EX-10.1 Second Amendment to Credit Agreement

Exhibit 10.1

Delphax Technologies Canada Limited.
Second Amendment To Credit Agreement

     This Second Amendment to Credit Agreement (herein, the “Amendment") is entered into as of August 11, 2003, by and among Delphax Technologies Canada Limited, f/k/a Check Technology Canada Ltd., an Ontario corporation (the “Borrower"), Delphax Technologies Inc., f/k/a Check Technology Corporation, a Minnesota corporation (the “Parent"), as Parent and as a Guarantor (the Parent, together with all Domestic Subsidiaries in existence from time to time being hereinafter referred to collectively as the “Guarantors” and each such entity individually as a “Guarantor"), and Harris Trust and Savings Bank (“HTSB”), as sole Lender and as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent").

Preliminary Statements

     A.     HTSB currently extends credit to the Borrower on the terms and conditions set forth in that certain Credit Agreement dated as of December 20, 2001 by and among the Borrower, the Parent, and HTSB as sole Lender and as Administrative Agent, as amended by that certain First Amendment to Credit Agreement dated as of December 18, 2002 (the “Credit Agreement"). All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement. Unless stated otherwise herein, all references to the “Lenders” shall be deemed to be references to HTSB in its capacity as sole Lender, together with any of its successors or assigns.

     B.     The Borrower has requested that HTSB permanently waive certain covenant defaults described in Section 1 below and enter into certain amendments to the Credit Agreement, and HTSB has agreed to do so, all on terms and conditions hereinafter set forth.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

Section 1. Waiver.

     Subject to the satisfaction of the conditions precedent set forth in Section 3 below, the Lenders hereby waive the following violations of the Credit Agreement: the violation of Section 8.23 (Fixed Charge Coverage Ratio) for the fiscal quarter ended June 30, 2003 and the violation of Section 8.26 (Minimum EBITDA) for the fiscal quarter ended June 30, 2003, and the Lenders hereby waive any Default or Event of Default which could or would otherwise result solely from such violations.

Section 2. Amendments.

     Subject to the satisfaction of the conditions precedent set forth in Section 3 below, the Credit Agreement shall be and hereby is amended as follows:

     2.1. Section 1.3(a) of the Credit Agreement is hereby amended by inserting the following sentence at the end of such Section:

     2.2. Section 1.6(a) of the Credit Agreement is hereby amended as follows:

     2.3. Section 1.13(b)(ii) of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

     2.4. Section 1.13(c) of the Credit Agreement is hereby amended by inserting the words “(other than the reinstatement described in clause (b)(ii) above)” at the end of such clause.

     2.5. Clause (b) of the definition of “Borrowing Base” set forth in Section 5.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:

     2.6. Clause (c) of the definition of “Borrowing Base” set forth in Section 5.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:

     2.7. The definition of “L/C Sublimit” set forth in Section 5.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:

     2.8. Section 8.5(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:

     2.9. Section 8.23 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

     2.10. The references to the Commitments on the signature page of HTSB to the Credit Agreement shall be amended and restated in their entirety to read as follows:

     2.11. Exhibit E to the Credit Agreement is hereby amended and restated to read as set forth in the revised Exhibit E attached hereto.

Section 3. Conditions Precedent.

     This Amendment shall become effective as of the date first above written upon the satisfaction of all of the following conditions precedent:

Section 4. Representations.

     In order to induce HTSB to execute and deliver this Amendment, each of the Parent and the Borrower hereby represents to the Lenders that as of the date hereof, and after giving effect to this Amendment, (a) this Amendment constitutes the legal, valid and binding obligations of each of the Borrower and the Parent, enforceable in accordance with its terms, (b) the representations and warranties set forth in Section 6 of the Credit Agreement are and shall be and remain true and correct (except that the representations contained in Section 6.5 shall be deemed to refer to the most recent financial statements of the Parent and the Subsidiaries delivered to the Lenders), (c) the Parent and the Borrower are in compliance with the terms and conditions of the Credit Agreement (including, without limitation, the requirement to pay of all applicable withholding taxes in accordance with Section 13.1 of the Credit Agreement), and (d) other than the “Existing Events of Default” described in the Amended and Restated Forbearance Agreement dated as of October 16, 2002 by and among the Borrower, the Parent and HTSB as sole Lender and as Administrative Agent, no Default or Event of Default has occurred and is continuing under the Credit Agreement or shall result after giving effect to this Amendment.

