Document:

Exhibit 10.7

 

CUBIC CORPORATION

 

MANAGEMENT INCENTIVE BONUS PLAN

 

This Incentive Bonus Plan (the “Plan”) is intended to provide an additional incentive for management employees of Cubic Corporation and its subsidiaries (collectively, the “Company”), to perform to the best of their abilities, to further the growth, development and financial success of the Company, and to enable the Company to attract and retain highly qualified employees.  The Plan is for the benefit of the Participants (as defined below).

 

The Compensation Committee (the “Committee”) of the Board of Directors of the Company (the “Board”) has adopted the Plan, effective October 27, 2014.

 

1.                                      Participants.  Participation in the Plan shall be limited to such employees of the Company and its subsidiaries whom the Committee from time to time determines shall be eligible to receive a bonus award (a “Bonus”) hereunder (the “Participants”).

 

2.                                      Administration.  The Plan shall be administered by the Committee.  The Committee shall have the discretion and authority to administer and interpret the Plan, including the authority to establish bonus programs or guidelines under the Plan (the “Bonus Guidelines”) from time to time containing such terms and conditions as the Committee may determine or deem appropriate in its discretion, including, without limitation, terms and conditions relating to the administration of the Plan and/or the determination and payment of Bonuses hereunder.

 

The Committee may modify, suspend, terminate or supersede the Bonus Guidelines at any time in its sole discretion.  Any and all Bonus Guidelines adopted by the Committee shall be subject to the terms and conditions of the Plan.  Any disputes under the Plan shall be resolved by the Committee or its designee, whose decision will be final.

 

3.                                      Performance Goals.  The Plan is intended to provide incentives for the achievement of approved annual corporate, business unit and/or individual objectives (the “Performance Goals”), as determined by the Committee with respect to each fiscal year during the term of the Plan (each an “Incentive Plan Year”).

 

(a)                                 Corporate Performance Goals.  At the beginning of each Incentive Plan Year, the Committee shall select such objective corporate Performance Goals as the Committee may determine in its sole discretion, which may include, without limitation, one or more of the following criteria:  net earnings (either before or after one or more of the following: interest, taxes, depreciation, amortization, and goodwill or other impairment charges, “EBITDA”); gross or net sales or revenue; net income (either before or after taxes); adjusted net income; net operating income, operating earnings; cash flow (including, but not limited to, operating cash flow and free cash flow); return on net or gross assets; return on capital; return on shareholders’ equity; total stockholder return; return on sales; gross or net profit or operating margin; costs; acquisitions or new investments; leverage level; expenses; working capital; earnings per share; adjusted earnings per share; funds from operations per share; price per share of the Company’s common stock; implementation or completion of critical projects; comparisons with various

 

 

stock market indices; debt reduction; shareholder equity; operating efficiency; financial ratios; and financing and other capital raising transactions.  It is intended that the corporate objectives be objectively determinable, with the weighting of the various corporate Performance Goals to be approved by the Committee.

 

(b)                                 Business Unit Goals.  Each year corporate and business unit management will establish a set of Performance Goals for recommendation to the Committee, applicable to each specific business unit, which may consider, in addition to any of the applicable goals set forth in the Corporate Performance Goals: corporate financial objectives, business unit past experience, the business units current business plan, any specific business emphasis appropriate at the time for the subject business unit for the year under consideration, and future business potential.  A portion of the award may be discretionary, as determined by the Committee.

 

(c)                                  Individual Performance Goals.  A portion of each Participant’s Bonus may be determined in the sole discretion of the Committee based on individual performance and the consideration of such other factors as the Committee determines to be appropriate.  If individual Performance Goals are to be established for an Incentive Plan Year, each Participant in the Plan will work with his or her direct manager and/or other appropriate manager to develop a list of key individual Performance Goals.  If appropriate, the Chief Executive Officer of the Company will work with the Committee to develop his individual Performance Goals.

 

A Performance Goal may be a single goal or a range with a minimum goal up to a maximum goal.  Unless otherwise determined by the Committee, the amount of each Participant’s Bonus shall be based upon a bonus formula determined by the Committee in its sole discretion that ties such Bonus to the attainment of the applicable Performance Goals.  The Committee may in its sole discretion modify or change the bonus formulas and/or Performance Goals at any time and from time to time during or upon completion of an Incentive Plan Year.

 

4.                                      Target Bonuses.  Each Participant will be assigned a “Target Bonus Percentage” based on his or her job classification and responsibilities.  If a Participant moves from one Target Bonus Percentage level to another during an Incentive Plan Year, his or her Target Bonus Percentage will be prorated for time spent in positions with different Target Bonus Percentages during the Incentive Plan Year.

 

A “Target Bonus” for each Participant will be determined by multiplying his or her Target Bonus Percentage by his or her Base Salary (as defined below) for the relevant Incentive Plan Year.  For purposes of this Plan, “Base Salary” shall mean the actual salary paid to a Participant, including salary paid during vacation and accumulated time off, during the Incentive Plan Year.

 

The Target Bonus Percentages for each Participant shall be approved by the Committee for each Incentive Plan Year.  A Participant’s maximum Bonus under the Plan shall not exceed 195% of his or her Target Bonus.

 

Effective for fiscal year 2015, and unless and until changed by the Committee, in its sole discretion, the Target Bonus Percentages for the executive officers of the Company for purposes of this Plan shall be as follows:

 

 

	
Position
    	
 
    	
Target Bonus Percentage
   (as % of Base Salary)
    
	
 
    	
 
    	
 
    
	
Chief Executive Officer
    	
 
    	
100
    
	
Chief Operating Officer
    	
 
    	
50
    
	
Chief Financial Officer
    	
 
    	
50
    
	
Other Key Corporate Officers
    	
 
    	
50
    
	
Business Unit Presidents
    	
 
    	
50
    
	
Senior Business Unit Officers
    	
 
    	
50
    
	
Other Key Personnel
    	
 
    	
25-40%
    

 

5.                                      Sliding Scale.  With respect to the corporate and business unit Performance Goals, a sliding scale of award determination will be used so that the incentive earned will decrease from 100% based on performance of less than 100% of the Performance Goal with the opportunity to earn  up to 150% of the target award should actual performance exceed 100% of the Performance Goal.

