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                                                                    EXHIBIT 10.1

                            VIRAGE LOGIC CORPORATION

                           1997 EQUITY INCENTIVE PLAN

     1. Purpose. The purpose of this Plan is to provide incentives to attract,
retain and motivate eligible persons whose present and potential contributions
are important to the success of the Company, its Parent and Subsidiaries, by
offering them an opportunity to participate in the Company's future performance
through awards of Options and Restricted Stock. Capitalized terms not defined in
the text are defined in Section 22. This Plan is intended to be a written
compensatory benefit plan within the meaning of Rule 701 promulgated under the
Securities Act.

     2. Shares Subject to the Plan.

     2.1  Number of Shares Available. Subject to Sections 2.2 and 17, the total
number of Shares reserved and available for grant and issuance pursuant to this
Plan will be 6,195,140 Shares or such lesser number of Shares as permitted under
Section 260.140.45 of Title 10 of the California Code of Regulations. Subject to
Sections 2.2 and 17, Shares will again be available for grant and issuance in
connection with future Awards under this Plan that: (a) are subject to issuance
upon exercise of an Option but cease to be subject to such Option for any reason
other than exercise of such Option or (b) are subject to an Award that otherwise
terminates without Shares being issued; provided, however, that any cancelled
option will continue to count against the maximum number of Shares for which
Awards may be granted to a Participant pursuant to Section 2.3 of this Plan. At
all times the Company will reserve and keep available a sufficient number of
Shares as will be required to satisfy the requirements of all Awards granted
under this Plan.

     2.2  Adjustment of Shares. In the event that the number of outstanding
shares of the Company's Common Stock is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or similar change in the capital structure of the Company
without consideration, then (a) the number of Shares reserved for issuance under
this Plan, (b) the Exercise Prices of and number of Shares subject to
outstanding Options, and (c) the Purchase Prices of and number of Shares subject
to other outstanding Awards will be proportionately adjusted, subject to any
required action by the Board or the shareholders of the Company and compliance
with applicable securities laws; provided, however, that fractions of a Share
will not be issued but will either be paid in cash at Fair Market Value of such
fraction of a Share or will be rounded down to the nearest whole Share, as
determined by the Committee.

     2.3  Limits on Grants for Qualified Performance-Based Compensation. The
Company may not issue Awards covering more than 500,000 Shares of Common Stock
to any one Participant in any calendar year.

     3. Eligibility. ISOs (as defined in Section 5 below) may be granted only to
employees (including officers and directors who are also employees) of the
Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors and consultants of the Company or any
Parent or Subsidiary of the Company; provided such consultants render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction. A person may be granted more than one Award under
this Plan.

     4. Administration.

     4.1  Committee Authority. This Plan will be administered by the Committee
or the Board acting as the Committee. From such time as the Company issues a
class of common equity securities required to be registered under Section 12 of
the Exchange Act, and with respect to Participants who reasonably could be
expected to be "covered employees" within the meaning of section 162(m)(3) of
the Code in any year in which the Award granted to them could generate a
deductible compensation expense, the Plan shall be administrated by a committee
of the Board comprised solely of two or more Board members who are "outside
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directors" within the meaning of Section 162(m)(4)(C)(i) of the Code and section
1.162-27(e)(3) of the Treasury Regulations. Subject to the general purposes,
terms and conditions of this Plan, and to the direction of the Board, the
Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:

          (a) construe and interpret this Plan, any Award Agreement and any
     other agreement or document executed pursuant to this Plan;

          (b) prescribe, amend and rescind rules and regulations relating to
     this Plan;

          (c) select persons to receive Awards;

          (d) determine the form and terms of Awards;

          (e) determine the number of Shares or other consideration subject to
     Awards;

          (f) determine whether Awards will be granted singly, in combination
     with, in tandem with, in replacement of, or as alternatives to, other
     Awards under this Plan or awards under any other incentive or compensation
     plan of the Company or any Parent or Subsidiary of the Company;

          (g) grant waivers of Plan or Award conditions;

          (h) determine the vesting, exercisability and payment of Awards;

          (i) correct any defect, supply any omission, or reconcile any
     inconsistency in this Plan, any Award, any Award Agreement, any Exercise
     Agreement or any Restricted Stock Purchase Agreement;

          (j) determine whether an Award has been earned, and

          (k) make all other determinations necessary or advisable for the
     administration of this Plan.

     4.2  Committee Discretion. Any determination made by the Committee with
respect to any Award will be made in its sole discretion at the time of grant of
the Award or, unless in contravention of any express term of this Plan or Award,
and subject to Section 5.9, at any later time, and such determination will be
final and binding on the Company and on all persons having an interest in any
Award under this Plan. The Committee may delegate to one or more officers of the
Company the authority to grant an Award under this Plan.

     5. Options. The Committee may grant Options to eligible persons and will
determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:

     5.1  Form of Option Grant. Each Option granted under this Plan will be
evidenced by an Award Agreement which will expressly identify the Option as an
ISO or an NQSO ("Stock Option Agreement"), and will be in such form and contain
such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.

     5.2  Date of Grant. The date of grant of an Option will be the date on
which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.

     5.3  Exercise Period. Options may be exercisable immediately (subject to
repurchase pursuant to Section 11 of this Plan) or may be exercisable within the
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option will
be exercisable after the expiration of ten (10) years from the date the Option
is granted, and further that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary of the
Company ("Ten Percent Shareholder") will be exercisable after the expiration of
five (5) years from the date

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the ISO is granted. The Committee also may provide for Options to become
exercisable at one time or from time to time, periodically or otherwise, in such
number of Shares or percentage of Shares as the Committee determines. Subject to
earlier termination of the Option as provided herein, each Participant who is
not an officer, director or consultant of the Company or of a Parent or
Subsidiary of the Company and does not have annual compensation of $60,000 or
more shall have the right to exercise an Option granted hereunder at the rate of
at least twenty percent (20%) per year over five (5) years from the date such
Option is granted. Subject to earlier termination of the Option as provided for
herein, each Participant who is an officer, director or consultant of the
Company or of a Parent or Subsidiary of the Company or has annual compensation
of $60,000 or more shall have the right to exercise an Option granted hereunder
at the rate of at least 20% per year over five (5) years from the later of (A)
the date when all other Options granted to the Participant by the Company have
become exercisable in full, and (B) the date when the Company's repurchase right
has lapsed in full with regard to all other shares of restricted stock held by
Participant.

     5.4  Exercise Price. The Exercise Price of an Option will be determined by
the Committee when the Option is granted and may not be less than 85% of the
Fair Market Value of the Shares on the date of grant; provided that (i) the
Exercise Price of an ISO will not be less than 100% of the Fair Market Value of
the Shares on the date of grant and (ii) the Exercise Price of any Option
granted to a Ten Percent Shareholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased must be made in accordance with Section 7 of this Plan.

     5.5  Method of Exercise. Options may be exercised only by delivery to the
Company of a written stock option exercise agreement (the "Exercise Agreement")
in a form approved by the Committee (which need not be the same for each
Participant), stating the number of Shares being purchased, the restrictions
imposed on the Shares purchased under such Exercise Agreement, if any, and such
representations and agreements regarding Participant's investment intent and
access to information and other matters, if any, as may be required or desirable
by the Company to comply with applicable securities laws, together with payment
in full of the Exercise Price, and any applicable taxes, for the number of
Shares being purchased.

