Document:

exv10w35

 

CONFIDENTIAL TREATMENT REQUESTED

EXHIBIT 10.35

CONSULTING AGREEMENT

This Consulting Agreement (“Agreement”) is executed on March 15, 2006 with an effective
date as of March 24, 2006 (“Effective Date”), by and between Silicon Image, Inc., a
Delaware corporation maintaining its principal place of business at 1060 E. Arques Ave., Sunnyvale,
California 94085 (“Company”) and Dr. David D. Lee (“Dr. Lee”).

WHEREAS, Dr. Lee was a founder of the Company, and has served as the Company’s Chief Executive
Officer and Chairman of the Board;

WHEREAS, after more than eleven years of service to the Company, Dr. Lee has expressed a desire to
transition from full-time employment by the Company and has agreed with Company to continue to
advise and provide consulting services to the Company, and also pursue other interests;

WHEREAS, Dr. Lee is willing to perform such services, on the terms set forth below;

WHEREAS, Dr. Lee is working with the Business Strategy Committee of the Board of Directors of the
Company (the “Business Strategy Committee”) and the Chief Executive Officer, has
substantial knowledge of the Company’s technology and strategy, and may continue to have access to
confidential information of Company, and therefore agrees to the non-competition provision in
Section 13 below;

NOW THEREFORE, in consideration of the mutual promises contained herein, Company and Dr. Lee agree
as follows:

	 	1.	 	Termination of Employment.

	 	A.	 	Effective as of the Effective Date, Dr. Lee resigns as an employee of
Company, and the Severance Agreement (as defined in Section 19 below) between
Company and Dr. Lee is terminated as set forth in Section 19. Company agrees that
the indemnity agreement entered into as of November 25, 2002 by Company and Dr. Lee
(the “Indemnity Agreement”) will continue to remain in effect, in
accordance with its terms, after the Effective Date. Furthermore, Company agrees
that any other indemnification and exculpation provisions set forth in Company’s
Certificate of Incorporation and By-Laws, and any other indemnification and
exculpation provisions existing on the Effective Date, shall remain in full force
and effect with respect to Dr. Lee in accordance with their terms.
	 
	 	B.	 	Dr. Lee’s resignation from employment by the Company as of the
Effective Date will not result in any acceleration of his existing options to
purchase shares of the Company’s stock. Stock options previously granted to Dr.
Lee by the Company will continue to vest while Dr. Lee renders services hereunder
and remain exercisable according to their terms, provided that upon termination of
his Agreement, Dr. Lee’s post-termination exercise period (other than the
applicable period for cause, death or disability) shall be nine (9) months;
provided further that if Dr. Lee is terminated pursuant to Dr. Lee’s purported
violation of Section 13 below, Dr. Lee’s post-termination exercise period shall be
reduced to three (3) months. Dr. Lee expressly acknowledges that Dr. Lee has
consulted his personal tax advisor as to the effect of Section 409A of the Internal
Revenue Code of 1986, as amended (“Section 409A”). The Company has consulted with
its tax advisors regarding Section 409A.

 

 

	 	C.	 	For a period of eighteen months following the Effective Date of this
Agreement, (a) Company will reimburse Dr. Lee for COBRA premiums actually paid by
Dr. Lee for Dr. Lee and his eligible family members to continue to receive medical
insurance coverage at a level commensurate with the coverage provided to Dr. Lee
immediately prior to the Effective Date, or at Dr. Lee’s election the Company will
make a lump sum payment equal to the eighteen month COBRA premium so that Dr. Lee
may purchase medical insurance coverage; provided, that the foregoing obligation
shall cease if a third party commences payment of Dr. Lee’s COBRA or medical
insurance premiums, and (b) Company will provide Dr. Lee with administrative
assistant support.

	 	2.	 	Services: Dr. Lee agrees to perform the services described in Exhibit A (the
“Services”), and to devote such time as is reasonably necessary to perform the
Services. Dr. Lee will perform all Services in a diligent and good faith manner and
Company will work in good faith to support Dr. Lee’s work in connection with such Services.
	 
	 	3.	 	Payment for Services: Company will pay Dr. Lee the fees set forth in Exhibit A
for the performance of the Services during the term of this Agreement.
	 
	 	4.	 	Term: This Agreement will commence on the Effective Date and will continue until the
first anniversary of the Effective Date or until termination as provided in Section 14
below. This Agreement may be extended for an additional year upon mutual written agreement
of the parties hereto.
	 
	 	5.	 	Relationship of Parties: Dr. Lee will perform the Services under the general direction
of Company’s Chief Executive Officer. Dr. Lee, however, will determine in Dr. Lee’s sole
discretion the manner and means by which the services are accomplished, subject to the
express condition that Dr. Lee will at all times comply with applicable law. Dr. Lee is an
independent contractor without authority to bind Company by contract or otherwise, and
neither Dr. Lee nor Dr. Lee’s employees and agents are agents or employees of Company.
	 
