TRANSITIONAL EMPLOYMENT AND SEVERANCE AGREEMENT

This Transitional Employment and Severance Agreement (“ Agreement ” ) is entered into as of August 22, 2008, by and between Hyun John Shin (“ Employee ”) and Silicon Image, Inc. (“ Company ”) (collectively referred to as the “ Parties ”).

WHEREAS , Employee has been employed by the Company as its Vice President, VP Strategic Technology Initiatives,

WHEREAS , the Company and Employee have agreed that Employee shall terminate his employment with the Company following a transitional period of employment, and the Parties desire to agree upon the terms and conditions applicable to such transitional period of employment and upon Employee’s termination of employment with the Company;

NOW THEREFORE , in consideration of the promises made herein, the Parties hereby agree as follows:

1.   Transitional Employment .  Employee shall continue in active full-time employment with the Company for the “ Transitional Period ”, which shall commence on and as of the date hereof and terminate on and as of July 31, 2009, unless earlier terminated as provided herein or extended by the mutual agreement of the Parties (in any case, the “ Termination Date ”).

2.   Resignation of Titles and Positions .  Effective as of the Termination Date, Employee’s employment with the Company shall terminate, and Employee shall relinquish all titles and positions then held by Employee with the Company or any subsidiary of the Company.

3.   Compensation and Benefits During Transitional Period .  During the Transitional Period, (i) Employee shall continue to receive payment of his current base salary for the duration of the Transitional Period without adjustment; (ii) Employee shall continue to participate in applicable Company employee benefit plans to the extent of his participation and on the terms and conditions in effect immediately prior to the commencement of the Transitional Period; (iii) Employee shall be eligible to participate in the Company’s 2008 Bonus program only; and (iv) Employee’s stock options and equity awards will remain outstanding and continue to vest in accordance with their terms, provided, however, that Employee shall not receive any additional equity awards or options or other rights to purchase shares of the Company’s common stock (except for shares acquired in connection with participation under the Company’s Employee Stock Purchase Plan) following the commencement of the Transitional Period.

4.   Payments and Benefits .

(a)   Accrued Payments and Benefits .  Upon the termination of Employee’s employment with the Company for any reason, the Company shall pay to Employee all amounts and benefits that have accrued or were earned but remain unpaid through the Termination Date in respect of salary and unreimbursed expenses, including accrued and unused vacation.

(b)   Severance Payments .

(i)   Upon the conclusion of the Transitional Period, and subject to Employee’s delivery to the Company of a signed general release of claims in favor of the Company, in a form acceptable to the Company, which shall be substantially in the form attached hereto as Exhibit 1 (the “ Release ”), following expiration of the statutory rescission period without any rescission of the Release, the Company will provide Employee with a severance payment ( “Severance Payment” ) in an amount equal to seven twelfths (7/12 ^th ) of forty percent (40%) of his current yearly base salary.

(ii)   If Employee terminates his employment with the Company before the conclusion of the Transitional Period, and subject to Employee’s delivery to the Company of a signed general release of claims in favor of the Company, in a form acceptable to the Company, which shall be substantially in the form attached hereto as Exhibit 1 (the “ Release ”), following expiration of the statutory rescission period without any rescission of the Release, the Company will provide Employee with a Severance Payment in an amount equal to Employee’s base salary for the remainder of the Transitional Period plus an amount equal to seven twelfths (7/12 ^th ) of forty percent (40%) of his current yearly base salary.

(c)   Notwithstanding the foregoing, Employee acknowledges and agrees that in the event that the Company terminates Employee’s employment for Cause (as hereinafter defined) before the conclusion of the Transitional Period, Employee will not be entitled to a Severance Payment.

For purposes of this Agreement, “Cause” shall mean:

(i)   a good faith determination by the Board of Directors of the Company (the “Board” ) that Employee willfully failed to follow the lawful written directions of the Board;

(ii)   Employee’s engagement in gross misconduct, which the Board determines in good faith is detrimental to the Company;

(iii)   Employee’s failure or refusal to comply in all material respects with (A) the Company’s Employee Inventions and Confidentiality Agreement, (B) the Company’s insider trading policy, or (C) any other policies of the Company, where such failure or refusal to comply would be detrimental to the Company;

(iv)   Employee’s conviction of, or a plea of no contest to, a felony or crime involving moral turpitude or commission of a fraud which the Board in good faith believes would reflect adversely on the Company; or

(v)   Employee’s unreasonable or bad-faith failure or refusal to cooperate with the Company in any investigation or formal proceeding initiated by the Board in good faith.

