SCHEDULE 14A
(Rule 14-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

---------------------------

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or
sec. 240.14a-12

VIRAGE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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[VIRAGE LOGO]

------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 5, 2001
------------------------

To the Stockholders:

Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Virage, Inc., a Delaware corporation ("Virage"), will be held on
Wednesday, September 5, 2001 at 1:00 p.m., local time, at the Crowne Plaza
Hotel, Drake Room, 1221 Chess Drive, Foster City, CA 94404, for the following
purposes:

1. To elect three Class I directors for a term of three years and until
their successors are duly elected and qualified.

2. To ratify the appointment by the Board of Directors of the firm Ernst &
Young LLP as Virage's independent accountants for the year ending March
31, 2002.

3. To transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.

The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice of Annual Meeting.

Only holders of record of Virage's common stock at the close of business on
July 26, 2001, the record date, are entitled to vote on the matters listed in
this Notice of Annual Meeting.

All stockholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, please
complete, sign, date and promptly return the enclosed proxy card in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the Annual Meeting may vote in person even if he or she has returned a proxy
card.

By Order of the Board of Directors
of Virage, Inc.

/s/ PAUL. G. LEGO
Paul G. Lego
Chairman of the Board of Directors,
President and Chief Executive Officer

San Mateo, California
August 3, 2001

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE, AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE.
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VIRAGE, INC.
------------------------

PROXY STATEMENT
FOR
2001 ANNUAL MEETING OF STOCKHOLDERS
------------------------

PROCEDURAL MATTERS

GENERAL

This Proxy Statement is being furnished to holders of common stock, par
value $0.001 per share (the "Common Stock"), of Virage, Inc., a Delaware
corporation ("Virage" or the "Company"), in connection with the solicitation of
proxies by the Board of Directors of Virage for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Wednesday, September 5, 2001
at 1:00 p.m., local time, and at any adjournment or postponement thereof for the
purpose of considering and acting upon the matters set forth herein. The Annual
Meeting will be held at the Crowne Plaza Hotel, Drake Room, 1221 Chess Drive,
Foster City, CA 94404. The Company's headquarters are located at 177 Bovet Road,
Suite 520, San Mateo, CA 94402. The telephone number at that location is (650)
573-3210.

This Proxy Statement, the accompanying form of proxy card and the Company's
Annual Report on Form 10-K are first being mailed on or about August 3, 2001 to
all holders of Common Stock entitled to vote at the meeting.

STOCKHOLDERS ENTITLED TO VOTE; RECORD DATE

Only holders of record of Virage's Common Stock at the close of business on
July 26, 2001 (the "Record Date") are entitled to notice of and to vote at the
Annual Meeting. Such stockholders are entitled to cast one vote for each share
of Common Stock held as of the Record Date on all matters properly submitted for
the vote of stockholders at the Annual Meeting. As of the record date, there
were 20,371,783 shares of Virage Common Stock outstanding and entitled to vote
at the Annual Meeting. No shares of preferred stock were outstanding. For
information regarding security ownership by management and by the beneficial
owners of more than 5% of Virage's Common Stock, see "Share Ownership by
Principal Stockholders and Management."

QUORUM; REQUIRED VOTE

The presence of the holders of a majority of the shares entitled to vote
generally at the Annual Meeting is necessary to constitute a quorum at the
Annual Meeting. Such holders are counted as present at the meeting if they (1)
are present in person at the Annual Meeting or (2) have properly submitted a
proxy card. Under the General Corporation Law of the State of Delaware, an
abstaining vote and a broker "non-vote" are counted as present and entitled to
vote and are, therefore, included for purposes of determining whether a quorum
of shares is present at a meeting.

A plurality of the votes duly cast is required for the election of
directors. A plurality of the votes duly cast means that only affirmative votes
will affect the outcome of the election. Therefore, neither abstentions nor
broker "non-votes" will have any impact on the election of directors.

The affirmative vote of a majority of the votes duly cast is required to
ratify the appointment of auditors. Abstentions are deemed to be "votes cast"
and will have the effect of votes in opposition to ratify the appointment of
auditors. However, broker "non-votes" are not deemed to be "votes cast." As a
result, broker "non-votes" are not included in the tabulation of the voting
results on the election of directors or issues requiring approval of a majority
of the votes cast and, therefore, do not have the effect of votes in opposition
in such tabulations. A broker "non-vote" occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner.
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VOTING

Voting by attending the meeting. A stockholder may vote his or her shares
in person at the Annual Meeting. A stockholder planning to attend the meeting
should bring proof of identification for entrance to the meeting.

Voting by proxy card. All shares entitled to vote and represented by
properly executed proxy cards received prior to the Annual Meeting, and not
revoked, will be voted at the Annual Meeting in accordance with the instructions
indicated on those proxy cards. If no instructions are indicated on a properly
executed proxy card, the shares represented by that proxy card will be voted as
recommended by the Board of Directors. If any other matters are properly
presented for consideration at the Annual Meeting, including, among other
things, consideration of a motion to adjourn the Annual Meeting to another time
or place (including, without limitation, for the purpose of soliciting
additional proxies), the persons named in the enclosed proxy card and acting
thereunder will have discretion to vote on those matters in accordance with
their best judgment. The Company does not currently anticipate that any other
matters will be raised at the Annual Meeting. Any proxy card given pursuant to
this solicitation may be revoked by the person giving it at any time before it
is voted. A proxy card may be revoked (1) by filing with the Secretary of the
Company, at or before the taking of the vote at the Annual Meeting, a written
notice of revocation or a duly executed proxy card, in either case dated later
than the prior proxy card relating to the same shares, or (2) by attending the
Annual Meeting and voting in person (although attendance at the Annual Meeting
will not of itself revoke a proxy). Any written notice of revocation or
subsequent proxy card must be received by the Secretary of the Company prior to
the taking of the vote at the Annual Meeting. Such written notice of revocation
or subsequent proxy card should be hand delivered to the Secretary of the
Company or should be sent to Virage, Inc., 177 Bovet Road, Suite 520, San Mateo,
CA 94402, Attention: Frank Pao, Corporate Secretary.

EXPENSES OF SOLICITATION

Virage will bear all expenses of this solicitation, including the cost of
preparing and mailing this proxy material. The Company may reimburse brokerage
firms, custodians, nominees, fiduciaries and other persons representing
beneficial owners of Common Stock for their reasonable expenses in forwarding
solicitation material to such beneficial owners. Directors, officers and
employees of the Company may also solicit proxies in person or by telephone,
letter, email, telegram, facsimile or other means of communication. Such
directors, officers and employees will not be additionally compensated, but they
may be reimbursed for reasonable out-of-pocket expenses in connection with such
solicitation. The Company may engage the services of a professional proxy
solicitation firm to aid in the solicitation of proxies from certain brokers,
bank nominees and other institutional owners. The Company's costs for such
services, if retained, will not be material.

PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS

Requirements for stockholder proposals to be considered for inclusion in
the Company's proxy material. Stockholders may present proper proposals for
inclusion in the Company's proxy statement and for consideration at the next
annual meeting of its stockholders by submitting their proposals in writing to
the Secretary of the Company in a timely manner. In order to be included in the
Company's proxy materials for the 2002 annual meeting of stockholders,
stockholder proposals must be received by the Secretary of the Company no later
than April 5, 2002, and must otherwise comply with the requirements of Rule
14a-8 of the Securities Exchange Act of 1934 (the "Exchange Act").

Requirements for stockholder proposals to be brought before an annual
meeting. In addition, the Company's Bylaws establish an advance notice procedure
for stockholders who wish to present certain matters before an annual meeting of
stockholders. The Company's Bylaws also provide that the only business that may
be conducted at an annual meeting is business that is (1) specified in the
notice of meeting given by or at the direction of the Board of Directors, (2)
properly brought before the meeting by or at the direction of the Board of
Directors, or (3) properly brought before the meeting by any stockholder
entitled to vote who has written notice delivered to the Secretary of the
Company within the Notice Period (as defined below), which notice must contain
specified information concerning the matters to be brought before such meeting
and concerning the stockholder proposing such matters.

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The "Notice Period" is defined as that period no later than the close of
business on the tenth day following the date on which such notice of the date of
the meeting was mailed or such public disclosure was made. As a result, the
Notice Period for the 2001 annual stockholder meeting shall end on August 13,
2001.

If a stockholder who has notified the Company of his or her intention to
present a proposal at an annual meeting does not appear to present his or her
proposal at such meeting, the Company need not present the proposal for vote at
such meeting.

A copy of the full text of the Bylaw provisions discussed above may be
obtained by writing to the Secretary of the Company. All notices of proposals by
stockholders, whether or not included in the Company's proxy materials, should
be sent to Virage, Inc., 177 Bovet Road, Suite 520, San Mateo, CA 94402,
Attention: Frank Pao, Corporate Secretary.

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PROPOSAL ONE

ELECTION OF DIRECTORS

GENERAL

The Company's Board of Directors is currently comprised of eight members
who are divided into three classes with overlapping three-year terms. A director
serves in office until his or her respective successor is duly elected and
qualified or until his or her death or resignation. Any additional directorships
resulting from an increase in the number of directors will be distributed among
the three classes so that, as nearly as possible, each class will consist of an
equal number of directors.

NOMINEES FOR CLASS I DIRECTORS

Three Class I directors are to be elected at the Annual Meeting for a
three-year term ending in 2004. The Board of Directors has nominated Paul G.
Lego, Alar E. Arras and Ronald E.F. Codd for election as Class I directors.
Unless otherwise instructed, the proxyholders will vote the proxies received by
them for the election of Mr. Lego, Mr. Arras and Mr. Codd. The Company expects
that Mr. Lego, Mr. Arras and Mr. Codd will accept such nominations. However, in
the event that the nominees are unable or decline to serve as directors at the
time of the meeting, the proxies will be voted for any nominees designated by
the Board of Directors to fill any vacancies. The term of office of the persons
elected as directors will continue until such directors' term expires in 2004 or
until such directors' successor has been elected and qualified.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED ABOVE.

INFORMATION REGARDING NOMINEES AND OTHER DIRECTORS

NOMINEES FOR CLASS I DIRECTORS FOR A TERM EXPIRING IN 2004

NAME AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
---- --- --------------------------------------------

Paul G. Lego............. 42 President and Chief Executive Officer of the Company. Paul
G. Lego joined Virage in January 1996 as President and
Chief Executive Officer. Mr. Lego also became chairman of
our board of directors in December 1999. From January 1995
to January 1996, Mr. Lego was an associate at Sutter Hill
Ventures, a venture capital firm. From June 1988 to
December 1994, Mr. Lego was the chief operating officer at
Digidesign, a manufacturer of digital audio recording and
editing systems which was acquired by Avid Technology in
January 1995. Mr. Lego has also held various marketing,
manufacturing and engineering positions with Pyramid
Technology Corporation, the General Electric Company and
Digital Equipment Corporation. Mr. Lego holds a B.S. in
electrical engineering from Cornell University and an
M.B.A. from Harvard Business School.
Alar E. Arras............ 51 Senior Executive Vice President of Audioand ATLINKS,
Thomson Multimedia. Alar E. Arras has served as a director
of Virage since July 2001. Mr. Arras had previously been
named Chief Executive Officer and Executive Vice President
for Audio & Communications in July 1997. Since June 1999,
he has been responsible for the WIDe program. He was
appointed Chief Executive Officer of ATLINKS, the recently
formed joint venture with Alcatel, in January 2000. From
October 1995 to July 1997, Mr. Arras served as Vice
President for Manufacturing Operations in Asia. From
January 1993 to October 1995, he was Vice President for
Audio & Communications. Between 1980 and 1993, he held
various management positions in the Audio Division as Vice
President of the Audio Division, Vice President for Home
Audio Systems, Hi-Fi General Manager, Business Development
Manager for Audio & Communications, Market and Audio
Manager, Tape Manager, Market Development Manager and
Product Manager. Mr. Arras is a graduate of Cornell
University.

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NAME AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
---- --- --------------------------------------------

Ronald E.F. Codd......... 45 President and Chief Executive Officer of Momentum Business
Applications, Inc. Ronald E.F. Codd has served as a
director of Virage since January 2001. Mr. Codd has served
as President, Chief Executive Officer and Director of
Momentum Business Applications, Inc. since December 1998.
Prior to becoming an officer and director of Momentum, Mr.
Codd served in various capacities with PeopleSoft. Mr.
Codd joined PeopleSoft in September 1991 as Vice President
of Finance and Chief Financial Officer. In November 1993,
he was appointed PeopleSoft's Senior Vice President of
Finance and Administration and Chief Financial Officer. He
was appointed Secretary of PeopleSoft in March 1992. Prior
to joining PeopleSoft, Mr. Codd was Corporate Controller
of MIPS Computer Systems, Inc., a microprocessor designer
and computer manufacturer, from March 1989 through
September 1991. From March 1984 through March 1989, he was
Corporate Controller and Chief Accounting Officer for Wyse
Technology, Inc., a computer and peripheral manufacturer.
Mr. Codd also serves on the Boards of Directors of Adept
Technology, Inc., Intraware, Inc., Interwoven, Inc., and
one private company. He received a B.Sc. in Business
Administration from the University of California, Berkeley
and an M.M. degree from the J.L. Kellogg Graduate School
of Management (Northwestern University).

