Exhibit 10.1

PMC-SIERRA, INC.

EMPLOYMENT AGREEMENT AND RELEASE

This Employment Agreement and Release (“Agreement”) is made by and between
PMC-Sierra, Inc. (“Company”) and Steve Perna (jointly referred to as the
“Parties”).

WHEREAS, Employee entered into an Invention Assignment Agreement with the
Company on March 15, 1995 (the “Invention Assignment Agreement”);

WHEREAS, Employee entered into a Conflict of Interest Agreement with the Company
on March 15, 1995 (the Conflict of Interest Agreement”);

WHEREAS, the Company and Employee entered into a Stock Option Agreement granting
Employee the option to purchase shares of the Company’s common stock (the
“Option”) subject to the terms and conditions of the Company’s 1994 Incentive
Stock Plan and the Stock Option Agreement (jointly the “Stock Option
Agreements”);

WHEREAS, the Company and Employee have agreed to change the terms of Employee’s
employment and to extend Employee’s employment to March 8, 2007 (the
“Termination Date”); and

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints,
grievances, charges, actions, petitions and demands that the Employee may have
against the Company as defined herein, including, but not limited to, any and
all claims arising out of, or related to, Employee’s employment with, or
separation from, the Company.

NOW THEREFORE, in consideration of the promises made herein, the Parties hereby
agree as follows:

COVENANTS

1. Continuing Employment. The Company shall continue to employ Employee until
the Termination Date, unless Employee resigns from his employment or the Company
terminates his employment for “Cause” prior to the Termination Date, as that
term is defined below. Employee shall report to Alan Krock. Employee shall
perform those duties and responsibilities assigned to him by Mr. Krock, at his
home office. Employee shall devote his full time and attention to the business
and affairs of the Company and shall use his best efforts to perform his
responsibilities faithfully and efficiently. The Company shall continue to pay
Employee a base salary at the annual rate of $255,000, less applicable
withholdings, in accordance with the Company’s regular payroll practices.
Employee shall comply with his Conflict of Interest Agreement and Invention
Assignment Agreement with the Company, as well as all other Company policies.

2. Employee Benefits. During his employment with the Company, Employee shall
continue to be eligible to participate in the Company’s health insurance
benefits, to accrue vacation, and to vest in the shares subject to the Option,
on the same terms, schedule and conditions as previously.

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Employee’s options shall continue to be subject to and governed by the Stock
Option Agreements. Starting on the Effective Date of this Agreement, Employee
shall not be eligible to participate in the Company’s Short Term Incentive Plan
or Evergreen Stock Option Grants, to receive any other bonuses or additional
stock option grants, or to participate in any other benefits or incidents of
employment.

3. Termination. If, prior to the Termination Date, Employee resigns from his
employment with the Company, then the Company shall pay Employee the base salary
that he would have received had he continued his employment until the
Termination Date, less applicable withholdings, provided that Employee signs a
Separation Agreement and Release timely after his last day of employment in a
form that is acceptable to the Company. Employee shall not be entitled to
continue to participate or receive any of the benefits or incidents of
employment, including vacation accrual or continued vesting of the shares
subject to the Option, after the last day of his employment with the Company.
If, prior to the Termination Date, the Company terminates Employee’s employment
for Cause, as that term is defined herein, then Employee shall be entitled only
to the wages he has earned as of the date of the termination of his employment,
including compensation for any accrued vacation, and authorized business
expenses incurred to date, and he shall not be entitled to any further
compensation or benefits or any severance from the Company. For purposes of this
Agreement, Cause is defined, similar to the way it is for all Company Employees,
as any of the following: (i) Employee’s conviction of or plea of nolo contendre
to a felony; (ii) Employee’s death; (iii) Employee’s inability to perform the
essential functions of his position with or without reasonable accommodation;
(iv) willful misconduct by Employee as defined in Company’s Employee Resource
Guide; (v) Employee’s failure to perform his duties as assigned by Alan Krock,
which is not cured by Employee to Mr. Krock’s satisfaction within 30 days of
receiving written notice from Mr. Krock of any deficiency; or (vi) Employee’s
breach of any provision of this Agreement, the Invention Assignment Agreement,
or the Conflict of Interest Agreement.

4. Preserving Confidential Information and Returning Company Property. Employee
shall continue to comply with the terms of the Invention Assignment Agreement
and shall maintain the confidentiality of all of the Company’s confidential and
proprietary information. Employee also shall return to the Company all of the
Company’s property, including all Company-issued equipment, all confidential and
proprietary information belonging to the Company, and all documents and
information that Employee obtained in connection with his employment with the
Company, on the last day of his employment with the Company.

