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                                                                    EXHIBIT 10.3

                            VIRAGE LOGIC CORPORATION

                        2000 EMPLOYEE STOCK PURCHASE PLAN


        1. Purpose.

        This Plan is intended to allow Employees of the Company and its
Designated Subsidiaries to purchase Common Stock through accumulated Payroll
deductions.

        2. Defined Terms.

        The meanings of defined terms (generally, capitalized terms) in this
Plan are provided in Section 23 ("Glossary").

        3. Eligibility.

        (a) Participation. Any person who is an Employee on an Offering Date
shall be eligible to participate in this Plan during the corresponding Offering
Period.

        (b) No Participation by Five-Percent Stockholders. Notwithstanding
Section 3(a), an Employee shall not participate in this Plan during an Offering
Period if immediately after the grant of a Purchase Right on the Offering Date,
the Employee (or any other person whose stock would be attributed to the
Employee under Section 424(d) of the Code) would own stock possessing five
percent or more of the total combined voting power or value of all classes of
stock of the Company or of any Subsidiary. For this purpose, an Employee is
treated as owning stock that he or she could purchase by exercise of Purchase
Rights or other options.

        4. Offering Periods.

        Except as otherwise determined by the Administrator:

        (a) the first Offering Period under this Plan shall begin on October 1,
2000 and shall end on March 31, 2001;

        (b) a new Offering Period shall begin on the first business day of each
April and October while this Plan is in effect;

        (c) the duration of each Offering Period (other than the first Offering
Period) shall be six months (measured from the first business day of the first
month to the last business day of the sixth month); and

        (d) an Offering Period shall terminate on the first date that no
Participant is enrolled in it.

        5. Participation.



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        (a) An Employee may become a Participant in this Plan by completing a
subscription agreement, in such form as the Administrator may approve from time
to time, and delivering it to the Administrator by 1 p.m. Pacific time on the
applicable Offering Date, unless another time for filing the subscription
agreement is set by the Administrator for all Employees with respect to a given
Offering Period. The subscription agreement shall authorize Payroll deductions
pursuant to this Plan and shall have such other terms as the Administrator may
specify from time to time.

        (b) At the end of an Offering Period, each Participant in the Offering
Period who remains an Employee shall be automatically enrolled in the next
succeeding Offering Period (a "Re-enrollment") unless, in a manner and at a time
specified by the Administrator, but in no event later than 1 p.m. Pacific time
on the Offering Date of such succeeding Offering Period, the Participant
notifies the Administrator in writing that the Participant does not wish to be
re-enrolled. Re-enrollment shall be at the withholding percentage specified in
the Participant's most recent subscription agreement. No Participant shall be
automatically re-enrolled whose participation has terminated by operation of
Section 10.

        6. Payroll Deductions.

        (a) Payroll deductions under this Plan shall be in whole percentages,
from a minimum of 1% up to a maximum of 15%, as specified by the Participant in
his or her subscription agreement in effect on the first day of an Offering
Period. Payroll deductions for a Participant shall begin with the first payroll
payment date of the Offering Period and shall end with the last payroll payment
date of the Offering Period, unless sooner terminated by the Participant as
provided in Section 10.

        (b) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code, a Participant's payroll deduction may be
decreased to zero percent (0%) at any time during an Offering Period. Payroll
deductions shall recommence at the rate provided in such Participant's
subscription agreement at the beginning of the first Offering Period that is
scheduled to end in the following calendar year, unless terminated by the
Participant as provided in Section 10 hereof.

        (c) A Participant's Payroll deductions shall be credited to his or her
account under this Plan. A Participant may not make any additional payments into
his or her account.

        (d) A Participant may reduce his or her Payroll deductions by any whole
percentage (but not below 1%) at any time during an Offering Period, effective
15 days after the Participant files with the Administrator a new subscription
agreement authorizing the change. A Participant may change his or her Payroll
deductions during an Offering Period, effective the first business day after a
Purchase Date, by delivering a new subscription agreement authorizing the change
to the Administrator by 1 p.m. Pacific time on the effective date of the
increase.

        7. Purchase Rights.


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        (a) Grant of Purchase Rights. On the Offering Date of each Offering
Period, the Participant shall be granted a Purchase Right to purchase on the
Purchase Date of such Offering Period up to a number of shares of Common Stock
determined by dividing (i) such Participant's payroll deductions accumulated on
or prior to such Purchase Date and retained in the Participant's account as of
the Purchase Date by (ii) the applicable Purchase Price; provided that in no
event shall a Participant be entitled to purchase during such Offering Period
more than 1,500 shares of Common Stock (subject to adjustment pursuant to
Section 17 hereof).