     5.6  Termination. Subject to earlier termination pursuant to Sections 17
and 18 and notwithstanding the exercise periods set forth in the Stock Option
Agreement, exercise of an Option will always be subject to the following:

          (a) If the Participant is Terminated for any reason except death,
     Disability or for Cause, then the Participant may exercise such
     Participant's Options only to the extent that such Options are exercisable
     upon the Termination Date no later than three (3) months after the
     Termination Date (or within such shorter time period, not less than thirty
     (30) days, or within such longer time period, not exceeding five (5) years,
     after the Termination Date as may be determined by the Committee, with any
     exercise beyond three (3) months after the Termination Date deemed to be an
     NQSO) but in any event, no later than the expiration date of the Options.

          (b) If the Participant is Terminated because of Participant's death or
     Disability (or the Participant dies within three (3) months after a
     Termination other than because of Participant's Disability or Cause), then
     Participant's Options may be exercised only to the extent that such Options
     are exercisable by Participant on the Termination Date and must be
     exercised by Participant (or Participant's legal representative or
     authorized assignee) no later than twelve (12) months after the Termination
     Date (or within such shorter time period, not less than six (6) months, or
     within such longer time period, not exceeding five (5) years, after the
     Termination Date as may be determined by the Committee, with any exercise
     beyond (a) three (3) months after the Termination Date when the Termination
     is for any reason other than the Participant's death or disability, within
     the meaning of Section 22(e)(3) of the Code, or (b) twelve (12) months
     after the Termination Date when the Termination is for Participant's
     disability, within the meaning of Section 22(e)(3) of the Code, deemed to
     be an NQSO) but in any event no later than the expiration date of the
     Options.

          (c) If the Participant is terminated for Cause, then Participant's
     Options shall expire on such Participant's Termination Date, or at such
     later time and on such conditions as are determined by the Committee.

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     5.7  Limitations on Exercise. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.

     5.8  Limitations on ISOs. The aggregate Fair Market Value (determined as of
the date of grant) of Shares with respect to which ISOs are exercisable for the
first time by a Participant during any calendar year (under this Plan or under
any other incentive stock option plan of the Company or any Parent or Subsidiary
of the Company) will not exceed $100,000. If the Fair Market Value of Shares on
the date of grant with respect to which ISOs are exercisable for the first time
by a Participant during any calendar year exceeds $100,000, then the Options for
the first $100,000 worth of Shares to become exercisable in such calendar year
will be ISOs and the Options for the amount in excess of $100,000 that become
exercisable in that calendar year will be NQSOs. In the event that the Code or
the regulations promulgated thereunder are amended after the Effective Date (as
defined in Section 18 below) to provide for a different limit on the Fair Market
Value of Shares permitted to be subject to ISOs, then such different limit will
be automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.

     5.9  Modification, Extension or Renewal. The Committee may modify, extend
or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of this Plan for
Options granted on the date the action is taken to reduce the Exercise Price.

     5.10  No Disqualification. Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISOs will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.

     6. Restricted Stock. A Restricted Stock Award is an offer by the Company to
sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the Purchase Price, the restrictions to which the Shares
will be subject, and all other terms and conditions of the Restricted Stock
Award, subject to the following:

     6.1  Form of Restricted Stock Award. All purchases under a Restricted Stock
Award made pursuant to this Plan will be evidenced by an Award Agreement
("Restricted Stock Purchase Agreement") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. The Restricted Stock Award will be accepted by the Participant's execution
and delivery of the Restricted Stock Purchase Agreement and full payment for the
Shares to the Company within thirty (30) days from the date the Restricted Stock
Purchase Agreement is delivered to the person. If such person does not execute
and deliver the Restricted Stock Purchase Agreement along with full payment for
the Shares to the Company within thirty (30) days, then the offer will
terminate, unless otherwise determined by the Committee.

     6.2  Purchase Price. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee and will be at least
85% of the Fair Market Value of the Shares on the date the Restricted Stock
Award is granted or at the time the purchase is consummated, except in the case
of a sale to a Ten Percent Shareholder, in which case the Purchase Price will be
100% of the Fair Market Value on the date the Restricted Stock Award is granted
or at the time the purchase is consummated. Payment of the Purchase Price must
be made in accordance with Section 7 of this Plan.

     6.3  Restrictions. Restricted Stock Awards may be subject to the
restrictions set forth in Section 11 of this Plan or such other restrictions not
inconsistent with the California Corporations Code.
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     7. Payment for Share Purchases.

     7.1  Payment. Payment for Shares purchased pursuant to this Plan may be
made in cash (by check) or, where expressly approved for the Participant by the
Committee and where permitted by law:

          (a) by cancellation of indebtedness of the Company to the Participant;

          (b) by surrender of shares that either: (1) have been owned by
     Participant for more than six (6) months and have been paid for within the
     meaning of SEC Rule 144 (and, if such shares were purchased from the
     Company by use of a promissory note, such note has been fully paid with
     respect to such shares); or (2) were obtained by Participant in the public
     market;

          (c) by tender of a full recourse promissory note having such term as
     may be approved by the Committee and bearing interest at a rate sufficient
     to avoid imputation of income under Sections 483 and 1274 of the Code;
     provided, however, that Participants who are not employees or directors of
     the Company will not be entitled to purchase Shares with a promissory note
     unless the note is adequately secured by collateral other than the Shares;

          (d) by waiver of compensation due or accrued to the Participant for
     services rendered;

          (e) with respect only to purchases upon exercise of an Option, and
     provided that a public market for the Company's stock exists:

             (1) through a "same day sale" commitment from the Participant and a
        broker-dealer that is a member of the National Association of Securities
        Dealers (an "NASD Dealer") whereby the Participant irrevocably elects to
        exercise the Option and to sell a portion of the Shares so purchased to
        pay for the Exercise Price, and whereby the NASD Dealer irrevocably
        commits upon receipt of such Shares to forward the Exercise Price
        directly to the Company; or

             (2) through a "margin" commitment from the Participant and an NASD
        Dealer whereby the Participant irrevocably elects to exercise the Option
        and to pledge the Shares so purchased to the NASD Dealer in a margin
        account as security for a loan from the NASD Dealer in the amount of the
        Exercise Price, and whereby the NASD Dealer irrevocably commits upon
        receipt of such Shares to forward the Exercise Price directly to the
        Company; or

          (f) by any combination of the foregoing.

     7.2  Loan Guarantees. The Committee may help the Participant pay for Shares
purchased under this Plan by authorizing a guarantee by the Company of a
third-party loan to the Participant.

     8. Withholding Taxes.

     8.1  Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.

     8.2  Stock Withholding. When, under applicable tax laws, a Participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Committee may in its sole
discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee for such elections and be in writing in a form
acceptable to the Committee.
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     9. Privileges of Stock Ownership.

     9.1  Voting and Dividends. No Participant will have any of the rights of a
shareholder with respect to any Shares until the Shares are issued to the
Participant. After Shares are issued to the Participant, the Participant will be
a shareholder and have all the rights of a shareholder with respect to such
Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock, provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Unvested
Shares that are repurchased pursuant to Section 11. The Company will comply with
Section 260.140.1 of Title 10 of the California Code of Regulations with respect
to the voting rights of Common Stock.

