EXHIBIT
10.03


 


SILICON IMAGE, INC.


 


1999 EQUITY INCENTIVE PLAN


 


Adopted July 20,
1999


As Amended March
29, 2001

As Amended and Restated May 20, 2003


 


1.             PURPOSE.  The purpose of this Plan is to provide
incentives to attract, retain and motivate eligible persons whose present and
potential contributions are important to the success of the Company, its Parent
and Subsidiaries, by offering them an opportunity to participate in the
Company’s future performance through awards of Options, Restricted Stock and Stock
Bonuses.  Capitalized terms not defined
in the text are defined in Section 23.


 


2.             SHARES SUBJECT TO THE PLAN.


 


2.1           Number of Shares Available.  Subject to Sections 2.2 and 18, the total
number of Shares reserved and available for grant and issuance pursuant to this
Plan will be 2,000,000 Shares plus Shares that are subject to:
(a) issuance upon exercise of an Option but cease to be subject to such
Option for any reason other than exercise of such Option; (b) an Award
granted hereunder but are forfeited or are repurchased by the Company at the
original issue price; and (c) an Award that otherwise terminates without
Shares being issued.  In addition, any
authorized shares not issued or subject to outstanding grants under the Silicon
Image, Inc. 1995 Equity Incentive Plan (the “Prior Plan”) on the Effective Date (as
defined below) and any shares issued under the Prior Plan that are forfeited or
repurchased by the Company or that are issuable upon exercise of options
granted pursuant to the Prior Plan that expire or become unexercisable for any
reason without having been exercised in full, will no longer be available for
grant and issuance under the Prior Plan, but will be available for grant and
issuance under this Plan.  In addition,
on the first business day of each calendar year of the Company during the term
of the Plan, the aggregate number of Shares reserved and available for grant
and issuance pursuant to this Plan will be increased automatically by a number
of Shares equal to 5% of the total outstanding shares of the Company, provided,
that the Board or the Committee may in its sole discretion reduce the amount of
the increase in any particular year; and, provided further, that no more
than 10,000,000 shares shall qualify as ISOs (as defined in Section 5
below).  At all times the Company shall
reserve and keep available a sufficient number of Shares as shall be required
to satisfy the requirements of all outstanding Options granted under this Plan
and all other outstanding but unvested Awards granted under this Plan.


 


2.2           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 (a) the number
of Shares reserved for issuance under this Plan, (b) the Share amounts set
forth in Section 3 below, (c) the number of Shares subject to each Annual Grant
described in Section 9 below, (d) the Exercise Prices of and number of Shares
subject to outstanding Options, and (e) the number of Shares subject to other
outstanding Awards will be proportionately adjusted, subject to any required
action by the Board or the stockholders of the Company and 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.


 


3.             ELIGIBILITY.  ISOs (as defined in Section 5 below) may be
granted only to employees (including officers and directors who are also
employees) of the Company or of a Parent or Subsidiary of the Company.  All other Awards may be granted to
employees, officers, directors, consultants, independent contractors and
advisors of the Company or any Parent or Subsidiary of the Company; provided
such consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction.  No person will be eligible
to receive more than 500,000 Shares in any calendar year under this Plan
pursuant to the grant of Awards hereunder, other than new employees of the Company
or of a Parent or Subsidiary of the Company (including new employees who are
also officers and directors of the Company or any Parent or


 

















 


Subsidiary of the
Company), who are eligible to receive up to a maximum of 750,000 Shares in the
calendar year in which they commence their employment.  A person may be granted more than one Award
under this Plan.


 


4.             ADMINISTRATION.


 


4.1           Committee Authority.  This Plan will be administered by the
Committee or by the Board acting as the Committee.  Except for automatic grants to Eligible Directors pursuant to
Section 9 hereof, and subject to the general purposes, terms and conditions of
this Plan, and to the direction of the Board, the Committee will have full
power to implement and carry out this Plan. 
Except for automatic grants to Eligible Directors pursuant to Section 9
hereof, the Committee will have the authority to:


 


(a)           construe and interpret
this Plan, any Award Agreement and any other agreement or document executed
pursuant to this Plan;


 


(b)           prescribe, amend and
rescind rules and regulations relating to this Plan or any Award;


 


(c)           select persons to
receive Awards;


 


(d)           determine the form and
terms of Awards;


 


(e)           determine the number of
Shares or other consideration subject to Awards;


 


(f)            determine whether
Awards will be granted singly, in combination with, in tandem with, in
replacement of, or as alternatives to, other Awards under this Plan or any
other incentive or compensation plan of the Company or any Parent or Subsidiary
of the Company;


 


(g)           grant waivers of Plan
or Award conditions;


 


(h)           determine the vesting,
exercisability and payment of Awards;


 


(i)            correct any defect,
supply any omission or reconcile any inconsistency in this Plan, any Award or
any Award Agreement;


 


(j)            determine whether an Award
has been earned; and


 


(k)           make all other
determinations necessary or advisable for the administration of this Plan.


