PROPOSAL 4: APPROVE THE AMENDMENT AND RESTATEMENT OF THE CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
The
Restated Plan is not being amended in any material respect other than to reflect the changes described above.
Equity Incentive Awards Are Critical to Long-Term Shareholder Value Creation
Our Existing Plan is the only equity plan pursuant to which we may grant equity awards to our directors, employees and consultants (other than our Employee
Stock Purchase Plan (our "ESPP")), and we believe that the adoption of the Restated Plan is essential to our success. Equity awards are intended to motivate high levels of performance, align the
interests of our directors, employees and consultants with those of our shareholders by giving directors, employees and consultants the perspective of an owner with an equity stake in our company and
providing
a means of recognizing their contributions to the success of our company. Our Board and management believe that equity awards are necessary to remain competitive in our industry and are
essential to recruiting and retaining the highly qualified employees who help our company meet its goals. As of December 14, 2018, 582 of our 5,797 employees had received grants of equity
awards and all 8 of our Independent Directors had received grants of equity awards. We have not historically granted equity awards to our consultants (of which we had approximately 1,040 as of
December 14, 2018).
The
table below presents information about the number of shares that were subject to outstanding equity awards under our equity incentive plans and the shares remaining available for issuance under
the Existing Plan and the ESPP, each at December 14, 2018, and the proposed increase in shares authorized for issuance under the Restated Plan.
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Number of
Shares
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As a % of
Shares
Outstanding
(1)
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Dollar Value
(2)
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2005 Equity Incentive Plan
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Time-based restricted stock units outstanding
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3,960
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0.01
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%
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$
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223,304
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Performance-based restricted stock units outstanding
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Shares available for grant under the 2005 Equity Incentive Plan
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Existing 2015 Incentive Award Plan
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Options outstanding
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Time-based restricted stock units outstanding
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410,300
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1.32
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%
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$
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23,136,817
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Performance-based restricted stock units outstanding
(3)
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284,633
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0.91
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%
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$
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16,050,455
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Shares available for grant under the existing 2015 Incentive Award Plan
(4)
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403,578
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1.30
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%
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$
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22,757,763
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Employee Stock Purchase Plan
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Shares available for grant under the Employee Stock Purchase Plan
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525,658
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1.69
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%
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$
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29,641,855
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Restated Plan
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Proposed increase in shares available for issuance under Restated Plan (over existing share reserve under Existing Plan)
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1,200,000
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3.85
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%
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$
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67,668,000
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(1)
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Based
on 31,132,991 shares of Cubic common stock outstanding as of December 14, 2018.
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(2)
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Based
on the closing price of Cubic common stock on December 14, 2018 of $56.39 per share.
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(3)
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Performance
awards are included at "target" levels. Performance awards granted prior to fiscal year 2019 may be eligible to vest in up to 200% of the "target" award
levels at "maximum" performance. Performance awards granted during fiscal year 2019 may be eligible to vest in up to 250% of the "target" award levels at "maximum" performance. The number of
performance-based restricted stock units outstanding as of December 14, 2018 assuming "maximum" performance is 623,264.
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(4)
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Shares
remaining available for issuance under the Existing Plan calculated assuming performance awards are counted against the share reserve at "target" levels. If
performance awards are counted against the share reserve assuming "maximum" performance, only 64,947 shares remained available for issuance under the Existing Plan as of December 14, 2018.
In
determining whether to approve the Restated Plan, including whether to increase the share reserve under the Restated Plan over the share reserve under the Existing Plan, our Board of Directors
considered the input of Radford Aon Hewitt ("Radford"), the Executive Compensation Committee's independent compensation consultant, and the following:
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The shares to be initially reserved for issuance under the Restated Plan represents an increase of 1,200,000 shares from the aggregate number of
shares reserved for issuance under the Existing Plan.
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In determining the size of the share reserve under the Restated Plan over the existing share reserve under the Existing Plan, our Board of
Directors considered the number of equity awards granted by our company during the past three calendar years. In fiscal years 2016, 2017 and 2018, equity awards representing a total of approximately
174,975 shares, 185,303 shares, and 166,082 shares, respectively, were granted under the Existing Plan, for an annual equity burn rate of 0.65%, 0.68% and 0.61%, respectively (with performance awards
counted assuming "target" performance for this purpose). This level of equity awards represents a 3-year average burn rate of 0.65% of common shares outstanding. Equity burn rate is calculated by
dividing the number of shares subject to equity awards granted during the fiscal year by the number of shares outstanding at the end of the period.
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In fiscal years 2016, 2017 and 2018, the number of stock options and time-vesting restricted stock units granted and the number of
performance-based restricted stock units earned, was as follows:
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2018
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2017
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2016
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Stock Options/SARs granted
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Time-based RSUs granted
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166,082
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185,303
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174,975
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Performance-based RSUs earned
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5,996
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10,884
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We expect the proposed aggregate share reserve under the Restated Plan to provide us with enough shares for awards for approximately two to
three years, assuming we continue to grant awards consistent with our current practices and historical usage, as reflected in our historical burn rate, and further dependent on the price of our shares
and hiring activity during the next few years, forfeitures of outstanding awards, and noting that future circumstances may require us to change our current equity grant practices. We cannot predict
our future equity grant practices, the future price of our shares or future hiring activity with any degree of certainty at this time, and the share reserve under the Restated Plan could last for a
shorter or longer time.
CUBIC
CORPORATION
2019 Proxy Statement
41
Table of Contents
PROPOSAL 4: APPROVE THE AMENDMENT AND RESTATEMENT OF THE CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
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In fiscal years 2016, 2017 and 2018, the end of year overhang rate was 5.69%, 5.12% and 4.55%, respectively. If the Restated Plan is approved,
we expect our overhang at the end of fiscal year 2019 will be approximately 8.4% (excluding the 525,658 million shares that were available for issuance under the ESPP as of December 14,
2018 and assuming no terminations or forfeitures of shares and giving effect to shares intended to vest pursuant to their terms in fiscal year 2018). If the shares available for issuance under the
ESPP are included, we expect our overhang at the end of fiscal year 2019 will be approximately 10.1%. Overhang is calculated by dividing (1) the sum of the number of shares subject to equity
awards outstanding at the end of the fiscal year plus shares remaining available for issuance for future awards at the end of the fiscal year by (2) the number of shares outstanding at the end
of the fiscal year.
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Radford's analysis, which was based on generally accepted evaluation methodologies used by proxy advisory firms, that the number of shares to be
reserved under the Restated Plan is well within generally accepted standards as measured by an analysis of the plan cost relative to industry standards.
In
light of the factors described above, and the fact that the ability to continue to grant equity compensation is vital to our ability to continue to attract and retain employees in the extremely
competitive labor markets in which we compete, our Board of Directors has determined that the size of the share reserve under the Restated Plan is reasonable and appropriate at this time. Our Board of
Directors will not create a subcommittee to evaluate the risk and benefits for issuing shares under the Restated Plan.
Other Key Features of the Restated Plan
We depend on the performance and commitment of our employees to succeed. The use of equity-based long-term incentives assists us in attracting, retaining,
motivating and rewarding talented employees. Providing equity grants creates long-term participation in our company and aligns the interests of our employees with the interests of our shareholders.
The use of equity awards as compensation also allows us to conserve cash resources for other important purposes.
The
Restated Plan reflects a broad range of compensation and governance best practices, with some of the key features of the Restated Plan as follows:
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No Increase to Shares Available for Issuance without Shareholder
Approval.
Without shareholder approval, the Restated Plan prohibits any alteration or amendment that operates to increase the total number of
shares of common stock that may be issued under the Restated Plan (other than adjustments in connection with certain corporate reorganizations and other events).
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No Automatic Vesting for Awards.
The Restated Plan does not have automatic
accelerated vesting provisions for awards in connection with a change of control (other than in connection with the non-assumption of awards).
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No Repricing of Awards.
Awards may not be repriced, replaced or regranted
through cancellation or modification without shareholder approval if the effect would be to reduce the exercise price for the shares under the award.
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Limitations on Dividend Payments on Unvested Awards.
Dividends and dividend
equivalents may not be paid on awards subject to vesting conditions unless and until such conditions are met. Dividend equivalents may not be paid on stock options or SARs.
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Limitations on Grants.
The maximum aggregate number of shares of
our
common stock that may be subject to one or more awards granted to any participant, other than a non-employee director, pursuant to the Restated Plan during any calendar year
cannot exceed 1,325,000 shares. However, this number may be adjusted to take into account equity restructurings and certain other corporate transactions as described below. In addition, the maximum
aggregate amount of cash that may be paid in cash to any one person during any calendar year with respect to one or more awards initially payable in cash shall be $10,000,000. In addition, the maximum
number of shares of our common stock that may be subject to one or more awards granted to any non-employee director pursuant to the Restated Plan during any calendar year for services as a
non-employee director cannot exceed 100,000 shares.
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No In-the-Money Option or Stock Appreciation Right Grants.
The Restated Plan
prohibits the grant of options or SARs with an exercise or base price less than 100% of the fair market value of our common stock on the date of grant.
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Reasonable Share Counting Provisions.
In general, when awards granted under
the Restated Plan are forfeited, expire or are settled in cash, or when the shares subject to a restricted stock award are forfeited by the holder or repurchased by us at a price not greater than the
price originally paid by the participant, the shares reserved for those awards will be returned to the share reserve and be available for future awards in an amount corresponding to the reduction in
the share reserve previously made with respect to such award. However, the following shares will not be returned to the share reserve under the Restated Plan: shares of common stock that are delivered
by the grantee or withheld by us as payment of the exercise price in connection with the exercise of an option or payment of the tax withholding obligation in connection with any award; shares
purchased on the open market with the cash proceeds from the exercise of options; and shares subject to a SAR that are not issued in connection with the stock settlement of the SAR on its exercise.
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Independent Administration.
The Executive Compensation Committee of our
Board, which consists of two or more non-employee directors, generally will administer the Restated Plan if it is approved by shareholders. The full Board will administer the Restated Plan with
respect to awards granted to non-employee directors. The Executive Compensation Committee may delegate certain of its duties and authorities to a management committee for awards to certain
individuals, within specific guidelines and limitations. However, no delegation of authority is permitted with respect to awards made to individuals who (1) are subject to Section 16 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or (2) have been delegated authority to grant, amend or administer awards under the Restated Plan.
Shareholder Approval Requirement
In general, shareholder approval of the Restated Plan is necessary in order for us to (1) meet the shareholder approval requirements of the principal
securities market on which shares of our common stock are traded, and (2) grant stock options that qualify as incentive stock options, or ISOs, as defined under Section 422 of the Code.
Summary of the Restated Plan
This section summarizes certain principal features of the Restated Plan. The summary is qualified in its entirety by reference to the complete text of the
Restated Plan. Shareholders are urged to read the actual text of the Restated Plan in its entirety, which is set forth in Appendix B to this proxy statement.
42 CUBIC
CORPORATION
2019 Proxy Statement
Table of Contents
PROPOSAL 4: APPROVE THE AMENDMENT AND RESTATEMENT OF THE CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
Authorized Shares.
The Restated Plan authorizes the issuance of 2,783,268 shares of our common stock, representing an increase of 1,200,000 shares over the existing
share reserve under the Existing Plan. In no event will more than 2,783,268 shares of our common stock be issuable pursuant to ISOs under the Restated Plan.
If
any award under the Restated Plan is forfeited, expires or is settled in cash, then the shares subject to such award may be used again for future grants of awards under the Restated Plan.
Notwithstanding the foregoing, shares tendered or withheld to satisfy the exercise price of an option granted under the Restated Plan or any tax withholding obligation with respect to an award granted
under the Restated Plan, any shares subject to a SAR that are not issued in connection with the stock settlement of such award on exercise, and shares purchased on the open market with the cash
proceeds from the exercise of options granted under the Restated Plan, will not be added to the shares authorized for grant under the Restated Plan. Shares forfeited by a participant or repurchased by
us at a price not greater than the price originally paid by the participant will also again be available for awards under the Restated Plan. The payment of dividend equivalents in cash in conjunction
with any outstanding awards will not be counted against the shares available for issuance under the Restated Plan.
To
the extent permitted by applicable law or any exchange rule, and subject to certain other restrictions, shares issued in assumption of, or in substitution for, any outstanding awards or shares
available under a pre-existing plan of an entity acquired by the Company or any of its subsidiaries that was approved by shareholders and not adopted in contemplation of such acquisition will not be
counted against the shares available for grant under the Restated Plan.
Plan Administration.
The Executive Compensation Committee of our Board will administer the Restated Plan (except with respect to any award granted to non-employee
directors, which must be administered by our full Board). To the extent necessary to comply with Rule 16b-3 of the Exchange Act, the members of the Executive Compensation Committee must each be
a "non-employee director" for purposes of Rule 16b-3 under the Exchange Act, and, with respect to awards that are intended to be performance-based compensation for purposes of
Section 162(m) of the Code, an "outside director" for purposes of Section 162(m). In addition, to the extent required by applicable law, each member of the Executive Compensation
Committee (or another committee or subcommittee of the Board assuming the functions of the Executive Compensation Committee under the Restated Plan shall be an "independent director" under the rules
of any securities exchange on which the shares of our common stock are listed. Subject to the terms and conditions of the Restated Plan, our Executive Compensation Committee has the authority to
select the persons to whom awards are to be made, to determine the type or types of awards to be granted to each person, the number of awards to grant, the number of shares to be subject to such
awards, and the terms and conditions of such awards, and to make all other determinations and decisions and to take all other actions necessary or advisable for the administration of the Restated
Plan. Our Executive Compensation Committee is also authorized to establish, adopt, amend or revise rules relating to administration of the Restated Plan. Our Board may at any time revest in itself the
authority to administer the Restated Plan.
Eligibility.
Options, SARs, restricted stock and other awards under the Restated Plan may be granted to individuals who are then our officers or employees or are
the officers or employees of any of our subsidiaries. Such awards may also be granted to our non-employee directors and consultants but only employees may be granted ISOs. As of December 14,
2018, there were eight non-employee directors and 5,797 employees who would have been eligible for awards under the Restated Plan had it been in effect on such date. Although the Restated Plan permits
the plan administrator to make grants to the approximately
1,040
consultants of the Company (as of December 14, 2018), the Company as a general practice has not in the past granted awards from the Existing Plan to consultants.
The
maximum aggregate number of shares that may be subject to one or more awards granted to any participant, other than a non-employee director, under the Restated Plan during any calendar year cannot
exceed 1,325,000 shares. In addition, the maximum aggregate amount of cash that may be paid in cash to any one person during any calendar year with respect to one or more awards initially payable in
cash shall be $10,000,000. In addition, the maximum number of shares of our common stock that may be subject to one or more awards granted to any non-employee director pursuant to the Restated Plan
during any calendar year for services as a non-employee director cannot exceed 100,000 shares.
Awards.
The Restated Plan provides that our Executive Compensation Committee (or the Board, in the case of awards to non-employee directors) may grant or issue
stock options, SARs, restricted stock, restricted stock units, dividend equivalents, stock payments and performance awards, or any combination thereof. Our Executive Compensation Committee (or the
Board, in the case of awards to non-employee directors) will consider each award grant subjectively, considering factors such as the individual performance of the recipient and the anticipated
contribution of the recipient to the attainment of our long-term goals. Each award will be set forth in a separate agreement with the person receiving the award and will indicate the type, terms and
conditions of the award.
