Document:

Exhibit 10.5

 

SEVENTEENTH
AMENDMENT TO SECOND AMENDED

AND RESTATED LEASE AGREEMENT

 

THIS
SEVENTEENTH AMENDMENT TO SECOND AMENDED AND RESTATED LEASE AGREEMENT is made and entered into as of March 31,
2008 by and among (i) each of the parties identified on the signature page hereof
as a landlord, as landlord (collectively, “Landlord”), and (ii) FIVE STAR QUALITY CARE TRUST, a Maryland business trust, as
tenant (“Tenant”).

 

W
I  T  N  E  S  S  E  T  H:

 

WHEREAS, pursuant to the terms of that certain
Second Amended and Restated Lease Agreement, dated as of November 19,
2004, as amended by that certain First Amendment of Lease, dated as of May 17,
2005, that certain Second Amendment to Second Amended and Restated Lease
Agreement, dated as of June 3, 2005, that certain Third Amendment to
Second Amended and Restated Lease Agreement, dated as of October 31, 2005,
that certain other Third Amendment to Second Amended and Restated Lease
Agreement, dated as of December 30, 2005, that certain Letter Agreement,
dated as of March 13, 2006, that certain Fifth Amendment to Second Amended
and Restated Lease Agreement, dated as of September 1, 2006, that certain
Sixth Amendment to Second Amended and Restated Lease Agreement, dated as of October 1,
2006, that certain Seventh Amendment to Second Amended and Restated Lease
Agreement, dated as of October 1, 2006, that certain Eighth Amendment to
Second Amended and Restated Lease, dated as of November 1, 2006, that
certain Ninth Amendment to Second Amended and Restated Lease, dated as of November 1,
2006, that certain Tenth Amendment to Second Amended and Restated Lease
Agreement, dated as of November 6, 2006 (effective as of November 5,
2006), that certain Eleventh Amendment to Second Amended and Restated Lease
Agreement, dated as of December 22, 2006, that certain Twelfth Amendment
to Second Amended and Restated Lease Agreement, dated as of January 1,
2007, that certain Thirteenth Amendment to Second Amended and Restated Lease
Agreement, dated as of January 4, 2008, that certain Fourteenth Amendment
to Second Amended and Restated Lease Agreement, dated as of February 7,
2008, that certain Fifteenth Amendment to Second Amended and Restated Lease
Agreement, dated as of February 17, 2008 and that certain Sixteenth
Amendment to Second Amended and Restated Lease Agreement, dated as of March 1,
2008 (as so amended, the “Consolidated Lease”), Landlord leases to
Tenant, and Tenant leases from Landlord, the 

 

 

Leased
Property (this and other capitalized terms used but not otherwise defined
herein having the meanings given such terms in the Consolidated Lease), all as
more particularly described in the Consolidated Lease; and

 

WHEREAS, on or about the date hereof, SNH Somerford Properties Trust has
acquired certain real property and related improvements with respect to eleven
(11) senior living properties located in California, Delaware and Maryland, as
more particularly described on Exhibits A-108 through A-118
attached hereto, (collectively, the “Somerford Properties”), which
Somerford Properties contain thirteen (13) Facilities; and

 

WHEREAS, SNH Somerford Properties Trust, the other entities
comprising Landlord and Tenant wish to amend the Consolidated Lease to include
the Somerford Properties;

 

NOW,
THEREFORE, in
consideration of the mutual covenants herein contained and other good and
valuable consideration, the mutual receipt and legal sufficiency of which are
hereby acknowledged, Landlord and Tenant hereby agree as follows:

 

1.             Joinder by SNH Somerford
Properties Trust.  Effective as of
the date hereof, SNH Somerford Properties Trust, a Maryland real estate
investment trust, hereby joins in the Consolidated Lease as if it had
originally executed and delivered the Consolidated Lease as a “Landlord”
thereunder.

 

2.             Definition of Base Year.  The definition of the term “Base Year” set
forth in Section 1.9 of the Consolidated Lease is hereby deleted in its
entirety and replaced with the following:

 

“Base
Year” shall
mean (i) with respect to the Existing Properties, the 2005 calendar year, (ii) with
respect to the Additional Properties, the 2006 calendar year, (iii) with
respect to the Hermitage/Marsh View/Somerset/Walking Horse and the Holiday
Properties, other than the Buena Vida Property, the 2007 calendar year, (iv) with
respect to the Buena Vida Property, the 2008 calendar year, and (v) with
respect to the Heritage Properties, the Meadowmere Properties, the Centennial
Property, the Wellstead Property and the Somerford Properties, the 2009
calendar year.

 

3.             Definition of Disbursement Rate.  The definition of the term “Disbursement Rate”
set forth in Section 1.23 of the Consolidated Lease is hereby deleted in
its entirety and replaced with the following:

 

2

 

“Disbursement
Rate”  shall mean (a) with respect to all
of the Properties other than the Hermitage/Marsh View/Somerset/Walking Horse
Properties, the Holiday Properties, the Meadowmere Properties, the Heritage
Properties, the Centennial Property, the Wellstead Property and the Somerford
Properties, an annual rate of interest, as of the date of determination, equal
to the greater of (i) the Interest Rate, and (ii) the per annum rate
for ten (10) year U.S. Treasury Obligations as published in The Wall
Street Journal plus four hundred (400) basis points, (b) with respect
to the Hermitage/Marsh View/Somerset/Walking Horse Properties, the Holiday
Properties, the Meadowmere Properties, the Heritage Properties, the Centennial
Property and the Wellstead Property, an annual rate of interest, as of the date
of determination, equal to the greater of (i) the Interest Rate, and (ii) the
per annum rate for ten (10) year U.S. Treasury Obligations as published in
The Wall Street Journal plus three hundred twenty-five (325) basis
points, and (c) with respect to the Somerford Properties, an annual rate
of interest, as of the date of determination, equal to the greater of (i) the
Interest Rate, and (ii) the per annum rate for ten (10) year U.S.
Treasury Obligations as published in The Wall Street Journal plus three
hundred (300) basis points; provided, however, that in no event
shall the Disbursement Rate exceed eleven and one-half percent (11.5%).

 

4.             Definition of Interest Rate.  The definition of the term “Interest Rate”
set forth in Section 1.54 of the Consolidated Lease is hereby deleted in
its entirety and replaced with the following:

 

“Interest
Rate” shall
mean, (i) with respect to the Existing Properties, ten percent (10%) per
annum, (ii) with respect to the Additional Properties, nine percent (9%)
per annum, (iii) with respect to the Hermitage/Marsh View/Somerset/Walking
Horse Properties and the Holiday Properties, eight and one quarter percent
(8.25%) per annum, and (iv) with respect to the Meadowmere Properties, the
Heritage Properties, the Centennial Property, the Wellstead Property and the
Somerford Properties, eight percent (8%) per annum.

 

5.             Definition of Minimum Rent.  Effective as of the date hereof, the
definition for the term “Minimum Rent” set forth in 

 

3

 

Section 1.69
of the Consolidated Lease is hereby deleted in its entirety and replaced with
the following:

 

“Minimum
Rent”  shall mean the sum of $64,413,228.00 per
annum.

 

6.             Definition
of Somerford Properties.  The
following new definition for the term “Somerford Properties” is hereby added to the Consolidated Lease as a new
section 1.108:

 

“Somerford
Properties” shall
mean the Properties located on the Land described on Exhibits A-108
through A-118 attached hereto.

 

7.             Leased Property.  Section 2.1 of the Consolidated Lease is
hereby amended by deleting subsection (a) in its entirety and replacing it
with the following:

 

(a)           those certain tracts, pieces and
parcels of land as more particularly described in Exhibits A-1 through A-118
attached hereto and made a part hereof (the “Land”).

 

8.             Exhibit A.  Exhibit A to the Consolidated Lease is
hereby amended by adding Exhibits A-108 through A-118 attached
hereto following Exhibit A-107 to the Consolidated Lease.