 

In the example of the Performance Goals being sales, EBITDA, return on net assets and earnings per share; for all components except for sales, between 100% and 120% of the financial goal, the percent earned will increase at a rate of 2.5% for every 1% improvement in financial performance, with a maximum of 150% of the target award. For the sales goal, between 100% and 110% of the financial goal, the percent earned will increase at a rate of 5% for every 1% improvement in financial performance, with a maximum of 150% of the target award. For all goals, between 100% and 90% of the financial goal, the percent earned will decrease at a rate of 3% of the target award for every 1% point shortfall in financial performance. Between 90% and 80% of the financial goal, the percent earned will decrease at a rate of 4.5% of the target award for every 1% point shortfall in financial performance. Between 80% and 75% of the financial goal, the percent earned will decrease at a rate of 5% of the target award for every 1% point shortfall in financial performance, so that at the 75% level, the award will be zero for that financial goal.

 

The individual component of each Participant’s Bonus will be evaluated separately.  Based on the determination of the Participant’s individual performance, a multiplier will be applied to the Participant’s Bonus as determined based on achievement relative to the corporate and/or business unit Performance Goals.  The multiplier for individual performance will be within the range of 0% to 130%.

 

6.                                      Calculation of Bonuses.  The actual Bonus for a Participant will be calculated by the Committee as soon as practicable following the completion of the relevant Incentive Plan year by applying the Sliding Scale to the Target Bonus for such Participant according to the weightings and methods approved by the Committee for such Incentive Plan Year.  The individual multiplier, if any, will then be multiplied by the resulting Bonus to determine the final Bonus for such Participant.

 

 

The incentive awards are based on the actual financial performance achieved by the respective business unit and the total corporation as reflected in the Company’s audited financial statements. If there are to be any adjustments to the audited results for the purposes of a Bonus determination, these adjustments will generally be established at the time the Performance Goals are set. Achievement of the financial goals will be calculated after deduction of the Bonus payments related to this Plan for the Plan Year and to any other applicable incentive plans.

 

The Company may, in its discretion, reduce or eliminate a Bonus otherwise payable to any Participant.  Any such reduction or elimination may be made based on objective or subjective determinations as the Company determines appropriate.

 

7.                                      Payment of Bonuses.  The payment of Bonuses under the Plan shall be made in cash between November 1 and December 31 of the calendar year following the Incentive Plan Year to which such Bonuses relate, on such date or dates determined by the Committee and shall be subject to such terms and conditions as may be determined by the Committee in its sole discretion.

 

Except as otherwise provided in a written employment agreement between a Participant and the Company or as otherwise determined by the Committee, in order to be entitled to receive such Bonus, a Participant must be an active employee of the Company or its subsidiaries or affiliates and in good standing and working on the last day of the Plan Year. However, there will be two exceptions to this provision.  First, should an employee elect full retirement (with retirement points pursuant to Cubic’s Pension plan of 85 or more, or at the age of 65), the Bonus will be prorated for the time prior to retirement and that amount paid in accordance with the provisions above, as long as the business unit, subsidiary or total company, achieves its financial goals.  Second, if an employee dies, or becomes totally and permanently disabled, the Bonus will be pro-rated for the time prior to death or disability, and that amount will be paid to his/her estate, or him/her as the case may be, in accordance with the provisions above, as long as the business unit, subsidiary or total company achieves its financial goals.

 

An employee may be excluded from receiving an incentive award in the event he/she is involuntarily terminated for any reason other than a lay off during the period from the last day of the respective fiscal year and the date that the Bonus would normally be paid.  In addition, an employee may be excluded if the terms and conditions of a separation agreement specifically exclude the receipt of the incentive award.

 

8.                                      Amendment, Suspension and Termination of the Plan.  The Committee shall have the authority to amend, suspend or terminate the Plan at any time in its sole discretion.

 

9.                                      Miscellaneous.

 

(a)                                 The Company shall deduct all federal, state, and local taxes required by law or Company policy from any Bonuses paid hereunder.

 

(b)                                 Nothing contained in this Plan shall confer upon any Participant any right to continue in the employ of the Company, or shall interfere with or restrict in any way the right of the Company, which is hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, with or without cause.  Notwithstanding anything to the contrary contained in the Plan, nothing in the Plan shall adversely affect any rights that a Participant may otherwise have under an employment or severance agreement or plan with or maintained by the Company to which such Participant is a party or under which such Participant is a beneficiary.

 

 

(c)                                  The Plan shall be unfunded.  Amounts payable under the Plan are not and will not be transferred into a trust or otherwise set aside.  The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Bonus under the Plan.  Any accounts under the Plan are for bookkeeping purposes only and do not represent a claim against the specific assets of the Company.

 

(d)                                 No Bonus granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated. All rights with respect to a Bonus granted to a Participant under the Plan shall be available during his or her lifetime only to the Participant.

 

(e)                                  Notwithstanding anything in the Plan to the contrary, any and all amounts payable to any Participant under the Plan from time to time may, in the Committee’s sole discretion, be reduced or offset by any amounts then due or owing by such Participant to the Company or any of its affiliates pursuant to or in accordance with any benefit or compensation plan, program, policy or arrangement maintained by the Company or such affiliates.

 

(f)                                   Any provision of the Plan that is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of the Plan.

 

(g)                                  The Plan shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of California. Should any provision of the Plan be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.

 

Any and all controversies or disputes involving, relating to, or arising out of, or under, this Plan, including but not limited to its construction, interpretation or enforcement, shall be litigated exclusively in the state or federal courts sitting in San Diego County, California.  Each Participant is hereby deemed to irrevocably and unconditionally consent to the personal jurisdiction of the state courts in San Diego County, California with regard to any and all controversies or disputes involving, relating to, or arising out of, or under, the Plan.  Each Participant is further deemed to irrevocably and unconditionally waive any defense or objection of lack of personal jurisdiction over Participant by the state or federal courts sitting in San Diego County, California.

 

(h)                                 Bonus payments are not intended to constitute a deferral of compensation subject to Section 409A of the Code and are intended to satisfy the “short-term deferral” exemption under Section 409A of the Code and the Treasury Regulations issued thereunder.

 

Accordingly, to the extent necessary to cause Bonus payments hereunder to satisfy the “short-term deferral” exemption under Section 409A of the Code and the Treasury Regulations issued thereunder, a Bonus payment shall be made not later than the later of: (i) the fifteenth day of the third month following the Participant’s first taxable year in which the Bonus payment is no longer subject to a substantial risk of forfeiture, or (ii) the fifteenth day of the third

 

 

month following the Company’s first taxable year in which the Bonus payment is no longer subject to a substantial risk of forfeiture; provided, however, that if due to administrative reasons Bonuses are not paid within the foregoing time periods, then such Bonuses will be paid as soon as administratively feasible but no later than the last day of the calendar year following the end of the Incentive Plan Year to which such Bonuses relate.Exhibit 10.9

 

 

September 11, 2015

 

Stephen Shewmaker

4914 Sandshore Court

San Diego CA 92130-2743

 

Re:                             Employment Transition Agreement (“Agreement”)

 

Dear Steve,

 

This Agreement will confirm our understanding with respect to the transition of your employment with Cubic Transportations Systems, Inc. (“CTS”) from President to Chairman of the Board for the period of FY 2016, and the mutual separation of your employment with CTS on October 1, 2016.

