Document:

Exhibit
10.1

LOAN AGREEMENT

This
Agreement is made this 25th day of July, 2007.

BETWEEN:

TUCOWS.COM
CO.

(the
“Borrower”)

- and -

TUCOWS
(DELAWARE), INC.

(“Delaware”)

- and -

TUCOWS,
INC.

(“Tucows”)

- and -

MAILBANK
NOVA SCOTIA CO.

(“Mailbank”)

- and -

TUCOWS
DOMAIN HOLDINGS CO.

(“Domain”)

- and -

INNERWISE,
INC.

(“Innerwise”)

- and -

BANK OF
MONTREAL

(the
“Bank”)

WHEREAS the Bank proposes to establish certain
credit facilities for the Borrower pursuant to the Term Sheet (as hereinafter
defined);

AND
WHEREAS the Bank, the
Borrower, Delaware, Tucows, Mailbank, Domain and Innerwise have entered into
this loan agreement in order to provide for certain additional representations,
warranties, covenants and other terms and conditions relating to such credit
facilities;

NOW
THEREFORE for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party, the parties agree as follows:

 

ARTICLE I -
INTERPRETATION

Definitions

1.01           In this Agreement, the
following words and phrases shall have the meanings set forth below:

“Acceleration Date” means the occurrence of an Event of
Default;

“Advance” means any extension of credit by the Bank to the
Borrower, including for greater certainty an extension of credit in the form of
a loan, the establishment of an overdraft, the issuance of a Bankers’
Acceptance, or the entering into of a Hedging Agreement or Service Agreement;

“BIA” means the Bankruptcy and Insolvency
Act (Canada), as amended from time to time;

“Bank” means Bank of Montreal;

“Banker’s Acceptance” means a bill of
exchange or a depository bill as defined in the Depository Bills and Notes Act (Canada) drawn by the
Borrower and accepted by the Bank in respect of which the Borrower becomes
obligated to pay the face amount thereof to the holder (which may be a third
party or the Bank) upon maturity;

“Borrower” means Tucows.com Co., a corporation incorporated
under the laws of the Province of Nova Scotia, and its successors and assigns;

“Business Day” means a day on which the main branch of the
Bank in Toronto is open for normal banking business, but not including a
Saturday or Sunday;

“CBCA” means the Canada Business Corporations Act as it may be amended from time to
time;

“Canadian Dollars” or “$” or “Cdn $” means the lawful money of
Canada;

“Companies” means the Borrower, Delaware, Tucows, Mailbank,
Domain and Innerwise; and “Company” means
any one of them as the context requires;

“Delaware” means Tucows (Delaware), Inc., a corporation
incorporated under the laws of the State of Delaware, and its successors and
assigns;

“Domain” means Tucows Domain Holdings Co., a corporation
incorporated under the laws of the Province of Nova Scotia, and its successors
and assigns;

“Event of Default” means the occurrence of any of the
following events:

(i)                                     if the Borrower fails to make punctual
payment when due of any principal amount or interest or fees payable under the
Term Sheet;

(ii)                                  if any representation or warranty made or
given herein or in the Term Sheet, in any certificate delivered pursuant
hereto, or in any financial statements delivered pursuant hereto is false or
erroneous in any material respect and, in the case of any erroneous
representation or warranty, if such error is not corrected within twenty (20)
days following the day on which such error is made known to the Borrower or any
Guarantor 

 2
 

 

through
written notification by the Lender or otherwise becomes known to the Borrower
or any Guarantor;

(iii)                               if any Company is in default with respect to
any indebtedness (other than amounts due to the bank under this Agreement, the
Term Sheet or under any of the Security) in an amount in excess of $50,000
individually or $250,000 in aggregate or any event or condition occurs that
results in any such indebtedness becoming due prior to its scheduled maturity
or that enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of such indebtedness (or any trustee or
agent on its or their behalf) to cause any such indebtedness to become due, or
to require the prepayment, repurchase, redemption or defeasance thereof, prior
to its scheduled maturity;

(iv)                              if, other than in respect of any covenant to
pay, there is any default or failure in the observance or performance of any
other act hereby required to be done or any other covenant or condition hereby
required to be observed or performed, and the default or failure continues for
thirty (30) days following the day such default or failure becomes known to the
Borrower or any Company through written notification by the Bank or otherwise
becomes known to the Borrower or any Company;

(v)                                 if any provision of this Agreement, the Term
Sheet or any Security shall for any reason cease to be valid, binding and
enforceable in accordance with its terms (or any Company shall so assert in
writing);

(vi)                              if an Insolvency Event should occur in
connection with any Company;

(vii)                           if any action or event has occurred which has
had or is expected to result in a Material Adverse Change;

(viii)                        if any Company suspends or ceases or threatens
to suspend or cease its business; or

(ix)                                if any auditor’s opinion or report required
to be delivered in accordance with this Agreement or the Term Sheet is
qualified in any manner.

“Exchange Rate” in connection with any
amount of Canadian Dollars to be converted into another currency pursuant to
this Agreement for any reason, or vice-versa, means the Bank’s spot rate of
exchange for converting Canadian Dollars into such other currency or
vice-versa, as the case may be, quoted at approximately noon (Toronto time) on
the effective date of such conversion. 
Any advances made hereunder shall be repaid in the currency that the
advances were made;

“Facilities” means the credit facilities established by the
Bank for the Borrower pursuant to the Term Sheet; and “Facility”
means any one of them as the context requires;

“Funded Debt” means all debt on which interest is paid, but
does not include trade debt incurred in the ordinary course of business;

“GAAP” means generally accepted accounting principles as approved
by the American Institute of Chartered Accountants in effect from time to time;

 3
 

 

“Governmental Authority” means any: (i) federal, provincial,
state, municipal, local or other governmental or public department, central
bank, court, commission, board, bureau, agency or instrumentality, domestic or
foreign; (ii) any subdivision or authority of any of the foregoing; or (iii)
any quasi-governmental or private body exercising any regulatory, expropriation
or taxing authority under or for the account of any of the above;

“Guarantee” means any agreement by which any Person assumes,
guarantees, endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes liable upon, the obligation of any other
Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person or otherwise assures any creditor of
such Person against loss, and shall include, without limitation, any contingent
liability under any letter of credit or similar document or instrument; but
shall not include liability arising from the endorsement of negotiable
instruments for collection;

“Hazardous Materials” means any contaminant, pollutant or
substance that is likely to cause harm or degradation to the surrounding environment
or risk to human health and without restricting the generality of the
foregoing, includes any pollutant, contaminant, waste, hazardous waste or
dangerous goods present in such quantity or state that it contravenes any
Requirements of Environmental Law;

“Hedging
Agreements” means all
agreements made between the Bank and the Borrower from time to time for the
purpose of hedging currency risk and interest rate risk, including currency
exchange agreements, interest rate exchange agreements (commonly known as
“interest rate swaps”) and forward rate agreements;

“Indemnitees” means the Bank and its agents (specifically
including a receiver or receiver-manager) and their respective officers,
directors and employees, and includes the respective successors and assignees
of the foregoing;

“Innerwise” means Innerwise, Inc., a corporation incorporated
under the laws of the State of Illinois, and its successors and assigns;

“Insolvency Event” means any one or more of
the following events:

·                                          any Company ceases to carry on its business;
commits an act of bankruptcy; becomes insolvent; makes an assignment for the
benefit of creditors; files a petition in bankruptcy or makes a proposal under
the BIA; is adjudicated insolvent or bankrupt; or petitions or applies to any
tribunal for the appointment of any receiver, trustee or similar liquidator;

