Document:

EX-10.1:

 

Exhibit 10.1

	 	 	 	 	 
	 

	 	
	 	 

October 30, 2005

Richard L. Clemmer

1110 American Parkway

Allentown, PA 18109

Dear Rick,

It gives me great pleasure to confirm your offer of employment with Agere Systems. The following
outlines the key features of your offer:

Assignment

Your position is President and Chief Executive Officer (CEO) of Agere Systems Inc., your work
location is Allentown, Pennsylvania and start date is October 25, 2005.

Compensation

Base Salary

Your starting base salary is $680,000 annually and paid monthly on or about the first of
each month. Your first paycheck will be December 1, 2005. Through our annual Board
Performance review at the end of the fiscal year you will receive a performance assessment
and we will approve the goals by which you will be evaluated for the new fiscal year. The
basis of the performance assessment will be revenue growth and absolute operating margin
income performance.

Short-Term Incentive Plan (STIP)

Agere’s Short-Term Incentive Plan (STIP) is a pay-for-performance bonus plan that is based
on company financial results and rewards individual performance in the form of an annual
bonus payout. The STIP target for the Chief Executive Officer is 125% of your annual base
salary or $850,000. Your bonus will be determined by company performance, as assessed
against the expectations set and approved by the Board. The Plan is designed to pay out
cash bonuses annually, after the close of the fiscal year, typically in December. For Fiscal
Year 2006 you will receive a minimum, guaranteed bonus of $425,000.

Long-Term Incentive Plan (LTIP)

You are eligible to participate in Agere’s New Hire Stock Option Plan. Your stock option
grant will be 500,000 shares. The grant will price 48 hours after your actual start date or
at such time the Compensation Committee approves the grant but in no case sooner than 48
hours after your start date. The option price will be equal to 100% of the average opening
and closing market price on that date.
The term of the option will be seven (7) years with equal annual vesting over a four (4)
year period from the date of the grant.

Restricted Stock Units 

You will be awarded 100,000 time-based restricted stock units with equal annual vesting over
a four year period. The grant will be made 48 hours after your actual start date or at such
time the Compensation Committee approves them but in no case sooner than 48 hours after your
start date.

Performance-Based Restricted Stock Units

You will be awarded 150,000 Performance Based restricted stock units. See the terms
outlined in the plan document attached to this letter.

Relocation/Commuting

Agere is providing you with a $100,000 one-time lump sum
allowance to cover housing and/or commuting expenses. Should you voluntarily resign, or be
terminated for cause, within one year from your date of hire, you agree by accepting this
employment offer to promptly repay the full amount of all commuting monies
paid to you by Agere. In addition, you will be eligible for
Agere’s standard relocation package.

Benefits

You are eligible for the benefit programs available to all U.S. employees. For many benefit plans,
if you enroll on time, you and your dependents will be covered retroactively to your start date.
Information about your

 

 

benefits is available on “My Agere View” at
http://www.myagereview.com. That’s where you will find the 2005 Benefits Summary, which
describes most plan options and includes the following:

Medical

Agere offers three medical options that are designed to assist employees with varied medical
and financial needs. All are described on pages 4 and 5 of the 2005 Benefits Summary, which
you find on My Agere View. You must enroll for medical benefits within 31 days of your start
date. Coverage is retroactive to the start date.

Dental, Vision and Flexible Spending Accounts

Agere offers dental and vision coverage to you and your eligible dependents. In addition,
you may also put aside pre-tax dollars for reimbursement for any out-of-pocket medical or
dependent-care costs throughout the year. For more information see the benefits summary. You
must enroll for each of these plans within 31 days of your start date.

401(k) Plan and Employee Stock Purchase Plan

Agere also offers a matching 401(k) Plan, and an Employee Stock Purchase Plan. You are
immediately eligible to participate in both programs. More information on these plans is
available through the benefits summary. You will also receive information on how to enroll
during your first week at Agere.

Paid Time Off

You are annually allotted 20 vacation days, 4 personal days, 7 company holidays, and 3
floating holidays, granted at the start of our fiscal year.

The following programs are offered to Agere Executives only and are not described in the
2005 Benefits Summary:

Executive Life Insurance

Agere Systems provides you with $1,000,000 term insurance. Agere will pay the entire
premium; therefore, you will be subject to imputed income annually. In addition, you may
purchase supplemental insurance coverage up to five times your total annual pay. Agere also
provides accidental loss insurance at one times your total annual pay. Additional coverage
of up to five times your total annual pay is available at your own expense. Upon offer
acceptance, you will receive two insurance beneficiary forms, which must be signed and
returned as soon as possible.

Automobile Allowance

You will be provided a car allowance of $1,400/month paid in the normal monthly payroll
cycle.

Financial Counseling

You are eligible for a $10,000 annual allowance (net of applicable taxes) to help cover the
cost of your financial planning. This amount will be paid annually in your May paycheck.

