EXHIBIT 10.3



 






Exhibit 10.3




SEPARATION AGREEMENT AND GENERAL RELEASE




     THIS
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 Ahmed Nawaz
(the “Employee”).



W I T N E S S E T H:




     WHEREAS, the Employee is currently employed by the Company;



     WHEREAS, the Employee and the Company have decided to (a) place the Employee on a paid leave
of absence (“LOA”) for 12 months beginning on January 1, 2006 as set forth in Section 1 below and
(b) terminate their employment relationship effective after such LOA (the “Employment Termination
Date”);



     WHEREAS, the Employee and the Company (the “Parties”) have negotiated and agreed to a final
settlement of their respective rights, obligations and liabilities; and



     WHEREAS, the Parties have agreed that the Company’s Officer Severance Policy attached hereto
as Exhibit A (the “Officer Severance Policy”), except as otherwise modified by this
Agreement, shall be applicable to the Employee.



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Employee and the Company hereby agree as follows:



     1.   FY 05 Bonus; Leave of Absence Payments; Severance.



            (a) Employee shall not be eligible to participate in the Company’s 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 agrees to place the Employee on a LOA for 12 months effective
from January 1, 2006 through December 31, 2006 at which time the Employee will terminate from the
Company’s payroll. During the LOA, the Company shall pay the Employee leave of absence payments
(the “LOA Payments”) in an amount equal to Seven Hundred and Seventy Thousand Dollars ($770,000).
The LOA Payments shall be made as follows:




            (i) For the six month period from January 1, 2006 to June 30, 2006, no LOA Payment
shall be made. On the first payroll date on or after July 1, 2006, the Company shall pay the
Employee a lump sum Payment in an amount equal to six (6) months of the Employee’s annual
salary;




            (ii) On each subsequent monthly payment cycle after July 1, 2006, the Company shall pay
the Employee a Payment in an amount equal to the Employee’s monthly salary for a total of
six (6) months; and



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            (iii) In December, 2006, the Company shall pay the Employee his target bonus amount in
an amount equal to Three Hundred and Thirty Thousand Dollars ($330,000).



            (c) In addition to the LOA Payments, on January 3, 2006 the Company shall pay the Employee a
severance payment in an amount equal to Seven Hundred and Seventy Thousand Dollars ($770,000) (the
“Severance Payment,” and together with the LOA Payments, the “Payments”).



            (d) The Payments shall be made in the ordinary course of the Company’s payroll cycle;
provided, however that no Payment will be made prior to the Expiration Date (as
defined in paragraph 8 of this Agreement). The Employee acknowledges and agrees that the Payments
(i) represent 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 policies. The Employee will not accrue any vacation or personal days while on a
LOA. Payment for accrued and unused vacation and personal days will be paid concurrent with the
first Payment hereunder in accordance with the Company’s vacation policy.



            (e) In the event of the death of the Employee while on leave of absence, then any portion of
the cash Payments not yet paid will be paid, in a lump sum, to the Employee’s estate. Any unvested
stock options and restricted stock units that would have otherwise vested during the remaining term
of the leave of absence will vest immediately upon the death of the Employee and become exercisable
by the Employee’s estate. Company provided medical coverage will end upon the death of the Employee
at which time any dependents covered at that time can continue coverage under the Consolidated
Omnibus Budget Reconciliation Act (Cobra) of 1986.



     2.   Equity. The Employee agrees to forfeit all of his stock options and restricted
stock grants except for (a) the 60,000 stock options granted on November 1, 2002 (strike price
$9.95), (b) the 60,000 stock options granted on December 1, 2003 (strike price $35.45) and (c) the
60,000 stock options granted on December 1, 2004 (strike price $13.80) (the “Non-Forfeited
Grants”). The Non-Forfeited Grants will continue to vest during the LOA. On the Employment
Termination Date, all Non-Forfeited Grants shall be treated in accordance with the provisions of
the applicable agreements and plans pursuant to which they were granted.



     3.   Health and Welfare Benefits. While on the LOA, The Employee will be treated as an
active employee for all Company benefits. The Employee will be eligible to continue participation
in the Company’s medical, dental and vision plans through COBRA for up to 18 months after the
Employee Termination Date, and the Company will pay for these COBRA benefits from January 1, 2007
to December 31, 2007. In addition, from January 1, 2007 to December 31, 2007 the Company will
reimburse the Employee for the costs of continuing disability and life insurance coverage and
provide a car allowance and financial counseling benefits, in each case as if the Employee was an
active employee.



     4.   Retirement Benefits. The Employee will receive a lump-sum payout of his accrued
retirement benefits, including payments under the Agere Systems Inc. Management 401(k) Plan and the
Agere Systems Inc. Pension Plan, in each case in accordance with the terms of the applicable plan.
In addition, the Employee has elected and will receive a one-time



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lump sum payment (the “Supplemental Pension Payment”) under the Agere Systems Inc.
Supplemental Pension Plan equal to the amount of his accrued benefit as of the Employee Termination
Date. The Supplemental Pension Payment shall be paid on July 1, 2007, 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
Company’s 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
Company’s 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 Company’s 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 Company’s 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 as well as any benefits provided for in
the Agreement (other than those from qualified retirement or welfare plans) and any continuing
vesting of stock options or restricted stock units, if any, 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
Company’s request in writing therefore. This provision shall not affect the Company’s 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
any subsidiary.



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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.



     7.   Confidentiality. 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 Company’s 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 Company’s 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 Company’s 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
Agreement.



            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 paragraph 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
Parties.



     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 Employee’s 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. In addition, the termination provisions set forth in the
Officer Severance Policy shall apply.



     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
OTHERWISE ENTITLED;



            (C) HE WAS ADVISED TO, AND IS AWARE OF HIS RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING
IT; AND



            (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.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Richard L. Clemmer
	 

	 	Name:
	 	Richard L. Clemmer
	 

	 	Title:
	 	President and Chief Executive

Officer
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	/s/ Ahmed Nawaz
	 

	 	Name:
	 	Ahmed Nawaz







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