Document:

Employment Agreement by and between DrugMax Inc. and Jugak K. Taneja

 Exhibit 10.3 
  
 EMPLOYMENT AGREEMENT 
  

THIS EMPLOYMENT AGREEMENT, dated effective as of April 1, 2003 (the “Agreement”), is by and between DrugMax, Inc., a Nevada
corporation (the “Company”), and Jugal K. Taneja (the “Employee”). 
  
 WHEREAS, the Company is a full-line, wholesale distributor of pharmaceuticals, over-the-counter products, health and beauty care aids, and nutritional
supplements; 
  
 WHEREAS, the Company wishes to assure itself of
the services of Employee for the period provided in this Agreement and Employee is willing to serve in the employ of the Company for such period upon the terms and conditions hereinafter set forth. 
  
 NOW THEREFORE, in consideration of the mutual covenants herein contained, the
parties, intending to be legally bound, hereby agree as follows: 
  
 1.
EMPLOYMENT. The Company hereby agrees to employ Employee upon the terms and conditions herein contained, and Employee hereby accepts such employment for the term described below. Employee agrees to serve as the Chairman and
Chief Operating Officer of the Company during the term of this Agreement and shall report to (title). In such capacity, Employee shall have such powers and responsibilities consistent with Employee’s position as the Chairman and Chief Executive
Officer may assign to Employee. Throughout the term of this Agreement, Employee shall devote Employee’s best efforts and substantially all of Employee’s business time and services to the business and affairs of the Company. 
  
 2. TERM OF AGREEMENT. The three (3) year initial term of the employment
under this Agreement shall commence as of the date set forth above (the “Effective Date”). After the expiration of such initial three-year period, the term of Employee’s employment hereunder shall automatically be extended
without further action by the parties for successive one (1) year renewal terms, provided that if either party gives the other party at least thirty (30) days advance written notice prior to the expiration of the then current term of such
party’s intention to not renew this Agreement for an additional term, the Agreement shall terminate upon the expiration of the current term. 
  
 3. SALARY AND BONUS 
  
 a. Employee shall receive an annual base salary during the term of this Agreement of $200,000, payable in installments consistent with the Company’s normal payroll
schedule; provided that the annual base salary shall be subject to periodic review and adjustment by the Compensation Committee and/or the Board of Directors of the Company in its discretion. 
  

 b. Employee shall also be eligible to participate in any executive bonus plan created by the Board of Directors in the
same manner and to the same extent as the other executives of the Company in the discretion of the Board of Directors. 
  
 4. WELFARE AND FRINGE BENEFITS. 
  
 a. Life Insurance. The Company shall pay a maximum of $1,000 per year towards a redeemable life insurance policy on the life of Employee, the proceeds of which
shall be payable to Employee’s family. 
  
 b. Automobile and Other
Allowances. During the term hereof, the Company shall also provide Employee with an automobile allowance of up to $750.00 per month and a club allowance of up $ 300.00 per month and also shall pay the dues on behalf of Employee for one airline
club membership per year. 
  
 c. Expenses. The Company shall reimburse
Employee for all reasonable expenses he incurs in promoting the Company’s business, including expenses for travel, entertainment of business associates, service and usage charges for business use of cellular phones and similar items, upon
presentation by Employee from time to time of an itemized account of such expenditures in a form acceptable to the Company. 
  
 d. Vacation. Employee shall be entitled to an annual vacation of not less than four weeks, during which time his compensation shall be paid in full. 
  
 e. General. Employee shall be eligible to participate in such welfare benefit plans,
programs, practices and policies of the Company as are generally applicable to other employees. Without limiting the foregoing, Employee shall be entitled to such other benefits as the Board of Directors and/or any Compensation and Stock Option
Committee of the Board of Directors may from time to time approve for him. 
  
 5.
TERMINATION 
  
 a. Involuntary Termination. The Company may
terminate Employee’s employment hereunder at any time by giving written notice to Employee of termination. However, if Employee’s employment is terminated by the Company during the term of this Agreement pursuant to this Section
5(a), Employee shall be entitled to receive Employee’s base salary accrued through the date of termination plus one additional year of base salary payable in the same manner as base salary was previously paid to Employee. 
  

 b. Disability. The Company shall be entitled to terminate Employee’s employment immediately if Employee
becomes disabled (as defined below). Upon such termination, the amount Employee shall be entitled to receive from the Company shall be limited to Employee’s base salary accrued through the date of termination and any payments as may be provided
under any long-term disability plan or other disability program or insurance policies maintained or provided by the Company. “Disabled” shall mean that for a period of three (3) consecutive months or an aggregate of four (4) months
in any twelve (12) month period Employee is incapable of fulfilling the duties of his or her position because of physical, mental or emotional incapacity, injury, sickness or disease. Any question as to the existence or extent of the disability upon
which Employee and the Company cannot agree shall be determined by a qualified, independent physician selected by the Company. The determination of any such physician shall be final and conclusive for all purposes. 
  
 c. Termination for Cause. The Company may terminate Employee’s employment
hereunder for Cause (as defined below) immediately without notice. If Employee’s employment is terminated by the Company for Cause, the amount Employee shall be entitled to receive from the Company shall be limited to Employee’s base
salary accrued through the date of termination. 
  