     9.2  Financial Statements. The Company will provide financial statements to
each Participant prior to such Participant's purchase of Shares under this Plan,
and to each Participant annually during the period such Participant has Awards
outstanding, or as otherwise required or permitted under Section 260.140.46 of
Title 10 of the California Code of Regulations. Notwithstanding the foregoing,
the Company will not be required to provide such financial statements to key
employees whose services in connection with the Company assure them access to
equivalent information.

     10. Transferability. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution. During the lifetime of the
Participant an Award will be exercisable only by the Participant or Participants
legal representative and any elections with respect to an Award, may be made
only by the Participant or Participant's legal representative.

     11. Restrictions on Shares.

     11.1  Right of First Refusal. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third party, unless
otherwise not permitted by the California Corporations Code, provided, that such
right of first refusal terminates upon the Company's initial public offering of
Common Stock pursuant to an effective registration statement filed under the
Securities Act.

     11.2  Right of Repurchase. At the discretion of the Committee, the Company
may reserve to itself and/or its assignee(s) in the Award Agreement a right to
repurchase Unvested Shares held by a Participant for cash and/or cancellation of
purchase money indebtedness following such Participant's Termination at any time
within the later of ninety (90) days after the Participant's Termination Date
and the date the Participant purchases Shares under the Plan at the
Participant's Exercise Price or Purchase Price, as the case may be, provided,
that unless the Participant is an officer, director or consultant of the Company
or of a Parent or Subsidiary of the Company, or has annual compensation of
$60,000 or more, such right of repurchase lapses at the rate of at least twenty
percent (20%) per year over five (5) years from: (A) the date of grant of the
Option or (B) in the case of Restricted Stock, the date the Participant
purchases the Shares, and provided further, that if Participant is an officer,
director or consultant of the Company or of a Parent or Subsidiary of the
Company or has annual compensation of $60,000 or more, such right of repurchase
shall lapse at the rate of at least twenty percent (20%) per year over five (5)
years from the later of (A) the date when all other Options granted to the
Participant by the Company have become exercisable in full, and (B) the date
when the Company's repurchase right has lapsed in full with regard to all other
shares of restricted stock held by Participant.

     12. Certificates. All certificates for Shares or other securities delivered
under this Plan will be subject to such stock transfer orders, legends and other
restrictions as the Committee may deem necessary or advisable, including
restrictions under any applicable federal, state or foreign securities law, or
any rules, regulations and
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other requirements of the SEC or any stock exchange or automated quotation
system upon which the Shares may be listed or quoted.

     13. Escrow, Pledge of Shares. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.

     14. Exchange and Buyout of Awards. The Committee may, at any time or from
time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, shares of Common
Stock of the Company (including restricted stock) or other consideration, based
on such terms and conditions as the Committee and the Participant may agree.

     15. Securities Law and Other Regulatory Compliance. An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable, and/or (b) compliance with any exemption, completion of any
registration or other qualification of such Shares under any state or federal
law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company will be under no obligation to register the
Shares with the SEC or to effect compliance with the exemption, registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company will have no liability
for any inability or failure to do so.

     16. No Obligation to Employ. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
Cause.

     17. Corporate Transactions.

     17.1  Assumption or Replacement of Awards by Successor. In the event of (a)
a dissolution or liquidation of the Company, (b) a merger or consolidation in
which the Company is not the surviving corporation (other than a merger or
consolidation with a wholly-owned subsidiary, a reincorporation of the Company
in a different jurisdiction, or other transaction in which there is no
substantial change in the shareholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption, conversion or
replacement will be binding on all Participants), (c) merger in which the
Company is the surviving corporation but after which the shareholders of the
Company immediately prior to such merger (other than any shareholder which
merges with the Company in such merger, or which owns or controls another
corporation which merges, with
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the Company in such merger) cease to own their shares or other equity interests
in the Company, or (d) the sale of all or substantially all of the assets of the
Company, any or all outstanding Awards may be assumed, converted or replaced by
the successor corporation (if any), which assumption, conversion or replacement
will be binding on all Participants. In the alternative, the successor
corporation may substitute equivalent Awards or provide substantially similar
consideration to Participants as was provided to shareholders (after taking into
account the existing provisions of the Awards). The successor corporation may
also issue, in place of outstanding Shares of the Company held by the
Participant, substantially similar shares or other property subject to
repurchase restrictions and other provisions no less favorable to the
Participant than those which applied to such outstanding Shares immediately
prior to such transaction described in this Subsection 17.1. In the event such
successor corporation (if any) refuses to assume or substitute Awards, as
provided above, pursuant to a transaction described in this Subsection 17.1,
then notwithstanding any other provision in this Plan to the contrary, such
Awards will expire on such transaction at such time and on such conditions as
the Board will determine.

     17.2  Other Treatment of Awards. Subject to any greater rights granted to
Participants under the foregoing provisions of this Section 17, in the event of
the occurrence of any transaction described in Section 17.1, any outstanding
Awards will be treated as provided in the applicable agreement or plan of
merger, consolidation, dissolution, liquidation or sale of assets.

     17.3  Assumption of Awards by the Company. The Company, from time to time,
also may substitute or assume outstanding awards granted by another company,
whether in connection with an acquisition of such other company or otherwise, by
either (a) granting an Award under this Plan in substitution of such other
company's award or (b) assuming such award as if it had been granted under this
Plan if the terms of such assumed award could be applied to an Award granted
under this Plan. Such substitution or assumption will be permissible if the
holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.

     18. Adoption and Shareholder Approval. This Plan will become effective on
the date that it is adopted by the Board (the "Effective Date"). This Plan will
be approved by the shareholders of the Company (excluding Shares issued pursuant
to this Plan), consistent with applicable laws, within twelve (12) months before
or after the Effective Date. Upon the Effective Date, the Board may grant Awards
pursuant to this Plan; provided, however, that: (a) no Option may be exercised
prior to initial shareholder approval of this Plan; (b) no Option granted
pursuant to an increase in the number of Shares approved by the Board shall be
exercised prior to the time such increase has been approved by the shareholders
of the Company; (c) in the event that initial shareholder approval is not
obtained within the time period provided herein, all Awards granted hereunder
shall be canceled, any Shares issued pursuant to any Award shall be canceled and
any purchase of Shares issued hereunder shall be rescinded; and (d) Awards
granted pursuant to an increase in the number of Shares approved by the Board
which increase is not timely approved by shareholders shall be canceled, any
Shares issued pursuant to any such Awards shall be canceled, and any purchase of
Shares subject to any such Award shall be rescinded. In the event that initial
shareholder approval is not obtained within twelve (12) months before or after
the date this Plan is adopted by the Board, all Awards granted hereunder will be
canceled, any Shares issued pursuant to any Award will be canceled and any
purchase of Shares hereunder will be rescinded.

     19. Term of Plan/Governing Law. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the Effective Date or, if
earlier, the date of shareholder approval. This Plan and all agreements
hereunder shall be governed by and construed in accordance with the laws of the
State of California.
<PAGE>   9

     20. Amendment or Termination of Plan. Subject to Section 5.9, the Board may
at any time terminate or amend this Plan in any respect, including without
limitation amendment of any form of Award Agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Board will not, without the
approval of the shareholders of the Company, amend this Plan in any manner that
requires such shareholder approval pursuant to the California Corporations Code
or the Code or the regulations promulgated thereunder as such provisions apply
to ISO plans.

     21. Nonexclusive of the Plan. Neither the adoption of this Plan by the
Board, the submission of this Plan to the shareholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and other equity awards otherwise than under this
Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.

