Exhibit 10.1



                        STANDARD MICROSYSTEMS CORPORATION
                  2005 DIRECTORS STOCK APPRECIATION RIGHTS PLAN


1.        Purpose.  The purpose of this 2005 Directors Stock Appreciation Rights
          Plan  (the  "Plan"  or  the  "SAR  Plan")  of  Standard   Microsystems
          Corporation (the "Company" or "SMSC"),  is to link the compensation of
          outside  directors  of the  Company,  whose  services  are  considered
          essential to the Company's continued  progress,  to the performance of
          SMSC  stock,  and to also  provide  them with a further  incentive  to
          continue  to  serve  as  directors  of the  Company.  The Plan is also
          intended to assist the Company  through  utilization of the incentives
          provided by the Plan to attract and retain  experienced  and qualified
          candidates  to fill  vacancies  in the  Board  that  may  occur in the
          future.

2.        Administration

          a.   The Plan  will be  administered  by the Board of  Directors  (the
               "Board") of the Company. Subject to the express provisions of the
               Plan,  the Board will have  complete  authority to interpret  the
               Plan; to  prescribe,  amend,  and rescind  rules and  regulations
               relating  to it; to  determine  the terms and  provisions  of the
               respective Stock  Appreciation  Rights ("SAR")  Agreements (which
               need  not be  identical);  and to make all  other  determinations
               necessary or advisable for the  administration  of the Plan.  The
               Board's determinations on the matters referred to in this Section
               2 will be conclusive and binding on all parties.

          b.   No member of the Board, or any employee of the Company authorized
               to  administer  the  Plan,  shall be  liable  for any  action  or
               determination made in good faith with respect to this Plan or any
               SAR Grant. To the full extent permitted by law, the Company shall
               indemnify  and hold harmless each person made or threatened to be
               made a party to any civil or  criminal  action or  proceeding  by
               reason of the fact that such person, or such person's testator or
               intestate,  is or was a member  of the  Board,  or an  authorized
               employee.

3.        Participation  in the Plan.  Each person who is now or shall  become a
          director of the Company and who is not, while serving as director,  an
          employee of the Company or any  Subsidiary  of the  Company,  shall be
          eligible  to  participate   in  the  Plan  (an  "Eligible   Director",
          hereinafter  also  referred  to as a  "Grantee").  A  director  of the
          Company shall not be deemed to be an employee of the Company solely by
          reason of the existence of a consulting contract between such director
          and the  Company  or any  Subsidiary  thereof  pursuant  to which  the
          director  agrees to  provide  consulting  services  as an  independent
          consultant  to  the  Company  or  its  Subsidiaries  on a  regular  or
          occasional basis for a stated consideration.

4.        SAR Shares  Subject to the Plan.  Subject to the provisions of Section
          10 hereof, this Plan has 49,000  "hypothetical"  shares (the "Shares")
          of $.10 par value common stock of SMSC (the "Common Stock")  available
          for the granting of SARs under the Plan.  The Plan does not permit any
          payments for a SAR Grant to be made in the Common Stock of SMSC.

          If any SARs are not granted  under the Plan in whole or in part,  such
          as if an Eligible  Director  should cease to be a Board member  before
          any Current  Service  SAR is granted,  or before a Vesting SAR becomes
          vested,  "hypothetical"  Shares that could have been granted or do not
          vest shall  remain  available  for the  granting of new SARs under the
          Plan.

5.        General Terms and Conditions of SAR Grants

          a.   Form of SARs. Each SAR granted under this Plan shall be evidenced
               by a written SAR  Agreement  in such form as the Board shall from
               time to time  approve,  which SAR  Agreement  shall set forth the
               applicable date of grant (the "Grant Date") and shall comply with
               and be subject to the terms and conditions set forth in the Plan.

          b.   Vesting  SARs.  Any Eligible  Director  first  elected  after the
               adoption of this Plan, upon such election, may be granted SARs in
               the event this Plan is amended to allocate any new SARs under the
               Plan, as provided by any  Amendment to Section 4 above.  Each SAR
               granted  pursuant to this  Section  5(b) (i.e.,  "Vesting  SARs")
               shall  become  vested,  to the extent of  one-third  (1/3) of the
               number of SARs  granted on the first  anniversary  of the date of
               grant, and cumulatively to the extent of an additional  one-third
               (1/3) on each of the next two (2)  succeeding  anniversaries,  so
               that on the third  anniversary  of the Grant Date, all SARs shall
               be fully vested.

