Document:

exv10w34

 

Exhibit 10.34

1060 East. Arques Ave.

November 11, 2004

Steve Laub

Dear Steve:

     On behalf of the Board of Directors (the “Board”) of Silicon Image, Inc. (the “Company”), it
is my pleasure to offer you the position of Chief Executive Officer and President of the Company.
The terms of our offer and the benefits provided by the Company are as follows:

     1. You will report to the Board, which will nominate and elect you to the Board as a Class I
director following the date you start your employment with the Company (the “Start Date”). Your
Start Date will be November 11, 2004. While you are employed at the Company, you will abide by
your duty of loyalty to the Company, will perform your duties and follow the lawful directions of
the Board in a diligent manner, and will devote your full time, energy and attention to the
interests of the Company, subject to your devotion of time to manage your personal assets and
investments, to participate in charitable, professional and community activities and to serve on
boards of directors of other companies, provided such devotion of time does not materially
interfere with your service to the Company and such service on boards of other companies is
permissible as not representing a conflict of interest under the Company’s Code of Conduct as
determined by the Board. You will receive an indemnification agreement for your service as an
officer and director of the Company consistent with indemnification agreements in place with other
members of the Board.

     2. Your annual base salary will be $425,000 per year. For the 2004 fiscal year, you will be
eligible to receive a cash bonus equal to a prorated portion of the calculated amount (if any)
payable to the current Chief Executive Officer under the executive bonus program of the Company for
the 2004 fiscal year (it being acknowledged that the current Chief Executive Officer’s target bonus
is $200,000). In addition, for the 2005 fiscal year and each fiscal year thereafter, you will be
eligible to receive a cash bonus under an executive bonus program for the year to be proposed by
you and approved by the Compensation Committee of the Board. Such executive bonus program will
provide for a potential cash bonus to you of at least 50% of your annual base salary, provided that
the actual bonus amount (which may be less than 50% of your annual base salary) will be determined
by Company performance and whatever other factors the executive bonus program considers. Your cash
compensation will be subject to annual review by the Compensation Committee.

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     3. You will be granted an option (the “Option”) for 1,500,000 shares of common stock (as of
October 29, 2004, there were approximately 76,648,000 shares outstanding). The Option will have an
exercise price equal to the closing price of our common stock on the Nasdaq Stock Market on the
Start Date and will vest and become exercisable with respect to one-fourth of the shares on the
first anniversary of the Start Date and an additional one-forty-eighth of the shares each month
thereafter so long as you remain continuously employed by the Company, subject to the vesting
acceleration provisions set forth in Section 5 of this letter agreement.

     4. You will be eligible to participate in the other employee benefit plans and executive
compensation programs maintained by the Company applicable to other employees and key executives of
the Company, including without limitation stock option, stock purchase, incentive or other bonus
plans, life, disability, health, accident and other insurance programs, and similar plans or
programs. You will receive not less than three weeks of paid vacation each year.

     5. Upon termination of your employment with the Company for any reason, you will receive
payment for all unpaid salary and vacation accrued to the date of your termination of employment,
you will receive reimbursement for expenses per existing Company policies and your benefits will be
continued under the Company’s then existing benefit plans and policies as provided under the terms
of such plans and policies and as required by applicable law; such payments and benefits are not
included within the separation benefits described below (but likewise will not operate to duplicate
such separation benefits either). Under certain circumstances, you will also be entitled to
receive separation benefits as set forth below, but you will not be entitled to any other
compensation, award or damages with respect to your employment or termination. A full unilateral
release (including a waiver of unknown claims and covenant not to sue) in favor of the Company and
its directors, officers and other related persons and an agreement not to solicit employees of the
Company for a period of one year following termination, each in the form then used by the Company
for departing executives (but in all events containing no terms inconsistent with, or additional
to, the terms hereof unless mutually and reasonably agreed at the time), must be executed by you in
order to receive any separation benefits; provided, however, you will not be required to release
any right to indemnification that you may have under applicable law, the Company’s Certificate of
Incorporation, the Company’s bylaws or any indemnity agreement between you and the Company nor any
rights related to your then existing equity ownership in the Company; provided further, that in the
event that the Company subsequently commences litigation or arbitration proceedings against you
(excluding derivative suits brought by stockholders of the Company unaffiliated with members of the
Board), upon written notice to the Company from you within 30 days of the initiation of any such
proceeding, such release shall be considered null and void.

