. Loan payable:

August

18,

2016,

the Company entered into a secured Credit Agreement (the

“2016

Credit Agreement”) with Bank of Montreal (“BMO” or the “Administrative Agent”) and Royal Bank of Canada (collectively with BMO, the “Lenders”) to establish a credit facility (the

“2016

Credit Facility”) that refinanced and replaced the Company's

2012

Demand Loan Facilities with BMO.

2016

Credit Facility

The obligations of the Company under the

2016

Credit Facility

are secured by a

first

priority lien on substantially all of the personal property and assets of the Company.

The

2016

Credit Facility has a

five

-year term. Under the

2016

Credit Facility, the Company has access to an aggregate of up to

$75

million in funds (inclusive of a

$15

million accordion facility described below) that are available as follows:

●

million revolving credit facility (“Facility A”);

●

$15

million revolving reducing term facility (“Facility B”); and

●

$40

million non-revolving facility (“Facility C”).

Borrowings under the

2016

Credit Facility

accrue interest and standby fees at variable rates based on borrowing elections by the Company and the Company’s Total Funded Debt to EBITDA as described below. The purpose of Facility A is for general working capital and general corporate requirements, while Facility B and Facility C support share repurchases, acquisitions and capital expenditures associated with the Company’s Fiber to the Home program (“FTTH”).

The repayment terms for Facility A

require monthly interest payments with any final principal payment becoming due upon maturity of the

2016

Credit Facility. Under the repayment terms for Facility B, at

December

31st

of each year, balances drawn during the year that remain outstanding will become payable on a quarterly basis commencing the

first

quarter of the following year, for the period of amortization based on the purpose of the draw. For Facility C, each draw will become payable beginning the

first

full quarter post initial draw for the period of amortization based on the purpose of the draw. The amortization periods for Facility B and Facility C are based on the purposes of the draws as follows: draws for share repurchases are repaid over

four

years, draws for acquisitions over

five

years and draws for FFTH capital expenditures over

seven

years. The

2016

Credit Facility includes a mechanism that is triggered based on the Company’s Total Funded Debt to EBITDA calculation at the end of each fiscal year. If Total Funded Debt to EBITDA exceeds

2.0:1

December

of each year during the term, the Company is obligated to make a repayment of

50%

of Excess Cash Flow as defined under the agreement.

December

31,

2016,

there was

outstanding balance under Facility A

(December

31,

2015

–

nil

$6.0

million outstanding under Facility B

(December

31,

2015

–

nil

) and

$4.7

million outstanding under Facility C

(December

31,

2015

–

nil

In addition, under the terms of the

2016

Credit Facility, the Company has the option, based on

days prior written notice and subject to approval by the Banks, to increase the size of Facility C by up to

$15

million.

Borrowings under the

2016

Credit Facility accrue interest and standby fees based on the Company

’s Total Funded Debt to EBITDA ratio and the availment type as follows:

If Total Funded Debt to EBITDA is less than

1.00,

then:

●

Canadian dollar borrowings based on Bankers

’ Acceptance (“CDN$ Bankers’ Acceptance Borrowings”) or U.S. dollar borrowings based on LIBOR (“US$ LIBOR Borrowings”) will be at

2.00%

margin;

●

Canadian dollar borrowings based on Prime Rate (“CDN$ Prime Rate Borrowings”), U.S. dollar borrowings based on Prime Rate (“US$ Prime Rate Borrowings”) or U.S. dollar borrowings based on Base Rate (“US$ Base Rate Borrowings”) will be at

0.75%

margin; and

●

Standby fees will be at

0.40%.

If Total Funded Debt to EBITDA is greater than or equal to

1.00

and less than

2.00,

then:

●

CDN$ Bankers

’ Acceptance Borrowings or US$ LIBOR Borrowings will be at

2.25%

margin;

●

CDN$ Prime Rate Borrowings, US$ Prime Rate Borrowings or US$ Base Rate Borrowings will be at

1.00%

margin; and

●

Standby fees will be at

0.45%.

