Chief Information Officer Employment Agreement

EMPLOYMENT AGREEMENT


This Employment Agreement ("Agreement") is entered into as of April 9, 2002 (the "Execution Date"), by and between Gerald J. Corvino ("Executive") and ZILOG, INC. (the "Company"), a Delaware corporation, based on the following:


WHEREAS, the Company desires to employ Executive to provide personal services to the Company, and wishes to provide Executive with certain compensation and benefits in return for his services;


WHEREAS, Executive wishes to be employed by the Company and to provide personal services to the Company in return for certain compensation and benefits;


NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, it is hereby agreed by and between the parties hereto as follows:


1. EMPLOYMENT BY THE COMPANY.


1.1 Title and Responsibilities. Subject to the terms set forth herein, the Company agrees to employ Executive in the position of Executive Vice President and Chief Information Officer, and Executive hereby accepts such employment effective on the date hereof (the "Effective Date"). During his employment with the Company, Executive will devote his full time and attention to the business of the Company, except as otherwise provided herein, and shall do and perform all acts and things necessary to perform his duties.


1.2 Company Employment Policies. The employment relationship between the parties shall be governed by the general employment policies and procedures of the Company, including those relating to the protection of confidential information and assignment of inventions, except that when the terms of this Agreement differ from or are in conflict with the Company's general employment policies or procedures, this Agreement shall control.


2. COMPENSATION.


2.1 Salary. Executive shall receive for services to be rendered hereunder a base salary at an annualized rate of $350,000.00 (the "Base Salary"), payable commencing on the Effective Date and in accordance with the Company's customary payroll practices. The CEO will review Executive's Base Salary on an annual basis.


2.2 Incentive Bonus. Executive shall be eligible for a cash bonus (the "Incentive Bonus") to be paid within 45 days after the end of each fiscal year of the Company (or if the external auditors have not yet delivered audited financials for the prior year, then within 5 days after such delivery). All bonuses under this section will be calculated based on straight-line increments between each of the EBITDA (as generally determined by the Company) milestones. The milestones for the first two years of this Agreement are as follows:


0% of annual salary will be paid for less than $18
million annual EBITDA
25% of annual salary will be paid on $18 million
annual EBITDA
75% of annual salary will be paid on $34 million or
higher annual EBITDA


After the first two years of this Agreement, the milestones shall be as set by the Board of Directors in their sole discretion.


2.3 Stock Purchase.


(a) Stock purchase upon employment. On or about the effective date of the Plan of Reorganization (the "Plan Effective Date"), the Company will grant Executive 293,000 shares of Restricted Stock subject to the terms and conditions and pursuant to the ZiLOG, Inc. 2002 Omnibus Stock Incentive Plan attached hereto as Exhibit A (the "Omnibus Plan") and any applicable Award Agreement (as defined in the Omnibus Plan). Executive shall receive 25% of such stock on the Effective Date and an additional 25% of such stock on each of the first three anniversaries of the Effective Date.


(b) EBITDA linked stock options. On or about the Plan Effective Date, the Company will grant Executive options to purchase 87,000 shares of Common Stock exercisable at $2.76 subject to the terms and conditions and pursuant to the Omnibus Plan and any applicable Award Agreements.


(c) Restrictions on Stock and Stock Options. Any stock granted to Executive under (a) or (b) above is subject to the restrictions contained in the Omnibus Plan and any applicable Award Agreement.


2.4 Company Benefits.


(a) Standard Benefits. Executive shall be entitled to all rights and benefits for which he is eligible under the terms and conditions of the standard Company benefits and compensation plans which may be in effect from time to time and provided by the Company to its executives.


(b) Vacation. Executive will be entitled to four (4) weeks' vacation per year at such times as may be mutually agreed by Executive and the Company. In no event shall Executive be eligible to accrue any more than four weeks' vacation time at any point in time.


(c) Business Expenses. The Company will reimburse Executive for all reasonable business expenses actually incurred by Executive. Executive shall provide appropriate supporting documentation of all such expenses in a form reasonably acceptable to the Company.


3. CONFIDENTIAL INFORMATION. Executive shall sign and abide by the Company's Employee Proprietary Rights and Non-Disclosure Agreement (the "Confidentiality Agreement") and the Company's Policy Statement on Conflicts of Interest (the "Policy Statement").


4. TERMINATION OF EMPLOYMENT.


4.1 Termination With or Without Cause.


(a) Term of Employment. Subject to Section 1.1, the initial period of employment shall be three years commencing on the Effective Date and shall be automatically renewed for additional terms of one year unless the Company or Executive provides written notice of no less than six months prior to the end of the relevant term of its intent not to renew. Notwithstanding the foregoing, the Company shall have the right to terminate Executive's employment with the Company at any time with or without Cause (as defined below), and Executive shall have the right to terminate his employment with the Company for or without Good Reason (as defined below), subject to the following limitations.


(i) Definition of Cause. For purposes of this Agreement, "Cause" shall mean one or more of the following: (a) Executive's material breach of this Agreement; (b) Executive's failure to reasonably and substantially perform his duties under this Agreement; (c) Executive's willful misconduct or gross negligence which materially injures the Company; (d) Executive's conviction or plea of nolo contendere to (i) a felony, or (ii) 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.


(ii) Definition of Good Reason. For purposes of this Agreement, "Good Reason" shall mean a material diminution in Executive's duties and responsibilities under this Agreement. Executive shall provide written notice to Company indicating in reasonable detail the event or circumstances that constitute Good Reason under this Agreement, and Executive will provide the Company with ...