·                                          any proceeding is commenced relating to any
Company or to any material portion of its property under any Insolvency
Legislation; or any receiver, trustee, manager, consultant, liquidator or
similar party is appointed in respect of it or any of its property;

·                                          any Person takes possession of a material
portion of the property of any Company by way of or in contemplation of
enforcement of security, or a distress or execution or similar process is
levied or enforced against any such property;

·                                          a judgment for the payment of money due in
excess of $25,000 is obtained or entered against any Company and remains unpaid
for a period of more than forty-five (45) days, unless such judgment is being
contested in good faith by all necessary proceedings and a reserve has been
established in an amount satisfactory to the Bank;

 4
 

 

“Insolvency
Legislation” means
legislation in any applicable jurisdiction relating to reorganization,
arrangement, compromise or re-adjustment of debt, dissolution or winding-up, or
any similar legislation, and for greater certainty specifically includes the
BIA, the Companies’ Creditors Arrangement Act
(Canada) and the Winding-Up and Restructuring Act
(Canada);

“Investment” means an investment by a Person, directly or
indirectly, in another Person (whether such investment was made by the
first-mentioned Person in such other Person or was acquired from a third
party), including such investments in the form of common or preferred shares,
debt obligations, capital contributions, partnership interests, joint ventures
and similar arrangements, or the provision of a Guarantee in respect of the
obligations of such other Person;

“Land” means real and immovable property (including leasehold
lands) and includes all buildings, improvements, fixtures and plant situated
thereon;

“Laws” means all statutes, codes, ordinances, decrees, rules,
regulations, municipal by-laws, judicial or arbitral or administrative or
ministerial or departmental or regulatory judgments, orders, decisions, rulings
or awards, or any provisions of such laws, including general principles of
common and civil law and equity or policies or guidelines, to the extent such
policies or guidelines have the force of law, binding on the Person referred to
in the context in which such word is used; and “Law”
means any of the foregoing;

“Leased Properties” means all Land in which any of the
Companies have a leasehold interest from time to time; specifically including
the Land listed in Schedule 3.01(j) attached hereto;

“Lien” means any lien, security interest, mortgage, pledge,
hypothecation, assignment, deemed trust, right of garnishment, charge or other
encumbrance whatsoever, including the lien of an attachment, judgment or execution,
or any conditional sale or other title retention agreement, any lease which in
substance creates a security interest, and the filing of, or agreement to give,
any financing statement under the Personal Property Security
Act (Ontario) or the comparable law of any other jurisdiction;

“Loan Documents” means this Agreement, the Security and all
other agreements, documents, instruments and assurances required or
contemplated herein to be provided by any Person;

“Mailbank” means Mailbank Nova Scotia Co., a corporation
incorporated under the laws of the Province of Nova Scotia, and its successors
and assigns;

“Material Adverse Change” in respect of any Company means any
change or event which: (i) constitutes a material adverse change in the
business, operations, condition (financial or otherwise), properties or
prospects of the Company; (ii) could materially impair the Company’s ability to
timely and fully perform its obligations under the Loan Documents provided by
it; or (iii) could materially impair the ability of the Bank to enforce its
rights and remedies under the Loan Documents;

“Minor Title Defects” means defects or irregularities in the
title to Land which are of a minor nature and in the aggregate will not
materially impair the present or contemplated use of such Land or materially
affect the Security;

“Obligations” means, at any time, all direct and indirect,
contingent and absolute obligations and liabilities of the Companies to the
Bank under or in connection with the Term Sheet, this Agreement and the
Security (or if the context requires, under or in connection with any Facility)

 5
 

 

at
such time, specifically including the outstanding principal amount of the
Advances and all accrued and unpaid interest thereon, and all fees, expenses
and other amounts payable pursuant to this Agreement and the Security;

“Owned Properties” means all Land in which any of the
Companies have a freehold interest from time to time, specifically including
those listed in Schedule 3.01(i);

“Pension Plan” means a pension plan or pension benefit plan
applicable to employees of any Company which is subject to funding requirements
established by applicable pension benefits legislation in any jurisdiction;

“Permitted Funded Debt” means: (i) the Obligations; (ii)
indebtedness secured by Permitted Liens; and (iii) Subordinated Debt;

“Permitted Liens” in respect of any Company
means the following:

·                                          Statutory Liens affecting the Company’s
property not at the time overdue, unless being contested in good faith by all
necessary proceedings and in respect of which a reserve has been established in
an amount satisfactory to the Bank;

·                                          security granted by the Company to a public
utility, municipality or other statutory or public authority to secure its
obligations incurred in the ordinary course of its business for utility
services, municipal taxes or other similar services or obligations;

·                                          Minor Title Defects affecting any Owned
Properties in which the Company has an interest;

·                                          Purchase-Money Security Interests incurred or
assumed by the Company in connection with the purchase or leasing of capital
equipment in the ordinary course of business, provided that the restrictions on
capital expenditures and all other applicable terms and conditions contained in
the Term Sheet and this Agreement are complied with;

·                                          Liens securing Subordinated Debt incurred by
the Company; and

·                                          the Security granted by or in respect of the
Company;

provided
that the use of the term “Permitted Liens” to describe such Liens shall mean
that they are permitted to exist (whether in priority to or subsequent in
priority to the Security, as determined by applicable law), and shall not be
interpreted as meaning that Liens are entitled to priority over the Security;

“Person” includes an individual, corporation, partnership,
trust, unincorporated association, Governmental Authority or any combination of
the foregoing;

“Purchase-Money Security Interest” means: (i) a Lien on any
property or asset which is created, issued or assumed to secure the unpaid
purchase price thereof, provided that such Lien is restricted to such property
or asset and secures an amount not in excess of the purchase price thereof; or
(ii) a lease of any property or asset which in substance constitutes a security
interest 

 6
 

 

(commonly
called a “capital lease”), provided that such lease is restricted to such
property or asset and secures an amount not in excess of the obligations under
such lease;

“Related Person” in relation to any Person means any
subsidiary, affiliate or associate (as such terms are defined in the CBCA) of
such Person;

“Requirements
of Environmental Law”
means (i) requirements imposed by or pursuant to statutes, regulations and
by-laws, (ii) requirements announced by a Governmental Authority as having
immediate effect, provided that at the time of making such announcement such
Governmental Authority also states its intention of enacting legislation to
confirm such requirements retroactively, (iii) all directives, policies and
guidelines issued by any Governmental Authority charged with the administration
thereof which have the force of law, and (iv) all requirements imposed under
any clean-up, compliance or other order made pursuant to any of the foregoing,
in each and every case relating to environmental, health or safety matters including,
but not limited to, all such obligations and requirements which relate to
solid, gaseous or liquid waste generation, handling, treatment, storage,
disposal or transportation and exposure to Hazardous Materials;

“Security” means all security agreements, Guarantees and
other documents and agreements previously given or hereafter provided by any
Person to the Bank from time to time as security for the payment and
performance of all present and future, direct and indirect obligations of the
Companies to the Bank;

“Service Agreements” means agreements between any Company and
the Bank in respect of cash management, payroll or other banking services;

“Statutory Lien” means a Lien in respect of any property or
assets of a Company created by or arising pursuant to any applicable
legislation in favour of any Person (such as but not limited to a Governmental
Authority), including a Lien for the purpose of securing the Company’s
obligation to deduct and remit employee source deductions and goods and
services tax pursuant to the Income Tax Act
(Canada), the Excise Tax Act (Canada), the Canada Pension Plan (Canada), the Employment
Insurance Act (Canada) and any federal or provincial legislation
similar to or enacted in replacement of the foregoing from time to time;