 


4.2           Committee Discretion.  Except for automatic grants to Eligible
Directors pursuant to Section 9 hereof, any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, at any later time, and such determination will be final and binding
on the Company and on all persons having an interest in any Award under this
Plan.  The Committee may delegate to one
or more officers of the Company the authority to grant an Award under this Plan
to Participants who are not Insiders of the Company.


 


5.             OPTIONS.  The Committee may grant Options to eligible
persons and will determine whether such Options will be Incentive Stock Options
within the meaning of the Code (“ISO”) or Nonqualified Stock Options (“NQSOs”), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:


 


5.1           Form of Option Grant.  Each Option granted under this Plan will be
evidenced by an Award Agreement which will expressly identify the Option as an
ISO or an NQSO (“Stock
Option Agreement”), and, except as otherwise required by
the terms of Section 9 hereof, will be in such form and contain such provisions


 


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(which need not be the
same for each Participant) as the Committee may from time to time approve, and
which will comply with and be subject to the terms and conditions of this Plan.


 


5.2           Date of Grant.  The date of grant of an Option will be the
date on which the Committee makes the determination to grant such Option,
unless otherwise specified by the Committee. 
The Stock Option Agreement and a copy of this Plan will be delivered to
the Participant within a reasonable time after the granting of the Option.


 


5.3           Exercise Period.  Except for automatic grants to Eligible
Directors pursuant to Section 9 hereof, Options may be exercisable within the
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that
no Option will be exercisable after the expiration of ten (10) years from the
date the Option is granted; and provided further that no ISO granted to
a person who directly or by attribution owns more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any
Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable
after the expiration of five (5) years from the date the ISO is granted.  The Committee also may provide for Options
to become exercisable at one time or from time to time, periodically or
otherwise, in such number of Shares or percentage of Shares as the Committee
determines.


 


5.4           Exercise Price.  The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may be not less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will be not less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any
ISO granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant.  Payment for the Shares purchased may be made in accordance with
Section 8 of this Plan.


 


5.5           Method of Exercise.  Options may be exercised only by delivery to
the Company of a written stock option exercise agreement  (the “Exercise Agreement”) in a form approved by the
Committee (which need not be the same for each Participant), stating the number
of Shares being purchased, the restrictions imposed on the Shares purchased
under such Exercise Agreement, if any, and such representations and agreements
regarding Participant’s investment intent and access to information and other
matters, if any, as may be required or desirable by the Company to comply with
applicable securities laws, together with payment in full of the Exercise Price
for the number of Shares being purchased.


 


5.6           Termination.  Notwithstanding the exercise periods set
forth in the Stock Option Agreement, exercise of an Option will always be
subject to the following:


 


(a)           If the Participant is
Terminated for any reason except death or Disability, then the Participant may
exercise such Participant’s Options only to the extent that such Options would
have been exercisable upon the Termination Date no later than three (3) months
after the Termination Date (or such shorter or longer time period not exceeding
five (5) years as may be determined by the Committee, with any exercise beyond
three (3) months after the Termination Date deemed to be an NQSO), but in any
event, no later than the expiration date of the Options.


 


(b)           If the Participant is
Terminated because of Participant’s death or Disability (or the Participant
dies within three (3) months after a Termination other than for Cause or
because of Participant’s Disability), then Participant’s Options may be
exercised only to the extent that such Options would have been exercisable by
Participant on the Termination Date and must be exercised by Participant (or
Participant’s legal representative or authorized assignee) no later than twelve
(12) months after the Termination Date (or such shorter or longer time period
not exceeding five (5) years as may be determined by the Committee, with any
such exercise beyond (a) three (3) months after the Termination Date when the
Termination is


 


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for any reason other than
the Participant’s death or Disability, or (b) twelve (12) months after the
Termination Date when the Termination is for Participant’s death or Disability,
deemed to be an NQSO), but in any event no later than the expiration date of
the Options.


