Exhibit 10.1

INTEGRATED SILICON SOLUTION, INC.

STAND-ALONE STOCK OPTION AGREEMENT

 

I. NOTICE OF STOCK OPTION GRANT

Optionee: Scott D. Howarth

Address: 2231 Lawson Lane, Santa Clara, CA 95054

You have been granted a Nonstatutory Stock Option to purchase Common Stock,
subject to the terms and conditions of this Agreement, as follows:

 

Date of Grant      February 21, 2006 Vesting Commencement Date      February 21,
2006 Exercise Price per Share      $6.33 Total Number of Shares Granted     
100,000 Total Exercise Price      $633,000 Expiration Date:      February 21,
2013

Vesting Schedule:

The Option will vest and may be exercised, in whole or in part, in accordance
with the following schedule:

Twelve thousand five hundred (12,500) of the Shares subject to the Option shall
vest six (6) months after the Vesting Commencement Date, and 1/48th of the
Shares subject to the Option shall vest each month thereafter on the same day of
the month as the Vesting Commencement Date, subject to Optionee continuing to be
a Service Provider through such dates.

Termination Period

The Option may be exercised for three (3) months after Optionee ceases to be a
Service Provider in accordance with Section 8 of this Agreement, unless such
termination is due to Optionee’s death or Disability, in which case this Option
shall be exercisable for one (1) year after Optionee ceases to be Service
Provider in accordance with Sections 9 and 10 of this Agreement. Notwithstanding
the foregoing sentence, in no event may this Option be exercised after the
Term/Expiration Date as provided above and may be subject to earlier termination
as provided in Section 11(c) of this Agreement.

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II. AGREEMENT

1. Definitions. As used herein, the following definitions will apply:

(a) “Agreement” means this Stand-Alone Stock Option Agreement between the
Company and Optionee evidencing the terms and conditions of the Option.

(b) “Applicable Laws” means the requirements relating to the administration of
stock options under U.S. state corporate laws, U.S. federal and state securities
laws, the Code, any stock exchange or quotation system on which the Common Stock
is listed or quoted and the applicable laws of any foreign country or
jurisdiction that may apply to the Option.

(c) “Board” means the Board of Directors of the Company or any committee of the
Board that has been designated by the Board to administer this Agreement.

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

(e) “Common Stock” means the common stock of the Company.

(f) “Company” means Integrated Silicon Solution, Inc., a Delaware corporation.

(g) “Director” means a member of the Board.

(h) “Disability” or “Disabled” means total and permanent disability as defined
in Section 22(e)(3) of the Code.

(i) “Employee” means any person, including Officers and Directors, employed by
the Company or any Parent or Subsidiary of the Company. Optionee shall not cease
to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.

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

(k) “Fair Market Value” means, as of any date, the value of Common Stock
determined as follows:

(1) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market
or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system for the last market trading
day prior to the time of determination, as reported in The Wall Street Journal
or such other source as the Board deems reliable;

(2) If the Common Stock is regularly quoted by a recognized securities dealer
but selling prices are not reported, the Fair Market Value of a Share of Common
Stock shall be the mean between the high bid and low asked prices for the Common
Stock on the last market trading day prior to the day of determination, as
reported in The Wall Street Journal or such other source as the Board deems
reliable; or

 

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(3) In the absence of an established market for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.

(l) “Nonstatutory Stock Option” means any Option that by its terms does not
qualify or is not intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code and the regulations promulgated thereunder.

(m) “Notice of Grant” means the written notice, in Part I of this Agreement,
evidencing certain terms and conditions of the Option. The Notice of Grant is
part of the Agreement.

(n) “Officer” means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

(o) “Option” means this option to purchase shares of Common Stock granted
pursuant to this Agreement.

(p) “Optioned Stock” means the Common Stock subject to an Option.

(q) “Optionee” means Scott D. Howarth.

(r) “Parent” means a “parent corporation”, whether now or hereafter existing, as
defined in Section 424(e) of the Code.

(s) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule
16b-3, as in effect when discretion is being exercised with respect to the
Agreement.

