Form of Employee Stock Option Agreement



 EXHIBIT 10.3 
  
 ALTERA CORPORATION 
 STOCK OPTION AWARD AGREEMENT 
 2005 EQUITY INCENTIVE PLAN 
 (U.S. FORM) 
  
 Unless otherwise defined herein, the terms defined in Altera’s 2005 Equity
Incentive Plan (the “Plan”) shall have the same defined meanings in this Award Agreement (the “Agreement”). 
  
 You have been granted an option to purchase Shares (the “Option”), subject to the terms and conditions of the Plan, the Notice of Stock Option Grant
(“Notice of Grant”) and this Agreement. 
  
 1. Vesting
Rights. Subject to the applicable provisions of the Plan and this Agreement, this Option may be exercised, in whole or in part, in accordance with the schedule set forth in the Notice of Grant. 
  
 2. Termination Period. 
  
 (a) General Rule. Except as provided below, and subject to Section 22.4 of the
Plan, this Option may be exercised for 60 days after termination of Participant’s employment with the Company. In no event shall this Option be exercised later than the Term/Expiration Date set forth in the Notice of Grant. 
  
 (b) Death; Disability. Upon the termination of Participant’s employment
with the Company by reason of his or her Disability or death, or if a Participant dies within 30 days of the Termination Date, this Option may be exercised for twelve months after the Termination Date, provided that in no event shall this Option be
exercised later than the Term/Expiration Date set forth in the Notice of Grant. 
  
 3. Grant of Option. The Participant named in the Notice of Grant has been granted an Option for the number of Shares 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 Section 24 of the Plan, in the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail. 

 
 If designated in the Notice of Grant as an Incentive Stock Option (“ISO”),
this Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this Option is intended to be an Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it shall be
treated as a Nonstatutory Stock Option (“NSO”). 
  
 4. Exercise
of Option. 
  
 (a) Right to Exercise. This Option is exercisable
during its term in accordance with the Vesting Schedule set forth in the Notice of Grant and the applicable provisions of the Plan and this Agreement. In the event of Participant’s death, Disability or other termination of Participant’s
employment relationship, the exercisability of the Option is governed by the applicable provisions of the Plan and this Agreement. 
  
 (b) Cessation of Vesting Due to Employee Schedule Change. In the event an employee of the Company or a Subsidiary, who is regularly scheduled to work twenty
(20) hours or more per week, voluntarily chooses (i.e., other than for reasons protected by law) to reduce his or her work schedule with the Company to fewer than twenty (20) hours per week, the Shares subject to the Option shall cease to vest
during the period of time in which such employee regularly maintains such a schedule. 
  
 U.S. Award Agreement (Options) 







 Shares subject to the Option shall begin to vest again once such employee is regularly scheduled to work twenty (20) hours or more
per week. The Committee shall make the determination as to when vesting shall cease or begin again. The Committee may, in its discretion, permit Shares subject to the Option to continue to vest during the time that such employee is regularly
scheduled to work fewer than (20) hours per week. 
  
 (c) Method of
Exercise. This Option is exercisable by delivery of an exercise notice (the “Exercise Notice”), 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 pursuant to the provisions of the Plan. The Exercise Notice shall be delivered in person, by mail, via electronic mail or facsimile or by
other authorized method to the Secretary of the Company or other person designated by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be
exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by such aggregate Exercise Price. 
  
 No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with all relevant provisions of law and the
requirements of any stock exchange or quotation service upon which the Shares are then listed. Assuming such compliance, for income tax purposes the Exercised Shares shall be considered transferred to the Participant on the date the Option is
exercised with respect to such Exercised Shares. 
  
 5. Method of
Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Participant: 
  
 (a) cash; or 
  
 (b) check; or 
  
 (c) “same day sale” (as described in Section 11(e)(1) of the Plan); or 
  
 (d) surrender of other Shares which (i) in the case of Shares acquired upon exercise of an option, have been owned by the Participant
for more than six (6) months on the date of surrender, and (ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares; or 
  
 (e) other method authorized by the Company. 
  

