Document:

exhibit10_1.htm

    
                                                                                                      Exhibit
        10.1

      

      Charter
        Communications, Inc.

       

      Amended
        and Restated Executive

      Cash
        Award Plan

       

       

      June
        2005

       

      Amended
        2006

       

      Amended
        and Restated in 2007

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Charter
        Communications, Inc.

      Amended
        and Restated Executive Cash Award Plan

       

      Article
        1. Establishment and Purpose.

       

      The
        Compensation and Benefits Committee of the Board of Directors of Charter
        Communications, Inc. hereby establishes the Charter Communications, Inc.
        Executive Cash Award Plan effective as of January 1, 2005, adopted June 2005
        and
        amended in 2006 and 2007.  The purpose of the Plan is to provide
        greater incentive to, and retain the services of, certain Board-designated
        officers of Charter Communications, Inc. and its subsidiaries and affiliates
        as
        now or hereinafter constituted to achieve the highest level of individual
        performance and contribute to the success of the Company.

       

      Article
        2. Eligibility.

       

      Select
        Officers of the Company or any of its subsidiaries or affiliates, as recommended
        by the CEO and approved by the Committee, shall be eligible to participate
        in
        this Plan.

       

      Article
        3. Administration of the Plan.

       

      The
        Committee shall have full responsibility and authority to interpret and
        administer the Plan, including the power to promulgate rules of Plan
        administration, the power to settle any disputes as to rights or benefits
        arising from the Plan, the power to appoint agents and delegate its duties,
        and
        the power to make such decisions or take such actions as the Committee, in
        its
        sole discretion, deems necessary or advisable to aid in the proper
        administration of the Plan. Actions and determinations by the Committee shall
        be
        final, binding, and conclusive for all purposes of the Plan.

       

      Article
        4. Participants.

       

      As
        soon
        as feasible after the adoption of this Plan, the Committee shall designate
        from
        the eligible officers those who will participate in the Plan.

       

      Article
        5. Grants of Plan Awards.

       

      Each
        individual selected as a Participant was granted a Plan Award which represents
        an opportunity to receive cash payments in accordance with, and subject to
        the
        terms and conditions of, this Plan. For each Participant who is granted a
        Plan
        Award, a Plan Award Account will be established. A Participant’s Plan Award
        Account will be credited in  book entry format.  For the
        Plan Awards made in year 2005, the amount credited to a Participant's Plan
        Award
        Account was based on 

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

         

         

        the
          Participant's Base Salary as of the time of Plan approval or hire date
          and for
          the year 2006, Plan Awards were made based upon a Participant’s Base Salary as
          of their hire date.

      

       

      For
        those
        Participants receiving awards beginning in 2005 ("2005 Award Participants"),
        the
        amounts have been and will be credited as follows:

       

      

       

      
        	
                Year

              	
                            Amount
                  Credited as of May 1 of the Year

              
	 	 
	
                2005

              	
                100%
                  of Base Salary

              
	
                2006

              	
                  20%
                  of Base Salary

              
	
                2007

              	
                  20%
                  of Base Salary

              
	
                2008

              	
                  20%
                  of Base Salary

              
	
                2009

              	
                  20%
                  of Base Salary

              
	 	 

      

      

       

      For
        those
        Participants receiving awards beginning in 2006, ("2006 Award Participants")
        the
        amounts have been and will be credited as follows:

       

      
        	
                Year

              	
                            Amount
                  Credited as of May 1 of the Year

              
	 	 
	
                2006

              	
                100%
                  of Base Salary

              
	
                2007

              	
                  20%
                  of Base Salary

              
	
                2008

              	
                  20%
                  of Base Salary

              
	
                2009

              	
                  20%
                  of Base Salary

              
	
                2010

              	
                  20%
                  of Base Salary

              
	 	 

      

      

       

      Article
        6. Vesting and Payment(s) of Plan Awards.

       

      (a)
        A
        Participant will only be entitled to receive payment(s) from his or her Plan
        Award Account balance pursuant to the Participant’s Plan Award if he or she
        remains employed by the Company continuously from the date of his or her
        initial
        participation through the end of the calendar year in which his or her Plan
        Award Account becomes vested, and only to the extent the Plan Award Account
        becomes vested, in accordance with the following schedule.  Payment of
        such vested amount will be made within two and one half months after the
        end of
        the applicable year, provided that all conditions to payment are satisfied,
        as
        follows:

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      

       

      2005
        Award Participants

       

       

      
        	
                Year

              	
                Vested
                  Portion of Balance of Plan Award Account as
                  

                of
                  Year End that is Vested and Shall be Paid Out

              
	 	 
	
                2005

              	
                    0%
                  of Plan Award Account Balance

              
	
                2006

              	
                    0%
                  of Plan Award Account Balance

              
	
                2007

              	
                  50%
                  of Plan Award Account Balance

              
	
                2008

              	
                    0%
                  of Plan Award Account Balance

              
	
                2009

              	
                100%
                  of Plan Award Account Balance

              
	 	 

      

      

       

      2006
        Award Participants

       

      
        	
                Year

              	
                Vested
                  Portion of Balance of Plan Award Account as 

                of
                  Year End that is Vested and Shall be Paid Out

              
	 	 
	
                2006

              	
                    0%
                  of Plan Award Account Balance

              
	
                2007

              	
                    0%
                  of Plan Award Account Balance

              
	
                2008

              	
                  50%
                  of Plan Award Account Balance

              
	
                2009

              	
                    0%
                  of Plan Award Account Balance

              
	
                2010

              	
                100%
                  of Plan Award Account Balance

              
	 	 

      

      

      (b)
        Notwithstanding the above schedules, should a Participant’s employment terminate
        due to death or Disability (as that term is defined in Article 15 below),
        the
        Participant shall be paid: (1) the balance of the Participant’s Plan Award
        Account as of the end of the calendar year prior to the calendar year in
        which
        the Participant’s employment terminated, and (2) a prorated portion of the
        amount to be credited to the Participant’s Plan Award Account for the calendar
        year in which the Participant’s employment terminated equal to the amount
        otherwise to be credited for that calendar year in accordance with Article
        5,
        multiplied by a fraction, the numerator of which is the total number of months,
        full or partial, that the Participant was employed during the applicable
        year,
        and the denominator of which is twelve (12).

       

      (c)
        Notwithstanding the above schedules and the schedules in Section 5 hereof,
        in
        the event that a Change of Control to the Company occurs , at such time as
        any
        severance payments shall become due and payable under a Participant’s employment
        agreement, (i) all amounts that would have been awarded to such Participant
        under Section 5 had such Participant remained employed by the Company in
        good
        standing for the term of this Plan, shall be immediately awarded to such
        Participant assuming Participant’s then-current Base Salary continued unchanged
        throughout the term of this Plan; and (ii) 100% of such Participant's Plan
        Award
        Account Balance after such Awards shall immediately become due and payable
        by
        the Company to the Participant; provided that, the event giving rise to
        severance payments becoming due and payable under the Participant’s employment
        agreement occurs either (a) upon or within thirty days before or thirteen
        (13)
        months 

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

         

         

        after
          a
          Change of Control, or (b) prior to a Change of Control at the request of
          a
          prospective purchaser whose proposed purchase would constitute a Change
          of
          Control upon its completion.

      

       

      Except
        as
        provided above in the event of death, Disability or a Change of Control,
        if a
        Participant’s employment with the Company and its subsidiaries and affiliates
        terminates for any reason before the day on which all or a portion of the
        Participant’s Plan Award Account becomes vested, the Participant shall forfeit
        the right to receive any amount that has not previously become vested in
        accordance with the schedule described above.

       

      Article
        7. Conditions To Payment, Nonalienation of Benefits.

