Exhibit 10.1
ARRIS GROUP, INC.
2007 STOCK INCENTIVE PLAN
Incentive Stock Option Agreement
No. of Shares subject to
Incentive Stock Option: ___
     THIS INCENTIVE STOCK OPTION AGREEMENT (this “Agreement”) dated as of the
___ day of                     , 20___, by and between Arris Group, Inc., a
Delaware corporation (the “Company”), and
                                         (the “Participant”), is made pursuant
and subject to the provisions of the Company’s 2007 Stock Incentive Plan (the
“Plan”), a copy of which is attached hereto. All terms used herein that are
defined in the Plan have the same meaning given them in the Plan. Paragraph 23
of this Agreement provides definitions of additional terms used herein.
     1. Grant of Option. Pursuant to the Plan, the Company, on
                    , 20___ (the “Date of Grant”), granted to the Participant,
subject to the terms and conditions of the Plan and subject further to the terms
and conditions set forth herein, the right and option to purchase from the
Company all or any part of an aggregate of                      shares of the
common stock of the Company, par value $0.01 per share (“Shares”) at the
exercise price of $                     per Share. Such price per Share is not
less than the Fair Market Value of a Share on the Date of Grant (or, in the case
of a Ten Percent Shareholder, not less than 110 percent of the Fair Market Value
of a Share on the Date of Grant). This Option is intended to be treated as an
incentive stock option under Code Section 422, but only to the extent the
aggregate Fair Market Value (determined as of the Date of Grant) of the Shares
for which this Option (and all other options of the Participant that are
intended to be incentive stock options whether granted under the Plan or any
other plan of the Company or any of its Affiliates) becomes exercisable for the
first time in any calendar year does not exceed One Hundred Thousand Dollars
($100,000). If that limitation is exceeded, the Option may be exercised for the
excess number of Shares as a nonqualified stock option. The Company shall not be
liable to the Participant if the Internal Revenue Service or any court or other
authority having jurisdiction over such matters determines for any reason
whatsoever that this Option or any portion thereof does not qualify as an
incentive stock option. This Option is exercisable as hereinafter provided.
     2. Terms and Conditions. This Option is subject to the following terms and
conditions:

  (a)   Expiration Date. This Option shall expire at 11:59 p.m. on
                     ___, 20___ (the “Expiration Date”) or such earlier time as
set forth in paragraphs 3, 4, 5 or 6 of this Agreement. In no event shall the
Expiration Date be later than 10 years from the Date of Grant (or, in the case
of a Ten Percent Shareholder, five years from the Date of Grant).     (b)  
Exercise of Option. Except as provided in the Plan and in paragraphs 3, 4, 5 or
6 of this Agreement, this Option shall become exercisable at the time or times
set forth on Exhibit A, attached hereto. Once this Option has become
exercisable, it shall continue to be exercisable until the earlier of the
termination of the Participant’s rights hereunder pursuant to paragraphs 3, 4, 5
or 6 of this Agreement or until the Expiration Date. A partial exercise of this
Option shall not affect the Participant’s right to exercise the Option with
respect to the remaining Shares, subject to the conditions of the Plan and this
Agreement.     (c)   Method of Exercise and Payment for Shares. This Option
shall be exercised by delivering written notice of exercise to the attention of
the Company’s Secretary at the Company’s address specified in paragraph 14
below. The exercise date shall be the date of delivery of the notice of
exercise. Such notice must be accompanied by payment of the Option price in
full. The Participant may pay part or all of the Option price and any applicable
withholdings (i) in cash, (ii) by certified or bank cashier’s check, (iii) by
surrendering Shares to the Company that the Participant already

 

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      owns, (iv) by a cashless exercise through a broker, (v) by any other
method the Committee authorizes or (vi) by any combination of the aforementioned
methods of payment. If Shares are used to pay part or all of the Option price,
the sum of the cash and cash equivalent and the Fair Market Value (determined as
of the day preceding the date of exercise) of the Shares surrendered must not be
less than the Option price of the Shares for which the Option is being
exercised.