INCUMBENT CLASS II DIRECTORS WHOSE TERMS EXPIRE IN 2002

NAME AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
---- --- --------------------------------------------

Randall S. Livingston.... 47 Vice President of Business Affairs and Chief Financial
Officer at Stanford University. Randall S. Livingston has
served as a director of Virage since May 2001. Mr.
Livingston has been the Vice President of Business Affairs
and Chief Financial Officer of Stanford University since
March 2001. From September 1999 to March 2001 he was
Executive Vice President, Office of the CEO, Chief
Financial Officer and director of OpenTV Corp. From 1996
to 1999 Mr. Livingston was a consultant and part-time
executive for multiple Silicon Valley technology
companies. Mr. Livingston holds a B.S. in Mechanical
Engineering and an M.B.A. from Stanford University. He
currently is a director of the Stanford Management
Company.
Lawrence K. Orr.......... 44 General Partner of Trinity Ventures. Lawrence K. Orr has
served as a director of Virage since April 1995. Mr. Orr
is a general partner of Trinity Ventures in Menlo Park,
California, where he has been a private equity technology
investor specializing in software and communications since
1989. Prior to Trinity, Mr. Orr worked at Bain and Company
and Hewlett-Packard, where he was a marketing manager in
the Information Networks Group, responsible for product
management and field sales and support programs for
Hewlett-Packard's data communications product lines. Mr.
Orr holds an A.B. degree in mathematics from Harvard
University and an M.B.A. from the Stanford Graduate School
of Business. He currently is a director of Extreme
Networks, as well as several private companies.
William H. Younger, 51 Managing Director of the General Partner of Sutter Hill
Jr. ................... Ventures. William H. Younger, Jr. has served as a director
of Virage since April 1995. Mr. Younger is currently a
managing director of the general partner of Sutter Hill
Ventures, a venture capital management firm, which he
joined in 1981. Mr. Younger currently serves as a director
of Vitria Technology, as well as several private
companies. Mr. Younger holds a B.S.E.E. from the
University of Michigan and an M.B.A. from Stanford
University.

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INCUMBENT CLASS III DIRECTORS WHOSE TERMS EXPIRE IN 2003

NAME AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
---- --- --------------------------------------------

Philip W. Halperin....... 37 General Partner of Weston Presidio Capital. Philip W.
Halperin has served as a director of Virage since
September 1999. Mr. Halperin has been a general partner of
Weston Presidio Capital, a venture capital firm, since
October 1993. Mr. Halperin currently serves as a director
of several private companies. Mr. Halperin holds an A.B.
in political science from Stanford University and an
M.B.A. from Harvard Business School.
Standish H. O'Grady...... 41 Senior Managing Director of Granite Ventures. Standish H.
O'Grady has served as a director of Virage since April
1998. Mr. O'Grady has been managing director of Granite
Ventures, a venture capital firm, since its formation in
July, 1998. Mr. O'Grady previously served in various
positions with Hambrecht & Quist Group's venture capital
department since 1986, including managing director from
1994 to 1998. In addition he has been an investment
manager for a series of Adobe Ventures partnerships since
their inception in 1994. Mr. O'Grady currently serves as a
director of Tumbleweed Communications, as well as a number
of private companies. He holds a B.S.E. in chemical
engineering from Princeton University.

BOARD MEETINGS AND COMMITTEES

During the fiscal year ended March 31, 2001, the Board of Directors held
eight meetings (including regularly scheduled and special meetings), and no
incumbent directors attended fewer than 75% of the total number of meetings of
the Board of Directors (subsequent to joining the Board of Directors) and of the
committees, if any, of which he was a member.

The Board of Directors currently has two standing committees: an Audit
Committee and a Compensation Committee. The Board of Directors has no nominating
committee or any committee performing a similar function. The Audit Committee
currently consists of Mr. Codd, Mr. Halperin and Mr. Livingston. The
Compensation Committee currently consists of Mr. O'Grady, Mr. Orr and Mr.
Younger.

Audit Committee. The Audit Committee, which met four times in the fiscal
year ended March 31, 2001, is primarily responsible for approving the services
performed by the Company's independent auditors and for reviewing and evaluating
the Company's accounting principles and its systems of internal accounting
controls, as well as other matters which may come before it or as directed by
the Board.

Compensation Committee. The Compensation Committee, which met one time in
the fiscal year ended March 31, 2001, reviews and approves the compensation and
benefits for the Company's executive officers and performs such other duties as
may from time to time be determined by the Board.

DIRECTOR COMPENSATION

Directors do not receive cash compensation for service on the Board of
Directors. Directors receive cash compensation for their services as members of
committees of the Board of Directors. These directors receive $1,000 to attend a
committee meeting in person and $500 to attend a committee meeting by telephone
unless the meetings are for a duration of less than one hour, in which case
directors receive no compensation for their attendance. The Company also
reimburses directors for their reasonable expenses incurred in attending
meetings of the Board of Directors and of committees of the board. Directors are
eligible to receive options to purchase the Company's Common Stock pursuant to
the Company's 1997 Stock Option Plan (the "1997 Plan"), which provides for
annual automatic grants of nonqualified stock options to continuing non-employee
directors, subject to the discretion of the Board to withhold such options. Each
new non-employee director will receive a nonqualified stock option grant of
30,000 shares of the Company's Common Stock under the 1997 Plan upon his or her
initial election to the Board of Directors, subject to the discretion of the
Board to withhold such options. These option shares vest over a four-year period
as follows: 25% upon the first anniversary of the option grant date with the
remainder vesting ratably on a monthly basis for the 36 months beginning one
year after the date of grant. Each subsequent year thereafter, each individual
who is at the time

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continuing to serve as a non-employee director will automatically be granted an
option to purchase 5,000 shares of the Company's Common Stock, subject to the
discretion of the Board to withhold such options. These subsequent options vest
ratably on a monthly basis for 24 months beginning on the date of grant. All
options automatically granted to non-employee directors will have an exercise
price equal to 100% of the fair market value on the date of grant. To date, the
Company has granted each of the Company's incumbent non-employee directors,
other than those for which option grants were withheld, an option to purchase
the Company's Common Stock in the amount of either 30,000 shares for recent
directors or 35,000 shares for directors in their positions as of the Company's
initial public offering, for a total of 200,000 shares of Common Stock.

REQUIRED VOTE

The three nominees receiving the highest number of affirmative votes of the
shares present or represented and entitled to vote for them shall be elected as
directors, whether or not such affirmative votes constitute a majority of the
shares voted.

PROPOSAL TWO

RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors has appointed Ernst & Young LLP as independent
auditors of the Company to audit the consolidated financial statements of the
Company for the year ending March 31, 2002, and has determined that it would be
desirable to request that the stockholders ratify such appointment.

Ernst & Young LLP has audited our financial statements since April 1995. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting with the opportunity to make a statement if he or she desires to do so,
and is expected to be available to respond to appropriate questions.

REQUIRED VOTE

Although stockholder approval is not required for the appointment of Ernst
& Young LLP since the Board of Directors has the responsibility for selecting
auditors, the Board of Directors has conditioned its appointment of the
Company's independent auditors upon the receipt of the affirmative vote of a
majority of the votes duly cast at the Annual Meeting. In the event that the
stockholders do not approve the selection of Ernst & Young LLP, the Board of
Directors will reconsider its selection.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.

