Document:

EX-4.1 Amended and Restated Performance Equity Pla

 

EXHIBIT 4.1

Initially Approved by Board of Directors on May 27, 1999

Initially Approved by Shareholders on August 23, 1999

Amendments Approved by Board of Directors and Compensation Committee

   On January 4, 2001 and February 7, 2001

Amendments Approved by Shareholders on May 7, 2001

Amendments Approved by Board of Directors on January 22, 2002

Amendment Approved by Shareholders on November 6, 2002

Amendment Approved by Board of Directors on July 13, 2006

Amendment Approved by Shareholders on November 1, 2006

[Amended and Restated through July 13, 2006]

LADENBURG THALMANN FINANCIAL SERVICES INC.

1999 PERFORMANCE EQUITY PLAN

ARTICLE I

Purpose: Definitions.

     1.1 Purpose. The purpose of the Ladenburg Thalmann Financial Services Inc. 1999
Performance Equity Plan is to enable the Company to offer to its key employees, officers, directors
and consultants whose past, present and any potential contributions to the Company and its
Subsidiaries have been, are or will be important to the success of the Company, an opportunity to
acquire a proprietary interest in the Company. The various types of long-term incentive awards
which may be provided under the Plan will enable the Company to respond to changes in compensation
practices, tax laws, accounting regulations and the size and diversity of its businesses.

     1.2 Definitions. For purposes of the Plan, the following terms shall be defined as set
forth below.

          (a) “Agreement” means the agreement between the Company and the Holder setting forth the terms
and conditions of an award under the Plan.

          (b) “Board” means the Board of Directors of the Company.

          (c) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any
successor thereto and the regulations promulgated thereunder.

          (d) “Committee” means the Stock Option Committee of the Board or any other committee of the
Board, which Board may designate to administer the Plan or any portion thereof. If no Committee is
so designated, then all references in this Plan to “Committee” shall mean the Board.

          (e) “Common Stock” means the Common Stock of the Company, no par value per share.

          (f) “Company” means Ladenburg Thalmann Financial Services Inc., a corporation organized under
the laws of the State of Florida.

          (g) “Deferred Stock” means Stock to be received, under an award made pursuant to Section 9
below, at the end of a specified deferral period.

 

 

          (h) “Disability” means disability as determined under procedures established by the Committee
for purposes of the Plan.

          (i) “Effective Date” means the date set forth in Section 13.1 below.

          (j) “Fair Market Value,” unless otherwise required by any applicable provision of the Code or
any regulations issued thereunder, means, as of any given date: (i) if the Common Stock is listed
on a national securities exchange or quoted on the Nasdaq National Market or Nasdaq Small Cap
Market, the last sale price of the Common Stock in the principal trading market for the Common
Stock on the last trading day preceding the date of grant of an award hereunder, as reported by the
exchange or Nasdaq, as the case may be: (ii) if the Common Stock is not listed on a national
securities exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap Market, but is
traded in the over-the-counter market, the closing bid price for the Common Stock on the last
trading day preceding the date of grant of an award hereunder for which such quotations are
reported by the OTC Bulletin Board or the National Quotation Bureau, Incorporated or similar
publisher of such quotations; and (iii) if the fair market value of the Common Stock cannot be
determined pursuant to clause (i) or (ii) above, such price as the Committee shall determine, in
good faith.

          (k) “Holder” means a person who has received an award under the Plan.

          (l) “Incentive Stock Option” means any Stock Option intended to be and designated as an
“incentive stock option” within the meaning of Section 422 of the Code.

          (m) “Nonqualified Stock Option” means any Stock Option that is not an Incentive Stock Option.

          (n) “Normal Retirement” means retirement from active employment with the Company of any
Subsidiary on or after age 65.

          (o) “Other Stock-Based Award” means an award under Section 10 below, that is valued in whole
or in part by reference to, or is otherwise based upon, Stock.

          (p) “Parent” means any present or future parent corporation of the Company, as such term is
defined in section 424(e) of the Code.

          (q) “Plan” means the Ladenburg Thalmann Financial Services Inc. 1999 Performance Equity Plan,
as hereinafter amended from time to time.

          (r) “Repurchase Value” shall mean the Fair Market Value in the event the award to be settled
under Section 2.2(h) or repurchased under Section 14.12 is comprised of shares of Common Stock and
the difference between Fair Market Value and the Exercise Price (if lower than Fair Market Value)
in the event the award is a Stock Option or Stock Appreciation Right; in each case, multiplied by
the number of shares subject to the award.

          (s) “Restricted Stock” means Stock, received under an award made pursuant to Section 8 below,
that is subject to restrictions under said Section 8.

          (t) “SAR Value” means the excess of the Fair Market Value (on the exercise date) of the number
of shares for which the Stock Appreciation Right is exercised over the exercise price that the

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participant would have otherwise had to pay to exercise the related Stock Option and purchase
the relevant shares.

          (u) “Stock” means the Common Stock of the Company, no par value per share.

          (v) “Stock Appreciation Right” means the right to receive from the Company, on surrender of
all or part of the related Stock Option, without a cash payment to the Company, a number of shares
of Common Stock equal to the SAR Value divided by the exercise price of the Stock Option.

          (w) “Stock Option” or “Option” means any option to purchase shares of Stock which is granted
pursuant to the Plan.

          (x) “Stock Reload Option” means any option granted under Section 6.3 below, as a result of the
payment of the exercise price of a Stock Option and/or the withholding tax related thereto in the
form of Stock owned by the Holder or the withholding of Stock by the Company.

          (y) “Subsidiary” means any present or future subsidiary corporation of the Company, as such
term is defined in Section 424(f) of the Code.

ARTICLE II

Administration.

     2.1 Committee Membership. The Plan shall be administered by the Board or a Committee.
Committee members shall serve for such term as the Board may in each case determine, and shall be
subject to removal at any time by the Board. The Committee members, to the extent possible, shall
be “non-employees” as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), and “outside directors” within the meaning of Section 162(m) of
the Code.

     2.2 Powers of Committee. The Committee shall have full authority to award,
pursuant to the terms of the Plan: (i) Stock Options; (ii) Stock Appreciation Rights, (iii)
Restricted Stock, (iv) Deferred Stock, (v) Stock Reload Options and/or (vi) Other Stock-Based
Awards. For purposes of illustration and not of limitation, the Committee shall have the authority
(subject to the express provisions of this Plan):

          (a) To select the officers, key employees, directors and consultants of the Company or any
Subsidiary to whom Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock,
Reload Stock Options and/or Other Stock-Based Awards may from time to time be awarded hereunder.

          (b) To determine the terms and conditions, not inconsistent with the terms of the Plan, of any
award granted hereunder (including, but not limited to, number of shares, share price or other
consideration, such as other securities of the Company or other property, any restrictions or
limitations, and any vesting, exchange, surrender, cancellation, acceleration, termination,
exercise or forfeiture provisions, as the Committee shall determine).

          (c) To determine any specified performance goals or such other factors or criteria which need
to be attained for the vesting of an award granted hereunder.

          (d) To determine the terms and conditions under which awards granted hereunder are to operate
on a tandem basis and/or in conjunction with or apart from other equity awarded under this Plan and
cash awards made by the Company or any Subsidiary outside of this Plan.

