Tucows 2015 Annual Report Download - page 204

Repayment of advances under the 2012 DLR Loan consist of interest only payments made monthly in arrears and
prepayment is permitted without penalty. The outstanding balance under the 2012 DLR Loan as of December 31st of each
year is to be fully repaid within 30 days of December 31st through an equivalent advance made under the 2012 DLRR
Loan. Advances under the 2012 DLRR Loan will be made annually and solely for such purpose. Each advance under the
2012 DLRR Loan is to be repaid in equal monthly principal payments plus interest, over a period of four years from the
date of such advance. At December 31, 2015, the outstanding balance under the 2012 DLR Loan was $3.5 million
(December 31, 2014 - Nil). Both of these financing arrangements remain available to fund future operations of the
Company, with no set expiry date.
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
18 months. As of December 31, 2015, the Company held contracts in the amount of $24.0 million to trade U.S. dollars in
exchange for Canadian dollars.
Operating Demand Loan
The Amended Credit Facility also provides the Company with a $1.0 million operating demand loan facility to
assist in meeting its operational needs (the “Operating Demand Loan”). The Operating Demand Loan accrues interest at
the Bank’s U.S. Base Rate plus 1.25%. The Company has also agreed to pay to the Bank a monthly monitoring fee of
US$500 with respect to this loan. The Operating Demand Loan is payable on demand at any time, at the sole discretion of
the Bank, with or without cause, and the Bank may terminate the Operating Demand Loan at any time. As of
December 31, 2015, the Company had no amounts outstanding under its Operating Demand Loan.
General Terms
The Company’s Amended Credit Facility contains customary representations and warranties, affirmative and
negative covenants, and events of default. The Company’s obligations under the Amended Credit Facility are guaranteed
and secured by a security interest in substantially all of its assets. The Amended Credit Facility also 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 of 2.00:1; and (ii) Minimum Fixed Charge Coverage of 1.20:1. Further, its
Maximum Annual Capital Expenditures cannot exceed $3.6 million per year, which limit will be reviewed on an annual
basis. For the year ended, December 31, 2015, the Company was in compliance with these covenants.
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