**Exhibit 10.17**

 

**ARTISAN COMPONENTS, INC.**

 

**2003 STOCK PLAN**

 

1. Purposes of the Plan. The purposes of this 2003 Stock Plan are: 

 

 

 

 

Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant.Stock Purchase Rights may also be granted under the Plan. 

 

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

 

(a) “Administrator” means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan. 

 

(b) “Applicable Laws” means the requirements relating to the administration of stock option plans underU.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 where Options or StockPurchase Rights are, or will be, granted under the Plan. 

 

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

 

(d) “Change in Control” means the occurrence of any of the following events: 

 

(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined inRule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or 

 

(ii) The consummation of the sale or disposition by the Company of all orsubstantially all of the Company’s assets; 

 

(iii) Achange in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” means directors who either (A) are Directors as of theeffective date of the Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whoseelection or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or 

(iv) The consummation of a merger or consolidation of the Company with any other corporation, other thana merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entityor its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation. 

 

(e) “Code” means the Internal Revenue Code of 1986, asamended. 

 

(f) “Committee” means a committee ofDirectors appointed by the Board in accordance with Section 4 of the Plan. 

 

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

 

(h) “Company” means Artisan Components, Inc., a Delaware corporation. 

 

(i) “Consultant” means any natural person, including an advisor, engaged by the Company or a Parent orSubsidiary to render services to such entity. 

 

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

 

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

 

(l) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. AService Provider 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. For purposesof Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not soguaranteed, then three (3) months following the 91st day of such leave any Incentive Stock Option held by theOptionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute“employment” by the Company. 

 

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

 

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

 

(i) If the Common Stock is listed on anyestablished 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 theclosing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in *The Wall Street Journal* or such other source as the Administrator deems reliable; 

 

(ii) If the Common Stock is regularly quoted by a recognized securitiesdealer 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 Administrator deems reliable; or 

 

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

 

(o) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of theCode and the regulations promulgated thereunder. 

 

(p)“Inside Director” means a Director who is an Employee. 

 

(q) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option. 

 

(r) “Notice of Grant” means a written or electronic notice evidencing certain terms and conditions of an individual Option or StockPurchase Right grant. The Notice of Grant is part of the Option Agreement. 

 

(s) “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. 

 

(t) “Option” means a stock option granted pursuant to thePlan. 

 

(u) “Option Agreement” means anagreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan. 

 

(v) “Option Exchange Program” means a program whereby outstanding Options are surrendered in exchange forOptions with a lower exercise price. 

 

(w) “OptionedStock” means the Common Stock subject to an Option or Stock Purchase Right. 

 

(x) “Optionee” means the holder of an outstanding Option or Stock Purchase Right granted under the Plan. 

 

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

 

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

 

(aa)“Plan” means this 2003 Stock Plan. 

 

(bb)“Restricted Stock” means shares of Common Stock acquired pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan. 

 

(cc) “Restricted Stock Purchase Agreement” means a written agreement between the Company and the Optionee evidencing the terms andrestrictions applying to stock purchased under a Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the Notice of Grant. 

 

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

 

(ee)“Section 16(b) “ means Section 16(b) of the Exchange Act. 

 

(ff) “Service Provider” means an Employee, Director or Consultant. 

 

(gg) “Share” means a share of the Common Stock, as adjusted in accordance with Section 13 of the Plan. 

 

(hh) “Stock Purchase Right” means the right to purchaseCommon Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant. 

 

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

 

3. Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan, the maximum aggregate number ofShares that may be optioned and sold under the Plan is 1,000,000 Shares plus (a) any Shares which have been reserved but not issued under the Company’s 1993 Stock Option Plan (the “1993 Plan”) as of the date of stockholder approval ofthis Plan, and (b) any Shares returned to the 1993 Plan as a result of termination of options or repurchase of Shares issued under the 1993 Plan. The Shares may be authorized, but unissued, or reacquired Common Stock. 

 

If an Option or Stock Purchase Right expires or becomes unexercisable withouthaving been exercised in full, or is surrendered pursuant to an Option Exchange Program, 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, whether upon exercise of an Option or Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that ifShares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan. 

 

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4. Administration of the Plan. 