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          (e) To permit a Holder to elect to defer a payment under the Plan under such rules and
procedures as the Committee may establish, including the crediting of interest on deferred amounts
denominated in cash and of dividend equivalents on deferred amounts denominated in Stock.

          (f) To determine the extent and circumstances under which Stock and other amounts payable with
respect to an award hereunder shall be deferred which may be either automatic or at the election of
the Holder.

          (g) To substitute (i) new Stock Options for previously granted Stock Options, which previously
granted Stock Options have higher option exercise prices and/or contain other less favorable terms,
and (ii) new awards of any other type for previously granted awards of the same type, which
previously granted awards are upon less favorable terms.

          (h) To make payments and distributions with respect to awards (i.e., to “settle” awards)
through cash payments in an amount equal to the Repurchase Value.

          Notwithstanding anything contained herein to the contrary, the Committee shall not grant to
any one Holder in any one calendar year awards for more then 1,500,000 shares in the aggregate.

     2.3 Interpretation of Plan.

          (a) Committee Authority. Subject to Section 12 below, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and practices governing
the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of
the Plan and any award issued under the Plan (and to determine the form and substance of all
Agreements relating thereto), and to otherwise supervise the administration of the Plan. Subject to
Section 12 below, all decisions made by the Committee pursuant to the provisions of the Plan shall
be made in the Committee’s sole discretion and shall be final and binding upon all persons,
including the Company, its Subsidiaries and Holders.

          (b) Incentive Stock Options. Anything in the Plan to the contrary notwithstanding, no
term or provision of the Plan relating to Incentive Stock Options (including, but not limited to,
Stock Reload Options or Stock Appreciation Rights granted in conjunction with an Incentive Stock
Option) or any Agreement providing for Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to
disqualify the Plan under Section 422 of the Code, or, without the consent of the Holder(s)
affected, to disqualify any Incentive Stock Option under such Section 422.

          (c) Section 162(m) Limitations. Anything in the Plan to the contrary notwithstanding,
no term or provision of the Plan or any Agreement providing for awards hereunder shall be
interpreted, amended, or altered, nor should any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 162(m) of the Code.”

ARTICLE III

Stock Subject to Plan.

     3.1 Number of Shares. The total number of shares of Common Stock reserved and
available for distribution under the Plan shall be 25,000,000 shares. Shares of Common Stock under
the Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares. If
any shares of Stock

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that have been granted pursuant to a Stock Option cease to be subject to a Stock Option, or if any
shares of Stock that are subject to any Stock Appreciation Right, Restricted Stock, Deferred Stock
award, Reload Stock Option or Other Stock-Based Award granted hereunder are forfeited or any such
award otherwise terminates without a payment being made to the Holder in the form of Stock, such
shares shall again be available for distribution in connection with future grants and awards under
the Plan. Only net shares issued upon a stock-for-stock exercise (including stock used for
withholding taxes) shall be counted against the number of shares available under the Plan.

     3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of any change in the
shares of Common Stock of the Company as a whole occurring as the result of a stock split, reverse
stock split, stock dividend payable on shares of Common Stock, combination or exchange of shares,
or other extraordinary or unusual event occurring after the grant of an Award, the Committee shall
determine, in its sole discretion, whether such change equitably requires an adjustment in the
terms of any Award or the aggregate number of shares reserved for issuance under the Plan. Any such
adjustments will be made by the Committee, whose determination will be final, binding and
conclusive.

ARTICLE IV

Eligibility.

     Awards may be made or granted to key employees, officers, directors and consultants who are
deemed to have rendered or to be able to render significant services to the Company or its
Subsidiaries and who are deemed to have contributed or to have the potential to contribute to the
success of the Company. No Incentive Stock Option shall be granted to any person who is not an
employee of the Company or a Subsidiary at the time of grant. Notwithstanding the foregoing, an
award may be made or granted to a person in connection with his hiring or retention, or at any time
on or after the date he reaches an agreement (oral or written) with the Company with respect to
such hiring or retention, even though it may be prior to the date the person first performs
services for the Company or its Subsidiaries; provided, however, that no portion of any such award
shall vest prior to the date the person first performs such services.

ARTICLE V

Intentionally Omitted

ARTICLE VI

Stock Options.

     6.1 Grant and Exercise. Stock Options granted under the Plan may be of two types (i)
Incentive Stock Options, and (ii) Nonqualified Stock Options. Any Stock Option granted under the
Plan shall contain such terms, not inconsistent with this Plan, or with respect to Incentive Stock
Options, not inconsistent with the Plan and the Code, as the Committee may from time to time
approve. The committee shall have the authority to grant Incentive Stock Options, Non-Qualified
Stock Options, or both types of Stock Options and which may be granted alone or in addition to
other awards granted under the Plan. To the extent that any Stock Option intended to qualify as an
Incentive Stock Option does not so qualify, it shall constitute a separate Nonqualified Stock
Option. An Incentive Stock Option may be granted only within the ten year period commencing from
the Effective Date and may only be exercised within ten years of the date of grant (or five years
in the case of an Incentive Stock Option granted to an optionee (“10% Shareholder”) who, at the
time of grant, owns Stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company.

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     6.2 Terms and Conditions. Stock Options granted under the Plan shall be subject to the
following terms and conditions:

          (a) Exercise Price. The exercise price per share of Stock purchasable under a Stock
Option shall be determined by the Committee at the time of grant and may not be less than 100% of
the Fair Market Value of the Stock as defined above; provided, however, that the
exercise price of an Incentive Stock Option granted to a 10% Shareholder shall not be less than
110% of the Fair Market Value of the Stock.

          (b) Option Term. Subject to the limitations in Section 6.1 above, the term of each
Stock Option shall be fixed by the Committee.

          (c) Exercisability. Stock Options shall be exercisable at such time or times and
subject to each terms and conditions as shall be determined by the Committee and as set forth in
Section 11 below. If the Committee provides, in its discretion, that any Stock Option is
exercisable only in installments, i.e., that it vests over time, the Committee may waive such
installment exercise provisions at any time at or after the time of grant in whole or in part,
based upon such factors as the Committee shall determine.

          (d) Method of Exercise. Subject to whatever installment, exercise and
waiting period provisions are applicable in a particular case, Stock Options may be exercised in
whole or in part at any time during the term of the Option, by giving written notice of exercise to
the Company specifying the number of shares of Stock to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, which shall be in cash or, if provided in the
Agreement, either in shares of Stock (including Restricted Stock and other contingent awards under
this Plan) or partly in cash and partly in such Stock, or such other means which the Committee
determines are consistent with the Plan’s purpose and applicable law. Cash payments shall be made
by wire transfer, certified or bank check or personal check, in each case payable to the order of
the Company; provided, however, that the Company shall not be required to deliver
certificates for shares of Stock with respect to which an Option is exercised until the Company has
confirmed the receipt of good and available funds in payment of the purchase price thereof.
Payments in the form of Stock shall be valued at the Fair Market Value of a share of Stock on the
date prior to the date of exercise. Such payments shall be made by delivery of stock certificates
in negotiable form which are effective to transfer good and valid title thereto to the Company,
free of any liens or encumbrances. Subject to the terms of the Agreement, the Committee may, in its
sole discretion, at the request of the Holder, delivery upon the exercise of a Nonqualified Stock
Option a combination of shares of Deferred Stock and Common Stock; provided,
however, that, notwithstanding the provisions of Section 9 of the Plan, such Deferred Stock
shall be fully vested and not subject to forfeiture. A Holder shall have none of the rights of a
Shareholder with respect to the shares subject to the Option until such shares shall be transferred
to the Holder upon the exercise of the Option. The Committee may permit a Holder to elect to pay
the Exercise Price upon the exercise of a Stock Option by irrevocably authorizing a third party to
sell shares of Common Stock (or a sufficient portion of the shares) acquired upon exercise of the
Stock Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire
Exercise Price and any tax withholding resulting from such exercise.