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Nonqualified stock options, or NQSOs, will provide for the right to purchase shares of our common stock at a specified price which may not be
less than the fair market value of a share of common stock on the date of grant, and usually will become exercisable (at the discretion of our Executive Compensation Committee or our Board, in the
case of awards to non-employee directors) in one or more installments after the grant date, subject to the participant's continued employment or service with us and/or subject to the satisfaction of
performance targets established by our Executive Compensation Committee (or our Board, in the case of awards to non-employee directors). NQSOs may be granted for any term (up to ten years from the
date of grant) specified by our Executive Compensation Committee (or our Board, in the case of awards to non-employee directors). The closing price per share of Cubic common stock on
December 14, 2018 was $56.39 per share.
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ISOs will be designed to comply with the provisions of the Code and will be subject to specified restrictions contained in the Code. Among such
restrictions, ISOs must have an exercise price of not less than the fair market value of a share of common stock on the date of grant, may only be granted to employees, must expire within a specified
period of time following the optionee's termination of employment, and must be exercised within ten years after the date of grant. In the case of an ISO granted to an individual who owns (or is deemed
to own) more than 10% of the total combined voting power of all classes of our capital stock, the Restated Plan provides that the exercise price must be at least 110% of the fair market value of a
share of common stock on the date of grant and the ISO must expire upon the fifth anniversary of the date of grant.
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Restricted stock may be granted to participants and made subject to such restrictions as may be determined by our Executive Compensation
Committee (or our Board, in the case of awards to non-employee directors). Typically, restricted stock may be forfeited for no consideration if the conditions or restrictions are not met, and it may
not be sold or otherwise transferred to third parties until the restrictions are removed or expire. Recipients of restricted stock, unlike recipients of options, may have voting rights prior to the
time
CUBIC
CORPORATION
2019 Proxy Statement
43
Table of Contents
PROPOSAL 4: APPROVE THE AMENDMENT AND RESTATEMENT OF THE CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
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when the restrictions lapse. Dividends may not be paid on restricted stock awards
subject to vesting conditions unless and until such conditions are met.
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Restricted stock units may be awarded to participants, typically without payment of consideration or for a nominal purchase price, but subject
to vesting conditions including continued employment or performance criteria established by our Executive Compensation Committee (or our Board, in the case of awards to non-employee directors). Like
restricted stock, restricted stock units may not be sold or otherwise transferred or hypothecated until vesting conditions are removed or expire. Unlike restricted stock, stock underlying restricted
stock units will not be issued until the restricted stock units have vested, and recipients of restricted stock units generally will have no voting prior to the time when vesting conditions are
satisfied.
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A SAR entitles its holder, upon exercise of all or a portion of the SAR, to receive from us an amount determined by multiplying the difference
obtained by subtracting the exercise or base price per share of the SAR from the fair market value at the time of exercise of the SAR by the number of shares with respect to which the SAR has been
exercised, subject to any limitations imposed by the Executive Compensation Committee (or our Board, in the case of awards to non-employee directors). The exercise or base price per share subject to a
SAR will be set by the Executive Compensation Committee (or our Board, in the case of awards to non-employee directors), but may not be less than 100% of the fair market value of a share of common
stock on the date the SAR is granted. The Executive Compensation Committee (or our Board, in the case of awards to non-employee directors) determines the period during which the right to exercise the
SAR vests in the holder, but in no event may a SAR have a term extending beyond the tenth anniversary of the date of grant. Payment pursuant to SAR awards may be in cash, shares, or a combination of
both, as determined by the Executive Compensation Committee (or our Board, in the case of awards to non-employee directors).
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Dividend equivalents represent the value of the dividends, if any, per share paid by us, calculated with reference to the number of shares
covered by the awards held by the participant. Dividends and dividend equivalents may not be paid on awards subject to vesting conditions unless and until such conditions are met. In addition,
dividend equivalents may not be paid on stock options or SARs.
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Performance awards may be granted in the form of cash awards, stock awards or other performance or incentive awards that are paid in cash,
shares or a combination of cash and shares. The value of performance awards may be linked to any one or more of the performance criteria listed below, or other specific criteria determined by the
Executive Compensation Committee (or our Board, in the case of awards to non-employee directors), in each case on a specified date or dates or over any period or periods determined by the plan
administrator. Performance awards may be payable upon the attainment of pre-established performance goals based on one or more of the performance criteria listed below, or other specific criteria
determined by the Executive Compensation Committee (or our Board, in the case of awards to non-employee directors). The goals are established and evaluated by the plan administrator and may relate to
performance over any periods as determined by the Executive Compensation Committee (or our Board, in the case of awards to non-employee directors).
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Stock payments may be authorized by our Executive Compensation Committee (or our Board, in the case of awards to non-employee directors) in the
form of common stock or an option or other right to purchase common stock as part of any bonus, deferred compensation or other arrangement, made in lieu of all or any part of compensation, that would
otherwise be payable to employees, consultants or members of our Board.
Tax Withholding.
The Restated Plan permits the Executive Compensation Committee to allow for the withholding or surrender of shares in satisfaction of tax
withholding with respect to awards with a value up to the maximum individual statutory tax rate in the applicable jurisdiction at the time of such withholding (or such other rate as may be required to
avoid the liability classification of the applicable award under generally accepted accounting principles in the United States of America).
Transferability of Awards.
Unless the administrator provides otherwise, our Restated Plan generally does not allow for the transfer of awards and only the recipient
of an option or SAR may exercise such an award during his or her lifetime.
Performance Criteria.
Under the Restated Plan, the Executive Compensation Committee may grant awards that are paid, vest or become exercisable upon the attainment
of performance criteria, which may include, but are not limited to, one or more of the following business criteria, each of which may be measured with respect to our performance or the performance of
a division, business unit or an individual: (1) net earnings (either before or after one or more of (a) interest, (b) taxes, (c) depreciation, (d) amortization,
(e) goodwill impairment charges, and (f) non-cash equity-based compensation expense), (2) gross or net sales or revenue, (3) net income (either before or after taxes),
(4) adjusted net income, (5) operating earnings or profit, (6) cash flow (including, but not limited to, operating cash flow and free cash flow), (7) return on assets,
(8) return on capital, (9) return on shareholders' equity, (10) total shareholder return, (11) return on sales, (12) gross or net profit or operating margin,
(13) costs, (14) expenses, (15) working capital, (16) earnings per share, (17) adjusted earnings per share, (18) price per share, (19) implementation
or completion of critical projects, (20) market share, (21) economic value, (22) comparisons with various stock market indices, (23) capital raised in financing
transactions or other financing milestones, (24) shareholders' equity, (25) market recognition (including, but not limited to, awards and analyst ratings), (26) financial ratios,
(27) return on invested capital, (28) asset turnover, and (29) implementation, completion or attainment of objectively determinable objectives relating to commercial or strategic
milestones or developments. These performance criteria may be measured in absolute terms or as compared to any incremental increase or decrease or as compared to results of a peer group or to market
performance indicators or indices. The Executive Compensation Committee shall select the performance criteria for each performance award for purposes of establishing the performance goal or
performance goals applicable to such performance award for the designated performance period. With regard to a particular performance period, the Executive Compensation Committee will have the
discretion to select the length of the performance period.
The
Executive Compensation Committee may provide that one or more adjustments will be made to one or more of the performance goals established for any performance period. Such adjustments may include,
but are not limited to, one or more of the following: (1) items related to a change in accounting principle, (2) items relating to financing activities, (3) expenses for
restructuring or productivity initiatives, (4) other non-operating items, (5) items related to acquisitions, (6) items attributable to the business operations of any entity
acquired by us during the performance period, (7) items related to the disposal of a business or segment of a business, (8) items related to discontinued operations that do not qualify
as a segment of a business under applicable accounting standards, (9) items attributable to any stock dividend, stock split, combination or exchange of shares occurring during the performance
period, (10) any other items of significant income or expense which are determined to be appropriate adjustments, (11) items relating to unusual or extraordinary corporate transactions,
events or developments, (12) items related to amortization of acquired intangible assets, (13) items that are outside the scope of our core, on-going business activities,
(14) items relating to changes in tax laws, (15) items relating to asset impairment charges, (16) items relating to gains and losses for litigation, arbitration or
44 CUBIC
CORPORATION
2019 Proxy Statement
Table of Contents
PROPOSAL 4: APPROVE THE AMENDMENT AND RESTATEMENT OF THE CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
contractual
settlements, or (17) items relating to any other unusual or nonrecurring events or changes in applicable laws, accounting principles or business conditions.
Forfeiture, Recoupment and Clawback Provisions.
Pursuant to its general authority to determine the terms and conditions applicable to awards under the Restated
Plan, the Executive Compensation Committee has the right to provide, in an award agreement or otherwise, that an award shall be subject to the provisions of any recoupment or clawback policies
implemented by us, including, without limitation, any recoupment or clawback policies adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any
rules or regulations promulgated thereunder.
Adjustments.
If there is any stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash
dividends) of our assets to shareholders, or any other change affecting the shares of our common stock or the share price of our common stock other than an equity restructuring (as defined in the
Restated Plan), the plan administrator may make such equitable adjustments, if any, as the plan administrator in its discretion may deem appropriate to reflect such change with respect to
(1) the aggregate number and type of shares that may be issued under the Restated Plan (including, but not limited to, adjustments of the number of shares available under the Restated Plan, the
maximum number of shares that may be issued pursuant to ISOs under the Restated Plan and the maximum number of shares which may be subject to one or more awards to a participant pursuant to the
Restated Plan during any calendar year), (2) the number and kind of shares, or other securities or property, subject to outstanding awards, (3) the terms and conditions of any
outstanding awards (including, without limitation, any applicable performance targets or criteria with respect thereto), and (4) the grant or exercise price per share for any outstanding awards
under the Restated Plan. If there is any equity restructuring, the number and type of securities subject to each outstanding award and the grant or exercise price per share for each outstanding award,
if applicable, will be proportionately adjusted. Adjustments in the event of an equity restructuring will not be discretionary. Any adjustment affecting an award intended as "qualified
performance-based compensation" will be made consistent with the requirements of Section 162(m) of the Code. The plan administrator also has the authority under the Restated Plan to take
certain other actions with respect to outstanding awards in the event of a corporate transaction, including provision for the cash-out, termination, assumption or substitution of such awards.
Corporate Transactions.
In the event of a change in control where the acquirer does not assume awards granted under the Restated Plan, awards issued under the
Restated Plan shall, to the extent held by a participant who has not experienced a termination of service prior to the date of such change in control, be subject to accelerated vesting such that 100%
of the awards will become vested and exercisable or payable, as applicable. Under the Restated Plan, a change in control is generally defined as:
-
-
a transaction or series of related transactions (other than an offering of our stock to the general public through a registration statement
filed with the Securities and Exchange Commission, or SEC) whereby any person or entity or related group of persons or entities (other than us, our subsidiaries, an employee benefit plan maintained by
us or any of our subsidiaries or a person or entity that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, us) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of the total combined voting power of our securities outstanding immediately after such
acquisition;
-
-
during any two-year period, individuals who, at the beginning of such period, constitute our Board together with any new director(s) whose
election by our Board or nomination for election by our shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of
the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of our Board;
-
-
our consummation (whether we are directly or indirectly involved through one or more intermediaries) of (1) a merger, consolidation,
reorganization, or business combination or (2) the sale or other disposition of all or substantially all of our assets in any single transaction or series of transactions or (3) the
acquisition of assets or stock of another entity, in each case other than a transaction:
-
-
which results in our voting securities outstanding immediately before the transaction continuing to represent (either by remaining
outstanding or by being converted into our voting securities or the voting securities of the person that, as a result of the transaction, controls us, directly or indirectly, or owns, directly or
indirectly, all or substantially all of our assets or otherwise succeeds to our business (we or such person being referred to as a successor entity)) directly or indirectly, at least 50% of the
combined voting power of the successor entity's outstanding voting securities immediately after the transaction; and
-
-
after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the
successor entity; provided, however, that no person or group is treated as beneficially owning 50% or more of combined voting power of the successor entity solely as a result of the voting power held
in us prior to the consummation of the transaction; or
-
-
a liquidation or dissolution of our company.
Amendment and Termination; Repricing Without Shareholder Approval Prohibited.
Our Board and our Executive Compensation Committee have the authority to amend,
suspend or terminate the Restated Plan at any time. However, shareholder approval of any amendment to the Restated Plan will be obtained to the extent necessary to comply with any applicable law,
regulation or stock exchange rule. Additionally, shareholder approval is required to (1) increase the maximum number of shares that may be issued under the Restated Plan, (2) increase
the limits imposed on the maximum number of shares that may be issued to any individual under the Restated Plan during any calendar year or the limit on the maximum number of shares that may be issued
pursuant to ISOs under the Restated Plan, (3) reduce the per-share exercise price of the shares subject to any option or SAR, and (4) cancel any option or SAR in exchange for cash or
another award when the option or SAR price per share exceeds the fair market value of the underlying shares. Except as necessary to comply with Section 409A of the Code, no amendment,
suspension or termination of the Restated Plan will impair the rights or obligations of a holder under an award theretofore granted, unless such award expressly so provides or such holder consents. If
not earlier terminated by our Board or the Executive Compensation Committee, the Restated Plan will continue until the tenth anniversary of the date of the Board's initial adoption of the Restated
Plan. As a result, no awards may be granted under the Restated Plan after December 18, 2028.
Securities Laws.
The Restated Plan is intended to conform to all provisions of the Securities Act of 1933, as amended, and the Exchange Act and any and all
regulations and rules promulgated by the SEC thereunder, including, without limitation, Rule 16b-3. The Restated Plan will be administered, and awards will be granted and may be exercised, only
in such a manner as to conform to such laws, rules and regulations.
CUBIC
CORPORATION
2019 Proxy Statement
45
Table of Contents
PROPOSAL 4: APPROVE THE AMENDMENT AND RESTATEMENT OF THE CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
Federal Income Tax Consequences
The material federal income tax consequences of the Restated Plan under current federal income tax law are summarized in the following discussion, which deals
with the general tax principles applicable to the Restated Plan. The following discussion is based upon laws, regulations, rulings and decisions now in effect, all of which are subject to change.
Foreign, state and local tax laws, and
employment, estate and gift tax considerations are not discussed due to the fact that they may vary depending on individual circumstances and from locality to locality.
Stock Options and Stock Appreciation Rights.
A Restated Plan participant generally will not recognize taxable income and we generally will not be entitled to a tax
deduction upon the grant of a stock option or SAR. The tax consequences of exercising a stock option and the subsequent disposition of the shares received upon exercise will depend upon whether the
option qualifies as an ISO as defined in Section 422 of the Code. The Restated Plan permits the grant of options that are intended to qualify as ISOs as well as options that are not intended to
so qualify; however, ISOs may be granted only to our employees and employees of our parent or subsidiary corporations, if any. Upon exercising an option that does not qualify as an ISO when the fair
market value of our stock is higher than the exercise price of the option, a Restated Plan participant generally will recognize taxable income at ordinary income tax rates equal to the excess of the
fair market value of the stock on the date of exercise over the purchase price, and we (or our subsidiaries, if any) generally will be entitled to a corresponding tax deduction for compensation
expense, in the amount equal to the amount by which the fair market value of the shares purchased exceeds the purchase price for the shares. Upon a subsequent sale or other disposition of the option
shares, the participant will recognize a short-term or long-term capital gain or loss in the amount of the difference between the sales price of the shares and the participant's tax basis in the
shares.
Upon
exercising an ISO, a Restated Plan participant generally will not recognize taxable income, and we will not be entitled to a tax deduction for compensation expense. However, upon exercise, the
amount by which the fair market value of the shares purchased exceeds the purchase price will be an item of adjustment for alternative minimum tax purposes. The participant will recognize taxable
income upon a sale or other taxable disposition of the option shares. For federal income tax purposes, dispositions are divided into two categories: qualifying and disqualifying. A qualifying
disposition generally occurs if the sale or other disposition is made more than two years after the date the option was granted and more than one year after the date the shares are transferred upon
exercise. If the sale or disposition occurs before these two periods are satisfied, then a disqualifying disposition generally will result.