  (d)   Nontransferability. This Option is nontransferable except by will or the
laws of descent and distribution. During the Participant’s lifetime, only the
Participant may exercise this Option. No right or interest of a Participant in
this Option shall be liable for, or subject to, any lien, obligation or
liability of the Participant.

     3. Exercise in the Event of Death. This Option shall be exercisable for all
or part of the number of Shares that the Participant is entitled to purchase
pursuant to paragraph 2(b) as of the date of the Participant’s death, reduced by
the number of Shares for which the Participant previously exercised the Option,
in the event the Participant dies while employed by the Company or any Affiliate
and prior to the Expiration Date and the termination of the Participant’s rights
under paragraphs 4, 5 or 6 of this Agreement. In that event, this Option may be
exercised by the Participant’s estate, or the person or persons to whom his
rights under this Option shall pass by will or the laws of descent and
distribution, for the remainder of the period preceding the Expiration Date or
within one year of the date the Participant dies, whichever period is shorter.
     4. Exercise in the Event of Disability. This Option shall be exercisable
for all or part of the number of Shares that the Participant is entitled to
purchase pursuant to paragraph 2(b) as of the date the Participant becomes
Disabled, reduced by the number of Shares for which the Participant previously
exercised the Option, if the Participant becomes Disabled while employed by the
Company or any Affiliate and prior to the Expiration Date and the termination of
the Participant’s rights under paragraphs 3, 5 or 6 of this Agreement. In that
event, the Participant may exercise this Option for the remainder of the period
preceding the Expiration Date or within [one year] of the date he ceases to be
employed by the Company or any Affiliate on account of being Disabled, whichever
period is shorter. However, to the extent the Participant exercises any portion
of the Option more than three months after the date he ceases to be employed by
the Company or any Affiliate on account of being Disabled, such portion of the
Option shall be treated as a nonqualified stock option.
     5. Exercise After Termination of Employment. This Option shall be
exercisable for all or part of the number of Shares that the Participant is
entitled to purchase pursuant to paragraph 2(b) as of the date the Participant
ceases to be employed by the Company or any Affiliate, reduced by the number of
Shares for which the Participant previously exercised the Option, if the
Participant ceases to be employed by the Company or any Affiliate other than on
account of death, becoming Disabled or being terminated by the Company or any
Affiliate for Cause prior to the Expiration Date and the termination of the
Participant’s rights under paragraphs 3, 4 or 6 of this Agreement. In that
event, the Participant may exercise this Option for the remainder of the period
preceding the Expiration Date or until the date that is three months after the
date he ceases to be employed by the Company or any Affiliate, whichever period
is shorter.
     6. Termination of Employment for Cause. Notwithstanding any other provision
of this Agreement, all rights hereunder will be immediately discontinued and
forfeited, and the Company shall not have any further obligation hereunder to
the Participant and this Option will not be exercisable for any number of Shares
(even if the Option previously became exercisable), on and after the time the
Participant is discharged from employment with the Company or any Affiliate for
Cause.
     7. Securities Law Restrictions.

  (a)   Notwithstanding any other provision of this Agreement, the Option shall
not be exercisable and no shares of Common Stock shall be issued, except in
compliance with all applicable federal and state laws and regulations
(including, without limitation, withholding tax requirements), any listing
agreement to which the Company is a party, and the rules of all domestic stock
exchanges on which the Company’s Shares may be listed. The Company shall have
the right to rely on an

 

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      opinion of its counsel as to such compliance. Any stock certificate
evidencing Shares issued pursuant to the Option may bear such legends and
statements as the Committee may deem advisable to assure compliance with federal
and state laws and regulations and to reflect any other restrictions applicable
to such shares as the Committee otherwise deems appropriate. The Option shall
not be exercisable and no shares of Common Stock shall be issued until the
Company has obtained such consent or approval as the Committee may deem
advisable from regulatory bodies having jurisdiction over such matters.