“Subordinated Debt” in respect of any Company means
indebtedness of the Company to any Person in respect of which the holder
thereof has entered into a subordination agreement in form and substance
satisfactory to the Bank, registered in all places where necessary or desirable
to protect the priority of the Security, which shall provide (among other
things) that: (i) the payment of principal and interest on such indebtedness is
postponed to the payment and satisfaction of the Obligations, except to the extent
as may be otherwise agreed in writing by the Bank; (ii) any security held in
respect of such indebtedness is subordinated to the Security; and (iii) the
holder of such indebtedness may not take any enforcement action in respect of
such indebtedness or any security held by it without the prior written consent
of the Bank, but for greater certainty will not include indebtedness to trade
creditors incurred by any of the Companies in the ordinary course of business;

“Subsidiary” has the meaning ascribed thereto in the CBCA;

“Term Sheet” means the term sheet dated July 19, 2007
issued by the Bank and accepted by the Borrower, a copy of which is attached
hereto as Exhibit “A”, as it may be amended, restated or replaced from
time to time;

 7

“Total Funded
Debt” has the meaning ascribed thereto in the Term Sheet, but, for
greater certainty, includes any vendor-take bank notes or similar indebtedness,
including, without limitation, the unsecured notes totally approximately
$6,000,000 issued in connection with the acquisition of Mailbank.com Inc. due
in June, 2008;

“Tucows” means Tucows, Inc., a corporation incorporated under
the laws of the State of Pennsylvania, and its successors and assigns;

Accounting Principles

1.02         Any reference in this Agreement to
generally accepted accounting principles shall be deemed to refer to accounting
principles approved from time to time by the American Institute of Chartered
Accountants as at the date on which such calculation is required.  Unless otherwise provided herein, all
financial terms used in this Agreement shall be determined in accordance with
generally accepted accounting principles. 
Where the character or amount of any asset or liability or item of
revenue or expense is required to be determined, or any consolidation or other
computation is required to be made for the purpose of this Agreement, such
determination or calculation shall be made in accordance with generally
accepted accounting principles applied on a consistent basis, unless otherwise
indicated.

Currency References

1.03         All monetary amounts referred to in
this Agreement are in Canadian Dollars unless otherwise noted.

References to Statutes

1.04         Whenever in this Agreement reference is
made to a statute or regulations made pursuant to a statute, such reference
shall be deemed to include all amendments to such statute or regulations from
time to time and all statutes or regulations which may come into effect from
time to time substantially in replacement thereof.

Extended Meanings

1.05         Words importing the singular number
include the plural and vice-versa.  When
used in the context of a general statement followed by a reference to one or
more specific items or matters, the term “including” shall mean “including,
without limitation”, and the term “includes” shall mean “includes, without
limitation”. Unless otherwise expressly stated herein, if reference is made to
any action or matter which requires the consent of the Bank or which is
required to be completed to the satisfaction of the Bank, the discretion of the
Bank to give such consent or to confirm its satisfaction with such action or
matter shall be absolute and unfettered.

Schedules

1.06         The following exhibits and schedules
are attached to this Agreement and incorporated herein by reference:

Exhibit “A” -                                                                                                    Term Sheet

Schedule
3.01(b)                                                                                Companies’ Information

Schedule
3.01(i) -                                                                           Owned Properties

Schedule 3.01(j) -                                                                           Leased Properties

 8
 

 

Schedule
3.01(l) -                                                                             Insurance Policies

Schedule
3.01(m) -                                                                       Collective Agreements

Schedule
3.01(o) -                                                                       Litigation

Schedule 3.01(p) -                                                                       Pension Plans

ARTICLE II - GENERAL CONDITIONS

Evidence of Obligations (Noteless Advances)

2.01         The Bank shall open and maintain, in
accordance with its usual practice, accounts evidencing the Obligations; and
the information entered in such accounts shall constitute prima facie evidence
of the Obligations absent manifest error. 
The Bank may, but shall not be obliged to, request the Borrowers to
execute and deliver from time to time such promissory notes as may be required
as additional evidence of the Obligations.

Place and Time of Advances and Payments; Authority
to Debit Account

2.02

(a)           Advances to the Borrowers shall be
made by the Bank through its main branch at Toronto, Ontario; and all payments
of principal, interest and other amounts to be made by the Borrower pursuant to
this Agreement shall be made at such branch.

(b)           All payments received by the Bank on
a Business Day before 12:00 noon Toronto time shall be treated as having been
received by the Bank on that day; payments made after such time on a Business
Day shall be treated as having been received by the Bank on the next Business
Day.

(c)           The Borrower hereby irrevocably
authorizes the Bank to debit any account maintained by the Borrower with the
Bank from time to time in order to pay any amount of principal, interest, fees,
expenses or other amounts payable by the Borrower pursuant to this Agreement.

(d)           Prior to any Advance all conditions
precedent set out in the Term Sheet must be satisfied or waived in writing by
the Bank.

Matters Relating to Interest

2.03

(a)           Unless otherwise indicated, interest
shall be calculated daily and shall be payable monthly in arrears on the last
day of each and every month; provided that if the last day of a month is not a
Business Day, such payment shall be made on the next Business Day and interest
shall continue to accrue and be payable until the date of such payment.
Interest shall accrue from and including the day upon which an Advance is made
or is deemed to have been made, and ending on but excluding the day on which
such Advance is repaid or satisfied.

(b)           Unless otherwise stated, in this
Agreement if reference is made to a rate of interest, fee or other amount “per
annum” or a similar expression is used, such interest, fee or other amount
shall be calculated on the basis of a year of 365 or 366 days, as the case may
be.  If the amount of any interest, fee
or other

 9
 

 

amount
is determined or expressed on the basis of a period of less than one year of
365 or 366 days, as the case may be, the equivalent yearly rate is equal to the
rate so determined or expressed, divided by the number of days in the said
period, and multiplied by the actual number of days in that calendar year.

(c)           Notwithstanding any other provisions
of this Agreement, if the amount of any interest, premium, fees or other monies
or any rate of interest stipulated for, taken, reserved or extracted under this
Agreement, the Term Sheet or the Security would otherwise contravene the
provisions of section 347 of the Criminal
Code (Canada), section 8 of the Interest
Act (Canada) or any successor or similar legislation, or would
exceed the amounts which the Bank is legally entitled to charge and receive
under any Law to which such compensation is subject, then such amount or rate
of interest shall be deemed to have been charged or paid by mutual mistake (the
parties having no intention of contravening any such provision) and shall be
reduced to such maximum amount as would not contravene such provision; and to
the extent that any excess has been charged or received the Bank shall apply
such excess against the Obligations and refund any further excess amount.

Bankers’ Acceptances

2.04         The Borrower agrees to execute the Bank’s
standard form of application and indemnity agreement and all other documentation
required by the Bank with respect to any Bankers’ Acceptance to be issued by
the Bank for the account of the Borrower.

Determination of Equivalent Amounts

2.05         Whenever it is necessary or desirable
in this Agreement to determine the equivalent amount in Canadian Dollars of an
amount expressed in U.S. Dollars, or vice-versa, the equivalent amount shall be
determined by reference to the applicable Exchange Rate in effect as at the
date of such determination.

