Exhibit 10.2

 

INTEGRATED SILICON SOLUTION, INC.

 

1995 DIRECTOR STOCK OPTION PLAN

 

(AS AMENDED THROUGH FEBRUARY 4, 2005)

 

1. Purposes of the Plan. The purposes of this 1995 Director Stock Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board. All options granted hereunder shall be
nonstatutory stock options.

 

2. Definitions. As used herein, the following definitions shall apply:

 

(a) “Board” means the Board of Directors of the Company.

 

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

 

(c) “Common Stock” means the Common Stock of the Company.

 

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

 

(e) “Continuous Status as a Director” means the absence of any interruption or
termination of service as a Director.

 

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

 

(g) “Employee” means any person, including officers and Directors, employed by
the Company or any Parent or Subsidiary of the Company. The payment of a
Director’s fee by the Company shall not be sufficient in and of itself to
constitute “employment” by the Company.

 

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

 

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

 

(i) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market
of the National Association of Securities Dealers, Inc. Automated Quotation
(“NASDAQ”) System, the Fair Market Value of a Share of Common Stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the date of grant, as reported in
The Wall Street Journal or such other source as the Board deems reliable;

 

(ii) If the Common Stock is quoted on the NASDAQ System (but not on the National
Market thereof) or 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 day of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable, or;

 

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

 

(j) “Option” means a stock option granted pursuant to the Plan.

 

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

 

(l) “Optionee” means an Outside Director who receives an Option.

 

(m) “Outside Director” means a Director who is not an Employee.

 

1

--------------------------------------------------------------------------------

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

 

(o) “Plan” means this 1995 Director Stock Option Plan.

 

(p) “Share” means a share of the Common Stock, as adjusted in accordance with
Section 10 of the Plan.

 

(q) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Internal Revenue Code of 1986.

 

3. Stock Subject to the Plan. Subject to the provisions of Section 10 of the
Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 225,000 Shares of Common Stock (the “Pool”). The Shares may be
authorized, but unissued, or reacquired Common Stock. If an Option expires or
becomes unexercisable without having been exercised in full, the unpurchased
Shares which were subject thereto shall become available for future grant or
sale under the Plan (unless the Plan has terminated); provided, however, that
Shares that have actually been issued under the Plan shall not be returned to
the Plan and shall not become available for future distribution under the Plan.

 

4. Administration and Grants of Options under the Plan.

 

(a) Procedure for Grants. The provisions set forth in this Section 4(a) shall
not be amended more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder. All grants of Options to Outside Directors
under this Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:

 

(i) No person shall have any discretion to select which Outside Directors shall
be granted Options or to determine the number of Shares to be covered by Options
granted to Outside Directors.

 

(ii) Each Outside Director shall be automatically granted an Option (the “First
Option”) to purchase 10,000 Shares (adjusted as provided in Section 10(a)
hereof) on the date on which such person first becomes an Outside Director,
whether through election by the stockholders of the Company or appointment by
the Board to fill a vacancy; provided, however, that no First Option shall be
granted hereunder to a person who was a Director and who has become an Outside
Director as a result of such person no longer being employed by the Company.

 

(iii) Each Outside Director shall be automatically granted an Option (a
“Subsequent Option”) to purchase 2,500 shares (adjusted as provided in Section
10(a) hereof) on the date on which such person is re-elected by the stockholders
of the Company as an Outside Director; provided, however, that no Option shall
be granted hereunder to an Outside Director who is re-elected within six months
of being appointed or elected to the Board.

 

(iv) Notwithstanding the provisions of subsections (ii) and (iii) hereof, no
Options shall be exercisable before the Company has obtained stockholder
approval of the Plan in accordance with Section 16.

 

(v) The terms of a First Option granted hereunder shall be as follows:

 

  (A) the term of the First Option shall be ten (10) years.

 

  (B) the First Option shall be exercisable only while the Outside Director
remains a Director of the Company, except as set forth in Section 8 hereof.