 

9.             Ratification.  As amended hereby, the Consolidated Lease is
hereby ratified and confirmed.

 

[SIGNATURE PAGE FOLLOWS]

 

4

 

IN
WITNESS WHEREOF,
Landlord and Tenant have caused this Seventeenth Amendment to Second Amended
and Restated Lease Agreement to be duly executed, as a sealed instrument, as of
the date first set forth above.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  ELLICOTT CITY LAND I LLC,
  ELLICOTT CITY LAND II LLC, HRES2 PROPERTIES TRUST, SNH CHS PROPERTIES TRUST,
  SPTIHS PROPERTIES TRUST, SPT-MICHIGAN TRUST, SPTMNR
  PROPERTIES TRUST, SNH/LTA PROPERTIES TRUST, SNH/LTA PROPERTIES GA LLC and SNH
  SOMERFORD PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/
  David J. Hegarty

  
	
   

  	
   

  	
  David J. Hegarty

  
	
   

  	
   

  	
  President, Chief
  Operating

  Officer and Secretary

  of each of the foregoing

  entities

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  FIVE STAR QUALITY CARE TRUST

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Bruce J. Mackey, Jr.

  
	
   

  	
   

  	
  Bruce J.
  Mackey, Jr.

  
	
   

  	
   

  	
  Treasurer, Chief
  Financial

  
	
   

  	
   

  	
  Officer and Assistant

  
	
   

  	
   

  	
  SecretaryEXHIBIT
10.4

 

CUBIC
CORPORATION

 

2005
DEFERRED COMPENSATION PLAN

 

EFFECTIVE
JANUARY 1, 2005

 

 

Table of Contents

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1 Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  “Account Balance”

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  “Annual Deferral Amount”

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  “Annual Installment Method”

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.4

  	
  “Base Annual Salary”

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.5

  	
  “Beneficiary”

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.6

  	
  “Beneficiary Designation Form”

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.7

  	
  “Board”

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.8

  	
  “Bonus”

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.9

  	
  “Change in Control”

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.10

  	
  “Claimant”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.11

  	
  “Code”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.12

  	
  “Committee”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.13

  	
  “Company”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.14

  	
  “Compensation”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.15

  	
  “Deferral Account”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.16

  	
  “Deferral Amount”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.17

  	
  “Disability”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.18

  	
  “Distribution Date”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.19

  	
  “Election Form”

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.20

  	
  “Employee”

  	
   

  	
  3

  

 

i

 

	
   

  	
  1.21

  	
  “Employers”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.22

  	
  “ERISA”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.23

  	
  “Fiscal Year”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.24

  	
  “Inactive Participant”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.25

  	
  “In-Service Distribution”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.26

  	
  “Key Employee”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.27

  	
  “Participant”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.28

  	
  “Plan”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.29

  	
  “Plan Agreement”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.30

  	
  “Plan Year”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.31

  	
  “Re-Deferral Election”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.32

  	
  “Separation from Service”

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.33

  	
  “Termination Benefit”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.34

  	
  “Unforeseeable Financial Emergency”

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2
  Eligibility, Selection, Enrollment

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Selection by Committee

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Enrollment Requirements

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  Termination of Participation and/or
  Deferrals

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3
  Deferral Elections/Crediting of Interest

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Deferred Compensation.

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Election to Defer Compensation

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Time and Form of Payment

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4

  	
  Withholding of Deferral Amounts

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.5

  	
  Interest

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.6

  	
  FICA and Other Taxes

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.7

  	
  Vesting

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4
  In-Service Distribution; Unforeseeable Financial Emergencies

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  In-Service Distribution

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Withdrawal Payout/Suspensions for
  Unforeseeable Financial Emergencies

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5
  Termination Benefit

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Termination Benefits

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Payment of Termination Benefit

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6 Death
  Benefit

  	
   

  	
  10

  

 

 

	
   

  	
  6.1

  	
  Death Prior to Distribution of Account
  Balance

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7
  Disability

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  General

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8
  Beneficiary Designation

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Beneficiary

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Beneficiary Designation; Change;
  Spousal Consent

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Acknowledgement

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  No Beneficiary Designation

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5

  	
  Doubt as to Beneficiary

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.6

  	
  Discharge of Obligations

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9
  Termination, Amendment, or Modification

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Termination

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Amendment

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3

  	
  Effect of Payment

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10
  Administration

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Committee Duties

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2

  	
  Agents

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.3

  	
  Binding Effect of Decisions

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.4

  	
  Indemnity of Committee

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.5

  	
  Employer Information

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11
  Claims Procedure

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Presentation of Claim

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.2

  	
  Notification of Decision

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.3

  	
  Requests for a Review of a Denied
  Claim

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.4

  	
  Decision on Review

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.5

  	
  Rules and Procedures

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.6

  	
  Exhaustion of Remedies

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.7

  	
  Optional Arbitration

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12
  Miscellaneous

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Unsecured General Creditor

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.2

  	
  Employer’s Liability

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.3

  	
  Non-Assignability

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.4

  	
  Coordination with Other Benefits

  	
   

  	
  17

  

 

 

	
   

  	
  12.5

  	
  Not a Contract of Employment

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.6

  	
  Furnishing Information

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.7

  	
  Terms

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.8

  	
  Captions

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.9

  	
  Governing Law

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.10

  	
  Notice

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.11

  	
  Successors

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.12

  	
  Spouse’s Interest

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.13

  	
  Validity

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.14

  	
  Incompetent

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.15

  	
  Court Order

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.16

  	
  Effect on Employee Benefits

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.17

  	
  Legal Fees to Enforce Rights Upon a
  Change in Control

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.18

  	
  Code Section 409A

  	
   

  	
  19

  

 

 

PURPOSE

 

The purpose of this Plan is to provide
specified benefits to a select group of management or highly compensated
employees, or independent directors, who contribute materially to the continued
growth, development and future business success of Cubic Corporation, a
Delaware corporation, and its subsidiaries, if any. This Plan shall be unfunded
for tax purposes and for purposes of Title I of ERISA, and is intended to
comply, in form and operation, with the requirements of Code Section 409A
so as to avoid the inclusion of deferred compensation in the gross income of
participants until actual receipt. In the event of any inconsistency between
the provisions of the Plan and the requirements of Code Section 409A, as
interpreted by the Treasury Department and the Internal Revenue Service in
guidance issued thereunder, the provisions of the Plan shall be applied in a
manner consistent with the requirements of Section 409A.

 

In order to transition to the requirements of
Code Section 409A and related Treasury Regulations, the Committee may make
available to Participants certain transition relief provided under Treasury
guidance as described more fully in Appendix A of this Plan.

 

This Plan has been adopted by the Board of
Directors of Cubic Corporation effective January 1, 2005, as a successor
to the Cubic Corporation Restated Deferred Compensation Plan for Designated
Directors, Officers and Key Employees (the “Prior Plan”). The provisions of the
Prior Plan shall continue to apply to the deferred compensation account
balances earned and vested under the Prior Plan as of December 31, 2004,
and subsequent earnings thereon, to the extent such amounts are not subject to Section 409A.
The provisions of this Plan shall supersede the provisions of the Prior Plan
with respect to amounts deferred after December 31, 2004, that are subject
to Section 409A.

 

ARTICLE 1

Definitions

 

For purposes hereof, unless otherwise clearly
apparent from the context, the following phrases or terms shall have the
following indicated meanings:

 

1.1           “Account Balance” shall mean, with
respect to a Participant, the balance of his or her Deferral Account. This
account shall be a bookkeeping entry only and shall be utilized solely as a
device for the measurement and determination of the amounts to be paid to or in
respect of a Participant pursuant to the Plan.

 

1.2           “Annual Deferral Amount” shall mean
that portion of a Participant’s Base Annual Salary or Bonus that a Participant
elects to have, and is, deferred in accordance with Article 3 for any one
Plan Year or Fiscal Year, as applicable. An Annual Deferral Amount shall also
mean that portion of a Participant’s Bonus payable with respect to more than
one Fiscal Year which a Participant elects to have, and is, deferred under the
Plan.