Illegality

2.06         The obligation of the Bank to make
Advances shall be suspended if and for so long as it is unlawful or impossible
for the Bank to maintain the Facilities or make Advances as a result of the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Bank with any request or directive (whether or not having the
force of law) of any such Governmental Authority, central bank or comparable
agency.

ARTICLE III - REPRESENTATIONS AND WARRANTIES

Representations and Warranties

3.01         Each Company which is a signatory
hereto hereby represents and warrants to the Bank as follows, with respect to
itself and also with respect to each of its Subsidiaries:

(a)                                  Corporate Status — It has been duly incorporated (or
amalgamated, as applicable) and organized and is validly subsisting under the
laws of its jurisdiction of incorporation and is up-to-date in respect of all
required corporate filings.

(b)                                 Companies’ Information - Schedule 3.01(b) attached hereto contains
a true and complete list of the Companies and their Subsidiaries, together with
the following information in respect of each Company and Subsidiary: issued and
outstanding share capital, registered and beneficial

 10
 

                                                shareholders, jurisdiction of incorporation,
registered or head office, principal place of business, all locations at which
it has places of business or owns assets, the particulars of all bank accounts
held by it, and the extent to which Investments have been made therein by any
other Company of Subsidiary.

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

(d)                                 No Conflicting Agreements - Neither the consummation of the
transactions contemplated by this Agreement, the execution and delivery to the
Bank of the Security, nor compliance with the terms, provisions and conditions
of this Agreement or the Security will conflict with, result in a breach of, or
constitute a default under its charter documents or by-laws or any agreement or
instrument to which it is a party or is otherwise bound, and does not require
the consent or approval of any Person, other than consents or approvals which
have been obtained unconditionally and without imposition of any material
conditions.

(e)                                  Power and Authority - It has full corporate power, authority and
capacity to enter into those Loan Documents to which it is a party and to
perform its obligations contained therein. Neither the consummation of the
transactions contemplated by this Agreement and all other agreements
contemplated hereunder, nor compliance with the terms, provisions and
conditions thereof, will conflict with, result in a breach of, or constitute a
default under its charter documents, by-laws or any agreement among its
shareholders, or result in a breach of, default under or the creation of any
Lien on its properties under any agreement or instrument to which it is a party
or by which its property and assets may be bound or affected, and does not
require the consent or approval of any Person.

(f)                                    Loan Documents - It has taken or caused to be taken all
necessary action to authorize, and has duly executed and delivered the Loan
Documents to which it is a party. The said Loan Documents provided by it
constitute legal, valid and binding obligations, enforceable against it in
accordance with the terms and provisions hereof, subject to laws of general
application affecting creditors’ rights and the discretion of the court in
awarding equitable remedies.

(g)                                 Conduct of Business; - It is in compliance in all material
respects with all applicable Laws of each jurisdiction in which it carries on
business and is duly licensed, registered and qualified to do business and is
in good standing in each jurisdiction in which the nature of the business
conducted by it or the property owned or leased by it make such qualification
necessary, except where the failure to be so qualified would not result in a
Material Adverse Change in respect of any Company.

(h)                                 Ownership of Assets - It owns, possesses and has a good and
marketable title to its undertaking, property and assets, free and clear of any
and all Liens except for Permitted Liens; and it has no commitment or
obligation (contingent or otherwise) to grant any Liens except for Permitted
Liens. No event has occurred which constitutes, or which with the giving of
notice, lapse of time or both would constitute, a material default under any
Permitted Lien.

(i)                                     Owned Properties - Schedule 3.01(i) attached hereto contains
a true and complete list of the Owned Properties.  Each Company or Subsidiary listed on such
schedule as the owner of an Owned Property is the registered and beneficial
owner of such Owned Property, having good and

 11
 

                                                marketable title thereto free of all Liens
other than Permitted Liens (and Liens which will be discharged from the
proceeds of the first Advance hereunder).

(j)                                     Leased Properties - Schedule 3.01(j) attached hereto contains
a true and complete list of the Leased Properties. A true and complete copy of
each said lease has been provided to the Bank.

(k)                                  Intellectual Property - It possesses or has the right to use all
licenses, franchises, permits, registrations, patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights, copyrights and other forms of intellectual property
material to the conduct of its business, each of which is in good standing in
all material respects; and has the right to use such intellectual property
without violation of any rights of others with respect thereto.

(l)                                     Insurance - Schedule 3.01(l) attached hereto contains a true and complete list
of all insurance policies held by the Companies and their Subsidiaries. In the
last three years no insurance policy held by the Companies or any of their
Subsidiaries has been cancelled by the insurer, and no insurer has refused to
renew any such insurance coverage.

(m)                               Labour Agreements - Schedule 3.01(m) attached hereto contains
a true and complete list of all collective agreements presently in effect
between the Companies and their Subsidiaries and any labour union or employee
association. Except for the said collective agreements listed in Schedule
3.01(m), neither the Companies nor any of their Subsidiaries are under any
obligation to assume any such contracts to or conduct negotiations with any
labour union or employee association with respect to any future agreements, and
it is not aware of any current attempts to organize or establish any such
labour union or employee association.

(n)                                 Environmental Laws - Its business, operations, assets,
equipment, property, leaseholds and other facilities are in compliance in all
material respects with all Requirements of Environmental Law, specifically
including all Requirements of Environmental Law concerning the storage and
handling of Hazardous Materials.

(o)                                 Litigation - Except as disclosed in Schedule 3.01(o) attached hereto, there are
no actions, suits or proceedings pending or to the best knowledge of each of
the Companies or any of their Subsidiaries threatened against it in any court
or before or by any federal, provincial, municipal or other Governmental
Authority where there is a reasonable likelihood that the liability of the
Companies or any one of them will exceed $250,000.

(p)                                 Pension Plans - Schedule 3.01(p) attached hereto contains
a true and complete list of all Pension Plans established by the Companies and
their Subsidiaries. No steps have been taken to terminate any such Pension Plan
(in whole or in part), no contribution failure has occurred with respect to any
such Pension Plan sufficient to give rise to a Lien under any applicable laws
of any jurisdiction, and no condition exists and no event or transaction has
occurred with respect to any such Pension Plan which might result in the
incurrence by any Company or Subsidiary of any material liability, fine or
penalty. Each such Pension Plan is in compliance in all material respects with
all applicable pension benefits and tax laws, (i) all contributions (including
employee contributions made by authorized payroll deductions or other
withholdings) required to be made to the appropriate funding agency in
accordance with all applicable laws and the terms of such Pension Plan have
been made in accordance with all applicable laws and the terms of such Pension
Plan, (ii) all liabilities under such Pension Plan are funded, on a going
concern and solvency basis, in accordance with the terms of the respective
Pension Plans, the requirements of applicable pension benefits laws and of
applicable regulatory authorities and the most recent

 12
 

                                                actuarial report filed with respect to the
Pension Plan, and (iii) no event has occurred and no conditions exist with
respect to any such Pension Plan that has resulted or could reasonably be
expected to result in such Pension Plan having its registration revoked or
refused for the purposes of any applicable pension benefits or tax laws or
being placed under the administration of any relevant pension benefits
regulatory authority or being required to pay any taxes or penalties under any
applicable pension benefits or tax laws.