  (b)   Notwithstanding any other provision of this Agreement, the Committee may
postpone the exercise of the Option for such time as the Committee in its sole
discretion may deem necessary in order to permit the Company (i) to effect,
amend or maintain any necessary registration of the Plan or the Shares issuable
pursuant to the Option under the securities laws; (ii) to take any action in
order to (A) list such Shares or other shares of stock of the Company on a stock
exchange if the Shares are not then listed on such exchange or (B) comply with
restrictions or regulations incident to the maintenance of a public market for
its Shares, including any rules or regulations of any stock exchange on which
the Shares are listed; (iii) to determine that such Shares in the Plan are
exempt from such registration or that no action of the kind referred to in
(ii)(B) above needs to be taken; (iv) to comply with any other applicable law,
including without limitation, securities laws; (v) to comply with any legal or
contractual requirements during any such time the Company or any Affiliate is
prohibited from doing any of such acts under applicable law, including without
limitation, during the course of an investigation of the Company or any
Affiliate, or under any contract, loan agreement or covenant or other agreement
to which the Company or any Affiliate is a party or (vi) to otherwise comply
with any prohibition on such acts or payments during any applicable blackout
period; and the Company shall not be obligated by virtue of any terms and
conditions of the Agreement or any provision of the Plan to recognize the grant,
exercise or vesting of the Option or to issue Shares in violation of the
securities laws or the laws of any government having jurisdiction thereof or any
of the provisions hereof. Any such postponement shall not extend the term of the
Option and neither the Company nor its directors and officers nor the Committee
shall have any obligation or liability to the Participant or to any other person
with respect to Shares as to which the Option shall lapse because of such
postponement.

     8. Non-Competition and Non-Solicitation Agreement. In consideration of the
grant of this Option, the Participant agrees as follows:

  (a)   During employment and for a period of four (4) months from the date of
termination of the Participant’s employment with the Company and its Affiliates
for any reason whatsoever, the Participant will not, directly or indirectly,
compete with the Company or any Affiliate by providing to any entity that is in
a Competing Business services substantially similar to the services provided by
the Participant at the time of termination.     (b)   During employment and for
a period of two (2) years after the termination of the Participant’s employment
with the Company and its Affiliates for any reason whatsoever, the Participant
will not, on his own behalf or on behalf of any other person, partnership,
association, corporation or other entity, solicit or in any manner attempt to
influence or induce any employee of the Company or its Affiliates (known by the
Participant to be such) to leave the employment of the Company or its
Affiliates, nor shall the Participant use or disclose to any person,
partnership, association, corporation or other entity any information obtained
while an employee of the Company or any Affiliate concerning the name and
addresses of the Company’s or any Affiliate’s employees.

If the Participant violates any of the provisions of (a) or (b) of this
paragraph 8, the Participant shall pay the Company any profits the Participant
received upon exercise of the Option, provided that the Option was exercised
less than six months prior to termination of the Participant’s employment.

 

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     9. Agreement to Terms of the Plan and Agreement. The Participant has
received a copy of the Plan, has read and understands the terms of the Plan and
this Agreement, and agrees to be bound by their terms and conditions.
     10. Minimum Exercise. This Option may not be exercised for less than
                     Shares unless it is exercised for the full number of Shares
that remain subject to the Option.
     11. Fractional Shares. Fractional Shares shall not be issuable hereunder,
and when any provision hereof may entitle the Participant to a fractional Share,
such fractional Share shall be disregarded.
     12. Change in Capital Structure. The terms of this Option shall be adjusted
in accordance with the terms and conditions of the Plan as the Committee
determines is equitably required in the event the Company effects one or more
stock dividends, subdivisions or consolidations of Shares, reorganizations,
recapitalizations, spin-offs or other similar changes in capitalization.
     13. Notification Upon Sale. The Participant shall give written notice of
any sale or other disposition of any Shares acquired under this Option to the
Company’s Secretary at the Company’s address specified in paragraph 14 below, if
the Participant sells or otherwise disposes of any Shares acquired under this
Option before the expiration of the later of the two-year period beginning on
the Date of Grant or the one-year period beginning on the date that the
Participant exercised this Option with respect to such Shares.
     14. Notice. Any notice or other communication given pursuant to this
Agreement, or in any way with respect to this Option, shall be in writing and
shall be personally delivered or mailed by United States registered or certified
mail, postage prepaid, return receipt requested, to the following addresses:

         
If to the Company:
  Arris Group, Inc.    
 