5. Release of Claims. Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company and its current and former: officers, directors, employees, agents,
investors, attorneys, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corporations and assigns (the
“Releasees”). Employee, on his own behalf, and on behalf of his respective
heirs, family members, executors, agents, and assigns, hereby fully and forever
releases the Releasees from, and agrees not to sue concerning, any claim, duty,
obligation or cause of action relating to any matters of any kind, whether
presently known or unknown, suspected or unsuspected, that Employee may possess
arising from any omissions, acts or facts that have occurred up until and
including the Effective Date of this Agreement including, without limitation,

 

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a. any and all claims relating to or arising out of Employee’s employment
relationship with the Company, including changes in job reporting structure,
responsibilities, position or title, removal of 16b status, and/or the
termination of Employee’s employment;

b. any and all claims relating to, or arising from, Employee’s right to
purchase, or actual purchase of shares of stock of the Company, including,
without limitation, any claims for fraud, misrepresentation, breach of fiduciary
duty, breach of duty under applicable state corporate law, and securities fraud
under any state or federal law;

c. any and all claims for wrongful discharge of employment; termination in
violation of public policy; discrimination; harassment; retaliation; breach of
contract, both express and implied; breach of a covenant of good faith and fair
dealing, both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment;
conversion; workers’ compensation and disability benefits;

d. any and all claims for violation of any federal, state or municipal statute,
including, but not limited to, Title VII of the Civil Rights Act of 1964, the
Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the
Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the
Employee Retirement Income Security Act of 1974, the Worker Adjustment and
Retraining Notification Act, the Older Workers Benefit Protection Act, the
Sarbanes-Oxley Act of 2002, the Fair Credit Reporting Act; the California Family
Rights Act; the Family and Medical Leave Act, the California Fair Employment and
Housing Act; the California Labor Code, except as prohibited by law, and the
California Workers’ Compensation Act;

e. any and all claims for violation of the federal, or any state, constitution;

f any and all claims arising out of any other laws and regulations relating to
employment or employment discrimination; and

g. any claim for any loss, cost, damage, or expense arising out of any dispute
over the non-withholding or other tax treatment of any of the proceeds received
by Employee as a result of this Agreement; and

h. any and all claims for attorneys’ fees and costs.

Employee acknowledges and agrees that any breach of this section 5 shall
constitute a material breach of this Agreement, except as provided by law.
Except as provided by law, Employee shall be responsible to the Company for all
costs, attorneys’ fees, and any and all damages incurred by the Company in:
(a) enforcing Employee’s obligations under this section 5, and (b) defending
against a claim or suit brought or pursued by Employee in violation of this
section 5.

Employee agrees that the release set forth in this section shall be and remain
in effect in all respects as a complete general release as to the matters
released. This release does not extend to any obligations incurred under this
Agreement.

 

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6. Acknowledgement of Waiver of Claims Under ADEA. Employee acknowledges that he
is waiving and releasing any rights he may have under the Age Discrimination in
Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and
voluntary. Employee and the Company agree that this waiver and release does not
apply to any rights or claims that may arise under ADEA after the Effective Date
of this Agreement. Employee acknowledges that the consideration given for this
waiver and release Agreement is in addition to anything of value to which
Employee was already entitled. Employee further acknowledges that he has been
advised by this writing that

 

  a. he should consult with an attorney prior to executing this Agreement;

 

  b. he has up to twenty-one (21) days within which to consider this Agreement;

 

  c. he has seven (7) days following his execution of this Agreement to revoke
the Agreement;

 

  d. this Agreement shall not be effective until the revocation period has
expired; and

 

  e. nothing in this Agreement prevents or precludes Employee from challenging
or seeking a determination in good faith of the validity of this waiver under
the ADEA, nor does it impose any condition precedent, penalties or costs for
doing so, unless specifically authorized by federal law.

Any revocation should be in writing and delivered to PMC-Sierra, Inc., Steve
Cadigan, Vice President Human Resources, Mission Towers 3975 Freedom Circle,
Santa Clara, California 95054 by the close of business on the seventh day from
the date that Employee signs this Agreement.

7. Civil Code Section 1542. Employee represents that he is not aware of any
claims against any of the Releasees. Employee acknowledges that he has been
advised to consult with legal counsel and is familiar with the provisions of
California Civil Code Section 1542, which provide as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

Employee, being aware of this code section, agrees to expressly waive any rights
he may have thereunder, as well as under any other statute or common law
principles of similar effect.

8. No Pending or Future Lawsuits. Employee represents that he has no lawsuits,
claims, or actions pending in his name, or on behalf of any other person or
entity, against the Company or any of the other Releasees. Employee also
represents that he does not intend to bring any claims on his own behalf or on
behalf of any other person or entity against the Company or any of the other
Releasees.

 

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9. No Cooperation. Employee agrees that he will not act in any manner that might
damage the business of the Company. Employee further agrees that he will not
knowingly counsel or assist any attorneys or their clients in the presentation
or prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against any of the Releasees, unless under a
subpoena or other court order to do so. Employee agrees both to immediately
notify the Company upon receipt of any such subpoena or court order, and to
furnish, within three (3) business days of its receipt, a copy of such subpoena
or court order to the Company. If approached by anyone for counsel or assistance
in the presentation or prosecution of any disputes, differences, grievances,
claims, charges, or complaints against any of the Releasees, Employee shall
state no more than that he cannot provide counsel or assistance.