(q)                                 Financial Statements - The most recent yearend financial
statements and interim financial statements delivered to the Bank for each of
the Companies and their Subsidiaries have been prepared in accordance with GAAP
on a basis which is consistent with the previous fiscal period, and present
fairly such Company’s or Subsidiary’s:

(a)                                  assets and liabilities (whether accrued,
absolute, contingent or otherwise) and financial condition as at the dates
therein specified;

(b)                                 sales, earnings and results of its operations
during the periods covered thereby; and

(c)                                  in the case of the yearend financial
statements, changes in financial position;

and since the dates of the
said yearend financial statements and interim financial statements, as the case
may be, no liabilities have been incurred by such Company or Subsidiary except
in the ordinary course of business and no change or event has occurred which
constitutes a Material Adverse Change in such Company’s or Subsidiary’s
business, operations, condition (financial or otherwise) or properties or which
could materially impair its ability to timely and fully perform its obligations
under the Loan Documents, or materially impair the ability of the Bank to
enforce its rights and remedies under this Agreement or the Security.

(r)                                    Financial and Other Information - All financial and other information
provided by or in respect of it to the Bank was true, correct and complete in
all material respects when provided; and no information, exhibit, or report
furnished by it to the Bank contains any material misstatement of fact or omits
to state a material fact or any fact necessary to make the statement contained
therein not materially misleading.

(s)                                  No Guarantees - It has not granted any Guarantees, except
for Guarantees which comprise part of the Security.

(t)                                    Tax Returns - It has duly and timely filed all tax returns required to be filed by
it, and has paid all taxes which are due and payable by it or has obtained
extensions from the applicable taxing authority to file such statements and has
then filed such tax returns within the extended time periods.  It has also paid all other taxes, charges,
penalties and interest due and payable under or in respect of all assessments
and re-assessments of which it has received written notice. There are no
actions, suits, proceedings, investigations or claims pending or to the best
knowledge of each of the Companies, threatened against it in respect of taxes,
governmental charges or assessments or any material matters under discussion
with any Governmental Authority relating to taxes, governmental charges or
assessments asserted by any such Governmental Authority.

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

 13
 

 

(v)                                 Full Disclosure - All factual information furnished by it to
the Bank (including without limitation in the Term Sheet, this Agreement and
the Security) for the purposes of or in connection with this Agreement, is true
and accurate in all material respects on the date as of which such information
is dated or certified and is not incomplete by omitting to state any fact
necessary to make such information (taken as a whole) not misleading at such
time in light of the circumstances under which such information was provided.

Survival of Representations and Warranties

3.02         Each Company hereby acknowledges that
the Bank is relying upon the foregoing representations and warranties in
connection with the establishment and continuation of the Facilities. The said representations
and warranties shall survive the execution and delivery of this Agreement and
the making of all Advances from time to time hereunder, notwithstanding any
investigations which may be made by the Bank.

ARTICLE IV - COVENANTS

Positive Covenants

4.01         Each Company hereby covenants and
agrees with the Bank that it will, and will cause each of its Subsidiaries, to:

(a)                                  Prompt Payment - in the case of the Borrower, pay all
principal, interest and other amounts payable by it to the Bank pursuant to the
Term Sheet and this Agreement promptly when due;

(b)                                 Compliance with Agreements with Bank - perform and satisfy all covenants and
obligations to be performed by it under those Loan Documents to which it is a
party and under any other agreement or undertaking now or hereafter made
between it and the Bank;

(c)                                  Notice of Certain Events - give prompt written notice to the Bank of:
(i) any contravention of or non-compliance by any Company with any terms and
conditions of any Loan Document; (ii) any Material Adverse Change affecting any
Company or Subsidiary; or (iii) any event or occurrence which could with the
giving of notice, lapse of time or both result in a Material Adverse Change
affecting any Company or Subsidiary;

(d)                                 Preservation of Corporate Existence - maintain its corporate existence, preserve
its rights, powers, material licences, material privileges, franchises and
goodwill, and exercise any rights of renewal or extensions of any leases,
licences, concessions, franchises or any other rights whatsoever which are
necessary or material to the conduct of its business and carry on and conduct
its business in a proper and efficient manner so as to protect its property and
the earnings, income, rents and profits of its business; and not materially
change the nature of its business;

(e)                                  Maintain Records - keep and maintain full and accurate
accounts and records of its operations in accordance with GAAP;

(f)                                    Inspection - permit the Bank and its employees and agents to enter upon and
inspect its property, assets, books and records from time to time upon
reasonable notice and during regular business hours and conduct environmental
investigations of its properties and assets; and it shall execute and deliver
all consents and further assurances as may be necessary or desirable in order
for the Bank and its agents to obtain information from Governmental Authorities
and other Persons with respect to such matters;

 14
 

 

(g)                                 Payment of Taxes, etc. - pay and discharge promptly when due (i)
all taxes, assessments and governmental charges or levies lawfully imposed upon
it or upon its property, except to the extent that it is diligently contesting
any such taxes, assessments, charges or levies in good faith and has
established reserves satisfactory to the Bank or has obtained the consent from
the taxing authorities to file such statements at a later date and then will
comply with the terms of such extension consent; and (ii) all claims which, if
unpaid, might become a Lien affecting its property, except for Permitted Liens;

(h)                                 Insurance - obtain from financially responsible insurance companies and maintain
insurance policies as would be considered prudent for similar businesses, all
of which policies of insurance shall be in such amounts as may be reasonably
required by the Bank and shall include a standard mortgage clause approved by
the Insurance Bureau of Canada; and cause the interest of the Bank to be noted
as first mortgagee and loss payee on all property insurance policies and as an
additional insured under all liability insurance policies; and provide the Bank
with certificates of insurance and certified copies of such policies from time
to time upon request;

(i)                                     Compliance with Laws - comply in all material respects with all
applicable laws, rules, governmental restrictions and regulations (specifically
including all Requirements of Environmental Law) and obtain and maintain in
good standing in all material respects all material leases, licences, permits
and approvals from any and all Governmental Authorities required in respect of
its operations;

(j)                                     Maintenance of Properties - maintain and preserve all of its
properties used in the conduct of its business in good working order and
condition;

(k)                                  Notice of Default - provide prompt notice to the Bank of the
occurrence of an Event of Default or any event which, with the giving of notice
or passage of time, could result in an Event of Default;

(l)                                     Books and Records - provide reasonable access to the Bank to
all of the books and records of any of the Companies upon request by the Bank;

(m)                               Bank Accounts - maintain all of its bank accounts with the
Bank; and

(n)                                 Further Assurances - provide the Bank with such further
security, information, financial data, documentation and other assurances as
the Bank may reasonably require from time to time.

Negative Covenants

4.02         Each Company hereby covenants and
agrees that it will not, and will ensure that each of its Subsidiaries does
not, without the prior written consent of the Bank:

(a)                                  Funded Debt - create or incur Funded Debt, except Permitted Funded Debt;

(b)                                 Payments on Permitted Funded Debt - make any payment of principal or interest
in respect of any Permitted Funded Debt (other than indebtedness to the Bank
and purchase money security interests);

(c)                                  Liens - create or permit to exist any Liens in respect of any of any of its
properties, assets or undertaking, except for Permitted Liens provided that the
Companies may not enter into Purchase Money Security Interests in excess of
$250,000 in any consecutive twelve (12) month period;

 15

(d)                                 Disposition of Assets - directly or indirectly sell or otherwise
dispose of, by conveyance, transfer, lease, declaration of trust or by any
other manner whatsoever, any of its properties or assets, except for the sale
of inventory and obsolete equipment in the ordinary course of business;

(e)                                  Corporate Changes - liquidate or dissolve or enter into any
amalgamation, consolidation, merger, partnership, joint venture or other
combination, or enter into any like transaction whereby all or substantially
all of its undertaking, property and assets would become the property of any
other corporation or Person, whether by way of reconstruction, reorganization,
recapitalization, consolidation, amalgamation, merger, transfer, sale or
otherwise; issue any securities which would result in any of the Companies
issuing more than ten percent (10%) of the issued and outstanding shares of
such Company to an entity other than the Companies, or materially change the
nature of its business; provided however that the Companies may amalgamate with
any existing wholly owned Subsidiaries provided such transaction is not a
significant transaction;

(f)                                    Guarantees - become obligated under Guarantees, other than Guarantees which
comprise part of the Security;

(g)                                 Investments - make or acquire an Investment in any Person;

(h)                                 Distributions - make any distribution to any shareholder
whether by way of dividend, transfer or otherwise;

(i)                                     Contracts with Related Persons - enter into any contract with any Related
Person unless all terms and conditions thereof (specifically including the
price) are commercially reasonable; or

(j)                                     Change of Control - enter into any transaction which would
result in a change of control (as such term is defined in the Business Corporations Act (Ontario)) of
such Company.

