SiliconBeat

At the same time as it was apparently fending off uninvited takeover talk from Fremont-based Virage Logic, the board of directors at LogicVision of San Jose was fashioning new change-in-control agreements for its three top executives that helped insure bigger payouts for them.

Virage Logic sent a letter yesterday to LogicVision’s board in which it said it was “sincerely disappointed in your unwillingness to engage in any substantive discussions regarding our indication of interest transmitted to you on November 10th regarding an all-cash acquisition of LogicVision.” The proposal was to pay $1.05 per share for LogicVision, a 114 percent premium to its closing price the day before the letter was sent.

In his letter to LogicVision’s board, Virage’s executive chairman Daniel McCranie wrote that  its position that “the company is not for sale…deserves serious reconsideration”, particularly in light of “(r)ecent economic events and the resulting downturn in business spending and the semiconductor market”, which “cast serious doubts on LogicVision’s long term future as a stand-alone public company.”

Two days after evidently receiving the offer, LogicVision’s board updated its severance agreements in the event of a change in control with with Chief Executive James Healy, chief Operating Officer Fadi Maamari, and Chief Financial Officer Mei Song.

In the event of an involuntary termination “within three months before or twelve months after a change of control” each executive would get a cash payment based on their salary and another based on their bonus targets. The payments would be equal to 150% of salary and bonus for Healy, and equal to 100% of salary and bonus for each Maamari and Song, immediate vesting of all options and reimbursement of health insurance premiums for each and their dependents for up to a year.

The updates were to previous agreements drawn up with the executives less than two years ago that seemed indistinguishable at first, until we got to this one caveat that has apparently been dropped from the new agreement: “If, however, a change of control occurs and the consideration per share of Company Common Stock as a result of the change of control is less than $3.30, then the percentages relating to cash payments will be reduced to 50%.”

LogicVision shares were trading at 80 cents this afternoon, indicating some doubt at this time by traders that the deal will take place.