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Exhibit 10.6
July 5, 1999
PRIVATE AND CONFIDENTIAL
Delano Technology Corporation
00 Xxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxx, Xxxxxxx
X0X 0X0
Dear Sirs:
Further to our recent discussions, we are pleased to confirm the revolving
demand Credit Facility described below, subject to the following terms and
conditions.
DEFINITIONS: The definitions attached hereto in Schedule "A" are incorporated
in this agreement by reference as if set out in full herein.
BORROWERS: DELANO TECHNOLOGY CORPORATION (the "Borrower").
LENDER: Royal Bank of Canada (the "Bank"), through its Branch at 000
Xxxx Xxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxx (the "Branch of
Account").
CREDIT
FACILITY: The Credit Facility is available in the following segments in
Canadian Dollars by way of, at the Borrower's option:
Segment(1) Lease line of credit/Equipment lease ("Leases").
Segment(2) Term - ITC Financing:
(a) RBP Loans.
(collectively the "Borrowings").
AMOUNT(S): Segment(1) $1,000,000.
Segment(2) $230,000.
TERMS OF
SEGMENT(1): The terms and conditions regarding Leases will be as outlined in
separate agreements entered into by the Borrower and the Bank.
PURPOSE: Segment(2) Finance ITC receivable.
REPAYMENT: Segment(2) Interest only. To be repaid from collection of ITC
receivable. Maximum term 8 months.
AVAILABILITY: Segment(2)
The Borrower may borrow and convert up to the amount of this
reducing term facility.
INTEREST
RATES & FEES: Segment(2) (a) Royal Bank Prime ("RBP") + 2.50%. (ITC only)
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PAYMENT OF
INTEREST & FEES: RBP Loans
Interest on these loans shall be computed on the daily
principal amounts outstanding, at the aforementioned rates,
based on the actual number of days elapsed divided by 365,
and shall be payable in arrears on the 26th of each month.
The yearly rates of interest to which the rates determined
in accordance with this Payment of Interest and Fees section
are equivalent, are the rates so determined multiplied by
the actual number of days in the calendar year and divided
by 365.
Overdue Payments
Any overdue payment in Canadian Dollars shall be deemed to
be a RBP Loan with interest payable at RBP plus 5%.
OTHER FEES: Arrangement Fee -- An arrangement fee of Nil is payable upon
acceptance of this agreement. The arrangement fee is
non-refundable and will be deemed to have been earned by the
Bank upon acceptance of this offer, to compensate for time,
effort and expense incurred by the Bank to approve these
facilities.
Re-Negotiation Fee -- The Borrower acknowledges that fees
may be levied for the annual review of the Credit Facilities
or the re-negotiation of the amount, collateral security
and/or the terms and conditions of this agreement during the
currency of this agreement.
Nothing in this agreement shall be construed as obliging the
Borrower to pay any interest, charges or other expenses as
provided by this agreement or in any other security
agreement related thereto in excess of what is permitted by
law.
PREPAYMENT: May be prepaid in whole or in part in reverse order of
maturity at any time or times without payment of bonus
interest.
COLLATERAL
SECURITY: General Security Agreement covering all assets
other than real property.
Cash Collateral Agreement covering GIC for the total amount
of outstanding leases at any time.
CONDITIONS
PRECEDENT: The obligation of the Bank to make available the
Borrowings to the Borrower is subject to and conditional
upon:
(1) receipt by the Bank of a properly executed copy of this
agreement;
(2) receipt by the Bank of the within stipulated Collateral
Security in form and substance satisfactory to the
Bank, together with such corporate authorizations and
legal opinions as the Bank may require;
(3) receipt by the Bank of satisfactory Y2K scored
questionnaire;
(4) Letter of Opinion from auditors regarding Investment
Tax Credit receivable (now held).
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EVIDENCE OF
INDEBTEDNESS: The bank shall open and maintain at the Branch of Account
accounts and records evidencing the Borrowings made available
to the Borrower by the Bank under this agreement. The Bank
shall record the principal amount of such Borrowings, the
payment of principal and interest on account of the loans, and
all other amounts becoming due to the Bank under this
agreement.