(t) “Share” means a share of the Common Stock, as adjusted in accordance with
Section 11 of this Agreement.

(u) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter
existing, as defined in Section 424(f) of the Code.

2. Grant of Option. The Board hereby grants to Optionee the Option to purchase
the number of Shares, as set forth in the Notice of Grant, at the exercise price
per Share set forth in the Notice of Grant (the “Exercise Price”), subject to
the terms and conditions of this Agreement.

3. Exercise of Option.

(a) Right to Exercise. The Option is exercisable during its term in accordance
with the Vesting Schedule set out in the Notice of Grant and the applicable
provisions of this Agreement. Vesting of the Option will be suspended during any
unpaid leave of absence, unless the Board provides otherwise or continued
vesting during such leave of absence is required by Applicable Law.

 

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(b) Method of Exercise. The Option is exercisable by delivery of an exercise
notice, in the form attached as Exhibit A (the “Exercise Notice”) or in such
other form and manner as determined by the Board, which shall state the election
to exercise the Option, the number of Shares in respect of which the Option is
being exercised (the “Exercised Shares”), and such other representations and
agreements as may be required by the Company. The Exercise Notice shall be
completed by Optionee and delivered to the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares, together with any applicable tax withholding. The Option shall be deemed
to be exercised upon receipt by the Company of such fully executed Exercise
Notice accompanied by such aggregate Exercise Price, together with any
applicable tax withholding.

(c) Legal Compliance. No Shares shall be issued pursuant to the exercise of the
Option unless such issuance and exercise complies with Applicable Laws. Assuming
such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to Optionee on the date the Option is exercised with
respect to such Exercised Shares.

(d) Buyout Provisions. The Board may at any time offer to buy out for a payment
in cash or Shares this Option on such terms and conditions as the Board shall
establish and communicate to Optionee at the time that such offer is made.

4. Method of Payment. Payment of the aggregate Exercise Price shall be by any of
the following, or a combination thereof, at the election of Optionee:

(a) cash;

(b) check;

(c) consideration received by the Company under a cashless exercise program
implemented by the Company in connection with the Agreement; or

(d) any combination of the foregoing methods of payment.

5. Non-Transferability of Option. The Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of this
Agreement will be binding upon the executors, administrators, heirs, successors
and assigns of Optionee.

6. Rights as a Stockholder. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to the Shares subject to the Option,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such Shares promptly after the Option is exercised. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Shares are issued, except as provided in Section 11 below.

7. Term of Option. Subject to Sections 8, 9, and 10, the Option may be exercised
only within the term set out in the Notice of Grant, and may be exercised during
such term only in accordance with the terms of this Agreement.

 

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8. Termination of Relationship as Service Provider. If Optionee ceases to be a
Service Provider, other than upon Optionee’s death or Disability, the Option
shall remain exercisable for three (3) months following Optionee’s termination
(but in no event later than the Option’s Expiration Date or as provided in
Section 11(c)). In that event, the Option will be exercisable only to the extent
that the Option was unexercised and vested on the date of termination. Unless
the Board provides otherwise, if on the date of termination the Optionee is not
vested as to his or her entire Option, the unvested portion of the Option will
terminate and Optionee will have no further rights to acquire the Shares subject
thereto. If, after termination, the Optionee does not exercise his or her Option
within the time specified herein, the Option will terminate and Optionee will
have no further rights to acquire the Shares subject thereto.

9. Disability of Optionee. If Optionee ceases to be a Service Provider as a
result of Optionee’s Disability, the Option may be exercised for a period of
twelve (12) months after the date of such termination (but in no event later
than the expiration date of the Option as set forth in the Notice of Grant or as
provided in Section 11(c)) to the extent that the Option is vested on the date
of such termination. Unless the Board provides otherwise, if on the date of
termination the Optionee is not vested as to his or her entire Option, the
unvested portion of the Option will terminate and Optionee will have no further
rights to acquire the Shares subject thereto. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option will terminate and Optionee will have no further rights to acquire
the Shares subject thereto.

