EXHIBIT 10.3

[HPL Letterhead]

December 9, 2001

Private & Confidential

Mr. Michael
P. Scarpelli
471 Montori Court
Pleasanton, CA 94566

Re:
Employment with HPL

Dear
Mike:

Subject
to the approval of the Board of Directors, HPL Technologies, Inc. or its designated subsidiary (the "Company" or "HPL") is pleased to offer you a position as Vice
President, Corporate Development, on the terms set forth in this letter agreement (this "Agreement"), effective upon your acceptance by execution of a counterpart copy of this Agreement where
indicated below.

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We
are excited and pleased to have you join the HPL team. We confident that we can work together to successfully capitalize on our substantial market opportunity.

|Sincerely,                                                                  |  |       |  |                  
|--------------------------------------------------------------------------- |  | ----- |  | -----------------
|/s/Y. DAVID LEPEJIANY. David Lepejian
President and Chief Executive Officer |  |       |  |                  
|Acknowledged, Accepted and Agreed:
Michael P. Scarpelli                     |  |       |  |                  
|/s/MICHAEL P. SCARPELLI                                                     |  | Date: |  | December 15, 2001

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GENERAL RELEASE

This GENERAL RELEASE ("Release"), is made this            day of December, 2001
(the
"Effective Date") by Michael P. Scarpelli ("Employee") in favor of HPL Technologies, Inc., a Delaware corporation or its designated subsidiary
("theCompany").

RECITALS

A.
On December            , 2001, the parties hereto entered into an Employment Agreement ("Agreement") pursuant to which the parties
agreed that, among other things, upon a termination without Cause, Employee would become eligible to receive certain benefits in exchange for Employee's release of the Company and its subsidiaries and
affiliates from all claims which Employee may have against the Company and its subsidiaries and affiliates as of his termination date.

B.
The parties desire to dispose of, fully and completely, all claims which Employee may have against the Company and its subsidiaries and affiliates in the manner set forth in this
Release.

NOW,
THEREFORE, in consideration of the benefits conferred on Employee pursuant to the Agreement referenced above and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Employee hereby agrees as follows:

1.Release.Employee, for himself and his heirs, successors and assigns, fully and forever releases,
relinquishes, acquits and discharges the Company, its officers, directors, employees, shareholders, attorneys, accountants, other professionals, insurers and agents of the other (collectively
"Agents"), and all entities related to each party, including, but not limited to, heirs, executors, administrators, personal representatives, assigns,
parent, subsidiary and sister corporations, affiliates, partners and co-venturers (collectively "Related Entities"), from all rights,
claims, demands, actions, causes of action, liabilities and obligations of every kind, nature and description whatsoever, Employee now has, owns or holds or has at anytime had, owned or held or may
have against the Company, Agents or Related Entities from any source whatsoever, whether or not arising from or related to the facts recited in this Release. Employee specifically releases and waives
any and all claims arising under any express or implied contract, rule, regulation or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991,
the Americans with Disabilities Act, the California Fair Employment and Housing Act, and the Age Discrimination in Employment Act, as amended ("ADEA").

2.Section 1542 Waiver.This Release is intended as a full and complete release and discharge of any and
all claims that Employee may have against the Company, Agents or Related Entities. In making this Release, Employee intends to release the Company, Agents and Related Entities from liability of any
nature whatsoever for any claim of damages or injury or for equitable or declaratory relief of any kind, whether the claim, or any facts on which such claim might be based, is know or unknown to him.
Employee expressly waives all rights under §1542 of the Civil Code of the State of California, which Employee understands provides as follows:



Employee
acknowledges that he may discover facts different from or in addition to those which he now believes to be true with respect to this Release. Employee agrees that this Release
shall remain effective notwithstanding the discovery of any different or additional facts.

3.Waiver of Certain Claims.Employee acknowledges that he has been advised in writing of his right to consult
with an attorney prior to executing the waivers set out in this Release, and that he has

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been given a twenty-one day period in which to consider entering into the release of ADEA claims, if any. In addition, Employee acknowledges that he has been informed that he may revoke a
signed waiver of the ADEA claims for up to 7 days after executing this Release.

4.No Undue Influence.This Release is executed voluntarily and without any duress or undue influence. Employee
acknowledges he has read this Release and executed it with his full and free consent. No provision of this Release shall be construed against any party by virtue of the fact that such party or its
counsel drafted such provision or the entirety of this Release.

5.Governing Law.This Release is made and entered into in the State of California and accordingly the rights
and obligations of the parties hereunder shall in all respects be construed, interpreted, enforced and governed in accordance with the laws of the State of California as applied to contracts entered
into by and between residents of California to be wholly performed within California.

6.Severability.If any provision of this Release is held to be invalid, void or unenforceable, the balance of
the provisions of this Release shall, nevertheless, remain in full force and effect and shall in no way be affected, impaired or invalidated.

IN
WITNESS WHEREOF, the undersigned has executed this General Release at San Jose, California as of the date first above written.

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