 

  (C) the exercise price per Share shall be 100% of the fair market value per
Share on the date of grant of the First Option.

 

  (D) the First Option shall become exercisable as to one-twelfth of the Shares
subject to the First Option one month from its date of grant, and as to an
additional one-twelfth of the Shares subject to the First Option each month
thereafter, provided that the Optionee remains an Outside Director as of the end
of each one month period, so that one year from its date of grant the First
Option shall be fully vested.

 

2

--------------------------------------------------------------------------------

(vi) The terms of a Subsequent Option granted hereunder shall be as follows:

 

  (A) the term of a Subsequent Option shall be ten (10) years.

 

  (B) a Subsequent Option shall be exercisable only while the Outside Director
remains a Director of the Company, except as set forth in Section 8 hereof.

 

  (C) the exercise price per Share shall be 100% of the fair market value per
Share on the date of grant of a Subsequent Option.

 

  (D) a Subsequent Option shall become exercisable as to one-twelfth of the
Shares subject to such Option one month from its date of grant, and as to an
additional one-twelfth of the Shares subject to such Option each month
thereafter, provided that the Optionee remains an Outside Director as of the end
of each one month period, so that one year from its date of grant a Subsequent
Option shall be fully vested.

 

(vii) In the event that any Option granted under the Plan would cause the number
of Shares subject to outstanding Options plus the number of Shares previously
purchased under Options to exceed the number of Shares in the Pool, then the
remaining Shares available for Option grant shall be granted under Options to
the Outside Directors on a pro rata basis. No further grants shall be made until
such time, if any, as additional Shares become available for grant under the
Plan through action of the Board or the stockholders to increase the number of
Shares which may be issued under the Plan or through cancellation or expiration
of Options previously granted hereunder.

 

5. Eligibility. Options may be granted only to Outside Directors. All Options
shall be automatically granted in accordance with the terms set forth in Section
4 hereof. An Outside Director who has been granted an Option may, if he or she
is otherwise eligible, be granted an additional Option or Options in accordance
with such provisions. The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the Director
or the Company may have to terminate his or her directorship at any time.

 

6. Term of Plan. The Plan shall become effective upon the date that the
Company’s registration statement on Form S-1 for the purpose of effecting the
initial public offering of the Common Stock becomes effective under the
Securities Act of 1933, as amended (the “Securities Act”). It shall continue in
effect until February 2, 2015 unless sooner terminated under Section 11 of the
Plan.

 

7. Form of Consideration. The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant) and may consist entirely of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option either have been owned by the Optionee for
more than six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (5) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that number of Shares
having a Fair Market Value on the date of exercise equal to the exercise price
for the total number of Shares as to which the Option is exercised, (6) by
delivering an irrevocable subscription agreement for the Shares which
irrevocably obligates the option holder to take and pay for the Shares not more
than twelve months after the date of delivery of the subscription agreement, (7)
delivery of a properly executed exercise notice together with such other
documentation as the Administrator and the broker, if applicable, shall require
to effect an exercise of the Option and delivery to the Company of the sale or
loan proceeds required to pay the exercise price; (8) any combination of the
foregoing methods of payment, (9) or such other consideration and method of
payment for the issuance of Shares to the extent permitted under Applicable
Laws. In making its determination as to the type of consideration to accept, the
Board shall consider if acceptance of such consideration may be reasonably
expected to benefit the Company (Section 315(b) of the California corporation
law).

 

3

--------------------------------------------------------------------------------

8. Exercise of Option.

 

(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable at such times as are set forth in Section 4
hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained. An Option may not be exercised for a fraction of a Share.

 

An Option shall be deemed to be exercised when written notice of such exercise
has been given to the Company in accordance with the terms of the Option by the
person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company. Full
payment may consist of any consideration and method of payment allowable under
Section 7 of the Plan. 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 stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. A share
certificate for the number of Shares so acquired shall be issued to the Optionee
as soon as practicable after exercise of the Option. No adjustment shall be made
for a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 10 of the Plan.

