VIRAGE INC
8-K, EX-20.1, 2000-12-05
COMPUTER PROGRAMMING SERVICES
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                                                                    EXHIBIT 20.1

                                December 5, 2000


Dear Fellow Stockholders:

        The Board of Directors of Virage, Inc. (the "Company") has adopted a
Stockholder Rights Plan (the "Plan"). We have enclosed a summary of the
principal terms of the Plan and we urge you to read it carefully.

        The Plan is designed to protect your interests in the event the Company
is confronted with an unsolicited takeover attempt. The Plan contains provisions
designed to deter unsolicited offers that do not treat all stockholders equally,
acquisitions of significant blocks of shares in the open market without paying a
control premium and other coercive takeover tactics which may impair the Board's
ability to represent your interests fully. These tactics unfairly pressure
stockholders, squeeze them out of their investment without giving them any real
choice and deprive them of the full value of their Common Stock. The Plan is
similar to plans adopted by over 3,000 publicly held companies, and was adopted
by the Board of Directors after consultation with the Company's investment
bankers and counsel. We consider the Plan to be an effective tool in protecting
your equity investment, while not preventing a fair acquisition offer.

        The Plan is not intended to prevent a takeover of the Company and will
not do so. It is designed to deal with unilateral actions by a hostile acquiror
that are calculated to deprive the Board and the Company's stockholders of the
ability to take actions to maximize stockholder value. The Plan does not
preclude the Board from considering or accepting an offer to acquire all or part
of the Company, if the Board believes the offer to be in the best interests of
the Company's stockholders. The Plan has not been adopted in response to any
known effort to acquire control of the Company.

        The adoption of the Plan does not weaken the financial strength of the
Company or interfere with its business plans. The issuance of the Rights has no
dilutive effect, will not affect reported earnings per share, is not taxable to
the Company or you, and will not change the way in which you can trade the
Company's stock. As explained in detail in the enclosed summary of the Plan, the
Rights can only be exercised if and when a situation arises which the Plan was
created to address.

        You are not required to take any action at this time. We recommend,
however, that you read the enclosed summary of the many features of the Plan,
and retain the summary with your Virage stock certificates or records. If you
should require further information, a copy of the Plan is available from the
Company's Secretary.

        The Board believes that the adoption of the Plan represents a sound and
reasonable means of preserving the long-term value of the Company for all of its
stockholders. We want to thank all stockholders for their continued support.

                                             Very truly yours,


                                             Paul G. Lego
                                             President and Chief Executive Offer


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