FEE DISCLOSURE

Audit and Audit Related Fees. Fees billed by Ernst & Young LLP for
professional services rendered for the audit of the Company's annual financial
statements for the year ended March 31, 2001 and for the reviews of the
financial statements included in the Company's Quarterly Reports on Form 10-Q
for that year were approximately $137,000. In addition, audit related fees for
the Company's registration statements on Forms S-1 and S-8 totaled approximately
$476,000 for the year ended March 31, 2001.

Financial Information Systems Design and Implementation Fees. The Company
did not engage Ernst & Young LLP to provide advice to the Company regarding
financial information systems design and implementation for the fiscal year
ended March 31, 2001.

All Other Fees. The aggregate fees billed by Ernst & Young LLP for the year
ended March 31, 2001 for all other non-audit services rendered to the Company,
including services for tax-related matters, totaled approximately $66,000.

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SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT

The following table sets forth certain information concerning the
beneficial ownership of Virage's Common Stock as of June 30, 2001 for the
following: (1) each person or entity who is known by the Company to own
beneficially more than 5% of our outstanding shares of the Company's Common
Stock, (2) each of the Company's directors; (3) each of the officers named in
the Summary Compensation Table; and (4) all directors and executive officers of
the Company as a group.

Percentage of beneficial ownership is based on 20,370,154 shares of common
stock outstanding as of June 30, 2001.

COMMON STOCK PERCENTAGE
NAME BENEFICIALLY OWNED(1) BENEFICIALLY OWNED
---- --------------------- ------------------

5% STOCKHOLDERS:
Paul G. Lego(2).......................................... 1,967,585 9.36%
177 Bovet Road, Suite 520
San Mateo, CA 94402
Entities affiliated with Weston Presidio Capital(3)...... 1,483,170 7.27%
343 Sansome Street, Suite 1210
San Francisco, CA 94104
Entities affiliated with Trinity Ventures(5)............. 1,125,732 5.52%
3000 Sand Hill Road, Bldg. 1, Suite 240
Menlo Park, CA 94025
William H. Younger, Jr.(6)............................... 1,154,087 5.66%
755 Page Mill Road, Suite A-200
Palo Alto, CA 94304
NAMED EXECUTIVE OFFICERS AND DIRECTORS:
Paul G. Lego(2).......................................... 1,967,585 9.36%
Weldon D. Bloom(7)....................................... 208,988 1.03%
Alfred J. Castino(8)..................................... 423,229 2.04%
Joseph Hyrkin(9)......................................... 278,494 1.35%
Mark K. Rattley(10)...................................... 321,309 1.55%
Ronald E. F. Codd(11).................................... 30,000 *
Philip W. Halperin(3).................................... 1,483,170 7.27%
Randall S. Livingston(12)................................ 30,500 *
Standish H. O'Grady(13).................................. 155,053 *
Lawrence K. Orr(5)....................................... 1,125,732 5.52%
Alar E. Arras(14)........................................ 909,090 4.46%
William H. Younger, Jr.(6)............................... 1,154,087 5.66%
All executive officers and directors as a
group (19 persons)(15)................................. 10,580,774 43.98%

- ---------------
* Less than one percent of the outstanding common stock.

(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under
such rule, beneficial ownership includes any shares as to which the
individual or entity has voting power or investment power and any shares
which the individual has the right to acquire within 60 days of June 30,
2001 through the exercise of any stock option or other right. Unless
otherwise indicated in the footnotes, each person or entity has sole voting
and investment power (or shares such powers with his or her spouse) with
respect to the shares shown as beneficially owned.

(2) Includes 643,751 shares subject to options exercisable within 60 days of
June 30, 2001.

(3) Includes 1,379,501 shares held by Weston Presidio Capital III, LLC; 68,669
shares held by Weston Presidio Capital Entrepreneur Fund, L.P.; and 35,000
shares subject to options exercisable within 60 days of June 30, 2001 held
by Philip W. Halperin. Mr. Halperin is a general partner of Weston Presidio
Capital and disclaims beneficial ownership of the shares held by Weston
Presidio Capital III,

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11

LLC and Weston Presidio Capital Entrepreneur Fund, L.P. except to the
extent of his proportionate partnership interest therein.

(4) Intentionally deleted.

(5) Includes 1,026,914 shares held by Trinity Ventures IV, L.P.; 58,922 shares
held by Trinity IV Side-By-Side Fund, L.P.; 4,837 shares held by
Lederer-Orr Family Trust; 59 shares held by Trinity Management Corp.; and
35,000 shares subject to options exercisable within 60 days of June 30,
2001 held by Lawrence K. Orr. Mr. Orr is a general partner of Trinity
Ventures and an officer of Trinity Management Corp. and disclaims
beneficial ownership of the shares held by Trinity Ventures IV, L.P.,
Trinity IV Side-By-Side Fund, L.P. and Trinity Management Corp. except to
the extent of his proportionate partnership interest therein. Mr. Orr is a
trustee of the Lederer-Orr Family Trust.

(6) Includes 942,724 shares held by Sutter Hill Ventures; 28,216 shares held by
affiliated funds of Sutter Hill Ventures; 114,814 shares held by William H.
Younger, Jr., Trustee, the Younger Living Trust; 33,333 shares held by the
retirement trust of William H. Younger, Jr.; and 35,000 shares subject to
options exercisable within 60 days of June 30, 2001 held by Mr. Younger.
Mr. Younger is a general partner of Sutter Hill Ventures and disclaims
beneficial ownership of the shares held by Sutter Hill Ventures and its
affiliated funds except to the extent of his proportionate partnership
interest therein.

(7) Includes 5,000 shares subject to options exercisable within 60 days of June
30, 2001. Mr. Bloom departed from the Company in May 2001.

(8) Includes 410,000 shares subject to options exercisable within 60 days of
June 30, 2001.

(9) Includes 269,291 shares subject to options exercisable within 60 days of
June 30, 2001. Mr. Hyrkin became an officer of the Company in July 2001.

(10) Includes 320,000 shares subject to options exercisable within 60 days of
June 30, 2001.

(11) Includes 30,000 shares subject to options exercisable within 60 days of
June 30, 2001. Mr. Codd joined as a director of the Company in January
2001.

(12) Includes 30,000 shares subject to options exercisable within 60 days of
June 30, 2001. Mr. Livingston joined as a director of the Company in May
2001.

(13) Includes 1,063 shares held by Granite Ventures LLC; 65,856 shares held by
Adobe Ventures II, L.P; 19,177 shares held by H&Q Virage Investors, L.P.;
8,630 shares held by H&Q Adobe Ventures Management II, LLC; and 35,000
shares subject to options exercisable within 60 days of June 30, 2001. Mr.
O'Grady is the senior managing director of Granite Ventures LLC and a
member of each of the general partners of Adobe Ventures II, L.P., H&Q
Virage Investors, L.P. and H&Q Adobe Ventures Management II, LLC. Mr.
O'Grady disclaims beneficial ownership of the shares held by Granite
Ventures LLC, Adobe Ventures II, L.P., H&Q Virage Investors, L.P. and H&Q
Adobe Ventures Management II, LLC except to the extent of his proportionate
partnership interest therein.

