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 Executives 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 Companys business.
Executives 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 Companys 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 Executives 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). Executives Base Salary will be payable in
arrears (no less frequently than monthly) in accordance with the Companys 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 Executives employment with the Company
pursuant to this Agreement, Executives 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. Executives 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 Executives 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 Companys 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 Executives 65th birthday.
4.
Termination
. Notwithstanding the provisions of Section 3 hereof, but subject to
the provisions of Section 5 hereof, Executives employment under this Agreement shall terminate as
follows:
(a)
Death
. Executives 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 Executives estate for a period
of three months after the date of Executives death.
(b)
Termination for Cause
. The Company may terminate Executives 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)
Executives conviction of a felony or a crime involving moral turpitude; (ii) Executives
commission of an act constituting fraud, deceit or material misrepresentation with respect to the
Company; (iii) Executives embezzlement of funds or assets from the Company; (iv) Executives
addiction to any alcoholic, controlled or illegal substance or drug; (v) Executives commission of
any act or omission which would give the Company the right to terminate Executives employment
under applicable law; or (vi) Executives 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 Executives 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 Executives 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 Companys normal payroll procedures and continued benefits on a
monthly basis through such time.
(f)
Payments
. Following any expiration or termination of this Agreement and
Executives 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 Executives employment, in the normal course consistent with the provisions of this
Agreement. Additionally, subject to Executives 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 Executives stock options and equity awards outstanding at
termination of Executives 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 Executives termination of employment).
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5.
Certain Termination Benefits
. Subject to Section 6(a) hereof, in the event (i) the
Company terminates Executives 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 Companys normal payroll procedures, beginning with
the first payroll date after the date of termination of Executives 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 Executives 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 Executives outstanding stock options and restricted stock grants
under the Companys stock option and other benefit plans shall immediately vest. Additionally, all
of Executives outstanding stock options shall remain outstanding until the original expiration
date of the stock options (disregarding any earlier expiration date based on Executives
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 Companys 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 Companys 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 Companys 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 Companys 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,
Executives 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 Executives 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,
Executives 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 Companys responsibility to continue providing, the
fringe benefits then being provided by the Company pursuant to this Section 5. The Company
acknowledges that if Executives 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 Executives 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 Companys 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 Executives 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 Companys standard written release of any and all
claims against the Company and all related parties with respect to all matters arising out of
Executives employment by the Company (other than as described above) no later than thirty (30)
days following Executives 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 Executives employment for any reason other than Cause, death or disability, the Company
shall pay to Executive: (1) an amount equal to one times the Executives 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 Companys 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 Executives outstanding stock options and restricted stock grants under the
Companys 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 Executives 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, Executives outstanding stock options shall
remain outstanding until the original expiration date of the stock options (disregarding any
earlier expiration date based on Executives 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 Companys common stock would be converted into cash,
securities or other property, other than a merger of the Company in which the holders of the
Companys 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 Companys 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 Companys 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
Executives 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 Executives
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 Executives 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
Executives death
except
to the extent that a change in duties relates to
the elimination of responsibilities attendant to the Companys no longer being a
publicly traded company;
(ii) A reduction by the Company in the Executives 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 Companys 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 Companys 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 Executives 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 Executives 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 Executives 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 Executives 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 Executives period of active employment under this Agreement), and in any event
must be promptly delivered to the Company upon termination of Executives 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 Executives 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 Executives
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 partys 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):
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If to the Company:
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Arris Group, Inc.
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3871 Lakefield Drive
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Suwanee, Georgia 30024
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Attention: Lawrence A. Margolis
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If to Executive:
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John Caezza
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55 Poplar Hill Drive
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Farmington, CT 06032
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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 Companys 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 Companys insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The
establishment of such trust shall not affect the Companys 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 Companys 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.
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Company
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ARRIS GROUP, INC.
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By:
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/s/ Lawrence A. Margolis
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Name:
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Lawrence A. Margolis
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Title:
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Executive Vice President of Strategic Planning,
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Administration and Chief Counsel, Secretary
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Executive
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/s/ John Caezza
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John Caezza
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15
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 Executives 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 Companys business.
