SECOND AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.8
SECOND AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Second Amendment”)
is made and entered into effective as of the 26th day of November, 2008, by and between Arris
Group, Inc., a Delaware corporation (“Company”), and Xxxxxx Xxxxxxxxx (“Executive”).
WHEREAS, the parties hereto have entered into that certain Amended and Restated Employment
Agreement dated as of August 6, 2001, which was amended subsequently by the First Amendment to
Amended and Restated Employment Agreement dated as of December 7, 2006 (collectively the
“Agreement”); and
WHEREAS, the parties hereto now desire to amend the Agreement as provided herein to make
certain changes in Executive’s supplemental pension benefit, provide for additional vesting of
Executive’s options and equity awards upon Executive’s termination of employment after he reaches
the age of 62 and bring the Agreement into compliance with Section 409A of the Code.
NOW, THEREFORE, for and in consideration of Executive’s continued employment with Company and
the premises and the mutual covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Executive
hereby agree as follows:
1. Capitalized terms that are used but not defined in this Second Amendment shall have the meaning
specified in the Agreement.
2. The first sentence of Section 1 of the Agreement is amended in its entirety to read as follows:
Company will employ Executive and Executive will work for Company in the Atlanta
area as follows: Executive will serve as President, Chief Executive Officer and
Chairman of the Board until this Agreement is terminated as provided in Section 5
(the “Termination Date”).
3. The last sentence of Section 2 is amended in its entirety to read as follows:
Executive’s Base Compensation shall be payable semi-monthly in accordance with the
ordinary payroll practices of Company, and the Bonus shall be payable as soon after
the end of each calendar year to which it relates as it can be determined, but in
any event within two and one-half (2-1/2) months thereafter.
4. Section 3(b) of the Agreement is amended in its entirety to read as follows:
Without limitation of any other rights under the Benefit Plans to which Executive
may be entitled, Executive will be provided a non-qualified supplemental pension
by Company in an amount equal to (i) the amount of pension he would have had under
Company’s defined benefit retirement plan and related excess benefit plan if the
period of Executive’s service under those plans were tripled for all purposes and
all calculations of Executive’s benefits were made in accordance with the terms and
definitions set forth in the Plan (as defined below), including without limitation
for purposes of eligibility for a pension, less (ii) the amount of pension to which
Executive is entitled under Company’s defined benefit retirement plan and related
excess benefit plan. Notwithstanding the foregoing, the amount of Executive’s
supplemental pension shall not exceed the amount calculated as determined in the
preceding sentence as of the time Executive reaches the age of 62 increased or
decreased as described in the next sentence. In the event Executive’s employment
under this Agreement continues past the time Executive reaches the age of 62, then
Executive’s supplemental pension from Company shall equal the amount Executive would
have received had he retired from employment with Company at the time he reached age
62, calculated as of the time Executive reaches age 62 (without regard to any
compensation or benefits payable to Executive or any service by Executive after such
time), increased by an amount equal to the interest, dividends, earnings and other
profits that would be received, and decreased by an amount equal to the losses,
expenses and other charges that would be incurred, on the then actuarial equivalent
lump sum value of Executive’s supplemental pension benefit as of age 62 if such
amount had been invested, from the time Executive reaches age 62 until the
Termination Date, in one or more permitted investments that Executive may designate
from time to time, in accordance with the Xxxxxx Xxxxxxxxx Supplemental Executive
Retirement Plan (the “Plan” by reference made a part hereof). This supplemental
pension benefit will be calculated and paid in accordance with the provisions of
that Plan as of the date hereof or as amended from time to time hereafter by mutual
written agreement of Company and Executive. Company also will establish a mutually
agreeable and irrevocable grantor trust (as described in Section 671 of the Internal
Revenue Code) for the purpose of accumulating assets to provide for its obligations
under this Section. The assets and income of such trust shall be subject only to
the claims of the creditors of Company in the event of Company’s insolvency as
defined in Rev. Proc. 92-64, 1992-2 C.B. 422. The establishment of such trust shall
not affect Company’s liability to pay benefits hereunder except that any such
liability shall be offset by any payments actually made to Executive from such
trust. Company will reasonably determine the amounts to contribute to such trust
pursuant to the requirements of the Plan, and the investment of the assets of the
trust shall be made in accordance with the terms of the trust document. Without
limitation, but only to the extent not prohibited by Section 409A(b) of the Code,
Company agrees to contribute to the trust pursuant to the requirements of the Plan,
ratably from the date hereof until the date Executive attains age 62 with respect to
the amount of the obligation due at age 62 and annually as the obligation accrues
each year thereafter, sufficient amounts to provide for the Company’s liability to
pay the benefits hereunder, except that Company agrees in any event to contribute
sufficient amounts to pay all the benefits hereunder no later than when a “Change in
Control” occurs (to the
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extent not prohibited by Section 409A(b) of the Code). The terms of the trust shall
contain such provisions as may be necessary to qualify the trust as a “rabbi trust”
under applicable rules so that the supplemental pension arrangement may be
considered “unfunded” for purposes of the Employee Retirement Income Security Act of
1974, as amended.