(14) Includes 909,090 shares held by Thomson Consumer Electronics. Mr. Arras is
the Senior Executive Vice President of Audio and ATLINKS, Thomson
Multimedia and disclaims beneficial ownership of the shares held by Thomson
Consumer Electronics. Mr. Arras joined as a director of the Company in July
2001.

(15) Includes 3,689,095 shares subject to options exercisable within 60 days of
June 30, 2001 held by all officers and directors as a group.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 ("Section 16(a)")
requires the Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity securities
("10% Stockholders"), to file reports of ownership on Form 3 and changes in
ownership on Form 4 or 5 with the SEC. Such executive officers, directors and
10% Stockholders are also required by SEC rules to furnish the Company with
copies of all Section 16(a) forms they file.

Based solely on its review of copies of such forms received, or written
representations from certain reporting persons that no filings on Forms 5 were
required for such persons, the Company believes that, during fiscal 2001, its
executive officers, directors and 10% Stockholders complied with all applicable
Section 16(a) filing requirements except that Mr. Vassel, Mr. Hyrkin, and Mr.
Codd failed to file timely reports for the initial statement of beneficial
ownership on Form 3; Mr. Hyrkin did not report one option grant in August 2000
and one option grant in January 2001 on a timely filed Form 5 report for the
2001 fiscal year but instead will report his two option grants on a late Form 5
filing; and a Form 4 report that was filed timely for Mr. Lego contained an
error in the price of the common stock purchased by Mr. Lego on the open market
in February 2001. When such error was discovered, a fully executed amended Form
4 was filed for Mr. Lego in May 2001.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Compensation Committee is currently composed of Mr. O'Grady,
Mr. Orr and Mr. Younger. No interlocking relationship exists between any member
of the Company's Compensation Committee and any member of the compensation
committee of any other company, nor has any such interlocking relationship
existed in the past. No member of the Compensation Committee is or was formerly
an officer or an employee of the Company.

The Company has entered into indemnification agreements with each of its
directors and officers. Such agreements require the Company to indemnify such
individuals to the fullest extent permitted by law.

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EXECUTIVE OFFICER COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain information concerning total
compensation received by the Chief Executive Officer and each of the four most
highly compensated executive officers during the last year (the "Named
Officers") for services rendered to Virage in all capacities for the three years
ended March 31, 2001:

LONG-TERM
COMPENSATION
AWARDS
------------
NUMBER OF
ANNUAL COMPENSATION SHARES
----------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS COMPENSATION
--------------------------- ---- ---------- --------- ------------ ------------

Paul G. Lego.............................. 2001 $250,000 $75,000 -- --
President, Chief Executive Officer 2000 210,000 40,000 500,000 --
and Chairman of the Board 1999 195,000 -- 100,000 --
Alfred J. Castino......................... 2001 200,350 50,000 100,000 --
Chief Financial Officer(1) 2000 45,833 20,000 210,000 --
Weldon D. Bloom........................... 2001 180,000 100,653 40,000 --
Vice President, Sales(2) 2000 175,000 43,727 -- --
1999 78,220 23,890 200,000 --
Joseph A. Hyrkin.......................... 2001 160,833 171,611 200,000 --
Vice President, Strategic Accounts and 2000 98,333 121,434 87,500 --
Asia-Pacific Sales(3) 1999 2,045 1,563 -- --
Mark K. Rattley........................... 2001 181,250 98,016 40,000 --
Vice President and General Manager, 2000 -- -- 200,000 --
European Operations(4) 1999 -- -- 50,000 --

- ---------------
(1) Mr. Castino began employment with the Company in January 2000.

(2) Mr. Bloom began employment with the Company in October 1998. Mr. Bloom
departed from the Company in May 2001.

(3) Mr. Hyrkin began employment with the Company in March 1999.

(4) Mr. Rattley worked as a consultant of the Company through March 2000. Mr.
Rattley began employment with the Company in April 2000.

OPTION GRANTS IN LAST YEAR

The following table sets forth, as to the Named Officers, information
concerning stock options granted during the year ended March 31, 2001.

INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SHARES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(4)
OPTIONS EMPLOYEES PRICE PER EXPIRATION ------------------------------
NAME GRANTED(1) IN YEAR(2) SHARE DATE(3) 5% 10%
---- ---------- ---------- --------- ---------- ----------- -------------

Paul G. Lego......... -- -- -- --
Alfred J. Castino.... 100,000 3.08% $11.00 10/26/10 $691,784 $1,753,117
Weldon D. Bloom...... 40,000 1.23% 11.00 10/26/10 276,714 701,247
Joseph A. Hyrkin..... 100,000 3.08% 11.88 8/3/10 747,127 1,893,366
60,000 1.85% 11.00 10/26/10 415,070 1,051,870
40,000 1.23% 4.63 1/17/11 116,471 295,161
Mark K. Rattley...... 40,000 1.23% 11.00 10/26/10 276,714 701,247

- ---------------
(1) The options in this table are incentive stock options or nonstatutory stock
options, except as otherwise provided, granted under the 1997 Plan and have
exercise prices equal to the fair market value of the

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Company's Common Stock on the date of grant. All such options have ten-year
terms and vest over a period of four years at a rate of 1/48 each month.

(2) The Company granted (or assumed) options to purchase 3,252,025 shares of
Common Stock in fiscal year 2001.

(3) The options in this table may terminate before their expiration upon the
termination of the optionee's status as an employee or consultant or upon
the optionee's disability or death.

(4) Under rules promulgated by the SEC, the amounts in these two columns
represent the hypothetical gain or "option spread" that would exist for the
options in this table based on assumed stock price appreciation from the
date of grant until the end of such options' ten-year term at assumed annual
rates of 5% and 10%. Annual compounding results in total appreciation of 63%
(at 5% per year) and 159% (at 10% per year). The 5% and 10% assumed annual
rates of appreciation are specified in SEC rules and do not represent the
Company's estimate or projection of future stock price growth. The Company
does not necessarily agree that this method can properly determine the value
of an option and there can be no assurance that the potential realizable
values shown in this table will be achieved.

OPTION EXERCISES AND HOLDINGS

The following table sets forth, as to the Named Officers, certain
information concerning the number of shares subject to both exercisable and
unexercisable stock options as of March 31, 2001. Also reported are values for
"in-the-money" options that represent the positive spread between the respective
exercise prices of outstanding stock options and the fair market value of the
Company's Common Stock as of March 31, 2001.