          (e) Transferability. Except as may be set forth in the next sentence of this Section
or in the Agreement, no Stock Option shall be transferable by the Holder other than by will or by
the laws of descent and distribution, and all Stock Options shall be exercisable, during the
Holder’s lifetime, only by the Holder (or, to the extent of legal incapacity or
incompetency, the Holder’s guardian or legal representative). Notwithstanding the foregoing, a
Holder, with the approval of the Committee, may

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transfer a Stock Option (i) (A) by gift, for no consideration, or (B) pursuant to a domestic
relations order, in either case, to or for the benefit of the Holder’s “Immediate Family” (as
defined below), or (ii) to an entity in which the Holder and/or members of Holder’s Immediate
Family own more than fifty percent of the voting interest, in exchange for an interest in that
entity, provided that such transfer is being made for estate, tax and/or personal planning purposes
and will not have adverse tax consequences to the Company and subject to such limits as the
Committee may establish and the execution of such documents as the Committee may require. In such
event, the transferee shall remain subject to all the terms and conditions applicable to the Stock
Option prior to such transfer. The term “Immediate Family” shall mean any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law,
including adoptive relationships, any person sharing the Holder’s household (other than a tenant or
employee), a trust in which these persons have more than fifty percent beneficial interest, and a
foundation in which these persons (or the Holder) control the management of the assets.

          (f) Termination by Reason of Death. If a Holder’s employment by the Company or a
Subsidiary terminates by Reason of Death, any Stock Option held by such Holder, unless otherwise
determined by the Committee at the time of grant and set forth in the Agreement, shall be fully
vested and may thereafter be exercised by the legal representative of the estate or by the legatee
of the Holder under the will of the Holder, for a period of one year (or such other greater or
lesser period as the Committee may specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the shorter.

          (g) Termination by Reason of Disability. If a Holder’s employment by the Company or
any Subsidiary terminates by Reason of Disability, any Stock Option held by such Holder unless
otherwise determined by the Committee at the time of grant and set forth in the Agreement, shall be
fully vested and may thereafter be exercised by the Holder for a period of one year (or such other
greater or lesser period as the Committee may specify at the time of grant) from the date of such
termination of employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter.

          (h) Other Termination. Subject to the provisions of Section 14.3 below, and unless
otherwise determined by the Committee at the time of grant and set forth in the Agreement, if a
Holder is an employee of the Company or a Subsidiary at the time of grant and if such Holder’s
employment by the Company or any Subsidiary terminates for any reason other than Death or
Disability, the Stock Option shall thereupon automatically terminate, except that if the Holder’s
employment is terminated by the Company or a Subsidiary without cause or due to Normal Retirement,
then the portion of such Stock Option which has vested on the date of termination of employment may
be exercised for the lesser of three months after termination of employment or the balance of such
Stock Option’s term.

          (i) Additional Incentive Option Limitation. In the case of an Incentive Stock Option,
the aggregate Fair Market Value of Stock (determined at the time of grant of the Option) with
respect to which Incentive Stock Options become exercisable by a Holder during any calendar year
(under all such plans of the Company and its Parent and Subsidiary) shall not exceed $100,000.

          (j) Buyout and Settlement Provisions. The Committee may, at any time, in its sole
discretion, offer to buy out a Stock Option previously granted, based upon such terms and
conditions as the committee shall establish and communicate to the Holder at the time that such
offer is made.

          (k) Stock Option Agreement. Each grant of a Stock Option shall be confirmed by, and
shall be subject to the terms of the Agreement executed by the Company and the Holder.

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     6.3 Stock Reload Option. The Committee may also grant to the Holder (concurrently with
the grant of an Incentive Stock Option and at or after the time of grant in the case of a
Nonqualified Stock Option) a Stock Reload Option up to the amount of shares of Stock held by the
Holder for a least six months and used to pay all or part of the exercise price of an Option and,
if any, withheld by the Company as payment for withholding taxes. Such Stock Reload Option shall
have an exercise price equal to the Fair Market Value as of the date of the Stock Reload Option
grant. Unless the Committee determines otherwise, a Stock Reload Option may be exercised commencing
one year after it is granted and shall expire on the date of expiration of the Option to which the
Reload Option is related.

ARTICLE VII

Stock Appreciation Rights.

     7.1 Grant and Exercise. The committee may grant Stock Appreciation Rights to
participants who have been or are being granted Options under the Plan as a means of allowing such
participants to exercise their Options without the need to pay the exercise price in cash. In the
case of a Nonqualified Stock Option, a Stock Appreciation Right may be granted either at or after
the time of the grant of such Nonqualified Stock Option. In the case of an Incentive Stock Option,
a Stock Appreciation Right may be granted only at the time of the grant of such Incentive Stock
Option.

     7.2 Terms and Conditions. Stock Appreciation Rights shall be subject to the following
terms and conditions:

          (a) Exercisability. Stock Appreciation Rights shall be exercisable as shall be
determined by the Committee and as set forth in the Agreement, subject to the limitations, if any,
imposed by the Code, with respect to related Incentive Stock Options.

          (b) Termination. A Stock Appreciate Right shall terminate and shall no longer be
exercisable upon the termination or exercise of the related Stock Option.

          (c) Method of Exercise. Stock Appreciation Rights shall be exercisable upon such terms
and conditions as shall be determined by the Committee and set forth in the Agreement and by
surrendering the applicable portion of the related Stock Option. Upon such exercise and surrender,
the Holder shall be entitled to receive a number of Option Shares equal to the SAR Value divided by
the exercise price of the Option.

          (d) Shares Affected Upon Plan. The granting of a Stock Appreciation Right shall not
affect the number of shares of Stock available under awards under the Plan. The number of shares
available for awards under the Plan will, however, be reduced by the number of shares of Stock
acquirable upon exercise of the Stock Option to which such Stock Appreciation Right relates.

ARTICLE VIII

Restricted Stock.

     8.1 Grant. Shares of Restricted Stock may be awarded either alone or in addition to
other awards granted under the Plan. The Committee shall determine the eligible persons to whom,
and the time or times at which grants or Restricted Stock will be awarded, the number of shares to
be awarded, the price (if any) to be paid by the Holder, the time or times within which such awards
may be subject to forfeiture (“Restricted Period”), the vesting schedule and rights to acceleration
thereof, and all other terms and conditions of the awards.

