Exhibit
4.08


 


SILICON IMAGE, INC.


NON-PLAN STOCK OPTION AGREEMENT


 


                This Stock Option Agreement
(this “Agreement”)
is made and entered into as of the date of grant set forth below (the “Date of Grant”) by
and between Silicon Image, Inc., a Delaware corporation (the “Company”), and the
optionee named below (“Optionee”). 
Capitalized terms not defined herein shall have the meaning ascribed to
them in Section 20.


 


	
  Optionee:

  	
  John LeMoncheck

  
	
   

  	
   

  
	
  Social Security Number:

  	
  ###-##-####

  
	
   

  	
   

  
	
  Total Option Shares:

  	
  325,000

  
	
   

  	
   

  
	
  Exercise Price Per Share:

  	
  $6.3500

  
	
   

  	
   

  
	
  Date of Grant:

  	
  January 6, 2003

  
	
   

  	
   

  
	
  First Vesting Date:

  	
  January 6, 2004

  
	
   

  	
   

  
	
  Expiration Date:

  	
  Option will expire 3
  months following termination for any

  
	
   

  	
  reason except death, disability or cause, but in no event

  
	
   

  	
  later than 01/06/13.
  (refer to Sec. 3 of this Stock Option Agreement)

  
	
   

  	
   

  
	
  Type of Stock Option:

  	
  NQSO

  



 


                             1.             Grant of Option.  The Company hereby grants to Optionee an
option (this “Option”)
to purchase up to the total number of shares of common stock of the Company,
$0.001 par value (“Common Stock”),
set forth above (collectively, the “Shares”) at the Exercise Price Per Share set forth above
(the “Exercise Price”),
subject to all of the terms and conditions of this Agreement.


 


                             2.             Vesting; Exercise Period.


 


                                             2.1           Vesting of Shares.  This Option shall be exercisable
as it vests.  Subject to the terms and
conditions of this Agreement, this Option shall vest and become exercisable as
to portions of the Shares as follows: 
(a) this Option shall not be exercisable with respect to any of the
Shares until January 6, 2004 (the “First Vesting Date”); (b) if Optionee
has continuously provided services to the Company, or any Parent or Subsidiary
of the Company, then on the First Vesting Date, this Option shall become exercisable
as to one fourth (1/4th) of the Shares (rounded to the nearest whole
share); and (c) thereafter this Option shall become exercisable as to an
additional one forty-eighth (1/48th) of the Shares (rounded to the
nearest whole share) at the end of each full succeeding month, provided that
Optionee has continuously provided services to the Company, or any Parent or
Subsidiary of the Company.   This Option
shall cease to vest upon Optionee’s Termination and Optionee shall in no event
be entitled under this Option to purchase a number of shares of the Company’s
Common Stock greater than the “Total Option Shares.”


 

















 


 


                             2.2           Expiration.  This Option shall expire on the Expiration
Date set forth above and must be exercised, if at all, on or before the earlier
of the Expiration Date or the date on which this Option is earlier terminated
in accordance with the provisions of Section 3, provided, however,
that this Option will be not be exercisable after the expiration of ten (10)
years from the Date of Grant.


 


                             3.             Termination.


 


                                             3.1           Termination for Any Reason Except Death,
Disability or Cause.  If Optionee is
Terminated for any reason except Optionee’s death, Disability or Cause, then
this Option, to the extent (and only to the extent) that it is vested in accordance
with the schedule set forth in Section 2.1 of this Agreement on the date of
Termination, may be exercised by Optionee no later than three (3) months after
the date of Termination, but in any event no later than the Expiration Date.


 


                                             3.2           Termination Because of Death or Disability.  If Optionee is Terminated because of death
or Disability of Optionee (or the Optionee dies within three (3) months after a
Termination other than because of death, Disability or Cause), then this
Option, to the extent that it is vested in accordance with the schedule set
forth in Section 2.1 of this Agreement on the date of Termination, may be
exercised by Optionee (or Optionee’s legal representative) no later than twelve
(12) months after the date of Termination, but in any event no later than the
Expiration Date.


 


                                             3.3           Termination for Cause.  If Optionee is Terminated for Cause, this
Option will expire on the Optionee’s date of Termination.