Financial Covenants

4.03         Each Company agrees to comply with all
financial covenants and restrictions contained in the Term Sheet.

Reporting

4.04         Each Company agrees to comply with all
reporting covenants contained in the Term Sheet; and also agrees to provide
such additional financial information and documents as the Bank may reasonably
require from time to time.

Security

4.05         Each Company agrees to provide or cause
to be provided to the Bank all security contemplated in the Term Sheet.

ARTICLE V- ACCELERATION AND REMEDIES

Acceleration

5.01         The Obligations are payable in
accordance with the terms of the Term Sheet, notwithstanding anything to the
contrary contained in the Term Sheet or the Security. In addition, the
Obligations shall

 16
 

 

become
immediately due and payable upon the occurrence of an Event of Default, without
any demand or notice to the Borrower by the Bank.

Acceleration of Certain Contingent Obligations

5.02         At any time after the Acceleration
Date, the Bank may (but shall not be obliged to) at any time and from time to
time, upon written notice to the Borrower, make a loan to the Borrower in an
amount equal to the face amount of any outstanding Bankers’ Acceptance.  Such loan shall bear interest at the highest
rate applicable under the Facilities. The Bank shall hold the proceeds of such
loan in a deposit account to satisfy the Bank’s obligations under the said
contingent obligations upon the maturity thereof.

Combining Accounts; Set-Off

5.03         At any time after the Acceleration
Date, in addition to and not in limitation of any rights now or hereafter
granted under applicable law, the Bank may at any time and from time to time,
without notice to the Companies, set off any or all direct and indirect,
contingent and absolute indebtedness, obligations and liabilities of the Bank
to any Company against any direct or indirect, contingent or absolute
indebtedness, obligations and liabilities of such Company to the Bank. Without
limiting the generality of the foregoing, the Bank may from time to time:

(a)                                  combine, consolidate or merge any or all of
the deposits or other accounts maintained by any Company with the Bank (whether
term, notice, demand or otherwise and whether matured or unmatured) and such
Company’s direct or indirect, contingent or absolute indebtedness, obligations
and liabilities to the Bank; and

(b)                                 set off, apply or transfer any or all sums
standing to the credit of any such deposits or accounts in or towards the
satisfaction of such Company’s direct or indirect, contingent or absolute
indebtedness, obligations and liabilities to the Bank.

Appropriation of Monies

5.04         At any time after the Acceleration
Date, the Bank may from time to time appropriate any proceeds of realization of
the Security against such portion of the Obligations as the Bank may determine
in its discretion, and the Companies may not require any different
appropriation.  The taking of a judgment
or any other action or dealing whatsoever by the Bank in respect of the
Security shall not operate as a merger of any of the Obligations or in any way
affect or prejudice the rights, remedies and powers which the Bank may have,
and the foreclosure, surrender, cancellation or any other dealing with any
Security or any portion of the Obligations shall not release or affect the liability
of the Companies or any other Person in respect of the remaining portion of the
Obligations.

No Further Advances

5.05         The Bank shall not be obliged to make
any further Advances (including honouring any cheques drawn by the Borrowers
which are presented for payment) from and after the earliest to occur of the
following: (i) delivery by the Bank to a Borrower of a demand for payment of
the Obligations; (ii) delivery by the Bank to a Borrower of a written notice
that such Borrower is not in compliance with any terms or conditions of any of
the Loan Documents and that as a result thereof no further Advances will be
made; (iii) the occurrence of an Event of Default; and (iv) receipt by the Bank
of any garnishment notice or other notice of similar effect in respect of any
Company pursuant to the Income
Tax Act (Canada) or any
similar notice under any other statute.

 17
 

 

Judgment Currency

5.06         If for the purposes of obtaining
judgment in any court in any jurisdiction with respect to this Agreement it
becomes necessary for the Bank to convert into the currency of such
jurisdiction (in this section called the “Judgment Currency”) any amount due to
the Bank hereunder in any currency other than the Judgment Currency, then
conversion shall be made at the Exchange Rate prevailing on the Business Day
before the day on which judgment is given. 
In the event that there is a change in the Exchange Rate prevailing
between the Business Day before the day on which the judgment is given and the
date of payment of the amount due, the Borrower will, on the date of payment,
pay such additional amounts (if any) or be entitled to receive reimbursement of
such amount, if any, as may be necessary to ensure that the amount paid on such
date is the amount in the Judgment Currency which when converted at the
Exchange Rate prevailing on the date of payment is the amount then due under
this Agreement in such other currency. 
Any additional amount due by the Borrower under this section will be due
as a separate debt and shall not be affected by judgment being obtained for any
other sums due under or in respect of this Agreement.

Remedies Cumulative

5.07         All of the rights and remedies granted
to the Bank in this Agreement, and any other documents or instruments in
existence between the parties or contemplated hereby, and any other rights and
remedies available to the Bank at law or in equity, shall be cumulative.  The exercise or failure to exercise any of
the said remedies shall not constitute a waiver or release thereof or of any
other right or remedy, and shall be non-exclusive.

Insolvency Proceedings

5.08         If any Company intends to apply for
protection from its creditors under any Insolvency Legislation, including
without limitation making an assignment for the general benefit of creditors, making
a proposal or filing a notice of intention to make a proposal, the Borrower
agrees to provide the Bank with not less than five Business Days’ prior written
notice before any of the aforementioned proceedings are commenced together with
copies of all relevant filing materials, including, without limitation, copies
of draft court orders, plans of compromise, proposals and notices of intention.
During this notice period the Bank may, in its sole discretion, elect to
exercise any and all rights and remedies as set out in this Agreement.

ARTICLE VI - GENERAL

Waivers to be in Writing

6.01         Any failure or delay by the Bank in
exercising any right or privilege with respect to the non-compliance with any
provisions of this Agreement by any Company and any course of action on the
part of the Bank, shall not operate as a waiver of any rights of the Bank
unless made in writing by the Bank. Any such waiver shall be effective only in
the specific instance and for the purpose for which it is given and shall not
constitute a waiver of any other rights and remedies of the Bank with respect
to any other or future non-compliance.

Governing  Law

6.02         This Agreement shall be interpreted in
accordance with the laws of the Province of Ontario. Without prejudice to the
right of the Bank to commence any proceedings with respect to this Agreement

 18
 

 

in
any other proper jurisdiction, the parties hereby attorn and submit to the
jurisdiction of the courts of the Province of Ontario.