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     8.2 Terms and Conditions. Each Restricted Stock award shall be subject to the
following terms and conditions:

          (a) Certificates. Restricted Stock, when issued, will be represented by a stock
certificate or certificates registered in the name of the Holder to whom such Restricted Stock
shall have been awarded. During the Restriction Period, certificates representing the Restricted
Stock and any securities constituting Retained Distributions (as defined below) shall bear a legend
to the effect that ownership of the Restricted Stock (and such Retained distributions), and the
enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions
provided in the Plan and the Agreement. Such certificates shall be deposited by the Holder with the
Company, together with stock powers or other instruments of assignment, each endorsed in blank,
which will permit transfer to the Company of all or any portion of the Restricted Stock and any
securities constituting Retained Distributions that shall be forfeited or that shall not become
vested in accordance with the Plan and the Agreement.

          (b) Rights of Holder. Restricted Stock shall constitute issued and outstanding shares
of Common Stock for all corporate purposes. The Holder will have the right to vote such Restricted
Stock, to receive and retain all regular cash dividends and other cash equivalent distributions as
the Board may in its sole discretion designate, pay or distribute on such Restricted Stock and to
exercise all other rights, powers and privileges of a holder of Common Stock with respect to such
Restricted Stock, with the exceptions that (i) the Holder will not be entitled to delivery of the
stock certificate or certificates representing such Restricted Notes until the Restriction Period
shall have expired and unless all other vesting requirements with respect thereto shall have been
fulfilled; (ii) the Company will retain custody of the stock certificate or certificates
representing the Restricted Stock during the Restriction Period; (iii) other than regular cash
dividends and other cash equivalent distributions as the Board may in its sole discretion
designate, pay or distribute, the Company will retain custody of all distributions (“Retained
Distributions”) made or declared with respect to the Restricted Stock (and such Retained
Distributions will be subject to the same restrictions, terms and conditions as are applicable to
the Restricted Stock) until such time, if ever, as the Restricted Stock with respect to which such
Retained Distributions shall have been made, paid or declared shall have become vested and with
respect to which the Restricted Period shall have expired; (iv) a breach of any of the
restrictions, terms or conditions contained in this Plan or the Agreement or otherwise established
by the Committee with respect to any Restricted Stock or Retained Distributions will cause a
forfeiture of such Restricted Stock and any Retained Distributions with respect thereto.

          (c) Vesting; Forfeitures. Upon the expiration of the Restriction Period with respect
to each award of Restricted Stock and the satisfaction of any other applicable restrictions, terms
and conditions (i) all or part of such Restricted Stock shall become vested in accordance with
terms of the Agreement, subject to Section 11 below, and (ii) any Retained Distributions with
respect to such Restricted Stock shall become vested to the extent that the Restricted Stock
related thereto shall have become vested, subject to Section 11 below. Any such Restricted Stock
and Retained Distributions that do not vest shall be forfeited to the Company and the Holder shall
not thereafter have any rights with respect to such Restricted Stock and Retained Distributions
that shall have been so forfeited.

ARTICLE IX

Deferred Stock.

     9.1 Grant. Shares of Deferred Stock may be awarded either alone or in addition to
other awards granted under the Plan. The Committee shall determine the eligible persons to whom and
the time

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or times at which grants of Deferred Stock will be awarded, the number of shares of Deferred Stock
to be awarded to any person, the duration of the period (the “Deferral Period”) during which, and
the conditions under which, receipt of the shares will be deferred, and all other terms and
conditions of the awards.

     9.2 Terms and Conditions. Each Deferred Stock award shall be subject to the following
terms and conditions.

          (a) Certificates. At the expiration of the Deferral Period (or the Additional Deferral
Period referred to in Section 9.2(d) below, where applicable), share certificates shall be issued
and delivered to the Holder, or his legal representative, representing the number equal to the
shares covered by the Deferred Stock award.

          (b) Rights of Holder. A person entitled to receive Deferred Stock shall not have any
rights of a Shareholder by virtue of such award until the expiration of the applicable Deferral
Period and the issuance and delivery of the certificates representing such Stock. The shares of
Stock issuable upon expiration of the Deferral Period shall not be deemed outstanding by the
Company until the expiration of such Deferral Period and the issuance and delivery of such Stock to
the Holder.

          (c) Vesting; Forfeitures. Upon the expiration of the Deferral Period with respect to
each award of Deferred Stock and the satisfaction of any other applicable restrictions, terms and
conditions all or part of such Deferred Stock shall become vested in accordance with the terms of
the Agreement, subject to Section 11 below. Any such Deferred Stock that does not vest shall be
forfeited to the Company and the Holder shall not thereafter have any rights with respect to such
Deferred Stock.

          (d) Additional Deferral Period. A Holder may request to, and the Committee may at any
time defer the receipt of an award (or an installment of an award) for an additional specified
period or until a specified event (“Additional Deferral Period”). Subject to any exceptions adopted
by the Committee, such request must generally be made at least one year prior to expiration of the
Deferral Period for such Deferred Stock award (or such installment).

ARTICLE X

Other Stock-Based Awards.

     10.1 Grant and Exercise. Other Stock-Based Awards may be awarded, subject to
limitations under applicable law, that are denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, shares of Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan, including, without limitation, purchase
rights, shares of Common Stock awarded which are not subject to any restrictions or conditions,
convertible or exchangeable debentures, or other rights convertible into shares of Common Stock and
awards valued by reference to the value of securities of or the performance of specified
Subsidiaries. Other Stock-Based Awards may be awarded either alone or in addition to or in tandem
with any other awards under this Plan or any other plan of the Company.

     10.2 Eligibility for Other Stock-Based Awards. The Committee shall determine the
eligible persons to whom and the time or times at which grants of such other stock-based awards
shall be made, the number of shares of Common Stock to be awarded pursuant to such awards, and all
other terms and conditions of the awards.

     10.3 Terms and Conditions. Each Other Stock-Based Award shall be subject to such terms
and conditions as may be determined by the Committee and to Section 11 below.

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ARTICLE XI

Accelerated Vesting and Exercisability.

     11.1 Non-Approved Transactions. Except as otherwise expressly provided in the
Agreement, if any “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act),
is or becomes the “beneficial owner” (as referred to in Rule 13-3) under the Exchange Act),
directly or indirectly, of securities of the Company representing 25% or more of the combined
voting power of the Company’s then outstanding securities in one or more transactions, and the
Board does not authorize or otherwise approve such acquisition, then, the vesting periods of any
and all Options and other Awards granted and outstanding under the Plan shall be accelerated and
all such Options and Awards will immediately and entirely vest, and the respective holders thereof
will have the immediate right to purchase and/or receive any and all Common Stock subject to such
Options and awards on the terms set forth in this Plan and the respective agreements respecting
such Options and Awards.

     11.2. Approved Transactions. Except as otherwise expressly provided in the Agreement,
the Committee may, in the event of an acquisition of substantially all of the Company’s assets or
at least 50% of the combined voting power of the Company’s then outstanding securities in one or
more transactions (including by way of merger or reorganization) which has been approved by the
Company’s Board of Directors, accelerate the vesting of any and all Stock Options and other awards
granted and outstanding under the Plan.

ARTICLE XII

Amendment and Termination.

     The Board may at any time, and from time to time, amend, alter, suspend or discontinue any of
the provisions of the Plan, but no amendment, alteration, suspension or discontinuance shall be
made which would impair the rights of a Holder under any Agreement theretofore entered into
hereunder, without the Holder’s consent.

ARTICLE XIII

Term of Plan.