Upon
a qualifying disposition of ISO shares, the participant will recognize long-term capital gain in an amount equal to the excess of the amount realized upon the sale or other disposition of the
shares over their purchase price. If there is a disqualifying disposition of the shares, then the excess of the fair market value of the shares on the exercise date (or, if less, the price at which
the shares are sold) over their purchase price will be taxable as ordinary income to the participant. If there is a disqualifying disposition in the same year of exercise, it eliminates the item of
adjustment for alternative minimum tax purposes. Any additional gain or loss recognized upon the disposition will be recognized as a capital gain or loss by the participant.
We
will not be entitled to any tax deduction if the participant makes a qualifying disposition of ISO shares. If the participant makes a disqualifying disposition of the shares, we should be entitled
to a tax
deduction
for compensation expense in the amount of the ordinary income recognized by the participant.
Upon
exercising or settling a SAR, a Restated Plan participant will recognize taxable income at ordinary income tax rates, and we should be entitled to a corresponding tax deduction for compensation
expense, in the amount paid or value of the shares issued upon exercise or settlement. Payments in shares will be valued at the fair market value of the shares at the time of the payment, and upon the
subsequent disposition of the shares the participant will recognize a short-term or long-term capital gain or loss in the amount of the difference between the sales price of the shares and the
participant's tax basis in the shares.
Restricted Stock and Restricted Stock Units.
A Restated Plan participant generally will not recognize taxable income and we generally will not be entitled to a tax
deduction upon the grant of restricted stock or restricted stock units. Upon the termination of restrictions on restricted stock or the settlement of restricted stock units, the participant will
recognize taxable income at ordinary income tax rates, and we should be entitled to a corresponding tax deduction for compensation expense, in the amount paid to the participant or the amount by which
the then fair market value of the shares received by the participant exceeds the amount, if any, paid for them. Upon the subsequent disposition of any shares, the participant will recognize a
short-term or long-term capital gain or loss in the amount of the difference between the sales price of the shares and the participant's tax basis in the shares. However, a Restated Plan participant
granted restricted stock that is subject to forfeiture or repurchase through a vesting schedule such that it is subject to a "risk of forfeiture" (as defined in Section 83 of the Code) may make
an election under Section 83(b) of the Code to recognize taxable income at ordinary income tax rates, at the time of the grant, in an amount equal to the fair market value of the shares of
common stock on the date of grant, less the amount paid, if any, for such shares. We will be entitled to a corresponding tax deduction for compensation, in the amount recognized as taxable income by
the participant. If a timely Section 83(b) election is made, the participant will not recognize any additional ordinary income on the termination of restrictions on restricted stock, and we
will not be entitled to any additional tax deduction.
Dividend Equivalents, Stock Payment Awards and Cash-Based Awards.
A Restated Plan participant will generally not recognize taxable income and we will not be
entitled to a tax deduction upon the grant of dividend equivalents, stock payment awards or cash-based awards until cash or shares are paid or distributed to the participant. At that time, any cash
payments or the fair market value of shares that the participant receives will be taxable to the participant at ordinary income tax rates and we should be entitled to a corresponding tax deduction for
compensation expense. Payments in shares will be valued at the fair market value of the shares at the time of the payment, and upon the subsequent disposition of the shares, the participant will
recognize a short-term or long-term capital gain or loss in the amount of the difference between the sales price of the shares and the participant's tax basis in the shares.
Section 409A of the Code.
Certain types of awards under the Restated Plan may constitute, or provide for, a deferral of compensation under
Section 409A. Unless certain requirements set forth in Section 409A are complied with, holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the
time of vesting instead of the time of payment) and may be subject to an additional 20% federal income tax (and, potentially, certain interest penalties). To the extent applicable, the Restated Plan
and awards
46 CUBIC
CORPORATION
2019 Proxy Statement
Table of Contents
PROPOSAL 4: APPROVE THE AMENDMENT AND RESTATEMENT OF THE CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
granted
under the Restated Plan will be structured and interpreted to comply with Section 409A and the Department of Treasury regulations and other interpretive guidance that may be issued
pursuant to Section 409A.
Section 162(m) Limitation.
In general, under Section 162(m), income tax deductions of publicly-held corporations may be limited to the extent total
compensation (including base salary, annual bonus, stock option exercises and non-qualified benefits paid) for certain executive officers exceeds $1 million (less the amount of any "excess
parachute payments" as defined in Section 280G of the Code) in any one year. Prior to the TCJA, covered employees generally consisted of our Chief Executive Officer and each of the next three
highest compensated officers serving at the end of the taxable year other than our Chief Financial Officer, and compensation that qualified as "performance-
based"
under Section 162(m) was exempt from this $1 million deduction limitation. As part of the TCJA, the ability to rely on this exemption was, with certain limited exceptions,
eliminated; in addition, the definition of covered employees was expanded to generally include all named executive officers. Certain awards under the Existing Plan granted prior to November 2,
2017 may be grandfathered from the changes made by the TCJA under certain limited transition relief, however, for grants after that date and any grants which are not grandfathered, we will no longer
be able to take a deduction for any compensation in excess of $1 million that is paid to a covered employee. There is no guarantee that we will be able to take a deduction for any compensation
in excess of $1 million that is paid to a covered employee under the Existing Plan or the Restated Plan.
New Plan Benefits
The following table sets forth the awards granted to the individuals and groups identified below under the Existing Plan since its inception through
December 14, 2018 that remained outstanding as of such date. No awards have been granted to date under the Restated Plan as it does not become effective until shareholder approval.
|
|
|
|
|
|
|
|
Name and Position
|
|
Number of
Options
|
|
Number of
Restricted
Stock Units
(1)
|
|
|
|
|
|
|
|
|
|
Bradley H. Feldmann
|
|
|
|
|
|
142,167
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
|
|
|
|
Anshooman Aga
|
|
|
|
|
|
23,802
|
|
Executive Vice President, Chief Financial Officer
|
|
|
|
|
|
|
|
David H. Buss
|
|
|
|
|
|
16,356
|
|
Senior Strategic Advisor, Cubic Global Defense and Senior Vice President, Corporate and Former Senior Vice President, Cubic Corporation and President, Cubic Global Defense
|
|
|
|
|
|
|
|
Matthew J. Cole
|
|
|
|
|
|
28,835
|
|
Senior Vice President, Cubic Corporation and President, Cubic Transportation Systems
|
|
|
|
|
|
|
|
Michael R. Twyman
|
|
|
|
|
|
27,546
|
|
Senior Vice President, Cubic Corporation and President, Cubic Mission Solutions
|
|
|
|
|
|
|
|
All executive officers as a group (8 persons)
|
|
|
|
|
|
269,132
|
|
All non-executive directors as a group (8 persons)
|
|
|
|
|
|
21,118
|
|
Each nominee for election as a director (9 persons)
|
|
|
|
|
|
163,285
|
|
Each associate of any of any such directors, executive officers or nominees (0 persons)
|
|
|
|
|
|
|
|
Each other person who received or is to receive 5% of such options, warrants or rights (0 persons)
|
|
|
|
|
|
|
|
All non-executive employees as a group (5,789 persons)
|
|
|
|
|
|
408,643
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Performance
awards are included at "target." Performance awards granted prior to fiscal year 2019 may be eligible to vest in up to 200% of the "target" award levels
at "maximum" performance. Performance awards granted during fiscal year 2019 may be eligible to vest in up to 250% of the "target" award levels at "maximum" performance.
All
other future grants under the Restated Plan are within the discretion of our Board of Directors or the Executive Compensation Committee and the benefits of such grants are, therefore, not
determinable.
CUBIC
CORPORATION
2019 Proxy Statement
47
Table of Contents
PROPOSAL 5: CONFIRMATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS
The Board Recommends That You Vote "FOR" This Proposal
Ernst & Young LLP has audited the Company's books and records since 1959 and continues as its auditors. Representatives of Ernst &
Young LLP are expected to be present at the shareholders' meeting with the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate
questions.
The
Board is seeking your confirmation of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending September 30, 2019. Our organizational
documents do not require that our shareholders confirm the selection of our independent auditors. We are doing so because we believe it is a matter of good corporate practice. If our shareholders do
not ratify the selection, the Audit and Compliance Committee will investigate the reasons for rejection and reconsider whether or not to retain Ernst & Young LLP, but still may retain
them. Even if the selection is confirmed, the Audit and Compliance Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in
the best interests of the Company and its shareholders.
Principal Accountant Fees and
Services
The following table sets forth the aggregate fees billed to us by Ernst & Young LLP, our independent auditor, for 2018 and 2017:
|
|
|
|
|
|
|
|
|
|
Fees $
|
|
Services Rendered
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Audit Fees
(1)
|
|
|
4,988,000
|
|
|
5,069,000
|
|
Audit-Related Fees
(2)
|
|
|
136,000
|
|
|
102,000
|
|
Tax Fees
(3)
|
|
|
172,000
|
|
|
259,000
|
|
All Other Fees
(4)
|
|
|
5,000
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
-
(1)
-
For
professional services rendered for the audits of our 2018 and 2017 annual financial statements, the reviews of our financial statements included in our Quarterly
Reports on Forms 10-Q, statutory audits of foreign subsidiaries, consultation on accounting matters during fiscal years 2018 and 2017. The audit fees for 2018 are estimated. The final amount of
the fees for those services may vary from the estimate provided.
-
(2)
-
These
fees included due diligence procedures.
-
(3)
-
These
fees were primarily for foreign tax compliance and consulting.
-
(4)
-
These
fees were for EY-online services.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended September 30, 2018 will be sent to shareholders of record on or about January 18, 2019. The
Annual Report does not constitute, and should not be considered, a part of this proxy solicitation material.
Any person who was a beneficial owner of the Company's common stock on the record date may request a copy of the
Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2018, and it will be furnished without charge upon receipt of a
written request identifying the person so requesting a report as a shareholder of the Company at such date. Requests should be directed to Cubic Corporation, 9333 Balboa Avenue, San Diego, California
92123, Attention: Corporate Secretary.
SHAREHOLDERS SHARING THE SAME ADDRESS
The
rules promulgated by the SEC permit companies, brokers, banks or other intermediaries to deliver a single copy of a proxy statement and Annual Report to households at which two or more
shareholders reside. This practice, known as "householding," is designed to reduce duplicate mailings and save significant printing and postage costs as well as natural resources. Shareholders sharing
an address who have been previously notified by their broker, bank or other intermediary and have consented to householding will receive only one copy of the Company's proxy statement and Annual
Report. If you would like to opt out of this practice for future mailings and receive separate proxy statements and Annual Reports for each shareholder sharing the same
address,
please contact your broker, bank or other intermediary. You may also obtain a separate proxy statement or Annual Report without charge by sending a written request to Cubic Corporation,
9333 Balboa Avenue, San Diego, California 92123, Attention: Corporate Secretary. The Company will promptly send additional copies of the proxy statement or Annual Report upon receipt of such
request. Shareholders sharing an address that are receiving multiple copies of the proxy statement or Annual Report can request delivery of a single copy of the proxy statement or Annual Report by
contacting their broker, bank or other intermediary or sending a written request to Cubic Corporation at the address above.
CUBIC
CORPORATION
2019 Proxy Statement
49
Table of Contents
OTHER MATTERS
The
expense of preparing, printing and mailing the proxy materials and all other expenses of soliciting proxies will be borne by the Company. In addition to the solicitation of proxies by use of the
mails, the directors, officers and regular employees of the Company, who will receive no compensation in addition to their regular salary, if any, may solicit proxies. The Company will also reimburse
brokerage firms, banks, trustees, nominees and other persons for their expenses in forwarding proxy material to the beneficial owners of shares held by them of record.
Management
knows of no business which will be presented for consideration at the Annual Meeting other than that stated in the Notice of Annual Meeting. However, if any such matter shall properly come
before the meeting, the persons named in the enclosed proxy form will vote the same in accordance with their best judgment.
By Order of the Board of Directors
James R. Edwards
Secretary
January 18, 2019
50 CUBIC
CORPORATION
2019 Proxy Statement
Table of Contents
APPENDIX A: AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF CUBIC CORPORATION
PROPOSED AMENDMENTS TO AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION, AS AMENDED
The
following language shows the changes to our Amended and Restated Certificate of Incorporation, as amended, that would result from the proposed amendments set forth in Proposal 3 if each of
Proposal 3(a), Proposal 3(b), Proposal 3(c) and Proposal 3(d) is approved, with deletions indicated by strikethroughs and additions indicated by underlining:
*
* *
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CUBIC CORPORATION
Cubic
Corporation, a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
FIRST:
The name of the corporation is Cubic Corporation.
SECOND:
The date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was December 13, 1984.
THIRD:
The
Amended and Restated
Certificate of Incorporation of said corporation
, as amended by that certain
Certificate of Amendment of Amended and Restated Certificate of Incorporation dated as of February 23, 2016,
shall be amended and restated to read in full as follows:
1.
The name of the corporation is Cubic Corporation.
2.
The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
3.
The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may
be organized under the Delaware General Corporation Law ("
DGCL
").
4.
The corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The
total number of shares of all classes of capital stock which the corporation shall have authority to issue is 55,000,000, of which 50,000,000 shares shall be Common Stock, without par value (the
"
Common Stock
"), and 5,000,000 shares shall be Preferred Stock, without par value (the "
Preferred Stock
").
The
Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby expressly authorized to provide for the issue of any or all of the remaining unissued and
undesignated shares of the Preferred Stock in one or more series, and to fix the number of shares and to determine or alter for each such series, such voting powers, full or limited, or no voting
powers, and such designation, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors providing for the issuance of such shares and as may be permitted by the DGCL. The Board of Directors is also expressly authorized to
increase or decrease the number of shares of any series subsequent to the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of
shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
Each
outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the corporation for their vote;
provided, however
, that, except as
otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate
of Incorporation (including any certificate of designation filed with respect to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if
the holders of such affected series of Preferred Stock are entitled, either separately or together as a class with the holders of one or more other series of Preferred Stock, to vote thereon by law or
pursuant to this Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred Stock).
5.
The management of the business and the conduct of the affairs of the corporation shall be vested in its Board of Directors. The number of
Directors that shall constitute the Board of Directors shall be fixed exclusively by resolutions adopted by a majority of the authorized number of Directors constituting the Board of Directors. Each
Director shall serve until his or her successor is duly elected and qualified or until his or her death, resignation or removal. No decrease in the number of Directors constituting the Board of
Directors shall shorten the term of any incumbent Director.
6.
Elections of Directors need not be by written ballot unless required by the Bylaws of the corporation.
CUBIC
CORPORATION
2019 Proxy Statement
A-1
Table of Contents
APPENDIX A: AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF CUBIC CORPORATION
7.
The affirmative vote of the holders of two-thirds (66
2
/
3
%) of the
outstanding Common Stock of this corporation shall be required for the approval, adoption or authorization of a business combination (as hereinafter defined) and no business combination shall be
entered into without such affirmative vote.