 


5.7           Limitations on Exercise.  The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.


 


5.8           Limitations on ISO.  The aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which ISO are exercisable
for the first time by a Participant during any calendar year (under this Plan
or under any other incentive stock option plan of the Company, Parent or
Subsidiary of the Company) will not exceed $100,000.  If the Fair Market Value of Shares on the date of grant with
respect to which ISO are exercisable for the first time by a Participant during
any calendar year exceeds $100,000, then the Options for the first $100,000
worth of Shares to become exercisable in such calendar year will be ISO and the
Options for the amount in excess of $100,000 that become exercisable in that
calendar year will be NQSOs.  In the
event that the Code or the regulations promulgated thereunder are amended after
the Effective Date of this Plan to provide for a different limit on the Fair
Market Value of Shares permitted to be subject to ISO, such different limit
will be automatically incorporated herein and will apply to any Options granted
after the effective date of such amendment.


 


5.9           Modification, Extension or Renewal.  The Committee may modify, extend or renew
outstanding Options and authorize the grant of new Options in substitution
therefor, provided that any such action may not, without the written consent of
a Participant, impair any of such Participant’s rights under any Option
previously granted.  Any outstanding ISO
that is modified, extended, renewed or otherwise altered will be treated in
accordance with Section 424(h) of the Code. 
The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them; provided,
however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of this Plan for
Options granted on the date the action is taken to reduce the Exercise Price.


 


5.10         No Disqualification.  Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISO will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.


 


6.             RESTRICTED STOCK.  A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to
restrictions.  The Committee will
determine to whom an offer will be made, the number of Shares the person may
purchase, the price to be paid (the “Purchase Price”), the restrictions to which the
Shares will be subject, and all other terms and conditions of the Restricted
Stock Award, subject to the following:


 


6.1           Form of Restricted Stock Award.  All purchases under a Restricted Stock Award
made pursuant to this Plan will be evidenced by an Award Agreement (“Restricted
Stock Purchase Agreement”) that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan.  The offer of
Restricted Stock will be accepted by the Participant’s execution and delivery
of the Restricted Stock Purchase Agreement and full payment for the Shares to
the Company within thirty (30) days from the date the Restricted Stock Purchase
Agreement is delivered to the person. 
If such person does not execute and deliver the Restricted Stock
Purchase Agreement along with full payment for the Shares to the Company within
thirty (30) days, then the offer will terminate, unless otherwise determined by
the Committee.


 


6.2           Purchase Price.  The Purchase Price of Shares sold pursuant
to a Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted, except in the case of


 


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a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value.  Payment of the Purchase Price
may be made in accordance with Section 8 of this Plan.


 


6.3           Terms of Restricted
Stock Awards.  Restricted Stock
Awards shall be subject to such restrictions as the Committee may impose.  These restrictions may be based upon
completion of a specified number of years of service with the Company or upon
completion of the performance goals as set out in advance in the Participant’s
individual Restricted Stock Purchase Agreement.  Restricted Stock Awards may vary from Participant to Participant
and between groups of Participants. 
Prior to the grant of a Restricted Stock Award, the Committee
shall:  (a) determine the nature, length
and starting date of any Performance Period for the Restricted Stock Award; (b)
select from among the Performance Factors to be used to measure performance
goals, if any; and (c) determine the number of Shares that may be awarded to
the Participant.  Prior to the payment
of any Restricted Stock Award, the Committee shall determine the extent to
which such Restricted Stock Award has been earned.  Performance Periods may overlap and Participants may participate
simultaneously with respect to Restricted Stock Awards that are subject to
different Performance Periods and having different performance goals and other
criteria.


 


6.4           Termination During Performance Period.  If a Participant is Terminated during a
Performance Period for any reason, then such Participant will be entitled to
payment (whether in Shares, cash or otherwise) with respect to the Restricted
Stock Award only to the extent earned as of the date of Termination in
accordance with the Restricted Stock Purchase Agreement, unless the Committee
will determine otherwise.


