ZILOG INC
SC 13D/A, 1997-11-20
SEMICONDUCTORS & RELATED DEVICES
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                SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, D.C. 20549

                           SCHEDULE 13D
                          (Rule 13d-101)

             UNDER THE SECURITIES EXCHANGE ACT OF 1934
                        (Amendment No. 1)*

                            ZILOG, INC.
- -----------------------------------------------------------------
                         (Name of Issuer)

                    Common Stock, no par value
      -----------------------------------------------------
                  (Title of Class of Securities)

                             98952410
      -----------------------------------------------------
                          (Cusip Number)

                         James J. O'Brien
                     2420 Texas Commerce Tower
                      Fort Worth, Texas 76102
                          (817) 871-4000
- -----------------------------------------------------------------
           (Name, Address and Telephone Number of Person
         Authorized to Receive Notices and Communications)

                         November 18, 1997
      -----------------------------------------------------
      (Date of Event which Requires Filing of this Statement)

      If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b) (3) or (4), check the following box [ ].

                  (Continued on following pages)

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

* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in
a prior cover page.

The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 or otherwise subject to
the liabilities of that section of the Act but shall be subject
to all other provisions of the Act (however, see the Notes).


                        Page 1 of 16 Pages
<PAGE>


CUSIP NO. 98952410               13D                Page 2 of 16 Pages

- -------------------------------------------------------------------------------
1.    Name of Reporting Person: TPG Partners II, L.P.



- -------------------------------------------------------------------------------
2.    Check the Appropriate Box if a Member of a Group:
                                                            (a) |_|
                                                            (b) |X|

- -------------------------------------------------------------------------------
3.    SEC Use Only


- -------------------------------------------------------------------------------
4.    Source of Funds: 00 - Contributions from Partners



- -------------------------------------------------------------------------------
5.    Check box if Disclosure of Legal Proceedings is Required Pursuant to 
      Items 2(d) or 2(e):

                                                                | |
- -------------------------------------------------------------------------------
6.    Citizenship or Place or Organization:  Delaware


- -------------------------------------------------------------------------------
                        7.    Sole Voting Power:  -0-

                        -------------------------------------------------------
Number of Shares        8.    Shared Voting Power:  5,477,504*
Beneficially Owned By
Each Reporting Person   -------------------------------------------------------
With                    9.    Sole Dispositive Power:  -0-

                        -------------------------------------------------------
                        10.   Shared Dispositive Power:  5,477,504*

- -------------------------------------------------------------------------------
11.   Aggregate Amount Beneficially Owned by Each Reporting Person:

      5,477,504*

- -------------------------------------------------------------------------------
12.   Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares:

                                                                | |

- -------------------------------------------------------------------------------
13.   Percent of Class Represented by Amount in Row (11):  27.1%1


- -------------------------------------------------------------------------------
14.   Type of Reporting Person:  PN


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


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

*     The Reporting Person disclaims beneficial ownership of all shares
      of Zilog Common Stock

1     Assumes, pursuant to Rule 13d-1(e) under the Act, that
      there are 20,229,412 shares of Zilog Common Stock
      outstanding.


<PAGE>

CUSIP NO. 98952410              13D            Page 3 of 16 Pages


This Amendment No. 1 amends and supplements the Schedule 13D
filed on July 30, 1997 (the "Schedule") by TPG Partners II, L.P.,
a Delaware limited partnership ("TPG") with respect to the Common
Stock, no par value (the "Stock"), of Zilog, Inc. (the "Issuer").
All capitalized terms used in this Amendment and not otherwise
defined herein have the meanings ascribed to such terms in the
Schedule.

Item 4. Purpose of Transaction.

      On November 18, 1997, the Issuer and TPG entered into an
amendment to the Merger Agreement (the "Merger Agreement
Amendment") and TPG and the Stockholders entered into an
amendment to the Stockholders Voting Agreement (the "Stockholders
Voting Agreement Amendment"), which are filed as Exhibit 7.3 and
Exhibit 7.4 hereto, respectively and incorporated by reference
herein.

