EX-10.1 FORM OF INCENTIVE STOCK OPTION AGREEMENT



 






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




 









 






	 	 	 	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




 









 






	 	 	 	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.



 









 





     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.



 









 





     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.




 









 












	 	(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.




 









 











     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






 









 






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.




 









 







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 ___.