 

1.                                      New Position. During the Term of this Agreement, you shall serve as Chairman of the Board for CTS. Your primary work location will remain CTS’ headquarters in San Diego, California, although substantial travel may be required. You agree that on or before the Effective Date of this Agreement, you will resign your position as President of CTS and Executive Vice President of Cubic Corporation.

 

2.                                      Duties. You will report directly to Brad Feldmann, President and CEO of Cubic Corporation, and shall have such duties and responsibilities commensurate with your position and as may be assigned to you from time to time by Mr. Feldmann. Your duties and responsibilities shall include those described in the Job Description for the Chairman position enclosed with this Agreement. You agree to use your best efforts and devote your full time and attention to the business and affairs of CTS during the Term of this Agreement and shall comply with the lawful directions and instructions given to you in good faith by Mr. Feldmann. You further agree not to, directly or indirectly, render services to any other person or organization without Mr. Feldmann’s consent or otherwise engage in activities that would interfere significantly with the faithful performance of your duties hereunder; provided, however, that you may serve on civic or charitable boards or engage in charitable activities without remuneration if doing so is not inconsistent with, or adverse to, your employment with CTS.

 

3.                                      Term. The term of your employment under this Agreement shall commence on October 1, 2015 (the “Effective Date”) and shall end on October 1, 2016 (the “Expiration Date”), or such earlier date on which your employment is terminated by you or CTS as permitted under Section 9, hereafter the “Term.” Upon the Expiration Date or prior termination of this Agreement, you agree to sign all necessary paperwork to effectuate the resignation of your Chairmanship of the Board of CTS and all other director or officer positions held with CTS or its affiliates.

 

9333 Balboa Avenue, San Diego, CA  92123 · P.O. Box 85587, San Diego, CA 92186-5587

858.505.2989 · Fax 858.505-1548 ·jay.thomas@cubic.com
 www.cubic.com · New York Stock Exchange Symbol: CUB

 

 

4.                                      Compensation. Subject to the conditions stated herein, during the Term of this Agreement you shall receive the following compensation:

 

(a) Annual base salary of $478,900.00, paid bi-weekly in accordance with CTS’ standard payroll practices.

 

(b) Participation in the Management Annual Incentive Plan at the same opportunity levels applicable to your position in FY15.

 

(c) Continued receipt of your car allowance and all other similar, discretionary employment benefits that you currently receive.

 

5.                                      Long Term Incentive. Except as noted below, you may continue to vest in any existing restricted stock units (RSUs) and performance-based restricted stock units (PRSUs) through the Term of this Agreement in accordance with the terms of the Cubic Corporation 2005 Equity Incentive Plan and your Restricted Stock Unit Award Grant Notices and Restricted Stock Unit Award Agreements. However, you will not receive any additional RSU or PRSU grants during the Term of this Agreement.

 

This Agreement supersedes the November 6, 2014 PRSU Award (“2014 Award”) and you will not be entitled to vest in any RSUs or PRSUs after October 1, 2016, except as set forth herein.   Specifically regarding the 2014 Award, Paragraph 1. (c) of Exhibit B, Vesting Schedule of the Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement shall be modified to read as follows:

 

(c)                                  Vesting Upon Covered Termination, Death or Disability.  Notwithstanding the foregoing, such number of RSUs as is equal to the Target RSUs shall vest immediately in the event Participant’s Continuous Service terminates as a result of his death or Disability.  In the event of Participant’s Covered Termination, Participant shall continue to be eligible to vest in the RSUs pursuant to Sections 1(a) and 1(b) above, provided, however, that the RSUs vesting pursuant to Section 1(a) shall be multiplied by the percentage determined by dividing (x) the number of calendar days elapsed from the beginning of the Performance Period through and including the date of such Covered Termination, by (y) one thousand ninety-five.

 

Therefore, you will pro rata vest in the Performance RSUs for the 2014 Award based on the date of your “Covered Termination” (as defined in the 2014 Award).  The number of shares of stock, if any, to be issued will be based on Cubic’s actual performance per the criteria in the 2014 Award and not on the Target value.   Such shares are expected to be issued in November 2017, following the filing of the fiscal year 2017 financials and the calculation of Cubic’s performance for the 2014 Award period against the Award criteria.   There will be no accelerated or partial vesting of the remaining PRSUs for this Award and such remaining PRSUs  shall automatically and without further action be cancelled and forfeited.

 

6.                                      Insurance Benefits.  During the Term of this Agreement you will remain eligible for all currently provided insurance benefits, subject to any group coverage changes, including but not limited to medical, dental and life insurance.

 

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7.                                      Paid Time Off and Holidays.  During the Term of this Agreement you will remain eligible to participate in CTS’ PTO and holiday policy and will continue to accrue PTO at the same rate currently in effect.

 

8.                                      Expenses. CTS will continue to provide you with, or subsidize your current work equipment and tools including your computer, mobile phone and tablet. CTS will continue to reimburse all other reasonable and necessary business and travel expenses related to the performance of your duties hereunder in accordance with its established policies and procedures. Travel expenses will be approved pursuant to company policy.

 

9.                                      [Intentionally deleted.]

 

10.                               Duty of Loyalty. During the Term of this Agreement you will not, anywhere in the world, directly or indirectly, compete with CTS in any way or act as an officer, director, employee, consultant, lender, or agent of any entity that is engaged in or actively pursuing any business of the same nature as, or in competition with, the business in which CTS is now engaged or in which it becomes engaged during your employment.

 

11.                               Separation Pay and Benefits. Upon the following circumstance you will be offered the separation pay and benefits described in, and subject to the terms and conditions of, the Separation Agreement and General Release (“Separation Agreement”), expressly incorporated herein as Attachment A: (i) you remain actively employed by CTS as Chairman through the Expiration Date of this Agreement; (ii) your employment is involuntary terminated by CTS without “Cause,” as defined below, prior to the Expiration Date of this Agreement; OR (iii) you voluntary resign your employment with CTS for “Good Reason,” prior to the Expiration Date of this Agreement. The parties agree that your termination under the circumstances described in the preceding sentence will constitute a “Covered Termination” for purposes of the 2014 Award.