	 	6.	 	Time Commitment: It is anticipated that Dr. Lee will spend at least eighty percent
(80%) of his work time, calculated on a quarterly basis, on the Services covered by this
Agreement. Company recognizes that the term of this Agreement will be a transition period
that will allow Dr. Lee to transition to other employment, and that this Agreement is not
intended to preclude Dr. Lee from working on other matters, subject to the terms and
conditions of this Agreement.
	 
	 	7.	 	Employment Taxes and Benefits: Dr. Lee acknowledges and agrees that Dr. Lee is
obligated to report as income all compensation received by Dr. Lee pursuant to this
Agreement, and Dr. Lee will indemnify, hold harmless and, at Company’s request, defend
Company and Company’s subsidiaries, affiliates, directors, officers, employees, agents and
independent contractors to the extent of any obligation imposed on Company to pay any
withholding taxes, social security, unemployment or disability insurance or similar items,
including interest and penalties thereon, in connection with any payments made to Dr. Lee
by Company pursuant to this Agreement.
	 
	 	8.	 	Indemnification:

A. Dr. Lee will indemnify, hold harmless Company against all claims, liabilities,
damages, losses and expenses, including but not limited to reasonable attorneys’ fees
and costs of suit, finally adjudicated to have arisen out of Dr. Lee’s gross negligence
and willful misconduct or any violation of Section 9 below; provided
however, that Dr. Lee shall not be obligated to
indemnify Company for: (i) settlements entered into without first obtaining Dr. Lee’s
written

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consent; provided such consent shall not be unreasonably withheld; (ii) any action taken
at the express direction of Company; or (iii) to the extent such indemnification is
adjudicated to be unlawful.

B. Company will defend, indemnify and hold harmless Dr. Lee from and against all claims,
liabilities, damages, losses and expenses arising out of Dr. Lee’s lawful actions under
the Agreement that are taken at the direction of the Company; provided
however, that the Company shall not be obligated to defend, indemnify or hold
harmless Dr. Lee under this Agreement for: (i) any matter for which Dr. Lee is obligated
to indemnify the Company pursuant to Section 8(A) above; (ii) proceedings and claims
initiated or brought voluntarily by Dr. Lee and not by way of defense, except with
respect to proceedings specifically authorized by the Board of Directors of the Company
or brought to establish or enforce a right to indemnification arising under this
Agreement or any statute or law or otherwise, but such indemnification may be provided
by Company in specific cases if the Board finds it appropriate, (iii) settlements
entered into without the Company’s authorization and prior written consent; (iv) an
action for an accounting of profits realized by Dr. Lee in violation of Section 16 of
the Securities Exchange Act of 1934 or other similar law; or (v) to the extent such
indemnification is adjudicated to be unlawful. As a condition of Company’s obligations
under this Section 8.B (collectively, “Company Indemnification Obligations”),
Dr. Lee will (1) provide Company with prompt written notice of any claim, liability,
damage, loss or expense (collectively, “Claim Against Dr. Lee”) that will give
rise to Company Indemnification Obligations (provided that any failure to provide such
prompt written notice shall only limit coverage to the extent Company is prejudiced by
such failure to provide prompt written notice), (2) permit Company to have sole control
of the defense, settlement, adjustment or compromise of any such Claim Against Dr. Lee;
provided, that (a) Company will not make any acknowledgment of culpability on Dr. Lee’s
behalf without Dr. Lee’s consent, and (b) Dr. Lee may secure his own legal
representation at his sole expense, who shall not control or participate in the defense,
provided further that if the Company and Dr. Lee are named as co-defendants in an action
and there is a conflict of interest that prevents the Company from representing Dr. Lee
in such action then, solely with respect to the issues where such conflict of interest
exists, Company will no longer control Dr. Lee’s defense in such action and will pay for
the reasonable fees and expenses of Dr. Lee’s counsel in such action, and (3) provide
Company with all reasonable assistance (which shall not be construed to include the
payment of funds by Dr. Lee) in the defense, settlement, adjustment or compromise of any
Claim Against Dr. Lee. Nothing herein shall limit Company’s obligations existing as of
the Effective Date (including obligations with respect to facts and circumstances
occurring after the Effective Date) to indemnify Dr. Lee outside of this Agreement,
including under the Indemnity Agreement.

