascribed to
such terms in the Credit Agreement.

            We hereby  request  the  following  Advance  on  __________________,
_______. The Advance shall be pursuant to:

      check the applicable boxes

      0     Prime Rate Advance in the principal amount of Cdn.$____________.

      0     Bankers'  Acceptance  Advance  in  the  aggregate  Face  Amount  and
                  principal amount of  Cdn.$____________  having a term of _____
                  days.

      0     Libor  Advance  in the  amount of  U.S.$____________  and  having an
                  Interest Period of _____ months.

      0     U.S. Base Rate Advance in the amount of U.S.$____________.

      0     Letter  of Credit in the Face  Amount  of  Cdn.$____________  and/or
                  U.S.$____________   with   __________________  as  beneficiary
                  having a term of ____ days.

            Payment instructions:    _____________________________________

                                     _____________________________________

                                     _____________________________________

            The  representations  and warranties set forth in Section 7.1 of the
Credit  Agreement  are,  mutatis  mutandis,  true and  correct  in all  material
respects on and as of the date

<PAGE>
                                       -2-


hereof,  both before and after giving  effect to the  Drawdown of the  requested
Advance and to the application of proceeds therefrom,  by reference to the facts
and  circumstances  now existing and assuming that each of such  representations
and warranties and the Schedules referred to therein had been amended to reflect
any notices provided by the Borrower to the  Administrative  Agent in respect of
the matters dealt with therein and, with respect to the representation set forth
in Section 7.1(g) of the Credit Agreement, the reference to the date October 27,
2002 shall be deemed to be a reference to the date of the  financial  statements
of the Borrower most recently delivered pursuant to Section 8.1(a) of the Credit
Agreement  and,  with  respect  to  unaudited  financial  statements,  that such
statements  fairly  present the  financial  condition  of the  Borrower  and its
Subsidiaries  as at such  date  and the  results  of  their  operations  for the
financial  period then ended,  in  accordance  with GAAP  consistently  applied,
subject to normal year end audit adjustments.

            No Default or Event of Default has occurred and is  continuing,  nor
shall any such event  occur as a result of making the  requested  Advance or the
application of proceeds therefrom.

            DATED this _____ day of _____________________, ________.

                                                MITEL NETWORKS CORPORATION

                                                by
                                                   -----------------------------
                                                   Name:  |X|
                                                   Title: |X|

                                                by
                                                   -----------------------------
                                                   Name:  |X|
                                                   Title: |X|


<PAGE>

                         SCHEDULE C - CONVERSION NOTICE

To:         Bank of Montreal
            100 King Street West
            1 First Canadian Place
            4th Floor, P.O. Box 150
            Toronto, Ontario
            M5X 1H3

            Attention:    Manager

            This Conversion  Notice is being  delivered  pursuant to the amended
and  restated  loan  agreement  made  as  of  February  27,  2003  (the  "Credit
Agreement") made between the Borrower, the Administrative Agent and the Lenders.
Capitalized  terms used herein but not defined  herein  shall have the  meanings
ascribed to such terms in the Credit Agreement.

            We hereby request the following  Conversions on  __________________,
_______. The Conversions shall be as set forth below:

      check the applicable boxes

      0     Prime Rate  Advance  in the  principal  amount of  Cdn.$____________
                  shall be converted into a Bankers' Acceptance Advance having a
                  term/Interest Period of _____ days.

      0     Prime Rate  Advance  in the  principal  amount of  Cdn.$____________
                  shall be converted  into an  Equivalent  Amount U.S. Base Rate
                  Advance.

      0     Prime  Rate  Advance  in the  principal  amount  of  Cdn.$  shall be
                  converted  into an Equivalent  Amount Libor Advance  having an
                  Interest Period of months.

      0     Bankers'    Acceptance   in   the    aggregate    Face   Amount   of
                  Cdn.$____________   shall  be  converted  into  a  Prime  Rate
                  Advance.

      0     Bankers'    Acceptance   in   the    aggregate    Face   Amount   of
                  Cdn.$____________ shall be converted into an Equivalent Amount
                  U.S. Base Rate Advance.

      0     Bankers'    Acceptance   in   the    aggregate    Face   Amount   of
                  Cdn.$____________ shall be converted into an Equivalent Amount
                  Libor Advance having an Interest Period of months.

      0     Libor Advance in the principal amount of U.S.$____________  shall be
                  converted into a U.S. Base Rate Advance.

<PAGE>
                                      -2-


      0     Libor Advance in the principal amount of U.S.$____________  shall be
                  converted into an Equivalent Amount Prime Rate Advance.

      0     Libor Advance in the  principal  amount of U.S. $ shall be converted
                  into an Equivalent Amount Bankers' Acceptance Advance having a
                  term/Interest Period of days.