 

(a)                                 Definition of Cause.  For the purposes of this Agreement, the term “Cause” shall mean a good faith determination by CTS or Cubic Corporation that you: (i) engaged in willful, reckless or gross misconduct that materially could or does injure the business or reputation of CTS or Cubic Corporation; (ii) materially breached this Agreement or any other agreement between you the CTS or Cubic Corporation, and such breach is either not curable as determined by CTS or has not been cured within thirty (30) days after your receipt of written notice of such breach; (iii) materially violated a CTS or Cubic Corporation policy, and such violation is either not curable in the determination of CTS or has not been cured within thirty (30) days after your receipt of written notice of such violation; (iv) materially failed to follow any lawful directive of CTS, Cubic Corporation or its management; (v) are unable to perform the essential functions of your position with or without reasonable accommodation of a disability; (vi) are convicted of, or pled no contest to a felony or any crime involving dishonesty or moral turpitude; (vii) failed or refused to adequately or satisfactorily perform the duties and responsibilities of your position with CTS and failed or refused to cure such performance failure to CTS’ satisfaction within thirty (30) days after written notice thereof has been given to you by CTS; OR (viii) are entitled to severance benefits under provisions of the Cubic Transition Protection Plan.

 

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(b)                                 Definition of Good Reason. For the purposes of this Agreement, the term “Good Reason” shall mean a good faith determination by you that CTS or Cubic Corporation has: (i) materially breached this Agreement, which breach has not been cured within thirty (30) days after written notice of such breach has been given by you to Mr. Feldmann; (ii) engaged in conduct that is illegal, which materially and adversely affects your employment; (iii) substantially reduced your duties, responsibilities and base salary, and failed to cure same within thirty (30) days of your written notice to Mr. Feldmann; OR (iv) relocated your principal place of business to a location more than sixty (60) miles from your current work location without your consent.

 

12.                               Transition Protection Plan. Consistent with Section 11, you understand and agree that if you become entitled to severance benefits under the Cubic Transition Protection Plan during the Term of this Agreement, CTS shall have no obligation to provide you with any of the separation pay or benefits described in this Agreement or the Attachment A. Your rights to participate in the Transition Protection Plan shall supersede and replace any rights you may have to Separation Pay or Benefits under this Agreement.

 

13.                               Confidentiality. In connection with the performance of this Agreement, you acknowledge that you will continue to have access to trade secrets and other confidential or proprietary information of CTS and Cubic Corporation. You agree to refrain from disclosing any confidential information, trade secrets or proprietary information relating to the services, products, processes, techniques, future developments, costs, profits, business development, market information and other subject matter pertaining to the business of CTS or Cubic Corporation that you acquire or learn during the Term of this Agreement. Your obligations under this Section 13 apply during the Term of your employment pursuant to this Agreement and indefinitely thereafter. You acknowledge that as a condition of your continued employment you must execute and comply with all of the terms and conditions contained in the Company’s Employee Inventions And Secrecy Agreement, a copy of which is enclosed and expressly incorporated into this Agreement.

 

14.                               Miscellaneous.

 

(a)                                 Successors. The rights and obligations of CTS under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of CTS and its parent company, Cubic Corporation. You agree not to assign any of your rights or obligations under this Agreement.

 

(b)                                 Legal Counsel. You acknowledge that you have been given the opportunity to consult with legal counsel or any other advisor of your choosing regarding this Agreement. You understand and agree that any attorney employed by CTS or Cubic Corporation and any member of management who has discussed any term or condition of this Agreement with you is only acting on behalf of CTS and/or Cubic Corporation, and not on your behalf.

 

(c)                                  Severability. If any material condition or provision contained herein is held to be invalid, void, or unenforceable by a final judgment of any court or arbitrator, then the remaining provisions of this Agreement shall remain in full force and effect and the unenforceable

 

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provision shall be deemed modified to the limited extent required to permit its enforcement in a manner most closely representing the intention of the parties as expressed herein.

 

(d)                                 Waiver. The failure to exercise any right under this Agreement shall not be deemed to be a waiver of such right, and shall not affect the right to enforce each and every right hereof. The waiver of any breach of any term, provision, covenant, or condition in this Agreement shall not be deemed to be a waiver of any (a) subsequent breach of such term, provision, covenant, or condition or (b) other term, provision, covenant, or condition.

 

(e)                                  Governing Law. This Agreement shall be governed by the laws of the State of California and the United States, as applicable.

 

(f)                                   Complete Agreement. Except as expressly stated herein, and for the Indemnity Agreement between Cubic Corporation and you, and the terms of any applicable benefit plans, this Agreement contains the entire agreement between you and CTS and supersedes any prior agreement or understanding between the parties (whether oral or written) regarding the subject matters contained herein. You acknowledge that no promises have been made to you regarding your employment with CTS for FY 2016 that are not contained in this Agreement. This Agreement may only be modified or amended by a subsequent written agreement signed by both parties.

 

(g)                                  Counterparts. This Agreement may be executed in counterparts. Each such counterpart shall be deemed an original agreement and together shall constitute one and the same agreement.

 

If you wish to accept this offer on the terms outlined above, please sign and return this letter Agreement to me by September 25, 2015. Should you have any questions, please do not hesitate to call me directly at (858) 505-2226.

 

	
Sincerely,
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
James   Edwards
    	
 
    
	
Sr.   Vice President, General Counsel & Secretary
    	
 
    
	
 
    	
 
    
	
Enclosures
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
AGREED   AND ACCEPTED BY:
    	
DATED:
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Stephen O. Shewmaker
    	
 
    	
 
    
			

 

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ATTACHMENT A

 

SEPARATION AGREEMENT AND GENERAL RELEASE

 

This Separation Agreement and General Release (“Agreement”) is made by and between Cubic Transportation Systems Inc. and Cubic Corporation (collectively “CUBIC”) on the one hand, and Stephen Shewmaker (“EMPLOYEE”) on the other hand, as of the date the parties have signed it below, with respect to the following facts:

 

A. EMPLOYEE and CUBIC have mutually agreed to separate EMPLOYEE’s employment.

 

B. CUBIC and EMPLOYEE wish to enter into an agreement with regard to the separation of that employment relationship to resolve any and all issues relating to CUBIC’s employment of EMPLOYEE.