As
used in this Article 7, the term "business combination" means:
|
|
|
|
|
(a)
|
|
The merger of this corporation into, or its consolidation with, any other corporation, person or business entity;
|
|
(b)
|
|
The merger of any other corporation, person or business entity into, or its consolidation with this corporation;
|
|
(c)
|
|
the sale, exchange, lease transfer, or other disposition by this corporation of sixty percent (60%) or more of its assets or business to any other corporation, person or business entity;
|
|
(d)
|
|
The issuance or transfer at any one time by this corporation, or by any subsidiary of this corporation, of fifty percent (50%) or more of voting securities issued pursuant to a stock option, purchase, bonus performance unit or other plan or
agreement for natural persons who are directors, employees, consultants, and/or agents of this corporation and/or a subsidiary thereof to any other corporation, person or business entity in exchange for cash, assets, or securities or any combination
thereof; or
|
|
(e)
|
|
any agreement, contract or other arrangement between this corporation and any other corporation, person or business entity providing for any of the transactions described in clauses (a), (b), (c), or (d) immediately preceding this
clause (e).
|
The
provisions of the Article 7, shall not apply to any transaction described in this Article 7, (i) if the Board of Directors of this corporation has approved
a memorandum of understanding with such other corporation, person or business entity with respect to and substantially consistent with such transaction prior to the time such other corporation, person
or business entity became an owner of five percent (5%) of the outstanding Common Stock of this corporation, or (ii) to any corporation, person or business entity which is an owner of five
percent (5%) of the outstanding Common Stock of this corporation at the time of adoption of this Article 7.
The
affirmative vote of the holders of two-thirds (66
2
/
3
%) of the outstanding Common Stock of this corporation shall be required for the amendment of all or any part
of this Article 7.
8
7
.
No action shall be
taken by the
Shareholders
Stockholders
except at an annual or special meeting of
Shareholders
Stockholders
.
9
8
.
Special meetings of the
Shareholders
Stockholders
of the corporation for any purpose or purposes may be called at any time by the Board of Directors, or by a
committee of the Board of Directors which has been duly designated by the Board of Directors and whose powers and authority, as provided in a resolution of the Board of Directors or in the Bylaws of
the corporation, include the power to call such meetings, but such Special meetings may not be called by any other person or persons.
10
9
.
In furtherance and not
in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind the Bylaws of this corporation
, but any
Bylaw amendment by the Board of Directors increasing or reducing the authorized number of Directors shall require a resolution adopted by the affirmative vote of not less than two-thirds (2/3rds) of
the then authorized number of Directors
. Bylaws shall not be made, repealed, altered, amended or rescinded by the
Shareholders
Stockholders
of the corporation except by the vote of the holders of not less than
a
majority
of the total voting power of all outstanding shares of voting stock of the corporation.
11
10
.
The corporation
reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on
Shareholders
Stockholders
herein are granted subject to this reservation.
Notwithstanding
the foregoing, the provisions set forth in Articles 7, 8, 9
, 10
and this
Article
10
11
may not be repealed or amended in any respect unless such repeal or amendment is approved by the affirmative
vote of the holders of not less than
66
2
/
3
%
a majority
of the total voting power of all outstanding shares of voting
stock of this corporation.
12
11
.
Subject to the rights
of the holders of any series of Preferred Stock that may come into existence from time to time, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or
other causes and any newly created directorships resulting from any increase in the number of Directors, shall, unless the Board of Directors determines by resolution that any such vacancies or newly
created directorships shall be filled by the stockholders, except as otherwise provided by law, be filled only by the affirmative vote of a majority of the Directors then in office, even though less
than a quorum of the Board of Directors, and not by the stockholders. Any Director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the
director for which the vacancy was created or occurred and until such Director's successor shall have been elected and qualified.
13
12
.
No action shall be
taken by the stockholders of the corporation by written consent.
14
13
.
Advance notice of
stockholder nominations for the election of Directors and of business to be brought by stockholders before any meeting of the stockholders of the corporation shall be given in the manner provided in
the Bylaws of the corporation.
15
14
.
No Director shall be
personally liable to the
Corporation
corporation
or its Stockholders for monetary damages for any breach of fiduciary duty by such
Director, as a Director. Notwithstanding the foregoing sentence, a Director shall be liable to the extent provided by applicable law (i) for breach of the Director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174
of the DGCL, or (iv) for any transaction from which the Director derived an improper personal benefit.
No
amendment to, or repeal of, this Article shall apply to, or have any effect on, the liability or alleged liability of any Director of the corporation for, or with respect to, any acts or omissions
of such Director, occurring prior to such amendment.
*
* * *
FOURTH:
This
Amended and Restated
Certificate of Incorporation has been duly adopted and approved by the Board of Directors.
FIFTH:
This Amended and Restated Certificate of Incorporation has been duly adopted and approved by written consent of the stockholders in accordance with
sections 245 and 242 of the DGCL.
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CORPORATION
2019 Proxy Statement
Table of Contents
APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
PROPOSED AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
The following language shows the proposed Amended and Restated Cubic Corporation 2015 Incentive Award Plan:
CUBIC CORPORATION
2015 INCENTIVE AWARD PLAN
(As Amended and Restated Effective February 18, 2019)
ARTICLE 1.
PURPOSE
The purpose of the Cubic Corporation 2015 Incentive Award Plan (as it may be amended or restated from time to time, the
"
Plan
") is to promote the success and enhance the value of Cubic Corporation, a Delaware corporation (the
"
Company
"), by linking the individual interests of the members of the Board, Employees, and Consultants to those of the Company's stockholders and by
providing such individuals with an incentive for outstanding performance to generate superior returns to the Company's stockholders. The Plan is further intended to provide flexibility to the Company
in its ability to motivate, attract, and retain the services of members of the Board, Employees, and Consultants upon whose judgment, interest, and special effort the successful conduct of the
Company's operation is largely dependent. This Plan constitutes an amendment and restatement of the Cubic Corporation 2015 Incentive Award Plan originally adopted by the Board on December 14,
2014, and approved by the Company's stockholders on February 24, 2015 (the "
Original Plan
"). This amended and restated Plan shall be effective on
the Restatement Effective Date (as defined below).
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular
pronoun shall include the plural where the context so indicates.
2.1 "
Administrator
" shall mean the entity that conducts the general administration of the Plan as provided in Article 12. With
reference to the duties of the Administrator under the Plan which have been delegated to one or more persons pursuant to Section 12.6, or as to which the Board has assumed, the term
"Administrator" shall refer to such person(s) unless the Committee or the Board has revoked such delegation or the Board has terminated the assumption of such duties.
2.2 "
Applicable Accounting Standards
" shall mean Generally Accepted Accounting Principles in the United States, International Financial
Reporting Standards or such other accounting principles or standards as may apply to the Company's financial statements under United States federal securities laws from time to time.
2.3 "
Applicable Law
" shall mean any applicable law, including without limitation: (a) provisions of the Code, the Securities Act, the
Exchange Act and any rules or regulations thereunder; (b) corporate, securities, tax or other laws, statutes, rules, requirements or regulations, whether federal, state, local or foreign; and
(c) rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded.
2.4 "
Award
" shall mean an Option, a Restricted Stock award, a Restricted Stock Unit award, a Performance Award, a Dividend Equivalents award,
a Stock Payment award or a Stock Appreciation Right, which may be awarded or granted under the Plan (collectively, "
Awards
").
2.5 "
Award Agreement
" shall mean any written notice, agreement, terms and conditions, contract or other instrument or document evidencing an
Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Administrator shall determine consistent with the Plan.
2.6 "
Board
" shall mean the Board of Directors of the Company.
2.7 "
Cause
" shall mean (a) the Administrator's determination that the Participant failed to substantially perform the Participant's
duties (other than any such failure resulting from the Participant's Disability); (b) the Administrator's determination that the Participant failed to carry out, or comply with any lawful and
reasonable directive of the Board or the Participant's immediate supervisor; (c) the Participant's conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated
probation for any felony, indictable offense or crime involving moral turpitude; (d) the Participant's unlawful use (including being under the influence) or possession of illegal drugs on the
premises of the Company or any of its Subsidiaries or while performing the Participant's duties and responsibilities; or (e) the Participant's commission of an act of fraud, embezzlement,
misappropriation, misconduct, or breach of fiduciary duty against the Company of any of its Subsidiaries. Notwithstanding the foregoing, if the Participant is a party to a
CUBIC
CORPORATION
2019 Proxy Statement
B-1
Table of Contents
APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
written
employment or consulting agreement with the Company (or its Subsidiary) in which the term "cause" is defined, then "Cause" shall be as such term is defined in the applicable written employment
or consulting agreement.
2.8 "
Change in Control
" shall mean and includes each of the following:
-
(a)
-
A transaction or series of transactions (other than an offering of Common Stock to the general public through a registration statement filed with
the Securities and Exchange Commission) whereby any "person" or related "group" of "persons" (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company,
any of its Subsidiaries, an employee benefit plan maintained by the Company or any of its Subsidiaries or a "person" that, prior to such transaction, directly or indirectly controls, is controlled by,
or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company
possessing more than 50% of the total combined voting power of the Company's securities outstanding immediately after such acquisition; or
-
(b)
-
During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new
Director(s) (other than a Director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in Section 2.8(a) or Section 2.8(c))
whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at
the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or
-
(c)
-
The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of
(x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company's assets in any single transaction or
series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:
-
(i)
-
which results in the Company's voting securities outstanding immediately before the transaction continuing to represent (either by remaining
outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or
indirectly, all or substantially all of the Company's assets or otherwise succeeds to the business of the Company (the Company or such person, the "
Successor
Entity
")) directly or indirectly, at least a majority of the combined voting power of the Successor Entity's outstanding voting securities immediately after the transaction, and
-
(ii)
-
after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity;
provided, however, that no person or group shall be treated for purposes of this Section 2.8(c)(ii) as beneficially owning 50% or more of the combined voting power of the Successor Entity
solely as a result of the voting power held in the Company prior to the consummation of the transaction; or
-
(d)
-
The liquidation or dissolution of the Company.
Notwithstanding
the foregoing, if a Change in Control constitutes a payment event with respect to any portion of an Award that provides for the deferral of compensation and is subject
to Section 409A of the Code, the transaction or event described in subsection (a), (b), (c) or (d) with respect to such Award (or portion thereof) must also constitute a
"change in control event," as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Section 409A.
The
Committee shall have full and final authority, which shall be exercised in its sole discretion, to determine conclusively whether a Change in Control of the Company has occurred pursuant to the
above definition, and the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of
whether a Change in Control is a "change in control event" as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.
2.9 "
Code
" shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the regulations and official guidance
promulgated thereunder, whether issued prior or subsequent to the grant of any Award.
2.10 "
Committee
" shall mean the Compensation Committee of the Board, or another committee or subcommittee of the Board or the Compensation
Committee, appointed as provided in Section 12.1.
2.11 "
Common Stock
" shall mean the common stock of the Company.
2.12 "
Company
" shall have the meaning set forth in Article 1.
2.13 "
Consultant
" shall mean any consultant or advisor engaged to provide services to the Company or any Subsidiary who qualifies as a
consultant under the applicable rules of the Securities and Exchange Commission for registration of shares on a Form S-8 Registration Statement.
2.14 "
Director
" shall mean a member of the Board, as constituted from time to time.
2.15 "
Disability
" shall mean that the Participant is either (a) unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, or (b) by reason
of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income
replacement benefits for a period of not less than three months under a long-term disability income plan, if any, covering employees of the Company. For purposes of the Plan, a Participant shall be
deemed to have incurred a Disability if the Participant is determined to be totally disabled by the Social Security Administration or in accordance with the applicable disability insurance program of
the Company; provided that the definition of "disability" applied under such disability insurance program complies with the requirements of this definition.
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APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
2.16 "
Dividend Equivalent
" shall mean a right to receive the equivalent value (in cash or Shares) of dividends paid on Shares, awarded under
Section 9.2.
2.17 "
DRO
" shall mean a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended from time to time, or the rules thereunder.
2.18 "
Eligible Individual
" shall mean any person who is an Employee, a Consultant or a Non-Employee Director, as determined by the
Administrator.
2.19 "
Employee
" shall mean any officer or other employee (as determined in accordance with Section 3401(c) of the Code) of the Company
or of any Subsidiary.
2.20 "
Equity Restructuring
" shall mean a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock
split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of Shares (or other securities of the Company) or the share price of
Common Stock (or other securities) and causes a change in the per share value of the Common Stock underlying outstanding Awards.
2.21 "
Exchange Act
" shall mean the Securities Exchange Act of 1934, as amended from time to time.
2.22 "
Expiration Date
" shall have the meaning given to such term in Section 13.1.
2.23 "
Fair Market Value
" shall mean, as of any given date, the value of a Share determined as follows:
-
(a)
-
If the Common Stock is (i) listed on any established securities exchange (such as the New York Stock Exchange, the NASDAQ Global Market and
the NASDAQ Global Select Market), (ii) listed on any national market system or (iii) listed, quoted or traded on any automated quotation system, its Fair Market Value shall be the
closing sales price for a Share as quoted on such exchange or system for such date or, if there is no closing sales price for a Share on the date in question, the closing sales price for a Share on
the last preceding date for which such quotation exists, as reported in
The Wall Street Journal
or such other source as the Administrator deems reliable;
or
-
(b)
-
If the Common Stock is not listed on an established securities exchange, national market system or automated quotation system, its Fair Market
Value shall be established by the Administrator in good faith.
2.24 "
Good Reason
" shall mean (a) a change in the Participant's position with the Company (or its Subsidiary employing
the Participant) that materially reduces the Participant's authority, duties or responsibilities or the level of management to which he or she reports, (b) a material diminution in the
Participant's level of compensation (including base salary, fringe benefits and target bonuses under any corporate performance-based incentive programs) or (c) a relocation of the Participant's
place of employment by more than 50 miles, provided that such change, reduction or relocation is effected by the Company (or its Subsidiary employing the Participant) without the Participant's
consent. Notwithstanding the foregoing, if Participant is a party to a written employment or consulting agreement with the Company (or its Subsidiary) in which the term "good reason" is defined, then
"Good Reason" shall be as such term is defined in the applicable written employment or consulting agreement.
2.25 "
Greater Than 10% Stockholder
" shall mean an individual then owning (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the Company or any subsidiary corporation (as defined in Section 424(f) of the Code) or parent corporation thereof (as defined
in Section 424(e) of the Code).
2.26 "
Incentive Stock Option
" shall mean an Option that is intended to qualify as an incentive stock option and conforms to the applicable
provisions of Section 422 of the Code.
2.27 "
Non-Employee Director
" shall mean a Director of the Company who is not an Employee.
2.28 "
Non-Employee Director Compensation Program
" shall have the meaning set forth in Section 4.6.
2.29 "
Non-Qualified Stock Option
" shall mean an Option that is not an Incentive Stock Option.
2.30 "
Option
" shall mean a right to purchase Shares at a specified exercise price, granted under Article 5. An Option shall be either
a Non-Qualified Stock Option or an Incentive Stock Option; provided, however, that Options granted to Non-Employee Directors and Consultants shall only be Non-Qualified Stock Options.
2.31 "
Option Term
" shall have the meaning set forth in Section 6.6.
2.32 "
Parent
" shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities ending with the
Company if each of the entities other than the Company beneficially owns, at the time of the determination, securities or interests representing at least 50% of the total combined voting power of all
classes of securities or interests in one of the other entities in such chain.
2.33 "
Participant
" shall mean a person who has been granted an Award pursuant to the Plan.
2.34 "
Performance Award
" shall mean a cash bonus award, stock bonus award, performance award or other incentive award that is paid in cash,
Shares or a combination of both, awarded under Section 9.1.
2.35 "
Performance-Based Compensation
" shall mean any compensation granted under the Plan prior to November 2, 2017 that is intended to
qualify as "performance-based compensation' as described in Section 162(m)(4)(C) of the Code prior to its repeal.
