Tucows 2012 Annual Report Download - page 96

F-20
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. As of, and for the year ended, December 31, 2012, the Company was in compliance with these covenants.
Scheduled principal loan repayments are as follows:
2013 1,000,000
2014 1,000,000
2015 1,000,000
2016 700,000
8. Common shares:
The Company’s authorized common share capital is 250 million shares of common stock without nominal or
par value. On December 31, 2012, there were 44,322,159 shares of common stock outstanding.
Repurchase of common shares:
(a) Modified Dutch Tender Offers:
On January 23, 2012, the Company announced that it successfully concluded a modified “Dutch auction tender
offer” that was previously announced on December 15, 2011. Under the terms of the offer, the Company repurchased an
aggregate of 7,570,236 shares of its common stock at a purchase price of $0.77 per share, for a total of $5,829,082,
excluding transaction costs of approximately $64,000. The purchase price and all transaction costs were funded from
available cash and an additional advance under its Amended Credit Facility from the Bank in the amount of $4.0 million.
All shares purchased in the tender offer received the same price and all shares repurchased were immediately cancelled.
As a result of the completion of the tender offer, as of January 23, 2012, the Company had 46,047,053 shares issued and
outstanding.
(b) Normal Course Issuer Bids:
On November 11, 2011 the Company commenced an NCIB which authorized the repurchase up to 3,840,000
shares of its common stock. During Fiscal 2011 the Company repurchased 23,765 of its common shares under the NCIB
at an average purchase price of $0.78 per share, for a total of $18,442. The purchase price and all transaction costs were
funded from available cash. All shares repurchased under the NCIB were immediately retired. This NCIB was
suspended upon the commencement of the modified Dutch auction tender offer on December 15, 2011.
On March 16, 2012, the Company announced that it was reinstating its previously announced stock buyback
program, which initially commenced on November 11, 2011 and which was temporarily suspended when the Company
undertook its Dutch auction tender offer. Under this buyback program, the Company may repurchase up to 3,840,000
shares of the Company's common stock over the 12-month period that commenced on November 15, 2011. The
Company repurchased 2,371,204 shares under this program during the year ended December 31, 2012.
9. Stock option plans:
The Company’s 1996 Stock Option Plan (the “1996 Plan”) was established for the benefit of the employees,
officers, directors and certain consultants of the Company. The maximum number of common shares which may be set
aside for issuance under the 1996 Plan was 11,150,000 shares, provided that the Board of Directors of the Company has
the right, from time to time, to increase such number subject to the approval of the shareholders of the Company when