     22. Definitions. As used in this Plan, the following terms will have the
following meanings:

     "Award" means any award under this Plan, including any Option or Restricted
Stock Award.

     "Award Agreement" means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms and
conditions of the Award.

     "Board" means the Board of Directors of the Company.

     "Cause" means Termination because of (i) any willful material violation by
the Participant of any law or regulation applicable to the business of the
Company or a Parent or Subsidiary of the Company, the Participant's conviction
for, or guilty plea to, a felony or a crime involving moral turpitude, any
willful perpetration by the Participant of a common law fraud, (ii) the
Participant's commission of an act of personal dishonesty which involves
personal profit in connection with the Company or any other entity having a
business relationship with the Company, (iii) any material breach by the
Participant of any provision of any agreement or understanding between the
Company or any Parent or Subsidiary of the Company and the Participant regarding
the terms of the Participant's service as an employee, director or consultant to
the Company or a Parent or Subsidiary of the Company, including without
limitation, the willful and continued failure or refusal of the Participant to
perform the material duties required of such Participant as an employee,
director or consultant of the Company or a Parent or Subsidiary of the Company,
other than as a result of having a Disability, or a breach of any applicable
invention assignment and confidentiality agreement or similar agreement between
the Company and the Participant, (iv) Participant's disregard of the policies of
the Company or any Parent or Subsidiary of the Company so as to cause loss,
damage or injury to the property, reputation or employees of the Company or a
Parent or Subsidiary of the Company, or (v) any other misconduct by the
Participant which is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company or a Parent
or Subsidiary of the Company.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Committee" means the committee appointed by the Board to administer this
Plan (including, with respect to Participants who reasonably could be expected
to be "covered employees" within the meaning of section 162(m)(3) of the Code in
any year in which the Award granted to them could generate a deductible
compensation expense, the committee of the Board established pursuant to Section
4.1 of the Plan to administrate the Plan with respect to such Participants), or
if no committee is appointed, the Board.

     "Company" means Virage Logic Corporation, or any successor corporation.

     "Disability" means a disability, whether temporary or permanent, partial or
total, as determined by the Committee.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Exercise Price" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.
<PAGE>   10

     "Fair Market Value" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:

          (a) if such Common Stock is then quoted on the Nasdaq National Market,
     its closing price on the Nasdaq National Market on the date of
     determination as reported in The Wall Street Journal;

          (b) if such Common Stock is publicly traded and is then listed on a
     national securities exchange, its closing price on the date of
     determination on the principal national securities exchange on which the
     Common Stock is listed or admitted to trading as reported in The Wall
     Street Journal;

          (c) if such Common Stock is publicly traded but is not quoted on the
     Nasdaq National Market nor listed or admitted to trading on a national
     securities exchange, the average of the closing bid and asked prices on the
     date of determination as reported by The Wall Street Journal (or, if not so
     reported, as otherwise reported by any newspaper or other source as the
     Board may determine); or

          (d)  if none of the foregoing is applicable, by the Committee in good
     faith.

     "Option" means an award of an option to purchase Shares pursuant to Section
5.

     "Parent" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of such corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.

     "Participant" means a person who receives an Award under this Plan.

     "Plan" means this Virage Logic Corporation 1997 Equity Incentive Plan, as
amended from time to time.

     "Purchase Price" the price at which a Participant may purchase Restricted
Stock.

     "Restricted Stock" means Shares purchased pursuant to a Restricted Stock
Award.

     "Restricted Stock Award" means an award of Shares pursuant to Section 6.

     "SEC" means the Securities and Exchange Commission.

     "Securities Act" means the Securities Act of 1933, as amended.

     "Shares" means shares of the Company's Common Stock reserved for issuance
under this Plan, as adjusted pursuant to Sections 2 and 17, and any successor
security.

     "Subsidiary" means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

     "Termination" or "Terminated" means, for purposes of this Plan with respect
to a Participant, that the Participant has for any reason ceased to provide
services as an employee, officer, director or consultant to the Company or a
Parent or Subsidiary of the Company. A Participant will not be deemed to have
ceased to provide services in the case of (i) sick leave, (ii) military leave,
or (iii) any other leave of absence approved by the Committee, provided that
such leave is for a period of not more than ninety (90) days unless
reinstatement (or, in the case of an employee with an ISO, reemployment) upon
the expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to formal policy adopted from time to time by the
Company and issued and promulgated in writing. In the case of any Participant on
(i) sick leave, (ii) military leave or (iii) an approved leave of absence, the
Committee may make such provisions respecting suspension of vesting of the Award
while on leave from the Company or a Parent or Subsidiary of the Company as it
may deem appropriate, except that in no event may an Option be exercised after
the expiration of the term set forth in the Stock Option Agreement. The
Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "Termination Date").

     "Unvested Shares" means 'Unvested Shares' as defined in the Award
Agreement.

     "Vested Shares" means 'Vested Shares' as defined in the Award Agreement.<PAGE>   1
                                                                     EXHIBIT 4.8

                       NON-QUALIFIED STOCK OPTION PLAN OF
                            ASIC INTERNATIONAL, INC.

         1. PURPOSE OF THE PLAN. This Non-Qualified Stock Option Plan of ASIC
International, Inc. (the "Company"), originally effective as of December 14,
1998 (the "Original Effective Date"), and amended and restated effective as of
this _____day of __________, 2001, is intended to provide an incentive for
employees of the Company and its Subsidiaries to expand and improve the profits
and prosperity of the Company and its Subsidiaries, and to assist the Company
and its Subsidiaries in attracting and retaining its personnel through the grant
of Options to purchase shares of the Company's common stock. The terms and
provisions of the Plan as amended and restated as of the date set forth above
shall supercede all terms and provisions of the Plan prior to such restatement.

         2. DEFINITIONS. When used herein, the following terms shall have the
meaning set forth below:

              2.1 "Board" means the Board of Directors of the Company.

              2.2 "Change in Control" means a change in control of the Company
         as a result of the occurrence of any of the following events:

                  (a) any Person other than an Exempt Person (an "Acquiring
              Person") is or becomes the beneficial owner, directly or
              indirectly, of Shares of the Company representing more than fifty
              percent (50%) of the combined voting power of the Company's then
              outstanding Shares, other than either in connection with an
              issuance of Shares or series of related issuances of Shares
              approved by the Board (which Board must include at least a
              majority who were Continuing Directors and which transaction or
              series of related transactions must have been approved by a
              majority of the Continuing Directors) or as the result of the
              reduction in the number of issued and outstanding Shares pursuant
              to a transaction or series of related transactions approved by the
              Board;
<PAGE>   2

                  (b) there shall cease to be a majority of the Board comprised
              of Continuing Directors; or

                  (c) (i) the stockholders of the Company approve a merger or
              consolidation of the Company with any other entity, other than a
              merger or consolidation which would result in the voting
              securities of the Company outstanding immediately prior thereto
              continuing to represent more than fifty percent (50%) of the
              combined voting power of the voting securities of the Company or
              such surviving entity outstanding immediately after such merger or
              consolidation, or (ii) the Board approves 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 (other than to a Subsidiary or other controlled
              person of the Company).

              2.3 "Code" means the Internal Revenue Code of 1986, as in effect
         at the time of reference, or any successor revenue code which may
         hereafter be adopted in lieu thereof, and reference to any specific
         provisions of the Code shall refer to the corresponding provisions of
         the Code as it may hereafter be amended or replaced.

