Exhibit 10.3

EXECUTIVE EMPLOYMENT AGREEMENT

THIS AGREEMENT, dated the 16th day of June, is by and between Delphax
Technologies, Inc. (“Company”), a Minnesota corporation, and Gregory S. Furness
(“Executive”), a Minnesota resident.

RECITALS

A. The Company desires to employ Executive in the capacity of Chief Financial
Officer (“CFO”).

B. Executive desires to be employed by the Company, with duties and
responsibilities commensurate with Executive’s education and background, and
compensation and other benefits at levels that reflect Executive’s contributions
to the Company.

In consideration of the parties’ mutual covenants and undertakings contained in
this Agreement, the Company and Executive agree as follows:

ARTICLE I.

DEFINITIONS

Capitalized terms used in the Agreement shall have their defined meaning
throughout the Agreement. The following terms shall have the meanings set forth
below, unless the context clearly requires otherwise.

1.1 “Agreement” means this Executive Employment Agreement, as from time to time
amended.

1.2 “Base Salary” means the total annual cash compensation payable on a regular
periodic basis, without regard to voluntary or mandatory deferrals.

1.3 “Beneficiary” means the person or persons designated in writing to the
Company by Executive to receive benefits payable after Executive’s death. In the
absence of such designation or in the event that all of the persons so
designated predecease Executive, Beneficiary means the executor, administrator
or personal representative of Executive’s estate.

1.4 “Board” means the Board of Directors of the Company.

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1.5 “Cause” has the meaning set forth at paragraph 4.2 of this Agreement.

1.6 “Change in Control” means:

 

  (a) the Company consummates a merger, consolidation, share exchange, division
or other reorganization of the Company with any corporation or entity (other
than an entity owned at least 80% by the Company) in which the Company is not
the surviving entity or 50% of the Company’s then existing Board is replaced; or

 

  (b) the shareholders of the Company approve an agreement for the sale or
disposition (in one transaction or a series of transactions) of assets of the
Company, the total consideration of which is greater than 51% of the total fair
market value of the Company; or

 

  (c) the shareholders of the Company approve an agreement for the sale or
disposition (in one transaction or a series of transactions) of stock in the
Company, the total sale or disposition of which is greater than 51% of the total
common stock of the Company; or

 

  (d) the Company adopts a plan of complete liquidation or winding-up of the
Company.

Such definition shall not include an Initial or follow-up Public Offering by
Company or additional equity capital obtained by the Company pursuant to the
approval of a majority of the Board.

1.7. “Confidential Information” means information that is proprietary to the
Company or proprietary to others and entrusted to the Company, whether or not
trade secrets. Confidential Information includes, but is not limited to,
information relating to business plans and to business as conducted or
anticipated to be conducted, and to past or current or anticipated products.
Confidential Information also includes, without limitation, information
concerning research, development, purchasing, accounting, marketing, selling and
services. All information that Executive has a reasonable basis to consider
confidential is Confidential Information, whether or not expressly designated as
such, whether or not originated by Executive and without regard to the manner in
which Executive obtains access to this and any other proprietary information.

1.8 “Date of Termination” has the meaning set forth at paragraph 4.6(b) of this
Agreement.

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1.9 “Disability” means the unwillingness or inability of Executive to perform
Executive’s duties under this Agreement because of incapacity due to physical or
mental illness, bodily injury or disease.

1.10 “Executive” means Gregory S. Furness.

1.11 “Good Reason to Terminate Employment” means termination of employment that
also involves any one or more of the following:

(a) An adverse change in Executive’s status or position as a result of a
substantial diminution in Executive’s duties, responsibilities or authority as
of the date of this Agreement;

(b) A reduction by the Company in Executive’s Base Salary as in effect as of the
date of commencement of this Agreement or as the same may be increased from time
to time, or a change in the eligibility requirements or performance criteria
under any Plan under which Executive is covered on or immediately prior to the
date of this Agreement, which adversely affects Executive’s participation or
materially reduces Executive’s benefits under any Plan;

(c) The Company’s requiring Executive to be based anywhere other than the
Minneapolis-St. Paul metropolitan area, except for required travel on the
Company’s business; or

(d) The failure by the Company to obtain from any Successor its assent to this
Agreement as contemplated by paragraph 6.1.