       

      (a)
        A
        Participant’s eligibility for, and right to receive, any payment from the
        Participant’s Plan Award Account under this Plan (except in the event of the
        Participant’s intervening death) is conditioned upon:

       

      (1)
        the
        Participant first executing and delivering to Charter an Acceptance Agreement
        (“Agreement”) in form and substance satisfactory to Charter’s legal counsel,
        effectively releasing and giving up all claims the Participant may have against
        the Company (and each of their respective controlling shareholders, employees,
        directors, officers, plans, fiduciaries, insurers and agents) arising out
        of or
        based upon any facts or conduct occurring prior to the date on which the
        Agreement is executed and containing additional restrictions on post-employment
        use of confidential information, non-competition and non-solicitation and
        recruitment of customers and employees which are the same as are contained
        in
        the standard form employment agreement for executive officers then used by
        the
        Company (or if no such agreement then exists, the most recent form of employment
        agreement used by the Company for one or more executive officers containing
        any
        such restrictions). The Agreement will be drafted by Charter, will be based
        upon
        the standard form employment agreement, if any, then being utilized by Charter
        for executive separations when severance is being paid (with such additional
        restrictions as to use and disclosure of confidential information, non
        competition and non solicitation and recruitment of customers and employees),
        and will be provided to the Participant within ten (10) business days after
        the
        Participant is eligible to receive a payment.  The Agreement will
        require the Participant, after his or her employment  terminates, to
        consult with Company representatives and/or voluntarily appear as a witness
        for
        trial or deposition (including the preparation for any such testimony) in
        connection with any claim which may be asserted by or against the Company,
        any
        investigation or administrative proceeding, any matter relating to a franchise,
        or any business matter concerning the Company or any of its transactions
        or
        operations in which the Participant was directly or indirectly involved or
        about
        which the Participant may have relevant factual knowledge or information;
        and

       

      (2)
        the
        Participant  executing and delivering the Agreement to Charter within
        twenty-one (21) days after delivery of the document (or such other time period
        as may be established for persons under the age of forty (40) or as may be
        required by applicable law), and all conditions to the effectiveness of that
        agreement and the releases contemplated thereby 

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      having
        been satisfied (including, without limitation, the expiration of any applicable
        revocation period without revoking acceptance).

       

      (b)
        Neither Plan Awards nor any other right or benefit under this Plan shall
        be
        subject to anticipation, alienation, sale, assignment, pledge, encumbrance,
        or
        charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber,
        or charge the same shall be void and shall not be recognized or given effect
        by
        the Company or the Committee.

       

      Article
        8. No Deferrals.

       

      No
        deferral of compensation (as defined under U.S. Internal Revenue Code Section
        409A or guidance thereto) is intended under this Plan.

    

    
      

      Article
        9. Funding.

       

      No
        promises made under this Plan shall be secured by any specific assets of
        the
        Company, nor shall any assets of the Company be designated as attributable
        or
        allocated to the satisfaction of such promises. Payments under this Plan
        shall
        be made from the Company’s general assets.

       

      Article
        10. Non-exclusivity Of This Plan.

       

      The
        adoption of this Plan shall not be construed as creating any limitations
        on the
        power of the Company’s Board of Directors or the Committee to adopt such other
        compensation arrangements as either may deem desirable for any
        Participant.

       

      Article
        11. No Employment Rights.

       

      The
        adoption of this Plan, and designating any employee as a Participant, shall
        not
        be construed as granting a Participant any right to employment for any specific
        period of time.

       

      Article
        12. Amendment, Suspension, or Termination of Plan.

       

      The
        Board
        or Committee may from time to time amend, suspend, or terminate the Plan,
        in
        whole or in part, except that (a) no such amendment, suspension, or termination
        shall materially adversely affect the rights of any Participant in respect
        of
        any Plan Award previously vested and not yet paid, and (b) if the Plan is
        terminated, then a Participant who is employed as of the time this termination
        occurs shall be paid, subject to the provisions of Article 7, an amount equal
        to
        (i) the amount the Participant would have been entitled to under the Plan
        if the
        Participant had been employed through December 31, 2009 for 2005 Award
        Participants and through December 31, 2010 for 2006 Award 

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

         

         

        Plan
          Participants (assuming that the Participant’s Base Salary for purposes of the
          initial contribution is the Participant’s Base Salary in effect as of the date
          the Participant first becomes included in the Plan, and that it would increase
          by 3.5% annually thereafter), multiplied by a fraction, the numerator of
          which
          is the number of full months between the effective date of the Plan and
          the date
          the Plan terminated, and the denominator of which is 60, less (ii) any
          payments
          previously made to the Participant under the Plan and any Plan Award vested
          but
          not yet paid under the Plan (but which otherwise is required to be paid
          notwithstanding termination of the Plan). This amount will be paid out
          in a lump
          sum within sixty (60) days after the Plan terminates and all conditions
          to
          payment specified in Article 7 are satisfied, but in no event later than
          two and
          one-half months after the end of the calendar year in which all the conditions
          to payment are satisfied.

      

       

      Article
        13. No Constraint on Corporate Action.

       

      Nothing
        in this Plan shall be construed to: (i) limit, impair, or otherwise affect
        the
        Company’s right or power to make adjustments, reclassifications,
        reorganizations, or changes of its capital or business structure, or to merge
        or
        consolidate, or dissolve, liquidate, sell, or transfer all or any part of
        its
        business or assets; or, (ii) limit the right or power of the Company to take
        any
        action which such entity deems to be necessary or appropriate.

       

      Article
        14. Governing Law, Effect, Forum.

       

      The
        Plan
        and each Plan Award shall be governed by the laws of the State of Missouri,
        excluding any conflicts or choice of law rule or principle that might otherwise
        refer construction or interpretation of this Plan to the substantive law of
        another jurisdiction. Recipients of a Plan Award under this Plan are deemed
        to
        submit to the exclusive jurisdiction and venue of the United States District
        Court for the Eastern District of Missouri (if federal jurisdiction exists)
        and
        the St. Louis County Circuit Court, to resolve any and all issues that may
        arise
        out of or relate to this Plan or any related Plan Award and to have waived
        any
        objection that any such federal or state court is not a proper or convenient
        forum. Payments received under this Plan will not constitute or be deemed
        compensation for purposes of any other benefit plan of the Company.

       

      Article
        15. Definitions.

       

      For
        purposes of this Plan, the following definitions will control:

       

      
        	
                 

              	
                a.

              	
                “Base
                  Salary” means the salary of record paid to a Participant as an annual rate
                  of salary, excluding amounts received under an annual incentive
                  plan or
                  other incentive or bonus plan or compensation, and excluding any
                  amounts
                  payable as benefits.

              

      

       

      
        	
                 

              	
                b.

              	
                “Board”
                  means the Board of Directors of
                  Charter.

              

      

       

      
        	
                 

              	
                c.

              	
                "Change
                  of Control" shall have the meaning set forth in the Company’s “2001 Stock
                  Incentive Plan”.

              

      

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

       

      
        	
                 

              	
                d.

              	
                “Committee”
                  means the Compensation and Benefits Committee of the Board or a
                  subcommittee thereof, or any other committee designated by the
                  Board to
                  administer this Plan. If the Committee does not exist or cannot
                  function
                  for any reason, the Board may take any action under the Plan that
                  would
                  otherwise be the responsibility of the
                  Committee.

              

      

       

      
        	
                 

              	
                e.

              	
                “Company”
                  means Charter Communications, Inc., a Delaware corporation and
                  its
                  subsidiaries and affiliates as now or hereinafter
                  constituted.

              

      

       

      
        	
                 

              	
                f.

              	
                “Charter”
                  means Charter Communications, Inc., a Delaware
                  corporation.

              

      

       

      
        	
                 

              	
                g.

              	
                “Disability”
                  means such permanent physical or mental impairment as renders a
                  person
                  eligible to receive disability benefits under the long-term disability
                  plan maintained by the Company, if the person is covered by such
                  a plan;
                  and if the person is not covered by such a plan, under the Social
                  Security
                  Act.

              

      

       

      
        	
                 

              	
                h.

              	
                “Distribution
                  Date” shall have the meaning set out in Section 6
                  (c).

              

      

       

      
        	
                 

              	
                i.

              	
                “Participant”
                  means any eligible officer or key employee selected by the Committee
                  in
                  its sole discretion to participate in the Plan pursuant to Article
                  4 and
                  his or her personal representative and/or
                  executor.

              

      

       

      
        	
                 

              	
                j.

              	
                “Plan”
                  means the Charter Communications, Inc.  the Amended and Restated
                  Executive Cash Award Plan.

              

      

       

      
        	
                 

              	
                k.

              	
                “Plan
                  Award” means an award granted to a Participant pursuant to
                  Article 5.

              

      

       

      
        	
                 

              	
                l.

              	
                “Plan
                  Award Account” means a book entry account maintained for each Participant
                  in accordance with Article 5.

              

      

       

      

       

      
        
          
          

        

        
          7EXHIBIT
10.2

 

CUBIC CORPORATION

 

TRANSITION PROTECTION PLAN

 

SECTION 1.         INTRODUCTION.

 

The
Cubic Corporation Transition Protection Plan (the “Plan”)
is hereby established effective November 29, 2005 (the “Effective Date”).