 


7.             STOCK BONUSES.


 


7.1           Awards of Stock Bonuses.  A Stock Bonus is an award of Shares (which
may consist of Restricted Stock) for services rendered to the Company or any
Parent or Subsidiary of the Company.  A
Stock Bonus may be awarded for past services already rendered to the Company,
or any Parent or Subsidiary of the Company pursuant to an Award Agreement (the
“Stock Bonus Agreement”)
that will be in such form (which need not be the same for each Participant) as
the Committee will from time to time approve, and will comply with and be
subject to the terms and conditions of this Plan.  A Stock Bonus may be awarded upon satisfaction of such
performance goals as are set out in advance in the Participant’s individual
Award Agreement (the “Performance Stock Bonus Agreement”) that will be in such
form (which need not be the same for each Participant) as the Committee will
from time to time approve, and will comply with and be subject to the terms and
conditions of this Plan.  Stock Bonuses
may vary from Participant to Participant and between groups of Participants,
and may be based upon the achievement of the Company, Parent or Subsidiary
and/or individual performance factors or upon such other criteria as the
Committee may determine.


 


7.2           Terms of Stock Bonuses.  The Committee will determine the number of
Shares to be awarded to the Participant. 
If the Stock Bonus is being earned upon the satisfaction of performance
goals pursuant to a Performance Stock Bonus Agreement, then the Committee will:
(a)  determine the nature, length and
starting date of any Performance Period for each Stock Bonus; (b) select from
among the Performance Factors to be used to measure the performance, if any;
and (c) determine the number of Shares that may be awarded to the
Participant.  Prior to the payment of
any Stock Bonus, the Committee shall determine the extent to which such Stock
Bonuses have been earned.  Performance
Periods may overlap and Participants may participate simultaneously with
respect to Stock Bonuses that are subject to different Performance Periods and
different performance goals and other criteria.  The number of Shares may be fixed or may vary in accordance with
such performance goals and criteria as may be determined by the Committee.  The Committee may adjust the performance
goals applicable to the Stock Bonuses to take into account changes in law and
accounting or tax rules and to make such adjustments as the Committee deems
necessary or appropriate to reflect the impact of extraordinary or unusual
items, events or circumstances to avoid windfalls or hardships.


 


7.3           Form of Payment.  The earned portion of a Stock Bonus may be
paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine.  Payment may


 


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be made in the form of
cash or whole Shares or a combination thereof, either in a lump sum payment or
in installments, all as the Committee will determine.


 


8.             PAYMENT FOR SHARE PURCHASES.


 


8.1           Payment.  Payment for Shares purchased pursuant to
this Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:


 


(a)           by cancellation of
indebtedness of the Company to the Participant;


 


(b)           by surrender of shares
that either:  (1) have been owned by
Participant for more than six (6) months and have been paid for within the
meaning of SEC Rule 144 (and, if such shares were purchased from the Company by
use of a promissory note, such note has been fully paid with respect to such
shares); or (2) were obtained by Participant in the public market;


 


(c)           by tender of a full
recourse promissory note having such terms as may be approved by the Committee
and bearing interest at a rate sufficient to avoid imputation of income under
Sections 483 and 1274 of the Code; provided, however, that
Participants who are not employees or directors of the Company will not be
entitled to purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares;


 


(d)           by waiver of
compensation due or accrued to the Participant for services rendered;


 


(e)           with respect only to
purchases upon exercise of an Option, and provided that a public market for the
Company’s stock exists:


 


(1)           through a “same day
sale” commitment from the Participant and a broker-dealer that is a member of
the National Association of Securities Dealers (an “NASD Dealer”) whereby the Participant
irrevocably elects to exercise the 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 the Participant and a NASD Dealer whereby the Participant
irrevocably elects to exercise the 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


 


(f)            by any combination of
the foregoing.


 


8.2           Loan Guarantees.  The Committee may help the Participant pay
for Shares purchased under this Plan by authorizing a guarantee by the Company
of a third-party loan to the Participant.


 


9.             AUTOMATIC GRANTS TO ELIGIBLE DIRECTORS.


 


9.1           Types of Options and
Shares.  Options granted under this
Plan and subject to this Section 9 shall be NQSOs.