1.12 “Plan” means any plan, program, policy or arrangement sponsored, maintained
or contributed to by the Company to which the Company is a party or under which
employees of the Company are covered, including, without limitation, any
employee benefit plan, such as thrift, pension, profit sharing, deferred
compensation, medical, dental, disability, accident, life insurance, fringe
benefit, vacation, sick or parental leave, severance plan or policy or any other
agreement, plan, program, policy or arrangement intended to benefit employees or
executive officers of the Company.

 

  1.13 “Successor” means any corporation, individual, group, association,
partnership, firm, venture, or other entity or person that, subsequent to the
date thereof, succeeds to the actual or practical ability to control, all or
substantially all of the Company’s business and/or assets, directly or
indirectly, by merger, consolidation, purchase, liquidation, redemption,
assignment, similar corporation transaction, operation of law or otherwise.

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ARTICLE II

EMPLOYMENT, DUTIES AND TERM

2.1 Employment. Upon the terms and conditions set forth in this Agreement, the
Company hereby employs Executive, and Executive accepts such employment. Except
as expressly provided herein, termination of this Agreement by either party
shall also terminate Executive’s employment by the Company.

2.2 Duties. During the term of this Agreement, and excluding any periods of
vacation, sick, disability or other leave to which Executive is entitled,
Executive agrees to devote reasonable attention and time to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to Executive hereunder, to use Executive’s reasonable
best efforts to perform faithfully and efficiently such responsibilities. During
the term of this Agreement, it shall not be a violation of this Agreement for
Executive to serve on corporate, civic or charitable boards or committees, and
manage personal investments, so long as such activities do not significantly
interfere with the performance of Executive’s responsibilities as an employee of
the Company in accordance with this Agreement. Executive shall comply with the
Company’s policies and procedures provided, that to the extent such policies and
procedures are inconsistent with this Agreement, the provisions of the policies
and procedures shall govern.

2.3 Certain Proprietary Information. If Executive possesses any proprietary
information of another person or entity as a result of prior employment or
relationship, Executive shall honor any legal obligation that Executive has with
that person or entity with respect to such proprietary information.

2.4 Employment At Will. Subject to the provisions of Article IV, Executive’s
employment with the Company shall be at will, meaning that the employment of
Executive under this Agreement commenced on April 5, 2006 and shall continue
until terminated by either Company or Executive for any reason or no reason,
whether with or without Cause, in accordance with the notice provisions of
Article IV.

2.5 Return of Property. Executive agrees that all property in Executive’s
possession belonging to the Company, including without limitation, all
documents, reports, manuals, memoranda, computer print-outs, customer lists,
credit cards, keys, identification, access cards, and all other property
relating in any way to the business of the Company are the exclusive property of
the Company, even if Executive authored, created or assisted in authoring or
creating such property. Executive shall return to the Company all such documents
and property immediately upon termination of employment or at such earlier time
as the Company may reasonably request.

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ARTICLE III.

COMPENSATION, BENEFITS AND EXPENSES

3.1 Base Salary. During the term of Executive’s employment under this Agreement
the Company shall pay Executive a Base Salary at an annual rate of One Hundred
Seventy Five Thousand and 00/100 dollars ($175,000) or such annual rate as may
from time to time be approved by the Company, such Base Salary to be paid in
substantially equal regular periodic payments biweekly. The Company shall review
Executive’s Base Salary annually. If Executive’s Base Salary is modified from
time to time during the term of Executive’s employment under this Agreement, the
modified amount shall become the Base Salary for the remainder of Executive’s
employment under this Agreement and for as long thereafter as required pursuant
to Article IV, subject to any subsequent increases.

