Exhibit 10.4
 
GENESIS MICROCHIP INC.
 
FORM OF CHANGE OF CONTROL SEVERANCE AGREEMENT
 
This Change of Control Severance Agreement (the “Agreement”) is made and entered
into effective as of March 2, 2007 (the “Effective Date”), by and between
___________________________ (“Executive”) and Genesis Microchip Inc., a Delaware
corporation (the “Company”). Certain capitalized terms used in this Agreement
are defined in Section 1 below.
 
RECITALS
 
A. It is expected that the Company from time to time will consider the
possibility of a Change of Control. The Board of Directors of the Company (the
“Board”) recognizes that such consideration can be a distraction to Executive
and can cause Executive to consider alternative employment opportunities.
 
B. The Board believes that it is in the best interests of the Company and its
shareholders to provide Executive with an incentive to continue Executive’s
employment and to maximize the value of the Company upon a Change of Control for
the benefit of its shareholders.
 
C. In order to provide Executive with enhanced financial security and sufficient
encouragement to remain with the Company notwithstanding the possibility of a
Change of Control, the Board believes that it is imperative to provide Executive
with certain severance benefits upon Executive’s termination of employment
following a Change of Control.
 
AGREEMENT
 
In consideration of the mutual covenants herein contained and the continued
employment of Executive by the Company, the parties agree as follows:
 
1.  Definition of Terms. The following terms referred to in this Agreement will
have the following meanings:
 
(a)  Cause. “Cause” means (a) any act of dishonesty or fraud taken by Executive
that is in connection with his or her responsibilities as an employee which is
intended to result in substantial personal enrichment of Executive or which has
a material and detrimental effect on the Company’s reputation or business; (b)
Executive’s conviction of, or no contest plea to, a felony; (c) a willful act by
Executive which constitutes misconduct and is injurious to the Company; (d) a
material breach of the terms of any confidentiality, invention assignment or
proprietary information agreement with the Company; or (e) continued violations
by Executive of Executive’s obligations to the Company or written Company
policies after there has been delivered to Executive a written demand for
performance from the Company which describes the basis for the Company’s belief
that Executive has not substantially performed his or her duties.
 

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(b)  Change of Control. “Change of Control” means the occurrence of any of the
following events:
 
(i)  the approval by shareholders of the Company of a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the total voting power represented by
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation;
 
(ii)  the approval by the shareholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets;
 
(iii)  any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing 50% or more of the total voting power represented by
the Company’s then outstanding voting securities; or
 
(iv)  a change in the composition of the Board, as a result of which fewer than
a majority of the directors are Incumbent Directors. “Incumbent Directors” will
mean directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of those directors whose election or
nomination was not in connection with any transactions described in subsections
(i), (ii), or (iii) or in connection with an actual or threatened proxy contest
relating to the election of directors of the Company.
 
(c)  Disability. “Disability” means that Executive has been unable to perform
his or her Company duties as the result of his or her incapacity due to physical
or mental illness, and such inability, at least twenty-six (26) weeks after its
commencement or one hundred eighty (180) days in any consecutive twelve (12)
month period, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to Executive or Executive’s legal
representative (such agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may only be effected after at
least thirty (30) days’ written notice by the Company of its intention to
terminate Executive’s employment. In the event that Executive resumes the
performance of substantially all of his or her duties hereunder before the
termination of his or her employment becomes effective, the notice of intent to
terminate will automatically be deemed to have been revoked.
 
(d)  Good Reason. “Good Reason” means without Executive’s express written
consent (a) a significant reduction of Executive’s duties, position or
responsibilities relative to Executive’s duties, position or responsibilities in
effect immediately prior to such reduction, or the removal of Executive from
such position, duties and responsibilities, unless Executive is provided with
comparable or greater duties, position and responsibilities; provided, however,
that a reduction in duties, position or responsibilities solely by virtue of the
Company being acquired and made part of a larger entity, whether as a
subsidiary, business unit or otherwise (as, for example, when the Chief
Financial Officer of the Company remains the Chief Financial Officer of the
Company following a Change in Control where the Company becomes a wholly owned
subsidiary of the acquiror, but is not made the Chief Financial Officer of the
acquiring corporation) will not constitute “Good Reason;” (b) a reduction by the
Company of Executive’s base salary as in effect immediately prior to such
reduction, other than substantially similar reductions that are also applied to
substantially similar employees of the Company; or (c) the imposition of a
requirement for the relocation of Executive to a facility or location more than
fifty (50) miles from Executive’s current work location.
 
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(e)  Termination Date. “Termination Date” will mean the effective date of any
notice of termination delivered by one party to the other hereunder pursuant to
Section 8(b) or otherwise.
 
2.  Term of Agreement. This Agreement is effective as of the Effective Date and
will remain in effect through the first anniversary of the Effective Date,
except in the event of a Change in Control during such term, in which case this
Agreement will remain in effect through, and automatically terminate upon, the
completion of all payments under the terms of this Agreement. No severance
benefits will be paid under this Agreement with respect to any termination of
employment effective after the date of the Agreement’s termination.
 