 

The
Company considers it essential to the best interests of the Company and its
shareholders to foster the continuous employment of the Company’s key
management personnel. The Board of Directors of the Company (the “Board”) recognizes that the
possibility of a Change in Control of the Company may occur and the uncertainty
and questions that this possibility may raise among management could result in
the departure of key executives, the distraction of key executives from the
management of the business, or the inability to hire new key executives, all to
the detriment of the Company and its shareholders.

 

The Board has carefully
considered the report of the Executive Compensation Committee and its
independent advisors and has evaluated available alternative courses of action,
including that of continuing the status quo. After discussion, debate and
evaluation, the Board has unanimously decided to adopt the Plan to reinforce
and encourage the continued dedication of key executives to their duties
without the distraction arising from the possibility of a Change in Control of
the Company and to provide such key executives with the benefits stated herein
that ensure that the expectations of the executives will be satisfied, and that
are also competitive with those of similar companies.

 

The
Plan will provide for the payment of severance benefits to certain eligible
employees of the Company in the event that such employees are subject to
qualifying employment terminations in connection with a Change in Control.

 

This
Plan shall supersede any severance benefit plan, policy or practice previously
maintained by the Company, other than an individually negotiated contract or
agreement with the Company relating to severance or change in control benefits
that is in effect on an employee’s termination date, in which case such
employee’s severance benefit, if any, shall be governed by the terms of such
individually negotiated employment contract or agreement and shall be governed
by this Plan only to the extent that the reduction pursuant to Section 7(b)
below does not entirely eliminate benefits under this Plan. Notwithstanding the
foregoing, this Plan shall not supersede, but rather shall supplement the
enhanced severance benefits (but not the Health Care Benefits) contained in the
Company’s Severance Policy in effect as of the Effective Time. This document
also is the Summary Plan Description for the Plan.

 

SECTION 2.         DEFINITIONS.

 

For
purposes of the Plan, the following terms are defined as follows:

 

(a)           “Affiliate” means any company controlled by, controlling
or under common control with the Company.

 

 

(b)           “Base Salary” means, with respect to a Participant, the
average of the Participant’s annual base pay (excluding incentive pay, premium
pay, commissions, overtime, bonuses and other forms of variable compensation)
paid or payable for the five fiscal years (or such annualized shorter period as
the Participant has been employed by the Company) immediately prior to the
Change in Control or immediately prior to the Participant’s termination of
employment, whichever is greater,  without
consideration of any reduction constituting a Constructive Termination.

 

(c)           “Average Bonus” means, with respect to a Participant,  an amount equal to the average of the annual
cash and long-term bonuses  (excluding
Base Salary and excluding any commissions, expatriate premiums, fringe benefits
(including without limitation car allowances), option grants, equity awards,
employee benefits and other similar items of compensation) paid or payable by
the Company to the Participant for the five fiscal years (or such annualized
shorter period as the Participant has been employed by the Company) immediately
prior to the Change in Control or immediately prior to the Participant’s
termination of employment, whichever is greater.

 

(d)           “Change in Control” shall be deemed to occur on the happening of
any of the following events:

 

(i)            Any acquisition of beneficial ownership (as
defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as defined in Rule
13d-3 of the Exchange Act of such number of shares of the Company’s equity
securities by any individual, entity or group (within the meaning of Section
13(d)(3) of the Exchange Act) (a “Person”)  (other than Walter J. Zable or a trust
established for himself, his spouse or issue) which enables such Person to
elect a majority of the Company’s Board by cumulative voting, assuming 90% of
outstanding shares vote;

 

(ii)           Any sale of a Substantial Portion of the
Property (as defined herein) of the Company.

 

(iii)         As to an Participant who is an employee of a
Subsidiary, any sale of a Substantial Portion of the Property or the sale or
issuance of a majority of the stock of such Subsidiary by the Company to any
party other than an Affiliate of the Company;

 

(iv)          Approval by the stockholders of the Company
of a complete liquidation or dissolution of the Company; or

 

(v)            The consummation by the Company, directly or
indirectly, in one or more steps, of a merger, consolidation, reorganization,
or business combination or any act or event which results in a majority of the
Company’s Board as existing immediately prior to such acts or events not
continuing to serve as such.

 

(e)           “Code”  means the Internal Revenue Code of 1986, as
amended.

 

(f)            “Company” means Cubic Corporation and its Subsidiaries
or, following a Change in Control, the surviving entity resulting from such
transaction.

 

(g)           “Constructive Termination” means a voluntary termination of employment
by a Participant after one of the following is undertaken without the
Participant’s express written consent:

 

(i)            a substantial reduction in the nature or
scope of the Participant’s authority, duties, function or responsibilities (and
not simply a change in title or reporting relationships) in effect 

 

 

immediately prior to the effective date of the
Change in Control; provided, however,
that it shall not be a “Constructive Termination” if, following the effective
date of the Change in Control, either (a) the Company is retained as a separate
legal entity or business unit and the Participant holds the same position in
such legal entity or business unit as the Participant held before such
effective date, or (b) the Participant holds a position with authority, duties,
function or  responsibilities comparable
(though not necessarily identical, in view of the relative sizes of the Company
and the entity involved in the Change in Control) to those of the Participant
prior to the effective date of the Change in Control;

 

(ii)           a
reduction in the Participant’s base salary (except
for salary decreases generally applicable to the Company’s other
similarly-situated employees);

 

(iii)         an  elimination of
the Participant’s opportunity to achieve bonuses on a basis comparable to that
provided prior to the Change in Control, or, if the Participant participates in
the Company’s Management Annual Incentive Plan or the Company’s Management
3-Year Incentive Plan, then an amendment to either such plan that reduces the
percentage of average annual salary used to determine Participant’s bonus under
such plan or plans either: (x) by more than 50% or (y) by an amendment that is
not generally applicable to the Company’s other similarly-situated employees;

 

(iv)          an increase in the Participant’s one-way
driving distance from the  Participant’s
principal personal residence to the principal office or business location at
which the Participant is required to perform services of more than 20 miles,
except for required travel for the Company’s business to an extent
substantially consistent with Participant’s prior business travel obligations;

 

(v)            a material breach by the Company of any
provisions of the Plan or any enforceable written agreement between the Company
and the Participant;  or

 

(vi)          any failure by the Company to obtain
assumption of the Plan by any successor or assign of the Company.

 

Notwithstanding the
foregoing, a voluntary termination shall not be deemed a Constructive
Termination unless (x) the Participant provides the Company with written notice
(the “Constructive Termination Notice”)
that the Participant believes that an event described in this Section 2(g) has
occurred, (y) the Constructive Termination Notice is given within three (3)
months of the date the event occurred, and (z) the Company does not rescind or
cure the conduct giving rise to the event described in this Section 2(g) within
ten (10) days of receipt by the Company of the Constructive Termination Notice.

 

(h)           “Covered Termination” means, with respect to a Participant, an Involuntary Termination
Without Cause or a Constructive Termination, but only if such event occurs at
any time within three (3) months before or twenty-four (24) months following the effective date of a Change in Control.
Termination of employment of a Participant due to death or disability shall not
constitute a Covered Termination unless a voluntary termination of employment
by the Participant immediately prior to the Participant’s death or disability
would have qualified as a Constructive Termination.

 

(i)            “ERISA”  means the
Employee Retirement Income Security Act of 1974, as amended.

 

(j)            “Involuntary Termination Without
Cause” means, with
respect to a Participant, an involuntary termination of employment by the
Company other than for one of the following reasons:

 

(i)            the willful and continued failure of the
Participant to perform substantially the Participant’s duties to the Company as
those duties exist on the date of the Change in Control (or the date of
termination, if earlier), other than any failure resulting from circumstances
outside the Participant’s

 

 

control, or from incapacity of the Participant due
to physical or mental illness or disability, or following the Participant’s
delivery of a Constructive Termination Notice, after a written demand for
substantial performance is delivered to the Participant, which demand specifically
identifies the manner in which the Company believes that the Participant has
not substantially performed the Participant’s duties satisfactorily, and
provided that the Company demonstrates that such failure has a demonstrably
harmful impact on the Company or its reputation, and provided further that the
Participant has been given a period of at least 30 days to cure his failure in
performance. No act or failure to act shall be considered “willful” unless it
is done, or omitted to be done, in bad faith or without reasonable belief that
the action was in the best interests of the Company or the Subsidiary; or

 

(ii)           the Participant’s gross negligence or breach
of fiduciary duty to the Company involving personal profit, personal dishonesty
or recklessness, or the Participant’s material breach of any agreement with the
Company, including a material violation of Company policies and procedures, provided that such termination of employment occur within 12
months following the Company’s discovery of such event;

 

(iii)         the Participant’s conviction (which has
become final) or entry of a plea of guilty or nolo
contendere regarding an act that would be deemed a felony under
California or Federal criminal statutes (or any comparable criminal laws of any
jurisdiction in which the Participant is permanently employed by the Company or
a Subsidiary) that has a demonstrably harmful impact on the Company’s business
or reputation, as determined in good faith by the Company’s Executive
Compensation Committee, provided that such
termination occur within 12 months following the Company’s discovery of such
event.