 

THE PARTIES THEREFORE AGREE AND PROMISE in consideration of all of the following terms and conditions as follows:

 

1. Separation Date. EMPLOYEE’s last day of employment with CUBIC will be October 1, 2016 (“Separation Date”). EMPLOYEE agrees to resign as Chairman of the Board of Cubic Transportations Systems, Inc. (“CTS”) and as a director or officer of CTS and all other affiliated companies.

 

2. Separation Pay and Benefits. In full consideration of EMPLOYEE signing, returning, and not revoking this Agreement within the time periods specified below in Section 21, CUBIC will provide EMPLOYEE with the following separation benefits to which employee is not otherwise entitled:

 

a.                                      Separation Pay. CUBIC will pay EMPLOYEE separation pay in the total gross amount of twelve (12) months of his current base salary (“Separation Pay”). The Separation Pay will be paid to EMPLOYEE in equal bi-weekly amounts over a twelve (12) month period following his Separation Date, in accordance with CUBIC’s regular payroll dates and practices. Payments will begin on the first regular CUBIC pay day after the Effective Date of this Agreement, as defined in Section 21. All Separation Pay will be subject to required tax withholdings.

 

b.                                      Insurance Benefit. If EMPLOYEE timely elects to continue EMPLOYEE’s insurance benefits under the provisions of COBRA subsequent to his Separation Date, CUBIC will pay EMPLOYEE’s COBRA premiums for twelve (12) months following EMPLOYEE’s Separation Date, subject to any group coverage changes. After twelve (12) months’ time, EMPLOYEE will be responsible for any COBRA premiums necessary to provide medical and dental coverage. If any of CUBIC’s health benefits are self-funded as of the date of EMPLOYEE’S separation, or if CUBIC cannot provide the foregoing benefits in a manner that is exempt from Section 409A of the Code or that is otherwise compliant with applicable law (including, without limitation, Section 2716 of the Public Health Service Act), instead of providing the benefits as set forth above, CUBIC shall instead pay to EMPLOYEE the foregoing monthly amount as a taxable monthly payment for the

 

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Separation Pay Period (or any remaining portion thereof). The “COBRA qualifying event” will be EMPLOYEE’s separation from CUBIC. COBRA election materials and forms will be provided to EMPLOYEE separately. EMPLOYEE must sign and return these forms in a timely manner to be eligible for the foregoing COBRA benefits.

 

Stock Units. Pursuant to the Cubic Corporation 2005 Equity Incentive Plan, EMPLOYEE has been granted restricted stock units (“RSUs”) pursuant to those certain Restricted Stock Unit Award Grant Notices and Restricted Stock Unit Award Agreements (each, an “RSU Agreement”). Except as set forth below, EMPLOYEE will retain only those RSUs and PRSUs that vest in accordance with their terms on or before EMPLOYEE’s Separation Date and any unvested RSUs and PRSUs shall terminate.

 

This Agreement supersedes the November 6, 2014 PRSU Award (“2014 Award”) and EMPLOYEE will not be entitled to vest in any RSUs or PRSUs after October 1, 2016, except as set forth herein.   Specifically regarding the 2014 Award, Paragraph 1. (c) of Exhibit B, Vesting Schedule of the Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement shall be modified to read as follows:

 

(c)                                  Vesting Upon Covered Termination, Death or Disability.  Notwithstanding the foregoing, such number of RSUs as is equal to the Target RSUs shall vest immediately in the event Participant’s Continuous Service terminates as a result of his death or Disability.  In the event of Participant’s Covered Termination, Participant shall continue to be eligible to vest in the RSUs pursuant to Sections 1(a) and 1(b) above,  provided, however, that the RSUs vesting pursuant to Section 1(a) shall be multiplied by the percentage determined by dividing (x) the number of calendar days elapsed from the beginning of the Performance Period through and including the date of such Covered Termination, by (y) one thousand ninety-five.

 

Therefore, EMPLOYEE will pro rata vest in the Performance RSUs for the 2014 Award based on the date of EMPLOYEE’S “Covered Termination” (as defined in the 2014 Award).  The number of shares of stock, if any, to be issued will be based on Cubic’s actual performance per the criteria in the 2014 Award and not on the Target value.   Such shares are expected to be issued in November 2017, following the filing of the fiscal year 2017 financials and the calculation of Cubic’s performance for the 2014 Award period against the Award criteria.   There will be no accelerated or partial vesting of the remaining PRSUs for this Award and such remaining PRSUs  shall automatically and without further action be cancelled and forfeited.

 

c.                                       Management Annual Incentive Plan.  EMPLOYEE will remain eligible for a FY16 bonus based on the established company and personal performance metrics in the 2016 Management Annual Incentive Plan. Such bonus will be calculated and paid in the normal course of CUBIC’s administration of the Management Annual Incentive Plan, but in no event later than March 15, 2017.

 

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EMPLOYEE agrees that the above Separation Pay and Benefits constitute adequate consideration for all terms and conditions contained in this Agreement, including but not limited to the full and final satisfaction of any and all claims of any nature and kind whatsoever that EMPLOYEE ever had, now has or may have against CUBIC and all other persons and entities released herein, arising through the date of this Agreement, including but not limited to any claims relating in any way to CUBIC’s employment of EMPLOYEE or the separation of EMPLOYEE’s employment.

 

EMPLOYEE agrees that the above separation pay and benefits supersede and replace any severance pay or benefits that EMPLOYEE would otherwise be eligible for under the provisions of Cubic Corporation’s Severance Policy.

 

3. General Release of All Claims. As a material inducement to CUBIC to enter into this Agreement, and in consideration of the other conditions herein, EMPLOYEE irrevocably and unconditionally releases CUBIC, its parent company, and any of their subsidiaries, divisions, affiliates, stockholders, predecessors, successors, assigns, agents, attorneys, directors, officers, employees, representatives and all persons acting by, through, under or in concert with any of them (collectively referred to as “Releasees”), from any and all claims, complaints, liabilities, obligations, agreements, damages, actions of any nature, known or unknown, suspected or unsuspected, that EMPLOYEE ever had, now has, or hereafter may have arising through the date of this Agreement, including but not limited to any claims arising out of EMPLOYEE’s employment relationship or the separation of EMPLOYEE’s employment relationship with CUBIC.