 

1.3           “Annual Installment Method” shall
mean the payment of a Participant’s benefit in annual installments to be paid,
if so elected by a Participant, as follows: 
(i) during the calendar year in which payment begins, such payment
shall equal (a) the Account Balance as of the 

 

1

 

Termination Date; divided by (b) the total number of installment
payments to be made; and (ii) during the benefit payment period, the
amount of each installment to be paid during each calendar year thereafter
shall be recalculated, and shall be equal to (a) the remaining amount
payable to the Participant as of such January 1; divided by (b) the
number of installment payments to be made in or after such subsequent calendar
year. The first such installment shall be made as of the Termination Date and
subsequent installments shall be made on the 15th of the first January following the
Termination Date and subsequent installments shall be made on the 15th of each subsequent January of each
subsequent calendar year. The final installment payment shall be equal to the
remaining amount payable to the Participant. In no event shall the amount of
any installment payment exceed the remaining amount payable to the Participant.

 

1.4           “Base Annual Salary” shall mean the
annual compensation (excluding bonuses, commissions, overtime, incentive
payments, non-monetary awards, stock options and grants, restricted stock,
severance or termination payments, foreign service payments, payments for
consulting services, and such other unusual or extraordinary payments as the
Committee may determine) paid to a Participant for services rendered to any
Employer, before reduction for compensation deferred pursuant to all
tax-qualified, non-qualified and Code Section 125 plans (other than
compensation deferred under individual employment contracts) of any Employer.
The Committee may, in its discretion, with respect to any one or more
Participants establish for any Plan Year a limit on the amount of Base Annual
Salary to be taken into account under this Plan.

 

1.5           “Beneficiary” shall mean one or more
persons, trusts, estates or other entities, designated in accordance with Article 8,
that are entitled to receive benefits under the Plan upon death of a
Participant.

 

1.6           “Beneficiary Designation Form” shall
mean the form established from time to time by the Committee that a Participant
completes, signs, and returns to the Committee to designate one or more
Beneficiaries.

 

1.7           “Board” shall mean the Board of
Directors of the Company.

 

1.8           “Bonus” shall mean any compensation,
in addition to Base Annual Salary, paid in respect of one or more Fiscal Years
to a Participant as an Employee under the Company’s Bonus Plan, or any other
incentive plan of the Company. The Committee may, in its discretion, with
respect to any one or more Participants establish for any Fiscal Year or Years
a limit on the amount of Bonus to be taken into account under this Plan.

 

1.9           “Change in Control” shall mean a
change in ownership or control of the Company effected through any of the
following transactions:  (i) a
merger, consolidation or other reorganization approved by the Company’s
stockholders, UNLESS securities representing fifty percent (50%) or more of the
total combined voting power of the voting securities of the successor
corporation are immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the persons who
beneficially owned the Company’s outstanding voting securities immediately
prior to such transaction; (ii) the sale, transfer or other disposition of
all or substantially all of the Company’s assets in complete liquidation or
dissolution of the Company; or (iii) the acquisition, directly or
indirectly by any person or related 

 

2

 

group of persons (other than the Company or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company), of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended from time to time), of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company’s outstanding securities.

 

1.10         “Claimant” shall have the meaning set
forth in Section 11.1.

 

1.11         “Code” shall mean the Internal Revenue
Code of 1986, as amended.

 

1.12         “Committee” shall mean the
administrative committee appointed to manage and administer the Plan in
accordance with its provisions pursuant to Article 10.

 

1.13         “Company” shall mean Cubic Corporation,
a Delaware corporation.

 

1.14         “Compensation” refers to Base Annual
Salary and Bonus, as may be designated by the Committee.

 

1.15         “Deferral Account” shall mean the sum
of (a) a Participant’s Deferral Amount, plus (b) interest credited in
accordance with Section 3.5, net of all distributions from such Account.
This account shall be a bookkeeping entry only and shall be utilized solely as
a device for the measurement and determination of the amounts to be paid to the
Participant pursuant to the Plan.

 

1.16         “Deferral Amount” shall mean the sum of
all of a Participant’s Annual Deferral Amounts.

 

1.17         “Disability” shall mean a Participant
is (1) unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, or (2) by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months,
receiving income replacement benefits for a period of not less than three
months under an accident and health plan covering employees of the Employer.

 

1.18         “Distribution Date” shall mean the date
or dates on which Compensation being deferred will be distributed, as selected
by the Participant on the Election Form. The term Distribution Date does not
include other dates on which amounts may be distributed to a Participant under
the Plan such as upon Disability, death, Unforeseeable Financial Emergency, or
Separation from Service.

 

1.19         “Election Form” shall mean the form
established from time to time by the Committee that a Participant completes,
signs, and returns to the Committee to make an election under the Plan.

 

1.20         “Employee” refers to any employee,
within the meaning of Section 3121(d) of the Code, who is highly
compensated, has the title of Vice President, President or Chief Executive
Officer, or is otherwise a member of management, selected by the Committee to
participate in 

 

3

 

this Plan. The Committee shall determine whether an employee is to be
considered highly compensated, applying a definition with a dollar threshold at
least as high as that set under Section 414(q) of the Code from time
to time with respect to qualified plans.

 

1.21         “Employers” shall mean the Company
and/or any of its subsidiaries that have been selected by the Board to
participate in the Plan.

 

1.22         “ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as amended from time to time.

 

1.23         “Fiscal Year” shall mean the Employer’s
tax year, which is currently the 12-month period ending on September 30.

 

1.24         “Inactive Participant” shall mean any
Participant who has elected to defer Compensation under the Plan during a
previous Plan Year but who does not defer any Compensation payable during the
current Plan Year.

 

1.25         “In-Service Distribution” shall mean
the payout set forth in Section 4.1.

 

1.26         “Key Employee” shall mean an employee
as defined in Code Section 416(i) without regard to paragraph (5) thereof.

 

1.27         “Participant” shall mean any Employee (a) who
is selected to participate in the Plan, (b) who elects to participate in
the Plan, (c) who signs a Plan Agreement and an Election Form, (d) whose
signed Plan Agreement and Election Form are accepted by the Committee, (e) who
commences participation in the Plan, and (f) whose Plan Agreement has not
terminated.

 

1.28         “Plan” shall mean the Company’s 2005
Deferred Compensation Plan which shall be evidenced by this instrument and,
with respect to each Participant, by his or her Plan Agreement, as each may be
amended from time to time.

 

1.29         “Plan Agreement” shall mean a written
agreement, as may be amended from time to time, which is entered into by and
between one or more Employers and a Participant. Each Plan Agreement executed
by a Participant shall provide for the entire benefit to which such Participant
is entitled under the Plan, and shall specify the Employer or Employers liable
for the Participant’s benefits hereunder and the magnitude or extent of such
liability. The Plan Agreement bearing the latest date of acceptance by the
Committee shall govern such entitlement and each Employer’s liability. Upon the
complete payment of a Participant’s Account Balance, each individual’s Plan
Agreement and his or her status as a Participant shall terminate.

 

1.30         “Plan Year” shall be the calendar year,
starting with 2005.

 

1.31         “Re-Deferral Election” shall mean a
Participant’s irrevocable election to extend a Distribution Date.

 

1.32         “Separation from Service” means a
termination of employment or service that constitutes a  “separation from service” within the meaning
of Code Section 409A(a)(2)(A)(i). A Separation from Service shall not
occur merely by reason of the transfer of employment of a 

 

4

 

Participant from an Employer to any entity directly or indirectly
controlled by or under common control with the Company and which is not an
Employer, unless otherwise provided under Section 409A. A Participant will
not be considered to have a termination of employment while the individual is
on a military leave, sick leave, or other bona fide leave of absence if the
period of the leave does not exceed six months or, if longer, so long as the
individual’s right to reemployment with the Employer is provided either by
statute or by contract.

 

1.33         “Termination Benefit” shall mean the
benefit set forth in Article 7.