Section 5. RELEASE. FOR VALUE RECEIVED, INCLUDING WITHOUT LIMITATION, THE AGREEMENTS OF THE LENDERS IN THIS AGREEMENT, THE BORROWER AND THE PARENT

HEREBY RELEASE THE ADMINISTRATIVE AGENT AND EACH LENDER, ITS CURRENT AND FORMER SHAREHOLDERS, DIRECTORS, OFFICERS, AGENTS, EMPLOYEES, ATTORNEYS, CONSULTANTS, AND PROFESSIONAL ADVISORS (COLLECTIVELY, THE “RELEASED PARTIES”) OF AND FROM ANY AND ALL DEMANDS, ACTIONS, CAUSES OF ACTION, SUITS, CONTROVERSIES, ACTS AND OMISSIONS, LIABILITIES, AND OTHER CLAIMS OF EVERY KIND OR NATURE WHATSOEVER, BOTH IN LAW AND IN EQUITY, KNOWN OR UNKNOWN, WHICH THE BORROWER OR THE PARENT HAS OR EVER HAD AGAINST THE RELEASED PARTIES FROM THE BEGINNING OF THE WORLD TO THIS DATE, INCLUDING, WITHOUT LIMITATION, THOSE ARISING OUT OF THE EXISTING FINANCING ARRANGEMENTS AMONG THE BORROWER, THE PARENT AND THE LENDERS, AND THE BORROWER AND THE PARENT FURTHER ACKNOWLEDGE THAT, AS OF THE DATE HEREOF, THEY DO NOT HAVE ANY COUNTERCLAIM, SET-OFF OR DEFENSE AGAINST THE RELEASED PARTIES, EACH OF WHICH THE BORROWER AND THE PARENT HEREBY EXPRESSLY WAIVE.

Section 6. Miscellaneous.

     6.1. The Borrower and the Parent have heretofore or concurrently herewith executed and delivered to the Lenders the Security Agreements, the Pledge Agreement and certain other Collateral Documents. The Borrower and the Parent hereby acknowledge and agree that the Liens created and provided for by the Collateral Documents continue to secure, among other things, the Obligations arising under the Credit Agreement as amended hereby; and the Collateral Documents and the rights and remedies of the Lenders thereunder, the obligations of the Borrower and the Parent thereunder, and the Liens created and provided for thereunder remain in full force and effect and shall not be affected, impaired or discharged hereby. Nothing herein contained shall in any manner affect or impair the priority of the liens and security interests created and provided for by the Collateral Documents as to the indebtedness which would be secured thereby prior to giving effect to this Amendment. Without limiting the foregoing, the Parent confirms that its guaranty set forth in Section 12 of the Credit Agreement, and all of the obligations of the Parent thereunder, remain in full force and effect.

     6.2. Except as specifically amended herein, the Credit Agreement and the other Loan Documents are hereby ratified and confirmed and shall continue in full force and effect in accordance with their terms. Reference to this specific Amendment need not be made in the Credit Agreement, the Notes, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to or with respect to the Credit Agreement, any reference in any of such items to the Credit Agreement being sufficient to refer to the Credit Agreement as amended hereby.

     6.3. The Borrower agrees to pay on demand all reasonable costs and expenses of the Agent in connection with the negotiation, preparation, execution and delivery of this Amendment and the other instruments and documents contemplated hereby, including the reasonable fees and expenses of counsel for the Agent.

     6.4. This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed

to be an original. A facsimile copy of this Amendment and signatures thereon shall be considered for all purposes as originals.

     6.5. This Amendment shall be governed by the internal laws of the State of Illinois.

[Signature Page to Follow]

     This Amendment is entered into as of the date and year first above written.