          c.   Current  Service  SARs.  In  addition to Vesting  SARs,  that are
               currently not available  under the Plan,  each Eligible  Director
               incumbent  for at least  three (3) years  shall be  granted  SARs
               equal to 3,500 shares of Common Stock (the  "Current SAR Grant"),
               which  shall  be fully  vested  upon the  granting  thereof  and,
               subject to any other  provisions of the Plan, shall be granted on
               each  January  15,  April 15, July 15, and October 15 (or, if any
               such day shall not be a business day, then on the next succeeding
               business  day).  Current  Service SARs shall only be forfeited to
               the  extent  an  Eligible  Director  is no longer a member of the
               Board on the applicable Grant Date.

          d.   SAR Value Per  Share.  All SARs  granted  hereunder  shall have a
               "Grant  Value"  equal to the  "Fair  Market  Value" of a share of
               Common  Stock on the date of the  grant,  as  defined  in Section
               13(f).

          e.   SARs  Nontransferable.  Each SAR  granted  under  the Plan by its
               terms shall not be transferable by the Grantee  otherwise than by
               will,  or by the  laws of  descent  and  distribution.  No SAR or
               interest  therein  may  be  transferred,  assigned,  pledged,  or
               hypothecated  by the Grantee during his or her lifetime,  whether
               by  operation  of  law  or  otherwise,  or  be  made  subject  to
               execution, attachment, or similar process.

          f.   No Exercise of SARs. A SAR, once vested, cannot be exercised by a
               Grantee  at any  point  in time.  SAR  Grants  are  only  paid in
               accordance with the provisions of Section 5(g) below.

          g.   Payment Dates.  All SARs (i.e.,  Vesting or Current Service SARs)
               shall automatically be paid on the applicable Payment Date, which
               is the end of the fifth  fiscal  year  following  the Grant Date,
               which is  intended  to be a fixed date to avoid any  adverse  tax
               consequences  under  Section 409A of the Code.  Accordingly,  for
               purposes of the SAR Plan,  Current  Service SARs shall be paid as
               follows:

               Grant Date                Payment Date

               October 15, 2005          February 28, 2011
               January 15, 2006          February 28, 2011
               April 15, 2006            February 29, 2012

               Notwithstanding  the proceeding  provisions of this Section 5(g),
               the fixed  Payment  Date in the event of death,  Disability  or a
               Change in  Control  shall be the date  sixty  (60) days after the
               occurrence  of such an  event,  or  sixty  (60)  days  after  the
               determination  that  such an  event  has  occurred,  or the  next
               business day,  consistent  with the provisions of Section 409A of
               the Code  (regardless  of the thirty (30) day notice period for a
               Change in Control under Section 11).

               Upon the  Payment  Date of a SAR, a Grantee  shall be entitled to
               receive an amount in cash equal to the excess of the Fair  Market
               Value of one share of Common  Stock  determined  on such  Payment
               Date over the Grant Value per share  specified in the related SAR
               Grant Agreement, multiplied by the number of shares in respect of
               which the SAR Grant is payable.  Full or fractional shares may be
               paid. Payment will be made on each applicable Payment Date.

               Fair Market  Value shall be  determined  as of the date of death,
               Disability, or the date a Change in Control is determined to have
               occurred,  regardless  of when the actual  Payment Date is (i.e.,
               the Fair Market Value is  determined  as of the date of the event
               and not the date of  payment  sixty (60) days after such an event
               occurs).

          h.   Termination   of   Grantee's   Directorship.   If   a   Grantee's
               directorship with the Company is terminated for any reason, other
               than  by  reason  of  death  or   Disability   (as  described  in
               Subsections  (i) and (j) below)  prior to the Payment  Date,  any
               vested  SARs  shall  nevertheless  be  valued  and  paid  on  the
               applicable Payment Date under Section 5(g).

          i.   Death of Grantee.  If a Grantee's  directorship  is terminated by
               reason of his death prior to the  Payment  Date of his SAR Grant,
               or if a Grantee whose directorship is terminated as a result of a
               Disability  (as  described  in  Subsection  (j) below)  shall die
               following  the  Grantee's  termination  of being a director,  but
               prior to the Payment Date of any SAR Grant,  such SAR Grant shall
               be paid to the Grantee's  Beneficiary to the extent of the number
               of SARs in  which  the  Grantee  was  vested  on the  date of the
               Grantee's death, as of the applicable  Payment Date (i.e.,  under
               the sixty (60) day provision).