      The Merger Agreement Amendment amended the Merger Agreement
to provide, among other things, that (i) each outstanding share
of Stock, other than Retained Shares, will be converted into the
right to receive an amount equal to $20.00 in cash and (ii)
375,000 Retained Shares will be converted into one share of
Surviving Corporation Common Stock. The Merger Agreement
Amendment also amended certain of the other rights and
obligations of the parties to the Merger Agreement.

      Pursuant to the terms of the Stockholders Voting Agreement,
as amended by the Stockholders Voting Agreement Amendment,
Warburg, Pincus Capital Company, L.P. has agreed to elect to
retain that number of shares of stock equal to 375,000 less the
aggregate number of Shares covered by effective elections to
retain Shares made by holders of Shares other than Warburg,
Pincus Capital Company have, L.P.

      The foregoing summaries of the Merger Agreement Amendment
and the Stockholders Voting Agreement Amendment are qualified in
their entirety by reference to the full agreements which are
filed as exhibits.

Item 7. Material to be Filed as Exhibits.

      Exhibit 7.3 Amendment Number One to the Agreement and Plan
of Merger, by and among TPG Partners II, L.P., TPG Zeus
Acquisition Corporation and Zilog, Inc. dated as of November 18,
1997.

      Exhibit 7.4 Amendment to the Stockholders Voting Agreement
among TPG Partners II, L.P., Warburg, Pincus Capital Company,
L.P. and Warburg, Pincus & Co. dated as of November 18, 1997.


<PAGE>

CUSIP NO. 98952410              13D            Page 4 of 16 Pages


      After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this
Amendment is true, complete and correct.

      DATED:  November 20, 1997

                           TPG PARTNERS II, L.P.,
                           a Delaware limited partnership


                           By: TPG GenPar II, L.P.,
                               a Delaware limited partnership,
                               General Partner


                               By: TPG Advisors II, Inc.,
                                   a Delaware corporation,
                                   General Partner


                                   By: /s/ James J. O'Brien
                                       --------------------
                                       James J. O'Brien
                                       Vice President


<PAGE>


CUSIP NO. 98952410              13D            Page 5 of 16 Pages


                           EXHIBIT INDEX

  EXHIBIT                      DESCRIPTION                       PAGE
- -----------   ---------------------------------------------    --------
    7.3       Amendment Number One to the Agreement and            6
              Plan of Merger, by and among TPG Partners 
              II, L.P., TPG Zeus Acquisition Corporation 
              and Zilog, Inc. dated as of November 18, 1997.


    7.4       Amendment to the Stockholders Voting Agreement      15
              among TPG Partners II, L.P., Warburg, Pincus 
              Capital Company, L.P. and Warburg, Pincus & Co. 
              dated as of November 18, 1997.



CUSIP NO. 98952410              13D            Page 6 of 16 Pages

                                                   CONFORMED COPY

                    AMENDMENT NUMBER ONE TO THE
                   AGREEMENT AND PLAN OF MERGER


      THIS AMENDMENT NUMBER ONE TO THE AGREEMENT AND PLAN OF
MERGER (this "Amendment"), dated as of November 18, 1997, by and
between TPG PARTNERS II, L.P., a Delaware limited partnership
("Parent"), TPG ZEUS ACQUISITION CORPORATION, a Delaware
corporation ("Sub") and ZILOG, INC., a Delaware corporation (the
"Company"),

                       W I T N E S S E T H:

      WHEREAS, Parent and the Company are parties to that certain
Agreement and Plan of Merger (the "Merger Agreement"), dated as
of July 20, 1997; and

      WHEREAS, pursuant to Section 8.3 of the Merger Agreement,
the parties hereto wish to amend the Merger Agreement as provided
herein:

      NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein
contained, the parties hereto hereby agree as follows:

      SECTION 1. Definitions. Capitalized terms used but not
defined herein shall the meanings set forth in the Merger
Agreement.

      SECTION 2.  Amendments to the Merger Agreement.