 

1.34         “Unforeseeable Financial Emergency”
shall mean an “unforeseeable emergency” within the meaning of Section 409A(2)(B)(ii) of
the Code, including a severe financial hardship to the Participant resulting
from illness or accident of the Participant, the Participant’s spouse or a
dependent (as defined in Section 152(a) of the Code) of the
Participant, loss of the Participant’s property due to casualty or other
similar extraordinary unforeseeable circumstances arising as a result of events
beyond the control of the Participant. Further, to qualify for distribution on
account of an “Unforeseeable Emergency,” the amounts distributed with respect
to the unforeseeable emergency cannot exceed the amounts necessary to satisfy
the emergency and pay taxes reasonably anticipated as a result of the
distribution. The amount needed is determined after taking into account amounts
that would be received by the Participant through reimbursement or compensation
by insurance or otherwise, or that could be obtained, without severe financial
hardship, through the liquidation of the Participant’s assets.

 

ARTICLE 2

Eligibility,
Selection, Enrollment

 

2.1           Selection by Committee. Participation
in the Plan shall be limited to employees of an Employer who are part of a
select group of management or highly compensated employees, and non-employee
members of the Board of Directors of the Company. From the foregoing, the
Committee shall select, in its sole and absolute discretion, individuals
eligible to participate in the Plan.

 

2.2           Enrollment Requirements. As a
condition to participation, each selected individual shall complete, execute,
and return to the Committee a Plan Agreement and an Election Form. In addition,
the Committee shall establish from time to time such other enrollment
requirements as it determines in its sole and absolute discretion are
necessary.

 

2.3           Termination of Participation and/or
Deferrals. If the Committee determines in its sole discretion that a
Participant no longer meets the requirement of Section 2.1 hereof, the
Committee shall prevent the Participant from making future deferral elections.

 

5

 

ARTICLE 3

Deferral
Elections/Crediting of Interest

 

3.1           Deferred Compensation.

 

(a)           Minimum. For each Plan Year or Fiscal
Year, as applicable, a Participant may elect to defer Compensation paid in
respect of such year the following minimum amounts for each deferral elected:

 

	
  Deferral

  	
   

  	
  Minimum
  Amount

  
	
   

  	
   

  	
   

  
	
  Base Annual Salary

  	
   

  	
  1% per Plan
  Year

  
	
   

  	
   

  	
   

  
	
  Annual Bonus

  	
   

  	
  5% per
  Fiscal Year

  

 

If no election is made, the amount deferred
shall be zero.

 

(b)           Short Plan Year. If a Participant
first becomes a Participant after the first day of a Plan Year, the minimum
Base Annual Salary shall be an amount equal to the minimum set forth above,
multiplied by a fraction, the numerator of which is the number of complete
months remaining in the Plan Year and the denominator of which is 12.

 

(c)           Maximum. For each Plan Year or Fiscal
Year, as applicable, a Participant may elect to defer Base Annual Salary and/or
Bonus up to the following maximum amounts:

 

	
  Deferral

  	
   

  	
  Maximum
  Amount

  
	
   

  	
   

  	
   

  
	
  Base Annual Salary

  	
   

  	
  90% per Plan
  Year

  
	
   

  	
   

  	
   

  
	
  Bonus

  	
   

  	
  100% per
  Fiscal Year

  

 

3.2           Election to Defer Compensation.

 

(a)           General. An individual selected to
participate must deliver to the Committee a completed and signed Election Form,
which Election Form must be accepted by the Committee, for a valid
election to exist. Except as otherwise provided under this Section 3.2, an
election to defer Compensation must be made and accepted (i) no later than
the close of the Plan Year preceding the Plan Year in which any of the services
for which the Compensation would be paid are performed, or (ii) within
30 days after the date the Participant first becomes eligible to
participate in this Plan (and any other plan that would be aggregated with the
Plan to the extent required under Section 409A), with respect to services
to be performed subsequent to the election.

 

(b)           Special Rule for First Year of
Eligibility. For purposes of Section 3.2(a) above, and to the
extent permitted under Section 409A, if a deferral election is made with
respect to a Bonus during the first year of eligibility, but after the
beginning of the service period with respect to which the Bonus is payable, the
election is deemed to apply to compensation paid for services performed
subsequent to the election if the election applies to a portion of the Bonus
that is no greater than the total amount of the Bonus for the performance
period multiplied by the 

 

6

 

ratio of the number of days remaining in the performance period after
the election over the total number of days in the performance period.

 

(c)           Special Rule for Fiscal Year
Compensation. To the extent permitted under Section 409A, the
Committee may permit a Participant to defer a Bonus based on service to be
performed during one or more consecutive Fiscal Years by making an election no
later than the close of the Fiscal Year preceding the first Fiscal Year in
which the services for which the Bonus is payable are to be performed, provided
that no portion of the Bonus is paid or payable during the Fiscal Year(s) in
which the services are to be performed.

 

(d)           Special Rule for Performance-Based
Compensation. The Committee may permit a Participant to make an initial
election to defer a Bonus based on a performance period of one or more Fiscal
Years, provided that the Participant has performed services continuously from
the date the performance criteria were established through the date of the
election, on any date that is at least six months prior to the end of the
performance period and before the Bonus has become both substantially certain
to be paid and readily ascertainable. This Section 3.2(e) shall apply
only to the extent the Bonus qualifies as “performance-based compensation”
within the meaning of Section 409A(a)(4)(B)(iii) of the Code and as
otherwise permitted under Section 409A.

 

(e)           Subsequent Elections. For each
service period (that is, a Plan Year or one or more consecutive Fiscal Years
with respect to which a Bonus is payable), a new Election Form must be
delivered to the Committee in accordance with its rules and procedures and
the requirements of this Section 3.2. If no Election Form is timely
delivered for a service period, no Annual Deferral Amount shall be withheld for
that service period. Notwithstanding the foregoing, the Committee may provide
that deferral elections shall remain in effect with respect to subsequent
service periods until changed or revoked, provided that the elections become
irrevocable with respect to compensation for service performed in a service
period as of the last day on which the Participant would be required to make a
deferral election for that service period.

 

3.3           Time and Form of Payment. At the
time of each election to defer an Annual Deferral Amount, the Committee may
permit the Participant to elect the time and form of payment of the Annual
Deferral Amount in accordance with the provisions of Section 4.1, with
respect to In-Service Distributions, and in accordance with such other rules and
procedures as the Committee may prescribe consistent with the requirements of Section 409A
of the Code with respect to a payment method for Termination Benefits. The
Committee may permit the Participant to change an election of a payment method
for Termination Benefits by submitting a new Election Form to the
Committee, provided that any such Election Form is submitted at least 12
months prior to the scheduled payment date and is not effective for 12 months,
and the first payment with respect to which the election is made is deferred
for a period of not less than five years from the earliest date such payment
would otherwise have been made or commenced if payable in installments (unless
payment is on account of death, Disability or Unforeseeable Financial
Emergency), subject to compliance with Code Section 409A.

 

3.4           Withholding of Deferral Amounts. For
each Plan Year, the Base Annual Salary portion of the Annual Deferral Amount
shall be withheld each payroll period in equal amounts or 

 

7

 

percentages from the Participant’s Base Annual Salary. The Bonus
portion of the Annual Deferral Amount shall be withheld at the time the Bonus
is or otherwise would be paid to the Participant. The Annual Deferral Amount
shall be credited to the Participant’s Deferral Account. A Participant shall at
all times have a fully vested and non-forfeitable interest in his or her
Deferral Account.

 

3.5           Interest. The Committee shall credit
the Account Balances monthly with an interest rate of return equal to the “Prompt
Payment Act” interest rate set by the Secretary of the Treasury semi-annually
on January 1st and July 1st, divided by 12. The crediting of
interest shall be for bookkeeping purposes only, and the Company shall not be
obligated actually to invest any money credited to the Account Balances.

