UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 26, 2008
Date of Report (Date of earliest event reported)
ARRIS Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
     
000-31254   58-2588724
     
(Commission File Number)   (IRS Employer Identification No.)
     
3871 Lakefield Drive, Suwanee, Georgia   30024
     
(Address of Principal Executive Offices)   (Zip Code)
678-473-2000
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 


 

Item 5.02 Departures of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
     On November 26, 2008, we entered into employment agreements with Messrs. John Caezza and Bruce McClelland. Each of the new agreements provides for (1) a term of one year and the automatic extension of that term by one day for each day of employment, (2) severance compensation equal to one year of base salary and bonus, continuation of participation in certain benefit plans, and immediate vesting of equity awards if terminated without cause, in the event that Arris breaches the agreement, or if the employee terminates his employment for good reason following a change in control, and (3) non-competition and confidentiality requirements. The agreements provide for base salaries equal to the current base salaries for the employees ($312,000 for Mr. Caezza and $300,000 for McClelland). Each agreement provides for target and maximum bonus opportunities (as a percentage of base salary) of 60% and 200%, respectively. The agreements also contain other customary terms, including terms comparable to those described below for Messrs. Coppock, Isaacs, Lakin, Potts, Margolis and Stanzione.
     On November 26, 2008, we entered into amendments of existing employment agreements with Ronald M. Coppock, Bryant K. Isaacs, James D. Lakin, David B. Potts, Lawrence Margolis and Robert Stanzione. Each of these amendments provides for clarification of existing terms regarding (1) severance compensation, continuation of participation in certain benefit plans, and immediate vesting of equity awards if terminated without cause, in the event that Arris breaches the agreement, or if the employee terminates his employment for good reason following a change in control, (2) deferral of certain payments to the extent necessary to avoid the imposition of an excise tax as contemplated by Internal Revenue Code Section 409A and the payment to the employees of a tax “gross-up” in the event that the excise tax cannot be avoided, and (3) the amendment of certain terms regarding non-competition and confidentiality requirements. Mr. Stanzione’s amendment permits Mr. Stanzione’s continued employment after age 62 subject to termination by the company or Mr. Stanzione on 12 months notice. Mr. Stanzione’s non-qualified benefit plan is frozen at age 62, but not distributed until his retirement. The age 62 actuarial equivalent value then will be increased or decreased based on the interest, dividends, earnings or profits, and expenses or losses incurred on permitted investments (as determined by the Compensation Committee of the Board of Directors) that Mr. Stanzione may designate under his Supplemental Executive Retirement Plan.
     On the same date, we entered into an amendment of the supplemental executive retirement plan with Robert Stanzione that provides for (1) clarification of the retirement benefits he receives depending on his retirement date, (2) additional provisions regarding Mr. Stanzione’s retirement benefit, and the (3) deferral of certain payments to the extent necessary to avoid the imposition of an excise tax as contemplated by Internal Revenue Code Section 409A and the payment to the employees of a tax “gross-up” in the event that the excise tax cannot be avoided.
     Attached as Exhibits 10.1 to 10.9 are copies of these agreements and amendments, each of which is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.

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(d)   Exhibits
10.1   Employment Agreement with John Caezza
 
10.2   Employment Agreement with Bruce McClelland
 
10.3   First Amendment to Employment Agreement with Ronald M. Coppock
 
10.4   First Amendment to Employment Agreement with Bryant K. Isaacs
 
10.5   First Amendment Employment Agreement with James D. Lakin
 
10.6   First Amendment to Employment Agreement with David B. Potts
 
10.7   Second Amendment to Amended and Restated Employment Agreement with Lawrence Margolis
 
10.8   Second Amendment to Amended and Restated Employment Agreement with Robert Stanzione
 
10.9   First Amendment to the Robert Stanzione Supplemental Executive Retirement Plan

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  ARRIS Group, Inc.
 
 
  By:   /s/ Lawrence A. Margolis    
    Lawrence A. Margolis   
    Executive Vice President of Strategic
Planning, Administration and Chief
Counsel and Secretary 
 
 
Dated: November 26, 2008

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EXHIBIT INDEX
         
Exhibit No.   Description of Exhibit
       
 
  10.1    
Employment Agreement with John Caezza
       
 
  10.2    
Employment Agreement with Bruce McClelland
       
 
  10.3    
First Amendment to Employment Agreement with Ronald M. Coppock
       
 
  10.4    
First Amendment to Employment Agreement with Bryant K. Isaacs
       
 
  10.5    
First Amendment Employment Agreement with James D. Lakin
       
 
  10.6    
First Amendment to Employment Agreement with David B. Potts
       
 
  10.7    
Second Amendment to Amended and Restated Employment Agreement with Lawrence Margolis
       
 
  10.8    
Second Amendment to Amended and Restated Employment Agreement with Robert Stanzione
       
 
  10.9    
First Amendment to the Robert Stanzione Supplemental Executive Retirement Plan

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Exhibit 10.1
EMPLOYMENT AGREEMENT
      THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of November 26, 2008, is by and between ARRIS GROUP, INC. , a Delaware corporation (the “Company”), and John Caezza (“Executive”).
     WHEREAS, Executive and the Company want to enter into a written agreement providing for the terms of Executive’s employment by the Company.
     NOW, THEREFORE, in consideration of the foregoing recital and of the mutual covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
     1.  Employment . Executive agrees to enter into the continued employment of the Company, and the Company agrees to employ Executive, on the terms and conditions set forth in this Agreement. Executive agrees during the term of this Agreement to devote substantially all of his business time, efforts, skills and abilities to the performance of his duties as stated in this Agreement and to the furtherance of the Company’s business.
          Executive’s job title will be President, Access, Transport and Supplies and his duties will be those as are designated by the Chief Executive Officer of the Company. Executive further agrees to serve, without additional compensation, as an officer or director, or both, of any subsidiary, division or affiliate of the Company or any other entity in which the Company holds an equity interest, provided, however, that (a) the Company shall indemnify Executive from liabilities in connection with serving in any such position to the same extent as his indemnification rights pursuant to the Company’s Certificate of Incorporation, By-laws and applicable Delaware law, and (b) such other position shall not materially detract from the responsibilities of Executive pursuant to this Section 1 or his ability to perform such responsibilities.
     2.  Compensation .
          (a) Base Salary . During the term of Executive’s employment with the Company pursuant to this Agreement, the Company shall pay to Executive as compensation for his services an annual base salary of not less than $312,000 (“Base Salary”). Executive’s Base Salary will be payable in arrears (no less frequently than monthly) in accordance with the Company’s normal payroll procedures and will be reviewed annually and subject to upward adjustment at the discretion of the Chief Executive Officer and Compensation Committee, but will not be lowered except in connection with reductions applied to all executive officers.
          (b) Incentive Bonus . During the term of Executive’s employment with the Company pursuant to this Agreement, Executive’s incentive compensation program shall be determined by the Company in its discretion with a target bonus equal to 60% of Base Salary,

 


 

and allowing for payment of up to 200% of target thereafter. Executive’s bonus, if any, shall be payable as soon after the end of each calendar year to which it relates as it can be determined, but in any event within two and one-half (2-1/2) months thereafter.
          (c) Executive Perquisites . During the term of Executive’s employment with the Company pursuant to this Agreement, Executive shall be entitled to receive such executive perquisites and fringe benefits as are provided to the executives in comparable positions and their families under any of the Company’s plans and/or programs in effect from time to time and such other benefits as are customarily available to executives of the Company and their families, including without limitation vacations and life, medical and disability insurance.
          (d) Tax Withholding . The Company has the right to deduct from any compensation payable to Executive under this Agreement social security (FICA) taxes and all federal, state, municipal or other such taxes or charges as may now be in effect or that may hereafter be enacted or required.
          (e) Expense Reimbursements . The Company shall pay or reimburse Executive for all reasonable business expenses incurred or paid by Executive in the course of performing his duties hereunder, including but not limited to reasonable travel expenses for Executive. As a condition to such payment or reimbursement, however, Executive shall maintain and provide to the Company reasonable documentation and receipts for such expenses. Such payments and reimbursements shall be made as soon as administratively practicable following submission of reasonable documentation and receipts for such expenses but all such payments and reimbursements shall be made no later than the last day of the calendar year following the calendar year in which Executive incurs the reimbursable expense.
     3.  Term . Unless sooner terminated pursuant to Section 4 of this Agreement, and subject to the provisions of Section 5 hereof, the term of employment under this Agreement shall commence as of the date hereof and shall continue for a period of one year. The term automatically shall be extended by one day for each day of employment hereunder. Notwithstanding the foregoing the term of employment under this agreement shall terminate, if it has not terminated earlier, without further action on the part of the Company or Executive upon Executive’s 65th birthday.
     4.  Termination . Notwithstanding the provisions of Section 3 hereof, but subject to the provisions of Section 5 hereof, Executive’s employment under this Agreement shall terminate as follows:
          (a) Death . Executive’s employment shall terminate upon the death of Executive, provided, however, that the Company shall continue to pay no less frequently than monthly (in accordance with its normal payroll procedures) the Base Salary to Executive’s estate for a period of three months after the date of Executive’s death.
          (b) Termination for Cause . The Company may terminate Executive’s employment at any time for “Cause” (as hereinafter defined) by delivering a written termination

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notice to Executive. For purposes of this Agreement, “Cause” shall mean any of: (i) Executive’s conviction of a felony or a crime involving moral turpitude; (ii) Executive’s commission of an act constituting fraud, deceit or material misrepresentation with respect to the Company; (iii) Executive’s embezzlement of funds or assets from the Company; (iv) Executive’s addiction to any alcoholic, controlled or illegal substance or drug; (v) Executive’s commission of any act or omission which would give the Company the right to terminate Executive’s employment under applicable law; or (vi) Executive’s failure to correct or cure any material breach of or default under this Agreement within ten days after receiving written notice of such breach or default from the Company.
          (c) Termination Without Cause . The Company may terminate Executive’s employment at any time by delivering a written termination notice to Executive.
          (d) Termination by Executive . Executive may terminate his employment at any time by delivering ninety days prior written notice to the Company; provided, however, that the terms, conditions and benefits specified in Section 5 hereof shall apply or be payable to Executive only if such termination occurs as a result of a material breach by the Company of any provision of this Agreement.
          (e) Termination Following Disability . In the event Executive becomes mentally or physically impaired or disabled and is unable to perform his material duties and responsibilities hereunder for a period of at least ninety days in the aggregate during any one hundred twenty consecutive day period, the Company may terminate Executive’s employment by delivering a written termination notice to Executive. Notwithstanding the foregoing, Executive shall continue to receive his full salary and benefits under this Agreement for a period of six months after the effective date of such termination with his base salary payable in arrears no less frequently than monthly in accordance with the Company’s normal payroll procedures and continued benefits on a monthly basis through such time.
          (f) Payments . Following any expiration or termination of this Agreement and Executive’s employment hereunder, in addition any amounts owed pursuant to Section 5 hereof, the Company shall pay to Executive all amounts earned by Executive hereunder prior to the date of such expiration and termination, as soon as administratively practicable following the date of termination of Executive’s employment, in the normal course consistent with the provisions of this Agreement. Additionally, subject to Executive’s continued compliance with Sections 7 and 8 of this Agreement, if Executive terminates his employment with the Company without Good Reason on or after Executive attains age 62 (provided Executive has no less than 10 years of continuous service with Company as of such termination), all of Executive’s stock options and equity awards outstanding at termination of Executive’s employment shall continue to vest for four (4) years after the termination as if Executive remained employed through such time, and such stock options shall remain outstanding through the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment).

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     5.  Certain Termination Benefits . Subject to Section 6(a) hereof, in the event (i) the Company terminates Executive’s employment without cause pursuant to Section 4(c) or (ii) Executive terminates his employment pursuant to Section 4(d) after a material breach by the Company (which the Company fails to cure within ten days after written notice of such reach from Executive):
          (a) Base Salary and Bonus . The Company shall continue to pay to Executive his Base Salary (as in effect as of the date of such termination) and bonus based upon the assumption that Executive would have fulfilled the requirements to earn his target bonus that would have been payable hereunder to Executive from the date of such termination for a period of twelve (12) months following the termination (and a prorate portion for any partial year). The Company shall continue to pay to Executive his Base Salary (as in effect as of the date of such termination) no less frequently than monthly in accordance with the Company’s normal payroll procedures, beginning with the first payroll date after the date of termination of Executive’s employment and continuing for twelve (12) months immediately following the termination. The Company also shall pay to Executive a bonus for each Company fiscal year (and a pro rata amount for each partial Company fiscal year) during the twelve (12) months immediately following Executive’s termination of employment in an amount equal to the bonus Executive would have received had he fulfilled the requirements to earn his target bonus that would have been payable during such time (or pro rata amount of such bonus for any partial Company fiscal year) with the bonus for any fiscal year or partial year to be paid after the end of such fiscal or partial year and within two and one-half (2-1/2) months thereafter. Notwithstanding the foregoing, all payments to be made or benefits to be provided under this Section are subject to the provisions of Section 5(f) below.
          (b) Stock . Subject to Section 10 hereof, on and as of the effective date of the termination of employment, all of Executive’s outstanding stock options and restricted stock grants under the Company’s stock option and other benefit plans shall immediately vest. Additionally, all of Executive’s outstanding stock options shall remain outstanding until the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment).
          (c) Life Insurance . The Company shall continue to provide Executive on a monthly basis with group and additional life insurance coverage, no less frequently than monthly, for a period of twelve (12) months immediately following termination of employment.
          (d) Medical Insurance . The Company shall continue to provide Executive and his family with group medical insurance coverage, no less frequently than monthly, under the Company’s medical plans (as the same may change from time to time) or other substantially similar health insurance for a period of twelve (12) months immediately following termination of employment.
          (e) Group Disability . The Company shall continue to provide Executive coverage, no less frequently than monthly, under the Company’s group disability plan for a period of twelve (12) months immediately following termination of employment (subject in the

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case of long-term disability to the availability of such coverage under Company’s insurance policy).
          (f) Section 409A . Notwithstanding any other provisions of this Agreement, it is intended that any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), will be provided and paid in a manner, and at such time, as complies with Section 409A of the Code. For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code. If Executive is a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) and any of Company’s stock is publicly traded on an established securities market or otherwise, then the payment of any amount or provision of any benefit under this Agreement which is considered to be nonqualified deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after the Termination Date or, if earlier, Executive’s death (the “409A Deferral Period”), as required by Section 409A(a)(2)(B)(i) of the Code. In the event payments are otherwise due to be made in installments or periodically during such 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled. In the event, benefits are otherwise to be provided hereunder during such 409A Deferral Period, any such benefits may be provided during the 409A Deferral Period at Executive’s expense, with Executive having a right to reimbursement for such expense from the Company as soon as the 409A Deferral Period ends, and the balance of the benefits shall be provided as otherwise scheduled. For purposes of this Agreement, Executive’s termination of employment shall be construed to mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services will be performed after such date or that the level of bona fide services Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to less than fifty percent (50%) of the average level of bona fide services performed over the immediately preceding thirty-six (36)-month period. Without limitation, if any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Code fails to comply with Section 409A of the Code, and Executive incurs any additional tax, interest and penalties under Section 409A of the Code, Company will pay Executive an additional amount so that, after paying all taxes, interest and penalties on such additional amount, Executive has an amount remaining equal to such additional tax, interest and penalties. All payments to be made to Executive pursuant to the immediately preceding sentence shall be payable no later than when the related taxes, interest and penalties are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of any tax liability addressed in the immediately preceding sentence must be made no later than when the related taxes, interest and penalties that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes, interest and penalties are remitted, within thirty (30) days of when the audit is completed or there is a final non-appealable settlement or resolution of the litigation.

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          (g) Offset . Any fringe benefits received by Executive in connection with any other employment that are reasonably comparable, but not necessarily as beneficial, to Executive as the fringe benefits then being provided by the Company pursuant to this Section 5, shall be deemed to be the equivalent of, and shall terminate the Company’s responsibility to continue providing, the fringe benefits then being provided by the Company pursuant to this Section 5. The Company acknowledges that if Executive’s employment with the Company is terminated, Executive shall have no duty to mitigate damages.
          (h) General Release . Acceptance by Executive of any amounts pursuant to this Section 5 shall constitute a full and complete release by Executive of any and all claims Executive may have against the Company, its officers, directors and affiliates, including, but not limited to, claims he might have relating to Executive’s cessation of employment with the Company; provided, however, that there may properly be excluded from the scope of such general release the following:
               (i) claims that Executive may have against the Company for reimbursement of ordinary and necessary business expenses incurred by him during the course of his employment;
               (ii) claims that may be made by the Executive for payment of Base Salary, fringe benefits or stock options properly due to him; or
               (iii) claims respecting matters for which the Executive is entitled to be indemnified under the Company’s Certificate of Incorporation or Bylaws, respecting third party claims asserted or third party litigation pending or threatened against the Executive.
Notwithstanding the foregoing, as a condition to the payment to Executive of any amounts pursuant to this Section 5, Executive shall execute and deliver to the Company a release in the customary form then being used by the Company, which may include non-disparagement and confidentiality agreements. In exchange for such release, the Company shall, if Executive’s employment is terminated without Cause, provide a release to Executive, but only with respect to claims against Executive which are actually known to the Company as of the time of such termination. Executive will be required to execute and not revoke the Company’s standard written release of any and all claims against the Company and all related parties with respect to all matters arising out of Executive’s employment by the Company (other than as described above) no later than thirty (30) days following Executive’s termination of employment (or such later time as the Company may permit). If the Executive does not provide such release, with the period for revoking same having already expired, then Company shall not be required to pay any further amounts pursuant to this Section 5 and Executive will be required to return to the Company any amounts previously paid pursuant to this Section 5.

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     6.  Effect of Change in Control .
          (a) If within one year following a “Change of Control” (as hereinafter defined), Executive terminates his employment with the Company for Good Reason (as hereinafter defined) or the Company terminates Executive’s employment for any reason other than Cause, death or disability, the Company shall pay to Executive: (1) an amount equal to one times the Executive’s Base Salary as of the date of termination; (2) an amount equal to one times the average annual cash bonus paid to Executive for the two fiscal years immediately preceding the date of termination (and a pro rata portion for any partial year); (3) all benefits under the Company’s various benefit plans, including group healthcare, dental and life, for the period equal to twelve months from the date of termination; and (4) subject to Section 10 hereof, on and as of the effective date of the termination of employment, all of Executive’s outstanding stock options and restricted stock grants under the Company’s stock option and other benefit plans shall immediately vest. The Company shall pay the amounts set forth in (1) and (2) above in one lump sum payment as soon as administratively practicable (and within thirty (30) days) following Executive’s termination of employment. The benefits provided under (3) above shall be provided no less frequently than monthly following the date of termination of employment. Additionally, Executive’s outstanding stock options shall remain outstanding until the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment). Notwithstanding the foregoing, all payments to be made and benefits to be provided under this Section are subject to the provisions of Section 5(f) above.
          (b) “Change of Control” shall mean the date as of which: (i) there shall be consummated (1) any consolidation or merger of the Company to which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company’s common stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company’s common stock immediately prior to the merger own more than 50% of the total fair market value or total voting power of the continuing or surviving entity, or (2) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company or (ii) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or (iii) otherwise (any person) as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended. (the “Exchange Act”)), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company’s outstanding common stock (in a single transaction or within twelve (12) months from the date of the final acquisition) or (iv) during any one year, individuals who at the beginning of such period constitute the entire Board of Directors of the Company shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company’s stockholders, of each new director was approved by a vote of at least two-thirds of the directors still then in office who were directors at the beginning of the period. This definition of “Change in Control” is intended to comply with the definition of a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code and shall be construed consistent with that intent.