              2.4 "Company" means ASIC International, Inc.

              2.5 "Committee" means any committee appointed by the Board which
         is delegated by the Board with responsibility for the administration
         of the Plan.

              2.6 "Continuing Director" means a director of the Company who is
         not an Acquiring Person or an affiliate or associate thereof or any of
         their representatives and who was either a director of the Company
         before any Person became an Acquiring Person or whose nomination or
         election to the Board was recommended or approved by a majority of the
         then Continuing Directors or by an Exempt Person.

              2.7 "Employee" means any employee of the Company or any of its
         Subsidiaries, including employees who are officers or directors.

<PAGE>   3

              2.8 "Exchange Act" means the Securities Exchange Act of 1934, as
         in effect at the time of reference, or any successor law which may
         hereafter be adopted in lieu thereof, and any reference to any specific
         provisions of the Exchange Act shall refer to the corresponding
         provisions of the Exchange Act as it may hereafter be amended or
         replaced.

              2.9 "Exempt Person" means the Company, any Subsidiary thereof, any
         employee benefit plan of the Company or any affiliate or Subsidiary
         thereof, any entity holding Shares for or pursuant to the terms of any
         such plan, and any shareholder as of the close of business on the date
         the Plan is adopted by the Board or any affiliate of any such
         shareholder.

              2.10 "Fair Market Value" means with respect to the Shares, the
         fair market value determined in good faith by the Board, or the
         Committee if one has been appointed, its discretion, which
         determination may, but need not, be based on (a) the advice of an
         independent financial advisor (which may be the Company's regular
         outside auditors) or (b) the last known price per Share paid by a
         purchaser in an arm's length transaction; provided, however, that if
         there shall be a public market for the Shares, Fair Market Value shall
         mean (i) the closing price of the Shares on the principal stock
         exchange on which Shares are then traded or admitted to trading, on the
         last business day prior to the date on which the value is to be
         determined, (ii) if no sale takes place on such day on any such
         exchange, the average of the last reported closing bid and asked prices
         on such day as officially quoted on any such exchange, or (iii) if the
         Shares are not then listed or admitted to trading on any such exchange,
         the average of the last reported closing bid and asked prices on such
         day on the over-the-counter market, provided that in no event may the
         Fair Market Value be less than the par value of a Share. For purposes
         of (i) above, the National Association of Securities Dealers National
         Market System shall be deemed a principal stock exchange. If there
         shall be a public market for the Shares, and the foregoing references
         are unavailable or inapplicable, then the Fair Market Value shall be

<PAGE>   4

         determined on the basis of the appropriate substitute public market
         price indicator as determined by the Committee, in its sole discretion.

              2.11 "Non-Qualified Stock Option" means an Option that is not
         intended to qualify as an incentive stock option within the meaning of
         Section 422 of the Code.

              2.12 "Option" means the right to purchase the number of Shares
         specified by the Board, or the Committee if one has been appointed, at
         a price and for a term fixed by the Board, or the Committee if one has
         been appointed, in accordance with the Plan, and subject to such other
         limitations and restrictions as the Plan or the Board or the Committee,
         as the case may be, may impose.

              2.13 "Option Agreement" means an agreement executed in connection
         with the grant of an Option.

              2.14 "Person" means any individual, partnership, corporation,
         trust, limited liability company or other entity.

              2.15 "Plan" means the Company's Non-Qualified Stock Option Plan as
         amended from time to time.

              2.16 "Regulation T" means Part 220, chapter II, title 12 of the
         Code of Federal Regulations, issued by the Board of Governors of the
         Federal Reserve System pursuant to the Exchange Act, as amended from
         time to time, or any successor regulation which may hereafter be
         adopted in lieu thereof.

              2.17 "Rule 16b-3" means Rule 16b-3 of the General Rules and
         Regulations of the Exchange Act, as in effect at the time of reference,
         or any successor rules or regulations which may hereafter be adopted in
         lieu thereof, and any reference to any specific provisions of Rule
         16b-3 shall refer to the corresponding provisions of Rule 16b-3 as it
         may hereafter be amended or replaced.

              2.18 "Shares" means shares of the Company's common stock, no par
         value, or, if by reason of the adjustment, assumption or replacement
         provisions contained herein,

<PAGE>   5

         any rights under an Option under the Plan pertain to any other
         security, such other security.

              2.19 "Subsidiary" or "Subsidiaries" means any corporation or
         corporations other than the employer corporation in an unbroken chain
         of corporations beginning with the employer corporation if each of the
         corporations other than the last corporation in the unbroken chain owns
         stock possessing more than fifty percent (50%) of the total combined
         voting power of all classes of stock in one of the other corporations
         in such chain.

              2.20 "Successor" means the legal representative of the estate of a
         deceased Employee or the person or persons who shall acquire the right
         to exercise or receive an Option by bequest or inheritance or by reason
         of the death of the Employee.

              2.21 "Term" means the period during which a particular Option may
         be exercised.

         3. STOCK SUBJECT TO THE PLAN. The aggregate number of Shares reserved
for use, upon the issuance, vesting or exercise of Options to be granted from
time to time under the Plan shall be 640,000, which Shares shall be authorized
but unissued Shares. Should one or more outstanding Options under the Plan
expire, lapse, terminate or be surrendered for any reason prior to exercise in
full, then the Shares subject to the portion of each Option not so exercised
shall be available for subsequent issuance under the Plan.

         4. ADMINISTRATION OF THE PLAN. The Board shall be vested with the
responsibility for the administration of the Plan; provided, however, that the
Board may appoint a Committee which shall delegated with the responsibility for
the administration of the Plan; provided, further, however, that at such time,
if ever, that the Company becomes subject to the Exchange Act, the Board shall
appoint a Committee, which shall consist of not less than two (2) outside
directors as defined in Treasury Regulation 1.162-27 who shall also qualify as
disinterested directors within the meaning of Rule 16b-3, which shall be vested
with the responsibility for the administration of the Plan; provided, further,
however, that the failure to appoint a Committee satisfying the

<PAGE>   6
foregoing requirement shall not affect the validity of any Options granted under
the Plan. Subject to the provisions of the Plan, the Board, or the Committee if
one has been appointed, shall have full authority, in its discretion, to
determine the Employees to whom Options shall be granted, the number of Shares
to be covered by each of the Options granted, and the terms of any such Option;
to amend or cancel Options (subject to Section 17 of the Plan); to accelerate
the vesting of Options; to require the cancellation or surrender of any
previously granted options under this Plan or any other plans of the Company as
a condition to the granting of an Option; to interpret the Plan; to prescribe,
amend and rescind rules and regulations relating to the Plan; and generally to
interpret and determine any and all matters whatsoever relating to the
administration of the Plan and the granting of Options hereunder. All decisions
or interpretations made by the Board, or the Committee if one has been
appointed, with regard to any question arising under the Plan or any Option
granted pursuant to the Plan shall be binding and conclusive on the Company and
the recipients of Options. The Board may from time to time appoint members to
the Committee in substitution for or in addition to members previously appointed
and may fill vacancies, however caused, in the Committee. The Committee, if one
has been appointed, shall select one of its members as its Chairman and shall
hold its meetings at such times and places as it shall deem advisable. Two
members shall constitute a quorum at meetings of the Committee. Any action of
the Committee may be effected by a resolution in writing signed by all of the
members for the time being, and any action so taken shall be fully as effective
as if it had been taken by a vote of a majority of the members at a meeting duly
called and held. The Committee shall make such rules and regulations for the
conduct of its business as it shall deem advisable and shall keep minutes of its
meetings and duly passed resolutions in writing. Subject to applicable laws, no
member of the Committee shall be liable, in the absence of conduct involving
dishonesty or a willful breach of duty, for any act or omission with respect to
his service on the Committee.