 

Also, without limiting the generality of the foregoing, EMPLOYEE agrees to waive any and all claims for breach of contract, breach of the covenant of good faith and fair dealing, employment discrimination, harassment, and retaliation in violation of any California or other state or federal statute or regulation, including but not limited to, claims for violation of Title VII of the Civil Rights Act of 1964, the Family and Medical Leave Act, the Age Discrimination in Employment Act (“ADEA”), the Older Workers Benefit Protection Act, the Americans with Disabilities Act, the California Fair Employment and Housing Act, the Employee Retirement Income Security Act of 1974, the federal Worker Adjustment and Retraining Notification (“WARN”) Act of 1988, the California WARN Act, the National Labor Relations Act, as well as claims for violation of California public policy or similar state or federal laws, violation of constitutional rights, as well as intentional and negligent infliction of emotional distress, defamation, fraud, and violation of the California Labor Code or similar state or federal laws.

 

This General Release provision does not apply to: (1) claims by EMPLOYEE for workers’ compensation benefits or unemployment insurance benefits, except claims for wrongful termination or discrimination under the Workers’ Compensation Act or the Unemployment Insurance Code; (2) any action to enforce or challenge the enforceability of this Agreement; or (3) any other claims that, by statute, cannot be released by this Agreement.

 

4. Waiver of Known and Unknown Claims. EMPLOYEE expressly waives and relinquishes all rights and benefits afforded by Section 1542 of the Civil Code of the State of California, and does so understanding and acknowledging the significance of this specific waiver of Section 1542. Section 1542 of the Civil Code of the State of California states as follows:

 

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A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her, must have materially affected his or her settlement with the debtor.

 

EMPLOYEE understands that EMPLOYEE is a “creditor” within the meaning of Section 1542.  Notwithstanding the provisions of Section 1542, this Agreement shall be in full settlement of all claims and disputes being released herein, including unknown claims.

 

5. Discovery of Different or Additional Facts. EMPLOYEE acknowledges that EMPLOYEE may discover facts different from, or in addition to, those EMPLOYEE now knows or believes to be true with respect to the claims, complaints, liabilities, obligations, agreements, damages and actions herein released, and agrees the release herein shall be and remain in effect in all respects as a complete and general release as to all matters released herein, notwithstanding any such different or additional facts.

 

6. Consulting Assistance During Separation Pay Period. The twelve (12) month period following EMPLOYEE’s Separation Date is “the Separation Pay Period.” During the Separation Pay Period, EMPLOYEE agrees to be available to provide information to CUBIC related to activities EMPLOYEE was engaged in during EMPLOYEE’s employment with CUBIC (“Consulting Activities”). Such Consulting Activities shall not require more than eight (8) hours in any single work week. EMPLOYEE shall also be named a member of the CTS Advisory Board at no additional compensation and will enter into the Advisory Board Agreement concurrent with this Separation Agreement and General Release. If the company agrees to continue EMPLOYEE on the Advisory Board beyond FY17, he shall be compensated accordingly.

 

Compensation to EMPLOYEE for the Consulting Activities shall be included within the Separation Pay, and therefore, EMPLOYEE shall not be entitled to any additional compensation for these activities, other than any out-of-pocket expenses necessarily incurred by EMPLOYEE in connection with such activities, provided such expenses are approved in writing by CUBIC before they are incurred.

 

7.  Confidentiality of Agreement. EMPLOYEE agrees to maintain and hold this Agreement, and all of its terms, specifically including but not limited to the nature and amount of the Separation Pay, in strict confidence. Accordingly, except as specifically provided in this Section 7, EMPLOYEE agrees not to make any public statement about or to otherwise disseminate or disclose this Agreement or any of its terms, to any other person or business entity, including without limitation any present or former CUBIC employee, customer or business partner.

 

It shall not be a violation of this provision for EMPLOYEE to reveal or discuss any terms of this Agreement to the extent reasonably necessary to obtain legal or financial advice related to this Agreement or the parties’ respective obligations under it, to enforce this Agreement, or as required in order to respond to an audit or inquiry by a government entity or a duly issued subpoena.

 

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In the event EMPLOYEE concludes he is obligated to disclose any term of this Agreement in response to an audit or inquiry by a government entity or a subpoena, unless prohibited by law from doing so, EMPLOYEE shall provide CUBIC, through its General Counsel, no less than five (5) business days’ notice of the audit, inquiry or subpoena along with a copy of any document(s) constituting or relating to such audit, inquiry or subpoena.

 

8.  Nondisparagement.  Neither the EMPLOYEE nor the officers or directors of CUBIC shall not make any disparaging comments, whether oral, written or via any web-based or social media vehicle, to any third person or party about each other, any of CUBIC’s executives or employees, or its products or services, as the term “disparage” and “disparaging” is set forth in any dictionary of English or of law.

 

This provision is not intended to prevent either party from providing truthful information to the other or any government or law enforcement entity in response to an official request for information, or from provided truthful information in response to a duly issued subpoena.  In the event EMPLOYEE receives an official request for information from a government or law enforcement entity, or a subpoena, and he concludes such request or subpoena will likely require him to provide information about CUBIC, unless prohibited by law from doing so, EMPLOYEE shall provide CUBIC, through its General Counsel, no less than (5) business days’ notice of the request or subpoena along with a copy of any document(s) constituting or relating to such request or subpoena.  CUBIC shall provide equivalent notice under similar terms and circumstances to EMPLOYEE.

 

9.  Restrictions on EMPLOYEE’s Activities During Separation Pay Period. As a condition of receiving the Separation Pay and Benefits, and in order that EMPLOYEE may remain available to provide consulting assistance to CUBIC as provided in Section 6 above during the Separation Pay Period, EMPLOYEE shall not accept or engage in any employment, nor provide any services for remuneration in any other capacity (e.g., as an independent contractor, sole proprietor, partner, or joint venturer) for any person or business engaged in the provision of any services or the design, manufacturing or sale of any product or service, that is the same, substantially similar to or competitive with, any product or service of CUBIC (“Competitive Activities”).

 

In the event EMPLOYEE engages in Competitive Activities during the Separation Pay Period, EMPLOYEE agrees that any Separation Pay that has been paid while EMPLOYEE was engaged in Competitive Activities shall be returned to CUBIC, and EMPLOYEE’s right to receive any payments constituting Separation Pay and Benefits after the date such Competitive Activity commenced shall be irrevocably waived.

 

Examples of companies currently engaged in the provision of services or the design, manufacturing or sale of a product, that is the same, substantially similar to or competitive with, services or products of CUBIC include but are not limited to: Xerox, Accenture, LG, Google, Saab, Meggitt, Rockwell Collins, L-3 Salt Lake, General Dynamics, and Engility.

 

If EMPLOYEE has questions or concerns as to whether a proposed activity or action would violate the provisions of this section, he will notify CUBIC through its General Counsel, to discuss the matter.  In such instance, the parties will negotiate in good faith to address the matter.

