EXHIBIT 10.4(K)
August 6, 2001
THIS DOCUMENT CONSTITUTES PART OF A
PROSPECTUS COVERING SECURITIES THAT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933
ARRIS GROUP, INC.
TERMS FOR DIRECTOR STOCK OPTIONS
1. DEFINITIONS
(a) "AGREEMENT" shall mean a stock option grant made subject to these
terms.
(b) "BOARD" shall mean the Board of Directors of the Corporation, as
constituted from time to time, or any committee of that Board
authorized to act on matters relating to stock options.
(c) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(d) "CORPORATION" shall mean ARRIS GROUP, INC., a Delaware corporation.
(g) "DATE OF GRANT" shall mean the date as of which an Agreement is
effective as stated in the Agreement.
(f) "DIRECTOR" shall mean an individual who is member of the Board.
[g] "EXERCISE PRICE" shall mean the amount for which one (1) Share may be
purchased upon exercise of an Option, as specified in the Agreement.
(h) "NON-STATUTORY STOCK OPTION" shall mean an option not described in
Sections 422(b), 422A(b), 423(b) or 424(b) of the Code.
(i) "OPTION" shall mean a Non-Statutory Stock Option granted pursuant to an
Agreement.
(j) "OPTION PERIOD" shall mean the term of an Option, as specified in an
Agreement.
(k) "PARTIAL EXERCISE" shall mean an exercise with respect to less than all
of the remaining Shares exercisable pursuant to an Option.
(l) "TERMS" shall mean these ARRIS GROUP, INC. Stock Option Terms.
(m) "PURCHASE PRICE" shall mean the Exercise Price multiplied by the number
of Shares with respect to which an Option is exercised.
(n) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
(o) "SHARE" shall mean one (1) share of Stock as adjusted in accordance
with Paragraph 4 of these Terms.
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EXHIBIT 10.4(K)
(p) "STOCK" shall mean the Common Stock of the Corporation.
2. RIGHT TO EXERCISE
Subject to the conditions and exceptions set forth in these Terms, an
Option shall become exercisable as set forth in the Agreement. No Partial
Exercise of an Option may be made for a number of Shares having an aggregate
value of less than $2,500.00.
3. TERM OF OPTION
An Option shall expire on the date specified in the Agreement. In
addition, an Option shall expire three years after the termination of Optionee's
service as a Director.
Any other provision of an Agreement or these Terms to the contrary
notwithstanding, an Option shall not be exercisable after the expiration date
set forth in the Agreement.
4. SHARES AND ADJUSTMENT
The Exercise Price in effect at any time and the number and kind of
securities purchasable upon exercise of an Option shall be subject to adjustment
from time to time upon the happening of certain events, as follows:
(a) In case the Corporation shall (i) pay a dividend in Shares of Stock or
make a distribution in Shares of Stock to its Stockholders, (ii)
subdivide its outstanding Shares of Stock, (iii) combine its
outstanding Shares of Stock into a smaller number of Shares of Stock,
or (iv) issue by reclassification of its Shares of Stock other
securities of the Corporation (including any such reclassification in
connection with a consolidation or merger in which the Corporation is
the continuing corporation), the number of Shares purchasable upon
exercise of an Option immediately prior thereto shall be adjusted so
that the Optionee shall be entitled to receive the kind and number of
Shares or other securities of the Company which the Optionee would have
owned or have been entitled to receive after the happening of any of
the events described above, had the Option been exercised immediately
prior to the happening of such event or any record date with respect
thereto. An adjustment made pursuant to this Paragraph (a) shall become
effective immediately after the effective date of such event
retroactive to immediately after the record date, if any, for such
event.
(b) In case the Corporation shall issue rights, options or warrants to all
holders of its Shares of Stock, without any charge to such holders,
entitling them (for a period expiring within 45 days after the record
date mentioned below in this Paragraph (b)) to subscribe for or
purchase Shares of Stock at a price per share which is lower at the
record date mentioned below than the then Current Market Price per
Share of Stock (as defined in Paragraph (d) below), the number of
Shares thereafter purchasable upon the exercise of an Option shall be
determined by multiplying the number of Shares theretofore purchasable
by a fraction, of which the numerator shall be the number of Shares of
Stock outstanding on such record date plus the number of additional
Shares of Stock offered for subscription or purchase, and of which the
denominator shall be the number of
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EXHIBIT 10.4(K)
Shares of Stock outstanding on such record date plus the number of
shares which the aggregate offering price of the total number of Shares
of Stock so offered would purchase at the then Current Market Price per
Share of Stock. Such adjustment shall be made whenever such rights,
options or warrants are issued, and shall become effective
retroactively immediately after the record date for the determination
of shareholders entitled to receive such rights, options or warrants.