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          (c) “Good Reason” shall mean any of the following actions taken by the Company without the Executive’s written consent after a Change of Control:
               (i) the assignment to the Executive by the Company of duties inconsistent with, or the reduction of the powers and functions associated with, the Executive’s position, duties, responsibilities and status with the Company immediately prior to a Change of Control or Potential Change of Control (as defined below), or an adverse change in Executive’s titles or offices as in effect immediately prior to a Change of Control or Potential Change of Control, or any removal of the Executive from or any failure to re-elect Executive to any of such positions, except in connection with the termination of his employment for Disability or Cause or as a result of Executive’s death except to the extent that a change in duties relates to the elimination of responsibilities attendant to the Company’s no longer being a publicly traded company;
               (ii) A reduction by the Company in the Executive’s Base Salary as in effect on the date of a Change of Control or Potential Change of Control, or as the same may be increased from time to time during the term of his Agreement;
               (iii) The Company shall require the Executive to be based anywhere other than at the Company’s principal executive offices or the location where the Executive is based on the date of a Change of Control or Potential Change of Control, or if Executive agrees to such relocation, the Company fails to reimburse the Executive for moving and all other expenses reasonably incurred with such move;
               (iv) The Company shall fail to continue in effect any Company-sponsored plan or benefit that is in effect on the date of a Change of Control or Potential Change of Control, that provides (A) incentive or bonus compensation, (B) fringe benefits such as vacation, medical benefits, life insurance and accident insurance, (C) reimbursement for reasonable expenses incurred by the Executive in connection with the performance of duties with the Company, or (D) pension benefits such as a Code Section 401(k) plan and the Company’s nonqualified defined benefit plan, except to the extent that such plans taken as a whole are replaced with substantially comparable plans;
               (vi) Any material breach by the Company of any provision of this Agreement; and
               (vii) Any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company effected in accordance with the provisions of Section 6.

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          (d) “Potential Change of Control” shall mean the date as of which (1) the Company enters into an agreement the consummation of which, or the approval by shareholders of which, would constitute a Change of Control; (ii) proxies for the election of Directors of the Company are solicited by anyone other than the Company; (iii) any person (including, but not limited to, any individual, partnership, joint venture, corporation, association or trust) publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change of Control; or (iv) any other event occurs which is deemed to be a Potential Change of Control by the Board and the Board adopts a resolution to the effect that a Potential Change of Control has occurred.
          (e) Company will pay to Executive the amount of any excise taxes, penalties and interest imposed on Executive under Section 4999 of the Code by reason of payments or benefits under the provisions of this Agreement, including this provision, and the amount of any federal and state income taxes, penalties and interest imposed on Executive by reason of payments to Executive under this Section. All payments to be made to Executive under this Section shall be payable no later than when the related taxes are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of a tax liability under this Section must be made no later than when the related taxes that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes are remitted, within thirty (30) days of when the audit is completed or there is a final and non-appealable settlement or resolution of the litigation.
7. Non-Competition .
          (a) As used in this Section:
          “Business of Company” means providing products and services to broadband internet service providers which support a full range of integrated voice, video and high-speed data services to the subscribers of such providers.
          “Restricted Period” means the period beginning on the Termination Date and ending twelve (12) months after the Termination Date.
          “Restricted Territory” means, and is limited to, the following Metropolitan Statistical Areas: (1) Atlanta — Sandy Springs — Marietta, (2) Denver — Aurora, (3) Portland — Vancouver — Beaverton, (4) Philadelphia — Camden — Wilmington, (5) New York — Northern New Jersey — Long Island, (6) San Francisco — Oakland — Fremont, (7) Los Angeles — Long Beach — Santa Ana, and (8) St. Louis. Executive acknowledges and agrees that this is the area in which the Company does business at the time of execution of this Agreement, and in which Executive will have responsibility, at a minimum, on behalf of the Company.
          “Material Contact” means contact in person, by telephone or by paper or electronic correspondence, in furtherance of the business interests of Company.

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          (b) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, within the Restricted Territory, perform services on his own behalf or on behalf of any other person or entity, which are the same as or similar to those he provided to Company and which support any business activities which compete with the Business of Company.
          (c) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective customers of Company with whom Executive had Material Contact, for the purpose of selling any products or services which compete with the Business of Company.
          (d) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective vendor of Company with whom Executive had Material Contact, for the purpose of providing products or services in support of any business activities which compete with the Business of Company.
          (e) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit or induce any employee or independent contractor of Company with whom Executive had Material Contact to terminate such employment or contract with Company.
Notwithstanding the foregoing, it is understood and agreed that, without limitation on other available remedies, the restrictions on Executive set forth in this Section 7(b), (c), (d) and (e) hereof shall not be applicable at any time that Company is in breach of its contractual obligations to Executive under this Agreement or the ARRIS Group, Inc. Supplemental Retirement Benefits Plan (the “Excess Benefit Plan”) following the thirty (30) days after being notified in writing by Executive of such breach and failure of Company to cure same. In the event Company cures such breach, the restrictions set forth in Sections 7(b), (c), (d) and (e) hereof shall continue pursuant to their terms as if such breach never occurred.
     8.  Nondisclosure of Trade Secrets . During the term of this Agreement, Executive will have access to and become familiar with various trade secrets and proprietary and confidential information of the Company, its subsidiaries and affiliates, including, but not limited to, processes, designs, computer programs, compilations of information, records, sales procedures, customer requirements, pricing techniques, product plans, marketing plans, strategic plans, customer lists, methods of doing business and other confidential information (collectively, referred to as “Trade Secrets”) which are owned by the Company, its subsidiaries and/or affiliates and regularly used in the operation of its business, and as to which the Company, its subsidiaries and/or affiliates take precautions to prevent dissemination to persons other than certain directors, officers and employees. Executive acknowledges and agrees that the Trade Secrets (1) are secret and not known in the industry; (2) give the Company or its subsidiaries or affiliates an advantage over competitors who do not know or use the Trade Secrets; (3) are of such value and nature as to make it reasonable and necessary to protect and preserve the confidentiality and secrecy of the Trade Secrets; and (4) are valuable, special and unique assets

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of the Company or its subsidiaries or affiliates, the disclosure of which could cause substantial injury and loss of profits and goodwill to the Company or its subsidiaries or affiliates. Executive may not use in any way or disclose any of the Trade Secrets, directly or indirectly, either during the term of this Agreement or at any time thereafter, except as required in the course of his employment under this Agreement, if required in connection with a judicial or administrative proceeding, or if the information becomes public knowledge other than as a result of an unauthorized disclosure by the Executive. All files, records, documents, information, data and similar items relating to the business of the Company, whether prepared by Executive or otherwise coming into his possession, will remain the exclusive property of the Company and may not be removed from the premises of the Company under any circumstances without the prior written consent of the Board (except in the ordinary course of business during Executive’s period of active employment under this Agreement), and in any event must be promptly delivered to the Company upon termination of Executive’s employment with the Company. Executive agrees that upon his receipt of any subpoena, process or other request to produce or divulge, directly or indirectly, any Trade Secrets to any entity, agency, tribunal or person, Executive shall timely notify and promptly hand deliver a copy of the subpoena, process or other request to the Board. For this purpose, Executive irrevocably nominates and appoints the Company (including any attorney retained by the Company), as his true and lawful attorney-in-fact, to act in Executive’s name, place and stead to perform any act that Executive might perform to defend and protect against any disclosure of any Trade Secrets.
     9.  Return of Profits . In the event that Executive violates any of the provisions of Sections 7 or 8 hereof or fails to provide the notice required by Section 4(d) hereof, the Company shall be entitled to receive from Executive the profits, if any, received by Executive upon exercise of any Company granted stock options or stock appreciation rights or upon lapse of the restrictions on any grant or restricted stock to the extent such options or rights were exercised, or such restrictions lapsed, subsequent to six months prior to the termination of Executive’s employment.
     10.  Severability . The parties hereto intend all provisions of Sections 7, 8 and 9 hereof to be enforced to the fullest extent permitted by law. Accordingly, should a court of competent jurisdiction determine that the scope of any provision of Sections 7, 8 or 9 hereof is too broad to be enforced as written, the parties intend that the court reform the provision to such narrower scope as it determines to be reasonable and enforceable. In addition, however, Executive agrees that the nonsolicitation and nondisclosure agreements set forth above each constitute separate agreements independently supported by good and adequate consideration shall be severable from the other provisions of, and shall survive, this Agreement. The existence of any claim or cause of action of Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants of Executive contained in the nonsolicitation and nondisclosure agreements. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision never constituted a part of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its

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severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added as part of this Agreement, a provision as similar in its terms to such illegal, invalid or enforceable provision as may be possible and be legal, valid and enforceable.
     11.  Arbitration — Exclusive Remedy .
          (a) The parties agree that the exclusive remedy or method of resolving all disputes or questions arising out of or relating to this Agreement shall be arbitration. Arbitration shall be held in Atlanta, Georgia by three arbitrators, one to be appointed by the Company, a second to be appointed by Executive, and a third to be appointed by those two arbitrators. The third arbitrator shall act as chairman. Any arbitration may be initiated by either party by written notice (“Arbitration Notice”) to the other party specifying the subject of the requested arbitration and appointing that party’s arbitrator.
          (b) If (i) the non-initiating party fails to appoint an arbitrator by written notice to the initiating party within ten days after the Arbitration Notice, or (ii) the two arbitrators appointed by the parties fail to appoint a third arbitrator within ten days after the date of the appointment of the second arbitrator, then the American Arbitration Association, upon application of the initiating party, shall appoint an arbitrator to fill that position.
          (c) The arbitration proceeding shall be conducted in accordance with the rules of the American Arbitration Association. A determination or award made or approved by at least two of the arbitrators shall be the valid and binding action of the arbitrators. The costs of arbitration (exclusive of the expense of a party in obtaining and presenting evidence and attending the arbitration and of the fees and expenses of legal counsel to a party, all of which shall be borne by that party) shall be borne by the Company only if Executive receives substantially the relief sought by him in the arbitration, whether by settlement, award or judgment; otherwise, the costs shall be borne equally between the parties. The arbitration determination or award shall be final and conclusive on the parties, and judgment upon such award may be entered and enforced in any court of competent jurisdiction. To the extent the Company is required to reimburse Executive for any such cost, fees and expenses, the Company shall reimburse such costs, fees and expenses within 90 days following the final determination, award, judgment or settlement.
     12.  Miscellaneous .
          (a) Notices . Any notices, consents, demands, requests, approvals and other communications to be given under this Agreement by either party to the other must be in writing and must be either (i) personally delivered, (ii) mailed by registered or certified mail, postage prepaid with return receipt requested, (iii) delivered by overnight express delivery service or same-day local courier service, or (iv) delivered by telex or facsimile transmission, to the address set forth below, or to such other address as may be designated by the parties from time to time in accordance with this Section 12(a):
     
          If to the Company:
  Arris Group, Inc.

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  3871 Lakefield Drive
 
  Suwanee, Georgia 30024
 
  Attention: Lawrence A. Margolis
 
   
          If to Executive:
  John Caezza
 
  55 Poplar Hill Drive
 
  Farmington, CT 06032
          Notices delivered personally or by overnight express delivery service or by local courier service are deemed given as of actual receipt. Mailed notices are deemed given three business days after mailing. Notices delivered by telex or facsimile transmission are deemed given upon receipt by the sender of the answer back (in the case of a telex) or transmission confirmation (in the case of a facsimile transmission).
          (b) Entire Agreement . This Agreement supersedes any and all other agreements, either oral or written, between the parties with respect to the subject matter of this Agreement and contains all of the covenants and agreements between the parties with respect to the subject matter of this Agreement.
          (c) Modification . No change or modification of this Agreement is valid or binding upon the parties, nor will any waiver of any term or condition in the future be so binding, unless the change or modification or waiver is in writing and signed by the parties to this Agreement.
          (d) Governing Law and Venue . The parties acknowledge and agree that this Agreement and the obligations and undertakings of the parties under this Agreement will be performable in Georgia. This Agreement is governed by, and construed in accordance with, the laws of the State of Georgia. If any action is brought to enforce or interpret this Agreement, venue for the action will be in Georgia.
          (e) Counterparts . This Agreement may be executed in counterparts, each of which constitutes an original, but all of which constitutes one document.
          (f) Costs . If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, each party shall bear its own costs and expenses.
          (g) Estate . If Executive dies prior to the expiration of the term of employment or during a period when monies are owing to him, any monies that may be due him from the Company under this Agreement as of the date of his death shall be paid to his estate and as when otherwise payable.
          (h) Assignment . The Company shall have the right to assign this Agreement to its successors or assigns. The terms “successors” and “assigns” shall include any person, corporation, partnership or other entity that buys all or substantially all of the Company’s assets or all of its stock, or with which the Company merges or consolidates. The rights, duties and

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benefits to Executive hereunder are personal to him, and no such right or benefit may be assigned by him.
          (i) Binding Effect . This Agreement is binding upon the parties hereto, together with their respective executors, administrators, successors, personal representatives, heirs and permitted assigns.
          (j) Waiver of Breach . The waiver by the Company or Executive of a breach of any provision of this Agreement by Executive or the Company may not operate or be construed as a waiver of any subsequent breach.
     13.  Rabbi Trust . The Company will establish an irrevocable grantor trust (as described in Section 671 of the Internal Revenue Code) for the purpose of accumulating assets to provide for any retirement obligations owed to Executive under the Excess Benefit Plan. The assets and income of such trust shall be subject only to the claims of the creditors of the Company in the event of the Company’s insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of such trust shall not affect the Company’s liability to pay benefits except that any liability under the Excess Benefit Plan shall be offset by any payments actually made to Executive from such trust. The Company will reasonably determine the amount to contribute to such trust pursuant to the requirements of the Excess Benefit Plan, and the investment of the assets of the trust shall be made in accordance with the terms of the trust document. Without limitation, but only to the extent not prohibited by Section 409A(b) of the Code, the Company agrees to contribute to the trust pursuant to the requirements of the Excess Benefit Plan sufficient amounts to provide for the Company’s liability to pay the benefits under such Excess Benefit Plan no later than when a “Change of Control” occurs. The terms of the trust shall contain such provisions as may be necessary to qualify the trust as a “rabbi trust” under applicable rules so that the supplemental retirement benefits may be considered “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
             
    “Company”    
 
           
    ARRIS GROUP, INC.    
 
           
 
  By:   /s/ Lawrence A. Margolis    
 
           
 
  Name:   Lawrence A. Margolis    
 
  Title:   Executive Vice President of Strategic Planning,    
 
      Administration and Chief Counsel, Secretary    
 
           
    “Executive”    
 
           
    /s/ John Caezza    
         
    John Caezza    

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Exhibit 10.2
EMPLOYMENT AGREEMENT
      THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of November 26, 2008, is by and between ARRIS GROUP, INC. , a Delaware corporation (the “Company”), and Bruce McClelland (“Executive”).
     WHEREAS, Executive and the Company want to enter into a written agreement providing for the terms of Executive’s employment by the Company.
     NOW, THEREFORE, in consideration of the foregoing recital and of the mutual covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
     1.  Employment . Executive agrees to enter into the continued employment of the Company, and the Company agrees to employ Executive, on the terms and conditions set forth in this Agreement. Executive agrees during the term of this Agreement to devote substantially all of his business time, efforts, skills and abilities to the performance of his duties as stated in this Agreement and to the furtherance of the Company’s business.
          Executive’s job title will be President, Broadband Communications Systems and his duties will be those as are designated by the Chief Executive Officer of the Company. Executive further agrees to serve, without additional compensation, as an officer or director, or both, of any subsidiary, division or affiliate of the Company or any other entity in which the Company holds an equity interest, provided, however, that (a) the Company shall indemnify Executive from liabilities in connection with serving in any such position to the same extent as his indemnification rights pursuant to the Company’s Certificate of Incorporation, By-laws and applicable Delaware law, and (b) such other position shall not materially detract from the responsibilities of Executive pursuant to this Section 1 or his ability to perform such responsibilities.
     2.  Compensation .
          (a) Base Salary . During the term of Executive’s employment with the Company pursuant to this Agreement, the Company shall pay to Executive as compensation for his services an annual base salary of not less than $300,000 (“Base Salary”). Executive’s Base Salary will be payable in arrears (no less frequently than monthly) in accordance with the Company’s normal payroll procedures and will be reviewed annually and subject to upward adjustment at the discretion of the Chief Executive Officer and Compensation Committee, but will not be lowered except in connection with reductions applied to all executive officers.
          (b) Incentive Bonus . During the term of Executive’s employment with the Company pursuant to this Agreement, Executive’s incentive compensation program shall be determined by the Company in its discretion with a target bonus equal to 60% of Base Salary,

 


 

and allowing for payment of up to 200% of target thereafter. Executive’s bonus, if any, shall be payable as soon after the end of each calendar year to which it relates as it can be determined, but in any event within two and one-half (2-1/2) months thereafter.
          (c) Executive Perquisites . During the term of Executive’s employment with the Company pursuant to this Agreement, Executive shall be entitled to receive such executive perquisites and fringe benefits as are provided to the executives in comparable positions and their families under any of the Company’s plans and/or programs in effect from time to time and such other benefits as are customarily available to executives of the Company and their families, including without limitation vacations and life, medical and disability insurance.
          (d) Tax Withholding . The Company has the right to deduct from any compensation payable to Executive under this Agreement social security (FICA) taxes and all federal, state, municipal or other such taxes or charges as may now be in effect or that may hereafter be enacted or required.
          (e) Expense Reimbursements . The Company shall pay or reimburse Executive for all reasonable business expenses incurred or paid by Executive in the course of performing his duties hereunder, including but not limited to reasonable travel expenses for Executive. As a condition to such payment or reimbursement, however, Executive shall maintain and provide to the Company reasonable documentation and receipts for such expenses. Such payments and reimbursements shall be made as soon as administratively practicable following submission of reasonable documentation and receipts for such expenses but all such payments and reimbursements shall be made no later than the last day of the calendar year following the calendar year in which Executive incurs the reimbursable expense.
     3.  Term . Unless sooner terminated pursuant to Section 4 of this Agreement, and subject to the provisions of Section 5 hereof, the term of employment under this Agreement shall commence as of the date hereof and shall continue for a period of one year. The term automatically shall be extended by one day for each day of employment hereunder. Notwithstanding the foregoing the term of employment under this agreement shall terminate, if it has not terminated earlier, without further action on the part of the Company or Executive upon Executive’s 65th birthday.
     4.  Termination . Notwithstanding the provisions of Section 3 hereof, but subject to the provisions of Section 5 hereof, Executive’s employment under this Agreement shall terminate as follows:
          (a) Death . Executive’s employment shall terminate upon the death of Executive, provided, however, that the Company shall continue to pay no less frequently than monthly (in accordance with its normal payroll procedures) the Base Salary to Executive’s estate for a period of three months after the date of Executive’s death.
          (b) Termination for Cause . The Company may terminate Executive’s employment at any time for “Cause” (as hereinafter defined) by delivering a written termination

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notice to Executive. For purposes of this Agreement, “Cause” shall mean any of: (i) Executive’s conviction of a felony or a crime involving moral turpitude; (ii) Executive’s commission of an act constituting fraud, deceit or material misrepresentation with respect to the Company; (iii) Executive’s embezzlement of funds or assets from the Company; (iv) Executive’s addiction to any alcoholic, controlled or illegal substance or drug; (v) Executive’s commission of any act or omission which would give the Company the right to terminate Executive’s employment under applicable law; or (vi) Executive’s failure to correct or cure any material breach of or default under this Agreement within ten days after receiving written notice of such breach or default from the Company.
          (c) Termination Without Cause . The Company may terminate Executive’s employment at any time by delivering a written termination notice to Executive.
          (d) Termination by Executive . Executive may terminate his employment at any time by delivering ninety days prior written notice to the Company; provided, however, that the terms, conditions and benefits specified in Section 5 hereof shall apply or be payable to Executive only if such termination occurs as a result of a material breach by the Company of any provision of this Agreement.
          (e) Termination Following Disability . In the event Executive becomes mentally or physically impaired or disabled and is unable to perform his material duties and responsibilities hereunder for a period of at least ninety days in the aggregate during any one hundred twenty consecutive day period, the Company may terminate Executive’s employment by delivering a written termination notice to Executive. Notwithstanding the foregoing, Executive shall continue to receive his full salary and benefits under this Agreement for a period of six months after the effective date of such termination with his base salary payable in arrears no less frequently than monthly in accordance with the Company’s normal payroll procedures and continued benefits on a monthly basis through such time.
          (f) Payments . Following any expiration or termination of this Agreement and Executive’s employment hereunder, in addition any amounts owed pursuant to Section 5 hereof, the Company shall pay to Executive all amounts earned by Executive hereunder prior to the date of such expiration and termination, as soon as administratively practicable following the date of termination of Executive’s employment, in the normal course consistent with the provisions of this Agreement. Additionally, subject to Executive’s continued compliance with Sections 7 and 8 of this Agreement, if Executive terminates his employment with the Company without Good Reason on or after Executive attains age 62 (provided Executive has no less than 10 years of continuous service with Company as of such termination), all of Executive’s stock options and equity awards outstanding at termination of Executive’s employment shall continue to vest for four (4) years after the termination as if Executive remained employed through such time, and such stock options shall remain outstanding through the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment).