 

3.6           FICA and Other Taxes. For each Plan
Year in which an Annual Deferral Amount is being withheld, the Participant’s
Employer(s) shall ratably withhold from that portion of the Participant’s
Base Annual Salary and/or Bonus that is not being deferred, the Participant’s
share of FICA taxes on deferred amounts and any other taxes which may be
required or appropriate. If necessary, but only to the extent permitted under
Code Section 409A, the Committee shall reduce the Annual Deferral Amount
in order to comply with this Section 3.6.

 

3.7           Vesting. A Participant shall at all
times be one hundred percent (100%) vested in his or her Deferral Account and
Annual Deferral Amount.

 

ARTICLE 4

In-Service
Distribution; Unforeseeable Financial Emergencies

 

4.1           In-Service Distribution. At the time
of each election to defer an Annual Deferral Amount, the Committee may permit a
Participant to elect to receive a future “In-Service Distribution” from the
Plan with respect to that Annual Deferral Amount in a lump sum payment or
pursuant to an Annual Installment Method over a period up to five years, as
early as five years but no later than ten years, after the year of deferral (as
described below), with the portion of the In-Service Distribution payment which
is yet to be distributed being credited with interest as set forth in Section 3.5.
The In-Service Distribution shall be an amount that is equal to the Annual
Deferral Amount plus interest credited on such amount under Section 3.5.
Subject to the other terms and provisions of this Plan, each In-Service
Distribution elected shall be paid or commence as soon as practicable after January 1st
of the first calendar year elected by the Participant that occurs at least five
years and no more than ten years after the end of the Plan Year or latest
Fiscal Year in the service period for which an Annual Deferral Amount would
otherwise have been paid. Subject to compliance with Code Section 409A,
the Committee may permit a Participant to change this election to commence
distribution on an allowable alternative Distribution Date by submitting a new
Election Form to the Committee, provided that any such Election Form is
submitted at least 12 months prior to the scheduled Distribution Date and
is not effective for 12 months, and the commencement of the distribution
with respect to which the election is made is deferred for a period of not less
than five years from the Distribution Date such payment would otherwise have
been made or commenced if payable in installments (unless payment is on account
of death, Disability or Unforeseeable Financial Emergency). Notwithstanding the
foregoing, but subject to compliance with Code Section 409A, should an 

 

8

 

event occur that triggers a benefit under Articles 5, 6 or 7, any
Annual Deferral Amount, plus interest credited on such amount under Section 3.5,
that is subject to an In-Service Distribution election under this Section 4.1
shall not be paid in accordance with this Section 4.1, but shall be paid
in accordance with the other applicable Article of this Plan.

 

4.2           Withdrawal Payout/Suspensions for
Unforeseeable Financial Emergencies. If the Participant experiences an
Unforeseeable Financial Emergency, the Participant may petition the Committee
to receive partial or full payout from the Plan. The payout shall not
exceed the lesser of the Participant’s Account Balance, calculated as if such
Participant were receiving a Termination Benefit, or the amount reasonably
needed to satisfy the Unforeseeable Financial Emergency as determined under Section 1.34.
Subject to the approval of the Committee in its sole and absolute discretion, and
compliance with Code Section 409A, the payout shall be made in a lump sum
no later than 60 days following the date of approval. In addition, if the
Committee approves the payout, the Participant’s outstanding deferral election
under the Plan  shall be cancelled. The
Committee may also permit a cancellation of a deferral election due to a
hardship distribution from the Company’s 401(k) plan to the extent
permitted under Section 409A. The Participant’s ability to make a deferral
election following a cancellation of a deferral election under this Section 4.2
shall be subject to the provisions governing initial deferral elections under Section 3.2.

 

ARTICLE 5

Termination Benefit

 

5.1           Termination Benefits. Upon a
Participant’s Separation from Service, the Participant shall receive a
Termination Benefit equal to the Participant’s Account Balance, credited with
interest in accordance with Section 3.5.

 

5.2           Payment of Termination Benefit. The
Termination Benefit shall be paid in accordance with the installment payment
method previously elected by the Participant in accordance with Section 3.3
or, if no election of an installment method was timely made, in a lump sum,
with the portion of such Termination Benefit yet to be distributed being
credited with interest in accordance with Section 3.5. The lump sum
payment shall be made, or installment payments shall commence, no later than 60
days after the Participant’s Separation from Service; provided, however, that
if a Participant changes the payment method for the Termination Benefit in
accordance with Section 3.3, the payment date shall be determined in
accordance with Section 3.3. Despite the foregoing, if the Participant’s
Account Balance at the time of his or her Separation from Service is less than
$50,000, payment of the Termination Benefit will be made in a lump sum no later
than 60 days after Separation from Service, provided that such distribution may
be made without violating Section 409A of the Code. In addition,
notwithstanding anything in the Plan to the contrary and to the extent required
under Section 409A, the distribution of a Termination Benefit to a
Participant who is a Key Employee shall not be made or commenced before the
date which is six months and one day after the Participant’s Separation from Service
(or, if earlier, the Participant’s death) if any stock of the Company (or any
affiliate of the Company which would be treated as a “single employer” with the
Company for purposes of Section 409A of the Code) is publicly traded on an
established securities market or otherwise at such time. If a delay in the
commencement of installment 

 

9

 

payments is required under the preceding sentence, the suspended
installments shall be paid on the first business day following the expiration
of the six-month period.

 

ARTICLE 6

Death Benefit

 

6.1           Death Prior to Distribution of Account
Balance. If a Participant dies before or after Separation from Service, the
Participant’s unpaid Account Balance shall be paid to the Participant’s
Beneficiary in a lump sum no later than 90 days following the date of death.
The Committee may require suitable proof of death as a condition of payment.

 

ARTICLE 7

Disability

 

7.1           General. If the Committee determines
that the Participant has incurred a Disability, the Participant’s outstanding
deferral elections shall be cancelled and the Participant’s unpaid Account
Balance shall be paid to the Participant or the Participant’s legal
representative in a lump sum no later than 60 days after the date of
Disability. If the Participant returns to employment or service as a director
with an Employer after a Disability ceases, the Participant’s ability to make a
deferral election following a cancellation of a deferral election under this Section 7.1
shall be subject to the provisions governing initial deferral elections under Section 3.2.

 

ARTICLE 8

Beneficiary
Designation

 

8.1           Beneficiary. Each Participant shall
have the right, at any time, to designate his or her Beneficiary (both primary
as well as contingent) to receive any benefits payable under the Plan to a
Beneficiary upon the death of a Participant. The Beneficiary designated under
this Plan may be the same as or different from the Beneficiary designation
under any other plan of an Employer in which the Participant participates.

 

8.2           Beneficiary Designation; Change; Spousal
Consent. A Participant shall designate his or her Beneficiary by completing
and signing the Beneficiary Designation Form, and returning it to the Committee
or its designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing, and otherwise complying with the terms of
the Beneficiary Designation Form and the Committee’s rules and
procedures, as in effect from time to time. Where required by law or by the
Committee, in its sole and absolute discretion, if the Participant names
someone other than his or her spouse as a Beneficiary, a spousal consent, in
the form designated by the Committee, must be signed by that Participant’s
spouse and returned to the committee. Upon the acceptance by the Committee of a
new Beneficiary Designation Form, all Beneficiary designation previously filed
shall be canceled. The Committee shall be entitled to 

 

10

 

rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his or her death.

 

8.3           Acknowledgement. No designation or
change in designation of a Beneficiary shall be effective until received,
accepted and acknowledged in writing by the Committee or its designated agent.

 

8.4           No Beneficiary Designation. If a
Participant fails to designate a Beneficiary as provided in this Article 8
or if all designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant’s benefits, then the Participant’s
designated Beneficiary shall be his or her surviving spouse. If the Participant
has no surviving spouse, the benefits remaining under the Plan shall be paid to
the Participant’s issue upon the principle of representation and if there is no
such issue, to the Participant’s estate.

 

8.5           Doubt as to Beneficiary. If the
Committee has any doubt as to the proper Beneficiary to receive payments
pursuant to this Plan, the Committee shall have the right, exercisable in its
sole and absolute discretion, to cause the Participant’s Employer to withhold
such payments until this matter is resolved to the Committee’s satisfaction.