	 	9.	 	Proprietary Information: The product of all work performed under this Agreement for
Company (“Work Product”), will be the sole property of Company, and Dr. Lee hereby
assigns to Company all right, title and interest, including but not limited to all patent
rights (including rights in any patent application of Company in which Dr. Lee is listed as
an inventor), copyright, mask work rights, trade secret rights and other proprietary rights
therein. During and after the term of this Agreement Dr. Lee will assist Company and its
nominees in every proper way, at Company’s expense, to document, secure, maintain and
defend for Company’s own benefit in any and all countries all copyrights, patent rights,
mask work rights, trade secret rights and other proprietary rights in and to the Work
Product. Since the Work Product is the sole property of Company, Dr. Lee will not seek to
charge or demand payment outside of this Agreement for Company use of Work Product or other
exploitation of its ownership rights in the Work Product.

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	 	10.	 	Other Information: Dr. Lee acknowledges that Company has not asked him to use any other
party’s confidential or proprietary information to perform the Services.
	 
	 	11.	 	LIMITATION OF LIABILITY.

A. IN NO EVENT WILL DR. LEE BE LIABLE TO COMPANY FOR ANY LOSS, DAMAGES, CLAIMS OR COSTS
WHATSOEVER FOR CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES, ANY LOST PROFITS OR LOST
SAVINGS, ANY DAMAGES RESULTING FROM BUSINESS INTERRUPTION OR ANY PUNITIVE DAMAGES EVEN IF
DR. LEE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS, DAMAGES, CLAIMS OR COSTS. THE
FOREGOING LIMITATIONS AND EXCLUSIONS APPLY TO THE EXTENT PERMITTED BY APPLICABLE LAW. DR.
LEE’S AGGREGATE LIABILITY AND THAT OF HIS AFFILIATES AND SERVICE PROVIDERS UNDER OR IN
CONNECTION WITH THIS AGREEMENT (INCLUDING UNDER ANY INDEMNITY SET FORTH IN THIS AGREEMENT)
WILL BE LIMITED TO THE AMOUNT PAID TO DR. LEE UNDER THIS AGREEMENT. THIS LIMITATION WILL
APPLY EVEN IN THE EVENT OF A FUNDAMENTAL OR MATERIAL BREACH OR A BREACH OF THE FUNDAMENTAL
OR MATERIAL TERMS OF THIS AGREEMENT.

B. IN NO EVENT WILL COMPANY BE LIABLE TO DR. LEE FOR ANY LOSS, DAMAGES, CLAIMS OR COSTS
WHATSOEVER FOR CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES, ANY LOST PROFITS OR LOST
SAVINGS, ANY DAMAGES RESULTING FROM BUSINESS INTERRUPTION OR ANY PUNITIVE DAMAGES EVEN IF
COMPANY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS, DAMAGES, CLAIMS OR COSTS. THE
FOREGOING LIMITATIONS AND EXCLUSIONS APPLY TO THE EXTENT PERMITTED BY APPLICABLE LAW.
COMPANY’S AGGREGATE LIABILITY (IN ADDITION TO COMPENSATION PAYMENTS TO BE MADE TO DR. LEE
HEREUNDER) AND THAT OF ITS AFFILIATES AND SERVICE PROVIDERS UNDER OR IN CONNECTION WITH THIS
AGREEMENT (INCLUDING UNDER ANY INDEMNITY SET FORTH IN THIS AGREEMENT) WILL BE LIMITED TO
$1,000,000. THIS LIMITATION WILL APPLY EVEN IN THE EVENT OF A FUNDAMENTAL OR MATERIAL
BREACH OR A BREACH OF THE FUNDAMENTAL OR MATERIAL TERMS OF THIS AGREEMENT. THE LIMITATION
SET FORTH IN THIS SECTION 11(B) SHALL NOT APPLY TO COMPANY’S OBLIGATIONS UNDER DR. LEE’S
OPTIONS, INDEMNITY AGREEMENT OR EXCULPATION OR INDEMNITY PROVISIONS OF COMPANY’S CERTIFICATE
OF INCORPORATION AND BYLAWS.

	 	12.	 	Confidentiality: Dr. Lee will not, during or for a period of two and one-half years
following the termination of this Agreement, directly or indirectly (a) use any of
Company’s Confidential Information for the benefit of anyone other than Company, or (b)
disclose any of Company’s Confidential Information to anyone other than an employee or
independent contractor of Dr. Lee who is obligated by written contract to protect the
confidentiality thereof and requires such information to perform hereunder, or an employee,
director, attorney or agent of Company, or a person designated by Company as an authorized
recipient of Company’s Confidential Information. Company’s Confidential Information
includes without limitation all confidential information related to the Services, Company’s
confidential know-how, all information regarding Company not known to the general public,
and all confidential information disclosed to Company by third parties (whether acquired or
developed by Dr. Lee during Dr. Lee’s performance under this Agreement or disclosed by
Company employees). Confidential Information does not include information which (c) is
known to Dr. Lee at the time of disclosure to Dr. Lee by Company, (d) has become publicly
known through no wrongful act of Dr. Lee, (e) has been rightfully received by Dr. Lee from
a third party who is authorized to make such disclosure, or (f) has been independently
developed by Dr. Lee other than pursuant to this Agreement.
	 