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     5.  Certain Termination Benefits . Subject to Section 6(a) hereof, in the event (i) the Company terminates Executive’s employment without cause pursuant to Section 4(c) or (ii) Executive terminates his employment pursuant to Section 4(d) after a material breach by the Company (which the Company fails to cure within ten days after written notice of such reach from Executive):
          (a) Base Salary and Bonus . The Company shall continue to pay to Executive his Base Salary (as in effect as of the date of such termination) and bonus based upon the assumption that Executive would have fulfilled the requirements to earn his target bonus that would have been payable hereunder to Executive from the date of such termination for a period of twelve (12) months following the termination (and a prorate portion for any partial year). The Company shall continue to pay to Executive his Base Salary (as in effect as of the date of such termination) no less frequently than monthly in accordance with the Company’s normal payroll procedures, beginning with the first payroll date after the date of termination of Executive’s employment and continuing for twelve (12) months immediately following the termination. The Company also shall pay to Executive a bonus for each Company fiscal year (and a pro rata amount for each partial Company fiscal year) during the twelve (12) months immediately following Executive’s termination of employment in an amount equal to the bonus Executive would have received had he fulfilled the requirements to earn his target bonus that would have been payable during such time (or pro rata amount of such bonus for any partial Company fiscal year) with the bonus for any fiscal year or partial year to be paid after the end of such fiscal or partial year and within two and one-half (2-1/2) months thereafter. Notwithstanding the foregoing, all payments to be made or benefits to be provided under this Section are subject to the provisions of Section 5(f) below.
          (b) Stock . Subject to Section 10 hereof, on and as of the effective date of the termination of employment, all of Executive’s outstanding stock options and restricted stock grants under the Company’s stock option and other benefit plans shall immediately vest. Additionally, all of Executive’s outstanding stock options shall remain outstanding until the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment).
          (c) Life Insurance . The Company shall continue to provide Executive on a monthly basis with group and additional life insurance coverage, no less frequently than monthly, for a period of twelve (12) months immediately following termination of employment.
          (d) Medical Insurance . The Company shall continue to provide Executive and his family with group medical insurance coverage, no less frequently than monthly, under the Company’s medical plans (as the same may change from time to time) or other substantially similar health insurance for a period of twelve (12) months immediately following termination of employment.
          (e) Group Disability . The Company shall continue to provide Executive coverage, no less frequently than monthly, under the Company’s group disability plan for a period of twelve (12) months immediately following termination of employment (subject in the

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case of long-term disability to the availability of such coverage under Company’s insurance policy).
          (f) Section 409A . Notwithstanding any other provisions of this Agreement, it is intended that any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), will be provided and paid in a manner, and at such time, as complies with Section 409A of the Code. For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code. If Executive is a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) and any of Company’s stock is publicly traded on an established securities market or otherwise, then the payment of any amount or provision of any benefit under this Agreement which is considered to be nonqualified deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after the Termination Date or, if earlier, Executive’s death (the “409A Deferral Period”), as required by Section 409A(a)(2)(B)(i) of the Code. In the event payments are otherwise due to be made in installments or periodically during such 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled. In the event, benefits are otherwise to be provided hereunder during such 409A Deferral Period, any such benefits may be provided during the 409A Deferral Period at Executive’s expense, with Executive having a right to reimbursement for such expense from the Company as soon as the 409A Deferral Period ends, and the balance of the benefits shall be provided as otherwise scheduled. For purposes of this Agreement, Executive’s termination of employment shall be construed to mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services will be performed after such date or that the level of bona fide services Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to less than fifty percent (50%) of the average level of bona fide services performed over the immediately preceding thirty-six (36)-month period. Without limitation, if any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Code fails to comply with Section 409A of the Code, and Executive incurs any additional tax, interest and penalties under Section 409A of the Code, Company will pay Executive an additional amount so that, after paying all taxes, interest and penalties on such additional amount, Executive has an amount remaining equal to such additional tax, interest and penalties. All payments to be made to Executive pursuant to the immediately preceding sentence shall be payable no later than when the related taxes, interest and penalties are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of any tax liability addressed in the immediately preceding sentence must be made no later than when the related taxes, interest and penalties that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes, interest and penalties are remitted, within thirty (30) days of when the audit is completed or there is a final non-appealable settlement or resolution of the litigation.

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          (g) Offset . Any fringe benefits received by Executive in connection with any other employment that are reasonably comparable, but not necessarily as beneficial, to Executive as the fringe benefits then being provided by the Company pursuant to this Section 5, shall be deemed to be the equivalent of, and shall terminate the Company’s responsibility to continue providing, the fringe benefits then being provided by the Company pursuant to this Section 5. The Company acknowledges that if Executive’s employment with the Company is terminated, Executive shall have no duty to mitigate damages.
          (h) General Release . Acceptance by Executive of any amounts pursuant to this Section 5 shall constitute a full and complete release by Executive of any and all claims Executive may have against the Company, its officers, directors and affiliates, including, but not limited to, claims he might have relating to Executive’s cessation of employment with the Company; provided, however, that there may properly be excluded from the scope of such general release the following:
               (i) claims that Executive may have against the Company for reimbursement of ordinary and necessary business expenses incurred by him during the course of his employment;
               (ii) claims that may be made by the Executive for payment of Base Salary, fringe benefits or stock options properly due to him; or
               (iii) claims respecting matters for which the Executive is entitled to be indemnified under the Company’s Certificate of Incorporation or Bylaws, respecting third party claims asserted or third party litigation pending or threatened against the Executive.
Notwithstanding the foregoing, as a condition to the payment to Executive of any amounts pursuant to this Section 5, Executive shall execute and deliver to the Company a release in the customary form then being used by the Company, which may include non-disparagement and confidentiality agreements. In exchange for such release, the Company shall, if Executive’s employment is terminated without Cause, provide a release to Executive, but only with respect to claims against Executive which are actually known to the Company as of the time of such termination. Executive will be required to execute and not revoke the Company’s standard written release of any and all claims against the Company and all related parties with respect to all matters arising out of Executive’s employment by the Company (other than as described above) no later than thirty (30) days following Executive’s termination of employment (or such later time as the Company may permit). If the Executive does not provide such release, with the period for revoking same having already expired, then Company shall not be required to pay any further amounts pursuant to this Section 5 and Executive will be required to return to the Company any amounts previously paid pursuant to this Section 5.

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     6.  Effect of Change in Control .
          (a) If within one year following a “Change of Control” (as hereinafter defined), Executive terminates his employment with the Company for Good Reason (as hereinafter defined) or the Company terminates Executive’s employment for any reason other than Cause, death or disability, the Company shall pay to Executive: (1) an amount equal to one times the Executive’s Base Salary as of the date of termination; (2) an amount equal to one times the average annual cash bonus paid to Executive for the two fiscal years immediately preceding the date of termination (and a pro rata portion for any partial year); (3) all benefits under the Company’s various benefit plans, including group healthcare, dental and life, for the period equal to twelve months from the date of termination; and (4) subject to Section 10 hereof, on and as of the effective date of the termination of employment, all of Executive’s outstanding stock options and restricted stock grants under the Company’s stock option and other benefit plans shall immediately vest. The Company shall pay the amounts set forth in (1) and (2) above in one lump sum payment as soon as administratively practicable (and within thirty (30) days) following Executive’s termination of employment. The benefits provided under (3) above shall be provided no less frequently than monthly following the date of termination of employment. Additionally, Executive’s outstanding stock options shall remain outstanding until the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment). Notwithstanding the foregoing, all payments to be made and benefits to be provided under this Section are subject to the provisions of Section 5(f) above.
          (b) “Change of Control” shall mean the date as of which: (i) there shall be consummated (1) any consolidation or merger of the Company to which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company’s common stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company’s common stock immediately prior to the merger own more than 50% of the total fair market value or total voting power of the continuing or surviving entity, or (2) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company or (ii) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or (iii) otherwise (any person) as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended. (the “Exchange Act”)), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company’s outstanding common stock (in a single transaction or within twelve (12) months from the date of the final acquisition) or (iv) during any one year, individuals who at the beginning of such period constitute the entire Board of Directors of the Company shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company’s stockholders, of each new director was approved by a vote of at least two-thirds of the directors still then in office who were directors at the beginning of the period. This definition of “Change in Control” is intended to comply with the definition of a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code and shall be construed consistent with that intent.

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          (c) “Good Reason” shall mean any of the following actions taken by the Company without the Executive’s written consent after a Change of Control:
               (i) the assignment to the Executive by the Company of duties inconsistent with, or the reduction of the powers and functions associated with, the Executive’s position, duties, responsibilities and status with the Company immediately prior to a Change of Control or Potential Change of Control (as defined below), or an adverse change in Executive’s titles or offices as in effect immediately prior to a Change of Control or Potential Change of Control, or any removal of the Executive from or any failure to re-elect Executive to any of such positions, except in connection with the termination of his employment for Disability or Cause or as a result of Executive’s death except to the extent that a change in duties relates to the elimination of responsibilities attendant to the Company’s no longer being a publicly traded company;
               (ii) A reduction by the Company in the Executive’s Base Salary as in effect on the date of a Change of Control or Potential Change of Control, or as the same may be increased from time to time during the term of his Agreement;
               (iii) The Company shall require the Executive to be based anywhere other than at the Company’s principal executive offices or the location where the Executive is based on the date of a Change of Control or Potential Change of Control, or if Executive agrees to such relocation, the Company fails to reimburse the Executive for moving and all other expenses reasonably incurred with such move;
               (iv) The Company shall fail to continue in effect any Company-sponsored plan or benefit that is in effect on the date of a Change of Control or Potential Change of Control, that provides (A) incentive or bonus compensation, (B) fringe benefits such as vacation, medical benefits, life insurance and accident insurance, (C) reimbursement for reasonable expenses incurred by the Executive in connection with the performance of duties with the Company, or (D) pension benefits such as a Code Section 401(k) plan and the Company’s nonqualified defined benefit plan, except to the extent that such plans taken as a whole are replaced with substantially comparable plans;
               (vi) Any material breach by the Company of any provision of this Agreement; and
               (vii) Any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company effected in accordance with the provisions of Section 6.

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          (d) “Potential Change of Control” shall mean the date as of which (1) the Company enters into an agreement the consummation of which, or the approval by shareholders of which, would constitute a Change of Control; (ii) proxies for the election of Directors of the Company are solicited by anyone other than the Company; (iii) any person (including, but not limited to, any individual, partnership, joint venture, corporation, association or trust) publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change of Control; or (iv) any other event occurs which is deemed to be a Potential Change of Control by the Board and the Board adopts a resolution to the effect that a Potential Change of Control has occurred.
          (e) Company will pay to Executive the amount of any excise taxes, penalties and interest imposed on Executive under Section 4999 of the Code by reason of payments or benefits under the provisions of this Agreement, including this provision, and the amount of any federal and state income taxes, penalties and interest imposed on Executive by reason of payments to Executive under this Section. All payments to be made to Executive under this Section shall be payable no later than when the related taxes are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of a tax liability under this Section must be made no later than when the related taxes that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes are remitted, within thirty (30) days of when the audit is completed or there is a final and non-appealable settlement or resolution of the litigation.
7. Non-Competition .
          (a) As used in this Section:
          “Business of Company” means providing products and services to broadband internet service providers which support a full range of integrated voice, video and high-speed data services to the subscribers of such providers.
          “Restricted Period” means the period beginning on the Termination Date and ending twelve (12) months after the Termination Date.
          “Restricted Territory” means, and is limited to, the following Metropolitan Statistical Areas: (1) Atlanta — Sandy Springs — Marietta, (2) Denver — Aurora, (3) Portland — Vancouver — Beaverton, (4) Philadelphia — Camden — Wilmington, (5) New York — Northern New Jersey — Long Island, (6) San Francisco — Oakland — Fremont, (7) Los Angeles — Long Beach — Santa Ana, and (8) St. Louis. Executive acknowledges and agrees that this is the area in which the Company does business at the time of execution of this Agreement, and in which Executive will have responsibility, at a minimum, on behalf of the Company.
          “Material Contact” means contact in person, by telephone or by paper or electronic correspondence, in furtherance of the business interests of Company.

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          (b) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, within the Restricted Territory, perform services on his own behalf or on behalf of any other person or entity, which are the same as or similar to those he provided to Company and which support any business activities which compete with the Business of Company.
          (c) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective customers of Company with whom Executive had Material Contact, for the purpose of selling any products or services which compete with the Business of Company.
          (d) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective vendor of Company with whom Executive had Material Contact, for the purpose of providing products or services in support of any business activities which compete with the Business of Company.
          (e) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit or induce any employee or independent contractor of Company with whom Executive had Material Contact to terminate such employment or contract with Company.
Notwithstanding the foregoing, it is understood and agreed that, without limitation on other available remedies, the restrictions on Executive set forth in this Section 7(b), (c), (d) and (e) hereof shall not be applicable at any time that Company is in breach of its contractual obligations to Executive under this Agreement or the ARRIS Group, Inc. Supplemental Retirement Benefits Plan (the “Excess Benefit Plan”) following the thirty (30) days after being notified in writing by Executive of such breach and failure of Company to cure same. In the event Company cures such breach, the restrictions set forth in Sections 7(b), (c), (d) and (e) hereof shall continue pursuant to their terms as if such breach never occurred.
     8.  Nondisclosure of Trade Secrets . During the term of this Agreement, Executive will have access to and become familiar with various trade secrets and proprietary and confidential information of the Company, its subsidiaries and affiliates, including, but not limited to, processes, designs, computer programs, compilations of information, records, sales procedures, customer requirements, pricing techniques, product plans, marketing plans, strategic plans, customer lists, methods of doing business and other confidential information (collectively, referred to as “Trade Secrets”) which are owned by the Company, its subsidiaries and/or affiliates and regularly used in the operation of its business, and as to which the Company, its subsidiaries and/or affiliates take precautions to prevent dissemination to persons other than certain directors, officers and employees. Executive acknowledges and agrees that the Trade Secrets (1) are secret and not known in the industry; (2) give the Company or its subsidiaries or affiliates an advantage over competitors who do not know or use the Trade Secrets; (3) are of such value and nature as to make it reasonable and necessary to protect and preserve the confidentiality and secrecy of the Trade Secrets; and (4) are valuable, special and unique assets

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of the Company or its subsidiaries or affiliates, the disclosure of which could cause substantial injury and loss of profits and goodwill to the Company or its subsidiaries or affiliates. Executive may not use in any way or disclose any of the Trade Secrets, directly or indirectly, either during the term of this Agreement or at any time thereafter, except as required in the course of his employment under this Agreement, if required in connection with a judicial or administrative proceeding, or if the information becomes public knowledge other than as a result of an unauthorized disclosure by the Executive. All files, records, documents, information, data and similar items relating to the business of the Company, whether prepared by Executive or otherwise coming into his possession, will remain the exclusive property of the Company and may not be removed from the premises of the Company under any circumstances without the prior written consent of the Board (except in the ordinary course of business during Executive’s period of active employment under this Agreement), and in any event must be promptly delivered to the Company upon termination of Executive’s employment with the Company. Executive agrees that upon his receipt of any subpoena, process or other request to produce or divulge, directly or indirectly, any Trade Secrets to any entity, agency, tribunal or person, Executive shall timely notify and promptly hand deliver a copy of the subpoena, process or other request to the Board. For this purpose, Executive irrevocably nominates and appoints the Company (including any attorney retained by the Company), as his true and lawful attorney-in-fact, to act in Executive’s name, place and stead to perform any act that Executive might perform to defend and protect against any disclosure of any Trade Secrets.
     9.  Return of Profits . In the event that Executive violates any of the provisions of Sections 7 or 8 hereof or fails to provide the notice required by Section 4(d) hereof, the Company shall be entitled to receive from Executive the profits, if any, received by Executive upon exercise of any Company granted stock options or stock appreciation rights or upon lapse of the restrictions on any grant or restricted stock to the extent such options or rights were exercised, or such restrictions lapsed, subsequent to six months prior to the termination of Executive’s employment.
     10.  Severability . The parties hereto intend all provisions of Sections 7, 8 and 9 hereof to be enforced to the fullest extent permitted by law. Accordingly, should a court of competent jurisdiction determine that the scope of any provision of Sections 7, 8 or 9 hereof is too broad to be enforced as written, the parties intend that the court reform the provision to such narrower scope as it determines to be reasonable and enforceable. In addition, however, Executive agrees that the nonsolicitation and nondisclosure agreements set forth above each constitute separate agreements independently supported by good and adequate consideration shall be severable from the other provisions of, and shall survive, this Agreement. The existence of any claim or cause of action of Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants of Executive contained in the nonsolicitation and nondisclosure agreements. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision never constituted a part of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its

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severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added as part of this Agreement, a provision as similar in its terms to such illegal, invalid or enforceable provision as may be possible and be legal, valid and enforceable.
     11.  Arbitration — Exclusive Remedy .
          (a) The parties agree that the exclusive remedy or method of resolving all disputes or questions arising out of or relating to this Agreement shall be arbitration. Arbitration shall be held in Atlanta, Georgia by three arbitrators, one to be appointed by the Company, a second to be appointed by Executive, and a third to be appointed by those two arbitrators. The third arbitrator shall act as chairman. Any arbitration may be initiated by either party by written notice (“Arbitration Notice”) to the other party specifying the subject of the requested arbitration and appointing that party’s arbitrator.
          (b) If (i) the non-initiating party fails to appoint an arbitrator by written notice to the initiating party within ten days after the Arbitration Notice, or (ii) the two arbitrators appointed by the parties fail to appoint a third arbitrator within ten days after the date of the appointment of the second arbitrator, then the American Arbitration Association, upon application of the initiating party, shall appoint an arbitrator to fill that position.
          (c) The arbitration proceeding shall be conducted in accordance with the rules of the American Arbitration Association. A determination or award made or approved by at least two of the arbitrators shall be the valid and binding action of the arbitrators. The costs of arbitration (exclusive of the expense of a party in obtaining and presenting evidence and attending the arbitration and of the fees and expenses of legal counsel to a party, all of which shall be borne by that party) shall be borne by the Company only if Executive receives substantially the relief sought by him in the arbitration, whether by settlement, award or judgment; otherwise, the costs shall be borne equally between the parties. The arbitration determination or award shall be final and conclusive on the parties, and judgment upon such award may be entered and enforced in any court of competent jurisdiction. To the extent the Company is required to reimburse Executive for any such cost, fees and expenses, the Company shall reimburse such costs, fees and expenses within 90 days following the final determination, award, judgment or settlement.
     12.  Miscellaneous .
          (a) Notices . Any notices, consents, demands, requests, approvals and other communications to be given under this Agreement by either party to the other must be in writing and must be either (i) personally delivered, (ii) mailed by registered or certified mail, postage prepaid with return receipt requested, (iii) delivered by overnight express delivery service or same-day local courier service, or (iv) delivered by telex or facsimile transmission, to the address set forth below, or to such other address as may be designated by the parties from time to time in accordance with this Section 12(a):
     
          If to the Company:
  Arris Group, Inc.