      SECTION 2.1. The Preamble to the Merger Agreement shall be
amended and restated in its entirety, and shall be replaced by
the following:

      "AGREEMENT AND PLAN OF MERGER, dated as of July 20, 1997
      (as amended by Amendment Number One, dated November 18,
      1997, this "Agreement"), between TPG PARTNERS II, L.P., a
      Delaware limited partnership ("Parent"), and ZILOG, INC., a
      Delaware corporation (the "Company"),"

      SECTION 2.2. Section 1.5(a) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:

           "(a) The Certificate of Incorporation of the Company,
      as in effect immediately prior to the Effective Time, shall
      be amended as of the Effective Time so that Article IV of
      such Certificate of Incorporation is amended to read in its
      entirety as follows:

      FOURTH: The Corporation shall be authorized to issue
      10,000,000 shares of common stock and 5,000,000 shares of
      preferred stock. There shall be two classes of common stock
      of the Corporation. The first class of common stock of


<PAGE>

CUSIP NO. 98952410              13D            Page 7 of 16 Pages


      the Corporation shall have a par value of $0.01 and shall
      be designated "Common Stock" and the number of shares
      constituting such class shall be 4,000,000. The second
      class of stock of the Corporation shall have a par value of
      $0.01 and shall be designated "Class A Non-Voting Common
      Stock" and the number of shares constituting such class
      shall be 6,000,000. Holders of shares of Common Stock shall
      be entitled to one vote for each share of such stock held
      on all matters as to which stockholders may be entitled to
      vote pursuant to the Delaware General Corporation Law.
      Holders of shares of Class A Non-Voting Common Stock shall
      not have any voting rights, except that the holders of
      shares of Class A NonVoting Common Stock shall have the
      right to vote as a class to the extent required by the
      Delaware General Corporation Law. In all other respects the
      rights, powers, preferences and limitations of the Common
      Stock and Class A NonVoting Common Stock shall be
      identical. The preferred stock shall have a par value of
      $100.00 and the board of directors may authorize the
      issuance from time to time of the preferred stock in one or
      more classes and/or series and with such powers,
      designations, preferences, rights and qualifications,
      limitations or restrictions (which may differ with respect
      to each such class and/or series) as the board may fix by
      resolution."

      "As so amended, such Certificate of Incorporation shall be
      the Certificate of Incorporation of the Surviving
      Corporation until thereafter changed or amended as provided
      therein or by applicable law."

      SECTION 2.3. Section 2.1(a) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:

           "(a) Conversion (or Retention) of Shares. Except as
      otherwise provided herein and subject to Section 2.1(d),
      each Share issued and outstanding immediately prior to the
      Effective Time, other than Shares to be canceled pursuant
      to Section 2.1(b) ("Excluded Shares") and any Dissenting
      Shares, shall be converted into the following (the "Merger
      Consideration"):

                (i) for each Share with respect to which an
           election to retain pursuant to Section 2.1(c) has been
           effectively made, and not revoked or lost ("Electing
           Shares"), the right to retain one fully paid and
           nonassessable Share (a "Non-Cash Election Share"); and

                (ii) for each Share (other than Electing Shares),
           the right to receive in cash from the Company
           following the Merger an amount equal to $20.00 (the
           "Cash Election Price")."


                              -2-
<PAGE>

CUSIP NO. 98952410              13D            Page 8 of 16 Pages


      SECTION 2.4. Section 2.1(d)(i) of the Merger Agreement
shall be amended and restated in its entirety, and shall be
replaced by the following:

                "(i) Notwithstanding anything in this Agreement
           to the contrary (but subject to the provisions of
           Section 2.4), the aggregate number of Shares to be
           converted into the right to retain Shares at the
           Effective Time (the "Non-Cash Election Number") shall
           equal 375,000 Shares."

