SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of March 26, 2007 is made by and among Delphax Technologies Inc., a Minnesota corporation, with headquarters located at 6100 West 110th Street, Bloomington, Minnesota 55438 ("Delphax"), Delphax Technologies Canada Limited, a corporation duly incorporated under the laws of the province of Ontario, with headquarters located at 5030 Timberlea Blvd., Mississauga, Ontario Canada L4W 2S5 ("Delphax Canada") and the investors named on the signature pages hereto, together with their permitted transferees (the "Investors"). Delphax and Delphax Canada are collectively called the "Companies" and individually called a "Company".
A. The Companies and the Investors are executing and delivering this Agreement in reliance upon the exemptions from securities registration afforded by Section 4(2) of the Securities Act and Rule 506 under Regulation D.
B. The Investors desire, upon the terms and conditions stated in this Agreement, to purchase Delphax Canada's Secured Subordinated Notes, for an aggregate purchase price of up to $7.0 million and to receive, in consideration for such purchase, Warrants to acquire shares of Common Stock of Delphax.
C. Contemporaneously with the execution and delivery of this Agreement, Delphax and the Investors are executing and delivering a Registration Rights Agreement under which the Company has agreed to provide certain registration rights under the Securities Act, the rules and regulations promulgated thereunder and applicable state securities laws.
D. The Notes will be secured by the Security Documents and guaranteed by Delphax pursuant to the Guaranty.
E. The capitalized terms used herein and not otherwise defined have the meanings given them in Article X hereof.
In consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investors hereby agree as follows:
PURCHASE AND SALE OF SECURED SUBORDINATED NOTES
1.1 Purchase and Sale of Secured Subordinated Notes. At each Closing, subject to the terms of this Agreement and the satisfaction or waiver of the conditions set forth in Articles VI and VII hereof, Delphax Canada will issue and sell to each Investor, and each Investor will (on a several and not a joint basis) purchase from the Company, secured subordinated notes substantially in the form of Exhibit A hereto (the "Note(s)") in the principal amount set forth beneath such Investor's name on the signature pages hereof for such Closing. The Notes will bear annual interest, at a fixed rate of 12% per annum, payable as set forth in the Notes. The Notes issued at the First Closing will mature on February 8, 2008 (subject to extension in the event of a Second Closing Date, as provided in the Notes) and the Notes issued at the Second Closing will mature on the first business day following the fifth anniversary of the Second Closing Date.
1.2 Payment. Each Investor will pay the principal amount for the Notes as is set forth beneath its name on the signature pages hereof, by wire transfer of immediately available funds in accordance with Delphax Canada's written wire instructions, simultaneously with delivery by the Companies to each Investor of (i) the Note(s) in the principal amount(s) so purchased by such Investor and (ii) Warrants to acquire the number of shares of Common Stock set forth beneath such Investor's name on the signature pages hereof for such Closing, and the Companies will deliver such Notes and Warrants against delivery of the purchase price as described above.
1.3 Closing Dates. Subject to the satisfaction or waiver of the applicable conditions set forth in Articles VI and VII hereof, (i) the First Closing will take place at 1:30 p.m., Central Time, on the date of this Agreement, or at another date or time agreed upon by the parties to this Agreement (the "First Closing Date") and (ii) the Second Closing will take place at 1:30 p.m., Central Time, on the first business day after the Delphax shareholder meeting referred to in Section 6.2(e) or at another date or time agreed upon by the parties to this Agreement (the "Second Closing Date"). In the event that the shareholder approval contemplated by Section 6.2(e) is not obtained, then (i) the Notes and Warrants issued at the First Closing shall remain outstanding in accordance with their terms, and (ii) the Company's obligation to issue, and the Investors obligation to purchase, the Notes and Warrants that are contemplated to be issued at the Second Closing shall terminate without liability. Each Closing will be held at the offices of Faegre & Benson LLP, or at such other place as the parties agree.