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

 
 7. Term of Option. This 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 Notice of Grant, the Plan and the terms of this Agreement. 
  
 8. U.S. Tax Consequences. For Participants subject to U.S. income tax, some of the federal and California tax consequences relating to this Option, as of the
date of this Option, are set forth below. All other Participants should consult a tax advisor for tax consequences relating to this Option in their respective jurisdiction. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. 
  
 U.S. Award Agreement (Options) 







 (a) Exercising the Option. 
  
 (i) Nonstatutory Stock Option. The Participant may incur regular federal income tax and California income tax liability upon
exercise of a NSO. The Participant will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Participant is an Employee or a former Employee, the Company will be required to withhold from his or her compensation or collect from Participant and pay to the applicable taxing authorities an amount in cash equal
to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise. 
  
 (ii) Incentive Stock Option. If this Option qualifies as an ISO, the
Participant will have no regular federal income tax or California income tax liability upon its exercise, although the excess, if any, of the Fair Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price will
be treated as an adjustment to alternative minimum taxable income for federal tax purposes and may subject the Participant to alternative minimum tax in the year of exercise. 
  
 (b) Disposition of Shares. 
  
 (i) NSO. If the Participant holds NSO Shares for at least one year, any gain realized on disposition of the Shares will be treated as long-term capital gain
for federal income tax purposes. 
  
 (ii) ISO. If the Participant
holds ISO Shares for at least one year after exercise and two years after the grant date, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. If the Participant disposes of ISO
Shares within one year after exercise or two years after the grant date, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, of the lesser of (A) the
difference between the Fair Market Value of the Shares acquired on the date of exercise and the aggregate Exercise Price, or (B) the difference between the sale price of such Shares and the aggregate Exercise Price. 
  
 (c) Notice of Disqualifying Disposition of ISO Shares. If the Participant sells
or otherwise disposes of any of the Shares acquired pursuant to an ISO on or before the later of (i) two years after the grant date, or (ii) one year after the exercise date, the Participant shall immediately notify the Company in writing of such
disposition. The Participant agrees that he or she may be subject to income tax withholding by the Company on the compensation income recognized from such early disposition of ISO Shares by payment in cash or out of the current earnings paid to the
Participant. 
  
 9. Entire Agreement; Governing Law. The Plan is
incorporated herein by reference. The Plan, the Notice of Grant, and this Agreement 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 Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Company and Participant. This agreement is governed by California law
except for that body of law pertaining to conflict of laws. 
  
 10. NO
GUARANTEE OF EMPLOYMENT. PARTICIPANT UNDERSTANDS AND AGREES THAT HIS OR HER EMPLOYMENT WITH THE COMPANY OR ITS SUBSIDIARIES IS 
  
 U.S. Award Agreement (Options) 







 FOR AN UNSPECIFIED DURATION AND CONSTITUTES “AT-WILL” EMPLOYMENT. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF
SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE AT THE WILL OF THE COMPANY OR ITS SUBSIDIARY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER).
PARTICIPANT 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 CONTINUED ENGAGEMENT AS AN EMPLOYEE FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH PARTICIPANT’S RIGHT OR THE COMPANY’S AND/OR SUBSIDIARY’S RIGHT TO TERMINATE PARTICIPANT’S EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE. 
  
 By your signature and the signature of the Company’s representative on the Notice
of Grant, you and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan, the Notice of Grant, and this Agreement. Participant has reviewed the Plan, the Notice of Grant, and this Agreement in their
entirety, has had an opportunity to obtain the advice of counsel prior to executing the Notice of Grant, and fully understands all provisions of the Plan, the Notice of Grant, and this Agreement. Participant hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice of Grant, and the Agreement. Participant further agrees to notify the Company upon any change in the residence address
indicated on the Notice of Grant. 
  
 U.S. Award Agreement (Options)