     13.1 Effective Date. The Plan shall be effective as of May 27, 1999 (the “Effective
Date”), subject to the approval of the Plan by the Company’s shareholders within one year after the
Effective Date. Any awards granted under the Plan prior to such approval shall be effective when
made (unless otherwise specified by the Committee at the time of grant), but shall be conditioned
upon, and subject to, such approval of the Plan by the Company’s shareholders and no awards shall
vest or otherwise become free or restrictions prior to such approval.

     13.2 Termination Date. Unless terminated by the Board, this Plan shall continue to
remain effective until such time no further awards may be granted and all awards granted under the
Plan are no longer outstanding. Notwithstanding the foregoing, grants of Incentive Stock Options
may only be made during the ten year period following the Effective Date.

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ARTICLE XIV

General Provisions.

     14.1 Written Agreements. Each award granted under the Plan shall be confirmed by, and
shall be subject to the terms of the Agreement executed by the Company and the Holder. The
Committee may terminate any award made under the Plan if the Agreement relating thereto is not
executed and returned to the Company within ten (10) days after the Agreement has been delivered to
the Holder for his or her execution.

     14.2 Unfunded Status of Plan. The Plan is intended to constitute an “unfunded” plan
for incentive and deferred compensation. With respect to any payments not yet made to a Holder by
the Company, nothing contained herein shall give any such Holder any rights that are greater than
those of a general creditor of the Company.

     14.3 Employees:

          (a) Engaging in Competition With the Company; Solicitation of Customers and Employees;
Disclosure of Confidential Information. Except as otherwise expressly provided in the
Agreement, in the event a Holder’s employment with the Company or a Subsidiary is terminated for
any reason whatsoever, and within eighteen (18) months after the date thereof such Holder either
(i) accepts employment with any competitor of, or otherwise engages in competition with, the
Company or any of its Subsidiaries, (ii) solicits any customers or employees of the Company or any
of its Subsidiaries to do business with or render services to the Holder or any business with which
the Holder becomes affiliated or to which the Holder renders services or (iii) discloses to anyone
outside the Company or uses any confidential information or material of the Company or any of its
Subsidiaries in violation of the Company’s policies or any agreement between the Holder and the
Company or any of its Subsidiaries, the Committee, in its sole discretion, may require such Holder
to return to the Company the economic value of any Shares that was realized or obtained by such
Holder at any time during the period beginning on the date that is 6 months prior to the date such
Holder’s employment with the Company is terminated. In such event, Holder agrees to remit to the
Company, in cash, an amount equal to the difference between the Fair Market Value of the Shares on
the date of termination (or the sales price of such Shares if the Shares were sold during such 6
month period) and the price the Holder paid the Company for such Shares, the Committee, in its sole
discretion, may require such Holder to return to the Company the economic value of any award which
was realized or obtained by such Holder at any time during the period beginning on that date which
is six (6) months prior to the date of such Holder’s termination of employment with the Company.

          (b) Termination for Cause. Except as otherwise expressly provided in the Agreement,
the Committee may, in the event of a Holder’s employment with the Company or a Subsidiary is
terminated for cause, annul any award granted under this Plan to such employee and, in such event,
the Committee, in its sole discretion, may require such Holder to return to the Company the
economic value of any award which was realized or obtained by such Holder at any time during the
period beginning on that date which is six (6) months prior to the date of such Holder’s
termination of employment with the Company.

          (c) No Right of Employment. Nothing contained in the Plan or in any award hereunder
shall be deemed to confer upon any Holder who is an employee of the Company or any Subsidiary any
right to continued employment with the Company or any Subsidiary, nor shall it interfere

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in any way with the right of the Company or any Subsidiary to terminate the employment of any
Holder who is an employee at any time.

          (d) Investment Representations. The Committee may require each person acquiring shares
of Stock pursuant to a Stock Option or other award under the Plan to represent to and agree with
the Company in writing that the Holder is acquiring the shares for investment without a view to
distribution thereof. Each person acquiring shares of Common Stock pursuant to a Stock Option or
other award under the Plan shall be required to abide by all policies of the Company in effect at
the time of such acquisition and thereafter with respect to the ownership and trading of the
Company’s securities.

     14.4 Additional Incentive Arrangements. Nothing contained in the Plan shall prevent
the Board from adopting such other or additional Incentive arrangements as it may deemed desirable,
including, but not limited to, the granting of Stock Options and the awarding of stock and cash
otherwise than under the Plan; and such arrangements may be either generally applicable or
applicable only in specified cases.

     14.5 Withholding Taxes. Not later than the date as of which an amount must first be
included in the gross income of the Holder for Federal income tax purposes with respect to any
option or other award under the Plan, the Holder shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any Federal, state and local taxes of any
kind required by law to be withheld or paid with respect to such amount. If permitted by the
Committee, tax withholding or payment obligations may be settled with Common Stock, including
Common Stock that is part of the award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditioned upon such payment or arrangements
and the Company or the Holder’s employer (if not the Company) shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind otherwise due to the
Holder from the Company or any Subsidiary.

     14.6 Governing Law. The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of New York (without regard to
choice of law provisions).

     14.7 Other Benefit Plans. Any award granted under the Plan shall not be deemed
compensation for purposes of computing benefits under any retirement plan of the Company or any
Subsidiary and shall not affect any benefits under any other benefit plan nor or subsequently in
effect under which the availability or amount of benefits is related to the level of compensation
(unless required by specific reference in any such other plan to awards under this Plan).

     14.8 Non-Transferability. Except as otherwise expressly provided in the Plan or the
Agreement, no right or benefit under the Plan may be alienated, sold, assigned, hypothecated,
pledged, exchanged, transferred, encumbranced or charged, and any attempt to alienate, sell,
assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void.

     14.9 Applicable Laws. The obligations of the Company with respect to all Stock Options
and awards under the Plan shall be subject to (i) all applicable laws, rules and regulations and
such approvals by any governmental agencies as may be required, including, without limitation, the
Securities Act of 1933, as amended, and (ii) the rules and regulations of any securities exchange
on which the Stock may be listed.

     14.10 Conflicts. If any of the terms or provisions of the Plan or an Agreement (with
respect to Incentive Stock Options) conflict with the requirements of Sections 162(m) or 422 of the
Code, then such terms or provisions shall be deemed inoperative to the extent they so conflict with
the requirements of

13

 

said Sections 162(m) or 422 of the Code. Additionally, if this Plan or any Agreement does not
contain any provision required to be included herein under Sections 162(m) or 422 of the Code, such
provision shall be deemed to be incorporated herein and therein with the same force and effect as
if such provision had been set out at length herein and therein. If any of the terms or provisions
of any Agreement conflict with any terms or provision of the Plan, then such terms or provisions
shall be deemed inoperative to the extent they so conflict with the requirements of the Plan.
Additionally, if any Agreement does not contain any provision required to be included therein under
the Plan, such provision shall be deemed to be incorporated therein with the same force and effect
as if such provision had been set out at length therein.

     14.11 Non-Registered Stock. The shares of Stock to be distributed under this Plan have
not been, as of the Effective Date, registered under the Securities Act of 1933, as amended, or any
applicable state or foreign securities laws and the Company has no obligation to any Holder to
register the Stock or to assist the Holder in obtaining an exemption from the various registration
requirements, or to list the Stock on a national securities exchange.