 


                                             3.4           No Obligation to Employ.  Nothing in this Agreement shall confer on
Optionee any right to continue in the employ of, or other relationship with,
the Company or any Parent or Subsidiary of the Company, or limit in any way the
right of the Company or any Parent or Subsidiary of the Company to terminate
Optionee’s employment or other relationship at any time, with or without Cause.


 


                             4.             Manner of Exercise.


 


                                             4.1           Stock Option Exercise Agreement.  To exercise this Option, Optionee (or in the
case of exercise after Optionee’s death, Optionee’s executor, administrator,
heir or legatee, as the case may be) must deliver to the Company an executed
stock option exercise agreement in the form attached hereto as Exhibit A,
or in such other form as may be approved by the Company from time to time (the
“Exercise Agreement”),
which shall set forth, inter  alia, Optionee’s election to
exercise this Option, the number of shares being purchased, any restrictions
imposed on the Shares and any representations, warranties and agreements
regarding Optionee’s investment intent and access to information as may be
required by the Company to comply with applicable securities laws.  If someone other than Optionee exercises
this Option, 


 


 


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then such person
must submit documentation reasonably acceptable to the Company that such person
has the right to exercise this Option.


 


                                             4.2           Limitations on Exercise.  This Option may not be exercised unless such
exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise.  This Option may not be exercised as to fewer than 100 Shares
unless it is exercised as to all Shares as to which this Option is then
exercisable.


 


                                             4.3           Payment.  The Exercise Agreement shall be accompanied
by full payment of the Exercise Price for the Shares being purchased in cash
(by check), or where permitted by law:


 


                                      (a)           provided
that a public market for the Company’s stock exists:  (1) through a “same day sale” commitment from Optionee and a
broker-dealer that is a member of the National Association of Securities
Dealers (an “NASD Dealer”)
whereby Optionee irrevocably elects to exercise this Option and to sell a
portion of the Shares so purchased to pay for the exercise price and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to forward the
exercise price directly to the Company; or (2) through a “margin”
commitment from Optionee and a NASD Dealer whereby Optionee irrevocably elects
to exercise this Option and to pledge the Shares so purchased to the NASD Dealer
in a margin account as security for a loan from the NASD Dealer in the amount
of the exercise price, and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the exercise price directly to the Company;
or


 


                                      (b)           by
any combination of the foregoing.


 


                                             4.4           Tax Withholding.  Prior to the issuance of the Shares upon
exercise of this Option, Optionee must pay or provide for any applicable
federal or state withholding obligations of the Company.  If the Committee permits, Optionee may
provide for payment of withholding taxes upon exercise of this Option by
requesting that the Company retain Shares with a Fair Market Value equal to the
minimum amount of taxes required to be withheld.  In such case, the Company shall issue the net number of Shares to
the Optionee by deducting the Shares retained from the Shares issuable upon
exercise.


 


                                             4.5           Issuance of Shares.  Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Optionee, Optionee’s
authorized assignee, or Optionee’s legal representative, and shall deliver
certificates representing the Shares with the appropriate legends affixed
thereto.


 


                             5.             Compliance with Laws and Regulations.  The exercise of this Option and the issuance
and transfer of Shares shall be subject to compliance by the Company and
Optionee with all applicable requirements of federal and state securities laws
and with all applicable 


 


 


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requirements of
any stock exchange on which the Company’s Common Stock may be listed at the
time of such issuance or transfer. 
Optionee understands that the Company is under no obligation to register
or qualify the Shares with the Securities and Exchange Commission, any state
securities commission or any stock exchange to effect such compliance.


 


                             6.             Nontransferability of Option.  This Option may not be transferred in any
manner other than by will or by the laws of descent and distribution and may be
exercised during the lifetime of Optionee only by Optionee.  The terms of this Option shall be binding
upon the executors, administrators, successors and assigns of Optionee.


 


                             7.             Tax Consequences.  Set forth below is a brief summary of some
of the federal and California tax consequences of exercise of this Option and
disposition of the Shares.  THIS SUMMARY
IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE.  OPTIONEE SHOULD CONSULT A TAX
ADVISOR BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.


 


                                             7.1           Exercise of Nonqualified Stock Option.  There may be a regular federal and
California income tax liability upon the exercise of this Option.  Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the fair market value of the Shares on the date of exercise over the
Exercise Price.  The Company will be
required to withhold from Optionee’s compensation or collect from Optionee and
pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise.