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  3871 Lakefield Drive  
 
  Suwanee, Georgia 30024  
 
  Attention: Lawrence A. Margolis  
 
     
          If to Executive:
     
 
 
   
 
     
 
 
   
 
     
 
 
   
          Notices delivered personally or by overnight express delivery service or by local courier service are deemed given as of actual receipt. Mailed notices are deemed given three business days after mailing. Notices delivered by telex or facsimile transmission are deemed given upon receipt by the sender of the answer back (in the case of a telex) or transmission confirmation (in the case of a facsimile transmission).
          (b) Entire Agreement . This Agreement supersedes any and all other agreements, either oral or written, between the parties with respect to the subject matter of this Agreement and contains all of the covenants and agreements between the parties with respect to the subject matter of this Agreement.
          (c) Modification . No change or modification of this Agreement is valid or binding upon the parties, nor will any waiver of any term or condition in the future be so binding, unless the change or modification or waiver is in writing and signed by the parties to this Agreement.
          (d) Governing Law and Venue . The parties acknowledge and agree that this Agreement and the obligations and undertakings of the parties under this Agreement will be performable in Georgia. This Agreement is governed by, and construed in accordance with, the laws of the State of Georgia. If any action is brought to enforce or interpret this Agreement, venue for the action will be in Georgia.
          (e) Counterparts . This Agreement may be executed in counterparts, each of which constitutes an original, but all of which constitutes one document.
          (f) Costs . If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, each party shall bear its own costs and expenses.
          (g) Estate . If Executive dies prior to the expiration of the term of employment or during a period when monies are owing to him, any monies that may be due him from the Company under this Agreement as of the date of his death shall be paid to his estate and as when otherwise payable.
          (h) Assignment . The Company shall have the right to assign this Agreement to its successors or assigns. The terms “successors” and “assigns” shall include any person, corporation, partnership or other entity that buys all or substantially all of the Company’s assets or all of its stock, or with which the Company merges or consolidates. The rights, duties and

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benefits to Executive hereunder are personal to him, and no such right or benefit may be assigned by him.
          (i) Binding Effect . This Agreement is binding upon the parties hereto, together with their respective executors, administrators, successors, personal representatives, heirs and permitted assigns.
          (j) Waiver of Breach . The waiver by the Company or Executive of a breach of any provision of this Agreement by Executive or the Company may not operate or be construed as a waiver of any subsequent breach.
     13.  Rabbi Trust . The Company will establish an irrevocable grantor trust (as described in Section 671 of the Internal Revenue Code) for the purpose of accumulating assets to provide for any retirement obligations owed to Executive under the Excess Benefit Plan. The assets and income of such trust shall be subject only to the claims of the creditors of the Company in the event of the Company’s insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of such trust shall not affect the Company’s liability to pay benefits except that any liability under the Excess Benefit Plan shall be offset by any payments actually made to Executive from such trust. The Company will reasonably determine the amount to contribute to such trust pursuant to the requirements of the Excess Benefit Plan, and the investment of the assets of the trust shall be made in accordance with the terms of the trust document. Without limitation, but only to the extent not prohibited by Section 409A(b) of the Code, the Company agrees to contribute to the trust pursuant to the requirements of the Excess Benefit Plan sufficient amounts to provide for the Company’s liability to pay the benefits under such Excess Benefit Plan no later than when a “Change of Control” occurs. The terms of the trust shall contain such provisions as may be necessary to qualify the trust as a “rabbi trust” under applicable rules so that the supplemental retirement benefits may be considered “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
             
    “Company”    
 
           
    ARRIS GROUP, INC.    
 
           
 
  By:   /s/ Lawrence A. Margolis    
 
           
 
  Name:   Lawrence A. Margolis    
 
  Title:   Executive Vice President of Strategic Planning,    
 
      Administration and Chief Counsel, Secretary    
 
           
    “Executive”    
 
           
    /s/ Bruce McClelland    
         
    Bruce McClelland    

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Exhibit 10.3
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
      THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this “First Amendment”) is made and entered into effective as of the 26th day of November, 2008, by and between Arris Group, Inc., a Delaware corporation (“Company”), and Ronald M. Coppock (“Executive”).
      WHEREAS, the parties hereto entered into that certain Employment Agreement dated as of December 6, 2006 (the “Agreement”); and
      WHEREAS, the parties hereto now desire to amend the Agreement as provided herein to make certain changes and bring the Agreement into compliance with Section 409A of the Code.
      NOW, THEREFORE, for and in consideration of Executive’s continued employment with Company and the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Executive hereby agree as follows:
1. Capitalized terms that are used but not defined in this Amendment shall have the meaning specified in the Agreement.
2. The second sentence of Section 2(a) of the Agreement is amended in its entirety to read as follows:
Executive’s Base Salary will be payable in arrears (no less frequently than monthly) in accordance with the Company’s normal payroll procedures and will be reviewed annually and subject to upward adjustment at the discretion of the Chief Executive Officer and Compensation Committee, but will not be lowered except in connection with reductions applied to all executive officers.
3. Section 2(b) is amended by adding the following at the end thereof:
Executive’s bonus, if any, shall be payable as soon after the end of each calendar year to which it relates as it can be determined, but in any event within two and one-half (2-1/2) months thereafter.
4. Section 2(e) of the Agreement is amended by adding the following at the end thereof:
Such payments and reimbursements shall be made as soon as administratively practicable following submission of reasonable documentation and receipts for such expenses but all such payments and reimbursements shall be made no later than the last day of the calendar year following the calendar year in which Executive incurs the reimbursable expense.

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5. Section 4(a) of the Agreement is amended in its entirety to read as follows:
Executive’s employment shall terminate upon the death of Executive, provided, however, that the Company shall continue to pay no less frequently than monthly (in accordance with its normal payroll procedures) the Base Salary to Executive’s estate for a period of three months after the date of Executive’s death.
6. The last sentence of Section 4(e) of the Agreement is amended in its entirety to read as follows:
Notwithstanding the foregoing, Executive shall continue to receive his full salary and benefits under this Agreement for a period of six months after the effective date of such termination with his base salary payable in arrears no less frequently than monthly in accordance with the Company’s normal payroll procedures and continued benefits on a monthly basis through such time.
7. Section 4(f) of the Agreement is amended in its entirety to read as follows:
Following any expiration or termination of this Agreement and Executive’s employment hereunder, in addition any amounts owed pursuant to Section 5 hereof, the Company shall pay to Executive all amounts earned by Executive hereunder prior to the date of such expiration and termination, as soon as administratively practicable following the date of termination of Executive’s employment, in the normal course consistent with the provisions of this Agreement. Additionally, subject to Executive’s continued compliance with Sections 7 and 9 of this Agreement, if Executive terminates his employment with the Company without Good Reason on or after Executive attains age 62 (provided Executive has no less than 10 years of continuous service with Company as of such termination), all of Executive’s stock options and equity awards outstanding at termination of Executive’s employment shall continue to vest for four (4) years after the termination as if Executive remained employed through such time, and such stock options shall remain outstanding through the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment).
8. Section 5(a) of the Agreement is amended by adding to the end thereof the following:
The Company shall continue to pay to Executive his Base Salary (as in effect as of the date of such termination) no less frequently than monthly in accordance with the Company’s normal payroll procedures, beginning with the first payroll date after the date of termination of Executive’s employment and continuing for twelve (12) months immediately following the termination. The Company also shall pay to Executive a bonus for each Company fiscal year (and a pro rata amount for each partial Company fiscal year) during the twelve (12) months immediately following Executive’s termination of employment in an amount

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equal to the bonus Executive would have received had he fulfilled the requirements to earn his target bonus that would have been payable during such time (or pro rata amount of such bonus for any partial Company fiscal year) with the bonus for any fiscal year or partial year to be paid after the end of such fiscal or partial year and within two and one-half (2-1/2) months thereafter. Notwithstanding the foregoing, all payments to be made or benefits to be provided under this Section are subject to the provisions of Section 5(f) below.
9. Section 5(b) of the Agreement is amended by adding the following to the end thereof:
Additionally, all of Executive’s outstanding stock options shall remain outstanding until the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment).
10. Section 5(c) of the Agreement is amended in its entirety to read as follows:
The Company shall continue to provide Executive on a monthly basis with group and additional life insurance coverage, no less frequently than monthly, for a period of twelve (12) months immediately following termination of employment.
11. Section 5(d) of the Agreement is amended in its entirety to read as follows:
The Company shall continue to provide Executive and his family with group medical insurance coverage, no less frequently than monthly, under the Company’s medical plans (as the same may change from time to time) or other substantially similar health insurance for a period of twelve (12) months immediately following termination of employment.
12. Section 5(e) of the Agreement is amended in its entirety to read as follows:
The Company shall continue to provide Executive coverage, no less frequently than monthly, under the Company’s group disability plan for a period of twelve (12) months immediately following termination of employment (subject in the case of long-term disability to the availability of such coverage under Company’s insurance policy).
13. Section 5(f) of the Agreement is amended in its entirety to read as follows:
(f) Notwithstanding any other provisions of this Agreement, it is intended that any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), will be provided and paid in a manner, and at such time, as complies with Section 409A of the Code. For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of

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the Code. If Executive is a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) and any of Company’s stock is publicly traded on an established securities market or otherwise, then the payment of any amount or provision of any benefit under this Agreement which is considered to be nonqualified deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after the Termination Date or, if earlier, Executive’s death (the “409A Deferral Period”), as required by Section 409A(a)(2)(B)(i) of the Code. In the event payments are otherwise due to be made in installments or periodically during such 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled. In the event, benefits are otherwise to be provided hereunder during such 409A Deferral Period, any such benefits may be provided during the 409A Deferral Period at Executive’s expense, with Executive having a right to reimbursement for such expense from the Company as soon as the 409A Deferral Period ends, and the balance of the benefits shall be provided as otherwise scheduled. For purposes of this Agreement, Executive’s termination of employment shall be construed to mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services will be performed after such date or that the level of bona fide services Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to less than fifty percent (50%) of the average level of bona fide services performed over the immediately preceding thirty-six (36)-month period. Without limitation, if any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Code fails to comply with Section 409A of the Code, and Executive incurs any additional tax, interest and penalties under Section 409A of the Code, Company will pay Executive an additional amount so that, after paying all taxes, interest and penalties on such additional amount, Executive has an amount remaining equal to such additional tax, interest and penalties. All payments to be made to Executive pursuant to the immediately preceding sentence shall be payable no later than when the related taxes, interest and penalties are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of any tax liability addressed in the immediately preceding sentence must be made no later than when the related taxes, interest and penalties that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes, interest and penalties are remitted, within thirty (30) days of when the audit is completed or there is a final non-appealable settlement or resolution of the litigation.
14. Section 5(h) of the Agreement is amended by adding at the end thereof the following:
Executive will be required to execute and not revoke the Company’s standard written release of any and all claims against the Company and all related parties

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with respect to all matters arising out of Executive’s employment by the Company (other than as described above) no later than thirty (30) days following Executive’s termination of employment (or such later time as the Company may permit). If the Executive does not provide such release, with the period for revoking same having already expired, then Company shall not be required to pay any further amounts pursuant to this Section 5 and Executive will be required to return to the Company any amounts previously paid pursuant to this Section 5.
15. Section 6(a) of the Agreement is amended by adding to the end thereof the following:
The Company shall pay the amounts set forth in (1) and (2) above in one lump sum payment as soon as administratively practicable (and within thirty (30) days) following Executive’s termination of employment. The benefits provided under (3) above shall be provided no less frequently than monthly following the date of termination of employment. Additionally, Executive’s outstanding stock options shall remain outstanding until the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment). Notwithstanding the foregoing, all payments to be made and benefits to be provided under this Section are subject to the provisions of Section 5(f) above.
16. Section 6(b) of the Agreement is amended in its entirety to read as follows:
“Change of Control” shall mean the date as of which: (i) there shall be consummated (1) any consolidation or merger of the Company to which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company’s common stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company’s common stock immediately prior to the merger own more than 50% of the total fair market value or total voting power of the continuing or surviving entity, or (2) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company or (ii) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or (iii) otherwise (any person) as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended. (the “Exchange Act”)), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company’s outstanding common stock (in a single transaction or within twelve (12) months from the date of the final acquisition) or (iv) during any one year, individuals who at the beginning of such period constitute the entire Board of Directors of the Company shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company’s stockholders, of each new director was approved by a vote of at least two-thirds of the directors still then in office who were directors at the beginning of the period. This definition of “Change in Control” is intended to comply with the definition of a change in the ownership or effective control of the Company or in

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the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code and shall be construed consistent with that intent.
17. Sections 6(e), (f) and (g) are deleted amended in their entirety and replaced with new Section (e) as follows:
Company will pay to Executive the amount of any excise taxes, penalties and interest imposed on Executive under Section 4999 of the Code by reason of payments or benefits under the provisions of this Agreement, including this provision, and the amount of any federal and state income taxes, penalties and interest imposed on Executive by reason of payments to Executive under this Section. All payments to be made to Executive under this Section shall be payable no later than when the related taxes are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of a tax liability under this Section must be made no later than when the related taxes that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes are remitted, within thirty (30) days of when the audit is completed or there is a final and non-appealable settlement or resolution of the litigation.
18. Section 7 and 8 of the Agreement are deleted in their entirety and replaced with new Section 7 to read as follows:
(a) As used in this Section:
“Business of Company” means providing products and services to broadband internet service providers which support a full range of integrated voice, video and high-speed data services to the subscribers of such providers.
“Restricted Period” means the period beginning on the Termination Date and ending twelve (12) months after the Termination Date.
“Restricted Territory” means, and is limited to, the following Metropolitan Statistical Areas: (1) Atlanta — Sandy Springs — Marietta, (2) Denver — Aurora, (3) Portland — Vancouver — Beaverton, (4) Philadelphia — Camden — Wilmington, (5) New York — Northern New Jersey — Long Island, (6) San Francisco — Oakland — Fremont, (7) Los Angeles — Long Beach — Santa Ana, and (8) St. Louis. Executive acknowledges and agrees that this is the area in which the Company does business at the time of execution of this Agreement, and in which Executive will have responsibility, at a minimum, on behalf of the Company.
“Material Contact” means contact in person, by telephone or by paper or electronic correspondence, in furtherance of the business interests of Company.

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(b) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, within the Restricted Territory, perform services on his own behalf or on behalf of any other person or entity, which are the same as or similar to those he provided to Company and which support any business activities which compete with the Business of Company.
(c) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective customers of Company with whom Executive had Material Contact, for the purpose of selling any products or services which compete with the Business of Company.
(d) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective vendor of Company with whom Executive had Material Contact, for the purpose of providing products or services in support of any business activities which compete with the Business of Company.
(e) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit or induce any employee or independent contractor of Company with whom Executive had Material Contact to terminate such employment or contract with Company.
Notwithstanding the foregoing, it is understood and agreed that, without limitation on other available remedies, the restrictions on Executive set forth in this Section 7(b), (c), (d) and (e) hereof shall not be applicable at any time that Company is in breach of its contractual obligations to Executive under this Agreement or the ARRIS Group, Inc. Supplemental Retirement Benefits Plan (the “Excess Benefit Plan”) following the thirty (30) days after being notified in writing by Executive of such breach and failure of Company to cure same. In the event Company cures such breach, the restrictions set forth in Sections 7(b), (c), (d) and (e) hereof shall continue pursuant to their terms as if such breach never occurred.
19. Section 10 of the Agreement is amended in its entirety to read as follows:
In the event that Executive violates any of the provisions of Sections 7 or 9 hereof or fails to provide the notice required by Section 4(d) hereof, the Company shall be entitled to receive from Executive the profits, if any, received by Executive upon exercise of any Company granted stock options or stock appreciation rights or upon lapse of the restrictions on any grant or restricted stock to the extent such options or rights were exercised, or such restrictions lapsed, subsequent to six months prior to the termination of Executive’s employment.
20. New Section 14 of the Agreement is added to read as follows:

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14. Rabbi Trust . The Company will establish an irrevocable grantor trust (as described in Section 671 of the Internal Revenue Code) for the purpose of accumulating assets to provide for any retirement obligations owed to Executive under the Excess Benefit Plan. The assets and income of such trust shall be subject only to the claims of the creditors of the Company in the event of the Company’s insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of such trust shall not affect the Company’s liability to pay benefits except that any liability under the Excess Benefit Plan shall be offset by any payments actually made to Executive from such trust. The Company will reasonably determine the amount to contribute to such trust pursuant to the requirements of the Excess Benefit Plan, and the investment of the assets of the trust shall be made in accordance with the terms of the trust document. Without limitation, but only to the extent not prohibited by Section 409A(b) of the Code, the Company agrees to contribute to the trust pursuant to the requirements of the Excess Benefit Plan sufficient amounts to provide for the Company’s liability to pay the benefits under such Excess Benefit Plan no later than when a “Change of Control” occurs. The terms of the trust shall contain such provisions as may be necessary to qualify the trust as a “rabbi trust” under applicable rules so that the supplemental retirement benefits may be considered “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended.
21. Section 11 of the Agreement is amended by replacing the references to Sections 7, 8, 9 and 10 to Sections 7, 9 and 10.
22. Section 12(c) of the Agreement is hereby amended by adding the following to the end of Section 12(c) to read as follows:
To the extent the Company is required to reimburse Executive for any such cost, fees and expenses, the Company shall reimburse such costs, fees and expenses within 90 days following the final determination, award, judgment or settlement.
23. Except as amended hereby, the Agreement shall remain in full force and effect.
24. The provisions of Section 13 of the Agreement shall apply to this First Amendment as if set forth in its entirety herein.

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      IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the day first above written.
             
    COMPANY    
 
           
    Arris Group, Inc.    
 
           
 
  By:   /s/ Lawrence A. Margolis    
 
           
 
  Name:   Lawrence A. Margolis    
 
  Title:   Executive Vice President of Strategic Planning,
Administration and Chief Counsel, Secretary
   
 
           
    EXECUTIVE    
 
           
    /s/ Ronald M. Coppock    
         
    Ronald M. Coppock    

9

Exhibit 10.4
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
      THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this “First Amendment”) is made and entered into effective as of the 26th day of November, 2008, by and between Arris Group, Inc., a Delaware corporation (“Company”), and Bryant K. Isaacs (“Executive”).
      WHEREAS, the parties hereto entered into that certain Employment Agreement dated as of December 7, 2006 (the “Agreement”); and
      WHEREAS, the parties hereto now desire to amend the Agreement as provided herein to make certain changes and bring the Agreement into compliance with Section 409A of the Code.
      NOW, THEREFORE, for and in consideration of Executive’s continued employment with Company and the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Executive hereby agree as follows:
1. Capitalized terms that are used but not defined in this Amendment shall have the meaning specified in the Agreement.
2. The second sentence of Section 2(a) of the Agreement is amended in its entirety to read as follows:
Executive’s Base Salary will be payable in arrears (no less frequently than monthly) in accordance with the Company’s normal payroll procedures and will be reviewed annually and subject to upward adjustment at the discretion of the Chief Executive Officer and Compensation Committee, but will not be lowered except in connection with reductions applied to all executive officers.
3. Section 2(b) is amended by adding the following at the end thereof:
Executive’s bonus, if any, shall be payable as soon after the end of each calendar year to which it relates as it can be determined, but in any event within two and one-half (2-1/2) months thereafter.
4. Section 2(e) of the Agreement is amended by adding the following at the end thereof:
Such payments and reimbursements shall be made as soon as administratively practicable following submission of reasonable documentation and receipts for such expenses but all such payments and reimbursements shall be made no later than the last day of the calendar year following the calendar year in which Executive incurs the reimbursable expense.