10. Death of Optionee. If Optionee dies while a Service Provider, the Option may
be exercised at any time within twelve (12) months following the date of death
(but in no event later than the expiration date of the Option as set forth in
the Notice of Grant or as provided in Section 11(c)), by Optionee’s estate or by
a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent that Optionee was entitled to exercise the
Option at the date of death. If on the date of death the Optionee is not vested
as to his or her entire Option, the unvested portion of the Option will
terminate and Optionee’s estate or the person who acquired the right to exercise
the Option by bequest or inheritance will have no further rights to acquire the
Shares subject thereto. If, after death, Optionee’s estate or a person who
acquired the right to exercise the Option by bequest or inheritance does not
exercise the Option within the time specified herein, the Option shall
terminate.

11. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
Sale.

(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of Shares covered by the Option, as well
as the price per Share covered by the Option, may be adjusted by the Board (in
its sole discretion) in order to prevent diminution or enlargement of the
benefits or potential benefits intended to be made available under the Option,
as the result of any increase or decrease in the number of issued Shares
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the Company
or any other change in the corporate structure of the Company affecting the
Shares (including, without limitation, a spin-off); provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been “effected without receipt of consideration.” Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the

 

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Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of Shares subject to the Option.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Board shall notify Optionee as soon as
practicable prior to the effective date of such proposed transaction. The Board
in its discretion may provide for Optionee to have the right to exercise his
Option until ten (10) days prior to such transaction as to all of the Optioned
Stock covered thereby, including Shares as to which the Option would not
otherwise be exercisable. In addition, the Board may provide that any Company
repurchase option applicable to any Shares purchased upon exercise of the Option
shall lapse as to all such Shares, provided the proposed dissolution or
liquidation takes place at the time and in the manner contemplated. To the
extent it has not been previously exercised, the Option will terminate
immediately prior to the consummation of such proposed action.

(c) Merger or Asset Sale. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the
Company, the Option shall be assumed or an equivalent option or right
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, Optionee shall fully vest in and have the
right to exercise the Option as to all of the Optioned Stock, including Shares
as to which it would not otherwise be vested or exercisable. If the Option is
not assumed or substituted for in the event of a merger or sale of assets, the
Board shall notify Optionee in writing or electronically that the Option shall
be fully vested and exercisable for a period of time determined by the Board,
and the Option shall terminate upon the expiration of such period. For the
purposes of this Section 11(c), the Option shall be considered assumed if,
following the merger or sale of assets, the Option confers the right to purchase
or receive, for each Share of subject to the Option immediately prior to the
merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders of
Shares for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding Shares); provided, however, that
if such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Board may, with the
consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share subject to the Option,
to be solely common stock of the successor corporation or its Parent equal in
fair market value to the per share consideration received by holders of Shares
in the merger or sale of assets.

12. Notices. Any notice to be given to the Company hereunder will be in writing
and will be addressed to the Company at its then current principal executive
office or to such other address as the Company may hereafter designate to
Optionee by notice as provided in this Section. Any notice to be given to
Optionee hereunder will be addressed to Optionee at the address set forth
beneath his signature hereto, or at such other address as Optionee may hereafter
designate to the Company by notice as provided herein. A notice will be deemed
to have been duly given when personally delivered or mailed by registered or
certified mail to the party entitled to receive it.

13. Compliance with Securities Law. The Option will be subject to the
requirement that if, at any time, counsel to the Company will determine that the
listing, registration or qualification of

 

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the Shares subject hereto upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental or regulatory body,
or that the disclosure of non-public information or the satisfaction of any
other condition is necessary as a condition of, or in connection with, the
issuance or purchase of Shares hereunder, the Option may not be exercised, in
whole or in part, unless such listing, registration, qualification, consent or
approval, disclosure or satisfaction of such other condition will have been
effected or obtained on terms acceptable to the Board. Nothing herein will be
deemed to require the Company to apply for, effect or obtain such listing,
registration, qualification, or disclosure, or to satisfy such other condition.