 


                                             7.2           Disposition of Shares.  If the Shares are held for more than twelve
(12) months after the date of the transfer of the Shares pursuant to the
exercise of an NQSO, any gain realized on disposition of the Shares will be
treated as long-term capital gain, as the case may be.


 


                             8.             Privileges of Stock Ownership. 
Optionee shall not have any of the rights of a shareholder with respect
to any Shares until Optionee exercises this Option and pays the Exercise Price.


 


                             9.             Interpretation. 
Any dispute regarding the interpretation of this Agreement shall be
submitted by Optionee or the Company to the Committee for review.  The resolution of such a dispute by the
Committee shall be final and binding on the Company and Optionee.


 


                             10.          Entire Agreement. 
This Agreement and the Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with
respect to such subject matter.


 


                             11.          Notices. 
Any notice required to be given or delivered to the Company under the
terms of this Agreement shall be in writing and addressed to the Corporate
Secretary of the Company at its principal corporate offices.  Any notice required to be given or delivered
to 


 


 


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Optionee shall be
in writing and addressed to Optionee at the address indicated above or to such
other address as such party may designate in writing from time to time to the
Company.  All notices shall be deemed to
have been given or delivered upon: 
personal delivery; three (3) days after deposit in the United States
mail by certified or registered mail (return receipt requested); one (1)
business day after deposit with any return receipt express courier (prepaid);
or one (1) business day after transmission by rapifax or telecopier.


 


                             12.          Successors and Assigns. 
The Company may assign any of its rights under this Agreement.  This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer set
forth herein, this Agreement shall be binding upon Optionee and Optionee’s
heirs, executors, administrators, legal representatives, successors and
assigns.


 


                             13.          Governing Law. 
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of California, without regard to that body of law
pertaining to choice of law or conflict of law.


 


                             14.          Acceptance. 
Optionee hereby acknowledges receipt of a copy of this Agreement.  Optionee has read and understands the terms
and provisions thereof, and accepts this Option subject to all the terms and
conditions of this Agreement.  Optionee
acknowledges that there may be adverse tax consequences upon exercise of this
Option or disposition of the Shares and that the Company has advised Optionee
to consult a tax advisor prior to such exercise or disposition.


 


                             15.          Modification, Extension or Renewal.  The Committee may modify, extend
or renew this Option and authorize the grant of new options in substitution
therefor, provided that any such action may not, without the written consent of
the Optionee, impair any of such Optionee’s rights under this Option.  The Committee may reduce the Exercise Price
of this Option without the consent of the Optionee affected by a written notice
to them; provided, however, that the Exercise Price may not be
reduced below 85% of the Fair Market Value of the Shares on the date of grant.


 


                             16.          Certificates.  All certificates for Shares or
other securities delivered upon exercise of this Option will be subject to such
stock transfer orders, legends and other restrictions as the Committee may deem
necessary or advisable, including restrictions under any applicable federal,
state or foreign securities law, or any rules, regulations and other
requirements of the SEC or any stock exchange or automated quotation system
upon which the Shares may be listed or quoted.


 


                             17.          Adjustment of Shares.  In the event that the number of outstanding
shares is changed by a stock dividend, recapitalization, stock split, reverse
stock split, subdivision, combination, reclassification or similar change in
the capital structure of the Company without consideration, then the Exercise
Price of and the number of Shares subject to this Option will be
proportionately adjusted, subject to any required action by the Board or the
Optionee and 


 


 


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compliance with
applicable securities laws; provided, however, that fractions of
a Share will not be issued but will either be replaced by a cash payment equal
to the Fair Market Value of such fraction of a Share or will be rounded up to
the nearest whole Share, as determined by the Committee.


 


                             18.          Corporate Transactions.


 