 

(a) Procedure. 

 

(i) Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.

 

(ii) Section 162(m). To the extent that theAdministrator determines it to be desirable to qualify Options granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more“outside directors” within the meaning of Section 162(m) of the Code. 

 

(iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemptionunder Rule 16b-3. 

 

(iv) Other Administration. Otherthan as provided above, the Plan shall be administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws. 

 

(b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated bythe Board to such Committee, the Administrator shall have the authority, in its discretion: 

 

(i) to determine the Fair Market Value; 

 

(ii) to select the Service Providers to whom Options and Stock Purchase Rights may be granted hereunder; 

 

(iii) to determine the number of shares of Common Stock to be covered by each Option and Stock Purchase Right granted hereunder; 

 

(iv) to approve forms of agreement for use under the Plan; 

 

(v) to determine the terms and conditions, not inconsistent with the termsof the Plan, of any Option or Stock Purchase Right granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based onperformance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the shares of Common Stock relating thereto, based in each case on such factorsas the Administrator, in its sole discretion, shall determine; 

 

(vi) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan; 

 

(vii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established forthe purpose of satisfying applicable foreign laws; 

 

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(viii) to modify or amend each Option or Stock Purchase Right (subject to Section 15(c) of the Plan),including the discretionary authority to extend the post-termination exercisability period of Options longer than is otherwise provided for in the Plan; 

 

(ix) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of anOption or Stock Purchase Right that number of Shares having a Fair Market Value equal to the minimum 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 bewithheld is to be determined. All elections by an Optionee to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; 

 

(x) to authorize any person to execute on behalf of the Company anyinstrument required to effect the grant of an Option or Stock Purchase Right previously granted by the Administrator; 

 

(xi) to make all other determinations deemed necessary or advisable for administering the Plan. 

 

(c) Effect of Administrator’s Decision. The Administrator’sdecisions, determinations and interpretations shall be final and binding on all Optionees and any other holders of Options or Stock Purchase Rights. 

 

(d) Stockholder Approval. The Administrator shall not reduce the exercise price of any previously granted option or stock purchase right norinstitute an Option Exchange Program without the consent of the stockholders of the Company. 

 

5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 

 

6. Limitations. 

 

(a) Each Option shall be designated in the Option Agreement as either anIncentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time bythe Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall betaken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. 

 

(b) Neither the Plan nor any Option or Stock Purchase Right shall confer upon an Optionee any right with respect tocontinuing the Optionee’s relationship as a Service Provider with the Company, nor shall they interfere in any way with the Optionee’s right or the Company’s right to terminate such relationship at any time, with or without cause.

 

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(c) The following limitations shall apply to grants of Options: 

 

(i) No Service Provider shall be granted, in any fiscal year of theCompany, Options to purchase more than 300,000 Shares. 

 

(ii)In connection with his or her initial service, a Service Provider may be granted Options to purchase up to an additional 200,000 Shares, which shall not count against the limit set forth in subsection (i) above. 

 

(iii) The foregoing limitations shall be adjusted proportionately inconnection with any change in the Company’s capitalization as described in Section 13. 

 

(iv) If an Option is cancelled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in Section 13), the cancelled Option will be counted against thelimits set forth in subsections (i) and (ii) above. For this purpose, if the exercise price of an Option is reduced, the transaction will be treated as a cancellation of the Option and the grant of a new Option. 

 

7. Term of Plan. Subject to Section 19 of the Plan, the Plan shallbecome effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unless terminated earlier under Section 15 of the Plan. 

 

8. Term of Option. The term of each Option shall be stated in the Option Agreement. In the case of an Incentive StockOption, the term shall be ten (10) years from the date of grant or such shorter term as may be provided in the Option Agreement. Moreover, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option isgranted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grantor such shorter term as may be provided in the Option Agreement. 

 

9. Option Exercise Price and Consideration. 

 

(a) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following: 

 

(i) In the case of an Incentive Stock Option 

 

(A) granted to an Employee who, at the time the Incentive Stock Option isgranted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on thedate of grant. 

 

(B) granted to any Employee other than anEmployee described in paragraph (A) immediately above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. 

