, Incorporated establishes, effective as of January 1, 2005, the 2005 Deferred
Incentive Compensation Plan
, Incorporated. Such plan is established to provide the
opportunity to defer incentive compensation payments in compliance with Section 409A of the
Internal Revenue Code of 1986. Incentive compensation payments (and earnings thereon) that are
deferred (for purposes of Section 409A of the Internal Revenue Code of 1986) after December 31,
2004 are eligible for deferral in accordance with the provisions of this plan. Incentive
compensation payments (and earnings thereon) that are deferred (for purposes of Section 409A of
the Internal Revenue Code) on or before December 31, 2004 are eligible for deferral in accordance
with the provisions of the Amended and Restated 1992 Deferred
Incentive Compensation Plan
For the purposes hereof, the following words and phrases shall have the meanings indicated.
1. Account shall mean a bookkeeping account in which Incentive Compensation which is
deferred by a Participant shall be recorded and to which gains, losses, earnings, dividends,
distributions and interest may be credited in accordance with the Plan.
2. Beneficiary or Beneficiaries shall mean the person or persons designated by a
Participant in accordance with the Plan to receive payment of the remaining balance of the
Participants Account in the event of the death of the Participant prior to receipt of the entire
amount credited to the Participants Account.
3. Board shall mean the Board of Directors of the Company.
4. Code means the Internal Revenue Code of 1986, as amended from time to time.
5. Change in Control shall mean that: (i) The Company is merged or consolidated or
reorganized into or with another corporation or other legal person, and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting power of the securities
of such corporation or person that are outstanding immediately following the consummation of such
transaction is held in the aggregate by the holders of Voting Stock (as hereinafter defined) of the
Company immediately prior to such transaction;
(ii) The Company sells or otherwise transfers all or substantially all of its assets to
any other corporation or other legal person, and as a result of such sale or transfer less
than a majority of the combined voting power of the securities of such corporation or person
that are outstanding immediately following the consummation of such sale or transfer is held
in the aggregate by the holders of Voting Stock (as hereinafter defined) of the Company
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor
schedule, form or report) thereto, each as promulgated pursuant to the Securities Exchange
Act of 1934, as amended (the Exchange Act), disclosing that any person (as the term
person is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term beneficial owner is defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act) of securities representing 20 percent
or more of the combined voting power of the then-outstanding securities entitled to vote
generally in the election of directors of the Company (the Voting Stock);
(iv) The Company files a report or proxy statement with the Securities and Exchange
Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A
(or any successor schedule, form or report or item therein) that a change in control of the
Company has or may have occurred or will or may occur in the future pursuant to any
then-existing contract or transaction; or
(v) If during any period of two consecutive years, individuals who at the beginning of
any such period constitute the Board cease for any reason to constitute at least a majority
of the members thereof, unless the election, or the nomination for election by the Companys
stockholders, of each member of the Board first elected during such period was approved by a
vote of at least two-thirds of the members of the Board then still in office who were members
of the Board at the beginning of any such period.
Notwithstanding the foregoing provisions of subsection (iii) or (iv) hereof, a Change in
Control shall not be deemed to have occurred for purposes of this Agreement, either (1) solely
because the Company, a Subsidiary, or any Company-sponsored employee stock ownership plan or other
employee benefit plan of the Company, files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange Act, disclosing beneficial
ownership by it of shares of Voting Stock, whether in excess of 20 percent or otherwise, or because
the Company reports that a change in control of the Company has or may have occurred or will or may
occur in the future by reason of such beneficial ownership or (2) solely because of a change in
control of any Subsidiary by which any Participant may be employed.
Notwithstanding the foregoing provisions of subsections (i-iv) hereof, if, prior to any event described in subsections (i-iv)
hereof that may be instituted by any person who is not an officer or director of the Company, or
prior to any disclosed proposal that may be instituted by any person who is not an officer or
director of the Company that could lead to any such event, management proposes any restructuring of
the Company that ultimately leads to an event described in subsections (i-iv) hereof pursuant to
such management proposal, then a Change in Control shall not be deemed to have occurred for
purposes of the Plan.
6. Committee shall mean the Compensation and Pension Committee of the Board or such
other Committee as may be authorized by the Board to administer the Plan.
