December 21, 2006

 

 

Mr. Darin G. Billerbeck

4281 Estrellita Ct.

Shingle Springs, CA 95682

 

Dear Darin,

 

It gives me great pleasure to present to you this offer of employment as the
President and Chief Executive Officer of ZiLOG, Inc. ("ZiLOG" or the "Company").

 

As the President and CEO, you will be the senior member of the ZiLOG Management
team and will report to ZiLOG's Board of Directors (the "Board"). Upon your
hire, you will be appointed as a member of the Board subject to re-election at
the Company’s next shareholder's meeting. During your employment, you shall
devote your full business efforts and time to ZiLOG. You agree not to engage in
any other employment, occupation or consulting activity for any direct or
indirect remuneration without prior approval of the Board.

 

Salary

 

Your starting base salary will be $29,167 per month, which equates to $350,000
annually, less taxes and other requested or required withholdings. You will also
receive a guaranteed cash bonus of $60,000 provided that you are employed by
ZiLOG as of March 31, 2007. This bonus represents a pro-rated bonus for your
services during ZiLOG's fourth quarter of fiscal year 2007. As additional cash
compensation, you will be eligible for a Manage by Objectives ("MBO") Incentive
plan payout equal to 80% of your base salary at 100% of your target annually,
commencing in fiscal year 2008. All applicable taxes and withholdings shall be
deducted from any incentive payments to you.

 

Equity Compensation

 

In addition to the cash compensation described above, ZiLOG will grant you a
non-qualified incentive stock option to purchase 400,000 shares of ZiLOG common
stock (the "Stock Option"), with a per share exercise price equal to the per
share "Fair Market Value," as defined in the 2004 ZiLOG Omnibus Stock Incentive
Plan (the "Incentive Plan") on your first day of employment. The Stock Option
will vest 25% on the first anniversary of your start date, with an additional
1/48th of the shares of the Stock Option vesting on each of the 36 succeeding
monthly anniversaries of the start date. The Stock Option will be subject to the
terms and conditions of the Incentive Plan and the applicable stock option
agreement.

 

 

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

Mr. Darin G. Billerbeck

Offer Letter

December 21, 2006

 

 

 

Benefits

 

As a full-time, regular employee of ZiLOG, your Company-sponsored health and
welfare benefits will be effective as of your first day of employment based on
your enrollment choices (i.e., medical, dental, and vision); however there may
be some exceptions for certain other Company benefits, which are subject to
waiting periods and eligibility requirements as set forth under the applicable
plans. All benefit plans and programs are subject to the terms and conditions
set forth in the applicable plan documents.

 

In addition, the Company will pay certain costs to relocate you from the
Sacramento area to the Bay Area in accordance with the Company’s Domestic
Relocation Policy and Procedure (the "Relocation Policy), a copy of which is
enclosed. Pursuant to the Relocation Policy, the Company will pay standard
relocation costs such as certain real estate fees, household moving expenses and
transportation allowances as well as an additional one time "Resettlement
Allowance" equal to 15% of your annual base salary, less applicable taxes and
other required withholdings.

 

All requests for payments and reimbursements related to relocation must be
submitted to the Company within one year of when such costs were incurred. In
addition, in the event that you terminate your employment with ZiLOG prior to
the first anniversary of your start date, you agree to repay the Company for all
amounts paid to you or on your behalf pursuant to the Relocation Policy,
including, but not limited to the Resettlement Allowance. A copy of the
Relocation Amount Acknowledgement Clause has been included for your review and
signature.

 

At-Will Employment

 

If you accept this offer, your employment with ZiLOG will be "at will." This
means that your employment with the Company is not for any specified period of
time and can be terminated by you or ZiLOG at any time, with or without reason
and/or advance notice. The "at will" nature of your employment may be changed
only in writing, signed and authorized by the Board.

 

Notwithstanding the at-will nature of your employment, if the Company terminates
your employment without "Cause" (as defined herein), you will be entitled to
receive twelve (12) months base salary, less applicable taxes and requested or
required withholdings, payable in equal installments for the twelve (12) month
period following your termination of employment ("Severance"). If you are
terminated for "Cause" or you resign from your employment with ZiLOG for any
reason, you will not be entitled to Severance and will only be entitled to
unpaid salary and accrued but unused vacation earned through your final date of
employment.

 

For purposes of this letter, "Cause" shall mean one or more of the following:
(i) your material violation of the Company's Invention Assignment and
Confidentiality

 

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

Mr. Darin G. Billerbeck

Offer Letter

December 21, 2006

 

 

Agreement; (ii) your failure to reasonably and substantially perform your
employment duties or to observe Company policies in all material respects; (iii)
your willful misconduct or gross negligence which materially injures the
Company; or (iv) yours conviction or plea of nolo contendere to a felony or
other serious crime involving moral turpitude. In all of the foregoing cases,
the Company shall provide you with written notice indicating in reasonable
detail the event or circumstances that constitute Cause.