 For purposes
of this Agreement, the term “Cause” shall be limited to (i) embezzlement, fraud, misappropriation of corporate assets or a breach of the covenants set forth in Sections 9, 10 and 11 below; (ii) Employee being arrested
or indicted in connection with a felony; (iii) Employee being arrested or indicted of any lesser crime or offense committed in connection with the performance of Employee’s duties hereunder or involving moral turpitude; (iv) the habitual
failure or refusal by Employee to perform Employee’s duties hereunder after being provided with written warnings and a reasonable period to cure; or (v) chronic absenteeism. 
  
 d. Voluntary Termination by Employee. If Employee resigns or otherwise voluntarily terminates Employee’s employment before the
end of the current term of this Agreement, other than pursuant to the provisions of Section 5(e) of this Agreement, the amount Employee shall be entitled to receive from the Company shall be limited to Employee’s base salary
accrued through the date of termination. 
  
 e. Termination for Good Reason by
Employee. Employee may terminate this Agreement for “Good Reason” (as defined below), provided that he shall first provide the Company with prior written notice, which notice shall state with specificity the reason for the termination
and provide the Company with thirty (30) days from and after the giving of such notice to cure the breach. If the Company fails to cure the breach within such thirty days, Employee shall be entitled to receive Employee’s base salary accrued
through the date of termination plus one additional year of base salary payable in the same manner as base salary was previously paid to Employee. For purposes of Section 5(e), the Executive shall have “Good Reason” to
terminate his employment hereunder if such termination shall be the result of: 
  

 (i) any material demotion regarding Employee’s status, title, authorities or responsibilities (including reporting
responsibilities) under this Employment Agreement; or 
  
 (ii) the reassignment of
Employee to a location more than fifty (50) miles from the location where he presently works. 
  
 6. DEATH. If Employee dies during the term of this Agreement, the Company shall pay to Employee’s estate a lump sum payment equal to the sum of Employee’s base salary accrued through the date
of death plus the total unpaid amount of any bonuses earned. In addition, the death benefits payable by reason of Employee’s death under any retirement, deferred compensation or other employee benefit plan maintained by the Company shall be
paid to the beneficiary designated by Employee in accordance with the terms of the applicable plan or plans. 
  
 7. CHANGE OF CONTROL. 
  
 a.
Salary. Upon a Change in Corporate Control (as defined below), if there is a reduction in the Employee’s base salary, the Employee shall have the option to terminate his Employment and should Employee elect to terminate his Employment,
the Company shall be obligated to make a series of twelve (12) monthly payments to the Employee. Each monthly payment shall be equal to the sum of one-twelfth ( 1/12th) of the Employee’s annual base
salary, as in effect on the date of termination, provided that if the Employee obtains a replacement position with any new employer (including a position as an officer, employee, consultant, or agent, or self-employment as a partner or sole
proprietor), the payments shall be reduced by all amounts the Employee receives as compensation for services performed during such period. 
  
 b. Stock Options. Further, upon a Change in Corporate Control, the vesting of any stock options granted to the Employee under the terms of the Company’s Stock
Option Plan shall become immediately vested in full and exercisable in full. 
  
 c. Definition. For purposes of this Agreement, a “Change in Corporate Control” shall include any of the following events: i. The acquisition in one or more transactions of more than forty percent (40%) of the Company’s
outstanding Common Stock by any corporation, or other person or group (within the meaning of Section 14(d)(3) of the Securities Exchange Act of 1934, as amended), with the exclusion of Jugal K. Taneja or any person, group, corporation, or affiliates
thereof, which are controlled by Jugal K. Taneja. 
  

	 	ii.	 	Any merger or consolidation of the Company into or with another corporation in which the Company is not the surviving entity, or any transfer or sale of substantially all of the
assets of the Company or any merger or consolidation of the Company into or with another corporation in which the Company is the surviving entity and, in connection with such merger or consolidation, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for other stock or securities of any other person, or cash, or any other property, with the exclusion of any mergers with any person, group, corporation, or affiliates thereof which are controlled by Jugal K.
Taneja 

  

	 	iii.	 	Any person, or group of persons, announces a tender offer for at least forty percent (40%) of the Company’s Common Stock, with the exclusion of Jugal K. Taneja or any person,
group, corporation, or affiliates thereof, which are controlled by Jugal K. Taneja. 

  
 d. Limitation. Notwithstanding anything else in this Agreement, the amount of severance compensation payable to the Employee as a result of a Change in Corporate Control under this Section 7, or
otherwise, shall be limited to the maximum amount the Company would be entitled to deduct pursuant to Section 280G of the Internal Revenue Code of 1986, as amended. 
  
 8. WITHHOLDING. The Company shall, to the extent permitted by law, have the right to withhold and deduct from
any payment hereunder any federal, state or local taxes of any kind required by law to be withheld with respect to any such payment. 
  