Executives 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 Companys 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 Executives 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). Executives Base Salary will be payable in
arrears (no less frequently than monthly) in accordance with the Companys 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 Executives employment with the Company
pursuant to this Agreement, Executives 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. Executives 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 Executives 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 Companys 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 Executives 65th birthday.
4.
Termination
. Notwithstanding the provisions of Section 3 hereof, but subject to
the provisions of Section 5 hereof, Executives employment under this Agreement shall terminate as
follows:
(a)
Death
. Executives 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 Executives estate for a period
of three months after the date of Executives death.
(b)
Termination for Cause
. The Company may terminate Executives employment at any
time for Cause (as hereinafter defined) by delivering a written termination
2
notice to Executive. For purposes of this Agreement, Cause shall mean any of: (i)
Executives conviction of a felony or a crime involving moral turpitude; (ii) Executives
commission of an act constituting fraud, deceit or material misrepresentation with respect to the
Company; (iii) Executives embezzlement of funds or assets from the Company; (iv) Executives
addiction to any alcoholic, controlled or illegal substance or drug; (v) Executives commission of
any act or omission which would give the Company the right to terminate Executives employment
under applicable law; or (vi) Executives 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 Executives 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 Executives 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 Companys normal payroll procedures and continued benefits on a
monthly basis through such time.
(f)
Payments
. Following any expiration or termination of this Agreement and
Executives 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 Executives employment, in the normal course consistent with the provisions of this
Agreement. Additionally, subject to Executives 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 Executives stock options and equity awards outstanding at
termination of Executives 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 Executives termination of employment).
3
5.
Certain Termination Benefits
. Subject to Section 6(a) hereof, in the event (i) the
Company terminates Executives 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 Companys normal payroll procedures, beginning with
the first payroll date after the date of termination of Executives 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 Executives 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 Executives outstanding stock options and restricted stock grants
under the Companys stock option and other benefit plans shall immediately vest. Additionally, all
of Executives outstanding stock options shall remain outstanding until the original expiration
date of the stock options (disregarding any earlier expiration date based on Executives
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 Companys 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 Companys 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 Companys 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 Companys 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,
Executives 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 Executives 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,
Executives 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 Companys responsibility to continue providing, the
fringe benefits then being provided by the Company pursuant to this Section 5. The Company
acknowledges that if Executives 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 Executives 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 Companys 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 Executives 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 Companys standard written release of any and all
claims against the Company and all related parties with respect to all matters arising out of
Executives employment by the Company (other than as described above) no later than thirty (30)
days following Executives 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 Executives employment for any reason other than Cause, death or disability, the Company
shall pay to Executive: (1) an amount equal to one times the Executives 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 Companys 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 Executives outstanding stock options and restricted stock grants under the
Companys 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 Executives 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, Executives outstanding stock options shall
remain outstanding until the original expiration date of the stock options (disregarding any
earlier expiration date based on Executives 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 Companys common stock would be converted into cash,
securities or other property, other than a merger of the Company in which the holders of the
Companys 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 Companys 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 Companys 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
Executives 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 Executives
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 Executives 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
Executives death
except
to the extent that a change in duties relates to
the elimination of responsibilities attendant to the Companys no longer being a
publicly traded company;
(ii) A reduction by the Company in the Executives 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 Companys 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 Companys 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 Executives 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 Executives 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 Executives 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 Executives 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 Executives period of active employment under this Agreement), and in any event
must be promptly delivered to the Company upon termination of Executives 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 Executives 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 Executives
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 partys 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):
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If to the Company:
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Arris Group, Inc.
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3871 Lakefield Drive
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Suwanee, Georgia 30024
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Attention: Lawrence A. Margolis
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If to Executive:
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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 Companys 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 Companys insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The
establishment of such trust shall not affect the Companys 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 Companys 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.
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Company
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ARRIS GROUP, INC.