AGGREGATED OPTION EXERCISES IN LAST YEAR
AND YEAR-END OPTION VALUES

NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES YEAR-END YEAR-END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------

Paul G. Lego................ 85,250 $1,052,838 443,751 -- -- --
22,917 279,129 -- -- -- --
83,333 541,665 -- -- -- --
Alfred J. Castino........... -- -- 310,000 -- -- --
Weldon D. Bloom............. -- -- 40,000 -- -- --
Joseph A. Hyrkin............ -- -- 239,291 40,000 -- --
Mark K. Rattley............. -- -- 290,000 -- -- --

- ---------------
(1) Market value of underlying securities is based on the closing price of the
Company's Common Stock on March 30, 2001 (the last trading day of the 2001
fiscal year), which was $2.063. For a majority of the options reflected in
this table, the exercise price is higher than the fair market value of the
stock on March 30, 2001, resulting in a negative valuation in the aggregate
for each Named Officer.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS

The Company routinely delivers written offer letters containing provisions
on salary, bonuses, benefits and stock option grants to prospective members of
management and other employees. In addition, the Company has entered into
agreements containing employment and change-in-control provisions as described
below.

The stock option agreements between Virage and Paul G. Lego, our president
and chief executive officer, in which Mr. Lego was granted options to purchase
602,500 shares of common stock, of which options for 411,833 shares have been
exercised, provide for full acceleration of vesting of all unvested options upon
a change-in-control event in which Mr. Lego is terminated or constructively
dismissed. The stock option agreement between Virage and Mr. Lego, in which Mr.
Lego was granted options to purchase 500,000 shares

12
15

of common stock, provides for 50% acceleration of vesting of all unvested
options upon a change-in-control event.

The stock option agreement between Virage and Alfred J. Castino, our chief
financial officer, provides for 50% acceleration of vesting of all unvested
options upon a change-in-control event and three months acceleration of vesting
of unvested options if he is terminated without cause. In addition, Mr. Castino
receives three months base salary if he is terminated without cause.

The stock option agreement between Virage and Mark K. Rattley, our vice
president and general manager, European operations, provides for 50%
acceleration of vesting of all unvested options upon a change-in-control event
in which Mr. Rattley is terminated or constructively dismissed and six months
acceleration of vesting of unvested options if he is terminated or
constructively dismissed without cause. In addition, Mr. Rattley receives six
months of his target earnings and benefits if he is terminated without cause.

The stock option agreement between Virage and Weldon D. Bloom provides for
50% acceleration of vesting of all unvested options upon a change-in-control
event in which he is terminated or constructively dismissed. In addition, Mr.
Bloom receives three months base salary if he is terminated without cause.

The stock option agreement between Virage and Joseph A. Hyrkin subsequent
to his promotion to an officer of the Company provides for 50% acceleration of
vesting of all unvested options upon a change-in-control event in which he is
terminated or constructively dismissed.

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

MEMBERSHIP AND ROLE OF THE AUDIT COMMITTEE

The Audit Committee consists of the following members of Virage's Board of
Directors: Ronald E.F. Codd, Philip W. Halperin, and Randall S. Livingston*.
Each of the members of the Audit Committee is independent as defined under the
National Association of Securities Dealers' listing standards. The Audit
Committee operates under a written charter adopted by the Board of Directors
which is included in this proxy statement as Appendix A and has fulfilled the
responsibilities delineated in this charter.

The primary function of the Audit Committee is to assist the Board of
Directors (the "Board") in fulfilling its financial oversight responsibilities
by reviewing and reporting to the Board upon: the financial reports and other
financial information provided by the Company to any governmental body or to the
public; the Company's systems of internal and external controls regarding
finance, accounting, legal compliance and ethics that management and the Board
have established; and the Company's auditing, accounting and financial reporting
processes in general. The Audit Committee's primary duties and responsibilities
are to: (1) serve as an independent and objective party to monitor Virage's
financial reporting process and internal control system; (2) review and appraise
the audit efforts of Virage's independent accountants; and (3) provide an open
avenue of communication among the independent accountants, financial and senior
management, counsel and the Board of Directors.

REVIEW OF VIRAGE'S AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED MARCH
31, 2001

The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended March 31, 2001 with Virage's
management. The Audit Committee has discussed with Ernst & Young LLP, the
Company's independent public accountants, the matters required to be discussed
by Statement of Auditing Standards No. 61 (Communication with Audit Committees).

The Audit Committee has also received the written disclosures and the
letter from Ernst & Young LLP required by Independence Standards Board Standard
No. 1 (Independence Discussion with Audit Committees) and the Audit Committee
has discussed the independence of Ernst & Young LLP with that firm.

The Audit Committee has considered the fees paid to Ernst & Young LLP for
non-audit related services and does not feel that these fees compromise Ernst &
Young LLP's independence in performing Virage's audit.

- ---------------

*Mr. Livingston joined the Audit Committee on May 14, 2001 and therefore did
not participate in discussions prior to that date.
13
16

Based upon the reports and discussions described in this Report, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended March 31, 2001.

AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS

Ronald E.F. Codd
Philip W. Halperin
Randall S. Livingston*

THE FOREGOING AUDIT COMMITTEE REPORT SHALL NOT BE DEEMED TO BE "SOLICITING
MATERIAL" OR TO BE FILED WITH THE SEC, NOR SHALL SUCH INFORMATION BE
INCORPORATED BY REFERENCE INTO ANY PAST OR FUTURE FILING UNDER THE SECURITIES
ACT OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY
INCORPORATES IT BY REFERENCE INTO SUCH FILING.

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee of the Board currently consists of Messrs.
O'Grady, Orr and Younger. The Compensation Committee of the Board of Directors
generally reviews and approves the Company's executive compensation policies,
including the base salary levels and target incentives for the Company's
executive officers at the beginning of each fiscal year, and approves the
performance objectives of the officers in their areas of responsibility. No
member of the Compensation Committee is a former or current officer or employee
of Virage or any of its subsidiaries. Meetings of the Compensation Committee are
also attended by Mr. Lego, except to the extent his own compensation is
discussed, who provides background and market information and makes
recommendations to the Compensation Committee on salary levels, officer
performance objectives, and corporate financial goals. However, Mr. Lego is not
entitled to vote on any actions taken by the Compensation Committee.

EXECUTIVE OFFICER COMPENSATION PROGRAMS

The objectives of the executive officer compensation program are to
attract, retain, motivate and reward key personnel who possess the necessary
leadership and management skills, through competitive base salary, annual cash
bonus incentives, long-term incentive compensation in the form of stock options,
and various benefits. The executive compensation policies of the Compensation
Committee are intended to combine competitive levels of compensation and rewards
for above average performance and to align relative compensation with the
achievements of key business objectives, optimal satisfaction of customers, and
maximization of stockholder value. The Compensation Committee believes that
stock ownership by management is beneficial in aligning management and
stockholder interests, thereby enhancing stockholder value.

Base Salaries. Salaries for the Company's executive officers are determined
primarily on the basis of the executive officer's responsibility, general salary
practices of peer companies and the officer's individual qualifications and
experience. The base salaries are reviewed annually and may be adjusted by the
Compensation Committee in accordance with certain criteria which include
individual performance, the functions performed by the executive officer, the
scope of the executive officer's on-going duties, general changes in the
compensation peer group in which the Company competes for executive talent, and
the Company's financial performance generally. The weight given each such factor
by the Compensation Committee may vary from individual to individual.

