Exhibit 10.13
August 13, 2002
Dear Xxxxx,
This letter formalizes our prior discussions and agreement on the terms
of potential bonus and severance arrangements, as previously discussed with the
Board of Directors, as follows:
The terms and conditions of your original signed offer letter continue
in full force and effect, except as amended pursuant to the terms and conditions
described in this letter. In the event there is a conflict in terms, definitions
or other interpretations between your original signed offer letter and this
letter agreement, this letter agreement shall supersede those conflicting terms
and govern that aspect of your employment arrangement. Nothing herein changes
the fact that your employment with Virage is for no specified period of time and
constitutes at-will employment. As a result, Virage is free to terminate its
employment relationship with you at any time, with cause or without cause.
As of August 13, 2002, your title has been changed to Acting Chief
Financial Officer, Vice President of Finance and Controller, although Virage is
free to modify your title at any time for any reason or for no reason.
In the event that you continue to be employed and are actively
performing duties for Virage through August 13, 2003, then Virage shall pay you
a one-time lump sum bonus in the gross amount of Forty Thousand Dollars (US
$40,000), less applicable withholding (including without limitation withholding
for applicable taxes) ("Retention Bonus"). This Retention Bonus is in lieu of
all other bonuses for the period August 13, 2002 to August 13, 2003, and you
will not be eligible for any other bonus based on your or the Company's
performance for the period August 13, 2002 to August 13, 2003. Subsequent to
August 13, 2003, you will fully participate in the Company's executive bonus
program and potentially earn a target bonus (currently 20% of base salary)
consistent with other non-commissioned vice presidents of the Company. You will
also be eligible to participate in any other employee benefits offered by the
Company that are applicable to other executive vice presidents at the Company to
the full extent provided for under such benefits.
Should the Company execute a definitive agreement for a Change of
Control (as defined herein) and any of the events described herein per the
following paragraphs occur such that you earn the Double Trigger Severance
Amount (as defined herein) on or before November 13, 2003, or should you receive
a Termination Without Cause Severance Amount (as defined herein), you will
forego and not receive (or will return) the Retention Bonus referred to above.
If, at any time, Virage mutually executes a definitive agreement for a
Change of Control, and there is (i) a material reduction of your duties, title,
authority or responsibilities, relative to your duties, title, authority or
responsibilities as in effect immediately prior to such reduction, or the
assignment to you of such reduced duties, title, authority or responsibilities,
or (ii) a reduction by the Company in your base salary as in effect immediately
prior to such reduction (other than a reduction that generally applies to
Company officers), or (iii) a material reduction by the Company in the aggregate
level of employee benefits, including participation in the Company's executive
bonus program, to which you were entitled immediately prior to such reduction
with the result that your aggregate benefits package is materially reduced
(other than a reduction that generally applies to Company officers), or (iv) the
relocation of you to a facility or a location more than thirty-five (35) 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, then, subject to you executing and not revoking a standard
form of mutual release of claims with the Company and not breaking any
confidentiality or other similar terms and conditions pursuant to your original
signed offer letter, you will receive a one-time lump sum severance payment in
the gross amount of Eighty Thousand Dollars (US $80,000.00), less applicable
withholding (including without limitation withholding for applicable taxes), in
accordance with the Company's standard payroll practices ("Double Trigger
Severance Amount"). The Company shall pay the Double Trigger Severance Amount
prior to the completion of the associated Change of Control. Notwithstanding
anything to the contrary herein, in no event shall the Double Trigger Severance
Amount be owed or paid if the definitive agreement is terminated or expires
prior to the completion of the associated Change of Control or otherwise does
not directly effectuate and result in a corresponding Change of Control.
If, at any time prior to a Change of Control but not after August 13,
2003, your employment with the Company terminates due to an involuntary
termination by the Company other than for "Cause" (as defined herein), then,
subject to you executing and not revoking a standard form of mutual release of
claims with the Company and not breaching any confidentiality or other similar
terms and conditions pursuant to your original signed offer letter, you will
receive a one-time, lump-sum payment in the gross amount of a prorated portion
of Forty Thousand Dollars (US $40,000.00), less applicable withholding
(including without limitation withholding for applicable taxes), in accordance
with the Company's standard payroll practices, with the prorated amount
calculated based on the percentage of time passed from August 13, 2002 until the
effective date of termination compared with August 13, 2003 ("Termination
Without Cause Severance Amount").
For purposes of this Agreement, "Cause" shall mean (i) an act of
personal dishonesty taken by you in connection with your responsibilities as an
employee and intended to result in personal enrichment of you, or (ii) you being
convicted of, or plea of nolo contendere to, a felony or misdemeanor, or (iii) a
willful act by you which constitutes misconduct and which is injurious to the
Company, or (iv) following delivery to you of a written demand for performance
from the Company which describes the basis for the Company's reasonable belief
that you have not substantially or adequately performed your duties, continued
indequate performance or failure to meet reasonable expectations of senior
management for your position.
For purposes of this Agreement, "Change of Control" shall mean the
occurrence of any of the following events in either a single transaction or a
series of related transactions:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) becomes the "beneficial owner"
(as defined in Rule 13d-3 under said Act), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the total voting
power represented by the Company's then outstanding voting securities; or
(ii) The consummation of the sale or disposition by the Company of all
or substantially all the Company's assets; or
(iii) The consummation of a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation.
The terms of your stock option agreements remain as stated per your
stock option agreements.
Your signature below indicates your 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,
Xxxx X. Lego
C.E.O. and President
Virage, Inc.
Agreed to and Accepted by:
Xxxxx Xxxxx
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Signature
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Date
