ex10-1agmt.htm


     

    EXHIBIT
      10.1

    


    


    CHANGE
      IN CONTROL AGREEMENT

     

    THIS
      CHANGE IN CONTROL AGREEMENT ("Agreement") is made and entered into on October
      10, 2007 by and between ZiLOG, Inc. (the "Company") and Perry J. Grace, the
      Company's Chief Financial Officer ("Executive") (together the
      "Parties").

     

    WHEREAS,
      Executive is currently employed as the Chief Financial Officer of the
      Company;

     

    WHEREAS,
      the Company recognizes that there is a possibility that the Company may become
      the subject of a Change in Control (defined below), either now or at some time
      in the future;

     

    WHEREAS,
      the Company believes that it is in the best interests of the Company and its
      stockholders to foster Executive's objectivity in making decisions with respect
      to any pending or threatened Change in Control of the Company and to assure
      that
      the Company will have the continued dedication and availability of Executive
      as
      an employee of the Company, notwithstanding the possibility or occurrence of
      a
      Change in Control; and

     

    WHEREAS,
      with these and other considerations in mind, the Board of Directors of the
      Company (the "Board"), acting through its Compensation Committee, has authorized
      the Company to enter into this Agreement with Executive to provide the
      protections set forth herein.

     

    NOW,
      THEREFORE, in consideration of the mutual premises, covenants and agreements
      herein contained, intending to be legally bound, the Parties agree as
      follows:

     

    1.  Term
      of Agreement.  This Agreement shall be effective for the two year
      period commencing on December 15, 2007, provided, however, that on each
      anniversary of December 15, 2007 the Term of the Agreement shall be
      automatically extended for an additional one-year period unless prior to such
      date, either party notifies the other of its intention not to so extend the
      Agreement (the "Term") and provided further, that if a Change in Control
      (defined below) occurs during the Term, the Term shall be extended as necessary
      such that the Agreement expires no earlier than the date twelve (12) months
      following the Change in Control.

     

    2.  Change
      in Control.  For purposes of this Agreement, a Change in Control shall
      mean the first to occur after the date of this agreement of the
      following:

     

    (a)  dissolution,
      liquidation or sale of all or substantially all of the assets of the
      Company;

     

    (b)  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

    

     

    (c)  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.

     

    3.  Termination
      in Connection with a Change in Control.  In the event Executive
      experiences a Qualifying Termination (defined below) anytime during the Change
      in Control Protection Period (defined below), Executive shall be entitled to
      the
      following payments and benefits (collectively, the "Change in Control
      Payments"), which shall be in addition to any payments to Executive for earned
      but unpaid salary and accrued but unused vacation through the date of
      termination, as well as any vested benefits to which Executive is entitled
      in
      accordance with the terms of any applicable employee benefit plan:

     

    (a)  a
      lump sum payment equal to twelve (12) months of Executive's base salary, at
      the
      rate in effect at the time of termination, payable within thirty (30) days
      of
      Executive's termination;

     

    (b)  any
      and all of Executive's Company stock options that are outstanding at the time
      of
      termination and not yet vested and that would otherwise vest within 12 months
      of
      a Qualifying Termination shall immediately become exercisable and the exercise
      period of any stock option shall continue for the length of the exercise period
      specified in the applicable stock option agreement or plan.

     

    (c)  continuation
      of Executive's Company medical and dental benefits for the period of one year
      from the date of termination; provided, however, that, if such continuation
      is
      not permitted under the terms of the Company's benefit plans, the Company shall
      reimburse the Executive for the costs and any premiums paid to the Executive
      for
      continuation of coverage required under the Consolidated Omnibus Budget
      Reconciliation Act for such one year period; and provided further that the
      Company's obligation to provide medical benefits under this section shall cease
      prior to the end of one year if Executive becomes eligible for coverage under
      another employer's medical plans.  Notwithstanding the foregoing, the
      Company shall not be obligated to provide long-term disability
      benefits.

