EXHIBIT 10.20

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