 

(k)           “Participant” means an individual who is employed by the
Company as its Executive Chairman of the Board, Chief Executive Officer, as a
senior vice president, or as a vice president (other than any individual who is
a vice president on sales commission, as determined by the Company in its sole
discretion) and such other key employees as may be recommended by the Company’s
management and selected by the Company’s Executive Compensation Committee; provided, however, that if the Company’s
Executive Compensation Committee shall make an affirmative determination that
an employee serving in any such capacity shall not be a Participant, then such
employee shall not be deemed a Participant. Any key employee who is selected by
the Company’s Executive Compensation Committee to be a Participant shall become
a Participant immediately following such action. The determination of whether
an employee is a Participant shall be made by such Committee, in its sole
discretion, and such determination shall be binding and conclusive on all
persons.

 

(l)            “Participation
Notice” means the latest
notice delivered by the Company to a Participant informing the employee that
the employee is a Participant in the Plan, substantially in the form of Exhibit A hereto.

 

(m)          “Plan
Administrator” means the
Board or any committee duly authorized by the Board to administer the Plan. The
Plan Administrator may, but is not required to be, the Compensation Committee
of the Board. The Board may at any time administer the Plan, in whole or in
part, notwithstanding that the Board has previously appointed a committee to
act as the Plan Administrator.

 

(n)           “Subsidiary” or “Subsidiaries” means
Cubic Defense Applications, Inc., Cubic Transportation Systems, Inc., Cubic
Simulation Systems, Inc. and Cubic Applications, Inc. and any other entity that
is designated by the Board.

 

(o)           “Substantial Portion of the
Property” means the sale
of assets for an amount totaling at least 51% of the aggregate consolidated
book value of the assets of the Company or a Subsidiary as set 

 

 

forth on the consolidated balance sheet of the
Company or on the balance sheet of a Subsidiary for its most recent year end,
as certified by its regular independent certified public accountants.

 

SECTION 3.         ELIGIBILITY FOR BENEFITS.

 

(a)           General Rules. Subject to the provisions set forth in this
Section and Section 6, in the event of a Covered Termination, the Company will
provide the severance benefits described in Section 4 of the Plan to the
affected Participant. Promptly upon an employee becoming a Participant, the
Company shall deliver to the Participant a Participation Notice.

 

(b)           Exceptions to Benefit Entitlement.
An employee, including an
employee who otherwise is a Participant, will not receive benefits under the
Plan (or will receive reduced benefits under the Plan) in the following
circumstances, as determined by the Company in its sole discretion:

 

(i)            The
employee has executed an individually negotiated employment contract or
agreement with the Company relating to severance or change in control benefits
that is in effect on his or her termination date, in which case such employee’s
severance benefit, if any, shall be governed by the terms of such individually
negotiated employment contract or agreement and shall be governed by this Plan
only to the extent that the reduction pursuant to Section 6(b) below does not
entirely eliminate benefits under this Plan.

 

(ii)           The employee voluntarily terminates
employment with the Company in order to accept employment with another entity
that is controlled (directly or indirectly) by the Company or is otherwise an
affiliate of the Company.

 

(iii)         The employee is offered immediate
reemployment by a successor to the Company or by a purchaser of its assets, as
the case may be, following a change in ownership of the Company or a sale of
all or substantially all the assets of a division or business unit of the
Company. For purposes of the foregoing, “immediate reemployment” means that the
employee’s employment with the successor to the Company or the purchaser of its
assets, as the case may be, results in uninterrupted employment such that the
employee does not suffer a lapse or reduction in pay or benefits (including
coverage under this Plan) as a result of the change in ownership of the Company
or the sale of its assets.

 

(iv)          The employee does not confirm in writing that
he or she shall be subject to the Company’s Confidentiality Agreement.

 

(c)           Termination of Benefits. A Participant’s right to receive the payment
of benefits under this Plan shall terminate immediately if, at any time prior
to or during the period for which the Participant is receiving benefits
hereunder, the Participant, without the prior written approval of the Company:

 

(i)            willfully breaches a material provision of
the Participant’s proprietary information or confidentiality agreement with the
Company, as referenced in Section 3(b)(iv);

 

(ii)           encourages or solicits any of the Company’s
then current employees to leave the Company’s employ for any reason or
interferes in any other manner with employment relationships at the time
existing between the Company and its then current employees; or

 

(iii)         induces any of the Company’s then current
clients, customers, suppliers, vendors, distributors, licensors, licensees or
other third party to terminate their existing business relationship with the
Company or interferes in any other manner with any existing business
relationship between the 

 

 

Company and any then current client, customer,
supplier, vendor, distributor, licensor, licensee or other third party.

 

If a Participant is in doubt
as to whether a proposed activity may be described in Section 3(c)(i) – (iii),
then such Participant shall have the right to request an interpretation by the
Company. Such request shall be made by giving notice to the Company. Unless
notice that such activity is described in Section 3(c)(i)-(iii) is provided to
the Participant within 45 days after the date of such Participant’s notice,
then such activity shall not be deemed to be described in this Section
3(c)(i)-(iii).

 

SECTION 4.         AMOUNT OF BENEFITS.

 

(a)           Cash Severance Benefits. Each Participant who incurs a Covered
Termination shall be entitled to receive a cash severance benefit equal to the number of months of Base
Salary plus Average Bonus set forth in such Participant’s Participation Notice.
Any cash severance benefits provided under this Section 4(a) shall be paid
pursuant to the provisions of Section 5.

 

(b)           Accelerated Stock Award
Vesting and Extended Exercisability of Stock Options. If a Participant incurs a Covered
Termination, then effective as of the date of the Participant’s Covered
Termination (or, if such Covered Termination occurs prior to a Change in Control,
then effective as of the date of such Change in Control), (i) the vesting and
exercisability of all outstanding options to purchase the Company’s common
stock that are held by the Participant on such date shall be accelerated in
full, and (ii) any reacquisition or repurchase rights held by the Company in
respect of common stock issued pursuant to any other stock award granted to the
Participant by the Company shall lapse.

 

In
addition, the post-termination of employment exercise period of any outstanding
option held by the Participant on the date of his or her Covered Termination
shall be extended, if necessary, such that the post-termination of employment
exercise period shall not terminate prior to the later of (i) the date twelve
(12) months after the effective date of the Covered Termination (or, if the
stock option was held by the individual at the time he or she first became a
Participant in this Plan and counsel for the Company has not advised the
Company that such acceleration would not cause such option to be treated as
covered by Section 409A of the Code or would not cause the Participant to
become subject to the immediate taxation prior to the date of exercise,
additional tax and interest under Section 409A of the Code, then the later of
the 15th day of the third month following the date at which, or
December 31 of the calendar year in which, the stock option would otherwise
have expired if the stock option had not been extended pursuant to this Section
4(b), based on the terms of the stock option at the original grant date) or
(ii) the post-termination exercise period provided for in such option; provided, however, that such option shall not be exercisable
after the expiration of its maximum term.

 

(c)           Continued Medical Benefits. If a Participant incurs a Covered
Termination and the Participant was enrolled in a health, dental, or vision  plan sponsored by the Company immediately prior to such
Covered Termination, the Participant may be eligible to continue coverage under
such health, dental, or vision plan (or to convert to an individual policy), at
the time of the Participant’s termination of employment, under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”). The
Company will notify the Participant of any such right to continue such coverage
at the time of termination pursuant to COBRA. No provision of this Plan will
affect the continuation coverage rules under COBRA, except that the Company’s
payment, if any, of applicable insurance premiums will be credited as payment
by the Participant for purposes of the Participant’s payment required under
COBRA. Therefore, the period during which a Participant may elect to continue
the Company’s health, dental, or vision plan coverage at his or her own expense
under COBRA, the length of time during which COBRA coverage will be made
available to the Participant, and all other rights and obligations of the
Participant 

 

 

under COBRA (except the obligation to pay insurance
premiums that the Company pays, if any) will be applied in the same manner that
such rules would apply in the absence of this Plan.