 

Exercise of an Option in any manner shall result in a decrease in the number of
Shares which thereafter may be available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.

 

(b) Rule 16b-3. Options granted to Outside Directors must comply with the
applicable provisions of Rule 16b-3 promulgated under the Exchange Act or any
successor thereto and shall contain such additional conditions or restrictions
as may be required thereunder to qualify Plan transactions, and other
transactions by Outside Directors that otherwise could be matched with Plan
transactions, for the maximum exemption from Section 16 of the Exchange Act.

 

(c) Termination of Continuous Status as a Director. In the event an Optionee’s
Continuous Status as a Director terminates (other than upon the Optionee’s death
or total and permanent disability (as defined in Section 22(e)(3) of the Code)),
the Optionee may exercise his or her Option, but only within three (3) months
from the date of such termination, and only to the extent that the Optionee was
entitled to exercise it on the date of such termination (but in no event later
than the expiration of its ten (10) year term). To the extent that the Optionee
was not entitled to exercise an Option on the date of such termination, and to
the extent that the Optionee does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall
terminate.

 

(d) Disability of Optionee. In the event Optionee’s Continuous Status as a
Director terminates as a result of total and permanent disability (as defined in
Section 22(e)(3) of the Code), the Optionee may exercise his or her Option, but
only within twelve (12) months following the date of such termination, and only
to the extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of termination, or if he or she does not exercise such Option (to the
extent otherwise so entitled) within the time specified herein, the Option shall
terminate.

 

(e) Death of Optionee. In the event of an Optionee’s death, the Optionee’s
estate or a person who acquired the right to exercise the Option by bequest or
inheritance may exercise the Option, but only within twelve (12) months
following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee’s estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.

 

4

--------------------------------------------------------------------------------

9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

 

10. 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 each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, and the number of
Shares issuable pursuant to the automatic grant provisions of Section 4 hereof
shall be proportionately adjusted for 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, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” Except as expressly provided herein, no
issuance by the 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 an Option.

 

(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option has not been previously
exercised, it shall 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, in a transaction or series of transactions whereby the stockholders of
the Company hold less than a majority of the outstanding capital stock of the
surviving or successor entity, each outstanding Option shall become fully vested
and exercisable, including as to Shares that would not otherwise be exercisable.
If an Option becomes fully vested and exercisable in the event of a merger or
sale of assets, the Board shall notify the Optionee that the Option shall be
fully exercisable for a period of thirty (30) days from the date of such notice,
and the Option shall terminate upon the expiration of such thirty (30) day
period.

 

11. Amendment and Termination of the Plan.

 

(a) Amendment and Termination. Except as set forth in Section 4, the Board may
at any time amend, alter, suspend, or discontinue the Plan, but no amendment,
alteration, suspension, or discontinuation shall be made which would impair the
rights of any Optionee under any grant theretofore made, without his or her
consent. In addition, to the extent necessary and desirable to comply with Rule
16b-3 under the Exchange Act (or any other applicable law or regulation), the
Company shall obtain stockholder approval of any Plan amendment in such a manner
and to such a degree as required.

 

(b) Effect of Amendment or Termination. Any such amendment or termination of the
Plan shall not affect Options already granted and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated.

 

12. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date determined in accordance with Section 4 hereof.

 

13. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act, the
Exchange Act, the rules and regulations promulgated thereunder, state securities
laws, and the requirements of any stock exchange upon

 

5

--------------------------------------------------------------------------------

which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. As a
condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law. Inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained.

 

14. Reservation of Shares. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

 

15. Option Agreement. Options shall be evidenced by written option agreements in
such form as the Board shall approve.

 

16. Stockholder Approval. Continuance of the Plan shall be subject to approval
by the stockholders of the Company at or prior to the first annual meeting of
stockholders held subsequent to the granting of an Option hereunder. Such
stockholder approval shall be obtained in the degree and manner required under
applicable state and federal law.

 

6