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By:
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/s/ Lawrence A. Margolis
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Name:
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Lawrence A. Margolis
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Title:
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Executive Vice President of Strategic Planning,
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Administration and Chief Counsel, Secretary
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Executive
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/s/ Bruce McClelland
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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 Executives 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:
Executives Base Salary will be payable in arrears (no less frequently than monthly)
in accordance with the Companys 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:
Executives 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.
1
5. Section 4(a) of the Agreement is amended in its entirety to read as follows:
Executives 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 Executives estate
for a period of three months after the date of Executives 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 Companys 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 Executives 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 Executives employment, in the normal course
consistent with the provisions of this Agreement. Additionally, subject to
Executives 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 Executives stock options and
equity awards outstanding at termination of Executives 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 Executives 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
Companys normal payroll procedures, beginning with the first payroll date after the
date of termination of Executives 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 Executives termination of employment in an amount
2
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 Executives outstanding stock options shall remain outstanding
until the original expiration date of the stock options (disregarding any earlier
expiration date based on Executives 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 Companys 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 Companys 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 Companys 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 Companys 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, Executives
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 Executives 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, Executives 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 Companys 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 Executives employment by the Company (other
than as described above) no later than thirty (30) days following Executives
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 Executives 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, Executives outstanding stock options
shall remain outstanding until the original expiration date of the stock options
(disregarding any earlier expiration date based on Executives 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 Companys
common stock would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Companys 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 Companys 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 Companys 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.
6
(b) Executive agrees that during Executives 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 Executives 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 Executives 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 Executives 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 Executives employment.
20. New Section 14 of the Agreement is added to read as follows:
7
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 Companys
insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of
such trust shall not affect the Companys 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 Companys 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.
8
IN WITNESS WHEREOF,
the parties hereto have executed this First Amendment as of the day first
above written.
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COMPANY
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Arris Group, Inc.
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By:
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/s/ Lawrence A. Margolis
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Name:
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Lawrence A. Margolis
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Title:
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Executive Vice President of Strategic Planning,
Administration and Chief Counsel,
Secretary
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EXECUTIVE
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/s/ Ronald M. Coppock
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Ronald M. Coppock
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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 Executives 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:
Executives Base Salary will be payable in arrears (no less frequently than monthly)
in accordance with the Companys 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:
Executives 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:
Executives 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 Executives estate
for a period of three months after the date of Executives 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 Companys 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 Executives 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 Executives employment, in the normal course
consistent with the provisions of this Agreement. Additionally, subject to
Executives 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 Executives stock options and
equity awards outstanding at termination of Executives 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 Executives 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
Companys normal payroll procedures, beginning with the first payroll date after the
date of termination of Executives 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 Executives termination of employment in an amount
2
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 Executives outstanding stock options shall remain outstanding
until the original expiration date of the stock options (disregarding any earlier
expiration date based on Executives 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 Companys 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 Companys 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 Companys 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
3
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 Companys 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, Executives
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 Executives 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, Executives 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 Companys standard written
release of any and all claims against the Company and all related parties
4
with
respect to all matters arising out of Executives employment by the Company (other
than as described above) no later than thirty (30) days following Executives
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 Executives 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, Executives outstanding stock options
shall remain outstanding until the original expiration date of the stock options
(disregarding any earlier expiration date based on Executives 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 Companys
common stock would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Companys 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 Companys 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 Companys 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
5
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.
6
(b) Executive agrees that during Executives 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 Executives 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 Executives 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 Executives 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 Executives employment.
20. New Section 14 of the Agreement is added to read as follows:
7
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 Companys
insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of
such trust shall not affect the Companys 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 Companys 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.
8
IN WITNESS WHEREOF,
the parties hereto have executed this First Amendment as of the day first
above written.
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COMPANY
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Arris Group, Inc.
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By:
Name:
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/s/ Lawrence A. Margolis
Lawrence A. Margolis
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Title:
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Executive Vice President of Strategic Planning,
Administration and Chief Counsel,
Secretary
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EXECUTIVE
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/s/ Bryant K. Isaccs
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Bryant K. Isaacs
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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 Executives 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.
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Capitalized terms that are used but not defined in this Amendment shall have the meaning
specified in the Agreement.