     14.12 Repurchase of Stock. Except as otherwise expressly provided in the Agreement,
the Committee may, in the event of an acquisition of substantially all of the Company’s assets or
at least 50% of the combined voting power of the Company’s then outstanding securities in one or
more transactions (including by way of merger or reorganization) which has been approved by the
Company’s Board of Directors, require a Holder of any award granted under this Plan to relinquish
such award to the Company upon the tender by the Company to Holder of cash in an amount equal to
the Repurchase Value of such award.

14EX-10.1 EMPLOYMENT AGREEMENT RONALD M. COPPOCK

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of December 8, 2006, is by and between
ARRIS GROUP, INC., a Delaware corporation (the “Company”), and Ronald M. Coppock (“Executive”).

     WHEREAS, Executive and the Company are parties to a previous employment agreement dated as of
October 6, 2000 that expired on October 6, 2005; and

     WHEREAS, Executive and the Company desire to enter into a new written agreement providing for
the terms of Executive’s employment by the Company.

     NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual covenants set
forth herein, and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

     1. Employment. Executive agrees to enter into the continued employment of the
Company, and the Company agrees to employ Executive, on the terms and conditions set forth in this
Agreement. Executive agrees during the term of this Agreement to devote substantially all of his
business time, efforts, skills and abilities to the performance of his duties as stated in this
Agreement and to the furtherance of the Company’s business.

          Executive’s initial job title will be President, Worldwide Sales and his duties will be those
as are designated by the Chief Executive Officer of the Company. Executive further agrees to
serve, without additional compensation, as an officer or director, or both, of any subsidiary,
division or affiliate of the Company or any other entity in which the Company holds an equity
interest, provided, however, that (a) the Company shall indemnify Executive from liabilities in
connection with serving in any such position to the same extent as his indemnification rights
pursuant to the Company’s Certificate of Incorporation, By-laws and applicable Delaware law, and
(b) such other position shall not materially detract from the responsibilities of Executive
pursuant to this Section 1 or his ability to perform such responsibilities.

     2. Compensation.

          (a) Base Salary. During the term of Executive’s employment with the Company pursuant
to this Agreement, the Company shall pay to Executive as compensation for his services an annual
base salary of not less than $267,000 (“Base Salary”). Executive’s Base Salary will be payable in
arrears in accordance with the Company’s normal payroll procedures and will be reviewed annually
and subject to upward adjustment at the discretion of the Chief Executive Officer and Compensation
Committee, but will not be lowered except in connection with reductions applied to all executive
officers.

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          (b) Incentive Bonus. During the term of Executive’s employment with the Company
pursuant to this Agreement, Executive’s incentive compensation program shall be determined by the
Company in its discretion with a target bonus equal to 60% of Base Salary, and allowing for payment
of up to 150% of target with respect to calendar year 2006 and 200% of target with respect to
calendar year 2007 and thereafter.

          (c) Executive Perquisites. During the term of Executive’s employment with the Company
pursuant to this Agreement, Executive shall be entitled to receive such executive perquisites and
fringe benefits as are provided to the executives in comparable positions and their families under
any of the Company’s plans and/or programs in effect from time to time and such other benefits as
are customarily available to executives of the Company and their families, including without
limitation vacations and life, medical and disability insurance.

          (d) Tax Withholding. The Company has the right to deduct from any compensation
payable to Executive under this Agreement social security (FICA) taxes and all federal, state,
municipal or other such taxes or charges as may now be in effect or that may hereafter be enacted
or required.

          (e) Expense Reimbursements. The Company shall pay or reimburse Executive for all
reasonable business expenses incurred or paid by Executive in the course of performing his duties
hereunder, including but not limited to reasonable travel expenses for Executive. As a condition
to such payment or reimbursement, however, Executive shall maintain and provide to the Company
reasonable documentation and receipts for such expenses.

     3. Term. Unless sooner terminated pursuant to Section 4 of this Agreement, and
subject to the provisions of Section 5 hereof, the term of employment under this Agreement shall
commence as of the date hereof and shall continue for a period of one year. The term automatically
shall be extended by one day for each day of employment hereunder. Notwithstanding the foregoing
the term of employment under this agreement shall terminate, if it has not terminated earlier,
without further action on the part of the Company or Executive upon Executive’s 65th birthday.

     4. Termination. Notwithstanding the provisions of Section 3 hereof, but subject to
the provisions of Section 5 hereof, Executive’s employment under this Agreement shall terminate as
follows:

          (a) Death. Executive’s employment shall terminate upon the death of Executive;
provided, however, that the Company shall continue to pay (in accordance with its normal payroll
procedures) the Base Salary to Executive’s estate for a period of three months after the date of
Executive’s death.

          (b) Termination for Cause. The Company may terminate Executive’s employment at any
time for “Cause” (as hereinafter defined) by delivering a written termination notice to Executive.
For purposes of this Agreement, “Cause” shall mean any of: (i) Executive’s conviction of a felony
or a crime involving moral turpitude; (ii) Executive’s commission of an

2

 

act constituting fraud,
deceit or material misrepresentation with respect to the Company; (iii)
Executive’s embezzlement of funds or assets from the Company; (iv) Executive’s addiction to
any alcoholic, controlled or illegal substance or drug; (v) Executive’s commission of any act or
omission which would give the Company the right to terminate Executive’s employment under
applicable law; or (vi) Executive’s failure to correct or cure any material breach of or default
under this Agreement within ten days after receiving written notice of such breach or default from
the Company.

          (c) Termination Without Cause. The Company may terminate Executive’s employment at
any time by delivering a written termination notice to Executive.

          (d) Termination by Executive. Executive may terminate his employment at any time by
delivering ninety days prior written notice to the Company; provided, however, that the terms,
conditions and benefits specified in Section 5 hereof shall apply or be payable to Executive only
if such termination occurs as a result of a material breach by the Company of any provision of this
Agreement.

          (e) Termination Following Disability. In the event Executive becomes mentally or
physically impaired or disabled and is unable to perform his material duties and responsibilities
hereunder for a period of at least ninety days in the aggregate during any one hundred twenty
consecutive day period, the Company may terminate Executive’s employment by delivering a written
termination notice to Executive. Notwithstanding the foregoing, Executive shall continue to
receive his full salary and benefits under this Agreement for a period of six months after the
effective date of such termination.

          (f) Payments. Following any expiration or termination of this Agreement or
Executive’s employment hereunder, and in addition to 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 or termination.

     5. Certain Termination Benefits. Subject to Section 6(a) hereof, in the event (i) the
Company terminates Executive’s employment without cause pursuant to Section 4(c) or (ii) Executive
terminates his employment pursuant to Section 4(d) after a material breach by the Company (which
the Company fails to cure within ten days after written notice of such breach 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 months
following the termination (and a prorate portion for any partial year).

3

 

          (b) Stock. Subject to Section 10 hereof, on and as of the effective date of the
termination of employment, all of Executive’s outstanding stock options and restricted stock grants
under the Company’s stock option and other benefit plans shall immediately vest.

          (c) Life Insurance. The Company shall continue to provide Executive with group and
additional life insurance coverage for a period of twelve months following termination.

