September 29. 2008
September 29. 2008
VIA EMAIL AND DHL DELIVERY
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Bloomington, MN 55438
Re: Credit and Security Agreement between Delphax Technologies Inc. ("Borrower"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corp., as successor to ▇▇▇▇▇ Fargo Bank, National Association, acting through its ▇▇▇▇▇ Fargo Business Credit operating division ("Lender"), dated September 10, 2007, as amended by a First Amendment to Credit and Security Agreement dated as of February 15, 2008 and a Second Amendment to Credit and Security Agreement dated as of June 30, 2008 (as amended from time to time, the "Credit Agreement")
Dear ▇▇▇▇▇▇:
Reference is made to the Credit Agreement. Capitalized terms used but not defined in this letter agreement (this "Letter Agreement") have the meanings given to them in the Credit Agreement, and references to articles or sections are to articles or sections of the Credit Agreement.
As you know, on or about August 7, 2008, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corp. acquired the Indebtedness of the Borrower to ▇▇▇▇▇ Fargo Bank, National Association, acting through its ▇▇▇▇▇ Fargo Business Credit operating division ("▇▇▇▇▇ Fargo"), and all of ▇▇▇▇▇ Fargo's rights and interests under the Loan Documents. ▇▇▇▇▇▇▇▇ has advised ▇▇▇▇▇▇ that it has an immediate need for additional liquidity in order for the Borrower to proceed with the parts order that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corp. placed with Borrower and which ▇▇▇▇▇▇▇▇ accepted (the "▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Order"). Specifically, the Borrower has requested that Lender amend the Credit Agreement so as to provide Borrower with additional liquidity to make deposits to its trade vendors and otherwise satisfy expenses related to proceeding with completion of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Order. Accordingly, ▇▇▇▇▇▇ is willing to amend the Credit Agreement to accommodate the Borrower's request, subject to the terms and conditions of this Letter Agreement.
Based on the foregoing, the "Availability" financial covenant set forth in Section 6.2(d) of the Credit Agreement is amended and restated in its entirety to read as follows:
"(d) Availability. The Borrower will not permit the sum of Availability, plus the Canadian Availability and the European Availability (as those terms are defined in the Canadian Credit Agreement), to be less than the following amounts during the following periods: (i) $1,500,000 beginning on September 29, 2008 and continuing through and including November 30, 2008, and (ii) $2,000,000 at all times prior to September 29, 2008 and beginning on and at all times after December 1, 2008."
By signing in the space provided below and accepting the increased liquidity resulting from the above amendment and restatement of the availability covenant set forth in Section 2.6(d), ▇▇▇▇▇▇▇▇ agrees that it will use the proceeds generated from such amendment solely in connection with expenses associated with the completion of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Order. Any use of such proceeds other than in connection with expenses associated with completion of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Order will constitute an Event of Default under the Credit Agreement.
The Credit Agreement, all of the Loan Documents and each term and condition thereof remain in full force and effect as amended hereby. Borrower reaffirms, ratifies and approves all of its obligations under the Credit Agreement and the Loan Documents, as amended hereby, and represents and warrants that no further approvals or authorizations are necessary for Borrower to execute this Letter Agreement. At the same time, nothing in this Letter Agreement is intended to waive, or shall waive, any Defaults or Events of Default that exist under the Credit Agreement or the Loan Documents on the date hereof (including without limitation the Defaults and Events of Default identified in Lender's letters to Borrower dated September 5, 2008 and September 23, 2008); all of Lender's rights and remedies with respect to such Defaults or Events of Default are expressly preserved.
This Letter Agreement contains the entire understanding of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Letter Agreement. This Letter Agreement shall be deemed part of the Credit Agreement and the Loan Documents for all purposes and may be executed in counterparts, each of which when so executed and delivered shall be deemed an original, and all of such counterparts together shall constitute but one and the same agreement. Further, facsimile copies of signatures shall be treated as original signatures for all purposes.
Please sign below to indicate your acknowledgment and agreement with the foregoing terms.
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Its: EVP & CFO
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ACKNOWLEDGED AND AGREED TO
this 29th day of September, 2008.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: CFO + VP, Finance
DELPHAX TECHNOLOGIES CANADA LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: CFO + VP, Finance
cc: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
DETROIT.3329809.5