Exhibit 10.26
FORM OF
NONQUALIFIED STOCK OPTION AGREEMENT
FOR STOCK OPTIONS
PURSUANT TO THE ZiLOG, INC.
2002 OMNIBUS STOCK INCENTIVE PLAN
          This Nonqualified Stock Option Agreement for Non-EBITDA-Linked Options
(the “Option Agreement”) is made and entered into as of [          ] (the “Date
of Grant”), by and between ZiLOG, Inc., a Delaware corporation (the “Company”),
and [          ] (the “Optionee”). Capitalized terms not defined herein shall
have the meaning ascribed to them in the ZiLOG, Inc. 2002 Omnibus Stock
Incentive Plan, as amended (the “Plan”) attached hereto as Exhibit A.
          1. Number of Shares. The Company hereby grants to the Optionee an
option (this “Option”) to purchase [          ] Shares (the “Option Shares”) at
an Exercise Price per Share of $[     ], subject to all of the applicable terms
and conditions of this Option Agreement and the Plan.
          2. Option Term. The Option shall have a ten (10) year term commencing
on the Date of Grant, unless sooner terminated pursuant to the Plan or this
Option Agreement (the “Option Term”).
          3. Conditions of Vesting and Exercise. The Option shall vest and
become exercisable at the rate                                          , in
each case to the extent the Optionee is employed by or providing services to the
Company or any Parent or Related Company on such date. The conditions of vesting
and exercise are otherwise determined pursuant to Section 7(e) of the Plan.
          4. Method of Exercise of Options. The methods of exercise of the
Option are determined pursuant to Section 7(f) of the Plan, including all
methods of exercise specified in Section 7(f)(i) — (iv) of the Plan, to the
extent permitted by applicable law.
          5. Effect of Termination of Employment or Service. The effect of
termination of employment or service is determined pursuant to Section 7(i) of
the Plan provided that options that are vested and exercisable at the time of
termination shall remain exercisable for a period of ninety from the termination
date. This ninety-day period shall be extended to six months from the date of
such termination in the event of the Optionee’s death or Disability prior to or
during such ninety-day period.
          6. Nontransferability of Options. The nontransferability provisions of
the Option are determined pursuant to Section 7(h) of the Plan.

 

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          7. Notices. All notices and other communications under this Option
Agreement shall be in writing and shall be given by facsimile or first class
mail, and shall be deemed to have been duly given three (3) days after mailing
or twenty-four (24) hours after transmission by facsimile to the respective
parties named below:

             
 
  If to Company:   ZiLOG, Inc.    
 
      532 Race Street    
 
      San Jose, CA 95126    
 
      Facsimile:     408-558-8525          
 
      Attn: Corporate Controller    
 
           
 
  If to the Optionee:        
 
           
 
           
 
           
 
           
 
           
 
      Facsimile:                                                               
 

          Either party hereto may change such party’s address for notices by
notice duly given pursuant hereto.
          8. Tax Consequences. The Optionee has reviewed with his or her own tax
advisors the federal, state, local and foreign tax consequences of the
transactions contemplated by the Option Agreement and is relying solely on such
advisors and not on any statements or representations of the Company or any of
its agents. The Optionee understands that he or she (and not the Company) shall
be responsible for any tax liability that may arise as a result of the
transactions contemplated by the Option Agreement.
          9. Securities Laws Requirements. The Option shall not be exercisable
to any extent, and the Company shall not be obligated to transfer any Option
Shares to the Optionee upon exercise of such Option, if such exercise, in the
opinion of counsel for the Company, would violate the Securities Act (or any
other federal or state statutes having similar requirements as may be in effect
at that time). Further, the Company may require as a condition of transfer of
any Option Shares pursuant to any exercise of the Option that the Optionee
furnish a written representation that he or she is purchasing or acquiring the
Option Shares for investment and not with a view to resale or distribution to
the public. Each certificate representing Option Shares may bear the legend set
forth below and any other legends that may be required by the Company or by any
federal or state securities laws:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER. SUCH TRANSFER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE
SHARES.
          Further, if the Company decides, in its sole discretion, that the
listing or qualification of the Option Shares under any securities or other
applicable law is necessary or desirable, the Option shall not be exercisable,
in whole or in part, unless and

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until such listing or qualification, or a consent or approval with respect
thereto, shall have been effected or obtained free of any conditions not
acceptable to the Company.
          10. No Obligation to Register Option Shares. The Company shall be
under no obligation to register the Option Shares pursuant to the Securities Act
or any other federal or state securities laws.
          11. Market Stand-Off. The market stand-off provisions are determined
pursuant to Sections 13(a) of the Plan.
          12. Protections Against Violations of Agreement. No purported sale,
assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift,
transfer in trust (voting or other) or other disposition of, or creation of a
security interest in or lien on, any of the Option Shares by any holder thereof
in violation of the provisions of the Plan, this Option Agreement or the
Certificate of Incorporation or the By-Laws of the Company, will be valid, and
the Company will not transfer any of said Option Shares on its books nor will
any of said Option Shares be entitled to vote, nor will any dividends be paid
thereon, unless and until there has been full compliance with said provisions to
the satisfaction of the Company. The foregoing restrictions are in addition to
and not in lieu of any other remedies, legal or equitable, available to enforce
said provisions.
          13. Withholding Taxes. The tax withholding provisions are determined
pursuant to Section 12 of the Plan.
          Options granted to employees or other Plan participants residing
outside North America may be subject to taxation or other local restrictions.
Any obligations arising from such stock option awards, exercises or sales of
stock are the sole responsibility of the participant, including but not limited
to, obligations for remittance of appropriate local income taxes.
          14. Failure to Enforce Not a Waiver. The failure of the Company to
enforce at any time any provision of this Option Agreement shall in no way be
construed to be a waiver of such provision or of any other provision hereof.
          15. Governing Law. This Option Agreement shall be governed by and
construed according to the laws of the State of Delaware, without giving effect
to the conflict of laws principles thereof.
          16. Incorporation of Plan. The Plan is hereby incorporated by
reference and made a part hereof, and the Option and this Option Agreement shall
be subject to all applicable terms and conditions of the Plan.
          17. Rights as a Stockholder. The rights of the Optionee as a
stockholder are determined pursuant to Section 7(g) of the Plan.
          18. Agreement Not a Contract for Services. Neither the Plan, the
granting of the Option, this Option Agreement nor any other action taken
pursuant to the

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Plan shall constitute or be evidence of any agreement or understanding, express
or implied, that the Optionee has a right to continue to provide services as an
officer, director, employee, consultant or advisor of the Company or any Parent
or Related Company for any period of time or at any specific rate of
compensation.
          19. Authority of the Committee. The Committee shall have full
authority to interpret and construe the terms of the Plan and this Option
Agreement. The determination of the Committee as to any such matter of
interpretation or construction shall be final, binding and conclusive.
          20. Acceptance. The Optionee hereby acknowledges receipt of a copy of
the Plan and this Option Agreement. The Optionee has read and understand the
terms and provisions thereof, and accepts the Option subject to all the terms
and conditions of the Plan and this Option Agreement.
          IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Option Agreement on the day and year first above written.

                      OPTIONEE     ZiLOG, INC.  
 
                   
By:
      By:                                  
 
                   
Name:
      Name:                                  
 
                   
 
      Title:                                  

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