          (d) Medical Insurance. The Company shall continue to provide Executive and his family
with group medical insurance coverage under the Company’s Medical Plans (as the same may change
from time to time) or other substantially similar health insurance for a period of twelve months
following termination.

          (e) Group Disability. The Company shall continue to provide Executive coverage under
the Company’s group disability plan for a period of twelve months following termination.

          (f) Section 409A. It is expressly contemplated by the parties that this Agreement
will conform to, and be interpreted to comply with, Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”). Unless expressly provided otherwise, all of the payments due to
Executive under this Section 5 will be made within fifteen (15) days following the date of
termination; provided, however, that if under Section 409A of the Code, such payments must be
delayed to conform with the applicable tax rules, the Company will defer any such payment until no
later than one day following the first date upon which such payment may be made without incurring
the tax imposed thereunder; provided, further, that if Executive incurs any additional tax,
interest or penalties under Section 409A of the Code, the Company will pay Executive an additional
amount so that, after all taxes on such amount, Executive has an amount equal to such additional
tax.

          (g) Offset. Any fringe benefits received by Executive in connection with any other
employment that are reasonably comparable, but not necessarily as beneficial, to Executive as the
fringe benefits then being provided by the Company pursuant to this Section 5, shall be deemed to
be the equivalent of, and shall terminate the Company’s responsibility to continue providing, the
fringe benefits then being provided by the Company pursuant to this Section 5. The Company
acknowledges that if Executive’s employment with the Company is terminated, Executive shall have no
duty to mitigate damages.

          (h) General Release. Acceptance by Executive of any amounts pursuant to this Section
5 shall constitute a full and complete release by Executive of any and all claims Executive may
have against the Company, its officers, directors and affiliates, including, but not limited to,
claims he might have relating to Executive’s cessation of employment with the Company; provided,
however, that there may properly be excluded from the scope of such general release the following:

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          (i) claims that Executive may have against the Company for reimbursement of
ordinary and necessary business expenses incurred by him during the course of his
employment;

          (ii) claims that may be made by the Executive for payment of Base Salary,
fringe benefits or stock options properly due to him; or

          (iii) claims respecting matters for which the Executive is entitled to be
indemnified under the Company’s Certificate of Incorporation or Bylaws, respecting
third party claims asserted or third party litigation pending or threatened against
the Executive.

Notwithstanding the foregoing, as a condition to the payment to Executive of any amounts pursuant
to this Section 5, Executive shall execute and deliver to the Company a release in the customary
form then being used by the Company, which may include non-disparagement and confidentiality
agreements. In exchange for such release, the Company shall, if Executive’s employment is
terminated without Cause, provide a release to Executive, but only with respect to claims against
Executive which are actually known to the Company as of the time of such termination.

     6. Effect of Change in Control.

          (a) If within one year following a “Change of Control” (as hereinafter defined), Executive
terminates his employment with the Company for Good Reason (as hereinafter defined) or the Company
terminates Executive’s employment for any reason other than Cause, death or disability, the Company
shall pay to Executive: (1) an amount equal to one times the Executive’s Base Salary as of the date
of termination; (2) an amount equal to one times the average annual cash bonus paid to Executive
for the two fiscal years immediately preceding the date of termination (and a prorate portion for
any partial year); (3) all benefits under the Company’s various benefit plans, including group
healthcare, dental and life, for the period equal to twelve months from the date of termination;
and (4) subject to Section 10 hereof, on and as of the effective date of the termination of
employment, all of Executive’s outstanding stock options and restricted stock grants under the
Company’s stock option and other benefit plans shall immediately vest.

          (b) “Change of Control” shall mean the date as of which: (i) there shall be consummated (1)
any consolidation or merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company’s common stock would be converted into cash,
securities or other property, other than a merger of the Company in which the holders of the
Company’s common stock immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger, 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

5

 

the Company; or (iii) 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% of the Company’s outstanding common stock; or (iv) during any period of
two consecutive years, individuals who at the beginning of such period constitute the entire board
of directors of the Company shall
cease for any reason to constitute a majority thereof unless the election, or the nomination
for election by the Company’s stockholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the beginning of the period.

          (c) “Good Reason” shall mean any of the following actions taken by the Company without the
Executive’s written consent after a Change of Control:

          (i) the assignment to the Executive by the Company of duties inconsistent with,
or the reduction of the powers and functions associated with, the Executive’s
position, duties, responsibilities and status with the Company immediately prior to
a Change of Control or Potential Change of Control (as defined below), or an adverse
change in Executive’s titles or offices as in effect immediately prior to a Change
of Control or Potential Change of Control, or any removal of the Executive from or
any failure to re-elect Executive to any of such positions, except in connection
with the termination of his employment for Disability or Cause or as a result of
Executive’s death except to the extent that a change in duties relates to
the elimination of responsibilities attendant to the Company’s no longer being a
publicly traded company;

          (ii) A reduction by the Company in the Executive’s Base Salary as in effect on
the date of a Change of Control or Potential Change of Control, or as the same may
be increased from time to time during the term of his Agreement;

          (iii) The Company shall require the Executive to be based anywhere other than
at the Company’s principal executive offices or the location where the Executive is
based on the date of a Change of Control or Potential Change of Control, or if
Executive agrees to such relocation, the Company fails to reimburse the Executive
for moving and all other expenses reasonably incurred with such move;

          (iv) The Company shall fail to continue in effect any Company-sponsored plan or
benefit that is in effect on the date of a Change of Control or Potential Change of
Control, that provides (A) incentive or bonus compensation, (B) fringe benefits such
as vacation, medical benefits, life insurance and accident insurance, (C)
reimbursement for reasonable expenses incurred by the Executive in connection with
the performance of duties with the Company, or (D) pension benefits such as a Code
Section 401(k) plan or the Company’s nonqualified defined benefit plan,
except to the extent that such plans taken as a whole are replaced with
substantially comparable plans;

6

 

          (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.

          (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) In the event that (i) Executive would otherwise be entitled to the compensation and
benefits described in Section 6(a) hereof (“Compensation Payments”), and (ii) the Company
determines, based upon the advice of tax counsel selected by the Company’s independent auditors and
acceptable to Executive, that, as a result of such Compensation Payments and any other benefits or
payments required to be taken into account under Code Section 280G(b)(2) (“Parachute Payments”),
any of such Parachute Payments would be reportable by the Company as “excess parachute payments”,
such Compensation Payments shall be reduced to the extent necessary to cause Executive’s Parachute
Payments to equal 2.99 times the “base amount” as defined in Code Section 280G(b)(3) with respect
to such Executive. However, such reduction in the Compensation Payments shall be made only if, in
the opinion of such tax counsel, it would result in a larger Parachute Payment to the Executive
than payment of the unreduced Parachute Payments after deduction of tax imposed on and payable by
the Executive under Section 4999 of the Code (“Excise Tax”). The value of any non-cash benefits or
any deferred payment or benefit for purposes of this paragraph shall be determined by the Company’s
independent auditors.

          (f) The parties hereto agree that the payments provided under Section 6(a) above, as the case
may be, are reasonable compensation in light of Executive’s services rendered to the Company and
that neither party shall contest the payment of such benefits as constituting an “excess parachute
payment” within the meaning of Section 280G(b)(1) of the Code.