 


 

5. Section 4(a) of the Agreement is amended in its entirety to read as follows:
Executive’s employment shall terminate upon the death of Executive, provided, however, that the Company shall continue to pay no less frequently than monthly (in accordance with its normal payroll procedures) the Base Salary to Executive’s estate for a period of three months after the date of Executive’s death.
6. The last sentence of Section 4(e) of the Agreement is amended in its entirety to read as follows:
Notwithstanding the foregoing, Executive shall continue to receive his full salary and benefits under this Agreement for a period of six months after the effective date of such termination with his base salary payable in arrears no less frequently than monthly in accordance with the Company’s normal payroll procedures and continued benefits on a monthly basis through such time.
7. Section 4(f) of the Agreement is amended in its entirety to read as follows:
Following any expiration or termination of this Agreement and Executive’s employment hereunder, in addition any amounts owed pursuant to Section 5 hereof, the Company shall pay to Executive all amounts earned by Executive hereunder prior to the date of such expiration and termination, as soon as administratively practicable following the date of termination of Executive’s employment, in the normal course consistent with the provisions of this Agreement. Additionally, subject to Executive’s continued compliance with Sections 7 and 9 of this Agreement, if Executive terminates his employment with the Company without Good Reason on or after Executive attains age 62 (provided Executive has no less than 10 years of continuous service with Company as of such termination), all of Executive’s stock options and equity awards outstanding at termination of Executive’s employment shall continue to vest for four (4) years after the termination as if Executive remained employed through such time, and such stock options shall remain outstanding through the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment).
8. Section 5(a) of the Agreement is amended by adding to the end thereof the following:
The Company shall continue to pay to Executive his Base Salary (as in effect as of the date of such termination) no less frequently than monthly in accordance with the Company’s normal payroll procedures, beginning with the first payroll date after the date of termination of Executive’s employment and continuing for twelve (12) months immediately following the termination. The Company also shall pay to Executive a bonus for each Company fiscal year (and a pro rata amount for each partial Company fiscal year) during the twelve (12) months immediately following Executive’s termination of employment in an amount

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equal to the bonus Executive would have received had he fulfilled the requirements to earn his target bonus that would have been payable during such time (or pro rata amount of such bonus for any partial Company fiscal year) with the bonus for any fiscal year or partial year to be paid after the end of such fiscal or partial year and within two and one-half (2-1/2) months thereafter. Notwithstanding the foregoing, all payments to be made or benefits to be provided under this Section are subject to the provisions of Section 5(f) below.
9. Section 5(b) of the Agreement is amended by adding the following to the end thereof:
Additionally, all of Executive’s outstanding stock options shall remain outstanding until the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment).
10. Section 5(c) of the Agreement is amended in its entirety to read as follows:
The Company shall continue to provide Executive on a monthly basis with group and additional life insurance coverage, no less frequently than monthly, for a period of twelve (12) months immediately following termination of employment.
11. Section 5(d) of the Agreement is amended in its entirety to read as follows:
The Company shall continue to provide Executive and his family with group medical insurance coverage, no less frequently than monthly, under the Company’s medical plans (as the same may change from time to time) or other substantially similar health insurance for a period of twelve (12) months immediately following termination of employment.
12. Section 5(e) of the Agreement is amended in its entirety to read as follows:
The Company shall continue to provide Executive coverage, no less frequently than monthly, under the Company’s group disability plan for a period of twelve (12) months immediately following termination of employment (subject in the case of long-term disability to the availability of such coverage under Company’s insurance policy).
13. Section 5(f) of the Agreement is amended in its entirety to read as follows:
(f) Notwithstanding any other provisions of this Agreement, it is intended that any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), will be provided and paid in a manner, and at such time, as complies with Section 409A of the Code. For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of

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the Code. If Executive is a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) and any of Company’s stock is publicly traded on an established securities market or otherwise, then the payment of any amount or provision of any benefit under this Agreement which is considered to be nonqualified deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after the Termination Date or, if earlier, Executive’s death (the “409A Deferral Period”), as required by Section 409A(a)(2)(B)(i) of the Code. In the event payments are otherwise due to be made in installments or periodically during such 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled. In the event, benefits are otherwise to be provided hereunder during such 409A Deferral Period, any such benefits may be provided during the 409A Deferral Period at Executive’s expense, with Executive having a right to reimbursement for such expense from the Company as soon as the 409A Deferral Period ends, and the balance of the benefits shall be provided as otherwise scheduled. For purposes of this Agreement, Executive’s termination of employment shall be construed to mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services will be performed after such date or that the level of bona fide services Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to less than fifty percent (50%) of the average level of bona fide services performed over the immediately preceding thirty-six (36)-month period. Without limitation, if any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Code fails to comply with Section 409A of the Code, and Executive incurs any additional tax, interest and penalties under Section 409A of the Code, Company will pay Executive an additional amount so that, after paying all taxes, interest and penalties on such additional amount, Executive has an amount remaining equal to such additional tax, interest and penalties. All payments to be made to Executive pursuant to the immediately preceding sentence shall be payable no later than when the related taxes, interest and penalties are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of any tax liability addressed in the immediately preceding sentence must be made no later than when the related taxes, interest and penalties that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes, interest and penalties are remitted, within thirty (30) days of when the audit is completed or there is a final non-appealable settlement or resolution of the litigation.
14. Section 5(h) of the Agreement is amended by adding at the end thereof the following:
Executive will be required to execute and not revoke the Company’s standard written release of any and all claims against the Company and all related parties

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with respect to all matters arising out of Executive’s employment by the Company (other than as described above) no later than thirty (30) days following Executive’s termination of employment (or such later time as the Company may permit). If the Executive does not provide such release, with the period for revoking same having already expired, then Company shall not be required to pay any further amounts pursuant to this Section 5 and Executive will be required to return to the Company any amounts previously paid pursuant to this Section 5.
15. Section 6(a) of the Agreement is amended by adding to the end thereof the following:
The Company shall pay the amounts set forth in (1) and (2) above in one lump sum payment as soon as administratively practicable (and within thirty (30) days) following Executive’s termination of employment. The benefits provided under (3) above shall be provided no less frequently than monthly following the date of termination of employment. Additionally, Executive’s outstanding stock options shall remain outstanding until the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment). Notwithstanding the foregoing, all payments to be made and benefits to be provided under this Section are subject to the provisions of Section 5(f) above.
16. Section 6(b) of the Agreement is amended in its entirety to read as follows:
“Change of Control” shall mean the date as of which: (i) there shall be consummated (1) any consolidation or merger of the Company to which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company’s common stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company’s common stock immediately prior to the merger own more than 50% of the total fair market value or total voting power of the continuing or surviving entity, or (2) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company or (ii) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or (iii) otherwise (any person) as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended. (the “Exchange Act”)), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company’s outstanding common stock (in a single transaction or within twelve (12) months from the date of the final acquisition) or (iv) during any one year, individuals who at the beginning of such period constitute the entire Board of Directors of the Company shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company’s stockholders, of each new director was approved by a vote of at least two-thirds of the directors still then in office who were directors at the beginning of the period. This definition of “Change in Control” is intended to comply with the definition of a change in the ownership or effective control of the Company or in

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the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code and shall be construed consistent with that intent.
17. Sections 6(e), (f) and (g) are deleted amended in their entirety and replaced with new Section (e) as follows:
Company will pay to Executive the amount of any excise taxes, penalties and interest imposed on Executive under Section 4999 of the Code by reason of payments or benefits under the provisions of this Agreement, including this provision, and the amount of any federal and state income taxes, penalties and interest imposed on Executive by reason of payments to Executive under this Section. All payments to be made to Executive under this Section shall be payable no later than when the related taxes are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of a tax liability under this Section must be made no later than when the related taxes that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes are remitted, within thirty (30) days of when the audit is completed or there is a final and non-appealable settlement or resolution of the litigation.
18. Section 7 and 8 of the Agreement are deleted in their entirety and replaced with new Section 7 to read as follows:
(a) As used in this Section:
“Business of Company” means providing products and services to broadband internet service providers which support a full range of integrated voice, video and high-speed data services to the subscribers of such providers.
“Restricted Period” means the period beginning on the Termination Date and ending twelve (12) months after the Termination Date.
“Restricted Territory” means, and is limited to, the following Metropolitan Statistical Areas: (1) Atlanta — Sandy Springs — Marietta, (2) Denver — Aurora, (3) Portland — Vancouver — Beaverton, (4) Philadelphia — Camden — Wilmington, (5) New York — Northern New Jersey — Long Island, (6) San Francisco — Oakland — Fremont, (7) Los Angeles — Long Beach — Santa Ana, and (8) St. Louis. Executive acknowledges and agrees that this is the area in which the Company does business at the time of execution of this Agreement, and in which Executive will have responsibility, at a minimum, on behalf of the Company.
“Material Contact” means contact in person, by telephone or by paper or electronic correspondence, in furtherance of the business interests of Company.

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(b) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, within the Restricted Territory, perform services on his own behalf or on behalf of any other person or entity, which are the same as or similar to those he provided to Company and which support any business activities which compete with the Business of Company.
(c) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective customers of Company with whom Executive had Material Contact, for the purpose of selling any products or services which compete with the Business of Company.
(d) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective vendor of Company with whom Executive had Material Contact, for the purpose of providing products or services in support of any business activities which compete with the Business of Company.
(e) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit or induce any employee or independent contractor of Company with whom Executive had Material Contact to terminate such employment or contract with Company.
Notwithstanding the foregoing, it is understood and agreed that, without limitation on other available remedies, the restrictions on Executive set forth in this Section 7(b), (c), (d) and (e) hereof shall not be applicable at any time that Company is in breach of its contractual obligations to Executive under this Agreement or the ARRIS Group, Inc. Supplemental Retirement Benefits Plan (the “Excess Benefit Plan”) following the thirty (30) days after being notified in writing by Executive of such breach and failure of Company to cure same. In the event Company cures such breach, the restrictions set forth in Sections 7(b), (c), (d) and (e) hereof shall continue pursuant to their terms as if such breach never occurred.
19. Section 10 of the Agreement is amended in its entirety to read as follows:
In the event that Executive violates any of the provisions of Sections 7 or 9 hereof or fails to provide the notice required by Section 4(d) hereof, the Company shall be entitled to receive from Executive the profits, if any, received by Executive upon exercise of any Company granted stock options or stock appreciation rights or upon lapse of the restrictions on any grant or restricted stock to the extent such options or rights were exercised, or such restrictions lapsed, subsequent to six months prior to the termination of Executive’s employment.
20. New Section 14 of the Agreement is added to read as follows:

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14. Rabbi Trust . The Company will establish an irrevocable grantor trust (as described in Section 671 of the Internal Revenue Code) for the purpose of accumulating assets to provide for any retirement obligations owed to Executive under the Excess Benefit Plan. The assets and income of such trust shall be subject only to the claims of the creditors of the Company in the event of the Company’s insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of such trust shall not affect the Company’s liability to pay benefits except that any liability under the Excess Benefit Plan shall be offset by any payments actually made to Executive from such trust. The Company will reasonably determine the amount to contribute to such trust pursuant to the requirements of the Excess Benefit Plan, and the investment of the assets of the trust shall be made in accordance with the terms of the trust document. Without limitation, but only to the extent not prohibited by Section 409A(b) of the Code, the Company agrees to contribute to the trust pursuant to the requirements of the Excess Benefit Plan sufficient amounts to provide for the Company’s liability to pay the benefits under such Excess Benefit Plan no later than when a “Change of Control” occurs. The terms of the trust shall contain such provisions as may be necessary to qualify the trust as a “rabbi trust” under applicable rules so that the supplemental retirement benefits may be considered “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended.
21. Section 11 of the Agreement is amended by replacing the references to Sections 7, 8, 9 and 10 to Sections 7, 9 and 10.
22. Section 12(c) of the Agreement is hereby amended by adding the following to the end of Section 12(c) to read as follows:
To the extent the Company is required to reimburse Executive for any such cost, fees and expenses, the Company shall reimburse such costs, fees and expenses within 90 days following the final determination, award, judgment or settlement.
23. Except as amended hereby, the Agreement shall remain in full force and effect.
24. The provisions of Section 13 of the Agreement shall apply to this First Amendment as if set forth in its entirety herein.

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      IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the day first above written.
             
    COMPANY    
 
           
    Arris Group, Inc.    
 
           
 
  By:
Name:
  /s/ Lawrence A. Margolis
 
Lawrence A. Margolis
   
 
  Title:   Executive Vice President of Strategic Planning,
Administration and Chief Counsel, Secretary
   
 
           
    EXECUTIVE    
 
           
    /s/ Bryant K. Isaccs    
         
    Bryant K. Isaacs    

9

Exhibit 10.5
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
      THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this “First Amendment”) is made and entered into effective as of the 26th day of November, 2008, by and between Arris Group, Inc., a Delaware corporation (“Company”), and James D. Lakin (“Executive”).
      WHEREAS, the parties hereto entered into that certain Employment Agreement dated as of December 7, 2006 (the “Agreement”); and
      WHEREAS, the parties hereto now desire to amend the Agreement as provided herein to make certain changes and bring the Agreement into compliance with Section 409A of the Code.
      NOW, THEREFORE, for and in consideration of Executive’s continued employment with Company and the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Executive hereby agree as follows:
1.   Capitalized terms that are used but not defined in this Amendment shall have the meaning specified in the Agreement.
 
2.   The second sentence of Section 2(a) of the Agreement is amended in its entirety to read as follows:
    Executive’s Base Salary will be payable in arrears (no less frequently than monthly) in accordance with the Company’s normal payroll procedures and will be reviewed annually and subject to upward adjustment at the discretion of the Chief Executive Officer and Compensation Committee, but will not be lowered except in connection with reductions applied to all executive officers.
 
3.   Section 2(b) is amended by adding the following at the end thereof:
 
    Executive’s bonus, if any, shall be payable as soon after the end of each calendar year to which it relates as it can be determined, but in any event within two and one-half (2-1/2) months thereafter.
 
4.   Section 2(e) of the Agreement is amended by adding the following at the end thereof:
    Such payments and reimbursements shall be made as soon as administratively practicable following submission of reasonable documentation and receipts for such expenses but all such payments and reimbursements shall be made no later than the last day of the calendar year following the calendar year in which Executive incurs the reimbursable expense.

 


 

5.   Section 4(a) of the Agreement is amended in its entirety to read as follows:
 
    Executive’s employment shall terminate upon the death of Executive, provided, however, that the Company shall continue to pay no less frequently than monthly (in accordance with its normal payroll procedures) the Base Salary to Executive’s estate for a period of three months after the date of Executive’s death.
 
6.   The last sentence of Section 4(e) of the Agreement is amended in its entirety to read as follows:
    Notwithstanding the foregoing, Executive shall continue to receive his full salary and benefits under this Agreement for a period of six months after the effective date of such termination with his base salary payable in arrears no less frequently than monthly in accordance with the Company’s normal payroll procedures and continued benefits on a monthly basis through such time.
 
7.   Section 4(f) of the Agreement is amended in its entirety to read as follows:
Following any expiration or termination of this Agreement and Executive’s employment hereunder, in addition any amounts owed pursuant to Section 5 hereof, the Company shall pay to Executive all amounts earned by Executive hereunder prior to the date of such expiration and termination, as soon as administratively practicable following the date of termination of Executive’s employment, in the normal course consistent with the provisions of this Agreement.
 
8.   Section 5(a) of the Agreement is amended by adding to the end thereof the following:
The Company shall continue to pay to Executive his Base Salary (as in effect as of the date of such termination) no less frequently than monthly in accordance with the Company’s normal payroll procedures, beginning with the first payroll date after the date of termination of Executive’s employment and continuing for twelve (12) months immediately following the termination. The Company also shall pay to Executive a bonus for each Company fiscal year (and a pro rata amount for each partial Company fiscal year) during the twelve (12) months immediately following Executive’s termination of employment in an amount equal to the bonus Executive would have received had he fulfilled the requirements to earn his target bonus that would have been payable during such time (or pro rata amount of such bonus for any partial Company fiscal year) with the bonus for any fiscal year or partial year to be paid after the end of such fiscal or partial year and within two and one-half (2-1/2) months thereafter. Notwithstanding the foregoing, all payments to be made or benefits to be provided under this Section are subject to the provisions of Section 5(f) below.

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9.   Section 5(c) of the Agreement is amended in its entirety to read as follows:
 
    The Company shall continue to provide Executive on a monthly basis with group and additional life insurance coverage, no less frequently than monthly, for a period of twelve (12) months immediately following termination of employment.
 
10.   Section 5(d) of the Agreement is amended in its entirety to read as follows:
 
    The Company shall continue to provide Executive and his family with group medical insurance coverage, no less frequently than monthly, under the Company’s medical plans (as the same may change from time to time) or other substantially similar health insurance for a period of twelve (12) months immediately following termination of employment.
 
11.   Section 5(e) of the Agreement is amended in its entirety to read as follows:
 
    The Company shall continue to provide Executive coverage, no less frequently than monthly, under the Company’s group disability plan for a period of twelve (12) months immediately following termination of employment (subject in the case of long-term disability to the availability of such coverage under Company’s insurance policy).
 
12.   Section 5(f) of the Agreement is amended in its entirety to read as follows:
 
    (f) Notwithstanding any other provisions of this Agreement, it is intended that any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), will be provided and paid in a manner, and at such time, as complies with Section 409A of the Code. For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code. If Executive is a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) and any of Company’s stock is publicly traded on an established securities market or otherwise, then the payment of any amount or provision of any benefit under this Agreement which is considered to be nonqualified deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after the Termination Date or, if earlier, Executive’s death (the “409A Deferral Period”), as required by Section 409A(a)(2)(B)(i) of the Code. In the event payments are otherwise due to be made in installments or periodically during such 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled. In the event, benefits are otherwise to be provided hereunder during such 409A Deferral Period, any such benefits may be provided during the 409A Deferral

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    Period at Executive’s expense, with Executive having a right to reimbursement for such expense from the Company as soon as the 409A Deferral Period ends, and the balance of the benefits shall be provided as otherwise scheduled. For purposes of this Agreement, Executive’s termination of employment shall be construed to mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services will be performed after such date or that the level of bona fide services Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to less than fifty percent (50%) of the average level of bona fide services performed over the immediately preceding thirty-six (36)-month period. Without limitation, if any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Code fails to comply with Section 409A of the Code, and Executive incurs any additional tax, interest and penalties under Section 409A of the Code, Company will pay Executive an additional amount so that, after paying all taxes, interest and penalties on such additional amount, Executive has an amount remaining equal to such additional tax, interest and penalties. All payments to be made to Executive pursuant to the immediately preceding sentence shall be payable no later than when the related taxes, interest and penalties are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of any tax liability addressed in the immediately preceding sentence must be made no later than when the related taxes, interest and penalties that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes, interest and penalties are remitted, within thirty (30) days of when the audit is completed or there is a final non-appealable settlement or resolution of the litigation.
 
13.   Section 5(h) of the Agreement is amended by adding at the end thereof the following:
 
    Executive will be required to execute and not revoke the Company’s standard written release of any and all claims against the Company and all related parties with respect to all matters arising out of Executive’s employment by the Company (other than as described above) no later than thirty (30) days following Executive’s termination of employment (or such later time as the Company may permit). If the Executive does not provide such release, with the period for revoking same having already expired, then Company shall not be required to pay any further amounts pursuant to this Section 5 and Executive will be required to return to the Company any amounts previously paid pursuant to this Section 5.
 
14.   Section 6(a) of the Agreement is amended in its entirety to read as follows:
 
    Commencing on the day following Executive’s normal retirement date (age 65), unless the Company and Executive agree in writing to defer his change in status, either indefinitely or for a specific period, Executive shall assume the status of a special employee to the Company and shall have and perform such responsibilities and receive such compensation as the Company and Executive

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    shall agree. This status shall continue, without termination, until May 30, 2013, at which time without any further action on the part of the Company or Executive, it shall terminate. In no event may Executive’s special status terminate before May 30, 2013, without Executive’s express written consent.
 
15.   Section 6(b) of the Agreement is amended in its entirety to read as follows:
 
    During the period that Executive serves as a special employee, only Sections 2(c) with respect to medical coverage only for Executive and his spouse (but excluding life, disability and other fringe benefits or perquisites), 2(e) 8, 9, 10, 11, 12, 13 and 14 hereof shall remain in effect, and for purposes of such sections, and for the avoidance of doubt, for purposes of continued vesting of restricted shares and stock options as well, Executive shall be treated as a full-time employee until May 30, 2013 or such earlier termination with Executive’s express written consent. Accordingly, subject to Executive’s continued compliance with Sections 8 and 10 of this Agreement, all of Executive’s stock options and equity awards outstanding shall continue to vest until May 30, 2013 or such earlier termination with Executive’s express written consent, as if Executive remained employed as a full-time employee through such time, and such stock options shall remain outstanding through the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s special status or subsequent termination of employment).
 
16.   Section 7(a) of the Agreement is amended by adding to the end thereof the following:
 
    The Company shall pay the amounts set forth in (1) and (2) above in one lump sum payment as soon as administratively practicable (and within thirty (30) days) following Executive’s termination of employment. The benefits provided under (3) above shall be provided no less frequently than monthly following the date of termination of employment. Notwithstanding the foregoing, all payments to be made and benefits to be provided under this Section are subject to the provisions of Section 5(f) above.
 
17.   Section 7(b) of the Agreement is amended in its entirety to read as follows:
 
    “Change of Control” shall mean the date as of which: (i) there shall be consummated (1) any consolidation or merger of the Company to which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company’s common stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company’s common stock immediately prior to the merger own more than 50% of the total fair market value or total voting power of the continuing or surviving entity, or (2) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company or (ii) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or (iii) otherwise (any person)

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    as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended. (the “Exchange Act”)), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company’s outstanding common stock (in a single transaction or within twelve (12) months from the date of the final acquisition) or (iv) during any one year, individuals who at the beginning of such period constitute the entire Board of Directors of the Company shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company’s stockholders, of each new director was approved by a vote of at least two-thirds of the directors still then in office who were directors at the beginning of the period. This definition of “Change in Control” is intended to comply with the definition of a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code and shall be construed consistent with that intent.
 