	 	13.	 	Non-Competition: Dr. Lee agrees not to solicit the services of any of Company’s
employees during the term of this Agreement. In addition to not soliciting the services of
Company’s employees, Dr. Lee agrees not to make a job offer to any Company employees while
they are

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	 	 	 	employed by Company during the term of this Agreement. During the term of this Agreement
Dr. Lee shall not Compete With The Company in any geographic area where the Company or any
subsidiary of the Company engages in business or maintains sales or service representatives
or employees. “Compete With The Company” means, directly or indirectly, to engage
in (whether as an employee, consultant, proprietor, partner, director or otherwise), or have
any ownership interest in (other than a 1% or less passive interest in a publicly traded
company), or participate in the financing, operation, management, or control of, any person,
firm, corporation or business that engages in a “Restricted Business”, as such term is
defined hereafter. “Restricted Business” shall mean any business that is engaged or
involved in (or, to Dr. Lee’s knowledge after due inquiry, planning or preparing to engage
or become involved in) research, development, production, marketing, leasing, selling or
servicing any product, product line or service (but does not include a company that has
multiple divisions or business units, and where the product or services are related to a
division or unit for which Dr. Lee provides no direct or indirect services or oversight, and
for which Dr. Lee does not have any other decision making responsibility) that competes, or
would compete, with any product, product line or service that is being designed, developed,
manufactured, marketed or sold by the Company or any subsidiary of the Company (or, to Dr.
Lee’s knowledge with a product or service that the Company or any such subsidiary is
planning or preparing to design, develop, manufacture, market or sell). In the event that
Company decides not to pursue an opportunity presented to Company by Dr. Lee, Dr. Lee shall
have the right to request that the Company’s Board of Directors (the “Board”)
determine whether or not Dr. Lee’s pursuit of such opportunity would result in a violation
of the foregoing provisions of this Section 13. Notwithstanding the foregoing, the Company
is aware of Dr. Lee’s position on the board of directors of, and Dr. Lee’s investment in,
Synerchip Co., Ltd. and, provided Dr. Lee complies with the guidelines adopted by the
Company’s Board of Directors for this purpose and attached hereto as Exhibit B, such
service and investment will not be considered to Compete With The Company.
	 
	 	14.	 	Termination: Dr. Lee may immediately terminate this Agreement upon Company Cause.
“Company Cause” means any breach of this Agreement, if such breach causes material
harm to Dr. Lee. The Company may immediately terminate this Agreement upon Dr. Lee Cause.
“Dr. Lee Cause” means (i) any breach of this Agreement, if such breach causes
material harm to the Company; (ii) any gross negligence or willful misconduct by Dr. Lee in
Dr. Lee’s performance of Services that causes harm to the Company; (iii) Dr. Lee’s
repeated failure to diligently perform Services in a reasonable manner pursuant to this
Agreement; (iv) Dr. Lee’s commission of a crime carrying a minimum sentence of one year as
determined under the laws of any nation or political subdivision thereof in which such
occurs (or is deemed to occur) or violation of the Foreign Corrupt Practices Act or
successor or replacement legislation that results in liability to Company; (v) Dr. Lee’s
commission of any act of fraud, embezzlement or dishonesty or breach of fiduciary duties
owed to the Company; or (vi) Dr. Lee’s abuse of alcohol or controlled substances that has a
detrimental effect upon Dr. Lee’s performance of Services. If Dr. Lee claims he
has satisfied a Milestone and the Business Strategy Committee determines that Dr. Lee has
not satisfied the Milestone, Dr. Lee may terminate the Agreement but shall not be entitled
to any further Milestone payments. Dr. Lee may terminate this Agreement upon any of the
events set forth in clauses (a) through (e) of Section 18.1 of Company’s 1999 Equity
Incentive Plan, as amended, other than a transaction in which each of the following are
true (i) the stockholders of Company before the transaction own more than 40% of the
outstanding shares of the combined company, and (ii) members of the Board of Directors of
Company prior to the announcement of the transaction represent a majority of the directors
following such transaction.

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	 	15.	 	Effect of Termination: Upon the termination of this Agreement pursuant to Section 14 or upon
expiration of the term of this Agreement, each party shall be released from all obligations
and liabilities to the other occurring or arising after the date of such termination under
this Agreement, as applicable, except that any such termination shall not relieve Dr. Lee or
Company of their respective obligations and agreements under any of Sections 1, 3, 7, 8, 9,
10, 11, 12, 14, 15, 17 , 18 and 19 hereof, nor shall any such termination relieve Dr. Lee or
Company from any liability arising from any breach of this Agreement, provided,
however if this Agreement is terminated by either party pursuant to Section 14,
Company shall not be obligated to pay for any Services that have not been rendered or any
milestones set forth in Exhibit A that have not been accomplished.
	 
