ARRIS GROUP INC
DIRECTOR STOCK OPTION TERMS
<DOCUMENT>
<TYPE>EX-10.4(K)
<SEQUENCE>7
<FILENAME>g72728ex10-4k.txt
<DESCRIPTION>DIRECTOR STOCK OPTION TERMS
<TEXT>
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                                                                 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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         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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