5. The second sentence of Section 5(a) of the Agreement is amended in its entirety to read as
follows:
The termination will not be effective until two years (one year for any termination
on or after the date Executive reaches the age of 62) after written notice of
termination is given Executive unless termination is for “Good Cause.”
6. The second sentence of Section 5(b) of the Agreement is amended in its entirety to read as
follows:
The termination will not be effective until two years (one year for any termination
on or after the date Executive reaches the age of 62) after written notice is given
Company unless termination is for “Good Reason.”
7. Section 5(c) of the Agreement is amended in its entirety to read as follows:
(c) If Executive terminates this Agreement and simultaneously therewith his
employment by Company for Good Reason on or before the date that Executive attains
age 62 or under clause (iii) of the definition of Good Reason after the date that
Executive attains age 62, subject to Executive’s continued compliance with Sections
5(d) and 6 below, all of Executive’s stock options and other equity awards
outstanding at the Termination Date shall fully vest as of the Termination Date and
such stock options shall remain outstanding until the original expiration date of
the stock options (disregarding any earlier expiration date based on Executive’s
termination of employment), and Company for a period of three years from such
Termination Date (the period during which Executive is entitled to severance
benefits is the “Severance Period”) shall continue to provide to Executive (a) his
Base Compensation, at the rate most recently determined, on a semi-monthly basis
beginning with the first semi-monthly payroll date after the Termination Date and
continuing through the Severance Period in accordance with the ordinary payroll
practices of Company, (b) a bonus for each Company fiscal year (and a pro rata
amount for each partial Company fiscal year) in the Severance Period in an amount
equal to Executive’s Typical Annual Bonus at the Termination Date (or a pro rata
amount of said Typical Annual Bonus for any partial Company fiscal year in the
Severance Period), with the bonus for any fiscal year or partial year in the
Severance Period to be paid after the end of such fiscal year or partial year and
within two and one half (2-1/2) months thereafter, and (c) the Benefit Plans as
provided by Section 3(a) on a monthly basis through the Severance Period (subject in
the case of long-term disability to the availability of such coverage under
Company’s insurance policy). Executive’s Typical Annual
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Bonus at the Termination Date shall be the annual average of the three highest full
year Bonuses received by Executive for the five full years immediately preceding the
Termination Date. If Company terminates this Agreement and simultaneously therewith
Executive’s employment by Company other than for Good Cause after the date that
Executive attains age 62, or Executive terminates this Agreement and simultaneously
therewith his employment by Company for Good Reason (other than under clause (iii)
of the definition thereof) after the date that Executive attains age 62, Company
shall continue to provide to Executive, to the extent Company does not retain
Executive during the full twelve (12)-month notice period described in Section 5(a)
or (b) above, (a) his Base Compensation, at the rate most recently determined, on a
semi-monthly basis beginning with the first semi-monthly payroll date after the
Termination Date (the period during which Executive is entitled to these severance
benefits is the “Notice Period”) and continuing through the Notice Period in
accordance with the ordinary payroll practices of Company, (b) a bonus for each
Company fiscal year (and a pro rata amount for each partial Company fiscal year) in
the Notice Period in an amount equal to Executive’s Typical Annual Bonus at the
Termination Date (or a pro-rata amount of said Typical Annual Bonus for any partial
Company fiscal year in the Notice Period), with the bonus for any fiscal year or
partial year in the Notice Period to be paid after the end of such fiscal year or
partial year and within two and one-half (2-1/2) months thereafter, and (c) the
Benefit Plans as provided by Section 3(a) on a monthly basis through the Notice
Period (subject in the case of long-term disability to the availability of such
coverage under Company’s insurance policy). Subject to Executive’s continued
compliance with Sections 5(d) and 6, if Executive terminates his employment under
this Agreement with or without Good Reason (or Company terminates Executive’s
employment under this Agreement without Good Cause) after Executive attains the age
of 62, all of Executive’s stock options and other equity awards outstanding at the
Termination Date shall continue to vest for four (4) years after the Termination
Date as if Executive remained employed through such time, and such stock options
shall remain outstanding through the original expiration date of the stock options
(disregarding any expiration date based on Executive’s termination of employment).