- ---------------

*Mr. Livingston joined the Audit Committee on May 14, 2001 and therefore did
not participate in discussions prior to that date.
14
17

Incentive Bonuses. The Compensation Committee believes that a cash
incentive bonus plan can serve to motivate the Company's executive officers and
management to address annual performance goals, using more immediate measures
for performance than those reflected in the appreciation in value of stock
options. The bonus amounts are based upon recommendations by management and a
subjective consideration of factors including such officer's level of
responsibility, individual performance, contributions to the Company's success
and the Company's financial performance generally.

Stock Option Grants. Stock options may be granted to executive officers and
other employees under the 1997 Plan and/or the 2001 Plan. Because of the direct
relationship between the value of an option and the stock price, the
Compensation Committee believes that options motivate executive officers to
manage the Company in a manner that is consistent with stockholder interests.
Stock option grants are intended to focus the attention of the recipient on the
Company's long-term performance which the Company believes results in improved
stockholder value, and to retain the services of the executive officers in a
competitive job market by providing significant long-term earnings potential. To
this end, stock options generally vest and become fully exercisable over a
four-year period. The principal factors considered in granting stock options to
executive officers of the Company are prior performance, level of
responsibility, other compensation and the executive officer's ability to
influence the Company's long-term growth and profitability. However, the 1997
Plan and 2001 Plan do not provide for any quantitative method for weighting
these factors, and a decision to grant an award is primarily based upon a
subjective evaluation of the past as well as future anticipated performance.

Other Compensation Plans. The Company has adopted certain general employee
benefit plans in which executive officers are permitted to participate on parity
with other employees. The Company also provides a 401(k) deferred compensation
plan.

Deductibility of Compensation. Section 162(m) of the Internal Revenue Code
("IRC") disallows a deduction by the Company for compensation exceeding $1.0
million paid to certain executive officers, excluding, among other things,
performance based compensation. Although, as a result of certain option
exercises, compensation paid to certain executive officers has exceeded this
limitation, applicable exemptions allow the deduction by the Company for such
compensation. Because the compensation paid to other executive officers has not
approached the limitation, the Compensation Committee has not had to use any of
the available exemptions from the deduction limit with regard to such officers'
compensation. The Compensation Committee remains aware the IRC Section 162(m)
limitations, and the available exemptions, and will address the issue of
deductibility when and if circumstances continue to warrant the use of such
exemptions.

CHIEF EXECUTIVE OFFICER COMPENSATION

The compensation of the Chief Executive Officer is reviewed annually on the
same basis as discussed above for all executive officers. Mr. Lego's base salary
for the year ended March 31, 2001 was $250,000. Mr. Lego's base salary was
established in part by comparing the base salaries of chief executive officers
at other companies of similar size. Mr. Lego received no stock options and a
$75,000 bonus for the year ended March 31, 2001.

COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS

Standish H. O'Grady
Lawrence K. Orr
William H. Younger, Jr.

THE FOREGOING COMPENSATION COMMITTEE REPORT SHALL NOT BE DEEMED TO BE
"SOLICITING MATERIAL" OR TO BE FILED WITH THE SEC, NOR SHALL SUCH INFORMATION BE
INCORPORATED BY REFERENCE INTO ANY PAST OR FUTURE FILING UNDER THE SECURITIES
ACT OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY
INCORPORATES IT BY REFERENCE INTO SUCH FILING.

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18

COMPANY STOCK PRICE PERFORMANCE GRAPH

The following graph compares the cumulative total return to stockholders on
the Company's Common Stock with the cumulative total return of the Nasdaq
Composite Index. The graph assumes that $100 was invested on June 29, 2000 (the
date of the Company's initial public offering) in the Company's Common Stock and
in each of the indices discussed above, including reinvestment of dividends. No
dividends have been declared or paid on the Company's Common Stock. Note that
historic stock price performance is not necessarily indicative of future stock
price performance.

[PERFORMANCE GRAPH]

- ---------------------------------------------------------------------------------
6/29/00 9/29/00 12/29/00 3/30/01
- ---------------------------------------------------------------------------------

Virage 100 100 31.852 12.225
Nasdaq Composite 100 94.132 63.007 47.089

THE INFORMATION CONTAINED IN THE STOCK PERFORMANCE GRAPH SHALL NOT BE
DEEMED TO BE "SOLICITING MATERIAL" OR TO BE FILED WITH THE SEC, NOR SHALL SUCH
INFORMATION BE INCORPORATED BY REFERENCE INTO ANY FUTURE FILING UNDER THE
SECURITIES ACT OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THE COMPANY
SPECIFICALLY INCORPORATES IT BY REFERENCE INTO SUCH FILING.

ANNUAL REPORT ON FORM 10-K

A COPY OF VIRAGE'S COMBINED ANNUAL REPORT TO STOCKHOLDERS AND ANNUAL REPORT
ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 2001 ACCOMPANIES THIS PROXY STATEMENT.
AN ADDITIONAL COPY WILL BE FURNISHED WITHOUT CHARGE TO BENEFICIAL STOCKHOLDERS
OR STOCKHOLDERS OF RECORD UPON REQUEST TO INVESTOR RELATIONS, VIRAGE, INC., 177
BOVET ROAD, SUITE 520, SAN MATEO, CA 94402.

16
19

OTHER MATTERS

The Board of Directors does not know of any other matters to be presented
at the Annual Meeting. If any additional matters are properly presented at the
Annual Meeting, the persons named in the enclosed proxy card will have
discretion to vote shares they represent in accordance with their own judgement
on such matters.

It is important that your shares be represented at the Annual Meeting,
regardless of the number of shares which you hold. You are, therefore, urged to
execute and return, at your earliest convenience, the enclosed proxy card in the
envelope which has also been enclosed.

THE BOARD OF DIRECTORS

San Mateo, California
August 3, 2001

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APPENDIX A

VIRAGE, INC.

AUDIT COMMITTEE CHARTER

I. STATEMENT OF POLICY

This Charter specifies the scope of the Audit Committee's (the "Committee")
responsibilities, and how it carries out those responsibilities, including the
structure, processes, and membership requirements. The primary function of the
Committee is to assist the Board of Directors (the "Board") in fulfilling its
financial oversight responsibilities by reviewing and reporting to the Board
upon: the financial reports and other financial information provided by the
Company to any governmental body or to the public; the Company's systems of
internal and external controls regarding finance, accounting, legal compliance
and ethics that management and the Board have established; and the Company's
auditing, accounting and financial reporting processes in general. Consistent
with this function, the Committee should encourage continuous improvement of,
and should foster adherence to, the Company's financial policies, procedures and
practices at all levels.

The Committee's primary duties and responsibilities are to:

- Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control systems.

- Review and appraise the audit efforts and independence of the Company's
auditors.

- Provide an open avenue of communication among the independent auditors,
financial and senior management, and the Board.

The Committee will primarily fulfill these responsibilities, and others as may
be prescribed by the Board from time to time, by carrying out the activities
enumerated in Section IV of this Charter.

