Interim CEO Employment Agreement with Eric Erdman

Exhibit 10.26


Execution Copy

GENESIS MICROCHIP INC.

INTERIM CEO EMPLOYMENT AGREEMENT

This Employment Agreement (the "Agreement") is entered into by and between Genesis Microchip Inc. (the "Company") and Eric Erdman ("Executive" and, together with the Company, the "Parties") as of the latest date set forth on the signature page of this Agreement, effective as of the date set forth in Section 15 below.

1. Duties and Scope of Employment .

(a) Positions and Duties . Executive will serve as Interim Chief Executive Officer of the Company until such time as the employment relationship is terminated by either Party pursuant to Section 2. Executive will render such business and professional services in the performance of his duties, consistent with Executive's position within the Company, as shall reasonably be assigned to him by the Company's Board of Directors (the "Board"). In addition, Executive will continue to serve as the Company's Chief Financial Officer until a new Chief Financial Officer is hired as contemplated by Section 3(b) below.


(b) Obligations . During the Employment Term (as defined in Section 2 below), Executive will perform his duties faithfully and to the best of his ability and will devote his full business efforts and time to the Company. For the duration of the Employment Term, Executive agrees not to engage actively in any other employment, occupation or consulting activity for any direct or indirect remuneration without the prior approval of the Board.

2. At-Will Employment . The period of Executive's employment under this Agreement is referred to herein as the "Employment Term." The Parties agree that Executive's employment with the Company will be "at-will" employment and may be terminated at any time with or without cause or notice. However, as described in this Agreement, Executive may be entitled to severance benefits depending upon the circumstances of Executive's termination of employment.


3. Compensation .

(a) Base Salary . During the Employment Term, the Company will pay Executive as compensation for his services a base salary at the annualized rate of $275,000 (the "Base Salary"), and may be increased on an annual basis in connection with the Company's normal compensation review process. The Base Salary will be paid periodically in accordance with the Company's normal payroll practices and will be subject to the usual, required withholding.

(b) One-Time Bonus . Within thirty (30) days after the Company hires a new Chief Financial Officer of the Company, the Company will pay to Executive a one-time lump-sum bonus equal to the product of (i) $10,000 and (ii) the number of months for which Executive has served as both Interim Chief Executive Officer and Chief Financial Officer of the Company, but in no event will the total amount of the bonus exceed $100,000.


(c) Annual Bonus . If the Company implements an annual bonus plan for senior executives, Executive will be eligible to participate in that plan, subject to the achievement of Company and individual performance objectives as determined by the Compensation Committee of the Board (the "Bonus"). The Company reserves the right to cancel or change any bonus plan it offers to its senior executives at any time.

(d) Housing . During the Employment Term, the Company will lease for Executive's use in the Bay area a furnished rental house that is reasonably acceptable to Executive and that is comparable to the furnished rental house currently being leased for Executive's use.

(e) Medical Costs Reimbursement . To the extent not reimbursed by insurance or previously reimbursed by the Company, the Company will reimburse Executive for reasonable medical costs actually incurred by Executive (or his dependents) from March 2002 through the end of the Employment Term, up to a maximum reimbursement of $5,000.


(f) Immigration . During the Employment Term, the Company will reimburse Executive and his spouse for reasonable immigration expenses (including reasonable legal costs) actually incurred by Executive in connection with his working in the United States for the Company.


(g) Tax Services . For years occurring during the Employment Term, the Company will reimburse Executive for reasonable tax services expenses actually incurred by Executive for tax return preparation and tax advice associated with such preparation. The Company will reimburse Executive only for expenses that do not exceed $10,000 per calendar year of the Employment Term.


(h) Vehicle Importation . The Company will reimburse Executive for reasonable costs actually incurred to meet vehicle importation guidelines for the importation of Executive's vehicles (set forth on Exhibit A ) into the United States for use by Executive during the Employment Term. In addition, at the end of the Employment Term, the Company will reimburse Executive for reasonable costs actually incurred to meet vehicle importation guidelines for the importation of such vehicles back to Canada. In lieu of the benefits set forth in the previous two sentences, if Executive so requests, the Company will instead lease vehicles, substantially similar to the vehicles set forth on Exhibit A , for the Executive's use in the Bay area during the Employment Term and pay reasonable shipment and storage fees, if any, actually incurred by Executive during the Employment term for the storage in Canada of the vehicles set forth on Exhibit A .


(i) Canada Relocation Expenses . At the end of the Employment Term, the Company agrees to reimburse Executive for reasonable moving expenses actually incurred by Executive and his family during their relocation from Executive's primary residence in California back to Canada. Such reimbursement shall not exceed $50,000.


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(j) Employee Benefits . During the Employment Term, Executive will be entitled to participate in the employee benefit plans currently and hereafter maintained by the Company of general applicability to other senior executives of the Company. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.


(k) General Expenses . The Company will reimburse Executive for reasonable travel, entertainment or other expenses actually incurred by Executive in the furtherance of or in connection with the performance of Executive's duties hereunder, in accordance with the Company's expense reimbursement policy as in effect from time to time.


(l) Legal Fee Reimbursement . The Company agrees to pay Executive's reasonable legal fees actually incurred in connection with the negotiation and execution of this Agreement upon receiving invoices for such services. Such reimbursement shall not exceed $15,000.


4. Severance .


(a) Removal other than for Cause . If the Company removes Executive as Interim Chief Executive Officer, or hires a new Chief Executive Officer, in each case unless Executive is offered a comparable or greater position, or unless Executive is offered an alternative position that he accepts, and in each case without his consent and for a reason other than Cause, then, subject to Executive entering into and not revoking a release of claims in a form acceptable to the Company, Executive will:

(i) receive a lump-sum payment equal to 100% of the then-current Base Salary;


(ii) receive a lump-sum payment equal to the prorated portion, based on the number of months Executive was employed by the Company ...