Bank’s Expenses

6.03         Whether or not the transactions contemplated
by this Agreement are completed or Advances are made, the Borrower agrees to
pay on demand by the Bank all reasonable expenses incurred by the Bank,
including reasonable legal fees, in connection with this Agreement, the Term
Sheet, the Security and all documents contemplated hereby, including: the
preparation, administration or interpretation of such documents, the protection
and enforcement of the rights of the Bank provided for thereby, the enforcement
of the Security, and the preparation of any waivers, partial discharges and
similar matters which may be required; together with interest after demand at
the highest rate applicable to the Facilities. 
The Borrower hereby authorizes the Bank to debit its account in order to
pay any such expenses from time to time.

Interest on Unpaid Costs and Expenses

6.04         If a Borrower fails to pay when due any
amount in respect of costs or expenses or any other amount required to be paid
by it hereunder (other than principal or interest on Advances), it shall pay
interest on such unpaid amount from the time such amount is due until paid at
the rate equal to the highest rate of interest then applicable to the
Facilities.

Notice

6.05         Without prejudice to any other method
of giving notice, all communications provided for or permitted hereunder shall
be in writing and delivered to the addressee by prepaid private courier or sent
by telecopy to the applicable address and to the attention of the officer of
the addressee as follows:

(a)                                  to any Company:

96 Mowat Avenue.

Toronto, Ontario

M6k 3M1

Attention: President

Fax no.: (416) 531-1257

(b)                                 to the Bank:

6th Floor, 302 Bay Street

Toronto, Ontario

M5X 1A1

Attention: Mark Shoniker

Fax no. (416) 643-1675

Any
communication transmitted by prepaid private courier shall be deemed to have
been validly and effectively given or delivered on the Business Day after which
it is submitted for delivery. Any communication transmitted by telecopy shall
be deemed to have been validly and effectively given or

 19
 

 

delivered
on the day on which it is transmitted, if transmitted on a Business Day on or
before 5:00 p.m. (local time of the intended recipient), and otherwise on the
next following Business Day. Any party may change its address for service by
notice given in the foregoing manner.

Severability

6.06         Any provision of this Agreement which
is illegal, prohibited or unenforceable in any jurisdiction, in whole or in
part, shall not invalidate the remaining provisions hereof; and any such
illegality, prohibition or unenforceability in any such jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

Further Assurances

6.07         Each Company shall, at its expense,
promptly execute and deliver or cause to be executed and delivered to the Bank
upon request from time to time all such other and further documents,
agreements, opinions, certificates and instruments in compliance with this
Agreement, or if necessary or desirable to more fully record or evidence the
obligations intended to be entered into herein, or to make any recording, file
any notice or obtain any consent.

Time of the Essence

6.08         Time shall be of the essence of this
Agreement.

Assignment and Participation

6.09         The Borrower may not assign any of its
rights and obligations hereunder without the prior written consent of the
Bank.  The Bank may from time to time
assign all or any portion of its rights and obligations under this Agreement to
other Persons in accordance with the provisions of the Term Sheet. The Borrower
agrees to execute and deliver such documents and assurances in favour of any
such assignees or new parties as may be reasonably required to evidence their
consent to and carry out the foregoing.

Effect of Term Sheet

6.10         The parties acknowledge that the Term
Sheet remains in full force and effect and that the terms and conditions
contained in this Agreement are supplementary to and not in substitution for
the terms and conditions contained in the Term Sheet. To the extent that there
is any inconsistency between a provision of this Agreement and a provision of
the Term Sheet, the said provision in this Agreement shall be paramount and
shall supersede the said provision of the Term Sheet.

Inconsistencies with Security

6.11         To the extent there is any
inconsistency between a provision of the Term Sheet or this Agreement and a
provision of any other Loan Document, the said provision of the Term Sheet or
this Agreement shall govern.  Any
inconsistency between this Agreement and the Term Sheet, unless otherwise
specifically provided for herein, shall be governed by the Term Sheet.

Entire Agreement

6.12         This Agreement, the Term Sheet, the
Security and any other documents or instruments contemplated therein shall
constitute the entire agreement and understanding among the parties hereto

 20
 

 

relating
to the subject-matter hereof. No provision of this Agreement or the Term Sheet
or any other document or instrument in existence among the parties may be
modified, waived or terminated except by an instrument in writing executed by
the party against whom such modification, waiver or termination is sought to be
enforced.

Binding Effect; Successor and Assigns

6.13         This Agreement shall be binding upon
and shall enure to the benefit of the parties hereto and their respective
successors and permitted assigns; “successors” includes any corporation
resulting from the amalgamation of a party with any other corporation.

THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK

 

 21

IN WITNESS WHEREOF
this Agreement has been executed, sealed and delivered by the parties hereto.

	
   

  	
  TUCOWS.COM CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by:

  	
  /s/ ELLIOT
  NOSS

  
	
   

  	
   

  	
  name:

  	
  Elliot Noss

  
	
   

  	
   

  	
  title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TUCOWS (DELAWARE), INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  by:

  	
  /s/ ELLIOT
  NOSS

  
	
   

  	
   

  	
  name:

  	
  Elliot Noss

  
	
   

  	
   

  	
  title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TUCOWS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  by:

  	
  /s/ ELLIOT
  NOSS

  
	
   

  	
   

  	
  name:

  	
  Elliot Noss

  
	
   

  	
   

  	
  title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MAILBANK NOVA SCOTIA CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  by:

  	
  /s/ STANLEY
  STERN

  
	
   

  	
   

  	
  name:

  	
  Stanley Stern

  
	
   

  	
   

  	
  title:

  	
  President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TUCOWS DOMAIN HOLDINGS
  CO.

  
	
   

  	
   

  	
   

  
	
   

  	
  by:

  	
  /s/ ELLIOT
  NOSS

  
	
   

  	
   

  	
  name:

  	
  Elliot Noss

  
	
   

  	
   

  	
  title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INNERWISE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  by:

  	
  /s/ ELLIOT
  NOSS

  
	
   

  	
   

  	
  name:

  	
  Elliot Noss

  
	
   

  	
   

  	
  title:

  	
  President

  
	
   

  	
   

  	
   

  

 

 22
 

 

	
  

  	
   

  	
   

  
	
   

  	
  BANK OF MONTREAL

  
	
   

  	
   

  	
   

  
	
   

  	
  by:

  	
  /s/ NEIL
  DOBBIE

  
	
   

  	
   

  	
  name:

  	
  Neil Dobbie

  
	
   

  	
   

  	
  title:

  	
  Commercial Account Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  by:

  	
   

  
	
   

  	
   

  	
  name:

  
	
   

  	
   

  	
  title:

  
	
   

  	
   

  	
   

  

 

 23Exhibit 10.2

Guaranty

For value received and in consideration of advances
made or to be made, or credit given or to be given, or other financial
accommodation afforded or to be afforded to TUCOWS.COM
CO., a company organized under the laws of Nova Scotia (hereinafter
designated as “Borrower”), by BANK OF MONTREAL, Toronto, Ontario,
Canada (hereinafter called the “Bank”), from
time to time, the undersigned hereby guarantees the full and prompt payment to
the Bank at maturity and at all times thereafter of any and all indebtedness,
obligations and liabilities of every kind and nature of the Borrower to the
Bank howsoever evidenced, whether now existing or hereafter created or arising,
whether direct or indirect, absolute or contingent, or joint or several, and
howsoever owned, held or acquired, whether through discount, overdraft,
purchase, direct loan or as collateral, or otherwise (hereinafter all such
indebtedness, obligations and liabilities being collectively referred to as the
“Indebtedness”); and the undersigned
further agrees to pay all expenses, legal and/or otherwise (including court
costs and reasonable attorneys’ fees), paid or incurred by the Bank in
endeavoring to collect the Indebtedness, or any part thereof, and in
protecting, defending or enforcing this guaranty in any litigation, bankruptcy
or insolvency proceedings or otherwise.