Notwithstanding the foregoing, all payments to be made or benefits to be provided
under this Section are subject to the provisions of Section 5(f) below.
8. Section 5(d) of the Agreement is amended in its entirety to read as follows:
During the Severance Period or the four (4) years after the Termination Date, as
applicable in Section 5(c) above, Executive will serve Company as a consultant on
matters within Executive’s expertise or knowledge as may be reasonably requested by
Company. All such consultation will be arranged by Company so as to not interfere
with the other activities of Executive. Executive will be promptly reimbursed by
Company for any expenses incurred by Executive at the direction of Company upon
submission of appropriate documentation of such expenses, subject to the prevailing
Company policies or other guidelines for reimbursement
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of expenses, but in no event later than the last day of the year following the year
in which Executive incurs the reimbursable expense.
9. Section 5(f) of the Agreement is amended in its entirety to read as follows:
(f) Notwithstanding any other provisions of this Agreement, it is intended that any
payment or benefit which is provided pursuant to or in connection with this
Agreement and which is considered to be nonqualified deferred compensation subject
to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), will
be provided and paid in a manner, and at such time, as complies with Section 409A of
the Code. For purposes of this Agreement, all rights to payments and benefits
hereunder shall be treated as rights to receive a series of separate payments and
benefits to the fullest extent allowed by Section 409A of the Code. If Executive is
a key employee (as defined in Section 416(i) of the Code without regard to paragraph
(5) hereof) and any of Company’s stock is publicly traded on an established
securities market or otherwise, then the payment of any amount or provision of any
benefit under this Agreement which is considered to be nonqualified deferred
compensation subject to Section 409A of the Code shall be deferred for six (6)
months after the Termination Date or, if earlier, Executive’s death (the “409A
Deferral Period”), as required by Section 409A(a)(2)(B)(i) of the Code. In the
event payments are otherwise due to be made in installments or periodically during
such 409A Deferral Period, the payments which would otherwise have been made in the
409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A
Deferral Period ends, and the balance of the payments shall be made as otherwise
scheduled. In the event, benefits are otherwise to be provided hereunder during
such 409A Deferral Period, any such benefits may be provided during the 409A
Deferral Period at Executive’s expense, with Executive having a right to
reimbursement for such expense from the Company as soon as the 409A Deferral Period
ends, and the balance of the benefits shall be provided as otherwise scheduled. For
purposes of this Agreement, Executive’s termination of employment shall be construed
to mean a “separation from service” within the meaning of Section 409A of the Code
where it is reasonably anticipated that no further services will be performed by
Executive for or on behalf of the Company or any of its subsidiaries or affiliates
after such date or that the level of bona fide services Executive would perform for
or on behalf of the Company or any of its subsidiaries or affiliates after that date
(whether as an employee or independent contractor) would permanently decrease to no
more than forty-nine percent (49%) of the average level of bona fide services
performed for or on behalf of the Company or any of its subsidiaries or affiliates
over the immediately preceding thirty-six (36)-month period. Without limitation, if
any payment or benefit which is provided pursuant to or in connection with this
Agreement and which is considered to be nonqualified deferred compensation subject
to Section 409A of the Code fails to comply with Section 409A of the Code, and
Executive incurs any additional tax, interest and penalties under Section 409A of
the Code, Company will pay Executive an additional amount so that, after paying all
taxes,
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interest and penalties on such additional amount, Executive has an amount remaining
equal to such additional tax, interest and penalties. All payments to be made to
Executive pursuant to the immediately preceding sentence shall be payable no later
than when the related taxes, interest and penalties are to be remitted. Any right
to reimbursement incurred due to a tax audit or litigation addressing the existence
or amount of a tax liability addressed in the immediately preceding sentence must be
made no later than when the related taxes, interest and penalties that are the
subject of the audit or litigation are to be remitted to the taxing authorities or,
where no such taxes, interest and penalties are remitted, within thirty (30) days of
when the audit is completed or there is a final non-appealable settlement or
resolution of the litigation.