 

If a Participant timely
elects continued coverage under COBRA, the Company shall pay the full amount of
the Participant’s COBRA premiums on behalf of the Participant for the
Participant’s continued coverage under the Company’s health plans (including
any dental care plans, but excluding any vision care plans maintained by the
Company), including coverage for the Participant’s eligible dependents, during
the lesser of: (i) the number of months of Base Salary and Average Bonus in
respect of which the amount paid to the Participant under Section 4(a) was
calculated (the “Severance Period”), or (ii)
18 months; provided, however, that
no such premium payments shall be made following the Participant’s death or the
effective date of the Participant’s coverage by a health plan of a subsequent
employer, except as necessary to provide coverage under this Plan to the
Participant’s surviving spouse. Each Participant shall be required to notify
the Company immediately if the Participant becomes covered by a health plan of
a subsequent employer. Upon the conclusion of such period of insurance premium
payments made by the Company, the Participant will be responsible for the
entire payment of premiums required under COBRA for the duration of the COBRA
period.

 

For purposes of this Section
4(c), (i) references to COBRA shall be deemed to refer also to analogous
provisions of state law and (ii) any applicable insurance premiums that are
paid by the Company shall not include any amounts payable by the Participant
under an Code Section 125 health care reimbursement plan, which amounts, if
any, are the sole responsibility of the Participant.

 

(d)           Other Employee Benefits. During a Participant’s Severance Period, the
Participant shall not be entitled to reimbursement for fringe benefits other
than as provided in this Plan, nor shall the Participant be entitled to receive
any payments or other compensation attributable to vacation periods that would
have been earned had Participant’s employment continued during the Severance
Period. Executive’s participation in all tax-deferred or tax qualified
retirement and cafeteria plans shall cease upon termination of employment. All
other employee benefits not described in this Section 4 shall terminate as of
the Participant’s termination date (except to the extent that a conversion
privilege may be available thereunder).

 

(e)           Outplacement Services. Upon a Covered Termination, the Company shall
pay an appropriate executive out placement service up to the amount listed in
such Participant’s Participation Notice for its services rendered to the
Participant.

 

(f)            Moving Expenses. If within 24 months prior to the Change in
Control a Participant had relocated his personal residence at the request of
the Company, then upon such Participant’s Covered Termination the Company shall
pay all costs and expenses of relocating the Participant, his or her household
goods and his or her family to a location of the Participant’s choice, provided
that the cost of such relocation shall not exceed the cost to relocate to the
city in which his or her immediately previous residence was located, and provided further that such costs and expenses would
otherwise be deductible under Code Section 217. If the Participant had
purchased a residence when he or she relocated, the Company shall also
reimburse the Participant for the reasonable costs of sale of such new
residence in accordance with the Company’s relocation policies in existence
immediately before the Change in Control. All such amounts shall be grossed up
for federal and state income taxes.

 

(g)           Additional Benefits. Notwithstanding the foregoing, the Company
may, in its sole discretion, provide benefits in addition to those pursuant to
Sections 4(a), 4(b), 4(c), 4(d), 4(e), and 4(f), to Participants or employees
who are not Participants (“Non-Participants”)
chosen by the Company, in its sole discretion; provided
that the Company shall communicate in writing on behalf of the Board
to such Participants or Non-Participants who become entitled to such benefits;
and provided further that the provision of
any such benefits to a Participant or a Non-Participant shall in no way
obligate the Company 

 

 

to provide such benefits to any other Participant or
to any other Non-Participant, even if similarly situated. If benefits under the
Plan are provided to a Non-Participant, references in the Plan to “Participant”(with
the exception of Sections 4(a), 4(b), 4(c), 4(d), 4(e), and 4(f)) shall be
deemed to refer to such Non- Participants.

 

SECTION 5.         TIME AND FORM OF SEVERANCE
PAYMENTS.

 

(a)           General Rules. Subject to Section 5(b), any cash severance
benefit provided under Section 4(a) shall be paid in installments pursuant to
the Company’s regularly scheduled payroll periods commencing as soon as
practicable following the effective date of a Participant’s Covered Termination
(or, if such Covered Termination occurs prior to a Change in Control, then
commencing as soon as practicable following the effective date of the Change in
Control) and shall be subject to all applicable withholding for federal, state
and local taxes. In the event of a Participant’s death prior to receiving all
installment payments of his or her cash severance benefit under Section 4(a),
any remaining installment payments shall be made to the Participant’s estate on
the same payment schedule as would have occurred absent the Participant’s death.
In no event shall payment of any Plan benefit be made prior to the effective
date of the Participant’s Covered Termination or prior to the effective date of
the release described in Section 7(a).

 

(b)           Application of Section 409A. In the event that any cash severance benefit
provided under Section 4(a) or continued medical benefit under Section 4(c)
shall fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of
the Code as a result of the application of Section 409A(a)(2)(B)(i) of the
Code, the payment of such benefit shall be accelerated to the minimum extent
necessary so that the benefit is not subject to the provisions of Section
409A(a)(1) of the Code. (The payment schedule as revised after the application
of the preceding sentence shall be referred to as the “Revised
Payment Schedule.”)  In
the event the payment of benefits pursuant to the Revised Payment Schedule
would be subject to Section 409A(a)(1) of the Code, the payment of such
benefits shall not be paid pursuant to the Revised Payment Schedule and instead
the payment of such benefits shall be delayed to the minimum extent necessary
so that such benefits are not subject to the provisions of Section 409A(a)(1)
of the Code. The Board may attach conditions to or adjust the amounts paid
pursuant to this Section 5(b) to preserve, as closely as possible, the economic
consequences that would have applied in the absence of this Section 5(b); provided, however, that no such condition or adjustment
shall result in the payments being subject to Section 409A(a)(1) of the Code.

 

SECTION 6.         LIMITATIONS ON BENEFITS.

 

(a)           Release. In order to be eligible to receive benefits
under the Plan, a Participant also must execute a general waiver and release in
substantially the form attached hereto as Exhibit B and such release must
become effective in accordance with its terms. For purposes of the preceding
sentence, with respect to any outstanding option held by the Participant, the
receipt of benefits shall be deemed to be the exercise of such option pursuant
to the extended exercisability of such option under Section 4(b), rather than
the acceleration or extension of such option’s exercisability. The Company, in
its sole discretion, may modify the form of the required release to comply with
applicable law and shall determine the form of the required release, which may
be incorporated into a termination agreement or other agreement with the
Participant.

 

(b)           Certain Reductions. The Company, in its sole discretion, shall
have the authority to reduce a Participant’s severance benefits, in whole or in
part, by any other severance benefits, pay in lieu of notice, or other similar
benefits payable to the Participant by the Company that become payable in
connection with the Participant’s termination of employment pursuant to
(i) any applicable legal requirement, including, without limitation, the
Worker Adjustment and Retraining Notification Act (the 

 

 

“WARN Act”), (ii) a written employment or
severance agreement with the Company, or (iii) any Company policy or practice
providing for the Participant to remain on the payroll for a limited period of
time after being given notice of the termination of the Participant’s
employment. The benefits provided under this Plan are intended to satisfy, in
whole or in part, any and all statutory obligations and other contractual
obligations of the Company that may arise out of a Participant’s termination of
employment, and the Plan Administrator shall so construe and implement the
terms of the Plan. The Company’s decision to apply such reductions to the
severance benefits of one Participant and the amount of such reductions shall
in no way obligate the Company to apply the same reductions in the same amounts
to the severance benefits of any other Participant, even if similarly situated.
In the Company’s sole discretion, such reductions may be applied on a
retroactive basis, with severance benefits previously paid being
recharacterized as payments pursuant to the Company’s statutory or other
contractual obligations.

 

(c)           Mitigation. Except as otherwise specifically provided
herein, a Participant shall not be required to mitigate damages or the amount
of any payment provided under this Plan by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this Plan be
reduced by any compensation earned by a Participant as a result of employment
by another employer or any retirement benefits received by such Participant
after the date of the Participant’s termination of employment with the Company.