     

    4.  Restricted
      Stock in Connection with a Change of Control.  In the event of a
      Change in Control, any and all of Executive's Company restricted stock awards
      that are outstanding at the time of the Change in Control and not free from
      restrictions but which would otherwise become free of restrictions under the
      terms of the award within 12 months from the 

     

    
      
        
        

      

      
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      time
        of the Change of Control, shall immediately become free from restrictions
        (other
        than restrictions required by applicable law or any national securities exchange
        upon which any securities of the Company are then listed).

    

     

    5.  Waiver
      and Release Required.  The Change in Control Payments described above
      are expressly conditioned upon Executive's execution of a valid waiver and
      release of any and all claims that Executive may have, or have had, against
      the
      Company and its agents, including but not limited to its officers, directors
      and
      employees, in a form provided by the Company or its successor.

     

    6.  Qualifying
      Termination.  For purposes of this Agreement, a Qualifying Termination
      shall mean Executive's termination by the Company or its successor without
      Cause
      (as defined below) or Executive's resignation of his employment for Good Reason
      (as defined below).  Executive's termination or resignation of his
      employment for any other reason, including without limitation, death, Disability
      (defined below), termination for Cause or resignation without Good Reason,
      shall
      not be deemed a Qualifying Termination and Executive shall not be entitled
      to
      the Change in Control Payments described above.

     

    (a)  For
      purposes of this Agreement, "Cause" shall mean one or more of the
      following:  (i) Executive's failure to reasonably and substantially
      perform his employment duties or to observe Company policies in all material
      respects; (ii) Executive's willful misconduct or gross negligence which
      materially injures the Company; or (iii) Executive's 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
      written notice to Executive indicating in reasonable detail the event or
      circumstances that constitute Cause under this Agreement, and, if such breach
      or
      failure is reasonably susceptible to cure, the Company will provide Executive
      with thirty days to cure such breach or failure prior to termination for
      Cause.

     

    (b)  For
      purposes of this Agreement, "Good Reason" shall be deemed to exist if, without
      the Executive's approval:  (i) the Company or its successor
      materially reduces Executive's duties or responsibilities; or (ii) the
      Company or its successor materially reduces Executive's overall compensation,
      including annual base salary and bonus opportunity; or (iii) Executive's
      principal place of employment is moved more than 50 miles from its location
      on
      the date of this Agreement.  Within 60 days of becoming aware of an
      event or circumstances that constitutes Good Reason under this Agreement,
      Executive shall provide written notice, describing such event or circumstances
      in reasonable detail, to Company and Executive will provide the Company with
      thirty days to cure such diminution prior to termination for Good
      Reason.

     

    (c)  For
      purposes of this Agreement, "Disability" shall mean any illness, disability
      or
      other incapacity that renders Executive physically or mentally unable regularly
      to perform his duties hereunder for a period in excess or sixty (60) consecutive
      days or more than ninety (90) days in any consecutive twelve (12) month
      period.  The Board shall make a good faith determination of whether
      Executive is physically or mentally unable to regularly perform his duties,
      subject to its review and consideration of any physical and/or mental health
      information provided to it by Executive as determined by a physician reasonably
      acceptable to the Company.

     

    
      
        
        

      

      
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    7.  Change
      in Control Protection Period.  For purposes of this Agreement, the
      Change in Control Protection Period shall be the period two (2) months prior
      to
      and twelve (12) months following a Change in Control.

     

    8.  Limitation
      on Payments.  In the event that the Company's tax counsel or certified
      public accounting professional confirms in writing to the Company and Executive
      that payments under this Agreement, together with any other payments to
      Executive from the Company that are "parachute payments" within the meaning
      of
      Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")
      ("Potential Parachute Payments") would otherwise equal or exceed three (3)
      times
      the Executive's "Base Amount" as defined in Section 280G of the Code, then
      notwithstanding anything to the contrary in this Agreement, the payments under
      this Agreement shall be reduced to an amount such that the Potential Parachute
      Payments do not exceed 2.99 times the Executive's Base Amount.  Any
      reduction in payments required by this Section 8 shall be applied to such
      payments and benefits under this Agreement as the Company in its sole discretion
      deems necessary, shall be communicated to Executive in writing prior to the
      date
      the first reduced payment or benefit would otherwise be due and shall be
      accompanied by written documentation from the Company's tax counsel or certified
      public accounting professional evidencing that the reduction is the minimum
      amount required to comply with this Section 8.