          (g) Unless the Company determines that any Parachute Payments made hereunder must be reported
as “excess parachute payments” in accordance with Section 6(e) above, neither party shall file any
return taking the position that the payment of such benefits constitutes an “excess parachute
payment” within the meaning of Section 280G(b)(1) of the Code.

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     7. Non-Competition. Executive agrees that during the term of this Agreement and for a
period of nine months from the date of the termination of Executive’s employment with the Company
pursuant to Sections 4(b), 4(c), 4(d), 4(e) or 6 herein or for any other reason that results in the
Executive being entitled to the benefits described in Section 5, he will not, directly or
indirectly, compete with the Company by providing to any company that is in a “Competing
Business” services substantially similar to the services provided by Executive at the time of
termination. Competing Business shall be defined as any business that engages, in whole or in
part, in the manufacture, development or sale of broadband communication equipment for broadband
communications architectures in the United States, and Executive’s employment function or
affiliation is directly or indirectly in such business.

     8. Nonsolicitation of Employees. For a period of two years after the termination or
cessation of his employment with the Company for any reason whatsoever, Executive shall 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
subsidiaries or affiliates (known by the Executive to be such) to leave the employment of the
Company or its subsidiaries or affiliates, nor shall he use or disclose to any person, partnership,
association, corporation or other entity any information obtained while an employee of the Company
concerning the names and addresses of the Company’s employees.

     9. 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 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

8

 

premises of the
Company under any circumstances without the prior written consent of the Board (except in the
ordinary course of business during Executive’s period of active employment under this Agreement),
and in any event must be promptly delivered to the Company upon termination of Executive’s
employment with the Company. Executive agrees that upon his receipt of any subpoena, process or
other request to produce or divulge, directly or indirectly, any Trade Secrets to any entity,
agency, tribunal or person, Executive shall timely notify and promptly hand deliver
a copy of the subpoena, process or other request to the Board. For this purpose, Executive
irrevocably nominates and appoints the Company (including any attorney retained by the Company), as
his true and lawful attorney-in-fact, to act in Executive’s name, place and stead to perform any
act that Executive might perform to defend and protect against any disclosure of any Trade Secrets.

     10. Return of Profits. In the event that Executive violates any of the provisions of
Sections 7, 8 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 of restricted stock to the extent such options or rights were exercised,
or such restrictions lapsed, subsequent to six months prior to the termination of Executive’s
employment.

     11. Severability. The parties hereto intend all provisions of Sections 7, 8, 9 and 10
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, 9 or 10 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
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.

     12. Arbitration — Exclusive Remedy.

9

 

          (a) The parties agree that the exclusive remedy or method of resolving all disputes or
questions arising out of or relating to this Agreement shall be arbitration. Arbitration shall be
held in Atlanta, Georgia by three arbitrators, one to be appointed by the Company, a second to be
appointed by Executive, and a third to be appointed by those two arbitrators. The third arbitrator
shall act as chairman. Any arbitration may be initiated by either party by written notice
(“Arbitration Notice”) to the other party specifying the subject of the requested arbitration and
appointing that party’s arbitrator.

          (b) If (i) the non-initiating party fails to appoint an arbitrator by written notice to the
initiating party within ten days after the Arbitration Notice, or (ii) the two arbitrators
appointed by the parties fail to appoint a third arbitrator within ten days after the date of the
appointment of the second arbitrator, then the American Arbitration Association, upon application
of the initiating party, shall appoint an arbitrator to fill that position.

          (c) The arbitration proceeding shall be conducted in accordance with the rules of the American
Arbitration Association. A determination or award made or approved by at least two of the
arbitrators shall be the valid and binding action of the arbitrators. The costs of arbitration
(exclusive of the expense of a party in obtaining and presenting evidence and attending the
arbitration and of the fees and expenses of legal counsel to a party, all of which shall be borne
by that party) shall be borne by the Company only if Executive receives substantially the relief
sought by him in the arbitration, whether by settlement, award or judgment; otherwise, the costs
shall be borne equally between the parties. The arbitration determination or award shall be final
and conclusive on the parties, and judgment upon such award may be entered and enforced in any
court of competent jurisdiction.

     13. Miscellaneous.

          (a) Notices. Any notices, consents, demands, requests, approvals and other
communications to be given under this Agreement by either party to the other must be in writing and
must be either (i) personally delivered, (ii) mailed by registered or certified mail, postage
prepaid with return receipt requested, (iii) delivered by overnight express delivery service or
same-day local courier service, or (iv) delivered by telex or facsimile transmission, to the
address set forth below, or to such other address as may be designated by the parties from time to
time in accordance with this Section 12(a):

	 	 	 	 	 
	 

	 	If to the Company:
	 	Arris Group, Inc.
	 

	 	 	 	3871 Technology Circle
	 

	 	 	 	Suwanee, Georgia 30024
	 

	 	 	 	Attention: Lawrence A. Margolis
	 
	 	 	 	 
	 

	 	If to Executive:
	 	Ronald M. Coppock
	 

	 	 	 	105 Aintree Court
	 

	 	 	 	Alpharetta, Georgia 30004

10

 

          Notices delivered personally or by overnight express delivery service or by local courier
service are deemed given as of actual receipt. Mailed notices are deemed given three business days
after mailing. Notices delivered by telex or facsimile transmission are deemed given upon receipt
by the sender of the answer back (in the case of a telex) or transmission confirmation (in the case
of a facsimile transmission).

          (b) Entire Agreement. This Agreement supersedes any and all other agreements, either
oral or written, between the parties with respect to the subject matter of this
Agreement and contains all of the covenants and agreements between the parties with respect to
the subject matter of this Agreement.

          (c) Modification. No change or modification of this Agreement is valid or binding
upon the parties, nor will any waiver of any term or condition in the future be so binding, unless
the change or modification or waiver is in writing and signed by the parties to this Agreement.

          (d) Governing Law and Venue. The parties acknowledge and agree that this Agreement
and the obligations and undertakings of the parties under this Agreement will be performable in
Georgia. This Agreement is governed by, and construed in accordance with, the laws of the State of
Georgia. If any action is brought to enforce or interpret this Agreement, venue for the action
will be in Georgia.

          (e) Counterparts. This Agreement may be executed in counterparts, each of which
constitutes an original, but all of which constitutes one document.

          (f) Costs. If any action at law or in equity is necessary to enforce or interpret the
terms of this Agreement, each party shall bear its own costs and expenses.

          (g) Estate. If Executive dies prior to the expiration of the term of employment or
during a period when monies are owing to him, any monies that may be due him from the Company under
this Agreement as of the date of his death shall be paid to his estate and as when otherwise
payable.

          (h) Assignment. The Company shall have the right to assign this Agreement to its
successors or assigns. The terms “successors” and “assigns” shall include any person, corporation,
partnership or other entity that buys all or substantially all of the Company’s assets or all of
its stock, or with which the Company merges or consolidates. The rights, duties and 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.

11

 

          (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.

12

 

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 	 	 
	 	 	“Company”	 	 
	 
	 	 	 	 	 	 
	 	 	ARRIS GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Lawrence Margolis
 

	 	 
	 

	 	Name:
	 	Lawrence Margolis	 	 
	 

	 	Title:
	 	Executive Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	“Executive”	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Ronald M. Coppock
	 	 
	 	 	 	 	 
	 	 	Ronald M. Coppock	 	 

13

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