         5. EMPLOYEES TO WHOM AWARDS MAY BE GRANTED. Options may be granted in
each calendar year or portion thereof while the Plan is in effect to such of the
Employees as the

<PAGE>   7

Board, or the Committee if one has been appointed, in its discretion, shall
determine. In determining the Employees to whom Options shall be granted and the
number of Shares subject to such Options, the Board, or the Committee if one has
been appointed, shall take into account the duties of the respective Employees,
their present and potential contributions to the success of the Company, and
such other factors as the Board or the Committee, as the case may be, shall deem
relevant in connection with accomplishing the purposes of the Plan.

         6. OPTIONS.

              6.1 Type of Option. Options granted under the Plan shall be
         Non-Qualified Stock Options and shall not be treated by the Company or
         the Employee to whom the Option is granted as an incentive stock option
         (within the meaning of Section 422 of the Code) for federal income tax
         purposes.

              6.2 Exercise Price. Unless otherwise determined by the Board, or
         the Committee if one has been appointed, in its sole discretion, the
         exercise price per Share over which Options are granted under the Plan
         shall be the Fair Market Value of the Shares on the date the Option is
         granted.

              6.3 Terms of Options. Options granted hereunder shall be
         exercisable for a Term of not more than ten (10) years from the date of
         grant thereof, but shall be subject to earlier termination as
         hereinafter provided. Each Option Agreement issued hereunder shall
         specify the term of the Option, which term shall be determined by the
         Board, or the Committee if one has been appointed, in accordance with
         its discretionary authority hereunder.

         7. DATE OF GRANT. The date of grant of an Option granted hereunder
shall be the date on which the Board, or the Committee if one has been
appointed, acts in granting the Option.

         8. EXERCISE OF RIGHTS UNDER OPTIONS.

              8.1 Notice of Exercise. An Employee entitled to exercise an Option
         may do so by delivery of a written notice to that effect specifying the
         number of Shares with respect to which the Option is being exercised
         and any other information the Board, or

<PAGE>   8

         the Committee if one has been appointed, may prescribe. The notice
         shall be accompanied by payment in full of the exercise price of any
         Shares to be purchased, which payment shall be made in cash or check.
         No Shares shall be issued upon exercise of an Option until full payment
         has been made therefor. All notices or requests provided for herein
         shall be delivered to the President of the Company, or such other
         person as the Board or the Committee, as the case may be, shall
         designate.

              8.2 Cashless Exercise Procedures. At such time, if ever, that
         Shares are traded on the over-the-counter market or on any other
         established securities market, the Company, in its sole discretion, may
         establish procedures whereby an Employee, subject to the requirements
         of Rule 16b-3, Regulation T, federal income tax laws, and other
         federal, state and local tax and securities laws, can exercise an
         Option or a portion thereof without making a direct payment of the
         exercise price to the Company. If the Company so elects to establish a
         cashless exercise program, the Company shall determine, in its sole
         discretion, and from time to time, such administrative procedures and
         policies as it deems appropriate and such procedures and policies shall
         be binding on any Employee wishing to utilize the cashless exercise
         program.

         9. OTHER OPTION TERMS AND CONDITIONS. Each Option Agreement setting
forth an Option shall contain such other terms and conditions (e.g. vesting
conditions) not inconsistent herewith as shall be approved by the Board, or the
Committee if one has been appointed.

         10. RIGHTS OF OPTION HOLDER. The holder of an Option shall not have any
of the rights of a shareholder with respect to the Shares subject to an Option,
until (i) the Shares are issued to the Option holder upon the valid exercise of
the Option covering such Shares accompanied by full payment of the exercise
price; and (ii) his name is registered on the statutory registers of the
Company.

         11. NONTRANSFERABILITY OF OPTIONS. An Option shall not be transferable,
other than: (a) by will or the laws of descent and distribution, and an Option
subject to exercise may be exercised, during the lifetime of the holder of the
Option, only by the holder or in the event of

<PAGE>   9

death, the holder's Successor, or in the event of disability, the holder's
personal representative or (b) pursuant to a qualified domestic relation order,
as defined in the Code or the Employee Retirement Income Security Act (ERISA) or
the rules thereunder.

         12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes
in all of the outstanding Shares by reason of stock dividends, stock splits,
recapitalizations, mergers, consolidations, combinations, or exchanges of
shares, separations, reorganizations or liquidations, or similar events, or in
the event of extraordinary cash or non-cash dividends being declared with
respect to the Shares, or similar transactions or events, the number and class
of Shares available under the Plan in the aggregate, the number and class of
Shares subject to Options theretofore granted, applicable exercise prices and
all other applicable provisions, shall, subject to the provisions of the Plan,
be equitably adjusted by the Board, or the Committee if one has been appointed
(which adjustment may, but need not, include payment to the holder of an Option,
in cash or in shares, in an amount equal to the difference between the price at
which such Option may be exercised and the then current Fair Market Value of the
Shares subject to such Option as equitably determined by the Board or the
Committee, as the case may be). The foregoing adjustment and the manner of
application of the foregoing provisions shall be determined by the Board or the
Committee, as the case may be, in its sole discretion. Any such adjustment shall
provide for the elimination of any fractional share which might otherwise become
subject to an Option.

         13. CHANGE IN CONTROL. Notwithstanding anything to the contrary in the
Plan or any Option Agreement, in the case of a Change in Control of the Company:

              (a) If the Change in Control of the Company is described in
         Section 2.2(a) or 2.2(b) of the Plan, the Board, or the Committee if
         one has been appointed, may, in its discretion, taking into account the
         purposes of this Plan, determine, on a case by case basis, that each
         Option granted under the Plan shall, subject to the following
         provisions, terminate thirty (30) days after the date that the Option
         holder receives written notice of the Company's intent to terminate his
         Option in connection with such Change in Control

<PAGE>   10

         but, in the event of any such termination, an Option holder shall have
         the right, conditioned upon the consummation of such Change in Control
         and subject to any other limitation (other than any vesting limitation)
         on the exercise of such Option in effect on the date of exercise, to
         immediately exercise any Options in full, without regard to any vesting
         limitations, to the extent they shall not have been theretofore
         exercised.

              (b) If the Change in Control of the Company is described in
         Section 2.2(c)(i) of the Plan, then (i) the Board, or the Committee if
         one has been appointed, shall use its reasonable efforts to cause the
         acquiring or successor entity (or parent thereof) to either assume all
         outstanding Options granted under the Plan or to replace all
         outstanding Options granted under the Plan with comparable options
         which preserve the spread, exercise period and vesting periods of such
         Options; (ii) all holders of outstanding Options that are assumed or
         replaced with comparable options shall be deemed to have consented to
         such assumption or replacement and shall execute any documents
         reasonably requested by the Company or the acquiring Person to
         effectuate such assumption or replacement; (iii) all outstanding
         Options granted under the Plan that are not so assumed or replaced with
         comparable options shall become exercisable in full immediately prior
         to, and conditioned upon, the closing of the transaction (a "Corporate
         Transaction") the approval of which resulted in a Change in Control
         described in Section 2.2(c)(i) of the Plan, and written notice of such
         acceleration shall be given to the holders of all non-assumed or
         non-replaced Options at least ten (10) days prior to the date of the
         closing of the Corporate Transaction; and (iv) all outstanding Options
         granted under the Plan shall automatically terminate upon the closing
         of the Corporate Transaction, except to the extent assumed by the
         acquiring or successor entity (or parent thereof).