II. ORGANIZATION AND MEMBERSHIP REQUIREMENTS

The Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. A
member of the Committee shall be considered independent if, among other things,
such Director:

a. Is not an employee of the Company or its affiliates and has not
been employed by the Company or its affiliates within the past three years.

b. Is not a member of the immediate family of an executive officer of
the Company or its affiliates who currently serves in that role or did so
during the past three years.

c. Has not accepted more than $60,000 in compensation from the Company
during the previous fiscal year (excluding compensation and the related
benefits for Board service, retirement plan benefits or non-discretionary
compensation).

d. Has not been a partner, controlling shareholder or an executive
officer of any for-profit business to which the Company made, or from which
it received, payments (other than those which arise solely from investments
in the Company's securities) that exceed five percent of the Company's
consolidated gross revenues for that year, or $200,000, whichever is more,
in any of the past three years.

e. Is not an executive of another corporation on whose Compensation
Committee any of the Company's current executives serves.

All members of the Committee must be able to read and understand
fundamental financial statements, including a balance sheet, income statement,
and cash flow statement. In addition, at least one member must have past
employment experience in finance or accounting, professional certification in
accounting, or other

A-1
21

comparable experience or background resulting in the individual's financial
sophistication, including being or having been a chief executive, chief
financial, or other senior officer with financial oversight responsibilities.

The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until their successors shall
be duly elected and qualified. Unless a chairman is elected by the full Board,
the members of the Committee may designate a chairman by majority vote of the
full Committee membership.

III. MEETINGS

As part of its job to foster open communication, the Committee must meet at
least annually with management and the independent auditors in separate
executive sessions to discuss any matters that the Committee or each of these
groups believe should be discussed privately. In addition, the Committee or at
least its Chair should meet with the independent auditors and management
quarterly to review the Company's financial statements consistent with Section
IV.6. below.

IV. PROCESSES

To fulfill its responsibilities and duties the Committee shall:

1. Obtain the Board members' approval of this Charter.

2. Review and reassess the Charter's adequacy periodically, at least
annually, or as conditions dictate.

3. Review the organization's annual audited financial statements and
any reports or other financial information submitted to any governmental
body, or the public, including any certification, report, opinion, or
review rendered by the independent auditors.

4. Review the regular Management Letter to management prepared by the
independent auditors and management's response.

5. Review related party transactions for potential conflicts of
interests.

6. Review the interim financial statements with financial management
and the independent auditors prior to the filing of the Company's Form 10-K
and Form 10-Qs. The chairman of the Committee may represent the entire
Committee for purposes of this review. These meetings should include a
discussion of the independent auditors judgment quality of the Company's
accounting and any uncorrected misstatements as a result of the auditors
quarterly review.

7. Maintain written minutes of its meetings, which minutes will be
filed with the minutes of the meetings of the Board. The Committee will
also record its summaries of recommendations to the Board in written form
that will be incorporated as part of the minutes of the Board meeting at
which those recommendations are presented.

8. Recommend to the Board the selection of the independent auditors,
considering independence and effectiveness.

9. Obtain from the independent auditors a formal written statement
delineating all relationships between the auditor and the Company, and
discussing with the auditor any disclosed relationships or services that
may impact auditor objectivity and independence (consistent with
Independence Standards Board Standard No. 1).

10. Taking, or recommending that the Board take, appropriate action to
oversee the independence of the outside auditor.

11. Review the performance of the independent auditors and approve any
proposed discharge of the independent auditors when circumstances warrant.

A-2
22

12. Periodically consult with the independent auditors out of the
presence of management about internal controls and the fullness and
accuracy of the Company's financial statements.

13. In consultation with the independent auditors, review the
integrity of the Company's financial reporting processes, both internal and
external.

14. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.

15. Consider and approve, if appropriate, major changes to the
Company's auditing and accounting principles and practices as suggested by
the independent auditors or management.

16. Review with both management and the independent auditors any
significant judgments made in management's preparation of the financial
statements and the view of each as to appropriateness of such judgments.

17. Review with both management and the independent auditors any
significant difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to required
information.

18. Review any significant disagreement among management and the
independent auditors in connection with the preparation of the financial
statements.

19. Review with the independent auditors and management the extent to
which changes or improvements in financial or accounting practices, as
approved by the Committee, have been implemented.

20. Provide oversight and review the Company's asset management
policies, including an annual review of the Company's investment policies
and performance for cash and short-term investments.

21. Ensure that management has set an appropriate corporate "tone" for
quality financial reporting, sound business practices and ethical behavior
and provide management.

22. Ensure that management has the proper review system in place to
ensure that Company's financial statements, reports and other financial
information disseminated to governmental organizations, and the public
satisfy legal requirements.

23. Review management's monitoring of compliance with the Foreign
Corrupt Practices Act.

24. Review, with the Company's counsel, legal compliance matters
including corporate securities trading policies.

25. Review, with the Company's counsel, any legal matter that could
have a significant impact on the Company's financial statements.

26. Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Committee or the Board deems
necessary or appropriate.

27. If necessary, initiate special investigations, and if appropriate,
hire special counsel or experts to assist the Committee.

A-3
23

VIRAGE, INC.

ANNUAL MEETING OF STOCKHOLDERS

This Proxy is Solicited on Behalf of the Board of Directors

The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and accompanying Proxy Statement each dated August 3, 2001 and
hereby appoints Frank H. Pao as proxy and attorney-in-fact to represent the
undersigned at the Annual Meeting of Stockholders to be held at Crowne Plaza
Hotel, Drake Room, 1221 Chess Drive, Foster City, California on September 5,
2001 at 1:00 p.m., local time, and at any adjournments thereof, and to vote the
shares of Common Stock the undersigned would be entitled to vote if personally
present, as indicated below.

1. Election of Directors
[ ] FOR all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLDING AUTHORITY to vote for all nominees listed below

Paul G. Lego, Alar E. Arras and Ronald E.F. Codd

(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below.)

- ------------------------------------------------------
2. Approval of the appointment of Ernst & Young LLP as independent auditors
of Virage for the year ending March 31, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN

THE SHARES OF COMMON STOCK REPRESENTED BY THIS PROXY WILL BE VOTED AS
DIRECTED; HOWEVER, IF NO DIRECTION IS GIVEN, THE SHARES OF COMMON STOCK WILL BE
VOTED FOR THE SELECTION OF THE NOMINEES AND FOR THE APPROVAL OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
24

If any other business is presented at the meeting, this proxy will be voted
by those named in this proxy in their best judgment. At the present time, the
Board of Directors knows of no other business to be presented at the meeting.

DATED: , 2001

Signature

Signature if held jointly

(Please date, sign as name
appears at the left, and return
promptly. If the shares are
registered in the names of two or
more persons, each person should
sign. When signing as Corporate
Officer, Partner, Executor,
Administrator, Trustee or
Guardian, please give full title.
Please note any changes in your
address alongside the address as
it appears in the proxy.)