The Bank's accounts and records constitute, in the absence of
manifest error, prima facie evidence of the indebtedness of the
Borrower to the Bank pursuant to this agreement.
The Borrower authorizes and directs the Bank to automatically
debit, by mechanical, electronic or manual means, any bank
account of the Borrower for all amounts payable under this
agreement, including but not limited to, the repayment of
principal and the payment of interest, fees and all charges for
the keeping of such bank accounts.
REPRESENTATIONS
AND WARRANTIES The Borrower represents and warrant to the Bank that:
(a) it is a corporation validly incorporated and subsisting
under the laws of Ontario, and that it is duly registered
or qualified to carry on business in all jurisdictions
where the character of the properties owned by it or the
nature of its business transacted makes such registration
or qualification necessary; and
(b) the execution and delivery of this agreement has been duly
authorized by all necessary actions and does not violate
any law or any provision of its constatating documents or
by-laws or any unanimous shareholders' agreement to which
it is subject, or result in the creation of any
encumbrance on its properties and assets except as
contemplated hereunder.
NON-MERGER: The provisions of this agreement shall not merge with any
security given by the Borrower to the Bank, but shall continue
in full force for the benefit of the parties hereto.
COVENANTS: The Borrower agrees:
(a) to pay all sums of money when due under this agreement;
(b) to provide the Bank with the following reports on an
annual basis, within 90 days of the end of its fiscal
year.
(i) audited financial statements;
(c) to give the Bank prompt notice of any Event of Default or
any event which, with notice or lapse of time or both,
would constitute an Event of Default;
(d) to refrain from declaring dividends which aggregate more
than the amount by which 50% of he cash flow generated by
earnings exceeds the current portion of long-term debt.
Cash flow generated by earnings shall be as defined in the
Statement of Changes in Financial Position of its audited
annual report;
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(e) to file all material tax returns which are or will be
required to be filed, to pay or make provision for payment
of all material taxes (including interest and penalties) and
other Potential Preferred Claims which are or will become
due and payable and to provide adequate reserves for the
payment of any tax, the payment of which is being contested;
(f) not to dispose of shares of any of its subsidiaries;
(g) not to grant, create, assume or suffer to exist any
mortgage, charge, lien, pledge, security interest,
including a purchase money security interest, or other
encumbrance affecting any of its properties, assets or other
rights;
(h) not to sell, transfer, convey, lease or otherwise dispose of
any part of its property or assets, without the prior
written consent of the Bank, except in the ordinary course
of business;
(i) not to, directly or indirectly, guarantee or otherwise
provide for, on a direct or indirect or contingent basis,
the payment of any monies or performance of any obligations
by any third party except as provided herein;
(j) to give the Bank 30 days prior notice in writing of any
intended change in the ownership of its shares;
(k) to insure and to keep fully insured all properties
customarily insured by companies carrying on a similar
business;
(l) not to change its name or merge, amalgamate or consolidate
with any other corporation; and
(m) to comply with all applicable environmental laws and
regulations; to advise the Bank promptly of any Action
Requests or Violation Notices (as such terms are defined
under the Environmental Protection Act (Ontario)) received
concerning any of the Borrower's property; and to hold the
Bank harmless for any costs or expenses which it incurs for
any environment-related liabilities existent now or in the
future with respect to the Borrower's property.
(n) The Borrower covenants to provide to the Bank any and all
information that the Bank may reasonable request from time
to time relating to the state of the Year 2000 readiness of
the Borrower.
For purposes of the foregoing, the "Year 2000 readiness" of
the Borrower means the ability of all information technology
used by the Borrower and its suppliers to continue to
perform all date-related functions and computations
accurately on and after January 1, 2000.