 

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10.  Nonsolicitation. EMPLOYEE agrees that, until the passage of one (1) year after the end of the Separation Pay Period, EMPLOYEE shall not take any action to directly or indirectly solicit any employee or contractor of CUBIC to terminate his, her or its relationship with CUBIC, including by making any solicitation or by providing to any person or entity information about the skills, capabilities, background, or compensation of any CUBIC employee or contractor (“Solicitation Activities”).

 

In the event EMPLOYEE engages in Solicitation Activities in breach of this provision, EMPLOYEE agrees that, in addition to any damages caused to CUBIC by such Solicitation Activities, any Separation Pay that has been paid while EMPLOYEE was engaged in Solicitation Activities shall be returned to CUBIC, and EMPLOYEE’s right to receive any payments constituting Separation Pay and Benefits after the date such Solicitation Activity commenced shall be irrevocably waived. Nothing in this provision shall limit CUBIC’s right to seek injunctive relief related to any Solicitation Activities in breach of this provision.

 

11. Non-Disclosure of CUBIC Confidential Information. EMPLOYEE agrees that EMPLOYEE shall not use or disclose to any person(s) or entity(ies), public or private, at any time or in any manner, directly or indirectly, any “CUBIC Confidential Information,” including but not limited to, all forms and types of business, technical, financial, economic, sales, marketing or customer information of CUBIC that EMPLOYEE received, developed or had access to as a result of his/her employment with CUBIC, which has not been previously disclosed to the general public by an authorized CUBIC representative or customer, regardless of whether such information would be deemed a trade secret under applicable law.

 

CUBIC Confidential Information shall be interpreted broadly and also includes, but is not limited to, business strategies and plans, financial information, projections, pricing and cost information, proposals, lists of present or future customers, all information obtained from or about current or future customers, supplier lists and information, plans and results of research and development, reports, manuals, policies, personnel information (other than EMPLOYEE’s own information), evaluations, designs, specifications, blueprints, drawings, patterns, compilations, formulas, programs, software, prototypes, methods, processes, devices, procedures, inventions, special techniques of any kind peculiar to CUBIC’s operations, or other confidential or proprietary information or intellectual property related to the business, products, services, or plans of Company, whether tangible or intangible, and whether stored or memorialized physically, electronically, photographically, or in EMPLOYEE’s memory. This specifically includes all information CUBIC has received from customers or other third parties that is not generally known to the public or is subject to a confidentiality agreement.

 

12. Code Section 409A. All separation payments to be made upon a termination of employment under this Agreement may be made only upon a “separation of service” within the meaning of Section 409A of the Code and the Department of Treasury regulations and other guidance promulgated thereunder.

 

Notwithstanding any provision to the contrary in this Agreement, if EMPLOYEE is deemed by CUBIC at the time of EMPLOYEE’s separation from service to be a “specified employee” for purposes of Code Section 401A(a)(2)(B)(i), to the extent delayed commencement of any portion of the benefits to which EMPLOYEE is entitled under this Agreement is required in order to

 

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avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i), such portion of EMPLOYEE’S benefits shall not be provided to EMPLOYEE prior to the earlier of (i) the expiration of the six-month period measured from the date of EMPLOYEE’S “separation of service” with CUBIC or (ii) the date of EMPLOYEE’S death.

 

Upon the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section 25 shall be paid in a lump sum to EMPLOYEE, and any remaining payments due under this Agreement shall be paid as otherwise provided herein. To the extent applicable, this Agreement shall be interpreted in accordance with the applicable exemptions from Section 409A of the Code.

 

To the extent that any provision of the Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner that no payments payable under this Agreement shall be subject to an “additional tax” as defined in Section 409A(a)(1)(B) of the Code.  Each series of installment payments made under this Agreement is hereby designated as a series of “separate payments” within the meaning of Section 409A of the Code.  Any reimbursement of expenses or in-kind benefits payable under this Agreement shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) and shall be paid on or before the last day of EMPLOYEE’S taxable year following the taxable year in which EMPLOYEE incurred the expenses.

 

The amount of expenses reimbursed or in-kind benefits payable during any taxable year of EMPLOYEE’S will not affect the amount eligible for reimbursement or in-kind benefits payable in any other taxable year of EMPLOYEE’S, and EMPLOYEE’S right to reimbursement for such amounts shall not be subject to liquidation or exchange for any other benefit

 

13. Pending and Future Claims. EMPLOYEE agrees to withdraw, with prejudice, any demand for arbitration or lawsuit EMPLOYEE may have against CUBIC and any other Releasees that is pending on the date that EMPLOYEE signs this Agreement.

 

EMPLOYEE further agrees that, to the fullest extent permitted by law, EMPLOYEE will not initiate any demand for arbitration or lawsuit related to the matters released above, it being the intention of the parties that with the execution of this release, the Releasees will be absolutely, unconditionally and forever discharged of and from all obligations to or on behalf of EMPLOYEE related in any way to the matters discharged herein.

 

In addition, EMPLOYEE agrees not to assist any other person or entity bringing any arbitration, lawsuit, or other legal action, that is opposed to CUBIC or any other Releasees unless compelled to do so by a court of law. However, this Agreement shall not preclude EMPLOYEE from filing a complaint with or participating in an investigation or proceeding conducted by a federal or state government agency.

 

EMPLOYEE nonetheless expressly releases EMPLOYEE’s right to receive any monetary damages, reward, or other personal relief based on a complaint or charge filed with a federal or state government agency by EMPLOYEE or on EMPLOYEE’s behalf.

 

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14. Return of Company Property. EMPLOYEE agrees to return any and all equipment, property and materials in EMPLOYEE’s possession that belong to, or identify EMPLOYEE as an employee or representative of CUBIC, including but not limited to, files, records, credit cards, business cards, badges, card key passes, computers, and keys by EMPLOYEE’s Separation Date.

 

15.  California Law. This Agreement shall be governed by and interpreted according to the laws of the State of California and the United States, as applicable.

 

16. Review of the Agreement and Voluntariness. EMPLOYEE acknowledges that EMPLOYEE has read this Agreement, fully understands EMPLOYEE’s rights, privileges and duties under the Agreement, and enters this Agreement freely and voluntarily, without coercion or duress.

 

17. Severability. If any term, part or provision of this Agreement is invalid or illegal, the validity of the Agreement’s other terms, parts and provisions shall not be affected thereby and said invalid or illegal term, part or provision shall be deemed not to be a part of this Agreement.

 

18.  Binding on Successors. This Agreement and all of its provisions shall be binding upon, and inure to the benefit of, any successors, assigns, personal representatives or heirs of the parties hereto.

