Severange Agreement - Virage Inc. and Frank Pao
June 17, 2003
Dear Frank,
This letter agreement formalizes our prior discussions and agreement on
the terms of a severance arrangement, as previously agreed upon by the company's
board of directors, in order to incent you to remain with the company. Virage,
Inc. and you agree, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, as follows:
In the event that both (A) Virage, Inc. executes a definitive agreement
for an acquisition, merger, consolidation, sale of all or substantially all of
its assets, change in control transaction or other similar corporate
reorganization, and (B) thereafter you are ever subject to termination or
constructive termination by Virage, Inc. or its successor entity(ies), then
Virage, Inc. and its successor entity(ies) shall immediately pay you, at a
minimum, the greater of (a) six (6) months of your then-current base salary, or
(b) One Hundred Thousand Dollars (US $100,000). For purposes of this agreement,
"constructive termination" includes, without limitation, (i) a reduction of your
duties, title, authority, reporting structure or responsibilities, relative to
your duties, title, authority, reporting structure or responsibilities as in
effect immediately prior to such reduction, or the assignment to you of such
reduced duties, title, authority, reporting structure or responsibilities, or
(ii) a reduction in your base salary or bonus plan as in effect immediately
prior to such reduction, or (iii) a reduction in the aggregate level of employee
benefits to which you were entitled immediately prior to such reduction with the
result that your aggregate benefits package is reduced, or (iv) the relocation
of you to a facility or a location more than twenty-five (25) miles from your
then present location, or (v) any act or set of facts or circumstances which
would, under California case law or statute constitute a constructive
termination of you. Any acquisition, merger, sale of all or substantially all of
the assets, change in control transaction or other similar corporate
reorganization of Virage, Inc. shall be subject to the successor entity agreeing
in writing to assume and be bound by all the obligations of Virage, Inc. herein,
to agree in writing to the assignment of this letter agreement to it, and to
agree to bind any subsequent successor entities to it to these same obligations.
This letter agreement shall be governed by the laws of the state of
California and both parties agree to the exclusive jurisdiction in the state and
federal courts in San Francisco, California. The prevailing party in any legal
action or proceeding related to this letter agreement shall recover its
reasonable attorneys' fees incurred in connection therewith.
Signatures below indicate both parties' assent and agreement to the
terms and conditions of this letter agreement, and executes this letter
agreement as of the date first set forth above.
Sincerely,
Virage, Inc.
/s/ Paul G. Lego /s/ William H. Younger, Jr.
Paul G. Lego William H. Younger, Jr.
C.E.O. & Chairman Compensation Committee
Virage, Inc. Chairman
Agreed to and Accepted by:
Frank Pao
/s/ Frank Pao
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Signature
June 17, 2003
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Date