Executive Severance Benefits

The terms of the standard Executive separation plan are described in the attached
document. These terms will not be changed during the course of your employment without
your consent. You will be eligible for this plan beginning on the date of this letter.
In the event that before October 26, 2006, and in lieu of any
bonus payment for fiscal 2006 or any other payment on account of such termination, you
choose to terminate your employment with the company, you will receive one year base
salary and bonus at target in a lump sum. If you terminate your employment with the
company pursuant to the preceding sentence and you take a senior executive position at
another company within six months of the date of your termination, you must repay us a
maximum of the amount paid pursuant to the preceding sentence subject to a determination
of the Board of Directors that will take into account any detrimental
financial impact to you. As a condition of being eligible for Executive Severance
Benefits, you agree that, at the request of the Board of Directors, you will serve as
non-executive Chairman of the Board for up to two years after such time as you cease
being Chief Executive Officer.

 

 

Employment At Will

Please be aware that this document is not an employment contract and should not be construed or
interpreted as creating an implied or expressed guarantee of continued employment. This employment
relationship with Agere Systems is by mutual consent. This means that employees have the right to
terminate their employment at any time and for any reason. Likewise, Agere reserves the right to
terminate your employment on the same basis.

Employment Verification

U.S. law requires all companies to verify their employees’ authorization to work in the U.S. Within
your first month of employment you will need to bring the required documentation. See MyAgere View
at http://www.myagereview.com

Contingency of Offer

This offer of employment is contingent upon your signing the Employee Agreement Regarding
Intellectual Property.

Next Steps...

Once again, be sure to visit “My Agere View” at http://www.myagereview.com. In addition to
benefits information, this site provides instructions for things you need to know right away, most
forms you’ll need to complete before you start work, information about Agere, and items to bring
with you on your first day.

Acceptance

Please acknowledge your written acceptance of this offer by signing and returning to Kevin
Pennington, EVP-Human Resources.

In Summary

We are very excited about the contributions we believe you will make to Agere and look forward to
helping you extend your professional career in a very exciting, visible and rewarding environment.
Your interest in Agere Systems is genuinely appreciated, and we look forward to being on the team.

Sincerely,

/s/ H. A. Wagner

H. A. Wagner

Chairman, Board of Directors

Acknowledged and Agreed to:

/s/ Richard L. Clemmer

Richard L. ClemmerEX-10.2

 

Exhibit 10.2

AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

	 	 	 	 	 
	Name

[insert name]
	 	HR ID No.

[insert HR ID No.]
	 	Grant Date

[insert grant date]

Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan.

You have been granted, as of the Grant Date set forth above, [insert number of RSUs]
restricted stock units (“Restricted Stock Units”). Upon vesting, each Restricted Stock Unit will be
converted into one share of common stock, par value $.01 per share, of the Company (each, a
“Share”).

1. Vesting of Award. The Restricted Stock Units covered by this award will vest on the
fourth anniversary of the Grant Date (such date being the “Vesting Date”) if there is positive
Excess Stockholder Return. If the Restricted Stock Units covered by this award do not vest on or
before the Vesting Date, then this award shall terminate and there shall be no payout hereunder.
The following definitions shall apply in determining whether there is positive Excess Stockholder
Return:

	 	(a)	 	“Excess Stockholder Return” means that Stockholder Return for Agere
Systems is greater than the Peer Group Stockholder Return.
	 
	 	(b)	 	“Stockholder Return” for any company means (1) the value, determined as
of the 30th day preceding the Vesting Date (or if such date is not a
Business Day, the immediately preceding Business Day), of an investment in one share
of common stock of the company made on the Grant Date, minus the Stock Price of the
company on the Grant Date, divided by (2) the Stock Price of the company on the
Grant Date. Any cash dividends shall be assumed to have been reinvested on the date
payable at the Stock Price on such date. If a company is acquired for cash between
the Grant Date and the Vesting Date, Stockholder Return shall be computed by
assuming that the cash received in the acquisition had been reinvested in the
remaining companies in the Peer Group on the date of acquisition and determining
Stockholder Return for such investments using the date of the acquisition as the
“Grant Date”. In the event that a company has more than one class of common stock
outstanding, the Committee shall determine Stockholder Return for such company using
a method it reasonably believes is consistent with the intent of this Agreement. The
Committee may make such other adjustments and determinations as it deems
appropriate.
	 
	 	(c)	 	“Peer Group Stockholder Return” shall be computed by determining
Stockholder Return for each member of the Peer Group and multiplying that amount by
such member’s Weighting, and adding together the amount so determined for all
members of the Peer Group.
	 
	 	(d)	 	“Weighting” for a company shall be determined by dividing the company’s
Capitalization by the sum of the Capitalization for all members of the Peer Group.
	 
	 	(e)	 	“Capitalization” for a company shall be determined by multiplying the
company’s Shares by its Stock Price.
	 
	 	(f)	 	“Shares” for a company shall be the total number shares reported as
outstanding on the cover page of the most recent Form 10-Q or Form 10-K filed by the
company with the Securities and Exchange Commission prior to the Grant Date.
	 