          A. In the event of your voluntary termination (other than for Good Reason) or termination for
Cause (as defined following), you will not be entitled to any cash separation benefits or
additional vesting of shares of restricted stock or options.

          B. In the event of your termination without Cause, termination by you for Good Reason or your
termination due to death or disability, you shall be entitled to (i) cash severance (at the rate of
your then current annual base salary) paid pro rata in accordance with normal payroll dates and
reimbursement of COBRA insurance premiums (if you elect COBRA coverage), each for twelve months
following your termination, and (ii) the calculated amount (if any) payable to the Chief Executive
Officer under the executive bonus program of the Company for the entire year in which such
termination occurs and pro rated for a sufficient portion of the following year so as to constitute
participation in such executive bonus program effective through the date that is one year after
such termination, in each case less

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applicable deductions and withholdings and in accordance with
the Company’s normal payroll practices. Your right to receive COBRA insurance premiums shall
terminate upon your commencement of full-time employment with another company (which you shall
promptly notify the Company of).

          C. In the event of your termination without Cause, termination by you for Good Reason or your
termination due to death or disability, you shall be entitled to twelve months of accelerated
vesting under your Company stock options and restricted stock awards (whether referred to above or
otherwise granted in the future).

          D. In the event (i) there is a Change of Control (as defined following), (ii) you are not
offered (or continued in, as the case may be) the position of chief executive officer of the
Successor Company (as defined following) for at least the one year period after the Change of
Control with annual base salary and potential cash bonus at least as favorable to you as those
referred to herein and principal office location located within 25 miles from the current location
of the Company’s principal place of business at 1060 East Arques Avenue, Sunnyvale, California, and
(iii) if so requested by the Successor Company, you continue to serve the Successor Company (unless
prevented by death or disability) on a full-time basis (the Successor Company to continue to
provide cash compensation (at the rate of your then current annual base salary), continued
eligibility for bonus, health benefits and equity vesting as provided herein) to provide reasonable
and appropriate transition assistance commensurate with your experience and reporting to the chief
executive officer for such transition period as is requested by the Successor Company, not to
exceed six months (unless you agree in writing to a longer transition period), then upon your
termination from the Company or Successor Company (as the case may be) in connection with the
Change of Control or completion of such transition period, in addition to the separation benefits
described in paragraph B above, but in lieu of the separation benefits described in paragraph C
above, you shall be entitled to accelerated vesting under your Company stock options and restricted
stock awards (whether referred to above or otherwise granted in the future), or equity securities
of the Successor Company received in exchange therefor, based on the number of options and/or
shares that would have vested had you remained employed with continued vesting for three years
after the later of the closing of the Change of Control or the completion of such transition
period.

          E. “Cause” means (i) conviction of, or plea of guilty or no contest to, a felony under the
laws of the United States or any state thereof or any act of fraud, embezzlement or dishonesty,
(ii) breach of fiduciary duties not remedied within thirty days of written notice, or (iii)
material breach of this agreement or any other written agreement with the Company not remedied
within thirty days of written notice.