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CORPORATION
2019 Proxy Statement
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APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
2.36 "
Performance Criteria
" shall mean the criteria (and adjustments) that the Committee selects for an Award for purposes of establishing
the Performance Goal or Performance Goals for a Performance Period, determined as follows:
-
(a)
-
The Performance Criteria that shall be used to establish Performance Goals shall be determined by the Administrator. Such criteria may include, but
are not limited to, one or more of the following: (i) net earnings (either before or after one or more of the following: (A) interest, (B) taxes, (C) depreciation,
(D) amortization, (E) goodwill impairment charges and (F) non-cash equity-based compensation expense); (ii) gross or net sales or revenue; (iii) net income (either
before or after taxes); (iv) adjusted net income; (v) operating earnings or profit; (vi) cash flow (including, but not limited to, operating cash flow and free cash flow);
(vii) return on assets; (viii) return on capital; (ix) return on stockholders' equity; (x) total stockholder return; (xi) return on sales; (xii) gross or net
profit or operating margin; (xiii) costs; (xiv) expenses; (xv) working capital; (xvi) earnings per Share; (xvii) adjusted earnings per Share; (xviii) price
per Share; (xix) implementation or completion of critical projects; (xx) market share; (xxi) economic value; (xxii) comparisons with various stock market indices;
(xxiii) capital raised in financing transactions or other financing milestones; (xxiv) stockholders' equity; (xxv) market recognition (including but not limited to awards and
analyst ratings); (xxvi) financial ratios; (xxvii) return on invested capital; (xxviii) asset turnover; or (xxix) implementation, completion or attainment of objectively
determinable objectives relating to commercial or strategic milestones or developments; in each case as determined in accordance with Applicable Accounting Standards, if applicable, any of which may
be measured either in absolute terms or as compared to any incremental increase or decrease or as compared to results of a peer group or to market performance indicators or indices.
-
(b)
-
The Administrator, in its sole discretion, may provide that one or more adjustments shall be made to one or more of the Performance Goals. Such
adjustments may include, but are not limited to, one or more of the following: (i) items related to a change in accounting principle; (ii) items relating to financing activities;
(iii) expenses for restructuring or productivity initiatives; (iv) other non-operating items; (v) items related to acquisitions; (vi) items attributable to the business
operations of any entity acquired by the Company during the Performance Period; (vii) items related to the disposal of a business or segment of a business; (viii) items related to
discontinued operations that do not qualify as a segment of a business under Applicable Accounting Standards; (ix) items attributable to any stock dividend, stock split, combination or exchange
of stock occurring during the Performance Period; (x) any other items of significant income or expense that are determined to be appropriate adjustments; (xi) items relating to unusual
or extraordinary corporate transactions, events or developments; (xii) items related to amortization of acquired intangible assets; (xiii) items that are outside the scope of the
Company's core, on-going business activities; (xiv) items relating to changes in tax laws; (xv) items relating to asset impairment charges; (xvi) items relating to gains or losses
for litigation, arbitration and contractual settlements; or (xvii) items relating to any other unusual or nonrecurring events or changes in Applicable Law, accounting principles or business
conditions.
2.37 "
Performance Goals
" shall mean, for a Performance Period, one or more goals established in writing by the Administrator
for the Performance Period. Performance Goals may be expressed in terms of overall Company performance or the performance of a Subsidiary, division, business unit, or an individual.
2.38 "
Performance Period
" shall mean one or more periods of time, which may be of varying and overlapping durations, as the Administrator may
select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant's right to, and the payment of, an Award.
2.39 "
Performance Stock Unit
" shall mean a Performance Award awarded under Section 9.1 which is denominated in units of value
including dollar value of Shares.
2.40 "
Permitted Transferee
" shall mean, with respect to a Participant, any "family member" of the Participant, as defined in the instructions
to Form S-8 under the Securities Act, or any other transferee specifically approved by the Administrator, after taking into account Applicable Law.
2.41 "
Plan
" shall have the meaning set forth in Article 1.
2.42 "
Restatement Effective Date
" shall mean the date this amended and restated Plan is approved by the stockholders of the Company.
2.43 "
Restricted Stock
" shall mean an award of Shares made under Article 7 that is subject to certain restrictions and may be subject
to risk of forfeiture or repurchase.
2.44 "
Restricted Stock Unit
" shall mean a contractual right awarded under Article 8 to receive in the future a Share or the cash value
of a Share.
2.45 "
Securities Act
" shall mean the Securities Act of 1933, as amended.
2.46 "
Shares
" shall mean shares of Common Stock.
2.47 "
Stock Appreciation Right
" shall mean a stock appreciation right granted under Article 10.
2.48 "
Stock Appreciation Right Term
" shall have the meaning set forth in Section 10.4.
2.49 "
Stock Payment
" shall mean a payment in the form of Shares awarded under Section 9.3.
2.50 "
Subsidiary
" shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning
with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing more than 50% of the
total combined voting power of all classes of securities or interests in one of the other entities in such chain.
2.51 "
Substitute Award
" shall mean an Award granted under the Plan upon the assumption of, or in substitution for, outstanding equity awards
previously granted by a company or other entity in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock; provided, however, that in
no event shall the term "Substitute Award" be construed to refer to an award made in connection with the cancellation and repricing of an Option or Stock Appreciation Right.
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APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
2.52 "
Termination of Service
" shall mean:
-
(a)
-
As to a Consultant, the time when the engagement of a Participant as a Consultant to the Company or a Subsidiary is terminated for any reason, with
or without cause, including, without limitation, by resignation, discharge, death, or retirement, but excluding terminations where the Consultant simultaneously commences or remains in employment or
service with the Company or any Subsidiary.
-
(b)
-
As to a Non-Employee Director, the time when a Participant who is a Non-Employee Director ceases to be a Director for any reason, including,
without limitation, a termination by resignation, failure to be elected, death, or retirement, but excluding terminations where the Participant simultaneously commences or remains in employment or
service with the Company or any Subsidiary.
-
(c)
-
As to an Employee, the time when the employee-employer relationship between a Participant and the Company or any Subsidiary is terminated for any
reason, including, without limitation, a termination by resignation, discharge, death, disability or retirement; but excluding terminations where the Participant simultaneously commences or remains in
employment or service with the Company or any Subsidiary.
The
Administrator, in its sole discretion, shall determine the effect of all matters and questions relating to any Termination of Service, including, without limitation, the question
of whether a Termination of Service resulted from a discharge for cause and all questions of whether particular leaves of absence constitute a Termination of Service; provided, however, that, with
respect to Incentive Stock Options, unless the Administrator otherwise provides in the terms of the Award Agreement or otherwise, or as otherwise required by Applicable Law, a leave of absence, change
in status from an employee to an independent contractor or other change in the employee-employer relationship shall constitute a Termination of Service only if, and to the extent that, such leave of
absence, change in status or other change interrupts employment for the purposes of Section 422(a)(2) of the Code and the then-applicable regulations and revenue rulings under said Section. For
purposes of the Plan, a Participant's employee-employer relationship or consultancy relationship shall be deemed to be terminated in the event that the Subsidiary employing or contracting with such
Participant ceases to remain an Subsidiary following any merger, sale of stock or other corporate transaction or event (including, without limitation, a spin-off).
ARTICLE 3.
SHARES SUBJECT TO THE PLAN
3.1
Number of Shares.
-
(a)
-
Subject to Sections 3.1(b) and 13.2, the aggregate number of Shares which may be issued or transferred pursuant to Awards under the Plan is
2,783,268 Shares. Notwithstanding anything in this Section 3.1 to the contrary, the number of Shares that may be issued or transferred pursuant to Incentive Stock Options under the Plan shall
not exceed an aggregate of 2,783,268 Shares, subject to adjustment pursuant to Section 13.2.
-
(b)
-
If any Shares subject to an Award are forfeited or expire or such Award is settled for cash (in whole or in part), the Shares subject to such Award
shall, to the extent of such forfeiture, expiration or cash settlement, again be available for future grants of Awards under the Plan. Notwithstanding anything to the contrary contained herein, the
following Shares shall not be added back to the Shares authorized for grant under Section 3.1(a) and will not be available for future grants of Awards: (i) Shares tendered by a
Participant or withheld by the Company in payment of the exercise price of an Option; (ii) Shares tendered by the Participant or withheld by the Company to satisfy any tax withholding
obligation with respect to an Award; (iii) Shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the stock appreciation right on exercise
thereof; and (iv) Shares purchased on the open market with the cash proceeds from the exercise of Options. Any Shares forfeited by the Participant or repurchased by the Company under
Section 7.4 at a price not greater than the price originally paid by the Participant so that such Shares are returned to the Company will again be available for Awards. The payment of Dividend
Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the Shares available for issuance under the Plan. Notwithstanding the provisions of this
Section 3.1(b), no Shares may again be optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an incentive stock option under Section 422
of the Code.
-
(c)
-
To the extent permitted by Applicable Law, and except as may be required by reason of Section 422 of the Code, Substitute Awards shall not
reduce the Shares authorized for grant under the Plan. Additionally, in the event that a company acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary combines, has
shares available under a pre-existing plan approved by its stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of
such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the
consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for
grant under the Plan; provided that Awards using such available Shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the
acquisition or combination, grants of Awards using such available shares are permitted without stockholder approval under the rules of the principal securities exchange on which the Common Stock is
then listed, and such grants shall be made only to individuals who were not employed by or providing services to the Company or its Subsidiaries immediately prior to such acquisition or combination.
3.2
Stock Distributed.
Any Shares distributed pursuant to an Award may consist, in whole or in part, of
authorized and unissued Common Stock, treasury Common Stock or Common Stock purchased on the open market.
3.3
Limitation on Awards.
Notwithstanding any provision in the Plan to the contrary, and subject to Section 13.2,
(a) the maximum aggregate number of Shares with respect to one or more Awards that may be granted to any one person other than a Non-Employee Director during any calendar year shall be
1,325,000, and (b) the maximum aggregate amount of cash that may be paid in cash to any one person during any calendar year with respect to one or more Awards initially payable in cash shall be
$10,000,000. To the extent required by Section 162(m) of the Code, Shares subject to Awards that are canceled shall continue to be counted against the share limitations contained in
Sections 3.1 and 3.3. Notwithstanding
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the
foregoing, and subject to Section 13.2, no Non-Employee Director shall be granted Awards under the Plan for services as a Non-Employee Director for any calendar year covering more than
100,000 Shares.
ARTICLE 4.
GRANTING OF AWARDs
4.1
Participation.
The Administrator may, from time to time, select from among all Eligible Individuals, those to whom an Award
shall be granted and shall determine the nature and amount of each Award, which shall not be inconsistent with the requirements of the Plan. No Eligible Individual shall have any right to be granted
an Award pursuant to the Plan.
4.2
Award Agreement.
Each Award shall be evidenced by an Award Agreement that sets forth the terms, conditions and limitations
for such Award, which may include the term of the Award, the provisions applicable in the event of the Participant's Termination of Service, and the Company's authority to unilaterally or bilaterally
amend, modify, suspend, cancel or rescind an Award. Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of
Section 422 of the Code.
4.3
Limitations Applicable to Section 16 Persons.
Notwithstanding any other provision of the Plan, the Plan, and any
Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under
Section 16 of the Exchange Act (including Rule 16b-3 of the Exchange Act and any amendments thereto) that are requirements for the application of such exemptive rule. To the extent
permitted by Applicable Law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
4.4
At-Will Employment; Voluntary Participation.
Nothing in the Plan or any Award Agreement shall confer upon any Participant
any right to continue in the employ of, or as a Director or Consultant for, the Company or any Subsidiary, or shall interfere with or restrict in any way the rights of the Company and any Subsidiary,
which rights are hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, with or without cause, and with or without notice, or to terminate or change all other
terms and conditions of employment or engagement, except to the extent expressly provided otherwise in a written agreement between the Participant and the Company or any Subsidiary. Participation by
each Participant in the Plan shall be voluntary and nothing in the Plan shall be construed as mandating that any Eligible Individual shall participate in the Plan.
4.5
Foreign Holders.
Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in countries
other than the United States in which the Company or any Subsidiary operates or has Employees, Non-Employee Directors or Consultants, or in order to comply with the requirements of any foreign
securities exchange, the Administrator, in its sole discretion, shall have the power and authority to: (a) determine which Subsidiaries shall be covered by the Plan; (b) determine which
Eligible Individuals outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to Eligible Individuals outside the United
States to comply with applicable foreign laws or listing requirements of any such foreign securities exchange; (d) establish subplans and modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable (any such subplans and/or modifications shall be attached to the Plan as appendices); provided, however, that no such subplans
and/or modifications shall increase the share limitations contained in Sections 3.1 and 3.3; and (e) take any action, before or after an Award is made, that it deems advisable to obtain
approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any such foreign securities exchange. Notwithstanding the foregoing, the
Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate Applicable Law. For purposes of the Plan, all references to foreign laws, rules, regulations or
taxes shall be references to the laws, rules, regulations and taxes of any applicable jurisdiction other than the United States or a political subdivision thereof.
4.6
Non-Employee Director Awards.
The Administrator, in its sole discretion, may provide that Awards granted to Non-Employee
Directors shall be granted pursuant to a written nondiscretionary formula established by the Administrator (the "
Non-Employee Director Compensation
Program
"), subject to the limitations of the Plan. The Non-Employee Director Equity Compensation Program shall set forth the type of Award(s) to be granted to Non-Employee
Directors, the number of Shares to be subject to Non-Employee Director Awards (subject to the limits of the Plan), the conditions on which such Awards shall be granted, become exercisable and/or
payable and expire, and such other terms and conditions as the Administrator shall determine in its sole discretion. The Non-Employee Director Equity Compensation Program may be modified by the
Administrator from time to time in its sole discretion.
4.7
Stand-Alone and Tandem Awards.
Awards granted pursuant to the Plan may, in the sole discretion of the Administrator, be
granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same
time as or at a different time from the grant of such other Awards.
ARTICLE 5.
PROVISIONS APPLICABLE TO AWARDS INTENDED TO QUALIFY AS PERFORMANCE-BASED COMPENSATION
Notwithstanding any other provision of the Plan or any Award, with respect to any Award which is intended to continue to qualify as Performance-Based
Compensation (as described in Section 162(m)(4)(C) of the Code prior to its repeal) pursuant to the transition relief rules in the Tax Cuts and Jobs Act of 2017, to the extent any of the
provisions of the Plan or any Award (or any amendments hereto pursuant to this amendment and restatement of the Plan) would cause such Awards to fail to so qualify, any such provisions shall not apply
to such Awards to the extent necessary to ensure the such Awards continue to so qualify. In addition, any Award which is intended to continue to qualify as Performance-Based Compensation (as described
in Section 162(m)(4)(C) of the Code prior to its repeal) pursuant to the transition relief rules in the Tax Cuts and Jobs Act of 2017 shall be subject to any additional limitations as the
Administrator determines necessary for such Award to continue to so qualify. To the extent permitted by Applicable Law, and the Plan and any such Awards shall be deemed amended to the extent necessary
to conform to such requirements.
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ARTICLE 6.
OPTIONS
6.1
Granting of Options to Eligible Individuals.
The Administrator is authorized to grant Options to Eligible Individuals from
time to time, in its sole discretion, on such terms and conditions as it may determine, which shall not be inconsistent with the Plan.
6.2
Option Exercise Price.
The exercise price per Share subject to each Option shall be set by the Administrator, but shall not
be less than 100% of the Fair Market Value of a Share on the date the Option is granted (or, as to Incentive Stock Options, on the date the Option is modified, extended or renewed for purposes of
Section 424(h) of the Code). In addition, in the case of Incentive Stock Options granted to a Greater Than 10% Stockholder, such price shall not be less than 110% of the Fair Market Value of a
Share on the date the Option is granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code).
6.3
Option Vesting.