 9. PROTECTION OF CONFIDENTIAL INFORMATION. Employee agrees that Employee shall keep all confidential or proprietary information of the Company or relating
to its business (including, but not limited to, information regarding the Company’s customers, vendors, pricing policies, methods of operation, proprietary computer programs and trade secrets) confidential, and that Employee shall not (except
with the Company’s prior written consent), while in the employ of the Company or thereafter, disclose any such confidential information to any person, firm, corporation, association or other entity, other than in furtherance of Employee’s
duties hereunder, and then only to those with a need to know. Employee shall not make use of any such confidential information for Employee’s own purposes or for the benefit of any person, firm, corporation, association or other entity (except
the Company) under any circumstances during or after the term of Employee’s employment. The foregoing shall not apply to any information which, is generally disclosed to the public by the Company or is otherwise in the public domain at the time
of disclosure. 
  
 Employee recognizes that because
Employee’s work for the Company shall bring Employee into contact with confidential and proprietary information of the Company, the restrictions of this Section 9 are required for the reasonable protection of the Company and its
investments and for the Company’s reliance on and confidence in Employee. 
  
 Further, Employee agrees that upon request or upon termination of this Agreement (for any reason), Employee shall deliver to the Company any and all 
  

 drawings, notes, documents and other materials which he has received from the Company or which have originated from the
employment activity. 
  
 10. COVENANT NOT TO COMPETE 
  
 a. Employee hereby agrees that Employee shall not, either during the employment term or
during a period of one (1) year from the time Employee’s employment under this Agreement ceases or is terminated (for whatever reason), engage in any business activities on behalf of any enterprise which competes with the Company. Employee
shall be deemed to be engaged in such competitive business activities if Employee participates in such a business enterprise as an employee, officer, director, consultant, agent, partner, proprietor, or other participant; provided that the ownership
of no more than 2 percent of the stock of a publicly traded corporation engaged in a competitive business shall not be deemed to be engaging in competitive business activities. 
  
 b. Employee agrees that Employee shall not for Employee or for any other person, firm, corporation, partnership or other entity, for a
period of one (1) year from the time Employee’s employment under this Agreement ceases or is terminated (for whatever reason), directly or indirectly 
  
 c. i. solicit any sales agent, employee, former employee who was employed by the Company in the preceding 180 days or full-time consultant of the Company for the purposes
of hiring or retaining such sales agent, employee or consultant, 
  

	 	ii.	 	contact any present or prospective client of the Company to solicit such a person to enter into a contract or arrangement with any competitor of the Company, or

  

	 	iii.	 	make known the names and/or addresses of such clients or any information relating in any manner to the Company’s trade or business relationships with such clients.

  
 d. Employee further agrees that Employee shall not, either
during the employment term or at any time thereafter, in any way disparage the Company. 
  
 11. OWNERSHIP OF DEVELOPMENTS 
  
 a.
All copyrights, patents, trade secrets, or other intellectual property rights associated with any ideas, concepts, techniques, inventions, processes, or works of authorship develop or created by Employee during the course of performing work for the
Company or its clients (collectively, the “Work Product”) shall belong exclusively to the Company and shall, to the extent possible, be considered a work made by Employee for hire for the Company within the meaning of Title 17 of
the United States Code. To the extent the Work Product may not be considered work made by Employee for hire for the Company, Employee agrees to assign and automatically assigns to the Company at the time of creation of the Work Product, without any
requirement of further consideration, any right, title, or interest Employee may have in such Work Product. Upon the request of the Company, Employee 
  

 shall take such further actions, including execution and delivery of instruments of conveyance, as may be appropriate to
give full and proper effect to such assignment. 
  
 b. Solely for purposes of
Sections 9, 10, 11 and 12 hereof only, the term “Company” also shall include any existing or future subsidiaries of the Company that are operating during the time periods described herein and any other entities that
directly or indirectly, through one or more intermediaries, control, are controlled by or are under common control with the Company during the periods described herein. 
  
 12. INJUNCTIVE RELIEF 
  
 a. Employee acknowledges and agrees that it would be difficult to fully compensate the Company for damages resulting from the breach or threatened breach of the covenants
set forth in Sections 9, 10 and 11 of this Agreement and accordingly agrees that the Company shall be entitled to temporary and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent
injunctions, to enforce such provisions in any action or proceeding instituted in any court having subject matter jurisdiction, without having to post a bond or other security. This provision with respect to injunctive relief shall not, however,
diminish the Company’s right to claim and recover damages. Employee agrees to pay to the Company all costs and expenses incurred by the Company relating to the enforcement of the terms of Sections 9, 10 and 11 hereof, including
reasonable fees and disbursements of counsel (both at trial and appellate proceedings). 
  
 b. It is expressly understood and agreed that although the parties consider the restrictions contained in this Agreement to be reasonable, if a court determines that the time or territory or any other restriction contained in this Agreement
is an unenforceable restriction on the activities of Employee, no such provision of this Agreement shall be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such extent as such court may judicially
determine or indicate to be reasonable. 
  