3.  At-Will Employment. The Company and Executive acknowledge that Executive’s
employment is and will continue to be at-will, as defined under applicable law.
If Executive’s employment terminates for any reason, Executive will not be
entitled to any payments, benefits, damages, awards or compensation other than
as provided by this Agreement, or as may otherwise be established under the
Company’s then existing employee benefit plans or policies at the time of
termination.
 
4.  Severance Benefits.
 
(a)  Termination Within Twelve Months Following a Change of Control. If within
the twelve (12) month period following a Change of Control, the Company (or any
parent or subsidiary of the Company) terminates Executive’s employment for
reasons other than Cause, death or Disability or Executive resigns from such
employment for Good Reason, then, subject to Executive complying with Section
4(d), Executive will receive the following severance benefits from the Company:
 
(i)  Executive will be entitled to receive a lump sum cash payment equal to six
(6) months of Executive’s base salary, as in effect on the Termination Date.
 
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(ii)  Twenty-five percent (25%) of Executive’s then outstanding, unvested equity
compensation awards will become fully vested and, if applicable, exercisable.
The period over which such equity compensation awards may be exercised will be
governed by the applicable provisions of the Company’s equity award plans and
related equity award agreements.
 
(iii)  The Company will reimburse Executive for the premiums paid for the
continued coverage of Executive (and any eligible dependents) under the
Company’s medical, dental and vision plans at the same level of coverage in
effect on the Termination Date until the earlier of (a) six (6) months after the
Termination Date (provided Executive validly elects to continue coverage under
the Consolidated Omnibus Budget Reconciliation Act (“COBRA”)), or (b)  the date
upon which Executive and Executive’s eligible dependents become covered under
similar plans.
 
(b)  Termination Apart from a Change of Control. If Executive’s employment with
the Company terminates prior to a Change of Control or after twelve (12) months
following a Change of Control, then Executive will not be entitled to receive
severance or other benefits hereunder, but may be eligible for those benefits
(if any) as may then be established under the Company’s then existing severance
and benefits plans and policies at the time of such termination or pursuant to a
written agreement between Executive and the Company.
 
(c)  Accrued Wages and Vacation; Expenses. Without regard to the reason for, or
the timing of, Executive’s termination of employment: (i) the Company will pay
Executive any unpaid base salary due for periods prior to the Termination Date;
(ii) the Company will pay Executive all of Executive’s accrued and unused
vacation through the Termination Date; and (iii) following submission of proper
expense reports by Executive, the Company will reimburse Executive for all
expenses reasonably and necessarily incurred by Executive in connection with the
business of the Company prior to the Termination Date. These payments will be
made promptly upon termination and within the period of time mandated by law.
 
(d)  Release and Non-Disparagement Agreement. As a condition to receiving
severance benefits pursuant to Section 4(a) of this Agreement, Executive will be
required to sign (and any such agreement must become effective) a waiver and
release of all claims arising out of his or her employment with the Company and
its subsidiaries and affiliates (including termination therefrom) and an
agreement not to disparage the Company, its directors, or its executive
officers, in a form reasonably satisfactory to the Company.
 
5.  Section 409A.
 
(a)  Amendment. This Agreement will be deemed amended to the extent necessary to
avoid imposition of any additional tax or income recognition prior to actual
payment to Employee under Code Section 409A and any temporary or final Treasury
Regulations and guidance promulgated thereunder and the parties agree to
cooperate with each other and to take reasonably necessary or desirable steps in
this regard.
 
(b)  Distributions. In the event that the Company determines that Section 409A
of the Code, or its regulations and other guidance issued thereunder, would
require the delay in the payment of any severance benefits under Section 4(a) to
Executive in the event Executive is considered to be a “Specified Employee” (as
defined below), the Company will, irrespective of any election to the contrary
or any other term of the Agreement, delay the payment of severance benefits
until the date which is at least six (6) months after the Termination Date. For
the purposes of this Section 5(b), the term “Specified Employee” has the meaning
given such term in Section 409A(a)(2)(B)(i) of the Code.
 
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6.  Limitation on Payments. In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to Executive (i) constitute
“parachute payments” within the meaning of Section 280G of the Code, and
(ii) would be subject to the excise tax imposed by Section 4999 of the Code (the
“Excise Tax”), then Executive’s benefits under this Agreement will be either
 
(a)  delivered in full, or
 
(b)  delivered as to such lesser extent which would result in no portion of such
benefits being subject to the Excise Tax,
 
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the Excise Tax, results in the receipt by
Executive on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code.
 
Unless the Company and Executive otherwise agree in writing, any determination
required under this Section will be made in writing by the Company’s independent
public accountants (the “Accountants”), whose determination will be conclusive
and binding upon Executive and the Company for all purposes. In the event of a
reduction in benefits hereunder, Executive will be given the choice of which
benefits to reduce. For purposes of making the calculations required by this
Section, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Section 280G and 4999 of the Code.
The Company and Executive will furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a
determination under this Section. The Company will bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section.
 