Events of
Default: Without limitation and notwithstanding the terms for
repayment of certain facilities as recited herein, if any
one or more of the following events has occurred and is
continuing:
(a) the non-payment when due of principal, or interest or any
other amounts due under this agreement:
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(b) the breach by the Borrower of any provisions of this
agreement or any other agreement with the Bank;
(c) if any representation or warranty made herein shall be
false or inaccurate in any materially adverse respect;
(d) if in the opinion of the Bank there is material adverse
change in the financial condition, ownership, or
operation of the Borrower;
(e) the breach at any time and in any material respect of the
provisions of any applicable law, regulation, by-law,
ordinance or work order of any lawful authority whether
federal, provincial, state, municipal, local or
otherwise, (including without restriction, those dealing
with pollution of the environment and toxic materials or
other environmental hazards, or public health and
safety), affecting any property of the Borrower or any
activity or operation carried out thereon; or
(f) if proceedings for the dissolution, liquidation or
winding-up of the Borrower or for the suspension of the
operations of the Borrower are commenced, unless such
proceedings are being actively and diligently contested
by the Borrower in good faith, or in the event of the
bankruptcy, liquidation, or general insolvency of the
Borrower, or if a receiver or receiver-manager is
appointed for all or any part of the business or assets
of the Borrower;
then the right of the Borrower to make further Borrowings
under this agreement shall immediately terminate and the Bank
may, by written notice to the Borrower, declare the Borrowings
under this agreement to be immediately due and payable without
further notice or demand.
Upon receipt of such notice, the Borrower shall immediately
pay to the Bank all Borrowings outstanding under this
agreement.
EXPENSES: The Borrower agrees to pay all of the Bank's costs incurred
from time to time in the preparation, negotiation and
execution of this agreement and the collateral security, and
any costs incurred in the operation or enforcement of this
agreement or any other agreement entered into pursuant to this
agreement.
GAAP: Unless otherwise provided, all accounting terms used in this
agreement shall be interpreted in accordance with Canadian
Generally Accepted Accounting Principles from time to time.
SEVERABILITY: If any provision of this agreement is or becomes prohibited or
unenforceable in any jurisdiction, such prohibition or
unenforceability shall not invalidate or render unenforceable
the provision concerned in any other jurisdiction nor shall it
invalidate, affect or impair any of the remaining provisions.
GOVERNING LAW: This agreement shall be construed in accordance with and
governed by the laws of the Province of Ontario and of Canada
applicable therein.
ACCEPTANCE: This offer expires if not accepted by July 15, 1999, unless
extended in writing by the Bank.
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If this agreement is acceptable, kindly sign and return the attached copy to
the Bank.
Yours truly,
ORIGINAL SIGNED BY
A.F. LA VISTA
Xxxx La Vista
Senior Account Manager
We acknowledge and accept the within terms and conditions.
DELANO TECHNOLOGY CORPORATION
Per: _______________________ Date:
Name:
Title:
Per: _______________________ Date:
Name:
Title:
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SCHEDULE "A"
Schedule "A" to the Letter Agreement dated the 5th day of July, 1999 between
DELANO TECHNOLOGY CORPORATION as the Borrower and Royal Bank of Canada as the
Bank.
For purposes of the foregoing agreement, the following terms and phrases shall
have the following meanings:
"Business Day" means a day on which the Branch of Account is open for business;
"Canadian Dollars" and "Cdn$" means lawful money of Canada;
"Person" includes an individual, a partnership, a joint venture, a trust, an
incorporated organization, a company, a corporation, an association, a
government or any department or agency thereof, and any other incorporated or
unincorporated entity;
"Potential Preferred Claims" means amounts owing for wages, employee
deductions, sales tax, excise tax, income tax, worker's compensation,
government royalties, pension fund obligations, overdue rents or taxes,
purchase-money security interests, and other statutory preferred claims;
"Premises" means any real property owned by the Borrower, either directly or
indirectly, against which the Bank holds a mortgage;
"RBP" means the annual rate of interest announced by the bank from time to time
as being a reference rate then in effect for determining interest rates on
Canadian Dollar commercial loans in Canada;