 c. Employee acknowledges and confirms
that (a) the restrictive covenants contained in Sections 9 and 10 hereof are reasonably necessary to protect the legitimate business interests of the Company, and (b) the restrictions contained in Sections 9 and 10 hereof
(including without limitation the length of the term of the provisions of Sections 9 and 10 hereof) are not overbroad, overlong, or unfair and are not the result of overreaching, duress or coercion of any kind. Employee further
acknowledges and confirms that Employee’s full, uninhabited and faithful observance of each of the covenants contained in Sections 9 and 10 hereof shall not cause Employee any undue hardship, financial or otherwise, and that
enforcement of each of the covenants contained herein shall not impair Employee’s ability to obtain employment commensurate with Employee’s abilities and on terms fully acceptable to Employee or otherwise to obtain income required for the
comfortable support of Employee and Employee’s family and the satisfaction of the needs of Employee’s creditors. Employee acknowledges and confirms that Employee’s special knowledge of the business of the Company is such as would
cause the Company serious injury or loss if Employee were to use such ability and knowledge to the benefit of a competitor or were to compete with the Company in violation of the terms of Sections 9 and 10 hereof. Employee 

 

 further acknowledges that the restrictions contained in Sections 9 and 10 hereof are intended to be, and
shall be, for the benefit of and shall be enforceable by, the Company’s successors and assigns. 
  
 d. If Employee shall be in violation of any provision of Sections 9 and 10, then each time limitation set forth in the applicable section shall be extended for a period of time equal to the period of
time during which such violation or violations occur. If the Company seeks injunctive relief from such violation in any court, then the time limitations shall be extended for a period of time equal to the pendency of such proceeding including all
appeals by Employee. 
  
 13. SEPARABILITY. If any provision
of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. 
  
 14. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of Employee and the assigns and successors of the Company, but neither this Agreement nor any rights hereunder shall be assignable or otherwise subject to hypothecation by Employee. 
  
 15. ENTIRE AGREEMENT. This Agreement represents the entire agreement of
the parties and shall supersede any and all previous contracts, arrangements or understandings between the Company and Employee. The Agreement may be amended at any time by mutual written agreement of the parties hereto. 
  
 16. GOVERNING LAW; VENUE. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of the State of Florida, other than the conflict of laws provisions of such laws. Hillsborough or Pinellas County, Florida shall be the proper venues for any litigation arising out of this
Agreement. 
  
 17. COUNTERPARTS. This Agreement may be executed in
one or more counterparts all of which taken together shall constitute one and the same instrument. 
  
 18. NOTICE. Any notice or other communication which is required or permitted under this Agreement shall be in writing and shall be deemed to have been given, delivered, or made, as the case may be
(notwithstanding lack of actual receipt by the addressee) (i) on the date sent if delivered personally or by cable, telecopy, telegram, telex, or facsimile (which is confirmed), (ii) three (3) business days after having been deposited in the United
States mail, certified or registered, return receipt requested, sufficient postage affixed and prepaid, or (iii) one (1) business day after having been deposited with a nationally recognized overnight courier service (such as by way of example, but
not limitation, U.S. Express Mail, Federal Express, or Airborne), to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): 
  

	 If to the Company:
	  	DrugMax, Inc.
	 	  	25400 U.S. Hwy 19 N. Ste 137
	 	  	Clearwater, FL 33763
	 	  	Attention: Chief Executive Officer

  

	 	 	 (727) 533-0431

	 	 	 	 	 Fax (727) 531-1280

		
	 With a copy to Counsel:
	 	 Shumaker, Loop & Kendrick LLP

	 	 	101 E. Kennedy Blvd. Suite 2800
	 	 	 Tampa, Florida 33602

	 	 	 Attention: Julio Esquivel

  

	 	 	If to the Employee:        	 	

	 	 	 	 	

	 	 	 	 	

	 	 	 	 	Fax	 	

  
 IN WITNESS WHEREOF,
the Company has caused this Agreement to be duly executed, and the Employee has hereunto set Employee’s hand, as of the day and year first above written. 
  

	DRUGMAX, INC.
		
	 By:
	 	 /s/    WILLIAM L.
LAGAMBA        

	 Name:
	 	William L. LaGamba
	 Title:
	 	President
	
	 EMPLOYEE:
  

		
	 	 	 /s/    JUGAL K.
TANEJA        

	 Name:
	 	Jugal K. TanejaSettlement Agreement and Release with James E. Donegan

 EXHIBIT 10.21 
  
 SETTLEMENT AGREEMENT AND RELEASE 
  
 This Settlement Agreement and Release (“Agreement”) is made by and between Genesis Microchip Inc. (including any
company or organization that Genesis Microchip Inc. has acquired in the past and any subsidiary or affiliate of Genesis Microchip Inc.) (the “Company”), and James E. Donegan (“Employee”) (collectively referred to as the
“Parties”). 
  
