<PAGE>   1
                                                                    Exhibit 10.6


July 5, 1999

PRIVATE AND CONFIDENTIAL

Delano Technology Corporation
40 West Wilmot Drive
Richmond Hill, Ontario
L4B 1H8

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 260
                East Beaver Creek, Richmond Hill, Ontario (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)
<PAGE>   2

DELANO TECHNOLOGY CORPORATION
July 5, 1999                                                             Page 2)
________________________________________________________________________________

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).

<PAGE>   3

DELANO TECHNOLOGY CORPORATION
July 5, 1999                                                             Page 3)
--------------------------------------------------------------------------------


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;
<PAGE>   4

DELANO TECHNOLOGY CORPORATION
July 5, 1999                                                            Page 4)
-------------------------------------------------------------------------------

               (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:
<PAGE>   5

DELANO TECHNOLOGY CORPORATION
July 5, 1999                                                             Page 5)
--------------------------------------------------------------------------------

                  (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.
<PAGE>   6

DELANO TECHNOLOGY CORPORATION
July 5, 1999                                                             Page 6)
________________________________________________________________________________

If this agreement is acceptable, kindly sign and return the attached copy to
the Bank.

Yours truly,

ORIGINAL SIGNED BY
A.F. LA VISTA

Tony 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:

<PAGE>   7


                                  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;