      0     U.S. Base Rate Advance in the principal amount of  U.S.$____________
                  shall be  converted  into a Libor  Advance  having an Interest
                  Period of _____ months.

      0     U.S. Base Rate Advance in the principal amount of  U.S.$____________
                  shall  be  converted  into an  Equivalent  Amount  Prime  Rate
                  Advance.

      0     U.S.  Base Rate  Advance in the  principal  amount of U.S.$ shall be
                  converted  into  an  Equivalent  Amount  Bankers'   Acceptance
                  Advance having a term/Interest Period of days.


            No Default or Event of Default has occurred and is  continuing,  nor
shall any such event occur as a result of making the requested conversion.

            DATED this _____ day of _____________________, ________.

                                                MITEL NETWORKS CORPORATION

                                                by
                                                   -----------------------------
                                                   Name:  |X|
                                                   Title: |X|

                                                by
                                                   -----------------------------
                                                   Name:  |X|
                                                   Title: |X|


<PAGE>

                          SCHEDULE D - ROLLOVER NOTICE

To:         Bank of Montreal
            Structured and Project Lending
            100 King Street West
            1 First Canadian Place
            4th Floor, P.O. Box 150
            Toronto, Ontario
            M5X 1H3

            Attention:   Manager

            This Rollover Notice is being delivered  pursuant to the amended and
restated loan  agreement  made as of February 27, 2003 (the "Credit  Agreement")
made between the Borrower, the Administrative Agent and the Lenders. Capitalized
terms used herein but not defined shall have the meanings ascribed to such terms
in the Credit Agreement.

            We hereby request the following:

      check the applicable box

      0     Rollover in respect of the Libor Advance  currently  outstanding  in
            the amount of  U.S.$____________  and with an Interest Period ending
            on  _____________,  ______.  The next Interest Period for such Libor
            Advance commencing on such date is to be _____ months.

      0     Acceptance of Bankers'  Acceptances in the aggregate Face Amount and
            principal amount of Cdn.$____________ having a term of _____ days.

            No Default or Event of Default has occurred and is  continuing,  nor
shall any such event occur as a result of making the requested rollover.

            DATED this _____ day of _____________________, ________.

                                                MITEL NETWORKS CORPORATION

                                                by
                                                   -----------------------------
                                                   Name:  |X|
                                                   Title: |X|


<PAGE>

                      SCHEDULE E - [Intentionally deleted]


<PAGE>

                       SCHEDULE F - PERMITTED ENCUMBRANCES

"Permitted Encumbrances" means the following types of Encumbrances:

             (i)     liens in  respect  of taxes,  assessments  or  governmental
                     charges or claims the payment of which is not, at the time,
                     overdue;

            (ii)     statutory liens of landlords,  statutory liens of banks and
                     rights   of   set-off,   statutory   liens   of   carriers,
                     warehousemen,    mechanics,    repairmen,    workmen    and
                     materialmen,  and other liens  imposed by law, in each case
                     incurred in the ordinary course of business (a) for amounts
                     not yet  overdue or (b) for  amounts  that are  overdue and
                     that (in the case of any such amounts  overdue for a period
                     in excess of five days) are being  contested  in good faith
                     by appropriate proceedings, so long as (1) such reserves or
                     other appropriate provisions,  if any, as shall be required
                     by generally accepted  accounting  principles as applied in
                     Canada shall have been made for any such contested amounts,
                     and (2) in the case of a lien with  respect to any  portion
                     of the  collateral in respect of which the Lenders,  or the
                     Administrative  Agent  on  their  behalf,  have a  security
                     interest  in respect  of the  obligations  of the  Borrower
                     hereunder  (the  "Collateral"),  such  contest  proceedings
                     conclusively operate to stay the sale of any portion of the
                     Collateral on account of such lien;

           (iii)     liens  incurred or deposits made in the ordinary  course of
                     business  in   connection   with   workers'   compensation,
                     unemployment  insurance and other types of social security,
                     or  to  secure  the   performance  of  tenders,   statutory
                     obligations,   surety  and  appeal  bonds,   bids,  leases,
                     government  contracts,  trade  contracts,  performance  and
                     return-of-money   bonds  and  other   similar   obligations
                     (exclusive  of  obligations  for the  payment  of  borrowed
                     money),  so  long  as  no  foreclosure,   sale  or  similar
                     proceedings have been commenced with respect to any portion
                     of the Collateral on account thereof;

