CIO Employment Agreement - David B. Potts

Exhibit 10.4 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 David B. Potts (" Executive" ). WHEREAS, Executive and the Company are parties to a previous employment agreement dated as of August 5, 2001 (the " Previous Agreement" ); WHEREAS, Executive and the Company desire to replace the Previous Agreement; and WHEREAS, Executive and the Company want to enter into a 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 Executive Vice President, Chief Financial Officer and Chief Information Officer 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 $305,000.00 (" 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. (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.

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(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 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

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would have been payable hereunder to Executive from the date of such termination for a period of twenty-four months following the termination (and a pro rata portion for any partial year). (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 twenty-four 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 twenty-fur 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 twenty-four 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 constit ...