7. Common Shares shall mean Common Shares, $1.25 par value, of the Company or any
security into which such Common Shares may be changed by reason of any transaction or event of the
type referred to in Section 9 of Article II of the Plan.
8. Company shall mean Diebold
, Incorporated and its successors, including, without
limitation, the surviving corporation resulting from any merger or consolidation of Diebold
Incorporated with any other corporation or corporations.
9. Effective Date shall mean January 1, 2005.
10. Election Agreement shall mean an agreement in substantially the form attached
hereto as Exhibit A, as modified from time to time by the Company.
11. Eligible Associate shall mean an associate of the Company (or a Subsidiary that has
adopted the Plan) who is selected by the Board or a duly authorized committee thereof to
participate in this Plan. Unless otherwise determined by the Board or a committee thereof, an
Eligible Associate shall continue as such until termination of employment.
12. Incentive Compensation shall mean (i) cash incentive compensation earned as an
associate pursuant to an incentive compensation plan
now in effect or hereafter established by the
Company, including, without limitation, the Annual Incentive Plan and the 1991 Plan, and (ii)
incentive compensation payable in the form of Common Shares pursuant to the 1991 Plan or any
similar plan approved by the Board for purposes of this Plan.
13. Participant shall mean any Eligible Associate who has at any time elected to defer
the receipt of Incentive Compensation in accordance with the Plan.
15. Subsidiary shall mean any corporation, joint venture, partnership, unincorporated
association or other entity in which the Company has a direct or indirect ownership or other equity
interest and directly or indirectly owns or controls more than 50 percent of the total combined
voting or other decision-making power.
16. Unforeseeable Emergency shall mean a severe financial hardship to the Participant
resulting from an illness or accident of the Participant, the Participants spouse, or a dependent
(as defined in Section 152(a) of the Code) of the Participant, loss of the Participants property
due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant. A withdrawal on account of an Unforeseeable
Emergency may be paid to the Participant only if the amounts distributed with respect to an
emergency do not exceed the amounts necessary to satisfy such emergency plus amounts necessary to
pay taxes reasonably anticipated as a result of the distribution, after taking into account the
extent to which such hardship is or may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the Participants assets (to the extent the liquidation
of such assets would not itself cause severe financial hardship).
17. Year shall mean a calendar year.
18. 1991 Plan shall mean the Diebold
, Incorporated 1991 Equity and Performance
Incentive Plan, as amended from time to time.
ELECTION TO DEFER
1. Eligibility. An Eligible Associate may elect to defer receipt of all or a
specified part of his or her Incentive Compensation for any Year in accordance with Section 2 of
this Article. An Eligible Associates entitlement to defer shall cease with respect to the Year
following the Year in which he or she ceases to be an Eligible Associate.
2. Election to Defer. (i) An Eligible Associate who desires to defer the
payment of all or a portion of his or her Incentive Compensation must complete and deliver an
Election Agreement to the Secretary of the Company before the first day of the first Year of
service for which such Incentive Compensation is payable. An Eligible Associate who timely
delivers an Election Agreement to the Secretary of the Company shall be a Participant.
(ii) Notwithstanding the foregoing provision of Subsection (i), any associate who becomes
an Eligible Associate after the Effective Date, e.g., new hires or promoted
associates, may become a Participant for a Year with respect to services
performed subsequent to the filing of an Election Agreement if he or she submits to the Secretary of the Company a
properly completed Election Agreement within thirty (30) days after becoming an Eligible
(iii) Notwithstanding the foregoing provision of Subsection (i), with respect to any
performance-based compensation (as determined by the Company in accordance with Section
409A of the Code) based on services performed over a period of at least 12 months an Eligible
Associate may complete and deliver an Election Agreement to the Secretary of the Company no
later than six months before the end of such period.
(iv) An Election Agreement that is timely delivered shall be effective for the
succeeding Year and, except as otherwise specified by an Eligible Associate in his or her
Election Agreement, shall continue to be effective from Year to Year until revoked or
modified by written notice to the Secretary of the Company. Except as provided for in the
below provision of Subsection (v), in order to be effective to revoke or modify an election
to defer Incentive Compensation otherwise payable for any particular Year, a revocation or
modification must be delivered prior to the date that an initial election would be required
to be delivered under either Subsection (i) or Subsection (iii) above.
