Severance Agreement - Virage Inc. and Frank Pao
AMENDMENT AND RESTATEMENT
TO THE
SEVERANCE LETTER AGREEMENT
THIS AMENDMENT AND RESTATEMENT (this "Agreement") to the Severance
Letter Agreement by and between Frank Pao (the "Executive") and Virage, Inc.
("Virage") dated as of June 17, 2003 (the "Severance Agreement"), is made by and
among Virage and Frank Pao, effective as of July 9, 2003.
WHEREAS, the Company and the Executive were parties to the Severance
Agreement attached hereto as Exhibit A.
WHEREAS, this Amendment and Restatement is being executed in connection
with the Agreement and Plan of Merger by and among Autonomy Corporation plc, a
corporation formed under the laws of England and Wales ("Autonomy"), Violet
Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of
Autonomy, ("Merger Sub") and Violet (the "Merger Agreement"), whereunder Merger
Sub shall be merged with and into Virage.
WHEREAS, Executive, as a shareholder and/or vested optionholder of
Company, will obtain consideration as a result of the closing of the
Transaction;
WHEREAS, Virage and Autonomy desire that Virage enter into an agreement
with Executive, and Executive desires to enter into an agreement with Virage,
whereby this Amendment and Restatement shall formalize the severance arrangement
of Executive with Virage.
NOW, THEREFORE, the parties hereto agree the Severance Agreement is
hereby amended and modified in its entirety as follows:
In the event that both (A) the transactions contemplated by the Merger
Agreement are consummated (the "Transaction Closing") and (B) within twelve (12)
months following the Transaction Closing the employment of Frank Pao (the
"Executive") with Virage is terminated without Cause (as defined below) or the
Executive resigns for Good Reason (as defined below), then Virage or its
successor entity(ies) shall immediately pay Executive the greater of (a) six (6)
months of Executive's then-current base salary, or (b) One Hundred Thousand
Dollars ($100,000).
For purposes of this agreement, "Cause" shall mean any of the
following: (i) the Executive's intentional and material theft, dishonesty, or
falsification of any Virage or Autonomy or any subsidiary thereof (Virage and
Autonomy collectively or individually with each of its subsidiaries, the
"Corporation") documents or records; (ii) the Executive's intentional and
material improper use or disclosure of the Corporation's confidential or
proprietary information; (iii) the Executive willfully engaging in intentional
misconduct that is in bad faith and materially injurious to the Company,
including misappropriation of trade secrets, fraud or embezzlement s; (iv) the
Executive's intentional and material failure or inability to perform any
reasonable assigned material duties after written notice from the Corporation
of, and a reasonable opportunity to cure, such failure or inability; (v) any
material breach by the Executive of any employment agreement between the
Executive and the Corporation, which breach is not cured pursuant to the terms
of such agreement; or (vi) the Executive's conviction (including any plea of
guilty or nolo contendere) of any criminal act which materially impairs the
Executive's ability to perform his or her duties with the Corporation.
<PAGE>
For purposes of this agreement, "Good Reason" shall mean any of the
following:
(i) without the Executive's express written consent, the
assignment to the Executive of any duties, or any limitation of the Executive's
responsibilities, substantially inconsistent with the Executive's positions,
duties, responsibilities and status with the Corporation immediately prior to
the date of the Transaction Closing, but giving effect to limitations ordinarily
contemplated by the Transaction;
(ii) without the Executive's express written consent, the
relocation of the principal place of the Executive's employment to a location
that is more than twenty-five (25) miles from the Executive's principal place of
employment immediately prior to the date of the Transaction Closing, or the
imposition of travel requirements substantially more demanding of the Executive
than such travel requirements existing immediately prior to the date of the
Transaction Closing;
(iii) any failure by the Corporation to pay, or any material
reduction by the Corporation of, (1) the Executive's base salary in effect as of
January 1, 2002, or (2) the Executive's bonus compensation percentage, if any,
in effect immediately prior to the date of the Transaction Closing (subject to
applicable mutually agreed upon performance requirements (negotiated in good
faith but in the absence of any such agreement such performance requirements in
effect immediately prior to the Transaction Closing) with respect to the actual
amount of bonus compensation earned by the Executive); or
(iv) any failure by the Corporation to (1) continue to provide
the Executive with the opportunity to participate, on terms no less favorable
than those in effect for the benefit of any employee group which customarily
includes a person holding the employment position or a comparable position with
the Corporation then held by the Executive, in any benefit or compensation plans
and programs, including, but not limited to, the Corporation's life, disability,
health, dental, medical, savings, profit sharing, stock purchase and retirement
plans, if any, in which the Executive was participating immediately prior to the
date of the Transaction Closing, or their equivalent, or (2) provide the
Executive with all other fringe benefits (or their equivalent) from time to time
in effect for the benefit of any employee group which customarily includes a
person holding the employment position or a comparable position with the
Corporation then held by the Executive.
As a condition to the receipt of any payment by the
Corporation to Executive pursuant to the terms and conditions hereof, Executive
shall execute a general release of all claims pursuant to Virage's standard form
of general release of claims. Other than as expressly set forth herein, the
Executive shall not be entitled to any other payment as a result of his
termination of employment with the Corporation.
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.
<PAGE>
This Agreement supercedes and replaces the terms and
conditions of any prior agreement, whether written or oral, related to your
severance, including but not limited to the Severance Agreement between
Executive and Virage which is hereby expressly terminated and rendered null and
void and of no further effect. This 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 the County of 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.
VIRAGE, INC.
/s/ Paul G. Lego
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By: Paul G. Lego
Title: Chairman of the Board
of Directors, President
and Chief Executive
Officer
Agreed and Accepted by:
/s/ Frank Pao
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Frank Pao