November 18, 1996
Private & Confidential
Gandalf Technologies Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxxx X. XxxXxxxxx
Vice-President, Finance & CFO
-----------------------------
Dear Sirs:
We refer to the letter agreement dated June 11, 1996 detailing a Credit Facility
made available to Gandalf Technologies Inc. by Royal Bank of Canada (the
"Agreement"). All capitalized terms and references herein have the same meaning
as those in the Agreement.
The Bank hereby acknowledges the breach by the Borrower of Sections 23(a) and
24(h) of the agreement for the reporting period ended September 28, 1996. The
Bank hereby waives its rights in respect of the breach of Section 24(h) and
amends Section 23(a) to an amount of US $34,5000,000 for the reporting period
ended September 28, 1996.
The Bank also acknowledges receipt from the Borrower of a letter dated November
11, 1996 attaching a revised plan of operations for the fiscal quarters ending
December 28, 1996, March 31, 1997 and June 28, 1997 (the "Bank Plan").
The Bank hereby amends the Agreement has follows:
(i) Section 23(a) To maintain Tangible Net Worth on a
consolidated basis in amounts not less than those
stated in the Bank Plan for the respective fiscal
quarters ending December 28, 1996, March 31, 1997
and June 28, 1997.
(ii) Section 23(b) Not to permit its Current Ratio on
a consolidated basis to be less than that stated
in the Bank Plan for the respective fiscal
quarters ending December 28, 1996, March 31, 1997
and June 28, 1997.
(iii) Section 23(c) Not to permit its Total Liabilities
to Tangible Net Worth Ratio on a consolidated
basis to be greater than that stated in the Bank
Plan for the respective fiscal quarters ending
December 28, 1996; March 31, 1997 and June 28,
1997.
This waiver and amendment is conditional upon the following:
(i) The Borrower will provide the Bank, within 15 calendars days of
each month end with:
(a) evidence of compliance with the Margin Requirement, together
with supporting lists of accounts receivable and other
information as appropriate;
(b) consolidated, rolling sales forecast for the current fiscal
quarter;
(c) interim consolidated financial statements with
comparisons to the previous fiscal quarter.
(ii) The Borrower will pay to the Bank a risk premium equal to 1% per
annum, calculated and payable monthly in arrears, of the amount
committed under Segment 2(a) of the Credit Facility, until the
earlier of Tangible Net Worth exceeding US $40,000,000 or the
company recording net after tax profit of $1,000,000 or more in
any fiscal quarter.
(iii) Written agreement to similar terms and conditions by GDCL with
respect to a credit facility extended to GDCL by the Bank's
subsidiary in London, England.
(iv) Suspension of Segment (1) of the Credit Facility dealing with FEF
Contracts.
This letter supersedes and cancels our waiver and amendment letter dated
November 6, 1996.
All other terms and conditions of the Agreement remain unchanged.
Please confirm your acceptance by signing and returning the enclosed copy of
this letter.
Yours truly,
BY: s/X. X. (XXX) XXXXXXXX
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Xxx Xxxxxxxx
Senior Manager
Technology Banking Group