          j.   Disability of Grantee.  If a Grantee shall become Disabled during
               the  Grantee's  directorship  with the Company and the  Grantee's
               directorship  with the Company is terminated as a consequence  of
               such Disability, or if a Grantee whose directorship is terminated
               shall become  Disabled  following  the Grantee's  termination  of
               being a Director, but prior to the Payment Date of any SAR Grant,
               any SAR  Grant  shall  be paid to the  Grantee  or the  Grantee's
               personal  representative  on the  applicable  Payment Date (i.e.,
               under the sixty (60) day provision).

          k.   Delivery of Notice and Execution of SAR Grant Agreement. Upon the
               determination  to issue a SAR Award,  the Company shall  promptly
               issue a notice  representing  the Shares subject to the SAR Grant
               to the Grantee.  Each Grantee  shall enter into,  and be bound by
               the  terms of, a SAR  Grant  Agreement  which  shall  include  or
               incorporate  by  reference  the terms of the Plan and which shall
               contain  such  other  terms,   conditions  and  restrictions  not
               inconsistent with the Plan as the Board shall determine.

          l.   Tax  Withholding.  The  obligation of the Company to make payment
               upon any  Payment  Date of any SAR Grant  shall be subject to all
               applicable Federal, state and local tax withholding requirements.
               A Grantee shall be  responsible  for any portion of the Grantee's
               tax liabilities associated with the exercise of any SAR Grants.

6.        No Right to Continue as a Director. Neither the Plan, the execution of
          any SAR Grant  Agreement,  nor any other action taken  pursuant to the
          Plan,   shall   constitute   or  be  evidence  of  any   agreement  or
          understanding,  express or  implied,  that the  Company  will retain a
          director  for  any  period  of  time,  or at any  particular  rate  of
          compensation.

7.        No Stockholder's  Rights for Grantees.  A Grantee shall have no rights
          as a stockholder  with respect to any Shares covered by SAR Grant, and
          no  adjustments  shall be made  for any  dividends  paid  prior to any
          Payment Date.

8.        No Right to Vote. A Grantee  shall have no right to vote any Shares as
          a result of the granting of any SAR.

9.        No Right to Dividends. A Grantee shall have no right to dividends as a
          result of the granting of any SARs.

10.       Adjustments.  The  number of Shares  representing  the  number of SARs
          which may be issued under the Plan, as stated in Section 4 hereof,  as
          well as the Grant Value per share under such  outstanding  SAR Awards,
          and the amount to be paid upon the Payment  Date of any SAR,  shall be
          suitably  adjusted by the Board to reflect any stock  dividend,  stock
          split, shares combination,  or similar change in the capitalization of
          the  Company.   The  Board  shall  use  its  reasonable   judgment  in
          determining a suitable adjustment.

          In the event the  Company is  liquidated  or a  corporate  transaction
          described in Section  424(a) of the Code and the Treasury  Regulations
          issued  thereunder occurs (as, for example,  a merger,  consolidation,
          acquisition of property or stock, separation or reorganization),  each
          outstanding  SAR Grant shall be assumed by the  surviving or successor
          corporation if any.

11.       Change in Control.  Notwithstanding any provisions to the contrary, in
          the  event  of  a  Change  in  Control,  the  Board  may,  within  its
          discretion, within a period of twelve (12) months after such Change in
          Control,  determine that each SAR Grant  outstanding  hereunder  shall
          terminate  within thirty (30) days after notice to the  Grantees,  and
          such Grantees shall receive, with respect to each SAR Grant, an amount
          equal to the  excess  of the Fair  Market  Value of such SAR  Grant as
          determined under Section 5(g), to the extent such action is consistent
          with Section 409A of the Code,  and any  guidance  issued  thereunder.
          Such amount shall be payable in cash.

12.       Amendment of the Plan. The Board may suspend or  discontinue  the Plan
          or revise or amend it in any respect  whatsoever;  provided,  however,
          that, without approval of the Grantees, no revision or amendment shall
          change the rights under any granted or vested SARs.

13.       Definition. For purposes of the Plan the words and phrases used herein
          shall have the following meanings:

          a.   "Beneficiary"  shall mean a Grantee's spouse, if married,  or the
               Grantee's  estate,  if no  spouse  exists  as of  any  applicable
               Payment Date. A Grantee may, however, designate other individuals
               or entities as a Beneficiary for any payment,  in accordance with
               procedures established by the Board.

          b.   "Board" means the Board of Directors of SMSC.