 

8.6           Discharge of Obligations. The payment
of benefits under the Plan to a Beneficiary shall fully and completely
discharge all Employers and the Committee from all further obligations under
this Plan with respect to the Participant, and that Participant’s Plan
Agreement shall terminate upon such full payment of benefits.

 

ARTICLE 9

Termination,
Amendment, or Modification

 

9.1           Termination. Any Employer reserves
the right to terminate the Plan at any time with respect to Participants
employed by the Employer. No distributions shall be made prior to the date or
dates otherwise provided under the Plan unless earlier distribution is
permitted under Code Section 409A. The Company shall have discretion to
terminate the Plan and make distributions upon termination to the maximum
extent permitted under Code Section 409A.

 

9.2           Amendment. Any Employer may, at any
time, amend or modify the Plan in whole or in part with respect to that
Employer; provided, however, that no amendment or modification shall be
effective to decrease a Participant’s Account Balance at the time of such
amendment. Notwithstanding the foregoing, the Employer may amend the Plan at
any time to comply with the provisions of Code Section 409A with respect
to any benefits or payments under the Plan.

 

9.3           Effect of Payment. The full payment
of the applicable benefit under the Plan shall completely discharge all
obligations to a Participant under this Plan and the Participant’s Plan
Agreement shall terminate.

 

11

 

ARTICLE 10

Administration

 

10.1         Committee Duties. This Plan shall be
administered by a Committee, to be known as the Cubic Corporation Deferred
Compensation Plan Committee, which shall consist of individuals approved by the
Board, or, after the occurrence of a Change in Control, a third party who,
before the occurrence of such Change in Control, was appointed by the then CEO
to act as the Plan Administrator in the event of a Change in Control, and
accepted such appointment. Members of the Committee may be Participants under
this Plan. The Committee shall also have the discretion and authority to make,
amend, interpret, and enforce all appropriate rules and regulations for
the administration of this Plan and decide on resolve any and all questions,
including but not limited to, interpretations of this Plan and entitlement to
or amount of benefits under this Plan, as may arise in connection with the
Plan. Any Committee member must recuse himself or herself on any matter of
personal interest to such member that comes before the Committee.

 

10.2         Agents. In the administration of this
Plan, the Committee may, from time to time, and at the expense of the Company,
employ agents and delegate to them such administrative duties as it sees fit
and may from time to time consult with counsel who may be counsel to any
Employer.

 

10.3         Binding Effect of Decisions. The
decision or action of the Committee with respect to any question arising out of
or in connection with the administration, interpretation and application of the
Plan and the rules and regulations promulgated hereunder shall be final
and conclusive and binding upon all persons having any interest in the Plan.

 

10.4         Indemnity of Committee. All Employers
shall indemnify and hold harmless the members of the Committee against any and
all claims, losses, damages, expenses, or liabilities, including attorneys’
fees, arising from any action or failure to act with respect to this Plan,
except in the case of gross negligence or willful misconduct by the Committee
or any of its members.

 

10.5         Employer Information. To enable the
Committee to perform its functions, each Employer shall supply full and timely
information to the Committee on all matters relating to the compensation of its
Participants, the date and circumstances of the Disability, death or Separation
from Service of its Participants, and such other pertinent information as the
Committee may reasonably require.

 

ARTICLE 11

Claims Procedure

 

11.1         Presentation of Claim. Any Participant
or Beneficiary of a deceased Participant (such Participant or Beneficiary being
referred to below as a “Claimant”) may deliver to the Committee a written claim
for a determination with respect to the amounts distributable to such Claimant
from the Plan. If such a claim relates to the contents of a notice received by
the Claimant, the claim must be made within 60 days after such notice was
received by the Claimant. The claim must state with particularity the
determination desired by the Claimant. All other claims must be made within 180
days of the date on which the event that caused the claim to 

 

12

 

arise occurred. The claim must state with particularity the
determination desired by the Claimant.

 

11.2         Notification of Decision. If the claim
is approved, prompt written notice to the Claimant shall be given.

 

In the event a Claimant’s claim for benefits
is denied in whole or in part, the Committee shall notify the Claimant of such
denial in writing and shall advise the Claimant of the right to a review
thereof. Such written notice shall set forth, in a manner calculated to be
understood by the Claimant,

 

(a)           specific reasons for the denial,

 

(b)           specific references to the Plan provisions
on which the denial is based,

 

(c)           a description of any information or material
necessary for the applicant to perfect the application, including an
explanation of why such material is necessary, and

 

(d)           an explanation of the Plan’s claims review
procedure, the time limits applicable under the procedures and a statement
regarding the claimant’s right to bring a civil action under section 502(a) of
ERISA following an adverse benefit determination on appeal.

 

Such written notice shall be given to the
applicant within 90 days after the Committee receives the application, unless
special circumstances require an extension of time of up to an additional 90
days for processing the application. If such an extension of time for
processing is required, written notice of the extension shall be furnished to
the applicant prior to the termination of the initial 90-day period. This notice
of extension shall indicate the special circumstances requiring the extension
of time and the date by which the Committee expects to render its decision on
the application for benefits.

 

11.3         Requests for a Review of a Denied Claim.
Any person whose claim is denied in whole or in part, or such person’s
authorized representative, may appeal from such denial by submitting to the
Committee a request for a review of the application within 60 days after
receiving written notice of such denial from the Committee. The request for a
review shall be in writing and shall set forth all of the grounds on which it
is based, all facts and documents in support of the request and any other
matters which the applicant deems pertinent. The Committee may require the
applicant to submit such additional facts, documents or other material as it
may deem necessary or appropriate in making its review. The Claimant may submit
written comments, documents, records and other information related to the
benefit claim on appeal. The Claimant must be provided, upon request and free
of charge, reasonable access to and copies of all documents, records and other
information relevant to the claim. A document is considered relevant to the
claim if it (i) was relied upon in making the determination on the claim; (ii) was
submitted, considered or generated in the course of making the determination,
without regard as to whether it was relied upon in making the decision; or (iii) demonstrates
compliance in making the decision on the claim with the requirement that the
determination must follow the terms of the Plan and be consistent when applied
to similarly situated claimants.

 

13

 

11.4         Decision on Review. The Committee on
appeal must undertake a full and fair review of the claim and consider all
comments, documents, records and other information submitted by the Claimant,
without regard to whether such information was submitted or considered in the
initial claim determination. The Committee shall render its decision on review
promptly, and not later than 60 days after the filing of a written request
for review of the denial, unless a hearing is held or other special circumstances
require an extension of time of up to an additional 60 days for processing the
request. If such an extension is required, written notice of the extension
shall be furnished to the applicant prior to the end of the initial 60-day
period. This notice of extension shall indicate the special circumstances
requiring the extension of time and the date by which the Committee expects to
render its decision on the application for benefits. If an extension of time is
required due to the claimant’s failure to submit information necessary to
review the claim, the period of time that the Committee has to review the claim
will be tolled from the date on which the notice of extension is sent to the
claimant until the date on which the claimant responds to the request for additional
information.

 

Within the time prescribed above, the
Committee shall give written notice of its decision to the Claimant and the
Company. In the event that the Committee confirms the denial of the claim in
whole or in part, such notice shall set forth, in a manner calculated to be
understood by the Claimant:

 

(a)           specific reasons for the denial;

 

(b)           specific reference(s) to the pertinent
Plan provisions upon which the decision was based;

 

(c)           a statement that the claimant is entitled to
receive, upon request and free of charge, reasonable access to and copies of
all documents, records and other information relevant to the benefit claim. A
document is considered relevant to the claim if it (i) was relied upon in
making the benefit determination; (ii) was submitted, considered or
generated in the course of making the benefit determination, without regard as
to whether it was relied upon in making the decision; or (iii) demonstrates
compliance in making the benefit decision with the requirement that the benefit
determination must follow the terms of the Plan and be consistent when applied
to similarly situated claimants, and

 

(d)           a description of any voluntary appeal
procedures offered under the Plan, the claimant’s right to obtain information
about such procedures and a statement regarding the claimant’s right to bring a
civil action under section 502(a) of ERISA following an adverse benefit
determination on appeal.