 


9.2           Eligibility.  Options subject to this Section 9 shall be
granted only to Eligible Directors.


 


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9.3           Annual Grants.
Immediately following each annual meeting of stockholders, (a) each Eligible
Director will automatically be granted an Option for 30,000 Shares, provided
the Eligible Director is a member of the Board on such date and has served
continuously as a member of the Board of Directors of the Company (or the
Company’s California predecessor) for a period of at least one year since the
date when such Eligible Director first became a member of the Board; and (b)
each Eligible Director who is a member of a standing committee of the Board
will automatically be granted an option for an additional 10,000 Shares for
each such committee on which such Eligible Director serves, provided such
Eligible Director is a member of such committee on such date and has served
continuously as a member of such committee of the Company (or the Company’s
California predecessor) for a period of at least one year since the date when
such Eligible Director first joined such committee.  The Options described in this Section 9.3 are referred to as the
“Annual Grants.”


 


9.4           Exercise Price;
Vesting; Exercise Period.  The
exercise price of an Annual Grant shall be the Fair Market Value of the Shares
at the time of grant.  Provided the
director continues to provide services to the Company, an Annual Grant shall
become vested and exercisable with respect to one twenty-fourth (1/24) of the
Shares each month following the date of grant until fully vested; provided,
however, that an Annual Grant shall become fully vested immediately prior to
the consummation of a Change in Control. 
The Exercise Period of an Annual Grant shall end five (5) years after
the date of grant.


 


10.          WITHHOLDING TAXES.


 


10.1         Withholding Generally.  Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. 
Whenever, under this Plan, payments in satisfaction of Awards are to be
made in cash, such payment will be net of an amount sufficient to satisfy
federal, state, and local withholding tax requirements.


 


10.2         Stock Withholding.  When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated
to pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be
issued that number of Shares having a Fair Market Value equal to the minimum
amount required to be withheld, determined on the date that the amount of tax
to be withheld is to be determined.  All
elections by a Participant to have Shares withheld for this purpose will be
made in accordance with the requirements established by the Committee and be in
writing in a form acceptable to the Committee


 


11.          TRANSFERABILITY.


 


11.1         Except as otherwise
provided in this Section 11, Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by
will or by the laws of descent and distribution or as determined by the
Committee and set forth in the Award Agreement with respect to Awards that are
not ISOs.


 


11.2         All Awards other than
NQSO’s.  All Awards other than
NQSO’s shall be exercisable: (i) during the Participant’s lifetime, only by
(A) the Participant, or (B) the Participant’s guardian or legal
representative; and (ii) after Participant’s death, by the legal representative
of the Participant’s heirs or legatees.


 


11.3         NQSOs.  Unless otherwise restricted by the
Committee, an NQSO shall be exercisable: (i) during the Participant’s lifetime
only by (A) the Participant, (B) the Participant’s guardian or legal
representative, (C) a Family Member of the Participant who has acquired
the NQSO by “permitted transfer;” and (ii) after Participant’s death, by the
legal representative of the Participant’s heirs or legatees.


 


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“Permitted transfer”
means, as authorized by this Plan and the Committee in an NQSO, any transfer
effected by the Participant during the Participant’s lifetime of an interest in
such NQSO but only such transfers which are by gift or domestic relations
order.  A permitted transfer does not
include any transfer for value and neither of the following are transfers for
value:  (a) a transfer of under a
domestic relations order in settlement of marital property rights or (b) a
transfer to an entity in which more than fifty percent of the voting interests
are owned by Family Members or the Participant in exchange for an interest in
that entity.


 


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12.          PRIVILEGES OF STOCK OWNERSHIP;
RESTRICTIONS ON SHARES.


 


12.1         Voting and Dividends.  No Participant will have any of the rights
of a stockholder with respect to any Shares until the Shares are issued to the
Participant.  After Shares are issued to
the Participant, the Participant will be a stockholder and have all the rights
of a stockholder with respect to such Shares, including the right to vote and
receive all dividends or other distributions made or paid with respect to such
Shares; provided, that if such Shares are Restricted Stock, then any
new, additional or different securities the Participant may become entitled to
receive with respect to such Shares by virtue of a stock dividend, stock split
or any other change in the corporate or capital structure of the Company will
be subject to the same restrictions as the Restricted Stock; provided, further,
that the Participant will have no right to retain such stock dividends or stock
distributions with respect to Shares that are repurchased at the Participant’s
Purchase Price or Exercise Price pursuant to Section 12.


 


12.2         Financial Statements.  The Company will provide financial
statements to each Participant prior to such Participant’s purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the
Company will not be required to provide such financial statements to
Participants whose services in connection with the Company assure them access
to equivalent information.