      SECTION 2.5. Section 2.1(f) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:

           "(f) Capital Stock of Sub. The shares of capital stock
      of Sub issued and outstanding immediately prior to the
      Effective Time shall be converted into and become in the
      aggregate 3,375,000 shares of Common Stock of the Surviving
      Corporation, 1,250,000 shares of Class A Non-Voting Common
      Stock of the Surviving Corporation and 250,000 shares of a
      new series of Non-Voting 13.5% Pay-in-Kind Preferred Stock,
      stated value $100.00 per share, of the Surviving
      Corporation."

      SECTION 2.6. Section 3.7 of the Merger Agreement shall be
amended and restated in its entirety, and shall be replaced by
the following:

           "SECTION 3.7 Absence of Material Adverse Change.
      Except as disclosed in items 3.7 or 3.12(a) of the Company
      Letter or in the Company SEC Documents filed and publicly
      available prior to the date of this Agreement (the "Company
      Filed SEC Documents"), since December 31, 1996, the Company
      and its Subsidiaries have conducted their respective
      businesses in all material respects only in the ordinary
      course consistent with past practice, and there has not
      been (i) any declaration, setting aside or payment of any
      dividend or other distribution with respect to its capital
      stock or any redemption, purchase or other acquisition of
      any of its capital stock, (ii) any split, combination or
      reclassification of any of its capital stock or any
      issuance or the authorization of any issuance of any other
      securities in respect of, in lieu of or in substitution for
      shares of its capital stock, (iii) (x) any granting by the
      Company or any of its Subsidiaries to any officer of the
      Company or any of its Subsidiaries of any increase in
      compensation, except in the ordinary course of business
      (including in connection with promotions) consistent with
      past practice or as was required under employment
      agreements in effect as of December 31, 1996, (y) any
      material change to the Company's or any of its
      Subsidiaries' severance or termination plans, agreements or
      arrangements with any of their employees, except as part of
      a standard employment package to any person promoted or
      hired (but not including the five most senior officers), or
      as was required under employment, severance or termination
      agreements in effect as of December 31, 1996, or (z) except
      for employment agreements in the ordinary course of
      business consistent with past practice with employees other
      than any executive officer of the Company, any entry by the
      Company or any of its Subsidiaries into any employment,
      consulting, severance, termination or indemnification
      agreement with any such employee or executive officer, (iv)
      any damage, destruction or loss, whether or not covered by


                              -3-
<PAGE>

CUSIP NO. 98952410              13D            Page 9 of 16 Pages


      insurance, that would reasonably be expected to have a
      Material Adverse Effect on the Company, (v) any revaluation
      by the Company of any of its material assets, (vi) any
      material change in accounting methods, principles or
      practices by the Company or (vii) any other action that
      occurred prior to the date hereof that, if it occurred
      after the date of this Agreement and prior to the Closing
      Date, would be prohibited by paragraphs (a), (b) (only with
      respect to the Company's Subsidiaries), (c), (f), (g) or
      (p) of Section 5.1 of this Agreement.

      SECTION 2.7. Section 4.7 of the Merger Agreement shall be
amended and restated in its entirety, and shall be replaced by
the following:

           "SECTION 4.7 Financing. Parent has binding written
      commitments, addressed to Parent or Sub, from one or more
      financially responsible financial institutions, dated as of
      November 18, 1997, true and complete copies of which have
      been furnished to the Company (collectively, the
      "Commitments") to obtain, together with the other funds to
      be provided by Parent, the financing necessary to pay the
      Cash Election Price with respect to each Share outstanding
      at the Effective Time (other than Electing Shares), to pay
      (or provide the funds for the Company to pay) all amounts
      contemplated by Section 2.2 when due, to refinance any
      indebtedness or other obligation of the Company and its
      Subsidiaries which may become due as a result of this
      Agreement or any of the transactions contemplated hereby,
      to pay all related fees and expenses and to provide for the
      anticipated working capital needs of the Surviving
      Corporation following the Merger (the financing necessary
      to provide such funds being hereinafter referred to as the
      "Financing"), which Commitments are in full force and
      effect as of November 18, 1997. There are no conditions
      precedent or other contingencies related to the funding of
      the full amount of the Financing other than as set forth in
      the Commitments. Subject to the terms and conditions of
      this Agreement and receipt of the proceeds of the Financing
      as set forth in the Commitments (or on other terms
      reasonably satisfactory to Parent), at the closing of the
      Merger, Parent will capitalize Sub with an aggregate equity
      contribution of at least $117.5 million. Parent will be
      under no obligation pursuant to the preceding sentence
      unless and until the proceeds of the Financing are received
      as set forth in the Commitments. In addition, Parent will
      be under no obligation under any circumstances to
      capitalize Sub with equity of more than $117.5 million."