10. Confidentiality. The Parties acknowledge that Employee’s agreement to keep
the terms and conditions of this Agreement confidential was a material factor on
which the Company relied in entering into this Agreement. Employee agrees to
maintain in confidence the existence, contents and terms of this Agreement,
including the consideration for this Agreement (hereinafter collectively
referred to as “Settlement Information”). Except as provided by law, Employee
agrees that he is permitted to disclose Settlement Information only to his
spouse, his attorney, his accountant to the extent necessary to prepare
Employee’s tax returns, and any tribunals to the extent necessary to enforce
this Agreement, and that he is required to prevent disclosure of the Settlement
Information to all other third parties. Employee agrees that he will not
publicize any Settlement Information. The Parties agree that if the Company
proves that Employee breached this Confidentiality provision, the Company shall
be entitled to an award of its costs spent enforcing this provision and proving
the breach, including all reasonable attorneys’ fees associated with the action,
without regard to whether the Company can establish actual damages from
Employee’s breach.

11. Non-Disparagement. Employee agrees to refrain from any defamation, libel or
slander of the Company and any of the other Releasees, or tortious interference
with the contracts and relationships of the Company and any of the other
Releasees. The Company’s current officers and directors agree to refrain from
any defamation, libel or slander of Employee, or tortious interference with
Employee’s contracts and relationships.

12. Non-Solicitation. Employee agrees that for a period of twelve (12) months
immediately following the last day of his employment with the Company, Employee
shall not directly or indirectly solicit, induce, recruit or encourage any of
the Company’s employees to leave their employment at the Company.

13. No Representations. Each party represents that it has consulted with an
attorney, and has carefully read and understands the scope and effect of the
provisions of this Agreement. Neither party has relied upon any representations
or statements made by the other party hereto which are not specifically set
forth in this Agreement.

14. Attorneys’ Fees. Except as otherwise provided herein, in the event that
either Party brings an action to enforce or effect its rights under this
Agreement, the prevailing party shall be entitled to recover its costs and
expenses, including the costs of mediation, arbitration, litigation, court fees,
plus reasonable attorneys’ fees, incurred in connection with such an action.

 

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15. Severability. In the event that any provision hereof becomes or is declared
by a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement will continue in full force and effect without said provision.

16. No Oral Modification. This Agreement may only be amended in writing signed
by Employee and the Chief Executive Officer of the Company.

17. No Admission of Liability. The Parties understand and acknowledge that this
Agreement constitutes a compromise and settlement of disputed claims. No action
taken by the Parties, previously or in connection with this Agreement, shall be
construed to be: (a) an admission of the truth or falsity of any potential
claims, or (b) an admission by either party of any fault or liability whatsoever
to the other party or to any third party.

18. Costs. The Parties shall each bear their own costs, expert fees, attorneys’
fees and other fees incurred in connection with the preparation of this
Agreement.

19. Arbitration. The Parties agree that any and all disputes arising out of, or
relating to, the terms of this Agreement, their interpretation, and any of the
matters herein released, shall be subject to binding arbitration in Santa Clara
County, California, before the American Arbitration Association under its
National Rules for the Resolution of Employment Disputes. The Parties agree that
the prevailing party in any arbitration shall be entitled to injunctive relief
in any court of competent jurisdiction to enforce the arbitration award. The
Parties hereby agree to waive their right to have any dispute between them
resolved in a court of law by a judge or jury. This section will not prevent
either party from seeking injunctive relief (or any other provisional remedy)
from any court having jurisdiction over the Parties and the subject matter of
their dispute relating to Employee’s obligations under this Agreement and the
agreements incorporated herein by reference.

20. Integration. This Agreement, together with the Stock Option Agreements, the
Invention Assignment Agreement, and the Conflict of Interest Agreement,
represents the entire agreement and understanding between the Parties concerning
Employee’s employment with and termination from the Company and supersedes all
prior and contemporaneous agreements, whether written or oral.

21. Governing Law. This Agreement shall be deemed to have been executed and
delivered within the State of California, and it shall be construed,
interpreted, governed, and enforced in accordance with the laws of the State of
California, without regard to choice of law principles.

22. Effective Date. This Agreement is effective on the eighth day after it has
been signed by both Parties (the “Effective Date”), unless revoked by Employee
or the Company before that time.

23. Counterparts. This Agreement may be executed in counterparts, and each
counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

24. Voluntary Execution of Agreement. This Agreement is executed voluntarily and
without any duress or undue influence on the part or behalf of the Parties
hereto, with the full intent of releasing all claims. The Parties acknowledge
that:

(a) They have read this Agreement;

 

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(b) They have been represented in the preparation, negotiation, and execution of
this Agreement by legal counsel of their own choice or that they have
voluntarily declined to seek such counsel;

(c) They understand the terms and consequences of this Agreement and of the
releases it contains; and

(d) They are fully aware of the legal and binding effect of this Agreement.

IN WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case
of the Company by their duly authorized officers, as of the day and year first
above written.

 

COMPANY:       PMC-Sierra, Inc.       By:  

/s/ Steve Cadigan

    Date:  

June 9, 2006

Title:  

Vice President, Human Resources

      EMPLOYEE:      

/s/ Steffen M. Perna

    Date:  

June 9, 2006

Steve Perna      

 

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