  3871 Lakefield Drive    
 
  Suwanee, Georgia 30024    
 
  Attn: Larry Margolis, Executive Vice President    
 
       
If to the Participant:
       
 
 
 
   
 
 
 
   
 
 
 
   

     15. No Right to Continued Employment. This Option does not confer upon the
Participant any right with respect to continued employment by the Company or any
Affiliate, nor shall it interfere in any way with the right of the Company or
any Affiliate to terminate the Participant’s employment at any time without
assigning a reason therefor.
     16. No Stockholder Rights. The Participant shall not have any rights as a
stockholder with respect to Shares subject to the Option until the date of
exercise of the Option and the issuance of the Shares that are being acquired.
     17. Binding Effect. Subject to the limitations stated above and in the
Plan, this Agreement shall be binding upon and inure to the benefit of the
legatees, distributees, transferees and personal representatives of the
Participant and the successors of the Company.
     18. Conflicts. In the event of any conflict between the provisions of the
Plan and the provisions of this Agreement, the provisions of the Plan shall
govern. All references herein to the Plan shall mean the Plan as in effect on
the date hereof.
     19. Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, except to the extent federal law applies.

 

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     20. Tax Consequences and Section 409A. The Participant acknowledges that
there may be tax consequences upon the acquisition and disposition of Shares
acquired upon exercise of this Option, and that the Participant should consult a
tax advisor prior to such acquisition or disposition. The Option is intended to
be exempt from the requirements of Section 409A of the Code. Notwithstanding the
preceding, the Company and its Affiliates shall not be liable to the Participant
or any other person if the Internal Revenue Service or any court or other
authority having jurisdiction over such matter determines for any reason that
this Agreement is subject to taxes, penalties or interest as a result of failing
to comply with Section 409A of the Code.
     21. Withholding Obligations. The Participant shall be responsible for
satisfying all applicable income and employment tax withholding obligations with
respect to the exercise of the Option (i) in cash, (ii) by certified or bank
cashier’s check, (iii) by surrendering Shares to the Company that the
Participant already owns (but only for the minimum required withholding),
(iv) by a cashless exercise through a broker, (v) by any other method the
Committee authorizes or (vi) by any combination of the aforementioned methods of
payment.
     22. Amendment or Termination. This Agreement may be amended or terminated
at any time by the mutual agreement and written consent of the Participant and
the Company, but only to the extent permitted under the Plan.
     23. Definitions. For purposes of this Agreement, the following words shall
have the meanings set forth below:

  (a)   “Affiliate” means, as it relates to any limitations or requirements with
respect to incentive stock options, any “subsidiary” or “parent” corporation (as
such terms are defined in Code Section 424) of the Company. Affiliate otherwise
means any entity that is part of a controlled group of corporations or is under
common control with the Company within the meaning of Code Sections 1563(a),
414(b) or 414(c), except that, in making any such determination, 50 percent
shall be substituted for 80 percent under such Code Sections and the related
regulations.     (b)   “Cause” shall have the same meaning as under any
employment agreement between the Company or any Affiliate and the Participant
or, if no such employment agreement exists or if such employment agreement does
not contain any such definition, Cause means any material breach of the terms of
the Participant’s employment contract (if any) or Agreement, or any conduct
intentionally or materially harmful to the Company, as determined in the sole
discretion of the Committee, including but not limited to the unauthorized use
of proprietary information.     (c)   “Code” means the Internal Revenue Code of
1986, as amended.     (d)   “Competing Business” means any business that
engages, in whole or in part, in the equipment and supply for broadband
communications systems in the United States.     (e)   “Disabled” means fully
and permanently disabled within the meaning of the Company’s group long-term
disability plan then in effect. The Committee, in its sole discretion, shall
determine whether the Participant is Disabled for purposes of this Agreement.  
  (f)   “Fair Market Value” means, on any given date, the fair market value of a
Share as the Committee in its discretion shall determine; provided, however,
that the Committee shall determine Fair Market Value without regard to any
restriction other than a restriction which, by its terms, will never lapse and,
if the Shares are traded on any national stock exchange or quotation system, the
Fair Market Value of a Share shall be the closing price of a Share as reported
on such stock exchange or quotation system on such date, or if the Shares are
not traded on such stock exchange or quotation system on such date, then on the
next preceding day that the Shares were traded on such stock exchange or
quotation system, all as reported by such source as the Committee shall select.
The Fair Market Value that the Committee determines shall be final, binding and
conclusive on the Company, any Affiliate and the Participant.