 

(d)           Non-Duplication of Benefits. Except as otherwise specifically provided for
herein, no Participant is eligible to receive benefits under this Plan or
pursuant to other contractual obligations more than one time. This Plan is
designed to provide certain severance pay and change in control benefits to
Participants pursuant to the terms and conditions set forth in this Plan. The
payments pursuant to this Plan are in addition to, and not in lieu of, any
unpaid salary, bonuses or benefits to which a Participant may be entitled for
the period ending with the Participant’s Covered Termination.

 

(e)           Indebtedness of Participants. If a Participant is indebted to the Company
on the effective date of his or her Covered Termination, the Company reserves
the right to offset any severance payments under the Plan by the amount of such
indebtedness.

 

(f)            Parachute Payments. If any payment or benefit (including payments
or benefits pursuant to this Plan) that a Participant would receive in
connection with a Change in Control or otherwise (a “Payment”) (a) would 
constitute a “parachute payment” within the meaning of Section 280G of
the Code, and (b) but for this sentence, would be subject to the excise tax
imposed by Section 4999 of the Code (the “Excise
Tax”), then the Company shall cause to be determined, before any
amount of the Payment is paid to such Participant, which of the following two
alternative forms of payment would maximize the Participant’s after-tax
proceeds: (i) payment in full of the entire amount of the Payment including any
amounts to be paid to the Participant pursuant to this Plan (a “Full Payment”), or (ii) payment of only a
part of the Payment so that the Participant receive the largest payment
possible without the imposition of the Excise Tax (a “Reduced Payment”), whichever amount results
in the Participant’s receipt, on an after-tax basis, of the greater amount of
the Payment notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax. For purposes of determining whether to make a Full
Payment or a Reduced Payment, the Company shall cause to be taken into account
all applicable federal, state and local income and employment taxes and the
Excise Tax (all computed at the highest applicable marginal rate, net of the
maximum reduction in federal income taxes which could be obtained from a
deduction of such state and local taxes). If a Reduced Payment is made, (i) the
Payment shall be paid only to the extent permitted under the Reduced Payment
alternative, and the Participant shall have no rights to any additional
payments and/or benefits constituting the Payment, and (ii) reduction in
payments and/or benefits shall occur in the following order unless the
Participant elects in writing a different order (provided, however, that such election shall be subject to
Company approval if made on or after the date on which the event that triggers
the Payment occurs): (1) reduction of cash payments; (2) 

 

 

cancellation of accelerated vesting of equity awards
other than stock options; (3) cancellation of accelerated vesting of stock
options; and (4) reduction of other benefits paid to the Participant. In the event
that acceleration of compensation from the Participant’s equity awards is to be
reduced, such acceleration of vesting shall be canceled in the reverse order of
the date of grant unless the Participant elects in writing a different order
for cancellation.

 

The independent registered public accounting firm engaged by the
Company for general audit purposes as of the day prior to the effective date of
the Change in Control shall make all determinations required to be made under
this Section. If the independent registered public accounting firm so engaged
by the Company is serving as accountant or auditor for the individual, entity
or group effecting the Change in Control, the Company shall appoint a
nationally recognized independent registered public accounting firm to make the
determinations required hereunder. The Company shall bear all expenses with
respect to the determinations by such independent registered public accounting
firm required to be made hereunder.

 

The independent registered public accounting firm engaged to make the
determinations hereunder shall provide its calculations, together with detailed
supporting documentation, to the Company and the Participant within fifteen
(15) calendar days after the date on which the Participant’s right to a Payment
is triggered (if requested at that time by the Company or Executive) or such
other time as requested by the Company or the Participant. If the independent
registered public accounting firm determines that no Excise Tax is payable with
respect to a Payment, either before or after the application of the Reduced
Amount, it shall furnish the Company and the Participant with an opinion
reasonably acceptable to the Participant that no Excise Tax will be imposed
with respect to such Payment. Any good faith determinations of the accounting
firm made hereunder shall be final, binding and conclusive upon the Company and
the Participant.

 

SECTION 7.         RIGHT TO INTERPRET PLAN;
AMENDMENT AND TERMINATION.

 

(a)           Exclusive Discretion. The Plan Administrator shall have the
exclusive discretion and authority to establish rules, forms, and procedures
for the administration of the Plan and to construe and interpret the Plan and
to decide any and all questions of fact, interpretation, definition,
computation or administration arising in connection with the operation of the
Plan, including, but not limited to, the eligibility to participate in the Plan
and amount of benefits paid under the Plan. The rules, interpretations,
computations and other actions of the Plan Administrator shall be binding and
conclusive on all persons.

 

(b)           Amendment or Termination. The term of this Plan shall be the period
commencing on the Effective Date and ending on December 31, 2008, provided,
however, that commencing on January 1, 2006, and on each January 1 thereafter
(a “Renewal Date”), the term of this
Agreement shall be extended so as to terminate three years from such Renewal
Date if, and only if, at any time during the calendar year prior to the Renewal
Date the Company’s Executive Compensation Committee (or its Board) resolves to
extend the term for an additional year. Unless otherwise required by law, no
approval of the shareholders of the Company shall be required for any amendment
or termination including any amendment that increases the benefits provided
under any option or other stock award.

 

(c)           The Company’s Executive Compensation
Committee may amend the Plan to reduce the benefits provided under Section 4 or
may provide that a person who is a Participant shall no longer be a Participant;
provided, however, that if the
Company’s Executive Compensation Committee either amends the Plan to reduce the
benefits provided under Section 4 or makes an affirmative determination that an
employee shall no longer be a Participant, then such action shall become first
effective on the 3rd anniversary of such determination; provided that, within 30 days before or after such action,
the Company gives the Participant notice of such event. The determination of
whether to reduce the benefits provided in Section 4 or whether an employee
shall no longer be a Participant shall be made by the Company’s 

 

 

Executive Compensation Committee, in its sole
discretion, and such determination shall be binding and conclusive on all
persons.

 

(d)           Regardless of whether such action would be
deemed to impair a Participant’s rights under the Plan, the Company’s Executive
Compensation Committee may amend the Plan in any way to comply with applicable
legal requirements. Except as expressly provided herein,  the Company’s Executive Compensation
Committee may amend the Plan at any time; provided that
no such amendment may impair the rights of a Participant without such
Participant’s consent.

 

SECTION 8.         NO IMPLIED EMPLOYMENT
CONTRACT.

 

The
Plan shall not be deemed (i) to give any employee or other person any
right to be retained in the employ of the Company or (ii) to interfere
with the right of the Company to discharge any employee or other person at any
time, with or without cause, which right is hereby reserved.

 

SECTION 9.         LEGAL CONSTRUCTION.

 

This
Plan shall be governed by and construed under the laws of the State of
California (without regard to principles of conflict of laws), except to the
extent preempted by ERISA.

 

SECTION 10.           CLAIMS, INQUIRIES AND
APPEALS.

 

(a)           Applications for Benefits and
Inquiries. Any application
for benefits, inquiries about the Plan or inquiries about present or future
rights under the Plan must be submitted to the Plan Administrator in writing by
an applicant (or his or her authorized representative). The Plan Administrator
is:

 

Cubic Corporation

Attn:  Vice President, Human Resources

9333
Balboa Avenue

San
Diego, California 92123

 

(b)           Denial of Claims. In the event that any application for
benefits is denied in whole or in part, the Plan Administrator must provide the
applicant with written or electronic notice of the denial of the application,
and of the applicant’s right to review the denial. Any electronic notice will
comply with the regulations of the U.S. Department of Labor. The notice of
denial will be set forth in a manner designed to be understood by the applicant
and will include the following:

 

(1)           the specific reason or reasons for the
denial;

 

(2)           references to the specific Plan provisions
upon which the denial is based;

 

(3)           a description of any additional information
or material that the Plan Administrator needs to complete the review and an
explanation of why such information or material is necessary; and

 

(4)           an explanation of the Plan’s review
procedures and the time limits applicable to such procedures, including a
statement of the applicant’s right to bring a civil action under Section 502(a)
of ERISA following a denial on review of the claim, as described in Section
10(d) below.

 

 

This
notice of denial will be given to the applicant within ninety (90) days after
the Plan Administrator receives the application, unless special circumstances
require an extension of time, in which case, the Plan Administrator has up to
an additional ninety (90) days for processing the application. If an extension
of time for processing is required, written notice of the extension will be
furnished to the applicant before the end of the initial ninety (90) day
period.

 

This
notice of extension will describe the special circumstances necessitating the
additional time and the date by which the Plan Administrator is to render its
decision on the application.