(d)   Company Stock Options .

(i)   Vested Options .  Employee shall have that period of time following the Termination Date specified in the governing written stock option agreement to exercise any options to purchase shares of the Company’s common stock (“ Options ”) which are vested, outstanding and not exercised as of the Termination Date.

(ii)   Unvested Options .  Any Options which remain unvested as of the Termination Date shall expire effective as of the Termination Date.

(e)   Benefits . Employee’s health insurance benefits will cease on the Termination Date, subject to Employee’s eligibility and timely election to continue group health coverage under COBRA, in which case Employee will be responsible for the payment of all further COBRA premiums.  If Employee terminates his employment with the Company before the conclusion of the Transitional Period, the Parties acknowledge and agree that, as part of the Severance Payment under Section 4(b)(ii) above, if any, and on the terms and conditions set forth herein, the Company shall pay Employee’s COBRA insurance premiums should Employee timely elect to continue group health coverage under COBRA, through July 31, 2009, to the extent that covered persons remain eligible for such coverage.  Employee’s participation in all other employee benefits and incidents of employment will cease on the Termination Date.  Employee will cease accruing employee benefits, including, but not limited to, vacation time and paid time off, as of the Termination Date.

(f)   Outplacement Assistance .  Company shall make available, and Employee shall be entitled to, outplacement assistance of the type and on the terms set forth in Exhibit 2 attached hereto for a duration of six (6) months, commencing on a date designated by Employee, but in no event later than August 1, 2009.

5.   No Mitigation Required .  The parties agree that some of the payments and benefits provided to Employee under this Agreement, as referenced in Section 4, are over and above anything owed to Employee by law and are offered in exchange for and conditioned upon Employee’s execution of the Release.  Employee shall not be required to seek other employment or to attempt in any way to reduce amounts payable to him pursuant to this Agreement.  Further, the amount of benefits provided under this Agreement shall not be reduced by any compensation earned by or other benefits provided to Employee as a result of employment by another employer following the Termination Date.

6.   Confidential Information .  During the Transitional Period and following the Termination Date, Employee shall continue to maintain the confidentiality of all confidential and proprietary information of the Company and shall continue to comply with the terms and conditions of the Employee Inventions and Confidentiality Agreement between Employee and the Company.  Employee shall return all of the Company’s property and confidential and proprietary information in his/her possession to the Company on the Termination Date.

7.   No Cooperation .  Employee agrees that he will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against the Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or other court order to do so.  Employee further agrees both to immediately notify the Company upon receipt of any court order, subpoena, or any legal discovery device that seeks or might require the disclosure or production of the existence or terms of this Agreement, and to furnish, within three (3) business days of its receipt, a copy of such subpoena or legal discovery device to the Company.

8.   Non-Solicitation .  Employee agrees that for a period of eighteen (18) months immediately following the Termination Date, Employee shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company’s employees to leave their employment, or take away such employees, or attempt to solicit, induce, recruit, encourage, or take away employees of the Company, either for him/herself or any other person or entity.  Employee further agrees not to otherwise interfere with the relationship of the Company or any of its subsidiaries or affiliates with any person who, to the knowledge of Employee, is employed by or otherwise engaged to perform services for the Company or its subsidiaries or affiliates (including, but not limited to, any independent sales representatives or organizations) or who is, or was within the then most recent prior twelve-month period, a customer or client of the Company, or any of its subsidiaries.

9.   Costs .  The Parties shall each bear their own costs, expert fees, attorneys’ fees and other fees incurred in connection with this Agreement except as specifically set forth herein.

10.   Post-Termination Assistance .  Following the Termination Date, and upon reasonable notice, Employee shall provide such information and assistance to the Company as may reasonably be requested by the Company in connection with any audit, governmental investigation or litigation in which it or any of its subsidiaries is or may become a party; provided that (i) the Company agrees to reimburse Employee for any related out-of-pocket expenses, including travel expenses, and (ii) any such assistance may not unreasonably interfere with Employee’s then-current employment.

11.   Tax Consequences .  The Company makes no representations or warranties with respect to the tax consequences of the payment of any sums to Employee under the terms of this Agreement.  Employee agrees and understands that he is responsible for payment, if any, of local, state and/or federal taxes on the sums paid hereunder by the Company and any penalties or assessments thereon and that all such sums shall be paid less all applicable withholdings and deductions.  Employee further agrees to indemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, assessments, executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of Employee’s failure to pay federal or state taxes or da