SILICON STORAGE TECHNOLOGY, INC. 1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

Exhibit 10.3

SILICON STORAGE TECHNOLOGY, INC.

1995 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

Adopted on October 3, 1995

Approved by the Shareholders November 1995

Amended by the Board of Directors June 1999 and

Approved by the Shareholders June 1999

Amended by the Board of Directors April 2003 and

Approved by the Shareholders June 2003

Amended by the Board of Directors April 2005

Amended by the Board of Directors April 2008

Terminated by the Board of Directors July 2008

(a) The purpose of the Silicon Storage Technology, Inc. 1995 Non-Employee Directors’ Stock Option Plan (the “Plan”) is to provide a means by which each director of Silicon Storage Technology, Inc. (the “Company”) who is not otherwise an employee of the Company or of any Affiliate of the Company (each such person being hereafter referred to as a “Non-Employee Director”) will be given an opportunity to purchase stock of the Company.

(b) The word “Affiliate” as used in the Plan means any parent corporation or subsidiary corporation of the Company as those terms are defined in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended from time to time (the “Code”).

(c) The Company, by means of the Plan, seeks to retain the services of persons now serving as Non-Employee Directors of the Company, to secure and retain the services of persons capable of serving in such capacity, and to provide incentives for such persons to exert maximum efforts for the success of the Company.

(a) The Plan shall be administered by the Board of Directors of the Company (the “Board”) unless and until the Board delegates administration to a committee, as provided in subparagraph 2(b).

(b) The Board may delegate administration of the Plan to a committee composed of not fewer than two (2) members of the Board (the “Committee”). If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan.

(a) Subject to the provisions of paragraph 10 relating to adjustments upon changes in stock, the stock that may be sold pursuant to options granted under the Plan shall not exceed in the aggregate nine hundred fifty thousand (950,000) shares of the Company’s common stock. If any option granted under the Plan shall for any reason expire or otherwise terminate without having been exercised in full, the stock not purchased under such option shall again become available for the Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise.

Options S hall be granted only to Non-Employee Directors of the Company.

(a) Upon the date of the effectiveness of the Company’s initial public offering (the “Effective Date”), each person who is then a Non-Employee director automatically shall be granted an option to purchase twenty four thousand (24,000) shares of common stock of the Company on the terms and conditions set forth herein.

(b) Each person who, after the Effective Date, is appointed or elected for the first time to be a Non-Employee Director automatically shall be granted, upon the date of initial appointment or election to be a Non-Employee Director by the Board or shareholders of the Company, an option to purchase forty-five thousand (45,000) shares of common stock of the Company on the terms and conditions set forth herein.

(c) On the date of each annual meeting of the Company after the Effective Date, commencing with the annual meeting held in 1997, (i) each person who is then a Non-Employee Director and continuously has been a Non-Employee Director since the Company’s annual meeting in the immediately preceding year automatically shall be granted an option to purchase twelve thousand (12,000) shares of common stock of the Company on the terms and conditions set forth herein, and (ii) each other person who is then a Non-Employee Director automatically shall be granted an option to purchase, on the terms and conditions set forth herein, the number of shares of common stock of the Company (rounded up to the nearest whole share) determined by multiplying twelve thousand (12,000) shares by a fraction, the numerator of which is the number of days the person continuously has been a Non-Employee Director as of the date of such grant and the denominator of which is 365.

(d) In the event an annual meeting is not held in a calendar year, then in the subsequent calendar year and prior to the next annual meeting, the Board of Directors may by resolution provide that each person who is, at the time of such action by the Board of Directors, a Non-Employee Director and has continuously been a Non-Employee Director since the Company’s last annual meeting may be granted an option to purchase twelve thousand (12,000) shares of common stock of the Company, or such lesser amount as the Board of Directors may so determine, on such date and on such terms and conditions as may be determined by the Board of Directors, in full satisfaction of, and in lieu of, the obligations to grant a non-discretionary stock option pursuant to Section 5(c) above.

Each option shall be subject to the following terms and conditions:

(a) The term of each option commences on the date it is granted and, unless sooner terminated as set forth herein, expires on the date ten (10) years from the date of grant (the “Expiration Date”). If the optionee’s service as a Non-Employee Director or employee of or consultant to the Company or any Affiliate terminates for any reason or for no reason, the option shall terminate on the earlier of the Expiration Date or the date twelve (12) months following the date of termination of all such service; provided, however, that if such termination of service is due to the optionee’s death, the option shall terminate on the earlier of the Expiration Date or eighteen (18) months following the date of the optionee’s death. In any and all circumstances, an option may be exercised following termination of the optionee’s service as a Non-Employee Director or employee of or consultant to the Company or any Affiliate only as to that number of shares as to which it was exercisable on the date of termination of all such service under the provisions of subparagraph 6(e).

(b) The exercise price of each option shall be one hundred percent (100%) of the fair market value of the stock subject to such option on the date such option is granted.

(c) Payment of the exercise price of each option is due in full in cash upon any exercise when the number of shares being purchased upon such exercise is less than 1,000 shares; when the number of shares being purchased upon an exercise is 1,000 or more shares, the optionee may elect to make payment of the exercise price under one of the following alternatives:

(i) Payment of the exercise price per share in cash at the time of exercise; or

(ii) Provided that at the time of the exercise the Company’s common stock is publicly traded and quoted regularly in the Wall Street Journal, payment by delivery of shares of common stock of the Company already owned by the optionee, held for the period required to avoid a charge to the Company’s reported earnings, and owned free and clear of any liens, claims, encumbrances or security interest, which common stock shall be valued at its fair market value on the date preceding the date of exercise; or

(iii) Payment by a combination of the methods of payment specified in subparagraph 6(c)(i) and 6(c)(ii) above.

Notwithstanding the foregoing, this option may be exercised pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which results in the receipt of cash (or check) by the Company prior to the issuance of shares of the Company’s common stock.

(d) An option shall not be transferable except by will or by the laws of descent and distribution, or pursuant to a qualified domestic relations order satisfying the requirements of Rule 16b-3 under the Securities Exchange Act of 1934 (“Rule 16b-3”) and shall be exercisable during the lifetime of the person to whom the option is granted only by such person (or by his guardian or legal representative) or transferee pursuant to such an order. Notwithstanding the foregoing, the optionee may, by delivering written notice to the Company in a form satisfactory to the Company, designate a third party who, in the event of the death of the optionee, shall thereafter be entitled to exercise the option.

(e) Each option granted to a Non-Employee Director upon the date of initial election to be a Non-Employee Director by the Board or shareholders of the Company pursuant to Section 5(b) hereof shall vest as to 25% of the shares subject to such option on the yearly anniversary of the date of grant. All other options granted hereunder shall be fully vested and exercisable upon the date of grant.

(f) The Company may require any optionee, or any person to whom an option is transferred under subparagraph 6(d), as a condition of exercising any such option: (i) to give written assurances satisfactory to the Company as to the optionee’s knowledge and experience in financial and business matters; and (ii) to give written assurances satisfactory to the Company