 

If the Committee is a committee or board that
holds regularly scheduled meetings at least quarterly, the determination on
appeal must be made no later than the date of the meeting that immediately
follows the Plan’s receipt of the appeal request. However, if the appeal is
received within 30 days before the date of the meeting, the determination must
be made by the date of the second meeting that immediately follows the Plan’s
receipt of the appeal request. If an extension of the time period for
processing the claim is needed, the determination must be made by the date of
the third meeting following the Plan’s receipt of the appeal request. If such
an extension for review is required, written notice of the extension shall be
furnished to the applicant before the 

 

14

 

commencement of the extension. This notice of extension shall indicate
the special circumstances requiring the extension of time and the date by which
the Committee expects to render its decision on the claim. The Committee must
provide the notice of determination on appeal to the Claimant as soon as
possible, but no later than 5 days after the determination is made.

 

In the event that the Committee determines
that the claim should not have been denied in whole or in part, the Company
shall take appropriate remedial action as soon as reasonably practicable after
receiving notice of the Committee’s decision.

 

11.5         Rules and Procedures. The
Committee may establish such rules and procedures, consistent with the
Plan and with ERISA, as it may deem necessary or appropriate in carrying out its
responsibilities under this Article 11. The Committee may require a
Claimant who wishes to submit additional information in connection with an
appeal from the denial of a claim in whole or in part to do so at the Claimant’s
own expense.

 

11.6         Exhaustion of Remedies. No legal action
for benefits under the Plan shall be brought unless and until the Claimant (i) has
submitted a written claim for benefits in accordance with Section 11.1; (ii) has
been notified by the Committee that the application is denied; (iii) has
filed a written request for a review of the application in accordance with Section 11.3;
and (iv) has been notified in writing that the Committee has affirmed the
denial of the claim. However, an action may not be brought by the Claimant
under Section 502(a) of ERISA if the Claimant fails to bring such
claim within the period prescribed by law, or to the extent the Claimant has
agreed to binding arbitration, as provided in Section 11.7.

 

11.7         Optional Arbitration. Any claim or
controversy between the parties arising out of, connected with, or related to
the formation, interpretation, performance, or breach of any provision of this
Plan shall, at the option of the Claimant, be submitted to and resolved
exclusively by expedited arbitration by a single arbitrator in accordance with
the following procedures:

 

(a)           In the event of a claim or controversy
subject to this arbitration provision, the complaining party shall promptly
send written notice to the other party identifying the matter in dispute and
the proposed remedy. Following the giving of such notice, the parties shall
meet and attempt in good faith to resolve the matter. In the event the parties
are unable to resolve the matter within 21 days, the parties shall meet
and attempt in good faith to select a single arbitrator acceptable to both
parties. If a single arbitrator is selected, the arbitrator shall proceed in
accordance with the Rules of the American Arbitration Association (“AAA”)
for Employment Disputes. If a single arbitrator is not selected by mutual
consent within 31 days following the giving of the written notice of
dispute, either party may file a Demand for Arbitration with the AAA pursuant
to its Rules for Employment Disputes.

 

(b)           Unless the parties agree otherwise, within
60 days of the selection of the arbitrator, a hearing shall be conducted
before such arbitrator at a time and a place in San Diego County agreed upon by
the parties. In the event the parties are unable to agree upon the time or
place of the arbitration, the time and place within San Diego County shall be
designated by the arbitrator after consultation with the parties. Within
30 days of the conclusion of the arbitration 

 

15

 

hearing, the arbitrator shall issue an award, accompanied by a reasoned
written decision explaining the basis for the arbitrator’s award.

 

(c)           In any arbitration hereunder, the Company
shall pay all administrative fees of the arbitration and all fees of the
arbitrator, except that the Participant or Beneficiary may, if he wishes, pay
up to one-half of those amounts. Each party shall pay its own attorneys’ fees,
costs, and expenses, unless the arbitrator orders otherwise. The prevailing
party in such arbitration, as determined by the arbitrator, and in any
enforcement or other court proceedings, shall be entitled, to the extent
permitted by law, to reimbursement from the other party for all of the
prevailing party’s costs (including but not limited to the arbitrator’s
compensation), expenses, and attorneys’ fees. The arbitrator shall have no
authority to add to or to modify this Plan, shall apply all applicable law, and
shall have no lesser and no greater remedial authority than would a court of
law resolving the same claim or controversy. The arbitrator shall, upon an
appropriate motion, dismiss any claim without an evidentiary hearing if the
party bringing the motion establishes that it would be entitled to summary
judgment if the matter had been pursued in court litigation. The parties shall
be entitled to reasonable discovery subject to the discretion of the
arbitrator.

 

(d)           The decision of the arbitrator shall be
final, binding, and non-appealable, and may be enforced as a final judgment in
any court of competent jurisdiction.

 

(e)           This arbitration provision of the Plan shall
extend to claims against any parent, subsidiary, or affiliate of each party,
and, when acting within such capacity, any officer, director, shareholder,
Participant, Beneficiary, or agent of each party, or of any of the above, and
shall apply as well to claims arising out of state and federal statutes and
local ordinances as well as to claims arising under the common law or under
this Plan.

 

(f)            Notwithstanding the foregoing, and unless
otherwise agreed between the parties, either party may, in an appropriate
matter, apply to a court for provisional relief, including a temporary
restraining order or preliminary injunction, on the ground that the arbitration
award to which the applicant may be entitled may be rendered ineffectual without
provisional relief.

 

(g)           Any arbitration hereunder shall be conducted
in accordance with the employment rules and procedures of the AAA then in
effect; provided, however, that, in the even of any inconsistency between the rules and
procedures of the AAA and the terms of this Plan, the terms of this Plan shall
prevail.

 

(h)           If any of the provisions of this Section 11.7
are determined to be unlawful or otherwise unenforceable, in whole or in part,
such determination shall not affect the validity of the remainder of this Section 11.7,
and this Section 11.7 shall be reformed to the extent necessary to carry
out its provisions to the greatest extent possible and to insure that the
resolution of all conflicts between the parties, including those arising out of
statutory claims, shall be resolved by neutral, binding arbitration. If a court
should find that the provisions of this Section 11.7 are not absolutely
binding, then the parties intend any arbitration decision and award to be fully
admissible in evidence in any subsequent action, given great weight by any
finder of fact, and treated as determinative to the maximum extent permitted by
law.

 

16

 

ARTICLE 12

Miscellaneous

 

12.1         Unsecured General Creditor. Participants
and their Beneficiaries, heirs, successors, and assigns shall have no legal or
equitable right, interest or claim in any property or assets of an Employer.
Any and all of an Employer’s assets shall be, and remain, the general,
un-pledged, and unrestricted assets of the Employer. An Employer’s obligation
under the Plan shall be merely that of an unfunded and unsecured promise to pay
money in the future and the sole interest of a Participant and a Participant’s
beneficiaries shall be as a general creditor of the Company and any Employer.

 

12.2         Employer’s Liability. An Employer’s
liability for the payment of benefits shall be defined only by the Plan. An
Employer shall have no obligation to a Participant under the Plan except as
expressly provided in the Plan.

 

12.3         Non-Assignability. Neither a
Participant nor any other person shall have any right to commute, sell, assign,
transfer, pledge, anticipate, mortgage, or otherwise encumber, transfer,
hypothecate, or convey in advance of actual receipt, the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which are
expressly declared to be un-assignable and non-transferable. No part of the
amounts payable shall, prior to actual payments be subject to seizure or
sequestration for the payment of any debts, judgments, alimony, or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant’s or any other person’s
bankruptcy or insolvency.

 

12.4         Coordination with Other Benefits. The
benefits provided for a Participant and Participant’s Beneficiary under the
Plan are in addition to any other benefits available to such Participant under
any other plan or program for employees of the Participant’s Employer. The Plan
shall supplement and shall not supersede, modify, or amend any other such plan
or program except as may otherwise be expressly provided.