10. Section 6 of the Agreement is amended in its entirety to read as follows:
(a) As used in this Section:
“Business of Company” means providing products and services to broadband internet
service providers which support a full range of integrated voice, video and
high-speed data services to the subscribers of such providers.
“Restricted Period” means the period beginning on the Termination Date and ending on
the third anniversary of the Termination Date.
“Restricted Territory” means, and is limited to, the 50 states of the United States
of America. Executive acknowledges and agrees that this is the area in which the
Company does business at the time of execution of this Agreement, and in which
Executive will have responsibility, at a minimum, on behalf of the Company.
“Material Contact” means contact in person, by telephone or by paper or electronic
correspondence, in furtherance of the business interests of Company.
(b) Executive agrees that during Executive’s employment hereunder and during the
Restricted Period, Executive shall not, within the Restricted Territory, perform
services on his own behalf or on behalf of any other person or entity, which are the
same as or similar to those he provided to Company and which support any business
activities which compete with the Business of Company.
(c) Executive agrees that during Executive’s employment hereunder and during the
Restricted Period, Executive shall not, directly or indirectly, solicit any actual
or prospective customers of Company with whom Executive had Material Contact, for
the purpose of selling any products or services which compete with the Business of
Company.
(d) Executive agrees that during Executive’s employment hereunder and during the
Restricted Period, Executive shall not, directly or indirectly, solicit any actual
or prospective vendor of Company with whom Executive had Material
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Contact, for the purpose of providing products or services in support of any
business activities which compete with the Business of Company.
(e) Executive agrees that during Executive’s employment hereunder and during the
Restricted Period, Executive shall not, directly or indirectly, solicit or induce
any employee or independent contractor of Company with whom Executive had Material
Contact to terminate such employment or contract with Company.
Notwithstanding the foregoing, it is understood and agreed that, without limitation
on other available remedies, the restrictions on Executive set forth in Sections 6
(b), (c), (d) and (e) hereof shall not be applicable at any time that Company is in
breach of its contractual obligations to Executive under this Agreement or the Plan
following the thirty (30) days after being notified in writing by Executive of such
breach and failure of the Company to cure same. In the event Company cures such
breach, the restrictions set forth in Sections 6(b), (c), (d) and (e) hereof shall
continue pursuant to their terms as if such breach never occurred.
11. Section 7 of the Agreement is amended in its entirety to read as follows:
Company will pay to Executive the amount of any excise taxes, penalties and interest
imposed on Executive under Section 4999 of the Code by reason of payments or
benefits under the provisions of this Agreement, including this provision, and the
amount of any federal and state income taxes, penalties and interest imposed on
Executive by reason of payments to Executive under this Section. All payments to be
made to Executive under this Section shall be payable no later than when the related
taxes are to be remitted. Any right to reimbursement incurred due to a tax audit or
litigation addressing the existence or amount of a tax liability under this Section
must be made no later than when the related taxes that are the subject of the audit
or litigation are to be remitted to the taxing authorities or, where no such taxes
are remitted, within thirty (30) days of when the audit is completed or there is a
final and non-appealable settlement or resolution of the litigation.
12. Section 14 of the Agreement is amended in its entirety to read as follows:
The prevailing party in any litigation concerning this Agreement shall be reimbursed
by the party found to be in breach of this Agreement for all reasonable costs,
including attorneys fees, incurred by the prevailing party in enforcing this
Agreement within thirty (30) days after any final settlement or resolution in which
the party substantially prevails.
13. Section 16 of the Agreement is amended in its entirety to read as follows:
Subject to and conditioned upon Company not having terminated this Agreement
pursuant to Section 5(a)(i) or (ii), Executive will be provided the supplemental
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pension benefits described in Section 3(b) above as set forth in the attached
Supplemental Executive Retirement Plan.
14. Except as amended hereby, the Agreement shall remain in full force and effect.
15. The provisions of Sections 9 through 12 of the Agreement shall apply to this Second Amendment
as if set forth in their entirety herein.
16. In the event that there is any conflict between the provisions of this Agreement and the
provisions of the Plan, the provisions of the Plan shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of the day first
above written.
| COMPANY | ||||||
| Arris Group, Inc. | ||||||
| By: Name: |
/s/ Xxxxxxxx X. Xxxxxxxx
|
|||||
| Title: | Executive Vice President of Strategic Planning, Administration and Chief Counsel, Secretary | |||||
| EXECUTIVE | ||||||
| /s/ Xxxxxx Xxxxxxxxx | ||||||
| Xxxxxx Xxxxxxxxx | ||||||
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