         14. FORMS OF OPTIONS. Nothing contained in the Plan nor any resolution
approved or to be approved by the Board or by the shareholders of the Company
shall constitute the granting of any Option. An Option shall be granted
hereunder only by action taken by the Board, or Committee if one has been
appointed, in granting an Option. Whenever the Board or

<PAGE>   11

the Committee, as the case may be, shall designate an Employee for the receipt
of an Option, the President of the Company, or such other person as the Board or
the Committee, as the case may be, shall designate, shall forthwith send notice
thereof to the Employee, in such form as the Board or the Committee, as the case
may be, shall approve, stating the number of Shares subject to the Option, its
Term, and Option Agreement in such form as may from time to time hereafter be
approved by the Board or the Committee, as the case may be, which shall have
been duly executed by or on behalf of the Company. If the surrender of
previously issued Options is made a condition of the grant, the notice shall set
forth the pertinent details of such condition. Execution by the Employee to whom
such Option is granted, of said Option Agreement in accordance with the
provisions set forth in this Plan, shall be a condition precedent to the
exercise of any Option.

         15. TAXES. The Company shall have the right to require a person
entitled to be issued Shares pursuant to the receipt, vesting or exercise of an
Option under the Plan to pay the Company the amount of any taxes which the
Company is or will be required to withhold with respect to such Shares before
the certificate for such Shares is delivered pursuant to the Option.
Furthermore, the Company may elect, subject to applicable laws, to deduct such
taxes from any other amounts then payable in cash or from any other amounts
payable any time thereafter to the Employee.

         16. TERMINATION OF THE PLAN. The Plan shall terminate five (5) years
from the Original Effective Date, and an Option shall not be granted under the
Plan after that date although the terms of any Options may be amended at any
date prior to the end of its Term. Any Options outstanding at the time of
termination of the Plan shall continue in full force and effect according to the
terms and conditions of the Option and this Plan.

         17. AMENDMENT OF THE PLAN. The Plan may be amended at any time and from
time to time by the Board, but no amendment without the approval of the
shareholders of the Company shall be made if shareholder approval under Rule
16b-3 or Code Section 162(m) (in either case, only if the Company is subject to
the Exchange Act at the time of such amendment)

<PAGE>   12

would be required. Notwithstanding the discretionary authority granted to the
Board, or the Committee if one has been appointed, no amendment of the Plan or
any Option granted under the Plan shall impair any of the rights of any holder,
without such holder's consent, under any Option theretofore granted under the
Plan.

         18. DELIVERY OF SHARES ON EXERCISE OR GRANT OF OPTIONS. Subject to
applicable laws, delivery of share certificates for Shares issued pursuant to
the valid exercise of an Option may be postponed by the Company for such period
as may be required for it with reasonable diligence to comply with any
applicable requirements of any federal, state or local law or regulation or any
administrative or quasi-administrative requirement applicable to the sale,
issuance, distribution or delivery of such Shares. The Board, or the Committee
if one has been appointed, may, in its sole discretion, require an Employee to
furnish the Company with appropriate representations and a written investment
letter prior to the exercise of an Option or the delivery of any Shares pursuant
to an Option.

         19. FEES AND COSTS. The Company shall pay all original issue taxes on
the grant or exercise of any Option under the Plan and all other fees and
expenses necessarily incurred by the Company in connection therewith.

         20. OTHER PROVISIONS. As used in the Plan, and in Option Agreements and
other documents prepared in implementation of the Plan, references to the
masculine pronoun shall be deemed to refer to the feminine or neuter, and
references in the singular or the plural shall refer to the plural or the
singular, as the identity of the person or persons or entity or entities being
referred to may require. The captions used in the Plan and in such Option
Agreements and other documents prepared in implementation of the Plan are for
convenience only and shall not affect the meaning of any provision hereof or
thereof.

         21. TENNESSEE LAW TO GOVERN. This Plan shall be governed by and
construed in accordance with the laws of the State of Tennessee.

         22. EFFECTIVENESS OF THE PLAN. The Plan, as amended and restated
herein, shall become effective when approved by the Board.

<PAGE>   13
                      NON-QUALIFIED STOCK OPTION AGREEMENT
                      ------------------------------------

        This Non-Qualified Stock Option Agreement ("Option Agreement") is made
as of the ____ day of __________, 2001 ("Grant Date"), between ASIC
International, Inc. a Tennessee corporation (hereinafter called the "Company"),
and _______________, an employee of the Company (hereinafter called the
"Employee").

        WHEREAS, the Company adopted the ASIC International, Inc. Nonstatutory
Stock Option Plan dated December 14, 1998, as amended and restated on
_____________, 2001 (the "Plan") ; and

        NOW, THEREFORE, in consideration of (i) the sum of one dollar ($1.00)
paid by the Option holder to the Company (the receipt, adequacy and sufficiency
of which the Company hereby acknowledges), and (ii) the mutual covenants
hereinafter set forth, and for other good and valuable consideration, the
parties hereto have agreed, and do hereby agree, as follows:

        1. GRANT OF OPTION. The Company hereby grants to the Employee the option
(hereinafter called the "Option") to purchase all or any part of an aggregate of
____________________ (____) ordinary shares of $0.01 each in the capital of the
Company ("Shares") (such number being subject to adjustment as set forth herein
and in the Plan) on the terms and conditions set forth herein and in the Plan.

        2. TYPE OF OPTION. The Option granted under this Option Agreement is a
Non-Qualified Stock Option and shall not be treated by the Company or the
Employee as an incentive stock option (within the meaning of Section 422 of the
Code) for federal income tax purposes.

        3. EXERCISE PRICE. The exercise price per Share covered by the Option is
_______________.

        4. TERM AND VESTING OF THE OPTION.

                (a) The Term of the Option shall be for a period of ten (10)
        years from the Grant Date, subject to earlier termination as hereinafter
        provided.
<PAGE>   14

                (b) Prior to its expiration or termination, and except as
        hereinafter provided, the Option will vest at a rate of twenty-five
        percent (25%) per year over a four year period beginning as of the Grant
        Date. Notwithstanding the preceding sentence, upon a Sale of the Company
        (as defined in Section 5(a) below) the Option will become one hundred
        percent (100%) vested.

        5. EXERCISE OF OPTION.

                (a) The Option shall not be exercisable until either a Sale of
        the Company occurs or until the Company ceases to be an "S corporation"
        under applicable provisions of the Code, and thereafter shall be
        exercisable only to the extent such Option is vested and shall not have
        previously been exercised. For purposes of this Section 5(b), "Sale of
        the Company" means the sale or exchange pursuant to a sale, exchange,
        merger or other transaction, or a series of related sales, exchanges,
        mergers or other transactions, of one hundred percent (100%) of the
        Company's Shares or assets.