(v) Subject to the approval of the Company, a Participant may make a subsequent
election requesting a change in the period of deferral (subject to the limitations set forth
in Section 3 of this Article) and/or the form of payment (subject to the limitations set
forth in this Section 5). Such subsequent election must meet all of the following
requirements and shall be in writing on a form provided by the Company:
(a) the subsequent election shall not take effect until at least 12 months after
the date on which such amendment is made;
(b) in the case of a subsequent election related to a payment not made on account
of the Participants death or an Unforeseeable Emergency, the first payment with
respect to which the amendment is made shall in all cases be deferred for a period of
not less then 5 years from the date on which such payment otherwise would have been
(c) in the case of a subsequent election related to a payment that is to be made
at a specified time or pursuant to a fixed schedule, such an amendment of the election
must be made at least 12 months prior to the date of the first scheduled payment.
3. Amount Deferred; Period of Deferral
. A Participant shall designate on the
Election Agreement the percentage of his or her Incentive Compensation that is to be deferred. A
Participant may specify in the Election Agreement that different percentages shall apply to
different Incentive Compensation plan
s or different forms of payment, i.e., cash or Common Shares.
The applicable percentage or percentages of Incentive Compensation shall be deferred until the
earlier to occur of (a) the date the Participant experiences a separation from service with the
Company (determined in accordance with the standards of Section 409A of the Code); provided,
however, that in the case of a Participant who is a specified employee (within the meaning of
Code Section 409A of the Code), such date shall be as soon as practicable after the date which is
six months after the date of the Participants separation from service with the Company, or (b) the
date specified by the Participant of the Election Agreement.
4. Accounts. (i) Cash Incentive Compensation that a Participant elects to defer
shall be treated as if it were set aside in an Account on the date the Incentive Compensation would
otherwise have been paid to the Participant. A Participants Account shall be credited with gains,
losses and earnings based on hypothetical investment directions made by the Participant, in
accordance with investment deferral crediting options and procedures adopted by the Committee from
time to time. A Participant may change such hypothetical investment directions pursuant to such
procedures adopted by the Committee from time to time. The Company specifically retains the right
in its sole discretion to change the investment deferral crediting options and procedures from time
to time. By electing to defer any amount pursuant to the Plan, each Participant shall thereby
acknowledge and agree that the Company is not and shall not be required to make any investment in
connection with the Plan, nor is it required to follow the Participants hypothetical investment
directions in any actual investment it may make or acquire in connection with the Plan or in
determining the amount of any actual or contingent liability or obligation of the Company
thereunder or relating thereto. Any amounts credited to a Participants Account with respect to
which a Participant does not provide investment direction shall be credited with earnings in an
amount determined by the Committee in its sole discretion or, if an amount is not so determined,
such amounts shall bear interest at Moodys Seasoned Bond Rate plus 3% until further ordered by the
Committee or the Board of Directors. A Participants Account shall be adjusted as of each business
day, except that interest, if any, for a calendar quarter shall be credited on the first day of the
(ii) Incentive Compensation payable in the form of Common Shares that a Participant
elects to defer shall be reflected in a separate Account, which shall be credited with the
number of Common Shares that would otherwise have been issued or transferred and delivered to
the Participant. Such Account shall be credited from time to time with amounts equal to
dividends or other distributions paid on the number of Common Shares reflected in such
Account, and such Account shall be credited with gains, losses and earnings on cash amounts
credited to such Account from time to time in the manner provided in Subsection (i) above
with respect to Cash Incentive Compensation.
5. Payment of Accounts. The amounts in Participants Accounts shall be paid as
provided in this Section 5.