      SECTION 2.8. Section 5.2(a) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:

           "(a) The Company shall, and shall direct and cause its
      officers, directors, employees, representatives and agents
      to, immediately cease any discussions or negotiations with
      any parties that may be ongoing with respect to a Takeover
      Proposal (as hereinafter defined). The Company shall not,
      nor shall it permit any of its Subsidiaries to, nor shall
      it authorize or permit any of its officers, directors or
      employees or any investment banker, financial advisor,
      attorney, accountant or other representative or agent
      retained by it or any of its Subsidiaries to, directly or
      indirectly, (i) solicit, initiate or knowingly encourage
      (including by way of furnishing information) any inquiries
      or the


                              -4-
<PAGE>

CUSIP NO. 98952410              13D            Page 10 of 16 Pages


      making of any proposal which constitutes, or may reasonably
      be expected to lead to, any Takeover Proposal or (ii)
      participate in any discussions or negotiations regarding
      any Takeover Proposal; provided, however, that if, at any
      time prior to the receipt of the Company Stockholder
      Approval, the Board of Directors of the Company determines
      in good faith, after consultation with outside counsel,
      that it would be consistent with its fiduciary
      responsibilities to the Company's stockholders under
      applicable law, the Company may, in response to a Takeover
      Proposal which was not solicited subsequent to the date
      hereof, (x) furnish information with respect to the Company
      to any person pursuant to a confidentiality agreement
      substantially identical to the Confidentiality Agreement
      (as defined in Section 6.2 hereof) and (y) participate in
      discussions, investigations and/or negotiations regarding
      such Takeover Proposal. The Company will promptly notify
      Parent in the event of the occurrence of any matter
      referred to in the foregoing proviso. For purposes of this
      Agreement, "Takeover Proposal" means any inquiry, proposal
      or offer from any person relating to any direct or indirect
      acquisition or purchase of 25% or more of the aggregate
      assets of the Company and its Subsidiaries, taken as a
      whole, or 25% or more of the voting power of the shares of
      Common Stock then outstanding or any tender offer or
      exchange offer that if consummated would result in any
      person beneficially owning 25% or more of the voting power
      of the shares of Common Stock then outstanding or any
      merger, consolidation, business combination,
      recapitalization, liquidation, dissolution or similar
      transaction involving the Company, other than the
      transactions contemplated by this Agreement."

      SECTION 2.9. Section 5.2(b) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:

           "(b) Except as set forth in this Section 5.2, neither
      the Board of Directors of the Company nor any committee
      thereof shall (i) withdraw or modify, or propose publicly
      to withdraw or modify, in a manner adverse to Parent, the
      approval or recommendation by such Board of Directors or
      such committee of the Merger or this Agreement; provided
      that, the Board of Directors may, (A) in response to any
      Takeover Proposal, suspend such recommendation pending its
      analysis of such Takeover Proposal or (B) at any time prior
      to the receipt of the Company Stockholder Approval, modify
      or withdraw such recommendation if the Board of Directors
      of the Company determines in good faith that a Takeover
      Proposal is a Superior Proposal (as hereinafter defined)
      and, after consultation with outside counsel, that it would
      be consistent with its fiduciary responsibilities to so
      modify or withdraw such recommendation, (ii) approve or
      recommend, or propose publicly to approve or recommend, any
      Takeover Proposal or (iii) cause the Company to enter into
      any acquisition agreement or other similar agreement (an
      "Acquisition Agreement") related to any Takeover Proposal.
      Notwithstanding the foregoing, in the event that prior to
      the receipt of the Company Stockholder Approval, the Board
      of Directors of the Company determines in good faith, after
      consultation with outside counsel, that it would be
      consistent with its fiduciary responsibilities to the
      Company's stockholders under applicable law, the Board of
      Directors of the Company may approve or recommend a
      Superior Proposal or