                (b) In order to exercise the Option, the person or persons
        entitled to exercise it shall deliver to the Company written notice of
        the number of full Shares with respect to which the Option is to be
        exercised. Such notice shall be delivered to the attention of the
        President of the Company, or such other person as the Board, or the
        Committee if one has been appointed, shall designate. Unless (i) the
        Company, in its discretion, establishes "cashless exercise" procedures
        pursuant to Section 8.2 of the Plan, and (ii) the Board, or the
        Committee if one has been appointed, in its discretion, permits the
        person or persons entitled to exercise the Option to utilize such
        "cashless exercise" procedures, the notice shall be accompanied by
        payment in full for any Shares being purchased. Such payment shall be in
        cash or check. No fractional Shares shall be issued.

                (c) No Shares shall be issued until the valid exercise of the
        Option by the holder thereof accompanied by full payment therefor, and
        the Employee shall have none of the rights of a shareholder in respect
        of such Shares until (i) completion of the

<PAGE>   15

        aforesaid, and (ii) the registration of such Option holder's name on the
        statutory registers of the Company.

        6. NONTRANSFERABILITY. The Option shall not be transferable, other than
(a) by will or the laws of descent and distribution, or (b) pursuant to a
qualified domestic relations order, as defined in the Internal Revenue Code of
1986, as amended (the "Code"), or ERISA or the rules thereunder, and the Option
may be exercised, during the lifetime of the holder of the Option, only by him,
or in the event of disability, his personal representative.

        7. TERMINATION OF EMPLOYMENT. In the event of the complete termination
of the Employee's employment with the Company for any reason other than death or
disability, then (i) the Option may be exercised by the Employee (to the extent
that he shall have been entitled to do so at the termination of his employment),
at any time within three (3) months after the date of such termination, but in
no event shall any Option be exercisable more than ten (10) years from the Grant
Date, (ii) the nonvested portion of the Option shall terminate on the date of
the termination of the Employee's employment; and (iii) the vested portion of
the Option shall automatically terminate upon the earlier of the expiration of
the three (3) month period described above or ten (10) years from the Grant Date
to the extent not theretofore exercised. So long as the Employee shall continue
to be an employee of the Company or one or more of its Subsidiaries, the Option
shall not be affected by any change of duties or position. Anything contained
herein to the contrary notwithstanding, in the event of Employee's termination
of employment by the Company prior to a Change in Control, or the Employee's
voluntary termination of employment other than by reason of disability, the
Option shall automatically terminate as of the date of the Employee's
termination of employment with the Company.

        8. DISABILITY OR DEATH OF EMPLOYEE. If the Employee dies or becomes
"disabled," as defined in Section 22(e)(3) of the Code, while he is employed by
the Company, or if the Employee dies within ninety (90) days after any
involuntary termination of his employment other than for cause, then (i) the
Option may be exercised, by the Employee's Successor in the event of the
Employee's death or the Employee or his personal representative in the event of
the

<PAGE>   16

Employee's disability, to the extent that the Employee shall have been entitled
to do so at the time of his death or termination of employment by reason of
disability at any time prior to the later of the six (6) month anniversary of
the date of the Employee's death or disability, as the case may be, or the fifth
(5th) anniversary of the Grant Date; (ii) the nonvested portion of the Option
shall automatically terminate upon the Employee's death or disability; and (iii)
the vested portion of the Option shall automatically terminate upon the
expiration of the period specified in (i) above.

        9. TAXES. The Company shall have the right to require a person entitled
to be issued Shares pursuant to the exercise of this Option under the Plan to
pay the Company the amount of any taxes which the Company is or will be required
to withhold with respect to such Shares before the certificate for such Shares
is delivered pursuant to the Option. Furthermore, the Company may, subject to
applicable laws, elect to deduct such taxes from any other amounts then payable
in cash or from any other amounts payable any time thereafter to the Employee.

        10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes
in all of the outstanding Shares by reason of stock dividends, stock splits,
reclassifications, recapitalizations, mergers, consolidations, combinations, or
exchanges of shares, separations, reorganizations, liquidations, or similar
events, or in the event of extraordinary cash or non-cash dividends being
declared with respect to all of the outstanding Shares, or similar transactions
or events, the number and class of Shares subject to the Option hereby granted,
the exercise price and all of the other applicable provisions thereof shall,
subject to the provisions of the Plan, be correspondingly equitably adjusted by
the Board, or the Committee if one has been appointed (which adjustment may, but
need not, include payment to the holder of the Option, in cash, in an amount
equal to the difference between the exercise price and the then current Fair
Market Value of the Shares subject to the Option as equitably determined by the
Board or the Committee, as the case may be), as it shall decide in its sole
discretion. Any such adjustment may provide for the elimination of any
fractional share which might otherwise be subject to the Option.
<PAGE>   17

        11. CHANGE IN CONTROL. If, pursuant to a Change in Control described in
Section 2.2(c)(i) of the Plan, the Company causes the acquiring Person (or
parent thereof) to assume or replace this Option as set forth in Section 13(b)
of the Plan, the Employee hereby consents to such assumption or replacement and
agrees to execute any document reasonably requested by the Company or the
acquiring Person (or parent thereof) to effectuate such assumption or
replacement.

        12. DELIVERY OF SHARES ON EXERCISE OF OPTIONS. Subject to applicable
laws, delivery of share certificates for Shares issued pursuant to the valid
exercise of the Option may be postponed by the Company for such period as may be
required for it with reasonable diligence to comply with any applicable
requirements of any federal, state or local law or regulation or any
administrative or quasi-administrative requirement applicable to the sale,
issuance, distribution or delivery of such Shares. The Board, or the Committee
if one has been appointed, may, in its sole discretion, require the holder of
the Option to furnish the Company with appropriate representations and a written
investment letter prior to the exercise of the Option or the delivery of any
Shares pursuant to the Option.

        13. INCORPORATION OF PROVISIONS OF THE PLAN. All of the provisions of
the Plan pursuant to which this Option is granted are hereby incorporated by
reference and made a part hereof as if specifically set forth herein, and to the
extent of any conflict between this Option Agreement and the terms contained in
the Plan, the Plan shall control. To the extent any capitalized terms are not
otherwise defined herein, they shall have the meanings set forth in the Plan.

        14. INVALIDITY OF PROVISIONS. The invalidity or unenforceability of any
provision of this Option Agreement as a result of a violation of any state or
federal law, or of the rules or regulations of any governmental regulatory body,
or any securities exchange shall not affect the validity or enforceability of
the remainder of this Option Agreement.
<PAGE>   18

        15. WAIVER AND MODIFICATION. The provisions of this Option Agreement may
not be waived or modified unless such waiver or modification is in writing and
signed by the parties hereto.

        16. INTERPRETATION. All decisions or interpretations made by the Board,
or the Committee if one has been appointed, with regard to any question arising
under the Plan or this Option Agreement, shall be binding and conclusive on the
Company and the Employee.

        17. MULTIPLE COUNTERPARTS. This Option Agreement may be signed in
multiple counterparts, all of which when taken together shall constitute an
original agreement. The execution by one party of any counterpart shall be
sufficient execution by that party, whether or not the same counterpart has been
executed by any other party.

        18. GOVERNING LAW. This Option Agreement shall be governed by the laws
of the State of Tennessee.

        IN WITNESS WHEREOF, the Company has caused this Option Agreement to be
duly executed by its duly authorized officer, and the Employee has hereunto set
his hand, all as of the day and year first above written.

                                  ASIC INTERNATIONAL, INC.

                                  By:
                                     -----------------------------------

                                  Title:
                                        --------------------------------

                                  EMPLOYEE

                                  --------------------------------------
                                                         , Employee
                                  ----------------------

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