L.J. (Jim) Blattman Royal Bank of Canada
Senior Manager 90 Sparks Street
Technology Banking Group Ottawa, Ontario
K1P 5T6
Tel: (613) 564-4898
Fax: (613) 564-4527
July 29, 1994
Gandalf Technologies Inc.
130 Colonnade Road South
Nepean, Ontario
K2E 7M4
AND
Gandalf Canada Ltd.
130 Colonnade Road South
Nepean, Ontario
K2E 7M4
Attention: Mr. Walter MacDonald
Vice-President, Finance & CFO
-----------------------------
Dear Sirs:
Royal Bank of Canada (the "Bank") refers to a letter agreement dated
January 7, 1994 between Gandalf Technologies Inc. ("GTI") and the Bank (the
"GTI Agreement") and to a letter agreement also dated January 7, 1994
between Gandalf Canada Ltd. ("GCL") and the Bank (the "GCL Agreement"),
collectively referred to herein as the Gandalf Agreements.
The Bank hereby acknowledges notice form GTI of its expected breach of
Sections 23(a), 23(b) and 23(c) of the GTI Agreement and Sections 24(a),
24(b) and 24(c) of the GCL Agreement for the fiscal quarter ended July 2,
1994. Specifically, Tangible Net Worth is expected to be $39,500,000, the
Current Ratio 1.30, and the ratio of Total Liabilities to Tangible Net
Worth 1.20. The Bank hereby waives its rights in respect of such breach
for the period July 2, 1994 to November 30, 1994 inclusive provided no
further deterioration occurs in any of Sections 23 (a), 23(b) and 23(c) of
the GTI Agreement and Sections 24(a), 24(b) and 24(c) of the GCL Agreement
as at the fiscal quarter ending October 1, 1994. This waiver is granted
only in respect of the aforementioned breach and only for the
aforementioned period and is further
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July 29, 1994
Gandalf Technologies Inc. &
Gandalf Canada Ltd.
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subject to the following paragraph.
As long as any of the aforementioned sections of the Gandalf Agreements
remain in breach, GTI agrees with the Bank as follows:
a. To provide the Bank with the following information within
15 days of the end of each month:
i. Internally prepared consolidated financial
statements.
ii. A consolidated summary of bookings, billings and
backlog.
iii. A consolidated cash flow and margin forecast for
the following 13 weeks.
b. To pay to the Bank a risk premium calculated as 1/8 of 1%
per month on the aggregate of average outstanding balances under
the GCL Agreement and Segment (3) of the GTI Agreement, subject
to a monthly minimum payment of US $5,000. The risk premium will
be calculated and is payable monthly by the fifth day of each
month.
This letter supersedes our tolerance letter dated June 1, 1994.
Please acknowledge your acceptance of the above terms and conditions by
signing the attached copy of this letter in the space provided and
returning it to the undersigned no later than August 12, 1994.
Yours truly,
s/L.J. BLATTMAN
WE ACKNOWLEDGE AND ACCEPT THE TERMS AND CONDITIONS.
GANDALF TECHNOLOGIES IN. GANDALF CANADA LTD.
Per: s/W.R. MACDONALD, VP FINANCE Per: s/W.R. MACDONALD, VP FINANCE
---------------------------- -----------------------------
Per: s/T.A. VASSILIADES, Per: s/T.A. VASSILIADES,
PRESIDENT & CEO PRESIDENT & CEO
---------------------------- -----------------------------
Date: August 5, 1994 Date: August 5, 1994
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