3.2 Bonus Compensation. Executive shall be eligible to participate in the
Management Bonus Plan maintained by the Company for its employees of similar
tenure and grade, subject to and on a basis consistent with the terms of such
Plan or program and at the discretion of the Board. Executive shall be eligible
for a bonus of up to 50% of base salary for the fiscal year October 1, 2005
through September 30, 2006 based on the Company meeting its stated objectives.

3.3 Other Compensation and Benefits. During the term of Executive’s employment
under this Agreement, the Company shall continue in full force and effect all
Plans in which Executive becomes entitled to participate after the date of this
Agreement (or Plans providing Executive with al least substantially similar
benefits) other than as a result of the normal expiration of any such Plan in
accordance with its terms as in effect as of the date of this Agreement or the
date as of which Executive first becomes entitled to participate in such Plan.
These plans shall include health, life, dental and long-term disability
insurance, Execucare Health Supplement Plan, Long-Term Incentive Plan and the
Company’s 401(k) Plan.

3.4 Paid Time Off. For the 2006 calendar year and each subsequent calendar year
that begins during Executive’s employment under this Agreement, Executive shall
be entitled to Paid Time Off (vacation and sick days), which will accrue at the
rate of 200 hours per year, which shall increase to 240 hours per year after
four years. Executive will also be entitled to all office holidays.

3.5 Business and Professional Expenses. During Executive’s employment under this
Agreement, the Company shall reimburse Executive for ordinary and necessary
business expenses incurred by executive in performing Executive’s duties as an
executive officer of the Company, including, without limitation, travel and
lodging

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while away from home on business directly related to the Company, dues and
expenses incurred by Executive for professional membership and participation,
and similar items. Expenses must be included as part of the Company’s budget and
must be approved by the treasurer or other executive officer of the Company. The
cost of these activities shall be reimbursed to Executive upon proper
presentation and substantiation to the Company of the expense.

3.6 Financial and Tax Planning Expenses. Each calendar year, Executive shall be
entitled to reimbursement up to $1,500 for expenses related to the cost of
personal financial planning and tax preparation. The cost of these activities
shall be reimbursed to Executive upon proper presentation and substantiation to
the Company of the expense.

3.7 Stock Options. Executive was granted options to purchase 20,000 shares of
common stock of the Company on April 5, 2006. Such options will vest as per the
Company’s standard vesting schedule and will also be evidenced by a standard
stock option agreement between Executive and the Company.

ARTICLE IV.

TERMINATION

4.1 Termination. Subject to the respective continuing obligations of the parties
pursuant to Article V, this Article sets forth the terms for termination of
Executive’s employment under this Agreement.

4.2 Termination by the Company for Cause. The Company may terminate this
Agreement immediately for cause. For purposes of this Agreement, “Cause” means
(a) an act or acts of personal dishonesty taken by Executive or any action not
approved in this Agreement, intended to result in substantial personal
enrichment of Executive at the expense of the Company; (b) repeated violations
by Executive of his obligations under paragraph 2.2 which are demonstrably
willful and deliberate on Executive’s part and which are not remedied within a
reasonable period after Executive’s receipt of notice of such violations from
the Company; or (c) the willful engaging by Executive in illegal conduct that is
materially and demonstrably injurious to the Company.

4.3 Termination in the Event of Death or Disability. Executive’s employment
under this Agreement shall terminate in the event of Executive’s death or
Disability that prevents Executive from performing the essential functions of
his employment for more than twelve (12) weeks.

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4.4 Termination by Executive for Good Reason. Executive may terminate his
employment under this Agreement for Good Reason.

4.5 Termination by Either Party. Either party may terminate Executive’s
employment under this Agreement by giving written notice to the other.

4.6 Notice of Termination; Date of Termination. The provisions of this paragraph
4.6 shall apply in connection with any termination of Executive’s employment
under this Agreement pursuant to this Article IV.

(a) For purposes of this Agreement, a “Notice of Termination” shall mean a
notice which shall indicate the specific termination provisions in this
Agreement relied upon and if for Cause, death or Disability, shall set forth in
reasonable detail the facts and circumstances for such termination. Any
purported termination by the Company or by Executive pursuant to this Article IV
(other than a termination because of death) shall be communicated by written
Notice of Termination to the other party hereto.