 

(c)           Request for a Review. Any person (or that person’s authorized
representative) for whom an application for benefits is denied, in whole or in
part, may appeal the denial by submitting a request for a review to the Plan
Administrator within sixty (60) days after the application is denied. A request
for a review shall be in writing and shall be addressed to:

 

Cubic Corporation

Attn:  Vice President, Human Resources

9333
Balboa Avenue

San
Diego, California 92123

 

A
request for review must set forth all of the grounds on which it is based, all
facts in support of the request and any other matters that the applicant feels
are pertinent. The applicant (or his or her representative) shall have the
opportunity to submit (or the Plan Administrator may require the applicant to
submit) written comments, documents, records, and other information relating to
his or her claim. The applicant (or his or her representative) shall be
provided, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant to his or her claim. The
review shall take into account all comments, documents, records and other
information submitted by the applicant (or his or her representative) relating
to the claim, without regard to whether such information was submitted or
considered in the initial benefit determination.

 

(d)           Decision on Review. The Plan Administrator will act on each
request for review within sixty (60) days after receipt of the request, unless
special circumstances require an extension of time (not to exceed an additional
sixty (60) days), for processing the request for a review. If an extension for
review is required, written notice of the extension will be furnished to the
applicant within the initial sixty (60) day period. This notice of extension
will describe the special circumstances necessitating the additional time and
the date by which the Plan Administrator is to render its decision on the
review. The Plan Administrator will give prompt, written or electronic notice
of its decision to the applicant. Any electronic notice will comply with the
regulations of the U.S. Department of Labor. In the event that the Plan
Administrator confirms the denial of the application for benefits in whole or
in part, the notice will set forth, in a manner calculated to be understood by
the applicant, the following:

 

(1)           the
specific reason or reasons for the denial;

 

(2)           references
to the specific Plan provisions upon which the denial is based;

 

(3)           a
statement that the applicant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to his or her claim; and

 

(4)           a
statement of the applicant’s right to bring a civil action under Section 502(a)
of ERISA.

 

 

(e)           Rules and Procedures. The Plan Administrator will establish rules
and procedures, consistent with the Plan and with ERISA, as necessary and
appropriate in carrying out its responsibilities in reviewing benefit claims. The
Plan Administrator may require an applicant who wishes to submit additional
information in connection with an appeal from the denial of benefits to do so
at the applicant’s own expense.

 

(f)            Exhaustion of Remedies. No legal action for benefits under the Plan
may be brought until the applicant (i) has submitted a written application
for benefits in accordance with the procedures described by Section 10(a)
above, (ii) has been notified by the Plan Administrator that the
application is denied, (iii) has filed a written request for a review of
the application in accordance with the appeal procedure described in Section
10(c) above, and (iv) has been notified that the Plan Administrator has
denied the appeal. Notwithstanding the foregoing, if the Plan Administrator
does not respond to an applicant’s claim or appeal within the relevant time
limits specified in this Section 10, the applicant may proceed directly to
arbitration pursuant to Section 11.

 

SECTION
11.       ARBITRATION

 

(a)           Any applicant’s claim remaining unresolved
after exhaustion of the procedures in Section 10 (and to the extent permitted
by law, any dispute concerning any breach or claimed breach of duty regarding
the Plan) shall be settled solely by binding arbitration in San Diego,
California, by a single arbitrator with at least 20 years of employment law
experience, in accordance with the Employment Claims Rules of the American
Arbitration Association. No depositions may be taken. The arbitrator, in
reviewing the decision of the Plan Administrator pursuant to Section 10, shall
apply the standard of a reviewing court under ERISA, namely that such decision
shall be affirmed unless the arbitrator finds it to be arbitrary and capricious.
Judgment on any award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Each party to any dispute regarding the Plan shall
pay the fees and costs of presenting his, her or its case in arbitration. All other
costs of arbitration, including the costs of any transcript of the proceedings,
administrative fees, and the arbitrator’s fees shall be borne by the Company.

 

(b)           Except as otherwise specifically provided in
this Plan, the provisions of this Section 11 shall be absolutely exclusive for
any and all purposes and fully applicable to each and every dispute regarding
the Plan, including any claim which, if pursued through any state or federal
court or administrative proceeding, would arise at law, in equity or pursuant
to statutory, regulatory or common law rules, regardless of whether such claim
would arise in contract, tort or under any other legal or equitable theory or
basis. The arbitrator shall have jurisdiction and authority to award only Plan
benefits and prejudgment interest; and apart from such benefits and interest,
the arbitrator shall not have any authority or jurisdiction to make any award
of any kind including, without limitation, compensatory damages, punitive
damages, foreseeable or unforeseeable economic damages, damages for pain and
suffering or emotional distress, adverse tax consequences or any other kind or
form of damages. The remedy, if any, awarded by such arbitrator shall be the
sole and exclusive remedy for each and every claim which is subject to
arbitration pursuant to this Section 11. Any limitations on the relief that can
be awarded by the arbitrator are in no way intended (i) to create rights or
claims that can be asserted outside arbitration or (ii) in any other way to
reduce the exclusivity of arbitration as the sole dispute resolution mechanism
with respect to this Plan.

 

(c)           The Plan and the Company will be the
necessary parties to any action or proceeding involving the Plan. No person
employed by the Company, no Eligible Employee or any other person having or
claiming to have an interest in the Plan will be entitled to any notice or
process, unless such person is a named party to the action or proceeding. In
any arbitration proceeding, all relevant statutes of limitation apply. Any
final judgment or decision that may be entered in any such action or proceeding
will be binding and conclusive on all persons having or claiming to have any
interest in the Plan.

 

 

SECTION
12.       BASIS OF PAYMENTS TO AND
FROM PLAN.

 

All
benefits under the Plan shall be paid by the Company. The Plan shall be
unfunded, and benefits hereunder shall be paid only from the general assets of
the Company.

 

SECTION
13.       OTHER PLAN INFORMATION.

 

(a)           Employer and Plan Identification
Numbers. The Employer
Identification Number assigned to the Company (which is the “Plan Sponsor” as
that term is used in ERISA) by the Internal Revenue Service is 77-0182779. The
Plan Number assigned to the Plan by the Plan Sponsor pursuant to the
instructions of the Internal Revenue Service is 520.

 

(b)           Ending Date for Plan’s Fiscal
Year. The date of the end of
the fiscal year for the purpose of maintaining the Plan’s records is May 31.

 

(c)           Agent for the Service of Legal
Process. The agent for the
service of legal process with respect to the Plan is:

 

Cubic Corporation

Attn:  Vice President, Human Resources

9333
Balboa Avenue

San Diego, California 92123

 

(d)           Plan Sponsor and Administrator. The “Plan Sponsor” and the “Plan
Administrator” of the Plan is:

 

Cubic Corporation

Attn:  Vice President, Human Resources

9333
Balboa Avenue

San Diego, California 92123

 

The Plan Sponsor’s and Plan
Administrator’s telephone number is (858)
277-6780. The Plan Administrator is the named fiduciary charged with the
responsibility for administering the Plan.

 

SECTION
14.       STATEMENT OF ERISA RIGHTS.

 

Participants in this Plan
(which is a welfare benefit plan sponsored by Cubic Corporation) are entitled
to certain rights and protections under ERISA. If you are a Participant, you
are considered a participant in the Plan for the purposes of this Section 14
and, under ERISA, you are entitled to:

 

Receive
Information About Your Plan and Benefits

 

(a)           Examine, without charge, at the Plan
Administrator’s office and at other specified locations, such as worksites, all
documents governing the Plan and a copy of the latest annual report (Form 5500
Series), if applicable, filed by the Plan with the U.S. Department of Labor and
available at the Public Disclosure Room of the Employee Benefits Security
Administration;

 

(b)           Obtain, upon written request to the Plan
Administrator, copies of documents governing the operation of the Plan and
copies of the latest annual report (Form 5500 Series), if applicable, and an
updated (as necessary) Summary Plan Description. The Administrator may make a
reasonable charge for the copies; and

 

 

(c)           Receive a summary of the Plan’s annual
financial report, if applicable. The Plan Administrator is required by law to
furnish each participant with a copy of this summary annual report.

 

Prudent Actions By Plan
Fiduciaries

 

In addition to creating
rights for Plan participants, ERISA imposes duties upon the people who are
responsible for the operation of the employee benefit plan. The people who
operate the Plan, called “fiduciaries” of the Plan, have a duty to do so
prudently and in the interest of you and other Plan participants and
beneficiaries. No one, including your employer, your union or any other person,
may fire you or otherwise discriminate against you in any way to prevent you
from obtaining a Plan benefit or exercising your rights under ERISA.