                              -5-
<PAGE>

CUSIP NO. 98952410              13D            Page 11 of 16 Pages


      terminate this Agreement, but in each case, subject to the
      provisions of Section 6.3 hereof and only at a time that is
      after the second business day following Parent's receipt of
      written notice (a "Notice of Superior Proposal") advising
      Parent that the Board of Directors of the Company has
      received a Takeover Proposal that may constitute a Superior
      Proposal, specifying the material terms and conditions of
      such Superior Proposal and identifying the person making
      such Superior Proposal. For purposes of this Agreement, a
      "Superior Proposal" means any proposal determined by the
      Board of Directors of the Company in good faith, after
      consultation with outside legal counsel, to be a bona fide
      proposal and made by a third party to acquire, directly or
      indirectly, for consideration consisting of cash, property
      and/or securities, more than 50% of the combined voting
      power of the shares of Common Stock then outstanding or all
      or substantially all the assets of the Company and
      otherwise on terms which the Board of Directors of the
      Company determines in its good faith judgment, after
      consultation with outside counsel and with a financial
      advisor of nationally recognized reputation, to be more
      favorable to the Company's stockholders than the Merger."

      SECTION 2.10. Section 5.3 of the Merger Agreement shall be
amended and restated in its entirety, and shall be replaced by
the following:

           "SECTION 5.3 Third Party Standstill Agreements. During
      the period from the date of this Agreement through the
      Effective Time, the Company shall not, except in connection
      with the making of a Takeover Proposal, terminate, amend,
      modify or waive any provision of any confidentiality or
      standstill agreement to which the Company or any of its
      Subsidiaries is a party (other than any involving Parent)
      unless the Company's Board of Directors shall have
      determined in good faith, after consultation with outside
      counsel, that such release of any third party or amendment,
      modification or waiver of such provisions is necessary in
      order to comply with its fiduciary duties to the Company's
      stockholders under applicable law."

      SECTION 2.11. Section 6.12(a) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:

           "(a) With respect to any officer or employee who is
      covered by a severance policy or plan separate from the
      standard severance policy for the Company's employees (all
      of which separate severance policies or plans are
      incorporated in the terms of the employment agreements
      listed in item 6.12 of the Company Letter), the Surviving
      Corporation shall maintain (or shall cause to be
      maintained) such separate policy or plan as in effect as of
      the date hereof, and, as to all other officers and
      employees, the Surviving Corporation shall maintain (or
      shall cause to be maintained) the Company's standard
      severance policy as in effect as of the date hereof until
      at least June 30, 1998; provided, however, that with
      respect to any severance policy maintained pursuant to any
      statutory requirement, such policy shall continue to be
      maintained in compliance with the applicable statute."


                              -6-
<PAGE>

CUSIP NO. 98952410              13D            Page 12 of 16 Pages


      SECTION 2.12. A new Section 6.20 shall be added to the
Merger Agreement, which shall read in its entirety as follows:

           "SECTION 6.20 Surviving Corporation Preferred Stock.
      Immediately after the Effective Time, the Board of
      Directors of the Surviving Corporation shall adopt a
      resolution providing for the creation of the series of
      Non-Voting 13.5% Pay-in-Kind Preferred Stock, stated value
      $100.00 per share, of the Surviving Corporation into which
      the shares of capital stock of Sub are to be converted in
      the Merger."