            (iv)     any  attachment  or judgment  lien not involving (i) in any
                     individual case an amount in excess of $1,000,000,  or (ii)
                     in the  aggregate  at any time  outstanding  an  amount  in
                     excess of  $2,500,000  (in either  case to the extent  such
                     amount is not adequately covered by insurance as to which a
                     solvent and unaffiliated insurance company has acknowledged
                     coverage)  except if any such  attachment  or judgment lien
                     shall  remain  undischarged,  undisputed  (in the case of a
                     writ  in  the  United  Kingdom),   unvacated,  unbonded  or
                     unstayed  for a period  of 60 days (or in any  event  later
                     than  five  days  prior  to the date of any  proposed  sale
                     thereunder);

             (v)     leases or subleases  granted to third  parties which do not
                     interfere in any material respect with the ordinary conduct
                     of the business of the Borrower
<PAGE>
                                      -2-


                     or  any  of  its  subsidiaries  or  result  in  a  material
                     diminution in the value of any of the Collateral;

            (vi)     easements, rights-of-way,  restrictions, encroachments, and
                     other minor  defects or  irregularities  in title,  in each
                     case which do not and will not  interfere  in any  material
                     respect  with the  ordinary  conduct of the business of the
                     Borrower or any of its subsidiaries or result in a material
                     diminution in the value of any of the Collateral;

           (vii)     any (a)  interest or title of a lessor or  sublessor  under
                     any operating lease in respect of which the Borrower or any
                     of its  subsidiaries  shall be, or  become  liable  whether
                     directly or by assignment or as a guarantor or other surety
                     for the  obligations of the lessee under any such operating
                     lease,  to the  extent  that the  aggregate  annual  rental
                     payments of the Borrower and its subsidiaries in respect of
                     all such operating leases shall not exceed $20,000,000, (b)
                     restriction  or  encumbrance  that the interest or title of
                     such  lessor  or  sublessor  may  be  subject  to,  or  (c)
                     subordination  of the  interest of the lessee or  sublessee
                     under such lease to any restriction or encumbrance referred
                     to in the  preceding  clause  (b), so long as the holder of
                     such  restriction  or  encumbrance  agrees to recognize the
                     rights of such lessee or sublessee under such lease;

          (viii)     liens arising from the filing of Personal Property Security
                     Act or UCC financing statements, relating solely to leases;

            (ix)     liens in favour of customs and revenue  authorities arising
                     as a matter of law to secure  payment of customs  duties in
                     connection with the importation of goods;

             (x)     any zoning or similar law or right reserved to or vested in
                     any  governmental  office or agency to control or  regulate
                     the use of any real property;

            (xi)     liens  against  owners'  or  sublessors'  interest  in  any
                     leasehold  property used or occupied by the Borrower or any
                     of its subsidiaries;

           (xii)     liens   securing   obligations   (other  than   obligations
                     representing   indebtedness   for  borrowed   money)  under
                     operating,   reciprocal   easement  or  similar  agreements
                     entered  into in the  ordinary  course of  business  of the
                     Borrower or any of its subsidiaries;

          (xiii)     licences  of  patents,  trademarks  and other  intellectual
                     property  rights  granted  by  the  Borrower  or any of its
                     subsidiaries  in the  ordinary  course of business  and not
                     interfering  in any  material  respect  with  the  ordinary
                     conduct of the business of the Borrower or such subsidiary;
<PAGE>
                                      -3-


           (xiv)     liens  granted to evidence  the  security  interests of the
                     Lenders,  or the  Administrative  Agent on their behalf, in
                     the Collateral;

            (xv)     Permitted Purchase Money Security Interests;

           (xvi)     Liens  granted  in  connection  with  obligations  incurred
                     pursuant  to  clause  (ix)  or  (x) of  the  definition  of
                     Permitted Debt;

          (xvii)     Liens not  included in any of the  foregoing  in respect of
                     obligations   not  exceeding   Cdn.   $5,000,000   (or  its
                     Equivalent Amount in another currency) in the aggregate;

         (xviii)     Liens granted to EDC in connection  with the obligations of
                     MNL incurred  pursuant to the EDC Facility  (including  the
                     Liens granted to EDC by the Borrower,  MNI, MNSI and MNL in
                     connection   therewith),   provided  that  EDC  shall  have
                     executed an intercreditor agreement with the Administrative
                     Agent in a form  satisfactory to the  Administrative  Agent
                     and such agreement is in full force and effect; and

           (xix)     certain   rights  of  the   Government  of  Canada  in  the
                     intellectual  property  of  the  Borrower  pursuant  to the
                     Technology Partnerships Canada Agreement.
<PAGE>

                             SCHEDULE G - LITIGATION


<PAGE>

                       SCHEDULE H - NON-COMPLIANCE MATTERS

Nil.