 WHEREAS, Employee was employed by the
Company; 
  
 WHEREAS, the Company and Employee have entered into a
Confidentiality and Property Rights Agreement (the “Confidentiality Agreement”); 
  
 WHEREAS, the Company and Employee have entered into an Indemnification Agreement, dated October 18, 2001 (collectively referred to as the “Indemnification Agreement”); 
  
 WHEREAS, the Company and Employee mutually determined that a prompt
termination of the employment relationship would be in the best interest of the Company, and therefore Employee resigned effective July 19, 2003 (the “Termination Date”); 
  
 WHEREAS, the Company and Employee entered into a Stock Option Agreement granting Employee, as of June 26, 2002, the option
to purchase Two Hundred Thousand (200,000) shares of the Company’s common stock subject to the terms and conditions of the Company’s 1997 Employee Stock Option Plan and the Stock Option Agreement (the “Employee Stock Option
Agreements”); 
  
 WHEREAS, the Company and Employee entered
into a Stock Option Agreement granting Employee, as of October 1, 2001, the option to purchase Seven Thousand, Five Hundred (7,500) shares of the Company’s common stock, subject to the terms and conditions of the Company’s 1997
Non-Employee Stock Option Plan, and the Stock Option Agreement (the “Non-Employee Stock Option Agreements”) (the Employee Stock Option Agreements and the Non-Employee Stock Option Agreements are collectively referred to herein as the
“Stock Option Agreements”) and 
  
 WHEREAS, the Parties,
and each of them, wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions and demands that the Employee may have against the Company as defined herein, including, but not limited to, any and all claims
arising or in any way related to Employee’s employment with, or separation from, the Company; 
  
 NOW THEREFORE, in consideration of the premises and the agreements made herein, the Parties hereby agree as follows: 
  
 COVENANTS 
  
 1. Resignation. Employee hereby resigns from his position as the
Company’s Chief Executive Officer and President and any or all other positions that may have at any time been held by Employee with the Company or any of its affiliates, and as Chairman of the Board and his position as a member of the
Company’s Board of Directors, effective the Termination Date. 
  
 2. Consideration. 
  
 (a) Cash Payment. The
Company agrees to pay Employee a lump sum equal to six (6) months of his base salary, less applicable withholding (the “Severance Payment”). The Severance Payment shall be made to Employee within ten days after the Effective Date of this
Agreement. 
  
 (b) COBRA. The Company shall reimburse
Employee for the payments he makes for COBRA coverage for a period of six (6) months beginning August 1, 2003, or until Employee has secured other employment with comparable coverage, whichever occurs first, provided Employee timely elects and pays
for COBRA coverage. COBRA reimbursements shall be made by the Company to Employee within fifteen (15) days of Employee’s provision to the Company of documentation substantiating his payments for COBRA coverage. 
  
 (c) Stock Options. 
  

	 	i.	 	        Additional Vesting. As additional consideration for the release of claims as set forth herein, the Company agrees to give
Employee the opportunity to earn up to a maximum of twelve months of additional vesting on Employee’s outstanding options to purchase Company common stock (the “Options”) represented by the Stock Option Agreements, subject to certain
restrictions. The Compensation Committee of the Company’s Board of Directors (the “Committee”) will meet with Employee in person or by telephone on a rolling basis every two months, commencing two months after July 31, 2003 and ending
one year from July 31, 2003. 

	 	  	 	Employee agrees to make himself reasonably available in person or by telephone to meet with the Committee at a mutually agreed upon time and place, at which time Employee will
provide information regarding communications, if any, he has had regarding the Company in the prior two-month period (the “Review Period”). The Committee agrees to meet with Employee every two months in person or by telephone, on a date no
later than thirty (30) days after the last day of the second month of the applicable Review Period in order to assess Employee’s communications, if any, regarding the Company during such period. If the Committee determines in its sole and
absolute discretion that Employee’s communications, if any, regarding the Company are acceptable, two months of the Options will vest and become exercisable as if Employee had continued providing services to the Company for such two-month
Review Period and Employee will be eligible to continue to earn additional vesting in two-month increments. If during the initial Review Period or at any time thereafter, the Committee determines that Employee’s communications regarding the
Company are not acceptable, there will be no additional vesting and all future opportunities for additional vesting of the Options will be permanently forfeited, including any opportunity for accelerated vesting provided for pursuant to Paragraph
2(c)(ii) below. Unless the Committee and Employee agree to an alternate meeting date after a Review Period, if the Committee fails to meet with Employee on a date no later than thirty (30) days after the last day of the second month of the Review
Period due to the Committee’s failure to propose a meeting date, two months of the Options will vest and become exercisable as if Employee had continued providing services to the Company. However, upon the request of the Committee, Employee
agrees that he shall nonetheless make himself reasonably available to meet in person or by telephone with the Committee at a mutually agreed upon time and place, at which time Employee will provide information regarding communications, if any, he
has had regarding the Company in the preceding Review Period so that the Committee may assess Employee’s communications. The Parties agree that no options will be impacted by truthful testimony provided in a formal hearing or deposition in a
court or regulatory proceeding. 

  

	 	ii.	 	        Change of Control. In the event of a sale or merger of the Company in which the Company’s shareholders do not control
more than fifty percent (50%) of the voting equity following such sale or merger, occurring within twelve (12) months of the Effective Date of this Agreement and assuming that the Committee has not determined that Employee’s communications
regarding the Company are not acceptable, under Paragraph 2(c)(i), the remaining portion of the Options eligible for additional vesting pursuant to Paragraph 2(c)(i), if any, shall immediately vest and become exercisable immediately preceding the
change of control transaction without further Committee meetings to determine the acceptability of Employee’s communications related to the Company. In no event shall Paragraphs 2(c)(i) and 2(c)(ii), individually or read in combination with one
another, be construed to provide more than a maximum of twelve (12) months of additional vesting in the Options beyond the number of shares vested as of the Termination Date. 