 

Enforce Your Rights

 

If your claim for a Plan
benefit is denied or ignored, in whole or in part, you have a right to know why
this was done, to obtain copies of documents relating to the decision without
charge, and to appeal any denial, all within certain time schedules.

 

Under ERISA, there are steps
you can take to enforce the above rights. For instance, if you request a copy
of Plan documents or the latest annual report from the Plan, if applicable, and
do not receive them within 30 days, you may file suit in a Federal court. In
such a case, the court may require the Plan Administrator to provide the
materials and pay you up to $110 a day until you receive the materials, unless
the materials were not sent because of reasons beyond the control of the Plan
Administrator.

 

If you have a claim for
benefits which is denied or ignored, in whole or in part, you may sue or
exercise such other rights as are described in this Plan.

 

If you are discriminated against
for asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a Federal court. The court will decide who
should pay court costs and legal fees. If you are successful, the court may
order the person you have sued to pay these costs and fees. If you lose, the
court may order you to pay these costs and fees, for example, if it finds your
claim is frivolous.

 

Assistance With Your Questions

 

If you have any questions
about the Plan, you should contact the Plan Administrator. If you have any
questions about this statement or about your rights under ERISA, or if you need
assistance in obtaining documents from the Plan Administrator, you should
contact the nearest office of the Employee Benefits Security Administration,
U.S. Department of Labor, listed in your telephone directory or the Division of
Technical Assistance and Inquiries, Employee Benefits Security Administration,
U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.
You may also obtain certain publications about your rights and responsibilities
under ERISA by calling the publications hotline of the Employee Benefits
Security Administration.

 

SECTION 15.           GENERAL
PROVISIONS.

 

(a)           Notices. Any notice, demand or request required or
permitted to be given by either the Company or a Participant pursuant to the
terms of this Plan shall be in writing and shall be deemed given when delivered
personally or deposited in the U.S. mail, First Class with postage prepaid, and
addressed to the parties, in the case of the Company, at the address set forth
in Section 10(a) and, in the case of a Participant, at the address as set forth
in the Company’s employment file maintained for the Participant as 

 

 

previously furnished by the Participant or such
other address as a party may request by notifying the other in writing.

 

(b)           Transfer and Assignment. The rights and obligations of a Participant
under this Plan may not be transferred or assigned without the prior written
consent of the Company. This Plan shall be binding upon any surviving entity
resulting from a Change in Control and upon any other person who is a successor
by merger, acquisition, consolidation or otherwise to the business formerly
carried on by the Company without regard to whether or not such person or
entity actively assumes the obligations hereunder.

 

(c)           Waiver. Any Party’s failure to enforce any provision
or provisions of this Plan shall not in any way be construed as a waiver of any
such provision or provisions, nor prevent any Party from thereafter enforcing
each and every other provision of this Plan. The rights granted the Parties
herein are cumulative and shall not constitute a waiver of any Party’s right to
assert all other legal remedies available to it under the circumstances.

 

(d)           Severability. Should any provision of this Plan be declared
or determined to be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired.

 

(e)           Section Headings. Section headings in this Plan are included
for convenience of reference only and shall not be considered part of this Plan
for any other purpose.

 

SECTION
16.           EXECUTION.

 

To
record the adoption of the Plan as set forth herein, Cubic Corporation has
caused its duly authorized officer to execute the same as of the Effective
Date.

 

	
   

  	
  CUBIC
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  William W. Boyle

  	
   

  
	
   

  	
  Senior
  Vice President,

  
	
   

  	
  Chief
  Financial Officer

  

 

 

EXHIBIT A

 

CUBIC CORPORATION

TRANSITION PROTECTION PLAN

PARTICIPATION NOTICE

 

To:

 

Date:

 

Cubic Corporation (the “Company”) has adopted
the Cubic Corporation Transition Protection Plan (the “Plan”). The Company
is providing you with this Participation Notice to inform you that, given your
position at the Company, you qualify as a participant in the Plan. A copy of
the Plan document, which also constitutes a summary plan description, is
attached to this Participation Notice. The terms and conditions of your
participation in the Plan are as set forth in the Plan, and in the event of any
conflict between this Participation Notice and the Plan, the terms of the Plan
shall prevail. Subject to the provisions of the Plan, the details of your Plan
benefits, as described in Section 4 of the Plan, are as follows:

 

Cash Severance Benefit:               
months.

 

Continued Medical Benefits:               
months, or such earlier date as you shall secure subsequent employment that
shall provide you with substantially similar medical benefits.

 

Outplacement
Services:  Up to $       .

 

Please retain a copy of this
Participation Notice, along with the Plan document, for your records.

 

	
   

  	
  CUBIC
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  

 

The undersigned Participant hereby
acknowledges receipt of the foregoing Participation Notice and the Plan.

 

	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print name

  

 

 

EXHIBIT B

 

RELEASE AGREEMENT

 

I understand and agree completely to the terms set forth in the Cubic
Corporation Transition Protection Plan (the “Plan”).
I understand that this release and waiver (the “Release”), together with the Plan, constitutes the complete,
final and exclusive embodiment of the entire agreement between the Company and
me with regard to the subject matter hereof. I am not relying on any promise or
representation by the Company that is not expressly stated herein.

 

In
consideration of benefits I will receive under the Plan, I hereby generally and
completely release the Company and its directors, officers, employees,
shareholders, members, partners, agents, attorneys, predecessors, successors,
parent and subsidiary entities, insurers, affiliates, and assigns from any and
all claims, liabilities and obligations, both known and unknown, that arise out
of or are in any way related to events, acts, conduct, or omissions occurring
prior to my signing this Release. This Release includes, but is not limited to:
(1) all claims arising out of or in any way related to my employment with the
Company or the termination of that employment; (2) all claims related to my
compensation or benefits from the Company, including, but not limited to,
salary, bonuses, commissions, vacation pay, expense reimbursements, severance
pay, fringe benefits, stock, stock options, or any other ownership interests in
the Company; (3) all claims for breach of contract, wrongful termination,
and breach of the implied covenant of good faith and fair dealing; (4) all
tort claims, including, but not limited to, claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all
federal, state, and local statutory claims, including, but not limited to,
claims for discrimination, harassment, retaliation, attorneys’ fees, or other
claims arising under the federal Civil Rights Act of 1964 (as amended), the
federal Americans with Disabilities Act of 1990, the federal Age Discrimination
in Employment Act of 1967 (as amended) (“ADEA”), and the California Fair Employment
and Housing Act (as amended).

 

If
I am over the age of 40 years at the time of an Covered Termination (as that
term is defined in the Plan), I acknowledge that I am knowingly and voluntarily
waiving and releasing any rights I may have under the ADEA. I also acknowledge
that the consideration given under the Release for the waiver and release in
the preceding paragraph hereof is in addition to anything of value to which I
was already entitled. I further acknowledge that I have been advised by this
writing, as required by the ADEA, that:  (A)
my waiver and release do not apply to any rights or claims that may arise on or
after the date I execute this Release; (B) I should consult with an attorney
prior to executing this Release;
(C) I have twenty-one (21) days to consider this Release
(although I may choose to voluntarily execute this Release earlier); (D) I have seven (7)
days following my execution of this Release to revoke the Release; and (E) this Release
shall not be effective until the date upon which the revocation period has
expired, which shall be the eighth (8th) day after I execute this
Release.

 

 If I am not over the age of 40 years at the
time of an Covered Termination (as that term is defined in the Plan), I
understand and agree that I will have ten days to consider and execute this
release and that it shall be effective upon such execution.

 

I
represent that I have not filed any claims against the Company, and agree that,
except as such waiver may be prohibited by statute, I will not file any claim
against the Company or seek any compensation for any claim other than the
payments and benefits referenced herein. I agree to indemnify and hold the
Company harmless from and against any and all loss, cost, and expense,
including, but not limited to court costs and attorney’s fees, arising from or
in connection with any action which may be commenced, prosecuted, or threatened
by me or for my benefit, upon my initiative, or with my aid or approval,
contrary to the provisions of this Release.

 

 

I
acknowledge that I have read and understand Section 1542 of the California
Civil Code which reads as follows:  “A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor.”  I hereby expressly
waive and relinquish all rights and benefits under that section and any law of
any jurisdiction of similar effect with respect to my release of any claims I
may have against the Company, its affiliates, and the entities and persons
specified above.

 

 

	
   

  	
  EMPLOYEE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

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