<PAGE>

                            SCHEDULE I - SUBSIDIARIES


<PAGE>

                         SCHEDULE J - TRANSFER AGREEMENT

TO: MITEL NETWORKS CORPORATION

            WHEREAS  the  Borrower  entered  into an amended and  restated  loan
agreement   dated   February  27,  2003  (the  "Credit   Agreement")   with  the
Administrative  Agent and the Lenders  whereby the Lenders agreed to provide the
Borrower with a revolving  credit facility in an aggregate  principal amount not
exceeding Cdn. $30,000,000 or the Equivalent Amount in United States Dollars for
the general corporate purposes of the Borrower;

            AND WHEREAS  pursuant to and in accordance with Section 15.11 of the
Credit  Agreement,  any  Lender  may,  with the  prior  written  consent  of the
Borrower,  assign or transfer all or any of its rights, benefits and obligations
under the Credit Agreement by duly  completing,  executing and delivering to the
Administrative Agent and to the Borrower this Transfer Certificate;

            AND  WHEREAS  any  Lender  (the  "Transferor")  wishes  to assign or
transfer to  __________________  (the  "Transferee")  the rights,  benefits  and
obligations of the Transferor under the Credit Agreement specified herein;

            AND WHEREAS the Borrower has consented in writing to such assignment
or transfer;

            NOW  THEREFORE in  consideration  of the  foregoing and of $1.00 and
other  good  and  valuable  consideration,   the  receipt  of  which  is  hereby
acknowledged, the signatories hereto agree as follows:

All   capitalized  terms  defined  in the  Credit  Agreement  and not  otherwise
      defined herein have the same meaning as in the Credit Agreement.

The   Transferor  assigns and transfers to the Transferee the following  rights,
      benefits and obligations (the "Transfer"):

            [description of the Transferred  Rights,  Benefits and  Obligations,
            indicating   retained   interest  or  fees,   if   applicable,   and
            Transferee's commitment and Participation]

            (the  "Transferred   Rights",   the  "Transferred   Benefits",   the
"Transferred  Obligations",  as applicable,  and  collectively  the "Transferred
Rights, Benefits and Obligations").

The   Transferee   accepts  the  Transfer  and  (if   applicable)   assumes  the
      Transferred Obligations (the "Assumption").

<PAGE>
                                      -2-


The   Transferee agrees with the  Administrative  Agent and the Borrower that it
      shall be bound by the same  obligations  of the Lenders as the  Transferee
      would have been under if the  Transferee had been an original party to the
      Credit Agreement.

The   Transfer and the  Assumption  are governed by and subject to Section 15.11
      of the Credit Agreement.

The   Transferee  acknowledges and confirms that it has not relied upon and that
      the  Transferor  and/or the  Administrative  Agent  has/have  not made any
      representation or warranty  whatsoever as to the due execution,  legality,
      effectiveness,  validity or  enforceability of the Credit Agreement or any
      other documentation or information  delivered by the Transferor and/or the
      Administrative  Agent to the Transferee in connection therewith or for the
      performance  thereof by any party  thereto or for the  performance  of any
      Guarantee by any Guarantor or for the financial  condition of the Borrower
      or of  any  Guarantor.  All  representations,  warranties  and  conditions
      expressed or implied by law or otherwise are hereby excluded.

The   Transferee  represents and warrants that it is not a  non-resident  within
      the meaning of the Income Tax Act  (Canada)  and that it has itself  been,
      and will continue to be, solely responsible for making its own independent
      appraisal   of   and   investigation   into   the   financial   condition,
      creditworthiness,  affairs,  status and nature of the Borrower and has not
      relied  and  will  not  hereafter  rely  on  the  Transferor   and/or  the
      Administrative  Agent to appraise  or keep under  review on its behalf the
      financial condition,  creditworthiness,  affairs,  status or nature of the
      Borrower.

Each  of the  Transferor  and the  Transferee  represents  and  warrants  to the
      Borrower  and the  Guarantors  that it has the capacity and power to enter
      into the Transfer and the  Assumption in accordance  with the terms hereof
      and to perform its obligations arising therefrom,  and all action required
      to authorize the execution and delivery hereof and the performance of such
      obligations has been duly taken.

This  Transfer Certificate shall be governed by and construed in accordance with
      the laws of the Province of Ontario, Canada.

            DATED this __________ day of _____________________, 200__.

                                                BANK OF MONTREAL

                                                by
                                                   -----------------------------
                                                   Name:     |X|
                                                   Title:    |X|

<PAGE>
                                      -3-


                                                [TRANSFEREE]

                                                by
                                                   -----------------------------
                                                   Name:     |X|
                                                   Title:    |X|

                                                MITEL NETWORKS CORPORATION

                                                by
                                                   -----------------------------
                                                   Name:     |X|
                                                   Title:    |X|


<PAGE>

                         SCHEDULE K - COMMITTED AMOUNTS

                  LENDER

                  Bank of Montreal                    Cdn. $30,000,000


<PAGE>

                           SCHEDULE L - BUSINESS PLAN