-
(a)
-
The period during which the right to exercise, in whole or in part, an Option vests in the Participant shall be set by the Administrator and the
Administrator may determine that an Option may not be exercised in whole or in part for a specified period after it is granted. Such vesting may be based on service with the Company or any Subsidiary,
any of the Performance Criteria, or any other criteria selected by the Administrator. Except as limited by the Plan, at any time after the grant of an Option, the Administrator, in its sole discretion
and subject to whatever terms and conditions it selects, may accelerate the period during which an Option vests.
-
(b)
-
No portion of an Option which is unexercisable at a Participant's Termination of Service shall thereafter become exercisable, except as may be
otherwise provided by the Administrator either in the Award Agreement evidencing the grant of an Option or by action of the Administrator following the grant of the Option. Unless otherwise determined
by the Administrator in the Award Agreement or by action of the Administrator following the grant of the Option, the portion of an Option that is unexercisable at a Participant's Termination of
Service shall automatically expire 30 days following such Termination of Service.
6.4
Manner of Exercise.
All or a portion of an exercisable Option shall be deemed exercised upon delivery of all
of the following to the Secretary of the Company, the stock administrator of the Company or such other person or entity designated by the Administrator, or his, her or its office, as applicable:
-
(a)
-
A written or electronic notice complying with the applicable rules established by the Administrator stating that the Option, or a portion thereof,
is exercised. The notice shall be signed by the Participant or other person then entitled to exercise the Option or such portion of the Option.
-
(b)
-
Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with Applicable
Law. The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to agents and registrars.
-
(c)
-
In the event that the Option shall be exercised by any person or persons other than the Participant, appropriate proof of the right of such person
or persons to exercise the Option, as determined in the sole discretion of the Administrator.
-
(d)
-
Full payment of the exercise price and applicable withholding taxes for the Shares with respect to which the Option, or portion thereof, is
exercised, in a manner permitted by Section 11.1 and Section 11.2.
6.5
Partial Exercise.
An exercisable Option may be exercised in whole or in part. However, an Option shall not
be exercisable with respect to fractional Shares unless otherwise determined by the Administrator and the Administrator may require that, by the terms of the Option, a partial exercise must be with
respect to a minimum number of shares.
6.6
Option Term.
The term of each Option (the "
Option Term
") shall be set by the
Administrator in its sole discretion; provided, however, that the Option Term shall not be more than 10 years from the date the Option is granted, or five years from the date an Incentive Stock
Option is granted to a Greater Than 10% Stockholder. The Administrator shall determine the time period, including the time period following a
Termination of Service, during which the Participant has the right to exercise the vested Options, which time period may not extend beyond the last day of the Option Term. Except as limited by the
requirements of Section 409A of the Code or the first sentence of this Section 6.6, the Administrator may extend the Option Term of any outstanding Option, and may extend the time period
during which vested Options may be exercised, in connection with any Termination of Service of the Participant, and may amend, subject to Section 13.1, any other term or condition of such
Option relating to such a Termination of Service.
6.7
Qualification of Incentive Stock Options.
No Incentive Stock Option shall be granted to any person who is not an Employee of
the Company or any subsidiary corporation (as defined in Section 424(f) of the Code) of the Company. No person who qualifies as a Greater Than 10% Stockholder may be granted an Incentive Stock
Option unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code. Any Incentive Stock Option granted under the Plan may be modified by the
Administrator, with the consent of the Participant, to disqualify such Option from treatment as an "incentive stock option" under Section 422 of the Code. To the extent that the aggregate Fair
Market Value of stock with respect to which "incentive stock options" (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable
for the first time by a Participant during any calendar year under the Plan, and all other plans of the Company and any parent or subsidiary corporation thereof (each as defined in
Section 424(e) and 424(f) of the Code, respectively), exceeds $100,000, the Options shall be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code. The
rule set forth in the immediately preceding sentence shall be applied by taking Options and other "incentive stock options" into account in the order in which they were granted and the Fair Market
Value of stock shall be determined as of the time the respective options were granted.
6.8
Notification Regarding Disposition.
The Participant shall give the Company prompt written or electronic notice of any
disposition of Shares acquired by exercise of an Incentive Stock Option which occurs within (a) two years from the date of granting (including the date the Option is
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APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
modified,
extended or renewed for purposes of Section 424(h) of the Code) such Option to such Participant, or (b) one year after the transfer of such Shares to such Participant.
6.9
Substitute Awards.
Notwithstanding the foregoing provisions of this Article 6 to the contrary, in the case of an
Option that is a Substitute Award, the price per share of the Shares subject to such Option may be less than the Fair Market Value per share on the date of grant; provided that the exercise price of
any Substitute Award shall be determined in accordance with the applicable requirements of Sections 424 and 409A of the Code.
ARTICLE 7.
RESTRICTED STOCK
7.1
Award of Restricted Stock.
-
(a)
-
The Administrator is authorized to grant Restricted Stock to Eligible Individuals, and shall determine the terms and conditions, including the
restrictions applicable to each award of Restricted Stock, which terms and conditions shall not be inconsistent with the Plan, and may impose such conditions on the issuance of such Restricted Stock
as it deems appropriate.
-
(b)
-
The Administrator shall establish the purchase price, if any, and form of payment for Restricted Stock; provided, however, that if a purchase price
is charged, such purchase price shall be no less than the par value, if any, of the Shares to be purchased, unless otherwise permitted by Applicable Law. In all cases, legal consideration shall be
required for each issuance of Restricted Stock.
7.2
Rights as Stockholders.
Subject to Section 7.4, upon issuance of Restricted Stock, the Participant
shall have, unless otherwise provided by the Administrator, all the rights of a stockholder with respect to said Shares, subject to the restrictions in each individual Award Agreement, including the
right to receive all dividends and other distributions paid or made with respect to the Shares; provided, however, that, in the sole discretion of the Administrator, any extraordinary distributions
with respect to the Shares shall be subject to the restrictions set forth in Section 7.3. In addition, with respect to a share of Restricted Stock subject to vesting, dividends which are paid
prior to vesting shall only be paid out to the Participant to the extent that the vesting conditions are subsequently satisfied and the share of Restricted Stock vests.
7.3
Restrictions.
All shares of Restricted Stock (including any shares received by Participants thereof with respect to shares
of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall, in the terms of each individual Award Agreement, be subject to such restrictions and
vesting requirements as the Administrator shall provide. Such restrictions may include, without limitation, restrictions concerning voting rights and transferability and such restrictions may lapse
separately or in combination at such times and pursuant to such circumstances or based on such criteria as selected by the Administrator, including, without limitation, criteria based on the
Participant's duration of employment, directorship or consultancy with the Company, the Performance Criteria, Company performance, individual performance or other criteria selected by the
Administrator. By action taken after the Restricted Stock is issued, the Administrator may, on such terms and conditions as it may determine to be appropriate, accelerate the vesting of such
Restricted Stock by removing any or all of the restrictions imposed by the terms of the applicable Award Agreement. Unless otherwise determined by the Administrator, Restricted Stock may not be sold
or encumbered until all restrictions are terminated or expire.
7.4
Repurchase or Forfeiture of Restricted Stock.
Except as otherwise determined by the Administrator at the time of the grant
of the Award or thereafter, (a) if no purchase price was paid by the Participant for the Restricted Stock, upon a Termination of Service, the Participant's rights in unvested Restricted Stock
then subject to restrictions shall lapse and be forfeited, and such Restricted Stock shall be surrendered to the Company and cancelled without consideration, and (b) if a purchase price was
paid by the Participant for the Restricted Stock, upon a Termination of Service, the Company shall have the right to repurchase from the Participant the unvested Restricted Stock then subject to
restrictions at a cash price per share equal to the price paid by the Participant for such Restricted Stock or such other amount as may be specified in the applicable Award Agreement. The
Administrator in its sole discretion may provide that, upon certain events, including without limitation a Change in Control, the Participant's death, retirement or disability, any other specified
Termination of Service or any other event, the Participant's rights in unvested Restricted Stock shall not terminate, such Restricted Stock shall vest and cease to be forfeitable and, if applicable,
the Company shall cease to have a right of repurchase.
7.5
Certificates for Restricted Stock.
Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the
Administrator shall determine. Certificates or book entries evidencing shares of Restricted Stock shall include an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock. The Company, in its sole discretion, may (a) retain physical possession of any stock certificate evidencing shares of
Restricted Stock until the restrictions thereon shall have lapsed and/or (b) require that the stock certificates evidencing shares of Restricted Stock be held in custody by a designated escrow
agent (which may but need not be the Company) until the restrictions thereon shall have lapsed and that the Participant deliver a stock power, endorsed in blank, relating to such Restricted Stock.
7.6
Section 83(b) Election.
If a Participant makes an election under Section 83(b) of the Code to be taxed with
respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Participant would otherwise be taxable under Section 83(a)
of the Code, the Participant shall be required to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.
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APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
ARTICLE 8.
RESTRICTED STOCK UNITS
8.1
Grant of Restricted Stock Units.
The Administrator is authorized to grant Awards of Restricted Stock Units to any Eligible
Individual selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator.
8.2
Purchase Price.
The Administrator shall specify the purchase price, if any, to be paid by the Participant to the Company
with respect to any Restricted Stock Unit award; provided, however, that value of the consideration shall not be less than the par value of a Share, unless otherwise permitted by Applicable Law.
8.3
Vesting of Restricted Stock Units.
At the time of grant, the Administrator shall specify the date or dates on which the
Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate, including, without limitation, vesting based upon the
Participant's duration of service to the Company or any Subsidiary, one or more Performance Criteria, Company performance, individual performance or other specific criteria, in each case on a
specified date or dates or over any period or periods, as determined by the Administrator.
8.4
Maturity and Payment.
At the time of grant, the Administrator shall specify the maturity date applicable to each grant of
Restricted Stock Units, which shall be no earlier than the vesting date or dates of the Award and may be determined at the election of the Participant (if permitted by the applicable Award Agreement);
provided that, except as otherwise determined by the Administrator and set forth in any applicable Award Agreement, the maturity date relating to each Restricted Stock Unit shall not occur following
the later of (a) the 15
th
day of the third month following the end of the calendar year in which the applicable portion of the Restricted Stock Unit vests; or
(b) the 15
th
day of the third month following the end of the Company's fiscal year in which the applicable portion of the Restricted Stock Unit vests. On the maturity date,
the Company shall, subject to Section 11.4, transfer to the Participant one unrestricted, fully transferable Share for each Restricted Stock Unit scheduled to be paid out on such date and not
previously forfeited, or in the sole discretion of the Administrator, an amount in cash equal to the Fair Market Value of such Shares on the maturity date or a combination of cash and Common Stock as
determined by the Administrator.
8.5
No Rights as a Stockholder.
Unless otherwise determined by the Administrator, a Participant of Restricted Stock Units shall
possess no incidents of ownership with respect to the Shares represented by such Restricted Stock Units, unless and until such Shares are transferred to the Participant pursuant to the terms of this
Plan and the Award Agreement.
ARTICLE 9.
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, STOCK PAYMENTS
9.1
Performance Awards.
-
(a)
-
The Administrator is authorized to grant Performance Awards, including Awards of Performance Stock Units and other Awards of cash bonuses or other
cash awards determined in the Administrator's discretion from time to time, to any Eligible Individual. The value of Performance Awards, including Performance Stock Units and any cash awards, may be
linked to the attainment of the Performance Goals or other specific criteria determined by the Administrator, in each case on a specified date or dates or over any period or periods and in such
amounts as may be determined by the Administrator. Performance Awards, including Performance Stock Unit awards, may be paid in cash, Shares, or a combination of cash and Shares, as determined by the
Administrator.
-
(b)
-
Without limiting Section 9.1(a), the Administrator may grant Performance Awards to any Eligible Individual in the form of a cash bonus
payable upon the attainment of objective Performance Goals, or such other criteria, whether or not objective, that are established by the Administrator, in each case on a specified date or dates or
over any period or periods determined by the Administrator.
9.2
Dividend Equivalents.
-
(a)
-
Dividend Equivalents may be granted by the Administrator based on dividends declared on the Common Stock, to be credited as of dividend payment
dates with respect to dividends with record dates that occur during the period between the date an Award is granted to a Participant and the date such Award vests, is exercised, is distributed or
expires, as determined by the Administrator. Such Dividend Equivalents shall be converted to cash or additional Shares by such formula and at such time and subject to such restrictions and limitations
as may be determined by the Administrator. In addition, Dividend Equivalents with respect to an Award subject to vesting that are based on dividends paid prior to the vesting of such Award shall only
be paid out to the Participant to the extent that the vesting conditions are subsequently satisfied and the Award vests.
-
(b)
-
Notwithstanding the foregoing, no Dividend Equivalents shall be payable with respect to Options or Stock Appreciation Rights.
9.3
Stock Payments.
The Administrator is authorized to make Stock Payments to any Eligible Individual. The
number or value of Shares of any Stock Payment shall be determined by the Administrator and may be based upon one or more Performance Criteria or any other specific criteria, including service to the
Company or any Subsidiary, determined by the Administrator. Shares underlying a Stock Payment which is subject to a vesting schedule or other conditions or criteria set by the Administrator shall not
be issued until those conditions have been satisfied. Unless otherwise provided by the Administrator, a Participant of a Stock Payment shall have no rights as a Company stockholder with respect to
such Stock Payment until such time as the Stock Payment has vested and the Shares underlying the Award have been issued to the Participant. Stock Payments may, but are not required to, be made in lieu
of base salary, bonus, fees or other cash compensation otherwise payable to such Eligible Individual.
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9.4
Purchase Price.
The Administrator may establish the purchase price of a Performance Award or Shares distributed as a Stock
Payment award; provided, however, that value of the consideration shall not be less than the par value of a Share, unless otherwise permitted by Applicable Law.
ARTICLE 10.
STOCK APPRECIATION RIGHTS
10.1
Grant of Stock Appreciation Rights.
-
(a)
-
The Administrator is authorized to grant Stock Appreciation Rights to Eligible Individuals from time to time, in its sole discretion, on such terms
and conditions as it may determine, which shall not be inconsistent with the Plan.
-
(b)
-
A Stock Appreciation Right shall entitle the Participant (or other person entitled to exercise the Stock Appreciation Right pursuant to the Plan)
to exercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the Stock Appreciation Right from the Fair Market Value on the date of exercise of the Stock Appreciation Right by the number of
Shares with respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations the Administrator may impose. Except as described in clause (c) below, the
exercise price per Share subject to each Stock Appreciation Right shall be set by the Administrator, but shall not be less than 100% of the Fair Market Value on the date the Stock Appreciation Right
is granted.
-
(c)
-
Notwithstanding the foregoing provisions of Section 10.1(b) to the contrary, in the case of a Stock Appreciation Right that is a Substitute
Award, the price per share of the Shares subject to such Stock Appreciation Right may be less than 100% of the Fair Market Value per share on the date of grant; provided that the exercise price of any
Substitute Award shall be determined in accordance with the applicable requirements of Sections 424 and 409A of the Code.
10.2
Stock Appreciation Right Vesting.
-
(a)
-
The period during which the right to exercise, in whole or in part, a Stock Appreciation Right vests in the Participant shall be set by the
Administrator, and the Administrator may determine that a Stock Appreciation Right may not be exercised in whole or in part for a specified period after it is granted. Such vesting may be based on
service with the Company or any Subsidiary, any of the Performance Criteria or any other criteria selected by the Administrator. Except as limited by the Plan, at any time after grant of a Stock
Appreciation Right, the Administrator, in its sole discretion and subject to whatever terms and conditions it selects, may accelerate the period during which a Stock Appreciation Right vests.
