Related Party Transactions and Outside Related Director Information

Sigma Designs, Inc. (SIGM)

5/22/2006 Proxy Information

During the quarter ended October 31, 2002, Sigma executed an agreement to sublease approximately 2,600 square feet of its headquartersÕ facility to a start-up company founded by Mr. William J. Almon, a member of SigmaÕs Board of Directors. The term of the sublease is one year at the same market rate per square foot as our lease arrangement with our landlord. The agreement was amended during the fourth quarter of fiscal 2004 for an additional one-year under the same terms and again in the fourth quarter of fiscal 2005 on a month-to-month basis on the same terms. The lease was terminated on August 31, 2005

On April 10, 2006, the Company entered into a sublease agreement to rent approximately 2,500 square feet of a facility from a start-up company founded by Mr. William J. Almon, a member of the CompanyÕs board of directors. This is a month-to-month operating lease with base rent of $4,000 plus proportionate share of operating costs commencing April 1, 2006.

During fiscal year 2005, Thinh Q. Tran adopted a pre-arranged stock trading plan to, over time, exercise certain options to purchase Sigma common stock and automatically sell the shares issued on exercise of such options in accordance with the planÕs specifications. This plan was established as part of Mr. TranÕs individual long-term strategy for asset diversification and liquidity and must be in effect at least 90 days before trading commences. Such plan was adopted in accordance with guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, as well as guidelines adopted by the Sigma Board for individuals who elect to enter into 10b5-1 trading plans.

On February 16, 2006, Sigma successfully acquired Blue7 Communications (ŌBlue7Ķ) which was a privately-held California corporation. Sigma purchased Blue7Õs shares for approximately $14.0 million in stock. Blue7 focuses on the development of advanced wireless technologies and Ultra-Wideband (UWB) semiconductor products. In exchange for all of the outstanding capital stock of Blue7, Sigma issued or reserved for issuance at the closing to holders of Blue7 capital stock other than Sigma an aggregate of 815,034 shares of Sigma Common Stock, of which 98,470 shares will be held in escrow to satisfy any obligations of Blue7 to indemnify Sigma against any claims against Blue7 for any breaches of its representations or warranties contained in or made pursuant to the Merger Agreement and certain other matters set forth in the Merger Agreement. The shares of Sigma Common Stock were issued pursuant to an exemption under Section 3(a)(10) of the Securities Act of 1933, as amended. An aggregate of 231,164 shares of the 815,034 shares of Sigma Common Stock issuable under the Merger Agreement are reserved for future issuance upon the exercise of options to purchase Common Stock, which options were assumed by Sigma under the terms of the Merger Agreement. Prior to the acquisition, Sigma held approximately 17% of the outstanding shares of Blue7 and provided loans totaling $900,000 to Blue7. In addition, our Board member, Mr. William J. Almon had invested $200,000 for a 2% ownership interest in Blue7 during fiscal 2005.