          F. “Good Reason” means (i) any material reduction in your job duties and responsibilities (it
being acknowledged and agreed that your position as Chief Executive Officer and President will
entail your having such oversight and authority over Company operations as is customary for a chief
executive officer of a typical public company, subject to such oversight of the Board of Directors
and its Committees as is customary for a typical public company, satisfaction of legal requirements
and the implementation of appropriate checks, balances and procedures associated with the Company’s
accounting and financial matters, internal controls and public securities disclosures as approved
or established by the Board or the Committee responsible for the matter in question) not approved
in writing by you and not restored within thirty days of written notice to the Board, (ii) your
failure to be elected at any time as a member of the Board, (iii) any demoting change in your job
title as Chief Executive Officer and President, reduction in annual base salary or potential cash
bonus, or requirement that your principal place of business be located more than 25 miles from the
current location of the Company’s principal place of business at 1060 East Arques Avenue,
Sunnyvale, California not rescinded

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within thirty days of written notice to the Board, or (iv) any
material breach by the Company of any written obligation to you not remedied within thirty days of
written notice to the Board.

          G. “Change of Control” means (i) 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 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 (the “Parent”), 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 of the voting power of the Parent immediately after the transaction or
transactions, or (ii) change in composition of the Board such that a majority of the authorized
directors consist of individuals whose nomination to the Board was not approved or ratified by a
majority of the directors in office immediately prior to such nomination (but excluding from such
vote any directors previously not so approved or ratified).

          H. “Successor Company” means (i) the combined company resulting from a Change of Control
involving any kind of business combination, (ii) the acquiror of all or substantially all of the
assets of the Company in such a transaction, or (iii) the Company in all other cases.

          I. No acceleration of vesting will be deemed to extend beyond the number of then-unvested
options or shares under a particular award at the time of acceleration. No additional vesting
shall occur following termination of service. Vested options (including replacement options in a
Successor Company) will be exercisable for (i) fifteen months following the termination date in the
case of your termination without Cause, termination by you for Good Reason, or your termination
from the Company or Successor Company (as the case may be) in connection with a Change of Control
or completion of transition services period associated with a Change of Control (provided the
conditions set forth in clauses (i)-(iii) of paragraph D are satisfied), (ii) twelve months
following the termination date in the case of termination due to death or disability, or (iii)
three months following the termination date in the case of your voluntary termination or
termination for Cause, but in no event later than the expiration date of the options.

     6. As an employee of the Company you will have access to certain Company confidential
information and you may, during the course of your employment, develop certain information or
inventions which will be the property of the Company. To protect the interests of the Company, you
will need to sign the Company’s standard employee invention assignment and confidentiality
agreement as a condition of your employment. We wish to impress upon you that we do not wish you
to bring with you any confidential or proprietary material of any former employer or to violate any
other obligations you may have to your former employers.

     7. This offer of employment is made to you in confidence, and its terms must not be disclosed
by you to anyone outside your immediate family and professional advisors. If you do disclose any
of its terms to such a family member or advisor, you must caution him or her that such information
is confidential and must not be disclosed to anyone else.

     8. While we look forward to a long and profitable relationship, should you decide to accept
our offer, you will be an at-will employee of the Company, which means the employment relationship
can be terminated by either of us for any reason at any time. Any statements or

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representations to
the contrary (and any statements contradicting any provision in this letter) should be regarded by
you as ineffective. Further, your participation in any stock option or benefit program is not to
be regarded as assuring you of continuing employment for any particular period of time.

     9. This letter agreement constitutes the entire understanding and agreement of the parties
hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect to such subject matter.

     10. This offer will remain open until November 12, 2004. If you decide to accept our offer,
and I hope you will, please sign the enclosed copy of this letter agreement in the space indicated
below and return it to me. Your signature will acknowledge that you have read and understood and
agreed to the terms and conditions of this offer. Should you have anything else that you wish to
discuss, please do not hesitate to call me.

     We look forward to the opportunity to welcome you to the Company.

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Very truly yours,

Silicon Image, Inc.

	 	 	 	 	 
	By:

	 	/s/ David Hodges	 	 
	
	 	 
	

	 	     David Hodges, Director	 	 

Acknowledged, Accepted and Agreed

/s/ Steve Laub

Steve Laub

6exv10w35

 

Exhibit 10.35

SILICON IMAGE, INC.