 

(ii) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than 100% of the Fair MarketValue per Share on the date of grant. 

 

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(iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than100% of the Fair Market Value per Share on the date of grant pursuant to a merger or other corporate transaction. 

 

(b) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the Option may beexercised and shall determine any conditions that must be satisfied before the Option may be exercised. 

 

(c) Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method ofpayment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: 

 

(i) cash; 

 

(ii) check; 

 

(iii) promissory note (may not be used by Directors or Officers); 

 

(iv) other Shares which, in the case of Shares acquired directly or indirectly from the Company, (A) have been owned by theOptionee for more than six (6) months on the date of surrender, and (B) 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; 

 

(v) consideration received by the Company under a cashless exercise programimplemented by the Company in connection with the Plan; 

 

(vi)a reduction in the amount of any Company liability to the Optionee, including any liability attributable to the Optionee’s participation in any Company-sponsored deferred compensation program or arrangement; 

 

(vii) any combination of the foregoing methods of payment; or 

 

(viii) such other consideration and method of payment for the issuance ofShares to the extent permitted by Applicable Laws. 

 

10.Exercise of Option. 

 

(a) Procedure for Exercise;Rights as a Stockholder. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Unless theAdministrator provides otherwise, vesting of Options granted hereunder shall be suspended during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share. 

 

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An Option shall be deemed exercised when the Company receives: (i) written or electronic notice ofexercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method ofpayment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his orher spouse. 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 existwith respect to the Optioned Stock, 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 whichthe record date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan. 

 

Exercising an Option in any manner shall decrease the number of Shares thereafter 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) Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, other than upon the Optionee’s death or Disability, the Optionee may exercise his or her Option within such period of time asis specified in the Option Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified timein the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by theunvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shallrevert to the Plan. 

 

(c) Disability of Optionee. If anOptionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date oftermination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months followingthe Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee doesnot exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 

 

(d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised following the Optionee’s death within suchperiod of time as is specified in the Option Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the OptionAgreement), by the Optionee’s designated beneficiary, provided such beneficiary has been designated prior to Optionee’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then suchOption may be exercised by the personal representative of the Optionee’s estate or by the person(s) to whom the Option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution. In theabsence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following Optionee’s death. If, at the time of death, Optionee is not vested as to his or her entire Option, the Shares covered bythe unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 

 

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11. Stock Purchase Rights. 

 

(a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with otherawards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing or electronically, by means of a Notice ofGrant, of the terms, conditions and restrictions related to the offer, including the number of Shares that the offeree shall be entitled to purchase, the price to be paid, and the time within which the offeree must accept such offer. The offer shallbe accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator. 

 

(b) Repurchase Option. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchaseoption exercisable upon the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or Disability). The purchase price for Shares repurchased pursuant to the Restricted Stock PurchaseAgreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at a rate determined by the Administrator. 

 

(c) Other Provisions. The Restricted Stock Purchase Agreement shallcontain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. 

 

(d) Rights as a Stockholder. Once the Stock Purchase Right is exercised, the purchaser shall have the rights equivalent to those of a stockholder,and shall be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the StockPurchase Right is exercised, except as provided in Section 13 of the Plan. 

 

12. Transferability of Options and Stock Purchase Rights. Unless determined otherwise by the Administrator, an Option or Stock Purchase Right may not be sold, pledged, assigned, hypothecated, transferred, ordisposed 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. If the Administrator makes an Option or Stock Purchase Right transferable, suchOption or Stock Purchase Right shall contain such additional terms and conditions as the Administrator deems appropriate. 

 

13. Adjustments Upon Changes in Capitalization, Merger or Change in Control. 

 

(a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number ofshares of Common Stock that have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or StockPurchase Right, 

 

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the number of Shares that may be added annually to the Plan pursuant to Section 3(i), and the number of shares of CommonStock as well as the price per share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from astock 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 of Common Stock 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.” Such adjustment shall be made by the Board, whose determination in that respectshall be final, binding and conclusive. 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 thereofshall be made with respect to, the number or price of shares of Common Stock subject to an Option or Stock Purchase Right. 