If Total Funded Debt to EBITDA is greater than or equal to

2.00,

then:

●

CDN$ Bankers

’ Acceptance Borrowings or US$ LIBOR Borrowings will be at

2.75%

margin;

●

CDN$ Prime Rate Borrowings, US$ Prime Rate Borrowings or US$ Base Rate Borrowings will be at

1.50%

margin; and

●

Standby fees will be at

0.55%.

Prior to the Company entering into the

2016

Credit Facility, the Company had credit agreements (collectively the “Amended Credit Facility”) with BMO that were amended on

November

19,

2012,

and which provided it with access to

two

revolving demand loan facilities (the

“2012

Demand Loan Facilities”), a treasury risk management facility, an operating demand loan and a credit card facility. In connection with the

2016

Credit Facility, the Company repaid its outstanding indebtedness of the

2012

Demand Loan Facilities. With the settlement of the outstanding indebtedness, the

2012

Demand Loan Facilities and the operating demand loan were simultaneously terminated and the outstanding balances were fully repaid through advances on the

2016

Credit Facility. The Company continues to have access to the treasury risk management facility and credit card facility.

In connection with establishing the

2016

Credit Facility, t

he Company incurred

$0.5

million of fees paid to the lenders and debt issuance costs which have been reflected as a reduction to the carrying value of the loan payable and will be amortized over the

five

-year term of the credit facility. For the year ended

December

31,

2016,

the Company amortized

$31,166

as interest expense (year ended

December

31,

2015

$0).

	December 31, 2016			December 31, 2015

2012 Demand Loan Facilities	$	-		$	3,500,000
2016 Credit Facility B		6,000,000			-
2016 Credit Facility C		4,731,306			-
Less: unamortized debt discount and issuance costs		(482,498	)		-
Total loan payable		10,248,808			3,500,000
Less: loan payable, current portion		2,233,110			3,500,000
Loan payable, long-term portion	$	8,015,698		$	-

The following table summarizes our

scheduled principal repayments

December

31,

2016:

Principal repayments as of December 31,
2017	$	2,233,110
2018		2,233,110
2019		2,233,110
2020		2,046,261
2021		1,485,714
Thereafter		500,000
	$	10,731,305

Treasury Risk Management Facility

The Amended Credit Facility also provides for a

$3.5

million settlement risk line to assist the Company with hedging Canadian dollar exposure through foreign exchange forward contracts and/or currency options. Under the terms of the Amended Credit Facility, the Company

may

enter into such agreements at market rates with terms not to exceed

months. As of

December

31,

2016,

the Company held contracts in the amount of

$26.6

million to trade U.S. dollars in exchange for Canadian dollars.

General Terms

The

2016

Credit Facility contains customary representations and warranties, affirmative and negative covenants, and events of default. The

2016

Credit Facility requires that the Company comply with certain customary non-financial covenants and restrictions. In addition, the Company has agreed to comply with the following financial covenants at all times, which are to be calculated on a rolling

four

quarter basis: (i) maximum Total Funded Debt to EBITDA Ratio of

2.25:1

until

March

31,

2017

and

2.00:1

thereafter; and (ii) minimum Fixed Charge Coverage Ratio of

1.20:1.

Further, the Company’s maximum annual Capital Expenditures cannot exceed

$22

million per year, which limit will be reviewed on an annual basis. In addition, funded share repurchases are not to exceed

$20

million, or up to

$40

million so long as the total loans related to share repurchases do not exceed

1.5

times of trailing

twelve

months EBITDA. As at and for the period ending

December

31,

2016,

the Company was in compliance with these covenants.

January

20,

2017,

the Company entered into a First Amended and Restated Credit Agreement (the “Amended Credit Agreement”) as more fully described in Note

16(b).