  

	 	iii.	 	        Exercisability of Vested Options. Employee’s period to exercise his Options, to the extent vested, shall be extended to
July 31, 2004. The terms of the existing Stock Option Agreements shall continue to govern all other aspects of Employee’s exercise and vesting of Options, and if applicable, the Company’s right to repurchase any common stock issued
pursuant to such Options. 

  
 (d) Attorneys’
Fees. The Company agrees to reimburse Employee for legal fees and costs incurred by Employee in connection with the preparation of this Agreement up to a maximum amount of Ten Thousand Dollars ($10,000), less applicable withholdings at the
supplemental withholding rates (the “Attorneys’ Fees Payment”). The Attorneys’ Fees Payment shall be made by the Company to Employee in a lump sum, less applicable withholdings at the supplemental withholding rates, within ten
(10) days of Employee’s provision to the Company of documentation substantiating his payments for legal fees and costs in connection with the preparation of this Agreement. 
  
 3. Benefits. Employee’s health insurance benefits with the Company will cease on July 31, 2003, subject to the
benefits described in paragraph 2(b), and subject to Employee’s right to continue his health insurance coverage under COBRA after expiration of the benefits described in paragraph 2(b). All other benefits and incidents of employment, including,
but not limited to paid time off, ceased on the Termination Date. 
  
 4. Trade Secrets and Confidential Information/Company Property. Employee reaffirms and agrees to observe and abide by the terms of the Confidentiality Agreement, specifically including the provisions therein regarding nondisclosure
of the Company’s trade secrets and confidential and proprietary information, and non-solicitation of Company employees. Employee’s signature below 

 constitutes his certification under penalty of perjury that he has returned all documents and other items provided to
Employee by the Company, developed or obtained by Employee as a result of his employment or service on the Board of Directors, or otherwise belonging to the Company, except as otherwise provided herein. 
  
 5. Payment of Compensation. Employee acknowledges and represents that
the Company has paid all salary, wages, bonuses, accrued vacation, housing allowances, relocations costs, interest, severance, outplacement costs, fees, stock, stock options, vesting, commissions and any and all other benefits and compensation due
to Employee, once the above referenced payments and benefits are provided. Employee has thirty (30) days from the Termination Date to file any remaining expense reports and the Company shall have two (2) weeks from the date of receipt of such
expense reports to make any appropriate reimbursements to Employee, pursuant to the Company’s regular policies and practices related to expense reimbursement. 
  
 6. Trading in Company Stock. Employee acknowledges and agrees that he is in possession of material nonpublic Company
information and that: (a) he shall not trade in Company stock prior to two (2) business days following the Company’s earnings telephone call to analysts in which the Company discloses its preliminary earnings results for the quarter ended
September 30, 2003; and (b) between September 30, 2003 and January 31, 2004 he shall comply with the Company’s insider trading policy, including, but not limited to, by obtaining prior consent to trade from the Chief Financial Officer before
making any trade in Company stock. 
  
 7. Release of
Claims. Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company and its current and former officers, directors, employees, agents, investors, attorneys,
advisors, shareholders, administrators, affiliates, divisions, subsidiaries, predecessor and successor corporations and assigns (the “Releasees”). 
  
 (a) Employee hereby and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute or pursue, any
claim, complaint, charge, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Employee may possess against any of the Releasees arising from any omissions, acts
or facts that have occurred up until and including the date Employee signs this Agreement including, without limitation: 
  
 (i) any and all claims relating to or arising out of Employee’s employment relationship with the Company and the termination of that relationship;

  
 (ii) any and all claims relating to, or arising from,
Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud; misrepresentation; breach of fiduciary duty; breach of duty under applicable state corporate law; and
securities fraud under any state or federal law; 
  
 (iii) any and
all claims under the law of any jurisdiction including, but not limited to, wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of
a covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; workers’ compensation; and disability benefits;

  
 (iv) 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 Americans with Disabilities Act of 1990; the Fair Labor Standards Act; the Fair Credit Reporting Act; the Age
Discrimination in Employment Act of 1967; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Restraining Notification Act; the Family and Medical Leave Act; the California Family Rights Act; the California Fair Employment
and Housing Act, and the California Labor Code, including, but not limited to Labor Code Sections 1400-1408; 
  
 (v) any and all claims for violation of the federal, or any state, constitution; 
  
 (vi) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;

  
 (vii) any and all claims for attorneys’ fees and costs;
and 
  
 (viii) any claim for any loss, cost, damage, or expense
arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by Employee as a result of this Agreement. 
  
 Employee agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters
released. This release does not extend to any obligations incurred under this Agreement, including any 

 obligations the Company may have to indemnify Employee as a former officer and director of the Company, pursuant to the
Indemnification Agreement, the Company’s Certificate of Incorporation and Bylaws, and/or statutory obligations. 
  