 

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  (g)   “Ten Percent Shareholder” means any individual who (considering the
stock attribution rules described in Code Section 424(d)) owns stock possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company or any Affiliate.

 

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a
duly authorized officer, and the Participant has affixed his signature hereto.

              COMPANY:
 
            ARRIS GROUP, INC.
 
       
 
  By:    
 
       
 
  Name:    
 
       
 
  Title:    
 
       
 
            PARTICIPANT:  
 
                  Participant

 

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EXHIBIT A
Vesting Provisions
Except as provided in paragraphs 3, 4, 5 or 6 of the Agreement, this Option
shall become exercisable as set forth below. For purposes of the Agreement,
including the vesting provisions in this Exhibit A, the Participant will be
deemed to have terminated employment as of his or her last day of active work
for the Company and its Affiliates; provided, however, that the Participant
shall be deemed to be actively at work during any period the Participant is on
approved paid medical leave or during the protected reemployment period
applicable to military leave.
1. General Vesting
Service-Based Vesting
[     ] The Option shall become exercisable with respect to [thirty-three]
percent ([33]%) of the Shares subject to the Option on the [first and second]
annual anniversaries of the Date of Grant and then with respect to the remaining
[thirty-four] percent ([34]%) of the Shares subject to the Option on the [third]
annual anniversary of the Date of Grant, provided the Participant is still
employed by the Company or any Affiliate at each such time.
Performance-Based Vesting
[     ] The Option shall become exercisable with respect to the percentage of
Shares set forth below with respect to each applicable vesting date, provided
that, at each such time, (a) the Participant is still employed by the Company or
any Affiliate and (b) the performance measures set forth below have been met.
Notwithstanding the foregoing, if the applicable performance measures are not
met at a specified vesting date, but the cumulative performance measures are met
at a subsequent vesting date, then the Option shall become exercisable with
respect to that percentage of Shares specified for the applicable vesting date
plus the percentage of Shares for prior vesting dates that did not become
exercisable solely because of a failure to meet the performance measures for the
prior vesting dates.

                      Percentage of Shares for             which Option may be  
Cumulative Vesting Date   Performance Target   Exercised   Performance Target  
                                                                               
                             

2. Accelerated Vesting
Accelerated Vesting on Death
[     ] Notwithstanding the foregoing, the Option shall become exercisable with
respect to one-hundred percent (100%) of the Shares subject to the Option if the
Participant dies while still employed by the Company or any Affiliate.
Accelerated Vesting on Disability
[     ] Notwithstanding the foregoing, the Option shall become exercisable with
respect to one-hundred percent (100%) of the Shares subject to the Option if the
Participant becomes Disabled while still employed by the Company or any
Affiliate.

 

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Accelerated Vesting on Retirement
[     ] Notwithstanding the foregoing, the Option shall become exercisable with
respect to one-hundred percent (100%) of the Shares subject to the Option if the
Participant voluntarily terminates employment with the Company and its
Affiliates after reaching age ___.