	 	16.	 	Assignment: The rights and liabilities of the parties hereto shall bind and inure to
the benefit of their respective successors, executors and administrators, as the case may
be; provided that, since Company has specifically contracted for Dr. Lee’s services, Dr.
Lee may not assign or delegate his obligations under this Agreement either in whole or in
part without the prior written consent of Company.
	 
	 	17.	 	Governing Law; Severability: This Agreement shall be governed by and construed in
accordance with the laws of the State of California. Both parties agree that arbitration
between the parties will take place in Santa Clara County, California and further agree
that any dispute regarding the interpretation or enforcement of this Agreement shall be
decided by confidential, final and binding arbitration conducted by Judicial Arbitration
and Mediation Services (“JAMS”) under the then existing JAMS rules rather than by
litigation in court, trial by jury, administrative proceeding or in any other forum. The
decision of such arbitration may be enforced by the party in whose favor it is given in any
court with jurisdiction over the party against whom enforcement is sought. If any
provision of this Agreement other than those provisions relating to the assignment of
rights to the Company is found by a court of competent jurisdiction to be unenforceable for
any reason, the remainder of this Agreement shall continue in full force and effect.
	 
	 	18.	 	Export: Dr. Lee will not export outside the United States, if a United States citizen,
or re-export, if a foreign citizen, any Confidential Information or direct product thereof,
except as permitted by the laws and regulations of the United States and as directed by
Company. Company shall not direct Dr. Lee to export outside the United States any
Confidential Information or direct product thereof, except as permitted by the laws and
regulations of the United States.
	 
	 	19.	 	Complete Understanding; Modification; Waiver of Benefits under Severance Agreement:
This Agreement constitutes the full and complete understanding and agreement of the parties
relating to the subject matter hereof and supersedes all prior understandings and
agreements relating to such subject matter. Any waiver, modification, or amendment of any
provision of this Agreement shall be effective only if in writing and signed by the parties
hereto. Where there is a conflict between the terms and conditions of this Agreement and
Exhibit A, the terms of this Agreement will control. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an original and
all of which shall constitute the same instrument. Dr. Lee hereby waives any benefits
under that certain August 15, 1997 Amended and Restated Severance Agreement between Dr. Lee
and Company as amended on January 24, 2000 and March 29, 2001 (collectively, the
“Severance Agreement”), and such agreement (including amendments to such agreement)
is hereby terminated without any obligation being owed to the other other than as set forth
herein.

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	 	20.	 	Notices: Any notices required or permitted hereunder will be given to the appropriate party
at the address specified below or at such other address as the party may specify in writing.
Such notice shall be deemed given upon personal delivery to the appropriate address or
three (3) days after the date of mailing if sent by certified or registered mail.
	 
	 	21.	 	Reporting: Dr. Lee will report to the Chief Executive Officer and/or the Board on the
status of Dr. Lee’s performance hereunder upon Company’s request and shall make a report to
the Business Strategy Committee on a quarterly basis of the plans described in the
milestones set forth in Section II of Exhibit A.

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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date first written
above.

	 	 	 	 	 
	COMPANY

	 	CONSULTANT	 	 
	 
	 	 	 	 
	Silicon Image, Inc.

	 	Name: David D. Lee	 	 
	 

	 	 	 	 
	1060 E. Arques Ave.

	 	Address Omitted	 	 
	 

	 	 	 	 
	Sunnyvale, California 94085
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Signature: /s/ Steve Tirado

	 	Signature: /s/ David D. Lee	 	 
	 

Name: Steve Tirado

	 	 

	 	 
	 

Title: Chief Executive Officer

	 	 

	 	 
	 

	 	 

	 	 

Exhibit A
— Statement of Work

Exhibit B
— Guidelines for Dr. Lee’s Investment and Service with Synerchip Co., Ltd.

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Exhibit A

Statement of Work

This Statement of Work is pursuant to the Consulting Agreement (the “Agreement”) effective as of
March 24, 2006 between Silicon Image, Inc. and David D. Lee (“Dr. Lee”). All capitalized terms
used but not otherwise defined herein shall have the meanings given such terms in the Agreement.
This Statement of Work shall be governed by all the terms and conditions of the Agreement.

I. Services to be Provided: Dr. Lee shall render such services as may be necessary to
complete in a professional manner the projects described as follows:

	 	•	 	Assist in successful transition of relationships and strategy formulation activities
for CEO.
	 
	 	•	 	Attend meetings of the Company’s board of directors to which Dr. Lee has been invited
by the Company’s board of directors.
	 