(b) For purposes of this Agreement, “Date of Termination” shall mean: (1) if
Executive’s employment is terminated due to death, the last day of the month
first following the month during which Executive’s death occurs; (2) if
Executive’s employment is to be terminated for Disability, thirty (30) calendar
days after Notice of Termination is given; (3) if Executive’s employment is
terminated by the Company for Cause or by Executive for any reason, the date
specified in the Notice of Termination which in no event shall be a date more
than thirty (30) calendar days after the date of such notice; or (4) if
Executive’s employment is terminated for any other reason, the date specified in
the Notice of Termination, which in no event shall be a date earlier than thirty
(30) calendar days after the date on which a Notice of Termination is given,
unless an earlier date has been expressly agreed to by Executive in writing
either in advance of, or after, receiving such Notice of Termination.

4.7 Compensation upon Termination, Death or During Disability.

(a) During any period that Executive fails to perform Executive’s duties
hereunder as a result of incapacity due to physical or mental illness, Executive
shall not continue to receive Base Salary, but would be eligible to utilize any
accrued PTO and could be eligible for the long-term disability plan. However,
Executive shall continue to receive any other compensation and benefits to which
Executive would otherwise be entitled under this Agreement and any Plan until
Executive’s Date of Termination.

(b) If Executive’s employment under this Agreement is terminated on account of
death, the Company shall pay to Executive his Base Salary as in effect until the
Date of Termination, together with any other unpaid and pro rata amounts to
which Executive is entitled as of the Date of Termination pursuant to Article
III hereof, including, without limitation, amounts which Executive is entitled
under any Plan in accordance with the terms of such Plan.

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(c) If Executive’s employment under this Agreement is terminated by the Company
for Cause or by Executive for any reason other than because of Good Reason, the
Company shall pay Executive the Base Salary through the Date of Termination and
any amounts to which the Executive is entitled under any Plan in accordance with
the terms of such Plan.

(d) If Executive’s employment under this Agreement is terminated by the Company
involuntarily for reasons other than Cause or by Executive for Good Reason, the
Company shall provide Executive with the payments and benefits as follows:

(1) continue to pay any amounts due to Executive for Base Salary or Bonus in
accordance with paragraphs 3.1 and 3.2 at the annual rate in effect thereunder
immediately prior to the Date of Termination (but determined without regard to
any purported reduction in Base Salary which gave rise to such termination of
employment, if any) for the period commencing on the Date of Termination and
ending the number of months equal to one month for every year of Executive’s
service with the Company, for a minimum of six (6) months and up to a maximum of
twelve (12) months, after the Date of Termination; and

(2) reimbursement of the actual COBRA premium for health and dental up to a
maximum period of twelve (12) months.

(e) If there is a Change in Control and within one year thereafter Executive
terminates his employment for Good Reason, the Company shall pay Executive Base
Salary in accordance with paragraph 3.1 at the annual rate in effect thereunder
immediately prior to the Date of Termination (but determined without regard to
any purported reduction in Base Salary which gave rise to such termination of
employment, if any) for the period commencing on the Date of Termination and
ending two (2) years after the Date of Termination. The Company shall also
provide reimbursement of the actual COBRA premium for health and dental up to a
maximum period of twelve months.

ARTICLE V.

CONFIDENTIAL INFORMATION

5.1 Prohibitions Against Use. Executive will not during or subsequent to the
termination of Executive’s employment under this Agreement use or disclose,
other than in connection with Executive’s employment with the Company, any
Confidential Information to any person not employed by the Company or not
authorized by the Company to receive such Confidential Information, without the
prior written consent of the Company. Executive will use reasonable and prudent
care to safeguard and protect and prevent the unauthorized use and disclosure of
Confidential Information. The obligations contained in this paragraph will
survive for as long as the Company in its sole judgment considers the
information to be Confidential Information.

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ARTICLE VI.