The undersigned further acknowledges and agrees with
the Bank that:

1.             This guaranty is a continuing, absolute and
unconditional guaranty, and shall remain in full force and effect until written
notice of its discontinuance shall be actually received by the Bank, and also
until any and all of the Indebtedness created, existing or committed to before
receipt of such notice shall be fully paid. 
The death or dissolution of the undersigned shall not terminate this
guaranty until notice of such death or dissolution shall have been actually
received by the Bank, nor until all of the Indebtedness created or existing
before receipt of such notice shall be fully paid.  The granting of credit from time to time by
the Bank to the Borrower in excess of the amount to which the right of recovery
under this guaranty is limited and without notice to the undersigned, is hereby
also authorized and shall in no way affect or impair this guaranty.

2.             In case of the death, incompetency, dissolution,
liquidation or insolvency (howsoever evidenced) of, or the institution of
bankruptcy or receivership proceedings against the Borrower or the undersigned,
all of the Indebtedness then existing shall, at the option of the Bank,
immediately become due or accrued and payable from the undersigned.  All dividends or other payments received from
the Borrower or on account of the Indebtedness from whatsoever source, shall be
taken and applied as payment in gross, and this guaranty shall apply to and
secure any ultimate balance that shall remain owing to the Bank.

3.             The liability hereunder shall in no way be affected or
impaired by (and the Bank is hereby authorized to make from time to time,
without notice to anyone) any sale, pledge, surrender, compromise, settlement,
release, renewal, extension, indulgence, alteration, substitution, exchange,
change in, modification or other disposition of any of the Indebtedness, either
express or implied, or of any contract or contracts evidencing any of the
Indebtedness, or of any security or collateral therefor.  The liability hereunder shall in no way be
affected or impaired by any acceptance by the Bank of any security for or other
guarantors upon any of the 

Indebtedness, or by any failure, neglect or omission
on the part of the Bank to realize upon or protect any of the Indebtedness, or
any collateral or security therefor, or to exercise any lien upon or right of
appropriation of any moneys, credits or property of the Borrower, possessed by
the Bank, toward the liquidation of the Indebtedness, or by any application of
payments or credits thereon.  The Bank
shall have the exclusive right to determine how, when and what application of
payments and credits, if any, shall be made on the Indebtedness, or any part
thereof.  In order to hold the
undersigned liable hereunder, there shall be no obligation on the part of the
Bank, at any time, to resort for payment to the Borrower or to any other
guaranty, or to any other persons or corporations, their properties or estates,
or resort to any collateral, security, property, liens or other rights or
remedies whatsoever, and the Bank shall have the right to enforce this guaranty
irrespective of whether or not other proceedings or steps seeking resort to or
realization upon or from any of the foregoing are pending.

4.             All diligence in collection or protection, and all
presentment, demand, protest and/or notice, as to any and everyone, whether or
not the Borrower or the undersigned or others, of dishonor and of default and
of non-payment and of the creation and existence of any and all of the
Indebtedness, and of any security and collateral therefor, and of the
acceptance of this guaranty, and of any and all extensions of credit and indulgence
hereunder, are waived.  No act of
commission or omission of any kind, or at any time, upon the part of the Bank
in respect to any matter whatsoever, shall in any way affect or impair this
guaranty.

5.             The undersigned will not exercise or enforce any right
of exoneration, contribution, reimbursement, recourse or subrogation available
to the undersigned against any person liable for payment of the Indebtedness,
or as to any security therefor, unless and until the full amount owing to the
Bank on the Indebtedness has been paid and the payment by the undersigned of
any amount pursuant to this guaranty shall not in any way entitle the
undersigned to any right, title or interest (whether by way of subrogation or
otherwise) in and to any of the Indebtedness or any proceeds thereof or any
security therefor unless and until the full amount owing to the Bank on the
Indebtedness has been paid.

6.             The Bank may, without any notice whatsoever to any one,
sell, assign or transfer all of the Indebtedness, or any part thereof, or grant
participations therein, and in that event each and every immediate and
successive assignee, transferee, or holder of or participant in all or any part
of the Indebtedness, shall have the right to enforce this guaranty, by suit or
otherwise, for the benefit of such assignee, transferee, holder or participant,
as fully as if such assignee, transferee, holder or participant were herein by
name specifically given such rights, powers and benefits; but the Bank shall
have an unimpaired right to enforce this guaranty for the benefit of the Bank
or any such participant, as to so much of the Indebtedness that it has not
sold, assigned or transferred.

7.             The undersigned waives any and all defenses, claims and
discharges of the Borrower, or any other obligor, pertaining to the
Indebtedness, except the defense of discharge by payment in full.  Without limiting the generality of the
foregoing, the undersigned will not assert, plead or enforce against the Bank
any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute, fraud,
incapacity, minority, usury, illegality or unenforceability which may be
available to the Borrower or any other person 

 2
 

liable in respect of any of the Indebtedness, or any
setoff available against the Bank to the Borrower or any such other person,
whether or not on account of a related transaction.  The undersigned agrees that the undersigned
shall be and remain liable for any deficiency remaining after foreclosure of
any mortgage or security interest securing the Indebtedness, whether or not the
liability of the Borrower or any other obligor for such deficiency is
discharged pursuant to statute or judicial decision.

8.             If any payment applied by the Bank to the Indebtedness
is thereafter set aside, recovered, rescinded or required to be returned for
any reason (including, without limitation, the bankruptcy, insolvency or
reorganization of the Borrower or any other obligor), the Indebtedness to which
such payment was applied shall for the purposes of this guaranty be deemed to
have continued in existence, notwithstanding such application, and this
guaranty shall be enforceable as to such of the Indebtedness as fully as if
such application had never been made.

9.             The liability of the undersigned under this guaranty is
in addition to and shall be cumulative with all other liabilities of the
undersigned to the Bank as guarantor of the Indebtedness, without any
limitation as to amount, unless the instrument or agreement evidencing or
creating such other liability specifically provides to the contrary.

10.           Any invalidity or unenforceability of
any provision or application of this guaranty shall not affect other lawful
provisions and applications hereof, and to this end the provisions of this
guaranty are declared to be severable. 
This guaranty shall be construed according to the law of the Commonwealth
of Pennsylvania, in which State it shall be performed by the undersigned and
may not be waived, amended, released or otherwise changed except by a writing
signed by the Bank.

11.           This guaranty and every part thereof
shall be effective upon delivery to the Bank, without further act, condition or
acceptance by the Bank, shall be binding upon the undersigned, and upon the
heirs, legal representatives, successors and assigns of the undersigned, and
shall inure to the benefit of the Bank, its successors, legal representatives
and assigns.  The undersigned waives
notice of the Bank’s acceptance hereof.

 3
 

Signed and delivered  by
the undersigned, in Toronto, Ontario Canada, this 25th day of July, 2007. The undersigned acknowledges receipt of a
completed copy of this guaranty as of the time of execution.

	
  

  	
  TUCOWS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ELLIOT NOSS

  	
   

  
	
   

  	
  Name:

  	
  Elliot Noss

  
	
   

  	
  Its:

  	
  President and Chief
  Executive Officer

  
					

 

 4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]