 

Change in Control

 

If within twelve months of the date of this letter, there is a Change in Control
(as defined herein) of the Company and, within twelve months following such
Change in Control, either (i) your employment is terminated other than for
Cause, as defined herein, or (ii) you terminate your employment for Good Reason
(as defined herein), then, 25% of the unvested shares subject to your Stock
Option shall immediately vest and become exercisable.

 

For the purposes of this letter, "Change in Control" shall mean (i) a
dissolution, liquidation or sale of all or substantially all of the assets of
the Company; (ii) the consummation of a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other corporation
or other entity, other than a merger or consolidation that results in the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 50% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation; or (iii) the
acquisition by any person, entity or group within the meaning of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or any affiliate of the Company) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, or comparable successor rule) of securities of the Company
representing at least 50% of the combined voting power entitled to vote in the
election of directors.

 

In addition, for purposes of this letter, “Good Reason” shall mean the
occurrence of one or more of the following, without your consent: (i) the
Company or its successor materially reduces your duties or responsibilities;
(ii) the Company or its successor materially reduces your overall compensation,
including annual base salary and incentive or bonus opportunity; or (iii) your
principal place of employment is moved more than 50 miles from its location as
of the date of this Agreement. Within 60 days of becoming aware of an event or
circumstances that constitutes Good Reason under this Agreement, you shall
provide written notice, describing such event or circumstances in reasonable

 

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

Mr. Darin G. Billerbeck

Offer Letter

December 21, 2006

 

 

detail to the Company, and you will provide the Company with thirty days to cure
such diminution prior to termination for Good Reason.

 

Invention Assignment and Confidentiality

 

This offer of employment is contingent upon you signing ZiLOG’s Invention
Assignment and Confidentiality Agreement. In connection with your employment by
ZiLOG, you are to abide by all contractual obligations owed to former employers,
including obligations respecting trade secrets and proprietary information. You
acknowledge and agree that the acceptance of this offer and subsequent
employment by ZiLOG will not breach any duty or obligation that you have to any
person or entity.

 

Entire Agreement

 

This letter is the only agreement between you and ZiLOG concerning your
compensation, benefits and other employment arrangements and it supersedes any
prior agreements or understandings concerning such matters, whether oral or
written.

 

Further Conduct

 

As part of your employment, you will be required to comply with all of ZiLOG’s
policies and procedures, which may be found in ZiLOG’s Employee Handbook and on
ZiLOG’s Intranet system under the heading “ZiDOC.” You will be responsible for
familiarizing yourself with these policies and procedures as soon as possible
following your date of hire and to re-familiarize yourself on a regular basis
going forward with all such policies and procedures. Enclosed with this letter
are documents that you will be responsible for reviewing and, in some cases, for
signing and returning to ZiLOG. In particular, please execute and return to
Human Resources executed copies of the following enclosed documents: Background
Disclosure and Authorization, Job Description, Invention Assignment and
Confidentiality Agreement, W-4, Employment Eligibility Verification (I-9), EEO
Supplement Form, Code of Business Conduct and Ethics, Direct Deposit Forms:
Payroll and Expense Reports, Personal Data Form, Educational Degree Form, and
the Insider Trading Policy. The remaining documents enclosed are for your
information but do not need to be executed and returned to Human Resources.

 

Background Check and I-9 Compliance  

 

This offer is contingent upon the results of your reference/background check. In
addition, the Immigration Reform and Control Act prohibits employers from
knowingly hiring anyone who is not eligible to work in the United States. This
law also requires all employees who are hired by ZiLOG, including you, to
satisfy an employment verification procedure, as described in the enclosed I-9
document.

 

 

 

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

Mr. Darin G. Billerbeck

Offer Letter

December 21, 2006

 

 

 

 

Start Date

 

We expect that your start date will be January 29, 2007.

 

The Board is looking forward to working with you as you apply your many skills
and talent to drive ZiLOG to the next phase of its growth. Please indicate your
acceptance of this offer on the terms and conditions described herein by signing
below and returning this document no later than 12:00 PM Midnight Pacific Time
on January 3, 2007.

 

Best regards,

 

/s/ Dick Sanquini                      

Dick Sanquini

Chairman

ZiLOG Compensation Committee

 

 

ACCEPTED AND AGREED:

 

 

/s/ Darin G. Billerbeck            

January 3, 2007            

Darin G. Billerbeck

Date

 

 

 

Enclosures:

Job Description

Invention Assignment and Confidentiality Agreement

Background Check Disclosure and Authorization Form

W-4

Employment Eligibility Verification (I-9)

Code of Business Conduct and Ethics

Benefits Summary

Personal Data Form

Insider Trading Policy

Relocation Policy and Relocation Amount Acknowledgement Clause

2004 Omnibus Stock Incentive Plan Prospectus

Employee Stock Purchase Plan Prospectus (ESPP)

Acknowledgement Form on Issues in the Workplace: Sexual Harassment

POL059 – Zero Tolerance for Harassment/Discrimination Policy

Corporate Governance Hotline

POL016 – Policy for usage of ZiLOG Communications Systems

POL017 – Conflict of Interest Policy

POL035 - Document Classification Policy

POL093 – Password Management Policy (WW)

Forms to be returned to Human Resources