(c) In case the Corporation shall distribute to all holders of Shares of
Stock (i) shares of stock other than Stock, (ii) evidences of its
indebtedness, (iii) assets or cash (excluding ordinary cash dividends
payable out of consolidated earnings or retained earnings and dividends
or distributions referred to in Paragraph (a) above), or (iv) rights,
options or warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase Shares of Stock
(excluding those referred to in Paragraph (b) above), then in each case
the number of Shares thereafter purchasable upon the exercise of an
Option shall be determined by multiplying the number of Shares
theretofore purchasable upon the exercise of the Option, by a fraction,
the numerator of which shall be the Current Market Price per Share of
Stock on the record date mentioned below in this Paragraph (c), and the
denominator of which shall be the Current Market Price per Share of
Stock on such record date, less the then fair value of the portion of
the shares of stock other than Stock or assets or evidences of
indebtedness so distributed or of such subscription rights, options or
warrants, or of such convertible or exchangeable securities applicable
to one (1) Share of Stock. Such adjustment shall be made whenever any
such distribution is made, and shall become effective on the date of
distribution retroactive to immediately after the record date for the
determination of shareholders entitled to receive such distribution.
(d) For the purpose of any computation under Paragraphs (b) and (c) above,
the Current Market Price per Share of Stock at any date shall be the
average of the daily closing prices for 15 consecutive trading days
commencing 20 trading days before the date of such computation. The
closing price for each day shall be the last reported sale price or, in
case of no such reported sale takes place on such day, the average of
the closing bid and asked prices for such day, in either case on the
principal national securities exchange on which the Shares are listed
or admitted to trading, or if they are not listed or admitted to
trading on any national securities exchange, but are traded in the
over-the-counter market, the closing sale price of the Stock, or in
case no sale is publicly reported, the average of the representative
closing bid and asked quotations for the Stock on NASDAQ or any
comparable system, or if the Stock is not listed on NASDAQ or a
comparable system, the closing sale price of the Stock, or in case no
sale is publicly reported, the average of the closing bid and asked
prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Corporation
for that purpose, or if there is no public market for the Stock, the
fair market value of the Stock, as determined by Duff & Phelps
Financial Consulting Company, or another independent appraisal firm
selected as a replacement therefor by the Board.
(e) No adjustment in the number of Shares purchasable hereunder shall be
required unless such adjustment would require an increase or decrease
of at least one percent (1 %) in the number of Shares purchasable upon
the exercise of an Option; Provided, however, that any adjustments
which by reason of this Paragraph (e) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment,
but not
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EXHIBIT 10.4(K)
later than three (3) years after the happening of the specified event
or events. All calculations shall be made to the nearest one thousandth
of a Share. Anything in these provisions to the contrary
notwithstanding, the Corporation shall be entitled, but shall not be
required, to make such changes in the number of Shares purchasable upon
the exercise of an Option, in addition to those required by this
Paragraph 4, as it, in its discretion, shall determine to be advisable
in order that any dividend or distribution in Shares of Stock, issuance
of rights, warrants or options to purchase Stock, or distribution of
shares of stock other than Stock, evidences of indebtedness or assets
or cash (other than ordinary cash dividends out of consolidated
earnings or retained earnings) or convertible or exchangeable
securities hereafter made by the Corporation to the holders of Stock
shall not result in any tax to the holders of Stock or securities
convertible into Stock.
(f) Whenever the number of Shares purchasable upon the exercise of an
Option is adjusted, as herein provided, the Exercise Price payable upon
exercise of the Option shall be adjusted by multiplying such Exercise
Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise
of the Option immediately prior to such adjustment, and of which the
denominator shall be the number of Shares so purchasable immediately
thereafter.
(g) In the event that at any time, as a result of any adjustment made
pursuant to Paragraph (a) above, the Optionee shall become entitled to
purchase any shares of capital stock of the Corporation other than
Shares of Stock, thereafter the number of such other shares so
purchasable upon exercise of this Option, and the Exercise Price of
such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Shares contained in Paragraphs (a)
through (f), inclusive, above, and Paragraphs (h) through (k)
inclusive, below, and the provisions of these Terms with respect to
Shares shall apply on like terms to such other shares.