(i) The amount of a Participants Account attributable to deferral of cash Incentive
Compensation shall be paid to the Participant in a lump sum or in a number of approximately
equal quarterly installments (not to exceed 40), as designated by
the Participant in the Election Agreement. The amount of such Account remaining unpaid shall continue to be
credited with gains, losses and earnings as provided in Section 4 of this Article. The lump
sum payment or the first quarterly installment, as the case may be, shall be made as soon as
practicable following the end of the period of deferral as specified in Section 3 of this
(ii) The number of Common Shares in a Participants Account attributable to deferral of
Incentive Compensation payable in the form of Common Shares shall be issued or transferred to
the Participant as soon as practicable following the end of the period of deferral as
specified in Section 3 of this Article. All amounts credited to such Account in respect of
dividends and distributions, and the gains, losses and earnings thereon as provided in
Subsection (ii) of Section 4 of this Article shall likewise be paid to the Participant at
such time. Upon application of an Eligible Associate prior to his or her election to defer
Incentive Compensation payable in the form of Common Shares, the Committee may authorize
payment in installments of the amounts in his or her Account attributable to such Incentive
6. Death of a Participant. In the event of the death of a Participant, the
amount of the Participants Account or Accounts shall be paid to the Beneficiary or Beneficiaries
designated in a writing substantially in the form attached hereto as Exhibit B (the Beneficiary
Designation), in accordance with the Participants Election Agreement and Section 5 of this
Article. A Participants Beneficiary Designation may be changed at any time prior to his or her
death by the execution and delivery of a new Beneficiary Designation. The Beneficiary Designation
on file with the Company that bears the latest date at the time of the Participants death shall
govern. In the absence of a Beneficiary Designation or the failure of any Beneficiary to survive
the Participant, the amount of the Participants Account or Accounts shall be paid to the
Participants estate in a lump sum 90 days after the appointment of an executor or administrator.
In the event of the death of the Beneficiary or Beneficiaries after the death of a Participant, the
remaining amount of the Account or Accounts shall be paid in a lump sum to the estate of the last
Beneficiary to receive payments 90 days after the appointment of an executor or administrator.
7. Small Payments. Notwithstanding the foregoing, if installment payments
elected by a Participant would result in a payment with a value of less than $500, the entire
amount of the Participants Account or Accounts may at the discretion of the Board be paid in a
lump sum in accordance with Section 5 of this Article.
8. Acceleration. Notwithstanding the provisions of the foregoing: (i) if a
Change in Control, which constitutes a change in the ownership or effective control of the
corporation, or in the ownership of a substantial portion of the assets of the corporation (for
purposes of Section 409A of the Code), occurs, the amount of each Participants Account or Accounts
shall immediately be paid to the Participant in full or (ii) if a Participant incurs an
Unforeseeable Emergency, to the extent permitted by Section 409A of the Code, an amount from each
Participants Account or Accounts shall be immediately paid to the Participant.
9. Adjustments. The Board may make or provide for such adjustments in the
numbers of Common Shares credited to Participants Accounts, and in the kind of shares so credited,
as the Board in its sole discretion, exercised in good faith, may determine is equitably required
to prevent dilution or enlargement of the rights of Participants that otherwise would result from
(i) any stock dividend, stock split, combination of shares, recapitalization or other change in the
capital structure of the Company, or (ii) any merger, consolidation, spin-off, split-off, spin-out,
split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance
of rights or warrants to purchase securities, or (iii) any other corporate transaction or event
having an effect similar to any of the foregoing. Moreover, in the event of any such transaction
or event, the Board, in its discretion, may provide in substitution for any or all Common Shares
deliverable under this Plan such alternative consideration as it, in good faith, may determine to
be equitable in the circumstances.
10. Fractional Shares. The Company shall not be required to issue any fractional
Common Shares pursuant to this Plan. The Board may provide for the elimination of fractions or for
the settlement of fractions in cash.
The Company, through its Board, shall be responsible for the general administration of the
Plan and for carrying out the provisions hereof. The Board may delegate any or all of its
authority under the Plan to the Committee. The Company shall have all such powers as may be
necessary to carry out the provisions of the Plan, including the power to (i) determine all
questions relating to eligibility for participation in the Plan and the amount in the Account or
Accounts of any Participant and all questions pertaining to claims for benefits and procedures for
claim review, (ii) resolve all other questions arising under the Plan, including any questions of
construction, and (iii) take such further action as the Company shall deem advisable in the
administration of the Plan. The actions taken and the decisions made by the Company hereunder
shall be final and binding upon all interested parties. In accordance with the provisions of
Section 503 of the Employee Retirement Income Security Act of 1974, the Company shall provide a
procedure for handling claims of Participants or their Beneficiaries under this Plan. Such
procedure shall be in accordance with regulations issued by the Secretary of Labor and shall
provide adequate written notice within a reasonable period of time with respect to the denial of
any such claim as well as a reasonable opportunity for a full and fair review by the Company of any
AMENDMENT AND TERMINATION
The Company reserves the right to amend or terminate the Plan with respect to any future Year
at any time by action of the Board; provided, however, that no such action shall adversely affect
any Participant or Beneficiary who has an Account, or result in the acceleration of payment of the
amount of any Account (except as otherwise permitted under the Plan).