	 	•	 	Assist the Company in maintaining and improving Company communications with Sunplus
leadership.
	 
	 	•	 	Assist in the development of relationships for Simplay Labs, LLC in Japan, Taiwan,
Korea and the People’s Republic of China (“China”).
	 
	 	•	 	Assist in the development of a comprehensive written strategic plan for establishing a
digital content distribution standard based on HDMI [***] in China. The plan should
include potential partners, specific action items, objectives that need to be
accomplished, estimates of resource requirements, and staffing recommendations.
	 
	 	•	 	Assist the Company in working with key governmental agencies/companies/universities
and other institutions in Japan, Taiwan, Korea and China to establish a digital content
distribution standard based on HDMI [***].
	 
	 	•	 	Assist the Company in the development of the UDI 1.0 standard and test specification.
	 
	 	•	 	Assist [***] and others to complete the development of [***].
	 
	 	•	 	Assist the Company in identifying and hiring appropriate representatives in standards
bodies, [***].

Company will provide commercially reasonable resources to assist in the provision of the foregoing
services.

II. Fee Schedule: Dr. Lee shall be paid $40,000 per month during the term of the
Agreement. Dr. Lee agrees that any reimbursable travel and entertainment expenses are to be
invoiced to Company at cost and must be in accordance with Company’s travel and expenses policy.

Dr. Lee shall also be paid as set forth below for accomplishment of the milestones set forth below
by their applicable Due Dates:

	 	1.	 	Milestone #1:
	 
	 	 	 	Acceptance by the Business Strategy Committee of the Board of Directors of (i) a strategy to
move HDMI specifications toward future versions including deep color, higher bandwidth, and
higher refresh rate, (ii) a strategy for product differentiation, key IP development
direction and plan, and

 

			
	***	 	Note: Confidential treatment has been requested with respect to the information contained
within the [***] marking. Such portions have been omitted from this filing and have been filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

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	 	 	 	building strategic relationship with HDMI founders to move the
specification move forward from V1.3.

   Goal Date: Q2, 2006

Due Date: July 15, 2006

Payment: $125,000 upon accomplishment of Milestone #1 by July 15, 2006
	 
	 	2.	 	Milestone #2:

Acceptance by the Business Strategy Committee of the Board of Directors of a plan to make
HDMI a well adopted digital display interface standard in China, which includes a plan for
building a strategic and working relationship with key Chinese entities.

Goal Date: Q3, 2006

Due Date: October 15, 2006

Payment: $250,000 upon accomplishment of Milestone #2 by October 15, 2006
	 
	 	3.	 	Milestone #3:

Acceptance by the Business Strategy Committee of the Board of Directors of a plan to jointly
develop or help develop new [***] for Chinese market with entities in China, which includes
directing and guiding evaluation of new [***] and feasibility of implementing the new [***]
in Company’s products. Endorsement from China’s Ministry of Information Industry
(“MII”) to promote HDMI to Chinese CE manufacturers.

Goal Date: Q4, 2006

Due Date: December 31, 2006

Payment: $125,000 upon accomplishment of Milestone #3 by December 31, 2006
	 
	 	 	 	The Business Strategy Committee shall act in good faith in determining whether to accept or
reject a plan presented by Dr. Lee.

III. Counterparts: This Statement of Work may be executed in one or more counterparts, each of
which shall for all purposes be deemed to be an original and all of which shall constitute the same
instrument.

IN WITNESS WHEREOF, the parties hereto have signed this Statement of Work as of the date first
written above.

	 	 	 	 	 
	COMPANY

	 	DR. LEE	 	 
	 
	 	 	 	 
	Silicon Image, Inc.

	 	Name: David D. Lee	 	 
	1060 E. Arques Ave.

	 	 

Address Omitted
	 	 
	 

	 	 	 	 
	Sunnyvale, California 94085
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Signature: /s/ Steve Tirado

	 	Signature: /s/ David D. Lee	 	 
	 

Name: Steve Tirado

	 	 

	 	 
	 

Title: Chief Executive Officer

	 	 

	 	 
	 

	 	 

	 	 

 

			
	***	 	Note: Confidential treatment has been requested with respect to the information contained
within the [***] marking. Such portions have been omitted from this filing and have been filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

10

 

Exhibit B

Guidelines for Dr. Lee’s Investment and Service with Synerchip Co., Ltd. (“Synerchip”)

Dr. Lee agrees not to disclose Company confidential information to Synerchip or Synerchip
confidential information to Company, without the express consent of the party owning the
confidential information.

If Dr. Lee is asked by Company or Synerchip to negotiate a deal with the other party, Dr. Lee
agrees to disclose that request, and his role in the negotiations, to the other party.