 (b) Employee acknowledges and agrees that any breach by him of this Paragraph 7 or of his obligations under Paragraphs 9, 11, 13, 14, or 16 hereof or of
any provision of the Confidentiality Agreement, as determined by a court of competent jurisdiction or through binding arbitration proceedings as set forth in Paragraph 17, shall constitute a material breach of this Agreement and shall entitle the
Company immediately to cease and recover the benefits provided to Employee under this Agreement, except as provided by law. Except as provided by law, Employee shall also be responsible to the Company for all costs, attorneys’ fees and any and
all damages incurred by the Company in: (a) enforcing his obligations under this Paragraph 7, Paragraphs 9, 11, 13, 14, or 16 hereof, or the Confidentiality Agreement, including the bringing of any action to recover the consideration, and (b)
defending against a claim brought or pursued by Employee in violation of the terms of this Agreement. Employee further agrees that in any such action or proceeding, this Agreement may be pled by the Company as a complete defense, or may be asserted
by way of counterclaim or cross-claim. 
  
 8. Acknowledgment of
Waiver of Claims under ADEA. Employee acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary.
Employee and the Company agree that this waiver and release does not apply to any rights or claims that may arise under ADEA after the Effective Date of this Agreement. Employee acknowledges that the consideration given for this waiver and release
Agreement is in addition to anything of value to which Employee was already entitled. Employee further acknowledges that he has been advised by this writing that (a) he should consult with an attorney prior to executing this Agreement; (b) he
has at least twenty-one (21) days within which to consider this Agreement; (c) he has at least seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; (d) this Agreement, and all of the terms and conditions
hereof, shall not be effective until the revocation period has expired; and (e) nothing in this Agreement prevents or precludes Employee from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor
does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by law. 
  
 9. Civil Code Section 1542. Employee represents that he is not aware of any claim other than the claims that are released by this Agreement.
Employee acknowledges that he has been advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows: 
  
 A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. 
  
 Employee, being aware of said code section, agrees to expressly waive any rights he may have thereunder, as well as under any other statute or common law principles of similar effect. 
  
 10. No Pending or Future Lawsuits. Employee represents that he has no
lawsuits, claims, or actions pending in his name, or on behalf of any other person or entity, against any of the Releasees. Employee also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or
entity against any of the Releasees. 
  
 11.
Non-Disparagement. Employee agrees to refrain from any defamation, libel or slander of the Releasees or tortious interference with the contracts and relationships of the Releasees. All inquiries by potential future employers of Employee will
be directed to the Company’s Vice President of Human Resources if there shall be one, and otherwise to its President. Upon inquiry by potential future employers of Employee, the Company shall only state the following: Employee’s last
position and dates of employment. 
  
 12. Application for
Employment. Employee understands and agrees that, as a condition of this Agreement, he shall not be entitled to any employment with the Company, and he hereby waives any right, or alleged right, of employment or re-employment with the Company.
Employee further agrees that he will not apply for employment with the Company. 
  
 13. Confidentiality. Employee agrees to maintain in complete confidence the contents and terms of this Agreement and the consideration for this Agreement (hereinafter collectively referred to as
“Separation Information”) until such time as, and to the extent that, the Separation Information is publicly disclosed by the Company in a filing with the SEC or otherwise. Except as required by law, Employee may disclose Separation
Information only to his immediate family members, the Court in any proceedings to enforce the terms of this Agreement, Employee’s legal counsel, his accountant and any professional tax advisor to the extent that they need to know the Separation
Information in order to provide advice on tax treatment or to prepare tax returns, and shall take every reasonable precaution to prevent disclosure of any Separation Information to all other third parties. Employee agrees that he will not publicize,
directly or indirectly, any Separation Information. 

 14. Cooperation in Litigation. Employee agrees that he will not knowingly counsel or assist any
attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against any of the Releasees, unless under a subpoena or other court order to do so. Employee
agrees both to immediately notify the Company upon receipt of any such subpoena or court order, and to furnish, within three (3) business days of its receipt, a copy of such subpoena or court order to the Company. If approached by anyone for counsel
or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints against any of the Releasees, Employee shall state no more than that he cannot provide counsel or assistance. Employee further
agrees to make himself reasonably available to provide information and assistance to the Company in any disputes, lawsuits, differences, grievances, claims, charges, or complaints brought against the Company, including, but not limited to making
himself available to provide testimony and serve as a witness. 
  
 15. No Admission of Liability. Employee understands and acknowledges that this Agreement constitutes a compromise and settlement of any and all potential disputed claims. No action taken by the Company hereto, either previously or in
connection with this Agreement, shall be deemed or construed to be: (a) an admission of the truth or falsity of any potential claims; or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Employee or to any
third party. 
  
 16. Non-Solicitation. Employee agrees that
for a period of twelve (12) months immediately following the Effective Date of this Agreement, Employee shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company’s employees or consultants to leave their
employment or service relationship, or attempt to do so, either for himself or any other person or entity. 
  