 


12.3         Restrictions on
Shares.  At the discretion of the
Committee, the Company may reserve to itself and/or its assignee(s) in the
Award Agreement a right to repurchase a portion of or all Unvested Shares held
by a Participant following such Participant’s Termination at any time within
ninety (90) days after the later of Participant’s Termination Date and the date
Participant purchases Shares under this Plan, for cash and/or cancellation of
purchase money indebtedness, at the Participant’s Exercise Price or Purchase
Price, as the case may be.


 


13.          CERTIFICATES.  All certificates for Shares or other securities
delivered under this Plan 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.


 


14.          ESCROW; PLEDGE OF SHARES.  To enforce any restrictions on a
Participant’s Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause
a legend or legends referencing such restrictions to be placed on the
certificates.  Any Participant who is
permitted to execute a promissory note as partial or full consideration for the
purchase of Shares under this Plan will be required to pledge and deposit with
the Company all or part of the Shares so purchased as collateral to secure the
payment of Participant’s obligation to the Company under the promissory note; provided,
however, that the Committee may require or accept other or additional
forms of collateral to secure the payment of such obligation and, in any event,
the Company will have full recourse against the Participant under the
promissory note notwithstanding any pledge of the Participant’s Shares or other
collateral.  In connection with any
pledge of the Shares, Participant will be required to execute and deliver a
written pledge agreement in such form as the Committee will from time to time
approve.  The Shares purchased with the
promissory note may be released from the pledge on a pro rata basis as the
promissory note is paid.


 


15.          EXCHANGE AND BUYOUT OF AWARDS.  The Committee may, at any time or from time
to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and
cancellation of any or all outstanding Awards. 
The Committee may at any time buy from a Participant an Award previously
granted with payment in cash, Shares (including Restricted Stock) or other
consideration, based on such terms and conditions as the Committee and the
Participant may agree.


 


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16.          SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.  An Award will not be effective unless such
Award is in compliance with all applicable federal and state securities laws,
rules and regulations of any governmental body, and the requirements of any
stock exchange or automated quotation system upon which the Shares may then be listed
or quoted, as they are in effect on the date of grant of the Award and also on
the date of exercise or other issuance. 
Notwithstanding any other provision in this Plan, the Company will have
no obligation to issue or deliver certificates for Shares under this Plan prior
to:  (a) obtaining any approvals from
governmental agencies that the Company determines are necessary or advisable;
and/or (b) completion of any registration or other qualification of such Shares
under any state or federal law or ruling of any governmental body that the
Company determines to be necessary or advisable.  The Company will be under no obligation to register the Shares
with the SEC or to effect compliance with the registration, qualification or
listing requirements of any state securities laws, stock exchange or automated
quotation system, and the Company will have no liability for any inability or
failure to do so.


 


17.          NO OBLIGATION TO EMPLOY.  Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any 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
Participant’s employment or other relationship at any time, with or without
cause.


 


18.          CORPORATE TRANSACTIONS.


 


18.1         Assumption or Replacement of Awards 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 the Awards
granted under this Plan are assumed, converted or replaced by the successor
corporation, which assumption will be binding on all Participants), (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,
any or all outstanding Awards (including without limitation Annual Grants under
Section 9) may be assumed, converted or replaced by the successor corporation
(if any), which assumption, conversion or replacement will be binding on all
Participants.  In the alternative, the
successor corporation may substitute equivalent Awards or provide substantially
similar consideration to Participants as was provided to stockholders (after
taking into account the existing provisions of the Awards).  The successor corporation may also issue, in
place of outstanding Shares of the Company held by the Participant,
substantially similar shares or other property subject to repurchase
restrictions no less favorable to the Participant.  In the event such successor corporation (if any) refuses to
assume or substitute Awards, as provided above, pursuant to a transaction
described in this Subsection 18.1, such Awards (including without limitation
Annual Grants under Section 9) will expire on such transaction at such time and
on such conditions as the Committee will determine.  Notwithstanding anything in this Plan to the contrary, the
Committee may, in its sole discretion, provide that the vesting of any or all
Awards granted pursuant to this Plan will accelerate upon a transaction
described in this Section 18.  If the
Committee exercises such discretion with respect to Options, such Options 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 such Options are not
exercised prior to the consummation of the corporate transaction, they shall
terminate at such time as determined by the Committee.