-
(b)
-
No portion of a Stock Appreciation Right which is unexercisable at a Participant's Termination of Service shall thereafter become exercisable,
except as may be otherwise provided by the Administrator in an Award Agreement or by action of the Administrator following the grant of the Stock Appreciation Right. Unless otherwise determined by the
Administrator in the Award Agreement or by action of the Administrator following the grant of the Stock Appreciation Right, the portion of a Stock Appreciation Right which is unexercisable at a
Participant's Termination of Service shall automatically expire 30 days following such Termination of Service.
10.3
Manner of Exercise.
All or a portion of an exercisable Stock Appreciation Right shall be deemed exercised
upon delivery of all of the following to the Secretary of the Company, the stock administrator of the Company, or such other person or entity designated by the Administrator, or his, her or its
office, as applicable:
-
(a)
-
A written or electronic notice complying with the applicable rules established by the Administrator stating that the Stock Appreciation Right, or a
portion thereof, is exercised. The notice shall be signed by the Participant or other person then entitled to exercise the Stock Appreciation Right or such portion of the Stock Appreciation Right.
-
(b)
-
Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with Applicable
Law. The Administrator, in its sole discretion, may also take whatever additional actions it deems appropriate to effect such compliance, including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to agents and registrars.
-
(c)
-
In the event that the Stock Appreciation Right shall be exercised by any person or persons other than the Participant, appropriate proof of the
right of such person or persons to exercise the Stock Appreciation Right, as determined in the sole discretion of the Administrator.
-
(d)
-
Full payment of the exercise price and applicable withholding taxes for the Shares with respect to which the Stock Appreciation Right, or portion
thereof, is exercised, in a manner permitted by Section 11.1 and Section 11.2.
10.4
Stock Appreciation Right Term.
The term of each Stock Appreciation Right (the "
Stock
Appreciation Right Term
") shall be set by the Administrator in its sole discretion; provided, however, that the Stock Appreciation Right Term shall not be more than ten
(10) years from the date the Stock Appreciation Right is granted. The Administrator shall determine the time period, including the time period following a Termination of Service, during which
the Participant has the right to exercise the vested Stock Appreciation Rights, which time period may not extend beyond the last day of the Stock Appreciation Right Term applicable to such Stock
Appreciation Right. Except as limited by the requirements of Section 409A of the Code or the first sentence of this Section 10.4, the Administrator may extend the Stock Appreciation
Right Term of any outstanding Stock Appreciation Right, and may extend the time period during which vested Stock Appreciation Rights may be exercised, in connection with any Termination of Service of
the Participant, and may amend, subject to Section 13.1, any other term or condition of such Stock Appreciation Right relating to such a Termination of Service.
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APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
10.5
Payment.
Payment of the amounts payable with respect to Stock Appreciation Rights pursuant to this Article 10 shall
be in cash, Shares (based on the Fair Market Value as of the date the Stock Appreciation Right is exercised), or a combination of both, as determined by the Administrator.
ARTICLE 11.
ADDITIONAL TERMS OF AWARDS
11.1
Payment.
The Administrator shall determine the methods by which payments by any Participant with respect to any Awards
granted under the Plan shall be made, including, without limitation: (a) cash or check, (b) Shares (including, in the case of payment of the exercise price of an Award, Shares issuable
pursuant to the exercise of the Award) held for such period of time as may be required by the Administrator in order to avoid adverse accounting consequences, in each case, having a Fair Market Value
on the date of delivery equal to the aggregate payments required, (c) delivery of a written or electronic notice that the Participant has placed a market sell order with a broker acceptable to
the Company with respect to Shares then issuable upon exercise or vesting of an Award, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company
in satisfaction of the aggregate payments required; provided that payment of such proceeds is then made to the Company upon settlement of such sale, or (d) any other form of legal consideration
acceptable to the Administrator in its sole discretion. The Administrator shall also determine the methods by which Shares shall be delivered or deemed to be delivered to Participants. Notwithstanding
any other provision of the Plan to the contrary, no Participant who is a Director or an "executive officer" of the Company within the meaning of Section 13(k) of the Exchange Act shall be
permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment, with a loan from the Company or a loan arranged by the
Company in violation of Section 13(k) of the Exchange Act.
11.2
Tax Withholding.
The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant's FICA, employment tax or other social security contribution
obligation) required by law to be withheld with respect to any taxable event concerning a Participant arising as a result of the Plan. The Administrator shall determine the methods by which payments
by any Participant with respect to the tax withholding obligations with respect to any Awards granted under the Plan shall be made, which methods may include any of the methods permitted under
Section 11.1 above. Without limiting the foregoing, the Administrator, in its sole discretion and in satisfaction of the foregoing requirement, may withhold, or allow a Participant to elect to
have the Company withhold, Shares otherwise issuable under an Award (or allow the surrender of Shares). The number of Shares which may be so withheld or surrendered may not exceed the number of Shares
which have a fair market value on the date of withholding or surrender equal to the aggregate amount of such tax withholding liabilities based on the maximum individual statutory tax rate in the
applicable jurisdiction at the time of such withholding (or such other rate as may be required to avoid the liability classification of the applicable award under generally accepted accounting
principles in the United States of America) and, to the extent such Shares were acquired by the Participant from the Company as compensation, the shares must have been held for the minimum period
required by applicable accounting rules to avoid a charge to the Company's earnings for financial reporting purposes; provided, that, such shares shall be rounded up to the nearest whole Share to the
extent rounding up to the nearest whole share does not result in the liability classification of the applicable Award under generally accepted accounting principles in the United States of America.
The Administrator shall determine the fair market value of the Shares, consistent with applicable provisions of the Code, for tax withholding obligations due in connection with a broker-assisted
cashless Option or Stock Appreciation Right exercise involving the sale of Shares to pay the Option or Stock Appreciation Right exercise price or any tax withholding obligation.
11.3
Transferability of Awards.
-
(a)
-
Except as otherwise provided in Section 11.3(b):
-
(i)
-
No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution or,
subject to the consent of the Administrator, pursuant to a DRO, unless and until such Award has been exercised, or the Shares underlying such Award have been issued, and all restrictions applicable to
such Shares have lapsed;
-
(ii)
-
No Award or interest or right therein shall be liable for the debts, contracts or engagements of the Participant or the Participant's successors
in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null
and void and of no effect, except to the extent that such disposition is permitted by Section 11.3(a)(i); and
-
(iii)
-
During the lifetime of the Participant, only the Participant may exercise an Award (or any portion thereof) granted to such Participant under the
Plan, unless it has been disposed of pursuant to a DRO; after the death of the Participant, any exercisable portion of an Award may, prior to the time when such portion becomes unexercisable under the
Plan or the Award Agreement, be exercised by the Participant's personal representative or by any person empowered to do so under the deceased Participant's will or under the then-applicable laws of
descent and distribution.
-
(b)
-
Notwithstanding Section 11.3(a), the Administrator, in its sole discretion, may determine to permit a Participant to transfer an Award other
than an Incentive Stock Option to any one or more Permitted Transferees, subject to the following terms and conditions: (i) an Award transferred to a Permitted Transferee shall not be
assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution or, subject to the consent of the Administrator, pursuant to a DRO; (ii) an
Award transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Award as applicable to the original Participant (other than the ability to further
transfer the Award); and (iii) the Participant and the Permitted Transferee shall execute any and all documents requested by the Administrator, including, without limitation documents to
(A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under Applicable Law and (C) evidence the
transfer.
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Table of Contents
APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
-
(c)
-
Notwithstanding Section 11.3(a), a Participant may, in the manner determined by the Administrator, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any Award upon the Participant's death. A beneficiary, legal guardian, legal representative, or other person claiming any
rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by the Administrator. If the Participant is married or a domestic partner in a domestic partnership qualified under
Applicable Law and resides in a community property state, a designation of a person other than the Participant's spouse or domestic partner, as applicable, as the Participant's beneficiary with
respect to more than 50% of the Participant's interest in the Award shall not be effective without the prior written or electronic consent of the Participant's spouse or domestic partner. If no
beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant's will or the laws of descent and distribution. Subject to
the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time; provided that the change or revocation is filed with the Administrator prior to the Participant's
death.
11.4
Conditions to Issuance of Shares.
-
(a)
-
Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates or make any book entries
evidencing Shares issuable pursuant to any Award, unless and until the Administrator has determined, with advice of counsel, that the issuance of such Shares is in compliance with Applicable Law and
the Shares are covered by an effective registration statement or applicable exemption from registration. In addition to the terms and conditions provided herein, the Administrator may require that a
Participant make such reasonable covenants, agreements and representations as the Administrator, in its sole discretion, deems advisable in order to comply with Applicable Law.
-
(b)
-
All Share certificates delivered pursuant to the Plan and all Shares issued pursuant to book entry procedures are subject to any stop-transfer
orders and other restrictions as the Administrator deems necessary or advisable to comply with Applicable Law. The Administrator may place legends on any Share certificate or book entry to reference
restrictions applicable to the Shares.
-
(c)
-
The Administrator shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement,
distribution or exercise of any Award, including a window-period limitation, as may be imposed in the sole discretion of the Administrator.
-
(d)
-
No fractional Shares shall be issued and the Administrator, in its sole discretion, shall determine whether cash shall be given in lieu of
fractional Shares or whether such fractional Shares shall be eliminated by rounding down.
-
(e)
-
Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by Applicable Law, the Company shall
not deliver to any Participant certificates evidencing Shares issued in connection with any Award and instead such Shares shall be recorded in the books of the Company (or, as applicable, its transfer
agent or stock plan administrator).
11.5
Forfeiture and Claw-Back Provisions.
Pursuant to its general authority to determine the terms and
conditions applicable to Awards under the Plan, the Administrator shall have the right to provide, in an Award Agreement or otherwise, or to require a Participant to agree by separate written or
electronic instrument, that:
-
(a)
-
(i) Any proceeds, gains or other economic benefit actually or constructively received by the Participant upon any receipt or exercise of the Award,
or upon the receipt or resale of any Shares underlying the Award, shall be paid to the Company, and (ii) the Award shall terminate and any unexercised portion of the Award (whether or not
vested) shall be forfeited, if (x) a Termination of Service occurs prior to a specified date, or within a specified time period following receipt or exercise of the Award, or (y) the
Participant at any time, or during a specified time period, engages in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as
further defined by the Administrator or (z) the Participant incurs a Termination of Service for Cause; and
-
(b)
-
All Awards (including any proceeds, gains or other economic benefit actually or constructively received by the Participant upon any receipt or
exercise of any Award or upon the receipt or resale of any Shares underlying the Award) shall be subject to the provisions of any claw-back policy implemented by the Company, including, without
limitation, any claw-back policy adopted to comply with the requirements of Applicable Law, including without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or
regulations promulgated thereunder, to the extent set forth in such claw-back policy and/or in the applicable Award Agreement.
11.6
Prohibition on Repricing.
Subject to Section 13.2, the Administrator shall not, without the approval
of the stockholders of the Company, (a) authorize the amendment of any outstanding Option or Stock Appreciation Right to reduce its price per share, or (b) cancel any Option or Stock
Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per share exceeds the Fair Market Value of the underlying Shares. Subject to
Section 13.2, the Administrator shall have the authority, without the approval of the stockholders of the Company, to amend any outstanding Award to increase the price per share or to cancel
and replace an Award with the grant of an Award having a price per share that is greater than or equal to the price per share of the original Award. Furthermore, for purposes of this
Section 11.6, except in connection with a corporate transaction involving the Company (including, without limitation, any
stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the terms of outstanding
Awards may not be amended to reduce the exercise price per share of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash,
other Awards or Options or Stock Appreciation Rights with an exercise price per share that is less than the exercise price per share of the original Options or Stock Appreciation Rights without the
approval of the stockholders of the Company.
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CORPORATION
2019 Proxy Statement
Table of Contents
APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
ARTICLE 12.
ADMINISTRATION
12.1
Administrator.
The Committee (or another committee or a subcommittee of the Board assuming the functions of the Committee
under the Plan) shall administer the Plan (except as otherwise permitted herein). To the extent necessary to comply with Rule 16b-3 of the Exchange Act, and with respect to Awards that are
intended to be Performance-Based Compensation, including Options and Stock Appreciation Rights, the Committee (or another committee or subcommittee of the Board assuming the functions of the Committee
under the Plan) shall take all action with respect to such Awards, and the individuals taking such action and, unless otherwise determined by the Board, shall consist solely of two or more members of
the Board appointed by and holding office at the pleasure of the Board, each of whom is intended to qualify as a "non-employee director" as defined by Rule 16b-3 of the Exchange Act or any
successor rule. Additionally, to the extent required by Applicable Law, each of the individuals constituting the Committee (or another committee or subcommittee of the Board assuming the functions of
the Committee under the Plan) shall be an "independent director" under the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded.
Notwithstanding the foregoing, any action taken by the Committee shall be valid and effective, whether or not members of the Committee at the time of such action are later determined not to have
satisfied the requirements for membership set forth in this Section 12.1 or otherwise provided in any charter of the Committee. Except as may otherwise be provided in any charter of the
Committee, appointment of Committee members shall be effective upon acceptance of appointment. Committee members may resign at any time by delivering written or electronic notice to the Board.
Vacancies in the Committee may only be filled by the Board. Notwithstanding the foregoing, (a) the full Board, acting by a majority of its members in office, shall conduct the general
administration of the Plan with respect to Awards granted to Non-Employee Directors and, with respect to such Awards, the terms "Administrator" and "Committee" as used in the Plan shall be deemed to
refer to the Board and (b) the Board or Committee may delegate its authority hereunder to the extent permitted by Section 12.6. Should any Awards made under the Plan prior to
November 2, 2017, be intended to qualify as Performance-Based Compensation within the meaning of Section 162(m)(4)(C) of the Code prior to its repeal, then all such determinations
regarding such Awards will be made solely by a Committee comprised solely of two of more "outside directors" within the meaning of Section 162(m) of the Code.
12.2
Duties and Powers of Committee.
It shall be the duty of the Committee to conduct the general administration of the Plan in
accordance with its provisions. The Committee shall have the power to interpret the Plan and Award Agreements, and to adopt such rules for the administration, interpretation and application of the
Plan as are not inconsistent therewith, to interpret, amend or revoke any such rules and to amend any Award Agreement; provided that the rights or obligations of the Participant of the Award that is
the subject of any such Award Agreement are not impaired by such amendment, unless the consent of the Participant is obtained or such amendment is otherwise permitted under Section 11.5,
Section 13.2 or Section 13.10. Any such grant or award under the Plan need not be the same with respect to each Participant. Any such interpretations and rules with respect to Incentive
Stock Options shall be consistent with the provisions of Section 422 of the Code. In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties
of the Committee under the Plan except with respect to matters which under Rule 16b-3 under the Exchange Act or any successor rule, or the rules of any securities exchange or automated
quotation system on which the Shares are listed, quoted or traded are required to be determined in the sole discretion of the Committee.
12.3
Action by the Committee.
Unless otherwise established by the Board or in any charter of the Committee, a majority of the
Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by all members of the Committee in lieu
of a meeting, shall be deemed the acts of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any
officer or other employee of the Company or any Subsidiary, the Company's independent certified public accountants, or any executive compensation consultant or other professional retained by the
Company to assist in the administration of the Plan.
12.4
Authority of Administrator.