      SECTION 2.13. Section 8.1(b)(i) of the Merger Agreement
shall be amended and restated in its entirety, and shall be
replaced by the following:

           "(b) by either Parent or the Company:

                (i) if the Merger shall not have been consummated
           by February 28, 1998; provided that the terminating
           party shall not have breached in any material respect
           its obligations under this Agreement in any manner
           that shall have proximately contributed to the failure
           to consummate the Merger by February 28, 1998;"

      SECTION 2.14. Section 8.1(c) of the Merger Agreement shall
be amended and restated in its entirety, and shall be replaced by
the following:

           "(c) by Parent or Sub if: (A) as of such time of
      determination, any of the representations or warranties of
      the Company set forth in this Agreement that are qualified
      as to materiality shall not be true and correct in any
      respect or any such representations or warranties that are
      not so qualified shall not be true and correct in any
      material respect, or (B) the Company shall have failed to
      perform in any material respect any material obligation or
      to comply in any material respect with any material
      agreement or covenant of the Company to be performed or
      complied with by it under this Agreement and, in the case
      of (A) such untruth or incorrectness cannot be or has not
      been cured within 60 days after the giving of written
      notice to the Company, and, in the case of (B) such failure
      cannot be or has not been cured within 20 days after the
      giving of written notice to the Company;"

      SECTION 3. Sub. Pursuant to Section 6.18 of the Merger
Agreement, each of Parent, Sub and the Company hereby agree that
by execution and delivery of this Amendment, Sub will be deemed
to have signed and become a party to the Merger Agreement as of
the date hereof and shall be entitled to all of the rights and
subject to all of the obligations and otherwise bound by all of
the provisions thereof, in each case applicable to Sub.

      SECTION 4.  Representations and Warranties.

      (a) The Company. The execution, delivery and performance of
this Amendment by the Company have been duly authorized by the
Board of Directors of the Company and by all other necessary
corporate action on the part of the Company. This Amendment has
been duly executed


                              -7-
<PAGE>

CUSIP NO. 98952410              13D            Page 13 of 16 Pages


and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Amendment by Parent
and Sub) constitutes the valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.

      (b) Parent and Sub. The execution, delivery and performance
of this Amendment by each of Parent and Sub have been duly
authorized by the General Partner of Parent and the Board of
Directors of Sub, respectively, and by all other necessary
partnership or corporate action on the part of Parent or Sub,
respectively. This Amendment has been duly executed and delivered
by each of Parent and Sub and (assuming the valid authorization,
execution and delivery of this Amendment by the Company)
constitutes the valid and binding obligation of each of Parent
and Sub enforceable against them in accordance with its terms,
except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or
relating to the enforcement of creditors' rights generally and
(ii) is subject to general principles of equity.

      SECTION 5.  Miscellaneous.

      (a) Other than as set forth in Section 2.1 through Section
2.8 and Section 3 hereof, this Amendment does not modify, change
or delete any other addendum, term, provision, representation,
warranty or covenant (the "Provisions") relating to or contained
in the Merger Agreement, and all such Provisions remain in full
force and effect. For the avoidance of doubt, all references in
the Merger Agreement to "the date hereof" or "the date of this
Agreement" shall be deemed to be references to the date July 20,
1997.

      (b) This Amendment shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles
of conflicts of laws thereof. This Amendment may be executed in
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and
delivered to the other parties.

      (c) This Amendment and any of the provisions hereof may not
be amended, altered or added to in any manner except by a
document in writing and signed by each party.

      IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Amendment


                              -8-
<PAGE>

CUSIP NO. 98952410              13D            Page 14 of 16 Pages


to be signed by their respective officers thereunto duly
authorized all as of the date first written above.

                      TPG PARTNERS II, L.P.

                      By: TPG GenPar II, L.P., its General Partner

                      By:  TPG Advisors II, Inc., its General Partner


                      By /s/ David M. Stanton
                        ----------------------------------
                        Title: Vice President



                      TPG ZEUS ACQUISITION CORPORATION


                      By /s/ David M. Stanton
                        ----------------------------------
                         Title: President



                      ZILOG, INC.