 


18.2         Other Treatment of Awards.  Subject to any greater rights granted to
Participants under the foregoing provisions of this Section 18, in the event of
the occurrence of any transaction described in Section 18.1, any outstanding
Awards (including without limitation Annual Grants under Section 9) will be
treated as provided in the applicable agreement or plan of merger,
consolidation, dissolution, liquidation, or sale of assets.


 


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18.3         Assumption of Awards by the Company.  The Company, from time to time, also may
substitute or assume outstanding awards granted by another company, whether in
connection with an acquisition of such other company or otherwise, by either;
(a) granting an Award under this Plan in substitution of such other company’s
award; or (b) assuming such award as if it had been granted under this Plan if
the terms of such assumed award could be applied to an Award granted under this
Plan.  Such substitution or assumption
will be permissible if the holder of the substituted or assumed award would
have been eligible to be granted an Award under this Plan if the other company
had applied the rules of this Plan to such grant.  In the event the Company assumes an award granted by another
company, the terms and conditions of such award will remain unchanged (except
that the exercise price and the number and nature of Shares issuable upon
exercise of any such option will be adjusted appropriately pursuant to Section
424(a) of the Code).  In the event the
Company elects to grant a new Option rather than assuming an existing option,
such new Option may be granted with a similarly adjusted Exercise Price.


 


19.          ADOPTION AND STOCKHOLDER APPROVAL.  This Plan will become effective on the date
on which the registration statement filed by the Company with the SEC under the
Securities Act registering the initial public offering of the Company’s Common
Stock is declared effective by the SEC (the “Effective Date”).  This Plan shall be approved by the
stockholders of the Company (excluding Shares issued pursuant to this Plan),
consistent with applicable laws, within twelve (12) months before or after the
date this Plan is adopted by the Board. 
Upon the Effective Date, the Committee may grant Awards pursuant to this
Plan; provided, however, that: (a) no Option may be exercised
prior to initial stockholder approval of this Plan; (b) no Option granted
pursuant to an increase in the number of Shares subject to this Plan approved
by the Board will be exercised prior to the time such increase has been
approved by the stockholders of the Company; (c) in the event that initial
stockholder approval is not obtained within the time period provided herein,
all Awards granted hereunder shall be cancelled, any Shares issued pursuant to
any Awards shall be cancelled and any purchase of Shares issued hereunder shall
be rescinded; and (d) in the event that stockholder approval of such increase
is not obtained within the time period provided herein, all Awards granted
pursuant to such increase will be cancelled, any Shares issued pursuant to any
Award granted pursuant to such increase will be cancelled, and any purchase of
Shares pursuant to such increase will be rescinded.


 


20.          TERM OF PLAN/GOVERNING
LAW.  Unless earlier terminated
as provided herein, this Plan will terminate ten (10) years from the date this
Plan is adopted by the Board or, if earlier, the date of stockholder
approval.  This Plan and all agreements
thereunder shall be governed by and construed in accordance with the laws of
the State of California.


 


21.          AMENDMENT OR TERMINATION OF PLAN.  The Board may at any time terminate or amend
this Plan in any respect, including without limitation amendment of any form of
Award Agreement or instrument to be executed pursuant to this Plan; provided,
however, that the Board will not, without the approval of the
stockholders of the Company, amend this Plan in any manner that requires such
stockholder approval.


 


22.          NONEXCLUSIVITY OF THE PLAN.  Neither the adoption of this Plan by the
Board, the submission of this Plan to the stockholders of the Company for approval,
nor any provision of this Plan will be construed as creating any limitations on
the power of the Board to adopt such additional compensation arrangements as it
may deem desirable, including, without limitation, the granting of stock
options and bonuses otherwise than under this Plan, and such arrangements may
be either generally applicable or applicable only in specific cases.


 


23.          DEFINITIONS.  As used in this Plan, the following terms
will have the following meanings:


 


“Award” means any award under this Plan,
including any Option, Restricted Stock or Stock Bonus.


 


“Award Agreement” means, with respect to
each Award, the signed written agreement between the Company and the
Participant setting forth the terms and conditions of the Award.


 


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“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.


 


“Change of Control”
means the consummation of any transaction or series of related transactions
which results in all of the holders of record of the Company’s capital stock
immediately prior to the transaction or transactions holding less than fifty percent
(50%) of the voting power of the surviving entity in the transaction or
transactions immediately after the transaction or transactions, including the
acquisition of the Company by another entity and any reorganization, merger or
consolidation, or which results in the sale of all or substantially all of the
assets of the Company; provided, however, if the surviving entity
in the transaction or transactions is wholly owned by another entity, then a
Change of Control has occurred only if the holders of record of the Company’s
capital stock immediately prior to the transaction or transactions hold less
than fifty percent (50%) of the voting power of the other entity immediately
after the transaction or transactions.