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2.
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The second sentence of Section 2(a) of the Agreement is amended in its entirety to read as
follows:
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Executives Base Salary will be payable in arrears (no less frequently than monthly)
in accordance with the Companys 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.
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3.
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Section 2(b) is amended by adding the following at the end thereof:
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Executives 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.
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4.
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Section 2(e) of the Agreement is amended by adding the
following at the end thereof:
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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.
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Section 4(a) of the Agreement is amended in its entirety to read as follows:
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Executives 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 Executives estate
for a period of three months after the date of Executives death.
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6.
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The last sentence of Section 4(e) of the Agreement is amended in its entirety to read as
follows:
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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 Companys normal payroll procedures and
continued benefits on a monthly basis through such time.
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7.
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Section 4(f) of the Agreement is amended in its entirety to read as follows:
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Following any expiration or termination of this Agreement and Executives 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 Executives employment, in the normal course
consistent with the provisions of this Agreement.
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8.
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Section 5(a) of the Agreement is amended by adding to the end thereof the following:
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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
Companys normal payroll procedures, beginning with the first payroll date after the
date of termination of Executives 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 Executives
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.
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Section 5(c) of the Agreement is amended in its entirety to read as follows:
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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.
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10.
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Section 5(d) of the Agreement is amended in its entirety to read as follows:
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The Company shall continue to provide Executive and his family with group medical
insurance coverage, no less frequently than monthly, under the Companys 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.
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11.
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Section 5(e) of the Agreement is amended in its entirety to read as follows:
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The Company shall continue to provide Executive coverage, no less frequently than
monthly, under the Companys 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 Companys insurance
policy).
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12.
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Section 5(f) of the Agreement is amended in its entirety to read as follows:
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(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 Companys 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, Executives 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 Executives 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, Executives 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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13.
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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 Companys standard written
release of any and all claims against the Company and all related parties with
respect to all matters arising out of Executives employment by the Company (other
than as described above) no later than thirty (30) days following Executives
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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14.
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Section 6(a) of the Agreement is amended in its entirety to read as follows:
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Commencing on the day following Executives 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 Executives special status terminate before May
30, 2013, without Executives express written consent.
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15.
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Section 6(b) of the Agreement is amended in its entirety to read as follows:
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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 Executives express written consent.
Accordingly, subject to Executives continued compliance with Sections 8 and 10 of
this Agreement, all of Executives stock options and equity awards outstanding shall
continue to vest until May 30, 2013 or such earlier termination with Executives
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 Executives special status or subsequent termination of employment).
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16.
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Section 7(a) of the Agreement is amended by adding to the end thereof the following:
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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 Executives 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.
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17.
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Section 7(b) of the Agreement is amended in its entirety to read as follows:
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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 Companys
common stock would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Companys 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
Companys 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 Companys 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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18.
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Section 7(e) is amended in its entirety to read as follows:
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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.
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19.
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Section 8 and 9 of the Agreement are deleted in their entirety and replaced with new Section 8
to read as follows:
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(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)
6
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 Executives 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 Executives 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 Executives 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 Executives 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.
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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 Executives employment.
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21.
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New Section 15 of the Agreement is added to read as follows:
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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 Companys
insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of
such trust shall not affect the Companys 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 Companys 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.
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Section 12 of the Agreement is amended by replacing the references to Sections 7, 8, 9 and 10
to Sections 8, 10 and 11.
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23.
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Section 13(c) of the Agreement is hereby amended by adding the following to the end of Section
13(c) to read as follows:
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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.
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24.
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Except as amended hereby, the Agreement shall remain in full force and effect.
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25.
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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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8
IN WITNESS WHEREOF,
the parties hereto have executed this First Amendment as of the day first
above written.
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COMPANY
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Arris Group, Inc.
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By:
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/s/ Lawrence A. Margolis
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Name:
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Lawrence A. Margolis
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Title:
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Executive Vice President of Strategic
Planning, Administration and Chief Counsel,
Secretary
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EXECUTIVE
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/s/ James. D. Lakin
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James D. Lakin
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9
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 Executives 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.