 

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify eachOptionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until ten (10) days prior to such transactionas to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased uponexercise of an Option or Stock Purchase Right 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, an Optionor Stock Purchase Right will terminate immediately prior to the consummation of such proposed action. 

 

(c) Merger or Change in Control. In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstandingOption and Stock Purchase Right 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 or Stock Purchase Right, theOptionee shall fully vest in and have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option or Stock Purchase Rightbecomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option or Stock Purchase Right shall be fullyvested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Purchase Right shall terminate upon the expiration of such period. 

 

For the purposes of this subsection (c), the Option or Stock Purchase Right shall be considered assumed if, following themerger or Change in Control, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option or Stock Purchase Right immediately prior to the merger or Change in Control, the consideration(whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, thetype of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent,the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock PurchaseRight, 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 Common Stock in the merger or Change in Control. 

 

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14. Date of Grant. The date of grant of an Option or Stock Purchase Right shall be, for allpurposes, the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee withina reasonable time after the date of such grant. 

 

15.Amendment and Termination of the Plan. 

 

(a)Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan. 

 

(b) Stockholder Approval. The Company shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply withApplicable Laws. 

 

(c) Effect of Amendment orTermination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed bythe Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination. 

 

16. Conditions Upon Issuance of Shares. 

 

(a) Legal Compliance. Shares shall not be issued pursuant to theexercise of an Option or Stock Purchase Right unless the exercise of such Option or Stock Purchase Right and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for theCompany with respect to such compliance. 

 

(b) InvestmentRepresentations. As a condition to the exercise of an Option or Stock Purchase Right, the Company may require the person exercising such Option or Stock Purchase Right to represent and warrant at the time of any such exercise that the Shares arebeing 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. 

 

17. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body havingjurisdiction, 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 towhich such requisite authority shall not have been obtained. 

 

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

 

19. Stockholder Approval. The Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date thePlan is adopted. Such stockholder approval shall be obtained in the manner and to the degree required under Applicable Laws. 

 

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**ARTISAN COMPONENTS, INC.**

 

**2003 STOCK PLAN**

 

**STOCK OPTION AGREEMENT**

 

Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement. 

 

**I. NOTICE OF STOCK OPTION GRANT**

 

[Optionee’s Name and Address] 

 

You have been granted an option to purchase Common Stock of the Company,subject to the terms and conditions of the Plan and this Option Agreement, as follows: 

 

Grant Number
 
 

Date of Grant
 
 

Vesting Commencement Date
 
 

Exercise Price per Share
 
$

 

Total Number of Shares Granted
 
 

Total Exercise Price
 
$

 

Type of Option:
      Incentive Stock Option  
     Nonstatutory Stock Option

Term/Expiration Date:
  
 

VestingSchedule: 

 

This Option may be exercised, in whole or inpart, in accordance with the following schedule: 

 

**[25% ofthe Shares subject to the Option shall vest twelve months after the Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall vest each month thereafter, subject to the Optionee continuing to be a Service Provider on such dates].**

 

Termination Period: 

 

This Option may be exercised for **[three months]** after Optionee ceasesto be a Service Provider. Upon the death or Disability of the Optionee, this Option may be exercised for **[twelve months]** after Optionee ceases to be a Service Provider. In no event shall this Option be exercised later than the Term/ExpirationDate as provided above. 

**II. AGREEMENT**

 

A. Grant of Option.

 

The Plan Administrator of the Company hereby grants to the Optionee named in the Notice of Grant attached as Part I of this Agreement (the“Optionee”) an option (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 termsand conditions of the Plan, which is incorporated herein by reference. Subject to Section 15(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Option Agreement, the terms andconditions of the Plan shall prevail. 

 

If designated in theNotice 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 itexceeds the $100,000 rule of Code Section 422(d) it shall be treated as a Nonstatutory Stock Option (“NSO”). 

 

B. Exercise of Option. 

 

(a) Right to Exercise. This Option is exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and theapplicable provisions of the Plan and this Option Agreement. 

 

(b) Method of Exercise. This Option is exercisable by delivery of an exercise notice, in the form attached as Exhibit A (the “Exercise Notice”), which shall state the election to exercise the Option, the number ofShares 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 becompleted by the Optionee and delivered to **[title]**of 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 theCompany 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 Applicable Laws. Assuming such compliance, for income tax purposes the Exercised Shares shall beconsidered transferred to the Optionee on the date the Option is exercised with respect to such Exercised Shares. 