11<PAGE>

                                                                   Exhibit 10.17

                                     FORM OF

                           NUANCE COMMUNICATIONS, INC.
                             2000 STOCK OPTION PLAN
                       RESTRICTED STOCK PURCHASE AGREEMENT

(A)  Name of Grantee: __________________

(B)  Grant Date: ____________________

(C)  Number of Shares: ______________

(D)  Price Per Share: ___________________

(E)  Effective Date: __________________

     THIS RESTRICTED STOCK PURCHASE AGREEMENT (the "AGREEMENT"), is made and
entered into as of the date set forth in Item E above (the "EFFECTIVE DATE")
between Nuance Communications, Inc., a Delaware corporation (the "COMPANY") and
the person named in Item A above ("GRANTEE").

     THE PARTIES AGREE AS FOLLOWS:

1.   GRANT OF STOCK. The Company hereby grants to Grantee pursuant to the
     Company's 2000 Stock Option Plan (the "PLAN"), a copy of which is attached
     to this Agreement as Exhibit 1, the number of shares of Common Stock of the
     Company, par value $0.001 per share (the "SHARES") listed in Item C above
     on the terms and conditions set forth herein and in the Plan, the terms and
     conditions of the Plan being hereby incorporated into this agreement by
     reference. In the event of a conflict between the terms and conditions of
     the Plan and the terms and conditions of this Agreement, the terms and
     conditions of the Plan shall prevail.

2.   PURCHASE PRICE. The purchase price for the Shares shall be the price set
     forth in Item D above.

3.   ADJUSTMENT OF SHARES. The Company shall adjust the number and kind of
     Shares in certain circumstances in accordance with the provisions of the
     Plan.

4.   COMPANY'S RIGHT OF REPURCHASE UPON TERMINATION OF EMPLOYMENT.

     4.1  RIGHT OF REPURCHASE. The Shares shall be subject to a right of
          repurchase in favor of the Company (the "RIGHT OF REPURCHASE") to the
          extent set forth on Exhibit 4.1 attached hereto. If the Grantee shall
          cease to be a Service Provider for reasons otherwise defined in
          Exhibit 4.1, before the Right of Repurchase lapses in accordance with
          Exhibit 4.1, the Company may purchase the Shares subject to the Right
          of Repurchase for an amount equal to the price the Grantee paid for
          such Shares (exclusive of any taxes

<PAGE>

          paid upon acquisition of the stock). The Grantee may not dispose of or
          transfer Shares while such Shares are subject to the Right of
          Repurchase and any such attempted transfer shall be null and void. The
          Grantee acknowledges and agrees that until such time as the Shares are
          no longer subject to the Right of Repurchase, the Shares shall be
          retained by the Company at the Company's executive offices.

     4.2  EXERCISE OF REPURCHASE RIGHT. The Company may exercise its Right of
          Repurchase set forth in this Section 4 by written notice to the
          Grantee within 90 days after the date on which the Grantee ceases to
          be retained as a Service Provider. If the Company (or its assignees)
          exercises its Right of Repurchase, the Grantee shall, if necessary,
          endorse and deliver to the Company (or its assignees) the stock
          certificates representing the Shares being repurchased, and the
          Company (or its assignees) shall pay the Grantee the total repurchase
          price in cash upon such delivery. The Grantee shall cease to have any
          rights with respect to such repurchased Shares immediately upon tender
          of the repurchase price.

5.   STOCK CERTIFICATE RESTRICTIVE LEGENDS. Stock certificates evidencing Shares
     will bear the following restrictive legend:

          "THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS OF AN
          AGREEMENT BETWEEN THE COMPANY AND THE HOLDER OF SUCH SECURITIES.
          PURSUANT TO THE TERMS OF SUCH AGREEMENT, THE COMPANY HAS A RIGHT TO
          REPURCHASE SUCH SECURITIES UNDER CERTAIN CIRCUMSTANCES. A COPY OF THE
          AGREEMENT CAN BE OBTAINED FROM THE SECRETARY OF THE COMPANY."

6.   RELATION TO COMPANY. Grantee is presently an officer, director, or other
     employee of, or consultant to the Company, and in such capacity has become
     personally familiar with the business, affairs, financial condition, and
     results of the operations of the Company.

7.   TAX ADVICE. The Company has made no warranties or representations to
     Grantee with respect to the income tax consequences of the transactions
     contemplated by the agreement pursuant to which the Shares will be
     purchased and Grantee is in no manner relying on the Company or its
     representatives for an assessment of such tax consequences. The Grantee
     acknowledges that the Grantee has not relied and will not rely upon the
     Company or the Company's counsel with respect to any tax consequences
     related to the ownership, purchase, or disposition of the Shares. The
     Grantee assumes full responsibility for all such consequences and for the
     preparation and filing of all tax returns and elections which may or must
     be filed in connection with the Shares.