 

12.5         Not a Contract of Employment. The terms
and conditions of this Plan shall not be deemed to constitute a contract of
employment between any Employer and the Participant. Such employment is hereby
acknowledged to be an “at will” employment relationship that can be terminated
at any time for any reason, with or without cause, unless expressly provided in
a written employment agreement. Nothing in this Plan shall be deemed to give a
Participant the right to be retained in the service of any Employer, either as
an employee or a director, or to interfere with the right of any Employer to
discipline or discharge the Participant at any time.

 

12.6         Furnishing Information. A Participant
or his or her Beneficiary will cooperate with the Committee by furnishing any
and all information requested by the Committee and take such other actions as
may be requested in order to facilitate the administration of the Plan and the
payments of benefits hereunder, including but not limited to taking such
physical examinations as the Committee may deem necessary.

 

12.7         Terms. Whenever any words are used
herein in the singular or in the plural, they shall be construed as though they
were used in the plural or the singular, as the case may be, in 

 

17

 

all cases where they would so apply. The masculine pronoun shall be
deemed to include the feminine and vice versa, unless the context clearly
indicates otherwise.

 

12.8         Captions. The captions of the articles,
sections, and paragraphs of this Plan are for convenience only and shall not
control or affect the meaning or construction of any of its provisions.

 

12.9         Governing Law. Subject to ERISA, the
provisions of this Plan shall be construed and interpreted according to the
laws of the State of California.

 

12.10       Notice. Any notice or filing required or
permitted to be given to the Committee under this Plan shall be sufficient if
in writing and hand-delivered, or sent by registered or certified mail to:

 

CUBIC CORPORATION

9333 BALBOA AVENUE

SAN DIEGO, CA 92123

ATTN:  VICE PRESIDENT, HUMAN RESOURCES

 

Such notice shall be deemed given as of the
date of delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.

 

Any notice or filing required or permitted to
be given to a Participant under this Plan shall be sufficient if in writing and
hand-delivered, or sent by First Class United States mail, to the last
known address of the Participant.

 

12.11       Successors. The provisions of this Plan
shall bind and inure to the benefit of the Participant’s Employer and its
successors and assigns and the Participant, the Participant’s Beneficiaries,
and their permitted successors and assigns.

 

12.12       Spouse’s Interest. A Participant’s
Beneficiary designation shall be deemed automatically revoked if the
Participant names a spouse as Beneficiary and the marriage is later dissolved
or the spouse dies. Without limiting the generality of the foregoing, the
interest in the benefits hereunder of a spouse of a Participant who has
predeceased the Participant or whose marriage with the Participant has been
dissolved shall automatically pass to the Participant and shall not be
transferable by such spouse in any manner, including but not limited to such
spouse’s will, nor shall such interest pass under the laws of intestate
succession.

 

12.13       Validity. In case any provision of this
Plan shall be illegal or invalid for any reason, said illegality or invalidity
shall not affect the remaining parts hereof, but this Plan shall be construed
and enforced as if such illegal or invalid provision had never been inserted
herein.

 

12.14       Incompetent. If the Committee determines
in its discretion that a benefit under this Plan is to be paid to a minor, a
person declared incompetent or to a person incapable of handling the
disposition of that person’s property, the Committee may direct payment of such
benefit to the guardian, legal representative, or person having the care and
custody of such minor, incompetent, or incapable person. The Committee may
require proof of minority, in competency, incapacity, or guardianship, as it
may deem appropriate prior to distribution of the 

 

18

 

benefit. Any payment of a benefit shall be a payment for the account of
the Participant and the Participant’s Beneficiary, as the case may be, and
shall be a complete discharge of any liability under the Plan for such payment
amount.

 

12.15       Court Order. The Committee is authorized
to make any payments as may be necessary to fulfill a domestic relations order
(as defined in Section 414(p)(1)(B) of the Code) in any action in
which the Plan or Committee has been named as a party.

 

12.16       Effect on Employee Benefits. Amounts
deferred under this Plan or distributed to the terms of this Plan are not taken
into account in the calculation of an Employee’s benefits under any employee
pension or welfare benefit program or under any other compensation practice
maintained by the Company, except to the extent provided in such program or
practice.

 

12.17       Legal Fees to Enforce Rights Upon a Change in
Control. The Company is aware that upon the occurrence of a Change in
Control, the Board (which might then be composed of new members) or a
shareholder of the Company, or of any successor corporation might then cause or
attempt to cause the Company or such successor to refuse to comply with its
obligations under the Plan and might cause or attempt to cause the Company to
institute, or may institute, litigation seeking to deny Participant’s the
benefits intended under the Plan. In these circumstances, the purpose of the
Plan could be frustrated. Accordingly, if, following a Change in Control, it
should appear to any Participant that the Company or any successor has failed
to comply with the provisions of the Plan or any other person takes any action
to declare the Plan void or unenforceable or institutes any litigation or other
legal action designed to deny, diminish or to recover from any Participant the
benefits intended to be provided, then the Company irrevocably authorizes such
Participant to retain legal counsel at the Company’s expense in connection with
the initiation or defense of any litigation or other legal action, whether by
or against the Company or any director, officer, shareholder or other person
affiliated with the Company or any successor thereto in any jurisdiction.

 

12.18       Code Section 409A. Notwithstanding
any provision of the Plan to the contrary, no distributions shall be made under
the Plan earlier than permitted under the requirements of Code Section 409A,
and no elections to defer Compensation, or to change the time or form of
distribution, shall be permitted unless in accordance with the requirements of
Code Section 409A.

 

IN WITNESS WHEREOF, the Company has signed
this Plan Document as of February 26, 2008.

 

	
   

  	
  CUBIC CORPORATION,

  
	
   

  	
   

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William Hoese

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President, General Counsel &
  Corporate Secretary

  

 

19

 

APPENDIX
A

 

LIMITED
TRANSITION RELIEF FOR DISTRIBUTION ELECTIONS MADE AVAILABLE IN ACCORDANCE WITH
NOTICES 2006-79, 2007-86 AND SUBSEQUENT GUIDANCE

 

The capitalized terms below shall have the same meaning as provided in Article 1
of the Plan.

 

Opportunity to Make New (or Revise Existing)
Distribution Elections.

 

Notwithstanding the required deadlines for the submission of distribution
elections under the Plan, the Committee may, to the extent permitted by Notice
2006-79, provide a limited period in which Participants may make new
distribution elections, or revise existing distribution elections, with respect
to amounts subject to the terms of the Plan, by submitting an Election Form on
or before the deadline established by the Committee, which for amounts that
would otherwise be paid to the Participant in 2008 shall in no event be later
than December 31, 2007. If any distribution election submitted by a
Participant in accordance with this paragraph either (a) relates to an
amount that would otherwise be paid to the Participant in 2007, or (b) would
cause an amount to be paid to the Participant in 2007, such election shall not be
effective.

 

In addition, notwithstanding the required deadlines for the submission
of distribution elections under the Plan, the Committee may, to the extent
permitted by Notice 2007-86, provide a limited period in which Participants may
make new distribution elections, or revise existing distribution elections,
with respect to amounts subject to the terms of the Plan, by submitting an
Election Form on or before the deadline established by the Committee,
which for amounts that would otherwise be paid to the Participant after 2008
shall in no event be later than December 31, 2008. If any distribution
election submitted by a Participant in accordance with this paragraph either (a) relates
to an amount that would otherwise be paid to the Participant in 2008, or (b) would
cause an amount to be paid to the Participant in 2008, such election shall not
be effective.

 

Any distribution election(s) made by a Participant, and accepted
by the Committee, in accordance with this Appendix A shall not be treated as a
change in either the form or timing of a Participant’s benefit payment for
purposes of Code Section 409A or the Plan.

 

The Committee may provide further transition relief for new
distribution elections and changes in existing distribution elections with
respect to amounts subject to the terms of the Plan to the extent permitted in
future Treasury Department or Internal Revenue Service guidance.

 

20

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