                       By /s/ Edgar A. Sack
                        ----------------------------------
                         Name: Edgar A. Sack
                         Title: President and CEO


                              -9-



CUSIP NO. 98952410              13D            Page 15 of 16 Pages


                                                   CONFORMED COPY

                       TPG Partners II, L.P.
                       345 California Street
                      San Francisco, CA 94104


                                                  November 18, 1997


Warburg, Pincus Capital Company, L.P.
Warburg, Pincus & Co.
466 Lexington Avenue
New York, New York  10017

Gentlemen and Ladies:

           Reference is made to the Stockholders Voting Agreement
(the "Voting Agreement") dated as of July 20, 1997, among TPG
Partners II, L.P. ("Parent"), on the one hand, and Warburg,
Pincus Capital Company, L.P. and Warburg, Pincus & Co., on the
other hand, and to the Agreement and Plan of Merger, dated as of
July 20, 1997, between Zilog, Inc. and Parent, as amended through
the date hereof (the "Merger Agreement"). Capitalized terms used
but not defined herein shall have the meanings set forth in the
Merger Agreement. The purpose of this letter agreement is to
amend, pursuant to Section 9(a) of the Voting Agreement, Section
4 of the Voting Agreement. The parties hereto hereby agree to
amend and restate Section 4 of the Voting Agreement to read in
its entirety as follows:

                4. Election to Retain Company Stock and
      Stockholders Agreement. Warburg, Pincus Capital Company,
      L.P. hereby agrees that it will make and not revoke an
      effective Non-Cash Election with respect to and otherwise
      cause the Requisite Number (subject to adjustment in
      accordance with Section 2.4 of the Merger Agreement) of
      Subject Shares to be "Electing Shares" under the Merger
      Agreement. For purposes of this Agreement, the "Requisite
      Number" shall mean 375,000 less the aggregate number of
      Electing Shares, if any, held by holders of Shares other
      than Warburg, Pincus Capital Company, L.P.; provided,
      however, that in no event shall the Requisite Number be
      less than zero. Parent shall cause the Exchange Agent to
      provide Warburg, Pincus Capital Company, L.P., Parent and
      the Company with the information necessary as of the
      Election Date to determine the Requisite Number and to
      permit Warburg, Pincus Capital Company, L.P. to make the
      Non-Cash Election called for hereby. Each of the
      Stockholders hereby agrees that, except for the election
      required to be made by Warburg, Pincus Capital Company,
      L.P., neither Stockholder will make a Non-Cash Election
      with respect to any of the Subject Shares. Prior to the
      Effective Time, each of Warburg, Pincus Capital Company,
      L.P. and Parent agrees that it and the Company will enter
      into a Stockholders Agreement consistent with the
      provisions of Schedule B hereto (all of the material terms
      of which are summarized therein).

                            * * *


<PAGE>

CUSIP NO. 98952410              13D            Page 16 of 16 Pages


           If the foregoing accurately sets forth your
understandings and agreements with Parent, please execute this
letter agreement in the space indicated below, whereupon this
letter agreement will constitute a binding agreement among the
signatories hereto.

                                  TPG PARTNERS II, L.P.

                                    By: TPG GenPar II, L.P.
                                        its General Partner,

                                    By: TPG Advisors II, Inc.
                                        its General Partner


                                    By: /s/ David M. Stanton
                                       --------------------------
                                    Name: David M. Stanton
                                    Title: Vice President


Accepted and Agreed to as of the date 
first above written:

WARBURG, PINCUS CAPITAL COMPANY, L.P.

By: Warburg, Pincus & Co.,
    its General Partner,

By: /s/ William H. Janeway
   -------------------------------
Name: William H. Janeway
Title: A General Partner

WARBURG, PINCUS & CO.

By: /s/ William H. Janeway
   -------------------------------
Name: William H. Janeway
Title: A General Partner

Acknowledged as of the date 
first above written:

ZILOG, INC.

By: /s/ Richard R. Pickard
   -------------------------------
Name:  Richard R. Pickard
Title:  Vice President, General Counsel and Secretary


                               2




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