ROYAL BANK
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L.James Blattman Royal Bank of Canada
Senior Account Manager Business Banking Centre
Advanced Technology 90 Sparks Street, P.O. Box 746, Station B
Tel.: (613) 564-4898 Ottawa, Ontario K1P 5T6
Transit 01196
June 1, 1994 Fax: (613) 564-4527
Toll Free: 1-800-267-0305
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
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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 from GTI of its expected
breach of Sections 23(a), 23(b), 23(c) and 24(h) of the GTI
Agreement and Sections 24(a), 24(b), 24(c) and 25(h) of the GCL
Agreement for the fiscal quarter ended March 1994. Specifically,
Tangible Net Worth is expected to be $40,000,000, the Current
Ratio 1.30:1, the ratio of Total Liabilities to Tangible Net
Worth 1.15:1 and the loss for the fiscal quarter $37,000,000.
The Bank hereby waives its rights in respect of such breach for
the period March 31, 1994 to July 31, 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 June 25, 1994.
This waiver is granted only in respect of the aforementioned
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June 1, 1994
Gandalf Technologies Inc. &
Gandalf Canada Ltd.
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breach and only for the aforementioned period and is further
subject to the following paragraph.
As long as any of the aforementioned sections of the Gandalf
Agreement 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. Internallyy 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 April 14, 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
June 3, 1994.
Yours truly,
ORIGINAL SIGNED BY
L.J.BLATTMAN
WE ACKNOWLEDGE AND ACCEPT THE TERMS AND CONDITIONS
GANDALF TECHNOLOGIES INC. GANDALF CANADA LTD.
Per: s/W.MacDonald, V.P. Finance Per: s/W.MacDonald, V.P. Finance GTI
Per: s/A.Gordon, Corp.Controller Per: s/A.Gordon, Corp. Controller GTI
Date: June 2, 1994 Date: June 2, 1994
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