ARRIS GROUP, INC. 2007 STOCK INCENTIVE PLAN Nonqualified Stock Option Agreement
Exhibit 10.2
ARRIS GROUP, INC.
2007 STOCK INCENTIVE PLAN
2007 STOCK INCENTIVE PLAN
No. of Shares subject to
Nonqualified Stock Option: ___
Nonqualified Stock Option: ___
THIS
NONQUALIFIED 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 22 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. 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.
(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 13 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) Transferability. Except as provided herein, this Option is nontransferable.
During the Participant’s lifetime, only the Participant may exercise this Option. This
Option may be transferred by will or the laws of descent and distribution and,
notwithstanding the foregoing, during the Participant’s lifetime, may be transferred by the
Participant to the Participant’s “family members” (as such term is defined in the
General Instructions to the Form S-8 Registration Statement Under the Securities Act of
1933), on such terms and conditions as the Committee may provide. Any such transfer will be
permitted only if (i) the Participant does not receive any consideration for the transfer
and (ii) the Committee expressly approves the transfer. Any transferee to whom this Option
is transferred shall be bound by the same terms and conditions that govern this Option;
provided, however, that the transferee may not transfer this Option except by will or the
laws of descent and distribution. No right or interest of the 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.
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.
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(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 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
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more stock dividends, subdivisions or consolidations of Shares,
reorganizations, recapitalizations, spin-offs or other similar changes in capitalization.
13. 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. | |||
| ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Executive Vice President | ||||
If to the Participant: |
||||
14. 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.
15. 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.
16. 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.
17. 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.
18. Governing Law. This Agreement shall be governed by the laws of the State of Delaware,
except to the extent federal law applies.
19. 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 the 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.
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20. 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.
21. 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.
22. Definitions. For purposes of this Agreement, the following words shall have the
meanings set forth below:
(a) “Affiliate” 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 414(b) or
414(c), except that, in making any such determination, 50 percent shall be substituted for
80 percent under such Code Sections and the related regulations.
(b) “Cause” shall have the same meaning as under any employment agreement between
the Company or any Affiliate and the Participant or, if no such employment agreement exists
or if such employment agreement does not contain any such definition, Cause means any
material breach of the terms of the Participant’s employment contract (if any) or Agreement,
or any conduct intentionally or materially harmful to the Company, as determined in the sole
discretion of the Committee, including but not limited to the unauthorized use of
proprietary information.
(c) “Code” means the Internal Revenue Code of 1986, as amended.
(d) “Competing Business” means any business that engages, in whole or in part, in
the equipment and supply for broadband communications systems in the United States.
(e) “Disabled” means fully and permanently disabled within the meaning of the
Company’s group long-term disability plan then in effect. The Committee, in its sole
discretion, shall determine whether the Participant is Disabled for purposes of this
Agreement.
(f) “Fair Market Value” means, on any given date, the fair market value of a Share
as the Committee in its discretion shall determine; provided, however, that the Committee
shall determine Fair Market Value without regard to any restriction other than a restriction
which, by its terms, will never lapse and, if the Shares are traded on any national stock
exchange or quotation system, the Fair Market Value of a Share shall be the closing price of
a Share as reported on such stock exchange or quotation system on such date, or if the
Shares are not traded on such stock exchange or quotation system on such date, then on the
next preceding day that the Shares were traded on such stock exchange or quotation system,
all as reported by such source as the Committee shall select. The Fair Market Value that
the Committee determines shall be final, binding and conclusive on the Company, any
Affiliate and the Participant.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly authorized
officer, and the Participant has affixed his signature hereto.
| COMPANY: | ||||||
| ARRIS GROUP, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| PARTICIPANT: | ||||||
| Participant | ||||||
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EXHIBIT A
Vesting Provisions
Vesting Provisions
Except as provided in paragraphs 3, 4, 5 or 6 of the Agreement, this Option shall become
exercisable as set forth below. For purposes of the Agreement, including the vesting provisions in
this Exhibit A, the Participant will be deemed to have terminated employment as of his or
her last day of active work for the Company and its Affiliates; provided, however, that the
Participant shall be deemed to be actively at work during any period the Participant is on approved
paid medical leave or during the protected reemployment period applicable to military leave.
1. General Vesting
Service-Based Vesting
[ ] The Option shall become exercisable with respect to [thirty-three] percent ([33]%) of the
Shares subject to the Option on the [first and second] annual anniversaries of the Date of Grant
and then with respect to the remaining [thirty-four] percent ([34]%) of the Shares subject to the
Option on the [third] annual anniversary of the Date of Grant, provided the Participant is still
employed by the Company or any Affiliate at each such time.
Performance-Based Vesting
[ ] The Option shall become exercisable with respect to the percentage of Shares set forth below
with respect to each applicable vesting date, provided that, at each such time, (a) the Participant
is still employed by the Company or any Affiliate and (b) the performance measures set forth below
have been met. Notwithstanding the foregoing, if the applicable performance measures are not met
at a specified vesting date, but the cumulative performance measures are met at a subsequent
vesting date, then the Option shall become exercisable with respect to that percentage of Shares
specified for the applicable vesting date plus the percentage of Shares for prior vesting dates
that did not become exercisable solely because of a failure to meet the performance measures for
the prior vesting dates.
| Percentage of Shares for | ||||||
| which Option may be | Cumulative | |||||
| Vesting Date | Performance Target | Exercised | Performance Target | |||
2. Accelerated Vesting
Accelerated Vesting on Death
[ ] Notwithstanding the foregoing, the Option shall become exercisable with respect to
one-hundred percent (100%) of the Shares subject to the Option if the Participant dies while still
employed by the Company or any Affiliate.
Accelerated Vesting on Disability
[ ] Notwithstanding the foregoing, the Option shall become exercisable with respect to
one-hundred percent
(100%) of the Shares subject to the Option if the Participant becomes Disabled while still employed
by the Company or any Affiliate.
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Accelerated Vesting on Retirement
[ ] Notwithstanding the foregoing, the Option shall become exercisable with respect to
one-hundred percent (100%) of the Shares subject to the Option if the Participant voluntarily
terminates employment with the Company and its Affiliates after reaching age ___.
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