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Capitalized terms that are used but not defined in this Amendment shall have the meaning
specified in the Agreement.
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2.
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The second sentence of Section 2(a) of the Agreement is amended in its entirety to read as
follows:
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Executives Base Salary will be payable in arrears (no less frequently than monthly)
in accordance with the Companys 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.
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3.
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Section 2(b) is amended by adding the following at the end thereof:
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Executives 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.
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4.
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Section 2(e) of the Agreement is amended by adding the following at the end thereof:
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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.
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Section 4(a) of the Agreement is amended in its entirety to read as follows:
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Executives 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 Executives estate
for a period of three months after the date of Executives death.
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6.
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The last sentence of Section 4(e) of the Agreement is amended in its entirety to read as
follows:
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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 Companys normal payroll procedures and
continued benefits on a monthly basis through such time.
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7.
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Section 4(f) of the Agreement is amended in its entirety to read as follows:
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Following any expiration or termination of this Agreement and Executives 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 Executives employment, in the normal course
consistent with the provisions of this Agreement. Additionally, subject to
Executives 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 Executives stock options and
equity awards outstanding at termination of Executives 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 Executives termination of employment).
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8.
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Section 5(a) of the Agreement is amended by adding to the end thereof the following:
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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
Companys normal payroll procedures, beginning with the first payroll date after the
date of termination of Executives 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 Executives 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.
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9.
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Section 5(b) of the Agreement is amended by adding the following to the end thereof:
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Additionally, all of Executives outstanding stock options shall remain outstanding
until the original expiration date of the stock options (disregarding any earlier
expiration date based on Executives termination of employment).
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10.
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Section 5(c) of the Agreement is amended in its entirety to read as follows::
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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.
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11.
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Section 5(d) of the Agreement is amended in its entirety to read as follows:
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The Company shall continue to provide Executive and his family with group medical
insurance coverage, no less frequently than monthly, under the Companys 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.
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12.
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Section 5(e) of the Agreement is amended in its entirety to read as follows:
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The Company shall continue to provide Executive coverage, no less frequently than
monthly, under the Companys 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 Companys insurance
policy).
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13.
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Section 5(f) of the Agreement is amended in its entirety to read as follows:
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(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
3
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 Companys 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, Executives
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 Executives 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, Executives 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.
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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 Companys standard written
release of any and all claims against the Company and all related parties with
respect to all matters arising out of Executives employment by the Company (other
than as described above) no later than thirty (30) days following Executives
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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15.
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Section 6(a) of the Agreement is amended by adding to the end thereof the following:
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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 Executives 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, Executives outstanding stock options
shall remain outstanding until the original expiration date of the stock options
(disregarding any earlier expiration date based on Executives 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.
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16.
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Section 6(b) of the Agreement is amended in its entirety to read as follows:
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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 Companys
common stock would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Companys 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 Companys 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 Companys 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.
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17. Sections 6(e), (f) and (g) are deleted amended in their entirety and replaced with new Section
(e) as follows:
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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.
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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.
6
(b) Executive agrees that during Executives 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 Executives 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 Executives 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 Executives 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.
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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 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 Executives employment.
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20.
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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 Companys
insolvency as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of
such trust shall not affect the Companys 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 Companys 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.
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Section 11 of the Agreement is amended by replacing the references to Sections 7, 8, 9 and 10
to Sections 7, 9 and 10.
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22.
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Section 12(c) of the Agreement is hereby amended by adding the following to the end of Section
12(c) to read as follows:
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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.
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Except as amended hereby, the Agreement shall remain in full force and effect.
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24.
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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.
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COMPANY
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Arris Group, Inc.
