Exhibit 10.1

[g209251kai001.jpg]

CUBIC
CORPORATION

 

 

October 4, 2006

 

Richard Efland
9265 Cedar Trails Lane
Valley Center, CA 92082

Re: Retention Bonus Agreement

Dear Dick:

We are pleased to be able to provide you with the following retention bonus
agreement (“the Agreement”) as an incentive to remain as President and CEO of
Cubic Transportation Systems, Inc. (“the Company”) during a critical period.

The following are the terms of our Agreement:

1. One Retention Bonus Payment: The Company will pay a lump sum retention bonus
of three hundred thousand dollars ($300,000) (the “Bonus”) to you provided that
you remain actively employed by the Company as its President and CEO through and
including December 31, 2007 and meet the eligibility requirements set forth
below. The payment will be made on or before January 30, 2008 in a lump sum and
is subject to regular withholding for federal and state taxes and any other
authorized deductions. Your eligibility for the Cubic Corporation Management
Incentive Plan will continue in 2006 and 2007 and will not be affected by
payment of the Bonus.

2. Moving, Storage of Household Goods and Home Rental Expenses: Upon the sale of
your current residence, the Company will provide you with a lump sum payment to
cover reasonable moving expenses, storage of household goods (up to 30 days) and
rental housing costs through December 31, 2007, in close proximity to the
Company. The amount of this lump sum payment will be determined at the
discretion of Bill Boyle and Bernie Kulchin and is subject to regular
withholding for federal and state taxes or any other authorized deductions.

3. Continuing Eligibility Requirement:

a.                 The Company shall have no liability to pay you any amounts
stated above which are unpaid
as of the date (if any) prior to December 31, 2007 which you voluntarily resign.

b.                In the event that you die or become disabled, the amount of
your Bonus will be determined
by the Executive Compensation Committee of the Cubic Corporation Board of
Directors.

9333 Balboa Ave., Sara Diego, CA 92123 • Box 85587, San Diego, CA 92186-5587
858-277-6780 • Fax 858-277-1878
www.cubic.com • American Stock Exchange Symbol: C1J13

--------------------------------------------------------------------------------

c.                 In the event that your position is eliminated due to a
reduction in force or reorganization, you will receive the full amount of the
Bonus. The Bonus shall be in addition to any benefits for which you may be
eligible in accordance with Cubic’s Severance Policy.

d.                The Company retains the right to reduce or eliminate the Bonus
if your personal performance level is unsatisfactory. Unsatisfactory personal
performance is determined in the sole discretion of the Cubic Corporation Board
of Directors, and may include such factors as misconduct, poor performance,
failure to adhere to Company policies and procedures, or other relevant factors.
You will be allowed reasonable opportunity to state your position to the Cubic
Board and your total performance during the time you served as President and CEO
will be considered in the Board’s assessment.

4. No Employment Contract: This Agreement does not change the nature of your
employment relationship with the Company. You are still employed on an at-will
basis.

5. Period of this Agreement: This Agreement will commence as of October 4, 2006,
or such later date that may be designated by Company management, and will end on
December 31, 2007.

6. General Provisions:

a.                 This is the sole and exclusive agreement with you concerning
the payment of the Bonus and other retention benefits. No one else can make
promises or commitments to you about such payments either written or oral and no
one except the Corporate Vice President of Human Resources can change the terms
of this Agreement.

b.                You may not assign your obligation to perform services for the
Company under this Agreement.

c.                 This Agreement is made and shall in all respects be
interpreted, enforced and governed by and under the laws of the United States
including the Federal Arbitration Act, and as appropriate, the laws of the State
of California. Any dispute arising out of this Agreement including its meaning
or interpretation will be resolved solely by arbitration before an experienced
employment arbitrator selected in accordance with the model employment
arbitration procedures of the American Arbitration Association. The location of
the arbitration will be in San Diego. The provisions of this paragraph are
exclusive for all purposes and applicable to any and all disputes between you
and the Company concerning this Agreement.

7. Confidentiality: You agree to hold in confidence, for the benefit of the
Company, all information, knowledge and data of the Company which you may
acquire, learn, obtain or develop during your continuing employment by the
Company. Further, you will not, during the term of this Agreement or at any time
thereafter, directly or indirectly use, communicate or divulge for your own
benefit or for the benefit of another any such information, knowledge or data
other than as required by the Company. You make the same commitments with
respect to the secret, confidential or proprietary information, knowledge and
data of vendors and others with whom the Company has a business relationship or
to whom the company or its affiliates owe a duty of confidentiality, other than
as required by the Company. Company Information will be considered and kept as
the private, proprietary and confidential information of the Company except
within the Company as required to perform services, and may not be divulged
without the express written authorization of the Company. You further agree that
you will not disclose the terms of this Agreement other than to financial
dependents, attorneys or tax advisors.

2

--------------------------------------------------------------------------------

We look forward to your continuing contributions to the Company. Please
acknowledge by signing below that you have read, understood and agree to the
terms of this Agreement.

Sincerely,
CUBIC CORPORATION

/s/ B.A. Kulchin                                                            

 

 

/s/ Walter J. Zable

By: Bernie Kulchin

By: Walter J. Zable

Vice-President, Corporate Human Resources

Chairman

 

I have read, understand and agree to the terms in this Agreement.

/s/ Richard A. Efland                                                        

 

 

October 3, 2006

Richard A. Efland

Date

 

 

3

--------------------------------------------------------------------------------