14. Tax Withholding. Optionee agrees to make appropriate arrangements with the
Company (or the Parent or Subsidiary employing or retaining Optionee) for the
satisfaction of all Federal, state, local and foreign income, employment and
other tax withholding requirements applicable to the Option exercise. Optionee
acknowledges and agrees that the Company may refuse to honor the exercise and
refuse to deliver Shares if such withholding amounts are not delivered at the
time of exercise. The Board, in its sole discretion and pursuant to such
procedures as it may specify from time to time, may allow Optionee to satisfy
such withholding tax obligations by electing to have the Company withhold from
the Shares to be issued upon exercise of the Option that number of Shares having
a Fair Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined. All elections by Optionee to
have Shares withheld for this purpose shall be made in such form and under such
conditions as the Board may deem necessary or advisable.

15. Entire Agreement; Governing Law. This Agreement, along with Optionee’s offer
letter entered into between Optionee and the Company and dated January 5, 2006
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to Optionee’s interest except by means
of a writing signed by the Company and Optionee. This Agreement is governed by
the internal substantive laws, but not the choice of law rules, of California.

16. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER).
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUES ENGAGEMENT AS A SERVICE
PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT
INTERFERE WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S
RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

 

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By Optionee’s signature and the signature of the Company’s representative below,
Optionee and the Company agree that the Option is granted under and governed by
the terms and conditions of this Agreement. Optionee has reviewed this Agreement
in its entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement and fully understands all provisions of this Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board upon any questions relating to this Agreement.
Optionee further agrees to notify the Company upon any change in the address
indicated below.

 

OPTIONEE      INTEGRATED SILICON SOLUTION, INC.

/s/ Scott D. Howarth

    

/s/ Jimmy S.M. Lee

Signature      By

Scott D. Howarth

    

Chairman, Chief Executive Officer and President

Print Name      Title

2231 Lawson Lane

     Address     

Santa Clara, CA 95054

    

 

    

 

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EXHIBIT A

INTEGRATED SILICON SOLUTION, INC.

EXERCISE NOTICE

Integrated Silicon Solution, Inc.

2231 Lawson Lane

Santa Clara, CA 95054

Attention:

1. Exercise of Option. Effective as of today,             , 20    , the
undersigned (“Optionee”) hereby elects to purchase                      shares
(the “Shares”) of the Common Stock of Integrated Silicon Solution, Inc. (the
“Company”) under and pursuant to the Stand-Alone Stock Option Agreement dated
February 21, 2006 (the “Option Agreement”). The purchase price per Share will be
$6.33, as required by the Option Agreement.

2. Delivery of Payment. Optionee herewith delivers to the Company the full
purchase price for the Shares, and any and all tax withholding due in connection
with the exercise of the Option.

3. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Option Agreement and agrees to abide by and be
bound by its terms and conditions.

4. Rights as Stockholder. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the Shares, no right to vote or receive dividends or any other
rights as a stockholder will exist with respect to the Shares subject to the
Option, notwithstanding the exercise of the Option. The Shares so acquired will
be issued to Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date of issuance, except as provided in Section 11 of the Option
Agreement.

5. Tax Consultation. Optionee understands that Optionee may suffer adverse tax
consequences as a result of Optionee’s purchase or disposition of the Shares.
Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.

6. Successors and Assigns. The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this Exercise Notice will
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Exercise Notice will be
binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.

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7. Interpretation. Any dispute regarding the interpretation of this Exercise
Notice will be submitted by Optionee or by the Company forthwith to the Board
which will review such dispute at its next regular meeting. The resolution of
such a dispute by the Board will be final and binding on all parties.

8. Entire Agreement; Governing Law. The Option Agreement is incorporated herein
by reference. This Exercise Notice, the Option Agreement and Optionee’s offer
letter entered into between Optionee and the Company and dated January 5, 2006
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to Optionee’s interest except by means
of a writing signed by the Company and Optionee. This Exercise Notice is
governed by the internal substantive laws, but not the choice of law rules, of
California.

 

Submitted by:     Accepted by: OPTIONEE     INTEGRATED SILICON SOLUTION, INC.

 

   

 

Signature    

 

   

 

Print Name    

 

    2231 Lawson Lane Address     Santa Clara, CA 95054

 

   

 

        Date Received:

 

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