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Sample Business Contracts

Severance Agreement - Artisan Components Inc. and Robert Selvi

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                           ARTISAN COMPONENTS, INC.

                              Severance Agreement


     This Agreement is made by and between Artisan Components, Inc. (the
"Company") and Robert Selvi ("Executive") as of the date set forth below.

     WHEREAS, the Company has employed Executive as the Company's Chief
Financial Officer, effective as of June 20, 1997, and

     WHEREAS, the Company and the Executive understand  and acknowledge that
Executive's employment with the Company constitutes "at-will" employment, and
that the employment relationship may be terminated at any time, with or without
good cause or for any or no cause, at the option either of the Company or the
Executive,

     NOW THEREFORE, the Company and the Executive hereby agree as follows:

     1.   Termination of Employment.  If Executive's employment with the Company
          -------------------------                                             
terminates other than voluntarily (which shall include a "Constructive
Termination" as defined below) or for "Cause" (as defined below), then (i)
Executive shall be entitled to receive as severance pay (less applicable
withholding taxes) a continuation of his base salary, as then in effect, for a
period of six (6) months, plus any targeted bonus amount pro rated for such six
(6) month period as determined by the Board of Directors of the Company and paid
ratably over such six (6) month period, and (ii) Executive's option to purchase
503,386 shares of Common Stock, shall continue to vest for a period of 18 months
following Executive's date of termination.  For this purpose, "Constructive
Termination" is defined as (i) a material reduction in salary or benefits, (ii)
a material change in responsibilities from those of the Chief Financial Officer
of the Company, (iii) a requirement to relocate, except for office relocation
that would not increase the Executive's current one-way commute distance by more
than twenty-five (25) miles or (iv) subjection of Executive to unreasonable
working conditions, such as violation of Executive's civil rights, defamation of
Executive, intentional infliction of emotional distress, coercion to condone,
tolerate or participate in illegal or immoral acts, or similar conditions.  In
the event of a Constructive Termination, the Company will be deemed to have
involuntarily terminated the Executive even if the Executive tenders his
resignation to the Company.  For this purpose, "Cause" is defined as (i) an act
of dishonesty made by Executive in connection with Executive's responsibilities
as an employee and intended to result in Executive's substantial personal
enrichment, (ii) Executive's conviction of a felony, (iii) a willful act by
Executive which constitutes gross misconduct and which is injurious to the
Company, or (iv) Executive's continued substantial violations of his employment
duties which are demonstrably willful and deliberate on Executive's part after
Executive has received a written demand for performance from the Company which
specifically sets forth the factual basis for the Company's belief that
Executive has not substantially performed his duties.

     2.   Termination Incident to an Acquisition of the Company.
          ----------------------------------------------------- 
Notwithstanding Section 1 above, in the event of a change of control of the
Company, followed within six (6) months thereafter by the Constructive
Termination or involuntary termination of Executive's employment with the
Company or its successor entity without Cause, (i) Executive shall be entitled
to receive a cash payment of 
<PAGE>
 
severance pay (less applicable withholding taxes) representing an amount equal
to six months at a rate equal to his base salary rate as then in effect, plus
any targeted bonus amount pro rated for such six (6) month period as determined
by the Board of Directors of the Company, and (ii) Executive's option to
purchase 503,386 shares of Common Stock shall become 100% vested. For this
purpose, "change of control of the Company" is defined as:
 
     (a)  Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 50% or more of the total voting power
represented by the Company's then outstanding voting securities; or

     (b)  A change in the composition of the Board of Directors of the Company
occurring within a two-year period, as a result of which fewer than  a majority
of the directors are Incumbent Directors. "Incumbent Directors" shall mean
directors who either (A) are directors of the Company as of the date hereof, or
(B) are elected, or nominated for election, to the Board of Directors of the
Company with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the Company);
or

     (c)  The date of the consummation of a merger or consolidation of the
Company with any other corporation that has been approved by the stockholders of
the Company, other than a 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 entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.

     3.   Enforcement.  In the event of any action to enforce the terms of this
          -----------                                                          
Agreement, the prevailing party in such action shall be entitled to such party's
reasonable costs and expenses of enforcement including, without limitation,
reasonable attorneys' fees.

     4.   Entire Agreement.  This Agreement, the Stock Option Plan, the Option
          ----------------                                                    
Agreement, and the Proprietary Information Agreement of even date herewith
represent the entire agreement and understanding between the Company and
Executive concerning Executive's employment relationship with the Company,
supersedes and replaces any and all prior agreements and understandings
concerning Executive's employment relationship with the Company.

     5.   No Oral Modification, Cancellation or Discharge.  This Agreement may
          -----------------------------------------------                     
only be amended, canceled or discharged in writing signed by Executive and the
Company.

     6.   Governing Law.  This Agreement shall be governed by the laws of the
          -------------                                                      
State of California.
<PAGE>
 
     7.   Effective Date.  This Agreement is effective immediately after it has
          --------------                                                       
been signed.

     8.   Acknowledgment.  Executive acknowledges that he has had the
          --------------                                             
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of June
20, 1997.


ARTISAN COMPONENTS, INC.



By:     /s/ Mark R. Templeton
        -------------------------------
        Mark R. Templeton
        President
 


ROBERT SELVI

/s/ Robert D. Selvi
------------------------------