18.   Section 7(e) is amended in its entirety to read as follows:
 
    Company will pay to Executive the amount of any excise taxes, penalties and interest imposed on Executive under Section 4999 of the Code by reason of payments or benefits under the provisions of this Agreement, including this provision, and the amount of any federal and state income taxes, penalties and interest imposed on Executive by reason of payments to Executive under this Section. All payments to be made to Executive under this Section shall be payable no later than when the related taxes are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of a tax liability under this Section must be made no later than when the related taxes that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes are remitted, within thirty (30) days of when the audit is completed or there is a final and non-appealable settlement or resolution of the litigation.
 
19.   Section 8 and 9 of the Agreement are deleted in their entirety and replaced with new Section 8 to read as follows:
(a) As used in this Section:
“Business of Company” means providing products and services to broadband internet service providers which support a full range of integrated voice, video and high-speed data services to the subscribers of such providers.
“Restricted Period” means the period beginning on the Termination Date and ending twelve (12) months after the Termination Date.
“Restricted Territory” means, and is limited to, the following Metropolitan Statistical Areas: (1) Atlanta — Sandy Springs — Marietta, (2) Denver — Aurora, (3)

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Portland — Vancouver — Beaverton, (4) Philadelphia — Camden — Wilmington, (5) New York — Northern New Jersey — Long Island, (6) San Francisco — Oakland — Fremont, (7) Los Angeles — Long Beach — Santa Ana, and (8) St. Louis. Executive acknowledges and agrees that this is the area in which the Company does business at the time of execution of this Agreement, and in which Executive will have responsibility, at a minimum, on behalf of the Company.
“Material Contact” means contact in person, by telephone or by paper or electronic correspondence, in furtherance of the business interests of Company.
(b) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, within the Restricted Territory, perform services on his own behalf or on behalf of any other person or entity, which are the same as or similar to those he provided to Company and which support any business activities which compete with the Business of Company.
(c) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective customers of Company with whom Executive had Material Contact, for the purpose of selling any products or services which compete with the Business of Company.
(d) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective vendor of Company with whom Executive had Material Contact, for the purpose of providing products or services in support of any business activities which compete with the Business of Company.
(e) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit or induce any employee or independent contractor of Company with whom Executive had Material Contact to terminate such employment or contract with Company.
Notwithstanding the foregoing, it is understood and agreed that, without limitation on other available remedies, the restrictions on Executive set forth in this Section 7(b), (c), (d) and (e) hereof shall not be applicable at any time that Company is in breach of its contractual obligations to Executive under this Agreement or the ARRIS Group, Inc. Supplemental Retirement Benefits Plan (the “Excess Benefit Plan”) following the thirty (30) days after being notified in writing by Executive of such breach and failure of Company to cure same. In the event Company cures such breach, the restrictions set forth in Sections 7(b), (c), (d) and (e) hereof shall continue pursuant to their terms as if such breach never occurred.
20.   Section 10 of the Agreement is amended in its entirety to read as follows:

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    In the event that Executive violates any of the provisions of Sections 8 or 10 hereof or fails to provide the notice required by Section 4(d) hereof, the Company shall be entitled to receive from Executive the profits, if any, received by Executive upon exercise of any Company granted stock options or stock appreciation rights or upon lapse of the restrictions on any grant or restricted stock to the extent such options or rights were exercised, or such restrictions lapsed, subsequent to six months prior to the termination of Executive’s employment.
 
21.   New Section 15 of the Agreement is added to read as follows:
15. Rabbi Trust . The Company will establish an irrevocable grantor trust (as described in Section 671 of the Internal Revenue Code) for the purpose of accumulating assets to provide for any retirement obligations owed to Executive under the Excess Benefit Plan. The assets and income of such trust shall be subject only to the claims of the creditors of the Company in the event of the Company’s insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of such trust shall not affect the Company’s liability to pay benefits except that any liability under the Excess Benefit Plan shall be offset by any payments actually made to Executive from such trust. The Company will reasonably determine the amount to contribute to such trust pursuant to the requirements of the Excess Benefit Plan, and the investment of the assets of the trust shall be made in accordance with the terms of the trust document. Without limitation, but only to the extent not prohibited by Section 409A(b) of the Code, the Company agrees to contribute to the trust pursuant to the requirements of the Excess Benefit Plan sufficient amounts to provide for the Company’s liability to pay the benefits under such Excess Benefit Plan no later than when a “Change of Control” occurs. The terms of the trust shall contain such provisions as may be necessary to qualify the trust as a “rabbi trust” under applicable rules so that the supplemental retirement benefits may be considered “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended.
22.   Section 12 of the Agreement is amended by replacing the references to Sections 7, 8, 9 and 10 to Sections 8, 10 and 11.
23.   Section 13(c) of the Agreement is hereby amended by adding the following to the end of Section 13(c) to read as follows:
    To the extent the Company is required to reimburse Executive for any such cost, fees and expenses, the Company shall reimburse such costs, fees and expenses within 90 days following the final determination, award, judgment or settlement.
24.   Except as amended hereby, the Agreement shall remain in full force and effect.
25.   The provisions of Section 13 of the Agreement shall apply to this First Amendment as if set forth in its entirety herein.

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      IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the day first above written.
         
    COMPANY
 
       
    Arris Group, Inc.
 
       
 
  By:   /s/ Lawrence A. Margolis
 
       
 
  Name:   Lawrence A. Margolis
 
  Title:   Executive Vice President of Strategic
Planning, Administration and Chief Counsel, Secretary
 
       
    EXECUTIVE
 
       
    /s/ James. D. Lakin
     
    James D. Lakin

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Exhibit 10.6
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
           THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this “First Amendment”) is made and entered into effective as of the 26th day of November, 2008, by and between Arris Group, Inc., a Delaware corporation (“Company”), and David B. Potts (“Executive”).
           WHEREAS, the parties hereto entered into that certain Employment Agreement dated as of December 7, 2006 (the “Agreement”); and
           WHEREAS, the parties hereto now desire to amend the Agreement as provided herein to make certain changes and bring the Agreement into compliance with Section 409A of the Code.
           NOW, THEREFORE, for and in consideration of Executive’s continued employment with Company and the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Executive hereby agree as follows:
1.   Capitalized terms that are used but not defined in this Amendment shall have the meaning specified in the Agreement.
2.   The second sentence of Section 2(a) of the Agreement is amended in its entirety to read as follows:
    Executive’s Base Salary will be payable in arrears (no less frequently than monthly) in accordance with the Company’s normal payroll procedures and will be reviewed annually and subject to upward adjustment at the discretion of the Chief Executive Officer and Compensation Committee, but will not be lowered except in connection with reductions applied to all executive officers.
 
3.   Section 2(b) is amended by adding the following at the end thereof:
 
    Executive’s bonus, if any, shall be payable as soon after the end of each calendar year to which it relates as it can be determined, but in any event within two and one-half (2-1/2) months thereafter.
4.   Section 2(e) of the Agreement is amended by adding the following at the end thereof:
    Such payments and reimbursements shall be made as soon as administratively practicable following submission of reasonable documentation and receipts for such expenses but all such payments and reimbursements shall be made no later than the last day of the calendar year following the calendar year in which Executive incurs the reimbursable expense.

 


 

5.   Section 4(a) of the Agreement is amended in its entirety to read as follows:
 
    Executive’s employment shall terminate upon the death of Executive, provided, however, that the Company shall continue to pay no less frequently than monthly (in accordance with its normal payroll procedures) the Base Salary to Executive’s estate for a period of three months after the date of Executive’s death.
 
6.   The last sentence of Section 4(e) of the Agreement is amended in its entirety to read as follows:
 
    Notwithstanding the foregoing, Executive shall continue to receive his full salary and benefits under this Agreement for a period of six months after the effective date of such termination with his base salary payable in arrears no less frequently than monthly in accordance with the Company’s normal payroll procedures and continued benefits on a monthly basis through such time.
 
7.   Section 4(f) of the Agreement is amended in its entirety to read as follows:
 
    Following any expiration or termination of this Agreement and Executive’s employment hereunder, in addition any amounts owed pursuant to Section 5 hereof, the Company shall pay to Executive all amounts earned by Executive hereunder prior to the date of such expiration and termination, as soon as administratively practicable following the date of termination of Executive’s employment, in the normal course consistent with the provisions of this Agreement. Additionally, subject to Executive’s continued compliance with Sections 7 and 9 of this Agreement, if Executive terminates his employment with the Company without Good Reason on or after Executive attains age 62 (provided Executive has no less than 10 years of continuous service with Company as of such termination), all of Executive’s stock options and equity awards outstanding at termination of Executive’s employment shall continue to vest for four (4) years after the termination as if Executive remained employed through such time, and such stock options shall remain outstanding through the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment).
 
8.   Section 5(a) of the Agreement is amended by adding to the end thereof the following:
 
    The Company shall continue to pay to Executive his Base Salary (as in effect as of the date of such termination) no less frequently than monthly in accordance with the Company’s normal payroll procedures, beginning with the first payroll date after the date of termination of Executive’s employment and continuing for twenty-four (24) months immediately following the termination. The Company also shall pay to Executive a bonus for each Company fiscal year (and a pro rata amount for each partial Company fiscal year) during the twenty-four (24) months immediately following Executive’s termination of employment in an amount

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    equal to the bonus Executive would have received had he fulfilled the requirements to earn his target bonus that would have been payable during such time (or pro rata amount of such bonus for any partial Company fiscal year) with the bonus for any fiscal year or partial year to be paid after the end of such fiscal or partial year and within two and one-half (2-1/2) months thereafter. Notwithstanding the foregoing, all payments to be made or benefits to be provided under this Section are subject to the provisions of Section 5(f) below.
 
9.   Section 5(b) of the Agreement is amended by adding the following to the end thereof:
 
    Additionally, all of Executive’s outstanding stock options shall remain outstanding until the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment).
 
10.   Section 5(c) of the Agreement is amended in its entirety to read as follows::
 
    The Company shall continue to provide Executive on a monthly basis with group and additional life insurance coverage, no less frequently than monthly, for a period of twenty-four (24) months immediately following termination of employment.
 
11.   Section 5(d) of the Agreement is amended in its entirety to read as follows:
 
    The Company shall continue to provide Executive and his family with group medical insurance coverage, no less frequently than monthly, under the Company’s medical plans (as the same may change from time to time) or other substantially similar health insurance for a period of twenty-four (24)months immediately following termination of employment.
 
12.   Section 5(e) of the Agreement is amended in its entirety to read as follows:
 
    The Company shall continue to provide Executive coverage, no less frequently than monthly, under the Company’s group disability plan for a period of twenty-four (24) months immediately following termination of employment (subject in the case of long-term disability to the availability of such coverage under Company’s insurance policy).
 
13.   Section 5(f) of the Agreement is amended in its entirety to read as follows:
(f) Notwithstanding any other provisions of this Agreement, it is intended that any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), will be provided and paid in a manner, and at such time, as complies with Section 409A of the Code. For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of

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separate payments and benefits to the fullest extent allowed by Section 409A of the Code. If Executive is a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) and any of Company’s stock is publicly traded on an established securities market or otherwise, then the payment of any amount or provision of any benefit under this Agreement which is considered to be nonqualified deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after the Termination Date or, if earlier, Executive’s death (the “409A Deferral Period”), as required by Section 409A(a)(2)(B)(i) of the Code. In the event payments are otherwise due to be made in installments or periodically during such 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled. In the event, benefits are otherwise to be provided hereunder during such 409A Deferral Period, any such benefits may be provided during the 409A Deferral Period at Executive’s expense, with Executive having a right to reimbursement for such expense from the Company as soon as the 409A Deferral Period ends, and the balance of the benefits shall be provided as otherwise scheduled. For purposes of this Agreement, Executive’s termination of employment shall be construed to mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services will be performed after such date or that the level of bona fide services Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to less than fifty percent (50%) of the average level of bona fide services performed over the immediately preceding thirty-six (36)-month period. Without limitation, if any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Code fails to comply with Section 409A of the Code, and Executive incurs any additional tax, interest and penalties under Section 409A of the Code, Company will pay Executive an additional amount so that, after paying all taxes, interest and penalties on such additional amount, Executive has an amount remaining equal to such additional tax, interest and penalties. All payments to be made to Executive pursuant to the immediately preceding sentence shall be payable no later than when the related taxes, interest and penalties are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of any tax liability addressed in the immediately preceding sentence must be made no later than when the related taxes, interest and penalties that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes, interest and penalties are remitted, within thirty (30) days of when the audit is completed or there is a final non-appealable settlement or resolution of the litigation.
14.   Section 5(h) of the Agreement is amended by adding at the end thereof the following:

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    Executive will be required to execute and not revoke the Company’s standard written release of any and all claims against the Company and all related parties with respect to all matters arising out of Executive’s employment by the Company (other than as described above) no later than thirty (30) days following Executive’s termination of employment (or such later time as the Company may permit). If the Executive does not provide such release, with the period for revoking same having already expired, then Company shall not be required to pay any further amounts pursuant to this Section 5 and Executive will be required to return to the Company any amounts previously paid pursuant to this Section 5.
 
15.   Section 6(a) of the Agreement is amended by adding to the end thereof the following:
 
    The Company shall pay the amounts set forth in (1) and (2) above in one lump sum payment as soon as administratively practicable (and within thirty (30) days) following Executive’s termination of employment. The benefits provided under (3) above shall be provided no less frequently than monthly following the date of termination of employment. Additionally, Executive’s outstanding stock options shall remain outstanding until the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment). Notwithstanding the foregoing, all payments to be made and benefits to be provided under this Section are subject to the provisions of Section 5(f) above.
 
16.   Section 6(b) of the Agreement is amended in its entirety to read as follows:
 
    “Change of Control” shall mean the date as of which: (i) there shall be consummated (1) any consolidation or merger of the Company to which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company’s common stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company’s common stock immediately prior to the merger own more than 50% of the total fair market value or total voting power of the continuing or surviving entity, or (2) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company or (ii) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or (iii) otherwise (any person) as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended. (the “Exchange Act”)), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company’s outstanding common stock (in a single transaction or within twelve (12) months from the date of the final acquisition) or (iv) during any one year, individuals who at the beginning of such period constitute the entire Board of Directors of the Company shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company’s stockholders, of each new director was approved by a vote of at least two-thirds of the directors still then in office who were directors at the beginning of the

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    period. This definition of “Change in Control” is intended to comply with the definition of a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code and shall be construed consistent with that intent.
17.    Sections 6(e), (f) and (g) are deleted amended in their entirety and replaced with new Section (e) as follows:
    Company will pay to Executive the amount of any excise taxes, penalties and interest imposed on Executive under Section 4999 of the Code by reason of payments or benefits under the provisions of this Agreement, including this provision, and the amount of any federal and state income taxes, penalties and interest imposed on Executive by reason of payments to Executive under this Section. All payments to be made to Executive under this Section shall be payable no later than when the related taxes are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of a tax liability under this Section must be made no later than when the related taxes that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes are remitted, within thirty (30) days of when the audit is completed or there is a final and non-appealable settlement or resolution of the litigation.
18.    Section 7 and 8 of the Agreement are deleted in their entirety and replaced with new Section 7 to read as follows:
(a) As used in this Section:
“Business of Company” means providing products and services to broadband internet service providers which support a full range of integrated voice, video and high-speed data services to the subscribers of such providers.
“Restricted Period” means the period beginning on the Termination Date and ending twelve (12) months after the Termination Date.
“Restricted Territory” means, and is limited to, the following Metropolitan Statistical Areas: (1) Atlanta — Sandy Springs — Marietta, (2) Denver — Aurora, (3) Portland — Vancouver — Beaverton, (4) Philadelphia — Camden — Wilmington, (5) New York — Northern New Jersey — Long Island, (6) San Francisco — Oakland — Fremont, (7) Los Angeles — Long Beach — Santa Ana, and (8) St. Louis. Executive acknowledges and agrees that this is the area in which the Company does business at the time of execution of this Agreement, and in which Executive will have responsibility, at a minimum, on behalf of the Company.
“Material Contact” means contact in person, by telephone or by paper or electronic correspondence, in furtherance of the business interests of Company.

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(b) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, within the Restricted Territory, perform services on his own behalf or on behalf of any other person or entity, which are the same as or similar to those he provided to Company and which support any business activities which compete with the Business of Company.
(c) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective customers of Company with whom Executive had Material Contact, for the purpose of selling any products or services which compete with the Business of Company.
(d) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective vendor of Company with whom Executive had Material Contact, for the purpose of providing products or services in support of any business activities which compete with the Business of Company.
(e) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit or induce any employee or independent contractor of Company with whom Executive had Material Contact to terminate such employment or contract with Company.
Notwithstanding the foregoing, it is understood and agreed that, without limitation on other available remedies, the restrictions on Executive set forth in this Section 7(b), (c), (d) and (e) hereof shall not be applicable at any time that Company is in breach of its contractual obligations to Executive under this Agreement or the ARRIS Group, Inc. Supplemental Retirement Benefits Plan (the “Excess Benefit Plan”) following the thirty (30) days after being notified in writing by Executive of such breach and failure of Company to cure same. In the event Company cures such breach, the restrictions set forth in Sections 7(b), (c), (d) and (e) hereof shall continue pursuant to their terms as if such breach never occurred.
19.   Section 10 of the Agreement is amended in its entirety to read as follows:
 
    In the event that Executive violates any of the provisions of Sections 7 or 9 hereof or fails to provide the notice required by Section 4(d) hereof, the Company shall be entitled to receive from Executive the profits, if any, received by Executive upon exercise of any Company granted stock options or stock appreciation rights or upon lapse of the restrictions on any grant or restricted stock to the extent such options or rights were exercised, or such restrictions lapsed, subsequent to six months prior to the termination of Executive’s employment.
 
20.   New Section 14 of the Agreement is added to read as follows:

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14. Rabbi Trust . The Company will establish an irrevocable grantor trust (as described in Section 671 of the Internal Revenue Code) for the purpose of accumulating assets to provide for any retirement obligations owed to Executive under the Excess Benefit Plan. The assets and income of such trust shall be subject only to the claims of the creditors of the Company in the event of the Company’s insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of such trust shall not affect the Company’s liability to pay benefits except that any liability under the Excess Benefit Plan shall be offset by any payments actually made to Executive from such trust. The Company will reasonably determine the amount to contribute to such trust pursuant to the requirements of the Excess Benefit Plan, and the investment of the assets of the trust shall be made in accordance with the terms of the trust document. Without limitation, but only to the extent not prohibited by Section 409A(b) of the Code, the Company agrees to contribute to the trust pursuant to the requirements of the Excess Benefit Plan sufficient amounts to provide for the Company’s liability to pay the benefits under such Excess Benefit Plan no later than when a “Change of Control” occurs. The terms of the trust shall contain such provisions as may be necessary to qualify the trust as a “rabbi trust” under applicable rules so that the supplemental retirement benefits may be considered “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended.
21.   Section 11 of the Agreement is amended by replacing the references to Sections 7, 8, 9 and 10 to Sections 7, 9 and 10.
 
22.   Section 12(c) of the Agreement is hereby amended by adding the following to the end of Section 12(c) to read as follows:
To the extent the Company is required to reimburse Executive for any such cost, fees and expenses, the Company shall reimburse such costs, fees and expenses within 90 days following the final determination, award, judgment or settlement.
23.   Except as amended hereby, the Agreement shall remain in full force and effect.
 
24.   The provisions of Section 13 of the Agreement shall apply to this First Amendment as if set forth in its entirety herein.
           IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the day first above written.
         
    COMPANY
 
       
    Arris Group, Inc.
 