 

2 

C. Method of Payment. 

 

(a) Optonees Outside India. For Options granted to Optionees outside India, payment of the aggregate Exercise Priceshall be by any of the following, or a combination thereof, at the election of the Optionee: 

 

1. cash; 

 

2. check; 

 

3. consideration received by the Company under a cashless exercise programimplemented by the Company in connection with the Plan, including the cashless exercise program outlined on Exhibit B hereto; 

 

4. surrender of other Shares which (i) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee 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; 

 

5. with the Administrator’s consent and provided that Optionee is not an executive officer or director of the Company, delivery by Optionee of apromissory note in form and substance satisfactory to the Administrator in the amount of the aggregate Exercise Price of the Exercised Shares together with the execution and delivery by the Optionee of a security agreement in form and substancesatisfactory to the Administrator; or 

 

6. a reduction in theamount of any Company liability to the Optionee, including any liability attributable to the Optionee’s participation in any Company-sponsored deferred compensation program or arrangement. 

 

(b) Optionees in India. For Options granted to Optionees in India,payment of the aggregate Exercise Price shall be solely by means of consideration received by the Company under the cashless exercise program outlined on Exhibit B hereto. 

 

D. 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 and may beexercised during the lifetime of Optionee only by the Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 

 

E. Term of Option. 

 

This Option may be exercised only within the term set out in the Notice ofGrant, and may be exercised during such term only in accordance with the Plan and the terms of this Option Agreement. 

 

3 

F. Tax Consequences. 

 

Some of the federal tax consequences relating to this Option, as of the date of this Option, are set forth below. THISSUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. 

 

G. Exercising the Option. 

 

1. Nonstatutory Stock Option. The Optionee may incur regular federalincome tax liability upon exercise of a NSO. The Optionee 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 ofexercise over their aggregate Exercise Price. If the Optionee is an Employee or a former Employee, the Company will be required to withhold from his or her compensation or collect from Optionee and pay to the applicable taxing authorities an amountin 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. 

 

2. Incentive Stock Option. If this Option qualifies as an ISO, theOptionee will have no regular federal 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 adjustmentto alternative minimum taxable income for federal tax purposes and may subject the Optionee to alternative minimum tax in the year of exercise. In the event that the Optionee ceases to be an Employee but remains a Service Provider, any IncentiveStock Option of the Optionee that remains unexercised shall cease to qualify as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option on the date three (3) months and one (1) day following such change ofstatus. 

 

3. Disposition of Shares. 

 

(a) NSO. If the Optionee holds NSO Shares for at least one year, anygain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. 

 

(b) ISO. If the Optionee holds ISO Shares for at least one year after exercise and two years after the grant date, any gain realized ondisposition of the Shares will be treated as long-term capital gain for federal income tax purposes. If the Optionee disposes of ISO Shares within one year after exercise or two years after the grant date, any gain realized on such disposition willbe 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 ExercisePrice, or (B) the difference between the sale price of such Shares and the aggregate Exercise Price. Any additional gain will be taxed as capital gain, short-term or long-term depending on the period that the ISO Shares were held. 

 

(c) Notice of Disqualifying Disposition of ISO Shares. If theOptionee 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 Optionee shall immediately notify the Company inwriting of such disposition. The Optionee 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 earningspaid to the Optionee. 

 

4 

H. Entire Agreement; Governing Law. 

 

The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of theparties 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 the Optionee’sinterest 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. 

 

I. NO GUARANTEE OF CONTINUED SERVICE. 

 

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BYCONTINUING 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 CONTEMPLATEDHEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHTOR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE. 

 

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

 

OPTIONEE:
 ARTISAN COMPONENTS, INC.
 