GENERAL PROVISIONS

6.1 Successor and Assigns.

This Agreement shall be binding upon and inure to the benefit of any Successor
of the Company, and any such Successor shall absolutely and unconditionally
assume all of the Company’s obligations hereunder. Upon Executive’s written
request, the Company will seek to have any Successor, by agreement in form and
substance satisfactory to Executive, assent to the fulfillment by the Company of
their obligations under this Agreement.

6.2 Disputes. Any dispute, controversy or claim for damages arising under or in
connection with this Agreement shall, in Executive’s sole discretion, be settled
exclusively by such judicial remedies as Executive may seek to pursue or by
arbitration in Minnesota by a panel of three (3) arbitrators in accordance with
the rules of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrator’s award in any court having jurisdiction. The
parties shall each bear their own costs and expenses, including attorney’s fees,
arising in connection with any arbitration proceeding pursuant to this paragraph
6.2. The Company shall be entitled to seek an injunction or restraining order in
a court of competent jurisdiction to enforce the provisions of Article V.

6.3 Notices. All notices, request and demands given to or made pursuant hereto
shall, except as otherwise specified herein, be in writing and be personally
delivered or mailed postage prepaid, registered or certified U.S. mail, to any
party as its address set forth on the last page of this Agreement. Either party
may, by notice hereunder, designate a changed address. Any notice hereunder
shall be deemed effectively given and received: (a) if personally delivered,
upon delivery; or (b) if mailed, on the registered date or the date stamped on
the certified mail receipt.

6.4 Withholding. To the extent required by any applicable law, including,
without limitation, any federal or state income tax or excise tax law or laws,
the Federal Insurance Contributions Act, the Federal Unemployment Tax Act or any
comparable federal, state or local laws, the Company retains the right to
withhold such portion of any amount or amounts payable to Executive under this
Agreement as the Company deems necessary.

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6.5 Captions. The various headings or captions in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.

6.6 Governing Law. The validity, interpretation, construction, performance,
enforcement and remedies of or relating to this Agreement, and the rights and
obligations of the parties hereunder, shall be governed by the substantive laws
of the state of Minnesota (without regard to the conflict of laws rules or
statutes of any jurisdiction).

6.7 Construction. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

6.8 Waivers. No failure on the part of either party to exercise, and no delay in
exercising, any right or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise or any right or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right or
remedy granted hereby or by any related document or by law.

6.9 Modification. This Agreement may not be modified or amended except by
written instrument signed by the parties hereto.

6.10 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto in reference to all the matters herein
agreed upon. This Agreement replaces in full all prior agreements or
understandings of the parties hereto, with the exception of the Non-Competition
Agreement entered into between the Company and Executive dated April 5, 2006,
which shall continue in full force and effect. Any and all other such prior
agreements or understandings are hereby rescinded by mutual agreement.

6.11 Counterparts. This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one (1) and the same instrument.

6.12 Survival. The parties expressly acknowledge and agree that the provisions
of this Agreement which by their express or implied terms extend beyond the
termination of Executive’s employment hereunder shall continue in full force and
effect notwithstanding Executive’s termination of employment hereunder or the
termination of this Agreement, respectively.

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6.13 Indemnification. The Company indemnifies, holds harmless, and will defend
the Executive against claims against Executive arising out of Executive’s
performance of the duties of the Executive’s employment by the Company, to the
full extent permitted by law, but not with respect to claims successfully
prosecuted against the Executive for fraudulent, grossly negligent, or criminal
acts.

IN WITNESS WHEREOF, the parties hereto have caused this Executive Employment
Agreement to be duly executed and delivered as of the day and year first above
written.

 

EXECUTIVE:

      DELPHAX TECHNOLOGIES INC.:

/s/ Gregory S. Furness

      By:  

/s/ Dieter P. Schilling

Gregory S. Furness         Dieter Schilling       Title:   Chief Executive
Officer Address:       Address: 14015 Drake Street NW       Delphax Technologies
Inc. Andover, MN 55304       6100 West 110th Street       Bloomington, MN 55438