Subject to the Company's Bylaws, the Committee's Charter and any specific designation in the
Plan, the Administrator has the exclusive power, authority and sole discretion to:
-
(a)
-
Designate Eligible Individuals to receive Awards;
-
(b)
-
Determine the type or types of Awards to be granted to Eligible Individuals;
-
(c)
-
Determine the number of Awards to be granted and the number of Shares to which an Award will relate;
-
(d)
-
Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price,
purchase price, any performance criteria, any restrictions or limitations on the Award, any schedule for vesting, lapse of forfeiture restrictions or restrictions on the exercisability of an Award,
and accelerations or waivers thereof, and any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Administrator in its sole
discretion determines;
-
(e)
-
Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in
cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;
-
(f)
-
Prescribe the form of each Award Agreement, which need not be identical for each Participant;
-
(g)
-
Decide all other matters that must be determined in connection with an Award;
-
(h)
-
Establish, adopt or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;
-
(i)
-
Interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement;
-
(j)
-
Make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to
administer the Plan; and
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CORPORATION
2019 Proxy Statement
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Table of Contents
APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
-
(k)
-
Accelerate wholly or partially the vesting or lapse of restrictions of any Award or portion thereof at any time after the grant of an Award,
subject to whatever terms and conditions it selects and Section 13.2.
12.5
Decisions Binding.
The Administrator's interpretation of the Plan, any Awards granted pursuant to the Plan,
and any Award Agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding and conclusive on all parties.
12.6
Delegation of Authority.
To the extent permitted by Applicable Law, the Board or Committee may from time to time delegate
to a committee of one or more members of the Board or one or more officers of the Company the authority to grant or amend Awards or to take other administrative actions pursuant to this
Article 12; provided, however, that in no event shall an officer of the Company be delegated the authority to grant awards to, or amend awards held by, or take administrative actions with
respect to Awards held by, the following individuals: (a) individuals who are subject to Section 16 of the Exchange Act, or (b) officers of the Company (or Directors) to whom
authority to grant or amend Awards has been delegated hereunder; provided, further, that any delegation of administrative authority shall only be permitted to the extent it is permissible under
Applicable Law. Any delegation hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation, and the Board may at any time rescind the
authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section 12.6 shall serve in such capacity at the pleasure of the Board and the Committee.
ARTICLE 13.
MISCELLANEOUS PROVISIONS
13.1
Amendment, Suspension or Termination of the Plan.
Except as otherwise provided in this Section 13.1, the Plan may be
wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board or the Committee. However, without approval of the Company's stockholders given
within twelve (12) months before or after the action by the Administrator, no action of the
Administrator may, except as provided in Section 13.2, (a) increase the limits imposed in Section 3.1 on the maximum number of Shares which may be issued under the Plan, the
maximum number of Shares that may be issued pursuant to Incentive Stock Options under the Plan, or the individual Award limits imposed in Section 3.3, (b) reduce the price per share of
any outstanding Option or Stock Appreciation Right granted under the Plan or take any action prohibited under Section 11.6, or (c) cancel any Option or Stock Appreciation Right in
exchange for cash or another Award in violation of Section 11.6. Except as provided in Section 11.5, Section 13.2 or Section 13.10, no amendment, suspension or termination
of the Plan shall, without the consent of the Participant, impair any rights or obligations under any Award theretofore granted or awarded, unless the Award itself otherwise expressly so provides. No
Awards may be granted or awarded during any period of suspension or after termination of the Plan, and in no event may any Award (including any Incentive Stock Option) be granted under the Plan after
December 18, 2028 (the "
Expiration Date
"). Any Awards that are outstanding on the Expiration Date shall remain in force according to the terms of
the Plan and the applicable Award Agreement.
13.2
Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.
-
(a)
-
In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal
cash dividends) of Company assets to stockholders, or any other change affecting the shares of the Company's stock or the share price of the Company's stock other than an Equity Restructuring, the
Administrator may make equitable adjustments, if any, to reflect such change with respect to: (i) the aggregate number and kind of shares that may be issued under the Plan (including, but not
limited to, adjustments of the limitations in Section 3.1 on the maximum number and kind of shares which may be issued under the Plan, the maximum number of Shares that may be issued pursuant
to Incentive Stock Options under the Plan, and the individual Award limitations in Section 3.3); (ii) the number and kind of Shares (or other securities or property) subject to
outstanding Awards; (iii) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and
(iv) the grant or exercise price per share for any outstanding Awards under the Plan. Any adjustment affecting an Award intended as Performance-Based Compensation shall be made consistent with
the requirements of Section 162(m)(4)(c) of the Code prior to its repeal unless otherwise determined by the Administrator.
-
(b)
-
In the event of any transaction or event described in Section 13.2(a) or any unusual or nonrecurring transactions or events affecting the
Company, any Subsidiary of the Company, or the financial statements of the Company or any Subsidiary, or of changes in Applicable Law or accounting principles, including, without limitation, a Change
in Control, the Administrator, in its sole discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such
transaction or event and either automatically or upon the Participant's request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such
action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to
facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:
-
(i)
-
To provide for either (A) termination of any such Award in exchange for an amount of cash, if any, equal to the amount that would have been
attained upon the exercise of such Award or realization of the Participant's rights (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction or event described in this
Section 13.2 the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant's rights, then such Award may
be terminated by the Company without payment) or (B) the replacement of such Award with other rights or property selected by the Administrator, in its sole discretion, having an aggregate value
not exceeding the amount that could have been attained upon the exercise of such Award or realization of the Participant's rights had such Award been currently exercisable or payable or fully vested;
-
(ii)
-
To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and
applicable exercise or purchase price;
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APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
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(iii)
-
To make adjustments in the number and type of shares of the Company's stock (or other securities or property) subject to outstanding Awards,
and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards and Awards which may be granted in the future;
-
(iv)
-
To provide that such Award shall be exercisable or payable or fully vested with respect to all shares covered thereby, notwithstanding anything to
the contrary in the Plan or the applicable Award Agreement; and
-
(v)
-
To provide that the Award cannot vest, be exercised or become payable after such event.
-
(c)
-
In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Section 13.2(a) and
13.2(b):
-
(i)
-
The number and type of securities subject to each outstanding Award and/or the exercise price or grant price thereof, if applicable, shall be
equitably adjusted by the Administrator; and/or
-
(ii)
-
The Administrator shall make such equitable adjustments, if any, as the Administrator, in its sole discretion, may deem appropriate to reflect
such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments to the limitation in Section 3.1
on the maximum number and kind of Shares which may be issued under the Plan, the maximum number of Shares that may be issued pursuant to Incentive Stock Options under the Plan, and the individual
Award limitations in Section 3.3).
The
adjustments provided under this Section 13.2(c) shall be nondiscretionary and shall be final and binding on the affected Participant and the Company.
-
(d)
-
In the event that the successor corporation in a Change in Control refuses to assume or substitute for an Award, the Administrator shall cause all
or any portion of such Award to the extent held by a Participant who has not experienced a Termination of Service prior to the date of such Change in Control to become fully vested and/or exercisable
and/or payable immediately prior to the consummation of such transaction and all forfeiture restrictions on all or any portion of such Award to lapse. If an Award is exercisable in lieu of assumption
or substitution in the event of a Change in Control, the Administrator shall notify the Holder that the Award shall be fully exercisable for a period of 15 days from the date of such notice,
contingent upon the occurrence of the Change in Control, and the Award shall terminate upon the expiration of such period.
-
(e)
-
For the purposes of this Section 13.2, an Award shall be considered assumed if, following the Change in Control, the Award confers the right
to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change
in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares);
provided
,
however
, that if such consideration received in
the Change in Control was not solely common stock of the successor corporation or its parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Award, for each Share subject to an Award, to be solely common stock of the successor corporation or its parent equal in fair market value to the per-share
consideration received by holders of Common Stock in the Change in Control.
-
(f)
-
The Administrator, in its sole discretion, may include such further provisions and limitations in any Award, agreement or certificate, as it may
deem equitable and in the best interests of the Company that are not inconsistent with the provisions of the Plan.
-
(g)
-
With respect to Awards that are intended to qualify as Performance-Based Compensation, no adjustment or action described in this
Section 13.2 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause such Award to fail to so qualify as Performance-Based
Compensation, unless the Administrator determines that the Award should not so qualify. No adjustment or action described in this Section 13.2 or in any other provision of the Plan shall be
authorized to the extent that such adjustment or action would cause the Plan to violate Section 422(b)(1) of the Code. Furthermore, no such adjustment or action shall be authorized to the
extent such adjustment or action would result in short-swing profits liability under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the Administrator determines that
the Award is not to comply with such exemptive conditions.
-
(h)
-
The existence of the Plan, the Award Agreement and the Awards granted hereunder shall not affect or restrict in any way the right or power of the
Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
-
(i)
-
No action shall be taken under this Section 13.2 which shall cause an Award to fail to be exempt from or comply with Section 409A of
the Code or the Treasury Regulations thereunder.
-
(j)
-
In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than
normal cash dividends) of Company assets to stockholders, or any other change affecting the Shares or the share price of the Common Stock including any Equity Restructuring, for reasons of
administrative convenience, the Company, in its sole discretion, may refuse to permit the exercise of any Award during a period of up to thirty (30) days prior to the consummation of any such
transaction.
13.3
Approval of Plan by Stockholders.
This amended and restated Plan shall be submitted for the approval of the
Company's stockholders within 12 months after the date of the Board's adoption of this amended and restated Plan. If this amended and restated Plan is not approved by the Company's
stockholders, this amended and restated Plan shall not become effective and the Original Plan shall continue in full force and effect in accordance with its terms.
CUBIC
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APPENDIX B: AMENDED AND RESTATED CUBIC CORPORATION 2015 INCENTIVE AWARD PLAN
13.4
No Stockholders Rights.
Except as otherwise provided herein, a Participant shall have none of the rights of a stockholder
with respect to Shares covered by any Award until the Participant becomes the record owner of such Shares.
13.5
Paperless Administration.
In the event that the Company establishes, for itself or using the services of a third party, an
automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise
of Awards by a Participant may be permitted through the use of such an automated system.
13.6
Effect of Plan upon Other Compensation Plans.
The adoption of the Plan shall not affect any other compensation or incentive
plans in effect for the Company or any Subsidiary. Nothing in the Plan shall be construed to limit the right of the Company or any Subsidiary: (a) to establish any other forms of incentives or
compensation for Employees, Directors or Consultants of the Company or any Subsidiary, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection
with any proper corporate purpose including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, limited liability company, firm or association.
13.7
Compliance with Laws.
The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of Shares
and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all Applicable Law (including but not limited to state, federal and foreign
securities law and margin requirements), and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in
connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such
assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all Applicable Law. To the extent permitted by Applicable Law, the Plan and
Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to Applicable Law.
13.8
Titles and Headings, References to Sections of the Code or Exchange Act.
The titles and headings of the Sections in the
Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. References to sections of the Code or the
Exchange Act shall include any amendment or successor thereto.
13.9
Governing Law.
The Plan and any agreements hereunder shall be administered, interpreted and enforced under the internal
laws of the State of Delaware without regard to conflicts of laws thereof or of any other jurisdiction.
13.10
Section 409A.
To the extent that the Administrator determines that any Award granted under the Plan is subject to
Section 409A of the Code, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan
and any Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including
without limitation any such regulations or other guidance that may be issued after the Restatement Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that
following the Restatement Effective Date the Administrator determines that any Award may be subject to Section 409A of the Code (including Department of Treasury guidance as may be issued after
the Restatement Effective Date), the Administrator may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and
procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code
and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and Department of Treasury
regulations and other interpretive guidance issued thereunder and thereby avoid the application of any penalty taxes under such Section.
13.11
No Rights to Awards.
No Eligible Individual or other person shall have any claim to be granted any Award pursuant to the
Plan, and neither the Company nor the Administrator is obligated to treat Eligible Individuals, Participants or any other persons uniformly.
13.12
Unfunded Status of Awards.
The Plan is intended to be an "unfunded" plan for incentive compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general
creditor of the Company or any Subsidiary.
13.13
Indemnification.
To the extent allowable pursuant to Applicable Law and the Company's charter and bylaws, each member of
the Administrator shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against
and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled pursuant to the Company's charter or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
13.14
Relationship to other Benefits.
No payment pursuant to the Plan shall be taken into account in determining any benefits
under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to the extent otherwise expressly provided in writing in
such other plan or an agreement thereunder.
13.15
Expenses.
The expenses of administering the Plan shall be borne by the Company and its Subsidiaries.
*
* * * *
B-16 CUBIC
CORPORATION
2019 Proxy Statement
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CUBIC CORPORATION
ATTN: INVESTOR RELATIONS
P.O. BOX 85587
SAN DIEGO, CA 92186
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VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on February 17, 2019. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on February 17, 2019. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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E54548-P15626
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KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS PORTION ONLY
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CUBIC CORPORATION
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For
All
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Withhold
All
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For All
Except
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To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below.
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The Board of Directors recommends you vote FOR the following:
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1.
Election of Directors
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Nominees:
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01)
Prithviraj Banerjee
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06)
Janice M. Hamby
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02)
Bruce G. Blakley
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07)
David F. Melcher
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03)
Maureen Breakiron-Evans
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08)
Steven J. Norris
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04)
Bradley H. Feldmann
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09)
John H. Warner, Jr.
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05)
Edwin A. Guiles
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The Board of Directors recommends you vote FOR proposals 2, 3a., 3b., 3c., 3d., 4 and 5.
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For
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Against
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Abstain
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For
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Against
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Abstain
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2.
To consider and vote upon, on an advisory basis, the compensation of the Companys named executive officers.
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3d.
To consider and vote upon amendments to the Certificate to eliminate the supermajority voting requirements for amendments to certain provisions of the Certificate.
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3a.
To consider and vote upon amendments to the Companys Amended and Restated Certificate of Incorporation (the Certificate) to eliminate the supermajority voting requirements for certain business combinations.
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4.
To consider and vote upon the amendment and restatement of the Cubic Corporation 2015 Incentive Award Plan.
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3b.
To consider and vote upon amendments to the Certificate to eliminate the supermajority voting requirements for the Board of Directors to amend the Companys Bylaws to change the authorized number of directors.
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5.
To confirm the selection of Ernst & Young LLP as the Companys independent registered public accountants for Fiscal Year 2019.
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3c.
To consider and vote upon amendments to the Certificate to eliminate the supermajority voting requirements for shareholders to amend the Companys Bylaws.
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NOTE:
Also includes authorization to vote upon such other business as may properly come before the meeting or any adjournment thereof.
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For address changes and/or comments, please check this box and write them on the back where indicated.
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Please indicate if you plan to attend this meeting.
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Yes
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No
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Annual Meeting Admission Ticket
Cubic Corporation
Annual Meeting of Shareholders
Cubic Corporation Headquarters
9333 Balboa Avenue
San Diego, CA 92123
This Admission Ticket will be required to admit you to the meeting
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Please write your name and address in the space provided below and present this ticket when you enter
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Name:
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Address:
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City, State and Zip Code:
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Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
E54549-P15626
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CUBIC CORPORATION
Annual Meeting of Shareholders
February 18, 2019 11:30 AM, PST
This proxy is solicited by the Board of Directors
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The shareholder(s) hereby appoint(s) Bradley H. Feldmann and Anshooman Aga, and each of them, as proxies, each with the full power to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, and in his discretion on any other matter that may properly come before the meeting, all of the shares of Common Stock of CUBIC CORPORATION that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholders to be held at 11:30 AM, PST on February 18, 2019, at 9333 Balboa Avenue, San Diego, CA 92123, and any adjournment or postponement thereof.
This proxy, when properly executed, will be voted as directed by the shareholder(s) and in the discretion of the proxies upon any other matter that may properly come before the meeting or any adjournment or postponement thereof. If no such directions are made, this proxy will be voted for the election of the nominees listed on the reverse side for the Board of Directors and for each proposal.
Please mark, sign, date and return this proxy card promptly using the enclosed reply envelope.
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Address Changes/Comments:
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(If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.)
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Continued and to be signed on reverse side
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