1. Non-alienation of Deferred Compensation. Except as permitted by this Plan, no
right or interest under this Plan of any Participant or Beneficiary shall, without the written
consent of the Company, be (i) assignable or transferable in any manner, (ii) subject to
alienation, anticipation, sale, pledge, encumbrance, attachment, garnishment or other legal process
or (iii) in any manner liable for or subject to the debts or liabilities of the Participant or
2. Participation by Associates of Subsidiaries. An Eligible Associate who is
employed by a Subsidiary and elects to participate in the Plan shall participate on the same basis
as an associate of the Company. The Account or Accounts of a Participant employed by a Subsidiary
shall be paid in accordance with the Plan solely by such Subsidiary to the extent attributable to
Incentive Compensation that would have been paid by such Subsidiary in the absence of deferral
pursuant to the Plan.
3. Interest of Associate. The obligation of the Company under the Plan to make
payment of amounts reflected in an Account merely constitutes the unsecured promise of the Company
to make payments from its general assets or in the form of its Common Shares, as the case may be,
as provided herein, and no Participant or Beneficiary shall have any interest in, or a lien or
prior claim upon, any property of the Company. Further, no Participant or Beneficiary shall have
any claim whatsoever against any Subsidiary for amounts reflected in an Account. The Company shall
establish a so-called rabbi trust to hold funds, Common Shares or other securities to be used in
payment of its obligations under the Plan, and may fund such trust; provided, however, that any
funds contained therein shall remain subject to the claims of the general creditors of the Company
or the Subsidiary for which the Eligible Associate performs services. Nothing in this Plan shall
be construed as guaranteeing future employment to Eligible Associates. It is the intention of the
Company that the Plan be unfunded for tax purposes and for purposes of Title I of ERISA.
4. Claims of Other Persons. The provisions of the Plan shall in no event be
construed as giving any other person, firm or corporation any legal or equitable right as against
the Company or any Subsidiary or the officers, associates or directors of the Company or any
Subsidiary, except any such rights as are specifically provided for in the Plan or are hereafter
created in accordance with the terms and provisions of the Plan.
5. Severability. The invalidity and unenforceability of any particular provision
of the Plan shall not affect any other provision hereof, and the Plan shall be construed in all
respects as if such invalid or unenforceable provision were omitted herefrom.
6. Governing Law
. Except to the extent preempted by federal law, the provisions
of the Plan shall be governed and construed in accordance with the laws of the State of Ohio
7. Relationship to Other Plans. This Plan is intended to serve the purposes of
and to be consistent with the 1991 Plan and any similar plan approved by the Board for purposes of
this Plan. The issuance or transfer of Common Shares pursuant to this Plan shall be subject in all
respects to the terms and conditions of the 1991 Plan and any other such plan. Without limiting
the generality of the foregoing, Common Shares credited to the Accounts of Participants pursuant to
this Plan as Incentive Compensation shall be taken into account for purposes of Section 3 of the
1991 Plan (Shares Available Under the Plan) and for purposes of the corresponding provisions of any
other such plan.
8. Compliance with Section 409A of the Code. To the extent applicable, it is
intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of
the Code. The Plan and any grants made hereunder shall be administered in a manner consistent with
this intent, and any provision that would cause the Plan or any grant made hereunder to fail to
satisfy Section 409A of the Code shall have no force and effect until amended to comply with
Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section
409A of the Code and may be made by the Company without the consent of Participants).
9. Special Elections. Notwithstanding any other provision of the Plan, on or
before December 31, 2005, the Committee may select a participant or participants who will be
permitted: (i) to cancel an outstanding deferral election (in whole or in part) in accordance with
Question and Answer 20 of the Internal Revenue Service Notice 2005-1, and/or (ii) to make a new
payment election with respect to designated deferred amounts in accordance with Question and Answer
19(c) of the Internal Revenue Service Notice 2005-1.