          c.   "Change in  Control"  means a Change in Control as defined  under
               IRS Notice 2005-1 Q&A-11, 12, 13 and 14. In accordance with these
               provisions,  the Plan may permit a payment upon the occurrence of
               a change in  "ownership"  of the Company as defined in Q&A-12;  a
               change in  "effective  control"  of the  Company  is  defined  in
               Q&A-13; or "change in the ownership" of a substantial  portion of
               the assets of the  Company as defined as Q&A-14.  To qualify as a
               Change  in  Control,   the   occurrence  of  the  event  must  be
               objectively  determinable  and the  requirement  that  the  Board
               certify  the  occurrence  of a Change in Control  event,  must be
               strictly ministerial and not involve any discretionary authority.
               For  purposes of this  provision,  a payment  shall be treated as
               occurring  upon a Change in Control  if the right to the  payment
               arises due to the Board's  exercise of discretion under the terms
               of this Plan to  terminate  the Plan upon a Change in Control and
               paid benefits in accordance with Section 11.

          d.   "Code" means the Internal  Revenue Code of 1986,  as amended from
               time to time.

          e.   "Disability" means a Grantee is:

               (i)  Unable to  engage in any  substantial  gainful  activity  by
                    reason  of any  medically  determinable  physical  or mental
                    impairment  which can be expected to result in death, or can
                    be expected to last for a continuous period of not less than
                    twelve (12) months; or

               (ii) By reason of any medically  determinable  physical or mental
                    impairment  which can be  expected to result in death or can
                    be expected to last for a continuous period of not less than
                    twelve (12) months,  receiving income  replacement  benefits
                    for a period of not less  than  three  (3)  months  under an
                    accident and health plan covering  employees or directors of
                    SMSC.

          f.   "Fair  Market  Value"  means,  as of the date on which  such Fair
               Market Value is to be determined, the closing price of a share of
               Common  Stock  as  reported  in The  Wall  Street  Journal  (or a
               publication or reporting  service  deemed  equivalent to The Wall
               Street   Journal   for  such   purpose  by  the  Board)  for  the
               over-the-counter  market or any national  securities exchange and
               other  securities  market  which at the time are  included in the
               stock price quotations of such  publication.  If no closing price
               is so reported  for such date,  Fair Market  Value shall mean the
               average of the latest bid and asked  prices so reported  for such
               date,  or if there was no bid and asked  prices so  reported  for
               such date,  Fair Market Value shall mean the closing price on the
               last previous day on which a closing price was reported.

          g.   "SAR Grant" means an award of SARs granted under the Plan.

          h.   "Stock  Appreciation Right" means a contractual right that allows
               a Grantee to receive  payment  for a SAR Grant equal to the value
               of any  appreciation  in the value of SMSC Common  Stock over the
               Grant Price, as provided in Section 5, on the applicable  Payment
               Date.

          i.   "Subsidiary" means any entity as defined in Section 424(f) of the
               Code.

14.       Section  409A.  The  Company  acknowledges  that  a SAR  Plan  may  be
          classified  as a form of  deferred  compensation  if the  Grantee  can
          control the payment of benefits.  It is intended  that by use of fixed
          payment dates,  no Grantee has the ability to control the  recognition
          of income attributable to any SAR Grant. To the extent necessary,  the
          Plan shall be  amended to avoid any  adverse  tax  consequences  under
          Section 409A, or any guidance issued thereunder.

15.       Notice.  Any notice to the  Company  required by this Plan shall be in
          writing  addressed  to  the  General  Counsel  of the  Company  at its
          principal  office,  and  shall be  deemed  delivered  only  when it is
          received by the General Counsel.

16.       Severability. In the event that any one or more provisions of the Plan
          or any  Agreement,  or any action  taken  pursuant to the Plan or such
          Agreement,  should, for any reason, be unenforceable or invalid in any
          respect under the laws of the United  States,  any state of the United
          States or any other government,  such  unenforceability  or invalidity
          shall not  affect  any other  provision  of the Plan or of such or any
          other Agreement,  but in such particular jurisdiction and instance the
          Plan  and  the  affected  Agreement  shall  be  construed  as if  such
          unenforceable or invalid  provision had not been contained  therein or
          as if the action in question had not been taken thereunder.

17.       Gender and Number. The masculine gender, where appearing herein, shall
          be deemed to include the feminine  gender,  and the singular  shall be
          deemed to include the plural,  unless the context clearly indicates to
          the contrary.

18.       Conflict.  In the event of a conflict  between  the terms of this Plan
          and the terms of any Agreement, the terms of this Plan shall govern.

19.       Governing Law. This Plan and all determinations made and actions taken
          pursuant hereto shall be governed by the law of the State of New York,
          without  regard to the  provisions  governing  conflict  of laws,  and
          construed accordingly.