       
 
  By:   /s/ Lawrence A. Margolis
 
       
 
  Name:   Lawrence A. Margolis

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  Title:   Executive Vice President of Strategic
Planning, Administration and Chief Counsel, Secretary
 
       
    EXECUTIVE
 
       
    /s/ David B. Potts
     
    David B. Potts

9

Exhibit 10.7
SECOND AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
      THIS SECOND AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Second Amendment”) is made and entered into effective as of the 26th day of November, 2008, by and between Arris Group, Inc., a Delaware corporation (“Company”), and Lawrence Margolis (“Executive”).
      WHEREAS, the parties hereto entered into that certain Amended and Restated Employment Agreement dated as of April 29, 1999, which was amended subsequently by the First Amendment to Amended and Restated Employment Agreement dated as of December 7, 2006 (collectively the “Agreement”); and
      WHEREAS, the parties hereto now desire to amend the Agreement as provided herein to make certain changes and bring the Agreement into compliance with Section 409A of the Code.
      NOW, THEREFORE, for and in consideration of Executive’s continued employment with Company and the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Executive hereby agree as follows:
1. Capitalized terms that are used but not defined in this Second Amendment shall have the meaning specified in the Agreement.
2. The last sentence of Section 2 is amended in its entirety to read as follows:
Executive’s Base Compensation shall be payable semi-monthly in accordance with the ordinary payroll practices of Company, and the Bonus shall be payable as soon after the end of each calendar year to which it relates as it can be determined, but in any event within two and one-half (2-1/2) months thereafter.
3. Section 5(c) of the Agreement is amended in its entirety to read as follows:
(c) If Executive terminates this Agreement and simultaneously therewith his employment by Company for Good Reason, subject to Executive’s continued compliance with Section 7 below, all of Executive’s stock options and other equity awards outstanding at the Termination Date shall fully vest as of the Termination Date and such stock options shall remain outstanding until the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment), and Company for a period of two (2) years from such Termination Date (the period during which Executive is entitled to severance benefits is the “Severance Period”) shall continue to provide to Executive (a) his Base Compensation, at the rate most recently determined, on a semi-monthly basis beginning with the first semi-monthly payroll date after the Termination Date and continuing through the Severance

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Period in accordance with the ordinary payroll practices of Company, (b) a Bonus for each fiscal year (and a pro rata amount for each partial year) in the Severance Period in an amount equal to Executive’s most recent Bonus paid or payable prior to the Termination Date (or a pro rata amount), with the bonus for any fiscal year or partial year in the Severance Period to be paid after the end of such fiscal year or partial year and within two and one half (2-1/2) months thereafter, and (c) the Benefit Plans as provided by Section 3 on a monthly basis through the Severance Period (subject in the case of long-term disability to the availability of such coverage under Company’s insurance policy). Subject to Executive’s continued compliance with Section 7 below, if Executive terminates this Agreement without Good Reason and therewith Executive’s employment by Company on or after Executive attains the age of 62 (provided Executive has no less than ten (10) years of continuous service with Company as of such Termination Date), all of Executive’s stock options and other equity awards outstanding at the Termination Date shall continue to vest for four years after the Termination Date as if Executive remained employed through such time, and such stock options shall remain outstanding until the original expiration date of the stock options (disregarding any expiration date based on Executive’s termination of employment). Notwithstanding the foregoing, all payments to be made or benefits to be provided under this Section are subject to the provisions of Section 5(e) below.
4. Section 5(e) of the Agreement is amended in its entirety to read as follows:
(e) Notwithstanding any other provisions of this Agreement, it is intended that any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), will be provided and paid in a manner, and at such time, as complies with Section 409A of the Code. For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code. If Executive is a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) hereof) and any of Company’s stock is publicly traded on an established securities market or otherwise, then the payment of any amount or provision of any benefit under this Agreement which is considered to be nonqualified deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after the Termination Date or, if earlier, Executive’s death (the “409A Deferral Period”), as required by Section 409A(a)(2)(B)(i) of the Code. In the event payments are otherwise due to be made in installments or periodically during such 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled. In the event benefits are otherwise to be provided hereunder during such 409A Deferral Period, any such benefits may be provided during the 409A Deferral

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Period at Executive’s expense, with Executive having a right to reimbursement for such expense from the Company as soon as the 409A Deferral Period ends, and the balance of the benefits shall be provided as otherwise scheduled. For purposes of this Agreement, Executive’s termination of employment shall be construed to mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services will be performed after such date or that the level of bona fide services Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to less than fifty percent (50%) of the average level of bona fide services performed over the immediately preceding thirty-six (36)-month period. Without limitation, if any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Code fails to comply with Section 409A of the Code, and Executive incurs any additional tax, interest and penalties under Section 409A of the Code, Company will pay Executive an additional amount so that, after paying all taxes, interest and penalties on such additional amount, Executive has an amount remaining equal to such additional tax, interest and penalties. All payments to be made to Executive pursuant to the immediately preceding sentence shall be payable no later than when the related taxes, interest and penalties are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of any tax liability addressed in the immediately preceding sentence must be made no later than when the related taxes, interest and penalties that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes, interest and penalties are remitted, within thirty (30) days of when the audit is completed or there is a final non-appealable settlement or resolution of the litigation.
5. Section 7 of the Agreement is amended in its entirety to read as follows:
(a) As used in this Section:
“Business of Company” means providing products and services to broadband internet service providers which support a full range of integrated voice, video and high-speed data services to the subscribers of such providers.
“Restricted Period” means the period beginning on the Termination Date and ending twelve (12) months after the Termination Date.
“Restricted Territory” means, and is limited to, the following Metropolitan Statistical Areas: (1) Atlanta — Sandy Springs — Marietta, (2) Denver — Aurora, (3) Portland — Vancouver — Beaverton, (4) Philadelphia — Camden — Wilmington, (5) New York — Northern New Jersey — Long Island, (6) San Francisco — Oakland — Fremont, (7) Los Angeles — Long Beach — Santa Ana, and (8) St. Louis. Executive acknowledges and agrees that this is the area in which the Company does business

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at the time of execution of this Agreement, and in which Executive will have responsibility, at a minimum, on behalf of the Company.
“Material Contact” means contact in person, by telephone or by paper or electronic correspondence, in furtherance of the business interests of Company.
(b) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, within the Restricted Territory, perform services on his own behalf or on behalf of any other person or entity, which are the same as or similar to those he provided to Company and which support any business activities which compete with the Business of Company.
(c) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective customers of Company with whom Executive had Material Contact, for the purpose of selling any products or services which compete with the Business of Company.
(d) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective vendor of Company with whom Executive had Material Contact, for the purpose of providing products or services in support of any business activities which compete with the Business of Company.
(e) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit or induce any employee or independent contractor of Company with whom Executive had Material Contact to terminate such employment or contract with Company.
Notwithstanding the foregoing, it is understood and agreed that, without limitation on other available remedies, the restrictions on Executive set forth in Section 7(b), (c), (d) and (e) hereof shall not be applicable at any time that Company is in breach of its contractual obligations to Executive under this Agreement or the ARRIS Group, Inc. Supplemental Retirement Benefits Plan (the “Excess Benefit Plan”) following the thirty (30) days after being notified in writing by Executive of such breach and failure of Company to cure same. In the event Company cures such breach, the restrictions set forth in Sections 7(b), (c), (d) and (e) hereof shall continue pursuant to their terms as if such breach never occurred.
6. Section 8 of the Agreement is amended by adding the following to the end thereof:
Company will pay to Executive the amount of any excise taxes, penalties and interest imposed on Executive under Section 4999 of the Code by reason of payments or benefits under the provisions of this Agreement, including this provision, and the amount of any federal and state income taxes, penalties and

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interest imposed on Executive by reason of payments to Executive under this Section. All payments to be made to Executive under this Section shall be payable no later than when the related taxes are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of a tax liability under this Section must be made no later than when the related taxes that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes are remitted, within thirty (30) days of when the audit is completed or there is a final and non-appealable settlement or resolution of the litigation.
7. Section 14 of the Agreement is amended in its entirety to read as follows:
The prevailing party in any litigation concerning this Agreement shall be reimbursed by the party found to be in breach of this Agreement for all reasonable costs, including attorneys fees, incurred by the prevailing party in enforcing this Agreement within thirty (30) days after any final settlement or resolution in which the party substantially prevails.
8. New Section 15 of the Agreement is added to read as follows:
15. Rabbi Trust . Company will establish an irrevocable grantor trust (as described in Section 671 of the Internal Revenue Code) for the purpose of accumulating assets to provide for any retirement obligations owed to Executive under the Excess Benefit Plan. The assets and income of such trust shall be subject only to the claims of the creditors of Company in the event of Company’s insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of such trust shall not affect Company’s liability to pay benefits except that any liability under the Excess Benefit Plan shall be offset by any payments actually made to Executive from such trust. Company will reasonably determine the amount to contribute to such trust pursuant to the requirements of the Excess Benefit Plan, and the investment of the assets of the trust shall be made in accordance with the terms of the trust document. Without limitation, but only to the extent not prohibited by Section 409A(b) of the Code, Company agrees to contribute to the trust pursuant to the requirements of the Excess Benefit Plan sufficient amounts to provide for the Company’s liability to pay the benefits under such Excess Benefit Plan no later than when a “Change of Control” occurs. The terms of the trust shall contain such provisions as may be necessary to qualify the trust as a “rabbi trust” under applicable rules so that the supplemental retirement benefits may be considered “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended.
9. Except as amended hereby, the Agreement shall remain in full force and effect.
10. The provisions of Sections 10 through 13 of the Agreement shall apply to this Second Amendment as if set forth in their entirety herein.

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      IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of the day first above written.
             
    COMPANY    
 
           
    Arris Group, Inc.    
 
           
 
  By:
Name:
  /s/ Robert J. Stanzione
 
Robert J. Stanzione
   
 
  Title:   Chairman of the Board of Directors, President and Chief Executive Officer    
 
           
    EXECUTIVE    
 
           
    /s/ Lawrence Margolis    
         
    Lawrence Margolis    

6

Exhibit 10.8
SECOND AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
      THIS SECOND AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Second Amendment”) is made and entered into effective as of the 26th day of November, 2008, by and between Arris Group, Inc., a Delaware corporation (“Company”), and Robert Stanzione (“Executive”).
      WHEREAS, the parties hereto have entered into that certain Amended and Restated Employment Agreement dated as of August 6, 2001, which was amended subsequently by the First Amendment to Amended and Restated Employment Agreement dated as of December 7, 2006 (collectively the “Agreement”); and
      WHEREAS, the parties hereto now desire to amend the Agreement as provided herein to make certain changes in Executive’s supplemental pension benefit, provide for additional vesting of Executive’s options and equity awards upon Executive’s termination of employment after he reaches the age of 62 and bring the Agreement into compliance with Section 409A of the Code.
      NOW, THEREFORE, for and in consideration of Executive’s continued employment with Company and the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Executive hereby agree as follows:
1. Capitalized terms that are used but not defined in this Second Amendment shall have the meaning specified in the Agreement.
2. The first sentence of Section 1 of the Agreement is amended in its entirety to read as follows:
Company will employ Executive and Executive will work for Company in the Atlanta area as follows: Executive will serve as President, Chief Executive Officer and Chairman of the Board until this Agreement is terminated as provided in Section 5 (the “Termination Date”).
3. The last sentence of Section 2 is amended in its entirety to read as follows:
Executive’s Base Compensation shall be payable semi-monthly in accordance with the ordinary payroll practices of Company, and the Bonus shall be payable as soon after the end of each calendar year to which it relates as it can be determined, but in any event within two and one-half (2-1/2) months thereafter.
4. Section 3(b) of the Agreement is amended in its entirety to read as follows:
Without limitation of any other rights under the Benefit Plans to which Executive may be entitled, Executive will be provided a non-qualified supplemental pension

 


 

by Company in an amount equal to (i) the amount of pension he would have had under Company’s defined benefit retirement plan and related excess benefit plan if the period of Executive’s service under those plans were tripled for all purposes and all calculations of Executive’s benefits were made in accordance with the terms and definitions set forth in the Plan (as defined below), including without limitation for purposes of eligibility for a pension, less (ii) the amount of pension to which Executive is entitled under Company’s defined benefit retirement plan and related excess benefit plan. Notwithstanding the foregoing, the amount of Executive’s supplemental pension shall not exceed the amount calculated as determined in the preceding sentence as of the time Executive reaches the age of 62 increased or decreased as described in the next sentence. In the event Executive’s employment under this Agreement continues past the time Executive reaches the age of 62, then Executive’s supplemental pension from Company shall equal the amount Executive would have received had he retired from employment with Company at the time he reached age 62, calculated as of the time Executive reaches age 62 (without regard to any compensation or benefits payable to Executive or any service by Executive after such time), increased by an amount equal to the interest, dividends, earnings and other profits that would be received, and decreased by an amount equal to the losses, expenses and other charges that would be incurred, on the then actuarial equivalent lump sum value of Executive’s supplemental pension benefit as of age 62 if such amount had been invested, from the time Executive reaches age 62 until the Termination Date, in one or more permitted investments that Executive may designate from time to time, in accordance with the Robert Stanzione Supplemental Executive Retirement Plan (the “Plan” by reference made a part hereof). This supplemental pension benefit will be calculated and paid in accordance with the provisions of that Plan as of the date hereof or as amended from time to time hereafter by mutual written agreement of Company and Executive. Company also will establish a mutually agreeable and irrevocable grantor trust (as described in Section 671 of the Internal Revenue Code) for the purpose of accumulating assets to provide for its obligations under this Section. The assets and income of such trust shall be subject only to the claims of the creditors of Company in the event of Company’s insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of such trust shall not affect Company’s liability to pay benefits hereunder except that any such liability shall be offset by any payments actually made to Executive from such trust. Company will reasonably determine the amounts to contribute to such trust pursuant to the requirements of the Plan, and the investment of the assets of the trust shall be made in accordance with the terms of the trust document. Without limitation, but only to the extent not prohibited by Section 409A(b) of the Code, Company agrees to contribute to the trust pursuant to the requirements of the Plan, ratably from the date hereof until the date Executive attains age 62 with respect to the amount of the obligation due at age 62 and annually as the obligation accrues each year thereafter, sufficient amounts to provide for the Company’s liability to pay the benefits hereunder, except that Company agrees in any event to contribute sufficient amounts to pay all the benefits hereunder no later than when a “Change in Control” occurs (to the

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extent not prohibited by Section 409A(b) of the Code). The terms of the trust shall contain such provisions as may be necessary to qualify the trust as a “rabbi trust” under applicable rules so that the supplemental pension arrangement may be considered “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended.
5. The second sentence of Section 5(a) of the Agreement is amended in its entirety to read as follows:
The termination will not be effective until two years (one year for any termination on or after the date Executive reaches the age of 62) after written notice of termination is given Executive unless termination is for “Good Cause.”
6. The second sentence of Section 5(b) of the Agreement is amended in its entirety to read as follows:
The termination will not be effective until two years (one year for any termination on or after the date Executive reaches the age of 62) after written notice is given Company unless termination is for “Good Reason.”
7. Section 5(c) of the Agreement is amended in its entirety to read as follows:
(c) If Executive terminates this Agreement and simultaneously therewith his employment by Company for Good Reason on or before the date that Executive attains age 62 or under clause (iii) of the definition of Good Reason after the date that Executive attains age 62, subject to Executive’s continued compliance with Sections 5(d) and 6 below, all of Executive’s stock options and other equity awards outstanding at the Termination Date shall fully vest as of the Termination Date and such stock options shall remain outstanding until the original expiration date of the stock options (disregarding any earlier expiration date based on Executive’s termination of employment), and Company for a period of three years from such Termination Date (the period during which Executive is entitled to severance benefits is the “Severance Period”) shall continue to provide to Executive (a) his Base Compensation, at the rate most recently determined, on a semi-monthly basis beginning with the first semi-monthly payroll date after the Termination Date and continuing through the Severance Period in accordance with the ordinary payroll practices of Company, (b) a bonus for each Company fiscal year (and a pro rata amount for each partial Company fiscal year) in the Severance Period in an amount equal to Executive’s Typical Annual Bonus at the Termination Date (or a pro rata amount of said Typical Annual Bonus for any partial Company fiscal year in the Severance Period), with the bonus for any fiscal year or partial year in the Severance Period to be paid after the end of such fiscal year or partial year and within two and one half (2-1/2) months thereafter, and (c) the Benefit Plans as provided by Section 3(a) on a monthly basis through the Severance Period (subject in the case of long-term disability to the availability of such coverage under Company’s insurance policy). Executive’s Typical Annual

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Bonus at the Termination Date shall be the annual average of the three highest full year Bonuses received by Executive for the five full years immediately preceding the Termination Date. If Company terminates this Agreement and simultaneously therewith Executive’s employment by Company other than for Good Cause after the date that Executive attains age 62, or Executive terminates this Agreement and simultaneously therewith his employment by Company for Good Reason (other than under clause (iii) of the definition thereof) after the date that Executive attains age 62, Company shall continue to provide to Executive, to the extent Company does not retain Executive during the full twelve (12)-month notice period described in Section 5(a) or (b) above, (a) his Base Compensation, at the rate most recently determined, on a semi-monthly basis beginning with the first semi-monthly payroll date after the Termination Date (the period during which Executive is entitled to these severance benefits is the “Notice Period”) and continuing through the Notice Period in accordance with the ordinary payroll practices of Company, (b) a bonus for each Company fiscal year (and a pro rata amount for each partial Company fiscal year) in the Notice Period in an amount equal to Executive’s Typical Annual Bonus at the Termination Date (or a pro-rata amount of said Typical Annual Bonus for any partial Company fiscal year in the Notice Period), with the bonus for any fiscal year or partial year in the Notice Period to be paid after the end of such fiscal year or partial year and within two and one-half (2- 1 / 2 ) months thereafter, and (c) the Benefit Plans as provided by Section 3(a) on a monthly basis through the Notice Period (subject in the case of long-term disability to the availability of such coverage under Company’s insurance policy). Subject to Executive’s continued compliance with Sections 5(d) and 6, if Executive terminates his employment under this Agreement with or without Good Reason (or Company terminates Executive’s employment under this Agreement without Good Cause) after Executive attains the age of 62, all of Executive’s stock options and other equity awards outstanding at the Termination Date shall continue to vest for four (4) years after the Termination Date as if Executive remained employed through such time, and such stock options shall remain outstanding through the original expiration date of the stock options (disregarding any expiration date based on Executive’s termination of employment). Notwithstanding the foregoing, all payments to be made or benefits to be provided under this Section are subject to the provisions of Section 5(f) below.
8. Section 5(d) of the Agreement is amended in its entirety to read as follows:
During the Severance Period or the four (4) years after the Termination Date, as applicable in Section 5(c) above, Executive will serve Company as a consultant on matters within Executive’s expertise or knowledge as may be reasonably requested by Company. All such consultation will be arranged by Company so as to not interfere with the other activities of Executive. Executive will be promptly reimbursed by Company for any expenses incurred by Executive at the direction of Company upon submission of appropriate documentation of such expenses, subject to the prevailing Company policies or other guidelines for reimbursement

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of expenses, but in no event later than the last day of the year following the year in which Executive incurs the reimbursable expense.
9. Section 5(f) of the Agreement is amended in its entirety to read as follows:
(f) Notwithstanding any other provisions of this Agreement, it is intended that any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), will be provided and paid in a manner, and at such time, as complies with Section 409A of the Code. For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code. If Executive is a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) hereof) and any of Company’s stock is publicly traded on an established securities market or otherwise, then the payment of any amount or provision of any benefit under this Agreement which is considered to be nonqualified deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after the Termination Date or, if earlier, Executive’s death (the “409A Deferral Period”), as required by Section 409A(a)(2)(B)(i) of the Code. In the event payments are otherwise due to be made in installments or periodically during such 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled. In the event, benefits are otherwise to be provided hereunder during such 409A Deferral Period, any such benefits may be provided during the 409A Deferral Period at Executive’s expense, with Executive having a right to reimbursement for such expense from the Company as soon as the 409A Deferral Period ends, and the balance of the benefits shall be provided as otherwise scheduled. For purposes of this Agreement, Executive’s termination of employment shall be construed to mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services will be performed by Executive for or on behalf of the Company or any of its subsidiaries or affiliates after such date or that the level of bona fide services Executive would perform for or on behalf of the Company or any of its subsidiaries or affiliates after that date (whether as an employee or independent contractor) would permanently decrease to no more than forty-nine percent (49%) of the average level of bona fide services performed for or on behalf of the Company or any of its subsidiaries or affiliates over the immediately preceding thirty-six (36)-month period. Without limitation, if any payment or benefit which is provided pursuant to or in connection with this Agreement and which is considered to be nonqualified deferred compensation subject to Section 409A of the Code fails to comply with Section 409A of the Code, and Executive incurs any additional tax, interest and penalties under Section 409A of the Code, Company will pay Executive an additional amount so that, after paying all taxes,