(h) Upon the expiration of any rights, options, warrants or conversion or
exchange privileges, if any thereof shall not have been exercised, the
Exercise Price and the number of shares of Stock purchasable upon the
exercise of an Option shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been originally
adjusted (or had the original adjustment not been required, as the case
may be) as if (x) the only Shares of Stock so issued were the Shares of
Stock, if any, actually issued or sold upon the exercise of such
rights, options, warrants or conversion or exchange rights, and (y)
such Shares of Stock, if any, were issued or sold for the consideration
actually received by the Corporation upon such exercise plus the
aggregate consideration, if any, actually received by the Corporation
for the issuance, sale or grant of all such rights, options, warrants
or conversion or exchange rights, whether or not exercised; provided,
however, that no such readjustment shall have the effect of increasing
the Exercise Price by an amount in excess of the amount of adjustment
initially made in respect of the issuance, sale or grant of such
rights, options, warrants or conversion or exchange rights.
(i) Whenever the number of Shares purchasable upon the exercise of an
Option or the Exercise Price of an Option is adjusted, as herein
provided, the Corporation shall promptly mail by first class mail,
postage prepaid to the Optionee notice of such adjustment or
adjustments. The Corporation may retain a firm of independent public
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EXHIBIT 10.4(K)
accountants (who may be the regular accountants employed by the
Corporation) to make any computation required by these provisions and
shall cause such accountants to prepare a certificate setting forth the
number of Shares purchasable upon the exercise of the Option and the
Exercise Price of such Shares after such adjustment, setting forth a
brief statement of the facts requiring such adjustment and setting
forth the computation by which such adjustment was made. Such
certificate shall be conclusive of the correctness of such adjustment,
and the Optionee shall have the right to inspect such certificate
during reasonable business hours.
(j) Except as provided in these provisions, no adjustment in respect of any
dividends shall be made during the term of an Option or upon the
exercise of an Option.
(k) In case of any consolidation of the Corporation with or merger of the
Corporation with or into another Corporation or in case of any sale or
conveyance to another corporation of the property of the Corporation as
an entirety or substantially as an entirety, the Corporation or such
successor or purchasing corporation (or an affiliate of such successor
or purchasing corporation), as the case may be, agrees that the
Optionee shall have the right thereafter upon payment of the Exercise
Price in effect immediately prior to such action to purchase upon
exercise of an Option the kind and amount of shares and other
securities and property (including cash) which the Optionee would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had the Option been exercised
immediately prior to such action. The provisions of this Paragraph (k)
shall similarly apply to successive consolidations, mergers, sales or
conveyances.
5. EXERCISE OF OPTION
The Optionee or the Optionee's Representative may exercise an Option by
giving written notice to the Secretary of the Corporation. The notice shall
specify the election to exercise the Option, the number of Shares for which it
is being exercised and the form of payment. The notice shall be signed by the
person or persons exercising the Option. In the event that the Option is being
exercised by the representative of the Optionee, the notice shall be accompanied
by proof satisfactory to the Corporation of the representative's right to
exercise the Option. The Optionee or the Optionee's Representative shall deliver
to the Secretary of the Corporation, at the time of giving the notice, payment
in the form which conforms to the applicable sub-paragraph of Paragraph 14 of
these Terms for the full amount of the Purchase Price.
The Corporation shall thereafter cause to be issued a certificate or
certificates for the Shares as to which an Option has been exercised, registered
in the name of the person exercising the Option (or in the names of such person
and his or her spouse as community property or as joint tenants with right of
survivorship).
6. WITHHOLDING TAXES
In the event that the Corporation determines that it is required to
withhold Federal, state or local tax as a result of the exercise of an Option,
the Optionee, as a condition to the exercise of the Option, shall make
arrangements satisfactory to the Corporation to enable it to satisfy such
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EXHIBIT 10.4(K)
withholding requirements. The Optionee shall also make arrangements satisfactory
to the Corporation to enable it to satisfy any withholding requirements that may
arise in connection with the disposition of Shares purchased by exercising an
Option.
7. RIGHTS AS A SHAREHOLDER
Neither the Optionee nor the Optionee's Representative shall have any
rights as a shareholder with respect to any shares subject to the Option until
the Option has been properly exercised and the Shares subject to the Option have
been issued in the name of the Optionee or the Optionee's Representative.