 17. Arbitration. The Parties agree that any and all disputes arising out of the terms of this Agreement, their interpretation, and any of the
matters herein released, shall be subject to binding arbitration in Santa Clara County before the American Arbitration Association under its National Rules for the Resolution of Employment Disputes. The Parties agree that the prevailing party in any
arbitration shall be entitled to injunctive relief in any court of competent jurisdiction to enforce the arbitration award. The Parties agree that the prevailing party in any arbitration shall be awarded its reasonable attorneys’ fees and
costs. The Parties hereby agree to waive their right to have any dispute between them resolved in a court of law by a judge or jury. This paragraph will not prevent either party from seeking injunctive relief (or any other provisional remedy)
from any court having jurisdiction over the Parties and the subject matter of their dispute relating to Employee’s obligations under this Agreement and the Confidentiality Agreement. 
  
 18. No Knowledge of Wrongdoing. Employee represents that he has no knowledge of any wrongdoing involving improper or
false claims against a federal or state governmental agency, or any other wrongdoing that involves any of the Releasees. 
  
 19. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company
and all who may claim through it to the terms and conditions of this Agreement. Employee represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and
conditions of this Agreement. Each Party warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein. 
  
 20. No Representations. Employee represents that he has consulted with
an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Employee has not relied upon any representations or statements made by the Company which are not specifically set forth in this Agreement.

  
 21. Severability. In the event that any provision or
any portion of any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision or portion of provision. 

 
 22. Attorneys’ Fees. Except as provided in paragraph 7(b)
hereof, in the event that either Party brings an action to enforce or effect its rights under this Agreement, the prevailing party shall be entitled to recover its costs and expenses, including the costs of mediation, arbitration, litigation, court
fees, plus reasonable attorneys’ fees, incurred in connection with such an action. 
  
 23. Indemnification. The Company agrees that it will not exercise its right to terminate the Indemnification Agreement with Employee as provided in Section 11 of the Indemnification Agreement. The Company will
provide Employee indemnification pursuant to the Indemnification Agreement and the Company’s Certificate of Incorporation and Bylaws, to the fullest extent authorized or permitted by law. The Company further agrees that with respect to the
period of time in which Employee was an officer or director of the Company, Employee shall continue to be covered by any Director and Officer insurance policies that the Company may have in place from time to time. 
  
 24. Entire Agreement. This Agreement represents the entire agreement
and understanding between the Company and Employee concerning Employee’s employment with and separation from the Company and the events leading thereto and associated therewith, and supersedes and replaces any and all prior agreements, offer
letters, and understandings concerning Employee’s relationship with the Company, with the exception of the Confidentiality Agreement, the Indemnification Agreement, and the Stock Option Agreements, as amended hereby. 

 25. No Oral Modification. This Agreement may only be amended in writing signed by Employee and the
Company’s then chief executive officer. 
  
 26. No
Waiver. The failure of the Company to insist upon the performance of any of the terms and conditions in this Agreement, or the failure to prosecute any breach of any of the terms and conditions of this Agreement, shall not be construed
thereafter as a waiver of any such terms or conditions. This entire Agreement shall remain in full force and effect as if no such forbearance or failure of performance had occurred. 
  
 27. Governing Law. This Agreement shall be governed by the laws of the State of California, without regard for choice
of law provisions. 
  
 28. Effective Date. This Agreement
will become effective after it has been signed by both Parties and after seven days have passed since Employee signed the Agreement (the “Effective Date”). Employee has seven days after he signs the Agreement to revoke it. 
  
 29. Counterparts. This Agreement may be executed in counterparts and
by facsimile, and each counterpart and facsimile shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned. 
  
 30. Survival of the Agreement. This Agreement shall not be terminated
by any dissolution of the Company resulting from either a merger or consolidation, in which the Company is not the surviving or consolidated corporation, or a transfer of all or substantially all of the assets of the Company. If either event
described in this Paragraph 30 occurs, the rights, benefits, and obligations set forth in this Agreement shall automatically be assigned to the surviving or resulting corporation or to the transferee of the assets. 
  
 31. Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of releasing all claims. The Parties acknowledge that: 
  
 (a) They have read this Agreement; 
  

(b) They have been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of their own choice; 
  
 (c) They understand the terms and consequences of this Agreement and of the
releases it contains; 
  
 (d) They are fully aware of the legal
and binding effect of this Agreement. 

 IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

  

	 	 	 	 	 James E. Donegan, an individual

			
	Dated: 7/20/03	 	 	 	 /s/    JAMES E.
DONEGAN        

	 	 	 	 	 	 	James E. Donegan

  

	 	 	 	 	 GENESIS MICROCHIP INC.

				
	Dated:                            	 	 	 	By:	 	 /s/    ERIC
ERDMAN        

	 	 	 	 	 	 	 	 	 Eric Erdman
 Chief Financial Officer

  

	 	 	 	 	 GENESIS MICROCHIP INC.

				
	Dated: 7/20/03	 	 	 	By:	 	 /s/    KENNETH A.
MURRAY        

	 	 	 	 	 	 	 	 	 Kenneth A. Murray
 Vice President of Human Resources

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