 

19.  No External or Prior Representations. EMPLOYEE represents and acknowledges that, in executing this Agreement, EMPLOYEE does not rely and has not relied upon any representation or statement not set forth herein made by any of the Releasees, their agents or representatives.

 

20. Entire Agreement. Except as expressly stated herein, and for the Indemnity Agreement between CUBIC and EMPLOYEE, and the terms of any applicable benefit plans, the parties acknowledge and represent that this Agreement contains the entire understanding between them with respect to the matters set forth herein and supersedes any prior inconsistent agreements or understandings.

 

The parties further acknowledge that the terms of this Agreement are contractual and not a mere recital. This Agreement may only be modified by a writing signed by both parties.

 

21. Time for Consideration of Agreement. This Agreement is intended to satisfy the requirements of the Older Workers’ Benefit Protection Act, 29 U.S.C. sec. 626(f), for the release of claims under the ADEA.  The following general provisions, along with the other provisions of this Agreement, are agreed to for this purpose:

 

a. EMPLOYEE is advised to consult with an attorney concerning the terms of this Agreement and the consequences of signing it and EMPLOYEE acknowledges and agrees that EMPLOYEE has obtained and considered any such legal advice EMPLOYEE deems necessary, such that EMPLOYEE is entering into this Agreement freely, knowingly, and voluntarily;

 

b. EMPLOYEE has twenty-one (21) days from receipt to review and consider this Agreement. EMPLOYEE may use as much of this time as EMPLOYEE wishes prior to

 

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signing. EMPLOYEE may not, however, sign this Agreement before his Separation Date;

 

c. For a period of seven (7) days following the execution of this Agreement, EMPLOYEE may revoke the Agreement, and the Agreement shall not become effective or enforceable until the revocation time has expired;

 

d. To be effective, any revocation of this Agreement must be made by EMPLOYEE in writing, signed, dated and delivered to James Edwards in CUBIC’s Law Department no later than seven (7) days from the execution of the Agreement.  If the seventh day falls on a weekend or a holiday, EMPLOYEE’s revocation must be delivered on the next business day;

 

e. This Agreement shall become effective eight (8) days after it is signed by EMPLOYEE (“Effective Date”), unless revoked by EMPLOYEE prior to that time as set forth above; and

 

f. This Agreement does not waive or release any rights or claims that EMPLOYEE may have that arise after the execution of this Agreement.

 

22. Construction. This Agreement shall not be construed or interpreted for or against any party hereto based on the fact that one party’s attorney drafted this Agreement or caused this Agreement to be drafted.

 

23. Controversies Arising Out of Agreement. The parties agree that any judicially cognizable controversy or claim arising out of or relating to this Agreement or its breach shall be resolved through a confidential and binding arbitration before a single neutral arbitrator in San Diego, California in accordance with the rules and procedures of the Judicial Arbitration and Mediation Services (“JAMS”). The JAMS rules and procedures may be found online at www.jamsadr.org. Both EMPLOYEE and CUBIC expressly waive their right to a jury trial.

 

This paragraph is intended to be the exclusive method for resolving any and all claims by the parties against each other for payment of damages under this Agreement or relating to EMPLOYEE’S employment; provided, however, that EMPLOYEE shall retain the right to pursue rights or claims expressly excluded from the “General Release of Claims” section  above, as well as EMPLOYEE’s rights to file or participate in a complaint or investigation with a government agency under the “Pending and Future Claims” section above.

 

This Agreement shall not limit either party’s right to obtain any provisional remedy, including, without limitation, injunctive or similar relief, from any court of competent jurisdiction as may be necessary to protect their rights and interests pending the outcome of arbitration, including without limitation injunctive relief, in any court of competent jurisdiction pursuant to California Code of Civil Procedure § 1281.8 or any similar statute of an applicable jurisdiction.

 

Seeking any such relief shall not be deemed to be a waiver of such party’s right to compel arbitration. This Agreement has been negotiated at arms’ length by two sophisticated parties and as such the parties agree to bear their own attorneys’ fees and costs related to such arbitration,

 

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and to share equally in all other costs of the arbitration, including the JAMS’ administrative fees, the fee of the arbitrator, and all other necessary fees and costs.

 

24.  Non-Disclosure and Other Agreements. The parties agree that this Agreement will not supersede any existing Employee Inventions And Secrecy Agreement executed by EMPLOYEE while employed at CUBIC or any other agreements relating to CUBIC’s confidential information, proprietary information, trade secrets, or intellectual property.

 

25. Wages & Benefits Received. EMPLOYEE acknowledges that, with the exception of the Separation Pay and Benefits offered in this Agreement and any payment he may be entitled to under the 2016 Management Annual Incentive Plan, EMPLOYEE has been paid all wages, salary, bonuses, commissions, accrued PTO and discretionary employee benefits owed to EMPLOYEE through EMPLOYEE’s Separation Date.

 

26.  No Admissions. The parties agree that this Agreement is not an admission of any liability or fault whatsoever by EMPLOYEE or CUBIC, and shall not be used as such in any legal or administrative proceeding.

 

27. Other. By signing below, EMPLOYEE is acknowledging that EMPLOYEE has carefully read this Agreement, fully understands what it means, is entering into it knowingly and voluntarily and that all of EMPLOYEE’s representations in it are true.

 

EMPLOYEE understands that the consideration period described in Section 21 started when EMPLOYEE was first given this Agreement, and EMPLOYEE waives any right to have it

 

 

(Text continued on next page)

 

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restarted or extended by any subsequent changes to this Agreement. EMPLOYEE acknowledges that CUBIC would not have given EMPLOYEE the Separation Pay and Benefits EMPLOYEE is getting in exchange for this Agreement but for EMPLOYEE’s representations and promises that EMPLOYEE is making by signing it.

 

PLEASE READ CAREFULLY.  THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN OR UNKNOWN CLAIMS.

 

AGREED AND ACCEPTED:

 

 

EMPLOYEE

 

 

	
 
    	
 
    
	
Stephen   Shewmaker
    	
 
    
	
 
    	
 
    
	
Executed   this     day of                ,   2016 at                         ,   California.
    
	
 
    	
 
    
	
CUBIC   TRANSPORTATION SYSTEMS, INC. and
    	
 
    
	
CUBIC CORPORATION
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
James   Edwards
    	
 
    
	
Sr. Vice President,   General Counsel & Secretary
    	
 
    
	
 
    	
 
    
	
Executed   this     day of              ,   2016 at San Diego, California.
    

 

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