<PAGE>

8.   WITHHOLDING OF TAXES. Notwithstanding any contrary provision of this
     Agreement, no certificate representing Shares may be released from the
     Company unless and until the Grantee shall have delivered to the Company
     the full amount of any federal, state or local income or other taxes which
     the Company may be required by law to withhold with respect to such Shares.

     8.1  Trade for Taxes. At the Grantee's election, the Company may deduct
          from any payment of distribution of Restricted Stock the amount of any
          tax required by law to be withheld with respect to the purchase of the
          shares of Restricted Stock.

     GRANTEE MUST INFORM THE COMPANY OF HIS OR HER PREFERENCE FOR PAYMENT OF
     THEIR WITHHOLDING TAX OBLIGATIONS WITHIN 30 DAYS OF RECEIPT OF THE
     DOCUMENTATION. AN ELECTION FORM IS ATTACHED HERETO AS EXHIBIT A.

9.   ASSIGNMENT; BINDING EFFECT. Subject to the limitations set forth in this
     Agreement, this Agreement shall be binding upon and inure to the benefit of
     the executors, administrators, heirs, legal representatives, and successors
     of the parties hereto; provided, however, that Grantee may not assign any
     of Grantee's rights under this Agreement.

10.  DAMAGES. Grantee shall be liable to the Company for all costs and damages,
     including incidental and consequential damages, resulting from a
     disposition of the Shares which is not in conformity with the provisions of
     this Agreement.

11.  GOVERNING LAW. This Agreement shall be governed by, and construed in
     accordance with, the laws of the Commonwealth of Massachusetts excluding
     those laws that direct the application of the laws of another jurisdiction.

12.  NOTICES. All notices and other communications under this Agreement shall be
     in writing. Unless and until the Grantee is notified in writing to the
     contrary, all notices, communications, and documents directed to the
     Company and related to the Agreement, if not delivered by hand, shall be
     mailed, addressed as follows:

                           Nuance Communications, Inc.
                                One Wayside Road
                              Burlington, MA 01803
             Attention: Vice President, Human Resources & Operations

     Unless and until the Company is notified in writing to the contrary, all
     notices, communications, and documents intended for the Grantee and related
     to this Agreement, if not delivered by hand, shall be mailed to Grantee's
     last known address as shown on the Company's books. Notices and
     communications shall be mailed by first class mail, postage prepaid;
     documents shall be mailed by registered mail, return receipt requested,
     postage prepaid. All mailings and

<PAGE>

     deliveries related to the Agreement shall be deemed received when actually
     received, if by hand delivery, and two business days after mailing, if by
     mail.

13.  ARBITRATION. Any and all disputes or controversies arising out of this
     Agreement shall be finally settled by arbitration conducted in Middlessex
     County in accordance with the then existing rules of the American
     Arbitration Association, and judgment upon the award rendered by the
     arbitrators may be entered in any court having jurisdiction thereof;
     provided that nothing in this Section 13 shall prevent a party from
     applying to a court of competent jurisdiction to obtain temporary relief
     pending resolution of the dispute through arbitration. The parties hereby
     agree that service of any notices in the course of such arbitration at
     their respective addresses as provided for in Section 12 shall be valid and
     sufficient.

14.  NO RIGHTS TO STOCK, OPTIONS OR EMPLOYMENT. Other than with respect to the
     Shares, neither Grantee nor any other person shall have any claim or right
     to be issued stock or granted an option under the Plan. Having received a
     stock grant under the Plan shall not give the Grantee any right to receive
     any other grant or option under the Plan. This Agreement is not an
     employment contract and nothing in this Agreement shall be deemed to create
     in any way whatsoever any obligation on your part to continue in the employ
     of the Company, or the Company to continue your employment with the
     Company.

15.  ENTIRE AGREEMENT. The Company and Grantee agree that this Agreement
     (including its attached Exhibits) is the complete and exclusive statement
     between the Company and Grantee regarding its subject matter and supersedes
     all prior proposals, communications, and agreements of the parties, whether
     oral or written, regarding the grant of stock options or issuances of
     Shares to Grantee.

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Restricted Stock
Purchase Agreement as of the dates set forth below.

                                        Nuance Communications, Inc.

                                        By:
                                            ------------------------------------
                                            VP Human Resources & Operations

                                        Date:
                                              ----------------------------------

     The Grantee hereby accepts and agrees to be bound by all of the terms and
conditions of this Agreement and the Plan.

                                        ----------------------------------------
                                        Grantee

                                        Date:
                                              ----------------------------------

<PAGE>

                                    EXHIBITS

Exhibit 1     Stock Option Plan

Exhibit 4.1   Right of Repurchase

Exhibit A     Tax Election

Exhibit 5     Stock Assignment

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