NON-PLAN STOCK OPTION AGREEMENT

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

	 	 	 	 	 
	Optionee:
	 	Steven A. Laub	 	 
	 
	 	
	 	 
	Total Option Shares:
	 	1,500,000	 	 
	 
	 	
	 	 
	Exercise Price Per Share:
	 	$15.20	 	 
	 
	 	
	 	 
	Date of Grant:
	 	November 11, 2004	 	 
	 
	 	
	 	 
	First Vesting Date:
	 	November 11, 2005	 	 
	 
	 	
	 	 
	Expiration Date:
	 	November 11, 2014	 	 
	 
	 	
	 	 
	Type of Stock Option:
	 	NQSO	 	 
	 
	 	
	 	 

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

          2. Vesting; Exercise Period.

               2.1 Vesting of Shares. This Option shall be exercisable as it vests. Subject to the
terms and conditions of this Agreement, this Option shall vest and become exercisable as to
portions of the Shares as follows: (a) this Option shall not be exercisable with respect to any of
the Shares until November 11, 2005 (the “First Vesting Date”); (b) if Optionee has continuously
provided services to the Company, or any Parent or Subsidiary of the Company, then on the First
Vesting Date, this Option shall become exercisable as to one fourth (1/4th) of the
Shares (rounded to the nearest whole share); and (c) thereafter this Option shall become
exercisable as to an additional one forty-eighth (1/48th) of the Shares (rounded to the
nearest whole share) at the end of each full succeeding month, provided that Optionee has
continuously provided services to the Company, or any Parent or Subsidiary of the Company. This
Option shall cease to vest upon Optionee’s Termination and Optionee shall in no event be entitled
under this Option to purchase a number of shares of the Company’s Common Stock greater than the
“Total Option Shares.”

          2.2 Expiration. This Option shall expire on the Expiration Date set forth above and
must be exercised, if at all, on or before the earlier of the Expiration Date or the date on which
this Option is earlier terminated in accordance with the provisions of Section 3, provided,

 

 

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however, that this Option will be not be exercisable after the expiration of ten (10) years
from the Date of Grant.

          3. Termination.

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

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

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

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

          4. Manner of Exercise.

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

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

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

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

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

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

          5. Compliance with Laws and Regulations. The exercise of this Option and the issuance
and transfer of Shares shall be subject to compliance by the Company and Optionee with all
applicable requirements of federal and state securities laws and with all applicable requirements
of any stock exchange on which the Company’s Common Stock may be listed at the time of such
issuance or transfer. Optionee understands that the Company is under no

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obligation to register or
qualify the Shares with the Securities and Exchange Commission, any state securities commission or
any stock exchange to effect such compliance.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          18. Corporate Transactions.

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

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

          19. Amendment or Termination of the Agreement. The Board may at any time terminate or
amend this Agreement in any respect; provided, however, that the Board will

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not,
without the approval of the Optionee, amend this Agreement in any manner that requires Optionee’s
approval.

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

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

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

               “Committee” means the Compensation Committee of the Board.

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

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

	 	(a)  	if such Common Stock is then quoted on the Nasdaq National Market,
its closing price on the Nasdaq National Market on the date of determination as
reported in The Wall Street Journal;
	 
	 	(b)  	if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of determination on
the principal national securities exchange on which the Common Stock is listed or
admitted to trading as reported in The Wall Street Journal;
	 
	 	(c)  	if such Common Stock is publicly traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on a national securities
exchange, the average of the closing bid and asked prices on the date of
determination as reported in The Wall Street Journal; or
	 
	 	(d)  	if none of the foregoing is applicable, by the Committee in good
faith.

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

-7-

 

Silicon Image,
Inc.
Non-Plan Stock Option Agreement

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

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

	 	 	 
	SILICON IMAGE, INC.

	 	OPTIONEE
	 
	 	 
	     /s/ Bob Gargus

	 	     /s/ Steven A. Laub
	 

	 	 
	Bob Gargus, Chief Financial Officer

	 	Steven A. Laub
	Chief Financial Officer
	 	 

-8-

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