Signature
 
By

 

Print Name
 
 

Title

 

Residence Address

 

 
  
 

5 

**CONSENT OF SPOUSE**

 

The undersigned spouse of Optionee has read and hereby approves the terms and conditions of the Plan and this OptionAgreement. In consideration of the Company’s granting his or her spouse the right to purchase Shares as set forth in the Plan and this Option Agreement, the undersigned hereby agrees to be irrevocably bound by the terms and conditions of thePlan and this Option Agreement and further agrees that any community property interest shall be similarly bound. The undersigned hereby appoints the undersigned’s spouse as attorney-in-fact for the undersigned with respect to any amendment orexercise of rights under the Plan or this Option Agreement. 

 

Spouse of Optionee

 

6 

**EXHIBIT A**

 

**ARTISAN COMPONENTS, INC.**

 

**2003 STOCK PLAN**

 

**EXERCISE NOTICE**

 

Artisan Components, Inc. 

[141 Caspian Court 

Sunnyvale, CA 94089] 

 

Attention: **[Title]**

 

1.Exercise of Option. Effective as of today,             ,             , the undersigned(“Purchaser”) hereby elects to purchase              shares (the “Shares”) of the Common Stock of Artisan Components, Inc. (the “Company”) under andpursuant to the 2003 Stock Plan (the “Plan”) and the Stock Option Agreement dated,              (the “Option Agreement”). The purchase price for the Shares shallbe $            , as required by the Option Agreement. 

 

2. Delivery of Payment. Purchaser herewith delivers to the Company the full purchase price for the Shares. 

 

3. Representations of Purchaser. Purchaser acknowledges that Purchaserhas received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions. 

 

4. Rights as Shareholder. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transferagent of the Company) of the Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares so acquired shall be issued to theOptionee 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 13 of the Plan. 

 

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

6. Entire Agreement; Governing Law. The Plan and Option Agreement are incorporated herein byreference. This Agreement, the Plan and the Option 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 Purchaserwith respect to the subject matter hereof, and may not be modified adversely to the Purchaser’s interest except by means of a writing signed by the Company and Purchaser. This agreement is governed by the internal substantive laws, but not thechoice of law rules, of California. 

 

Submitted by:
 Accepted by:
PURCHASER:
 ARTISAN COMPONENTS, INC.
 

Signature
 
 

By

 

Print Name
 
 

Its

Address:
 Address:  
ARTISAN COMPONENTS, INC.
 
[141 Caspian Court

Sunnyvale, California94089]

 

 

 

 
 
Date Received

 

2 

**EXHIBIT B**

 

**CASHLESS EXERCISE PROGRAM**

 

**The terms and provisions of the Plan shall govern the rights of all Optionees. This Exhibit B is an appendix to the Plan. In the event that anyconflict arises between the terms and conditions of the Plan and this Exhibit B, the terms and conditions of this Exhibit B shall prevail. Notwithstanding any provision in the Plan to the contrary, Options granted to Optionees in India shall besubject to the Plan’s approval by the Reserve Bank of India, if required, and the following provisions.**

 

The Cashless Exercise Program (referenced in the Option Agreement) provides that the Optionee, upon exercise of an Option, will receive cash or CommonStock, or a combination thereof, equal to the difference between the fair market value of the Common Stock on the exercise day and the Option exercise price, multiplied by the number of Shares of Common Stock represented by the Option exercise.Applicable tax withholding and transaction charges may be deducted from this resulting amount. The transaction will be consummated through a broker, who will sell all or a portion of the Optioned Stock on the open market, as per the Optionee’sinstructions. A portion of the proceeds from such sale will be transferred to the Company in satisfaction of the Optionee’s exercise price. Any remaining Common Stock or cash will be remitted to the Optionee. No cash or other property will betransferred out of India. 

 

Example: 

 

Assume an option grant to purchase 5,000 share with a per share exerciseprice of US$10 which equals the fair market value of a share on the date of grant. Assume further that the fair market value on the date of exercise is US$15 per share. Upon exercise, the Optionee would receive the following: 

 

-Total market value
  = US$75,000
-Total exercise price
  = US$50,000
-Profit
  = US$25,000
 

Therefore, theOptionee receives US$25,0001 (in the applicable denomination) or 1,666 shares (US$25,000/15 = 1,666) without anycash expenditures. The Optionee is free to choose any combination of cash and Common Stock. 
1 Please note that for simplicity, tax withholding and transaction charges, if any, have not been calculated in this example.