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By:
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/s/ Lawrence A. Margolis
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Name:
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Lawrence A. Margolis
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8
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Title:
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Executive Vice President of Strategic
Planning, Administration and Chief Counsel,
Secretary
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EXECUTIVE
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/s/ David B. Potts
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David B. Potts
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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 Executives 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:
Executives 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 Executives continued compliance
with Section 7 below, all of Executives 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 Executives
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
1
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 Executives 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 Companys insurance policy). Subject to Executives continued
compliance with Section 7 below, if Executive terminates this Agreement without Good
Reason and therewith Executives 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 Executives 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
Executives 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 Companys 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, Executives 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
2
Period at Executives 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, Executives 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
3
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 Executives 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 Executives 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 Executives 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 Executives 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
4
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 Companys insolvency
as defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of such trust
shall not affect Companys 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
Companys 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.
5
IN WITNESS WHEREOF,
the parties hereto have executed this Second Amendment as of the day first
above written.
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COMPANY
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Arris Group, Inc.
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By:
Name:
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/s/ Robert J. Stanzione
Robert J. Stanzione
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Title:
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Chairman of the Board of Directors, President and Chief Executive Officer
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EXECUTIVE
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/s/ Lawrence Margolis
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Lawrence Margolis
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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 Executives supplemental pension benefit, provide for additional vesting of
Executives options and equity awards upon Executives 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 Executives 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:
Executives 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
Companys defined benefit retirement plan and related excess benefit plan if the
period of Executives service under those plans were tripled for all purposes and
all calculations of Executives 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 Companys defined benefit retirement plan and related
excess benefit plan. Notwithstanding the foregoing, the amount of Executives
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 Executives employment
under this Agreement continues past the time Executive reaches the age of 62, then
Executives 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 Executives 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 Companys insolvency as
defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of such trust shall
not affect Companys 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 Companys 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
2
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 Executives continued compliance with Sections
5(d) and 6 below, all of Executives 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 Executives
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 Executives 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
Companys insurance policy). Executives Typical Annual
3
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
Executives 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 Executives 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 Companys insurance policy). Subject to Executives continued
compliance with Sections 5(d) and 6, if Executive terminates his employment under
this Agreement with or without Good Reason (or Company terminates Executives
employment under this Agreement without Good Cause) after Executive attains the age
of 62, all of Executives 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 Executives 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 Executives 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
4
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 Companys 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, Executives 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 Executives 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, Executives 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,
5
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 Executives 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 Executives 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 Executives 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
6
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 Executives 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
7
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.
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COMPANY
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Arris Group, Inc.
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By:
Name:
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/s/ Lawrence A. Margolis
Lawrence A. Margolis
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Title:
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Executive Vice President of Strategic Planning, Administration and Chief Counsel,
Secretary
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EXECUTIVE
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/s/ Robert Stanzione
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Robert Stanzione
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8
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 Participants 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
Participants 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 Participants 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
Participants investment directions among the Permitted Investments in accordance
with Article V of this Plan, beginning as of Participants 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 Participants 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, Executives benefits under the
Other Retirement Programs will continue to accrue under the terms of the Other
Retirement Programs until Executives Termination of Service.
6. The first two sentences of Section 2.04 of the Plan are amended in their entirety to read as
follows:
2
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 Participants 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
3
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 Participants 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
Participants separation from service or, if earlier, the Participants 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
Corporations 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
4
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 Participants
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 Corporations insolvency as defined by Rev. Proc.
92-64, 1992-2 C.B. 422. The establishment of such trust shall not affect the
Corporations 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 Corporations 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.
5
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. Participants 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
Participants 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 Participants 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 Companys 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 Participants
6
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
Participants prior election.
5.04
Crediting of Earnings and Losses
The Actuarial Equivalent lump sum value of Participants 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 Participants
participation in this Plan. To the extent that the Company is
required to withhold any income taxes, employment taxes or other such
amounts from Participants 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 Participants
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
Participants 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 Participants benefits under the Plan.
Participant acknowledges that this may require payment of Participants benefits under the Other
Retirement Programs at the same time and in the same form as Participants benefits under the Plan.
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the date first above
written.
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COMPANY
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Arris Group, Inc.
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By:
Name:
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/s/ Lawrence A. Margolis
Lawrence A. Margolis
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Title:
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Executive Vice President of Strategic Planning, Administration and Chief Counsel, Secretary
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EXECUTIVE
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/s/ Robert Stanzione
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Robert Stanzione
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