 


“Code” means the Internal Revenue Code of
1986, as amended.


 


“Committee” means the Compensation Committee
of the Board.


 


“Company” means Silicon Image, Inc. or any
successor corporation.


 


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


 


“Eligible Director” means a member of the
Board (1) who is not an employee of the Company or any Parent, Subsidiary or
Affiliate of the Company, and (2) whose direct pecuniary interest (as defined
by the SEC in Rule 16a-1 promulgated under the Exchange Act) in the Company’s
Common Stock is less than five percent (5%) of total shares of Common Stock
outstanding.


 


“Exchange Act” means the Securities Exchange
Act of 1934, as amended.


 


“Exercise Price” means the price at which
a holder of an Option may purchase the Shares issuable upon exercise of the
Option.


 


“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;


 


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(d)           in the case of an Award
made on the Effective Date, the price per share at which shares of the
Company’s Common Stock are initially offered for sale to the public by the
Company’s underwriters in the initial public offering of the Company’s Common
Stock pursuant to a registration statement filed with the SEC under the
Securities Act;  or


 


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


 


“Family Member” includes any of the following:


 


(a)           child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law of the Participant, including any such person
with such relationship to the Participant by adoption;


 


(b)           any person (other than
a tenant or employee) sharing the Participant’s household;


 


(c)           a trust in which the
persons in (a) and (b) have more than fifty percent of the beneficial interest;


 


(d)           a foundation in which
the persons in (a) and (b) or the Participant control the management of assets;
or


 


(e)           any other entity in
which the persons in (a) and (b) or the Participant own more than fifty percent
of the voting interest.


 


“Insider” means an officer or director of the
Company or any other person whose transactions in the Company’s Common Stock
are subject to Section 16 of the Exchange Act.


 


“Option” means an award of an option to
purchase Shares pursuant to Section 5.


 


“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.


 


“Participant” means a person who receives an
Award under this Plan.


 


“Performance Factors” means the factors
selected by the Committee from among the following measures to determine
whether the performance goals established by the Committee and applicable to
Awards have been satisfied:


 


(a)           Net revenue and/or net
revenue growth;


 


(b)           Earnings before income
taxes and amortization and/or earnings before income taxes and amortization
growth;


 


(c)           Operating income and/or
operating income growth;


 


(d)           Net income and/or net
income growth;


 


(e)           Earnings per share
and/or earnings per share growth;


 


13

















 


(f)            Total stockholder
return and/or total stockholder return growth;


 


(g)           Return on equity;


 


(h)           Operating cash flow
return on income;


 


(i)            Adjusted operating
cash flow return on income;


 


(j)            Economic value added;
and


 


(k)           Individual confidential
business objectives.


 


“Performance Period” means the period of
service determined by the Committee, not to exceed five years, during which
years of service or performance is to be measured for Restricted Stock Awards
or Stock Bonuses.


 


“Plan” means this Silicon Image, Inc. 1999
Equity Incentive Plan, as amended from time to time.


 


“Restricted Stock Award” means an
award of Shares pursuant to Section 6.


 


“SEC” means the Securities and Exchange
Commission.


 


“Securities Act” means the Securities Act
of 1933, as amended.


 


“Shares” means shares of the Company’s Common
Stock reserved for issuance under this Plan, as adjusted pursuant to Sections 2
and 18, and any successor security.


 


“Stock Bonus” means an award of Shares,
or cash in lieu of Shares, pursuant to Section 7.


 


“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.


 


“Termination” or “Terminated” means, for purposes of this Plan
with respect to a Participant, that the Participant 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
any employee on an approved leave of absence, the Committee may make such
provisions respecting suspension of vesting of the Award while on leave from
the employ of the Company or a Subsidiary as it may deem appropriate, except
that in no event may an Option be exercised after the expiration of the term
set forth in the Option agreement.  The
Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the “Termination Date”).


 


“Unvested Shares” means “Unvested Shares” as
defined in the Award Agreement.


 


14

















 


“Vested Shares” means “Vested Shares” as
defined in the Award Agreement.


 


15