8. LEGALITY OF ISSUANCE
No Shares shall be issued upon the exercise of an Option unless and
until the Corporation has determined that:
(a) It and the Optionee have taken all actions required to register the
Shares under the Securities Act or to perfect an exemption from the
registration requirements thereof;
(b) Any applicable listing requirement of any stock exchange on which stock
is listed has been satisfied; and (c) Any other applicable provision of
state or Federal law has been satisfied.
9. RESTRICTIONS ON TRANSFER OF SHARES
Regardless of whether the offering and sale of Shares have been
registered under the Securities Act or have been registered or qualified under
the securities laws of any state, the Corporation may impose restrictions upon
the sale, pledge or other transfer of such Shares (including the placement of
appropriate legends on stock certificates) if, in the judgment of the
Corporation and its counsel, such restrictions are necessary or desirable in
order to achieve compliance with the provisions of the Securities Act, the
securities laws of any state or any other law.
In the event that the sale of Shares is not registered under the
Securities Act but an exemption is available which requires an investment
representation or other representation, the Optionee shall represent and agree
that the Shares to be acquired pursuant to the exercise of an Option are being
acquired for investment, and not with a view to the sale or distribution
thereof, and shall make such other representations as are deemed necessary or
appropriate by the Corporation and its counsel.
Stock certificates evidencing Shares acquired under an Agreement in an
unregistered transaction shall bear the following restrictive legend (and such
other restrictive legends as are required or deemed advisable under the
provisions of any applicable law):
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (`ACT'). ANY TRANSFER OF SUCH
SECURITIES WILL BE INVALID UNLESS A
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EXHIBIT 10.4(K)
REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER
OR, IN THE OPINION OF COUNSEL FOR THE ISSUER, SUCH REGISTRATION IS
UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT."
Any determination by the Corporation and its counsel in connection with
any of the matters set forth in this Paragraph 9 shall be conclusive and binding
on the Optionee and all other persons.
10. REGISTRATION OF SECURITIES
The Corporation may, but shall not be obligated to, register or qualify
the sale of Shares under the Securities Act or any other applicable law. The
Corporation shall not be obligated to take any affirmative action in order to
cause the sale of Shares acquired under an Agreement to comply with any law.
11. REMOVAL OF LEGENDS
If, in the opinion of the Corporation and its counsel, any legend
placed on a stock certificate representing Shares sold under an Agreement is no
longer required, the holder of such certificate shall be entitled to exchange
such certificate for a certificate representing the same number of Shares but
lacking such legend.
12. NO TRANSFER OR ASSIGNMENT OF OPTION
Except as otherwise provided in Paragraph 3(a) of these Terms, or
expressly permitted by the Board, an Option and the rights and privileges
conferred thereby shall not be transferred, assigned, pledged or hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
sale under execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of an Option, or of
any right or privilege conferred hereby, contrary to the provisions hereof, or
upon any attempted sale under any execution, attachment or similar process upon
the rights and privileges conferred hereby, the Option and the rights and
privileges conferred hereby shall immediately become null and void.
13. DESIGNATION OF OPTION
All Options shall be Non-Statutory Stock Options.
14. PAYMENT FOR STOCK
(a) Payment in Cash
The entire Purchase Price may be paid in US dollars.
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EXHIBIT 10.4(K)
(b) Surrender of Stock
All or part of the Purchase Price may be paid by the surrender
of Shares in good form for transfer. Such Shares must have
been owned by the Optionee or the Optionee's Representative
for six (6) months or more and must have a value (as
determined pursuant to Paragraph 4(d) on the date of exercise
of an Option which, together with any amount paid in a form
other than Shares, is equal to the Purchase Price.
15. CHANGES AND INTERPRETATION
These Terms and an Agreement may be modified only in writing authorized
by the Committee and by either the Optionee to whom the modification is being
applied or by holders of a majority of options to purchase Stock issued to
Employees by the Corporation. Notwithstanding the foregoing, the Committee shall
have the authority to interpret and administer the provisions of these Terms and
an Agreement, and such actions by the Committee shall be final and binding.
IN WITNESS WHEREOF, the Corporation has caused these Terms to be
executed on its behalf of its officer duly authorized to act on behalf of the
Corporation as of this 6TH day of August, 2001.
ARRIS GROUP, INC.,
a Delaware corporation
By:
---------------------------
Lawrence A. Margolis
Its: Executive Vice President
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