        (b) Terms of Purchase Rights. Except as otherwise determined by the
Administrator, each Purchase Right shall have the following terms:

               (i) The per-share Purchase Price of the shares subject to a
        Purchase Right shall be 85% of the lower of the fair market value of a
        share of Common Stock on (a) the Offering Date on which the Purchase
        Right was granted and (b) the Purchase Date. The fair market value of
        the Common Stock on a given date shall be the closing price as reported
        in the Wall Street Journal; provided, however, that if there is no
        public trading of the Common Stock on that date, then fair market value
        shall be determined by the Administrator in its discretion.

               (ii) Payment for shares purchased by exercise of Purchase Rights
        shall be made only through Payroll deductions under Section 6.

               (iii) Upon purchase or disposition of shares acquired by exercise
        of a Purchase Right, the Participant shall pay, or make provision
        satisfactory to the Administrator for payment of, all tax (and similar)
        withholdings that the Administrator determines, in its discretion, are
        required due to the acquisition or disposition, including without
        limitation any such withholding that the Administrator determines in its
        discretion is necessary to allow the Company and its Subsidiaries to
        claim tax deductions or other benefits in connection with the
        acquisition or disposition.

               (iv) During his or her lifetime, a Participant's Purchase Right
        is exercisable only by the Participant.

               (v) Purchase Rights will in all respects be subject to the terms
        and conditions of this Plan, as interpreted by the Administrator from
        time to time.

        8. Purchase of Shares.

        (a) Each then-outstanding Purchase Right shall be exercised
automatically on each Purchase Date, following addition to the Participant's
account of that day's Payroll deductions, to purchase the maximum number of full
shares of Common Stock at the applicable Purchase Price using the Participant's
accumulated Payroll deductions.

        (b) The shares purchased upon exercise of a Purchase Right shall be
deemed to be transferred to the Participant on the Purchase Date.


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        9. Registration and Delivery of Share Certificates.

        (a) Shares purchased by a Participant under this Plan will be registered
in the name of the Participant, or in the name of the Participant and his or her
spouse, or in the name of the Participant and joint tenant(s) (with right of
survivorship), as designated by the Participant.

        (b) As soon as administratively feasible after each Purchase Date, the
Company shall deliver to the Participant a certificate representing the shares
purchased upon exercise of a Purchase Right. If approved by the Administrator in
its discretion, the Company may instead (i) deliver a certificate (or
equivalent) to a broker for crediting to the Participant's account or (ii) make
a notation in the Participant's favor of non-certificated shares on the
Company's stock records.

        10. Withdrawal; Termination of Employment.

        (a) A Participant may withdraw all, but not less than all, the Payroll
deductions credited to his or her account under this Plan before a Purchase Date
by giving written notice to the Administrator, in a form the Administrator
prescribes from time to time, at least 15 days before the Purchase Date. Payroll
deductions will then cease as to the Participant, no purchase of shares will be
made for the Participant on the Purchase Date, and all Payroll deductions then
credited to the Participant's account will be refunded promptly.

        (b) Upon termination of a Participant's Continuous Employment for any
reason, including retirement or death, all Payroll deductions credited to the
Participant's account will be promptly refunded to the Participant or, in the
case of death, to the person or persons entitled thereto under Section 14, and
the Participant's Purchase Right will automatically terminate.

        (c) A Participant's withdrawal from an offering will not affect the
Participant's eligibility to participate in a succeeding offering or in any
similar plan that may be adopted by the Company.

        11. Use of Funds; No Interest.

        Amounts withheld from Participants under this Plan shall constitute
general funds of the Company, may be used for any corporate purpose, and need
not be segregated from other funds. No interest shall accrue on a Participant's
Payroll deductions.

        12. Number of Shares Reserved.

        (a) The following numbers of shares of Common Stock are reserved for
issuance under this Plan, and such number may be issued at any time before
termination of this Plan:

               (i) Beginning the date of approval of this Plan by the
        stockholders of the Company, 200,000 shares of Common Stock; and


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               (ii) Beginning the first business day of each fiscal year
        starting October 1, 2001 or after, the lesser of an additional (A)
        200,000 shares of Common Stock, (B) 0.75% of the outstanding shares of
        capital stock on such date, or (C) an amount determined by the Board.

        (b) If the total number of shares that would otherwise be subject to
Purchase Rights granted on an Offering Date exceeds the number of shares then
available under this Plan (after deduction of all shares for which Purchase
Rights have been exercised or are then exercisable), the Administrator shall
make a pro-rata allocation of the available shares in a manner that it
determines to be as uniform and equitable as practicable. In such event, the
Administrator shall give written notice of the reduction and allocation to each
Participant.

