SEPARATION AGREEMENT AND GENERAL RELEASE
(the Agreement) is entered into as of November 9, 2005 (the Effective Date), by and between Agere Systems Inc., a Delaware corporation (together
with its predecessors and its successors and assigns, the Company or Agere), and Sohail A. Khan
W I T N E S S E T H:
WHEREAS, the Employee is currently employed by the Company;
the Employee and the Company (the Parties) have decided to
terminate their employment relationship effective as of December
31, 2005 (the Termination
WHEREAS, the Parties have negotiated and agreed to a final
settlement of their respective rights, obligations and liabilities; and
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties hereby agree as follows:
1. FY 05 Bonus; Severance.
Employee shall not be eligible to participate in the Companys FY05 bonus program for
executive committee members.
(b) Subject to the terms and conditions of this Agreement and in exchange for the Employee
executing this Agreement, the Company shall pay the Employee a
severance payment equal to $1,540,000 (the Payment). The
Payment together with the Employees accrued and unused vacation
shall be paid within 30 business days of the Expiration Date (as
defined in Section 8 of this Agreement). The Employee acknowledges and agrees that the Payment
(i) represents the gross amount before all applicable federal, state and local withholding taxes
that are required to, and will, be deducted by the Company, and (ii) except as set forth in
Sections 2, 3 and 4 below, are in consideration of all amounts owed by the Company to the Employee,
including without limitation any amounts that may be due to the Employee under any Company benefit
or welfare plan or policy.
All of the Employees vested and unvested stock options and restricted
stock will be treated in accordance with the agreements and plans
under which they were issued.
3. Health and Welfare Benefits.
Employees health and welfare benefits will be treated in
accordance with the health and welfare plans and policies applicable
to the Employee, including, without limitation, eligibility for COBRA
benefits. The Company agrees to pay for the Employees COBRA
benefits until the earlier of (a) June 30, 2007 and
(b) such date that the Employee is employed by a third party
and becomes eligible for benefits under the new employers
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Benefits. The Employees retirement benefits will be treated
in accordance with the retirement plan applicable to the Employee. In
addition, the Employee has elected and will receive a one-time lump sum
payment (the Supplemental Pension Payment) under the Agere Systems Inc. Supplemental Pension
Plan in an amount equal to $587,483. The
Supplemental Pension Payment shall be paid on July 1, 2006, in accordance with Section 409A of the
Internal Revenue Code of 1986.
5. Non-Solicitation; Non-Compete and Cooperation.
(a) Until December 31, 2006, the Employee shall not, without the prior written consent of the
Companys Chief Executive Officer, (i) directly or indirectly solicit or employ (or encourage any
company or business organization in which he is an officer, employee, partner, director, consultant
or member of a technical advisory board to solicit or employ) or (ii) refer to any employee search
firms, any person who was employed by the Company on the Effective Date.
(b) Until December 31, 2006, the Employee shall not, without the prior written consent of the
Companys Chief Executive Officer, at any time or for any reason, anywhere in the world, directly
or indirectly (i) engage in any business or activity, whether as an employee, consultant, partner,
principal, agent, representative, stockholder (except as a holder of less than 5% of the combined
voting power of the outstanding stock of a publicly held company) or in any other individual,
corporate or representative capacity, or render any services or provide any advice to any business,
activity, person or entity, if the Employee knows or reasonably should know that such business,
activity, service, person or entity, directly or indirectly, competes in any material manner with
the Companys business, or (ii) meaningfully assist, help or otherwise support any person,
business, corporation, partnership or other entity or activity, whether as an employee, consultant,
partner, principal, agent, representative, stockholder (other than in the capacity as a stockholder
of less than 5% of the combined voting power of the outstanding shares of stock of a publicly held
company) or in any other individual, corporate or representative capacity, to create, commence or
otherwise initiate, or to develop, enhance or otherwise further, any business or activity if the
Employee knows or reasonably should know that such business, activity, service, person or entity,
directly or indirectly, competes in any material manner with the Companys business.
(c) If at any time the Employee violates the provisions of Sections 5(a) or 5(b) above, any
amounts remaining unpaid under the terms of this Agreement shall immediately be forfeited and
terminated, and any amounts already paid by the Company to the Employee in accordance herewith,
except for the sum of One Thousand Dollars ($1,000) shall, at the sole discretion of the Company,
be required to be repaid by the Employee to the Company within ten (10) business days of the
Companys request in writing therefore. This provision shall not affect the Companys right to
otherwise specifically enforce any provision relating to non-solicitation or non-competition that
is in this Agreement or in any other agreement, document or plan applicable to the Employee.
(d) The Employee hereby agrees that, from time to time upon the reasonable request of the
Company, the Employee shall assist the Company in connection with any pending or future dispute,
litigation, arbitration or similar proceeding or investigation or any regulatory requests or
filings involving the Company, any of its employees or directors or the employees and directors of
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6. Publicity and Non-Disparagement.
The Employee agrees that he shall not (i) testify or otherwise provide testimony in any form
at or for any legal or administrative proceeding, including testimony related to any matter
involving the Company, unless legally compelled to do so or (ii) make statements to third parties,
the public, the press or the media or any administrative agency, in either case that would portray
the Company in an adverse light or disparage the Company, or cause injury to the Company with
respect to events occurring prior to or after the Effective Date.
