. Loan payable:

2017

Amended Credit Facility

January 20, 2017,

the Company entered into an amended and restated secured Credit Agreement (the “

2017

Amended Credit Agreement”) with Bank of Montreal (“BMO” or the “Administrative Agent”), Royal Bank of Canada and Bank of Nova Scotia (collectively with “Lenders”) under which the Company increased its access to funds to an aggregate of

$140

million. This amendment and restatement to the Company’s

2016

Credit Facility (defined below), among other things, reduced the existing Tucows non-revolving facility (such existing non-revolving facility, together with other existing facilities, the “Existing Facilities”) from

$40.0

million to

$35.5

million, and established a new non-revolving credit facility of

$84.5

million

(the “Facility D”). The Company immediately drew down

$84.5

million under Facility D to fund the acquisition of eNom (note

(b)). As used herein, the

“2016

Credit Facility” refers to the credit facility

established under the Company’s secured credit agreement (the

“2016

Credit Agreement”) among the Company, BMO and the Lenders, dated as of

August 18, 2016

In connection with the

2017

Amended Credit Agreement, the

Company incurred

$0.6

million of fees paid to lenders and debt issuance costs, which have been reflected as a reduction to the carrying amount of the loan payable and will be amortized over the term of the credit facility agreement.

The obligation

s of the Company under the

2017

Amended Credit Facility are secured by a

first

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

The

2017

Amended

Credit Facility has a

four

-year term. Under the

2017

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

$140

million in funds that are available as follows:

●

million revolving credit facility (“Facility A”);

●

$15

million revolving reducing t

erm facility (“Facility B”);

●

a $

35.5

million non-revolving facility (“Facility C”); and

●

a $

84.5

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

Borrowings under the

201

Amended 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”). Facility D was provided and used for the acquisition of eNom.

The repayment terms for Facility A

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

2017

Amended 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 Facilities C and D, 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 Facilities B, C and D 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 FTTH capital expenditures over

seven

years. The

2017

Amended Credit Facility also 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

2.25:1

December 31

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.

The

2017

Amended Credit Facility contains customary representations and warranties, affirmative and negative

covenants, and events of default. The

2017

Amended Credit Facility requires that the Company 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

3.00:1

until

September 30, 2017,

2.50:1

until

September 30, 2018

and

2.25:1

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

1.20:1.

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

$32.8

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

June 30, 2017,

the Company was in compliance with these covenants.

June 6, 2017,

the Company entered into the First Amendment to First Amended and Restated Credit Agreement (the “

First Amendment”) with BMO and the Lenders. Among other things, the First Amendment (i) increases the amount available for borrowing under “Facility C,” a committed, non-revolving credit facility by

$502,500,

which was the portion of Facility D which was

not

used by the Company to fund its acquisition of eNom, Incorporated and was cancelled in accordance with the Credit Agreement, (ii) allows the Company to maintain bank accounts with Commonwealth Bank of Australia, subject to certain restrictions, (iii) provides for an extension of time for the Company to transfer its bank accounts from Silicon Valley Bank, and (iv) amends the definition of “EBITDA” to provide for an add-back in respect of certain liabilities.

Borrowings under the

2017

Amended

Credit Facility will 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:

Availment type or fee	Less than 1.00			Greater than or equal to 1.00 and less than 2.00			Greater than or equal to 2.00 and less than 2.25			Greater than or equal to 2.25
Canadian dollar borrowings based on Bankers ’ Acceptance or U.S. dollar borrowings based on LIBOR (Margin)		2.00	%		2.25	%		2.75	%		3.25	%

Canadian or U.S. dollar borrowings based on Prime Rate or U.S. dollar borrowings based on Base Rate (Margin)		0.75	%		1.00	%		1.50	%		2.00	%

Standby fees		0.40	%		0.45	%		0.55	%		0.65	%

The following table summarizes the Company

’s borrowings under the

2017

Amended Credit Facility as at

June 30, 2017:

	June 30, 2017			December 31, 2016

Facility B	$	-		$	6,000,000
Facility C		6,625,465			4,731,306
Facility D		80,273,100			-
Less: unamortized debt discount and issuance costs		(938,939	)		(482,498	)
Total loan payable		85,959,626			10,248,808
Less: loan payable, current portion		18,289,853			2,233,110
Loan payable, long-term portion	$	67,669,773		$	8,015,698

The following table summarizes our

scheduled principal repayments as of

June 30, 2017:

Principal repayments
Remainder of 2017	$	9,144,926
2018		18,289,853
2019		18,289,853
2020		18,103,004
2021		17,542,457
Thereafter		5,528,472
	$	86,898,565

Treasury Risk Management Facility

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.

The treasury risk management facility under the Amended Credit Facility 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

June 30, 2017,

the Company held contracts in the amount of

$13.8

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