        (c) The Administrator may, in its discretion, transfer shares reserved
for issuance under this Plan into a plan or plans of similar terms, as approved
by the Board, providing for the purchase of shares of Common Stock to employees
of Subsidiaries designated by the Board that do not (or do not thereafter)
participate in this Plan. Such additional plans may, without limitation, provide
for variances from the terms of this Plan to take into account special
circumstances (such as foreign legal restrictions) affecting the employees of
the designated Subsidiaries.

        13. Administration.

        This Plan shall be administered by the Board or by such directors,
officers, and employees of the Company as the Board may select from time to time
(the "Administrator"). All costs and expenses incurred in administering this
Plan shall be paid by the Company, provided that any taxes applicable to an
Employee's participation in this Plan may be charged to the Employee by the
Company. The Administrator may make such rules and regulations as it deems
necessary to administer this Plan and to interpret any provision of this Plan.
Any determination, decision, or action of the Administrator in connection with
the construction, interpretation, administration, or application of this Plan or
any right granted under this Plan shall be final, conclusive, and binding upon
all persons, and no member of the Administrator shall be liable for any such
determination, decision, or action made in good faith.

        14. Designation of Beneficiary.

        (a) A Participant may file a written designation of a beneficiary who is
to receive any shares and cash, if any, from the Participant's account under
this Plan in the event of the Participant's death.

        (b) A designation of beneficiary may be changed by the Participant at
any time by written notice. In the event of the death of a Participant, and in
the absence of a beneficiary validly designated under this Plan who is living at
the time of the Participant's death, the Administrator shall deliver such shares
and/or cash to the executor or administrator of the Participant's estate, or if
no such executor or administrator has been appointed (to the Administrator's
knowledge), the Administrator, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
Participant or, if no


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spouse, dependent, or relative is known to the Administrator, then to such other
person as the Administrator may designate.

        15. Transferability.

        Neither Payroll deductions credited to a Participant's account nor any
rights with regard to the exercise of a Purchase Right or to receive shares
under this Plan may be assigned, transferred, pledged, or otherwise disposed of
in any way (other than by will, the laws of descent and distribution, or as
provided in Section 14) by the Participant. Any such attempt at assignment,
transfer, pledge, or other disposition shall be without effect, except that the
Administrator may treat such act as an election to withdraw funds in accordance
with Section 10.

        16. Reports.

        Individual accounts will be maintained for each Participant in this
Plan. Statements of account will be given to participating Employees promptly
following each Purchase Date, setting forth the amounts of Payroll deductions,
per-share purchase price, number of shares purchased, and remaining cash
balance, if any.

        17. Adjustments upon Changes in Capitalization.

        (a) Subject to any required action by the stockholders of the Company,
the number of shares of Common Stock covered by each unexercised Purchase Right
and the number of shares of Common Stock authorized for issuance under this Plan
but not yet placed under a Purchase Right (collectively, the "Reserves"), as
well as the price per share of Common Stock covered by each unexercised Purchase
Right, shall be proportionately adjusted for any change in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any change in
the number of shares of Common Stock effected without receipt of consideration
by the Company (not counting shares issued upon conversion of convertible
securities of the Company as "effected without receipt of consideration"). Such
adjustment shall made by the Board and shall be final, binding, and conclusive.
Except as expressly provided herein, no issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall
affect, and no consequent adjustment shall be made with respect to, the number
or price of shares of Common Stock subject to a Purchase Right.

        (b) In the event of the proposed dissolution or liquidation of the
Company, the then-current Offering Period will terminate immediately before the
consummation of the proposed action, unless otherwise provided by the Board. In
the event of a proposed sale of all or substantially all of the Company's
assets, or the merger of the Company with or into another corporation (if the
Company's stockholders own less than 50% of the total outstanding voting power
in the surviving entity or a parent of the surviving entity after the merger),
each Purchase Right under this Plan shall be assumed or an equivalent purchase
right shall be substituted by the successor corporation or a parent or
subsidiary of the successor corporation, unless the successor corporation does
not agree to assume the Purchase Rights or to substitute equivalent purchase
rights, in which case the Board may, in lieu of such assumption or substitution,
accelerate the


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exercisability of Purchase Rights and allow Purchase Rights to be exercisable as
to shares as to which they would not otherwise be exercisable, on terms and for
a period that the Board determines in its discretion. To the extent that the
Board accelerates exercisability of Purchase Rights as described above, it shall
promptly so notify all Participants in writing.