                                             18.1            Assumption or Replacement of Option by Successor.  In the event of (a) a dissolution or liquidation
of the Company, (b) a merger or consolidation in which the Company is not
the surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change in
the stockholders of the Company or their relative stock holdings and this
Option is assumed, converted or replaced by the successor corporation, which
assumption will be binding on the Optionee), (c) a merger in which the Company
is the surviving corporation but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges, or
which owns or controls another corporation that merges, with the Company in such
merger) cease to own their shares or other equity interest in the Company, (d)
the sale of substantially all of the assets of the Company, or (e) the
acquisition, sale, or transfer of more than 50% of the outstanding shares of
the Company by tender offer or similar transaction, this Option may be assumed,
converted or replaced by the successor corporation (if any), which assumption,
conversion or replacement will be binding on the Optionee.  In the alternative, the successor
corporation may substitute equivalent options or provide substantially similar
consideration to the Optionee as was provided to other stockholders.  The successor corporation may also issue, in
place of outstanding Shares of the Company held by the Optionee, substantially
similar shares or other property subject to repurchase restrictions no less
favorable to the Optionee.  In the event
such successor corporation (if any) refuses to assume or substitute this
Option, as provided above, pursuant to a transaction described in this
subsection, this Option will expire on such transaction at such time and on
such conditions as the Committee will determine; provided, however,
that the Committee may, in its sole discretion, provide that the vesting of
this Option will accelerate.  If the
Committee exercises such discretion with respect to this Option, this Option
will become exercisable in full prior to the consummation of such event at such
time and on such conditions as the Committee determines, and if this Option is
not exercised prior to the consummation of the corporate transaction, it shall
terminate at such time as determined by the Committee.


 


                                             18.2         Other Treatment of Option.  Subject to any greater rights granted to the
Optionee under the foregoing provisions of this section, in the event of the
occurrence of any transaction described in Section 18.1, this Option will be
treated as provided in the applicable agreement or plan of merger,
consolidation, dissolution, liquidation, or sale of assets.


 


                             19.          Amendment or Termination of the
Agreement.  The Board may
at any time terminate or amend this Agreement in any respect; provided, however,
that the Board will not, without the approval of the Optionee, amend this
Agreement in any manner that requires Optionee’s approval.


 


 


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                             20.          Definitions.   As used in this Agreement, the following terms will have the
following meanings:


 


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


 


                                             “Cause” means the
commission of an act of theft, embezzlement, fraud, dishonesty or a breach of
fiduciary duty to the Company or a Parent or Subsidiary of the Company.


 


                                             “Committee” means the
Compensation Committee of the Board.


 


                                             “Disability” means a
disability, whether temporary or permanent, partial or total, within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended,
as determined by the Committee.


 


                                             “Fair Market Value”
means, as of any date, the value of a share of the Company’s Common Stock
determined as follows:


 


                                                                                      (a)           if
such Common Stock is then quoted on the Nasdaq National Market, its closing
price on the Nasdaq National Market on the date of determination as reported in
The Wall Street Journal;


 


                                                                                      (b)           if
such Common Stock is publicly traded and is then listed on a national securities
exchange, its closing price on the date of determination on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading as reported in The Wall Street Journal;


 


                                                                                      (c)           if
such Common Stock is publicly traded but is not quoted on the Nasdaq National
Market nor listed or admitted to trading on a national securities exchange, the
average of the closing bid and asked prices on the date of determination as
reported in The Wall Street Journal; 
or


 


                                                                                      (d)           if
none of the foregoing is applicable, by the Committee in good faith.


 


                                             “Parent” means any
corporation (other than the Company) in an unbroken chain of corporations
ending with the Company if each of such corporations other than the Company
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.


 


                                             “Subsidiary” means any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.


 


 


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                                             “Termination” or “Terminated” means,
for purposes of this Agreement with respect to the Optionee, that the Optionee
has for any reason ceased to provide services as an employee, officer,
director, consultant, independent contractor, or advisor to the Company or a
Parent or Subsidiary of the Company.  An
employee will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of
absence approved by the Committee, provided, that such leave is for a period of
not more than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute or unless provided otherwise pursuant to
formal policy adopted from time to time by the Company and issued and promulgated
to employees in writing.  In the case of
the Optionee is on an approved leave of absence, the Committee may make such
provisions respecting suspension of vesting of this Option while on leave from
the employ of the Company or a Subsidiary as it may deem appropriate, except
that in no event may this Option be exercised after the expiration of the term
set forth in this Agreement.  The
Committee will have sole discretion to determine whether the Optionee has
ceased to provide services and the effective date on which the Optionee ceased
to provide services (the “Termination Date”).


 


IN WITNESS WHEREOF, the Company has caused this Agreement
to be executed in duplicate by its duly authorized representative and Optionee
has executed this Agreement in duplicate as of the Date of Grant.


 


	
  SILICON IMAGE, INC.

  	
   

  	
  OPTIONEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Robert Gargus

  	
   

  	
  John LeMoncheck

  
	
  Chief Financial Officer

  	
   

  	
   

  



 


 


 


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