	 	(g)	 	“Stock Price” for a company on a day shall mean the average of the
highest and lowest reported sales prices, regular way, of a share of that company’s
common stock in transactions reported on the principal market for such stock, or if
no sales of such shares are reported on such market for that date, the comparable
average sales price for the last previous day for which sales were reported on such
market.
	 
	 	(h)	 	“Business Day” means a day on which the principal market for the relevant
security is open for trading in securities.

 

 

	 	(i)	 	“Peer Group” means Advanced Micro Devices, Analog Devices, Atmel,
Broadcom, Intersil, LSI, Marvell, National Semiconductor and PMC/Sierra.

2. Termination of Employment. (a) Upon termination of your employment for any reason other
than death or Disability (as defined below), including without limitation, retirement and
termination as a result of your employer ceasing to be either Agere Systems Inc. (“Agere”) or a
Subsidiary, any Restricted Stock Units that are not vested shall be forfeited. Transfer to or from
Agere and any Subsidiary shall not be considered a termination of employment for purposes of this
Agreement. Nor shall it be considered a termination of employment for purposes of this Agreement
if you are placed on a military leave or other approved leave of absence, unless the Committee
shall otherwise determine.

	 	A.	 	Death. If you die before the Vesting Date for any Restricted Stock Units, those
Restricted Stock Units will become immediately vested and nonforfeitable, and the award
will be paid as specified in Section 3.
	 
	 	B.	 	Disability. Upon termination of your employment prior to the Vesting Date for any
Restricted Stock Units as a result of your Disability, those Restricted Stock Units will
become immediately vested and nonforfeitable, and the award will be paid as specified in
Section 3. “Disability” means termination of employment under circumstances which
entitling you to one of the following:

	 	(i)	 	Disability Pension under Agere’s Management Pension Plan;
	 
	 	(ii)	 	Disability Benefit under the Long Term Disability Plan for Management
Employees of Agere;
	 
	 	(iii)	 	Similar disability benefits under any plan of Agere that is a successor
to or offered in substitution for one or more of the foregoing plans; or
	 
	 	(iv)	 	Disability benefits of a type similar to those described in (i) through
(iii) under any plan of a Subsidiary that adopts reasonable standards and criteria
for benefit entitlement.

     [If Company Action vesting is to be applicable, insert the following] [(b) Notwithstanding
Section 2(a), in the event that the Company terminates your employment other than for Cause, then
the Company Action Vesting Portion of this Award shall not terminate and instead shall be eligible
to be paid out pursuant to Section 3 if the vesting requirements of Section 1 are met. “Company
Action Vesting Portion” is a whole number of Restricted Stock Units determined as of the date of
termination of employment as follows (but not less than zero, and with any fractional portion of a
Restricted Stock Unit being ignored):

          Company Action Vesting Portion = N x Y/4

	 	 	 	 	 	 	 
	 	 	where:	 	 
	 
	 	 	 	 	 	 
	 

	 	N
	 	=
	 	the number of Restricted Stock Units originally subject to this award, and
	 
	 	 	 	 	 	 
	 

	 	Y
	 	=
	 	the number of complete years elapsed since the Grant Date.]

3. Payment of Shares. Subject to Section 6, as soon as practicable after the Vesting Date
for any Restricted Stock Units, the Company will deliver to you or to your legal representative the
Shares into which those Restricted Stock Units are converted. You have no rights as a stockholder
of Agere with respect to any Restricted Stock Unit that has not vested and been converted to a
Share. The Company expects that it will typically make this delivery by depositing Shares in your
account with the Plan recordkeeper.

4. Transferability. You may not transfer, pledge, assign, sell or otherwise alienate your
Restricted Stock Units.

5. No Right of Employment. Neither the Plan nor this Restricted Stock Unit Award shall be
construed as giving you the right to be retained in the employ of Agere or any Subsidiary.

 

 

6. Taxes. Agere shall deduct or cause to be deducted from, or collect or cause to be
collected with respect to, any distribution hereunder, any federal, state, or local taxes required
by law to be withheld or
paid with respect to such distribution, and you or your legal representative or beneficiaries shall
be required to pay any such amounts. Agere shall have the right to take such action as may be
necessary, in Agere’s opinion, to satisfy such obligations. Typically, Agere expects that upon the
vesting of any Restricted Stock Units, it will withhold Shares having a value approximately equal
to the taxes required to be withheld. Thus, upon the vesting of any Restricted Stock Units, you
should expect to receive a smaller number of Shares.

7. Governing Law. The validity, construction and effect of this Agreement shall be
determined in accordance with the laws of the State of Delaware without giving effect to principles
of conflicts of law.

Please indicate your acceptance of terms 1-7, and acknowledge that you have received a copy
of the Plan, as currently in effect, by signing at the place provided and returning the original
of this Agreement.

	 	 	 	 	 	 	 	 	 
	ACCEPTED AND AGREED:	 	
AGERE SYSTEMS INC.	 	 
	 
	SIGNATURE

	 	Social Security No.
	 	BY

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