     

    9.  No
      Right to Continued Employment.  Nothing in this Agreement shall
      guarantee the right of Executive to continued employment by the Company and
      the
      Company retains all rights to terminate Executive's employment at any time
      for
      any reason or for no reason and with or without prior notice.

     

                         
      10.  Binding Agreement.  This Agreement is a personal
      contract and the rights and interests of Executive hereunder may not be sold,
      transferred, assigned, pledged, encumbered, or hypothecated by
      him.  This Agreement shall be binding upon and shall inure to the
      benefit of the Company's successors and assigns.

     

                          
      11.  Tax Withholding.  The Company may withhold from any
      amounts payable under this Agreement any taxes that are required to be withheld
      pursuant to any applicable law or regulation.

     

                          
      12.  Entire Agreement.  This Agreement contains all the
      understandings between the Parties hereto pertaining to the matters referred
      to
      herein and supersedes all undertakings and agreements, whether oral or in
      writing, previously entered into by them with respect thereto, provided that
      it
      shall not supersede that certain Change in Control Agreement, dated as of
      December 15, 2005, by and between the Parties, which shall remain in effect
      until December 14, 2007.  For avoidance of doubt, Employee shall not
      receive payments under Section 3 of this Agreement.  Executive
      represents that, in executing this Agreement, he does not rely and has not
      relied upon any representation or statement not set forth herein made by the
      Company with regard to the subject matter of this Agreement or
      otherwise.

     

    13.  Amendment
      or Modification.  No provision of this Agreement may be amended or
      waived unless such amendment or waiver is agreed to in writing, signed by
      Executive and by a duly authorized officer of the Company.

     

     

    
      
        
        

      

      
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    14.  Notices.  Any
      notice to be given hereunder shall be in writing and shall be deemed given
      when
      delivered personally, sent by courier or fax or registered or certified mail,
      postage prepaid, return receipt requested, addressed to the party concerned
      at
      the address indicated below or to such other address as such party may
      subsequently give notice of hereunder in writing:

     

    To
      Executive at:

     

    6800
      Santa Teresa Boulevard

    San
      Jose, CA  95119

    To
      the Company at:

     

    ZiLOG,
      Inc.

    U.S.
      Headquarters

    6800
      Santa Teresa Boulevard

    San
      Jose, CA  95119

    Attn:  Legal
      Department

     

    Any
      notice delivered personally or by courier under this Section 13 shall be deemed
      given on the date delivered and any notice sent by telecopy or registered or
      certified mail, postage prepaid, return receipt requested, shall be deemed
      given
      on the date telecopied or mailed.

     

    15.  Waiver
      of Other Severance Rights.  To the extent that Change in Control
      Payments are made to Executive pursuant to this Agreement, Executive hereby
      expressly waives the right to receive severance payments or severance benefits
      under any other plan or agreement of the Company.

     

    16.  Each
      Party the Drafter.  This Agreement and the provisions contained in it
      shall not be construed or interpreted for or against any party to this Agreement
      because that party drafted or caused that party's legal representative to draft
      any of its provisions.

     

    17.  Governing
      Law.  This Agreement will be governed by and construed in accordance
      with the laws of the State of California, without regard to its conflicts of
      laws principles.

     

    18.  Headings.  All
      descriptive headings of sections and paragraphs in this Agreement are intended
      solely for convenience, and no provision of this Agreement is to be construed
      by
      reference to the heading of any section or paragraph.

     

    19.  Counterparts.  This
      Agreement may be executed in counterparts, each of which shall be deemed an
      original, but all of which together shall constitute one and the same
      instrument.

     

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
      date
      first written above.

     

    
      	
              ZiLOG,
                INC. 

            	 	
              EXECUTIVE

            
	 	 	 	 
	 	 	 	 
	
              By:

            	
              
                /s/
                  Darin Billerbeck

              

            	 	
              
                /s/
                  Perry J. Grace

              

            
	
               

            	Darin
              Billerbeck	 	
              Perry
                J. Grace