The Employee hereby agrees and covenants, that:
(a) he shall not divulge to any person or entity other than the Company, without express
written authorization of the Companys Chief Executive Officer, any proprietary or confidential
information, whether written or oral, received or gained by him in the course of his employment by
the Company or of his duties with the Company (Confidential Information), nor shall he make use
of any such Confidential Information on his own behalf or on behalf of any other person or entity,
for so long as such Confidential Information is not known to the general public; and
(b) he shall return or cause to be returned to the Companys Chief Executive Officer any and
all property of the Company of any kind or description whatsoever, including, but not limited to,
any Confidential Information, which has been furnished to him or is held by him, at his residence
or elsewhere, and shall not retain any copies, duplicates, reproductions or excerpts thereof.
8. Release. In consideration of the Companys entering into this Agreement and the
payments and benefits set forth herein, the Employee, on behalf of himself and his heirs,
executors, administrators, successors and assigns, knowingly and voluntarily waives, releases and
forever discharges the Company, each of its subsidiaries or affiliated companies, their respective
current and former officers, employees, agents and directors, and any successor or assign of any of
the foregoing, from any claim, charge, action or cause of action any of them may have against any
such released person, whether known or unknown, from the beginning of time through the date of this
Agreement based upon any matter, cause or thing whatsoever related to or arising out of his
employment by the Company or his termination other than claims arising out of a breach of this
Agreement or any claim that cannot be waived by law. All such claims are forever barred by this
This release and waiver includes, but is not limited to, any rights or claims under United
States federal, state or local law, for wrongful or abusive discharge, for breach of any contract,
or for discrimination based upon race, color, ethnicity, sex, age, national origin, religion,
disability, sexual orientation, or any unlawful criterion or circumstance, including, but not
limited to, rights or claims under the Family and Medical Leave Act, claims of discrimination under
the Employee Retirement Income Security Act, the Equal Pay Act, the Occupational Safety and Health
Act, the Workforce Adjustment Retraining Notification Act, Title VII of the Civil Rights Act of
1964, the Americans with Disabilities Act, Section 1981 through 1988 of the Civil Rights Act of
1866, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Older
Workers Benefit Protection Act, the Rehabilitation Act of 1973, Executive Order 11246 and any other
executive order, the Fair Labor Standards Act and its state and local counterparts, the Uniform
Services Employment and Reemployment Rights Act, and the Immigration Reform Control Act, all as
amended. The Employee confirms that he has no claim
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or basis for a claim whatsoever against the Company with respect to any such matters related
to or arising out of his employment by the Company or his termination.
The Employee affirms that he has been given at least 21 days within which to consider this
release and its consequences, that he has seven days following his signing of this Agreement (the
seventh day being the Expiration Date) to revoke and cancel the terms and conditions contained
herein and the terms and conditions of this Agreement shall not become effective or enforceable
until the seven-day revocation and cancellation period has expired, and that, prior to the
execution of this Agreement, he has been advised by the Company to
consult with an attorney of his
choice concerning the terms and conditions set forth herein. Any revocation or cancellation of this
Agreement by the Employee pursuant to this Section shall be in writing delivered to the Company.
9. Entire Agreement. This Agreement contains the entire agreement between the Parties
concerning the subject matter hereof and supersedes all prior agreements, understandings,
discussions, negotiations, and undertakings, whether written or oral, between the Parties with
respect thereto. This Agreement may not be modified or amended except by a writing signed by both
10. No Admission. The Parties acknowledge and agree that this Agreement does not
constitute and should not be construed in any way as an admission by any other party of (a) any
wrongdoing or liability whatsoever, (b) any violation of the Employees rights or those of any
other person, or (c) any violation of any order, law, statute, duty or contract. The Company
specifically disclaims any liability for any alleged wrongdoing or liability, for any alleged
violation of my rights or those of any other person, or for any alleged violation of any order,
law, statute, duty or contract.
11. Severability. In the event that any provision or portion of this Agreement shall
be determined to be invalid or unenforceable for any reason, the remaining provisions or portions
of this Agreement shall be unaffected thereby and shall remain in full force and effect to the
fullest extent permitted by law.
12. Survival; Termination. The respective rights and obligations of the Parties
hereunder shall survive any termination of this Agreement to the extent necessary for the intended
preservation of such rights and obligations. This Agreement may be terminated by the Company if the
Employee breaches any provision hereof.
13. Interpretation; Governing Law. This Agreement shall be interpreted in accordance
with the plain meaning of its terms and not strictly for or against any person or entity. To the
extent that federal law controls the interpretation or enforceability of any provision of this
Agreement, this Agreement shall be construed and enforced in accordance with federal law.
Otherwise, this Agreement shall be governed by and construed and interpreted in accordance with the
laws of the Commonwealth of Pennsylvania without reference to the principles of conflicts of law.
14. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall constitute one and the same
instrument. Signatures delivered by facsimile shall be effective for all purposes.
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BY SIGNING AND DELIVERING THIS AGREEMENT, THE EMPLOYEE STATES:
(A) HE HAS READ IT AND UNDERSTANDS IT AND HAS AT LEAST 21 DAYS TO CONSIDER IT AND A PERIOD OF
SEVEN DAYS AFTER EXECUTING IT TO REVOKE IT;
(B) HE AGREES WITH IT AND IS AWARE THAT HE IS GIVING UP IMPORTANT RIGHTS, INCLUDING RIGHTS
PROVIDED BY THE OLDER WORKERS BENEFIT PROTECTION ACT, FOR CONSIDERATION TO WHICH HE WAS NOT ALREADY
(C) HE WAS ADVISED TO, AND IS AWARE OF HIS RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING
(D) HE HAS SIGNED IT KNOWINGLY AND VOLUNTARILY.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first written above.
||AGERE SYSTEMS INC.
||/s/ Richard L. Clemmer
||Richard L. Clemmer
||President and Chief Executive
||/s/ Sohail A. Khan
||Sohail A. Khan
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