        (c) The Board may, in its discretion, also make provision for adjusting
the Reserves, as well as the price per share of Common Stock covered by each
outstanding Purchase Right, if the Company effects one or more reorganizations,
recapitalizations, rights offerings, or other increases or reductions of shares
of its outstanding Common Stock, or if the Company consolidates with or merges
into any other corporation, in a transaction not otherwise covered by this
Section 17.

        18. Amendment or Termination.

        (a) The Board may at any time terminate or amend this Plan. No amendment
may be made without prior approval of the stockholders of the Company (obtained
in the manner described in Section 20) if it would increase the number of shares
that may be issued under this Plan.

        (b) The Board may elect to terminate any or all outstanding Purchase
Rights at any time, except to the extent that exercisability of such Purchase
Rights has been accelerated pursuant to Section 17(b). If this Plan is
terminated, the Board may also elect to terminate Purchase Rights upon
completion of the purchase of shares on the next Purchase Date or to permit
Purchase Rights to expire in accordance with their terms (with participation to
continue through such expiration dates). If Purchase Rights are terminated
before expiration, any funds contributed to this Plan that have not been used to
purchase shares shall be refunded to Participants as soon as administratively
feasible.

        19. Notices.

        All notices or other communications by a Participant to the Company or
the Administrator under or in connection with this Plan shall be deemed to have
been duly given when received in the form specified by the Administrator at the
location, or by the person, designated by the Administrator for that purpose.

        20. Stockholder Approval.

        This Plan shall be submitted to the stockholders of the Company for
their approval within 12 months after the date this Plan is adopted by the
Board.

        21. Conditions upon Issuance of Shares.

        (a) Shares shall not be issued with respect to a Purchase Right unless
the exercise of such Purchase Right and the issuance and delivery of such shares
pursuant thereto complies with all applicable provisions of law, domestic or
foreign, including, without limitation, the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, the rules and


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regulations promulgated thereunder, and the requirements of any stock exchange
upon which the shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

        (b) As a condition to the exercise of a Purchase Right, the Company may
require the person exercising such Purchase Right to represent and warrant at
the time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such a representation is required
by any of the aforementioned applicable provisions of law.

        22. Term of Plan.

        This Plan shall become effective upon the earlier of its adoption by the
Board or its approval by the stockholders of the Company as described in Section
20. It shall continue in effect for a term of 20 years unless sooner terminated
under Section 18.

        23. Glossary. The following definitions apply for purposes of this Plan:

        (a) "Administrator" means the Board or the persons appointed by the
Board to administer this Plan pursuant to Section 13.

        (b) "Board" means the Board of Directors of the Company.

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

        (d) "Common Stock" means the Common Stock of the Company.

        (e) "Company" means Virage Logic Corporation, a Delaware corporation.

        (f) "Continuous Employment" means the absence of any interruption or
termination of service as an Employee. Continuous Employment shall not be
considered interrupted in the case of a leave of absence agreed to in writing by
the Company, provided that either (i) the leave does not exceed 90 days or (ii)
re-employment upon expiration of the leave is guaranteed by contract or statute.

        (g) "Designated Subsidiaries" means the Subsidiaries that have been
designated by the Board from time to time in its sole discretion to participate
in this Plan.

        (h) "Employee" means any person, including an officer, who is
customarily employed for at least 20 hours per week and five months per year by
the Company or one of its Designated Subsidiaries. Whether an individual
qualifies as an Employee shall be determined by the Administrator, in its sole
discretion, by reference to Section 3401(c) of the Code and the regulations
promulgated thereunder; unless the Administrator makes a contrary determination,
the Employees of the Company shall, for all purposes of this Plan, be those
individuals who satisfy the customary employment criteria set forth above and
are carried as employees by the Company or a Designated Subsidiary for regular
payroll purposes.


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        (i) "Offering Date" means the first business day of an Offering Period.

        (k) "Offering Period" means a period established by the Administrator
pursuant to Section 4 during which Payroll deductions are accumulated from
Participants and applied to the purchase of Common Stock.

        (l) "Participant" means an Employee who has elected to participate in
this Plan pursuant to Section 5.

        (m) "Payroll" means all regular, straight-time gross earnings, exclusive
of payments for overtime, shift premium, incentive compensation or payments,
bonuses, and commissions.

        (m) "Plan" means this Virage Logic Corporation 2000 Employee Stock
Purchase Plan.

        (n) "Purchase Date" means the March 31 or September 30 that occurs
during an Offering Period.

        (o) "Purchase Right" means a right to purchase Common Stock granted
pursuant to Section 7.

        (p) "Subsidiary" means, from time to time, any corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or another Subsidiary of the Company.


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