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interest and penalties on such additional amount, Executive has an amount remaining equal to such additional tax, interest and penalties. All payments to be made to Executive pursuant to the immediately preceding sentence shall be payable no later than when the related taxes, interest and penalties are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of a tax liability addressed in the immediately preceding sentence must be made no later than when the related taxes, interest and penalties that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes, interest and penalties are remitted, within thirty (30) days of when the audit is completed or there is a final non-appealable settlement or resolution of the litigation.
10. Section 6 of the Agreement is amended in its entirety to read as follows:
(a) As used in this Section:
“Business of Company” means providing products and services to broadband internet service providers which support a full range of integrated voice, video and high-speed data services to the subscribers of such providers.
“Restricted Period” means the period beginning on the Termination Date and ending on the third anniversary of the Termination Date.
“Restricted Territory” means, and is limited to, the 50 states of the United States of America. Executive acknowledges and agrees that this is the area in which the Company does business at the time of execution of this Agreement, and in which Executive will have responsibility, at a minimum, on behalf of the Company.
“Material Contact” means contact in person, by telephone or by paper or electronic correspondence, in furtherance of the business interests of Company.
(b) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, within the Restricted Territory, perform services on his own behalf or on behalf of any other person or entity, which are the same as or similar to those he provided to Company and which support any business activities which compete with the Business of Company.
(c) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective customers of Company with whom Executive had Material Contact, for the purpose of selling any products or services which compete with the Business of Company.
(d) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit any actual or prospective vendor of Company with whom Executive had Material

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Contact, for the purpose of providing products or services in support of any business activities which compete with the Business of Company.
(e) Executive agrees that during Executive’s employment hereunder and during the Restricted Period, Executive shall not, directly or indirectly, solicit or induce any employee or independent contractor of Company with whom Executive had Material Contact to terminate such employment or contract with Company.
Notwithstanding the foregoing, it is understood and agreed that, without limitation on other available remedies, the restrictions on Executive set forth in Sections 6 (b), (c), (d) and (e) hereof shall not be applicable at any time that Company is in breach of its contractual obligations to Executive under this Agreement or the Plan following the thirty (30) days after being notified in writing by Executive of such breach and failure of the Company to cure same. In the event Company cures such breach, the restrictions set forth in Sections 6(b), (c), (d) and (e) hereof shall continue pursuant to their terms as if such breach never occurred.
11. Section 7 of the Agreement is amended in its entirety to read as follows:
Company will pay to Executive the amount of any excise taxes, penalties and interest imposed on Executive under Section 4999 of the Code by reason of payments or benefits under the provisions of this Agreement, including this provision, and the amount of any federal and state income taxes, penalties and interest imposed on Executive by reason of payments to Executive under this Section. All payments to be made to Executive under this Section shall be payable no later than when the related taxes are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of a tax liability under this Section must be made no later than when the related taxes that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes are remitted, within thirty (30) days of when the audit is completed or there is a final and non-appealable settlement or resolution of the litigation.
12. Section 14 of the Agreement is amended in its entirety to read as follows:
The prevailing party in any litigation concerning this Agreement shall be reimbursed by the party found to be in breach of this Agreement for all reasonable costs, including attorneys fees, incurred by the prevailing party in enforcing this Agreement within thirty (30) days after any final settlement or resolution in which the party substantially prevails.
13. Section 16 of the Agreement is amended in its entirety to read as follows:
Subject to and conditioned upon Company not having terminated this Agreement pursuant to Section 5(a)(i) or (ii), Executive will be provided the supplemental

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pension benefits described in Section 3(b) above as set forth in the attached Supplemental Executive Retirement Plan.
14. Except as amended hereby, the Agreement shall remain in full force and effect.
15. The provisions of Sections 9 through 12 of the Agreement shall apply to this Second Amendment as if set forth in their entirety herein.
16. In the event that there is any conflict between the provisions of this Agreement and the provisions of the Plan, the provisions of the Plan shall control.
      IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of the day first above written.
             
    COMPANY    
 
           
    Arris Group, Inc.    
 
           
 
  By:
Name:
  /s/ Lawrence A. Margolis
 
Lawrence A. Margolis
   
 
  Title:   Executive Vice President of Strategic Planning, Administration and Chief Counsel, Secretary    
 
           
    EXECUTIVE    
 
           
    /s/ Robert Stanzione    
         
    Robert Stanzione    

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Exhibit 10.9
FIRST AMENDMENT TO THE ROBERT STANZIONE
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
      THIS FIRST AMENDMENT TO THE ROBERT STANZIONE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (this “Amendment”) is made and entered into effective as of the 26th day of November, 2008, by and between Arris Group, Inc., a Delaware corporation (“Corporation”), and Robert Stanzione (“Participant”).
      WHEREAS, Corporation and Participant previously entered into the Robert Stanzione Supplemental Participant Retirement Plan, effective August 6, 2001 (the “Plan”), to provide certain supplemental retirement benefits to Participant on the terms and conditions stated therein; and
      WHEREAS, the parties hereto now desire to amend the Plan as provided herein.
      NOW, THEREFORE, for and in consideration of Participant’s continued employment with Corporation and the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Corporation and Participant hereby agree as follows:
1. Capitalized terms that are used but not defined in this Amendment shall have the meanings specified in the Plan.
2. Section 1.08 of the Plan is amended in its entirety to read as follows:
1.08 Employment Agreement
The Amended and Restated Employment Agreement between Participant and Corporation effective August 6, 2001, as amended by the First Amendment to Amended and Restated Employment Agreement effective December 7, 2006 and as subsequently amended by the Second Amendment to Amended and Restated Employment Agreement dated November 26th, 2008. All defined terms from the Employment Agreement not defined in this Plan shall have the same meaning in this Plan as in the Employment Agreement.
3. Section 1.16 of the Plan is amended in its entirety to read as follows:
1.16 Termination of Service
Participant’s separation from service with the Corporation, its subsidiaries and affiliates, whether by resignation, discharge, death, disability, retirement or otherwise, consistent with the meaning of a “separation from service” under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), where it is reasonably anticipated that no further services would be performed for or on behalf of the Corporation or any of its subsidiaries or affiliates after such

 


 

date or that the level of bona fide services Participant would perform after that date for or on behalf of the Corporation or any of its subsidiaries or affiliates (whether as an employee or an independent contractor) would permanently decrease to no more than forty-nine percent (49%) of the average level of bona fide services performed for or on behalf of the Corporation or any of its subsidiaries or affiliates over the immediately preceding thirty-six (36)-month period.
4. The last two sentences of Section 2.02(b) of the Plan are amended in their entirety to read as follows:
Benefit payments under this Section 2.02 shall commence on the first day of the month coincident with or next following Participant’s Termination of Service on his Normal Retirement Date.
5. Section 2.03 of the Plan is amended in its entirety to read as follows:
If Participant incurs a Termination of Service after his Normal Retirement Date, he shall receive a Late Retirement Benefit in an amount equal to (a) the Actuarial Equivalent lump sum value of his Normal Retirement Benefit calculated as if his Termination of Service (and thus, the calculations of the Normal Retirement Benefit, Final Average Compensation, Continuous Service and benefits payable from Other Retirement Programs) occurred on his Normal Retirement Date in accordance with Section 2.02 above (without regard to any changes after his Normal Retirement Date in his Continuous Service, Final Average Compensation and the benefits payable from Other Retirement Programs), (b) increased by an amount equal to the interest, dividends, earnings and other profits that would be received, and decreased by an amount equal to the losses, expenses and other charges that would be incurred, on such Actuarial Equivalent lump sum value if such amount were invested pursuant to Participant’s investment directions among the Permitted Investments in accordance with Article V of this Plan, beginning as of Participant’s Normal Retirement Date and ending on his Termination of Service (with the resulting sum as calculated above, expressed as an Actuarial Equivalent monthly benefit payable as a single life annuity). Benefit payments under this Section 2.03 shall commence on the first day of the month coincident with or next following Participant’s Termination of Service after his Normal Retirement Date. It is understood and agreed that although the Normal Retirement Benefit is calculated initially as of the Normal Retirement Date and increased by deemed interest, dividends, earnings and profits and decreased by deemed losses, expenses and other charges thereafter, Executive’s benefits under the Other Retirement Programs will continue to accrue under the terms of the Other Retirement Programs until Executive’s Termination of Service.
6. The first two sentences of Section 2.04 of the Plan are amended in their entirety to read as follows:

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If Participant terminates the Employment Agreement with Good Reason prior to his Normal Retirement Date or incurs a Termination of Service after his Early Retirement Date, but prior to his Normal Retirement Date not due to the termination by the Corporation of the Employment Agreement pursuant to Section 5(a)(i) or (ii) of the Employment Agreement, Participant shall receive a benefit, in an amount equal to his Normal Retirement Benefit calculated in accordance with Section 2.02 as of his Normal Retirement Date (but with the calculations of his Final Average Compensation and Continuous Service as of his Termination of Service and the benefits payable from Other Retirement Programs as of the Normal Retirement Date), said amount to be paid commencing on the first day of the month coincident with or next following his Normal Retirement Date. Alternately, Participant may elect to receive a reduced monthly benefit commencing on the first day of any month before his Normal Retirement Date and following his Termination of Service. Any such election by Participant to receive a reduced monthly benefit commencing on the first day of any month before his Normal Retirement Date and following his Termination of Service must specify the first day of the month payment shall commence within such time period and be filed with the Committee on or before December 31, 2008 and will only be effective with respect to any Termination of Service occurring on or after January 1, 2009. Any such elections shall be in writing, in such form as the Committee may require, and, once filed with the Committee, may be withdrawn only by written notice of withdrawal filed with the Committee within the time limits for making an election.
7. The last sentence of Section 2.04 of the Plan is amended in its entirety to read as follows:
     In the event Termination of Service is by Participant for Good Reason as defined in clause (iii) of Section 5(b) of the Employment Agreement, the benefit pursuant to this Section 2.04 shall not be lower than $33,333, less the benefits payable to Participant from the Other Retirement Programs, including the benefits that would have been payable to him if he had not elected to accept other benefits in lieu of the benefits provided by the Other Retirement Programs (expressed as Actuarial Equivalent monthly benefits payable as single life annuities commencing on the first day of the month coincident with or next following Participant’s Normal Retirement Date.
8. Section 2.05 of the Plan is amended by adding the following to the end thereof:
Notwithstanding any other provision of the Plan, the Joint and Survivor Annuity that Participant elects in lieu of a single life annuity must be the Actuarial Equivalent of the single life benefit.
9. Section 2.07 of the Plan is amended in its entirety to read as follows:
In lieu of the benefits to which Participant or his Surviving Spouse would otherwise be entitled under the foregoing provisions of this Article II, Participant

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may elect to receive an Actuarial Equivalent lump sum payment of such benefit, subject to the following:
(a) Any such election to receive an Actuarial Equivalent lump sum payment of such benefit must be filed with the Committee on or before December 31, 2008 and will only be effective with respect to any Termination of Service occurring on or after January 1, 2009. Any such election shall be in writing, in such form as the Committee may require, and once filed with the Committee, may be withdrawn only by written notice of withdrawal filed with the Committee within the time limits for making an election.
(b) If Participant makes an effective election under this Section 2.07, the lump sum payment shall be made in full on the date the benefit payments otherwise would have commenced notwithstanding the Participant’s election to receive an Actuarial Equivalent lump sum payment of such benefit.
10. New Section 2.08 is added to the Plan to read as follows:
2.08 Internal Revenue Code Section 409A
Notwithstanding any other provision of this Plan, it is intended that any payment or benefit which is provided pursuant to or in connection with this Plan, which is considered to be nonqualified deferred compensation subject to Section 409A of the Code, shall be provided and paid in a manner, and at such time and in such form, as complies with the applicable requirements of Section 409A of the Code. For purposes of this Plan, all rights to payments hereunder shall be treated as rights to receive a series of separate payments to the fullest extent allowed by Section 409A of the Code. Payments in connection with a “separation from service” will be delayed, to the extent required by Section 409A of the Code, until six months after the Participant’s separation from service or, if earlier, the Participant’s death (the “409A Deferral Period”), if the Participant is a key employee as defined in Section 416(i) of the Code (without regard to paragraph (5) thereof) and any of Corporation’s stock is publicly traded on an established securities market or otherwise. In the event any payments are due to made in installments or periodically during the 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled.
Any benefit payable under the Plan shall be paid as described in the Plan. The Plan is intended to satisfy the requirements of Section 409A of the Code, and all provisions of the Plan shall be interpreted in such manner.
Without limitation, if any payment or benefit which is provided pursuant to or in connection with the Plan and which is considered to be nonqualified deferred compensation subject to Section 409A of the Code fails to comply with Section 409A of the Code, and Participant incurs any additional tax, interest or penalties

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under Section 409A of the Code, the Corporation will pay Participant an additional amount so that, after paying all taxes, interest and penalties on such additional amount, Participant has an amount remaining equal to such additional tax, interest and penalties. All payments to be made to Participant pursuant to the immediately preceding sentence shall be payable no later than when the related taxes, interest and penalties are to be remitted. Any right to reimbursement incurred due to a tax audit or litigation addressing the existence or amount of a tax liability addressed in the immediately preceding sentence must be made no later than when the related taxes, interest and penalties that are the subject of the audit or litigation are to be remitted to the taxing authorities or, where no such taxes, interest and penalties are remitted, within thirty (30) days of when the audit is completed or there is a final and non-appealable settlement or resolution of the litigation.
11. Section 3.04 of the Plan is amended by adding the following to the end thereof:
Notwithstanding the foregoing, as soon as administratively practicable following the execution of this Amendment, the Corporation will establish an irrevocable grantor trust (as described in Section 671 of the Code), into which all of Participant’s benefits under the Plan will be deposited, as described herein, for the purpose of accumulating assets to provide for the obligations under this Plan. The assets and income of such trust shall be subject only to the claims of the creditors of the Corporation in the event of the Corporation’s insolvency as defined by Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of such trust shall not affect the Corporation’s liability to pay benefits hereunder except that any such liability shall be offset by any payments actually made to Participant from such trust. Following the establishment of the trust, the amount to be contributed thereto shall be in accordance with the Plan, as reasonably determined by the Corporation, and the investment of such assets shall be made in accordance with the terms of the trust agreement. Without limitation, but only to the extent not prohibited by Section 409A(b) of the Code, the Corporation agrees to contribute to the trust pursuant to the requirements of the Plan, ratably from the date hereof until the time Executive attains age 62 with respect to the amount of the obligation due at age 62 and annually as the obligation accrues each year thereafter, sufficient amounts to provide for the Corporation’s liability to pay the benefits hereunder, except the Company agrees in any event to contribute sufficient amounts to pay all the benefits hereunder no later than when a “Change in Control” occurs (to the extent such funding is not prohibited by Section 409A(b) of the Code. The terms of the trust shall contain such provisions as may be necessary to qualify and maintain the trust as a “rabbi trust” under the applicable trust agreement so that the Plan may be considered “unfunded” for purposes of ERISA.

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12. New Article V is added to the Plan to read as follows:
ARTICLE V
EARNINGS AND LOSSES
5.01 Permitted Investments
     On and after attaining age 62 and prior to his Termination of Service, Participant may designate that the Actuarial Equivalent lump sum value of his Normal Retirement Benefit calculated as if his Termination of Service occurred on his Normal Retirement Date (and as adjusted pursuant to this Article V) be deemed to have been invested in one or more Permitted Investments as described below. Participant’s designations shall be made in such form, and in such manner, as the Committee may permit but must result in the deemed investment of one hundred percent (100%) of the Actuarial Equivalent lump sum value of Participant’s Normal Retirement Benefit calculated as if his Termination of Service occurred on his Normal Retirement Date (and as adjusted pursuant to this Article V). In the event Participant has made an incomplete or improper election, Participant shall be deemed to have elected the Permitted Investment selected by the Committee.
5.02 Earnings and Losses
     On and after Participant attains age 62 and prior to his Termination of Service, the Actuarial Equivalent lump sum value of Participant’s Normal Retirement Benefit calculated as if his Termination of Service occurred on his Normal Retirement Date (and as adjusted pursuant to this Article V) shall be deemed to receive all interest, dividends, earnings and other profits, and to have incurred all losses, expenses and other charges, which would have been received or incurred if such Actuarial Equivalent lump sum value (and as adjusted pursuant to this Article V) had been invested in such Permitted Investments. Nevertheless, the Company need not actually make any such Permitted Investments, which shall represent investment benchmarks only. If the Company from time to time should make any investments similar to Permitted Investments, such investments shall be solely for the Company’s own account, and neither Participant nor his Beneficiaries shall have any right, title or interest therein. Participant and his Beneficiaries are unsecured creditors of the Company with respect to any amounts to be distributed under this Plan.
5.03 Change of Permitted Investments
     Participant may change an investment election effective as of the first day of any month (provided at least thirty (30) days have elapsed since any such previous election). In addition, Participant also may reallocate amounts previously credited to one or more Permitted Investments to other Permitted Investments offered under this Plan effective as of the first day of any month (provided at least thirty (30) days have elapsed since any such previous election). Such changes of election shall be made in such form, and in such manner, as the Committee may permit but must result in the deemed investment of one hundred percent (100%) of the Actuarial Equivalent lump sum value of Participant’s

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Normal Retirement Benefit calculated as if his Termination of Service occurred on his Normal Retirement Date (and as adjusted pursuant to this Article V). Any changes of election shall be effective as of the first day of the month as soon as practical following receipt of the change election by the Committee or its designee for this purpose; provided, however, that an election change will not be effective until at least thirty (30) days have passed since Participant’s prior election.
5.04 Crediting of Earnings and Losses
     The Actuarial Equivalent lump sum value of Participant’s Normal Retirement Benefit calculated as if his Termination of Service occurred on his Normal Retirement Date (and as adjusted pursuant to this Article V) shall be credited with interest, dividends, earnings and profits and debited with losses, expenses and other charges thereon no less frequently than monthly.
5.05 Permitted Investment
     Permitted Investment means any such fund or type of investment as may be approved by the Committee from time to time as a deemed benchmark investment for purposes of the Plan, except that a Permitted Investment may not include any stock or securities of the Company or any subsidiaries or affiliates.
13. New Article VI is added to the Plan to read as follows:
ARTICLE VI
TAX WITHHOLDING
6.01 Tax Withholding
     Notwithstanding any other provision of this Plan, the Company shall withhold from any payments hereunder or obtain from Participant any amounts required to be withheld as the result of Participant’s participation in this Plan. To the extent that the Company is required to withhold any income taxes, employment taxes or other such amounts from Participant’s benefit pursuant to any state, federal or local law, such amounts may be taken out of any payments hereunder or any other amounts to be paid to Participant or Participant may be required to pay in cash any amounts that must be withheld. Notwithstanding the foregoing, to the extent permitted by Section 409A of the Code, payment may be made and deducted from Participant’s supplemental pension benefit payable hereunder to pay any relevant employment taxes required to be withheld with respect to the Plan and to pay any required income tax withholdings as a result of payment of such employment taxes. However, the total payment and deduction from Participant’s supplemental pension benefit hereunder may not exceed the aggregate of such employment taxes and any income tax withholding related to the payment of such employment taxes.

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14. It is understood and agreed that the Plan can be amended only pursuant to the mutual written agreement of the Participant and the Corporation. Except as amended hereby, the Plan shall remain in full force and effect.
15. Participant agrees that the Corporation may amend the Other Retirement Programs as reasonably necessary to bring them into compliance with Section 409A of the Code taking into account corresponding changes as to the form and time of payment of Participant’s benefits under the Plan.  Participant acknowledges that this may require payment of Participant’s benefits under the Other Retirement Programs at the same time and in the same form as Participant’s benefits under the Plan.
     IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the date first above written.
             
    COMPANY    
 
           
    Arris Group, Inc.    
 
           
 
  By:
Name:
  /s/ Lawrence A. Margolis
 
Lawrence A. Margolis
   
 
  Title:   Executive Vice President of Strategic Planning, Administration and Chief Counsel, Secretary    
 
           
    EXECUTIVE    
 
           
    /s/ Robert Stanzione    
         
    Robert Stanzione    

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