Current assets

EXHIBIT 10.20

Virage Logic Corporation
FY2005 Bonus Plan

1. Purpose

The Virage Logic Corporation FY 2005 Bonus Plan (the “Plan”) is intended to: (i) enhance shareholder value by promoting strong linkages between employee contributions and company performance; (ii) support achievement of the business objectives of Virage Logic Corporation and its subsidiaries (the “Company”); and (iii) promote retention of employees.

2. Effective Date

This Plan is only effective for the Company’s 2005 fiscal year beginning October 1, 2004, through September 30, 2005 (the “Fiscal Year”). This Plan is limited in time and will expire automatically on September 30, 2005 (“Expiration Date”). This Plan also supersedes all prior bonus or commission incentive plans, whether with the Company or any subsidiary or affiliate thereof, or any written or verbal representations regarding the subject matter of this Plan.

3. Administration

4. Eligibility

Any full-time regular employee of the Company in the U.S. may be eligible to participate in this Plan, provided he or she is designated by the Administrator as a participant and as to whom the Administrator has not, in its sole discretion, withdrawn such designation (a “Participant”) and he or she meets all the following conditions:

5. Plan Metrics

The Base Salary is the base salary actually paid to the employee in the fiscal quarter for which a Payout is calculated.

Bonus Pool is a maximum of 10% of cumulative Pre-Bonus Operating Income.

Incentive Target Percentage is a percentage determined by the Administrator according to employee grade level and set forth in the Acknowledgment Form attached hereto as Exhibit A.

Pre-Bonus Operating Income is US GAAP Operating Income excluding charges associated with bonuses determined under this Plan, if any.

Total Bonus Target Amount is determined by aggregating each Participant’s total potential bonus amount (each Participant’s Base Salary multiplied by such Participant’s Incentive Target Percentage).

6. Timing and Form of Payment of Payouts

Subject to the terms and conditions of this Plan, Payouts shall be made on a quarterly basis by the end of the month following the end of the fiscal quarter. No Payouts will be made if Pre-Bonus Operating Income is below 50% of the quarterly budgeted target and/or the annually budgeted target.

7. Plan Changes; No Entitlement

The Compensation Committee of the Board may at any time amend, suspend, or terminate this Plan, including may amend the Plan so as to ensure that no amount paid or to be paid hereunder shall be subject to the provision of Internal Revenue Code Section 409A(a)(1)(B). Nothing in this Plan is intended to create an entitlement to any employee for any incentive payment hereunder.

8. General Provisions

EXHIBIT A

I understand that I have been designated a Participant in the Virage Logic Corporation FY2005 Bonus Plan (the “Plan”). I have received a copy of the Plan document.

I understand that, notwithstanding any other agreements, arrangements or understandings that may exist, my Incentive Target Percentage for the Fiscal Year (FY2005) is ___%.

I hereby agree to the terms and conditions set forth in the Plan. I understand that I have no right to earn any amount under the Plan until all conditions described in the Plan have been met, as determined by the Compensation Committee of the Virage Logic Corporation Board of Directors, in its sole judgment.