7.  Successors.
 
(a)  Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
will assume the Company’s obligations under this Agreement and agree expressly
to perform the Company’s obligations under this Agreement in the same manner and
to the same extent as the Company would be required to perform such obligations
in the absence of a succession. For all purposes under this Agreement, the term
“Company” will include any successor to the Company’s business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
 
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(b)  Executive’s Successors. Without the written consent of the Company,
Executive will not assign or transfer this Agreement or any right or obligation
under this Agreement to any other person or entity. Notwithstanding the
foregoing sentence, the terms of this Agreement and all rights of Executive
hereunder will inure to the benefit of, and be enforceable by, Executive’s
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
 
8.  Notices.
 
(a)  General. Notices and all other communications contemplated by this
Agreement will be in writing and will be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of Executive, mailed notices
will be addressed to Executive at the home address which Executive most recently
communicated to the Company in writing. In the case of the Company, mailed
notices will be addressed to its corporate headquarters, and all notices will be
directed to the attention of its Secretary.
 
(b)  Notice of Termination. Any termination by the Company for Cause or by
Executive as a result of Good Reason will be communicated by a notice of
termination to the other party hereto given in accordance with this Section.
Such notice will indicate the specific termination provision in this Agreement
relied upon, will set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so indicated, and
will specify the Termination Date (which will be not more than 30 days after the
giving of such notice). The failure by Executive to provide the notice or to
include in the notice any fact or circumstance which contributes to a showing of
Good Reason will not waive any right of Executive hereunder or preclude
Executive from asserting such fact or circumstance in enforcing his rights
hereunder.
 
9.  Arbitration.
 
(a)  Any dispute or controversy arising out of, relating to, or in connection
with this Agreement, or the interpretation, validity, construction, performance,
breach, or termination thereof, will be settled by binding arbitration to be
held in Santa Clara, California, in accordance with the National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association (the “Rules”). The arbitrator may grant injunctions or other relief
in such dispute or controversy. The decision of the arbitrator will be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator’s decision in any court having jurisdiction.
 
(b)  The arbitrator(s) will apply California law to the merits of any dispute or
claim, without reference to conflicts of law rules. The arbitration proceedings
will be governed by federal arbitration law and by the Rules, without reference
to state arbitration law. Executive hereby consents to the personal jurisdiction
of the state and federal courts located in California for any action or
proceeding arising from or relating to this Agreement or relating to any
arbitration in which the parties are participants.
 
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(c)  Executive understands that nothing in this Section modifies Executive’s
at-will employment status. Either Executive or the Company can terminate the
employment relationship at any time, with or without Cause.
 
(d)  EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF,
RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION,
VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING
ARBITRATION, CONSTITUTES A WAIVER OF EXECUTIVE’S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EXECUTIVE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING
CLAIMS:
 
(i)  ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF
CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND
FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF
EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR
INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND
DEFAMATION.
 
(ii)  ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL
STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF
1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF
1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT,
THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et
seq;
 
(iii)  ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING
TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
 
10.  Miscellaneous Provisions.
 
(a)  Effect of Any Statutory Benefits. To the extent that any severance benefits
are required to be paid to Executive upon termination of employment with the
Company as a result of any requirement of law or any governmental entity in any
applicable jurisdiction, the aggregate amount of severance benefits payable
pursuant to Section 4 hereof will be reduced by such amount.
 
(b)  No Duty to Mitigate. Executive will not be required to mitigate the amount
of any payment contemplated by this Agreement, nor will any such payment be
reduced by any earnings that Executive may receive from any other source.
 
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(c)  Waiver. No provision of this Agreement may be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by Executive and by an authorized officer of the Company (other than
Executive). No waiver by either party of any breach of, or of compliance with,
any condition or provision of this Agreement by the other party will be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
 
(d)  Integration. This Agreement and any outstanding agreements relating to
Executive’s equity awards represent the entire agreement and understanding
between the parties as to the subject matter herein and supersede all prior or
contemporaneous agreements, whether written or oral, with respect to this
Agreement and any stock option agreement or any restricted stock purchase
agreement, provided, that, for clarification purposes, this Agreement will not
affect any agreements between the Company and Executive regarding intellectual
property matters or confidential information of the Company.
 
(e)  Choice of Law. The validity, interpretation, construction and performance
of this Agreement will be governed by the internal substantive laws, but not the
conflicts of law rules, of the State of California.
 
(f)  Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement will not affect the validity or enforceability of
any other provision hereof, which will remain in full force and effect.
 
(g)  Tax Withholding. All payments made pursuant to this Agreement will be
subject to withholding of applicable income, employment and other taxes.
 
(h)  Counterparts. This Agreement may be executed in counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
 
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.
 

      COMPANY:  GENESIS MICROCHIP INC.  
   
   
  By:    
Title: 

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EXECUTIVE:
     

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Signature
             

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Printed Name

 
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